Sh Surinder Mohini Bawa, Kapurthala V. The Income Tax Officer, Kapurthala

ITA 341/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8686 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-01-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 13-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Keywords: Tangible material; Reassessment proceedings
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JALANDH AR ) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.341(ASR)/2016 ASSESSMENT YEAR: 2005-06 SH. SURINDER MOHINI BAWA, 1, GURU KIRPA, JALANDHAR ROAD, KAPURTHALA. PAN:AAOPB-0256B VS. INCOME TAX OFFICER, KAPURTHALA JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. J.S.BHASIN (ADV.) RESPONDENT BY: SH. BHAWANI SHANKAR (DR.) DATE OF HEARING: 20.01.2017 DATE OF PRONOUNCEMENT:27.03.201 7 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LD. CIT(A), JALANDHAR, DATED 23.11.2015, FOR ASST. YEAR: 2005-0 6. 3. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ASS ESSMENT ORDER AGAINST WHICH PENALTY WAS IMPOSED AND WAS CONFIRMED PARTLY BY LD. CIT(A) HAS ALREADY BEEN QUASHED BY HONBLE ITAT, AM RITSAR BENCH BY ITS ORDER DATED 11.07.2016 IN ITA NO.649(ASR)/2015 AND THEREFORE, IN VIEW OF THE QUASHING OF ASSESSMENT ORDER NOTHING SURVIVES A ND THEREFORE, THE APPELLATE ORDER WHICH RESULTED FROM THE ASSESSMENT PROCEEDINGS HAS BECOME INFRUCTUOUS. ITA NO.34 1(ASR)/2016 ASST. YEAR: 2005-06 2 4. THE LD. DR, HOWEVER, RELIED ON THE ORDER OF AUT HORITIES BELOW. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GO NE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE HONBLE TRIBUNA L IN ITA NO.649(ASR)/ 2015 FOR ASST. YEAR: 2005-06 VIDE ORDER DATED 11.07 .2016 HAD QUASHED THE ORDER PASSED BY LD. CIT(A). FOR THE SAKE CONVEN IENCE THE FINDINGS OF HONBLE TRIBUNAL ARE REPRODUCED BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD. THE AO HAS RECORDED THE FOLLOWING REASON S WHILE REOPENING THE CASE: REASONS FOR THE BELIEF AIR INFORMATION HAS DISCLOSED VARIOUS ENTRIES AMOUN TING TO RS. 1,09,49,156/- IN THE CASE OF MS. SURINDER MOHINI R/O 1- GURU KIRP A, JALANDHAR ROAD, KAPURTHALA. THE ASSESSEE FILED HER INCOME TAX RETURN FOR THE F. Y. 2004- OS RELEVANT TO A.Y. 2005-06 FOR A NET TAXABLE INCOME OF RS.6,97,855/-. THE DETAILS OF WHICH IS GIVEN AS UNDER: I) SHARE IN FIRM 57040 II) SHORT TERM CAPITAL GAIN 208357 HI) INTEREST INCOME 444458 GROSS TOTAL INCOME 709855 LESS REBATE U/S 80-B 12000 NET TAXABLE INCOME 697855 THE SAID RETURN WAS PROCESSED U/S 143910 BY ACIT, C IRCLE- IV, JALANDHAR POSITION OF STOCK HOLDINGS ACCOUNTS, TRADING ACCOUN TS OF SHARES & MUTUAL FUNDS & SOURCE OF INVESTMENTS THEREOF HAS NOT BEEN EXPLAINED IN THE RETURN OF INCOME COMPLETELY. I HAVE, THEREFORE, REASON TO BELIEF THAT INCOME OF RS.1,09,49,156/- ON ACCOUNT OF SOURCE OF DEPOSITS IN MUTUAL FUNDS AS ABOVE HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR THE ACCOUNT YEAR RELEVANT TO THE ASSESSMENT YEAR 2005-06. SD/- (S. LATA KHURANA) I.T.O-II KAPURTHALA ITA NO.34 1(ASR)/2016 ASST. YEAR: 2005-06 3 A PERUSAL OF THE REASONS RECORDED SHOWS THAT THE VE RY BASIS OF INITIATION OF REASSESSMENT PROCEEDINGS WAS AIR INFORMATION POSSES SED BV AO, SHOWING VARIOUS ENTRIES AMOUNTING TO RS.1,09,49,156/- RELAT ING TO INVESTMENT IN MUTUAL FUND ETC. IN OUR CONSIDERED OPINION, THE ASS UMPTION OF JURISDICTION U/S 147/148 ON THE BASIS OF AIR INFORMATION WAS ILLEGAL INASMUCH AS IT WAS SIMPLIFY IN THE DOMAIN OF SUSPICION AND F OR VERIFICATION OF THE SOURCE OF INVESTMENT MADE IN MUTUAL FUNDS, WHICH IS IMPERMISSIBLE U/S 148. SECTION 148 DOES NOT PERMIT VERIFICATION, AS RIGHTLY CONTENDED, AS THE SAME FALLS IN THE DOMAIN OF SECTION 143(2), AFTER THE RETURN IS FILED. IT IS AN UNDISPUTED FACT ON THE RECORD, THAT BUT FOR THE AIR INFORMATION, THERE WAS NO OTHER MATERIAL WITH THE AO TO REACH THE REQUISITE SATISFACTION U/S 148( 2). IN THE REASONS RECORDED, THE AO HAS NOTED THAT ENTRIES OF RS.1,09,49,156/- W ERE DISCLOSED AS PER THE AIR INFORMATION. THEN BY REFERRING TO THE RETURN FI LED, SHE SAID THAT THE SOURCE OF INVESTMENT IN SHARES/MUTUAL FUNDS WERE NOT DISCL OSED IN THE RETURN FILED. THIS PURPORTEDLY LEAD HER TO BELIEVE THAT THE SAID INCOME OF RS.1,09,49,156/- HAD ESCAPED ASSESSMENT. 8. THE ABOVE REASONS ARE NO REASONS IN THE EYES OF LAW , INASMUCH AS THE SOURCE OF INVESTMENT IS YET TO BE VERIFIED AND EXPL AINED, AND IT CANNOT BE HELD AS INCOME ESCAPING ASSESSMENT FOR THE PURPOSES OF S ECTION 148. FOR SUCH A VERIFICATION, THE AO IS TO ASSUME NORMAL JURISDICTI ON UNDER SECTION 143(2), AFTER THE RETURN IS FILED. IT IS ONLY DURING SUCH REGULAR ASSESSMENT PROCEEDINGS, THAT THE SOURCE CAN BE QUESTIONED, AND DEEMED TO BE INCO ME U/S.68/69, IN CASE NO SATISFACTORY EXPLANATION IS OFFERED BY ASSESSEE. IN THE ABSENCE OF VERIFICATION/EXPLANATION OF THE ASSESSEE IN THE COU RSE OF ASSESSMENT PROCEEDINGS, IT IS PREMATURE TO ASSUME THE SAME AS 'INCOME', MUCH LESS FOR THE PURPOSES OF SECTION 148. THEREFORE, THE AIR INFORMA TION IS NO TANGIBLE MATERIAL TO EMPOWER THE AO TO REACH THE REQUISITE SATISFACTI ON AS ENVISAGED U/S 147/148. 9. IN THIS REGARD, IN SH. ASHWANI KUMAR VS. ITO , THE AMRITSAR BENCH OF THE TRIBUNAL, VIDE ORDER DATED 23.02.2016 (SMC) (COPY P LACED ON RECORD), PASSED IN ITA NO.L29/ASR/2015, HAS HELD THE REASONS RECORD ED U/S 148, BASED ON THE VAGUE INFORMATION, BACKED BY THE AIR, TO BE INVALID , BEING NOT SUFFICIENT TO LEND THE REQUISITE BELIEF OF ESCAPEMENT OF INCOME. 10. VIR BAHADUR SINGH VS. ITO, RENDERED BY THE DELHI BENCH OF THE TRIBUNAL, VIDE ORDER DATED 19.02.2016 IN ITA NO.7/DEL/2013, I S ALSO TO THE SAME EFFECT. 11. IN VIEW OF THE ABOVE, WE FIND THAT IN THE PRESE NT CASE, THE REASONS RECORDED U/S 148, BEING VAGUE, ARE NOT VALID IN THE EYE OF LAW. ACCORDINGLY, ALL THE PROCEEDINGS, PURSUANT THERETO, CULMINATING IN THE IMPUGNED ORDER, ARE ALSO QUASHED. ITA NO.34 1(ASR)/2016 ASST. YEAR: 2005-06 4 IN VIEW OF THE QUASHING OF THE ASSESSMENT OR DER AND CIT(A)S ORDER NOTHING SURVIVES FOR IMPOSITION OF PENALTY U/S 271( 1)(C) AND THEREFORE, THE APPEAL FIELD BY THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.03. 2017 . SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:27.03.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER