Shri Sham Sunder S/o. Shri Babu Ram, Pathankot V. The Income-tax Officer, Pathankot

ITA 50/ASR/2012

• Counselvise Citation: 5020914 RSA 2012
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-08-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 06-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Assessee Lawyers: P N ARORA S; SSH J S BHASIN
• Keywords: Unexplained cash credit; Wrong claim; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 147; 68; 148; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.51(ASR)/2012 ASSESSMENT YEAR:2001-02 PAN : SH. GOPAL SHARAN, VS. INCOME TAX OFFICER, S/O SH. BABU RAM WARD-3, PATHANKOT. PATHANKOT. (APPELLANT) (RESPONDENT) I.T.A. NO.50(ASR)/2012 ASSESSMENT YEAR:2001-02 PAN :ACAPS7305J SH. SHAM SUNDER VS. INCOME TAX OFFICER, S/O SH. BABU RAM WARD-3, PATHANKOT. PATHANKOT. (APPELLANT) (RESPONDENT) APPELLANT BY:S/SH. J.S. BHASIN & P.N.ARORA, ADVOCAT ES RESPONDENT BY: SH. R.L. CHHANALIA, DR DATE OF HEARING:29/08/2012 DATE OF PRONOUNCEMENT:05/09/2012 ORDER PER BENCH ; THESE TWO APPEALS OF TWO DIFFERENT ASSESSEES ARISE FROM TWO DIFFERENT ORDERS OF CIT(A), AMRITSAR, EACH DATED 28.11.2011 F OR THE ASSESSMENT YEAR 2001-02. SINCE THE FACTS IN BOTH THE APPEALS ARE ID ENTICAL AND, THEREFORE, BOTH ITA NO.51 & 50(ASR)/2012 2 THE APPEALS ARE DECIDED BY THIS CONSOLIDATED ORDE R FOR THE SAKE OF CONVENIENCE. 2. THE ASSEESSEE SH. GOPAL SHARAN IN ITA NO.51(ASR) /2012 HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN FACTS AND ON LAW, IN UPHOLDING THE INITIATION OF PROCEEDINGS U/S 147/148 BY THE ITO, AS ALSO THE APPROVAL GRANTED FOR SUCH ACTION U/S 15 1(1) BY THE ADDL. CIT. 2. THAT IN THE LIGHT OF ENDLESS ROVING AND FISHING ENQUIRIES MADE BY THE ITO UPTIL THE FINALIZATION OF APPEAL WHICH S TILL REMAINED INCONCLUSIVE, THE RESORT TO JURISDICTION U/S 147 UN DER SUCH CIRCUMSTANCES, WAS PRIMA FACIE ILLEGAL. 3. THAT NOTICE U/S 148 HAS BEEN WRONGLY CONFIRMED B Y THE LD. CIT(A) TO HAVE BEEN SERVED AS PER LAW. 4. THAT THE SUBSTANTIVE ASSESSMET MADE IN ASSESSEE S CASE O BRING TO TAX RS.9,25,000/- AS A FOREGONE CONCLUSION, PURS UANT TO PROTECTIVE ASSESSMENT ALREADY MADE IN THE CASE OF S ELLER SH. INDERJIT KAPOOR, OUGHT TO HAVE BEEN ANNULLED BY THE LD. CIT(A), ON THIS VERY PREMISE. 5. THAT ON THE SAME ANALOGY, THE LD. CIT(A) OUGHT T O HAVE SIMULTANEOUSLY DISPOSED OF BOTH THE PROTECTIVE AND SUBSTANTIVE APPEALS BEFORE HIM. HIS FAILURE TO DO SO, AND PASSI NG OF ORDER, IN THE CASE OF SELLER, PRIOR TO PASSING OF ORDER IN BU YERS CASE, VITIATES HIS ORDER UNDER APPEAL. 6. THAT THE LD. CIT(A) HAS BEEN MOST UNJUST, UNFAIR AND ARBITRARY IN CONFIRMING THE ADDITION OF RS.9,25,000/- ALLEGED LY PAID BY ASSESSEE, OVER AND ABOVE THE APPARENT COST OF LAND PURCHASED FROM ONE SHRI INDERJEET KAPOOR, BASED ON FORGED DOCUMENTS/MATERIAL, INADMISSIBLE IN LAW. 7. THAT THE ORDER OF LD. CIT(A) CONFIRMING THE IMPU GNED ADDITION, IS NOT SUSTAINABLE INASMUCH AS HE HAS RELIED UPON V ARIOUS DOCUMENTS, PROVIDED BY SELLER, NOT AT ALL CONFRONTE D TO ASSESSEE FOR REBUTTAL. CROSS EXAMINATION OF SH.JATINDERBIR S INGH, WHOSE COMPLAINT TO ADC GURDASPUR, HAS BEEN RELIED UPON AS KEY EVIDENCE, TOO OUGHT TO HAVE BEEN ALLOWED. ITA NO.51 & 50(ASR)/2012 3 8. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT TAK ING ANY COGNIZANCE OF NUMEROUS CONTRADICTIONS AND SHIFTING STANDS OF SH.INDERJIT KAPOOR, AS BROUGHT TO HIS NOTICE DURING APPELLATGE PROCEEDINGS AND FOR THAT MATTER, THE DECISION OF HO NBLE APEX COURT IN CIT VS. P V KALYANASUNDRAM WAS DIRECTLY AP PLICABLE IN ASSESSEES CASE. 9. THAT THE LD. CIT(A) HAS FURTHER ERRED IN CONFIRM ING THE ADDITION OF RS.2,50,000/- AS UNEXPLAINED CREDIT IN SB A/C OF ASSESSEE, EVEN WHEN THIS ADDITION U/S 68 WAS NOT LE GALLY SUSTAINABLE. 10. THAT THE ORDER UNDER APPEAL, TO THE EXTENT DISP UTED HEREINABOVE, IS AGAINST THE LAW AND FACTS OF THE CASE. 3. THE GROUNDS RAISED IN ITA NO.50(ASR)/2012 ARE S IMILAR TO THAT REPRODUCED HEREINABOVE IN THE CASE OF GOPAL SHARAN, IN ITA NO. 51(ASR)/2012. THEREFORE, THERE IS NO NEED TO REPROD UCE THE SAME. 4. FIRST OF ALL, WE SHALL TAKE UP APPEAL IN THE CAS E OF SH. GOPAL SHARAN, IN ITA NO.51(ASR)2012 FOR THE ASSESSMENT YEAR 2001-02. THE GROUNDS NO.1, 2 & 3 RELATE TO LEGAL ISSUE, WHICH THE LD. COUNSEL FO R THE ASSESSEE, SH. J.S. BHASIN, ADVOCATE, HAS PRAYED TO ARGUE. THE DECISION ON THE LEGAL ISSUE IN THE SAID APPEAL SHALL BE APPLICABLE IN OTHER APPEAL I.E . IN ITA NO.50(ASR)2012 BEING IDENTICAL ISSUE. 5. IN THE APPEAL OF THE ASSESSEE, SH. GOPAL SHARAN, IN ITA NO.51(ASR)/2012, THE LD. COUNSEL FOR THE ASSESSEE I NVITED OUR ATTENTION TO PAGE 1 OF THE AOS ORDER, WHERE THE AO HAD ISSUED NOTICE DATED 31.03.2008 ON 31.03.2008 WHICH WAS SERVED ON THE ASSESSEE ON 0 1.04.2008 WHICH IS BEYOND THE PERIOD PROVIDED IN THE PROVISO TO SECTIO N 143(2)(II) OF THE ITA NO.51 & 50(ASR)/2012 4 INCOME-TAX ACT, 1961. IN THE PRESENT CASE, NOTICE C OULD BE SERVED UPON THE ASSESSEE UPTO 31.03.2008 WHEREAS THE SAME WAS SERVE D ON 01.04.2008, THEREFORE, NOTICE SERVED BY THE AO ON THE ASSESSEE ON 01.04.2008 IS BAD IN LAW AND ASSESSMENT SO FRAMED IS INVALID. MR. J.S. B HASIN, RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF C.I.T. VS. VARDHMAN ESTATE P. LTD. REPORTED IN (2006) 287 ITR 368. 6. THE LD. COUNSEL FOR THE ASSESSEE, SH. J.S. BHASI N, INVITED OUR ATTENTION TO PAGE NO.64 OF THE PAPER BOOK, WHERE THE REASONS RECORDED FOR ISSUING NOTICE U/S 148 OF THE ACT DATED 26.03.2008 BY THE I TO, WHICH FOR THE SAKE OF CLARITY ARE REPRODUCED AS UNDER: REASONS RECORDED FOR ISSUING U/S 148 OF THE INCOM E TAX ACT, 1961 IN THE CASE OF SH. SHAM SUNDER S/O SH. BABU RAM, RESID ENT OF PATHANKOT FOR THE ASSESSMENT YEAR 2001-02. AS PER INFORMATION IN MY POSSESSION PASSED ON BY AD IT (INV.) AMRITSAR VIDE LETTER NO.ADIT/INV./2007-08/2481 DATE D 17.03.2008, THE ASSESSEE SH. GOPAL SHARAN AND SH. SHAM SUNDER B OTH SONS OF SH. BABU RAM HAVE MADE A DEAL FOR PURCHASE OF AGRICULTU RAL LAND AT VILLAGE SHARIF CHAK, DISTT. GURDASPUR FROM SH. INDE RJIT KAPOOR, A GENERAL POWER OF ATTORNEY OF SH. BHUPINDER SINGH, S H. DAVINDER SINGH AND SH. BALJINDER SINGH SONS OF SH. KULDIP SI NGH RESIDENTS OF VILLAGE LITHER, DISTT. GURDASPUR AND THE PAYMENT OF RS.5,00,000/- HAS BEEN MADE AS ADVANCE THROUGH CHEQUE NO.991594 AND 2 36401 DATED 27.10.2000 OF ORIENTAL BANK OF COMMERCE AND THE HIN DU URBAN COOPERATIVE BANK, PATHANKOT, RESPECTIVELY AND BALAN CE AMOUNT OF RS.19,25,000/- WAS PAID IN CASH ON 15.02.2001 BY SH . GOPAL SHARAN AND SH. SHAM SUNDER. THESE FACTS HAVE BEEN ADMITTED BY SH.INDERJIT KAPOOR, GENERAL POWER OF ATTORNEY HOLDER, WHO HAS R ECEIVED THESE PAYMENTS FROM SH. GOPAL SHARAN AND SH. SHAM SUNDER IN CONNECTION WITH THE PURCHASE OF ABOVE SAID LAND VIDE HIS STATE MENT DATED 14.03.2008 RECORDED ON OATH BEFORE THE ADIT (INV.) AMRITSAR. ITA NO.51 & 50(ASR)/2012 5 HOWEVER, SH. SHAM SUNDER HAS NOT REFLECTED THE SAID TRANSACTION IN HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-0 2. THEREFORE, THE SOURCE OF PAYMENT OF RS.12,12,500/0 {1/2 SHARE OF S H. SHAM SUNDER IN TOTAL PAYMENT OF RS.24,25,000/- {5,00,000 + 19,2 5,000} REMAINS UNEXPLAINED AND IS TO BE TREATED AS INCOME OF THE A SSESSEE WHICH HAS NOT BEEN DISCLOSED IN HIS RETURN FILED FOR ASSESSME NT YEAR 2001-02. I HAVE, THEREFORE, REASON TO BELIEVE THAT INCOME TO T HE TUNE OF RS.12,12,500/- HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE ASSESSMENT YEAR 2001-02. DATED: 26.03.2008 SD/- (S.P. KATHA) INCOME TAX OFFICER, WARD-3, PATHANKOT. 7. IT WAS ARGUED BY SH. J.S. BHASIN, THAT THERE IS NO SATISFACTION OF THE AO, WHO ISSUED THE NOTICE TO THE ASSESSEE AND IT HA S BEEN BORROWED FROM THE ASSISTANT DIRECTOR OF INVESTIGATION, AMRITSAR. SUCH BORROWED SATISFACTION DOES NOT CALL FOR THE AO TO INITIATE REASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. HE RELIED UPON THE DECISION OF THE HONBL E RAJASTHAN HIGH COURT, IN THE CASE OF CIT VS. SHREE RAJASTHAN SYNTEX LTD. REPORTED IN 313 ITR 231 (RAJ.). MR. BHASIN FURTHER RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF C.I.T. VS. SFIL STOCK BRO KING LTD. REPORTED IN (2010) 325 ITR 285, WHERE THE FACTS OF THE CASE ARE THAT THE AO WHILE ISSUING NOTICE U/S 148 ON THE BASIS OF INFORMATION GIVEN BY THE DDIT THAT THE ASSESSEE IS BENEFICIARY OF BOGUS CLAIM OF LONG-TERM CAPITAL GAIN, SERVED NOTICE U/S 148 OF THE ACT. IT WAS HELD THAT THE AO HAS NOT APPLIED HIS MIND ITA NO.51 & 50(ASR)/2012 6 TO INFORMATION TO INDEPENDENTLY ARRIVE AT A BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. TO THIS DECISION OF THE TRIBUNAL, THE H ONBLE HIGH COURT OF DELHI HAD OPINED THAT NO SUBSTANTIAL QUESTION OF LA W AROSE. MR. BHASIN, PRAYED THE BENCH TO QUASH THE NOTICE SERVED BEYOND TIME LIMITATION AS PER PROVISO TO SECTION 143(2)(II) OF THE ACT AND ACCORD INGLY QUASH THE ASSESSMENT IN VIEW OF NOTICE SERVED BEYOND TIME L IMITATION PROVIDED UNDER THE ACT AND ON THE BORROWED SATISFACTION AND WITHOU T APPLICATION OF MIND BY THE A.O. AND TO TREAT THE ASSESSMENT AS INVALID. 8. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE ARE CONVINCED WITH THE ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE, MR. J.S. BHASIN THAT NOTICE ISSUED BY THE AO ON 31.03.2008 HAS BEEN SERVED ON 01.04.2008. THE NOTICE WAS REQUIRED TO BE SERVED ON THE ASSESSEE ON OR BEFORE 31.03.2008. THE REVENUE HAS N OT PLACED ANY RECORD TO SUGGEST THAT NOTICE ISSUED ON 31.03.2008 HAD BEEN S ERVED ON THE ASSESSEE ON 31.3.2008. NOTHING HAS BEEN BROUGHT ON RECORD TO MA KE THE PRESUMPTION FOR DEEMED SERVICE ON 31.03.2008. THEREFORE, THE NOTICE SERVED IN THE PRESENT CASE IS BAD IN LAW AND ASSESSMENT SO MADE IS INVALI D, IN VIEW OF THE DECISION OF ITA NO.51 & 50(ASR)/2012 7 THE HONBLE DELHI HIGH COURT IN THE CASE OF C.I.T. VS. VARDHMAN ESTATE P. LTD.(SUPRA). 9.1. AS REGARDS THE REASONS RECORDED, NOTHING HAS B EEN BROUGHT ON RECORD BY THE REVENUE THAT THE AO HAS APPLIED HIS MIND TO THE INFORMATION OF THE ADIT, AMRITSAR INDEPENDENTLY AND ARRIVED AT BELIEF ON THE BASIS OF MATERIAL PLACED BEFORE HIM THAT INCOME HAD ESCAPED ASSESSMEN T. ON SUCH BORROWED SATISFACTION OF THE ADIT, AMRITSAR, SECTION 147 DOE S NOT CONFER POWER ON THE AO TO INITIATE REASSESSMENT PROCEEDINGS. THE RELIAN CE IS PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SFIL STOCK BROKING LTD. (SUPRA) AND HONBLE GUJARAT HIGH COURT IN THE CASE OF HYNOUP FOOD AND OIL INDUSTRIES LTD. VS. ACIT, REPORTED IN (2008) 307 ITR 115 AND HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SHREE RAJASTHAN SYNTEX LTD.(SUPRA). IN THE FACTS AND CIRCUMSTANCES, THE AS SESSMENT FRAMED BY THE AO IS TREATED AS INVALID. THUS, GROUND NOS. 1, 2 & 3 ARE ALLOWED. 9.2 SINCE THE ASSESSMENT HAS BEEN TREATED AS INVALI D ON LEGAL ISSUE IN GROUND NOS. 1 TO 3 HEREINABOVE, THEREFORE, GROUND N OS. 4 TO 10 BEING ON MERITS ARE NOT BEING DECIDED BEING INFRUCTUOUS. THU S, THE APPEAL OF THE ASSESSEE IS ALLOWED IN ITA NO.51(ASR)/2012. 10. NOW, WE TAKE UP APPEAL OF THE ASSESSEE IN ITA N O.50(ASR)/2012. THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACT S AS IN THE CASE OF SH. GOPAL ITA NO.51 & 50(ASR)/2012 8 SHARAN, ITA NO.51(ASR)/2012 DECIDED HEREINABOVE. T HUS, FOLLOWING THE DECISION IN THE CASE OF SH. GOPAL SHARAN, GROUND NO S. 1 TO 3 ARE ALLOWED AND DECISION IN THE APPEAL IN ITA NO.51(ASR)/2012 IS AP PLICABLE IN THE PRESENT CASE. GROUND NOS. 4 TO 10 BEING ON MERIT ARE TREATE D AS INFRUCTUOUS AS THE ASSESSMENT HAS BEEN TREATED AS INVALID IN GROUND NO . 1 TO 3 HEREINABOVE AND FOLLOWING OUR DECISION IN ITA NO.51(ASR)/2012 HEREI NABOVE, GROUND NOS. 4 TO 10 ARE TREATED AS INFRUCTUOUS. THUS, THE APPEAL OF THE ASSESSEE IN ITA NO. 50(ASR)/2012 IS ALLOWED. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE S ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5TH SEPTEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 5TH SEPT., 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH GOPAL SHARAN II) SH. SHAM SUNDER PA THANKOT. 2. THE ITO WARD-1 PATHANKOT. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.