Harish Tyagi, Ghaziabad V. ITO WARD - 1(3), Ghaziabad

ITA 3849/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2300 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C P SINGH
• Assessee Lawyers: SURBHI GOYAL
• Keywords: Reassessment proceedings
• Section: 147; 148; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI SMC-I BENCH, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3849/DEL/2019 [ASSESSMENT YEAR: 2010-11] HARISH TYAGI, VS. ITO, WARD 1(3), H.NO. 0, HANS COLONY, GHAZIABAD JEETPUR, RAWLI ROAD, MURADNAGAR, GHAZIABAD - 201206 (PAN : ADOPT0663K) [APPELLANT] [RESPONDENT] ASSESSEE BY : MS. SURBHI GOYAL, CA REVENUE BY : SH. C.P. SINGH, SR. DR. ORDER THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX [APPEALS], GHAZIABAD DAT ED 31.01.2019 PERTAINING TO ASSESSMENT YEAR 2010-11 AND RAISED AS MANY AS 06 GROUNDS ON LEGAL ISSUE AS WELL AS ON MERIT. HOWEVER, LD. CO UNSEL FOR THE ASSESSEE HAS ONLY ARGUED THE GROUND NO. 1-3 ON LEGAL GROUNDS AND NOT ARGUED ON MERIT I.E. GROUND NO. 4, HENCE, THE GROUND NO. 4 IS DISMISSED AS SUCH. GROUND NO. 5 & 6 ALSO NOT ARGUED HENCE, THE SAME A RE ALSO DISMISSED. FOR THE SAKE OF CONVENIENCE, THE GROUND NOS. 1 TO 3 ON THE MERIT, AS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE ARE REPR ODUCED AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. CIT(A) IS BAD, BOTH IN T HE EYE OF LAW AND ON THE FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECT ING THE CONTENTION OF THE ASSESSEE THAT THE INITIATION OF THE REASSESSMENT PROCEEDINGS AND THE REASSESSMENT 2 ORDER ARE BAD BOTH ON FACTS AND IN LAW AND LIABLE T O BE QUASHED AS THE STATUTORY CONDITIONS AND PROCEDURE PRESCRIBED UNDER THE STATUTE HAVE NOT BEEN COMPLIED WITH. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTION OF THE ASSESSEE THAT THE REASSESSMENT ORDER PASSED BY THE AO IS BAD AND LIABLE TO BE QUASHED AS THE SAME HAS BEEN REOPENED ON THE BASIS OF THE REASONS WHICH ARE VAGUE AND HA S BEEN RECORDED WITHOUT APPLICATION OF MIND ON THE PART OF THE AO. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE'S SOURCE OF INCOME IS AGRICULTURE AND STOCKING OF GUR AND AGRICULTURE PRO DUCE AFTER PURCHASING FROM THE RURAL FARMERS IN CROP SEASON. THE ASSESSEE HAD MANUALLY FILED INCOME TAX RETURN ON 25.05.2010, DECLARING AN INCOM E OF RS. 1,73,105/- FROM THE SALE OF SUGAR CANE. THEREAFTER, ON THE BA SIS OF AIR INFORMATION RECEIVED BY THE AO THAT THE ASSESSEE HAS DEPOSITED CASH OF RS. 27,28,000/- IN THE SAVINGS BANK ACCOUNT, VARIOUS VE RIFICATION LETTERS WERE ISSUED TO THE ASSESSEE TO VERIFY THESE TRANSACTIONS . SUBSEQUENTLY, THE ASSESSEE'S CASE WAS REOPENED U/S 147 OF THE ACT AND NOTICE DATED 23.03.2016 U/S 148 OF THE ACT WAS ISSUED TO THE ASS ESSEE. HOWEVER, THE AO COMPLETED THE ASSESSMENT PROCEEDINGS U/S 144 OF THE ACT BY ALLEGING THAT THE ASSESSEE DID NOT FURNISH ITR FOR THE YEAR UNDER CONSIDERATION AND MADE AN ADDITION OF RS. 27,43,000/- IN THE HANDS OF THE ASSESSEE. AGGRIEVED BY THIS, ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 31.01.2019 HAS DISMIS SED THE APPEAL OF THE ASSESSEE. AGAINST THE IMPUGNED ORDER, THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT LD. CIT(A) HAS ERRED IN REJECTING THE CONTENTION OF THE ASSESSEE THAT THE INITIATION OF THE REASSESSMENT PROCEEDINGS AND THE REASSESSMENT ORDER 3 ARE BAD BOTH ON FACTS AND IN LAW AND LIABLE TO BE Q UASHED AS THE STATUTORY CONDITIONS AND PROCEDURE PRESCRIBED UNDER THE STATU TE HAVE NOT BEEN COMPLIED WITH. IT WAS FURTHER SUBMITTED THAT LD. CI T(A) HAS ERRED IN REJECTING THE CONTENTION OF THE ASSESSEE THAT THE REASSESSMENT ORDER PASSED BY THE AO IS BAD AND LIABLE TO BE QUASHED AS THE SAME HAS BEEN REOPENED ON THE BASIS OF THE REASONS WHICH ARE VAG UE AND HAS BEEN RECORDED WITHOUT APPLICATION OF MIND ON THE PART OF THE AO. TO SUPPORT HIS AFORESAID CONTENTION, HE FILED THE WRITTEN SUBM ISSIONS AS WELL AS PAPER BOOK CONTAINING PAGES 1-27 IN WHICH HE HAS ATTACHE D THE VARIOUS DOCUMENTARY EVIDENCE TO SUPPORT THE CASE OF THE ASS ESSEE AND REQUESTED BY CONSIDERING THE WRITTEN SUBMISSIONS AS WELL AS THE DOCUMENTARY EVIDENCES, THE ASSESSMENT MAY BE QUASHED. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A). 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS ESPECIALLY THE IMPUGNED ORDER OF THE LD. CIT(A), WRITTEN SUBM ISSIONS FILED BY THE ASSESSEES COUNSEL AND THE CASE LAWS RELIED THEREIN AND THE PAPER BOOK CONTAINING PAGES 1-27 IN WHICH HE HAS ATTACHED THE COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN ALONGWITH CO MPUTATION OF INCOME; COPY OF BANK STATEMENT; COPY OF CASH FLOW S TATEMENT; COPY OF AFFIDAVIT OF THE BUYERS; COPY OF DETAILS OF LAND RE CORD; COYP OF DETAILS OF SALE OF SUGAR CANE AND COPY OF ASSESSMENT ORDER IN THE ASSESSEES CASE FOR THE AY 2012-13. AFTER PERUSING THE WRITTEN SUBM ISSIONS AS WELL AS THE DOCUMENTARY EVIDENCES, IT IS NOTED THAT THE AO HAS ISSUED THE NOTICE U/S 148 OF THE ACT MERELY ON THE BASIS OF NON-COMPLIANC E OF THE VERIFICATION LETTERS ISSUED BY HIM FOR VERIFYING THE CASH DEPOSI TS IN THE BANK ACCOUNT OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE ASSESS MENT ORDER (PG.1 OF AO'S ORDER) READ AS UNDER: '...TO VERIFY THE GENUINENESS OF FINANCIAL TRANSACT ION VERIFICATION LETTERS DATED 27.04.2016, 14.09.2016, 09.12.2016 & 25.01.2017 WERE ISSUED TO THE ASSESSEE THROUGH SP EED POST. IN RESPONSE TO THESE NOTICES NO COMPLIANCES W ERE MADE BY THE ASSESSEE. SUBSEQUENTLY PROVISIONS OF SECTION 147 OF 4 THE I.T. ACT, 1961 WERE INVOKED AND AFTER OBTAINING NECESSARY APPROVAL FROM THE APPROPRIATE AUTHORITY, STATUTORY N OTICE U/S 148 OF THE ACT DATED 23.03.2016 WAS ISSUE TO THE ASS ESSEE... 6. ON PERUSAL OF THE ABOVE ORDER, IT IS EVIDENT THA T THE AO REOPENED THE CASE OF THE ASSESSEE MERELY ON THE BASIS OF SUS PICION THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. IT IS A SET TLED THAT NOTICE U/S 148 OF THE ACT CANNOT BE ISSUED MERELY ON THE B ASIS OF THE INSUFFICIENT COMPLIANCE TO THE LETTERS ISSUED BY THE DEPARTMENT. THERE MUST BE A SOMETHING WHICH INDICATES, EVEN IF IT DOES NOT ESTA BLISH, THE ESCAPEMENT OF INCOME FROM ASSESSMENT. MERELY BECAUSE SOME FURT HER INVESTIGATIONS HAVE NOT BEEN CARRIED OUT, WHICH, IF MADE, COULD HA VE LED TO DETECTION OF AN INCOME ESCAPING ASSESSMENT, CANNOT BE REASON ENO UGH TO HOLD THE VIEW THAT THE INCOME HAS ESCAPED ASSESSMENT. THUS, IN THE PRESENT CASE ALSO, THE AO ISSUED NOTICE U/S 148 OF THE ACT MERE LY ON THE BASIS OF SUSPICION THAT THE CASH DEPOSITED IN THE BANK ACCOU NT OF THE ASSESSEE HAS ESCAPED ASSESSMENT. TO SUPPORT THIS VIEW, I DRAW SU PPORT FROM THE THE DECISION OF THE ITAT DELHI BENCH IN THE CASE OF BIR BAHADUR SINGH SIJWALI VS. ITO, IN I.T.A. NO. 3814/DEL/2011, VIDE ORDER DA TED 20.01.2015 WHEREIN IT WAS HELD AS UNDER: ALL THAT THE REASONS RECORDED FOR REOPENING INDICA TE IS THAT CASH DEPOSITS AGGREGATING TO RS. 10,24,100 HAVE BEEN MADE IN THE BANK ACCOUNT OF THE ASSESSEE, BUT THE MERE FACT THAT THESE DEPOSITS HAVE BEEN MADE IN A BANK ACCOUNT DOES NOT INDICATE THAT THESE DEPOSITS CONSTITUTE AN INCOME WHICH HAS ESCAPED ASSESSMENT. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT DO NOT MAKE OUT A CASE THAT THE ASSESSEE WAS ENGAGED IN SOME BUSINESS AND THE INCOME FROM SUCH A BUSINESS HAS NOT BEEN RETURNED BY THE 5 ASSESSEE. IT IS NOT OPEN TO DEAL WITH THE QUESTION AS TO WHETHER THE ASSESSEE COULD BE SAID TO BE ENGAGED IN ANY BUSINESS; ALL THAT IS TO BE EXAMINED IS WHET HER THE FACT OF THE DEPOSITS, PER SE, IN THE BANK ACCOU NT OF THE ASSESSEE COULD BE BASIS FOR HOLDING THE VIEW TH AT THE INCOME HAS ESCAPED ASSESSMENT. THE ANSWER IS IN NEGATIVE. THE ASSESSING OFFICER HAS OPINED. THAT AN INCOME OF RS.10,24,100 HAS ESCAPED ASSESSMENT OF INCOME BECAUSE THE ASSESSEE HAS RS.10,24,100 IN HIS BANK ACCOUNT BUT THEN SUCH AN OPINION PROCEEDS ON THE FALLACIOUS ASSUMPTION THAT THE BANK DEPOSITS CONSTITUTE UNDISCLOSED INCOME, AND OVERLOOKS THE FA CT THAT THE SOURCES OF DEPOSIT NEED NOT NECESSARILY BE INCOME OF THE ASSESSEE. OF COURSE, IT MAY BE DESIRABLE, FROM THE POINT OF VIEW OF REVENUE AUTHORITIES, TO EXAMINE THE MATTER IN DETAIL, BUT T HEN REASSESSMENT PROCEEDINGS CANNOT BE RESTORED TO ONLY TO EXAMINE THE FACTS OF A CASE, NO MATTER HOW DESIRABLE THAT BE, UNLESS THERE IS A REASON TO BELI EVE, RATHER THAN SUSPECT, THAT AN INCOME HAS ESCAPED ASSESSMENT. {PARA 8} IN VIEW OF THE REASONS SET OUT ABOVE, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, THE REASONS RECORDED BY THE ASSESSING OFFICER, AS SET OUT EARLI ER, WERE NOT SUFFICIENT REASONS FOR REOPENING THE ASSESSMENT PROCEEDINGS. WE, THEREFORE, QUASH THE REASSESSMENT PROCEEDINGS. AS THE REASSESSMENT ITSEL F IS QUASHED, ALL OTHER ISSUES ON MERITS OF THE ADDIT IONS, 6 IN THE IMPUGNED ASSESSMENT PROCEEDINGS, ARE RENDERED ACADEMIC AND INFRUCTUOUS. [PARA 1 0}. 7. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES O F THE CASE AS EXPLAINED ABOVE AND RESPECTFULLY FOLLOWING THE PREC EDENT, AS AFORESAID, I AM OF THE VIEW THAT THE REASSESSMENT PROCEEDINGS I NITIATED BY THE AO ARE BAD IN LAW AND LIABLE TO BE QUASHED. I HOLD AN D DIRECTLY ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. THE ORDER PRONOUNCED ON 19.03.2020. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATED:19-03-2020 SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) ASST. REGISTRAR, 5. DR ITAT, NEW DELHI