Mr. Shree Bhagwan, Delhi V. ITO, New Delhi

ITA 877/DEL/2012

• Counselvise Citation: 87720114 RSA 2012
• Duration Of Justice: 3 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 17-08-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 22-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V K AGGARWAL
• Keywords: Principle of natural justice; Reason to believe; Reassessment proceedings
• Section: 142(1); 147; 148; 68

Judgement Text

ITA NO. 877 /DEL/201 2 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO. 877 / D EL/201 2 A.Y. : 200 3 - 0 4 MR. SHREE BHAGWAN, H. NO. 9, VILLAGE NAYA BANS, NEAR NARELA, DELHI 110036 (PAN:AUPPB5795C) VS. ITO, WARD 21(4), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : S HRI V.K. AGGARWAL, A.R. DEPARTMENT BY : SH RI SUJIT KUMAR, SR. DR DATE OF HEARING : 1 7 - 0 8 - 201 5 DATE OF ORDER : 1 0 - 0 9 - 201 5 ORDER PER H.S. SIDHU : J M THE APPEAL FILED BY THE ASSESSEE EMANATE OUT OF THE ORD ER DATED 5 . 1 2 .201 1 PASSED BY THE LD. CIT(A) - X XI I , NEW DELHI RELEVANT TO ASSESSMENT YEAR 200 3 - 0 4 . 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THE ASSESSEE S APPEAL: - 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLATE ORDER PASSED BY THE LD. CIT(A) IS ILLEGAL BEING AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND AGAINST THE PROVISIONS OF I.T . ACT, 1961. ITA NO. 877 /DEL/201 2 2 2. THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN NOT HOLDING THAT NOTICE U/S. 148 IS INVALID AND WITHOUT JURISDICTION. 3. THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN NOT ANNULLING THE ASSESSMENT ORDER BASED ON AN INVALID / ILLEGAL NOTICE U/S. 148. 4. THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN HOLDING THAT BANK PASS BOOK IS BOOKS OF ACCOUNTS FOR THE PURPOSES OF SECTION 68. 5. THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN CONFIRMING THE ADDITION OF RS. 20,34,000/ - U/S. 68 ON ACCOUNT OF CASH DEPOSITED IN THE BACK ACCOUNT. 6. THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN CONFIRMING THE ADDITION OF RS. 1,10,000/ - WITHOUT ASSIGNING ANY REASON EXCEPT TH AT IT IS THE THRESHOLD LIMIT FOR LEVYING TAX. 7. THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN CONFIRMING CHARGING OF INTEREST UNDER VARIOUS SECTIONS OF THE I.T. ACT, 1961. 8. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY AND WITHOUT ANY GROUND OF APPEAL BEFORE OR DURING THE APPELLATE PROCEEDINGS. ITA NO. 877 /DEL/201 2 3 3 . THE BRIEF FACTS OF THE CASE ARE THAT AN INFORMATION FROM ADIT (INV.), NEW DELHI HAS BEEN RECEIVED ON 29.3.2010 THAT A TAX EVASION PETITION AGAINST SH. HARISH PAWAR PROP. AMRIT IMPEX (INDI A) WAS RECEIVED ON 28.12.2008. DURING THE INVESTIGATION, IT HAS BEEN NOTICED THAT SH. SHREE BHAGWAN PROP. SHREE AGENCIES, HOUSE NO. 9, VILLAGE NAYA BANS, NEAR NARELA HAS MAINTAINED AND OPERATED A BANK ACCOUNT IN HDFC BANK LIMITED, PUSA ROAD, BAZAR MARG , RAJINDER NAGAR, NEW DELHI AND IN THIS ACCOUNT CASH OF RS. 20,34,000/ - WAS DEPOSITED DURING THE PERIOD 28.4.2002 TO 25.1.2003. THE ACCOUNT WAS USED FOR TRANSFERRING FUND TO THE BANK OF SH. HARISH PAWAR WHO PROVIDED ACCOMMODATION ENTRY. WHEREAS SH. SHRE E BHAGWAN IN HIS REPLY DATED 20.8.2009 HAS ADMITTED THAT HE HAS NO OTHER BANK ACCOUNT EXCEPT IN PANCHVATI AZADPUR, NEW DELHI AND SBI KHERA KHURD. T HE CASH DEPOSIT IN THE ABOVE SAID HDFC BANK ACCOUNT HAS NOT BEEN PROPERLY RECORDED. THE CASE OF THE ASSESSEE HAS BEEN REOPENED U/S. 147 OF THE I.T. ACT, 1961 AFTER RECORDING THE REASON AND TAKING APPROVAL OF THE LD. ADIT, RANGE - 21, NEW DELHI. NOTICE U/S. 148 OF THE I.T. ACT, 1961 DATED 29.3.2010, ISSUED WHICH REMAINED UN - COMPLIED. NO RET URN HAS BEEN FILED BY THE ASSESSEE U/S. 139(1) AND EVEN IN RESPONSE OF NOTICE U/S. 148 OF THE I.T. ACT, 1961. DESPITE, ISSUING NOTICES TO THE ASSESSEE U/S. 142(1) / 143(2) OF THE I.T. ACT, 1961, NEITHER ASSESSEE NOR ANY REPRESENTATIVE FROM THE ASSESSEE HAS ATTENDED THE HEARING. IN THE ABSENCE OF RETURN FILED BY THE ASSESSEE U/S. 139(1) AND IN RESPONSE OF NOTICE U/S. 148 . T HE AO ESTIMATED THE INCOME OF THE ASSESSEE AT RS. 1,10,000/ - BEING THE MINIMUM AMOUNT CHARGEABLE TO TAX AND SINCE NO EXPLANATION AL ONGWITH SOURCE OF CASH DEPOSIT OF RS. 20,34,000/ - IN HDFC BANK WAS FILED BY THE ASSESSEE, THE SAME WAS TREATED AS UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE VIDE ORDER DATED 16.12.2010 PASSED U/S. 144/147 OF THE I.T. ACT, 1961. ITA NO. 877 /DEL/201 2 4 4. AGGRIEVED BY THE ORDER DATED 16.12.2010, ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 5.12.2011 DISMISSED THE APPEAL OF THE ASSESSEE. 4.1 AGGRIEVED BY THE IMPUGNED ORDER DATED 5.12.2011, ASSESSEE FILED THE APPEAL BEFORE THE TRIBUNA L. 5. LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT NOTICE U/S. 148 HAS BEEN ISSUED IN A MECHANICAL MANNER ON THE BASIS OF VAGUE INFORMATION FROM ADIT (INV.) RECEIVED ON 29.3.2010 AND ALSO STATED THAT AO HAS NOT MENTIONED ANY MATERIAL WHICH HAS LED HIM TO BELIEVE THAT THE CASH DEPOSITED IN THE BANK ACCOUNT REPRESENTED UNDISCLOSED INCOME WHICH HAS ESCAPED ASSESSMENT. HE HAS SIMPLY FILLED UP A PROFORMA MENTIONING THE INFORMATION RECEIVED AND SENT THE PROFORMA REPORT TO THE ADDL. CIT FOR APPROVAL, HENCE, T HE NOTICE U/S. 148 IS PATENTLY ILLEGAL. IN THIS REGARD, HE PLACED RELIANCE OF THE VARIOUS DECISIONS OF HON BLE DELHI HIGH COURT INCLUDING THE DECISION IN THE CASE OF SIGNATURES HOTELS (P) LTD. VS. ITO & ANR. (2011) 338 ITR 51 (DEL.) AND STATED THAT THE PR ESENT CASE IS COVERED BY THE AFORESAID DECISION OF THE HON BLE DELHI HIGH COURT, HENCE, THE REOPENING IS REQUIRED TO BE QUASHED. 6 . ON THE OTHER HAND, LD. DR CONTROVERTED THE CONTENTIONS RAISED BY THE LD. COUNSEL OF THE ASSESSEE AND STATED THAT THE LOW ER AUTHORITIES HAVE PASSED THE WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON THE PART OF THE TRIBUNAL, THEREFORE, THE ORDERS OF THE REVENUE AUTHORITIES MAY BE UPHELD. 7 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IN THE PRESENT CASE THE UNDATED REASONS RECORDED BY THE AO FOR INITIATION OF PROCEEDINGS READ AS UNDER: - AS PER INFORMATION RECEIVED FROM THE ASSTT. DIRECTOR OF INCOME TAX (INV.) UNIT - II(2), NEW DELHI VIDE HIS LETTER NO. F.NO. ADIT ITA NO. 877 /DEL/201 2 5 (INV.)/UN ITII(2)/2009 - 10/96 DATED 29.3.2010, THAT MR. SHREE BHAGWAN PROP. M/S SHREE AGENCIES HAS DEPOSITED IN CASH OF RS. 20,34,000/ - IN HIS SAVING BANK ACCOUNT. I HAVE REASON TO BELIEVE THAT RS. 20,34,000/ - HAS ESCAPED ASSESSMENT AND IS TO BE TAXED U/S. 68 OF TH E I.T. ACT, 1961. 7 .1 ON PERUSAL OF THE AFORESAID REASONS INDICATES THAT NOTICE ULS 148 HAS BEEN ISSUED IN A MECHANICAL MANNER ON THE BASIS OF VAGUE INFORMATION FROM ADIT (INV.), NEW DELHI RECEIVED ON 29/3/2010. THE INFORMATION RECEIVED WAS THAT THE ASSE SSEE HAS DEPOSITED CASH OF RS. 20,34,000 / - IN HIS SAVINGS BANK ACCOUNT. THE INFORMATION DID NOT SAY THAT THE CASH REPRESENTS UNDISCLOSED INCOME. THE AO DID NOT DWELL UPON THE VERACITY AND THE BASIS OF INFORMATION RECEIVED. HE HAS NOT MENTIONED ANY MATERIAL WHICH HAS LED HIM TO BELIEVE THAT THE CASH DEPOSITED IN THE BANK ACCOUNT REPRESENTED UNDISCLOSED INCOME WHICH HAS ESCAPED ASSESSMENT. HE HAS SIMPLY FILLED UP A PROFORMA MENTIONING THE INFORMATION RECEIVED AND SENT THE PERFORMA REPORT TO THE ADD L CIT, FOR APPROVAL. THEREFORE, THE NOTICE U/S. 148 IS PATENTLY ILLEGAL. WE ALSO NOTE THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR AND IDENTICAL TO THAT OF THE CASE IN THE SIGNATURE HOTELS (P) LTD. VS. ITO & ANR. (2011) 338 ITR 51 (DEL.) DECID ED BY THE HON BLE DELHI HIGH COURT. IN THE SAID CASE DURING THE ASSESSMENT PROCEEDINGS SIMILAR REASONS WERE RECORDED BY THE AO WHICH READS AS UNDER: - '7. IN THE PRESENT CASE THE UNDATED REASONS RECORDED BY THE AO FOR INITIATION OF PROCEEDINGS; READ AS UN DER: INFORMATION RECEIVED FROM THE OFFICE OF THE DIRECTOR OF IT (INV.) - VI, NEW DELHI REVEALED THAT MLS SIGNATURE HOTELS ITA NO. 877 /DEL/201 2 6 (P) LTD. HAS INTRODUCED UNACCOUNTED MONEY IN ITS BOOKS OF ACCOUNT DURING FINANCIAL YEAR 2002 - 03 THROUGH ACCOMMODATION ENTRY FROM MLS SWETU STONE PV FOR RS. 5LACS. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THAT TAXABLE INCOME TO THE TUNE OF RS. 5 LAC HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF S. 147 OF THE IT ACT, 1961. 7. 2 FROM READING OF THE ABOVE, IT IS CRYSTAL CLEAR THAT THE AFORESAID REASONS DO NOT SATISFY THE REQUIREMENTS OF S. 147 OF THE ACT. THE R EASONS AND THE INFORMATION REFERRED TO IS EXTREMELY SCANTY AND VAGUE. THERE IS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT ANNEXURE, WHICH HAS BEEN QUOTED ABOVE. ANNEXU RE CANNOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWS OR ESTABLISHES NEXUS OR LINK WHICH DISCLOSES ESCAPEMENT OF INCOME. ANNEXURE IS NOT A POINTER AND DOES NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, IT IS APPARENT THAT THE AO DID NOT APPL Y HIS OWN M IND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THE AO ACCEPTED THE PLEA ON THE BASIS OF VAGUE INFORMATION IN A MECHANICAL MANNER. THE C IT ALSO ACTED ON THE SAME BASIS BY MECHANICALLY GIVING HIS APPROVAL. THE REASON S RECORDED REFLECT THAT THE AO DID NOT INDEPENDENTLY APPLY HIS MIND TO THE INFORMATION RECEIVED FROM THE DIRECTOR OF I.T. (INV.) AND ARRIVE AT A BELIEF WHETHER OR NOT ANY INCOME HAD ESCAPED ASSESSMENT. WE FURTHER FIND CONSIDERABLE COGENCY IN THE ASSESSE E S SUBMISSION THAT THE PRESENT CASE IS SQUARELY COVERED BY THE ORDER OF THE HON BLE DELHI HIGH COURT DATED 21.7.2011 PASSED IN THE CASE OF SIGNATURE HOTELS P. LTD. VS. INCOME TAX OFFICER [2011] 338 ITR 0051 , WHEREIN THE HON BLE COURT HAS HELD AS UNDER: - ITA NO. 877 /DEL/201 2 7 HELD, ALLOWING THE PETITION, THAT THE REASSESSMENT PROCEEDING WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME TAX (INVESTIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS. 5 LACS DURING THE FINANCIAL YEAR 2002 - 03 AS STATED IN THE ANNEXURE. ACCORDING TO THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIREMENTS OF SECTIO N 147 OF THE ACT. THERE WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DISCLOSED ESCAPEMENT OF INCOME. THE A NNEXURE WAS NOT A POINTER AND DID NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THERE WAS NO DISPUTE THAT THE COMPANY, S, HAD A PAID - UP CAPITAL OF RS. 90 LAKHS AND WAS INCORPORATED ON JANUARY 4, 1989, AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER, 2001. THUS, IT COULD NOT BE HELD TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LIABLE TO BE QUASHED. 8 . IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS , WE ARE OF THE CONSIDERED OPINION THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR TO THAT OF HOTEL SIGNATURE S CASE WHICH WAS DECIDED BY THE HON BLE DELHI HIGH COURT, A S AFORESAID, THEREFORE, RESPECTFULLY FOLLOWING THE SAME REASONING , WE DECIDE THE LEGAL ISSUE IN DISPUTE ITA NO. 877 /DEL/201 2 8 IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE AND ACCORDINGLY QUASH THE REASSESSMENT PROCEEDINGS. THE OTHER ISSUES ARE NOT DEALT WITH AS THE SAME HAVE BECOME ACADEMIC IN NATURE. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. S D / - S D / - [ O.P. KANT ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 1 0 / 9 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES