Smt Soobha Prajapati, Faizabad V. The Income TAx Officer-I, Faizabad

ITA 728/LKW/2011

• Counselvise Citation: 72823714 RSA 2011
• Duration Of Justice: 2 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 12-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARE BEING DISPOSED OF
• Keywords: Gift; Income from undisclosed sources; Reason to believe
• Section: 143(3); 147; 69; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS.728 & 729/LKW/2011 A.YRS.:2004 - 05 & 2005 - 06 SMT. SHOBHA PRAJAPATI, 18, CIVIL LINES, FAIZABAD. PAN:ALEPP1118D VS. INCOME TAX OFFICER - 1, FAIZABAD. (APPELLANT) (RESPONDENT) O R D E R PER A. K. GARODIA, A.M. BOTH THESE APPEALS ARE FILED BY THE ASSESSEE, WHICH ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LEARNED CIT(A) - I, LUCKNOW DATED 06/09/2011 FOR THE ASSESSMENT YEAR 2004 - 05 AND DATED 07/09/2011 FOR ASSESSMENT YEAR 2005 - 2006. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. AS PER GROUND NO. 1 TO 3 IN BOTH THE YEARS, THE ASSESSEE IS CHALLENGING THE VALIDITY OF REASSESSMENT AND HENCE, THESE GROUNDS ARE REPRODUCED HEREIN BELOW FROM ASSESSMENT YEAR 2004 - 05 I.E. I.T.A. NO.728/LKW/2011 BECAUSE THE GROUNDS ARE IDENTICAL IN BOTH THE YEARS: 1. THAT THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AS W ELL AS ON FACTS IN ISSUING THE NOTICE U/S 148 READ WITH SECTION 147 OF THE I . T. ACT, 1961 AS THE APPELLANT BY SHRI M. P. MISHRA, ADVOCATE SHRI SHAILENDRA MISHRA, ADVOCATE RESPONDENT BY SHRI R. K. RAM, D.R. DATE OF HEARING 21/08/2014 DATE OF PRONOUNCEMENT 2 3 /09/2014 2 ASSESSEE HAS ALREADY FILED HER RETURN WHERE SHE HAS NOT UNDERSTATED HER INCOME OR CLAIMED EXCESSIVE LOSS, CLAIMED DEDUCTION, ALLOWANCE OR RELIEF IN HER RETURN OR SHE HAS BEEN ASSESSED AT TOO LOW RATE AND THUS THE ASSESSMENT AS FRAMED U/S 143(3) BASED ON NOTICE U/S 148 IS NOT A VALID ASSESSMENT ORDER AND THAT TOO ON PROTECTIVE BASIS. 2. THAT THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AS WE LL AS ON FACTS IN ARBITRARILY UPHOLDING THE INITIATION OF THE PROCEEDINGS U/S 147 OF THE I . T. ACT, 1961, WHICH WAS BASED ON THE INFORMATION RECEIVED FROM THE ADDL. DIRECTOR ( I NV.) AND THERE IS NO APPLICATION OF MIND OF THE L D. A.O. AS APPARENT FROM THE ASS ESSMENT ORDER. 3. THAT THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT THERE EXISTED RELEVANT MATERIAL WHICH COULD LEAD TO FORMATION OF REQUISITE 'REASON TO BELIEVE' AND THE ASSESSING OFFICER COMMITTED NO ERROR AS SUCH IN INITIATING THE PROCEEDINGS U/S 147 OF THE INCOME - TAX ACT, 1961 AND FAILING AS SUCH TO FOLLOW THE DECISION OF HON'BLE I.T.A.T., LUC K NOW 'B' BENCH, LUCKNOW, IN ASSESSEE'S APPEALS FOR ASSESSMENT YEARS 2001 - 02, 2002 - 03 & 2003 - 04, WHEREIN O N IDENTICAL FACTS THE ASSESSMENT ORDERS HAVE BEEN CANCELLED. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION RENDERED IN THE CASE OF SHRI CHUNNI LAL PRAJAPATI IN I.T.A. NO.726 & 727/LKW/2011 DATED 14/03/2013 IN THE CASE OF HUSBAND OF THE ASSESSEE UNDER SIMILAR FACTS. HE SUBMITTED A COPY OF THIS TRIBUNAL DECISION. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE REGARDING VALIDITY OF REOPEN ING WAS DECIDED BY THE TRIBUNAL IN THE CASE OF SHRI CHUNNILAL PRAJAPATI, HUSBAND OF THE ASSESSEE, AS PER PARA NO. 6 TO 8 OF 3 THIS TRIBUNAL ORDER AND THESE PARAS FROM THE TRIBUNAL ORDER ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 6. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THE REASONS FOR REOPENING ARE AS FOLLOWS: THE REASON FOR INVOKING SECTION 147 AND ISSUING OF NOTICE U/S 148 OF THE I.T. ACT, 1961 (COPY PLACED AT PAGE 5 OF THE PAPER BOOK), IS TRANSLATED INTO ENGLISH AS FOLLOWS: REASON FOR ISSUANCE OF NOTICE U/S 148 IN CASE OF THE ASSESSEE THE VA LU A TION OF COST OF CONSTRUCTION WAS REFERRED TO THE DEPARTMENTAL VALUATION OFFICER U/S 142A(1), WHOSE REPORT WAS RECEIVED ON 21.11.2006. IN THE REPORT COST OF CONSTRUCTION HAS BEEN FIXED AT RS. 32,86,500 / - AS AGAINST RS. 26 , 40 , 000/ - SHOWN BY THE ASSESSEE. THE INVESTMENT DECLARED BY THE ASSESSEE AND ESTIMATED BY THE D.V.O. (DEPARTMENTAL VALUATION OFFICER) IS AS UNDER - F.Y. DECLARED COST IN CONSTRUCTION/INVESTMENT(RS) F.Y. WISE ESTIMATED COST OF DIFFERENCE CONSTRUCTION /INVESTMENT (RS.) (RS.) 2000 - 01 1,70,000.00 2,30.712.00 60,712.00 2001 - 02 9,57,500.00 12,51,828.00 2,94,328.00 2002 - 03 4,67,500.00 5,89,269.00 1,21,769.00 2003 - 04 2,50,000.00 3,02,687.00 52,687.00 2004 - 05 7,95,000.00 9,12,004.00 1,17,004.00 TOTAL 26,40,000.00 32,86,500.00 6,46.500.00 AFTER DETAILED DISCUSSION IN ASSESSMENT YEAR 2001 - 02, THE DIFFERENCE IN INVESTMENT DECLARED BY THE ASSESSEE AND THE COST OF INVESTMENT ESTIMATED BY THE VALUATION OFFICER HAS BEEN ADDED U/S 69 TO THE INCOME AS INCOME FROM UNDISCLOSED SOURCES OF THE ASSESSEE. IN RELEVANT A.Y. 2004 - 05 THE DIFFERENCE AMOUNTS TO ` 52,687/ - WHICH IS TREATED TO HAVE ESCAPED ASSESSMENT ON ACCOU NT OF INACCURATE PARTICULARS FURNISHED BY THE ASSESSEE AND NOTICE U/S 148 IS ISSUED ACCORDINGLY. DA TE:05/07/2007 (S. K. SAXENA) INCOME TAX OFFICER - II, FAIZABAD. 4 7. THIS BENCH OF THE TRIBUNAL, VIDE ORDER DATED 28/02/2001 WHILE CONSIDERING THE VALIDITY OF REOPENING THE IN ASSESSMENT YEARS 1999 - 2000, 2001 - 2002, 2002 - 2003 AND 2003 - 2004 HAD IN ITS DETAILS ORDER AT PARA 16 HELD AS FOLLOWS: 16. CONSIDERING THE TOTALITY O F THE FACTS AS DISCUSSED HEREINABOVE, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND HOLD THAT THE ASSESSING OFFICER WITHOUT REFERRING TO ANY MATERIAL WHICH COULD JUSTIFY HIS CONCLUSION THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT, INSTANTIATED TH E PROCEEDINGS U/S. 147 OF THE ACT, THE SAID ACTION WAS NOT JUSTIFIED BECAUSE THE SAID ACTION APPEARS TO BE ON SUSPICION AND FOR MAKING ROVING ENQUIRIES. IN THAT VIEW OF THE MATTER, ASSESSMENTS FRAMED ON THE BASIS OF NOTICES DATED 22.3.2006 ISSUED U/S. 148 OF THE ACT ARE SET ASIDE CONSIDERING THE SAME AS ILLEGAL AND BAD IN LAW, HENCE VITIATED. SINCE WE HAVE DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, THEREFORE, NO FINDING HAS BEEN GIVEN ON THE OTHER GROUNDS CONTESTED BY THE ASSESSEE ON MERITS. 8. AS THE FACTS AND CIRCUMSTANCES FOR REOPENING ARE THE SAME, WE RESPECTFULLY FOLLOW THE DECISION OF COORDINATE BENCH AND HOLD THAT THE REOPENING FOR THE ASSESSMENT YEARS 2004 - 2005 AND 2005 - 2006 ARE BAD IN LAW. 6. THE REASONS RECORDED BY THE ASSESSING OFFIC ER FOR REOPENING THE ASSESSMENT IN BOTH THE YEARS IN THE CASE OF THE PRESENT ASSESSEE ARE AVAILABLE ON PAGE NO.S 4 & 5, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: THE ASSESSEE, AN INDIVIDUAL, IS STALED TO BE DERIVING INCOME FROM SEWING, ST I TC HING , EMBROIDERY WORK, BESIDES HAVING AGRICULTURA L INCOME FOR THE ASSTT. YEAR 2004 - 05, R ETURN SHOWING AN INCOME OF RS.82,500 / - FROM BUSINESS AND RS.1,50,000/ - AS AGRICULTURAL INCOME WAS FILED ON 29.10.2004. EXCEPT A PAPER CONTAINING COMPUTATION OF INC OME ANY OTHER DETAILS WHATSOEVER HAVE NOT BEEN FURNISHED. FROM A REPORT SENT BY THE ADDL. DIRECTOR OF INCOME - TAX (INVESTIGATION) , L UCKNO W DATED 06.03.2006 , IT CAME TO NOTICE THAT T HE ASSESSEE, ALONG WITH HER HUSBAND SHRI CHUNNI L AL PRAJAPATI, WAS INVESTING HANDSOME AMOUNT OF MONEY IN THE CONSTRUCTION OF A HOUSE PROPERTY SITUATED AT 60, ELD E CO GREEN, RAFI AHMAD KIDWAI NAGAR , GOMTI NAGAR , LUCKNOW. THEREFORE, NOTICES U/S 148 OF I . T. ACT, 1961 FOR ASSTT. YEARS 2001 - 02, 2002 - 03 AND 5 2003 - 04 WERE ISSUED TO THE A SS ESSEE. IN THE COURSE OF ASSTT. PROCEEDINGS FOR THESE YEARS IT TRANSPIRED THAT THE ASSESSEE HAD IN FACT NO KNOWN SOURCE OF HER INCOME AND WHATEVER INCOME FROM SEWING, STITCHING EMBROIDERY ETC. AND AGRICULTURE