Shri Hari Ram Gupta, Delhi V. ITO, New Delhi

ITA 5111/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7175 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 09-05-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 04-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVINDER MANI
• Keywords: Reopening of assessment; Gift; Opportunity of being heard; Reason to believe; Reassessment proceedings
• Section: 147; 148

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI I.C.SUDHIR , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 5111/DEL/2013 (ASSESSMENT YEAR: 2002 - 03 ) SHRI HARI RAM GUPTA, C/O. M/S. AVC & CO., CA, 5C/9, IIND FLOOR, OPP. LIBERTY CINEMA, NEW ROHTAK ROAD, DELHI PAN:AAIPG5121E VS. ITO, WARD - 25(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. RAKESH GUPTA, ADV MR. SOMIL AGARWAL, ADV REVENUE BY: SH. RAVINDER MANI, SR. DR DATE OF HEARING 09/05/ 2016 DATE OF PRONOUNCEMENT 04 / 07 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1. THIS IS A FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - XVII, NEW DELHI DATED 10.07.2013 FOR THE ASSESSMENT YEAR 2002 - 03. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT - (A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITIONS OF RS. 2,00,000/ - ON ACCOUNT OF GIFTS RECEIVED DURING THE YEAR BY RECORDING INCORRECT FACTS AND MA KING IRRELEVANT OBSERVATIONS. THEREFORE, THE ADDITIONS MADE AS SUCH MAY BE LIABLE TO BE DELETED. 2. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT - (A) HAS GROSSLY ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ORDERS FRAMED BY THE L D. AO U/S. 143(3)/ 147 AND THAT TOO WITHOUT SERVING MANDATORY NOTICE U/S. 143(2) WITHIN THE STATUTORY ALLOWABLE PERIOD. THEREFORE, THE ASSESSMENT COMPLETED AS SUCH MAY BE HELD AB - INITIO INVALID. 3. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF TH E CASE, LD. CIT - (A) HAS GROSSLY ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ORDERS FRAMED BY THE LD. AO U/S. 143(3)7 147 INSPITE OF THE FACT THAT THE LD. AO PASSED ORDERS WITHOUT JURISDICTION, AS THE APPELLANTS JURISDICTION WAS WITH ITO WARD 46(3), NEW DE LHI. THEREFORE, THE ASSESSMENT COMPLETED AS SUCH MAY BE HELD AB - INITIO INVALID. 4. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD, CIT - (A) HAS GROSSLY ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ORDERS FRAMED BY THE LD. AO U/S. 143(3)7 147 AND THAT TOO WITHOUT CONSIDERING THE MATERIAL ON RECORD; THEREFORE, THE ADDITIONS MADE AS SUCH PER GROUND OF APPEALS NO. 2 MAY BE LIABLE TO BE DELETED. PAGE 2 OF 5 5. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT - (A) HAS GROSSLY ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ORDERS FRAMED BY THE LD. AO U/S. 143(3)7 147 AND THAT TOO WITHOUT GIVING AN ADEQUATE OPPORTUNITY OF BEING HEARD, THEREFORE, THE ADDITIONS MADE AS SUCH AS PER GROUNDS OF APPEALS NO. 2 MAY BE LIABLE TO BE DELETED . 6. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT - (A) HAS GROSSLY ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ORDERS FRAMED BY THE LD. AO U/S. 143(3)7 147 AND THAT TOO WITHOUT PROVIDING THE MATERIAL TO APPELLANT COLLECTED ON TH E BACK OF HIM, THEREFORE, THE ADDITIONS MADE AS SUCH AS PER GROUNDS OF APPEALS NO. 2 MAY BE LIABLE TO BE DELETED. 7. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT - (A) HAS GROSSLY ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ORDER S FRAMED BY THE LD. AO U/S. 143(3)/ 147 AND THAT TOO WITHOUT PROVIDING THE OPPORTUNITY OF CROSS - EXAMINATION OF THE PARTIES WHO WERE EXAMINED BY THE LEARNED AO ON THE BACK OF IT; THEREFORE, THE ADDITIONS MADE AS SUCH AS PER GROUNDS OF APPEALS NO. 2 MAY BE LIABLE TO BE DELETED. 8. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT - (A) HAS GROSSLY ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ORDERS FRAMED BY THE LD. AO U/S. 143(3)7 147 AND THAT TOO WITHOUT FINDING ANY MATERIAL AGAINST TH E APPELLANT IN THE BOOKS OF ACCOUNTS EXAMINED BY HIM AND WITHOUT ASSIGNING COGENT REASONS; THEREFORE, THE ADDITIONS MADE AS SUCH AS PER GROUNDS OF APPEALS NO. 2 MAY BE LIABLE TO BE DELETED. 9. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT - (A) HAS GROSSLY ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ACTION OF THE LD. AO DESPITE THE FACT THAT HE INVOKED HIS RE ASSESSMENT JURISDICTION BY INVOKING SECTION 147 SIMPLY ON THE BASIS OF INFORMATION AND WITHOUT HAVING ANY 'REASONS TO * BELI EVE' OR APPLICATION OF MIND THAT THE INCOME HAS ESCAPED ASSESSMENT, THEREFORE, THE ORDERS PASSED ON THE BASIS OF SUCH A DEFECTIVE NOTICE MAY BE LIABLE TO BE QUASHED. 10. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT - (A) HAS GROSSL Y ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ACTION OF THE LD. AO DESPITE THE FACT THAT HE INVOKED SECTION 147 WITHOUT HAVING ANY BASIS OF ESCAPEMENT OF INCOME AS THE BASIC DOCUMENT I.E. INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2002 - 03 WAS NOT AVAILABLE AND TRACEABLE WITH THE AO AT THE TIME OF ALLEGED, ISSUANCE OF NOTICE U/S. 148. THEREFORE, REASON TO BELIEVE IS BASED ON PURELY GUESSWORK ONLY. THEREFORE, THE ORDERS PASSED ON THE BASIS OF SUCH A DEFECTIVE NOTICE MAY BE LIABLE TO BE QUASHED. 11. THAT HAVIN G REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT - (A) HAS GROSSLY ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ACTION OF THE LD. AO DESPITE THE FACT THAT HE INVOKED SECTION 147 WITHOUT FIRST HAVING DISPOSED OF F THE CASE UNDER SECTION 143(1)/ 14 3(3) ETC. AS THE SAME FACT COULD NOT FIND A MENTION IN THE ASSESSMENT ORDERS. THEREFORE, REASON TO BELIEVE IS BASED ON PURELY GUESSWORK ONLY. THEREFORE, THE ORDERS PASSED ON THE BASIS OF SUCH A DEFECTIVE NOTICE MAY BE LIABLE TO BE QUASHED. 12. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT - (A) HAS GROSSLY ERRED IN LAW AND ON FACTS, IN CONFIRMING THE ACTION OF THE LD. AO DESPITE THE FACT THAT HE INVOKED SECTION 147 WITHOUT FIRST HAVING STATUTORY REQUIREMENT OF SECTION 151(2) REGARDIN G THE SATISFACTION OF THE HON'BLE JOINT COMMISSIONER OF TAX, AS THE SAME IS ABSENT IN THE FILE HAVING PAGE 3 OF 5 NO COMMENT AND SEAL OF THE HONBLE JOINT COMMISSIONER OF INCOME TAX. AS SUCH, THE ORDERS PASSED IN THE ABSENCE OF THESE STATUTORY REQUIREMENTS MAY BE LIAB LE TO BE QUASHED. 3. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF COMMISSION AGENT IN PLASTIC MATERIAL. DURING THE YEAR THE ASSESSEE HAS RECEIVED OF RS. 1 LAKH FROM SH. SUBHASH GUPTA AND RS. 1 LAKH FROM SHRI MANISH AGARWAL. THE INVESTIGATION WING RECEIVED THE INFORMATION THAT MR. SUBHASH GUPTA IS AN ACCOMMODATION ENTRY PROVIDER. THEREFORE, THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUING NOTICE U/S 148 OF THE INCOME TAX ACT ON 24.03.2009. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED COPY OF THE GIFT DEED FROM THE ABOVE TWO DONORS AND BANK STATEMENT OF SH. MANISH GUPTA. THE ASSESSEE WAS ASKED TO PROVIDE THE BANK STATEMENT OF SHRI SUBASH GUPTA. ON PERUSAL OF THE BANK ACCOUNT IT WAS FOUND THAT TH E BEFORE ISSUING THE CHEQUE THERE WAS NEGLIGIBLE BANK BALANCE IN THE BANK ACCOUNT OF THE DONOR. SUMMONS U/S 141 WERE ALSO ISSUED TO BOTH THE DONOR WHICH WERE RECEIVED BANK FROM POSTAL AUTHORIZES AS NO SUCH PERSON WAS FOUND AT THE GIVEN ADDRESS. THEREFORE, THE LD ASSESSING OFFICER WAS OF THE VIEW THAT IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE PARTIES WERE NOT PROVIDED AND THEREFORE MADE AN ADDITION OF RS. 2 LAKHS TREATING THE UNDISCLOSED INCOME OF THE ASSESSEE. THE LD CIT(A) ON APPEAL BEFORE HIM CON FIRM THE ABOVE ADDITION AND THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US. 4. LD AR OF THE APPELLANT SUBMITTED THAT THE ASSESSEE FILED ORIGINAL RETURN OF INCOME ON 29.07.2002 FOR AY 2002 - 03 AND FURTHER, NOTICE WAS ISSUED ON 24.03.2009 NOTICE U/S 148 OF THE ACT AT PAGE NO. 16 OF THE PAPER BOOK. HE SUBMITTED THAT REASONS ARE RECORDED WHICH DOES NOT STATE THAT WHAT IS THE FAILURE ON PART OF THE ASSESSEE. HE FURTHER, REFERRED TO PAGE NO. 17 AND ALSO STATED THAT THE SATISFACTION RECORDED BY THE JOINT COMMISSIONER OF INCOME TAX IS ALSO NOT PROPER. HIS FURTHER ARGUMENT WAS THAT THERE IS NO SPECIFIC ALLEGATION AGAINST THE ASSESSEE AND FURTHER BEFORE ISSUING THE NOTICE THE LD ASSESSING OFFICER HAS NOT RECORDED A FINDING ABOUT ESCAPEMENT OF INCOME. HE THEREFORE RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF G&G PHARMA LTD. HE FURTHER REFERRED TO AFFIDAVIT SUBMITTED BY THE ASSESSEE AT PAGE NOS. 7 & 8 OF THE PAPER BOOK AND STATED THAT THE ASSESSEE HAS NOT FILED ANY RETURN IN RESPONSE TO NOTICE DATED 24.03 .2009 AND HE SUBMITTED A PAGE 4 OF 5 LETTER CHALLENGING THE JURISDICTION OF THE APPELLANT WAS NOT WITH ITO WARD - 25(1), NEW DELHI BUT WITH ITO, WARD 46(1). HE THEREFORE SUBMITTED THAT THIS AFFIDAVIT HAS NOT BEEN CONTROVERTED AND THEREFORE THE ASSESSMENT ORDER ITSELF IS WITHOUT JURISDICTION. HE FURTHER STATED THAT THE ASSESSEE HAS FILED A RTI APPLICATION ABOUT THE JURISDICTION OF THE ASSESSEE WHICH ALSO SHOWS THAT THE JURISDICTION HAS BEEN WITH THE ITO, WARD 46(2) FROM 08.02.2007 TO 28.06.2008 AND THEREAFTER, WITH ITO, W ARD 46(1). THE INFORMATION ALSO SHOWS THAT JURISDICTION OVER THE ASSESSEE FROM 10.01.2007 TO 08.02.2007 WERE WITH ITO, WARD 25(1). HE FURTHER STATED THAT WHERE THERE IS NO ASSESSMENT ORIGINALLY THERE CANNOT BE ANY REASSESSMENT. FOR THIS HE RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF STANDARD CHARTERED FINANCE LTD. VS. CIT . IN VIEW OF THIS HE CHALLENGED THE PROCEEDINGS U/S 147 ON SEVERAL FRONTS. 5. THE LD DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 6. WE HAVE CAREFULLY CONSIDERED THE R IVAL CONTENTIONS AND WE HAVE ALSO REFERRED TO THE VARIOUS DOCUMENTS RELIED UPON BY THE LD AR. ON THE PERUSAL OF THE REASONS RECORDED WHICH IS PLACED AT PAGE NO. 16 AND 17 OF THE PAPER BOOK IT IS APPARENT THAT THE LD ASSESSING OFFICER HAS RECORDED THE REASO NS ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING. THERE IS NO SPECIFIC ALLEGATION IN THE REASONS RECORDED WITH THE INFORMATION GIVEN BY INVESTIGATION WING. THEREFORE, IT IS APPARENT THAT AO HAS NOT APPLIED HIS MIND SO AS TO COME TO AN INDEPENDENT CONCLUSION THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED. HONBLE DELHI HIGH COURT IN CASE OF PR. COMMISSIONER OF INCOME TAX VS. G&G PHARMA INDIA LTD. IN ITA NO. 545/2015 DATED 08.10.2015 CONFIRMING THE ORDER OF THE ITAT AS HELD THAT WHEN BASIC REQUIREMENT THAT AO HAS MUST APPLY HIS MIND TO MATERIAL ON RECORD IN ORDER TO HAVE REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT IS MISSING THEN REOPENING OF ASSESSMENT IS NOT JUSTIFIED. IN VIEW OF ABOVE DECISION OF THE HONBLE HIGH COURT WE ARE OF THE VIEW THAT IN THE PRESENT CASE ALSO THERE IS FAILURE ON THE PART OF THE LD ASSESSING OFFICER IN APPLYING HIS OWN MIND TO THE INFORMATION AVAILABLE. O N THIS COUNT REASSESSMENT PROCEEDINGS ARE NOT SUSTAINABLE. FURTHER, WE HAVE ALSO PERUSED THE SATISFACTION RECORDED BY THE JOINT COMMISSIONER OF INCOME TAX RANGE - 25, NEW DELHI WHEREIN HE HAS SIMPLY GIVEN APPROVAL STATING THAT YES I AM SATISFIED. THE ABOV E KIND OF SATISFACTION SHOWS THAT JOINT PAGE 5 OF 5 COMMISSIONER DID NOT APPLY HIS MIND BUT SIGNED ON THE DOTTED LINE. THE HONBLE SUPREME COURT IN CASE OF CIT VS. S GOENKA LIME AND CHEMICALS LTD. 64 TAXMANN.COM 313 (SC) HAS CONFIRMED DECISION OF HONBLE MADHYA PRADE SH HIGH COURT IN ITA NO. 82/2012 DATED 15.10.2014 WHEREIN, REASSESSMENT ON IDENTICAL FACTS WAS QUASHED. IN VIEW OF THE ABOVE SUPREME COURT DECISION ALSO THE REASSESSMENT CANNOT BE SUSTAINED. AS WE HAVE ALREADY QUASHED REASSESSMENT PROCEEDINGS ALL OTHER ARG UMENTS RAISED BY THE LD AR BECOMES ACADEMIC IN NATURE AND THEREFORE, SAME ARE NOT REQUIRED TO DEAL WITH SPECIFICALLY. IN VIEW OF THIS WE DISPOSE OF GROUND NO. 9 AND 12 OF THE APPEAL ALLOWING BOTH OF THEM. 7. IN THE RESULT CONSEQUENTLY THE APPEAL OF THE ASSES SEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 4 / 07 /2016 . - S D / - - S D / - ( I.C.SUDHIR ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 4 / 07 / 2016 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI