Sh. Bhagwan Dass Garg, Ludhiana V. DCIT, Ludhiana

ITA 557/CHANDI/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90215 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-07-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 23-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Keywords: Unexplained cash credit; Gift; Accommodation entries
• Section: 143(3); 153A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 557/CHD/2011 ASSESSMENT YEAR: 2002-03 SHRI BHAGWAN DASS GARG VS THE DCIT, 2543, PHASE 1, CENTRAL CIRCLE II URBAN ESTATE, DUGRI, LUDHIANA. LUDHIANA. PAN: AECPG8745E83C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : DR.AMARVEER SINGH, DR DATE OF HEARING : 08.07.2015 DATE OF PRONOUNCEMENT : 10.07.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME TAX (CENTRAL) LUDHIANA D ATED 28.03.2011 FOR ASSESSMENT YEAR 2002-03 UNDER SECTIO N 263 OF THE INCOME TAX ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT RETURN OF INCOME WAS FILED ON 21.08.2007 UNDER SECTION 153A OF THE A CT. AFTER TAKING THE CASE FOR SCRUTINY, THE ASSESSMENT WAS COMPLETED UNDER SECTION 153A READ WITH SECTION 143( 3) OF THE ACT AT THE INCOME OF RS. 3,16,690/- ON 30.12.20 08. THE LD. COMMISSIONER OF INCOME TAX ISSUED SHOW CAUSE N OTICE ON 09.03.2011 SEEKING EXPLANATION OF THE ASSESSEE A S TO WHY THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER SHOU LD NOT 2 BE CONSIDERED TO BE ERRONEOUS IN SO FAR AS PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. THE ASSESSEE FILED REPLY BEFORE LD. COMMISSIONER OF INCOME TAX. THE LD. COMMISSIONER O F INCOME TAX, CONSIDERING THE EXPLANATION OF THE ASSE SSEE AND MATERIAL ON RECORD, DIRECTED THE ASSESSING OFFICER TO GIVE AN ADEQUATE OPPORTUNITY TO THE ASSESSEE ON LIMITED ISS UE OF INFORMATION RECEIVED FROM INVESTIGATION DEPARTMENT IN REGARD TO THE LOANS RECEIVED FROM ENTRY OPERATORS E TC. AND MAKING ADDITIONS. 3. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL ON RECORD. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FIRST ISSUE WAS WITH REGARD TO ACCOMMODATION ENTRIE S RECEIVED FROM SHRI LEELA DHAR AS PER SHOW CAUSE NOT ICE ISSUED UNDER SECTION 263 OF THE ACT. HE HAS SUBMIT TED THAT NO LOAN OR GIFT HAS BEEN RECEIVED FROM SHRI LEELA D HAR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THIS FACT WAS ADMITTED BY ASSESSING OFFICER IN CONSEQUENTIAL ORDE R PASSED ON 19.12.2011 IN RESPONSE TO THE ORDER PASSED UNDER SECTION 263 OF THE ACT AND THE ASSESSING OFFICER DI D NOT MAKE ANY ADDITION ON ACCOUNT OF SHRI LEELA DHAR. H E HAS, THEREFORE, SUBMITTED THAT ORDER OF THE LD. COMMISSI ONER OF INCOME TAX SHOULD NOT SUSTAIN ON THIS ISSUE AND PROCEEDINGS SHOULD HAVE DROPPED AGAINST THE ASSESSE E. 5. ON THE OTHER HAND, LD. DR SUBMITTED THAT REPORT WAS RECEIVED FROM INVESTIGATION WING THAT ASSESSEE HAS RECEIVED 3 ACCOMMODATION ENTRY FROM SHRI LEELA DHAR, COPY OF T HE REPORT IS PLACED ON RECORD. THEREFORE, LD. COMMISS IONER OF INCOME TAX WAS JUSTIFIED IN INVOKING JURISDICTION U NDER SECTION 263 OF THE ACT. 6. ON CONSIDERATION OF THE ABOVE FACTS IN THE LIGHT OF THE RIVAL SUBMISSIONS OF THE PARTIES, WE ARE OF THE VIE W THAT LD. COMMISSIONER OF INCOME TAX, THOUGH HAS INITIALLY TA KEN UP THE PROCEEDINGS UNDER SECTION 263 OF THE ACT WITH R EGARD TO ACCOMMODATION ENTRIES RECEIVED FROM SHRI LEELA DHAR BUT THAT FACT WAS FOUND INCORRECT. THE ASSESSEE SUBMIT TED BEFORE LD. COMMISSIONER OF INCOME TAX THAT NO LOAN/ GIFT HAS BEEN RECEIVED FROM SHRI LEELA DHAR, THEREFORE, NOTI CE UNDER SECTION 263 WOULD NOT SURVIVE. THE LD. COMMISSIONE R OF INCOME TAX, IN THAT EVENT SHOULD HAVE VERIFIED THIS FACT FROM THE RECORD, EVEN IF INFORMATION WAS SUPPLIED BY THE INVESTIGATION WING TO HIM IN THIS REGARD. ULTIMATE LY, THE CONTENTION OF THE ASSESSEE WAS FOUND CORRECT BY THE ASSESSING OFFICER IN THE CONSEQUENTIAL PROCEEDINGS UNDER SECTION 143(3) READ WITH SECTION 263 OF THE INCOME TAX ACT VIDE ORDER DATED 19.12.2011 AND THE ASSESSING OFFIC ER CONFIRMED THE VIEW OF THE ASSESSEE THAT NO LOAN IS SHOWN IN THE NAME OF SHRI LEELA DHAR AND NO ADDITION HAS BEE N MADE AGAINST THE ASSESSEE. SINCE LD. COMMISSIONER OF IN COME TAX HAS FAILED TO EXAMINE THIS ISSUE IN PROPER PERS PECTIVE IN PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX AC T, THEREFORE, LD. COMMISSIONER OF INCOME TAX SHOULD NO T HAVE INVOKE THE JURISDICTION UNDER SECTION 263 OF THE AC T AGAINST 4 THE ASSESSEE ON THIS ISSUE AND SHOULD HAVE DROPPED THE PROCEEDINGS AGAINST THE ASSESSEE. 7. THE OTHER ISSUE IS WITH REGARD TO ACCOMMODATION ENTRY RECEIVED FROM SHRI SUBHASH GUPTA. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. COMMISSIONER OF INCOME TAX IN THE SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT NOTED THAT INFORMATION WAS RECEIVED FROM INVESTIGATION WI NG THAT ASSESSEE RECEIVED ACCOMMODATION ENTRIES FROM SHRI S UBHASH GUPTA WHO PURCHASED BANK DRAFTS FROM ORIENTAL BANK OF COMMERCE, MINTO ROAD, NEW DELHI. HE HAS, HOWEVER, SUBMITTED THAT THIS FACTS IS INCORRECT BECAUSE ASSE SSEE HAS RECEIVED ADVANCE OF RS. 5 LACS THROUGH DD DATED 23. 03.2002 PURCHASED FROM PUNJAB NATIONAL BANK, DELHI. COPY O F THE CONFIRMATION OF SHRI SUBHASH GUPTA IS FILED AT PAGE 2 OF THE PAPER BOOK. THE LD. COUNSEL FOR THE ASSESSEE, THER EFORE, SUBMITTED THAT THIS INFORMATION WAS WRONG AS IS NOT ED IN THE IMPUGNED NOTICE UNDER SECTION 263 OF THE INCOME TAX ACT. HE HAS ALSO REFERRED TO QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER AT THE ORIGINAL ASSESSMENT STAGE DATED 22.01.2008 (PB-3) IN WHICH THE ASSESSING OFFICER CA LLED FOR INFORMATION FROM THE ASSESSEE WITH REGARD TO SOURCE OF ACCRETION IN THE CAPITAL ACCOUNT WITH SUPPORTING EV IDENCE AND ALSO TO FILE COMPLETE DETAILS OF BANK ACCOUNTS, FDR ETC. AND COPIES OF THE SQUARED UP ACCOUNTS. HE HAS SUBM ITTED THAT ASSESSEE HAS FILED REPLY DATED 19.02.2008 BEFO RE ASSESSING OFFICER (PB-1) IN WHICH THE ASSESSEE FILE D CERTIFICATE OF SHRI SUBHASH CHAND CONFIRMING LOAN O F RS. 5 LACS. COPY OF THE CONFIRMATION IS FILED AT PAGE 2 O F THE PAPER 5 BOOK. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT SINCE ASSESSING OFFICER RAISED THE QUESTIONNAI RE ON THE ISSUE OF LOAN RECEIVED FROM SHRI SUBHASH CHAND AND ACCEPTED THE CLAIM OF ASSESSEE, THEREFORE, THE ORIG INAL ASSESSMENT ORDER COULD NOT BE SAID TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 8. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT NO COPY OF THE BANK ACCOUNT WAS FILED BEFORE ASSESSING OFFI CER AT THE ORIGINAL ASSESSMENT STAGE AND THAT COPY OF THE INFO RMATION RECEIVED FROM DIT SHOWS THAT ASSESSEE RECEIVED ACCOMMODATION ENTRY FROM SHRI SUBHASH GUPTA. THEREF ORE, IT WAS NECESSARY FOR LD. COMMISSIONER OF INCOME TAX TO EXAMINE THIS ISSUE AND THAT THE ASSESSING OFFICER, WITHOUT RAISING ANY SPECIFIC QUERY ON THIS ISSUE, ACCEPTED THE CLAIM OF ASSESSEE WITHOUT MAKING ANY ENQUIRY ON THIS ISSU E. THEREFORE, LD. COMMISSIONER OF INCOME TAX CORRECTLY EXERCISED JURISDICTION UNDER SECTION 263 OF THE ACT . THE LD. DR ALSO REFERRED TO THE ORDER OF THE LD. COMMISSION ER OF INCOME TAX IN WHICH LD. COMMISSIONER OF INCOME TAX ACCEPTED THAT WITH REGARD TO BANK ACCOUNT, THERE MA Y BE A TYPOGRAPHICAL MISTAKE AND THAT ASSESSING OFFICER HA S FAILED TO MAKE INVESTIGATION WITH REGARD TO GENUINENESS OF THE TRANSACTION IN THE MATTER. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ASSESSEE CLAIMED THAT HE HAS RECEIVED LOAN FROM SHR I SUBHASH CHAND IN A SUM OF RS. 5 LACS AND COPY OF TH E CONFIRMATION PB-2 WAS FILED BEFORE ASSESSING OFFICE R AT THE 6 ORIGINAL ASSESSMENT STAGE. HOWEVER, IT IS WELL SET TLED LAW THAT WHEN ENTRIES MADE IN THE BOOKS OF ACCOUNT OF R ECEIPT OF ANY LOAN, THE BURDEN WOULD BE UPON ASSESSEE TO PROV E IDENTITY OF THE CREDITOR, HIS CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER AT AS SESSMENT STAGE IS FILED AT PAGE 3 OF THE PAPER BOOK IN WHICH THE ASSESSING OFFICER HAS NOT SPECIFICALLY CALLED FOR E XPLANATION OF THE ASSESSEE WITH REGARD TO CREDIT WORTHINESS OF THE CREDITOR SHRI SUBHASH CHAND AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE ASSESSEE MERELY FIL ED COPY OF THE CONFIRMATION BEFORE ASSESSING OFFICER IN HIS RE PLY (PB- 2). THE ASSESSMENT ORDER ALSO DID NOT SHOW IF THE A SSESSING OFFICER MADE ANY ENQUIRY ON THE MATTER IN ISSUE WIT H REGARD TO GENUINENESS OF THE LOAN. THE LD. COUNSEL FOR TH E ASSESSEE ALSO DID NOT PRODUCE ANY MATERIAL BEFORE US TO SHOW IF ASSESSEE PROVED GENUINENESS OF THE TRANSACTION IN T HE MATTER AND CREDIT WORTHINESS OF THE CREDITOR BEFORE ASSESSING OFFICER. THEREFORE, MERE FILING OF THE C ONFIRMATION AT ASSESSMENT STAGE IS NOT ENOUGH TO PROVE THE CRED IT WORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE LD. COMMISSIONER OF INCOME TAX, THEREFORE, CORRECTLY NOTED IN THE IMPUGNED ORD ER THAT EXPLANATION OF THE ASSESSEE IS NOT ACCEPTABLE BECAU SE ASSESSING OFFICER HAS TO SEE THE GENUINENESS OF THE TRANSACTION AT ASSESSMENT STAGE. IT IS, THUS, CLEA R THAT ASSESSING OFFICER DID NOT EXAMINE ALL THESE POINTS OF GENUINE LOANS AT ORIGINAL ASSESSMENT STAGE. THEREF ORE, 7 FAILURE TO MAKE ENQUIRY AT THE ASSESSMENT STAGE WOU LD RENDER THE ASSESSMENT ORDER TO BE ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF REVENUE. THE LD. COMMISSIONER O F INCOME TAX WAS, THEREFORE, JUSTIFIED IN INVOKING JURISDICT ION UNDER SECTION 263 OF THE ACT. WE ARE FORTIFIED IN OUR VI EW BY JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF GEE VE E ENTERPRISES 99 ITR 375, DECISION OF GAUHATI HIGH CO URT IN THE CASE OF TARJAN TEA COMPANY PVT. LTD. 205 ITR 45 AND DECISION OF MADRAS HIGH COURT IN THE CASE OF K.A. RAMASWAMI CBHETTIAR 220 ITR 657. WE MAY ALSO NOTE HERE THAT THE ASSESSING OFFICER IN THE CONSEQUENTIAL PRO CEEDINGS UNDER SECTION 143(3) READ WITH SECTION 263 OF THE I NCOME TAX ACT MADE ADDITION OF RS. 5,01,500/- IN THE NAME OF SHRI SUBHASH CHAND ON ACCOUNT OF UNEXPLAINED CREDIT. 10. CONSIDERING THE ABOVE DISCUSSION, IN THE LIGHT OF THE ABOVE DECISIONS AND THAT ASSESSING OFFICER FAILED T O MAKE ENQUIRY ON THE ISSUE OF GENUINENESS OF THE LOAN IN THE NAME OF SHRI SUBHASH CHAND, LD. COMMISSIONER OF INCOME T AX WAS JUSTIFIED IN INVOKING JURISDICTION UNDER SECTIO N 263 OF THE ACT AND DIRECTING ASSESSING OFFICER TO MAKE ENQ UIRY INTO THE GENUINENESS OF LOAN RECEIVED FROM SHRI SUBHASH CHAND. THE ORDER OF LD. COMMISSIONER OF INCOME TAX IS, THE REFORE, CONFIRMED TO THAT EXTENT. 11. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED THAT LD. COMMISSIONER OF INCOME TAX IN THE SHOW CAUSE NO TICE UNDER SECTION 263 OF THE ACT HAS RAISED THE ISSUE O F ACCOMMODATION ENTRIES RECEIVED FROM SHRI SUBHASH GU PTA 8 AND SHRI LEELA DHAR ONLY BUT WHILE PASSING THE ORDE R HAS DIRECTED THE ASSESSING OFFICER TO VERIFY THE ACCOMM ODATION ENTRIES IN REGARD TO LOANS RECEIVED FROM ENTRY OPER ATORS ETC. AND THE ASSESSING OFFICER IN THE SUBSEQUENT PROCEED INGS MADE THE ADDITION OF UNEXPLAINED LOAN IN THE NAME O F SHRI MITHILESH KUMAR ALSO WHICH WAS NOT PART OF THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 263 OF THE ACT. THEREF ORE, LD. COMMISSIONER OF INCOME TAX HAS NO AUTHORITY TO MAKE DIRECTIONS TO THE ASSESSING OFFICER TO RE-INVESTIGA TE THE MATTER IN RESPECT OF OTHER PERSONS EXCEPT IN THE CA SE OF SHRI SUBHASH GUPTA AND SHRI LEELA DHAR. 12. ON THE OTHER HAND, LD. DR RELIED UPON IMPUGNED ORDER/ 13. WE HAVE CONSIDERED RIVAL SUBMISSIONS. THE HON'B LE MADRAS HIGH COURT IN THE CASE OF CIT VS R.G. UMARAN EE 262 ITR 507 HELD THAT IN PROCEEDINGS UNDER SECTION 263, ASSESSMENT CANNOT BE REVISED ON GROUND WHICH IS NOT MENTIONED IN THE SHOW CAUSE NOTICE. SAME VIEW IS T AKEN BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. CON TIMETER ELECTRICALS PVT.LTD. REPORTED IN 317 ITR 249. IT I S ADMITTED FACT THAT IN THE SHOW CAUSE NOTICE UNDER SECTION 26 3 OF THE INCOME TAX ACT, LD. COMMISSIONER OF INCOME TAX ASKE D FOR THE EXPLANATION OF THE ASSESSEE WITH REGARD TO ACCOMMODATION ENTRIES RECEIVED FROM SHRI SUBHASH GU PTA AND SHRI LEELA DHAR ONLY. THE ASSESSEE ALSO FILED REPLY WITH REGARD TO BOTH THESE PERSONS AND THE LD. COMMISSION ER OF INCOME TAX, AFTER DISCUSSING THE ISSUE IN DETAIL, D IRECTED THE ASSESSING OFFICER TO MAKE ENQUIRIES ON THE SAME 9 ADVANCES RECEIVED FROM SHRI SUBHASH CHAND AND SHRI LEELA DHAR. THE LD. COMMISSIONER OF INCOME TAX THEREFORE , DID NOT HAVE ANY OCCASION TO ASK FOR EXPLANATION OF THE ASSESSEE WITH REGARD TO ADVANCE RECEIVED FROM MITHILESH KUMA R. THE ASSESSING OFFICER MADE ADDITION IN THE NAME OF MITH ILESH KUMAR ALSO IN SUBSEQUENT ASSESSMENT YEAR UNDER SECT ION 143(3) READ WITH SECTION 263 OF THE ACT BECAUSE THE LD. COMMISSIONER OF INCOME TAX DIRECTED TO EXAMINE THE ISSUE WITH REGARD TO INFORMATION RECEIVED FROM INVESTIGAT ION DEPARTMENT IN REGARD TO LOANS RECEIVED FROM ENTRY OPERATORS ETC. THUS, THE LD. COMMISSIONER OF INCOM E TAX EXCEEDED HIS JURISDICTION UNDER SECTION 263 OF THE ACT. HOWEVER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T APPEAL OF THE ASSESSEE WITH REGARD TO MITHILESH KUMAR IS P ENDING BEFORE LD. CIT(APPEALS). THEREFORE, IT WOULD NOT B E IN THE FITNESS OF THE THINGS TO FURTHER ADJUDICATE UPON TH E ISSUE BECAUSE IT MAY PREJUDICE BOTH THE PARTIES. THEREFO RE, WE DO NOT PROPOSE TO GIVE FURTHER FINDINGS ON THIS ISSUE. ANY HOW, IT WOULD NOT MAKE ANY DIFFERENCE BECAUSE THE ULTIMA TE CRUX OF THE MATTER WOULD BE THAT LD. COMMISSIONER OF INC OME TAX CORRECTLY EXERCISED JURISDICTION UNDER SECTION 263 OF THE ACT WITH REGARD TO ACCOMMODATION ENTRY RECEIVED IN THE CASE OF SHRI SUBHASH CHAND AND THE ORDER OF THE LD. COMMISS IONER OF INCOME TAX SHALL HAVE TO BE AFFIRMED TO THAT EXT ENT. 14. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE SAME IS ACCORDINGLY, DISMISSED. HOWEVER, WE CLARIFY THAT A NY OBSERVATION GIVEN IN THIS ORDER SHALL NOT PREJUDICE THE RIGHTS 10 OF BOTH THE PARTIES IN THE CONSEQUENTIAL PROCEEDING S PENDING IN APPEALS. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JULY,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10 TH JULY,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH