Shri Ranjan Ahuja, New Delhi V. ITO, New Delhi

ITA 3897/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6510 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-03-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 04-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBINA CHAUDHARI
• Keywords: Gift; Business income; Principle of natural justice; Question of law; Tangible material; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 147; 68; 148; 139

Judgement Text

ITA NO S . 3897, 3867, 3896 &3899 /DEL./201 6 ASSESSMENT Y EAR: 2003 - 04 & 2004 - 05 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SM C NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMB E R ITA NO. 3897 /DEL./201 6 ASSESSMENT YEAR: 2003 - 04 RANJAN AHUJA G - 78, ASHOK VIHAR, PHASE - 1, NEW DELHI VS. ITO WARD - 19(2) NEW DELHI (APPLICANT) (RESPONDENT) (PAN: AA FPA713B ) ITA NO. 3867 /DEL./201 6 ASSESSMENT YEAR S : 2004 - 05 POOJA AHUJA G - 78, ASHOK VIHAR, PHASE - 1, NEW DELHI VS. ITO WARD - 19(2) NEW DELHI (APPLICANT) (RESPONDENT) (PAN: ADQPA4301C) ITA NO. 3896 /DEL./201 6 ASSESSMENT YEAR: 2003 - 04 POOJA AHUJA G - 78, ASHOK VIHAR, PHASE - 1, NEW DELHI VS. ITO WARD - 19(2) NEW DELHI (APPLICANT) (RESPONDENT) (PAN: ADQPA4301C) PAGE 2 OF 11 ITA NO. 3899 /DEL./201 6 ASSESSMENT YEAR: 2003 - 04 TUSHAN AHUJA G - 78, ASHOK VIHAR, PHASE - 1, NEW DELHI VS. ITO WARD - 19(2) NEW DELHI (APPLICANT) (RESPONDENT) (PAN: AAFPA7130A) ASSESSEE BY: SH. SALIL AGGARWAL, ADV. SH. SHAILESH GUPTA, ADV. REVENUE BY: MS. BEDOBINA CHAUDHARI, SR. DR DATE OF HEARING 0 8 / 0 3 /201 7 DATE OF PRONOUNCEMENT 0 9 / 0 3 /201 7 ORDER PER B.P. JAIN , ACCOUNTANT MEMBER : 1. TH ESE FOUR APPEAL S OF THE ASSESSEE ARISE FROM DIFFERENT ORDERS OF LD. CIT(A) , NEW DELHI VIDE DIFFERENT ASSESSMENT YEARS AS PER THE DETAILS IN THE LD. CIT(A) S ORDER. 2. IT WAS BROUGHT TO OUR NOTICE BY SH. SALIL AGGARWAL, ADVOCATE , THE ISSUE IN ALL THE FOUR APPEALS IS IDENTICAL AND THEREFORE ONCE THE APPEAL IN THE CASE OF SH. RANJAN AHUJA IN ITA NOS. 3896/D/2016 IS DECIDED, OTHER APPEALS HAVING THE IDENTICAL ISSUES WILL FOLLOW THE SAME ORDER. THE LD. COUNSEL PROCEEDED TO ARGUE IN THE CASE OF SH. RANJAN AHUJA . 3. THE GROUNDS OF APPEAL TAKEN ARE REPRODUCED HEREIN BELOW: - PAGE 3 OF 11 1. THAT THE ORDER PASSED BY THE HON BLE CIT(A) IS BAD IN LAW, WRONG ON FACTS AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2(A) THAT THE PROCEEDINGS INITIATED UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 ARE VOID - AB - INITIO AND THE RE - ASSESSMENT IS BAD IN LAW. THE ASSESSMENT U/S 147 HAS BEEN COMPLETED ON WHOLLY ERRONEOUS INTERPRETATION OF SECTION 147 OF THE INCOME TAX ACT. THE CONDITIONS PRECEDENT IMPERATIVE FOR THE ISSUANCE OF A NOTICE U/S 147 OF THE INCOME TAX ACT WERE WHOLLY CONSPICUOUS BY THEIR ABSENCE IN THE FACTS AND CIRCUMS TANCES OF THIS CASE AND AS A CONSEQUENCE THEREOF, ALL IMMINENT PROCEEDINGS AND THE ASSESSMENT ORDER ARE WHOLLY ILLEGAL, WITHOUT THE AUTHORITY OF LAW, NULL AND VOID. ( B ) THE HON BLE CIT(A) HAS FAILED TO CONSIDER THE FACT THAT THE LEARNED ASSESSING OFFICER HAS E XERCISED HIS POWERS UNDER SECTION 147 OF THE INCOME TAX ACT ON MERE SURMISES AND SUSPICIONS AND ON WHOLLY UNREASONABLE AND SPECULATIVE PREMISES AND HE HAD NO REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX FOR THE AFORESAID RELEVANT YEAR HAS ESCAPED ASSESS MENT EITHER BY REASON OF THE APPELLANT COMPANY FAILING TO MAKE A RETURN U/S 139 OF THE INCOME TAX ACT OR BY ITS FAILURE BY OMISSION OR FAILURE TO DISCLOSE, FULLY AND TRULY, ALL THE MATERIAL FACTS NECESSARY FOR SUCH AN ASSESSMENT. (C) THE HON BLE CIT(A) HAS FAILED TO APPRECIATE THAT THE NOTICE U/S 148 OF THE INCOME TAX ACT WAS NOT SERVED UPON ON THE APPELLANT WITHIN THE STIPULATED TIME LIMIT AND THEREFORE THE ASSESSMENT IS INVALID, NULL AND VOID - AB - INITIO. 3(A) THE HON BLE CIT(A) HAS ERRED BOTH IN LAW AND IN FACTS IN CONFIRMING THE ADDITION OF RS.4 LACS MADE BY THE LD. AO U/S 68 OF THE INCOME TAX ACT IN RESPECT OF GIFT RECEIVED BY HIM FROM SHRI SUDHIR SACHDEVA . PAGE 4 OF 11 3(B) THE HON BLE CIT(A) HAS CONFIRMED THE ADDITION OF RS.4 LACS WITHOUT APPRECIATING THE FACT THAT THE APPELLANT DURING THE COURSE OF ASSESSMENT AND APPELLATE PROCEEDINGS HAD FILED COPY OF DECLARATION OF GIFT BY THE DONOR ALONGWITH HER AFFIDAVIT, BANK STATEMENT OF THE DONOR AND THE ACKNOWLEDGMENT OF INCOME TAX RETURN OF THE DO NOR AND THEREFORE THE IDENTITY OF THE DONOR, GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE DONOR STANDS PROVED AND THEREFORE THE QUESTION OF MAKING AN ADDITION IN RESPECT OF GIFT RECEIVED DOES NOT ARISE AT ALL. 4. THE HON BLE CIT(A) HAS E RRED IN CONFIRMING THE ADDITION OF RS.1000/ - BEING ALLEGED PAYMENT OF COMMISSION @ 0.25% ON THE GIFT RECEIVED WITHOUT HAVING ANY EVIDENCE IN THIS REGARD AND THE ADDITION HAS BEEN MADE MERELY ON CONJECTURES AND SURMISES. 5. THE HON BLE CIT(A) WHILE COMPUTI NG THE ADDITION OF RS.4 LACS U/S 68 OF THE INCOME TAX ACT HAS FAILED TO APPRECIATE THE FACT THAT AS THE APPELLANT IS NOT HAVING ANY BUSINESS INCOME DURING THE YEAR THEREFORE HE WAS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS AND THEREFORE THE PROVISION OF S ECTION 68 ARE NOT APPLICABLE TO THE APPELLANT AND THEREFORE THE ADDITION HAS BEEN WRONGLY MADE. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MODIFY OR FOREGO ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HE ARING. 4. ON THE ISSUE OF SECTION 147 RAISED BEFORE THE LD. CIT (A) THE SAME WAS DISMISSED AND THEREFORE THE ASSESSEE IN APPEAL BEFORE ME IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE INCLUDES IS SQUARELY COVERED BY THE DECISION OF ITAT DELHI SMC BENCH VIDE OR DER DATED 3.1.2017 IN ITA NO. 3895/D/2016 IN THE CASE OF MS. BINDIYA AHUJA AND VIPIN AHUJA PAGE 5 OF 11 BROUGHT TO OUR NOTICE THE RELEVANT PARAS OF THE DECISIONS I.E. PARA 9 TO 13 WHICH ARE REPRODUCED HEREIN UNDER: - 9. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND THE CASE LAW CITED BY THE ASSESSEE S COUNSEL ON THE ISSUE IN DISPUTE. IN MY VIEW, IT IS VERY MUCH NECESSARY TO REPRODUCE THE REASONS RECORDED BY THE AO BEFORE ISSUE OF NOTICE TO THE ASSESSEE U/S. 148 OF THE I.T. ACT, 1961 WHICH IS REPRODUCED HEREUNDER: - SMT. BINDIYA AHUJA, G - 78, ASHOK VIHAR, PHASE - I, DELHI IN THIS CASE AN INFORMATION IS RECEIVED FROM THE O/O THE DI (INV. - I, ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI V IDE OFFICE LETTER NO. DIT(INV)/1/2006 - 07/AE/1543 DATED 5.2.2007 SMT. BINDIYA AHUJA HAS TAKEN BOGUS ACCOMMODATION ENTRIES FROM THE FOLLOWING PARTIES IN LIEU OF UNACCOUNTED MONEY PAID BY THE ABOVE NAMED ASSESSEE. AS PER ANNEXURE ENCLOSED WITH THE ABOVE LETTE R DIT(INV. UNIT - I), NEW DELHI DATED 5.2.2007 THE DETAIL OF TRANSACTION MADE BY THE ABOVE ASSESSEE IS AS UNDER DATE AMOUNT CHEQUE NO. NAME OF THE PARTY 400600 00874601 RENU MAINI 400600 00874501 RENUMAIM. (SBI INDORE) THE RELEVANT ASSESSMENT YEAR INVOLVE D IS 2003 - 04. PAGE 6 OF 11 IN VIEW THE ABOVE FACTS, I AM SATISFIED THAT SMT. BINDIYA AHUJA, R/O ASHOK VIHAR, PHASE - I, NEW DELHI HAS CONCEALED HIS INCOME RS. 8,01,200/ - FOR TAXATION. SINCE THE AOUNT INCOME WHICH HAS ESCAPED ASSESSMENT MORE THAN 100000/ - , THEREFORE, NOTI CE U/S. 148 OF THE I. T. ACT, 1961 MAY BE ISSUED. SD/ - (NAND LAL) INCOME TAX OFFICER, 1 0. AFTER GOING THROUGH THE REASONS RECORDED BY THE AO, AS AFORESAID. I AM OF THE VIEW THAT AO HAS NOT APPLIED HIS MIND SO AS TO COME TO AN INDEPENDENT CONCLUSION THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED DURING THE YEAR. IN MY VIEW THE REASONS AR E VAGUE AND ARE NOT BASED ON ANY TANGIBLE MATERIAL AS WELL AS ARE NOT ACCEPTABLE IN THE EYES OF LAW. THE AO HAS MECHANICALLY ISSUED NOTICE U/S. 148 OF THE ACT, ON THE BASIS OF INFORMATION ALLEGEDLY RECEIVED BY HIM FROM THE DIRECTORATE OF INCOME TAX (INVEST IGATION), NEW DELHI. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE CASE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, I AM OF THE CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF THE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BA D IN LAW AND DESERVES TO BE QUASHED. MY VIEW IS SUPPORTED BY THE FOLLOWING JUDGMENT/DECISION: - PR. CIT VS. G&G PHARMA INDIA LTD. IN ITA NO.545/2015 DATED 8.10.2015 OF THE DELHI HIGH COURT WHEREIN THE HONHLE COURT HAS ADJUDICATED THE ISSUE AS UNDER: - 