Sh. Rupesh Kumar, Jalandhar V. The Income Tax Officer, Jalandhar

ITA 402/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8737 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 25-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Assessee Lawyers: P N ARORA
• Keywords: Reassessment proceedings; Borrowed satisfaction
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JALANDH AR ) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NOS.402 & 403 (ASR)/2016 ASSESSMENT YEARS: 2010-11 & 2011-12 SH. RUPESH KUMAR, S/O:- SH. VIJAY KUMAR, 140-SAINIK VIHAR, LANE NO.4 DHILWAN ROAD, RAMA MANDI, JALANDHAR. PAN: ANOPK-3541R VS. INCOME TAX OFFICER, WARD-IV(3) JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P. N. ARORA (ADV.) RESPONDENT BY: SH. BHAWANI SHANKAR (DR.) DATE OF HEARING: 19.01.2017 DATE OF PRONOUNCEMENT: 27.02.20 17 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEALS FILED BY ASSESSEE AGAINST THE SEPARATE ORDERS OF LD. CIT(A), BOTH DATED 01.06.2016 FOR AS ST. YEAR 2010-11 & 2011-12. 2. THE ASSESSEE HAS TAKEN VARIOUS GROUNDS OF APP EAL, HOWEVER, AT THE TIME OF HEARING, THE LD. AR INVITED OUR ATTENTION T O ADDITIONAL GROUNDS OF APPEAL TAKEN IN THESE APPEALS AND IT WAS SUBMITT ED THAT THE ADDITIONAL GROUNDS BEING LEGAL GROUNDS SHOULD BE AD MITTED. ITA NOS.4 02 & 403(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 2 3. THE LD. DR HAD NO OBJECTION TO ADMISSION OF ADDI TIONAL GROUNDS OF APPEAL AND WE FOUND THAT VIDE THESE ADDITIONAL G ROUNDS, THE ASSESSEE HAS RAISED THE ISSUE OF NOTICE U/S 148 OF THE ACT. THEREFORE, KEEPING IN VIEW, THE FACT THAT THE ISSUE RAISED BY ASSESSEE VI DE ADDITIONAL GROUNDS OF APPEAL IS LEGAL IN NATURE AND IS COMING OUT FROM THE FACTS ON RECORD, THEREFORE, KEEPING IN VIEW, THE RATIOS OF JUDGMENT OF HONBLE SUPRME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT 223 ITR 383(SC) , WE ADMITTED THE ADDITIONAL GROUNDS OF APPEAL AND DIRECTED THE LD. AR TO PROCEED WITH HIS ARGUMENTS. 4. THE LD. AR, AT THE OUTSET, INVITED OUR ATTENTION TO THE REASONS RECORDED WHICH WERE PLACED IN (PB-32 &12) RESPECTIV ELY FOR THE ABOVE TWO YEARS. THE LD. AR SUBMITTED THAT ASSESSING OFFI CER HAD RECORDED SIMILAR REASONS FOR REOPENING OF THE CASES AND WHER EIN THE ASSESSING OFFICER HAS NOT MADE HIS INDEPENDENT FINDING REGARD ING THE FACT THAT INCOME HAD ESCAPED ASSESSMENT. THE LD. AR SUBMITTED THAT BEFORE FORMATION OF BELIEF THAT INCOME HAD ESCAPED ASSESSM ENT, THE ASSESSING OFFICER SHOULD HAVE MADE SOME ENQUIRIES AND ON THE BASIS OF THAT ENQUIRY HE SHOULD HAVE ARRIVED AT THE CONCLUSION TH AT SOME INCOME HAD ESCAPED ASSESSMENT. THE LD. AR SUBMITTED THAT HONB LE AMRITSAR BENCH IN A NUMBER OF CASES HAS HELD THAT ASSESSMENT CANNOT BE REOPENED U/S 148 ON THE BASIS OF BORROWED SATISFACT ION. RELIANCE WAS PLACED ON THE CASE LAW OF SH. CHARANJIV LAL AGGARWA L IN ITA NO.598(ASR)/2015, VIDE ORDER DATED 15.09.2016. (II) KARANNVIR VERMA ITA NOS.4 02 & 403(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 3 VS. ITO IN ITA NO.352(ASR)/2014 VIDE ORDER DATED 18 .05.2016. THE LD. AR FURTHER SUBMITTED THAT ALL CASH DEPOSITS IN THE BANK CANNOT BE SAID TO BE INCOME OF THE ASSESSEE AS WAS HELD BY HONBLE ITAT DELHI BENCHES, DELHI, IN THE CASE OF BIR BAHADUR SINGH SI JWALI VS. ITO IN ITA NO.3814/DEL/2011 VIDE ORDER DATED 20.01.2015. IN VI EW OF ABOVE JUDGMENTS, THE LD. AR SUBMITTED THAT THE NOTICES IS SUED U/S 148 WERE ILLEGAL AND THE ASSESSMENT ORDERS PASSED SHOULD BE QUASHED. 5. THE LD. DR, ON THE OTHER HAND, HEAVILY PLACED HI S RELIANCE ON THE ORDER OF AUTHORITIES BELOW AND SUBMITTED THAT ASSES SEE WAS NOT RESPONDING TO THE LETTERS ISSUED BY ASSESSING OFFIC ER AND THEREFORE, IN THE ABSENCE OF NOTICES, THE ASSESSING OFFICER HAD H ELD THE INCOME TO HAVE ESCAPED ASSESSMENT. 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSING O FFICER ON 30.01.2014 HAD RECORDED SIMILAR REASONS FOR REOPENING OF THE C ASES. FOR THE SAKE OF CONVENIENCE REASONS RECORDED BY ASSESSING OFFICER I N ASST. YEAR: 2010- 11 PLACED AT (PB- 32) ARE REPRODUCED BELOW. SHRI RUPESH KUMAR S/0 SHRI VIJAY KUMAR, 140 SAINIK VIHAR, LANE NO. 04, DILWAN ROAD, RAMA MANDI, JALANDHAR CANTT. F.Y. 2009-10 RELEVANT TO THE A.Y. 2010-11 30. 01.2014 INFORMATION IN MY POSSESSION REVEALS THAT THE ASSESSEE HAS MADE CASH DEPOSITS AMOUNTING TO RS.32,74,300/- IN H IS SAVING BANK ACCOUNT WITH IDBI JALANDHAR, DURING THE FINANCIAL Y EAR 2009- 10 RELEVANT TO THE ASSESSMENT YEAR 2010-11. ITA NOS.4 02 & 403(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 4 VERIFICATION LETTER WAS ISSUED TO THE ASSESSEE VIDE THIS OFFICE LETTER NMS/ANOPK3541R/725959/U93 DATED 30.08.2013 T O EXPLAIN THE REASONS FOR NON FURNISHING OF RETURN OF INCOME FOR THE AFORESAID ASSESSMENT YEAR. THE ASSESSEE FAILED TO FILE THE RE TURN OF INCOME/REASONS FOR NON FURNISHING OF RETURN OF INCO ME. AN ANOTHER LETTER DATED 01.01.2014 WAS ISSUED TO THE ASSESSEE AND AGAIN THE ASSESSEE FAILED TO COMPLY THE DIRECTIONS CONTAINED IN THE LETTER. THEREFORE, I HAVE REASONS TO BELIEVE THAT THE ASSES SEE HAS EARNED THE INCOME OF RS. 32,74,300/- DURING THE FINANCIAL YEAR 2009-10 RELEVANT TO THE ASSESSMENT YEAR 2010-11 FROM THE UNDISCLOSED SOURCES AND HE HAS NOTHING TO SAY ABOUT THE TRANSACTIONS IN HIS BA NK ACCOUNT WITH IDBI, JALANDHAR. THE ASSESSEE FAILED TO FILE HIS RE TURN OF INCOME ALTHOUGH HIS TOTAL INCOME IN RESPECT OF WHICH HE IS ASSESSABLE UNDER INCOME TAX ACT, 1961 DURING THE PREVIOUS YEAR EXCEE DED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME TAX. TO BR ING THE INCOME ESCAPED ASSESSMENT TO TAX, PROCEEDING UNDER SECTION 147 OF INCOME TAX ACT, 1961 ARE INITIATED BY ISSUING NOTICE U/S 1 48 OF THE INCOME TAX ACT, 1961. THE PERUSAL OF ABOVE REASONS REVEALS THAT AO HAD N OT APPLIED HIS MIND. THE AO HAS REOPENED THE CASE ON THE BASIS OF BORROWED SATISFACTION WHICH IS NOT PERMISSIBLE UNDER THE LAW . BEFORE ISSUE OF NOTICE FOR REOPENING OF THE CASES, HE SHOULD HAVE C ARRIED OUT SOME ENQUIRIES U/S 131/133 OF THE ACT WHICH HAS NOT BEEN CARRIED OUT. THE ITAT AMRITSAR BENCH IN THE CASE OF SH. CHARANJIV LA L AGGARWAL (SUPRA) VIDE ORDER DATED 15.09.2011 IN ITA NO.598(ASR)/2015 HAS HELD THAT WHILE REOPENING THE CASE THE ASSESSING OFFICER HAS TO MAKE UP HIS ENQUIRIES AND HE CANNOT REOPEN THE CASE ON THE BOR ROWED SATISFACTION. THE HON,BLE ITAT AMRITSAR BENCH HAD FOLLOWED THE EA RLIER ORDER OF ITAT AMRITSAR BENCH IN THE CASE OF MOHD. YUSUF WANIT VS. ITO IN ITA NO.372(ASR)/2009 DATED 06.06.2011. THE REASONS RECO RDED FOR REOPENING THE ASSESSMENT DO NOT SUGGEST ANY INDEPEN DENT APPLICATION OF MIND BY THE AO TO THE MATERIAL BEFORE HIM. IN CI T VS. SFIL STOCK ITA NOS.4 02 & 403(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 5 BROKING LTD. 325 ITR 285, THE HONBLE HIGH COURT H AS HELD TO THE EFFECT THAT WHERE IT IS NOT DISCERNIBLE FROM THE RE ASONS THAT AO HAD INDEPENDENTLY APPLIED HIS MIND TO THE INFORMATION A VAILABLE OR THAT THE AO HAD INDEPENDENTLY ARRIVED AT A BELIEF ON THE BAS IS OF MATERIAL BEFORE HIM THAT INCOME HAD ESCAPED ASSESSMENT, PROCEEDINGS U/S 147/148 OF THE ACT ARE LIABLE TO BE QUASHED. NO DECISION TO TH E CONTRARY HAS BEEN BROUGHT TO THE KNOWLEDGE OF THIS BENCH. WE FURTHER FIND THAT ALL BANK DEPOSITS CAN NOT BE S AID TO BE INCOME OF THE ASSESSEE AS HAS BEEN HELD BY HONBLE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF BIR BAHADUR SINGH SIJWALI V S. ITO IN ITO IN ITA NO. 3814/DEL/2011, VIDE ORDER DATED 20.01.2015. THE OPERATIVE PART OF THE ORDER OF HONBLE DELHI BENCH AS CONTAINED IN PA RA 8 TO 10 IS REPRODUCED BELOW. 8. LET US, IN THE LIGHT OF THIS LEGAL POSITION, RE VERT TO THE FACTS OF THE CASE BEFORE US. ALL THAT THE REASONS RECORDED FOR REOPEN ING INDICATE IS THAT CASH DEPOSITS AGGREGATING TO RS10,24,100 HAVE BEEN MADE IN THE BANK ACCOUNT OF THE ASSESSEE, BUT THE MERE FACT THAT THE SE 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 THA T THE ASSESSEE WAS ENGAGED IN SOME BUSINESS AND THE INCOME FROM SUCH A BUSINESS HAS NOT BEEN RETURNED BY THE ASSESSEE. AS WE DO NOT HAVE TH E LIBERTY TO EXAMINE THESE REASONS ON THE BASIS OF ANY OTHER MATERIAL OR FACT, OTHER THAN THE FACTS SET OUT IN THE REASONS SO RECORDED, IT IS NOT OPEN TO US TO DEAL WITH THE QUESTION AS TO WHETHER THE ASSESSEE COULD BE SA ID TO BE ENGAGED IN ANY BUSINESS; ALL THAT IS TO BE EXAMINED IS WHETHER THE FACT OF THE DEPOSITS, PER SE, IN THE BANK ACCOUNT OF THE ASSESS EE COULD BE BASIS OF HOLDING THE VIEW THAT THE INCOME HAS ESCAPED ASSESS MENT. THE ANSWER, IN OUR HUMBLE UNDERSTANDING, IS IN NEGATIVE. THE AS SESSING OFFICER HAS OPINED THAT AN INCOME OF RS.10,24,100 HAS ESCAPED A SSESSMENT OF INCOME BECAUSE THE ASSESSEE HAS RS.10,24,100 IN HIS BANK ACCOUNT BUT THEN SUCH AN OPINION PROCEEDS ON THE FALLACIOUS ASS UMPTION THAT THE BANK DEPOSITS CONSTITUTE UNDISCLOSED INCOME, AND OV ERLOOKS THE FACT THAT ITA NOS.4 02 & 403(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 6 THE SOURCES OF DEPOSIT NEED NOT NECESSARILY BE INCO ME OF THE ASSESSEE. OF COURSE, IT MAY BE DESIRABLE, FROM THE POINT OF VIEW OF REVENUE AUTHORITIES, TO EXAMINE THE MATTER IN DETAIL, BUT THEN REASSESSM ENT PROCEEDINGS CANNOT BE RESORTED 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. 9. LEARNED DEPARTMENTAL REPRESENTATIVE HAS RE FERRED TO A NUMBER OF JUDICIAL PRECEDENTS IN SUPPORT OF HER STAND THAT EV EN DEPOSITS IN THE BANK ACCOUNT, AS HAVING COME TO THE NOTICE OF THE ASSESS ING OFFICER THROUGH AIR, CAN BE REASON ENOUGH FOR HOLDING THE BELIEF TH AT INCOME HAS ESCAPED ASSESSMENT. SHE HAS RELIED UPON THE DECISIONS IN TH E CASES OF CIT VS NOVA PROMOTERS & FINLEASE PVT LTD [(2012)342 ITR 16 9] BUT THEN NONE OF THE QUESTIONS BEFORE I.T.A. NO.: 3814/DEL/L 1 ASSES SMENT YEAR: 2008-09 HON'BLE HIGH COURT HAD ANYTHING TO DO WITH REOPENIN G OF ASSESSMENT AND THIS DECISION CAN NOT, THEREFORE, BE TAKEN AS A N AUTHORITY ON THE LEGAL ISSUE WHICH DID NOT EVEN COME UP FOR SPECIFIC ADJUD ICATION BEFORE THEIR LORDSHIPS. AS FOR HER RELIANCE ON HON'BLE SUPREME C OURT'S JUDGMENT IN THE CASE OF PHOOL CHAND BAJRANG LAI VS ITO [(1993) 203 ITR 456], THAT WAS CASE IN WHICH THEIR LORDSHIPS CONCLUDED THAT TH E AO 'RIGHTLY INITIATED THE REASSESSMENT PROCEEDINGS ON THE BASIS OF SUBSEQUENT INFORMATION, WHICH WAS SPECIFIC RELEVANT AND RELIAB LE, AND AFTER RECORDING THE REASONS FOR FORMATION OF HIS OWN BELIEF THAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD NOT DISCLO SED THE MATERIAL FACTS TRULY AND FULLY AND, THEREFORE, INCOME CHARGE ABLE TO TAX HAD ESCAPED ASSESSMENT' AND WE ARE UNABLE TO SEE ANYTHI NG ON THE FACTS OF THE PRESENT CASE WHICH ARE MATERIALLY SIMILAR TO TH E FACTS OF THE SAID CASE. AS REGARDS HER RELIANCE ON THE DECISION OF A COORDINATE BENCH IN THE CASE OF MITHILA CREDIT SERVICES LIMITED VS ITO (ITA NO. 1078/DEL/2013; ORDER DATED 23.5.2014), IT IS IMPORTANT TO BEAR IN MIND THE FACT THAT IT WAS A CASE IN WHICH THE ASSESSING OFFICER HAD REOPE NED THE ASSESSMENT ON THE BASIS OF RECEIPT OF INFORMATION FROM DIRECTO RATE OF INVESTIGATION, AND, AS NOTED BY THE ASSESSING OFFICER IN THE REASO NS RECORDED FOR REOPENING THE ASSESSMENT, 'THE NAME OF THE ASSESSEE FIGURES AS ONE OF THE BENEFICIARIES OF THESE ALLEGED BOGUS TRANSACTIO NS' IN THE INFORMATION GIVEN BY THE DIRECTORATE. IF THE ASSESSEE WAS A BEN EFICIARY OF SUCH A SCAM, THE INCOME WAS INDEED TO HAVE BEEN TAXED IN I TS HANDS BUT THEN IN THE CASE BEFORE US THE ONLY REASON FOR REASSESSMENT PROCEEDINGS WAS THE FACT OF DEPOSIT OF BANK ACCOUNT WHICH BY ITSELF DOE S NOT LEAD TO INCOME BEING TAXED IN THE HANDS OF THE ASSESSEE. LEARNED D EPARTMENTAL REPRESENTATIVE HAS REFERRED TO SEVERAL OTHER JUDICI AL PRECEDENTS IN SUPPORT OF THE PROPOSITION THAT AT THE STAGE OF INI TIATION OF REASSESSMENT PROCEEDINGS, ALL THAT IS TO BE SEEN AS EXISTENCE, R ATHER THAN ADEQUACY, OF THE MATERIAL TO COME TO THE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT. TO US, THERE CANNOT BE ANY, AND THERE I S NO, DOUBT ON THE CORRECTNESS OF THIS PROPOSITION BUT THEN, AS WE HAV E ELABORATELY EXPLAINED EARLIER IN THIS ORDER, THE MATERIAL MUST INDICATE INCOME ESCAPING ASSESSMENT RATHER THAN DESIRABILITY OF FUR THER PROBE IN THE MATTER WHICH MAY OR MAY NOT LEAD TO INCOME ESCAPING THE ASSESSMENT. ON THE BASIS OF REASONS AS RECORDED IN THIS CASE, S UCH AN INFERENCE ABOUT ITA NOS.4 02 & 403(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 7 INCOME ESCAPING ASSESSMENT, IN OUR HUMBLE UNDERSTAN DING, CANNOT BE DRAWN. 10. IN VIEW OF THE REASONS SET OUT ABOVE, AS A LSO BEARING IN MIND ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE REASONS RECORDED BY THE ASSESSING OFFICER, AS SET OUT EARLI ER, WERE NOT SUFFICIENT REASONS FOR REOPENING THE ASSESSMENT PROCEEDINGS. W E, THEREFORE, QUASH THE REASSESSMENT PROCEEDINGS. AS THE REASSESSMENT I TSELF IS QUASHED, ALL OTHER ISSUES ON MERITS OF I.T.A. NO. 3814/DEL/11 AS SESSMENT YEAR:2008- 09 THE ADDITIONS, IN THE IMPUGNED ASSESSMENT PROCEE DINGS, ARE RENDERED ACADEMIC AND INFRUCTUOUS. KEEPING IN VIEW THESE FACTS AND CIRCUMSTANCES, AND IN VIEW OF THE JUDICIAL PRECEDENTS RELIED ON BY ASSESSEE, WE HOLD THE NOTICES ISSUED U/S 148 TO BE ILLEGAL AND THEREFORE, THE ASSESSMENT ORDERS PASSED ARE QUASHED. IN VIEW OF THE ABOVE, THE ADDITIONAL GROUNDS OF AP PEAL OF THE ASSESSEE ARE ALLOWED. SINCE WE HAVE QUASHED THE ASSESSMENTS, THERE IS NO NEED TO ADJUDICATE ON THE MERITS OF THE CASES. 7. IN NUTSHELL, THE APPEALS FILED BY ASSESSEE ARE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 .02. 2017. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27.02.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: ITA NOS.4 02 & 403(ASR)/2016 ASST. YEARS: 2010-11 & 2011-12 8 (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER