Smt Fuleswari Das, Nadia V. ITO, Wd-3, Murshidabad, Kolkata

ITA 615/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100244 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 07-04-2014
• Court: TRIBUNAL
• Assessee Lawyers: P S GUPTA; A K CHAKRABORTY
• Keywords: Reopening of assessment; Gift
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC A BEN CH: KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM] I.T.A NOS.613 & 614/KOL/2014 ASSESSMENT YEAR: 2003-04 & 2004-05 SHRI ASHOK KR. DAS VS. INCOME-TAX OFFICER,WD-3, MURSHIDABAD (PAN: AGAPD6043J) ( APPELLANT ) ( RESPONDENT ) & I.T.A NOS.615 & 616/KOL/2014 ASSESSMENT YEAR: 2003-04 & 2004-05 SMT. FULESWARI DAS VS. INCOME-TAX OFFICER,WD-3 , MURSHIDABAD (PAN: AGAPD6044R) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 08.12.2015 DATE OF PRONOUNCEMENT: 11.12.2015 FOR THE APPELLANT: S/ SHRI A. K. CHAKRABORTY & P. S . GUPTA, ADVOCATES FOR THE RESPONDENT: SHRI TANUJ NIYOGI, JCIT, SR. DR ORDER ITA NOS. 613 & 614/K/2014 FILED BY ASSESSEE IS ARIS ING OUT OF SEPARATE ORDERS OF CIT(A)-XXXVI, KOLKATA VIDE APPEAL NOS. 569/CIT(A)-X XXVI/KOL/WD-3,MSD/2008- 09 AND NO. 562/CIT(A)-XXXVI/KOL/WARD-3,MSD/2009-10 BOTH DATED 31.01.2014. ITA NOS. 615 & 616/K/2014 FILED BY ASSESSEE IS ARIS ING OUT OF SEPARATE ORDERS OF CIT(A)-XXXVI, KOLKATA VIDE APPEAL NOS. 568/CIT(A)-X XXVI/KOL/ITO/WD- 3,MSD/2008-09 AND NO. 567/CIT(A)-XXXVI/KOL/ITO,WARD -3,MSD/2009-10 BOTH DATED 31.01.2014 ASSESSMENTS WERE FRAMED BY ITO, WA RD-3, MURSHIDABAD U/S. 143(3)/147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2003-04 AND 2004-05 VIDE HIS SEPAR ATE ORDERS ALL DATED 31.12.2008. 2. THE ONLY COMMON ISSUE IN ALL THESE FOUR APPEALS OF ASSESSEE IS AS REGARDS TO ASSUMPTION OF JURISDICTION BY THE AO FOR REOPENING OF ASSESSMENT U/S. 147 R.W.S.148 OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR AY 2003- 04. THE AO SUBSEQUENTLY ISSUED NOTICE U/S. 148 OF T HE ACT FOR THE REASON THAT THE ASSESSEE HAS RECEIVED GIFT OF RS.2.15 LACS DURING T HE YEAR UNDER CONSIDERATION AND ACCORDING TO HIM, THIS IS A BOGUS GIFT. FOR THIS, HE RECORDED REASONS FOR ISSUANCE OF NOTICE U/S. 148 OF THE ACT ON 26.03.2008 AND THE RE LEVANT REASON READS AS UNDER: 2 ITA NOS.613 TO 616/K/2014 SRI ASHOK KR. DAS & FULESWARI DAS AY 2003-04 & 200 4-05 26.3.08. SEEN LD. CIT-XXI, KOLS REVIEW ORDER PL ACED IN RECORDS. THE LD. CIT-XXI, AFTER REVIEWING THE RECORDS DIRECTED THE AO TO REOP EN THE ASSESSMENT AS THE ASSESSEE HAS RECEIVED GIFTS OF RS.3,15,000/- DURING THE YEAR UND ER CONSIDERATION. I HAVE THEREFORE REASONS TO BELIEVE THAT THE ASSESSEE HAS ESCAPED GI FT DURING THE F.Y. 2002-03. ISSUE NOTICE U/S. 148. THE AO AFTER REOPENING OF THE ASSESSMENT FRAMED ASS ESSMENT AND ASSESSED THE RECEIPT OF GIFT OF RS.3.15 LACS AS UNEXPLAINED U/S. 68 OF THE ACT. THE CIT(A) ALSO CONFIRMED THE ACTION OF AO AND ALSO UPHELD THE REOPENING OF ASSES SMENT U/S. 148 OF THE ACT. AGGRIEVED, NOW ASSESSEE HAS CHALLENGED THE REOPENIN G BEFORE THE TRIBUNAL. 4. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, I HAVE NOTICED THAT THE REASO NS RECORDED BY AO ARE MERELY ON THE DIRECTIONS OF THE CIT-XXI, KOLKATA, WHICH IS NOT AP PLICATION OF MIND BY THE AO. THE CIT(A) IN HIS ORDER AT PAGE 4 REPRODUCED THE REASON S, WHICH IN TURN, ARE REPRODUCED ABOVE AT PARA 3 AND ALSO COMMENTS OF CIT AT PAGE 4 OF CIT(A) AT PARA 2.2. FROM THE ABOVE REASONS RECORDED BY THE AO FOR ISSUANCE OF NO TICE U/S. 148 OF THE ACT, IT IS CLEAR THAT THESE ARE MERELY DIRECTIONS OF CIT(A) AND NOT REASONS INDEPENDENTLY. THE AO HAS NOT APPLIED HIS MIND FOR RECORDING OF REASONS. I A M OF THE VIEW THAT THE AO SHOULD HAVE APPLIED HIS OWN MIND TO THE MATERIALS LYING BEFORE HIM AND HE SHOULD HAVE FORMED A BELIEF REGARDING ESCAPEMENT OF INCOME. THE BELIEF MUST BE FROM BY HIM AT HIS OWN AND NOT AT THE DICTATION OF ANY SUPERIOR AUTHORITY. HE SHOULD HAVE FORMED HIS OWN BELIEF AND NOT AS SUCH THE REASONS TO BELIEVE ON THE PART OF T HE AO AS DICTATED BY CIT CONCERNED. THE REASONS TO BELIEVE ON THE PART OF THE AO ARE PU RELY SUBJECTIVE SATISFACTION ON HIS PART BEFORE ISSUING NOTICE U/S. 148 OF THE ACT. TH IS ISSUE IS COVERED BY THE DECISION OF HONBLE PATNA HIGH COURT IN THE CASE OF SHEO NARAIN JAISWAL V ITO (1989) 176 ITR 352 AT PAGE 369 HELD AS UNDER:- 22. LEARNED COUNSEL FOR THE RESPONDENTS VEHEMENTLY URGED THAT THERE IS NOTHING IN LAW WHICH PREVENTS A HIGHER AUTHORITY FROM GIVING INSTR UCTIONS AND ADVICE FROM TIME TO TIME TO SUBORDINATE AUTHORITIES. SUCH INSTRUCTIONS CANNOT V ITIATE THE JUDGMENT OF THE SUBORDINATE AUTHORITIES. HE SUBMITTED THAT VERY OFTEN INCOME-TA X OFFICERS, WHEN THEY ARE IN DOUBT, SEEK ADVICE OF A HIGHER AUTHORITY, SUCH AS THE COMMISSIO NER OF INCOME-TAX, AND THEY ARE GUIDED BY SUCH ADVICE AND INSTRUCTIONS AS THEY RECEIVE FRO M THEM. IN THE INSTANT CASE, HOWEVER, I FIND THAT THIS IS NOT A CASE WHERE THE INCOME-TAX O FFICER WAS SEEKING ANY CLARIFICATION OR ADVICE IN REGARD TO A MATTER WHERE HE HAD DOUBTS. T HE INCOME-TAX OFFICER CONCERNED AS WELL AS HIS PREDECESSOR HAD CLEARLY EXPRESSED THE V IEW THAT THERE DID NOT APPEAR TO BE ANY REASON TO INITIATE PROCEEDINGS UNDER SECTION 147 OF THE ACT, BUT FINDING THAT THE COMMISSIONER OF INCOME-TAX WAS OF THE OPPOSITE VIEW , HE SOUGHT INSTRUCTIONS IN THE MATTER. PURSUANT THERETO, BY LETTER DATED JULY 13, 1972, TH E COMMISSIONER OF INCOME-TAX DIRECTED HIM TO SUBMIT A PROPOSAL UNDER SECTION 147 OF THE ACT. LEARNED COUNSEL SUBMITTED THAT THE COMMISSIONER DID NOT SUGGEST THE REASONS WHICH HAVE BEEN RECORDED FOR THE PROPOSAL MADE BY THE INCOME-TAX OFFICER. THAT, TO MY MIND, I S NOT OF MUCH CONSEQUENCE. THE 3 ITA NOS.613 TO 616/K/2014 SRI ASHOK KR. DAS & FULESWARI DAS AY 2003-04 & 200 4-05 INCOME-TAX OFFICER, CONTRARY TO HIS OWN BELIEF, FEL T COMPELLED TO SUBMIT A PROPOSAL FOR INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT. THE COMMISSIONER OF INCOME-TAX AND THE ADDITIONAL COMMISSIONER OF INCOME-TAX ALWAY S HELD A VIEW TO THE CONTRARY, AND, THEREFORE, THE INCOME-TAX OFFICER HAD NO DIFFICULTY IN FOLLOWING THE LINE OF REASONING ADVANCED BY THEM. HE, THEREFORE, RECORDED REASONS I N SUPPORT OF THE PROPOSAL, EVEN THOUGH HE HIMSELF DID NOT BELIEVE THAT THOSE REASONS JUSTI FIED THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT. THE REQUISITE BELIEF UNDER SECTION 147 OF THE ACT MUST BE THAT OF THE INCOME-TAX OFFICER CONCERNED AND NOT OF ANY OTHER OFFICER. IF THE INCOME-TAX OFFICER DOES NOT FORM HIS OWN BELIEF, BUT MERELY ACTS AT TH E BEHEST OF ANY SUPERIOR AUTHORITY, IT MUST BE HELD THAT THE ASSUMPTION OF JURISDICTION UNDER SECTION 148 OF THE ACT WAS BAD FOR NON- SATISFACTION OF THE CONDITIONS PRECEDENT. 23. I AM, THEREFORE, OF THE VIEW THAT THE PROCEEDIN GS INITIATED PURSUANT TO THE PROPOSALS SUBMITTED BY THE INCOME-TAX OFFICER DATED DECEMBER 4, 1971, AND MARCH 15, 1972, ARE BAD IN LAW. THE NOTICES ISSUED UNDER SECTION 148 OF THE ACT ON MARCH 27, 1972, ARE, FOR THE SAME REASON, BAD IN LAW AND THE PROCEEDINGS TAKEN P URSUANT THERETO, ARE INVALID AND OF NO CONSEQUENCE. THE NOTICES DATED MARCH 27, 1972 (ANNE XURES-8 TO 8-F), AS ALSO PROCEEDINGS TAKEN PURSUANT THERETO ARE HEREBY QUASHED. 5. SIMILARLY, IN THE CASE OF CIT VS. T. R. RAJAKUMA RI (1974) 96 ITR 78 (MAD) HAS LAID DOWN THE SAME PROPOSITION BY OBSERVING AS UNDE R: THE OTHER REASON GIVEN BY THE TRIBUNAL FOR UPHOLDI NG THE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER ANNULLING THE REASSESSMENT P ROCEEDINGS UNDER SECTION 147(A) , HOWEVER, APPEARS TO US TO BE SOUND. THE CONDITION P RECEDENT FOR INITIATING PROCEEDINGS UNDER THE SAID SUB-SECTION IS THE ISSUE OF A NOTICE UNDER SECTION 148 . SECTION 148(2) SPECIFICALLY PROVIDES THAT THE INCOME- TAX OFFICER SHALL, BEFORE ISSUING ANY NOTICE UNDER THIS SECTION, RECORD HIS REASONS FOR DOING SO . THERE CANNOT BE ANY DISPUTE THAT THE PROVISIONS OF SECTION 148 IS MANDATORY. IN THIS CASE, APART FROM THE COMMUNI CATION WHICH THE INCOME- TAX OFFICER WROTE TO THE COMMISSIONER REQUIRING SANCTI ON UNDER SECTION 151 , THERE IS NO SEPARATE RECORD WHERE THE INCOME- TAX OFFICER HAS SET OUT HIS REASONS FOR INITIATING PROCEEDINGS UNDER SECTION 147(A) . IN THE SAID COMMUNICATION THE ONLY REASON GIVEN FOR INCITING PROCEEDINGS UNDE R SECTION 147(A) IS THE DIRECTION OF THE COMMISSIONER; AND THERE IS NO INDICATION THAT T HE INCOME- TAX OFFICER HAD ENTERTAINED ANY BELIEF THAT BY REASON OF OMISSION OR FAILURE O N THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS, THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN THIS COMMUNICATION THE INCOM E- TAX OFFICER HAS ONLY STATED THAT HE IS INITIATING PROCEEDINGS UNDER SECTION 147(A) IN VIEW OF THE DIRECTION OF THE COMMISSIONERS HE HAS NOWHERE STATED THAT HE HAS ENTERTAINED A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT DUE TO THE NON-DISCLOSURE BY THE ASSESSEE OF MATERIAL FACTS FOR THE ASSESSMENT YEAR 1955-56. WE ARE NOT INCLINED TO AGR EE WITH THE CONTENTION OF THE LEARNED COUNSEL FOR THE REVENUE THAT THE RECORDING OF REASONS CONTEMPLATED BY SECTION 148(2) AND SECTION 151 NEED NOT RELATED TO THE MATTERS SET OUT IN SECTION 147(A) AND THAT THE INCOME- TAX OFFICER HAVING GIVEN THE DIRECTION OF THE COMMISSI ONER AS A REASON FOR INITIATING THE PROCEEDINGS IT SHOULD BE TAKEN TO BE A SUFFICIENT COMPLIANCE WITH THE PROVISIONS OF SECTIONS 148(2) AND 151 . THE LEARNED COUNSEL FOR THE REVENUE IS RIGHT WHEN HE SAYS THAT THE SUFFICIENCY OF THE REASONS RE CORDED BY THE INCOME- TAX OFFICER IS NOT A MATTER FOR THE COURT TO CONSIDER. BUT WHETHER THE REASONS GIVEN WERE RELEVANT TO SUSTAIN A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT AS A RESULT OF THE NON-DISCLOSURE OF INCOME BY THE ASSESSEE HAS TO BE CONSIDERED BY THE COURT WHEN THE JURISDICTION OF THE INCOME- TAX OFFICER TO INITIATE PROCEEDINGS UNDER SECTION 147 IS QUESTIONED. THE REVENUE WANTS US TO CONSTRUE THE WORDS 'RECORD HIS REASONS FOR DOING SO' OCCURRING IN SECTION 148(2) AS REQUIRING THE RECORDING OF REASONS FOR ISSUING THE NOTICE AS SUCH AND WITHOUT REFERENCE TO THE MATTER SET OUT IN SECTION 147(A) . WE ARE OF THE VIEW THAT HAVING REGARD TO THE SETTING IN WHICH THESE WORDS OCCUR AND THE S IGNIFICANCE OF THE OPENING WORDS IN SECTION 148(1) , THEY HAVE TO BE UNDERSTOOD ONLY AS REQUIRING THE RECORDING OF REASONS 4 ITA NOS.613 TO 616/K/2014 SRI ASHOK KR. DAS & FULESWARI DAS AY 2003-04 & 200 4-05 FOR INITIATING THE PROCEEDINGS UNDER SECTION 147 . IF IT IS OTHERWISE, WE CANNOT CONTEMPLATE AS TO WHAT ARE THE REASONS WHICH COULD BE GIVEN BY THE INCOME- TAX OFFICER FOR ISSUING THE NOTICE AS SUCH, WITHOUT REFERENCE T O THE INGREDIENTS REFERRED TO IN SECTION 147(A) . ADMITTEDLY, THE ONLY REASON RECORDED FOR ISSUING THE NOTICE IS THE DIRECTION OF THE COMMISSIONER TO REOPEN THE ASSESSMENT. THEREFOR E, IT HAS TO BE TAKEN THAT THE ONLY REASON RECORDED BY THE INCOME- TAX OFFICER FOR ISSUING THE NOTICE AS WELL AS FOR ANNOTATING PROCEEDINGS UNDER SECTION 147(A) IS THE DIRECTION OF THE COMMISSIONER AND NOT A REASONABLE BELIEF ENTERTAINED BY THE INCOME- TAX OFFICER THAT INCOME HAS ESCAPED ASSESSMENT AS A RESULT OF THE NON-DISCLOSURE OF MAT ERIAL FACTS BY THE ASSESSEE. 6. IN VIEW OF THE ABOVE REPRODUCED REASONS WHICH CL EARLY SPEAKS OF RECORDING ON THE BASIS OF DIRECTIONS OF CIT BY THE AO AND PRINCIPLES LAID DOWN BY HONBLE PATNA HIGH COURT AND HONBLE MADRAS HIGH COURT IN THE CASES, C ITED SUPRA, I AM OF THE VIEW THAT WHERE THE AO DOES NOT HIMSELF EXERCISED HIS JURISDI CTION U/S. 147 READ WITH SECTION 148 OF THE ACT BUT MERELY ACTS AT THE BEHEST OF ANY SUP ERIOR AUTHORITY, THE ASSUMPTION OF JURISDICTION IS BAD IN LAW FOR NON SATISFACTION OF THE CONDITIONS PRECEDENT. IN THE PRESENT CASE, AT THE SAME TIME, THE INITIATION BY THE AO AT THE DIRECTION OF THE CIT, WITHOUT SATISFACTION ON THE PART OF THE AO HIMSELF, IS INVA LID. ACCORDINGLY, THE REOPENING IS HELD TO BE INVALID IN ALL THE FOUR APPEALS AND ACCORDING LY, THE APPEALS OF THE ASSESSEES ARE ALLOWED. 7. IN THE RESULT, ALL THE APPEALS OF ASSESSEES ARE ALLOWED. 8. ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.12.2 015 SD/- (MAHAVIR SINGH) JUDICIAL MEMBER DATED : 11TH DECEMBER, 2015 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI ASHOK KR. DAS & SMT. FULESWARI DAS, C/O P. S. GUPTA (ADVOCATE), 100, BANK LANE, HATAR PARA, P.O. KRISHNAGAR, DIST. NADIA, PIN-741101 2 RESPONDENT ITO, WARD-3, MURSHIDABAD. 3. THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .