M/s Fateh Homes Private Limited, Chandigarh V. ITO Ward-1(4), Chandigarh

ITA 50/CHANDI/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3096 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-06-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENAKSHI VOHRA CIT
• Keywords: Valuation report; Borrowed satisfaction; Set aside
• Section: 72; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH SMC CHANDIGARH !', # BEFORE: SMT. DIVA SINGH, JM ./ ITA NO. 50,51 & 52/CHD/2020 / A.YS : 2009-10, 2010-11 & 2011-12 M/S FATEH HOMES PVT. LTD., H.NO. 2144, SECTOR 15-C, CHANDIGARH. VS THE ITO, WARD 1(4), CHANDIGARH. ./ PAN NO: AABCF0763F / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI PARIKSHIT AGGARWAL, C.A. # ! ' / REVENUE BY : SMT. MEENAKSHI VOHRA, ADDL. CIT $ % ! &/ DATE OF HEARING : 10.06.2021 '()* ! &/ D ATE OF PRONOUNCEMENT : 16.06.2021 HEARING CONDUCTED VIA WEBEX $%/ ORDER THE PRESENT APPEALS PERTAINING TO 2009-10, 2010-11 AND 2011-12 ASSESSMENT YEARS HAVE BEEN FILED BY THE ASS ESSEE WHEREIN THE CONSOLIDATED ORDER DATED 31.10.2019 OF CIT(A)-I CHANDIGARH ARE ASSAILED ON VARIOUS GROUNDS. HOWEVE R, IN VIEW OF THE FACT THAT THE ORDER OF THE ITAT ON THE JURIS DICTIONAL ISSUE WAS NOW AVAILABLE AND ALSO IN FAVOUR OF ASSES SEE, THE ARGUMENTS BY THE PARTIES, ACCORDINGLY, WERE CONFINE D TO GROUND NO. 2 WHICH WAS IDENTICAL AND COMMON IN EACH OF THESE THREE APPEALS. FOR THE SAKE OF COMPLETENESS, IT BE REFERRED THAT THOUGH THE CONSOLIDATED ORDER ALSO INCLUDES 20 13-14 ITA 50,51 & 52/CHD/2020 A.Y. 2009-10, 2010-11 & 2011-12 PAGE 2 OF 8 ASSESSMENT YEAR, HOWEVER, THE ISSUES THEREIN ARE SE PARATE AND DISTINCT, HENCE THIS APPEAL HAS BEEN ADJOURNED. 2. IT NEED ALSO BE REFERRED THAT THESE APPEALS CAME UP FOR HEARING IN THE BACKGROUND WHERE REPEATEDLY ADJOURNM ENTS WERE SOUGHT BY THE LD. AR STATING THAT THE SPECIFIC ISSUE I.E. THE JURISDICTIONAL ISSUE HAS BEEN ARGUED BEFORE THE ITAT IN A CONNECTED CASE ON THE SAME SET OF FACTS AND CIRCUMS TANCES AND THE ORDER OF THE ITAT IS AWAITED. PAPER BOOKS HAVE BEEN FILED BY THE ASSESSEE THEREAFTER AND IT HAS BEEN CL AIMED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. THE APPEAL WAS ADJOURNED SO AS TO ENABLE THE LD. SR.DR TO GO THROU GH THE ORDER OF THE TRIBUNAL AND TO HEAR THESE ALONGWITH I DENTICAL APPEALS. 3. IN THE SAID BACKGROUND, THE LD. AR ON THE DATE O F HEARING INVITING ATTENTION TO GROUND NO. 2 RAISED BY THE AS SESSEE IN THE PRESENT APPEAL SUBMITTED THAT THE SAID GROUND I S IDENTICAL IN ALL THE THREE YEARS AND THIS ISSUE IS FULLY COVE RED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF THE ORDER OF THE ITAT IN ITA NO. 54, 55 AND 57/CHD/2020 DATED 24.05.2021 IN THE CASE OF M/S FATEH SOFTECH PVT. LTD. , CHANDIGARH. THE LD. SR.D R MS. VOHRA AGREED THAT THE FACTS AND CIRCUMSTANCES QUA GROUND NO. 2 IN EACH OF THESE THREE APPEALS IS IDENTICAL. ACCORDIN GLY, IN THE AFORESAID FACTUAL BACKGROUND, GROUND NO. 2 AS RAISE D IN ITA 50/CHD/2020 WAS TAKEN UP FOR HEARING. ITA 50,51 & 52/CHD/2020 A.Y. 2009-10, 2010-11 & 2011-12 PAGE 3 OF 8 4. FOR READY REFERENCE THE GROUND IS REPRODUCED FRO M ITA 50/CHD/2020 : 2. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, W ORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREI N LD. AO HAD ERRED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT AND HAD FU RTHER ERRED IN CONTINUATION AND COMPLETION OF THE SAID RE-ASSESSME NT PROCEEDINGS U/S 147 OF THE ACT EVEN WHEN THE WHOLE OF THE PROCESS W AS ILLEGAL AND AGAINST THE PROVISIONS OF INCOME TAX ACT AND HENCE REQUIRED TO BE DECLARED VOID-AB-INITIO. 5. THE LD. AR INVITING ATTENTION TO THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE REASONS R ECORDED FOR RE-OPENING ARE SET OUT IN PAGE 60 AND ARE IDENTICA L IN EACH OF THE THREE APPEALS TO THE REASONS AS CONSIDERED BY T HE ITAT IN ITS CONSOLIDATED ORDER. FOR THE SAKE OF COMPLETENE SS, THE REASONS RECORDED IN ITA 50/CHD/2020 ( IDENTICAL IN THE REMAINING TWO APPEALS) ARE REPRODUCED HEREUNDER : REASONS FOR ISSUING NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE A.Y. 2009-10 ON 30.08,2010 AT AN INCOME OF RS. 5,31,950/-. AS PER INFORMATION RECEIV ED FROM THE OFFICE OF THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION)-II, CHANDIGA RH VIDE HIS LETTER DATED 03.02.2016, IT HAS BEEN NOTICED THAT THE ASSESSEE COMPANY MADE AN ADDITION OF RS. 68,98,376/-'TO THE FIXED ASSETS DURING THE F.Y. 2008-09 RELEVANT TO TH E A.Y. 2009-10. HOWEVER, IT HAS BEEN NOTICED FROM THE AFORESAID LETTER OF THE DEPUTY DIR ECTOR OF INCOME TAX (INVESTIGATION)- II, CHANDIGARH THAT NO DOCUMENTARY EVIDENCE IN SUPP ORT OF GENUINENESS AND SOURCE OF SUCH INVESTMENT WAS SUBMITTED BY THE ASSESSEE TO HI M DURING THE COURSE OF INVESTIGATION. THUS, THE ADDITIONS MADE TO THE FIXED ADDITIONS BY THE ASSESSEE DURING THE YEAR REMAIN UNEXPLAINED. FURTHER, IT HAS ALSO BEEN NOTICED THAT THE ASSESSEE SPENT RS. 2.95.CRORES ON THE CONSTRUCTION OF A HOUSE SITUATED AT H. NO. 59, SECT OR-4, CHANDIGARH FROM F.Y. 2007-08 TO THE F.Y. 2011-12 BUT AS PER FINAL ENQUIRY REPORT SUBMITTED BY THE PUNJAB VIGILANCE BUREAU, PUNJAB (ON THE BASIS OF VALUATION REPORT OF A GOVT. APPROVED VALUER), THE ACTUAL AMOUNT SPENT ON THE CONSTRUCTION IS RS. 72 L AKH MORE THAN THE AMOUNT CLAIMED BY THE ASSESSEE. THE PROPORTIONATE EXTRA AMOUNT SPENT DURING THE F.Y. 2008-09 COMES TO RS. 16,83,671/- WHICH STAND UNEXPLAINED IN VIEW OF THE FACTS, NARRATED ABOVE. THEREFORE, KEEPING IN VIEW THE FACTS NARRATED ABOVE , I HAVE REASONS TO BELIEVE THAT AN INCOME OF RS. 85,82.047/- HAS ESCAPED ASSESSMENT WI THIN THE MEANING OF SECTION 147(A) (ANKJT JAIN) INCOME TAX OFFICER, WARD 1(4), CHANDIGARH ITA 50,51 & 52/CHD/2020 A.Y. 2009-10, 2010-11 & 2011-12 PAGE 4 OF 8 OF THE INCOME TAX ACT, 1961 FOR THE A.Y. 2009-10. 5.1 REFERRING TO THE SAID REASONS RECORDED, IT W AS HIS SUBMISSION THAT THE FIRST PARA OF THE SAME WOULD SH OW THAT IT WAS BEYOND THE SCOPE OF RE-OPENING AS THE REASONS S ET OUT THEREIN ARE THAT THE SOURCES OF ITEMS REFLECTED IN THE BALANCE SHEET WERE NOTICED TO BE LACKING IN DOCUMENTARY EVI DENCE SUPPORTING THE GENUINENESS. REFERRING TO THE SECOND PARA OF THE REASONS RECORDED, IT WAS HIS SUBMISSION THAT AD MITTEDLY SOME VALUATION REPORT HAS BEEN RELIED UPON TO UNSET TLE THE ASSESSEE'S CLAIM. REFERRING TO THE DECISION OF THE APEX COURT IN THE CASE OF SARGAM CINEMA VS. COMMISSIONER OF IN COME TAX 328 ITR 513 (S.C) IT WAS HIS SUBMISSION THAT SUCH A N ACTION DID NOT HAVE JUDICIAL SANCTION AND IT WAS BARRED BY THE AO. 6. LD. SR.DR MS. MEENAKSHI VOHRA SOUGHT TO INTERVEN E THAT THE REASON RECORDED AND THE FORMATION OF THE BELIEF IS NOT THE VALUATION REPORT BUT REPORT OF THE PUNJAB VIGILANCE BUREAU AND THUS, DECISION OF THE APEX COURT MAY NOT BE ATT RACTED. 7. THE LD. AR AGREED THAT RELIANCE HAS BEEN PLACED ON THE PUNJAB VIGILANCE BUREAU REPORT WHICH HAS RELIED UPO N THE VALUATION REPORT OF SOME APPROVED VALUER. THIS ISS UE IDENTICALLY HAS BEEN CONSIDERED BY THE ITAT IN A CO NNECTED CASE AND HE WAS ONLY FURTHER SUPPORTING THE DECISIO N OF THE ITAT. THESE VERY SAME REASONS HAVE BEEN RECORDED AS IN THE ITA 50,51 & 52/CHD/2020 A.Y. 2009-10, 2010-11 & 2011-12 PAGE 5 OF 8 FACTS OF ASSESSEE'S CASE CAME UP FOR CONSIDERATION BEFORE ITAT AND HAVE BEEN EXTRACTED IN PARA 17 CONSIDERING WHIC H THE ISSUE HAS BEEN DEALT WITH AT LENGTH IN PARAS 18 TO 21 THEREBY ALLOWING THE APPEAL OF THE ASSESSEE AND QUASHING TH E RE- OPENING. IT WAS HIS SUBMISSION THAT THE POSITION O N FACTS, LAW AND SUBMISSIONS THEREON AS FAR AS THE ASSESSEE IS C ONCERNED, REMAIN IDENTICAL. APART FROM THE SAID FINDING, IT W AS ALSO HIS SUBMISSION THAT IT HAS BEEN ARGUED ON MERITS THAT T HE AO DID NOT REFER THE MATTER TO THE DVO RIGHT THROUGH THE A SSESSMENT STAGE OR TILL DATE AND NO EXPERT VALUERS REPORT WA S TAKEN BY HIM. HE BLINDLY RELIED UPON A REPORT BASED ON ESTI MATION AND EVEN OTHERWISE, THIS STAND DID NOT HAVE LEGAL LEG T O STAND ON. 8. THE LD. SR.DR FAIRLY AGREED THAT THE ITAT HAS CO NSIDERED THE VERY SAME REASONS AND THUS, SHE WOULD HAVE NOTH ING FURTHER TO STATE EXCEPT PLACE RELIANCE UPON THE ORD ERS OF THE AUTHORITIES BELOW. ON QUERY IT WAS FURTHER AGREED BY HER THAT THE AO DID NOT REFER THE MATTER TO THE DVO AT ANY S TAGE. 9. I HAVE HEARD THE SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. CONSIDERING THE REASONS AS SET OUT IN P AGE 60 OF THE ASSESSEE'S PAPER BOOK WHICH HAS BEEN THE BASIS FOR RE- OPENING THE ASSESSMENT IN THE PRESENT CASE, IT IS S EEN THAT THE VERY SAME ISSUE CAME UP FOR CONSIDERATION BEFOR E ITAT IN THE CASE OF M/S FATEH SOFTECH PVT. LTD. , CHANDIGAR H (SUPRA). ITA 50,51 & 52/CHD/2020 A.Y. 2009-10, 2010-11 & 2011-12 PAGE 6 OF 8 ON A CONSIDERATION OF THE DECISION OF THE APEX COUR T IN THE CASE OF SARGAM CINEMA (SUPRA) IT IS SEEN THAT THEIR LORDSHIPS IN THE FACTS OF THE SAID DECISION HELD THAT THE AO COULD NOT HAVE REFERRED THE MATTER TO THE DEPARTMENTAL VALUAT ION OFFICER (DVO) WITHOUT FIRST REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THEIR LORDSHIPS THEREIN TOOK NOTE OF THE FACT THAT THE TRIBUNAL THEREIN HAD RECORDED A FINDING THAT TH E BOOKS WERE NEVER REJECTED. THE SAID PRINCIPLE OF LAW IN T HE FACTS OF THE PRESENT CASE AS ARGUED AND PRESENTED BEFORE THE ITAT, IT IS SEEN HAS NO RELEVANCE OR APPLICABILITY. REVERTING BACK TO THE PECULIAR FACTS AND CIRCUMSTANCES CONSIDERING THE IS SUE AS DECIDED BY THE ITAT VIDE PARAS 17 TO 20 ON FACTS WH ICH ARE IDENTICAL, I FIND THAT THE ASSESSEE'S CONTENTIONS A RE CORRECT. IT IS SEEN THAT THE ISSUE STANDS CONCLUDED BY THE AFOR ESAID FINDING OF THE ITAT IN FAVOUR OF THE ASSESSEE. FOR READY REFERENCE, THE SAME IS REPRODUCED HEREUNDER : 17. VIDE GROUND NOS. 2 AND 3, THE ASSESSEE HAS AGI TATED THE VALIDITY OF THE RE-OPENING OF THE ASSESSMENT U/S 147 READ WITH SECTION 148 OF THE ACT. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSE E HAS INVITED MY ATTENTION TO THE REASONS RECORDED BY THE AO FOR FOR MING BELIEF FOR RE- OPENING OF THE ASSESSMENT. REASONS FOR ISSUING NOTICE UNDER SECTION 148 OF TH E INCOME TAX ACT, 1961 THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE A.Y. 2009-10 AT NIL INCOME AND HAD SHOWN AGRICULTURAL INCOME AT RS. 1,1 0,000/-. AS PER INFORMATION RECEIVED FROM THE OFFICE OF THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION)-II, CHANDIGARH VIDE HIS LETTER DATE D 03.02.2016 AND ON THE BASIS OF REPORT OF PUNJAB VIGILANCE BUREAU, IT HAS BEEN NOTICED THAT THE ASSESSEE COMPANY HAS BEEN USING ITS ASSETS FOR ARRA NGING MARRIAGE FUNCTIONS AND AFTER PERUSAL OF THE INCOME TAX RETURN OF THE A SSESSEE, IT HAS BEEN NOTICED THAT THE ASSESSEE IS NOT SHOWING ANY SUCH I NCOME. MOREOVER, IT HAS ALSO BEEN NOTICED THAT THE ASSESSEE HAD ALSO INVEST ED A SUM OF RS. 32.84 LAC ON THE CONSTRUCTION/DEVELOPMENT OF A FARM HOUSE/RES ORT AT ITS LAND BUT NO SUCH EXPENSES ARE REFLECTED IN THE BALANCE SHEET OF THE COMPANY. THEREFORE, ITA 50,51 & 52/CHD/2020 A.Y. 2009-10, 2010-11 & 2011-12 PAGE 7 OF 8 IT IS CLEAR THAT THE EXPENSES HAVE BEEN MET OUT FRO M THE INCOME .WHICH HAS NOT BEEN SHOWN IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THEREFORE, KEEPING IN VIEW THE FACTS NARRATED ABOVE , I HAVE REASONS TO BELIEVE THAT AN INCOME OF RS. 32,84,000/- HAS ESCAP ED ASSESSMENT WITHIN THE MEANING OF SECTION 147(A) OF THE INCOME TAX ACT, 19 61 FOR THE A.Y. 2009-10. 18. A PERUSAL OF THE ABOVE REASONS RECORDED REVEAL THAT RE-OPENING OF THE ASSESSMENT HAS BEEN MADE BY THE AO ON THE REPOR T OF INVESTIGATION WING THAT THE ASSESSEE COMPANY HAS BEEN USING ITS A SSETS FOR ARRANGING MARRIAGE FUNCTIONS. HOWEVER, THE ASSESSEE HAS NOT OFFERED ANY INCOME FROM THE ABOVE ACTIVITY. FURTHER IT WAS NOTICED TH AT THE ASSESSEE HAD ALSO INVESTED A SUM OF RS. 32.84 LACS ON CONSTRUCTI ON/ DEVELOPMENT OF FARM HOUSES/RESORT AT ITS LAND BUT NO SUCH EXPENSES ARE REFLECTED IN THE BALANCE SHEET OF THE COMPANY. THEREFORE, THE AO FOR MED THE BELIEF THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. 19. THE LD. COUNSEL FOR THE ASSESSEE, IN THIS RESP ECT HAS SUBMITTED THAT THE ASSESSEE DOES NOT OWN ANY MARRIAGE PALACE OR RE SORT AS ALLEGED BY THE AO. THAT THERE WAS NO RELIABLE INFORMATION/DOCU MENT/EVIDENCES AVAILABLE WITH THE AO TO FORM THE BELIEF THAT THE A SSESSEE HAS BEEN RUNNING ANY MARRIAGE PALACE OR HAD CONSTRUCTED A RE SORT AS HAS BEEN ALLEGED IN THE REASONS RECORDED. HE HAS FURTHER SU BMITTED THAT EVEN OTHERWISE, THE AO HAS NOT MADE ANY ADDITION ON ACCO UNT OF INCOME FROM ANY MARRIAGE PALACE/RESORT. THE LD. DR ON THE OTHER HAND HAS RELIED UPON THE F INDINGS OF THE LOWER AUTHORITIES. 20. I FIND THAT THE REASONS RECORDED BY THE AO ARE VAGUE AND ARE BASED ON BORROWED SATISFACTION. THE AO AFTER RECEI PT OF THE ALLEGED INFORMATION WAS SUPPOSED TO APPLY HIS MIND AND SHOU LD HAVE FORMED THE BELIEF BASED ON SOME RELIABLE EVIDENCES THAT THE AS SESSEE OWNED ANY MARRIAGE PALACE/RESORT. EVEN AFTER ASSESSMENT, THE AO HAS NOT MADE ANY ADDITION ON ACCOUNT OF ANY OWNERSHIP OF THE ASS ESSEE OF ANY MARRIAGE PALACE/RESORT. THE AO DID NOT HAVE ANY MA TERIAL TO FORM THE BELIEF THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THEREFORE, THE RE-OPENING OF THE ASSESSMENT IN MY V IEW IS BAD IN LAW AND THE SAME IS ACCORDINGLY ORDERED TO BE QUASHED. 10. ACCORDINGLY, IN THE ABSENCE OF ANY CHANGE IN FA CTS, CIRCUMSTANCES OR POSITION OF LAW, THE APPEAL OF THE ASSESSEE IS ALLOWED. THE RE-OPENING IS HELD TO BE NOT MAINTAIN ABLE AND THE IMPUGNED ORDER IS SET ASIDE AND THE ASSESSMENT ORDER IS QUASHED. ITA 50,51 & 52/CHD/2020 A.Y. 2009-10, 2010-11 & 2011-12 PAGE 8 OF 8 11. SINCE IN ITA 51 & 52/CHD/2020, THERE IS NO CHAN GE IN FACTS, CIRCUMSTANCES OR POSITION OF LAW, GROUND NO. 2 RAISED THEREIN WHICH IS IDENTICAL TO GROUND NO. 2 AS CONSI DERED IN ITA 50/CHD/2020, THE APPEALS ARE ALLOWED IN RESPECT TO THE SAID GROUND. THE RE-OPENING IS HELD TO BE BAD IN LAW AN D THE ASSESSMENT ORDERS ARE QUASHED SETTING ASIDE THE IMP UGNED ORDER IN BOTH THESE YEARS ALSO. 12. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. SAID ORDER WAS PRONOUNCED AT THE TIME OF VIRTUAL HEARING ITSELF IN THE PRESENCE OF THE PARTIES VIA WEBEX. ORDER PRONOUNCED ON 16 TH JUNE,2021. SD/- ( !' ) (DIVA SINGH) # / JUDICIAL MEMBER ' ( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , , / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR