Rakesh Kumar Khanna HUF, Panchkula V. ITO, W-3, Panchkula

ITA 892/CHANDI/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6919 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 05-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NALIN KUMAR NOHRIA
• Section: 148; 143(3); 73

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ I N T H E I N C O M E T A X A P P E L L A T E T R I B U N A L D I V I S I O N B E N C H , “ S M C ” , C H A N D I G A R H ी एन. के. सैनी, उपा य एवं ी संजय गग , या यक सद य B E F OR E SH R I N . K . SA I N I , V I C E P R E SI D E N T & SH R I S A N J A Y G A R G, J U D I C I A L M E M B E R आयकर अपील सं./ ITA No. 892/C H D / 2 0 1 9 नधा रण वष / Assessment Year : 2 0 0 9 - 1 0 Sh. Rakesh Kumar Khanna, HUF H.No.415, Sector 7 Panchkula बनाम The ITO, Ward-3, Aaykar Bhawan, Sec 2, Panchkula थायी लेखा सं./PAN NO: AAKHR6411E अपीलाथ&/Appellant ()यथ&/Respondent Hearing though video Conferencing नधा *रती क, ओर से/Assessee by : Shri Nalin Kumar Nohria, CA राज व क, ओर से/ Revenue by : Sh. Ashok Khanna, Addl. CIT स ु नवाई क, तार0ख/Date of Hearing : 23.11.2021 उदघोषणा क, तार0ख/Date of Pronouncement : 07.12.2021 आदेश/Order P er S an jay G ar g, Ju d ic i a l Me mb er : T he p re s e n t ap pe a l ha s b e e n p r e f e r re d by t h e as s e s se e a g a i ns t t h e or d e r d a te d 15. 0 3. 2 01 9 o f t h e Co mm is s i one r o f I nc o me T a x (A pp ea l s )-3 , L u dhi a n a [ h e re in a ft e r re fe r re d t o a s ‘ C IT (A )’ ] 2. T he a s s e s se e in t hi s a pp e a l ha s ta ke n fo l l ow i ng g ro un ds of a pp e a l : - 1. That the Ld. CIT(Appeals)-3 Ludhiana has erred in upholding the order of the learned A0 u/s 143(3) r.w.s. 147 without ITA No. 892-Chd-2019 Rakesh Kumar Khanna, HUF, Panchkula 2 supply of reasons to believe recorded u/s 147/ 148 of the Income Tax Act, 1961 inspite of specific request during assessment proceedings. Hence the proceedings initiated u/s 147/148 of the Act be quashed. 2. That the Ld. CIT(Appeals)-3 Ludhiana has erred in upholding the order of the learned A 0 inspite of the objection of the appellant that the sanction of the Pr. CIT Panchkula under Section 151(1) of the Act is in a mechanical manner and is on the dotted lines and there is no application of mind by the sanctioning authority and as such sanction taken is no sanction in the eyes of law. 3. That the Ld. CIT(Appeals)-3 Ludhiana has erred in upholding the order of the learned AO inspite of the objection of the appellant that no reasons to believe were supplied by the learned A 0 within the stipulated period of 6 years under Section 148 of the Income Tax Act, 1961. Hence the order is quashed. 4. That the Ld. CIT(Appeals)-3 Ludhiana has erred in upholding the order of the learned Assessing Officer as the learned A0 has failed to apply his mind and carry out any independent verification/ inquiry on receipt of information from Dl Wing, Ahmadabad before recording of the reasons which is a mandatory condition and as such the assessment framed is illegal, arbitrary and unjustified and the addition made on this basis is deleted. 5. That the Ld. CIT(Appeals)-3 Ludhiana has erred in upholding the order of the learned Assessing Officer as the learned A 0 has failed to provide the details of Rs.4,78,318/- on account of client code modification during the assessment proceedings. 6. That the appellant reserves the right to add, amend or delete one or more of the grounds of appeal before the appeal is disposed off. ITA No. 892-Chd-2019 Rakesh Kumar Khanna, HUF, Panchkula 3 3. T he a s se s s e e in t h i s a ppe a l i nt e r a li a ha s c o nt es te d t h e v a li di t y o f t he re op e ni ng o f t h e as s e s s me nt o n t h e g r ou n d t ha t d es p i t e t h e r eq ues t t he re t o , th e a s s es s e e w as n ot s upp l i ed t h e r ea s o ns r e c or de d by t he A s s es s i ng o ff i c e r fo r r e o pe ni ng o f t he as s e s s me nt , th e r e b y , t h e A s s es s i ng o ff i c e r de p ri ve d t he a s s es s e e f ro m fi l in g t he o bj e ct i o ns a ga in st t he r e o p e n i n g o f t he as s e s s me n t . 5. A t t he ou t s e t, t h e L d. c o u ns e l fo r t h e as s e s s ee h as i n v it e d ou r a tt e n t i o n t o t h e i m p ug ne d o r d e r o f th e CI T (A ) to s ub m i t t h a t t he a s s es s e e had t ak e n th i s p le a o f n o n- su ppl yi ng t h e re a s ons re co r de d be fo r e t h e L d. CI T ( A ) a ls o, ho w e ve r, Ld. CI T (A ) br us he d as i de t h e p l e a o f t h e as s e s s ee on th e gr ou nd t h a t t he c o p y o f t h e a p pl i c a ti on o f t he a s s es s e e fo r s up pl y o f r e a s ons w a s no t o n t he re c o rd. T h e L d. C ou n s el fo r th e as s e s s e e h a s i nv i t ed o u r a t t e n ti on t o pa ge N o. 9 o f t h e pa pe r bo ok w h ic h i s th e c op y o f t h e a p pl i ca t i o n o f t he a ss ess e e t o t he A s s es s i ng o ff ic er de ma n di ng t he d e t ai l e d re as o n s rec or d e d b y t h e A s s es s i ng o f fi c e r t o fo r m t he b e l ie f t h at th e in co me o f t he a s s es s e e ha d e s ca p e d as s e s s me nt . The L d . Co uns e l h as fu rt her i n vit e d o ur a t t en t i on t o pa g e N o. 9A of t h e pa p er b o o k, w h er e b y , i n fo r ma t io n s ou ght o n a q uer y ra i s e d , t he In c o m e T ax o ffi c e r h as i n fo r me d a s un der: - “ Af t e r r e ce i v i n g t h e a b ov e d i r e c t i o ns , t he in w ar d D AK R e g is t e r wa s c he ck e d a nd f o u nd t ha t th e D A K i s e nt er e d a t Sr . N o. 21 1 o n 2 8. 04. 2 0 16 w hi ch was r e ce i ve d f r om Ra k e s h Kum a r K h an n a, H . N o. , 415, Se c to r 7, P a n c h k u la a nd th e s ub je c t m a t t e r is “ not i ce u / s 148 f or t he A. Y 200 9 - 10 ” . ITA No. 892-Chd-2019 Rakesh Kumar Khanna, HUF, Panchkula 4 B ut t he D AK e nt er e d i n r e c e i p t r eg is t e r a t Sr . No . 2 11 da t e d 2 8 . 0 4. 20 1 6 is n o t a va il ab l e on r e co rd . H enc e , c o ul d n o t b e s u p pl i ed to t h e A p pl i c a n t. ” 6. T he L d. C ou ns e l , t he r e for e, ha s s u b mi t te d t ha t th e D e p ar t m e n t ha s a d mi t te d th e re c e i p t o f t h e a p pl i ca t i on of t he a s s es s e e fo r s u ppl y o f th e re a s o ns r e co rd e d t o e n a b l e t h e a s s e s s e e t o fi l e o b je c t i on s. T he L d. Co u ns e l ha s s u b mi t te d t h at th e p ri n c i pl e o f na t u r a l j us t i c e h a v e b e e n vi o l a te d i n th is c as e a s t he as s e s see h a s be e n p r even t e d t o fi l e ob j e c t i ons a ga i ns t th e re o p e n i n g o f t h e as s e s s me nt . T h e L d. c o un s e l i n t hi s re s p e c t h as r el i ed u po n t h e de ci s i on o f t he H on ' bl e S upre m e C o ur t i n th e c as e o f ‘G K N D r iv es h a ft s ( I n di a) L t d. V s . ITO & O r s ’ (20 0 3) 2 5 9 IT R 19 ( S C) an d fu rt h e r t he d ec is i o n o f t h e H o n' bl e B o m b a y H i g h C o ur t i n t he c a s e o f ‘ A s i a n P a in t s L td V s. D CI T’ (2 0 0 8) 296 I T R 9 0 (B o mb a y) . Th e L d . c ouns e l h as fu r t h er s ub mi tt e d t ha t t he al l e g at i o n a ga in st t he a s s e ss e e w er e th at t he a s s es s e e ha d m a nip ul a t ed hi s i nc o me by s h i ft i n g- in - l o s s es an d s h i f t i n g - ou t - p r o f it s a mo unt i ng to Rs . 4, 78 , 31 8/ - t h ro u g h t h e br o ke r b y w a y o f ma n i p ul a tion o f c l ie nt c o d e. H ow e ver , t he a s s es s e e ha d n e v er i n d ul ge d i n a ny s u ch p r a ct i c e a nd t h at t he re w as no c o n t r i ve d p ro f it / los s an d t h e re w a s n o e s ca p e me n t o f i nc o me . E ve n du r i n g t h e a ss e s s me nt pr o c e e d i n gs , t he A s s ess i ng o ff i c e r ha s no t m en ti o ne d a ny tr ans a c ti on in w h ic h t h e a ss es s e e h ad d o ne a ny s uc h m a lp r ac t i c e , a s al l eg e d . T h e L d . Co u ns e l h as s ub mi t t e d th at e v e n t he L d. P CI T di d no t ap pl y h is mi nd w h i l e a c co r d i ng s ec ti on fo r ITA No. 892-Chd-2019 Rakesh Kumar Khanna, HUF, Panchkula 5 re o p e ni ng o f t he a s s ess me n t a nd he gav e s a nc t i o n in a me ch a ni c a l m a nn e r . H e , t he r e fo r e, h as su b mi t te d th at t he re o pen i n g o f th e a s s es s men t i n t hi s c a s e w as b ad i n l aw . 7. T he Ld. D R O n th e o t h er ha nd h as r el i ed o n t he fi n di n g s o f t h e l ow er a u t ho ri t i e s . 8. We h a v e h ea r d t h e ri v a l c ont en ti on s a n d g o ne t hro u gh t h e r e c o r d. It i s e v i d e n t o n t h e fi l e t ha t in t h i s ca s e t he A s ses s i ng o f fi ce r o n th e ba s i s o f t he r e p o rt o f t he I n v e s ti g a t io n Wi ng r e c orde d t he re as on s t h at t he as s e s s ee ha d m a ni p u l a t ed t h e p r o fi t s in s ha re tr ans a c ti on s by s hi ft i n g cl i e n t c od e t h r o ug h h is br ok e r. H o w e ve r, we fi nd t ha t i n t h e re a s o ns re co rd e d, no de ta i l s o f su c h t ra ns a c t i o ns ha s be en m e nt i o ne d, w he re in , t h e as s e s s ee a l l e g e d l y sh i f t e d t h e cl i e nt c od e to ma ni pu l a t e pr o fi t s / l os s e s . T he A s s e ss in g o ffi c er s i mp ly r el ie d o n t he r ep o r t o f t he In v e st i ga ti on W in g, w hi c h w a s a ge ne r a l re po rt w i t ho ut c o -r e l a t i n g w i t h t he s a me t o t h e a s s e s s me nt r ec or d . Th e a s s es s e e w as ne ve r s upp li e d t he re a s o ns re c o r de d fo r re ope ni ng o f t he a s s e ss me nt des p it e w r it t en r eq ues t m a de by t he as s e s s ee . T he a s se s s e e, t h e re fo re , w as p r e v e n t e d fr o m fi l i n g t he o bj ec t i on s a g a i ns t t he r ea s o n s r ec o rd ed f or r e ope n i n g o f t h e a s s es s men t . Ev en t he Ld . C I T (A ) a ls o br u s he d a s i d e th e a fo re s a id p l e a o f t h e as s e s s ee a n d d i d not gi ve op p or t u n i t y t o t h e a s s ess e e to fi le ob j e c t i ons a g ai ns t t he r e o p en in g o f t h e as s e s s me n t . T he H on ' b le ITA No. 892-Chd-2019 Rakesh Kumar Khanna, HUF, Panchkula 6 S upr e m e C ou r t i n t he c a s e o f ‘G K N D ri v e s ha ft s ( I nd ia ) L t d. V s . I TO & O t her s ’ (s u p ra ) ha s al s o he l d as un de r: - “that when a notice under Section 148 of the Income tax Act is issued, the proper course of action for the assessee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the assessee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. After disposing of the objections, if filed, by passing a speaking Order then the assessment procedure has to be followed”. 9. T h us , t he H on' bl e S u pre me Co ur t in c l ea r te r ms ha s h el d th a t t h e A s s es s i ng o ff ic er i s boun d t o fu r n i s h re a s o ns w i th in a r ea s on a b l e t i me t o t he a s s es s e e a nd o n r ec e ip t o f r e a s on s t h e as s e ss ee i s ent i t l e d t o fi l e ob j e c t i ons a n d t he A s s es s in g o ff i c e r i s b ou nd t o dis p os e o f t h e s a me b y pa s s i ng a s pe ak in g or d er . T he H on ' b l e B o mb a y H i g h Co ur t i n th e c as e o f ‘A s ia n P a i n ts L t d V s. D CIT ’ (s u pr a ) ha s hel d a s und e r; - “ 4. H en ce , w e m ak e i t c l e a r t h a t i f t he As s e s si ng of f i c er do es n ot a c c e p t t he ob j e c ti ons s o fi l e d , he s h al l not pr o ce ed f u r th er i n t he m at te r wi th in a pe r i o d of f our w e ek s fr o m t h e d at e of r e c ei pt o f s e r vi c e of the s ai d or d er on o bj e c t io n s , o n th e a ss e s se e. 5. A cc or di ng l y , ru le i s m ad e a bs o l u t e. ” 10 . In th e l i gh t o f t h e a fo re sa i d p r o pos i t i o n o f law l a i d d ow n by t he H on' bl e S up re me C our t a nd b y t h e H o n' b l e B o m ba y H igh Cou r t i n t he c as e o f ‘ A s ia n P a i nt s L t d V s . D CIT ’ ( s upra ), t he p ri nc i p le s o f nat ur al j us t i c e ha ve b e en vi o l a t e d b y t h e A s s es s i ng o ff i ce r i n not s up pl yi ng re a s o ns re c o r de d fo r re op e n i n g o f t h e a s s e ss me nt . The as s e s s ee ha s b e e n ITA No. 892-Chd-2019 Rakesh Kumar Khanna, HUF, Panchkula 7 pr e v e nt e d fr o m f il i ng o bj ec t i on s ag ai ns t t h e sa m e whi c h t he A s s e s s in g o f fi c e r o t h e rw i s e w as r eq u i r ed t o di s p o s e o f b y w a y o f a s pe a ki ng o r de r. E ve n t h e H o n ' bl e Bo mb a y H ig h C our t ha s he l d th a t t he A s s e s s in g o f fi c e r s h ou l d n ot pr o c e ed w it h t he a s s es s me n t fo r a pe r i o d o f fo u r w ee ks , i f t h e o bj e c ts a r e d e ci de d ag a i ns t t h e a s s esse e s o th at th e a s s es s e e ma y be a bl e t o ch al l en g e t h e s a me b e f o re th e hi g he r fo ru m. U nde r t h e c i rc u ms t an c e s , t he r e o pe ni n g o f t h e a s s ess m en t i n t h is c a s e i s ba d i n la w . F ur t he r, w e no t e t ha t th e Ld. P C IT has a l s o ac c o rd e d t he s a nc t i o n fo r re ope ni n g o f t he as s e s s me nt i n a me c h ani c a l ma nn e r w i th o ut a pp l i ca t io n o f m in d. I t ha s b e en h e l d t i me a n d ag ai n by t he va r i o us Co u r t s t h a t th e Ld . P CI T i s s u pp os e d t o a p pl y h is mi n d a nd a cc or d sa n c t i o n b y w ay o f a s p e a k in g ord er . R e l ia nce i n t hi s c a s e c a n b e pl a ce d o n t h e or de r o f th e H on ' bl e M a dh ya P r a d e s h Hig h C ou rt in th e c as e o f ‘C I T vs S . G oy an ka L i m e & C he mi ca l s L t d. ’ ( 20 15 ) 2 3 1 T ax m a n 00 73 (M P ) . In v ie w o f th e a b o ve d i s cu ss i o n , t he a s s e s sme n t fra m e d b y t h e A s s es s i ng o ff i c e r i s he l d t o be b a d i n l a w an d t he s a m e i s a c c or di ng l y qu as h e d. T he a pp e a l o f th e a s s ess e e s t a nds a ll o w e d. O r d e r p r o n o u n c e d o n 0 7 . 1 2 . 2 0 2 1 . Sd/- Sd/- (एन. के. सैनी / N.K. SAINI) (संजय गग! / SANJAY GARG) उपा#य$ / Vice President या%यकसद&य/ Judicial Member Dated : 07.12.2021 “आर.के .” ITA No. 892-Chd-2019 Rakesh Kumar Khanna, HUF, Panchkula 8 आदेशक,( त4ल5पअ6े5षत/ Copy of the order forwarded to : 1. अपीलाथ&/ The Appellant 2. ()यथ&/ The Respondent 3. आयकरआय ु 7त/ CIT 4. आयकरआय ु 7त (अपील)/ The CIT(A) 5. 5वभागीय( त न9ध, आयकरअपील0यआ9धकरण, च;डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar