Sushila Singla, Ludhiana V. ACIT, Ludhiana

ITA 780/CHANDI/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9933 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-06-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 30-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Opportunity of being heard; Additional evidence; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 68; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NO. 780/CHD/2012 ASSESSMENT YEAR: 2002-03 MS SUSHILA SINGLA, VS. THE ACIT, CIRCLE-1, C/O M/S SHREE GANESH INDUSTRIES, LUDHIANA LUDHIANA PAN NO. AEFOS5580L (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI SUDHIR SEHGAL & ASHOK GOYAL RESPONDENT BY : SHRI R. K.GUPTA DATE OF HEARING : 09.06.2015 DATE OF PRONOUNCEMENT : 15.06.2015 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)- II, LUDHIANA, DATED 30.05.2012 RELATING TO ASSESSME NT YEAR 2002-03. 2. GROUND NOS 1 AND 2 OF THE APPEAL READS AS UNDER: - 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN WRONGLY ASSUMING JURISDICTION U/S 147 OF THE ACT AND REOPENING OF TH E CASE U/S 148 OF THE INCOME TAX ACT. 2. THAT THE REOPENING OF THE ASSESSMENT HAS BEEN M ADE AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT FO R THE ASSESSMENT YEAR 2002- 03, THE ASSESSEE SUBMITTED A RETURN OF INCOME ON 6. 3.2003 DECLARING TOTAL INCOME AT RS. 5,87,895/-. THE RETURN WAS PROCESSED U/S 14 3(1) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). SUBSEQUENTLY, INFORMATI ON WAS RECEIVED FROM ACIT, 2 CC-V, LUDHIANA TO THE EFFECT THAT HIS ASSESSEE ONE SHRI JAGDISH DUGGAL RESIDENT OF SARABHA NAGAR, LUDHIANA HAD DISCLOSED TO HAVE MA DE A GIFT OF RS. 5 LAKHS DURING THE YEAR UNDER CONSIDERATION IN FAVOUR OF TH E ASSESSEE. IN VIEW OF THE NATURE OF THIS ENTRY AND QUANTUM OF GIFT INVOLVED, IT APPEARED TO BE AN ENTRY OF ACCOMMODATION NATURE. IN THAT VIEW OF THE MATTER, THE ASSESSING OFFICER FORMED AN OPINION THAT ASSESSEES INCOME TO THE EXTENT OF RS. 5 LAKHS REPRESENTING THE VALUE OF SO CALLED GIFT HAS ESCAPED ASSESSMENT IN T ERMS OF PROVISIONS OF SECTION 147 OF THE ACT AND NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE AFTER RECORDING FOLLOWING REASONS:- IN THIS CASE THE ASSESSEE HAS RECEIVED GIFT OF RS. 5,00,000/- FROM SHRI JAGDISH DUGGAL, 38-G, SARABHA NAGAR, LUDH IANA FROM THE BANK ACCOUNT NO. 16503 OF SHRI JAGDISH DUG GAL MAINTAINED WITH THE CANARA BANK, BHARAT NAGAR CHOWK , LUDHIANA. THIS INFORMATION HAS BEEN RECEIVED FROM ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-V, LUDHI ANA VIDE HIS LETTER NO. ACIT/CC.V/LDH/24 DATED 7.4.2004 ADDRESSED TO THE ADDL. COMMISSIONER OF INCOME TAX, RANGE VII, LUDHIANA FOR CONSIDERING APPROPRIATE ACTION IN THE HANDS OF THE DONEES. THAT THE NATURE OF THIS ENTRY APPEARS TO BE AN ACCO MMODATION ENTRY. I HAVE THEREFORE, REASONS TO BELIEVE THAT THE ABOVE SAID AMOUNT OF GIFT RECEIVED BY THE ASSESSEE REQUIRES TH ROUGH INVESTIGATION BY REOPENING THE CASE U/S 148 OF THE INCOME-TAX ACT, 1961. IN VIEW OF THE GIFT RECEIVED BY THE ASSE SSEE NOTICE U/S 148 IS ISSUED FOR THE ASSESSMENT YEAR 2002-03. 4. IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEE REQUESTED THE ASSESSING OFFICER FOR SUPPLY OF A COPY OF THE REASONS RECORDE D FOR RE-OPENING OF THE ASSESSMENT AND ALSO STATED THAT THE RETURN ALREADY FILED ON 6.3.2003 MAY BE TREATED AS HER RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THE ASSESSEE VIDE HER LETTER DATED 2.9.2008 RAISED CERTAIN OBJECTIONS TO NOTICE ISSUED U/S 148 OF THE ACT. THE ASSESSING OFFICER REJECTED THE OBJECTIONS RAISED BY THE ASSESSEE AND 3 THE REASONS GIVEN FOR REJECTION WERE COMMUNICATED T O THE ASSESSEE VIDE LETTER DATED 9.9.2008. THEREAFTER THE ASSESSING OFFICER F RAMED THE ASSESSMENT U/S 143(3) / 147 READ WITH SECTION 144 OF THE ACT VIDE HIS ORDER DATED 15.10.2008 WHEREIN HE MADE THE ADDITION OF RS. 5 LAKHS STATING AS UNDER:- IN THE CASE OF ASSESSEE THE ENTRY OF RS. 5 LAKHS I N THE BANK ACCOUNT IS UNEXPLAINED CREDIT IN THE BOOKS. FOR AN INDIVIDUAL WHO DOES NOT MAINTAIN REGULAR BOOKS OF ACCOUNT, THE BANK ACCOUNT HAS TO BE TREATED AS THE ACCOUNT FOR THE PU RPOSE OF SECTION 68. THE PROVISIONS OF SECTION 68 ARE CLEAR LY APPLICABLE TO THE CASE OF THE ASSESSEE WHEREBY THE CREDIT HAS NOT BEEN EXPLAINED AND THE SAME NEED TO BE TREATED AS INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-03. S O THE CREDIT OF RS. 5 LAKHS IS TREATED AS INCOME OF THE A SSESSEE FOR ASSESSMENT YEAR 2002-03 AND ADDED THE SAME TO THE I NCOME AS RETURNED BY THE ASSESSEE . 5. BEING AGGRIEVED BY THE ORDER OF ASSESSING OFFICE R THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT( A), THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING OF THE ASSESSM ENT MADE U/S 147 OF THE ACT. THE MAIN CONTENTION OF THE ASSESSEE BEFORE THE CIT( A) WAS THAT ASSESSING OFFICER IN HIS REASONS RECORDED HAS TOTALLY RELIED UPON THE LETTER OF THE ACIT, CC-V, LUDHIANA AND HAS NOT FORMED HIS INDEPENDENT O PINION AND HAS ALSO NOT APPLIED HIS MIND FOR FORMATION OF BELIEF. THEREFORE , THE ISSUANCE OF NOTICE U/S 148 WAS NOT PROPER. IT WAS ALSO SUBMITTED BY THE AS SESSEE BEFORE THE CIT(A) THAT ASSESSING OFFICER HAS REOPENED THE CASE JUST TO INV ESTIGATE FURTHER IN THIS MATTER AS HE HAS STATED THAT THERE IS REQUIREMENT OF THORO UGH INVESTIGATION. THE ASSESSEE CONTENDED THAT REASONS RECORDED ITSELF WER E INVALID AS THERE WAS NO REASONABLE BELIEF ON THE PART OF THE ASSESSING OFFI CER. IT WAS ALSO STATED BY THE ASSESSEE BEFORE THE CIT(A) THAT PROCEEDINGS U/S 148 OF THE ACT CANNOT BE INITIATED JUST TO MAKE FISHING OR ROVING ENQUIRIES OR TO MAKE ANY FURTHER 4 INVESTIGATION IN A CASE WITHOUT THE ASSESSING OFFIC ER HAVING ANY FIRM FOUNDATION OF BELIEF WITH REGARD TO THE ESCAPEMENT OF INCOME. 6. THE LD. CIT(A) DID NOT FIND ANY MERIT IN THE SUB MISSIONS MADE ON BEHALF OF THE ASSESSEE AND REJECTED THE SAME FOR THE REASO NS STATED IN PARAS 4.3 OF THE IMPUGNED ORDER. THE LD. CIT(A) OBSERVED THAT THE I NFORMATION RECEIVED BY THE ASSESSING OFFICER CONSTITUTED REASON TO BELIEVE, PR IMA-FACIE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT IN THE HAN DS OF THE ASSESSEE. HE FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS INI TIATED THE PROCEEDINGS ON THE BASIS OF SPECIFIC INFORMATION AND, THEREFORE, IT CA NNOT BE SAID THAT ACTION OF THE ASSESSING OFFICER WAS ON THE BASIS OF CERTAIN SURMI SES OR CONJECTURES ONLY. 7. I HAVE HEARD S/SHRI SUDHIR SEHGAL AND ASHOK GOYA L, LD. REPRESENTATIVES OF THE ASSESSEE AND SHRI R.K. GUPTA, LD. DR AT LENG TH AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORDS. ON BEHALF OF THE AS SESSEE RELIANCE WAS PLACED ON THE WRITTEN SUBMISSIONS DATED 13.1.2012 SUBMITTED B EFORE THE COMMISSIONER OF INCOME TAX (APPEAL), LUDHIANA. LD. REPRESENTATIVES FOR THE ASSESSEE SUBMITTED THAT ASSESSING OFFICER HAS ISSUED A NOTICE U/S 148 OF THE ACT WITHOUT APPLYING HIS MIND TO THE INFORMATION FURNISHED BY THE ACIT, CC-V, LUDHIANA. IT IS STATED THAT THE REASONS RECORDED BY THE ASSESSING OFFICER MAKES A REFERENCE ONLY TO THE INFORMATION SUPPLIED BY THE ACIT, CC-V, LUDHIANA AN D THERE IS NOTHING TO SUGGEST FROM THE LANGUAGE OF THE REASONS RECORDED B Y THE ASSESSING OFFICER THAT ASSESSING OFFICER HAS APPLIED HIS MIND TO THE INFOR MATION RECEIVED BY HIM FROM THE AFORESAID OFFICER BEFORE ISSUING A NOTICE U/S 1 48 OF THE ACT. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, NOTICE U/S 148 OF THE ACT HAS BEEN ISSUED MECHANICALLY AS A RESULT OF VAGUE INFORMATION SUPPLIED BY ANOTHE R ASSESSING OFFICER. 8. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER AFTER APPLICATION OF HIS OWN MIND HAS INITIATED RE-ASSESS MENT PROCEEDINGS ON THE BASIS 5 OF RELEVANT AND SUFFICIENT MATERIALS COMING TO HIS KNOWLEDGE FOR INFORMATION. HE FURTHER SUBMITTED THAT ASSESSING OFFICER HAS REOPEN ED THE ASSESSMENT ON THE BASIS OF MATERIAL OR INFORMATION SUPPLIED BY ACIT, CC-V, LUDHIANA RELATED TO GIFT OF RS. 5 LAKHS RECEIVED BY THE ASSESSEE FROM O NE SHRI JAGDISH DUGGAL, RESIDENT OF SARABHA NAGAR, LUDHIANA. 9. IN THE PRESENT CASE ORIGINALLY RETURN FILED BY T HE ASSESSEE ON 6.9.2003 WAS PROCESSED U/S 143(1) OF THE ACT AND A NOTICE U/S 14 8 WAS ISSUED ON 20.3.2008. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENI NG OF ASSESSMENT AS PER THE SUBMISSIONS NOTED HEREIN ABOVE. AS REGARDS THE SCO PE OF THE EXPRESSION REASON IN THE PHRASE REASON TO BELIEVE AND ALSO THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTED W.E.F. APRIL 1, 1989, AS ALSO SECTIONS 148 TO 150 HAS BEEN CONSIDERED BY THE HON'BLE SUPREME COURT IN THE CASE OF ACIT V RAJESH JHAVERI (2007) 291 ITR 500 (SC) AT PAGE 511 & 512 A ND OBSERVED AS UNDER:- 16. SECTION 147 AUTHORISES AND PERMITS THE ASSESSI NG OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF H E HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YE AR HAS ESCAPED ASSESSMENT. THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATION. IF T HE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNO W OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPE D ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN T HAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED T HE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF THE A SSESSING OFFICER IS TO ADMINISTER THE STATUTE WITH SOLICITUD E FOR THE PUBLIC EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS T O TAXPAYERS. AS OBSERVED BY THE SUPREME COURT IN CENT RAL PROVINCES MANGANESE ORE CO. LTD. V. ITO [1991] 191 ITR 662 , FOR INITIATION OF ACTION UNDER SECTION 147(A) (AS THE PROVISION STOOD AT THE RELEVANT TIME) FULFILMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. A T THAT STAGE, THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT . IN OTHER WORDS, AT THE INITIATION STAGE, WHAT IS REQUIRED IS 'REASON TO BELIEVE', BUT NOT THE ESTABLISHED FACT OF ESCAPEMEN T OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY Q UESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REAS ONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHE R THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT I S NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMA TION OF BELIEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION (SEE ITO V. SELECTED DALURB AND COAL 6 CO. P. LTD. [1996] 217 ITR 597 (SC) ; RAYMOND WOOLLEN MILLS LTD. V. ITO [1999] 236 ITR 34 (SC). 17. THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITU TED WITH EFFECT FROM APRIL 1, 1989, AS ALSO SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PROVISIONS OF S ECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMST ANCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED. T O CONFER JURISDICTION UNDER SECTION 147(A) TWO CONDITIONS WE RE REQUIRED TO BE SATISFIED : FIRSTLY THE ASSESSING OF FICER MUST HAVE REASON TO BELIEVE THAT INCOME, PROFITS OR GAIN S CHARGEABLE TO INCOME TAX HAVE ESCAPED ASSESSMENT, A ND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT S UCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER OMISSIO N OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE ASSESSING OFFICER COULD HAVE J URISDICTION TO ISSUE NOTICE UNDER SECTION 148 READ WITH SECTION 147(A). BUT UNDER THE SUBSTITUTED SECTION 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE ASS ESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE T HAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURISDICTION TO R EOPEN THE ASSESSMENT. IT IS, HOWEVER, TO BE NOTED THAT BOTH T HE CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITH IN THE AMBIT OF THE PROVISO TO SECTION 147. THE CASE AT HAND IS COVERED BY THE MAIN PROVISION AND NOT THE PROVISO. 18. SO LONG AS THE INGREDIENTS OF SECTION 147 ARE F ULFILLED, THE ASSESSING OFFICER IS FREE TO INITIATE PROCEEDING UN DER SECTION 147 AND FAILURE TO TAKE STEPS UNDER SECTION 143(3) WILL NOT RENDER THE ASSESSING OFFICER POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS EVEN WHEN INTIMATION UNDER SECTION 143(1) HAD BEEN ISSUED. 10. IN THE INSTANT CASE ALSO THE RETURN WAS PROCESS ED U/S 143(1) OF THE ACT. IN VIEW OF THE ABOVE DECISION OF THE HON'BLE SUPREME C OURT, IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE T HAT INCOME HAS ESCAPED ASSESSMENT, IT CONFERS JURISDICTION TO REOPEN THE A SSESSMENT. IN THE CASE OF ACIT V RAJESH JHAVERI THE HON'BLE SUPREME COURT HAS OBSE RVED THAT WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. THE HON 'BLE SUPREME COURT FURTHER OBSERVED THAT EXPRESSION CANNOT BE READ TO MEAN THA T THE ASSESSING OFFICER 7 SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL E VIDENCE OR CONCLUSION. WHAT IS REQUIRED IS REASON TO BELIEVE BUT NOT THE ESTABLI SHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COUL D HAVE FORMED THE REQUISITE BELIEF. THE HON'BLE SUPREME COURT FURTHER OBSERVED THAT WHETHER MATERIAL WOULD CONCLUSIVELY PROVE ESCAPEMENT OF INCOME IS NO T THE CONCERN AT THIS STAGE. THIS IS SO BECAUSE THE FORMATION OF THE BELIEF IS W ITHIN THE REALM OF THE SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER. FROM THE ABOVE DECISION OF HON'BLE SUPREME COURT IT IS CLEAR THAT AT THE TIME OF RECORDING REASONS FOR INITIATING PROCESSING U/S 147 OF THE ACT, IT IS NO T NECESSARY THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAIN THE FACTS BY LEGAL EVIDENCE OR CONCLUSION. AT THE INITIAL STAGE WHAT IS REQUIRED IS REASON TO BELIEVE BUT NOT ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE TIME OF ISSUAN CE OF NOTICE U/S 148, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQUISITE BELIEF. THE QUESTI ON WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THIS STAGE. IN THE INSTANT CASE, ASSESSING OFFICER RECEIVED AN INFORMA TION FROM ACIT, CC-V, LUDHIANA THAT ASSESSEE HAS RECEIVED GIFT OF RS. 5 LAKHS FROM SHRI JAGDISH DUGGAL, 38G, SARABHA NAGAR, LUDHIANA FROM BANK ACC OUNT NO. 16503 OF SHRI JAGDISH DUGGAL MAINTAINED WITH CANARA BANK, BHARAT NAGAR CHOWK, LUDHIANA. THE ASSESSING OFFICER HAS ALSO THIS INFORMATION THA T THE NATURE OF THIS ENTRY WAS AN ACCOMMODATION ENTRY. IN MY OPINION, THE ABOVE IN FORMATION / MATERIAL RECEIVED BY THE ASSESSING OFFICER WAS RELEVANT AND AFFORDED A LIVE LINK OR NEXUS TO THE FORMATION OF THE PRIMA FACIE BELIEF THAT INC OME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT IN THE ASSESSEES HANDS. THEREF ORE, THERE IS NO MERIT IN THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE THAT REO PENING OF THE ASSESSMENT WAS INVALID. WHILE TAKING SUCH A VIEW I AM FORTIFI ED BY THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF RAJAT EXPORT IMPO RT INDIA PVT. LTD V ITO 8 (2012) 341 ITR 135 (DELHI) WHEREIN THE HON'BLE DELH I HIGH COURT OBSERVED AS UNDER:- AT THE STAGE WHEN REASONS ARE RECORDED FOR REOPENI NG THE ASSESSMENT, THE ASSESSING OFFICER IS NOT REQUIRED T O BUILD A FOOL PROOF CASE FOR MAKING ADDITION TO THE ASSESSEE S INCOME ; ALL THAT HE IS REQUIRED TO DO AT THAT STAGE IS TO F ORM A PRIMA FACIE OPINION OR BELIEF THAT INCOME HAS ESCAPED ASS ESSMENT. THE RELEVANCY OF THE MATERIAL BEFORE THE ASSESSING OFFICER IS TO BE JUDGED ONLY FROM THAT PERSPECTIVE AND NOT FROM T HE PERSPECTIVE AS TO WHETHER THE MATERIAL IS SUFFICIEN T OR ADEQUATE TO SUSTAIN THE ADDITION ULTIMATELY. THAT WILL BE AN ASPECT WHICH THE ASSESSING OFFICER WILL EXAMINE AND DECIDE IN TH E COURSE OF THE REASSESSMENT PROCEEDINGS AFTER HEARING THE ASSE SSEE IN THE MANNER REQUIRED BY LAW. 11. IN THE ABOVE CASE, INVESTIGATION WING PROVIDED THE INFORMATION ALONG WITH CHEQUE NUMBER AND BANK DETAILS THAT THE ASSESSEE HA S TAKEN CHEQUE FROM ENTRY PROVIDER AND THE HON'BLE DELHI HIGH COURT HELD THA T THERE IS REASON TO BELIEVE PRIMA-FACIE THAT INCOME CHARGEABLE TO TAX HAD ESCAP ED ASSESSMENT IN THE HANDS OF THE ASSESSEE. THE HON'BLE HIGH COURT FURTHER HEL D THAT MATERIAL BEFORE THE ASSESSING OFFICER WAS RELEVANT AND AFFORDED A LIVE LINK OR NEXUS TO THE FORMATION OF THE PRIMA FACIE BELIEF THAT INCOME CHA RGEABLE TO TAX HAD ESCAPED ASSESSMENT IN THE ASSESSEES HANDS 12. IN VIEW OF THE ABOVE, I DO NOT SEE ANY INFIRMIT Y IN THE ORDER OF CIT(A) AND HOLD THAT REOPENING OF THE ASSESSMENT WAS VALID AN D ACCORDINGLY I UPHOLD THE ORDER OF CIT(A) AND DISMISS GROUND NOS. 1 & 2 OF TH E APPEAL. 13. GROUND NOS. 3 AND 4 OF THE APPEAL READS AS UNDE R:- 3. THAT WITHOUT PREJUDICE TO THE ABOVE SAID GROUNDS OF APPEAL, IT IS SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN CONFI RMING THE 9 ADDITION OF RS. 5 LACS ON ACCOUNT OF GIFT RECEIVED FORM SHRI JGDISH DUGGAL AS INCOME FROM UNDISCLOSED SOURCES. 4. THAT THE LD. CIT(A) HAS ERRED IN NOT ADMITTING T HE ADDITIONAL EVIDENCE FILED BEFORE HIM WHICH WAS FURTHER STEP TO PROVE THE GENUINENESS, IDENTIFY AND CREDIT WORTHINESS OF THE DONOR AND THE EVIDENCE SHOULD HAVE BEEN ADMITTED IN VIEW OF T HE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MUKTA METAL WORKS 336 ITR 555. 14. FIRSTLY, I WILL DECIDE GROUND NO. 4 OF THE APPE AL, WHICH GOES TO THE ROUTE OF MATTER. SHRI SUDHIR SEGHAL LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BEFORE THE CIT(A), APPLICATION DATED 13.1.2012 WAS FILED FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A OF I.T. RULES, 1 962. ON THE SAME DATE, WRITTEN SUBMISSIONS WERE ALSO SUBMITTED BEFORE THE CIT(A) WHEREIN THE DETAILED SUBMISSIONS WERE MADE FOR ADMISSION OF ADDITIONAL E VIDENCE IN ORDER TO PROVE THE IDENTITY OF THE DONOR, CAPACITY OF THE DONOR AN D THE GENUINENESS OF THE TRANSACTION / GIFT. SHRI SUDHIR SEHGAL, LD. COUNSE L FOR THE ASSESSEE VEHEMENTLY ARGUED THAT ADDITIONAL EVIDENCE TENDERED BY THE ASS ESSEE BEFORE THE CIT(A) GOES TO THE ROUTE OF DECIDING THE ISSUE AND EVEN THE ASS ESSING OFFICER BEFORE PASSING THE ORDER DID NOT DOUBT THE CAPACITY OF THE DONOR B UT ONLY MENTIONED THAT ENTRY APPEARED TO BE AN ACCOMMODATION ENTRY AND FURTHER I NVESTIGATION IS REQUIRED. SHRI SUDHIR SEHGAL, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT LD. CIT(A) WITHOUT ASSIGNING ANY COGENT REASON HAS REFUSED TO ADMIT THE ADDITIONAL EVIDENCE SUBMITTED BEFORE HIM. 15. SHRI R.K. GUPTA, LD. DR SUBMITTED THAT ASSESSEE S CASE DOES NOT FALL UNDER ANY OF THE EXCEPTIONS MENTIONED IN RULE 46A O F THE I.T. RULES, 1962. HE, THEREFORE, SUBMITTED THAT CIT(A) WAS JUSTIFIED IN N OT ADMITTING THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE BEFORE HIM. 16. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE AS SESSEE SUBMITTED THE FOLLOWING DOCUMENTS AS ADDITIONAL EVIDENCE BEFORE T HE CIT(A):- 10 I) THE COPY OF THE AFFIDAVIT CONFIRMING THAT THE GIFT HAS BEEN GIVEN BY SHRI JAGDISH DUGGAL TO THE ASSESSEE. II) THE COPY OF THE GIFT DEED EXECUTED BETWEEN THE DON OR (SHRI JAGDISH DUGGAL) AND THE DONEE (THE ASSESSEE) III) THE COPY OF CHEQUE NO. 300403 DATED 11.10.2001 DRAW N ON CANARA BANK RECEIVED BY THE ASSESSEE. IV) THE COPY OF THE BANK STATEMENT IN CASE OF SHJ JAGDI SH DUGGAL WHEREIN THE AMOUNT OF RS. 5,00,000/- VIDE CH. NO. 3 00402 PAID TO THE ASSESSEE IS DULY REFLECTED. V) THE COPY OF THE EXPLANATION OF ALL THE ENTRIES IN T HE BANK STATEMENT OF SHRI JAGDISH DUGGAL FOR THE PERIOD 1.4 .2001 TO 31.3.2002. 17. THE LD. CIT(A) DID NOT ADMIT THE ADDITIONAL EVI DENCE MAINLY ON THE GROUND THAT ASSESSEE DID NOT AVAIL THE OPPORTUNITY TO SUBMIT THE REQUISITE INFORMATION BEFORE THE ASSESSING OFFICER AND THAT T HE ASSESSEES CASE DOES NOT FALL IN ANY OF THE EXCEPTIONS LISTED IN RULE 46A. HE FURTHER OBSERVED THAT THE ASSESSEES CASE WAS FIXED BY THE ASSESSING OFFICER ON 17.9.2008, 23.9.2008, 29.9.2008 AND 3.10.2008. NOTICE IN THIS REGARD WAS DULY SERVED ON THE ASSESSEE. HOWEVER, NO ONE ATTENDED. ACCORDING TO CIT(A), FOU R OPPORTUNITIES WERE GIVEN TO PRESENT THE COMPLETE CASE BEFORE THE ASSESSING O FFICER BUT THE ASSESSING OFFICER DID NOT REFUSED TO ANY EVIDENCE WHICH SOUGH T TO HAVE BEEN ADMITTED. THE CIT(A) ALSO OBSERVED THAT THE ASSESSEE FAILED TO ES TABLISH THAT THERE WAS A SUFFICIENT CAUSE WHICH PREVENTED HER TO PRODUCE THE ADDITIONAL EVIDENCE BEFORE THE ASSESSING OFFICER. HE ACCORDINGLY REFUSED TO AD MIT THE ADDITIONAL EVIDENCE ADDUCED BY THE ASSESSEE BEFORE HIM. 18. THE OBSERVATIONS MADE BY THE CIT(A) ARE FACTUAL LY INCORRECT. AT PAGE 4 OF THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS OBSERVED AS UNDER:-- 11 IN RESPONSE TO THIS NOTICE, COUNSEL OF THE ASSESSE E SUBMITTED T VIDE HIS LETTER DT 29.9.2008 THAT ASSESSEE MAY BE PROVIDED WITH THE INFORMATION ON THE BASIS OF WHICH THE CASE HAS BEEN REOPENED U/S 148. THE INFORMATION AS REQUESTED BY T HE ASSESSEE WAS PROVIDED VIDE LETTER DATED 3.10.2008 A ND SERVED ON THE ASSESSEE ON 8.10.2008. THE CASE WAS FIXED FO R 10.10.2008 BUT NO ONE ATTENDED THE ASSESSMENT PROCE EDINGS ON THE FIXED DATE. FROM THE ABOVE, IT IS CLEAR THAT ON 29.9.2008, THE ASSESSEES COUNSEL REQUESTED THE ASSESSING OFFICER TO PROVIDE THE INFORMATION ON THE BASIS OF WHICH THE CASE WAS REOPENED U/S 148 OF THE ACT. THUS, IT IS CLEAR THAT ON 29.9.2008, THE ASSESSEES REPRESENTATIVES WAS PRESENT BEFORE THE A SSESSING OFFICER. THEREFORE, THE LD. CIT(A) HAS WRONGLY OBSERVED THAT NOBODY APP EARED ON BEHALF OF THE ASSESSEE ON 29.9.2008. THE CIT(A) HAS ALSO OBSERVE D THAT ASSESSEES CASE WAS FIXED FOR HEARING BEFORE THE ASSESSING OFFICER ON 3 .10.2008. THIS OBSERVATION IS ALSO INCORRECT IN VIEW OF THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. FROM THE ABOVE ORDER OF THE ASSE SSING OFFICER IT IS CLEAR THAT THE INFORMATION AS REQUESTED BY THE ASSESSEE WAS PR OVIDED TO HER VIDE LETTER DATED 3.10.2008 WHICH WAS SERVED ON THE ASSESSEE ON 8.10.2008. THEREFORE, THE OBSERVATION MADE BY CIT(A) THAT NOBODY APPEARED ON 3.10.2008 IS FACTUALLY INCORRECT AS THE ASSESSEES CASE WAS NEVER FIXED ON 3.10.2008. THESE OBSERVATIONS ARE FACTUALLY WRONG AND, THEREFORE, TH E ORDER OF CIT(A) IS NOT SUSTAINABLE. AT THIS STAGE IT WOULD BE WORTHWHILE TO REFER TO SECTION 250(4) OF THE I.T. ACT, WHICH READS AS UNDER:- THE COMMISSIONER (APPEALS), MAY BEFORE DISPOSING O F ANY APPEAL, MAKE SUCH FURTHER INQUIRY AS HE THINKS FIT, OR MAY DIRECT THE ASSESSING OFFICER TO MAKE FURTHER INQUIR Y AND REPORT THE RESULT OF THE SAME TO THE COMMISSIONER ( APPEALS) 12 19. AS PER THE ABOVE PROVISION, THE CIT(A) AT THE T IME OF HEARING OF THE APPEAL CAN MAKE SUCH FURTHER INQUIRY AS HE DEEMS F IT AND MAY ASK THE ASSESSING OFFICER TO MAKE FURTHER INQUIRY. IT IS WELL SETTLE D THAT THE ABOVE PROVISION IN THE ACT VESTS THE CIT(A) WITH THE POWER TO MAKE FURTHER INQUIRY WHICH WOULD INCLUDE THE POWER TO ADMIT FURTHER EVIDENCE. IT IS RELEVANT TO OBSERVE HERE THAT THE PROCEDURE AND MANNER IN WHICH SUCH EVIDENCE IS TO BE PRODUCED IS PROVIDED IN RULE 46A OF I.T. RULE 1962. SUB RULE (1) OF RUL E 46A PROVIDES THE GROUNDS ON WHICH THE CIT(A) CAN ALLOW ADDITIONAL EVIDENCE. SU B RULE (2) PROVIDES THAT THE CIT(A) WHILE ADMITTING SUCH EVIDENCE MUST RECORD IT S REASONING IN WRITING. SUB RULE (4) OF RULE 46A READS AS UNDER:- (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT TH E POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CAS E MAY BE, THE COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTIO N OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENA BLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENA LTY (WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFICER]) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SE CTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.] 20. AS PER SUB RULE (4) OF RULE 46A, THE CIT(A) HI MSELF HAS THE POWER TO DIRECT FOR PRODUCTION OF ANY DOCUMENT OR WITNESS TO ENABLE HIM TO DISPOSE OF THE APPEAL OR FOR ANY OTHER SUBSTANTIAL CAUSE. IN THE I NSTANT CASE THE ADDITIONAL EVIDENCE MENTIONED HEREIN ABOVE WAS PRODUCED NOT ON THE DIRECTION OF CIT(A) BUT BY THE ASSESSEE HERSELF. THE ASSESSEE EXPLAINED THAT SHE PRODUCED THIS EVIDENCE BECAUSE OF HER NON-APPEARANCE BEFORE THE A SSESSING OFFICER AND THEREFORE, THE CIT(A) OUGHT TO HAVE ADMITTED THE AD DITIONAL EVIDENCE IN TERMS OF SECTION 250(4) OF THE ACT AND RULE 46A OF THE ACT. IT IS RELEVANT TO OBSERVE HERE THAT THE ASSESSING OFFICER HAS NOT PROVIDED SUFFICI ENT OPPORTUNITY TO THE ASSESSEE TO ADDUCE EVIDENCE RELEVANT IN SUPPORT OF HER CASE. IT IS APPARENT FROM 13 THE ASSESSMENT ORDER, THE COUNSEL OF THE ASSESSEE VIDE HIS LETTER DATED 29.9.2008 REQUESTED THE ASSESSING OFFICER TO PROVIDE THE INFO RMATION / REASONS ON THE BASIS OF WHICH THE CASE HAS BEEN REOPENED U/S 147 / 148 OF THE ACT. AS PER ASSESSING OFFICER, THE REQUISITE INFORMATION WAS PROVIDED TO THE ASSESSEE VIDE LETTER DATED 10.10.2008 WHICH WAS RECEIVED BY THE ASSESSEE ON 8. 10.2008. THE CASE WAS FIXED FOR 10.10.2008 BUT NO ONE ATTENDED THE ASSESS MENT PROCEEDINGS ON THE FIXED DATE. THUS IT IS CLEAR THAT THE ASSESSING OFF ICER HAS NOT PROVIDED SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO ADDUCE THE RELEVANT EVIDENCE. IT IS ALSO SEEN THAT ASSESSING OFFICER PASSED THE ASSESSMENT ORDER ON 15 .10.2008. THE ORDER WAS PASSED WITHIN A WEEK TIME FROM THE DATE OF RECEIPT OF INFORMATION I.E. 8.10.2008 AS REQUESTED BY THE ASSESSEE VIDE HERE LETTER DATED 29.9.2008. 21. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE, I AM OF THE OPINION THAT THE ASSESSING OFFICER HAS PASSED T HE ASSESSMENT ORDER WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO AD DUCE THE EVIDENCE RELEVANT TO THE GROUND OF APPEAL ON MERITS AND, THEREFORE, THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE ADDITIONAL EVID ENCE BEFORE THE ASSESSING OFFICER WHICH IS RELEVANT FOR DECIDING THE MERITS O F THE CASE. THUS, IN VIEW OF THE PROVISIONS OF SECTION 250(4) OF THE I.T. ACT RE AD WITH RULE 46A, THE CIT(A) SHOULD HAVE ADMITTED THE ADDITIONAL EVIDENCE SUBMIT TED BY THE ASSESSEE BEFORE HIM. ACCORDINGLY, I DIRECT THE CIT(A) TO ADMIT THE ADDITIONAL EVIDENCE AND DECIDE GROUND NO.3 RELATING TO THE ADDITION OF RS. 5 LAKHS MADE ON ACCOUNT OF GIFT RECEIVED FORM SHRI JAGDISH DUGGAL AS INCOME FR OM UNDISCLOSED SOURCES. 22. IN VIEW OF THE ABOVE, I ALLOW GROUND NO. 4 OF T HE APPEAL. 23. SO FAR AS GROUND NO. 3 IS CONCERNED, I SET ASID E THE FINDINGS OF THE CIT(A) ON THIS ISSUE AND REMAND THE SAME TO THE CIT(A) WIT H A DIRECTION TO DECIDE THE MATTER AFRESH IN ACCORDANCE WITH LAW CONSIDERING TH E ADDITIONAL EVIDENCE 14 REFERRED TO ABOVE, PRODUCED BY THE ASSESSEE BEFORE HIM. AT THIS STAGE, I DO NOT THINK IT NECESSARY TO GIVE ANY COMMENTS / OBSERVATI ONS ON MERITS OF THE CASE. THE CIT(A) IS DIRECTED TO DECIDE THE ISSUE ON MERIT S IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT THE CIT(A) WILL GIVE DUE AND R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE ASSESSING OFFIC ER. 24. IN THE RESULT, THE APPEAL IS ALLOWED PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15.06.2015 SD/- (H.L.KARWA) VICE PRESIDENT DATED : 15 TH JUNE, 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR