ASHOK KUMAR BOTHRA & SONS, NEW DELHI V. ITO, WARD- 36(4), NEW DELHI

ITA 3260/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7308 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Earning of tax free income; Reason to believe; Reassessment proceedings
• Section: 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3260/DEL/2018 ASSESSMENT YEAR : 2009-10 ASHOK KUMAR BOTHRA & SONS K-5/24, MODEL TOWN-II, NEW DELHI 110 009 (PAN AAAHA2193J) VS. ITO, WARD 36(4) , NEW DELHI ( APPELLANT ) ( RESPONDENT ) ASSESSEE B Y : MS. HIMANI AGARWAL, CA DEPARTMENT BY : SH. S.L. ANURAGI, SR. DR. ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE LD. CIT(A)-12, NEW DELHI ON 28.3.2018 IN RELATION TO THE ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY LD CIT (A) IS BAD BOTH IN EYES OF LAW AND ON FACTS. 2. THAT LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON FAC TS BY UPHOLDING THE ADDITION OF RS. 11,56,570 MADE BY LD. AO. 3. THAT LD.CIT (A) HAS UPHELD THE ABOVE ADDITION ARBITRARILY AND WITHOUT APPRECIATING THE FACTS OF T HE CASE. 4. THAT LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON FAC TS IN IGNORING THE FACT THAT THE ASSESSING OFFICER HAS NOT PROVIDED ANY PROOF OF ABOVE TRANSACTION MADE 2 EXCEPT REPETITIONS OF BORROWED FACTS AND INFORMATIO N AND NOT ON THE BASIS OF INDEPENDENT INQUIRY. 5. THAT THE LD. CIT(A) ERRED IN FACT AND LAW AS WELL B Y NOT PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD. 6. THAT THE LD. CIT(A) ERRED IN LAW AS WELL AS FACT BY PASSING THE ORDER WITHOUT TAKING INTO CONSIDERATION THE DETAILS AND EVIDENCES SUBMITTED BY THE APPLICANT. 7. THAT THE AO HAS ERRED IN LAW AND FACT AS WELL BY INITIATING PENALTY PROCEEDINGS U/S. 271(1) OF THE ACT. 8. THAT THE APPELLANT RESERVES THE RIGHT TO ADD, MODIFY, ALTER, AMEND OR DELETE ANY OF THE GROUNDS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E E-FILED THE RETURN OF INCOME FOR A Y 2009-10 ON 24.03.2010 DECLARI NG AN INCOME OF RS.1,78,275/-. THE CASE OF THE ASSESSEE WAS RE- OPENED UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 ON THE BASI S OF INFORMATION RECEIVED BY ADIT (INV) UNIT-1(3) AHMEDABAD VIDE DATE D 18.03.2016 IN RESPECT OF CLIENT CODE MODIFICATION (CCM) DISSEMI NATION OF BENEFICIARY CLIENT WHO HAVE TAKEN CONTRIVED LOSSES A ND SHIFTED OUT PROFIT OF RS..11,56,570.75 DURING THE FY 2008-09. BEF ORE THE AO, THE ASSESSEE HAS SUBMITTED THAT NO TRANSACTION TOOK PLAC E WITH THE ALLEGED BROKER AND THAT THE TOTAL INCOME OF THE ASSE SSEE DURING THE YEAR INCLUDING THE EXEMPT INCOME WAS RS.1,78,275/-. IN REPLIES DATED 17.06.2016 AND 12.12.2016, THE ASSESSEE SHARE D ALL THE DMAT 3 DETAILS ALONGWITH BANK STATEMENTS FOR FY 2007-08 AND FY 2008-09. IN ORDER TO CLARIFY THE ALLEGATIONS, THE ASSESSEE REQUESTE D THE A.O. FOR A CROSS EXAMINATION, WHICH WAS NEVER ARRANGED. A PERUSAL OF THE REASONS RECORDED BY THE AO CLEARLY SHOW THAT THE AO HA S SIMPLY ACTED UPON THE INFORMATION RECEIVED FROM THE INVESTIGA TION WING AND DID NOT APPLY HIS OWN MIND TO THE SAID INFORMATION. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 28.3.2018 HAS UPHELD THE ACTION OF THE AO BY HOLDING THE OPENING OF ASSESSMENT PROCEEDINGS AS VA LID AND ALSO ON MERIT CONFIRMED THE ADDITION IN DISPUTE. AGAINST THE IMPUGNED ORDER 28.3.2018, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. DURING THE HEARING, LD. COUNSEL FOR THE ASSESSEE REI TERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FU RTHER SUBMITTED THAT WITHOUT PREJUDICE EVEN IF RELIANCE IS PLACED ON THE ALLEGED ACCOUNT STATEMENT OF THE BROKER, NO PROFIT/INCOME HAS B EEN EARNED BY THE ASSEESEE DURING THE ABOVE PERIOD AND HENCE, NO ADDITION IS CALLED FOR EVEN ON MERIT. THE LD. COUNSEL FOR THE ASSES SEE FURTHER SUBMITTED THAT THE REASONS RECORDED DO NOT SHOW ANY A PPLICATION OF MIND NOR THE SAME SHOW ANY BELIEF INDEPENDENTLY ARRIVE D AT BY THE AO, WHICH IS THE BASIC PRE-REQUISITE FOR ISSUING NOT ICE U/S 148. AO 4 MADE ADDITION PURELY ON THE BASIS REPORT RECEIVED FRO M INVESTIGATION TEAM AND WITHOUT APPLYING HIS MIND. THEREFORE, IN VI EW OF THE ABOVE CIRCUMSTANCES AND FURTHER CONSIDERING THE SETTLED POSI TION OF LAW IN THIS REGARD, THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO ARE WITHOUT DUE APPLICATION OF MIND, AND THUS, THE REASS ESSMENT PROCEEDINGS SHOULD BE QUASHED AS SUCH. FURTHER, THE AO S ORDER SHOWS THAT THIS MAY AT BEST BE A REASON TO SUSPECT & NOT REASON TO BELIEVE. ONLY ON THE BASIS OF REASON TO SUSPECT, RE OPENING CANNOT BE DONE. THEREFORE, THE ADDITION MADE BY THE AO AND SUS TAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED AND NEEDS TO BE DELETE D. 4. IN HIS RIVAL SUBMISSIONS, THE LD. DR STRONGLY SUPP ORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD S ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW. IN THE PRESENT CAS E, IT IS EVIDENT FROM THE COPY OF ACCOUNT OF THE BROKER WHICH THE ASSES SEE HAS STRONGLY DENIED HAVING DEALT WITH, THAT NO INCOME HA S ACCRUED TO THE ASSEESSEE RATHER A LOSS OF RS. 11,56,570/- HAS BEEN INCURRED AND THE SAME HAS ALSO NOT BEEN CLAIMED BY THE ASSEESSEE. TH E ASSEESSEE HAS NEITHER PAID NOR RECEIVED ANY AMOUNT TO/FROM THE BROKER. IN MY OPINION, WHEN NO INCOME HAS BEEN EARNED AND THE ASSE ESSEE HAS NOT CLAIMED ANY LOSSES IN THE RETURN OF INCOME NOR SETOFF THOSE LOSSES 5 AGAINST ANY INCOME AIDED BY THE FACT THAT THE ASSES SEE HAS NEITHER RECEIVED/PAID ANY AMOUNT TO/FROM THE BROKER WHICH SUBSTAN TIATES THE CLAIM OF THE ASSESSEE THAT HE HAVE NOT DEALT WITH T HE BROKER, THEN THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CI T(A) WAS NOT JUSTIFIED. THEREFORE, I DELETE THE ADDITION IN DISP UTE AND ALLOW THE GROUND RAISED BY THE ASSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED ORDER PRONOUNCED ON 11-01-2019. SD/- [ H.S. SIDHU ] JUDICIAL MEMBER DATED: 11-01-2019 SRBHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.