M/s. RL Travels, New Delhi V. ACIT, New Delhi

ITA 5414/DEL/2012

• Counselvise Citation: 541420114 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-10-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 23-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Keywords: Reopening of assessment; Difference of opinion; Reason to believe; Change of opinion
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER & SHRI J.S. REDDY, ACCOUNTANT MEMBER ITA NO. 5414/DEL/2012 ASSESSMENT YEAR: 2002-03 RL TRAVELS, VS. ACIT, 118, ANSAL BHAWAN, CENTRAL CIRCLE-12, KASTURBA GANDHI MARG, NEW DELHI. NEW DELHI. AAAFR7325R (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHWANI KUMAR, CA RESPONDENT BY : SH. SAMEER SHARMA, SR. DR ORDER PER H.S. SIDHU, J.M. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 03.09.2012 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS)-XXXI, NEW DELHI FOR A.Y. 2002-03. 2. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE STATED THAT IN THE CASE OF ASSESSEES SISTER CONCERN EXACTLY SIMIL AR LEGAL ISSUE WAS RAISED BEFORE THE ITAT, DELHI C BENCH AND THE BEN CH HAS QUASHED THE REOPENING OF ASSESSMENT. HE HAS FILED A COPY OF TH E ORDER DATED JUNE 18, 2014 IN THE CASE OF ASSESSEES SISTER CONCERN I .E. REPORTED AS (2014) 33 ITR (TRIB) 526 (DEL.) INDO ARAB AIR SERVICES VS. ACIT. HE REQUESTED THAT KEEPING IN VIEW OF THE DECISION OF AFORESAID C ASE THE REOPENING OF ASSESSMENT IN THE CASE OF ASSESSEE MAY BE QUASHED. ON THE CONTRARY LD. DR RELIED UPON THE ORDER PASSED BY THE REVENUE AUTHORITIES. ITA NO. 5414/D/2012 RL TRAVELS 2 2.1 WE HAVE HEARD THE BOTH PARTIES AND PERUSED THE RECORDS AVAILABLE WITH US SPECIALLY THE ORDER PASSED BY THE ITAT DELH I C BENCH IN THE CASE OF ASSESSEES SISTER CONCERN I.E. INDO ARAB AIR SER VICES VS. ACIT REPORTED IN [2014] 33 ITR (TRIB) 526 (DEL.). THE RELEVANT F INDING GIVEN BY THE ITAT DELHI C BENCH (SUPRA) IS REPRODUCED AS UNDER: WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE E NTIRE MATERIAL AVAILABLE ON RECORD. SECTION 147 CAN BE I NVOKED WHEN THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS EASCAPED ASSESSME NT. THUS, THE CRUCIAL POINT IS THAT THE AO SHOULD HAVE PROPER REASON TO BELIEVE THE ESCAPEMENT OF INCOME. THE W ORDS REASON TO BELIEVE AND ESCAPEMENT OF INCOME HAVE BEEN JUDICIALLY INTERPRETED BY VARIOUS COURTS. THE HONBLE SUPREME COURT IN THE CASE OF LAKHMANI MEWAL DAS (1976) 103 ITR 347 (SC) HAS HELD THAT THE POWERS OF THE INCOME-TAX OFFICER TO REOPEN THE ASSE SSMENT, THOUGH WIDE, YET ARE NOT PLENARY. THE WORDS OF THE STATUTE ARE REASON TO BELIEVE AND NOT REASON TO SUSPECT . THE REOPENING OF AN ASSESSMENT IS A SERIOUS MATTER AND IT SHOULD BE ENSURED THAT THESE POWERS ARE USED BY THE AO PROPERLY. THUS, THE HONBLE SUPREME COURT HAS HELD THAT THE REASON TO SUSPECT CANNOT BE A BASIS FOR REASON TO BELIEVE. THE HONBLE SUPREME COURT IN THE CASE OF GANGA SAR AN AND SONS P. LTD. [1981] 130 ITR 1 (SC) HAS HELD THA T THE AMENDED WORDS IN SECTION 147, I.E., HAS REASON TO BELIEVE ARE STRONGER THAN THE WORDS IS SATISFIED . THE BELIEF ENTERTAINED BY THE AO MUST NOT BE ARBITRARY AND IT MUST BE BASED ON REASONS WHICH ARE RELEVANT AND MAT ERIAL. THE COURT THOUGH CANNOT GO INTO THE ADEQUACY OR SUFFICIENCY OF THE REASON BUT COURT CAN CERTAINLY E XAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE BEARING O N THE MATTER IN REGARD TO WHICH THE BELIEF IS EXERCISED. THE HONBLE SUPREME COURT IN THE CASE OF KELVINATO R OF INDIA LTD. [2010] 320 ITR 561 (SC) HAS ALSO HELD TH AT FOR THE AO TO REOPEN THE ASSESSMENT THERE SHOULD BE TAN GIBLE MATERIAL TO COME TO THE CONCLUSION AND SHOULD HAVE A LIVE- LINK WITH THE FORMATION TO BELIEF TO COME TO A CONC LUSION THAT THERE IS ESCAPEMENT OF INCOME. ON SIMILAR LINES, THE HONBLE SUPREME COURT IN THE CASE OF SHEO NATH SINGH [1971] 82 ITR 147 (SC) HAS HELD THAT ITA NO. 5414/D/2012 RL TRAVELS 3 THE REASON TO BELIEVE MUST BE THAT OF A REASONABLE PERSON BASED UPON REASONABLE GROUNDS; THE AO MAY ACT ON DI RECT OR CIRCUMSTANTIAL EVIDENCE, BUT NOT ON MERE SUSPICI ON OR VAGUE INFORMATION. IF PROPER REASON FOR HIS BELIEF DOES NOT EXIST THEN THE REOPENING OF ASSESSMENT WILL BE WITH OUT JURISDICTION. CONSIDERING THE FACTS OF THE CASE BEFORE US IN THE LIGHT OF THE ABOVE PLEADINGS AND OTHER JUDGMENTS ON THE MEAN ING OF THE WORDS REASON TO BELIEVE, AS RECORDED, WE H AVE TO EXAMINE WHETHER IN THE ASSESSEES CASE THE REASONS AS RECORDED CONSTITUTE A TANGIBLE AND CORRECT AND ARE INDICATIVE ESCAPEMENT OF INCOME IN MATERIAL TERMS, OR THEY AMOUNT TO MERE SUSPICION, VAGUE, OR INCORRECT INFOR MATION WHICH OUGHT TO HAVE BEEN FURTHER VERIFIED BY THE AO FROM THE ASSESSEE RECORD, WHICH ARE NOT DISPUTED TO BE AVAILABLE. IN ORDER TO MAKE A REASONABLE BELIEF IN TERMS OF S ECTION 147 THE AO SHOULD BE IN POSSESSION OF SOME VALID INFORMATION WHICH SHOULD HAVE A LIVE NEXUS WITH THE ASSESSEES RECORD OF INCOME. THE INFORMATION SHOUL D BE CORRECT IN THE FIRST PLACE AND SHOULD NOT MERELY RA ISE SUSPICION. IN THE CASE BEFORE US IT HAS NOT BEEN D ISPUTED THAT THE INFORMATION IN POSSESSION OF THE AO WAS ON LY TO THE EFFECT OF COMMUNICATION FROM THE ENFORCEMENT DIRECTORATE WHICH IS REPRODUCED ABOVE. FROM THIS COMMUNICATION THE ENFORCEMENT DIRECTORAT E HAS COMMUNICATED (I) THE ASSESSEE HAS NOT DISCLOSED CASH TRANSACTIONS I N ITS BOOKS OF ACCOUNTS. (II) IN THE INVESTIGATION OF THE ENFORCEMENT DIRECTORATE NO PLAUSIBLE EXPLANATION WAS OFFERED BY THE PARTNER OF THE ASSESSEE ABOUT THE SOURCE OF THIS CASH RECEIVED. THIS ENFORCEMENT DIRECTORATE INFORMATION IN THE FIR ST PLACE IS NOT CORRECT IN AS MUCH AS THE ASSESSEE IS REGULARLY ASSESSED TO INCOME TAX. RETURN ALONG WIT H ACCOUNT STATEMENT, SALES, PURCHASES, BANK TRANSACTI ONS ARE FILED ON THE BASIS OF AUDITED BOOKS OF ACCOUNT. THE AO HIMSELF HAS GIVEN A FINDING IN THE REASONS THAT THE CASH TRANSACTIONS ARE RECORDED IN THE BOOKS OF ACCO UNT. THUS FROM THE AOS REASONS ITSELF IT EMERGE, THE INFORMATION SENT BY THE ENFORCEMENT DIRECTORATE WAS NOT CORRECT. ITA NO. 5414/D/2012 RL TRAVELS 4 THE INFORMATION NO PLAUSIBLE EXPLANATION FROM THE ENFORCEMENT DIRECTORATE POINT OF VIEW AGAIN IS VAGU E AND CANNOT BE A BASIS FOR THE AO TO FORM A BELIEF U NLESS THE STATEMENT GIVEN BY MR. CHETAN GUPTA TO THIS EFF ECT WAS ALSO ENCLOSED WITH THE INFORMATION WHICH DOES N OT EMERGE FROM RECORD. THUS, BOTH THE SUSPICION RAISE D BY ENFORCEMENT DIRECTORATE WERE INCORRECT AND OUGHT TO HAVE BEEN VERIFIED FROM AVAILABLE RECORD BY THE AO TO COME TO A REASON TO BELIEVE THAT THE ASSESSEES INC OME HAD ESCAPED ASSESSMENT. WHEN THE AO HAS RECORDED IN THE REASONS THAT ALL THE CASH TRANSACTIONS ARE RECORDED IN THE ASSESSEE S BOOKS OF ACCOUNT, ENTIRE EDIFIES OF THE VERACITY OF THE ENFORCEMENT DIRECTORATE INFORMATION FAILS. BESIDES , IN THE ABSENCE OF ANY INFORMATION ABOUT THE NON-PLAUSI BLE EXPLANATION FROM THE ENFORCEMENT DIRECTORATE POINT OF VIEW THIS VAGUE INFORMATION ON ITS OWN ALSO CANNOT BE A BASIS TO FORM A REASONED BELIEF. THUS, IN OUR CONS IDERED OPINION THE AO HAS BLINDLY RELIED ON THE SUSPICION INTIMATED BY THE ENFORCEMENT DIRECTORATE. THE ASSE SSING OFFICER ON ONE HAND GAVE A REASON THAT TRANSACTIONS ARE RECORDED, ON THE OTHER HAND WITHOUT MAKING ANY EFFO RT RECORDED REASON TO BELIEVE TO REOPEN THE ASSESSMENT OF THE ASSESSEE. IN OUR CONSIDERED VIEW, THE REASON TO BELIEVE MADE BY THE AO ARE SELF-CONTRADICTORY AND BASED ONLY ON SUSPICION. THE LD. CIT(APPEALS) HAS DECIDED THE IS SUE ONLY ON THE ISSUE OF CHANGE OF OPINION OR SUFFICIEN CY OF REASONS AND NOT ON THE TENABILITY AND CORRECTNESS O F REASONS AND THE AOS OWN CONTRADICTORY REASONS. THE ASSESSEE HAS ASSAILED THE PRIMARY INFORMATION ITSELF BEING WRONG, VAGUE AND BEREFT OF ANY MATERIA L. WE FIND MERIT IN THE ARGUMENT OF LD. COUNSEL THAT THE REASON TO BELIEVE AS FORMED BY THE AO ARE NOT IN TERMS AS CONTEMPLATED BY SECTION 147 AND AS MANDATED BY THE COURTS IN THE DECISIONS REFERRED TO ABOVE. RESPECT FULLY FOLLOWING THE ABOVE REFERRED JUDGMENTS BY THE HONB LE SUPREME COURT, I.E., LAKHMANI MEWAL DAS [1976] 103 ITR 437 (SC); GANGA SARAN & SONS P. LTD. [1981] 130 ITR 1 (SC), KELVINATOR OF INDIA LTD. [2010] 320 ITR 561 (SC) AND SHEO NATH SINGH [1971] 82 ITR 147 (SC), WE HOLD THAT THE AO DID NOT HAVE VALID REASON TO BELIE VE THAT ITA NO. 5414/D/2012 RL TRAVELS 5 IMPUGNED INCOME HAD ESCAPED ASSESSMENT. THEREBY, T HE REOPENING IS QUASHED AS BAD IN LAW. SINCE WE HAVE HELD THE REOPENING OF ASSESSMENT TO BE BAD IN LAW, THEREFORE, WE NEED NOT TO GO INTO TH E MERITS OF THE CASE. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED AN D THAT OF THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 18, 2014. 3. KEEPING IN VIEW OF THE AFORESAID ORDER PASSED BY THE ITAT DELHI C BENCH IN THE CASE OF ASSESSEES SISTER CONCERN (SUPRA) WE ARE OF THE VIEW THAT THE LEGAL ISSUE RAISED BY THE ASSESSEE IS EXACTLY SIMILAR TO THE CASE OF ASSESSEES SISTER CONCERN I.E. INDO ARAB AI R SERVICES VS. ACIT (SUPRA) AND RESPECTFULLY FOLLOWING THE AFORESAID OR DER, WE QUASH THE REOPENING OF ASSESSMENT IN THE CASE OF ASSESSEE BY ACCEPTING THE PRESENT APPEAL. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22.10.2014 SD/- SD/- (J.S. REDDY) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22/10/2014 *KAVITA, P.S. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR ITA NO. 5414/D/2012 RL TRAVELS 6