Smt. Alka Bhadur, Bhopal V. The ACIT, Bhopal

ITA 400/IND/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0028 (ITAT-INDORE)
• Duration Of Justice: 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-08-2009
• Assessment Year: 1997-1998
• Appeal Filed On: 03-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: R N GUPTA
• Keywords: Reopening of assessment; Reason to believe
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE (S.M.C.-I) BENCH : INDORE BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER PAN NUMBER AEDPB7779J I.T.A.NOS.400 TO 402/IND/2009 A.YS. : 1997-98, 1998-99 & 1999-2000 SMT.ALKA BAHADUR, ASSISTANT COMMISSIONER OF INCOME-TAX, C/O SHRI SATYENDRA BAHADUR, VS. 1(1), CHIEF CONSERVATOR OF FOREST, BHOPAL. C/O SHRI R.N. GUPTA, CHARTERED ACCOUNTANT, 6, NEW MARKET (1 ST FLOOR), T.T.NAGAR, BHOPAL. APPELLANT BY : SHRI R.N.GUPTA, C.A. RESPONDENT BY : SMT. APARNA KARAN, ADDL. CIT DR O R D E R ALL THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINS T THE ORDER OF CIT(A)-I, BHOPAL, DATED 22 ND MAY, 2009, FOR ASSESSMENT YEARS 1997- 98,19998-99 AND 1999-2000. - :2: - 2 2. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PA RTIES, GONE THROUGH THE MATERIAL AVAILABLE ON RECORD AND P ERUSED THE FINDINGS OF THE AUTHORITIES BELOW. THE APPEALS ARE DECIDED AS UNDER. I.T.A.NO. 400/IND/2009 : (A.Y.1997-98 ) : 3. THE ASSESSEE DID NOT FILE RETURN OF INCOME IN THE ASSESSMENT YEAR 1997-98. PROCEEDINGS U/S 148 WERE I NITIATED BY RECORDING REASONS FOR REOPENING ON 18 TH MARCH, 2004. THE A.O. COMPUTED TAXABLE INCOME OF THE ASSESSEE AT RS. 2,32 ,153/-. DETAILS OF THE SAME ARE GIVEN AT PB-18. THE LD. CIT(A) DISM ISSED THE APPEAL OF THE ASSESSEE ON MERITS AS WELL AS CONFIRM ED THE REOPENING OF THE ASSESSMENT IN THE MATTER. 4. ON THE ISSUE OF THE RE-ASSESSMENT, THE LEARNED COUN SEL FOR THE ASSESSEE REFERRED TO PB-13, WHICH ARE REASONS F OR REOPENING OF THE ASSESSMENT AND SUBMITTED THAT PB-53 IS THE LETT ER, WHICH WAS FILED BEFORE THE A.O. TO SHOW THAT THERE WAS NO TAX ABLE IN THE ASSESSMENT YEAR UNDER APPEAL AS WELL AS IN THE EARL IER YEARS. HE HAS SUBMITTED THAT REASONS WERE RECORDED ON 18 TH MARCH, 2004, FOR REOPENING THE ASSESSMENT I.E. ABOUT SIX YEARS FROM THE END OF THE - :3: - 3 RELEVANT ASSESSMENT YEAR. THEREFORE, THE PROVISIONS OF SECTION 149(1)(B) OF THE ACT WOULD APPLY. HE HAS SUBMITTED THAT THERE WAS NO DEFINITE OR RELEVANT MATERIAL AVAILABLE ON RECOR D FOR THE A.O. TO RECORD REASONS FOR BELIEF THAT INCOME CHARGEABLE TO TAX MORE THAN RS.1 LAKH OR MORE HAS ESCAPED ASSESSMENT. HE HAS SU BMITTED THAT REASONS ARE BASED UPON INCORRECT FACTS AND ESTIMATE ONLY AND MERE CONJECTURES AND SURMISES. THEREFORE, REOPENING OF T HE ASSESSMENT IS INVALID. HE HAS RELIED UPON THE DECISION OF THE HON BLE M.P.HIGH COURT IN THE CASE OF ARJUN SINGH VS. ASSISTANT DIRE CTOR OF INCOME- TAX, 246 ITR 363, IN WHICH IT WAS HELD THE MATERIA L UNDER THE LAW, WHICH CAN BE THE BASIS FOR REASON TO BELIEF SHOULD BE SUCH MATERIAL, WHICH ARE DEFINITE, PRECISE, BASED ON SOLID FACTUAL FOUNDATION AND NOT MERELY HEAR SAY, GOSSIP, SURMISES AND CONJECTURES. HE HAS RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN T HE CASE OF ITO VS. LAKHMANI MEWAL DAS, (1976) 103 ITR 437, IN WHIC H IT WAS HELD AS UNDER :- THE REASONS FOR THE FORMATION OF THE BELIEF CONTEMPLATED BY SECTION 147(A) OF THE INCOME-TAX AC T, - :4: - 4 1961, FOR THE REOPENING OF AN ASSESSMENT MUST HAVE A RATIONAL CONNECTION OR RELEVANT BEARING ON THE FORM ATION OF THE BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MA TERIAL COMING TO THE NOTICE OF THE INCOME-TAX OFFICER AND THE FORMATION OF THE BELIEF THAT THERE HAS BEEN ESCAPEM ENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IT IS NO DOUBT TRUE T HAT THE COURT CANNOT GO INTO THE SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTITUTE ITS OWN OPINION FOR THAT OF THE ITO ON THE POINT AS TO WHETHER ACTION SHOULD BE INI TIATED FOR REOPENING THE ASSESSMENT. AT THE SAME TIME WE H AVE TO BEAR IN MIND THAT IT IS NOT ANY AND EVERY MATERI AL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT, REMOTE A ND FAR-FETCHED, WHICH WOULD WARRANT THE FORMATION OF T HE BELIEF RELATING TO ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT. - :5: - 5 5. HE HAS RELIED UPON THE DECISION OF THE HON'BLE SUPR EME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STONE BROKERS PRIVATE LIMITED, 291 ITR 500, IN WHICH IT WAS HELD THAT AT THE INITIAL STAGE WHAT IS REQUIRED IS REASON TO BELIEF BUT NOT THE ES TABLISHED FACT OF ASSESSMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTI CE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON WOULD HAVE FORMED A REQUISITE BEL IEF. HE HAS ALSO RELIED UPON THE ORDER OF THE TRIBUNAL IN THE CASE O F THE ACIT VS. O.P.CHAWLA, 306 AT (TM) 329, IN WHICH IT WAS HELD T HAT IF THE A.O. HAS NO SUCH MATERIAL OR EVIDENCE AND MERELY WANTS B Y HIS IPSI DIXIT TO TAKE A RETURN FOR FURTHER PROOF, IT WILL BE A CA SE FOR REASON TO SUSPECT. HE HAS ALSO RELIED UPON THE ORDER OF I.T.A .T., INDORE BENCH IN THE CASE OF K.J.AGENCIES, 8 ITJ 593 IN WHICH IT HAS BEEN HELD THAT REASONS RECORDED WERE MERELY BASED ON SUSPICION, GO SSIP, RUMOUR, WITHOUT ANY MATERIAL RELATING TO THE ASSESSMENT YEA R IN QUESTION CAPABLE OF GIVING RISE TO INFERENCE OF ESCAPEMENT O F INCOME AND, THEREFORE, HELD THAT REASSESSMENT, IS NOT PERMISSIB LE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN THIS CASE NOTICE WAS - :6: - 6 ISSUED AFTER FOUR YEARS FROM THE END OF THE RELEVAN T ASSESSMENT YEAR. THEREFORE, THE ISSUE OF NOTICE IS PERMISSIBLE ONLY WHEN THE INCOME ESCAPED ASSESSMENT IS LIKELY TO AMOUNT RS. 1 LAKH O R MORE FOR THAT YEAR. IN THE CASE OF THE ASSESSEE, THERE IS NO ESCA PEMENT OF INCOME, WHICH WAS RS. 1 LAKH OR MORE AS PER THE REASONS. TH E A.O. VAGUELY ESTIMATED THE INCOME WITHOUT ANY MATERIAL TO BRING THE CASE OF THE ASSESSEE WITH RS. 1 LAKH OR MORE. HE HAS FURTHER SU BMITTED THAT NO REOPENING IS PERMISSIBLE FOR VERIFICATION OF INFORM ATION OR MAKING INQUIRY AND THAT CERTAIN ITEMS ARE NON-EXISTENT AND FACTUALLY INCORRECT, WHICH ARE DEMONSTRATED BY HIM BY REFERRI NG TO PB-9 TO 12 OF THE PAPER BOOK TO SHOW THAT THE A.O. HAS RECO RDED WRONG REASONS FOR REOPENING OF THE ASSESSMENT. HE HAS REL IED UPON THE DECISIONS OF HONBLE PUNJAB & HARYANA HIGH COURT I N THE CASE OF CIT VS. ATLAS CYCLE INDUSTRIES, 180 ITR 319. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE SUBMITTED THAT IN THE ASSESSMENT YEAR 2003-04, A.O. HAS SPECIFIC MATERIAL WITH HIM TO SHOW THAT INCOME ESCAPED ASSES SMENT, WHICH WAS MORE THAN RS. 1 LAKH. THEREFORE, THE A.O. RIGHT LY INVOKED THE - :7: - 7 JURISDICTION U/S 147/148 OF THE INCOME-TAX ACT, 196 1, AND CORRECTLY REOPENED THE ASSESSMENT. THE LD. DEPARTMENTAL REPRE SENTATIVE ALSO RELIED UPON THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PRIVATE LIMIT ED, 291 ITR 500. 7. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SECTION 147 AUTHORIZES THE A.O. TO ASSESS OR RE-ASSESS THE INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FROM ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORDS REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATI ON. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN THE C ASE OF THE ASSESSEE SINCE SPECIFIC MATERIAL WAS WITH THE A.O. THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THEREFORE , THE A.O. HAS CAUSE OR JUSTIFICATION TO REOPEN THE ASSESSMENT IN THE MATTER AND THE LD. CIT(A) CORRECTLY REJECTED THE SUBMISSION OF THE ASSESSEE. 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MATERIA L AVAILABLE ON RECORD. THE ASSESSEE HAS FILED COPY OF THE REASONS RECORDED U/S 147/148 OF THE INCOME-TAX ACT, 1961, D ATED 18 TH MARCH, - :8: - 8 2004, IN THE PAPER BOOK AT PAGE 13. IT IS NECESSARY TO PRODUCE THE REASONS FOR REOPENING THE ASSESSMENT IN ORDER TO DE CIDE THE ISSUE. THE SAME IS REPRODUCED AS UNDER : (I) THE ASSESSEE HAS FILED RETURN FOR THE ASSESSMENT YE AR 2003-04 SHOWING TOTAL INCOME OF RS. 77,149/-. THE SOURCE OF INCOME AS PER DETAILS ENCLOSED IS SAID TO BE RS. 60,000/- FROM TUITION AND RS. 7624/- COMMISSION INCOME FROM SAHARA INDIA. THERE ARE TWO LIC PREMIUM RECEIPT ENCLOSED WITH THE RETURN ONE IN THE NAME OF SMT. ALKA BAHADUR AND THE OTHER IN THE NAME OF SMT. ALKA SHRIVASTAVA AND THE ADDRESS HAS BEEN MENTIONED AS C/O SHRI LOKESH GARG. OPP. STADIUM, CHHATARPUR. THE POLICY NO. IS 380968158 WHICH HAS BEEN COMMENCED FROM 1993 FOR PREMIUM OF RS. 4565/- YEARLY. WHILE THE OTHER POLICY NO. IS 375040477 AND HAS COMMENCED FROM 28.8.1995 FOR A PREMIUM OF RS. 4048/-. THE SUM ASSURED IN BOTH THE CASES ARE FOR RS. 50,000/- EACH. THE AMOUNT OF INSURANCE PREMIUM PAID DURING THE FINANCIAL YEAR 1996-97 RELEVANT TO ASSESSMENT YEAR 1997-98 THEREFORE WORKS OUT TO RS. 8613/-. (II) THE SAVING BANK A/C NO.1190005346 WITH STATE BANK OF INDIA, REWA IN THE NAME OF ALKA SHRIVASTAVA ( - :9: - 9 BAHADUR ) SHOWS A SUM OF RS. 63,233/- AS THE BALANC E BROUGHT FORWARDED AS ON 27.9.1997 FROM LEDGER 084 OLDA/C NO. 055838 WHICH IS EVIDENT WITH THE FACT TH AT DURING THE YEAR UNDER CONSIDERATION RELEVANT TO 19 97- 98 THE ASSESSEE HAD OPERATED THIS A/C IN WHICH DEPOSITS HAD BEEN MADE. THE ESTIMATED DEPOSIT OF RS . 50,000/- SUBJECT TO FURNISHING OF PARTICULARS BY TH E ASSESSEE CAN BE ATTRIBUTED FOR THE FINANCIAL YEAR 1 996- 97. (III) THERE IS ANOTHER DEPOSIT OF RS. 25,000/- ON 31.1.19 97 WITH M/S. SAHARA INDIA A/C NO. 15445002752. (IV) BESIDES, THE ASSESSEE HAD BEEN IN POSSESSION OF STD R NO.3924 VIDE A/C NO. 1292005710 FOR RS. 25,000/-. BESIDES ANOTHER A/C 55540 HAD BEEN TRANSFERRED TO KHANDWA ON 23.10.2001 AND THEREFORE WAS OPERATED/INVESTED PRIOR TO OCT 2001. THIS ALSO NEED S TO BE INVESTIGATED. THE SON AND THE DAUGHTERS OF TH E ASSESSEE WERE STUDYING IN FIFTH AND SECOND CLASS IN ENGLISH MEDIUM SCHOOL FOR WHICH THE DETAILS OF EXPENSES CAN BE ATTRIBUTED AS APPROXIMATELY RS. 40,000/-. (V) IN THE RETURN FOR ASSESSMENT YEAR 2003-04, THERE HA S BEEN NO EVIDENCE FOR EARNING INCOME OF RS. 60,000/- . BESIDES THE HUSBAND OF ASSESSEE SHRI SATYENDRA HAD - :10: - 10 TRIED TO EXPLAIN SOME OF THE ASSETS IN HIS NAME AS INVESTED MADE BY HIS WIFE SMT.ALKA BAHADUR, NAMELY PLOT OF LAND 2400 SQ.FT. AT CHHATARPUR PURCHASED IN YEAR 1995 FOR WHICH NO EVIDENCE OF SOURCE OR EVEN THE YEAR OF PAYMENT IS AVAILABLE AND THE SAME ALSO APPARENTLY INVESTED IN THE YEAR 1996-97. (VI) THE TELEPHONE NO. 2772734 AND THE MOBILE NO. 9425010104 ARE PRESENTLY IN THE NAME OF THE ASSESSE E AND THE EXPENDITURE INCURRED ON TELEPHONE/MOBILE PHONE BY THE ASSESSEE IN THE FINANCIAL YEAR 1996-97 , NOR THE SOURCE OF THE SAME HAS BEEN INFORMED BY THE HUSBAND DURING THE COURSE OF EXAMINATION BEFORE THE DDIT(INVESTIGATION ), BHOPAL (VII) BESIDES, THE HOUSE HOLD EXPENSES ARE ESTIMATED AT R S. 50,000/- IN VIEW OF THE STANDARD OF LIVING OF THE ASSESSEE. DURING THE COURSE OF STATEMENT RECORDED ON 3.6.2003 BEFORE THE DDIT (INVESTIGATION), BHOPAL, S HRI SATYENDRA BAHADUR HAD NOT FURNISHED ANY DETAILS OF RETURNS FILED BY SMT. ALKA BAHADUR. - :11: - 11 IN VIEW OF THE FACTS MENTIONED ABOVE I HAVE THEREFORE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE AMOUNTING MORE THAN RS. 1,00,000/- CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT FOR WHICH NO RETURN O F INCOME HAD BEEN FURNISHED BY THE ASSESSEE. THEREFOR E, IN VIEW OF EXPLANATION (2) OF SECTION 147, AND IT IS A LSO TO BE EXAMINED THAT THE INCOME/EXPENDITURE ATTRIBUTABL E TO SMT. ALKA BAHADUR HAS BEEN INCURRED FROM HER DISCLO SED SOURCE OF INCOME OR THE SAME CAN BE ATTRIBUTED TO S HRI SATYENDRA BAHADUR, HUSBAND OF THE ASSESSEE. 9. THE GRIEVANCE OF THE ASSESSEE IS THAT NOTICE U/S 14 8 HAS BEEN ISSUED TO BRING THE CASE OF THE ASSESSEE FOR ESCARP MENT OF ASSESSMENT OF INCOME OF RS. 1 LAKH OR MORE, BECAUSE FOUR YEARS HA VE ALREADY EXPIRED FORM THE END OF THE RELEVANT ASSESSMENT YEAR FROM T HE DATE OF ISSUE OF THE NOTICE. IT IS ADMITTED FACT THAT ASSESSMENT YEAR UN DER APPEAL IS 1997-98 AND REASONS FOR REOPENING OF THE ASSESSMENT HAVE BE EN RECORDED ON 18 TH MARCH, 2004. THEREFORE, THE PROVISIONS OF SECTION 1 49(1)(B) WOULD APPLY IN THIS CASE. THE PROVISIONS OF SECTION 149 OF THE INCOME-TAX ACT, 1961, ARE REPRODUCED AS UNDER :- - :12: - 12 TIME LIMIT FOR NOTICE. 149. [(1) NO NOTICE UNDER SECTION 148 SHALL BE ISSUED FOR THE RELEVANT ASSESSMENT YEAR, [( A ) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER CLAUSE ( B ); ( B ) IF FOUR YEARS, BUT NOT MORE THAN SIX YEARS, HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOUNTS TO OR IS LIKELY TO AMOUNT TO ONE LAKH RUPEES OR MORE FOR THAT YEAR.] EXPLANATION. IN DETERMINING INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT FOR THE PURPOSES OF TH IS SUB-SECTION, THE PROVISIONS OF EXPLANATION 2 OF SECTION 147 SHALL APPLY AS THEY APPLY FOR THE PURPOSES OF THAT SECTION.] - :13: - 13 (2) THE PROVISIONS OF SUB-SECTION (1) AS TO THE ISS UE OF NOTICE SHALL BE SUBJECT TO THE PROVISIONS OF SECTION 151 . (3) IF THE PERSON ON WHOM A NOTICE UNDER SECTION 148 IS TO BE SERVED IS A PERSON TREATED AS THE AGENT OF A NON- RESIDENT UNDER SECTION 163 AND THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION TO BE MADE IN PURSUAN CE OF THE NOTICE IS TO BE MADE ON HIM AS THE AGENT OF SUCH NON-RESIDENT, THE NOTICE SHALL NOT BE ISSUED AFTER THE EXPIRY OF A PERIOD OF TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 10. ON PERUSAL OF THE AFORESAID PROVISIONS WOULD MAKE I T CLEAR THAT THE SUBMISSIONS REGARDING TIME LIMIT FOR ISSUE OF N OTICE U/S 148 OF THE ACT, AS RAISED BY THE ASSESSEE IS CORRECT AND THAT NOTICE U/S 148 OF THE ACT COULD BE ISSUED ONLY IF THE ESCAPED INCOME WAS LIKE LY TO BE MORE THAN RS.1 LAKH. A READING OF THE REASON AS RECORDED BY T HE ASSESSING OFFICER WOULD SHOW THAT ACCORDING TO THE A.O., SOME OF THE ITEMS MENTIONED IN THE REASONS WERE NON-EXISTENT OR DO NOT RELATE TO T HE ASSESSMENT YEAR IN - :14: - 14 QUESTION OR BASED UPON MERE ESTIMATE WITHOUT HAVING ANY MATERIAL WITH HIM. BEFORE PROCEEDING FURTHER, IT WOULD BE RELEVAN T TO DISCUSS EACH ITEM AS UNDER :- I. FOR LIC PAYMENT, IT IS NOT CLARIFIED AS TO WHICH YEAR THE PAYMENTS RELATE. ACCORDING TO THE ASSESSEE, LIC PAYMENTS OF RS. 8613/- WERE MADE BY CHEQUE AS REFLECTED IN THE BANK STATEMENT. II. THE A.O. NOTED THAT THERE IS ESTIMATED DEPOSIT OF RS. 50,000/- IN THE ACCOUNT OF THE ASSESSEE IN FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR, WHICH WAS BASED UPON ENTRIES IN THE PASS BOOK ( PB-22) SHOWING RS. 63,233/- ON 27.9.1997. THE A.O., THUS, WITHOUT ANY BASIS ESTIMATED THE DEPOSIT OF RS. 50,000/-. SUCH ESTIMATE IS WITHOUT ANY MATERIAL. III. REGARDING THE DEPOSIT OF RS. 25,000/- IN SAHARA INDIA ACCOUNT, THE A.O. DOES NOT SAY IT WAS ESCAPED INCOME. - :15: - 15 IV. THE DEPOSIT OF RS. 25,000/- IN S.T.D.R. IN OCTOBER 2001. COPY OF SAME IS FILED IN THE PAPER BOOK OF ASSESSMENT YEAR 1998-99 (P.B.18) SHOW THAT DATE OF INVESTMENT IS 22.9.2000. THEREFORE, AS PER ASSESSEE AND AS PER A.O., THE SAME DO NOT PERTAIN TO THE ASSESSMENT YEAR IN QUESTION. THERE IS FURTHER ESTIMATE OF EDUCATION EXPENSES OF RS. 40,000/- OF THE CHILDREN WITHOUT BRINGING ANY MATERIAL ON RECORD, WHICH IS MERE ASSUMPTION AND PRESUMPTION OF THE A.O.NO MATERIAL IS REFERRED TO AS TO HOW SUCH A WILD ESTIMATE HAD BEEN MADE. V. IT IS BASED UPON RETURN FOR ASSESSMENT YEAR 2003- 04 THAT SOME INVESTMENT IS MADE AT CHHATARPUR. THE A.O. HIMSELF MENTIONED THAT NO EVIDENCE HAD BEEN BROUGHT ON RECORD. IT WAS, THEREFORE, MERE IMAGINATION OF THE A.O. AND WITHOUT ANY SUPPORTING MATERIAL THAT INCOME ESCAPED ASSESSMENT. - :16: - 16 VI. THE A.O. MENTIONED THAT TELEPHONE AND MOBILE PHONE ARE PRESENTLY IN THE NAME OF THE ASSESSEE. MEANING THEREBY, THE SAME DO NOT RELATE TO THE ASSESSMENT YEAR IN QUESTION. ACCORDING TO THE EXPLANATION OF THE ASSESSEE, THERE WAS NO PHONE IN THE ASSESSMENT YEAR IN QUESTION IN THE NAME OF THE ASSESSEE. VII. THE A.O. ESTIMATED HOUSE HOLD EXPENSES AT RS.50,000/-. HOWEVER, ACCORDING TO THE EXPLANATION OF THE ASSESSEE, SHE WAS LIVING WITH HER HUSBAND WAS DEPENDENT UPON HOUSE HOLD EXPENDITURE. 11. CONSIDERING THE ABOVE REASONS RECORDED FOR REOPENIN G OF THE ASSESSMENT IN THE LIGHT OF THE EXPLANATION OF THE A SSESSEE AND OBSERVATIONS NOTED ABOVE, IT IS CLEAR THAT THE A.O. DID NOT BRIN G ANY MATERIAL ON RECORD IN SUPPORT OF THE ABOVE REASONS FOR FORMING HIS BEL IEF THAT INCOME HAS ESCAPED ASSESSMENT, WHICH IS ABOUT RS. 1 LAKH OR MO RE. IT IS, THUS, CLEAR THAT THE A.O. WITHOUT ANY MATERIAL ON RECORD MERELY ON SUSPICION, GOSSIPS OR RUMORS RECORDED THE REASONS IN ORDER TO BRING TH E CASE OF THE ASSESSEE - :17: - 17 FOR ESCAPEMENT OF INCOME OF RS. 1 LAKH OR MORE AND TO JUSTIFY HIS ACTION. HON'BLE SUPREME COURT IN THE CASE OF SHEONATH SINGH , 82 ITR 147, HELD THAT EXISTENCE OF MATERIAL IS NECESSARY ON WHICH BE LIEF OF THE A.O. MUST BE BASED AND IT SHOULD NOT BE MERE SUSPICION, GOSSI P OR RUMOURS. AS NOTED ABOVE, THERE ARE SEVERAL ITEMS, WHICH WERE NO N-EXISTENT OR DO NOT BELONG TO THE ASSESSMENT YEAR IN QUESTION AND THE S AME WERE MERE PRESUMPTIONS OF THE A.O. FOR ESCAPEMENT OF INCOME, OTHERWISE, ACCORDING TO THE REASONS RECORDED ABOVE, THE ESCAPEMENT OF IN COME COULD NOT EXCEED MORE THAN RS. 1 LAKH. THE A.O. COULD BE SATI SFIED WITH THE INCOME ESCAPED ASSESSMENT, BUT HE COULD NOT JUMP TO THE CO NCLUSION THAT THE ESCAPED INCOME WAS LIKELY TO BE RS. 1 LAKH OR MORE UNLESS THERE WERE SOME MATERIAL ON RECORD TO SUPPORT THE REASONS. IT IS SETTLED LAW THAT THERE HAS TO BE A REASONABLE NEXUS BETWEEN THE SATISFACT ION ARRIVED AT BY THE ASSESSING OFFICER WITH THE MATERIAL IN HIS POSSESSI ON REGARDING ESCAPED INCOME. IN THE PRESENT CASE, THERE IS NO SUCH NEXUS , AS THE A.O. DID NOT REFER TO ANY MATERIAL OR ITEM OF ESCAPED ASSESSMENT INCOME IN THE REASONS RECORDED BY HIM. THEREFORE, I AM OF THE VIEW THAT T HE A.O. STATED IN THE REASONS RECORDED THAT ESCAPED INCOME WAS LIKELY TO BE MORE THAN RS. 1 LAKH ONLY WITH A VIEW TO, OVERCOME THE HURDLE OF LI MITATION WHEN THERE - :18: - 18 WAS NO MATERIAL WITH HIM IN SUPPORT OF HIS SATISFAC TION. IT MAY ALSO BE STATED THAT THERE IS NO REFERENCE TO ANY INVESTIGAT ION CARRIED OUT IN THE CASE OF THE ASSESSEE OR ANY EVIDENCE OR MATERIAL COLLECT ED AS A RESULT OF ANY INVESTIGATION CARRIED OUT BY ANY INVESTIGATION AGEN CY WHICH COULD HAVE AFFORDED THE REQUIRED NEXUS OR LIVE LINK OR RATIONA L CONNECTION WITH THE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED AS SESSMENT OF AMOUNT OF RS. 1 LAKH OR MORE. THERE MUST BE SOME BASIS UPON W HICH BELIEF CAN BE BUILT OR FOUNDED. THE A.O. HAD, THUS, ACTED ON THE BASIS OF SUSPICION AND IT COULD NOT BE SAID THAT IT WAS BASED ON BELIEF TH AT INCOME CHARGEABLE TO TAX IN AMOUNT OF RS. 1 LAKH OR MORE ESCAPED AMOUNT. I RELY ON JUDGMENTS OF DELHI HIGH COURT IN THE CASE OF CIT VS. BATRA BH ATTA COMPANY, 220 CTR 531 AND PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. PARAMJIT KAUR, 311 ITR 38. HONBLE PUNJAB & HARYANA HIGH COU RT IN THE CASE OF MOHINDER SINGH MALIK VS. CCIT, (2004) 267 ITR 716 ( P & H) CONSIDERING THE SAME MATTER AND ISSUE HELD, THAT A READING OF THE REASONS AS RECORDED BY THE ASSESSING OFFICER WOULD SHOW THAT, ACCORDING TO HI M, THE ASSESSEE HAD CLAIMED A DEDUCTION OF RS. 87,746/- ON INCENTIVE BONUS WHICH WAS NOT ALLOWABLE IN VIEW OF THE - :19: - 19 JUDGMENT OF THE COURT IN B.M. PARMAR, DEVELOPMENT OFFICER, LIC OF INDIAV. CIT [1999] 235 ITR 679 ( P & H ). IT WAS, THUS, CLEAR THAT IF THE ASSESSEE HAD CLAIME D THIS DEDUCTION WHICH WAS OTHERWISE NOT ALLOWABLE, THE A. O. COULD BE SATISFIED THAT INCOME TO THAT EXTENT HAD E SCAPED ASSESSMENT BUT HE COULD NOT JUMP TO THE CONCLUSION THAT THE ESCAPED INCOME WAS LIKELY TO BE RS. 1 LAKH OR M ORE UNLESS THERE WERE SOME OTHER ITEMS OF ESCAPED INCOM E REFERRED TO IN THE REASONS. THE A.O. STATED IN THE NOTICE THAT THE ESCAPED INCOME WAS LIKELY TO BE MORE THAN RS. 1 LAKH ONLY WITH A VIEW TO OVERCOME THE HURDLE OF LIMITATI ON WHEN THERE WAS NO MATERIAL WITH HIM IN SUPPORT OF THIS SATISFACTION. IN THIS VIEW OF THE MATTER, THE NOTIC E COULD NOT BE SUSTAINED. OBITER DICTA : THE VERY PURPOSE FOR WHICH THE PROVISION OF SANCTION HAS BEEN MADE STANDS FRUSTRAT ED WHEN SUCH SANCTIONS ARE ACCORDED WITHOUT APPLICATIO N OF MIND. THE REASONS RECORDED BY THE ASSESSING OFFICER COULD NOT LEAD TO THE CONCLUSION THAT THE ESCAPED INCOME WAS - :20: - 20 LIKELY TO BE MORE THAN RS. 1 LAKH. IF THE SANCTIONI NG AUTHORITY HAD A LOOK AT THE REASONS, HE WOULD HAVE NOTICED THE FALLACY IN THE ACTION PROPOSED BY THE ASSESSING OFFICER. 12. CONSIDERING THE ABOVE DISCUSSION AND THE CASE LAWS REFERRED TO IN THIS ORDER, I AM OF THE VIEW THAT THE REASONS RE CORDED BY THE ASSESSING OFFICER ARE NOT BASED UPON ANY DEFINITE OR RELIABLE MATERIAL. IT WAS IMAGINATION OF THE A.O. BASED ON NO MATERIAL THAT I NCOME LIKELY TO ESCAPE ASSESSMENT WAS ABOUT RS. 1 LAKH OR MORE. THEREFORE, THE REASONS RECORDED BY THE ASSESSING OFFICER AND THE RESULTANT RE-ASSES SMENT PROCEEDINGS CAN NOT BE SUSTAINED IN LAW. I, ACCORDINGLY, SET-ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH THE RE-ASSESSMENT PROCE EDINGS. 13. SINCE THE RE-ASSESSMENT PROCEEDINGS HAVE BEEN QUASH ED, THEREFORE, THERE IS NO PURPOSE IN CONSIDERING THE A DDITIONS ON MERIT WHICH WOULD BE OF ACADEMIC INTEREST ONLY. 14. AS A RESULT, THE APPEAL OF THE ASSESSEE IN I.T.A.NO . 400/IND/2009 IS ALLOWED. I.T.A.NO. 401/IND/2009 : - :21: - 21 15. IN THIS CASE ALSO, THE ASSESSEE CHALLENGED THE REOP ENING OF THE ASSESSMENT U/S 148 OF THE INCOME-TAX ACT, 1961. THE COPY OF THE REASONS RECORDED U/S 148 DATED 18 TH MARCH, 2004, ARE FILED AT PAGES 8 & 9 OF THE PAPER BOOK, WHICH ARE REPRODUCED AS UNDER :- (I) THE ASSESSEE HAS FILED RETURN FOR THE ASSESSMENT Y EAR 2003-04 SHOWING TOTAL INCOME OF RS. 77,149/-. THE SOURCE OF INCOME AS PER DETAILS ENCLOSED IS SAID TO BE RS. 60,000/- FROM TUITION AND RS. 7624/- COMMISSION INCOME FROM SAHARA INDIA. THERE ARE TWO LIC PREMIUM RECEIPT ENCLOSED WITH THE RETURN ONE IN THE NAME OF SMT. ALKA BAHADUR AND THE OTHER IN THE NAME OF SMT. ALKA SHRIVASTAVA AND THE ADDRESS HAS BEEN MENTIONED AS C/O SHRI LOKESH GARG. OPP. STADIUM, CHHATARPUR. THE POLICY NO. IS 380968158 WHICH HAS BEEN COMMENCED FROM 1993 FOR PREMIUM OF RS. 4565/- YEARLY. WHILE THE OTHER POLICY NO. IS 375040477 AND HAS COMMENCED FROM 28.8.1995 FOR A PREMIUM OF RS. 4048/-. THE SUM ASSURED IN BOTH THE CASES ARE FOR RS. 50,000/- EACH. THE AMOUNT OF INSURANCE PREMIUM PAID DURING THE FINANCIAL YEAR 1996-97 RELEVANT TO ASSESSMENT YEAR 1997-98 THEREFORE WORKS OUT TO RS. 8613/-. - :22: - 22 (II) THE SAVING BANK A/C NO.1190005346 WITH STATE BANK OF INDIA, REWA IN THE NAME OF ALKA SHRIVASTAVA ( BAHADUR ) SHOWS A SUM OF RS. 63,233/- AS THE BALANC E BROUGHT FORWARDED AS ON 27.9.1997 FROM LEDGER 084 OLD A/C NO. 055838 WHICH IS EVIDENT WITH THE FACT T HAT DURING THE YEAR UNDER CONSIDERATION RELEVANT TO 19 97- 98 THE ASSESSEE HAD OPERATED THIS A/C IN WHICH DEPOSITS HAD BEEN MADE. THE DEPOSIT OF RS. 81,413/- ALSO REQUIRES INVESTIGATION SUBJECT TO FURNISHING PARTICULARS BY THE ASSESSEE. (III) THERE IS ANOTHER DEPOSIT OF RS. 40,000/-WITH M/S. SAHARA INDIA A/C NO. 15445002752. (IV) BESIDES, THE ASSESSEE HAD BEEN IN POSSESSION OF STD R NO.3924 VIDE A/C NO. 1292005710 FOR RS. 25,000/-. BESIDES ANOTHER A/C 55540 HAD BEEN TRANSFERRED TO KHANDWA ON 23.10.2001 AND THEREFORE WAS OPERATED/INVESTED PRIOR TO OCT 2001. THIS ALSO NEED S TO INVESTIGATED. THE ACCRUED INTEREST ON THESE FDRS ALSO REQUIRED TO BE CONSIDERED FOR ASSESSMENT IN TH IS YEAR. THE SON AND THE DAUGHTERS OF THE ASSESSEE WER E STUDYING IN FIFTH AND SECOND CLASS ENGLISH MEDIUM SCHOOL FOR WHICH THE DETAILS OF EXPENSES CAN BE ATTRIBUTED AS APPROXIMATELY RS. 40,000/-. - :23: - 23 (V) IN THE RETURN FOR ASSESSMENT YEAR 2003-04, THERE HA S BEEN NO EVIDENCE FOR EARNING INCOME OF RS. 60,000/- . BESIDES THE HUSBAND OF ASSESSEE SHRI SATYENDRA HAD TRIED TO EXPLAIN SOME OF THE ASSETS IN HIS NAME AS INVESTED MADE BY HIS WIFE SMT.ALKA BAHADUR. (VI) THE TELEPHONE NO. 2772734 AND THE MOBILE NO. 9425010104 ARE PRESENTLY IN THE NAME OF THE ASSESSE E AND THE EXPENDITURE INCURRED ON TELEPHONE/MOBILE PHONE BY THE ASSESSEE IN THE FINANCIAL YEAR 1996-97 , NOR THE SOURCE OF THE SAME HAS BEEN INFORMED BY THE HUSBAND DURING THE COURSE OF EXAMINATION BEFORE THE DDIT(INVESTIGATION ), BHOPAL (VII) BESIDES, THE HOUSE HOLD EXPENSES ARE ESTIMATED AT R S. 50,000/- IN VIEW OF THE STANDARD OF LIVING OF THE ASSESSEE. DURING THE COURSE OF STATEMENT RECORDED ON 3/6/2003 BEFORE THE DDIT(INVESTIGATION BHOPAL SHRI SATYENDRA BAHADUR HAD NOT FURNISHED ANY DETAILS OF RETURNS FILED BY SMT.ALKA BAHADUR. IN VIEW OF THE FACTS MENTIONED ABOVE I HAVE THEREFO RE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE AMOUNTING MORE THAN RS. 1,00,000/- CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR WHICH NO RETURN OF INCOM E - :24: - 24 HAD BEEN FURNISHED BY THE ASSESSEE. THEREFORE, IN V IEW OF EXPLANATION (2) OF SECTION 147, AND IT IS ALSO T O BE EXAMINED THAT THE INCOME/EXPENDITURE ATTRIBUTABLE T O SMT. ALKA BAHADUR HAS BEEN INCURRED FROM HER DISCLO SED SOURCE OF INCOME OR THE SAME CAN BE ATTRIBUTED TO S HRI SATYENDRA BAHADUR, HUSBAND OF THE ASSESSEE. 16. IT IS ADMITTED THAT ALL THE REASONS ARE SAME, WHICH ARE CONSIDERED IN PRECEDING ASSESSMENT YEAR 1997-98 ABOVE, EXCEPT THE REASON NO.2. ON THIS REASON, THE A.O. NOTED THAT THE DEPOSIT OF RS. 81413/- REQUIRES INVESTIGATION. THE ASSESSEE FILED TRUE COPY OF THE PASS BOOK AT P.B.14 TO SHOW THAT THERE IS A TOTALING MISTAKE AS NOTED BY T HE ASSESSING OFFICER AT RS. 81,413/-, BECAUSE THE TOTAL OF THE SAME, IN FAC T, IS RS. 31,689/-. 17. THE LD. REPRESENTATIVES OF BOTH THE PARTIES SUBMITT ED THAT THEIR ARGUMENTS ARE SAME AS THEY HAVE ARGUED IN ASSESSMEN T YEAR 1997-98. 18. ON CONSIDERATION OF THE ABOVE, I AM OF THE VIEW, TH E ISSUE IS COVERED BY MY EARLIER ORDER IN I.T.A.NO. 400/IND/20 09, BECAUSE OF ITEMS OF REOPENING OF ASSESSMENT ARE SAME EXCEPT ON REASO N NO.2 IN WHICH ALSO I FIND THERE IS A CONSIDERABLE FORCE IN THE SUBMISS ION OF THE LEARNED - :25: - 25 COUNSEL FOR THE ASSESSEE THAT THE A.O. HAS FACTUALL Y NOTED WRONG FIGURE OF DEPOSIT OF RS. 81,413/-, BECAUSE OF FACT THAT THE S AME IS RS. 31,689/-. THE LD. DEPARTMENTAL REPRESENTATIVE DID NOT OFFER ANY C OMMENT ON THIS FACTUAL ASPECT. THE REOPENING OF THE ASSESSMENT IN THIS CASE IS ALSO NOT IN ACCORDANCE WITH LAW AS IS HELD IN I.T.A.NO. 400/IND /2009. I, ACCORDINGLY, BY FOLLOWING THE EARLIER ORDER IN I.T.A.NO. 400/IND /2009, SET-ASIDE AND QUASH THE ORDERS OF THE AUTHORITIES BELOW ON REOPEN ING OF THE ASSESSMENT. 19. AS A RESULT, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. THERE IS NO PURPOSE TO DECIDE THE APPEAL OF THE ASS ESSEE ON MERIT, BECAUSE OF QUASHMENT OF THE REOPENING PROCEEDINGS. 20. AS A RESULT, THE APPEAL OF THE ASSESSEE IN I.T.A.NO . 401/IND/2009 IS ALLOWED. I.T.A.NO. 402/IND/2009: 21. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS REOPENING OF THE ASSESSMENT IN THIS CASE, BECAUSE REOPENING WAS MADE WITHIN 4 YEARS AT THE END OF THE RELEVANT ASSESSMENT YEAR. THIS GROUN D OF APPEAL OF THE ASSESSEE IS, ACCORDINGLY, DISMISSED. 22. THE A.O. NOTED THAT THE ASSESSEE HAS FILED RETURN O F INCOME SHOWING INCOME OF RS. 39,000/- FROM TUITION AND RS. 26,500/- FROM OTHER - :26: - 26 SOURCES. THE A.O., HOWEVER, COMPUTED THE TOTAL INCO ME AT RS. 95,500/- BY MAKING FUR ADDITION OF RS. 30,000/- ON ACCOUNT O F MATURITY OF FDRS FOR WHICH NO EVIDENCE WAS FILED BEFORE THE A.O. THE LD. CIT(A) DELETED THE ADDITION OF RS. 65,500/- ON ACCOUNT OF TUITION INCOME AND INTEREST INCOME SHOWN IN THE RETURN OF INCOME. HOWEVER, THE ADDITION OF RS. 30,000/- IS MAINTAINED BECAUSE NO EVIDENCE IS FILED EVEN BEFORE THE LD. CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ISSUE IS CONFINED TO THE ADDITION OF RS. 30,000/-. HE HAS AD MITTED THAT NO EVIDENCE IS FILED BEFORE THE AUTHORITIES BELOW TO REBUT THE FINDINGS OF THE AUTHORITIES BELOW. HE HAS SUBMITTED THAT IN CASE THE ADDITION O F RS. 30,000/- IS MAINTAINED BY THE TRIBUNAL, SET OFF OF THE SAME MA Y BE GIVEN IN THE SUBSEQUENT ASSESSMENT YEARS IN WHICH APPEALS OF THE ASSESSEE ARE PENDING. HE HAS ALSO SUBMITTED THAT THE OTHER ITEMS OF THE INCOME, WHICH WERE SHOWN IN THE CASH FLOW CHART MAY ALSO BE MADE AVAILABLE TO THE ASSESSEE IN THE SUBSEQUENT ASSESSMENT YEAR, WHICH H AVE NOT BEEN DISPUTED BY THE AUTHORITIES BELOW. 23. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. - :27: - 27 24. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE ADDITION IS RIGHTLY MADE AND FORMED BY THE AUT HORITIES BELOW IN A SUM OF RS.30,000/-, BECAUSE THE ASSESSEE HAS NOT FILED ANY EVIDENCE TO EXPLAIN THE ABOVE ADDITION BEFORE ANY OF THE AUTHORITIES BE LOW. THE SAME IS THE POSITION BEFORE THE TRIBUNAL. THE ADDITION OF RS. 3 0,000/- IS, THEREFORE, CONFIRMED. HOWEVER, THE ASSESSEE WOULD BE ENTITLED FOR SET-OFF OF THE SAME IN THE SUBSEQUENT YEAR IN ACCORDANCE WITH LAW. 25. AS A RESULT, THE APPEAL OF THE ASSESSEE IN I.T.A.NO . 402/IND/2009 IS DISMISSED. 26. CONSEQUENTLY, THE APPEALS OF THE ASSESSEE IN I.T.A. NOS. 400 & 401/IND/2009 ARE ALLOWED, HOWEVER, THE APPEAL IN I. T.A.NO. 402/IND/2009 IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST, 2009. SD/- BHAVNESH SAINI JUDICIAL MEMBER DATED : 24 TH AUGUST, 2009. CPU* 20218