Jiten Gurnani, New Delhi V. ITO, New Delhi

ITA 4908/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87177 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 28-01-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 17-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DOMKAUNAJMA PER PR
• Assessee Lawyers: SALIL AGARWAL
• Keywords: Reassessment proceedings
• Section: 143(3)

Judgement Text

I.T.A. NO.: 4908/DEL/2012 ASSESSMENT YEAR: 2002-03 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI D BENCH, NEW DELHI [CORAM: I C SUDHIR JM AND PRAMOD KUMAR AM] I.T.A. NO.: 4908/DEL/2012 ASSESSMENT YEAR: 2002-03 JITEN GURNANI .APPELLANT BT-1 SHALIMAR BAGH SHALIMAR BAGH SO, NEW DELHI 110 088 [PAN: ESPF9422A] VS. INCOME TAX OFFICER WARD 19(1), NEW DELHI .RESPONDEN T DATE OF CONCLUDING THE HEARING : 28 TH JANUARY, 2015. DATE OF PRONOUNCING THE ORDER : 31 ST MARCH, 2015 APPEARANCES BY: SALIL AGARWAL , FOR THE APPELLANT P DOMKAUNAJMA, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR, AM: 1. THIS IS AN APPEAL FILED BY THE ASSESSE AND IS DI RECTED AGAINST THE ORDER DATED 28 TH JUNE 2012 PASSED BY THE CIT(A) IN THE MATTER OF AS SESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 19 61, FOR THE ASSESSMENT YEAR 2002-03. 2. ONE OF THE GRIEVANCES RAISED IN THIS APPEAL IS A GAINST THE VALIDITY OF REASSESSMENT PROCEEDINGS. AS THIS IS A FUNDAMENTAL ASPECT OF THE MATTER, WE WILL TAKE IT UP FIRST. 3. IT IS A CASE OF, AS WE HAVE NOTED ABOVE, REOPENE D ASSESSMENT. THE CASE WAS REOPENED ON THE BASIS OF A REPORT RECEIVED FROM THE DY DIRECTOR OF INCOME TAX (INVESTIGATION) STATING THAT THE AMOUNT OF RS 4,00,000 RECEIVED BY THE I.T.A. NO.: 4908/DEL/2012 ASSESSMENT YEAR: 2002-03 PAGE 2 OF 5 ASSESSE, BY WAY OF A MANAGERS CHEQUE ISSUED BY THE HDFC BANK, CONSTITUTED AN ACCOMMODATION ENTRY AS IT WAS GOT MADE BY HARISH PA WAR FROM THE ACCOUNT OF AMRIT IMPEX (INDIA) WAS AN ACCOMMODATION ENTRY AS T HIS PERSON, IN A STATEMENT BEFORE THE INVESTIGATION WING, HAD ACCEPTED THAT T HE BANK ACCOUNT OF M/S AMRIT IMPE (INDIA) HAS BEEN USED FOR PROVIDING ACCOMMODAT ION ENTRIES. THE ASSESSE OBJECTED TO THIS REOPENING ON SEVERAL GROUNDS, INCL UDING THE GROUND THAT THE AO HAD NOT APPLIED HIS MIND TO THE MATTER, THAT THERE WAS NOT EVEN A CASUAL REFERENCE TO THE RETURN HAVING BEEN FILED BY THE AS SESSE UNDER SECTION 139(1), THAT HE HAS PROCEEDED TO REOPEN THE ASSESSMENT WITH OUT EXAMINING THE CORROBORATING THE MATERIAL RECEIVED FROM A THIRD PA RTY, THAT THE ASSESSE WAS NOT ALLOWED ANY OPPORTUNITY TO CROSS EXAMINE THE PERSON WHOSE STATEMENT IS RECORDED AND THAT THE REASSESSMENT PROCEEDINGS ARE NOT SUSTAINABLE IN LAW. NONE OF THESE OBJECTIONS HOWEVER IMPRESSED THE ASSE SSING OFFICER. HE PROCEEDED TO REJECT THESE OBJECTIONS AS AT THE STAG E OF RECORDING THE REASONS ALL THESE FACTORS ARE NOT, IN HIS OPINION, RELEVANT. AG GRIEVED, ASSESSE CARRIED THE MATTER IN APPEAL BUT WITHOUT ANY SUCCESS. THE ASSES SE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF T HE APPLICABLE LEGAL POSITION. 5. AS NOTED BY A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF ITO VS VIJENDRA KUMAR (67 DTR 283) , NO DOUBT SUFFICIENCY OF REASON CANNOT BE AGITATED HOWEVER THE FIRST HURDLE THAT THE FORMATIO N OF BELIEF IS OF THE CONCERNED AO AND NOT OF SOME OTHER AO HAS TO BE MET. THE BLIN D ACCEPTANCE IN HASTE THE VIEW OF ANOTHER AO HAS NOT BEEN REBUTTED BY ANY COG ENT FACT OR ARGUMENT AND TO OUR MIND CASE LAW CANNOT ADDRESS THE ISSUE. WHAT I S ESSENTIALLY IMPLIES THAT EVEN WHEN AN INFORMATION IS RECEIVED FROM ANOTHER W ING, THE ASSESSING OFFICER MUST APPLY HIS MIND TO THE SAME BEFORE ONE CAN DEAL WITH THE QUESTION AS TO WHETHER SUCH AN INFORMATION CONSTITUTES LEGALLY SUS TAINABLE REASONS FOR REOPENING THE ASSESSMENT. THE QUESTION OF EXISTENCE OR ADEQUACY OF REASONS FOR REOPENING THE ASSESSMENT WILL STILL BE A STEP AWAY FROM THIS FUNDAMENTAL I.T.A. NO.: 4908/DEL/2012 ASSESSMENT YEAR: 2002-03 PAGE 3 OF 5 EXERCISE. AS WE MAKE NOTE OF THIS POSITION, WE MAY ALSO REFER TO THE OBSERVATIONS MADE BY HONBLE JURISDICTIONAL HIGH COURT, IN THE C ASE OF CIT VS PRADEEP KUMAR GUPTA (303 ITR 95) , AS FOLLOWS: 4. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES AT GREAT LENGTH, WE ARE OF THE VIEW THAT THE ORDER OF THE ITAT IS UNASSAILA BLE. IN THIS CASE, THE ASSESSMENT HAD NOT BEEN COMPLETED UNDER SECTION 143 (3) OF THE IT ACT. THERE ARE BANKING TRANSACTIONS BETWEEN THE ASSESSEE S AND SHRI ANAND PRAKASH AND, THEREFORE, INITIATION OF REASSESSMENT PROCEEDINGS UNDER SECTIONS 147/148 MAY BE IMPREGNABLE EVEN TO THE CHA RGE OF LEGITIMACY OF INVOCATION OF SECTIONS 147/148. IN OTHER WORDS, SINCE THERE WERE BANKING TRANSACTIONS BETWEEN THESE PERSONS, AND SHR I ANAND PRAKASH HAD, IN FACT, DEPOSED THAT HE HAD PROVIDED BOGUS TR ANSACTIONS TO THE ASSESSEES THAT WOULD CONSTITUTE REASONS FOR THE AO TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT JUS TIFYING ACTION UNDER SECTIONS 147/148. SHRI ANAND PRAKASH CANNOT B E SEEN AS A BUSYBODY OR AN INFORMER OR A STOCK WITNESS WHOLLY U NCONNECTED WITH THE ASSESSEE CONCERNED. LEARNED COUNSEL FOR THE REV ENUE HAD DRAWN OUR ATTENTION TO PHOOL CHAND BAJRANG LAL -VS INCOME - TAX OFFICER, [1993] 203 ITR 456 WHERE THE ITO HAD LEARNT THAT TH E PARTY FROM WHOM THAT ASSESSEE HAD ALLEGEDLY BORROWED RS.50,000 /- IN CASH HAD NOT ACTUALLY DONE SO. INFORMATION PERTAINING TO THE FALSE NATURE OF THESE TRANSACTIONS WAS EXCHANGED BETWEEN THE RESPEC TIVE INCOME-TAX OFFICERS. THEIR LORDSHIPS OPINED THAT - ACQUIRING F RESH INFORMATION, SPECIFIC IN NATURE AND RELIABLE IN CHARACTER, RELAT ING TO A CONCLUDED ASSESSMENT WHICH WENT TO EXPOSE THE FALSITY OF THE STATEMENT MADE BY THE ASSESSEE AT THE TIME OF THE ORIGINAL ASSESSMENT WAS DIFFERENT FROM DRAWING A FRESH INFERENCE FROM THE SAME FACTS AND M ATERIAL AVAILABLE WITH THE INCOME-TAX OFFICER AT THE TIME OF THE ORIG INAL ASSESSMENT PROCEEDINGS. THIS DECISION, HOWEVER, DOES NOT EMPOW ER THE AO TO RELY ONLY ON THE DEPOSITION OF A THIRD PARTY IN ORDER TO UPSET THE RETURN FILED BY AN ASSESSEE. 5. THIS IS WHERE THE FAILURE OF THE REVENUE TO PROD UCE SHRI ANAND PRAKASH FOR CROSS-EXAMINATION BY THE ASSESSEES, ASS UMES FATAL CONSEQUENCES. REASSESSMENT PROCEEDINGS HAVE BEEN IN ITIATED AFTER SEVERAL YEARS OF THE ACCEPTANCE OF THE RETURN UNDER SECTION 143(1) OF THE IT ACT. THE ASSESSEES HAVE THEMSELVES RELIED ON THE BANKING TRANSACTIONS BETWEEN THEMSELVES AND SHRI ANAND PRAK ASH; SECONDLY ON BILLS ISSUED BY THEM TO SHRI ANAND PRAKASH, AND ON THE UNASSAILED PAYMENT OF RENT TO SHRI MOOL CHAND. IT IS TRUE THAT THE ASSESSEES FAILURE TO PRODUCE SHRI KISHAN CHAND HAD THE CONSEQ UENCE OF NOT I.T.A. NO.: 4908/DEL/2012 ASSESSMENT YEAR: 2002-03 PAGE 4 OF 5 PROVING THAT THE SAID PERSON WAS TILLING THE LAND O N THEIR BEHALF. THIS FAILURE CANNOT INEXORABLY LEAD TO THE CONCLUSION TH AT NO AGRICULTURAL INCOME HAD BEEN GENERATED BY THE ASSESSEES. SUCH AN INFERENCE CAN ONLY BE DRAWN FROM THE STATEMENT OF SHRI ANAND PRAK ASH TO THE EFFECT THAT THE TRANSACTIONS BETWEEN HIM AND THE ASSESSES WERE BOGUS. THEREFORE, IT WAS MANDATORY FOR THE REVENUE TO PROD UCE SHRI ANAND PRAKASH FOR CROSS-EXAMINATION BY THE ASSESSEES ON T HEIR SPECIFIC DEMAND IN THIS REGARD. THE FACTS ON WHICH THE DECIS ION TO INVOKE SECTIONS 147/148 ARE PREDICATED MAY IN SOME CASES B E SUFFICIENT BOTH FOR DECISION TO CARRY OUT A REASSESSMENT AS WELL TO JUSTIFY OR SUSTAIN THE FRESH ASSESSMENT. HOWEVER, THERE MAY WELL BE IN STANCES WHERE THE FORMER SAID REOPENING MAY PASS MUSTER IN THE LIGHT OF SOME FACTS, BUT THOSE FACTS BY THEMSELVES MAY TURN OUT TO BE INSUFF ICIENT TO PRESERVE THE ASSESSMENT ITSELF. ONCE SECTIONS 147/148 ARE RE SORTED TO, THE AO MUST FIRST DISCHARGE THE BURDEN OF SHOWING THAT INC OME HAS ESCAPED ASSESSMENT. IT IS ONLY THEREAFTER THAT THE ASSESSEE HAS TO PROVIDE ALL THE ANSWERS. WE FIND NO REASON WHY THE INITIAL BURD EN OF PROOF SHOULD NOT REST ON THE AO EVEN WHERE THE ASSESSMENT HAS GO NE THROUGH UNDER SECTION 143(1) OF THE ACT. THE TRIBUNAL HAS, THEREF ORE, ARRIVED AT THE CORRECT CONCLUSION . 6. THE VIEWS SO EXPRESSED BY THE HONBLE JURISDICTI ONAL HIGH COURT BIND US. VIEWED THUS, THE VERY REASSESSMENT WAS LEGALLY UNSU STAINABLE IN THIS CASE. IN THIS VIEW OF THE MATTER, WE QUASH THE IMPUGNED REAS SESSMENT PROCEEDINGS. AS REASSESSMENT ITSELF IS QUASHED, ALL OTHER ISSUES, R AISED ON MERITS, ARE ACADEMIC IN EFFECT. WE, THEREFORE, SEE NO DEAL TO DEAL WITH THOSE GRIEVANCES. 7. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON 31 ST DAY OF MARCH, 2015. SD/- SD/- I C SUDHIR PRAMOD KUMA R (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NEW DELHI,31 ST DAY OF MARCH, 2015 I.T.A. NO.: 4908/DEL/2012 ASSESSMENT YEAR: 2002-03 PAGE 5 OF 5 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI