Harbans Singh Malhotra S/O, Ludhiana V. ITO, Ludhiana

ITA 332/CHANDI/2015

• Counselvise Citation: 33221514 RSA 2015
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-06-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 07-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: Y K SAXENA
• Keywords: Opportunity of being heard
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NO. 332/CHD/2015 (ASSESSMENT YEAR: 2002-03) HARBANS SINGH MALHOTRA, VS. THE INCOME TAX OFFICER -VII(3) S/O SH.GURMUKH SINGH, LUDHIANA. 373-G, BRS NAGAR. LUDHIANA. PAN NO. AKLPM0031E (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI Y.K.SAXENA & AMANDEEP SAXENA RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 23.06.2015 DATE OF PRONOUNCEMENT : 26.06.2015 O R D E R PER H.L.KARWA, VP : THIS APPEAL FILED BY THE ASSESSEE IS DIR ECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA DATED 27.8.2013 RELATING TO ASSESSMENT YEAR 2002-03. 2. GROUND NO.1 OF THE APPEAL READS AS UNDER : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT (APPEALS)-II, LUDHIANA HAS ERRED IN LAW BY HO LDING 2 THAT AO HAD APPLIED HIS MIND WHILE REOPENING THE ASSESSMENT BY RESORTING TO THE PROVISIONS OF SECTION 14 7 OF THE INCOME-TAX ACT. 1961. 3. AT THE TIME OF HEARING OF THE APPEAL S/SHRI Y.K.SAXENA AND AMANDEEP SAXENA, LEARNED COUNSEL FOR ASSESSEE DID NOT PRESS FOR THIS GROUND OF APPEAL AN D ACCORDINGLY, I DISMISS THE SAME AS NOT PRESSED. 4. GROUND NOS. 2 AND 3 OF THE APPEAL ARE DIRECTED AGAINST THE ACTION OF THE LEARNED CIT (APPEALS) IN CONFIRMING THE ADDITION OF RS.5,10,000/- MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE MADE INVESTMENT OU T OF UNDISCLOSED SOURCES. THE ASSESSEE IS A RETIRED EXE CUTIVE ENGINEER OF PUNJAB STATE ELECTRICITY BOARD. ON TH E BASIS OF TAX EVASION PETITION, ENQUIRY WAS CONDUCTED BY THE ASSISTANT DIRECTOR OF INCOME TAX (INVESTIGATION)-III, LUDHIAN A, NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT) WAS ISSUED ON 15.2.2007, WHICH WAS SERVED UPO N THE ASSESSEE ON 22.2.2007. THE ASSESSEE SUBMITTED HI S RETURN OF INCOME DECLARING AN INCOME OF RS.1,12,551/- UNDE R THE HEAD SALARY ON 24.12.2007. THEREAFTER THE ASSES SING OFFICER ISSUED NOTICES UNDER SECTION 143(2) AND 142 (1) OF THE ACT. AS PER INFORMATION RECEIVED FROM THE DI(IN VESTIGATION), LUDHIANA, THE ASSESSEE LODGED FIR WITH POLICE STATI ON, SARABHA NAGAR, LUDHIANA STATING THAT HE HAD ADVANCE D RS.25 LACS TO VARIOUS PERSONS OUT WHICH THE ASSESSEE FAIL ED TO EXPLAIN THE SOURCE OF INVESTMENT MADE ON 18.9.2001 AMOUNTING TO RS.5,10,000/-. THE ASSESSEES VERSIO N WAS THAT 3 THE AFORESAID INVESTMENT WAS MADE AFTER LIFTING COM MITTEE FROM SHRI JATINDER SHARMA OF MEENA BAZAR, LUDHIANA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE SUBMITTED THAT THE AMOUNT OF RS.5,10,000/- WAS RECE IVED FROM SHRI JATINDER SHARMA AND PAYMENT TO SHRI JATINDER S HARMA WAS ACTUALLY MADE IN INSTALLMENTS BY CASH @ RS.10,0 00/- PER MONTH FOR THE LAST 51 MONTHS FROM 1997. THE ASSES SEE ALSO CLAIMED BEFORE THE ASSESSING OFFICER THAT HE HAD SU FFICIENT FUNDS FOR MAKING THE PAYMENT OF COMMITTEE, WHICH WA S MADE BY CASH AND AS A MATTER OF PRACTICE, COMMITTEE PAYM ENT IS ALWAYS MADE BY CASH. THE ASSESSING OFFICER DID NO T ACCEPT THE REPLY OF THE ASSESSEE STATING THAT THE ASSESSEE HAS HIMSELF STATED IN THE FIR THAT HE LIFTED COMMITTEE OF RS.5, 10,000/- FROM SHRI JATINDER SHARMA OF MEENA BAZAR, LUDHIANA ON 18.9.2001, WHEREAS THIS CLAIM OF THE ASSESSEE HAS B EEN CATEGORICALLY DENIED BY SHRI JATINDER SHARMA. THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE MADE INVESTMENT OF RS.5,10,000/- OUT OF UNDISCLOSED SOURCES AND THE SA ME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. ON APPEAL, THE LEARNED CIT (APPEALS) CONFIRMED THE ADDITION FOR THE REASONS STATED IN PARA 5.8 OF THE IMPUGNED ORDER, AND HENCE THE ASSESSEE IS IN APPEAL BEFORE T HE TRIBUNAL. 6. I HAVE HEARD THE S/SHRI Y.K.SAXENA AND AMANDEEP SAXENA, LEARNED COUNSEL FOR ASSESSEE AND SHRI S.K.M ITTAL, LEARNED D.R FOR THE REVENUE AT LENGTH. THE LEARNE D COUNSEL FOR ASSESSEE SUBMITTED THAT THE LEARNED CIT (APPEAL S) HAS 4 CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER UNDER SECTION 250(4) OF THE ACT. THE COPY OF REMAND REP ORT IS AVAILABLE AT PAGE 3 OF ASSESSEES PAPER BOOK. IN HER REMAND REPORT, THE ASSESSING OFFICER ENCLOSED AFFIDAVIT OF SHRI JATINDER SHARMA DATED 28.11.2011. ACCORDING TO LE ARNED COUNSEL FOR ASSESSEE, THE ASSESSING OFFICER RELIED UPON THE STATEMENT OF SHRI JATINDER SHAMRA GIVEN IN THE AFFI DAVIT, WHEREIN IT HAS BEEN SOLEMNLY AFFIRMED THAT THE ASS ESSEE HAD CONTRIBUTED RS.10,000/- PER MONTH FOR ABOUT 51 MON THS SINCE 1997 IN THE ASSOCIATION OF 51 MEMBERS OF COMM ITTEE. SHRI JATINDER SHARMA HAS ALSO STATED IN THE AFFIDAV IT THAT THE ASSESSEE WAS THE LAST MEMBER AMONGST 51 MEMBERS TO TAKE SUM OF RS.5,10,000/- IN 2001. SHRI JATINDER SHARM A FURTHER STATED IN HIS AFFIDAVIT THAT THE ABOVE SUM DOES NO T REFLECT IN MY BOOKS OF ACCOUNT AS I WAS ONLY ENTRUSTED WITH CO LLECTING AND TO HAND THE SAME TO THE WINNER OF DRAW. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT A BARE READING OF THE STATEMENT OF SHRI JATINDER SHARMA GIVEN ON SOLEMN AFFIRMATION IN THE SAID AFFIDAVIT CORROBORATES THE VERSION OF THE ASSESSEE THAT HE IN FACT LIFTED THE COMMITTEE A MOUNT OF RS.5,10,000/- ON 18.9.2001, AS STATED BY HIM IN THE FIR NO.208, REFERRED TO ABOVE. THE NEXT CONTENTION OF THE LEARNED COUNSEL FOR ASSESSEE IS THAT THE LEARNED CIT (APPEA LS) HAS REJECTED THE REMAND REPORT OF THE ASSESSING OFFICER MERELY ON THE GROUND THAT THE AFFIDAVIT OF SHRI JATINDER SHAR MA FILED DURING THE ASSESSMENT PROCEEDINGS WAS AT VARIANCE W ITH HIS STATEMENT RECORDED BY ADI, AND NO EVIDENCE WAS PROD UCED BY THE ASSESSEE, OR SHRI JATINDER SHARMA REGARDING THE 5 CONTRIBUTION OF RS.10,000/- PER MONTH TOWARDS THE C OMMITTEE. THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARG UED THAT THE STATEMENT OF SHRI JATINDER SHARMA, AS REFERRED TO BY THE LEARNED CIT (APPEALS), HAS NEVER BEEN CONFRONTED TO THE ASSESSEE AND, THEREFORE SUCH STATEMENT, EVEN IF REC ORDED BY ADI AT THE BACK OF THE ASSESSEE, CANNOT BE THE BASI S FOR ADDITION EITHER BY THE ASSESSING OFFICER OR BY THE LEARNED CIT (APPEALS). IN MY CONSIDERED VIEW, THERE IS A MERI T IN THE ABOVE SUBMISSIONS OF THE LEARNED COUNSEL FOR ASSESS EE. THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER RE ADS AS UNDER : NO. 254 OFFICE OF THE INCOME TAX OFFICER WARD VII(3), RISHI NAGAR LUDHIANA 30.11.11 TO THE COMMISSIONER OF INCOME TAX(A)-II LUDHIANA. SIR, SUB:- APPEAL NO. 235/CIT(A)-II/ LDH 107-08 IN THE CASE OF SH.HARBANS SINGH MALHOTRA, 373-G, BRS NAGAR, LUDHIAN A-A.Y. 2002-03 REG:- KINDLY REFER TO YOUR OFFICE LETTER NO. CIT(A)-II/LD H/11-12/1036 DATED 04.11.2011 ON THE SUBJECT CITED ABOVE. IN THIS REGARD SH. JATINDER SHARMA WAS SUMMONED IN T HIS OFFICE. MR. JATINDER SHARMA OF M/S RAJA TELECOM HAS NOT ATTE NDED THE OFFICE RATHER HE HAS FILED AN AFFIDAVIT IN SUPPORT OF THE ASSESSEE'S CLAIM. SH JATINDER SHARMA HAS STATED THAT SH. H.S. MALHOTRA C ONTRIBUTED RS.L0,000/- PER MONTH FOR ABOUT 51 MONTHS SINCE 1997 IN THE ASS OCIATION OF 51 MEMBERS OF THE COMMITTEE. THAT MR. MALHOTRA WAS THE LAST AMON G THE MEMBERS TO TAKE THE SUM OF RS. 5,10,000/- IN 2001. HE HAS ALSO STATED THAT THIS SUM DOES NOT REFLECT IN HIS BOOKS. AFFIDAVIT OF SH. JAT INDER SHARMA OF M/S RAJA TELECOM IS PLACED ON FILE FOR YOUR KIND PERUSAL. 6 IN VIEW OF THE ABOVE FACTS THE APPEAL MAY BE DECIDED ON MERITS. ENCL:-COPY OF AFFIDAVIT YOURS FAITHFULLY (BALWINDER KAUR) INCOME TAX OFFICER WARD VII(3), RISHI NAGAR LUDHIANA. 7. ON PERUSAL OF THE REMAND REPORT, IT WOULD BE CL EAR THAT THE ASSESSING OFFICER HAS NEVER REJECTED THE A FFIDAVIT OF SHRI JATINDER SHARMA. THE ASSESSING OFFICER HAS N OT GIVEN ANY ADVERSE COMMENTS TO THE EFFECT THAT THE FACTS S TATED BY SHRI JATINDER SHARMA ARE INCORRECT. HOWEVER, THE LEARNED CIT (APPEALS) HAS REJECTED THE REMAND REPORT ON FLI MSY GROUND STATING THAT THE AFFIDAVIT SUBMITTED BY SHRI JATINDER SHARMA WAS AT VARIANCE WITH HIS STATEMENT RECORDED BY THE ADI. IT IS TRUE THAT THE STATEMENT OF SHRI JATIND ER SHARMA, AS REFERRED TO BY THE LEARNED CIT (APPEALS) HAS NEV ER BEEN CONFRONTED TO THE ASSESSEE, AND THEREFORE, SUCH STA TEMENT EVEN IF RECORDED BY THE ADI AT THE BACK OF THE ASS ESSEE, CANNOT BE THE BASIS FOR REJECTING THE STATEMENT OF SHRI JATINDER SHARMA STATED IN THE AFFIDAVIT. THE STAT EMENT, IF ANY, HAS BEEN RECORDED BY THE ADI HAS NEVER BEEN C ONFRONTED TO THE ASSESSEE, AND, THEREFORE, SUCH STATEMENT, EV EN IF RECORDED BY THE ADI AT THE BACK OF THE ASSESSEE CA NNOT BE RELIED UPON AND, THEREFORE, THE LEARNED CIT (APPEAL S) WAS NOT JUSTIFIED IN REJECTING THE AFFIDAVIT OF SHRI JATIND ER SHARMA FILED DURING THE REMAND PROCEEDINGS. NO OPPORTUNI TY WAS AFFORDED BY THE ADI TO THE ASSESSEE TO CROSSES EXAM INE SHRI 7 JATINDER SHARMA. THE LEARNED COUNSEL FOR ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE HAD NEVER STATED IN HIS REPLY THAT HE HAD MADE CONTRIBUTION TOWARDS COMMITTEE AFTER WITHDRAWING CASH FROM THE BANK ACCOUNT. THE LEARN ED COUNSEL FOR ASSESSEE INVITED MY ATTENTION TO A REPL Y DATED 23.2.2011 (PAGES 10 TO 14 OF ASSESSEES PAPER BOOK) AND SUBMITTED THAT IN THE SAID REPLY, THE ASSESSEE HAS STATED THAT IN ANY CASE, THE ASSESSEE AND HIS WIFE HAVE S UFFICIENT FUNDS FOR MAKING THE PAYMENT OF COMMITTEE, FOR WHIC H FIR WAS LODGED. IT WAS ALSO POINTED OUT THAT IN THE SAID REPLY, IT IS CLEARLY STATED THAT AS A MATTER OF PRACTICE MONTHLY PAYMENTS TOWARDS COMMITTEE ARE MADE BY CASH. THE NEXT CONT ENTION OF THE LEARNED COUNSEL FOR ASSESSEE WAS THAT THE LEARN ED CIT (APPEALS) WHILE PASSING THE ORDER HAS DRAWN PEAK OF WITHDRAWALS AND DEPOSITS IN RESPECT OF BANK ACCOUNT OF THE ASSESSEE ONLY FOR THE PERIOD FROM 1.1.1999 TO 31.3. 2001. ACCORDING TO THE LEARNED COUNSEL FOR ASSESSEE, THE LEARNED CIT (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSEE HA D SERVED THE PUNJAB GOVERNMENT FOR MORE THAN 36 YEARS AND HAVING BANKING TRANSACTIONS PRIOR TO THE AFORESAID PERIOD ALSO. MOREOVER, NO COGNIZANCE OF BANK ACCOUNT OF HIS WIFE SMT.GURSWARAN KAUR FURNISHED TO THE LEARNED CIT (AP PEALS) WAS TAKEN WITHOUT ASSIGNING ANY REASON. THE PEAK OF WITHDRAWALS AND DEPOSITS IN RESPECT OF BANK ACCOUNT OF THE ASSESSEE MENTIONED IN THE IMPUGNED ORDER WAS NOT CO NFRONTED TO THE ASSESSEE BY THE LEARNED CIT (APPEALS). EV EN THE LEARNED CIT (APPEALS) HAS NOT CORRECTLY REFLECTED T HE DATES AND FIGURES MENTIONED IN BANK ACCOUNT OF THE ASSESSEE. IT WAS 8 ALSO STATED BY THE LEARNED COUNSEL FOR ASSESSEE THA T SMT.GURSWARAN KAUR WAS HAVING RENTAL INCOME FROM TH E INDUSTRIAL SHED AT LUDHIANA. SHE WAS ALSO HAVING RENTAL INCOME FROM A PORTION OF THEIR RESIDENTIAL HOUSE. THE RENTAL INCOME FROM INDUSTRIAL SHED WAS BEING RECEIVED BY C HEQUE. ACCORDINGLY, IT WAS SUBMITTED THAT THE ASSESSEE AND HIS WIFE WERE HAVING SUFFICIENT CASH IN THEIR HANDS TO MAKE THE PAYMENT OF RS.10,000/- PER MONTH FOR THE COMMITTEE. TAKING INTO CONSIDERATION THE ENTIRE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE, I THINK IT PROPER TO SET ASIDE THE OR DER OF THE LEARNED CIT (APPEALS) ON THIS ISSUE AND REMAND THE MATTER TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE TH E ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING DUE A ND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. BEFORE PARTING WITH THIS CASE, IT IS MADE CLEAR THA T THE ASSESSING OFFICER MAY EXAMINE SHRI JATINDER SHARMA AND MEMBER(S) OF THE COMMITTEE, IF HE FINDS IT NECESSAR Y FOR DECIDING THE ISSUE CORRECTLY. 8. IN THE RESULT, THE APPEAL IS ALLOWED PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF JUNE, 2015. SD/- (H.L.KARWA) VICE PRESIDENT DATED : 26 TH JUNE, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. 9 ASSISTANT REGISTRAR, ITAT, CHANDIGARH