HAD BEEN SHOWN WAS NOTHING B UT INCOME OF HER HUS BAND FROM UNDISCLOSED SOURCES LIABLE TO BE CHARGED TO TAX IN HIS CASE SUBSTANTIVE L Y AND ON PROTECTIVE BASIS IN CASE OF THE ASS E SSEE TO SAFEGUARD THE INTEREST OF REVENUE. FOR THE ASST T . YEAR 2004 - 05 THE POSITION IS THE SA M E AS IN EARLIER YEARS. IN THIS YEAR , ASSESSEE HAS SHOWN HER AGRICULTURAL INCOME AS RS.1,50,000/ - WHICH IS NOT ACCEPTABLE AND IS TO BE ASSESSED IN HER HAND AS INCOME FOR UNDISCLOSED SOURCES. I HAVE THEREFORE, REASON TO BELIEVE T HAT INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT OWING TO FAILURE ON THE PART OF THE ASSESSES TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR ASSESSMENT. ISSUE NOTICE U/S 148. SD/. (SANJEEV KUMAR SAXENA) INCOME TAX OFFICER - I, FAIZABAD THE ASSESSEE, AN INDIVIDUAL, IS STA T ED TO B E DERIVING INCOME FROM SEWING , STITCHING, EMBROIDERY WORK, BESIDES HAV ING AGRICULTURAL INCOME FOR THE ASSTT. VEAR 2005 - 06 , RETURN SHOWING AN INCOME OF RS. 95,000/ - FROM BUSINESS AND RS.1 , 50 , 000/ - AS AGRICULTURAL INCOME WAS F I L ED ON 06.09.2005. E XCEPT A PAPER CONTAINING COMPUTATION OF INCOME ANY OTHER DETAILS WHATSOEVER HAV E NOT BEEN FURNISHED FROM A REPORT SENT BY THE ADDL. D I RECTOR OF INCOME - TAX (INVESTIGATION) , LUCKNOW, DATED 06 , 03.2006 , IT CAME TO NOTICE THAT THE ASSESSEE, ALONG WITH HER HUSBAND, S HRI CHUNNI LAL PRAJAPATI WAS INVESTING HANDSOME AMOUNT OF MONEY IN THE CONSTRUCTION OF A HOUSE PROPERTY SITUATED AT 160 , ELD E CO GREEN, RAFI AHMAD KIDWAI NAGAR, GOM T I NAGAR , LUCKNO W . THEREFORE, NOTICES U/S 148 OF I.T. ACT, 196 1 FOR ASSTT. YEARS 2001 - 02 , 2002 - 03 AND 2003 - 04 WERE ISSUED TO THE ASSESSEE. IN THE COURSE OF ASSTT. PROCEEDINGS FOR THESE YEARS IT TRANSPIRED THAT THE ASSESSEE HAD IN FACT NO KNOWN SOURCE OF HER INCOME AND WHATEVER INCOME FROM SEWING, STITCHING EMBROIDERY ETC. AND AGRICULTURE HAD B EEN SHOWN WAS NOTHING BUT INCOME OF HER HUSBAND FROM UNDISCLOSED SOURCES LIABLE TO BE CHARGED TO TAX IN HIS CASE SUBSTANTIVELY AND ON PROTECTIVE BASIS IN CASE OF THE ASSESSEE TO 6 SAFEGUARD THE INTEREST OF REVENUE. FOR THE ASSTT. YEAR 2005 - 06 THE POSITION IS THE SAME AS IN EARLIER YEARS. IN THIS YEAR, ASSESSEE HAS SHOWN HER AGRICULTURAL INCOME AS RS.1 , 50 , 000/ - WHICH IS NOT ACCEPTABLE AND IS TO B E ASSESSED IN HER HAND AS INCOME FOR UNDISCLOSED SOURCES. FURTHER, ASSE S SEE HAS ALLEGEDLY RECEIVED GIFTS OF RS.5 , 00 , 00 0/ - AS HER REPLY D T D. 18 . 08.06 IS ASSESSMENT PRO C EE D IN G S FOR A. Y . 2001 - 02 FROM FRIE NDS /RELA TIVES. IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2002 - 03 AS A.Y. 2003 - 04 , THE CLAIMS OF ASSESSEE THAT SHE HAD RECEIVED GIFTS OF RS.2,80 , 000/ - AND RS.2 , 75,0 00/ - RESPECTIVEL Y H AS NOT ACCEPTED DUE TO VARIOUS REASONS ELABORATELY DISCUSSED IN THE ASSESSMENT ORDER FOR RELEVANT Y EAR AND T H ESE GIFTS WERE TREATED AS INCOME OF HER HUSBAND FROM UNDISCLOSED SOURCES LIABLE TO HE CHARGED TO TAX IN HIS CASE SUBSTANTIVELY A ND ON PRO TECTIVE BASIS IN CASE OF THE ASSESSEE TO SAFEGUARD THE INTEREST OF REVENUE. POSITION IN THIS YEAR IS SAME AS IN EARLIER YEARS. I HAVE THEREFORE, REASON TO BELIEVE THAT INCOME OF RS.1 , 50 , 000/ - +RS.5,00,000/ - I.E. RS.6,50,000/ - CHARGEABLE TO LAX HAS ESCAPED THE ASSESSMEN T OWING TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. ISSUE NOTICE U/S 148. SD/. (SANJEEV KUMAR SAXENA) INCOME TAX OFFICER - I, FAIZABAD 6.1 FROM THE REASONS RECORDED BY THE ASSESSING OFFICER IN THESE YEARS, IT IS SEEN THAT THE BASIS OF THE REASONS RECORDED BY THE ASSESSING OFFICER IS THAT THE ASSESSEE ALONG WITH HER HUSBAND SHRI CHUNNI LAL PRAJAPATI WAS MAKING HUGE INVESTMENT IN CONSTRUCTION OF PROPERTY. IN THE CASE OF SHRI CHUNNI LAL PRAJAPATI, THE REASONS RECORDED BY THE ASSESSING OFFICER ARE REPRODUCED BY THE TRIBUNAL IN PARA 6 OF THE TRIBUNAL ORDER AS REPRODUCED ABOVE AND FROM THE SAME , IT IS SEEN THAT IN THE CA SE OF HUSBAND OF THE ASSESSEE I.E. SHRI CHUNNI LAL PRAJAPATI, IT WAS HELD BY THE TRIBUNAL THAT THE REOPENING WAS NOT JUSTIFIED BECAUSE THE SAID ACTION WAS ON SUSPICION AND FOR MAKING ROVING 7 ENQUIRIES. WHEN THE INVESTMENT IN HOUSE PROPERTY ALLEGED BY THE D EPARTMENT IS IN THE JOINT NAME OF THE ASSESSEE AND HER HUSBAND, IT WAS HELD BY THE TRIBUNAL THAT THE REOPENING IS NOT VALID BECAUSE THE SAME IS ON SUSPICION AND FOR MAKING ROVING ENQUIRIES. IN THE CASE OF THE PRESENT ASSESSEE ALSO, IT CANNOT BE SAID THAT THE REOPENING IS VALID BECAUSE THE FACTS AND THE BASIS OF REOPENING ARE SAME IN BOTH CASES AND HENCE , RESPECTFULLY FOLLOWING THE TRIBUNAL DECISION RENDERED IN THE CASE OF THE ASSESSEES HUSBAND, WE HOLD THAT THE REOPENING IS BAD IN LAW IN BOTH THE YEARS. 7 . REGARDING OTHER GROUNDS OF THE ASSESSEE ON MERIT, WE WOULD LIKE TO OBSERVE THAT WHEN REOPENING ITSELF IS NOT VALID, THE OTHER GROUNDS DO NOT SURVIVE AND NO SEPARATE ADJUDICATION IS CALLED FOR REGARDING THESE GROUNDS. 8. IN THE RESULT, BOTH APPEALS OF TH E ASSESSEE STAND ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 /09/2014 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR