TRILOK CHAND, FARIDABAD V. ITO, WARD- 2(3), FARIDABAD

ITA 3525/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7938 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 11-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: VIRAT JUNEJA
• Keywords: Reopening of assessment; Bogus purchase; Opportunity of being heard
• Section: 147; 148

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3525/DEL/2018 A.Y. 2008-09 TRILOK CHAND, VS. ITO, WARD 2(3) 5-E/19, PB, NIT, FARIDABAD FARIDABAD (PAN: AARPC3512A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VIRAT JUNEJA, ADVOCATE DEPARTMENT BY : SH. S.L. ANURAGI, SR. DR. O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 23.2.2018 OF THE LD. CIT(A), FARIDABAD RELEVANT TO ASSESSMENT YE AR 2008-09 ON THE FOLLOWING GROUNDS:- I) THE LD. CIT(A) ERRED IN LAW AND FACTS IN SUSTAINING TH E VALIDITY OF NOTICE OF SECTION 148 ISSUED BY THE ITO. II) THE LD. CIT(A) ERRED IN LAW AND FACTS IN SUSTAINING TH E ACTION OF ITO IN TREATING PURCHASES FROM MAA DURGA TRADING COMPANY AS BOGUS AMOUNTING TO RS. 10,80,974/- WITHOUT ANY CLINCHING EVIDENCE ON RECORD. III) THE LD. CIT(A) ERRED IN LAW AND FACTS IN SUSTAINING 1 2.5% OF THE PURCHASES ON ADHOC BASIS WHEN STOCK TALLY WAS PRODUCED BEFORE HIM AND BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED. 2 IV) THE LD. CIT(A) ERRED IN LAW AND FACTS IN SUSTAINING THE ACTION OF ITO IN NOT RESPONDING TO THE OBJECTIONS ON REOPENING OF ASSESSMENT, SUBMITTED ON BEHALF OF ASSESSEE. V) THE LD. CIT(A) ERRED IN LAW AND FACTS IN SUSTAINING TH E ALLEGATION MADE UNDER A WRONG IMPRESSION BY THE ITO THAT THE ASSESSEE CLAIMED THESE PURCHASES TO REDUCE THE GP. THE APPELLANT CRAVES TO ADD, AMEND, ALTER OR VARY FR OM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME O F HEARING. IT IS THEREFORE, PRAYED THAT THE ADDITIONS OF RS. 10,80,974/- BE DELETED ALTOGETHER AS SUCH. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED HIS RETURN DECLARING AN INCOME OF RS. 2,20,990/- ON 16.9.2008. LATER ON, A S PER THE INFORMATION AVAILABLE WITH THE DEPARTMENT THE PROCEEDINGS U/S. 147 OF THE I.T. ACT, 1961 WERE INITIATED AFTER RECORDING REASONS BY THE AO. NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 25.3.2015. NO RETURN WAS FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. THE REASSESSMENT U/S . 143(3)/147 WAS COMPLETED ON 21.3.2016 AT AN ASSESSED INCOME OF RS. 13, 01,964/-. AGAINST THE ORDER OF THE AO, THE ASSESSEE APPEALED BEFO RE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 23.2.2018 HAS PARTL Y ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE ORDER OF THE LD. CI T(A), ASSESSEE APPEALED BEFORE THE TRIBUNAL. 3 3. DURING THE HEARING, LD. COUNSEL FOR THE ASSESSEE HAS N OT PRESSED THE GROUNDS NO. (II), (III) & (V), HENCE, THE SAME ARE DI SMISSED AS NOT PRESSED. AS REGARDS THE GROUND NO. (I) & (IV) ARE CONCERNED, HE DREW MY ATTENTION TOWARDS PAGE NO. 6 & 7 OF THE PAPER BOOK WHICH IS THE OBJECTION LETTER DATED 7.3.2016 OF THE ASSESSEE ADDRESSED TO THE ASSESSING OF FICER STATING THEREIN THAT AS PER THE REASONS RECORDED BY THE AO, IT WAS OBSERVED THAT THE CASE IS REOPENED ONLY ON THE BASIS OF INFORMATION RECEIVED FROM OTHER WING OF THE INCOME TAX DEPARTMENT. THE INFORMATION R ECEIVED IS NOT SUBSTANTIATED BY ANY MATERIAL LIKE ANY DOCUMENT, THIRD PARTY CONFIRMATION ETC. REACHING A CONCLUSION THAT THE ASSESSEE HAS ACTUALLY MAD E BOGUS PURCHASES OF THE PARTY M/S MAA DURGA TRADING CO. MERELY ON THE GROUND THAT INFORMATION RECEIVED FROM OTHER PARTY CANNOT BE THE BASIS OF REACHING A CONCLUSION THAT THERE IS NO ESCAPEMENT OF INCOME AND IT W AS MENTIONED IN THE SAID LETTER THAT IF THERE IS ANY ADDITIONAL MATER IAL AVAILABLE ON RECORD IN SUPPORT OF THE BELIEF, IT SHOULD BE PROVIDED BEFORE A DVANCING PROCEEDINGS U/S. 147 OF THE ACT, WHICH WAS NOT DEALT WITH BY THE A O NEITHER BY A SEPARATE ORDER NOR IN THE FINAL ASSESSMENT ORDER DATED 21.3.2016, WHICH IS AGAINST THE LAW LAID DOWN BY THE HONBLE SUPREME COU RT OF INDIA IN THE CASE OF GKN DRIVE SHAFTS INDIA LTD. VS. ITO (2003) 259 ITR 19. HENCE, HE REQUESTED TO QUASH THE REASSESSMENT ORDER. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECOR DS, ESPECIALLY THE ASSESSMENT ORDER PASSED U/S. 143(3)/147 OF THE ACT AND THE IMPUGNED ORDER. I FIND THAT ASSESSEE HAS FILED THE OBJECTION LETT ER DATED 7.3.2016 BEFORE THE ASSESSING OFFICER STATING THEREIN THAT AS P ER THE REASONS RECORDED BY THE AO, THE CASE WAS REOPENED ONLY ON THE BASIS OF INFORMATION RECEIVED FROM OTHER WING OF THE INCOME TA X DEPARTMENT. THE INFORMATION RECEIVED WAS NOT SUBSTANTIATED BY ANY MATE RIAL LIKE ANY DOCUMENT, THIRD PARTY CONFIRMATION ETC. REACHING A CONCLU SION THAT THE ASSESSEE HAS ACTUALLY MADE BOGUS PURCHASES OF THE PARTY M/S MA A DURGA TRADING CO. MERELY ON THE GROUND THAT INFORMATION R ECEIVED FROM OTHER PARTY CANNOT BE THE BASIS OF REACHING A CONCLUSION THAT THERE IS NO ESCAPEMENT OF INCOME AND IT WAS MENTIONED IN THE SAID LE TTER THAT IF THERE IS ANY ADDITIONAL MATERIAL AVAILABLE ON RECORD IN SUP PORT OF THE BELIEF, IT SHOULD BE PROVIDED BEFORE ADVANCING PROCEEDINGS U/S. 147 OF THE ACT. THE ASSESSING OFFICER HAS NOT DECIDED THE OBJECTION NEITHER BY A SEPARATE ORDER NOR IN THE FINAL ASSESSMENT ORDER DATED 21.3.2016, WHI CH IS VERY ESSENTIAL TO DECIDE THE SAME BEFORE COMPLETING THE ASSESSMENT. THER EFORE, IN THE INTEREST OF JUSTICE, I AM REMITTING BACK THE ISSUE NO. ( I) & (IV) TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTIONS TO FIRST DECIDE T HE OBJECTIONS OF THE ASSESSEE AND THEN DECIDE THE GROUND NO. (I) & (IV), AFRE SH, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. MY AFORESAID VIEW IS FORTIFIED BY THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF 5 GKN DRIVE SHAFTS INDIA LTD. VS. ITO (2003) 259 ITR 19 WHEREIN THE HONBLE SUPREME COURT OF INDIA HAS PASSED THE FOLLOWING ORDER: - HEARD LEARNED COUNSEL FOR THE PARTIES. LEAVE IS GRANTED. BY THE ORDER UNDER CHALLENGE, A DIVISION BENCH OF THE HIGH COURT AT DELHI (SEE [2002] 257ITR 702) DISMISSED THE WRIT PETITION FILED BY THE APPELLANT CHALLENGING THE VALIDITY OF NOTICES ISSUED UNDER SECTIONS 148 AND 143(2) OF THE INCOME-TAX ACT, 1961. THE HIGH COURT TOOK THE VIEW THAT THE APPELLANT COULD HAVE TAKEN AL L THE OBJECTIONS IN ITS REPLY TO THE NOTICES AND THAT, AT THAT STAGE THE WRIT PETITION WAS PREMATURE. ACCORDINGLY, THE WRIT PETITION WAS DISMISSED ON JANUARY 31, 2002. AGGRIEVED BY THAT ORDER, THE APPELLANT IS IN APPEAL BEFORE US. MR. M. L. VERMA, LEARNED SENIOR COUNSEL APPEARING FOR THE APPELLANT, SUBMITS THAT THE IMPUGNED NOTICES RELATE TO SEVEN ASSESSMENT YEARS ; THAT DURING; THE PENDENCY OF THESE APPEALS, IN RESPECT OF TWO ASSESSMENT YEARS, VIZ., 1995-96 AND 1996-97, ASSESSMENT HAS BEEN COMPLETED AGAINST WHICH APPEALS HAVE BEEN FILED. NOTICES RELATING TO THE OTHER FIVE ASSESSMENT YEARS, 6 VIZ., 1992-93 1993-94, 1994-95, 1997-98 AND 1998- 99, ARE NOW THE SUBJECT-MATTER OF THESE APPEALS. WE SEE NO JUSTIFIABLE REASON TO INTERFERE WITH THE ORD ER UNDER CHALLENGE. HOWEVER, WE CLARIFY THAT WHEN A NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICEE IS TO FILE A RETURN AND IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING NOTICES. THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, THE (NOTICEE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. IR. THE INSTANT CASE, AS THE REASONS HAVE BEEN DISCLOSED IN THESE PROCEEDINGS, THE ASSESSING OFFICER HAS TO DISPOSE OF THE OBJECTIONS, IF FILED, BY PASSING A SPEAKING ORDER, BEFORE PROCEEDING WITH THE ASSESSMENT IN RESPECT OF THE ABOVE-SAID FIVE ASSESSMENT YEARS. IN SO FAR AS THE APPEALS FILED AGAINST THE ORDER OF ASSESSMENT BEFORE THE COMMISSIONER (APPEALS), WE DIRECT THE APPELLATE AUTHORITY TO DISPOSE OF THE SAME, EXPEDITIOUSLY. 7 WITH THE ABOVE OBSERVATIONS, THE CIVIL APPEALS ARE DISMISSED. NO COSTS. 6. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS PARTLY AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 08-01-2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE:08/01/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR , ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES