Subhash Chand Ahuja, Dehradun V. ITO, Dehradun

ITA 5481/DEL/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6660 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 15-02-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 07-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Reassessment proceedings
• Section: 143(3); 147; 69; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SH. G.D. AGRAWAL V.P. AND SH. C.M. GARG, J.M ITA NO. 5481 /DEL/201 1 [ ASSTT. YEAR: 200 1 - 0 2 ] APPELLANT BY: SH. SANJAY MALIK, ADV RESPONDENT BY: SMT. RASHMITA JHA, SR. DR DATE OF FINAL HEARING : 18 .02.2016 DATE OF PRONOUNCEMENT : 29. 02.2016 ORDER PER C.M. GARG, JM 1. THIS APPEAL BY THE ASS ESSEE HAS BEEN FILED AGAINST THE ORDER OF THE COMMISSIONE R OF THE INCOME TAX (APPEALS) I I, DEHRADUN ORDER DATED 07.09.2011 PASSED IN FIRST APPEAL NO. 136/DDN/2008 - 09 FOR AY 200 1 - 02 . 2. THE REVISED GROUNDS FILED BY THE ASSESSEE ON 12.03.2012 READ AS UNDER : 1. THAT THE DETERMINATION OF INCOME FROM BUSINESS AT RS. 75,000/ - AS AGAINST DECLARED INCOME OF RS. 55,300/ - RESULTING IN AN ADDITION OF RS. 19,700/ - WAS UNWARRANTED AND UNTENABLE ON FACTS AND IN LAW. THE IMPUGNED ADDITION OF RS. 19,700/ - DESERVES TO BE DELETED BEING VOID, ILLEGAL AND NOT BASED ON ANY LEGAL BASIS. 2. THAT THE INVESTMENT IN PURCHASE OF HOUSE WAS FROM KNOWN SOURCES AND NO PART OF INVESTMENT WAS FROM UNDISCLOSED SOURCES AS ASSUMED BY THE LD. ASSESSING OFFICER. THERE WAS THUS NO ESCAPEMEN T OF INCOME WARRANTING INITIATION OF PROCEEDINGS UNDER SECTION 147 OF I.T. ACT. SUBHASH CHAND AHUJA 105, REST CAMP DEHRADUN VS ITO WARD - 1(1) DEHRADUN - 248001 APPELLANT RESPONDENT PAN NO. ABDPA5437B 2 3. THAT THE INITIATION OF PROCEEDINGS U/S 147 WITH THE ISSUE OF NOTICE U/S 148 OF THE I.T ACT WAS VOID, ILLEGAL WITHOUT JURISDICTION AND BARRED BY LIMITATION. 4. THAT THE CONSEQUENT ASSESSMENT FRAMED VIDE ASSESSMENT ORDER DATED 17.11.2008 U/S 148/143(3) OF THE I.T. ACT DESERVES TO BE QUASHED BEING ILLEGAL, VOID, WITHOUT JURISDICTION AND BARRED BY LIMITATION. 5. THAT THE APPELLANT DID NOT MAKE ANY UN - EXPLAINED INVESTMENT AS THE INVESTMENT FOR PURCHASE OF PROPERTY WAS FROM KNOWN/DECLARED SOURCES. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, PROVISIONS OF SECTION 69 OF THE ACT WERE NOT APPLICABLE . 6. THAT THE ADDITION OF RS. 4,04,800/ - AS UN - EXPLAINED INVESTMENT IN PUR CHASE OF PROPERTY U/S 69 OF I.T. ACT DESERVES TO BE DELETED BEING VOID, ILLEGAL AND WITHOUT JURISDICTION . 3. WE HAVE HEARD ARGUMENT OF BOTH THE SIDES AND CAREFUL PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE THE TRIBUNAL. THE LD. COUNSEL OF T HE ASSESSEE CHALLENGING TO THE INITIATION OF PROCEEDINGS AND ISSUANCE OF NOTICE UNDER SECTION 147/148 OF THE INCOME TAX ACT 1961, (FOR SHORT THE ACT) SUBMITTED THAT THE INITIATION OF PROCEEDINGS ARE BEYOND FOUR YEARS FROM THE YEAR OF ASSESSMENT. HE FURTHER CONTENTED THAT THE REASON RECORDED DO NOT BEAR ANY DATE OR YEAR OF INITIATION OF PROCEEDINGS AND DO NOT MENTION THE GROUND THAT ESCAPEMENT OF INCOME WAS BECAUSE OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL NECESSARY FACTS FOR ASSESSMENT. THE LD COUNSEL VEHEMENTLY POINTED OUT THAT IN ABSENCE OF COMPLIANCE OF STATUTORY CONDITIONS RENDERS THE INITIATION OF REASSESSMENT PROCEEDINGS, ISSUANCE OF NOTICE AND CONSEQUENTIAL REASSESSMENT ORDER AS VOID, BAD IN LAW, ILLEGAL AND WITHOUT JURISDICTION. THE LD C OUNSEL DRAWN OUR ATTENTION TOWARDS PROVISO TO SECTION 147 OF THE ACT AND SUBMITTED THAT THE AO MISERABLY FAILED TO SHOW AND ESTABLISH THAT THE INCOME CHARGEABLE TO TAX HAS A ESCAPED ASSESSMENT FOR ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE UNDER SUB - SECTION 1 OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. THE LD COUNSEL ALSO PLACED RELIANCE ON THE DECISION OF HON BLE HIGH COURT OF DELHI IN THE CASE OF PCIT VS G&G PHARMA INDIA LTD. DATED 08.10.2015 PASSED IN ITA NO. 545/2015 AND SUBMITTED THAT WHEN THE REASONS RECORDED DOES NOT EXPRESS NATURE OF ENTRIES AND 3 TRANSACTION THEN REASONS RECORDED AND REOPENING OF ASS ESSMENT CANNOT BE HELD AS VALID AND THE SAME DOES NOT SATISFIED THE REQUIREMENT OF LAW. 4 . REPLYING TO THE ABOVE , THE LD DR STRONGLY SUPPORTED THE ACTION OF THE AO AND SUBMITTED THAT THERE WAS SUFFICIENT MATERIAL BEFORE THE AO TO SHOW THAT THE SOURCE OF INVESTMENT EXPLAINED BY THE ASSESSEE WAS NOT BELIEVABLE THEREFORE THE AO WAS QUITE JUSTIFIED AND CORRECT IN INITIATING REASSESSMENT PROCEEDINGS AND ISSUING NOTICE U/S 148 OF THE ACT. 5 . ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS AT THE OUTSET WE FIND IT APPROPRIATE TO REPRODUCE REASONS RECORDED BY THE AO FOR INITIATION OF PROCEEDINGS U/S 147 OF THE ACT WHICH READS AS FOLLOW : ASSTT. YEAR2001 - 02 DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSTT. YEAR 2005 - 06, IT WAS GATHERED THAT THE ASSESSEE HAS PURCHASED A PROPERTY AT 28 HARDWAR ROAD, DEHRADUN FOR RS. 3,68,000/ - PLUS RS. 36,800/ - STAMP PAPERS IN THE NAME OF SAROJINI FISH. THE ASSESSEE STATED SOURCE OF INVESTMENT WAS A CASH LOAN OF RS. 4,00,000/ - FROM DR. D.P. MEHTA, R/O INDORE. THE ASSESSEE HAS FILED A COPY OF AFFIDAVIT OF DR. MEHTA. AS PER THIS AFFIDAVIT, CASH LOAN WAS TAKEN IN 1996 AND PROPERTY WAS PURCHASED IN FEB. 2001, I.E. AFTER 5 YEARS OF TAKING LOAN. THE SOURCE OF INVESTMENT EXPLAINED BY THE ASSESSEE IS NOT BELIEVABLE. I HAVE REASONS TO BELIEVE THAT INCOME OF RS. 4,04,800/ - WHICH IS CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT. 6 . FURTHER, WE OBSERVED THAT THE ASSESSEE FILED ORIGINAL RETURN OF INCOME ON 27.03.2012 AND THE NOTICE U/S 148 OF THE ACT WAS ISSUED ON 26.02.2008 WHICH IS BE YOND EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR 2001 - 02 THEREFORE IT WAS THE DUTY OF THE AO TO SHOW AND PRIMA - FACIE ESTABLISH IN THE REASONS RECORDED THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY TH E REASONS OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY 4 FOR HIS ASSESSMENT FOR AY 2001 - 02. WHEN WE LOGICALLY ANALYZE THE CONTENTS OF THE REASONS RECORDED THEN IT IS AMPLE CLEAR THAT THERE IS NO ALLEGATIONS OR STIPULATIONS SHOWING THAT INCOME CHARGEABLE TO TAX ESCAPED ASSESSMENT DUE TO FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. WE ALSO NOTE THAT THERE IS NO MENTION ABOUT DATE MONTH AND YEAR OF RECORDIN G SATISFACTION WHICH SHOWS CASUAL APPROACH OF THE AO AND WE ARE PRESUMING DATE OF INITIATION OF PROCEEDINGS U/S 147 OF THE ACT FROM THE DATE OF ISSUANCE OF NOTICE I.E. 26.02.2008. IT WAS ALSO POINTED OUT BY THE LD COUNSEL THAT THE NOTICE U/S 148 OF THE ACT DOES NOT SHOW THE QUANTUM OF INCOME WHICH WAS ALLEGED TO HAVE BEEN ESCAPED ASSESSMENT THEREFORE SAID NOTICE IS ILLEGAL AND WITHOUT JURISDICTION. 7 . THE LD COUNSEL PLACING RELIANCE ON THE DECISIONS OF HON BLE MADRAS HIGH COURT IN THE CASE CIT VS SCHWING STETTER INDIA PVT. LTD. REPORTED AS (2016) 282 CTR (MADRAS) 504 SUBMITTED THAT WHEN THE AO HAS FAILED TO RECORD ANY WHERE HIS SATISFACTION OR BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOS E TRULY AND FULLY ALL MATERIALS FACT NECESSARY FOR ASSESSMENT THEN THE NOTICE ISSUED U/S 147 OF THE ACT BEYOND THE PERIOD OF FOUR YEARS WAS WHOLLY WITHOUT JURISDICTION AND CANNOT BE SUSTAINED. FURTHER, PLACING RELIANCE ON THE DECISIONS OF HON BLE HIGH COU RT OF DELHI IN THE CASE OF CIT VS VISHISHTH CHAY VYAPAR LTD. REPORTED AS (2016) 283 CTR (DELHI) 102 SUBMITTED THAT THERE WAS NO MATERIAL BEFORE THE AO FOR COMING TO THE CONCLUSION THAT THE ASSESSEE UNDER STATED ITS INCOME DISPUTE THE FACT THAT THE REOPENIN G WAS SOUGHT TO BE MADE AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR AND WHEN THERE WAS NO MENTION BY THE AO OF THE FAILURE BY THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE MATERIAL FACT IN THE ORIGINAL ASSESSMENT PROCEEDINGS. 8 . I N THE LIGHT OF ABOVE NOTED PREPOSITIONS, AS RELIED BY THE LD COUNSEL OF THE ASSESSEE, WHEN WE EVALUATE THE REASONS RECORDED BY THE AO IN THE PRESENT CASE THEN IT IS AMPLE CLEAR THAT THE AO HAS NOT MADE ANY SPECIFIC ALLEGATIONS OR MENTION THERE IN THAT THE INCOME ESCAPED ASSESSMENT DUE TO FAILURE OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE OR RELEVANT FACT NECESSARY FOR HIS ASSESSMENT. IT WAS RELEVANT TO MENTION THAT THE REASONS RECORDED DOES NOT SHOW EVEN THE DATE OF RECORDING OF REASONS WHICH SHOW CASUAL 5 A PPROACH OF THE ASSESSEE AND INITIATION OF REASSESSMENT PROCEEDINGS ALSO DOES NOT SHOW THE BASIS OF REOPENING OF ASSESSMENT WHICH WAS COMPLETED U/S 143(3) OF THE ACT. 9 . AT THIS STAGE IT WAS ALSO BE NECESSARY AND APPROPRIATE TO CONSIDER THE PREPOSITION REN DERED BY HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF PCIT VS G&G PHARMA LTD. WHEREIN IT WAS HELD THAT WHERE THE NATURE OF ENTRIES OR TRANSACTIONS HAS N OT BEEN RECORDED BY THE AO AND IT IS THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT. THERE LORDSHIP CLEARLY HELD THAT THE REQUIREMENT OF LAW THAT PRIOR TO REOPENING OF ASSESSMENT, THE AO HAS TO, APPLYING HIS MIND TO THE MATERIALS, CONCL UDE THAT HE HAS REASONS TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. UNLESS, THE BASIC JURISDICTIONAL REQUIREMENTS IT SATISFIED A POSTPARTUM EXERCISE OF ANALYZING THE MATERIALS PRODUCED SEQUENT TO THE REOPENING WILL NOT RESCUE AND IN INHE RENTLY DEFECTIVE REOPENING ORDER FROM IN VALIDITY. 10 . IN THE PRESENT CASE THE AO PROCEEDED TO REOPEN ASSESSMENT AND TO INITIATE PROCEEDINGS U/S 147 OF THE ACT BEYOND FOUR YEARS WITHOUT ASSIGNING OR ALLEGING ANY REASONS THAT A PARTICULAR INCOME HAS ESCAPED ASSESSMENT DUE TO FAILURE ON THE PART OF ASSESSEE TO DISCLOS E FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR AS REQUIRED BY THE FIRST PROVISO TO SECTION 147 OF THE ACT. ALL SUBSEQUENT MATERIAL FOR FILLING THE GAPS AND POSTPARTUM EXERCISE OF ANALYZING MATERIAL PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT COVER OR CURE THE INHERENT DEFECT IN THE REASONS RECORDED AND INITIATION OF PROCEEDINGS AS HAS BEEN HELD BY THERE LORDSHIP IN THE CASE O F G&G PHAR MA INDIA LTD. (SUPRA). 1 1 . IT IS ALSO RELEVANT TO MENTION THAT THE ASSESSING OFFICER HAS NOT MENTIONED EVEN THE DATE MONTH AND YEAR OF THE INITIATION OF PROCEEDINGS IN THE REASONS RECORDED WHICH AGAINST SHOWS HIS CASUAL APPRO ACH AND VITIATE THE PROCEEDING S . FINALLY, RESPECTFULLY FOLLOWING THE PREPOSITIONS LAID DOWN BY HON BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS VISHISHTH CHAY VYAPAR LTD . (SUPRA) AND HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS SCHWING STETTER INDIA PVT. LTD WHEN WE ANALYZE THE ACT ION OF THE AO IN THE PRESENT THEN 6 IT IS AMPLE CLEAR THAT THE AO HAD FAIL TO RECORD ANYWHERE HIS SATISFACTION OR BELIEVE THAT THE INCOME CHARGEABLE TO FACTS HAD ESCAPED ASSESSMENT ON ACCOUNT OF THE FAILURE OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MAT ERIAL FACTS NECESSARY HIS ASSESSMENT, AS REQUIRED BY THE FIRST PROVISO TO SECTION 147 OF THE ACT, THEN THE NOTICE ISSUED U/S 148 OF THE ACT IN PURSUANT TO INCOMPLETE REASONS BEYOND THE PERIOD OF FOUR YEARS HAS TO BE HELD AS WITHOUT JURISDICTION AND BAD IN LAW AND CONSEQUENTLY THE SAME CANNOT BE HELD AS SUSTAINABLE AND THUS WE ARE INCLINED TO HOLD THAT THE ASSESSING OFFICER DID NOT ASSUME VALID JURISDICTION FOR INITIATION OF PROCEEDING U/S 147 OF THE ACT AND FOR ISSUANCE OF NOTICE U/S 147 OF THE ACT BEYOND F OR YEARS OF COMPLETION RELEVANT ASSESSMENT YEARS, AS PER REQUIREMENT OF FIRST PROVISO TO SECTION 147 OF THE ACT AND HENCE WE QUASH THE SAME. ACCORDINGLY, LEGAL OBJECTION CONTAINED IN GROUND NO. 2 3, & 4 ARE ALLOWED. 1 2 . SINCE, BY EARLIER OF THIS ORDER W E HAVE QUASHED INITIATION OF PROCEEDINGS AND ISSUANCE OF NOTICE U/S 147/148 OF THE ACT BY ALLOWING LEGAL GROUND OF THE ASSESSEE THEN OTHER GROUNDS OF THE ASSESSEE ON MERITS BECOME S ACADEMIC AND INFRUCTUOUS AND W E DISMISS THE SAME AS HAVING BECOME INFRUCTUO US. 1 3 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED ON LEGAL GROUNDS. ORDER IS PRONO UNCED IN THE OPEN COURT ON 29 .0 2 /2016 S D / - S D / - (G. D. AGRAWAL) (C.M GARG) VICE PRESIDENT JUDICIAL MEMBER DATED : 29 TH FEBRUARY 2 015 *RES. DESKTOP COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT (APPEALS) 5 . DR: ITAT