ITO, Bulandshahr V. Sh. Mukesh Kumar Kedia, Bulandshahr

ITA 3633/DEL/2010

• Counselvise Citation: 363320114 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 11-10-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 29-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Keywords: Depreciation; Accommodation entries; Reason to believe
• Section: 143(3); 142(1); 147; 148; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO.3633/DEL/2010 ASSESSMENT YEAR: 1998-99 INCOME-TAX OFFICER, VS. MUKESH KUMAR KEDIA, PROP. WARD 2, KEDIA DAIRY SIYANA ROAD, BULANDSHAHR BULANDSHAHR (PAN: ADEPK2910N) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RS NEGI , SR.DR RESPONDENT BY: SHRI RK GUPTA, C A ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 17.05.2010 PASSED FOR ASSESSMENT YEAR 1998-99. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LEARNED C IT(APPEALS) HAS ERRED IN QUASHING THE REASSESSMENT ORDER ON THE GROUND THAT INITIATION OF PROCEEDINGS UNDER SEC. 147 OF THE INCOME-TAX ACT, 1961 ARE NOT IN ACCORDANCE WITH LAW. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL. HE WAS RUNNING A PROPRIETARYSHIP CONCERN IN THE NAME A ND STYLE OF M/S. KEDIA DIARY, SIYANA ROAD, BULLANDSHAHR. HE HAS FILED HIS RETURN OF INCOME ON 30.10.1998 DECLARING AN INCOME OF RS.12,630. THE AS SESSEE HAS DISCLOSED A LONG TERM CAPITAL GAIN OF RS.7,84,056 AND CLAIMED E XEMPTION UNDER SECTION 54 OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTE D FOR SCRUTINY ASSESSMENT 2 AND A NOTICE UNDER SEC. 143(2) OF THE ACT WAS ISSUE D ON 27.9.1991. ASSESSING OFFICER AFTER HEARING THE ASSESSEE PASSED AN ASSESS MENT ORDER ON 7.11.2000 UNDER SEC. 143(3) OF THE ACT. HE DETERMINED THE TAX ABLE INCOME OF THE ASSESSEE AT RS.2,16,140. ACCORDING TO THE ASSESSING OFFICER, HE HAS RECEIVED AN INFORMATION FROM ADI(INV.), MEERUT EXHIBITING TH E FACT THAT CERTAIN CONCERNS WERE INVOLVED IN PROVIDING ACCOMMODATION E NTRY OF LONG TERM CAPITAL GAIN. ASSESSEE IS ALSO ONE OF THE BENEFICIA RIES OF SUCH ACCOMMODATION ENTRY, THEREFORE, HE RECORDED THE REA SONS WHICH ENABLED HIM TO FORM A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT . HE ISSUED NOTICE UNDER SEC. 148 OF THE ACT. THE REASONS RECORDED BY THE AS SESSING OFFICER FOR REOPENING OF THE ASSESSMENT READ AS UNDER: IN THE RETURN OF INCOME FILED ON 31.10.1998, THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAINS RS.7,84,056 WHICH WAS CLAIMED AS EXEMPT U/S. 54 AND ALLOWED WHILE COMPLETING THE ASS ESSMENT U/S. 143(3) ON 7.11.2000. SUBSEQUENTLY ADIT(INV.) MEERUT MADE ENQUIRIES ON A REFERENCE MADE BY ADDL.DIRECTOR OF I NCOME-TAX (EXEMPTION)(INV.) AGRA, WHEREIN CERTAIN BROKERS OF DELHI WERE FOUND TO BE ENGAGED IN GIVING ACCOMMODATION ENTRIES IN TH E NATURE OF LONG TERM CAPITAL GAIN BY MEANS OF CHEQUES/DRAFTS IN LIE U OF CASH RECEIVED FROM BENEFICIARIES. THE ASSESSEE SHRI MUKESH KEDIA WAS FOUND TO BE ONE OF SUCH BENEFICIARIES. SH. MUKESH KUMAR KEDIA W AS FOUND TO HAVE OBTAINED ONLY ACCOMMODATION ENTRIES AND THE SA LE OF SHARES AS 3 WELL AS CONSEQUENTIAL DEDUCTION U/S. 54 WAS BOGUS. IN THE ASSESSMENT ORDER PASSED UNDER SEC. 143(3) THE ALLEGED SALE OF SHARES AMOUNTING TO RS.7,85,400 WHICH WAS ALLOWED AS EXEMPT U/S. 54 WAS NOTHING BUT MERE SHAM TRANSACTION TO AVAIL DEDUCTION U/S. 54 OF THE IT ACT, 1961. IN VIEW OF THE THESE FACTS OF THE CASE, I HAVE REAS ONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX AT RS.7,85,400 HAS ES CAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147, READ WITH EXPLAN ATION 2(C) TO IT. THEREFORE, NECESSARY PERMISSION UNDER THE PROVISION OF SEC. 