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENTRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10 TH FEBRUARY 2003, FROM FOUR ENTITIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE O F INVESTIGATION, THE AO STATED: 'I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM PAGE 7 OF 11 INVESTIGATION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODATION E NTRIES.' THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE AO APPLIED HIS MIND TO THE MATERIALS THAT HE TALKS ABOUT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WE RE PROVIDED IS KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG W ITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER 2004 AND WAS PROCESSED UNDER SECTION 142(2) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: 'IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES'. IN THE CONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SUFFICIENT CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCUSSED HEREINBEFORE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. 13. MR. SAWHNEY TOOK THE COURT THROUGH THE ORDER OF THE CIT(A) TO SHOW HOW THE CIT (A) DISCUSSED THE MATERIALS PRODUCED DURING THE HEARING OF THE APPEAL. THE COURT WOULD LIKE TO OBSERVE THAT THIS IS IN THE NATURE OF A POST MORTEM EXERCISE AFTER THE EVENT OF REOPENING OF THE ASSESSMENT HAS TAKEN PLACE. WHILE THE CIT MAY HAVE PROCEEDED ON THE BASIS THAT THE REOPENING OF THE ASSESSMENT WAS VALID, THIS DOES NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO THE REOPENING OF THE ASSESSMENT, THE AO PAGE 8 OF 11 HAS TO, APPLYING HIS MIND TO THE MATERIALS, CONCLUDE THAT HE HAS REASON TO BELIEV E THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. UNLESS THAT BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED A POST MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT RESCUE AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALIDITY . 14. IN THE CIRCUMSTANCES, THE CONCLUSION REACHED BY THE ITAT CANNOT BE SAID TO BE ERRONEOUS. NO SUBSTANTIAL QUESTION OF LAW ARISES. 15. THE APPEAL IS DISMISSED. 11. IN VIEW OF ABOVE, I AM OF THE CONSIDERED VIEW THAT THE AFORESAID ISSUE IN DISPUTE IS EXACTLY THE SIMILAR AND IDENTICAL TO THE ISSUE INVOLVED IN THE PRESENT APPEAL AND IS SQUARELY COVERED BY THE AFORESAID DECISION OF THE HONTDLE HIGH COURT OF DELHI IN THE CASE OF G&G PHARMA (SUPRA). HENCE, RESPECTFULLY FOLLOWING THE ABOVE PRECEDE NT IN THE CASE OF PR. CIT - 4 VS. G&G PHARMA INDIA LTD. (SUPRA) I DECIDE THE LEGAL ISSUE IN DISPUTE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE AND ACCORDINGLY QUASH THE REASSESSMENT PROCEEDINGS AND ALLOW THE LEGAL ISSUE. SINCE I HAVE ALREADY QUASHED TH E REASSESSMENT PROCEEDINGS, AS AFORESAID, THE OTHER ISSUES ARE NOT BEING DEALT WITH BEING ACADEMIC IN NATURE. 12. AS FAR AS ITA NO. 3868/DEL/2016 (AY 2003 - 04) IS CONCERNED, FOLLOWING THE CONSISTENT VIEW AS TAKEN IN ITA NO. 3895/DEL/2016 (AY 2003 - 04), AS A FORESAID, THE ITA NO. 3868/DEL/2016 (AY 2003 - 04) - TITLE SH. VIPIN AHUJA VS. ITO FILED BY THE ASSESSEE ALSO STANDS ALLOWED. 13. IN THE RESULT, BOTH THE ASSESSEE S APPEALS ARE ALLOWED. PAGE 9 OF 11 5. THE LD. COUNSEL FOR THE ASSESSEE PLACED THE REASONS RECORDED WHICH ASSESSEE REPRODUCED HEREIN BELOW: - SH. RANJAN AHUJA, A.Y. 03 - 04 IN THIS CASE AN INFORMATION IS RECEIVED FROM THE O/O THE DIT(INV.) ARA CENTRE JHANDEWALAN EXTN . NEW DELHI VIDE OFFICE LETTER NO. DIT (INV.)/1/2006 - 07/ASSESSEE/1543 DATED 5.2.2007 THAT SH. RANJAN AHUJA HAS TAKEN BOGUS ACCOMMODATION ENTRIES FROM THE FOLLOWING PARTIES IN LIEU OF UNACCOUNTED MONEY PAID BY THE ABOVE NAMED ASSESSEE. AS PER ANNEXURE ENCL OSED WITH THE ABOVE LETTER OF DIT (INV. UNI - I), NEW DELHI DATED 5.2.2007 THE DETAIL OF TRANSACTION MADE BY THE ABOVE ASSESSEE AS UNDER: - DATE AMOUNT CHEUQE NO. NAME OF THE PARTY 17.7.2002 400600 2870 SUDHIR SACHDEVA THE RELEVANT ASSESSMENT YEAR INVOLVED IS 2003 - 04 IN VIEW OF THE ABOVE FACTS I AM SATISFIED THAT SH. RANJAN AHUJA G - 78, ASHOK VIHAR, DELHI HAS CONCEALED HIS INCOME OF RS. 400600/ - FOR TAXATION. SINCE THE AMOUNT INCOME WHICH HAS ESCAPED ASSESEMNT IS MORE 100000/ - , THEREFORE, NOTICE U/S 148 OF THE IT ACT 1961 MAY BE ISSUED. SD/ - NAND LAL INCOME TAX OFFICER PAGE 10 OF 11 WARD 19(2), NEW DELHI 6. THE REASONS RECORDED IN THIS APPEAL ARE IDENTICAL TO THE REASONS RECORDED IN THE CASE OF BINDIYA AHUJA (SUPRA) AND ACCORDINGLY I AM OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND SO AS TO COME TO THE INDEPENDENT CONCLUSION THAT HE HAS REASON TO BELIEVE THAT INCOME ESCAPED ASSESSMENT FOR THE IMPUGNED YEAR HAS ESCAPED ASSESSMENT . THE REASONS ARE VAGUE AND ACCORDINGLY THE ASSESSMENT/ REASSESSMENT SO MADE IS DIRECTED TO BE QUASHED. 7. SINCE THE FACTS IN THE OTHER APPEALS I.E. IN ITA NOS. 3867, 3896 & 3899/D/2016 ARE IDENTICAL , AS MENTIONED HEREIN ABOVE, IN THE CASE OF SH. RANJAN AHUJA IN ITA NO. 3897/D/2016 AND ACCORDINGLY THESE CASES ARE ALSO DIRECTED TO BE QUASHED. THUS ALL GROUNDS OF THE ITA NOS. 3897, 3867, 3896 & 3899/D/2016 ARE ALLOWED. 8 . IN THE RESULT , THE ALL APPEAL S OF THE ASSESSEE ARE ALLOWED. 9 . P RONOUNCED IN THE OPEN COURT ON 0 9 . 0 3 .201 7. S D / - ( B.P. JAIN ) ACCOUNTANT MEMB E R PAGE 11 OF 11 DATED: 0 9 . 0 3 .2017 NARENDER COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT (APPEALS) 5) DR: ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON 8 .0 3 .2017 DRAFT PLACED BEFORE AUTHOR 9 .0 3 .2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 9 .3.2017 KEPT FOR PRONOUNCEMENT ON FILE SENT TO THE BENCH CLERK 9 .3.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.