Sh. Gurmeet Singh, New Delhi V. ITO, New Delhi

ITA 3793/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7275 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 15-06-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 30-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: UDAIBIR SINGH KOCHAR
• Keywords: Reason to believe; Reassessment proceedings
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 3793 / D EL/201 4 A.Y. : 200 3 - 0 4 GURMEET SINGH C/O JS KOCHAR & ASSOCIATES, 209, SEWAK BHAWAN, 16/2, WEA, KAROL BAGH, NEW DELHI 110 005 (PAN: BHKPS8743N) VS. ITO WARD 26(1), NEW DELHI (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : S HRI UDAIBIR SINGH KOCHAR, ADV. DEPARTMENT BY : SH RI KK JAISWAL, SR. DR DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 15 1515 15- -- -0 00 06 66 6- -- -201 201 201 2016 66 6 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 1 11 15 55 5- -- -0 00 06 66 6- -- -201 201 201 2016 66 6 ORDER ORDER ORDER ORDER PER PER PER PER H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU : : : : J JJ JM MM M THE APPEAL FILED BY THE ASSESSEE EMANATE OUT OF T HE ORDER DATED 31.10.2012 PASSED BY THE LD. CIT(A)-XVII, NEW DELHI RELEVANT TO ASSESSMENT YEAR 2003-04 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THE A SSESSEES APPEAL:- 1. THAT THE IMPUGNED ORDER IS BAD IN LAW AND DESE RVES TO BE QUASHED, AS IT HAS BEEN PASSED EVEN CONSIDERING, MUCH LESS DISCUSSING, THE SUBMISSIONS MADE IN WRITING BY THE ASSESSEE IN SUPPORT OF GROUN DS NO. 1, 2 AND 7 RAISED BEFORE THE CIT(A). 2. THAT THE LEARNED CIT(A) ERRED IN LAW IN UPHOL DING THE VALIDITY OF INITIATION OF PROCEEDINGS U/S. 147 OF T HE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ITA NO. 3793/DEL/2014 2 ACT') AS THE REASONS RECORDED BY THE AO DID NOT LEA D TO ANY BELIEF THAT THE ASSESSEE'S INCOME HAD ESCAPE D ASSESSMENT. 3. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE VALIDITY OF A VAGUE AND STEREOTYPED NOTICE U/S. 148 OF THE A CT, WHICH MANIFESTLY SHOWED NON APPLICATION OF MIND. 4. THAT THE LEARNED CIT(A) ERRED IN LAW IN CONF IRMING THE ADDITION MADE BY THE AO TO T E TUNE OF RS.2,00,000/ - TO THE RETURNED INCOME OF THE ASSESSEE, DESPITE THE FACT THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS PLACED ON IT AS PER SECTION 68 OF THE ACT. 5. THE LEARNED CIT(A) ERRED IN CONFIRMING THE AD DITION OF RS.2,00,000 TO HE RETURNED INCOME OF THE ASSESSEE, WITHOUT GIVING ANY REGARD TO THE FACT THAT THE ASSE SSEE WAS NOT EARNING ANY INCOME, BEING OF JUST 21 YEARS OF AGE, HAVING JUST PASSED OUT OF THE COLLEGE. ADDITIONAL GROUND THE APPELLANT RESPECTFULLY PRAYS FOR BEING GRANTED LEAVE TO URGE AND BE HEARD ON THE FOLLOWING LEGAL GROUND WHI CH REQUIRES NO INVESTIGATION OF FACTS AND CAN BE DECID ED ON THE BASIS OF MATERIAL ALREADY ON RECORD: '6. THAT THE ASSESSMENT ORDER DT. 14.11.2008 IS VOI D AB INITIO, HAVING BEEN PASSED IN PURSUANCE OF AN INVAL ID NOTICE DT. 14.10.2008 ISSUED U/S 143(2) OF THE ACT. ' ITA NO. 3793/DEL/2014 3 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS NOT ASSESSED TO TAX AND NO RETURN OF INCOME WAS FILED FOR THE RELEVANT ASSESSMENT YEAR. THE RETURN OF INCOME WAS FILED FOR THE FIRST TIME IN RESPONSE TO NOTICE U/S. 148. BASED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING TH AT THE ASSESSEE HAS RECEIVED ACCOMMODATION ENTRY OF RS. 2,00,000/- FROM PAWAN KU MAR CHANGIA FROM HIS BANK ACCOUNT WITH STATE BANK OF PATIALA, DARYA GAN J BRANCH, THE AO ISSUED NOTICE U/S. 148 ON 03.1.2008. THE ASSESSMENT WAS C OMPLETED U/S. 144/147 ON 14.11.2008 AFTER ADDING THIS AMOUNT OF RS. 2,00,000 /- AS ACCOMMODATION ENTRY RECEIVED DURING THE YEAR. 4. AGGRIEVED BY THE ORDER DATED 14.11.2008, ASSESSE E FILED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATE D 31.10.2012 DISMISSED THE APPEAL OF THE ASSESSEE. 4.1 AGGRIEVED BY THE IMPUGNED ORDER DATED 31.10.20 12, ASSESSEE FILED THE APPEAL BEFORE THE TRIBUNAL. 5. LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT NOTICE U/S. 148 HAS BEEN ISSUED IN A MECHANICAL MANNER ON THE BASIS OF VAGUE INFORMATION RECEIVED FROM DIT (INV.) AND ALSO STATED THAT THE REASONS RECORDE D BY THE AO DID NOT LEAD TO ANY BELIEF THAT THE ASSESSEES INCOME HAD ESCAPED A SSESSMENT. HE STATED THAT THE LOWER AUTHORITIES HAS WRONGLY ISSUED THE NOTIC E U/S. 148 WHICH MANIFESTLY SHOWED NON-APPLICATION OF MIND. HE FURTHER STATED T HAT THE AO HAS SIMPLY FILLED UP A PROFORMA MENTIONING THE INFORMATION RECEIVED, HENCE, THE NOTICE U/S. 148 IS PATENTLY ILLEGAL. IN THIS REGARD, HE PLACED RELIAN CE OF THE VARIOUS DECISIONS OF HONBLE DELHI HIGH COURT INCLUDING THE DECISION IN THE CASE OF SIGNATURES HOTELS (P) LTD. VS. ITO & ANR. (2011) 338 ITR 51 (DEL.) AN D STATED THAT THE PRESENT CASE IS COVERED BY THE AFORESAID DECISION OF THE HONBLE DE LHI HIGH COURT, HENCE, THE REOPENING IS REQUIRED TO BE QUASHED. ITA NO. 3793/DEL/2014 4 6. ON THE OTHER HAND, LD. DR CONTROVERTED THE CO NTENTIONS RAISED BY THE LD. COUNSEL OF THE ASSESSEE AND STATED THAT THE LOWER A UTHORITIES HAVE PASSED THE WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFE RENCE ON THE PART OF THE TRIBUNAL, THEREFORE, THE ORDERS OF THE REVENUE AUT HORITIES MAY BE UPHELD. 7. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. I FIND THAT IN THE PRESENT CASE THE REASONS RECORDED BY THE AO FOR INI TIATION OF PROCEEDINGS READ AS UNDER:- AN INFORMATION WAS RECEIVED FROM DIRECTORATE OF I NSPECTION (INV.) THAT SH. GURMEET SINGH RESIDENT OF J-10/20, RAJOUR I GARDEN, NEW DELHI HAS RECEIVED RS. 2,00,000/- THROUGH CHEQUE DATED 7. 12.2002 ISSUED BY PAWAN KUMAR GUPTA CHANGIA FROM HIS/HER BANK ACCOUNT NO. 6944 WITH STATE BANK OF PATIALA, DARYA GANJ, NEW DELHI. THE SAID CHEQUE HAS BEEN CREDITED IN HIS / HER BANK ACCOUNT NO. 15863 WITH PUNJAB & SINGH BANK, JANAKPUREI, DELHI. HENCE, I HAVE REASON TO BELIEVE THAT AN INCOME OF R S. 2,00,000/- CHARGEABLE TO TAX FOR THE ASSTT. YEAR 2003-04 RELEV ANT TO FY 2002-03 HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTIO N 147 OF THE I.T. ACT, 1961. 7.1 ON PERUSAL OF THE AFORESAID REASONS INDICATES THAT NOTICE ULS 148 HAS BEEN ISSUED IN A MECHANICAL MANNER ON THE BASIS OF VAGUE INFORMATION FROM DIRECTORATE OF INSPECTION (INV.). THE AO DID NOT D WELL UPON THE VERACITY AND THE BASIS OF INFORMATION RECEIVED. HE HAS NOT MENTIONED ANY MATERIAL WHICH HAS LED HIM TO BELIEVE THAT THE AMOUNT DEPOSITED IN THE BA NK ACCOUNT REPRESENTED ACCOMMODATION ENTRY WHICH HAS ESCAPED ASSESSMENT. H E HAS SIMPLY FILLED UP A PROFORMA MENTIONING THE INFORMATION RECEIVED. THER EFORE, THE NOTICE U/S. 148 IS PATENTLY ILLEGAL. I ALSO NOTE THAT THE FACTS AND C IRCUMSTANCES OF THE PRESENT CASE ITA NO. 3793/DEL/2014 5 ARE SIMILAR AND IDENTICAL TO THAT OF THE CASE IN T HE SIGNATURE HOTELS (P) LTD. VS. ITO & ANR. (2011) 338 ITR 51 (DEL.) DECIDED BY THE HONBLE DELHI HIGH COURT. IN THE SAID CASE DURING THE ASSESSMENT PROCEEDINGS SIM ILAR REASONS WERE RECORDED BY THE AO WHICH READS AS UNDER:- '7. IN THE PRESENT CASE THE UNDATED REASONS RECORDE D BY THE AO FOR INITIATION OF PROCEEDINGS; READ AS UNDER: INFORMATION RECEIVED FROM THE OFFICE OF THE DIRECTO R OF IT (INV.)- VI, NEW DELHI REVEALED THAT MLS SIGNATURE HOTELS (P) LT D. HAS INTRODUCED UNACCOUNTED MONEY IN ITS BOOKS OF ACCOUN T DURING FINANCIAL YEAR 2002-03 THROUGH ACCOMMODATION ENTRY FROM MLS SWETU STONE PV FOR RS. 5LACS. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THA T TAXABLE INCOME TO THE TUNE OF RS. 5 LAC HAS ESCAPED ASSESSMENT WIT HIN THE MEANING OF S. 147 OF THE IT ACT, 1961. 7.2 FROM READING OF THE ABOVE, IT IS CRYSTAL CLEAR THAT THE AFORESAID REASONS DO NOT SATISFY THE REQUIREMENTS OF S. 147 OF THE ACT. THE REASONS AND THE INFORMATION REFERRED TO IS EXTREMELY SCANTY AND VAGUE. THERE IS NO REFERENCE TO ANY DOCUMENT OR STATEMENT. FURTHER, IT IS APPARENT THAT THE AO D ID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THE AO ACCEPTED THE PLEA ON THE BASIS OF VAGUE INFORMATION IN A MECHANICAL MANNER. THE REASONS RECORDED REFLECT THAT THE AO DID NOT IN DEPENDENTLY APPLY HIS MIND TO THE INFORMATION RECEIVED FROM THE DIT (INV.) AN D ARRIVE AT A BELIEF WHETHER OR NOT ANY INCOME HAD ESCAPED ASSESSMENT. I FURTHER F IND CONSIDERABLE COGENCY IN THE ASSESSEES SUBMISSION THAT THE PRESENT CASE IS SQUARELY COVERED BY THE ORDER OF THE HONBLE DELHI HIGH COURT DATED 21.7.2011 PAS SED IN THE CASE OF SIGNATURE ITA NO. 3793/DEL/2014 6 HOTELS P. LTD. VS. INCOME TAX OFFICER [2011] 338 I TR 0051, WHEREIN THE HONBLE COURT HAS HELD AS UNDER:- HELD, ALLOWING THE PETITION, THAT THE REASSESSMENT PROCEEDING WERE INITIATED ON THE BASIS OF INFORMATI ON RECEIVED FROM THE DIRECTOR OF INCOME TAX (INVESTIGA TION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS . 5 LACS DURING THE FINANCIAL YEAR 2002-03 AS STATED IN THE ANNEXURE. ACCORDING TO THE INFORMATION, THE AMOUNT RECEIVED F ROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESEE WAS THE BENEFICIARY. THE REASONS DID N OT SATISFY THE REQUIREMENTS OF SECTION 147 OF THE ACT. THERE WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR EST ABLISHED NEXUS OR LINK WHICH DISCLOSED ESCAPEMENT OF INCOME . THE ANNEXURE WAS NOT A POINTER AND DID NOT INDICATE ESC APEMENT OF INCOME. FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS A ND MATERIAL OF THE INFORMATION. THERE WAS NO DISPUTE THAT THE COMPANY, S, HAD A PAID-UP CAPITAL OF RS. 90 LAKHS A ND WAS INCORPORATED ON JANUARY 4, 1989, AND WAS ALSO ALLOT TED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER, 2001. THUS , IT COULD NOT BE HELD TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LI ABLE TO BE QUASHED. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS, I AM OF THE CONSIDERED OPINION THAT THE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE ARE SIMILAR TO THAT OF ITA NO. 3793/DEL/2014 7 SIGNATURES HOTEL CASE WHICH WAS DECIDED BY THE HON BLE DELHI HIGH COURT, AS AFORESAID, THEREFORE, RESPECTFULLY FOLLOWING THE SA ME REASONING, I DECIDE THE LEGAL ISSUE IN DISPUTE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE AND ACCORDINGLY QUASH THE REASSESSMENT PROCEEDINGS. THE OTHER ISSUES ARE NOT DEALT WITH AS THE SAME HAVE BECOME ACADEMIC IN NATURE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.06.2016. SD/- [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 15/6/2016 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 3793/DEL/2014 8