151 OF THE INCOME-TAX ACT, 1961 MAY KINDLY BE ACCORDED TO ISSU E NOTICE U/S. 148 OF THE INCOME-TAX ACT, 1961 IN THIS CASE. 3. DISSATISFIED WITH THE REASSESSMENT ORDER DATED 2 7.3.2006, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT (APPEALS). HE RAISED MULTIFOLD SUBMISSIONS BEFORE THE LEARNED FIRST APPE LLATE AUTHORITY. THE SUBMISSIONS HAVE BEEN REPRODUCED BY THE LEARNED CIT (APPEALS) FROM PAGE NOS. 3 TO 15 OF THE IMPUGNED ORDER. THE ASSESSEE HA S REFERRED A LARGE NUMBER OF DECISIONS WHICH HAVE ALSO BEEN NOTICED IN THE WRITTEN SUBMISSIONS REPRODUCED BY THE LEARNED FIRST APPELLATE AUTHORITY . ON AN ANALYSIS OF THE SUBMISSIONS, VIS--VIS THE REASONS RECORDED BY THE ASSESSING OFFICER, LEARNED CIT(APPEALS) ARRIVED AT A CONCLUSION THAT A SSESSING OFFICER HAS NOT ASSIGNED ANY SPECIFIC REASON IN THE REASONS RECORDE D BY HIM THAT INCOME HAS ESCAPED ASSESSMENT BECAUSE OF THE FAILURE OF THE AS SESSEE TO DISCLOSE ALL 4 MATERIAL FACTS FULLY AND TRULY. LEARNED DR RELIED U PON THE ORDER OF THE ASSESSING OFFICER WHEREAS LEARNED COUNSEL FOR THE A SSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT(APPEALS). HE HAS PLACED ON RECORD THE SUMMARY OF SUBMISSIONS FILED BEFORE THE LEARNED CIT(APPEALS). 4. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. IN ORDER TO APPRECIATE THE CONTRO VERSY, IN MORE APPROPRIATE WAY, IT IS IMPERATIVE UPON US TO TAKE NOTE OF SECTI ON 147 WHICH EMPOWERS THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT, WHI CH READS AS UNDER: 147. IF THE 73 [ASSESSING] OFFICER 74 [HAS REASON TO BELIEVE 75 ] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT 75 FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 , ASSESS OR REASSESS 75 SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPE D ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PRO CEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTE R IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT Y EAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE 76 ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTIO N (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS 76 NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: 5 77 [ PROVIDED FURTHER THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE T HE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX A ND HAS ESCAPED ASSESSMENT.] EXPLANATION 1. PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DU E DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESS ARILY 76 AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SH ALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCA PED ASSESSMENT, NAMELY : ( A ) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY T HE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER PERSON IN R ESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; ( B ) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY TH E ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OF FICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOS S, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN ; ( C ) WHERE AN ASSESSMENT HAS BEEN MADE, BUT ( I ) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSED ; OR ( II ) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE ; OR ( III ) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIV E RELIEF UNDER THIS ACT ; OR ( IV ) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY O THER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED.] 78 [ EXPLANATION 3. FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDE R THIS SECTION, THE ASSESSING OFFICER MAY SSESS OR RE ASSESS THE INCOME IN RESPECT OF 6 ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH I SSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLU DED IN THE REASONS RECORDED UNDER SUB-SECTION (2) OF SECTION 148 .] 5. THIS SECTION CONTEMPLATES THE POWERS OF ASSESSIN G OFFICER FOR RE- OPENING OF ASSESSMENT. ACCORDING TO IT, WITHIN FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, THE ASSESSING OFFICER, WH ERE HE HAS REASONS TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR ANY ASSESSMENT YEAR MAY ASSESS OR REASSESS SUCH INCOME. HOWEVER, BEYOND FOUR YEARS, THE INTERDICTION PROVIDED IN THE FIRST PROVI SO WOULD COME IN THE WAY OF ASSESSING OFFICER. IN THAT CASE, HE CAN REOPEN THE ASSESSMENT IF HE HAS REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE RETURN UNDER SEC. 139 OR IN RESPONSE TO A NOTICE UNDER SEC. 142(1) OR UNDER SEC . 148 OF THE ACT AND THE ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. THUS, THE INTERDICTION PR OVIDED IN THE PROVISO PUT AN EMBARGO UPON THE ASSESSING OFFICER AND IT WOULD BE RELEVANT FOR THE CASES WHERE FOUR YEARS HAVE EXPIRED AND EARLIER RET URN OF THE ASSESSEE WAS SCRUTINIZED UNDER SEC. 143(3) OF THE INCOME-TAX ACT , 1961. IN THOSE CASES, IF THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS, FULLY AND TRULY THEN EVEN IF SUCH INCOME ESCAPED ASSESSMENT, THE ASSESSING OFFIC ER CANNOT REOPEN THE 7 ASSESSMENT. IN THE PRESENT CASE, ADMITTEDLY FOUR YE ARS HAVE EXPIRED BEFORE ISSUANCE OF NOTICE UNDER SEC. 148 OF THE ACT. THE A SSESSMENT YEAR INVOLVED HEREIN IS 1998-99. ASSESSING OFFICER HAD ISSUED NOT ICE UNDER SEC. 148 ON 30.3.2005 WHICH INDICATES THAT IT IS BEYOND FOUR YE ARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ASSESSMENT AT THE FIR ST INSTANCE WAS MADE UNDER SEC. 143(3). WE FIND FROM THE RECORD THAT ASS ESSING OFFICER HAD ISSUED A QUESTIONNAIRE UNDER SEC. 142(1) ON 26 TH SEPTEMBER 2000. AT SR. NOS.16 AND 18 OF THIS QUESTIONNAIRE, ASSESSING OFFICER HAD CAL LED FOR THE FOLLOWING DETAILS: XVI: DETAILS REGARDING LONG TERM PROFIT ON SALE OF SHARES; & XVIII: MARKET QUOTATION OF SHARES SOLD AS ON 15.4.1 996 AND AS ON 9.6.1997. 6. APART FROM THESE DETAILS, ASSESSING OFFICER HAS CALLED FOR A NUMBER OF OTHER DETAILS. THE ASSESSEE HAS FILED REPLY TO THE QUESTIONNAIRE AND COPY OF THE REPLY HAS BEEN PLACED ON PAGES 10 AND 11 OF THE PAPER BOOK. THUS, AFTER AN EXAMINATION, ASSESSING OFFICER HAS ACCEPTED THE SALE OF SHARES AND THE LONG TERM CAPITAL GAIN EARNED BY THE ASSESSEE. IN T HE REASONS EXTRACTED SUPRA, ASSESSING OFFICER NOWHERE ALLEGED THAT ASSESSEE FAI LED TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY IN RESPECT OF ASSESS MENT OF HIS INCOME FOR ASSESSMENT YEAR 1998-99. ASSESSING OFFICER HAS ALSO NOT MADE REFERENCE TO 8 ANY MATERIAL WHICH CAN DEMONSTRATE THAT WHATEVER DI SCLOSURE MADE BY THE ASSESSEE WAS FACTUALLY INCORRECT. WE COULD APPRECIA TE THE CASE OF THE ASSESSING OFFICER, HAD HE WAS ABLE TO LAY HIS HANDS ON SOME INFORMATION, DEMONSTRATING THE FACT THAT WHATEVER DISCLOSED BY T HE ASSESSEE IN THE ORIGINAL ROUND OF LITIGATION WAS A FABRICATED STORY AND BASE D ON FACTUALLY INCORRECT OR NONEXISTENCE EVIDENCE. HE MERELY RELIED UPON THE IN FORMATION TRANSMITTED BY THE ADIT(INV.), MEERUT WHICH IS OF A GENERAL NAT URE. CONSIDERING ALL THESE ASPECTS AND THE DETAILED ORDER OF THE LEARNED CIT(APPEALS), WE DO NOT FIND ANY MERIT IN THIS APPEAL. IT IS REJECTED. DECISION PRONOUNCED IN THE OPEN COURT ON 14.10.201 1 SD/- SD/- ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14/10/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR