Mange Lal, Bhiwani V. ITO Ward-2, Bhiwani

ITA 3174/DEL/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3751 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 21-06-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 20-10-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Assessee Lawyers: YASHU GOEL C AS; NK GOEL
• Keywords: Unexplained investment; Principle of natural justice; Difference of opinion; Change of opinion
• Section: 143(2); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: E NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER ITA NO: 3174/DEL/2008 ASSESSMENT YEAR : 2002-03 M/S MANGE LAL VS. ITO, WA RD 2, BHIWANI S/O SHRI MAHABIR PRASAD MANGELAL HARY ANA SIWANI DT.BHIWANI, HARYANA (APPELLANT) (RESPOND ENT) APPELLANT BY : SH.NK GOEL & SH.YASHU GOEL, C.AS RESPONDENT BY : SRI G.S.SAHOTA, SR. D.R. O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER INITIALLY, THIS APPEAL WAS HEARD ON 26.5.2009 AND THE SAME WAS DISMISSED VIDE ORDER DT. 26 TH MAY, 2009 KEEPING IN VIEW THE PROVISIONS OF RULE 19(2) OF THE INCOME TAX APPELLATE TRIBUNAL RUL ES. THIS ORDER WAS RECALLED ON 16.10.2009 WHILE DECIDING M.A. 439/2009 FILED BY THE ASSESEE. . THE CASE WAS HEARD ON 24.6.2010. 2. IN THIS APPEAL THE ASSESSEE HAS TAKEN THE FOLLOW ING GROUNDS OF APPEAL. 2 1. THAT THE LD.ITO HAS ILLEGALLY AND ARBITRARILY I NITIATED PROCEEDINGS U/S 148 OF THE I.T.ACT, 1961 ON THE ASS ESEE. THE TRANSACTION IN QUESTION DOES NOT PERTAIN TO THE ASS ESEE AND THE LD.CIT(A) UPHELD THE SAME. 2. THAT THE LD.ITO HAS ILLEGALLY AND ARBITRARILY EN HANCED THE INCOME OF THE ASSESSEE WITHOUT ANY REASONS AND THE LD.CIT(A) UPHELD THE SAME. 3. THAT THE LD.ITO HAS ILLEGALLY AND ARBITRARILY MA DE ADDITION ON ACCOUNT OF PENALTY OF RS. 1,15,000/- PAID BY OTH ER PERSON, IN THE INCOME OF THE ASSESSEE AND THE LD.CIT(A) UPH ELD THE SAME. 4. THAT THE LD.ITO HAS ILLEGALLY AND ARBITRARILY M ADE ADDITION OF RS. 5,27,000/- BEING THE VALUE OF GOODS NOT TRAD ED BY THE ASSESSEE AND THE LD.CIT(A) HAS UPHELD THE SAME. 5. THAT THE LD.A.O. HAS ERRED IN CHARGING OF INTERE ST U/S 234A AND 234 B OF THE INCOME TAX ACT, 1961. 6. THAT THE RETURNED INCOME BE ACCEPTED. 7. THAT THE PETITIONER HAS THE PRIVILEGE TO ADD, AM END OR ALTER THE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THERE WAS A TAX EVASION PETITION BEFORE THE LD.CIT(A), HISSAR. IN THE TAX EVASION PE TITION THE MAIN ALLEGATION WAS THAT ETO, FATEHABAD DURING THE COURS E OF ROAD SIDE 3 CHECKING ON 17.5.2001 IMPOUNDED THE THREE TRUCKS AT FATEHABAD ROAD, NEAR RATIA. ON THE SPOT ENQUIRY IT IS FOUND THAT T HE BILLS/G.RS STAMPED BY COMMERCIAL TAXES CHECK POST WERE FAKE. THESE F AKE BILLS WERE IN THE NAME OF M/S GOYAL TRADING CO. RAJGADH (RAJ.) AND SH RI RAM TRADING CO. JAIPUR. SHRI MANGE LAL ASSESSEE ADMITTED THAT THE GOODS TRANSPORTED BY THESE TRUCKS WERE BELONGING TO HIM. HE PAID PENALT Y IN THE NAME OF MANGE RAM MAHABIR PRASAD. ASSESSEE HAD GIVEN HIS N AME AS MANGE RAM BEFORE THE SALES TAX AUTHORITIES. THUS SHRI M ANGE RAM IS MANGE LAL (THE ASSESSEE). HE HIMSELF APPEARED BEFORE T HE AETO WHO WAS THE ASSESSING AUTHORITY, FATEHABAD ON 18.05.2001 AND AD MITTED THIS FACT THAT THE GOODS BELONG TO HIM AND HE HAS ISSUED FAKE BILLS OF RAJASTHAN WITH A VIEW TO EVADE THE TAX. AFTER HEARING THE AE TO, FATEBABAD IMPOSED A PENALTY OF RS. 1,15,000/- ON THE VALUE OF RS. 5,40,000/- WHICH THE ASSESSEE HAS PAID IN THE NAME OF MANGE RAM MAHA BIR PRASAD. ON THE BASIS OF THIS INFORMATION THE A.O. BHIWANI ISSU ED A NOTICE U/S 148 OF THE I.T.ACT WHICH WAS DULY DISPATCHED BY REGISTERE D A.D. ON 20.7.2005. THE SAME WAS SERVED ON THE ASSESEE ON 22.7.2005 BY THE POSTAL AUTHORITIES. 4. THE LD.A.R. PLEADED THAT THERE IS NO FIRM IN EX ISTENCE BY NAME M/S MANGE RAM MAHABIR PARSHAD. THEREFORE THE NOTIC E IS NOT VALID. THE TRANSACTIONS ARE NOT RELATED TO ASSESSEE. PENA LTY PAID BY SOME OTHER PERSON AND GOODS ALSO BELONG TO OTHER PERSONS. LAS TLY HE PLEADED THAT 4 ASSESSEE WAS WORKING AS BROKER. ON THE OTHER HAND THE LD.D.R. SUBMITTED THAT SHRI MANGE LAL HAS GIVEN HIS NAME A S MANGE RAM MAHABIR PRASAD BEFORE THE AETO, SALES TAX AUTHORITY AND ADMITTED THE FACT THAT THE GOODS BELONGED TO HIM AND PAID A PENA LTY IN THAT NAME ONLY. THE ASSESEE IS MISGUIDING THE TAX AUTHORITI ES BY CREATING A CONFUSION BY STATING THAT THERE IS NO FIRM IN THE N AME OF M/S MANGE RAM MAHABIR PARSHAD. THE NOTICE WAS SERVED ON SHR I MANGE RAM MAHABIR PARSHAD AT THE ADDRESS GIVEN. THEREFORE TH ERE IS NO SUBSTANCE IN ASSESSEES CLAIM. THE PENALTY IMPOSED BY AETO F ATEBABAD WAS ALSO PAID IN THIS NAME ONLY. HE HIMSELF ADMITTED THAT H E IS SOLE OWNER OF THE GOODS (SARSON) AND PAID THE PENALTY TO THE SALES TA X DEPARTMENT. THE NOTICES ISSUED U/S 143(2) OF THE I.T.ACT IN THE NAM E OF M/S MANGE LAL MAHABIR PARSHAD SENT THROUGH REGISTERED POST WAS SE RVED ON THE ASSESEE. THUS THERE IS NO INFIRMITY IN ISSUING THE NOTICE IN THE NAME OF MANGE RAM MAHABIR PARSHAD, SIWANI. HE FURTHER SUBM ITTED THAT THE NOTICE U/S 148 WAS ISSUED AFTER RECORDING PROPER R EASONS AND THERE WAS A SUFFICIENT MATERIAL FOR MAKING THE BELIEF THAT I NCOME HAS ESCAPED ASSESSMENT. THIS BELIEF WAS VERY HONEST AND REASO NABLE BELIEF. THERE WAS NO CHANGE OF OPINION AS THERE IS DIRECT NEXUS BETWEEN THE MATERIAL ON RECORD AND THE BELIEF OF THE A.O. THE A.O. HAS APPLIED HIS MIND BEFORE ISSUING OF NOTICE. THE INFORMATION WAS DEFI NITE. THEREFORE PROCEEDINGS U/S 148 WERE VALID AND WITHOUT ANY INFI RMITY. HE ALSO RELIED THAT S.292B OF THE I.T.ACT, 1961 WHICH PROVIDE THA T NO NOTICE SHALL BE 5 DEEMED TO BE INVALID MAINLY BY REASON OF ANY DEFECT , OMISSION IF THE NOTICE IS IN SUBSTANCE AND EFFECT IN CONFORMITY WIT H OR ACCORDING TO THE INTENT AND PURPOSE OF THE ACT. KEEPING ALL THESE A SPECTS IN VIEW THE D.R. PLEADED TO CONFIRM THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. 5. AFTER HEARING BOTH THE SIDES AT LENGTH, WE HOLD THAT SHRI MANGE LAL HIMSELF APPEARED BEFORE THE SALES TAX AUTHORITIES AND GAVE THE INFORMATION THAT THE GOODS TRANSPORTED BY THREE TR UCKS BELONG TO HIM. HE HIMSELF GAVE THE NAME OF THE CONCERN AS M/S MAN GE RAM MAHABIR PARSHAD, SHIVANI. HE HAS PAID A PENALTY LEVIED OF RS. 1,15,000/- IN THIS NAME ONLY AND GOT THE GOODS (SARSON) RELEASED. IN V IEW OF THIS FACT ASSESEES CLAIM THAT THERE WAS NO CONCERN IN THE NA ME OF MANGE RAM MAHABIR PRASAD HAS NO SUBSTANCE. NOTICE WAS ISSUED IN THE NAME WHICH WAS GIVEN BY THE ASSESSEE TO THE SALES TAX AUTHORIT IES AND THE ASSESSEE PAID THE PENALTY IN THAT NAME ONLY. NOTICE ISSUED U/S 148 AFTER PROPER RECORDING OF REASON SERVED ON ASSESSEE BY INDEPENDE NT POSTAL AUTHORITIES. WE HOLD THAT THERE IS NO INFIRMITY IN ASSUMING JURISDICTION FOR REASSESSMENT OF INCOME. FURTHER SUCH DISCREPA NCY IF ANY ARE COVERED BY PROVISIONS OF SECTION 292 B OF THE I.T.A CT. 6. THE AFFIDAVITS FILED AT A MUCH LATER DATE AND HA D NO RELEVANCE TO THE FACTS OF THE CASE. PRIMA FACIE THESE AFFIDAVIT S IN THE NAME OF SHRI MUSHADI RAM AND DAYA RAM ARE NOT BELIEVABLE AS BOTH AFFIDAVITS TYPED 6 IN SAME LANGUAGE AND PARTICULARS IN RESPECT OF NAME AND ADDRESS ETC. WERE LEFT BLANK WHICH ARE FILLED UP LATER ON. THIS IS A STORY MADE TO AVOID THE INCOME TAX PAYABLE ON AN UNACCOUNTED INVESTMENT S IN THE PURCHASE OF SARSON AND PENALTY PAID. THE ASSESEES CLAIM T HAT HE WAS WORKING ONLY AS A BROKER IS NOT SUPPORTED BY ANY INDEPENDEN T OR CREDIBLE EVIDENCE. HE HAS NOT SHOWN ANY INCOME FROM THE BRO KERAGE. HE HAD NOT MENTIONED ANYTHING IN THIS REGARD BEFORE THE SALES TAX AUTHORITIES. FURTHER HE HIMSELF ADMITTED THAT THE GOODS WERE BEL ONGING TO HIM AND HAD PAID THE PENALTY TO THE SALE TAX AUTHORITIES WH ICH CLEARLY ESTABLISHED THAT THESE GOODS WERE BELONGING TO THE ASSESEE. HE HAS GOT RELEASED HIS GOODS AND PAID THE PENALTY. 7. THE TAX AUTHORITIES ALSO FOLLOWED THE PRINCIPL E OF NATURAL JUSTICE AND THERE IS NO VIOLATION ON THEIR PART IN THIS RE GARD. NO EVIDENCE THAT ASSESSEE WAS WORKING AS BROKER PARTICULARLY IN RESP ECT OF THESE UNACOUNTED INVESTMENTS AND PAYMENT OF PENALTY. KE EPING ALL THESE FACTS IN VIEW AND CONSIDERING ALL THE CASE LAWS REL IED BY THE ASSESEE, WE FIND THAT THERE IS NO INFIRMITY IN INITIATING PROCE EDINGS U/S 148 OF THE I.T.ACT AND ALSO IN SUSTAINING THE ADDITION OF RS.5 ,27,000/- + RS.1,15,000/-. KEEPING ALL THESE FACTS IN VIEW WE HAVE NO HESITATION TO CONFIRM THE ORDER OF LD.CIT(A) AND DISMISS THE ASSE SSEES APPEAL. WE UPHOLD VALIDITY OF PROCEEDINGS U/S 148 FOR REASSESS MENT AND ALSO UPHOLD ADDITION OF RS. 5,27,000/- INVESTMENT MADE IN SARS ON AND RS. 7 1,15,000/- PENALTY PAID FROM UNDISCLOSED SOURCE. THUS GROUND NO.1 TO 4 OF ASSESEES APPEAL STAND DISMISSED. 8. GROUND NO.5 IS IN RESPECT OF CHARGING OF INTERES T U/S 234A AND S.234B. THE CHARGING OF INTEREST UNDER THESE PROVI SIONS ARE MANDATORY, HENCE, WE DISMISS THIS GROUND. THE GROUND NO. 6 AN D 7 ARE GENERAL IN NATURE HENCE NO ADJUDICATION IS REQUIRED. 9. IN THE RESULT, THE APPEAL OF THE ASSESEE IS DISM ISSED. ORDER PRONOUNCED ON (C.L.SETHI ) (B.C.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24 TH JUNE, 2010 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CI T(A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR // C O P Y //