Vipul Virendrakumar Patel, Ahmedabad V. The ITO, Ward-3(3)(14), Ahmedabad

ITA 770/AHD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7307 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-04-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 27-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: A L THAKKAR
• Keywords: Salary income; Bonafide belief
• Section: 143(3); 68; 148

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD ( CONVENED THROUGH VIRTUAL COURT ) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO. 770/AHD/2018 ( ASSESSMENT YEAR : 2010-11) VIPUL VIRENDRAKUMAR PATEL 8, SIDDHIVINAYAK ROW HOUSE, NR. JIVRAJ PARK OVER BRIDGE, AHMEDABAD - 380051 / VS. ITO WARD 3(3)(14), AHMEDABAD ./ ./ PAN/GIR NO. : AGQPP0881N ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI A. L. THAKKAR, A.R. / RESPONDENT BY : SHRI L. P. JAIN, SR. D.R. DATE OF HEARING 19/08/2020 !'# / DATE OF PRONOUNCEMENT 03/09/2020 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS)-3, AHMEDABAD (CIT(A) IN SHORT), DATED 2 2.02.2017 ARISING IN THE ASSESSMENT ORDER DATED 31.03.2015 PA SSED BY THE ITA NO. 770/AHD/18 (VIPUL V. PATEL VS.ITO) A.Y. 2010-11 - 2 - ASSESSING OFFICER (AO) UNDER S. 143(3) R.W.S. 147 O F THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2010-11. 2. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE BROADLY VOICED TWO FOLD OBJECTIONS TO ASSAIL THE ADDITIONS OF RS.85,85,865/- MADE BY THE AO UNDER S. 68 OF THE ACT. 3. AS REGARDS LEGAL OBJECTION ON LACK OF JURISDICTI ON, THE LEARNED AR ADVERTED TO THE ASSESSMENT ORDER AND SUBMITTED T HAT THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUANCE OF NOTICE UND ER S.147 OF THE ACT ON THE BASIS OF CERTAIN INFORMATION AVAILABLE W ITH THE AO WHICH GAVE RISE TO THE ALLEGED BELIEF THAT CHARGEABLE INC OME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. A NOTICE UNDER S. 148 OF THE ACT WAS CONSEQUENTLY ISSUED DATED 29.08.2013. THE LEAR NED AR FURTHER SUBMITTED THAT IN THE ABSENCE OF ANY CHARGEABLE POS ITIVE INCOME, THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT HE IS NOT R EQUIRED TO FILE RETURN OF INCOME. ON ISSUANCE OF NOTICE UNDER S.14 7 OF THE ACT, THE ASSESSEE SOUGHT REASONS RECORDED FOR FORMATION OF B ELIEF ABOUT THE INCOME HAVING ESCAPED ASSESSMENT TO ENABLE HIM TO F ILE A PROPER AND CORRECT RETURN OF INCOME. IT WAS SUBMITTED THA T IMPLICIT OBJECTIVE OF ISSUANCE OF NOTICE UNDER S.147 OF THE ACT IS TO EXTEND HELP TO AN ASSESSEE TO ENABLE HIM TO FILE A PROPER RETURN IN RESPONSE TO SUCH NOTICE. NO CONCRETE INFORMATION, HOWEVER, WAS SHARED WITH THE ASSESSEE. THE LEARNED AR FURTHER SUBMITTED THA T DESPITE THE ABSENCE OF RETURN, A NOTICE UNDER S.143(2) OF THE A CT WAS ISSUED TO ASSUME JURISDICTION FOR ASSESSMENT GIVING RISE TO I NHERENT JURISDICTIONAL DEFECT. THE LEARNED AR THEREAFTER S TATED THAT VIDE LETTER DATED 15.11.2013, IT WAS VAGUELY INFORMED TH AT THE ASSESSEE HAS DEPOSITED CASH IN THE BANK ACCOUNT ABOVE RS.10 LAKHS AND HAS ENTERED INTO SHARE TRANSACTIONS ABOVE RS.20,000/- W HICH HAS RESULTED IN FORMATION OF BELIEF TOWARDS ESCAPED ASSESSMENT A GAINST THE ITA NO. 770/AHD/18 (VIPUL V. PATEL VS.ITO) A.Y. 2010-11 - 3 - ASSESSEE. THE LEARNED AR THUS SUBMITTED THAT IN TH E ABSENCE OF ANY OBJECTIVE AND INTELLIGIBLE REASONS AND QUANTUM OF E SCAPEMENT, THE SO CALLED BELIEF TOWARDS ESCAPEMENT OF CHARGEABLE I NCOME CANNOT PASS THE SCRUTINY OF LAW. IT WAS ALLEGED THAT THE AO HAS ENTERED INTO AN ARBITRARY FISHING EXPEDITION WHILE EXERCISING TH E JURISDICTION AT THE TIME OF ISSUANCE OF NOTICE. THE LEARNED AR HOW EVER SUBMITTED THAT IN COMPLIANCE OF NOTICE UNDER S.147 OF THE ACT , THE ASSESSEE EVENTUALLY FILED RETURN OF INCOME ON 31.03.2015 DEC LARING SALARY INCOME OF RS.76,821/- AND SHORT TERM CAPITAL LOSS O F RS.42,68,655/-. 4. ON MERITS, THE LEARNED AR SUBMITTED THAT THE CAS H DEPOSITS IN THE BANK ACCOUNT HAS BEEN ADDED TO THE DECLARED INC OME OF RS.76,821/- SO RETURNED BY THE ASSESSEE. THE LEARN ED AR POINTED OUT THAT THE AO DID NOT PAY ANY HEED TO THE LOSSES INCURRED ON SALE OF SHARES AS WELL AS SOURCE OF CASH DEPOSITS EXPLAI NED TO BE OUT OF SALE OF FAMILY GOLD. THE LEARNED AR THUS SUBMITTED IN CONCLUSION THAT THE WHOLE ACTION OF THE AO AND THE CIT(A) IS U NSUSTAINABLE IN LAW BOTH ON GROUNDS OF JURISDICTION AS WELL AS ON M ERITS. 5. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE LOWER AUTHORITIES AND CONTENDED THAT WHERE LARG E AMOUNT OF CASH IN THE VICINITY OF RS.85LAKHS IS SEEN TO HAVE BEEN DEPOSITED, THE AO WAS RIGHT IN ISSUANCE OF NOTICE UNDER S.147 OF THE ACT FOR PROPER ASSESSMENT OF INCOME. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. WE SHALL STRAIGHTWAY ADDRESS OURSELVES TO THE VALIDITY OF AS SUMPTION OF JURISDICTION UNDER S.147 OF THE ACT IN THE INSTANT CASE. 6.1 SECTION 147 OF THE ACT ENABLES THE AO TO REOPEN THE ASSESSMENT WHERE ANY CHARGEABLE INCOME HAS ESCAPED ASSESSMENT. ITA NO. 770/AHD/18 (VIPUL V. PATEL VS.ITO) A.Y. 2010-11 - 4 - EXPLANATION 2 TO SECTION 147 OF THE ACT INTER ALIA DEEMS ESCAPEMENT OF CHARGEABLE INCOME WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH THE TOTAL INCOME OF THE AS SESSEE IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THE ACT EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME TAX. HENC E, THE ESSENTIAL PRE-REQUISITE FOR INVOCATION OF POWER UNDER S.147 O F THE ACT IS ESCAPEMENT OF CHARGEABLE INCOME, BOTH IN THE EVENT OF RETURN HAVING BEEN FILED OR WHERE NO RETURN HAS BEEN FILED. THE AO CAN COMPEL THE ASSESSEE TO FILE RETURN OF INCOME UNDER S.147 O F THE ACT ONLY IN THE EVENT OF ESCAPEMENT OF INCOME. WITHOUT HAVING COGENT REASONS FOR BELIEF TOWARDS ESCAPEMENT, EVEN A NON-FILER OF RETURN OF INCOME CANNOT BE FORCED TO FILE A RETURN WITH THE AID OF S ECTION 147 OF THE ACT. 6.2 IN THIS BACKDROP, WE FIRSTLY OBSERVE THAT THE S ALARY INCOME OF THE ASSESSEE IS ADMITTEDLY RS.76,821/-, WHICH IS NO T CHARGEABLE TO TAX ON STANDALONE BASIS BEING LOWER THAN THRESHOLD LIMIT. SECONDLY, THERE ARE ALLEGATIONS OF CASH DEPOSITS IN BANK ACCO UNT IN EXCESS OF RS.10LAKHS AS PER SOME NON-DESCRIPT AND VAGUE INFOR MATION AS PER AIR-001. SIMILARLY A NON-SPECIFIC REFERENCE HAS BE EN MADE BY THE AO TO THE CIB-32 REGARDING SHARE TRANSACTIONS OF RS .20,000/- OR MORE ENTERED INTO BY THE ASSESSEE. THUS, ENTIRE GA MUT OF INFORMATION AVAILABLE WITH AO IS VAGUE AND WITHOUT ANY PROPER IDENTIFICATION AND QUANTIFICATION OF ALLEGED ESCAPE D INCOME. HENCE, WHAT IS ESSENTIALLY AVAILABLE BEFORE AO IS THAT ASS ESSEE HAS DEPOSITED CASH ABOVE RS.10 LAKHS AND ENTERED INTO C ERTAIN SHARE TRANSACTIONS GIVING RISE TO PRESUMPTION OF ESCAPEME NT OF INCOME. WE NOW STRAIGHTWAY NOTICE THE DECISION OF THE CO-OR DINATE BENCH OF TRIBUNAL IN THE CASE OF SHRI RAVINDRASINH N. GOHIL VS. ITO ITA NO. 3343 & 3344/AHD/2015 ORDER DATED 04.09.2019 WHEREIN IT HAS BEEN OBSERVED THAT MERE CASH DEPOSITS IN THE BANK ACCOUN T CANNOT JUSTIFY ITA NO. 770/AHD/18 (VIPUL V. PATEL VS.ITO) A.Y. 2010-11 - 5 - THE BELIEF OR INFERENCE OF ESCAPEMENT OF INCOME PER SE . SAME LOGIC WOULD APPLY FOR INDULGING IN SHARE TRANSACTIONS IN REFERENCE. THUS, THE INITIAL ONUS WHICH LAY UPON THE AO TOWARDS ALLE GED ESCAPEMENT OF CHARGEABLE INCOME AT THE TIME OF ISSUANCE OF NOT ICE AND SECTION 147 OF THE ACT IS NOT FOUND TO BE DISCHARGED. IN T HE ABSENCE OF SPECIFIC DETAILS OF ESCAPED INCOME ABOVE THE THRESH OLD LIMIT SHOWN TO BE IN POSSESSION OF AO, THE NOTICE UNDER S.147 O F THE ACT IS EXTRANEOUS AND BAD IN LAW. 6.3 SINCE, THE PROCEEDINGS UNDER S.147 OF THE ACT I S QUASHED FOR THE REASONS NOTED ABOVE, WE DO NOT CONSIDER IT NECE SSARY TO GO INTO THE OTHER ASPECTS OF LEGALITY OF THE PROCEEDINGS NO R DO WE CONSIDER IT NECESSARY TO LOOK INTO THE MERITS OF THE ADDITIONS. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (RAJPAL YADAV) (PRADIP KUMA R KEDIA) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD: DATED 03/09/2020 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED ON 03/09/2020