Nishchint Bagga, New Delhi V. ITO, Ward- 23(1), New Delhi

ITA 6261/DEL/2017

AI Insights

The case involves Mrs. Nishchint Bagga, who appealed against the order of the CIT (Appeals) confirming the AO's assessment treating a cash credit of Rs.5,16,423 as undisclosed income for the assessment year 2002-03. The AO had issued a notice under section 148 of the Income-tax Act based on information from the Investigation Wing that the assessee received an accommodation entry. The CIT (Appeals) and subsequently the ITAT dismissed the appeal, finding that the AO had sufficient reason to believe that income had escaped assessment and that the assessee had not provided any satisfactory explanation for the cash credit during the reassessment proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114052 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 05-03-2023
• Assessment Year: 2002-2003
• Appeal Filed On: 08-10-2017
• Other Referred Cases: ITO vs. Biju Patnaik (1991) 188 ITR 247
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Revised return; Reason to believe; Set aside
• Section: 148; 143(3); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘SMC’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA No.6261/Del./2017 (ASSESSMENT YEAR : 2002-03) Mrs. Nishchint Bagga, vs. ITO, Ward 23 (1), C/o Mr. J. Baggar (Authorised Representative) Delhi. 15 th Floor, Corporate Tower, Nehru Place, New Delhi – 110 019. (PAN : AAKPB4005G) (APPELLANT) (RESPONDENT) ASSESSEE BY : None REVENUE BY : Shri Om Prakash, Sr. DR Date of Hearing : 06.03.2023 Date of Order : 09.03.2023 ORDER This appeal by the assessee is directed against the order of ld. CIT (Appeals)-31, new Delhi dated 16.06.2017 pertaining to the Assessment Year 2002-03. 2. The grounds of appeal taken by the assessee read as under :- “1. The Learned commissioner erred in not considering the fact that on the date of passing the order on 14-3-2014 (before the date fixed for the next date of hearing on the plea that the AO had to go for election duty) the learned AO had no jurisdiction whatsoever and therefore the order is NON EST, void ab initio, and a nullity, and is unprecedented and a mockery of justice. (The appeal before the Commissioner (appeals) and this appeal filed for abundant caution). 2. Section 250 (6) requires that "The order of the [* * "I [Commissioner (Appeals)] disposing of the appeal shall be in writing ITA No.6261/Del./2017 2 and shall state the points for determination, the decision thereon and the reason for the decision". The Learned Commissioner has erred in not stating the points to be determined, nor decided on the points raised in the appeal, and not giving any reasons for his decision except quoting from judgements which are old and not relevant to the points/issues which were to be determined, and which issues/points therefore remain undetermined and or undecided and no definitive reasons given for not determining the points/issues, and or for not taking any definitive decisions on the same. 3. The learned Commissioner erred in not considering the fact that the learned AO who passed the order dated 14-03-2014 did not give an opportunity to the assessee to inspect the file to know the basis of the issue of the notice u/s 148, as no basis was mentioned in the notice that was issued. 4. The learned Commissioner erred in not considering the fact that the learned AO who issued the notice u/s 148 did not give the reasons for the issue of the notice under S 148, or that the reasons had not been mentioned in that notice, and or that the assessee had protested that he had filed the return (and submitted the details of the return filed), and the AO instead of informing the assessee about the validity of the notice and satisfying that the notice was correctly issued, just kept quiet on the matter, and after several months just proceeded on the path of passing an ex parte order dated 12.12.2007, giving no opportunity or the reasons, and yet the assessee was not given any opportunity by the AO (whose order dated 14.03.2014 is now to be considered to verify the correctness of the issue of the notice under section 148 5. The learned Commissioner erred in not considering the fact that the learned AO did not give the reasons for the issue of the notice under S 148 when the reasons had not been mentioned in that notice, and the assessee had protested that he had filed the return (and submitted the details of the return filed) and yet the assessee was not given any opportunity by AO who passed the order dt. 14.03.2014 to verify the correctness of the issue of the notice under section 148. 6. The Learned Commissioner erred in not considering the fact that the law regarding the law of Limitation and the law relating to statutory notices, as to the how and when the same are to be issued are substantive law, and if there is no compliance of the law and rules and procedure (which is meant for protecting the assessee from harassment by the assessing authority) on the aspect of the issue of notices, the assessee cannot be called upon for reassessment. ITA No.6261/Del./2017 3 7. The learned Commissioner erred in not considering the fact that the learned AO did not consider the fact that after the Honourable Appellate Tribunal set aside the Ex parte Assessment Order and referred back the matter for assessment, and the then AO instead of apprising the Assessee of the details of the Notice u/s 148, namely the reasons for sending the same, the basis of the same, and the basis of the approval by the competent authority for issuing the notice, merely adjourned the same sine die, even though the requirement was for time bound assessment, and the Learned Commissioner has further erred in making no comments on this matter. 8. The learned Commissioner erred in not considering the fact that the learned AO ought to have given every assistance in coming to a conclusion that the notice was issued according to the statutory requirement of issuing the notice and getting the approval for the issue of the same. 9. The learned Commissioner erred in not considering the fact that the learned AO who passed the order dated 14-03-2014 had not given inspection of the file whereby the assessee could have learned the proper basis for issue of the notice under Section 148, and take further action on the matter, namely to challenge the same. 10. The learned Commissioner erred in not considering the fact that the learned AO who passed the order dated 14-03-2014, (instead of giving every assistance to the assessee to verify the validity of the notice u/s 148, and if necessary to challenge the same), chose to deny an opportunity to the assessee to have a look into this precondition before going into the matter of reassessment. 11. The learned Commissioner erred in not considering the fact that the learned AO who passed the order dated 14-03-2014 did not go into the fact whether the notice u/s 148 was issued on the basis of belief (based on verification and belief based on verification) of the AO who issued the notice, and whether the same was recorded in the file by the -same officer before issue of the notice under section 148. 12. The Learned Commissioner erred in not considering the fact whether the Learned AO satisfied himself and the assessee that there was proper/legal approval by the Commissioner for issue of notice u/s 148, and that the same approval was not mechanical. ITA No.6261/Del./2017 4 13. The learned Commissioner erred in not considering the fact that the learned AO which had issued the notice under section 148 had merely advised the assessee to file a revised return. 14. The learned Commissioner erred in not considering the fact that the learned AO who passed the order on 14-03-2014 had merely mentioned that the matter was adjourned and not mentioned the specific date of the next date fixed for hearing to create obfuscation 15. The Learned Commissioner has erred in not considering the fact that the AO who passed the order dated 14-03-2014 did not take up the matter of assessment till the nearing of the time barring date, and further that the AO (whose ex parte order was set aside) had earlier done the same. 16. The Learned Commissioner erred in not considering the fact that the matter of merit could not have been gone into or considered without first considering the fact whether the statutory requirements regarding notices were satisfied. 17. The Learned Commissioner erred in not considering the fact that the matter of merit could not have been gone into or considered without first considering the fact whether the order of the learned AO was legal, particularly when it was the specific plea of the assessee that the order was illegal, and VOID, without jurisdiction, on the basis of usurped powers and unprecedented, defying all canons of justice and fair play. 18. The Learned Commissioner erred in not considering the fact that the learned department is avoiding the issue of legal validity of statutory notice (issue of and service of the same). 19. The Learned Commissioner erred in not considering the fact the assessee's representative appeared immediately before the AO when contacted on phone. 20. The Learned Commissioner erred in not considering the fact the assessee was not given inspection even though the same was asked for and the assessment order was passed to deny the opportunity to the assessee to inspect the file, and to challenge the issue and service of the notices (whether the same were as per law, rules and procedures laid down to protect the assessee). 21. The learned commissioner erred in considering and dealing with only part of ground 1 but did not consider nor comment on the ITA No.6261/Del./2017 5 fact of how the learned AO could have jurisdiction on the date of the order when the matter had been fixed for hearing for a later date. 22. The Learned Commissioner erred in not considering and not commenting on the fact that the order of the Learned AO on 14.03.2014 (prior to the next date of hearing) had no legal validity. 23. The Learned Commissioner erred in not considering the fact that the demand on the basis of the order of the learned AO can only be NDN EST/void/nullity. 24. The Learned Commissioner erred in not declaring the order of the AO as not enforceable. 25. The Learned Commissioner erred in not cancelling the order of the Learned AO. 26. The Learned Commissioner erred in not considering the Letters exchanged between the assessee and the Commissioner X (appeals) (copies of the letters enclosed herewith). 27. The Learned Commissioner erred in not considering the letters exchanged between the assessee and himself (copies of the letter enclosed herewith). 28. The Learned Commissioner erred in not considering the submissions and arguments and case laws submitted by the assessee in the correspondence with the Commissioner and Commissioner (appeal X) and in the facts mentioned in the memorandum. 29. The submissions made in the correspondence exchanged with the Commissioner (appeals 31)and Commissioner (Appeal X) forms part of the appeal and its proceedings before the learned commissioner. 30. The learned Commissioner erred in not answering/determining the preliminary issues, and further erred in not passing any orders on the preliminary issues, and thus denying any opportunity to the Assessee. 31. The learned Commissioner erred in just mentioning ground no. 2 without dealing with the same. 32. The Learned commissioner erred in merely dealing with old judgements and case laws and discussing the same when he same had and no relevance with the questions and issues raised in the ITA No.6261/Del./2017 6 appeal, and the same issue have been determined in the latest case laws pointed out by the assessee in the correspondence exchanged with the learned Commissioner (appeal 31) and the Commissioner (Appeal X). 33. The Learned Commissioner erred in not considering the issue of absence/lack of jurisdiction on the date of passing of the orders, on the usurping of the powers by the learned order on the date of the Order, and in not dealing with and or considering the grounds 3 to 19 of the grounds of appeal. 34. The learned Commissioner erred in not considering the fact that it was the duty of the AO to consider the grounds/points/issues raise before the Honourable Appellate Tribunal before the Honourable tribunal set aside the ex parte assessment order and particularly so, as there was no reply filed by the respondents to the grounds/points/issues. 35. The learned Commissioner erred in not referring to and not discussing and or commenting on the case law referred to and submitted by the appellant regarding the law Notices to be issued, usurping of powers by the AO and consequences of not abiding by the rule of law laid down by the Honourable Courts.” 3. Brief facts of the case are that the assessee is an individual and had manually filed the return showing an income of Rs.40,000/- on 31.03.2003. A notice u/s 148 of the Income-tax Act, 1961 (for short 'the Act') was issued on the basis of information received from Investigation Wing that the assessee had received an accommodation entry amounting to Rs.5,16,423/-. The person from whom the cheque was received admitted that he was indulged in providing accommodation entries to various persons including the assessee. The entry operator after receipt of cash from the assessee issued a cheque and on this basis, the Assessing Officer initiated proceedings and a notice u/s 148 of the Act was issued. ITA No.6261/Del./2017 7 The AO completed assessment proceedings u/s 147/144 of the Act, treating the amount of Rs.5,16,423/- as undisclosed income of the assessee since no compliance was made despite affording many opportunities. Against the aforesaid assessment order, the assessee filed an appeal before CIT(A)-XXXIII, New Delhi. The CIT (A) dismissed the appeal for non attendance/non prosecution with the remarks that the assessee does not want to pursue the appeal. Aggrieved by the decision, the assessee filed further appeal before ITAT. The ITAT, Bench-E, New Delhi vide order ITA No. 2454/De1l2011 dated 04.04.2012 set aside the assessment order and restored back the matter to the Assessing Officer on the assessee's plea to provide adequate opportunity in view of natural justice with the directions to her (assessee) to approach the Assessing Officer within two months of the receipt of the ITAT order. Subsequently, notice u/s 143(2) was issued on 04.06.2012 by the AO and was duly served. It is seen from the assessment order that no compliance of the requirements of the AO was made by the assessee despite availing a large number of opportunities and no explanation for the impugned cash credit was furnished. Consequently, the AO completed the assessment u/s 254/ 143(3) / r.w.s. 147 vide order dated 14.03.2014 at an income of Rs.5,56,4201-, making an addition of Rs.5,16,423/- on the account of unexplained cash credit. ITA No.6261/Del./2017 8 4. Upon assessee’s appeal, as regards challenge to reopening, ld. CIT(A) after elaborately discussing the issue and pressing the reliance on several case laws rejected the challenge by concluding as under :- “ The sufficiency or the correctness of the material is not a thing to be considered at this stage. Since the belief is that the AD, the sufficiency of the reasons of forming the belief is not for the Court to judge but it is open to the assessee to establish that there, in fact, existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. 4.7. The question before me is that as to whether on the basis of facts of this case, the AO had reason to believe that income had escaped assessment or not. I have referred to various decisions of Hon'ble Supreme Court wherein it has been specifically laid down that power to reopen an assessment by the AO is subject to condition that he has reason to believe that income has escaped assessment. It is also established from judicial principles laid down by Hon'ble Apex Court that formation of belief need not necessarily result into reassessment. Taking the totality of the facts and circumstances of this case into consideration and in light of the legal principle laid down by Hon'ble Supreme Court referred to earlier in this order, I am of the considered view that AO has not committed any error in facts and in law while issuing the notice u/s 147/148 and is J justified in forming belief that the income of the appellant had escaped assessment for the assessment year under consideration. In the case of ITO vs. Biju Patnaik (1991) 188 ITR 247, the Apex Court has sounded the note of caution that at the stage of notice under section 147/148 of the Act, the Court is not to go into the merits of the controversy whether a particular income is taxable. Taking, the totality of the facts and circumstances of this case into consideration, I uphold the reopening of assessment u/s 148. Accordingly, the ground no.1 is rejected.” 5. As regards the unexplained cash credit, ld. CIT (A) confirmed the same also that nothing was produced in the second round. Ld. CIT (A) also placed reliance on several case laws. Operative part of the ld. CIT(A) order is as under :- ITA No.6261/Del./2017 9 “5.4 I have carefully considered the findings recorded by the ld. AO as per the impugned order, the position of law and the facts of the case on record and the letters sent on behalf of the appellant. As can be seen from the records, the appellant neither appeared before the Id. AO during the assessment proceedings to explain the cash credit of Rs.5,16,423/- nor filed any explanation on the same during the appellate proceedings. Same was the case when the original assessment was done by the ld. AO after issuing a notice u/s 148. Though the matter was set aside by Hon'ble ITAT to the AO after the appeal of the assessee was dismissed by the then CIT(A), yet the appellant did not appear before the ld. AO during the reassessment proceedings as a result of such setting aside of the earlier assessment. In various letters sent during the appellate proceedings by post, the appellant has only stated that the assessment was completed without jurisdiction and has neither elaborated the same nor has submitted a justification behind saying so. At the same time, no explanation for the cash credit of Rs.5,16,423/- was filed either before the AO or during the appellate proceedings.” 6. Against this order, the assessee is in appeal before me. I have heard the ld. DR for the Revenue. Nobody is appearing on behalf of the assessee despite several notices and several notices have returned unserved. Hence, I proceed to adjudicate the issue by hearing the ld. DR of the Revenue and perusing the records. 7. Upon careful consideration, I find that authorities below have taken a correct view of the matter and the order of the ld. CIT (A) is well- reasoned and does not need any interference on my part. Accordingly, I uphold the same. 8. In the result, the appeal filed by the assessee stands dismissed. Order pronounced in the open court on this 9 th day of March, 2023. Sd/- (SHAMIM YAHYA) ACCOUNTANT MEMBER Dated the 9 th day of March, 2023/TS ITA No.6261/Del./2017 10 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-31, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.