Surender Kumar Chawla HUF, New Delhi V. DCIT, New Delhi

ITA 5385/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53340 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 22-11-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 01-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Keywords: Reopening of assessment; Unexplained cash credit; Accommodation entries
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMEBR AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A NO. 5385/DEL/2010 ASSTT. YEAR 2001-02 SURENDER KUMAR CHAWLA HUF, 44/52, PUNJABI BAGH (WEST) NEW DELHI. VS. DCIT, CIRCLE 25 (1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. SINGHVI, CA RESPONDENT BY: SHRI B.R.R. KUMAR, DR ORDER PER RAJPAL YADAV, JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LD. CIT(A) DATED 10 TH SEPTEMBER, 2010 PASSED FOR ASSTT. YEAR 2001-02. TH E GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONAN CE WITH RULE 8 OF ITAT RULES. THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NA TURE. IN BRIEF, THE GRIEVANCE OF ASSESSEE IS OF TWO FOLDS . IN THE FIR ST FOLD, HE HAS CHALLENGED REOPENING OF ASSESSMENT BY ISSUANCE OF NOTICE U/S 1 48 AND IN THE SECOND FOLD, HE HAS CHALLENGED CONFIRMATION OF ADDITION OF `. 766149/- WITH THE AID OF SECTION 68 ON ACCOUNT OF UNEXPLAINED CREDITS AVA ILABLE IN THE ACCOUNTS. ITA NO. 5385/DEL/2010 ASSTT. YEAR 2001-02 2 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED HIS RETURN OF INCOME FOR ASSTT. YEAR 2001-02 DECLARING INCOME OF `. 9,93,415/-. LD. AO HAS OBSERVED THAT HE HAD RECEIVED AN INFORMATION IN THE FORM OF CD FROM DIT (INVESTIGATION), NEW DELHI ALONGWITH LETTER DAT ED 9 TH FEBRUARY, 2007 WHICH CONTAINS THE LIST OF PERSONS WHO HAVE BEEN TH E BENEFICIARIES OF ACCOMMODATION ENTRIES. ACCORDING TO THE AO, ASSESSE E IS ONE OF THE BENEFICIARY AND HE RECEIVED ACCOMMODATION ENTRIES T O THE TUNE OF `. 7,66,149/- WHICH HAS ESCAPED ASSESSMENT. HE, THEREF ORE, RECORDED THE REASONS AND REOPENED THE ASSESSMENT. THE NOTICE U/S 148 OF THE INCOME TAX ACT WAS ISSUED ON 26 TH MARCH, 2008. ON RECEIPT OF NOTICE, ASSESSEE HAS FILED OBJECTIONS AGAINST THE REOPENING AND THE COPY OF SUCH LETTER HAS BEEN PLACED ON PAGES 3 TO 6 OF THE PAPER BOOK. LD. AO HAS REJECTED THE OBJECTION FILED BY THE ASSESSEE AND PROCEED TO FRAM E THE REASSTT. ORDER. ACCORDING TO THE AO, ON MERIT, ASSESSEE WAS UNABLE TO EXPLAIN THE ENTRIES AND, THEREFORE, HE MADE AN ADDITION OF `. 7,66,149/ -. 3. APPEAL TO THE LD. CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE. 4. LD. COUNSEL FOR THE ASSESSEE WHILE CHALLENGING T HE REOPENING OF ASSESSMENT TOOK US THROUGH THE REASONS RECORDED BY THE AO WHICH IS AVAILABLE ON PAGE 2 OF THE ASSTT. ORDER. HE SUBMITT ED THAT ON PERUSAL OF THESE REASONS, IT DOES NOT DISCLOSE THE BASIS FOR T HE FORMATION OF BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. LD. AO SIMPLY M ADE REFERENCE TO THE CD AND FEW ENTRIES WHICH ACCORDING TO HIM RECEI VED BY THE ASSESSEE. ITA NO. 5385/DEL/2010 ASSTT. YEAR 2001-02 3 HE HAS NOWHERE DISCLOSED THE NATURE OF THESE ENTRIE S AND HOW HE ARRIVED AT A PRIME FACIE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT. ON THE STRENGTH OF HONBLE DELHI HIGH COURT S DECISION IN THE CASE OF SIGNATURE HOTELS PVT. LTD. VS ITO REPORTED IN 60 DTR PAGE 30, HE POINTED OUT THAT HONBLE DELHI HIGH COURT HAS CONSIDERED REOPENING O F AN ASSESSMENT UNDER SIMILAR CIRCUMSTANCES AND ARRIVED AT A CONCLU SION THAT THE COURT MAY NOT GO INTO THE SUFFICIENCY OF REASONS FOR AUTH ORISING THE AO TO FORM AN OPINION FOR REOPENING OF THE ASSTT. BUT THE EXIS TENCE OF BELIEF CAN BE A SUBJECT MATTER OF SCRUTINY. THE COURT CAN CONSIDER WHETHER THE BELIEF OF THE AO IS A BONAFIDE ONE BASED ON SPECIFIC INFORMAT ION OR IT IS BASED ON VAGUE, IRRELEVANT OR NON SPECIFIC INFORMATION. IF T HERE IS NO LIVE LINK BETWEEN THE INFORMATION VIS A VIS FORMATION OF SUCH BELIEF, THEN REASSESSMENT WOULD NOT BE SUSTAINABLE. LD. COUNCIL FOR THE ASSESSEE TOOK US THROUGH PARAGRAPH NO. 13 TO 15 OF THE JUDGMENT F OR A SPECIFIC REFERENCE. HE POINTED OUT THAT THERE WAS NO INFORMA TION POSSESSED BY THE AO WHICH CAN ENABLE HIM TO FORM AN OPINION THAT INC OME HAS ESCAPED ASSESSMENT. AO HAS NOT APPLIED HIS MIND. HE HAS NOT ASCERTAINED THE NATURE OF RECEIPTS AND HOW THEY HAVE BEEN ACCOUNTED BY THE ASSESSEE IN HIS BOOKS. THE AO HAS NOT DISCLOSED THE REASONS FOR FORMATION OF BELIEF. HE, THEREFORE, PRAYED THAT REASSESSMENT BE QUASHED. 5. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER O F AO. HE SUBMITTED THAT DIT (INVESTIGATION) IS A PART OF THE INCOME TA X ORGANIZATION, WHO HAD COLLECTED INFORMATION AND WAS OF THE OPINION THAT C ERTAIN INDIVIDUALS WERE ITA NO. 5385/DEL/2010 ASSTT. YEAR 2001-02 4 INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. HE TR ANSMITTED THE INFORMATION TO ALL THE AOS IN WHOSE JURISDICTION BE NEFICIARIES ARE EXISTING. THE ASSESSEE IS ONE OF THE BENEFICIARY OF SUCH ACCO MMODATION ENTRIES AND, THEREFORE, SPECIFIC INFORMATIONS WERE WITH THE AO WHICH ENABLE HIM TO FORM AN OPINION THAT INCOME HAS ESCAPED ASSESSME NT. HE RELIED UPON THE ORDERS OF REVENUE AUTHORITIES BELOW AND PRAYED THAT GROUND OF APPEAL RAISED BY THE ASSESSEE REGARDING REOPENING OF ASSES SMENT BE REJECTED. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. THE REASONS RECORDED BY THE AO FO R REOPENING OF THE ASSESSMENT ARE AVAILABLE ON PAGE 2 OF THE PAPER BOO K. THEY READ AS UNDER :- REASONS FOR TAKING ACTION U/S 147/148 IN THE CASE OF SHRI SURINDER KUMAR CHAWLA (HUF) FOR THE ASSESSMENT YEAR 2001-2002. AN INFORMATION ABOUT ACCOMMODATION ENTRIES TAKEN BY DIFFERENT PERSONS / ASSESSEES HAS BEEN RECEIVED IN THE FORM OF CD FROM THE DIT (INV)-I, NEW DELHI THROUGH CIT, DEL HI-IX, NEW DELHI VIDE F NO. CIT-IX/HQRS/2006-07/2180 DATED 9.2 .2007 DUTY FORWARDED BY THE ADDL. CIT, RANGE-25, NEW DELH I VIDE F. NO. ADDL. CIT/R-25/06-07/1142 DATED 9.2.2007 WHICH INCLUDES THE NAME OF THE ABOVE MENTIONED ASSESSEE AS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES. THE ASSESSE E HAS TAKEN ACCOMMODATION ENTRIES TO THE TUNE OF ` 766149 /- FROM SHRI BRIJESH KUMAR, SUDHA GUPTA, SANJEEV GOEL, SARI TA RANI, MANOJ SHARMA, SAVITRI DEVI, SUSHILA DEVI GARG, SHRE E RAM GARG, SANJAY KUMAR VIDE VARIOUS INSTRUMENTS DRAWN O N CORPORATION BANK, KAMLA NAGAR BRANCH (A/C NOS. 1466 0, 12318, 16104, 12317, 17654, 11176, 9348, 14470, AND 2250 RESPECTIVELY) ON 5.4.00, 21.9.00, 3.10.00, 5.12.00, 11.12.00, AND THE SAID AMOUNT HAS BEEN CREDITED INTO ASSESSEE S BANK ACCOUNT IN INDIAN OVERSEAS BANK, PUNJABI BAGH BRANC H, NEW DELHI. ITA NO. 5385/DEL/2010 ASSTT. YEAR 2001-02 5 I HAVE, THEREFORE, RESPONSE TO BELIEVE THAT INCOME CHARGEABLE TO TAX TO THE EXTENT OF `. 766149/- HAS ESCAPED ASSESSMENT FOR AY 2001-02. IT IS , THEREFORE, NECES SARY TO TAKE ACTION U/S 147/148 IN THIS CASE FOR THE SAID ASSESS MENT YEAR. ACIT, CIRCLE-25(1), NEW DELHI 7. FROM THE PERUSAL OF THE REASONS, IT NOWHERE REVE ALS THE BASIS FOR FORMATION OF OPINION. LD. AO HAS MADE A REFERENCE T O THE INFORMATION ALLEGED TO BE CONTAINED IN THE CD. THEREAFTER, HE O BSERVED THAT ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES FROM 9 PERSONS. HE HAS GIVEN CHEQUE NUMBER AND THE DATE. HE OBSERVED THAT AMOUNTS HAVE BEEN CREDITED IN THE ACCOUNTS WITH INDIAN OVERSEAS BANK, PUNJABI BA GH. THEREAFTER, HE HAS NOT MADE ANY REFERENCE REGARDING NATURE OF THE ENTR IES OR HOW HE BELIEVED THAT THESE ARE BOGUS ENTRIES TAKEN BY THE ASSESSEE. HE HAS NOT MADE REFERENCE TO ANY MATERIAL. SOMEWHAT OF THE SIM ILAR REASONS WERE RECORDED BY THE AO IN THE CASE OF SIGNATURE HOTEL, WHICH WERE TERMED BY THE HONBLE HIGH COURT AS VAGUE NOT DISCLOSING ANY EVIDENCE ESTABLISHING NEXUS OR LIVE LINK BETWEEN THE INFORMATION AS WELL AS ESCAPEMENT OF INCOME. THE OBSERVATION OF THE HONBLE HIGH COURT I NCLUDING THE REASONS RECORDED IN PARAGRAPH 12 TO 15 OF THE JUDGMENT RE AD AS UNDER :- 12. IN THESE CIRCUMSTANCES, WE ARE EXAMINING THE RE ASONS GIVEN BY THE AO IN THE PROFORMA SEEKING PERMISSION / APPR OVAL OF THE CIT AND WHETHER THE SAME SATISFY THE PRECONDITI ONS MENTIONED IN S. 147 OF THE ACT. 13. ANNEXURE ATTACHED TO THE SAID PROFORMA PLACED O N RECORD OF THE PETITION READS AS UNDER : BENEFICIARYS NAME VALUE OF ENTRY TAKEN INSTRUMENT NUMBER BY WHICH ENTRY DATE ON WHICH ENTRY TAKEN ITA NO. 5385/DEL/2010 ASSTT. YEAR 2001-02 6 TAKEN SIGNATURE HOTELS (P) LTD. 5,00,000 AC NO. 21060 9 TH OCT.,2002 NAME OF ACCOUNT HOLDER OF ENTRY GIVING ACCOUNT BANK FROM WHICH ENTRY GIVEN BRANCH OF ENTRY GIVING BANK ACCOUNT NUMBER ENTRY GIVING ACCOUNT SWETU STONE PV SBP DG 50106 14. THE FIRST SENTENCE OF THE REASONS STATES THAT I NFORMATION HAD BEEN RECEIVED FROM DIRECTOR OF IT (INV.) THAT THE P ETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS. 5 LACS DURING FIN ANCIAL YEAR 2002-03 AS PER THE DETAILS GIVEN IN ANNEXURE. THE SAID ANNEXURE, REPRODUCED ABOVE, RELATES TO A CHEQUE REC EIVED BY THE PETITIONER ON 9 TH OCTOBER. 2002 FROM SWETU STONE PV FROM THE BANK AND THE ACCOUNT NUMBER MENTIONED THEREIN. THE LAST SENTENCE RECORDS THAT AS PER THE INFORMATION, THE A MOUNT RECEIVED WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. 15. THE AFORESAID REASONS DO NOT SATISFY THE REQUIR EMENTS OF S. 147 OF THE ACT. THE REASONS AND THE INFORMATION REF ERRED TO IS EXTREMELY SCANTY AND VAGUE. THERE IS NO REFERENCE T O ANY DOCUMENT OR STATEMENT, EXCEPT ANNEXURE, WHICH HAS B EEN QUOTED ABOVE. ANNEXURE CANNOT BE REGARDED AS A MATE RIAL OR EVIDENCE THAT PRIMA FACIE SHOWS OR ESTABLISHES NEXU S OR LINK WHICH DISCLOSES ESCAPEMENT OF INCOME. ANNEXURE IS N OT A POINTER AND DOES NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, IT IS APPARENT THAT THE AO DID NOT APPLY HIS OWN M IND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF T HE INFORMATION. THE AO ACCEPTED THE PLEA ON THE BASIS OF VAGUE INFORMATION IN A MECHANICAL MANNER. THE CIT ALSO AC TED ON THE SAME BAIS BY MECHANICALLY GIVING HIS APPROVAL. THE REASONS RECORDED REFLECT THAT THE AO DID NOT INDEPENDENTLY APPLY HIS MIND TO THE INFORMATION RECEIVED FROM THE DIRECTOR OF IT (INV.) AND ARRIVE AT A BELIEF WHETHER OR NOT ANY INCOME HA D ESCAPED ASSESSMENT. 8. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE ARE OF THE VIEW THAT THE FACTS OF THE CASE IN HAND ARE IDENTIC AL TO THE FACTS OF SIGNATURE HOTEL. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE ITA NO. 5385/DEL/2010 ASSTT. YEAR 2001-02 7 DELHI HIGH COURT, WE ARRIVED AT A CONCLUSION THAT A O FAILED TO BRING JUSTIFIABLE REASONS FOR REOPENING OF THE ASSESSMENT . ACCORDINGLY, WE ALLOW THIS GROUND OF APPEAL RAISED BY THE ASSESSEE AND QU ASH THE ASSTT. ORDER. 9. SINCE WE HAVE QUASHED THE ASSTT. ORDER, WE DO NO T WISH TO GO INTO THE ADDITIONS ON MERIT. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2011. SD/- SD/- [K.G. BANSAL] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30.11.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT