Bhajan Lal, Delhi V. ITO, Ward- 2 , Narnaul

ITA 3984/DEL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0792 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 16-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Capital asset; Reason to believe
• Section: 142(1); 147; 148; 6

Judgement Text

1 ITA NO. 3984/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC + D NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 3984/DEL/2017 ( A.Y 2007-08) BHAJAN LAL C/O. KAPIL GOEL ADV, F-26/124, SECTOR-7 ROHINI DELHI AHEPL5682J (APPELLANT) VS ITO WARD-2 NARNAUL HARYANA (RESPONDENT) APPELLANT BY SH. KAPIL GOEL, ADV RESPONDENT BY SH. SURENDER PAL, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 27/01/2016 PASSED BY CIT (APPEALS)- ROHTAK FOR ASSESSMENT YEA R 2007-08. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT NOTICE ISSUED U/S 148, SUBSEQUENT ORDER PA SSED U/S 147, IMPUGNED ORDER PASSED BY CIT(APPEALS) ALL ARE BAD IN LAW, BE CAUSE OF NON - FULFILLMENT OF MANDATORY JURISDICTIONAL CONDITIONS SPECIFIED UN DER THE ACT. 1.1 THAT ORDERS PASSED BY AO AND CIT(APPEALS) ARE B AD IN LAW, BEING BASED ON INVALID REASONS WHICH IN TURN ARE BASED ON MERE CASH DEPOSIT WITHOUT DATE OF HEARING 19.09.2018 DATE OF PRONOUNCEMENT 20.09.2018 2 ITA NO. 3984/DEL/2017 ANYTHING MORE. 1.2. THAT ORDERS PASSED BY AO AND CIT(APPEALS) ARE BAD IN LAW, BECAUSE AFTER RETURN FILING NO VALID NOTICE U/S 143 (2) IS ISSUED, AS EVIDENT FROM PARA - 3 OF THE IMPUGNED ORDER. 1.3. THAT ORDERS PASSED BY AO AND CIT(APPEALS) ARE BAD IN LAW, BECAUSE THERE IS NO VALID EXERCISE OF JURISDICTION BY ASSESSING OFFICER WHO HAS PASSED THE FINAL ORDER (ITO, WARD-2, NARNAUL), AS R EASONS ARE RECORDED BY ITO, WARD-2, REWARI AND NOTICE U/S 148 IS ALSO ISSU ED BY ITO, WARD-2, REWARI. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD. CIT(APPEALS) ERRED IN SUSTAINING THE ADDITIONS MADE BY THE AO AMOUNTING TO RS. 19,00,000/- U/S 69A OF THE INCOME TAX ACT, BEIN G ALLEGED UNEXPLAINED DEPOSIT. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LD. AO AND LD. CITA MADE EGREGIOUS ERROR IN MAKING AND CON FIRMING OF THE ADDITION OF RS. 18,17,621/- AS PER PARA-5 OF THE ASSESSMENT ORDER, WHICH NEITHER FORMS PART OF REASONS RECORDED U/S 148, FOR WHICH N O SEPARATE NOTICE U/S 148 IS ISSUED AND SAME IS EVEN NOT SUSTAINABLE ON MERIT S. 3. NOTICE U/S 148 FOR A.Y. 2007-08 WAS ISSUED TO TH E ASSESSEE ON 16.03.2012 BY THE INCOME TAX OFFICER, WARD-2, REWAR I HAVING TERRITORIAL JURISDICTION TO THE ASSESS THE INCOME OF THE ASSESS EE AFTER RECORDING THE FOLLOWING REASONS: AS PER AIR INFORMATION FOR THE F.Y. 2006-07 RECEIV ED IN THIS OFFICE THE ASSESSEE HAS MADE CASH DEPOSITS OF RS. 19,00,000/- IN HIS BANK ACCOUNT 3 ITA NO. 3984/DEL/2017 WITH PUNJAB NATIONAL BANK REWARI. A QUERY NOTICE WA S ISSUED TO THE ASSESSEE ON 24.01.2012. BUT NO RESPONSE HAS BEEN RE CEIVED FROM THE ASSESSEE. I, THEREFORE, HAVE REASON TO BELIEVE THAT THE ASSE SSEE HAS DEPOSITED CASH IN HIS BANK ACCOUNT OUT OF HIS INCOME FROM UNEXPLAINED SOURCES. ACCORDINGLY INCOME TO THE EXTENT OF RS. 19,00,000/- AND ANY OTH ER INCOME WHICH SUBSEQUENTLY COMES TO THE NOTICE OF THE UNDERSIGNED HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961. ISSUE NOTICE U/S 148 OF I. T. ACT, 1961 FOR THE ASSESSMENT YEAR 2007-08. SD/- (O. P. PUNIA) INCOME-TAX OFFICER, WARD-2, REWARI. IN RESPONSE TO NOTICE U/S 148, NO RETURN OF INCOME WAS FILED BY THE ASSESSEE. AGAIN NOTICE U/S 142(1) WAS ISSUED ON 17.08.2012 AS KING THE ASSESSEE TO FILE HIS RETURN OF INCOME BUT NO RETURN WAS FILED IN COM PLIANCE TO THIS NOTICE ALSO AND ONLY POWER OF ATTORNEY OF THE ADVOCATE WAS FILE D. LATER ON THE JURISDICTION OF THE CASE WAS ASSIGNED TO THE INCOME TAX OFFICER, WA RD-2, NARNAUL BY THE JOINT COMMISSIONER OF INCOME TAX, REWARI RANGE, REWARI VI DE OFFICE ORDER DATED 04.02.2013. NOTICE U/S 142(1) CALLING THE RETURN OF INCOME ALONG WITH QUERY LETTER WAS ISSUED FOR 15.02.2013 AND IN RESPONSE TO THIS ASSESSMENT PROCEEDINGS WERE ATTENDED BY THE COUNSEL OF THE ASS ESSEE BUT NO RETURN OF INCOME WAS FILED. BUT AFTERWARDS RETURN OF INCOME D ECLARING NIL INCOME WAS FILED AS WELL AS WRITTEN REPLIES WERE FILED BY THE ASSESSEES COUNSEL. THE ASSESSING OFFICER OBSERVED THAT AS PER INFORMATION AVAILABLE ON RECORD, THE ASSESSEE MADE CASH DEPOSIT OF RS. 12,50,000/- ON 08 .05.2006 AND RS. 6,50,000/- ON 11.05.2006 IN HIS BANK ACCOUNT MAINTA INED WITH BRANCH OFFICE ATELI. THE ASSESSEE WAS ASKED A QUERY DATED 06.02.2 013 AS TO EXPLAIN THE SOURCE OF THESE CASH DEPOSITS WITH DOCUMENTARY EVID ENCE. THE ASSESSEE VIDE REPLY DATED 11.03.2013 SUBMITTED THAT THE DEPOSIT I N THE BANK ACCOUNT WAS OUT OF THE CASH RECEIVED FROM THE AGREEMENT TO SALE . THE ASSESSING OFFICER REJECTED THE PLEA OF THE ASSESSEE ON THE GROUND THA T NO SALE DEEDS OF THE LAND 4 ITA NO. 3984/DEL/2017 WAS EXECUTED TILL DATE FOR WHICH ALLEGED AGREEMENTS WERE MADE. THE ASSESSING OFFICER OBSERVED THAT AS PER MATERIAL AVAILABLE ON RECORD DURING THE F.Y. 2006-7 RELEVANT TO A.Y. 2007-08, THE ASSESSEE SOLD HIS SHA RE OF AGRICULTURAL LAND SITUATED IN THE REVENUE ESTATE OF VII-PADIYAWAS FOR RS. 19,06,250/-. THE ASSESSING OFFICER HELD THAT THE LAND SOLD BY THE AS SESSEE IS COVERED IN THE DEFINITION OF CAPITAL ASSETS IN VIEW OF THE NOTIFIC ATION ISSUED BY CBDT ON 06.01.1994 F.NO. 164/03/87ITAI, HENCE LAND IN QUEST ION IS LIABLE TO CAPITAL GAIN. THUS, THE ASSESSING OFFICER MADE AN ADDITION OF RS. 18,17,621 AS CAPITAL GAIN OF THE ASSESSEE. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT ON IDENTICAL I.E. EXAC T WORDINGS THE REASONS RECORDED IN THE PRESENT CASE HAS BEEN DEALT BY THE TRIBUNAL IN CASE OF KRISHAN KUMAR VS. ITO (ITA NO. 3985/DEL/2017 A.Y. 2007-08 D ATED 15.12.2017) WHEREIN THE APPEAL OF THE ASSESSEE IS ALLOWED AS RE ASSESSMENT PROCEEDINGS INITIATED BY THE AO ARE HELD TO BE VOID. THEREFORE, THE LD. AR SUBMITTED THAT ON THE LEGAL GROUND ITSELF THE APPEAL BE ALLOWED. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AS W ELL AS THE ORDER OF THE CIT(A), BUT COULD NOT DISTINGUISH THE FACTS OF THE CASE DECIDED BY THE TRIBUNAL IN CASE OF KRISHAN KUMAR (SUPRA). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE HERE T HAT THE FACTS OF THE CASE IN CASE OF KRISHAN KUMAR (SUPRA) AND IN THE PRESENT CASE AR E IDENTICAL IN NATURE. IN FACT, THE FIGURES OF AMOUNT, BANK NAME AND THE NOTI CE ISSUING DATE ARE EXACTLY THE SAME AS WELL AS THE ASSESSMENT YEAR IS ALSO THE SAME. THE LD. DR ALSO COULD NOT POINT OUT ANY DISTINGUISHING FACTOR WITH THE ORDER OF THE TRIBUNAL IN CASE OF KRISHAN KUMAR AND IN PRESENT ASSESSEES CAS E. THE TRIBUNAL HELD AS UNDER: 5 ITA NO. 3984/DEL/2017 9. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND LD. CIT(A) AND THE PAPERBO OK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VARIOUS DE CISIONS CITED BEFORE ME. A PERUSAL OF THE REASONS RECORDED BY THE AO AS REPR ODUCED BY HIM IN THE ASSESSMENT ORDER SHOWS THAT THE REOPENING WAS MADE ON ACCOUNT OF CASH DEPOSIT OF RS. 19 LAKH IN THE BANK ACCOUNT OF THE A SSESSEE. HOWEVER, THE AO IN THE ASSESSMENT ORDER HAS MADE ADDITION OF RS. 36,26,500/- ON ACCOUNT OF CAPITAL GAIN AND INTEREST INCOME. THUS, THERE IS NO ADDITION ON ACCOUNT OF WHICH THE ASSESSMENT WAS REOPENED BY ISS UE OF NOTICE U/S 148 OF THE I.T. ACT. HONBLE DELHI HIGH COURT IN THE CA SE OF 6 ITA NO. 3985/DEL/2017 RANBAXY LABORATORY LTD., VS CIT(SUPRA ) HAS HELD THAT THE ASSESSING OFFICER HAS THE JURISDICTION TO REASSESS THE ISSUES OTHER THAN ISSUES IN RESPECT OF WHICH PROCEEDINGS WERE INITIAT ED. BUT HE WAS NOT JUSTIFIED WHEN THE REASONS FOR THE INITIATION OF TH OSE PROCEEDINGS SEIZED TO SURVIVE. SINCE, IN THE INSTANT CASE, THERE WAS NO A DDITION MADE IN THE ASSESSMENT ORDER ON ACCOUNT OF WHICH THE ASSESSMENT WAS REOPENED BUT SOME OTHER ADDITIONS HAVE BEEN MADE BY THE AO, THER EFORE, THE AO DOES NOT HAVE JURISDICTION TO MAKE SUCH OTHER ADDITIONS IN ABSENCE OF ANY ADDITION MADE FOR WHICH THE ASSESSMENT WAS RE-OPENE D IN THE LIGHT OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORY LTD. (SUPRA). THEREFORE, THE RE-ASSESSMENT PROCEEDI NGS HAVE TO BE QUASHED. 10. EVEN OTHERWISE, ALSO THE REOPENING WAS MADE ON THE BASIS OF AIR INFORMATION RECEIVED THAT THE ASSESSEE HAS MADE CAS H DEPOSIT OF RS. 19 LAKHS. I FIND IDENTICAL ISSUE HAD COME UP BEFORE TH IS BENCH OF THE TRIBUNAL IN THE CASE OF MAHAVIR PRASAD (SUPRA). THE TRIBUNAL VIDE ITA NO. 924/DEL/2015 ORDER DATED 09.10.2017 FOR ASSESSMENT YEAR 2007-08 HAD QUASHED SUCH RE-ASSESSMENT PROCEEDINGS BY OBSERVING AS UNDER: 9. AFTER GOING THROUGH THE REASONS RECORDED BY THE ITO, WARD-2, REWARI, AM OF THE VIEW THAT THERE IS NO NEXUS BETWE EN THE PRIMA FACIE INFERENCE ARRIVED IN THE REASONS RECORDED AND INFORMATION; THE INFORMATION WAS RESTRICTED TO CASH DEPOSITS IN BANK ACCOUNT BUT THERE WAS NO MATERIAL MUCH LESS TANGIBLE, CREDIBLE, COGENT AND RELEVANT MATERIAL TO FORM A REASON TO BELIEVE THAT CASH DEPOSITS REPRESENTED INCOME OF THE ASSESSEE; THAT EVEN THE C OMMUNICATION DATED 24.1.2012 COULD NOT BE MADE A BASIS TO ASSUME JURISDICTION IN VIEW OF THE FACT THAT SUCH AN ENQUIRY LETTER IS AN ILLEGAL ENQUIRY LETTER AND THUS CANNOT BE RELIED UPON; THAT THE PROCEEDING S INITIATED ARE BASED ON SURMISES, CONJECTURES AND SUSPICION AND TH EREFORE, 7 ITA 6 ITA NO. 3984/DEL/2017 NO. 3985/DEL/2017 THE SAME ARE WITHOUT JURISDICTION ; THAT THE REASONS RECORDED ARE HIGHLY VAGUE, FAR-FETCHED AND CANNOT BY ANY STRETCH OF IMAGINATION LEAD TO CONCLUSION OF ESCAPE MENT OF INCOME AND THESE ARE MERELY PRESUMPTION IN NATURE; THAT IT IS A CASE OF MECHANICAL ACTION ON THE PART OF THE AO AS THERE IS NON-APPLICATION OF MIND MUCH LESS INDEPENDENT APPLICATION OF MIND S O AS TO SHOW THAT HE FORMED AN OPINION BASED ON ANY MATERIAL THA T SUCH DEPOSITS REPRESENTED INCOME. KEEPING IN VIEW THE FACTS AND C IRCUMSTANCES OF THE PRESENT CASE AND THE CASE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, I AM OF THE CONSIDERED VIEW THAT THE REOP ENING IN THE CASE OF THE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS B AD IN LAW AND DESERVES TOBE QUASHED. 11. IN VIEW OF THE ABOVE DISCUSSION, THE REASSESSME NT PROCEEDINGS INITIATED BY THE AO ARE HELD TO BE VOID. SINCE ASSE SSEE SUCCEEDS ON THIS LEGAL GROUND I.E. VALIDITY OF REASSESSMENT PROCEEDI NG, THEREFORE, GROUNDS ON MERIT BECOME ACADEMIC IN NATURE AND THEREFORE AR E NOT BEING ADJUDICATED. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THUS, THE ISSUE CONTESTED HEREIN IS IDENTICAL IN THE PRESENT APPEAL. THUS, THE ASSESSEE SUCCEEDS IN THE LEGAL GROUND REGARDING VALIDITY OF REASSESSMENT PROCEEDING, THEREFORE, WE ARE NOT ADJUDICATING THE GROUNDS ON MERIT AS THE SAME BECOMES ACADEMIC IN NATURE. THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20TH SEPTEM BER, 2018. SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 20/09/2018 R.N* COPY FORWARDED TO: 7 ITA NO. 3984/DEL/2017 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 19.09.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19.09.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 20 .09.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 20 .09.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20 .09.2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER