Smt. C.P. Prameelamma, Channapatna V. ITO, Mandya

ITA 369/BANG/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1481 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-08-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 18-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Source of fund; Reason to believe; Reassessment proceedings
• Section: 147

Judgement Text

ITA.369/BANG/2014 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH, BANGALORE BEFORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER SINGLE MEMBER CASE I.T.A NO.369/BANG/2014 (ASSESSMENT YEAR : 2000-01) SMT. C. P. PRAMEELAMMA, W/O. SHRI. C. GOVINDAPPA, KEREMEGALA DODDI, TIPPI SILK FARM, CHANNAPATNA 571501 .. APPELLANT PAN : AOUPP5330C V. INCOME-TAX OFFICER, WARD 3, MANDYA .. RESPONDENT ASSESSEE BY : SHRI. SURESH MUTHUKRISHNAN, CA REVENUE BY : DR. P. K. SRIHARI, ADDL. CIT HEARD ON : 08.10.2015 PRONOUNCED ON : 09 .10.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE IT HAS ALTOGETHER RAISED SEVEN GROUNDS OF WHICH GROUNDS 1, 5 AND 7 ARE GENERAL NEEDING NO SPE CIFIC ADJUDICATION. GROUND 6 IS ON LEVY OF INTEREST U/S.234C OF THE INCOME-TAX ACT, 1961 (THE ACT IN SHORT), WHICH IS CONSEQUENTIAL IN NATURE WHICH AGAI N NEEDS NO SPECIFIC ADJUDICATION. ITA.369/BANG/2014 PAGE - 2 02. VIDE GROUND 2 ASSESSEE ASSAILS REOPENING RESORT ED BY THE AO FOR THE IMPUGNED ASSESSMENT YEAR. APPEAL OF THE ASSESSEE H AD EARLIER TRAVELLED UP TO THE TRIBUNAL AND THIS TRIBUNAL CONSIDERING THE ASSE SSEES REQUEST TO ADMIT ADDITIONAL GROUND ASSAILING THE JURISDICTION ASSUME D U/S.148 OF THE ACT HAD REMITTED IT BACK TO THE CIT (A) FOR CONSIDERING IT TO BE A FRESH GROUND. CIT (A) HAD DISPOSED OF THIS GROUND IN FAVOUR OF THE REVENU E, WHICH IS NOW ASSAILED BEFORE US BY THE ASSESSEE. 03. FACTS APROPOS ARE THAT DURING THE COURSE OF ASS ESSMENT PROCEEDINGS OF ASSESSEES HUSBAND SHRI. GOVINDAPPA, IT WAS FOUND B Y THE AO THAT THE SAID SHRI. GOVINDAPPA HAD SHOWN A LOAN OF RS.10.77 LAKHS AS RE CEIVED FROM THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. SINCE ASSESSEE HAD NOT FILED ANY RETURN FOR THE IMPUGNED ASSESSMENT YEAR, NOTICE U/S.148 OF THE ACT WAS SERVED ON THE ASSESSEE WITH PRIOR APPROVAL FROM JCIT, RANGE-2, MY SURU. REASONS FOR REOPENING WAS FURNISHED TO THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE CIT (A). SUCH REASONS READ AS FOLLOWS : '23/03/2006 IT IS LEARNT THAT THE ABOVE REFERRED SMT. PRAMEELAM A HAS ADVANCED A SUM OF RS. 10.00 LAKHS TO SRI. GOVINDAPPA DURING THE F. Y. 99- 00. THE PAYMENT HAS STATED TO BE MADE IN CASH & OUT OF THE OWN INCOME OF THE SAID SMT. PRAMEELAMA. IT IS ALSO GATH ERED THAT THE SAID PRAMEELAMA IS NOT ASSESSED TO TAX SO FAR. ITA.369/BANG/2014 PAGE - 3 IN VIEW OF THE ABOVE FACTS & CIRCUMSTANCES AND WITH A VIEW TO VERIFY THE SOURCES OF INCOME FOR THE ABOVE SAID PAY MENTS I AM OF THE VIEW THAT THE INCOME FOR THE SAID A. Y. HAS ESC APED TAXES, WITHIN THE MEANING OF THIS SECTION 147 OF TH E IT. ACT & _____ THE PROVISIONS OF THE SECTION 147 OF THE IT. ACT. AS THE CASE IS A BEYOND 4 YEARS OLD, THE JCIT APPRO VAL IS OBTAINED. THE JCJT'S ORDER DTD. 23/3/06 IS PLACED RECORD. ASSESSEE PURSUANT TO THE NOTICE U/S.148 OF THE ACT FILED RETURN OF INCOME ON 02.08.2006 DECLARING AGRICULTURAL INCOME OF RS.2,75 ,000/- AND TOTAL INCOME OF NIL. IN THE DOCUMENTS APPENDED TO SUCH RETURN ASSE SSEE CLAIMED NET AGGREGATE AGRICULTURAL RECEIPTS OF RS.19,70,000/- FOR FINANCI AL YEARS 1991-92 TO 1999-00 FROM VARIOUS CROPS LIKE MANGO, HORSE-GRAM AND COCON UT. AO WAS OF THE OPINION THAT EXCEPT FOR GIVING DETAILS OF THE AREA UNDER CULTIVATION FOR EACH CROP, ASSESSEE COULD FURNISH NO EVIDENCE REGARDING SALE OF THE PRODUCE. AO RESORTED TO HIS OWN ESTIMATION OF THE AGRICULTURAL INCOME FO R THESE YEARS BASED ON MARKET RATES OF THE AGRICULTURAL COMMODITIES FOR THE PERIO D 1991-92 TO 2000-01, GIVEN BY AGRICULTURAL MARKETING COMMITTEE, CHANNAPATNA. HE REWORKED THE NET AGRICULTURAL INCOME OF THE ASSESSEE AT RS.9,55213/- FOR F. YS. 1991-92 TO 1999- 00 AND AFTER DEDUCTING THEREFROM VARIOUS EXPENDITUR E AND OUTFLOW DUE TO LOANS ADVANCED BY THE ASSESSEE DURING THESE YEARS CAME TO A CONCLUSION THAT WHAT COULD HAVE BEEN AVAILABLE WITH THE ASSESSEE FOR GIV ING A LOAN DURING THE RELEVANT PREVIOUS YEAR TO HER HUSBAND WAS ONLY RS.4 ,60,248/-. THUS OUT OF THE SUM OF RS.10,77,000/- SHOWN BY ASSESSEE AS LOAN GIV EN TO HER HUSBAND DURING ITA.369/BANG/2014 PAGE - 4 THE RELEVANT PREVIOUS YEAR, AO WAS OF THE OPINION T HAT ASSESSEE HAD EXPLAINABLE SOURCE FOR ONLY RS.4,60,248/- BEING SAVINGS FROM AG RICULTURAL INCOME. THE BALANCE OF RS.6,16,752/- WAS ADDED AS UNEXPLAINED I NVESTMENT. 04. BEFORE CIT (A), ASSESSEE HAD SOUGHT FOR THE RE ASONS FOR REOPENING WHICH WAS FURNISHED TO IT. AS PER THE ASSESSEE, REOPENIN G WAS ONLY ON A SUSPICION AND NOT BASED ON A REASON TO BELIEVE THAT INCOME HAD ES CAPED ASSESSMENT. HOWEVER CIT (A) WAS NOT IMPRESSED BY THIS CONTENTION. HE W AS OF THE OPINION THAT ASSESSEE HAD ADVANCED SUM OF RS.10,77,000/- TO HER HUSBAND AND HAD FAILED TO FILE A RETURN OF INCOME AT ALL. THUS AS PER THE CI T (A), AO HAD SUFFICIENT REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. ACC ORDING TO HIM THE RATIO OF THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD V. ITO REPORTED IN 259 ITR 19, APPLIED. HE HEL D THE REOPENING VALID. IN THE EARLIER ROUND OF PROCEEDINGS, CIT (A) HAD CONFI RMED THE MERITS OF THE ADDITION. 05. NOW BEFORE US, LD. AR STRONGLY ASSAILING THE OR DER OF CIT (A) SUBMITTED THAT THE REASONS MENTIONED BY THE AO FOR THE REOPEN ING WAS ONLY FOR VERIFICATION OF SOURCE OF INCOME. THERE WAS NOTHIN G IN IT WHICH WOULD SHOW THAT ANY INCOME HAD ESCAPED TAXES. IT WAS MERELY A SUSPICION WHICH WAS UNFOUNDED. RELYING ON THE JUDGMENT OF HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF C. M. MAHADEVA V. CIT [ITA NO.795/2009, DT.24.08.2015], LD. AR ITA.369/BANG/2014 PAGE - 5 SUBMITTED THAT A REOPENING FOR FURTHER INVESTIGATIO N, TO FIND SOURCE OF AN INVESTMENT WAS NOT PERMISSIBLE IN LAW. ACCORDING T O HIM ASSESSEE WAS ONLY AN AGRICULTURIST AND HER ONLY SOURCE OF INCOME WAS AGR ICULTURAL INCOME. SIMPLY BASED ON SURMISES THE REOPENING WAS RESORTED TO. R ELIANCE WAS ALSO PLACED ON THE HONBLE APEX COURT IN THE CASE OF CIT V. P. K. NOORJAHAN [237 ITR 570]. 06. PER CONTRA, LD. DR STRONGLY SUPPORTING THE ORDE R OF CIT (A) SUBMITTED THAT JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE C ASE OF C. M. MAHADEVA (SUPRA) DID NOT APPLY ON FACTS HERE. ACCORDING TO HIM IN THE SAID CASE CONCERNED ASSESSEE HAD FILED A RETURN U/S.143(1) OF THE ACT AND THE REASSESSMENT PROCEEDINGS WERE INITIATED AFTER PROCESSING OF SUCH RETURN. AS AGAINST THIS, HERE THE ASSESSEE HAD NOT FILED A RETURN OF INCOME AT AL L. WHEN NO RETURN OF INCOME WAS FILED BY THE ASSESSEE, THE TESTS TO BE APPLIED FOR DETERMINING THE RELEVANCY OF THE REASONS WAS MUCH LIGHTER. AS PER THE LD. DR WHEN CASH LOANS WERE FOUND CREDITED BY ASSESSEES HUSBAND IN HIS BANK AC COUNT FOR WHICH, SOURCE WAS SHOWN AS GIVEN BY ASSESSEE, AO WAS DUTY BOUND TO VE RIFY THE CREDIT. BY THE TIME THE VERIFICATION OF ASSESSEES HUSBANDS ACCOU NTS WERE DONE, THE DUE DATE FOR FILING THE RETURN IN THE NORMAL COURSE AND EVEN FOR FILING A BELATED RETURN WAS LONG OVER. ACCORDING TO HIM, THE ONLY AVAILABLE MO DE OF INVESTIGATION WITH THE AO WAS THROUGH ISSUE OF A NOTICE U/S.148 OF THE ACT . THEREFORE AS PER THE LD. DR, THE REOPENING WAS RIGHTLY DONE. ITA.369/BANG/2014 PAGE - 6 07. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. BEFORE ADJUDICATING THE MERITS OF THE ADDITION MADE BY THE AO, IT IS REQUIRED TO SEE WHETHER THE REOPENING WAS RIGHTLY RESORTED TO IN TH E CIRCUMSTANCES OF THE CASE. THERE IS NO DISPUTE THAT ASSESSEE WAS ONLY AN AGRIC ULTURIST AND WAS HAVING ONLY AGRICULTURAL INCOME. THERE IS ALSO NO DISPUTE THAT ASSESSEES HUSBAND HAD SHOWN IN HIS RETURN OF INCOME, A SUM OF RS.10.77 LA KHS AS LOAN RECEIVED FROM THE ASSESSEE. TO A QUESTION WHETHER ASSESSEES HU SBAND HAD FILED A CONFIRMATION FROM THE ASSESSEE DURING THE COURSE OF HIS ASSESSMENT PROCEEDINGS, LD. AR SUBMITTED THAT IT WAS FURNISHED . THIS WAS NOT CONTRADICTED BY THE LD. DR. IN A CASE WHERE CONFIRMATION OF A C REDITOR IS FILED BY A PARTY THE AO IS HAVING AMPLE POWERS TO VERIFY THE CORRECTNESS OF THE CONFIRMATION. IN OUR OPINION, THE FIRST COURSE OF ACTION THAT SHOULD ORDINARILY BE RESORTED TO, IS NOT ISSUE OF A NOTICE U/S.148 OF THE ACT TO THE CONCERN ED CREDITOR. AO NEVER ISSUED SUMMONS U/S.131 OF THE ACT TO THE CONCERNED CREDITO R AND OBTAINED A STATEMENT ON OATH. IF FROM SUCH STATEMENT HE COULD GATHER SU FFICIENT MATERIAL TO COME TO A CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME, OR EVEN IN A CASE CREDITOR FAILED TO ATTEND THE SUMMONS, THE AO COULD HAVE RE SORTED TO A REOPENING. NO DOUBT ASSESSEE HERE HAD NOT FILED A RETURN OF INCOM E AT ALL. EXPLANATION 2 TO SECTION 147 OF THE ACT DEALS WITH A SITUATION WHERE THERE HAS BEEN NO RETURN OF INCOME FILED. EXPLANATION 2 IS REPRODUCED HEREUNDE R : ITA.369/BANG/2014 PAGE - 7 EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY:-- (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DU RING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARG EABLE TO INCOME-TAX; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY TH E ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOM E OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN T HE RETURN; IT IS CLEAR FROM CLAUSE (A) OF THE ABOVE EXPLANATIO N THAT THERE CAN BE DEEMED OR FICTIONAL PRESUMPTION OF INCOME ESCAPING TAX IN A C ASE WHERE NO RETURN OF INCOME WAS FURNISHED, ONLY IF THE TOTAL INCOME OF SUCH PARTY WOULD HAVE EXCEEDED THE MAXIMUM AMOUNT, NOT CHARGEABLE TO TAX. IN OTHER WORDS WHERE NO RETURN HAS BEEN FILED BY AN ASSESSEE AND THE AO WANTS TO INVOKE JURISDICTION VESTED UPON HIM U/S.147 OF THE ACT, THE REASONS MEN TIONED BY THE AO FOR REOPENING SHOULD SHOW A LOGICAL THOUGHT PROCESS WHI CH WOULD SHOW HOW HE CAME TO A CONCLUSION THAT THE TOTAL INCOME OF THE S UCH PERSON EXCEEDED THE MAXIMUM AMOUNT WHICH WAS NOT CHARGEABLE TO TAX. NO W IF WE HAVE A LOOK AT THE REASONS RECORDED BY THE AO IN THE CASE BEFORE U S, WHAT IS MENTIONED IS THAT HE WANTED TO VERIFY THE SOURCE OF INCOME FOR THE AD VANCE OF RS.10.77 LAKHS GIVEN BY THE ASSESSEE TO HER HUSBAND. THERE IS NOT HING HERE WHATSOEVER MENTIONED REGARDING ANY LACUNAE IN THE CONFIRMATION FILED BY THE ASSESSEE IN THE ITA.369/BANG/2014 PAGE - 8 COURSE OF HER HUSBANDS ASSESSMENT PROCEEDINGS OR R EGARDING ANY INVESTIGATION DONE BY THE AO THAT COULD BRING OUT SOMETHING WHICH WOULD SHOW AN ESCAPEMENT OF INCOME. ARGUMENT OF THE LD. DR IS TH AT IN A CASE WHERE ASSESSEE HAS NOT FILED A RETURN AT ALL, THE REASONS THAT ARE TO BE GIVEN FOR REOPENING SHOULD NOT BE SEEN WITH THE SAME EYES AS IN THE CASE OF AN ASSESSEE WHO HAD FILED A RETURN OF INCOME EARLIER. EVEN IF WE ACCEPT THIS CONTENTION, REASONS GIVEN BY THE LD. AO FOR ISSUE OF NOTICE U/S .148 OF THE ACT, DOES NOT GIVE EVEN A HINT OF ANY ESCAPEMENT OF INCOME OR TAX . AS FOR THE RELIANCE PLACED BY THE CIT (A) ON THE HONBLE APEX COURT JUD GMENT IN THE CASE OF GKN DRIVESHAFTS (SUPRA), QUESTION THERE WAS WHETHER REA SONS HAD TO BE FURNISHED TO AN ASSESSEE AND HIS REPLY DISPOSED OFF, BEFORE CONC LUDING THE ASSESSMENT. IN OUR OPINION THIS CASE WILL NOT SUPPORT THE CASE OF THE REVENUE HERE. IN THE CIRCUMSTANCES OF THE CASE WE ARE CONVINCED THAT REO PENING WAS RESORTED ONLY ON SUSPICIONS AND THE TEST OF RELEVANCY IS NOT SATISFI ED. EX-CONSEQUENTI WE HOLD THE REASSESSMENT INVALID. 08. SINCE GROUND 2 OF THE ASSESSEE IS ALLOWED, ITS GROUNDS RELATING TO MERITS OF THE ADDITION ARE NOT ADJUDICATED. ITA.369/BANG/2014 PAGE - 9 09. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH DAY OF OC TOBER, 2015. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR ITA.369/BANG/2014 PAGE - 10