Sh. Sanjeev Aggarwal, Amritsar. V. The Dy. Commissioner of Income-tax, Amritsar.

ITA 547/ASR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63561 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-10-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 11-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Assessee Lawyers: P N ARORA
• Keywords: Reopening of assessment; Gift; Principle of natural justice; Accommodation entries; Assessment record; Reason to believe; Reassessment proceedings
• Section: 147; 148

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. 547(ASR)/2011 ASSESSMENT YEAR:2001-02 PAN :ACOPA1766B SHRI SANJEEV AGGARWAL PROP. VS. THE DY.COMMR. OF I NCOME-TAX, M/S. SHREE SATYA GURU RUBBER MILLS, CIRCLE IV, AMR ITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. P.N. ARORA, ADVOCATE RESPONDENT BY:SH. R.L. CHHANALIA, DR DATE OF HEARING:30/12/2012 DATE OF PRONOUNCEMENT:01/11/2012 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), AMRITSAR, DATED 02.09.2011 FOR THE ASSESSMENT YEAR 2001-02. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE AO AS WELL AS THE ORDER O F THE LD. CIT(A), AMRITSAR, ARE BOTH AGAINST THE FACTS OF THE CASE AN D UNTENABLE IN LAW. ITA NO.547(ASR)/2011 2 2. THAT THE LD. CIT(A) DID NOT APPRECIATE THAT THE NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961 ISSUED BY THE AO IS ILL EGAL, INVALID AND VOID AB-INITIO AND THE SAME IS LIABLE TO BE CAN CELLED. 3. THAT THE LD. CIT(A) DID NOT APPRECIATE THAT THE CONDITIONS LAID DOWN U/S 148 OF THE I.T. ACT, WERE NOT FULFILLED. A S SUCH THE ORDER IS BAD IN LAW AND THE SAME DESERVES TO BE CAN CELLED. 4. THAT THE LD. CIT(A) DID NOT APPRECIATE THAT THE OBJECTIONS FILED BEFORE THE AO AGAINST THE ISSUE OF NOTICE U/S 148 O F THE ACT, DATED 12.12.2008, WERE CORRECT AND THE APPEAL SHOUL D HAVE BEEN ACCEPTED. A COPY OF THE LETTER DATED 12.12.2008 IS MADE PART & PARCEL OF THE GROUNDS OF APPEAL AND THE ASSESSMENT MADE ACCORDINGLY DESERVES TO BE CANCELLED. 5. THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT TH ERE WAS NO NEXUS BETWEEN THE FACTS OF THE CASE AND THE REASONS RECOR DED FOR REOPENING THE CASE U/S 148 OF THE ACT AND AS SUCH T HE LD. CIT(A) FAILED TO APPRECIATE THAT THE ISSUE OF NOTIC E U/S 148 OF THE ACT, IS ILLEGAL, INVALID AND VOID AB-INITIO AND THE SAME IS LIABLE TO BE CANCELLED. 6. THAT THE LD. CIT(A) DID NOT APPRECIATE THAT THE AFFIDAVIT DATED 10.12.2008 FILED BEFORE THE AO WAS CORRECT AFFIDAVI T AND IN VIEW OF THESE CIRCUMSTANCES NO ADDITION SHOULD HAVE BEEN MADE BY THE AO AND SIMILARLY THE LD. CIT(A) WAS NOT JUST IFIED IN CONFIRMING THE ADDITION IN VIEW OF THE DECISION OF SUPREME COURT OF INDIA, IN THE CASE OF MEHTA PARIKH REPORTE D IN 30 ITR 181 AND THE ADDITION MADE BY THE AO SHOULD HAVE BEE N DELETED BY THE LD. CIT(A). 7. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE TH AT THE GIFT RECEIVED WAS GENUINE AND NO ADDITION SHOULD HAVE BE EN MADE. SIMILARLY, THE LD. CIT(A) HAS GROSSLY ERRED IN CON FIRMING THE ADDITION MADE BY THE AO. THE ADDITION MADE BY THE A O AND CONFIRMED BY THE LD. CIT(A) MAY BE DELETED IN THE INTEREST OF NATURAL JUSTICE. 8. THAT NO INTEREST SHOULD HAVE BEEN CHARGED U/S 23 4B, 234C, 244A(3) & 234D OF THE INCOME-TAX ACT, 1961 AND THE INTEREST ITA NO.547(ASR)/2011 3 CHARGED UNDER THESE SECTIONS OF THE INCOME TAX ACT, 1961 SHOULD HAVE BEEN CANCELLED AS NO REASONABLE OPPORTU NITY OF BEING HEARD WAS ALLOWED BEFORE CHARGING THE INTERES T. AS SUCH, THE INTEREST CHARGED UNDER THESE SECTIONS OF THE IN COME TAX ACT, 1961 MAY BE DELETED. ALTERNATIVELY, THE INTEREST CHARGED UNDER THESE SE CTIONS OF THE I.T.ACT, 1961, IS VERY HIGH & EXCESSIVE. 9. ANY OTHER GROUND OF APPEAL THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 2. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N.ARORA ADVOCATE POINTED OUT AT PAGES 1 & 2 OF THE ASSESSMENT ORDER, WHICH CONTA INED REASONS RECORDED, WHICH FOR THE SAKE OF CLARITY ARE REPRODUCED HEREUN DER: IN THIS CASE RETURN OF INCOME FOR THE A.Y. 2001-02 HAS BEEN FILED ON 28.11.2001 DECLARING AN INCOME OF RS.6,61,379/-. THERE IS AN INFORMATION IN MY POSSESSION, AS FURNIS HED BY THE INVESTIGATION WING, IT DEPARTMENT, DELHI THAT CERTA IN BANK A/CS HAD BEEN UTILIZED BY THE BOGUS/NON GENUINE ENTITIES TO PROVIDE ACCOMMODATION ENTRIES TO VARIOUS PERSONS (BENEFICIA RIES) WHO WANTED TO LAUNDER THEIR UNACCOUNTED FUNDS. THE BENEFICIARI ES WOULD DEPOSIT THEIR UNACCOUNTED CASH IN THESE BOGUS/NON-GENUINE B ANK A/C AND WOULD GET CHEQUE/DEMAND DRAFT OF EQUIVALENT AMOUNT FROM SUCH BANK A/C, THEREBY ROUTING THEIR UN-DISCLOSED FUNDS THROU GH BANKING CHANNEL. THE BENEFICIARIES HAD TO PAY SOME COMMISSI ON TO OPERATOR OF THE BANK A/C FOR PROVIDING ACCOMMODATION ENTRIES. THE ASSESSEE SH. SANJEEV AGGARWAL HAS ALSO OBTAINED A CHEQUE NO.898388 DATED 09.10.2000 FOR RS.5,01,000/- FROM O NE SUCH BANK A/C BEARING A/C NO.2321 MAINTAINED IN NAME OF SATWAN T SINGH SODHI ITA NO.547(ASR)/2011 4 CONSTRUCTION P. LTD. IN VIJAYA BANK , RAM NAGAR. TH E REPORT CATEGORICALLY MENTIONS THAT SATWANT SINGH SODHI CON STRUCTION P. LTD. WAS THE NAME UTILIZED BY MUKESH GUPTA, RAJAN JASSAL , SURINDER PAL SINGH, YASH PAL GUPTA TO PROVIDE ACCOMMODATION ENTI RES TO BUSINESSMEN. FURTHER PERUSAL OF ASSESSMENT RECORD S HOWS THAT THE ASSESSEE HAS SHOWN TO HAVE RECEIVED GIFT OF RS. 2 L ACS FROM SH. RAJAN JASSAL, ONE OF THE ENTRY OPERATOR. IT HAS TO BE EXA MINED WHETHER THIS RS. 2 LACS IS INCLUDED IN THE RS.5,01,000/- AMOUNT OR IS A SEPARATE ACCOMMODATION ENTRY. SINCE THE BANK A/C 2321 IS BOG US/NON-GENUINE AND HAD BEEN UTILIZED FOR PROVIDING ACCOMMODATION E NTRIES AS PER INFORMATION AVAILABLE IN MY POSSESSION, THE AMOUNT OF RS.5,01,000/- REPRESENTS UNDISCLOSED FUNDS OF THE ASSESSEE. FOR O BTAINING THE SAID ACCOMMODATION, THE ASSESSEE HAD TO PAY COMMISSION @ 3% WHICH COMES TO THE TUNE OF RS.15,030/-. THE INFORMATION AS RECEIVED THE DIT (INV)-1, DELHI , HAS BEEN CONSIDERED BY ME & AFTER THROUGH EXAMINATION OF INF ORMATION & THE RECORD OF THE ASSESSEE. I HAVE REASONS TO BELIEVE T HAT INCOME OF RS.5,16,030/- CHARGEABLE TO TAX HAS ESCAPED ASSESSM ENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY THIS MATERIAL FACT NECESSARY FOR HIS ASSESSMENT AND HENC E ACTION U/S 147 OF THE I.T. ACT, IS WARRANTED TO TAX THE ABOVE INCOME AND ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AND WHICH COMES TO NOTICE SUBSEQUENTLY IN THE COURSE OF THE P ROCEEDINGS UNDER THIS SECTION. 3. THE ASSESSEE FILED LETTER DATED 29.04.2008 THAT HIS RETURN MAY BE CONSIDERED AS HAVING BEEN FILED IN RESPONSE TO NOTI CE U/S 148 OF THE ACT. ON 15.07.2008 NOTICES U/S 142 & 143(2) WERE ISSUED ALO NGWITH THE SHOW CAUSE ASKING THE ASSESSEE TO FURNISH THE FOLLOWING INFOR MATION: (I) WHETHER CHEQUE NO.898388 DATED 09.10.2000 FOR RS.5,01,000/- FROM SATWANT SINGH SODHI CONSTRUCTION PVT. LTD. WA S CREDITED IN YOUR BOOKS OR IN YOUR BANK ACCOUNT. ITA NO.547(ASR)/2011 5 II) IN WHICH BANK ACCOUNT WAS IT CREDITED. FILE THE DOC UMENTARY EVIDENCE. III) PLEASE EXPLAIN THE CONTEXT IN WHICH THE SAID PAYMEN T WAS MADE BY SATWANT SINGH SODHI CONSTRUCTION PVT. LTD. IV) FURTHER, IN RESPECT OF THE GIFT OF RS. 2 LACS SH. R AJAN JASSAL, PLEASE FURNISHED THE FOLLOWING INFORMATION:- : YOUR RELATIONSHIP WITH THE DONOR. : WHAT WAS THE OCCASION FOR THE GIFT. 4. THE ASSESSEE VIDE LETTER DATED 15.07.2008 DENIED OF HAVING RECEIVED ANY CHEQUE OF RS.5,01,000/- FROM SATWANT SINGH SODH I CONSTRUCTION PVT. LTD. IN THE MEANTIME, AFTER REOPENING OF ASSESSMENT I.E. DURING REASSESSMENT PROCEEDINGS, THE AO RECEIVED INFORMATION FROM ADDL. DIT (INV.) THAT RS.5,01,000/- HAS BEEN RECEIVED BY THE ASSESSEE AND HIS FATHER SH. CHARANJIV AGGARWAL AMOUNTING TO RS.2 LACS AND RS. 3 LACS RESP ECTIVELY. THE AO GOT CONFIRMATION FROM PUNJAB & SIND BANK VIDE LETTERS DATED 24.11.2008 & 26.11.2008 THAT AMOUNT OF RS. 2 LACS HAD BEEN CREDI TED ON 14.10.2000 IN THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE RAISED O BJECTIONS ON 12.12.2008 AGAINST REOPENING OF THE ASSESSMENT CITI NG THAT THERE IS NON- APPLICATION OF MIND AND NON EXISTENCE OF MATER IAL. IT WAS SUBMITTED THAT IT IS ONLY SUBSEQUENTLY DURING THE ASSESSM ENT PROCEEDINGS, IT CAME TO THE KNOWLEDGE OF THE AO THAT THE ASSESSEE HAD RECEIVED RS. 2 LACS. THE AO DID NOT ACCEPT THE EXPLANATION OF THE A SSESSEE AND EVEN DID NOT ITA NO.547(ASR)/2011 6 ACCEPT THE COUNTER-SIGNED GIFT DEED OF RAJAN JASSA L TREATING THE SAME AS SELF- SERVING DOCUMENT AND RELYING UPON THE DECISION OF H ONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF JASPAL SINGH VS. CIT 290 ITR 306 (P&H) OBSERVED THAT THE ASSESSEE HAS NOT DISCHARGED HIS B URDEN CAST UPON HIM TO PROVE THE GENUINENESS OF THE GIFT RECEIVED AND ACCO RDINGLY AN AMOUNT OF RS. 2 LACS AND RS.500/- BEING COMMISSION PAID TO SH. RA JAN JASSAL WAS ADDED TO THE INCOME OF THE ASSESSEE. 5. BEFORE THE LD. CIT(A), THE ASSESSEE AGITATED ON LEGAL ISSUE AS WELL AS ON FACTS AND THE LD. CIT(A) DISMISSED BOTH THE GRO UNDS OF THE ASSESSEE. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE, SH. P.N.ARORA ARGUED BY INVITING OUR ATTENTION TO THE REASONS RECORDED THAT AO HAD RECORDED THE REASONS THAT ASSESSEE HAD RECEIVED RS.5,01,000/- IN THE BANK ACCOUNT FROM SATWANT SINGH SODHI CONSTRUCTION PVT. LTD; WHEREAS THIS FACT IS WRONG AND THIS INFORMATION FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT WAS ALSO WRONG AND THE AO WITHOUT APPLYING HIS MIND AND WITHOUT COLLECTING THE MATERIAL ON RECORD HAD PROCEEDED WRO NGLY TO INITIATE THE REASSESSMENT PROCEEDINGS REGARDING WHY INCOME OF RS .5,16,030/- CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. IT IS ONLY DURING THE ASSESSMENT PROCEEDINGS, THE INVESTIGATION WING OF THE INCOME T AX DEPARTMENT HAD SENT ITA NO.547(ASR)/2011 7 THE INFORMATION THAT RS. 2 LACS HAD BEEN RECEIVED B Y THE ASSESSEE AND RS. 3 LACS HAD BEEN RECEIVED BY THE ASSESSEES FATHER SH. CHARANJIV AGGARWAL. THE AO DEFINITELY APPLIED THE MIND BUT ON 24.11.2008 WH EN HE CONFIRMED FROM THE MANAGER OF THE PUNJAB & SIND BANK THAT ASSESSEE HAD RECEIVED RS.2 LACS. THOUGH THE ASSESSEE RAISED OBJECTIONS TO THE VERY I NITIATION OF THE REASSESSMENT PROCEEDINGS AND THE ASSESSEE TO THIS E FFECT HAD SUBMITTED COUNTER-SIGNED GIFT DEED OF RAJAN JASSAL WHICH HAS NOT BEEN DISPROVED OR HAS NOT BEEN PROVED WRONG. THEREFORE, REOPENING OF THE ASSESSMENT IS WITHOUT ANY MATERIAL ON RECORD AND IT CAN NOT BE SAID THAT THE AO HAD ANY REASON TO BELIEVE TO RECORD THAT ASSESSEES INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. MR. P.N. ARORA, RELIED UPON THE DECISIO NS OF VARIOUS COURTS OF LAW IN THIS REGARD. 6.1. HE FURTHER ARGUED THAT ASSESSEE HAVING RECEIVE D GIFT THROUGH BANKING CHANNEL FOR WHICH THE ASSESSEE HAD SUBMITTED COUNTE R-SIGNED GIFT DEED FROM THE DONOR, WHICH IS A MATTER OF RECORD. THE SAID GI FT DEED HAS NOT BEEN DISPROVED BY THE AO IN VIEW OF THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF MEHTA PARIKH & CO. VS. CIT REPORTED IN 30 ITR 181 (SC). THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, ARGUED THA T THE NOTICE ISSUED U/S 148 OF THE ACT, IS BAD IN LAW AND PRAYED TO QUASH THE R EASSESSMENT SO MADE BY ITA NO.547(ASR)/2011 8 THE A.O. U/S 147/143(3) OF THE ACT AND ALLOW THE A PPEAL OF THE ASSESSEE ON THE MERIT ALSO, AS ARGUED HEREINABOVE. 7. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORDS. THERE IS NO DISPUTE TO THE F ACT THAT THE AO HAD RECORDED THE REASONS WITH RESPECT TO RS.5,01,000/- ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. IT IS ALSO NOT IN DISPUTE THAT BEFORE R ECORDING THE REASONS, THE AO HAS NOT APPLIED HIS MIND. HAD HE APPLIED THE MI ND, THE AMOUNT OF RS. 5,01,000/- AS SUGGESTED BY THE INVESTIGATION WING O F THE INCOME TAX DEPARTMENT COULD HAVE BEEN CORRECTED BEFORE RECORD ING THE REASONS BUT THE SAME HAS NOT BEEN DONE, WHICH IN FACT, HAS BEEN DON E AND MIND HAS BEEN APPLIED ONLY DURING THE ASSESSMENT PROCEEDINGS BY M AKING CONFIRMATION FROM THE MANAGER OF PUNJAB & SIND BANK AND THAT TO O ON ADDITIONAL INFORMATION RECEIVED FROM INVESTIGATION WING OF THE INCOME TAX DEPARTMENT DURING ASSESSMENT PROCEEDINGS. BUT THE F ACT REMAINS THAT THE AO DID NOT HAVE ANY MATERIAL OR WAS HAVING WRONG MATER IAL TO SUGGEST THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THE AO HAS NOT REJECTED OR ITA NO.547(ASR)/2011 9 DISPROVED THE GIFT DEED FILED BY THE ASSESSEE IS AL SO A MATTER OF RECORD. IN THE FACTS AND CIRCUMSTANCES, THE NOTICE ISSUED U/S 148 OF THE ACT IS BAD IN LAW AND REASSESSMENT PROCEEDING SO MADE ARE DIRECTED T O BE QUASHED. THUS, ALL THE GROUNDS OF THE ASSESSEE I.E. GROUNDS NO. 1 TO 7 ARE ALLOWED. 9. AS REGARDS GROUND NO.8 WITH REGARD TO CHARGING OF INTEREST U/S 234B, 234C, 244A(3) & 234D ARE CONCERNED, THE SAME ARE MA NDATORY AND CONSEQUENTIAL IN NATURE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.547(ASR)/2011 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1ST NOVEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1ST NOVEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. SANJEEV AGGARWAL, AMRITSAR. 2. THE DCIT, CIRCLE-IV, AMRITSAR. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) ITA NO.547(ASR)/2011 10 INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.