ACIT, New Delhi V. Shri Vipin Kumar Khanna, New Delhi

ITA 3637/DEL/2013

• Counselvise Citation: 363720114 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 24-09-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 06-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Keywords: Reopening of assessment; Unexplained cash credit; Salary income; Source of fund; Reason to believe
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H NEW DELHI BEFORE SHRI H.S.SIDHU, J.M. AND SHRI J.SUDHAKAR REDDY, A.M. ITA NO.3 637 /DEL/201 3 ASSESSMENT YEAR : 200 4 - 05 ACIT, CENTRAL CIRCLE 5 VS. SH. VIPIN KUMAR KHANNA ROOM NO.361, 3 RD FLOOR B 35, G.K. I ARA CENTRE, JHANDEWALAN EXTN NEW DELHI NEW DELHI PAN: AVDPK 6630 J ITA NO.3 388 /DEL/201 3 ASSESSMENT YEAR : 200 4 - 05 SHRI VIPIN KUMAR KHANNA VS. ACIT, CENTRAL CIR.5 NEW DELHI NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY: - SHRI SALIL AGARWAL, ADV. AND SHRI SHAILESH GUPTA, C.A. DEPARTMENT BY: - SH. SAMEER SHARMA, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER TH ESE ARE CROSS APPEALS DIRECTED AGAINST THE ORDER OF LD.CIT(APPEALS) - X XXI , NEW DELHI DT. 30.3.2013 PERTAINING TO THE ASSESSMENT YEAR 200 4 - 05 . 2. THE REVENUE S GROUNDS OF APPEAL ARE AS UNDER: 1. THE ORDER OF LD.CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN LAW IN CONCLUDING THAT ORDER IS BAD IN LAW AND DELETING THE ADDITION OF RS.91,52,774/ - MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.91,52,774/ - MADE ON ACCOUNT OF ITA 3 637 /DEL/201 3 ITA 3 388 /DEL/11) AY 200 4 - 05 SH. VIPIN KUMAR KHANNA, NEW DELHI PAGE 2 OF 6 UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT WITHOUT GOING INTO MERITS AND FACTS OF THE CASE. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 2.1. THE ASSESSEE S APPEAL IS ON THE FOLLOWING GROUNDS. 1. THAT THE LD.CIT(A) - XXXI, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING AN ADDITION MADE OF RS.91,52,774/ - REPRESENTING REMITTANCES RECEIVED BY THE APPELLANT AND, HELD TO ALLEGED UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 1.1. THAT WHILE UPHOLDING THE LD.CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN HOLDING THAT APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE AND GENUINENESS OF THE TRANSACTIONS. THAT WOULD BE ENOUGH FOR THE LD.AO TO MAKE ADDITION U/S 68 OF THE ACT. THE FINDING IS VAGUE, OVERLOOKS DOCUMENTARY EVIDENCE ON RECORD AND SETTLED JUDICIAL POSITION AND, IS CONTRADICTORY AS HE HAS FURTHER HELD THAT SINCE I HAVE ALREADY HELD ORDER IS BAD IN LAW, I DO NOT FIND IT NECESSARY TO ADJUDICATE THESE GROUNDS IN DETAIL. 1.2. THAT THE LD.CIT(A) HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN OBSERVIN G THAT AMOUNTS ARE ROUTED THROUGH ON ACCOUNT IN TAX HEAVEN AND THAT THE APPELLANT S SALARY INCOME HAS NOT BEEN ADEQUATE ENOUGH TO EXPLAIN THE SOURCE OF FUNDS AMPLY SHOWS THAT THIS IS A TRANSACTION MEANT TO INTRODUCE SOME UNACCOUNTED FUNDS THROUGH CIRCUITOUS AND OPAQUE CHANNELS . IN ARRIVING AT THE ABOVE CONCLUSION THE LD.CIT(A) HAS PROCEEDED ON SUBJECTIVE CONSIDERATIONS , PURELY WHIMSICAL ASSUMPTIONS UNSUPPORTED BY ANY MATERIA L MUCH LESS EVIDENCE PLACED ON RECORD. 1.3. THAT FURTHER FINDING OF THE LD.CIT(A) THAT THEY HAVE NOT PRODUCED ANY DOCUMENTS THAT REVEAL THE UNDERLYING BANK TRANSACTIONS REFLECTING THE ORIGINAL RECEIPT OF FUNDS BY THE APPELLANT (AS CLAIMED BY THE ASSESSEE) IS AL SO FACTUALLY INCORRECT, LEGALLY MISCONCEIVED AND UNSUSTAINABLE. 1.4. THAT THE VARIOUS OTHER ADVERSE FINDINGS RECORDED BY THE LD.CIT(A) AND, THE LD.ACIT ARE TOTALLY AND WHOLLY BASED ON MISAPPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND, OVERLOOKING D ETAILED SUBMISSIONS OF THE ASSESSEE SUPPORTED BY VARIOUS EVIDENCES AND JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE. 2. THAT THE LD.CIT(A) HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN NOT HOLDING THAT ASSUMPTION OF JURISDICTION IS ILLEGAL AND, INVALID SI NCE THERE WAS NO MATERIAL MUCH LESS TANGIBLE AND RELEVANT MATERIAL TO FORM A REASON TO BELIEVE INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT AND IN FACT REASONS RECORDED WERE WITHOUT ANY INDEPENDENT APPLICATION OF MIND. IT IS THEREFORE PRAYED THAT ADDITION SO MADE BY THE LD.ACIT AND, UPHELD BY THE LD.CIT(A) BE DELETED AND APPEAL OF THE APPELLANT BE ALLOWED. IT ;BE FURTHER HELD THAT THERE WAS NO REASON TO BELIEVE TO ASSUME JURISDICTION U/S 147 OF THE ACT. ITA 3 637 /DEL/201 3 ITA 3 388 /DEL/11) AY 200 4 - 05 SH. VIPIN KUMAR KHANNA, NEW DELHI PAGE 3 OF 6 3 . WE FIRST TAKE UP THE JURISDICTIONAL ISSUE RAISED BY THE ASSESSEE IN ITA 3388/DEL/2013. 3 .1. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT BY ISSUE OF A NOTICE U/S 148 OF THE ACT ON 29.3.2011 , ON THE GROUND THAT THE APPROVAL CONTEMPLATED U /S .1 51(2) WAS NOT COMPLIED WITH. HE ARGUED THAT FROM THE AO S ORDER, IT IS CLEAR THAT THE PRIOR APPROVAL OF THE LD.CIT , CENTRAL I, NEW DELHI WAS TAKEN AND WHEREAS THE APPROVAL SH OULD HAVE BEEN OBTAINED FROM THE JCIT AND NOT FROM THE CIT UNDER THE ACT . HE R ELIED ON THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SPL S SIDDARTHA LTD. (SUPRA) REPORTED IN 345 ITR 223(DEL HI). HE FURTHER SUBMITTED THAT ON IDENTICAL FACTS IN THE ASSESSEE S OWN CASE , FOR THE AY 2001 - 01 TO 2002 - 03 , THE TRIBUNAL VIDE ORDER DT. 28.6.2000 DECIDED IN FAVOUR OF THE ASSESSEE ON THE VERY SAME FACTS AND GROUNDS. 3 .2 . THE LD.D.R. SUBMITTED THAT THE ACIT HA D ALSO AFFIXED HIS SIGNATURE IN APPROVAL AND HENCE THERE IS NO DEFECT AND THAT THE REQUIREMENTS OF THE ACT ARE FULFILLED. HE CONTESTED THE CONTENTIONS OF THE LD.COUNSEL FOR THE ASSESSEE. 4 . AFTER HEARING RIVAL SUBMISSIONS, WE FIND THAT IT IS ONLY THE COMMISSIONER WHO HAS GRANTED APPROVAL FOR THE REOPENING IN THIS CASE ON 30.3.2007. THIS BENCH OF THE TRI BUNAL HAD ON IDENTICAL FACTS IN THE ASSESSEE S OWN CASE IN ITA NOS. 1730/DEL/2012 TO 1732/DEL/2012 FOR AYS 2000 - 01 TO 2002 - 03 HAD HELD AS FOLLOWS. ITA 3 637 /DEL/201 3 ITA 3 388 /DEL/11) AY 200 4 - 05 SH. VIPIN KUMAR KHANNA, NEW DELHI PAGE 4 OF 6 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US . THE PHOTOCOPY OF THE REASONS RECORDED FOR AY 2000 - 01 IS PLACED AT PAGE 15 OF THE ASSESSEE'S PAPER BOOK. A COPY OF THE SAME IS BEING ENCLOSED AS ANNEXURE - 1 TO THIS ORDER. ADMITTEDLY, IN OTHER TWO YEARS, I.E. AY 2001 - 02 & 2002 - 03 ALSO, THE FACTS ARE IDENTI CAL AND SIMILAR APPROVALS HAVE BEEN TAKEN. COPIES OF THE SAME ARE PLACED AT PAGES 10 AND 46 RESPECTIVELY IN VOLUME - 2 OF THE ASSESSEE'S PAPER BOOK. HOWEVER, FOR THE SAKE OF BREVITY, THE SAME ARE NOT APPENDED HEREWITH. FROM THE ABOVE, IT IS EVIDENT THAT FIR ST THE ASSESSING OFFICER HAS RECORDED THE REASONS FOR REOPENING OF ASSESSMENT. THEREAFTER, THE ADDITIONAL CIT SIMPLY SIGNED THE SAME AND FORWARDED TO THE CIT. THE CIT EXAMINED THE ABOVE RECORDING OF REASONS AND THEN MENTIONED 'APPROVAL IS ACCORDED FOR REOP ENING ASSESSMENT OF SH. VIPIN KHANNA FOR A. Y. 2001 - 02'. 6. THAT SUB - SECTION (2) OF SECTION 251 READS AS UNDER: - '(2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB - SECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF JOINT COMMISSIONER, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE JOINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. [EXPLANATION. - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE JOINT COMMISSIONER, THE COMMISSION ER OR THE CHIEF COMMISSIONER, AS THE CASE MAY BE, BEING SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER ABOUT FITNESS OF A CASE FOR THE ISSUE OF NOTICE UNDER SECTION 148, NEED NOT ISSUE SUCH NOTICE HIMSELF]. ' 7. THUS, AS PER PROVISO TO SE CTION 151(2), APPROVAL OF JOINT COMMISSIONER IS REQUIRED. WE FIND THAT THE IDENTICAL ISSUE HAS BEEN CONSIDERED BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SPL'S SIDDHARTHA LTD. (SUPRA), WHEREIN THEIR LORDSHIPS HELD AS UNDER: - 'HELD, THAT UNDER SEC TION 151 OF THE ACT; IT WAS ONLY THE JOINT COMMISSIONER OR ADDITIONAL COMMISSIONER, WHO COULD GRANT THE APPROVAL FOR ISSUE OF NOTICE UNDER SECTION 148. THE APPROVAL WAS NOT GRANTED BY THE JOINT COMMISSIONER. INSTEAD, IT WAS TAKEN FROM THE COMMISSIONER OF I NCOME - TAX. THIS WAS NOT AN IRREGULARITY CURABLE UNDER SECTION 2928. THE NOTICE WAS NOT VALID. ' 8. IN OUR OPINION, THE RATIO OF THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. NO CONTR ARY DECISION ON THESE FACTS HAS BEEN BROUGHT TO OUR KNOWLEDGE. WE, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT, HOLD THAT THE ASSESSMENT REOPENED WITH THE APPROVAL OF ITA 3 637 /DEL/201 3 ITA 3 388 /DEL/11) AY 200 4 - 05 SH. VIPIN KUMAR KHANNA, NEW DELHI PAGE 5 OF 6 COMMISSIONER OF INCOME - TAX, WHEREAS THE STA TUTE REQUIRED THE APPROVAL OF THE JOINT COMMISSIONER OF INCOME - TAX, IS NOT VALID. WE, THEREFORE, QUASH THE REOPENING OF ASSESSMENT FOR THESE THREE YEARS UNDER CONSIDERATION. SINCE THE REOPENING OF ASSESSMENT ITSELF HAS BEEN QUASHED. THE CONSEQUENTIAL ASSES SMENT ORDERS PASSED FOR THE ABOVE THREE YEARS ARE ALSO QUASHED. 9. AS WE HAVE ALREADY QUASHED THE ASSESSMENT ORDERS. THE VARIOUS GROUNDS OF APPEAL RAISED BY THE ASSESSEE AGAINST THE ADDITIONS MADE BY THE ASSESSING OFFICER NEED NO ADJUDICATION. 4.1. C ONSISTENT WITH THE VIEW TAKEN THEREIN, WE QUASH THE REOPENING AS BAD IN LAW. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. 6 . COMING TO THE REVENUE S APPEAL , WE ARE OF THE OPINION THAT IN VIEW OF OUR DECISION IN THE ASSESSEE S APPEAL , ADJUDICATING THE MERITS WOULD BE AN ACADEMIC EXERCISE AND HENCE WE DIS MISS THE SAME AS INFRUCTUOUS . 7 . IN THE RESULT, THE REVENUE S APPEAL IS DISMISSED AND THE ASSESSEE S APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER , 2014. SD/ - SD/ - ( H.S.SIDHU ) ( J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 21 ST OCTOBER , 2014 *MANGA ITA 3 637 /DEL/201 3 ITA 3 388 /DEL/11) AY 200 4 - 05 SH. VIPIN KUMAR KHANNA, NEW DELHI PAGE 6 OF 6 COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR