Naresh Kumar Gupa HUF, Ranchi V. ITO, Ranchi

ITA 67/RAN/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6612 (ITAT-RANCHI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 29-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHURY ORAM
• Assessee Lawyers: VINAY JALAN
• Keywords: Source of fund; Deemed to accrue or arise in india; Capital receipt; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI SMC BENCH, RANCHI BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 67 /RAN/2016 ASSESSMENT YEAR : 2002 - 2003 NARESH KUMAR GUPTQA, HUF, C/O SRI VINAY KUMAR JALAN, SARAI ROAD, RANCHI. VS. ITO, WARD 2(2), RANCHI PAN/GIR NO.AABHN 9852 L (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI VINAY JALAN, AR REVENUE BY : SHRI CHAUDHURY ORAM , DR DATE OF HEARING : 16 /12/ 2016 DATE OF PRONOUNCEMENT : 3 /1/ 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF CIT(A) - RANCHI , DATED 21.12.2015 , FOR THE ASSESSMENT YEAR 2002 - 2003 . 2. GROUND A OF THE APPEAL READS AS UNDER: FOR THAT THE LD CIT(A) WAS NOT RIGHT IN CONFIRMING THE INITIATION OF PROCEEDINGS UNDER SECTION 148 OF THE INCOME TAX ACT WHERE THERE WAS NO MATERIAL IN THE HANDS FOR THE INTIMATION OF SUCH PROCEEDINGS. 3. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE 2 ITA NO. 227/RAN/2016 ASSESSMENT YEAR :2012 - 2013 ASSESSE HUF FILED ITS RETURN OF INCOME INITIALLY ON 12.8.2002 DISCLOSING TOTAL INCOME AT RS.75,000/ - . THEREAFTER, A NOTICE U/S.148 WAS ISSUED ON 17.7.2008. THE REAS ONS RECORDED FOR ISSUANCE OF SAID NOTICE IS AS UNDER: M/S. NARESH KUMAR GUPTA, HUFD, ASST.YEAR 2002 - 03 PAN AAQBHA 9852 L C/O. GUPTA JWELLERS, MAIN ROAD, RANCHI. I HAVE INFORMATION IN MY POS SESSION THROUGH THE ITO, WARD - 3( 1), RANCHI THAT THE ASSESSE HAS RECEIVED COPARCENARY INTEREST FROM A.S.GUPTA, HUF AMOUNTING TO RS.9,46,000/ - DURING THE F.Y. RELEVANT FOR ASSESSMENT YEAR 2002 - 03. IN ADDITION TO THAT IT ALSO RECEIVED CAPITAL RECEIPT ON SALE OF ACCESSED JEWELLERY AMOUNTING TO RS.5,84,743/ - AND GIVEN LOAN TO SMT. SUDHA GUPTA, PROP. M/S. GUPTA JEWELLERS. THE ASSESSE DO NOT FILE BALANCE SHEET IN REGULAR COURSE OF FILING RETURN AND THE SAME HAS BEEN FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF LOAN DR. HOWEVER, IT DENIED TO FILE ANY EVIDENCE IN SUPPORT OF THE RECEIPT AS COPARCENARY INTEREST AND CAPITAL RECEIPT ON SALE OF ACCESSED JEWELLERY. IN VIEW OF THE ABOVE THE SOURCE OF FUND RS.15,31,543/ - OUT OF WHICH LOAN OF RS.12,75,000/ - HAS BEEN GIVEN TO SMT. SUDHA GUPTA REMAINE D UNEXPLAINED IN THE HAND OF THE ASSESSE ALSO. CONSIDERING THE ABOVE FACTS THE INCOME OF THE ASSESSE HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T.ACT, 1961. THEREFORE, THE REOPENING OF THE CASE IS NECESSARY. AS THE PERIOD OF FOUR YEAR BUT NOT MORE THAN SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT HAS EXPIRED THE NOTICE U/S.148 OF THE I.T.ACT CAN BE ISSUED ONLY WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER OF INCOME TAX. THEREFORE, CONSIDERING THE FACT OF THE CASE THE SANC TION FOR ISSUE OF NOTICE U/S.148 IS REQUIRED IN THIS CASE. HENCE, AS PER DRAFT ALONGWITH THE CASE RECORD IS SENT TO THE JCIT FOR NECESSARY FOR ISSUE OF NOTICE U/S.148 OF THE I.T.ACT. SD/ - ITO, WARD 2(2) 4. ACCORDING TO THE LD A.R. OF THE ASSESSE, THE AFORESAID RECORDING IS NOT A REASON TO BELIEVE AS CONTEMPLATED U/S.148 OF THE ACT. THE SAID REASON IS NOT BASED ON ANY RELEVANT MATERIAL WHICH CAME TO POSSESSION OF THE 3 ITA NO. 227/RAN/2016 ASSESSMENT YEAR :2012 - 2013 ASSESSING OFFICER SUBSEQUENT TO THE ACCEPTANCE OF THE ORIGIN AL RETURN. THE REOPENING HAS BEEN MADE ONLY ON THE BASIS OF SUSPICION AND BORROWED SATISFACTION OF THE ASSESSING OFFICER, WHICH IS NOT LEGALLY PERMISSIBLE. 5. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT TH E RECORDING OF REASONS WERE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 147 OF THE ACT. 6. IT IS AN ESTABLISHED POSITION OF LAW THAT THE VALIDITY OF NOTICE ISSUED U/S.148 IS TO BE JUDGED ONLY ON THE BASIS OF THE RECORDINGS MADE U/S.148(2) OF THE ACT AND THE RECORDINGS MADE U/S.148(2) OF THE A CT MUST CONTAIN THE REASONS ON THE BASIS OF WH ICH A BELIEF WAS ENTERTAINED ABOUT THE ESCAPEMENT FROM TAX OF AN INCOME WHICH WAS OTHERWISE CHARGEABLE TO TAX. 7. ON A PERUSAL OF THE RECORDINGS MADE U/S.148( 2), I FIND THAT THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE ITO, WARD 3(1), RANCHI. FROM THE SAID INFORMATION, THE ASSESSING OFFICER WAS INFORMED THAT THE ASSESSE E HAS RECEIVED COPARCENARY INTEREST FROM A.S.GUPTA, HUF AMOUNTING TO RS.9,46,000/ - A ND ALSO RECEIVED CAPITAL RECEIPT OF RS.5,84,743/ - ON SALE OF JEWELLERY. THE ONLY OTHER INFORMATION WHICH WAS RECEIVED BY THE ASSESSING OFFICER WAS THAT THE ASSESSE HAS ADVANCED LOAN OF RS.12,75,000/ - TO SMT. SUDHA GUPTA DURING THE YEAR UNDER CONSIDERATIO N . IT IS NOT IN DISPUTE THAT THE INTEREST WHICH WAS EARNED BY 4 ITA NO. 227/RAN/2016 ASSESSMENT YEAR :2012 - 2013 THE ASSESSE ON THE ABOVE LOAN WAS DULY DISCLOSED IN THE RETURN OF INCOME FILED BY THE ASSESSE FOR THE YEAR UNDER CONSIDERATION AND WAS DULY ASSESSED TO TAX. 8. THE ASSESSING OFFICER ALSO CLAIMED TO KNOW FROM THE ITO, WARD 3(1), RANCHI THE EVIDENCE OF RECEIPT OF COPARCENARY INTEREST AND CAPITAL RECEIPT BY WAY OF SALE OF JEWELLERY WERE NOT FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF SMT, SUDHA GUPTA. ON THE BASIS OF THE ABOVE, THE ASS ESSING OFFICER INFERRED THAT IF THE PROCEEDINGS ARE INITIATED IN THE CASE OF THE ASSESSE E THEN THE ASSESSE E MAY NOT BE IN A POSITION TO FURNISH THE EVIDENCE OF RECEIPT OF COPARCENARY INTEREST AND CAPITAL RECEIPT BY WAY OF SAL E OF JEWELLERY AND IN THAT CIRCUMSTANCES, THE SAID RECEIPT AGGREGATING TO RS.15,31,543/ - COULD BE TREATED AS INCOME OF THE ASSESSE E FROM UNDISCLOSED SOURCES. 9. THUS, IT IS OBSERVED THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED NOT ON THE BASIS OF ANY MATERIAL TO SHOW THAT ANY INCOME CHARGEABLE TO TAX WAS ACTUALLY EARNED BY THE ASS E SSEE WHICH WAS NOT DISCLOSED IN THE ORIGINAL RETURN OF INCOME BUT ON THE GROUND THAT THE ASSESSE MAY NOT BE IN A POSITION TO SUBSTANTIATE ITS RECEIPTS BY WAY OF COPARCENARY I NTEREST AND CAPITAL RECEIPT BY WAY OF SALE OF JEWELLERY WHICH THEN IN THE CIRCUMSTANCES, WHEN THE ASSESSE CANNOT SUBSTANTIATE ITS RECEIPTS, IT CAN BE TREATED AS DEEMED INCOME OF THE ASSESSE. 5 ITA NO. 227/RAN/2016 ASSESSMENT YEAR :2012 - 2013 10. IT IS AN ESTABLISHED POSITION OF LAW THAT THE EXPRESSION BELIEF USED IN SECTION 147 IS STRONGER THAN THE EXPRESSION SATISFIED AND IS NOT THE SAME AS SUSPICION. THE ABOVE RECORDINGS MADE BY THE ASSESSING OFFICER GIVE RISE A MERE SUSPICION ALONE WHICH IS NOT THE SAME THING WHICH IS REQUIRED BY LAW THAT IS BELIEF BASED ON RELEVANT AND SPECIFIC MATERIAL. THE ASSESSE EXPLAINED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF SMT. S UDHA GUPTA, SMT. SUDHA GUPTA WAS REQUIRED TO PROVE HER SOURCE OF RECEIPTS OF RS.12,75,000/ - WHICH WAS RECEIVED FROM THE ASSESSE E AND IN THAT THE PROCEEDINGS, THE SOURCE OF SOURCE WAS NOT REQUIRED TO BE PROVED. THEREFORE, THE ASSESSE WAS NOT REQUIRED TO PROVE ITS OWN SOURCE OF RS.12,75, 000/ - AND, THEREFORE, NO ADVERS E INFERENCE UNDER LAW COULD HAVE BEEN DRAWN FROM THE FACT BROUGHT OUT IN THE PROCEEDINGS MADE U/S.148(2) OF THE ACT. 11. I FIND FORCE IN THE ABOVE CONTENTION OF LD A.R. OF THE ASSESSE AS IT A SETTLED POSITION OF LAW THAT UNDER SECTION 1 4 8 OF THE ACT, THE ASSESSE IS REQUIRED TO EXPLAIN ITS SOURCE OF THE CREDIT AND NOT THE SOURCE OF SOURCE. FURTHER, THE HONBLE DELHI HIGH COURT IN THE CASE OF BAWA ABHAI SINGH VS DCIT, (2002) 253 ITR 83 (DEL) HAS HELD THAT THE CRUCIAL EXPRESSION REASON T O BELIEVE PREDICATES THAT THE ASSESSING OFFICER MUST HOLD A BELIEF . B Y THE EXISTENCE OF REASONS FOR HOLDING SUCH A BELIEF. IN OTHER WORDS, IT CONTEMPLATES EXISTENCE OF REASONS ON WHICH THE BELIEF IS FOUNDED AND NOT 6 ITA NO. 227/RAN/2016 ASSESSMENT YEAR :2012 - 2013 MERELY A BELIEF IN THE EXISTENCE OF R EASONS INDUCING THE BELIEF. SUCH A BELIEF MAY NOT BE BASED MERELY ON REASONS BUT IT MUST BE FOUNDED ON INFORMATION. 12. IN VIEW OF ABOVE SETTLED POSITION OF LAW AS HELD BY HONBLE DELHI HIGH COURT IN THE CASE OF BAWA ABHAI SINGH(SUPRA), IN MY CONSIDERED OPINION, THE REASONS RECORDED IN THE INSTANT CASE DOES NOT SATISFY THE REQUIREMENT OF LAW. I, THEREFORE, HOLD THAT THE INITIATION OF REASSESSMENT PROCEEDINGS IN THE INSTANT CASE WAS NOT IN ACCORDANCE WITH LAW AND CONSEQUENTLY THE IMPUGNED ORDER OF REASSES SMENT PASSED U/S.147 IS BAD IN LAW AND UNSUSTAINABLE. HENCE, THE IMPUGNED ORDER OF REASSESSMENT IS HEREBY SET ASIDE AND THIS GROUND OF THE ASSESSE IS ALLOWED. 13. AS I HAVE CANCELLED TH E REASSESSMENT ORDER DATED 30.12.2009 , THE OTHER GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ON MERITS OF THE ADDITIONS HAVE BECOME ONLY ACADEMIC IN NATURE AND HENCE, INFRUCTUOUS AND DISMISSED . 14 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT O N 3/1/2017. SD/ - N.S. SAINI) A CCOUNTANT MEMBER RANCHI ; DATED 3/1 /2017 B.K.PARIDA, SPS 7 ITA NO. 227/RAN/2016 ASSESSMENT YEAR :2012 - 2013 COPY OF THE ORDER FORWARDED TO : BY ORDER, AR , ITAT, ITAT, RANCHI 1. THE APPELLANT : . NARESH KUMAR GUPTQA, HUF, C/O SRI VINAY KUMAR JALAN, SARAI ROAD, RANCHI 2. THE RESPONDENT: ITO, WARD 2( 2) , RANCHI 3. THE CIT(A) RANCHI 4. CIT , RANCHI 5. DR, ITAT, RANCHI 6. GUARD FILE. //TRUE COPY//