Asstt. Commissioner of Income Tax-6, Kanpur V. M/s Mohd Ayub Mohd., Kanpur

ITA 388/LKW/2013

• Counselvise Citation: 38823714 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-12-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Assessee Lawyers: NAVIN BHARGAV
• Keywords: Reopening of assessment; Loose papers; Document seized; Documents seized; Reassessment proceedings
• Section: 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.388/LKW/2013 ASSESSMENT YEAR:2003-04 ASSTT. CIT-6 KANPUR V. M/S MOHD. AYUB MOHD. YAQUB PERFUMERS PVT. LTD., 13/386(1), PARMAT, CIVIL LINES, KANPUR TAN/PAN: (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. R. K. RAM, D.R. RESPONDENT BY: SHRI. NAVIN BHARGAV, FCA DATE OF HEARING: 04 12 2014 DATE OF PRONOUNCEMENT: 10 12 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL PERTAINING TO ASSESSMENT YEAR 2004-05 IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE APPEAL OF THE ASSESSEE, AS HE HAS CONCLUDED ON THE BASIS OF HIS INCOMPLETE INQUIRY THAT SHRI. MALIK OF KANNAUJ WAS NOT THE SAME SHRI ABDUL MALIK, MD OF M/S S.M.D. AYUB MD. YAQUB (PERFUMERS) PVT. LTD., ASHOK NAGAR, KANNAUJ, WHEREAS THE AO HAS MATERIAL IN POSSESSION THAT SHRI MALIK IS SHRI ABDUL MALIK, MD OF M/S S.M.D. AYUB MD. YAQUB (PERFUMERS) PVT. LTD., ASHOK NAGAR, KANNAUJ AS SHRI MALIK WAS CLEARLY REFERRED AS C/O M/S S.M.D. AYUB MD. YAQUB (PERFUMERS) PVT. LTD., ASHOK NAGAR KANNAUJ IN THE INFORMATION RECEIVED FROM INVESTIGATION WING. :- 2 -: 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ANNULLING THE ASSESSMENT ORDER WITHOUT APPRECIATING THE FACT THAT THE A O HAD SUFFICIENT REASONS IN HIS POSSESSION TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ANNULLING THE ASSESSMENT ORDER WITHOUT APPRECIATING THE FACT THAT THE ASSESSMENT ORDER WAS PASSED BY THE AO ON THE BASIS OF CONCRETE FACTS AND MATERIAL AVAILABLE ON RECORDS AS WELL AS VARIOUS INQUIRIES MADE AND NOT ON THE BASIS OF ANY CONJUNCTURE OR SURMISES. 4. THAT THE ORDER OF THE LD. CIT(A) BEING ERRONEOUS UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF THE ASSESSING OFFICER RESTORED. 2. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT DURING THE COURSE OF SEARCH CONDUCTED UPON SHRI. SOHANRAJ MEHTA, C&F OF RMD GUTKHA GROUP IN BANGALORE, STATEMENT OF ACCOUNT WAS SEIZED IN WHICH THERE WAS AN ENTRY OF RS.50 LAKHS IN THE NAME OF MALIK KANNAUJ. THIS ENTRY WAS INTERPRETED BY THE REVENUE AS THIS AMOUNT WAS GIVEN TO SHRI. ABDUL MALIK, MD OF THE ASSESSEE-COMPANY. ON THE BASIS OF SEIZED DOCUMENTS, THE ASSESSING OFFICER HAS FORMED A BELIEF IN THE ASSESSEES CASE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, AS THIS AMOUNT WAS NOT SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. ACCORDINGLY A NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') WAS ISSUED AND ASSESSMENT WAS COMPLETED UNDER SECTION 147 OF THE ACT READ WITH SECTION 144 OF THE ACT IN THE HANDS OF THE ASSESSEE, RESULTING INTO AN ADDITION OF RS.10.48 LAKHS AS PROFIT ON THIS UNACCOUNTED SALE OF RS.50 LAKHS. 3. AN APPEAL WAS PREFERRED BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT NO DOCUMENT INDICATING PAYMENT OF RS.50 LAKHS TO THE ASSESSEE- COMPANY WAS FOUND DURING THE COURSE OF SEARCH. ONLY DUMB DOCUMENTS :- 3 -: WERE FOUND IN WHICH THERE WAS A DEBIT ENTRY OF RS.50 LAKHKS IN THE NAME OF MALIK KANNAUJ. EVEN IN THE STATEMENT OF SHRI. SOHANRAJ GUPTA, THERE WAS NO MENTION OF THE DIRECTOR OF THE ASSESSEE-COMPANY, SHRI. ABDUL MALIK. THEREFORE, THE LD. CIT(A) CAME TO THE CONCLUSION THAT IN THE ABSENCE OF ANY EVIDENCE INVOLVING THE ASSESSEE TO THE ALLEGED RECEIPT OF RS.50 LAKHS, REOPENING IN THE HANDS OF THE ASSESSEE UNDER SECTION 147 OF THE ACT IS NOT PROPER AND HE ACCORDINGLY ANNULLED THE ASSESSMENT. 4. AGGRIEVED THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND REITERATED ITS CONTENTIONS. DURING THE COURSE OF HEARING, A SPECIFIC QUERY WAS RAISED FROM THE LD. D.R. AS TO WHAT EVIDENCE THEY HAVE COLLECTED DURING THE COURSE OF SEARCH OR THEREAFTER, ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS FORMED A BELIEF THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE. NO SATISFACTORY ANSWER WAS FURNISHED BY THE LD. D.R. WE HAVE ALSO CAREFULLY PERUSED THE SEIZED DOCUMENTS AND WE FIND THAT THERE IS A DEBIT ENTRY OF RS.50 LAKHS IN THE NAME OF MLIK KANNAUJ, BUT THIS ENTRY DOES NOT INDICATE THAT THE AMOUNT OF RS.50 LAKHS WAS GIVEN TO THE MANAGING DIRECTOR OF THE ASSESSEE. THERE MAY BE HUNDRED OF MALIK IN KANNAUJ BUT ON THE BASIS OF THIS DUMB DOCUMENT, THE REOPENING OF ASSESSMENT IN THE HANDS OF THE ASSESSEE IS NOT PERMISSIBLE. MOREOVER, THE SEARCHED PARTY HAS ALSO EXAMINED SHRI. SOHANRAJ GUPTA AND THE STATEMENT IS ALSO PLACED ON RECORD AND AT NOWHERE SHRI. SOHANRAJ GUPTA HAS DEPOSED ABOUT PAYMENT OF RS.50 LAKHS TO THE ASSESSEE. IN THE ABSENCE OF ANY RELEVANT MATERIAL, THE REOPENING OF ASSESSMENT IN THE HANDS OF THE ASSESSEE IS NOT PROPER. THE LD. CIT(A) HAS GIVEN VALID REASONS WHILE HOLDING THAT THE REOPENING IS BAD. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRACTED HEREUNDER:- 5.1.6 FROM ALL THE AFORESAID CORRESPONDENCE, IT IS OBVIOUS THAT THERE IS NO CLUE AS TO HOW THE IDENTITY OF 'MALIK KANNAUJ' AS APPEARING IN :- 4 -: THE SEIZED DOCUMENT (SUPRA) WAS INTERPRETED AS SHRI ABDUL MALIK, MD OF THE APPELLANT COMPANY. IN THE STATEMENT GIVEN BY SHRI SOHANRAJ GUPTA, THERE IS NO MENTION OF ANY MALIK. FURTHER, IN HIS STATEMENT UNDER OATH BEFORE THE ADIT(LNV), KANPUR, SHRI ABDUL MALIK, THE M.D. OF THE APPELLANT COMPANY HAD DENIED SUCH TRANSACTION. IN THESE CIRCUMSTANCES, I FAIL TO UNDERSTAND AS TO HOW, THE A.O. FORMED THE BELIEF THAT THE ENTRY IN THE NAME OF 'MALIK KANNAUJ' (AS APPEARING IN THE SEIZED DOCUMENT) REFERRED TO SHRI 'MALIK, M.D. OF THE APPELLANT COMPANY. FURTHER, EVEN FOR ARGUMENT SAKE IF 'MALIK KANNAUJ' INDEED REFERRED TO SHRI ABDUL MALIK, THE M.D. OF THE APPELLANT COMPANY, THERE WAS NO EVIDENCE/MATERIAL ON RECORD WHICH COULD LINK THAT PAYMENT TO THE ASSESSEE COMPANY. JUST BECAUSE THE ADIT (INV), KANPUR HAD INFORMED THE A.O. THAT THE ENTRY OF PAYMEN OF RS. 50 LAKHS (AS MENTIONED IN THE SEIZED DOCUMENT) TO ONE 'MALIK KANNAUJ RELATED TO THE APPELLANT COMPANY (WITHOUT ANY SUPPORTING IN THIS REGARD), TO SAME COULD NOT HAVE BEEN THE BASIS FOR THE A.O. TO INITIATE THE REASSESSMENT PROCEEDINGS IN THE CASE OF THE APPELLANT COMPANY. IT IS A TRITE LAW THAT THE REASONS TO BELIEVE' FOR REOPENING THE CASE SHOULD BE THAT OF THE A.O. ALONE AND COULD NOT BE FORMED AT THE DICTATES OF OTHERS OR ON SUSPICION, CONJECTURES OR SURMISES. 5.1.7 IN THE INSTANT CASE, IN MY CONSIDERED VIEW, THE A.O. HAD NO MATERIAL BEFORE HIM WHICH COULD LINK THE SAID PAYMENT TO THE APPELLANT COMPANY. THE 'REASONS TO BELIEVE' IN THE CASE HAVE BEEN RECORDED ON IRRELEVANT MATERIAL. ON THE BASIS OF SUCH MATERIAL, NO PRUDENT MAN COULD HAVE FORMED THE BELIEF THAT INCOME HAD ESCAPED ASSTT. IN THE HANDS OF THE APPELLANT COMPANY. ACCORDINGLY, I HOLD THAT THE VERY ASSUMPTION OF JURISDICTION BY THE A.O. UNDER SECTION 147 OF THE ACT WAS ILLEGAL AND, THEREFORE, ANY ASSTT. FRAMED PURSUANT TO SUCH ILLEGALITY CANNOT BE SUSTAINED. THUS, THE WHOLE ASSTT. FRAMED U/S 147 IS HEREBY ANNULLED, WHILE TAKING THIS VIEW, I AM FORTIFIED BY THE DECISIONS OF THE HON'BLE APEX COURT IN FIE CASE OF CIT VS DAULAT RAM RAWAT MULL (87 ITR 349) WHEREIN, IT WAS HELD: :- 5 -: 'THERE SHOULD, IN OUR OPINION, BE SOME DIRECT NEXUS BETWEEN THE CONCLUSION OF FACT ARRIVED AT BY THE AUTHORITY CONCERNED AND THE PRIMARY FACTS UPON WHICH THE CONCLUSION IS BASED. THE USE OF EXTRANEOUS AND IRRELEVANT MATERIAL IN ARRIVING AT THAT CONCLUSION WOULD VITIATE THE CONCLUSION OF FACTS..............................' IN THE RESULT, THE APPEAL IS ALLOWED. 5. SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), WE CONFIRM HIS ORDER. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10 TH DECEMBER, 2014 JJ:0412 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR