Sh. Rakesh Kumar, Jaandhar city V. The Income-tax Officer, Jalandhar

ITA 72/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0535 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 06-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISRA
• Assessee Lawyers: RAVISH SOOD
• Keywords: Reason to believe; Reassessment proceedings
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.72(ASR)/2015 ASSESSMENT YEAR: 2005-06 SH. RAKESH KUMAR, PROP. M/S RAKESH TRADING CO., AJIT NAGAR, KISHAN PURA, JALANDHAR CITY AND C/O M/S SAGAR MAL RAKESH KUMAR, MANDI FENTON GANJ, JALANDHAR CITY. PAN:AESPK6661H VS. ITO, WARD-2(2) JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. RAVISH SOOD (ADV.) RESPONDENT BY: SH. A.N.MISRA (DR.) DATE OF HEARING: 25.05.2016 DATE OF PRONO UNCEMENT: 14.07.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LEARNED CIT(A), JALANDHAR, 09.12.2014 FOR ASST. YEAR: 2005- 06. 2. THE ASSESSEE HAS TAKEN VARIOUS GROUNDS OF APPEAL AND HAS ALSO TAKEN ADDITIONAL GROUND OF APPEAL CHALLENING THE JU RISDICTION ASSUMED BY ASSESSING OFFICER U/S 147 OF THE ACT. THE ASSESSEE HAS ALSO TAKEN A FURTHER JURISDICTINAL GROUND FOR NON SERVICE OF NOT ICE U/S 143(2) OF THE ACT. 3. AT THE OUTSET, LEAREND AR, INVITIED OUR ATTEN TIN TO THESE LEGAL ISSUES RAISED BY ASSESSEE AND SUBMITTED THAT THESE MAY BE ADMITTED AS THE ISSUES ARE PURELY LEGAL ISSUES AND RELIED UPON THE JUDGMENT OF HONBLE ITA NO.72 (ASR)/2015 ASST. YEAR : 2005-06 2 SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT 299 ITR 383 (SC) AND SUBMITTED THAT ASSESSEE WAS ENTITLED TO RAISE THESE ISSUES BEFORE THE HONBLE TRIBUNAL. 4. THE LEARNED DR HAD NO OBJECTION TO RAISING OF TH ESE ADDITIONAL GROUNDS AND THE ADDITIONAL GROUNDS BEING LEGAL IN N ATURE, WE ADMITTED THE SAME AND LEARNED AR WAS DIRECTED TO PROCEED WIT H HIS ARGUMENTS. 5. ARGUING THE FIRST ADDITIONAL GROUND THE LEARNED AR SUBMITTED THAT ASSESSING OFFICER HAD NOT APPLIED HIS INDEPENDENT M IND AND SIMPLY ON THE BASIS OF INFORMATION RECEIVED BY HIM FROM THE O FFICE OF ADIT (INV.), JALANDHAR HAD INITIATED PROCEEDINGS U/S 147 IN A ME CHANICAL MANNER. THE LEARNED AR SUBMITTED THAT BEFORE STARTING PROCE EDING U/S 147 THE AO MUST HAVE REASON TO BELIEVE WHICH IMPLIES THAT THERE SHOULD BE (I) SOME MATERIAL OR MATERIALS AND NOT MERE FANCY, IMAG INATION, SPECUALTION, SUSPICITION; (II) A NEXUS BETWEEN SUCH MATERIAL AND THE BELIEF OF ESCAPEMENT OF INCOME; (III) AN APPLICATION OF MIND BY THE A.O. TO SUCH MATERIAL; (IV) AN INFERENCE BASED ON REASONS DRAWN TENTATIVELY BY THE OFFICER THAT THE INCOME HAD ESCAPED ASSESSMENT. IT WAS SUBMITTED THAT IN THE PRESENT CASE THE ASSESSING OFFICER BALATANTL Y FAILED TO COMPLY WITH THE STATUTORY REQUIREMENT OF FORMATION OF A BONAFID E INDEPENDENT BELIEF AND PROCEEDED TO REOPEN PROCEEDINGS U/S 147 ON THE REPORT OF INVESTIGATION WING AND THEREFORE IT WAS SUBMITTED T HAT THE ASSUMPTION OF JURISDICTION U/S 147 BY HIM CANNOT BE SUSTAINED AND IS LIABLE TO BE QUASHED. ITA NO.72 (ASR)/2015 ASST. YEAR : 2005-06 3 6. THE LEARNED AR IN THIS RESPECT FILED A JUDGMENT PASSED BY SINGLE MEMBER BENCH OF AMRITSAR BENCH IN ITA NO.352(ASR)/2 014 FOR ASST. YEAR 2005-06 WHEREIN THE HONBLE TRIBUNAL HAD ALLOWED AP PEAL TO THE ASSESEE IN SIMILAR FACTS AND CIRCUMSTANCES. 7. THE LEARNED DR, HOWEVER, HEAVILY PLACED HIS RELI ANCE ON THE ORDER OF AUTHORIEIS BELOW AND SUBMITTED THAT THE NOTICE F OR REASSESSMENT PROCEEDINGS WERE ISSUED ON THE BASIS OF DEFINITE IN FORAMTION OF ADIT(INV.) AND THEREFORE, NEEDS TO BE UPHELD. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED RECORD. WE FIND THAT WHILE INITIATI NG PROCEEDINGS U/S 147, THE ASSESSING OFFICER HAD RECORDED THE FOLLOWING RE ASONS: IN THIS CASE INFORMATION HAS BEEN RECEIVED FROM TH E OFFICE OF ASSTT. DIRECTOR OF INCOME TAX (INV.), JALANDHAR VIDE HIS O FFICE LETTER BEARING NUMBERADIT(INV.)/JAL/TEP/GMS/2011-12/4013 DATED 02. 03.2012 VIDE WHICH IT HAS BEEN INITIATED THAT SH. RAKESH KUMAR, C/O M/S SAGAR MAL RAKESH KUMAR, MANDI FANTONGANJ, JALANDHAR, HAS BEEN INVOLVED IN THE BUSINESS OF MONEY LENDING AND HE HAS FAILED TO PROV IDE DETAILS AND SOURCE OF RS.5,50,000/- ADVANCED BY HIM TO ONE SH. RAMESH KUMAR AND RS.7,00,000/- ADVANCED TO ONE SH. VISHNU MOHAN (AS ON 01.04.2004). FURTHER MORE IT HAS BEEN REPORTED THAT SH. RAMESH K UMAR HAS NOT DECLARED ACCRUED INTEREST (WORKED OUT @ 18% P.A.) R S.2,25,000/- ON THE ABOVE MENTIONED UNEXPLAINED ADVANCES , FOR TAXATION. IT HAS ALSO BEEN REPORTED THAT DURING F.Y.2004-05 ( 06.10.2004 TO 10.10.2004) SH; RAKESH KUMAR VISITED SINGAPORE. BUT HE HAS NOT ABLE TO PROVIDE DETAILS AND SOURCE OF EXPENDITURE INCURRED EXPENDITURE ON FOREIGN VISIT HAS BEEN ESTIMATED RS.1,00,000/-. IN THE LIGHT OF ABOVE FACTS/INFORMATION, I HAVE REA SONS TO BELIEVE THAT IN THIS CASE INCOME EXCEEDING RS.1,00,000/- HA S ESCAPED ASSESSMENT. ITA NO.72 (ASR)/2015 ASST. YEAR : 2005-06 4 FROM THE ABOVE REASONS RECORDED BY ASSESSING OFFICE R, WE FIND THAT THE REOPENING IS BASED UPON INFORMATION RECEIVED FROM A DIT (INV.) REGARDING CERTAIN TRANSACTIONS CARRIED OUT BY ASSESSEE AND AS SESSING OFFICER HAD NOT APPLIED HIS OWN MIND. THE HONBLE AMRITSAR BENC H IN THE CASE OF SH. KARANVIR VERMA HAS DEALT WITH SIMILAR ISSUE AND HA S ALLOWED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: 6. I HAVE HEARD THE PARTIES ON THIS ISSUE AND HAVE PERUSED THE MATERIAL WITH REGARD THERETO. AT PAGE 2 OF THE ASSESSMENT, A N EXTRACT FROM THE REASONS RECORDED FOR REOPENING THE ASSESSMENT HAS B EEN REPRODUCED, AS FOLLOWS: AS PER THE INFORMATION AVAILABLE WITH THE DEPARTME NT, WHICH WAS RECEIVED FROM DDI(INV.II), AMRITSAR, VIDE HIS L ETTER NO.1868 DATED 23.02.2012 THAT SH. KARANVIR VERMA, S/O SH. D ARBARI LAL, R/O 55-GREEN AVENEU, AMRITSAR HAS PURCHASED 4/20 SH ARES OF LAND FOR RS.16,09,000/- FRO, SH. DIWAN SINGH S/O SH . BHAGWAN SINGH MEASURING LAND 42 KANAL 18 MARLAS (22000 GAJ) TO FOUR PERSONS FOR RS.80,45,000/-. THE 4/20 SHARE COMES TO RS.16,09,000/- IN THE NAME OF SH. KARNVIR VERMA, S/ O SH. DARBARI LAL, R/O 55-GREEN AVENUE, AMRITSAR. THEREFORE, THE INVESTMENT FOR THE PURCHO.SE OF LAND AS THE AGREEMENT DATED 30.04. 2004 REMAINED UNEXPLAINED. ASSESSEE HAS NOT FILED ANY RETURN FOR THE PERIOD FROM 1.4.2004 TO 31.3.2005 RELEVANT TO THE AY 2005-06. A S ADMITTED BY THE ASSESSEE BEFORE THE DDI (INV.-II). THE ASSESSEE ALLOTTED PAN FOR OPERATING BANK ACCOUNT ONLY. I HAVE GONE THROUGH TH E FACTS NARRATED IN THE AGREEMENT DEED AS WELL AS THE STATEMENT OF T HE ASSESSEE FILED BEFORE THE DDI (INV-II), AMRITSAR. I AM OF TH E CONSIDERED VIEW AND HAVE, THEREFORE, REASONS TO BELIEVE THAT INCOME TO THE EXTENT OF RS. 16,09,000/- ESCAPED ASSESSMENT FOR THE A.Y. 200 5-06 WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961 AN D ALSO ANY OTHER INCOME CHARGEABLE TO TAX IN RESPECT OF WHICH ASSESS EE IS ASSESSABLE, WHICH HAS ESCAPED ASSESSMENT. 7. THUS, AS AVAILABLE FROM THE REASONS THEMSE LVES, THE REOPENING IS BASED ON INFORMATION RECEIVED FROM DDI (INV-II), AMRITSAR VIDE LETTER NO. 1868 DATED 23.03.2012 REGARDING ALLEGED PURCHASE OF LAND BY TH E ASSESSEE, ALONGWITH OTHER PERSONS. NO INDEPENDENT ENQUIRY WAS CONDUCTED BY THE AO. 8. THIS IS ALSO VERY CLEAR FROM PARA 2 OF THE ASSESSMENT ORDER, WHICH READS AS UNDER: 02. BRIEF FACTS OF THE CASE ARE THAT ENQUIRIES WER E MADE BY THE INVESTIGATION WING OF THE DEPARTMENT, AMRITSAR REGA RDING PURCHASE OF A PROPERTY MEASURING 42 KANALS 18 MARLAS BEARING KHASRA ITA NO.72 (ASR)/2015 ASST. YEAR : 2005-06 5 NO.395(9-2) 387 (5-16) 6594/3882(2-4) 397(8-2) 402( 9-16) 398 (7- 18) FOR A SUM OF RS.80,45,000/- BY SHRI SUKHCHAIN S INGH S/O SH. GURNAM SINGH, RESIDENT OF JANDIALA GURU, DISTT. AMR ITSAR (SHARE 3/20), SHRI SOM NATH S/O SH. DARSHAN LAI, RESIDENT OF FATEHGARH CHURIAN, DISTT. GURDASPUR AND SH. SWEEKAR S/O SH. O NKAR NATH RESIDENT OF CHHEHARTA, TEHSIL AMRISAR (BOTH 13/20 S HARE), SH. KARANVIR VERMA S/O SH. D.L. VERMA, RESIDENT OF 2889 /12, KATRA SHER SINGH, AMRITSAR ( 4/20 SHARE). THE CONVEYANCE DEED WAS EXECUTED ON 30.04.2004. A COPY OF THE DEED IS AVAIL ABLE ON RECORD. ON THE BASIS OF ENQUIRY REPORT OF THE INVESTIGATION WING, PROCEEDINGS IN THIS CASE WERE STARTED U/S 147 AFTER RECORDING THE REASONS BY THEM INCOME TAX OFFICER, WARD-5(2), AMRI TSAR AND BY OBTAINING NECESSARY APPROVAL OF THE ADDL. COMMISSIO NER OF INCOME TAX, RANGE-V, AMRITSAR, AS RECEIVED VIDE HER OFFICE LETTER NO.8685 DATED 12.03.2012 9. FURTHER, PARA 4 OF THE IMPUGNED ORDER ALSO ST ATES AS UNDER: ON THE BASIS OF ENQUIRY OF THE INVESTIGATION WING, PROCEEDINGS IN THIS CASE WERE STARTED U/S 147 AFTER RECORDING THE REASONS BY THEN INCOME TAX OFFICER, WARD-5(2), AMRITSAR. 10. IN CIT VS. SFIL STOCK BROKING LTD., 325 ITR 285), THE HONBLE ' DELHI HIGH COURT HAS HELD TO THE EFFECT THAT WHERE IT IS NOT DISCERNIBLE FROM THE REASONS THAT THE AO HAD INDEPENDENTLY APPLIED HIS M IND TO THE INFORMATION AVAILABLE OR THAT THE AO HAD INDEPENDENTLY ARRIVED AT A BELIEF ON THE BASIS OF THE MATERIAL BEFORE HIM THAT INCOME HAD ESCAPED ASS ESSMENT, PROCEEDINGS U/S 147/148 OF THE ACT ARE LIABLE TO QUASHED. NO DECISION TO THE CONTRARY HAS BEEN CITED BEFORE THIS BENCH. 11. IN THE PRESENT CASE, AS IN CIT VS. SFIL ST OCK BROKING LTD., (SUPRA), A THE SO-CALLED REASONS RECORDED FOR REOPENING THE AS SESSMENT DO NOT EVINCE ANY INDEPENDENT APPLICATION OF MIND BY THE AO TO TH E MATERIAL BEFORE HIM, I.E., THE INFORMATION FROM THE INVESTIGATION WING, MUCH L ESS ANY INDEPENDENT ARRIVAL BY THE AO, AT A BELIEF ON THE BASIS OF SUCH MATERIAL BEFORE HIM, THAT INCOME HAD ESCAPED ASSESSMENT. IN FACT, THE ASSESSM ENT ORDER AND EVEN THE IMPUGNED ORDER ENDORSE THIS FACT, AS NOTICED HEREIN ABOVE. 12. THEREFORE, THE ASSESSEES GRIEVANCE BY WA Y OF THE ADDITIONAL GROUND IS JUSTIFIED AND IT IS ACCEPTED AS SUCH. ACCORDINGLY, THE VERY ASSUMPTION OF JURISDICTION BY THE AO U/S 147/148 OF THE ACT, AND THE ENTIRE REASSESSMENT PROCEEDINGS, CULMUNATING IN THE IMPUGNED ORDER ARE QUASHED. THE FACTS OF THE PRESENT CASE ARE SIMILAR, THEREFOR E RESPECTFULLY FOLLOWING THE ORDERS OF HONBLE TRIBUNAL, WE HELD THAT THE VE RY ASSUMPTION OF JURISDICTION BY ASSESSING OFFICER U/S 147/148 WERE BAD IN LAW AND ENTIRE ITA NO.72 (ASR)/2015 ASST. YEAR : 2005-06 6 REASSESSMENT PROCEEDINGS CULMINATING IN THE IMPUGNE D ORDER ARE QUASHED. 9. FOR THE ABOVE, NOTHING FURTHER SURVIVES FOR ADJU DICATIN. 10. IN THE RESULT, THE APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 .07.2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14.07.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER