Nirmala Devi, Hisar V. ITO WARD-03, Hisar

ITA 2731/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1975 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 29-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Diversion of income; Tangible material; Reassessment proceedings
• Section: 143(1); 147; 148

Judgement Text

1 ITA NO. 2731/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I(2) + SM C-1 NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER, AND SHRI PRASHANT MAHARISHI, ACCOU NTANT MEMBER ITA NO. 2731/DEL/2019 ( A.Y 2009-10) NIRMALA DEVI HOUSE NO. 8, GREEN PARK, HISAR HARYANA PIN: 125001 PAN: AAPPD3170P (APPELLANT) VS ITO WARD-03 AYAKAR BHAWAN, HISAR HARYANA (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SH. PRADEEP SINGH GAUTAM, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 11/01/2019 PASSED BY CIT(A)-5, LUDHIANA, FOR ASSESSMENT YEAR 2009-10. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE IMPUGNED ORDER IS AGAINST FACTS AND BAD I N LAW. 2. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED A.O. GROSSLY ERRED IN ASSUMING JURISDICTION U/S 147 /151 OF THE IT ACT,1961 AND NOTICE ISSUED U/S 148 OF THE IT ACT, 1961 WAS V OID-AB-INITIO ON THE FOLLOWING GROUNDS : I. THAT THE REOPENING WAS BASED ON MERE 'BORROWED SAT ISFACTION' OF THE INVESTIGATING WING WITHOUT INDEPENDENT APPLICATION OF MIND BY THE AO AND THERE WAS NO INTANGIBLE MATERIAL TO INVOKE SECTION 147 OF IT ACT, 1961 SINCE THE RECORDED REASONS WERE SOLELY BASED ON MERE HEAR SAY INFORMATION RELATED TO BROKER/THIRD PARTY AND THERE WAS NOT IOTA OF MAT ERIAL IN THE RECORDED REASONS TO DRAW ADVERSE INFERENCE THAT APPELLANT HA S ANY DIRECT NEXUS OR DATE OF HEARING 05.03.2020 DATE OF PRONOUNCEMENT 12 .05.2020 2 ITA NO. 2731/DEL/2019 CONNECTION OF ALLEGED LOSS OF RS. 8,56,225 TAKEN BY MISUSING THE CLIENT CODE MODIFICATION FACILITIES AND THE ENTIRE MATERIAL REL ATED IN THE RECORDED REASONS WAS MERE HEARSAY MATERIAL. II. THAT NO EFFORT WAS MADE BY LD. A.O. U/S 133(6)/131 OF IT ACT, 1961 BEFORE RECORDING THE REASONS TO CONFRONT THE THIRD PARTY/B ROKER TO ESTABLISH THE NEXUS OF ANY INVOLVEMENT OF APPELLANT IN THE ALLEGED DIVE RSION OF INCOME OF RS.20,24,792/- IN CONNIVANCE WITH THE BROKER IN LIG HT OF RATIO DECIDED BY HON'BLE SUPREME COURT DECISION IN CASE OF KISHINCHA ND CHELLARAM VS. CIT BOMBAY CITY - II REPORTED IN [1980] 125 ITR 713(SC) . III. THAT IT WAS INCORRECT AND ILLEGAL TO USE THE ASSES SMENT PROCEEDINGS FOR MERELY CONDUCTING ROVING ENQUIRY WHICH ACTION SHOUL D HAVE BEEN INITIATED UNDER SECTION 133(6)/131 OF INCOME TAX ACT, 1961 BE FORE RECORDING THE REASONS BY LD. A.O. IN THE LIGHT OF RATIO DECIDED B Y GUJARAT HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX 5 VS. MANZIL DINESHKUMAR SHAH 2018 (5) TMI 16 ALSO SLP FILED BY THE DEPARTMENT IN THIS CASE WAS DISMISSED BY THE HON'BLE SUPREME COUR T. IV. THAT APPROVAL MADE BY PRINCIPAL COMMISSION OF INCO ME TAX WAS INVALID BASED ON VAGUE FEELING AND THERE WAS NO TANGIBLE MA TERIAL AT ALL TO INFER DIVERSION OF INCOME BY APPELLANT IN THE RECORDED RE ASONS AND ON MERE REASONS TO SUSPECT SUCH APPROVAL UNDER SECTION 151 OF INCOM E TAX ACT 1961 WAS MECHANICAL AND POWER WAS EXERCISED CASUALLY AND IN A ROUTINE MATTER WITHOUT APPLICATION OF MIND IN LIGHT OF RATIO DECID ED BY HON'BLE SUPREME COURT IN THE CASE OF CHHUGAMAL RAJPAL VS S.P. CHALIHA 79 ITR 603 (SC). AND IN THE LIGHT OF RATIO DECIDED BY JURISDICTION DELHI HIGH COURT PRINCIPAL COMMISSIONER OF INCOME TAX VS. MEENAKASHI OVERSEAS PRIVATE LIMITED REPORTED IN [2017] 395 ITR 677 [DEL] 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, A ND THE LEGAL POSITION THE APPELLANT HAS RESPONDED TO ALL NOTICES SENT BY LD. A.O. AND NO REASONABLE OPPORTUNITY WAS GIVEN BY THE LD. A.O. TO CROSS EXAM INE THE BROKER OR THE PERSON TO WHOM DIVERSION OF INCOME WAS ALLEGED TO B E MADE BY APPELLANT WHEN, PARTICULARLY, NO SUPPORTING DOCUMENT AT ALL F OR ALLEGED DIVERSION OF INCOME WAS CONFRONTED BY LD. A.O. IN THE COURSE OF REASSESSMENT PROCEEDINGS. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, A ND THE LEGAL POSITION THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.20,24,792/- AND THE 3 ITA NO. 2731/DEL/2019 SAME IS PERVERSE BEING SOLELY BASED ON NO EVIDENCE AT ALL AND ON MERE HEARSAY INFORMATION TO PROVE THAT THERE WAS DIVERSI ON OF INCOME BY THE APPELLANT AND NOT ON IOTA OF EVIDENCE WAS PUT ON RE CORD NOR THIRD PARTY WAS EVER CROSS EXAMINED BY AO OR THE APPELLANT. SUSPICI ON HOWSOEVER STRONG CANNOT BE ASSESSED AS INCOME. THERE MUST BE SOMETHI NG MORE THAN SUSPICION TO BE ASSESSED AN INCOME. SUPREME COURT 26 ITR 775 DHANESHWARI COTTON MILLS. 3. THE ASSESSEE, SMT. NIRMALA DEVI FILED HER RETUR N OF INCOME FOR THE ASSESSMENT YEAR 2009-10 AT TOTAL INCOME OF RS. 6230 10/- ON 30.03.2010 WITH INCOME TAX OFFICER, WARD-3, HISAR. THE RETURN WAS P ROCESSED U/S 143(1) OF INCOME TAX ACT, 1961. SUBSEQUENTLY THE INFORMATION WAS RECEIVED THROUGH ASSISTANT DIRECTOR OF INCOME TAX (INVESTIGATION), U NIT-1(3) AHEMDABAD VIDE LETTER DATED 18.03.2016 REGARDING CLIENT CODE MODIF ICATION AND IT WAS INFORMED THAT THE TRANSACTION WAS NOT GENUINE. AFTER RECORDI NG REASONS AND TAKING APPROVAL FROM THE APPROPRIATE AUTHORITY, NOTICE U/S 148 OF THE IT ACT, 1961 DATED 30-03-2016 WAS ISSUED AND SERVED UPON THE ASS ESSEE. THE RE- ASSESSMENT PROCEEDINGS WERE STARTED BY THE DEPARTME NT AND HEARING IN THIS CASE WAS GIVEN FROM TIME TO TIME AS PER ORDER SHEET ENTRY OF THE I.T.O. AND THE ASSESSMENT IN THIS CASE IS FINALLY FRAMED U/S 143(3 ) OF THE ACT IBID BY THE INCOME TAX OFFICER WARD-3, HISAR AT A TOTAL INCOME OF RS. 2647802/- AS AGAINST RETURNED INCOME OF RS. 623010/- VIDE HIS OR DER DATED 29-12-2016. THE NOTICE OF DEMAND ALONGWITH ASSESSMENT ORDER WAS SER VED UPON THE ASSESSEE ON 30.12.2016. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE AS SESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF TH E ASSESSEE. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE AND THER E IS NO ADJOURNMENT APPLICATION ON BEHALF OF THE ASSESSEE. THE NOTICE HAS BEEN DULY SERVED TO THE ASSESSEE. THEREFORE, WE ARE TAKING UP THE SUBMISSI ONS OF THE ASSESSEE BEFORE 4 ITA NO. 2731/DEL/2019 THE CIT(A) AS WELL AS BEFORE THE ASSESSING OFFICER AS SUBMISSIONS/ARGUMENTS BEFORE US. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L AVAILABLE ON RECORD. IT CAN BE SEEN THAT THE ASSESSEE EARNED SHORT TERM CAPITAL GAIN AMOUNTING TO RS. 29,50,000/- ON SALE OF PLOT BUT THE SAME WAS SE T OFF AGAINST THE LOSS FROM F & O SECURITIES TRANSACTIONS & OTHER BUSINESS LOSS. THE INVESTIGATION DIRECTORATE, AHMEDABAD CARRIED OUT SURVEY U/S 133(A ) TO EXAMINE THE MISUSE OF CLIENT CODE MODIFICATION FOR TAX EVASION. IN TH IS CASE, THE CLIENT CODE OF THE ASSESSEE WAS SS 493 & AS PER THE ASSESSING OFFICER THE ERROR BY THE OPERATOR COULD BE IN THE FORM OF PUNCHING CLIENT CODE AS FS- 493, HS-493, SS-439 OR SIMILAR PHONIC SOUNDS BUT CERTAINLY CODE WAS S-1. HENCE, THE MODIFICATION IN THIS CASE, WAS NOT FOUND GENUINE BY THE ASSESSING O FFICER AS WELL AS CIT (A). BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS NOT AT ALL PROVED AS TO WHY THE ERROR HAS INCURRED. IN THE WRITTEN SUBMISSIONS AS WELL, THE ASSESSEE SUBMITTED THAT THE DETAILS OF TRADING AND HOW THE LOSS COME A CROSS, BUT THE SAME WAS NOT FULLY SATISFIED BEFORE THE ASSESSING OFFICER AS WEL L AS BEFORE THE CIT(A) BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER HAS RIG HTLY MADE ADDITION OF RS.15, 25,782/- AND THE SAME WAS PROPERLY CONFIRMED BY THE CIT (A). THERE IS NO NEED TO INTERFERE WITH THE SAID FINDING OF THE CIT (A). THE APPEAL OF THE ASSESSEE IS DISMISSED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED ON THIS 12TH DAY OF MAY, 2020. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12/05/2020 R. NAHEED 5 ITA NO. 2731/DEL/2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 16.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 3 . 5 . 2 0 2 0 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER