Manish Kumar, Dhuri V. ITO, Malerkotla

ITA 929/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73577 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-03-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 26-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Reopening of assessment; Unexplained investment; Gift; Salary income; Wrong claim; Reason to believe; Reassessment proceedings
• Section: 147; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.929 /CHD/2013 ASSESSMENT YEAR : 2005-06 MANISH KUMAR, VS. THE INCOME TAX OFFICER, S/O SH.KEWAL KRISHAN IV(3), MALERKOTLA. R/O HOUSE NO.C-6/342, BADAN STREET, NEAR GOLE PARK, DHURI. PAN: AHRPK7166R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH KUMAR RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 05.03.2014 DATE OF PRONOUNCEMENT : 20.03.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, LUDHIANA D ATED 30.06.2013 RELATING TO ASSESSMENT YEAR 2005-06 AGAINST THE ORD ER PASSED UNDER SECTION 143(3)/147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER: FEELING AGGRIEVED, THE APPELLANT I.E. ASSESSEE CH ALLENGE THE IMPUGNED ORDER DATED 30.08.2013 PASSED BY LEARNED CIT(A), LUDHIANA U/S 250(6) OF INCOME TAX ACT ON THE FOLLOWING AMONGST OTHER GROUNDS WHICH ARE TA KEN IN ALTERNATIVE WITHOUT PREJUDICE TO EACH OTHER: 1. THAT THE PRESENT APPEAL IS FILLED WITHIN LIMITATION . 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) I.E. CIT(A) HAS PASSED IMPUGNED ORDER MERELY ON ASSUMPTIONS & P RESUMPTIONS AND WITHOUT ANY FACTUAL AND/ OR LEGAL GROUND. 2 3 . THAT THE IMPUGNED ORDER PASSED BY THE LEARNE D CIT(A) IS BAD BOTH ON FACTS AND LAW TO THE EXTENT THE ADDITION SUSTAINED THEREIN. 4. THAT THE LEARNED CIT(A) FAILED TO CONSIDER THAT THE NOTICE ISSUED U/S 148 OF THE I.T. ACT 1961 AND THE SANCTION/APPRO VAL TO ISSUE THE NOTICE ARE AGAINST LAW AND ARE NOT PROPER AND T HE SAME ARE ILLEGAL. 5. THAT THE LEARNED CIT (A) FAILED TO APPRECIATE TH E FACT THAT THE ASSESSING OFFICER I.E. AO HEREIN HAS ACTED TOTALLY IN MECHANICAL MANNER BY RELYING ONTO THE INFORMATION GIVEN BY ACI T, CIRCLE 47 (1), NEW DELHI AND BY NOT MAKING ANY INDEPENDENT ENQUIRY AND/ OR FORMING ANY INDEPENDENT OPINION REGARDING ESCAPEMENT OF INC OME BY THE ASSESSEE BEFORE INITIATING REASSESSMENT PROCEEDINGS . 6. THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THA T THE ASSESSEE AND HIS PARENTS ARE INDEPENDENT INCOME TAX PAYERS/ ASSESSES AND INITIATION OF RE-ASSESSMENT PROCEEDINGS ONLY AGAINS T THE ASSESSEE HEREIN IS BAD IN LAW. 7. THAT THE LEARNED CIT (A) FAILED TO APPRECIATE T HE FACT THAT THE ASSESSEE AND HIS PARENTS ARE ALL EMPLOYEES AND HAVE DULY FILED THEIR INCOME TAX RETURNS FOR THE TOTAL TAXABLE INCO ME OF RS 10,78,404/- FOR THE FINANCIAL YEAR I.E. 2004-05 IN QUESTION AND THE LEARNED AO ARBITRARILY CONSIDERED PROVIDENT FUND WI THDRAWALS OF THE PARENTS OF THE ASSESSEE BUT FAILED TO CONSIDER SAID SALARIES OF THE ASSESSEE AND HIS PARENTS WHILE MAKING THE ADDITION TO THE INCOME OF THE ASSE SSEE. 8. THAT THE LEARNED CIT(A) TRANSCENDED BASIC PRINCI PLES OF LAW AND ILLEGALLY MADE ADDITION OF RS1,09,000/- AGAINS T ALLEGED UNEXPLAINED INVESTMENT IN PURCHASE OF GOLD JEWELLER Y WITHOUT HAVING ANY EVIDENCE OF PURCHASE OF JEWELLERY BY THE ASSESS EE. 9. THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THA T IN HINDU AGGARWAL (MITTAL) FAMILIES, FROM WHICH THE ASSESSEE BELONG TO, JEWELL ERY IS PASSED OVER FROM ONE GENERATION TO OTHER AND AS SUCH THERE WAS NO EXPENDITURE INCURRED BY THE ASSESSEE PERSONALLY ON PURCHASE OF ALLEGED JEWELLERY OR GOLD ORNAMENTS IN THE MENTIONED FINANCIAL YEAR I.E. 2004-05 AND THERE IS AS SUCH NO EVIDENCE OF PURCHASE OF SAI D GOLD BY THE ASSESSEE. 10. THAT THE LEARNED CIT(A) TOTALLY IGNORED THE EV IDENCE PLACED ON RECORD BY THE ASSESSEE HEREIN IN REGARD TO THE GOLD VALUE IN THE MONTH OF NOVEMBER/ YEAR 2004 AND RELIED UPON THE GO LD VALUE AVERTED BY THE AO IN HIS OBJECTIONS WITHOUT ANY EVIDENCE PL ACED IN SUPPORT THEREOF. 11. THAT THE LEARNED CIT(A) TOTALLY IGNORED SOME O F THE LEGAL AND FACTUAL GROUNDS TAKEN BY THE ASSESSEE AND SELECTIV ELY PICKED AVERMENTS FROM THE WRITTEN SUBMISSIONS AND THE REJO INDER TO THE OBJECTIONS FILED BY THE AO FILED BY THE ASSESSEE. 12. THAT THE ORDER PASSED BY THE LEARNED CIT(A) IS SOLELY BASED ON THIRD PARTY INFORMATION AND IS NOT SUSTAINABLE IN T HE EYES OF LAW. IT IS THEREFORE PRAYED THAT THE PRESENT APPEAL MAY KINDLY BE ALLOWED, AND ORDER DATED 30.08.2013 UNDER SECTION 250(6) OF INCOME TAX ACT, 1961 PASSED BY COMMISSIONER OF INCOME TAX (APPEALS) , LUDHIANA IN THE MATTER OF TH E APPELLANT HEREIN I.E. MANISH KUMAR 3 (PAN NO. AHRPK7166R) MAY KINDLY BE SET ASIDE AND IN COME ADDITIONS SUSTAINED THEREIN MAY KINDLY BE DELETED WITH COSTS OR ANY OTHER RELIE F TO WHICH THE APPELLANT MAY BE FOUND ENTITLED, MAY KINDLY BE PASSED AND APPELLANT MAY BE ALLOWED TO EXPLAIN, ELUCIDATE, ADD, AMEND OR DELETE ANY GROUND OF APPEAL. 3. THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEA L BUT ALL AGAINST THE ADDITION OF RS.2,68,000/-. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE HAD FURNISHED RETURN OF INCOME ON 20.7.2005 DECLARING T OTAL INCOME OF RS.7,97,800. THEREAFTER THE ASSESSING OFFICER RECO RDED REASONS FOR REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE AC T. THE ASSESSING OFFICER ON THE BASIS OF THE INFORMATION FORWARDED B Y ACIT, CIRCLE 47(1), NEW DELHI VIDE LETTER DATED 3.3.2011 NOTED THAT THE TOTAL VALUE OF GOLD/DIAMOND ORNAMENTS/CLOTHS/OTHER EXPENSES MENTIO NED IN THE STATEMENT DATED 14.9.2006 GIVEN BY SMT.PRATIBHA BAN SAL WAS RS.22,71,000/-, OF WHICH THE VALUE OF GOLD ORNAMENT S GIVEN IN THE MARRIAGE BY ASSESSEES FAMILY WAS RS.4,28,000/-. T HE SAID INVESTMENT AS PER THE ASSESSING OFFICER REQUIRED EXPLANATION ABOU T THE SOURCE OF INVESTMENT AND CONSEQUENTLY REASONS WERE RECORDED U NDER SECTION 147 OF THE ACT AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE ASSE SSEE FILED LETTER DATED 8.5.2011 STATING THAT THE ORIGINAL RETURN OF INCOME FILED IN THE IMPUGNED ASSESSMENT ORDER MAY BE TREATED AS FILED IN RESPONS E TO NOTICE ISSUED UNDER SECTION 148 OF THE ACT. CERTAIN OBJECTIONS W ERE ALSO FILED BY THE ASSESSEE AGAINST REOPENING OF ASSESSMENT UNDER SECT ION 147 OF THE ACT, WHICH WERE REJECTED BY THE ASSESSING OFFICER. IN R EPLY THE ASSESSEE EXPLAINED THAT THE PARENTS OF THE ASSESSEE HAD WITH DRAWN RS.1,20,000/- AND RS.40,000/- FROM THEIR RESPECTIVE GPF ACCOUNTS FOR THE MARRIAGE OF THEIR SON AND IN ADDITION THE ASSESSEE HAD DECLARED TOTAL INCOME OF RS.8,07,800/- FOR THE RELEVANT FINANCIAL YEAR. THE ASSESSING OFFICER 4 CONCLUDED THAT THE MARRIAGE OF THE ASSESSEE WAS SOL EMNIZED ON 3.12.2004 AND DURING THE YEAR UNDER CONSIDERATION THE ASSESSE E HAD PAID SUM OF RS.2 LACS AND RS.1 L,29,665/- AGAINST PURCHASE OF F LAT IN NOIDA AND FURTHER INSTALLMENT OF RS.22,996/- PER MONTH AGAIN ST REPAYMENT OF THE HOUSING LOAN. THE ASSESSING OFFICER IN VIEW OF THE ABOVE SAID CIRCUMSTANCES AND DAY-TODAY EXPENSES BEING MADE BY THE ASSESSEE OUT OF HIS SALARY INCOME WAS OF THE VIEW THAT THE EXPENSES OF RS.4,28,000/- REMAINED UNEXPLAINED. HOWEVER, CREDIT OF SUM OF RS .1,60,000/- I.E. THE AMOUNT WITHDRAWN BY HIS PARENTS FROM GPF ACCOUNT WA S ALLOWED AND BALANCE OF RS.2,68,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE. 5. THE CIT (APPEALS) UPHELD THE RE-ASSESSMENT PROCE EDINGS INITIATED IN THE CASE AND ALSO PARTLY UPHELD ADDITION MADE B Y THE ASSESSING OFFICER PARTLY ACCEPTING THE PLEA OF THE ASSESSEE T HAT THE LIST OF JEWELLERY MENTIONED THE APPROXIMATE VALUE OF GOLD AND DIAMOND ORNAMENTS AS ON DATE AND NOT AS ON THE DATE OF PURCHASE. THE TOTAL INVESTMENT IN GOLD JEWELLERY WAS WORKED OUT AT RS.2,69,700/- AND CREDI T OF RS.1,60,000/- WAS ALLOWED AND BALANCE ADDITION WAS CONFIRMED AT R S.1,09,700/-. 6. THE ASSESSEE IS IN APPEAL AGAINST THE SAME. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT THE COMPLAINT WAS MAD E AGAINST HIM DUE TO MATRIMONIAL DIFFERENCE. THE ASSESSING OFFICER ACTI NG ON THE SAID COMPLAINT HAD REOPENED THE ASSESSMENT IN THE CASE O F THE ASSESSEE AND MADE THE ADDITION ON SURMISES AND WITHOUT ANY BASIS . 7. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD ORIGINALLY FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WITHIN THE PRESCRIBED TIME DECLARING TOTAL INCOME OF 5 RS.7,97,800/-. THEREAFTER REASONS WERE RECORDED FO R REOPENING THE ASSESSMENT IN THE CASE OF THE ASSESSEE WHICH ARE RE PRODUCED AT PAGES 2 AND 3 OF THE APPELLATE ORDER WHICH READ AS UNDER: 'FROM THE PERUSAL OF THE AVAILABLE INFORMATION FORW ARDED BY ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 47(1), NEW DELHI VIDE LETTER NO. 599 DATED 03.03.2011, IN THE ABOVE CASE IT IS OBSERVED THAT T HE TOTAL VALUE OF GOLD/DIAMOND ORNAMENTS/CLOTHS/OTHER EXPENSES MENTIONED IN THE ST ATEMENT DATED 14.09.2006 GIVEN BY SMT. PRATIBHA BANSAL DAUGHTER OF SHRI PAWAN KUMA R BANSAL IS RS.22,71,000/- OUT OF WHICH THE VALUE OF GOLD ORNAM ENTS GIVEN IN THE MARRIAGE BY THE BOYS SIDE (MANISH KUMAR MITTAL AND HIS FAMILY) COMES TO RS.4,28,000/-. THUS LEAVING A BALANCE AMOUNT OF RS .18,43,000/- SHRI MANISH KUMAR AND HIS PARENTS HAVING INVESTED RS.4,2 8,000/- DURING F/Y 2004-05 ON GOLD ORNAMENTS (GIFTS OF RS.4,28,000/- TO SMT. P RATIBHA BANSAL) DURING THE MARRIAGE CEREMONY OF SHRI MANISH KUMAR MITTAL WHICH REQUIRES EXPLANATION REGARDING SOURCES OF INVESTMENTS. AS THE ASSESSEE HAS ESCAPED RS.4,28,000/- DURING F/ Y 2004-05 AS PER THE PROVISIONS OF SECTION 147 OF INCOME TAX ACT, 1961 W HICH SHOULD BE BROUGHT TO TAX, I AM SATISFIED THAT THE ABOVE INCOME IS ESCAPED ASSESSME NT AND IT IS FIT CASE TO ISSUE NOTICE UNDER SECTION 148. ' 9. THE PERUSAL OF THE ABOVE SAID REASONS REFLECTS T HAT ON THE BASIS OF THE COMPLAINT MADE BY ONE SMT.PRATIBHA BANSAL, WHO WAS THE EX-WIFE OF THE ASSESSEE, REASONS WERE RECORDED TO THE EFFECT T HAT THE FAMILY OF THE ASSESSEE HAD SPENT A SUM OF RS.4,28,000/- ON THE MA RRIAGE CEREMONY OF THE ASSESSEE, WHICH REQUIRED EXPLANATION REGARDING THE SOURCE OF INVESTMENT. THE LADY HAD FILED A COMPLAINT AGAINST THE ASSESSEE AND HIS FAMILY AND HAD CLAIMED THAT IT HAD RECEIVED CERTAIN ITEMS OF JEWELLELRY DURING HER MARRIAGE, WHICH ARE ENLISTED AT PAGE 4 O F THE APPELLATE ORDER. ON THE BASIS OF THE AFORESAID COMPLAINT, THE ASSESS EE WAS SHOW CAUSED TO FURNISH THE DETAILS OF EXPENSES INCURRED ON THE MAR RIAGE. UNDER THE PROVISIONS OF SECTION 147 OF THE ACT, THE REQUIREME NT IS THAT WHERE THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY IN COME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, THEN THE ASSESSING OFFICER MAY SUBJECT TO THE PROVISIONS OF SECTION 14 8 TO 153 OF THE ACT, ASSESS OR RE-ASSESS SUCH INCOME AND SUCH OTHER INCO ME CHARGEABLE TO TAX, WHICH HAD ESCAPED ASSESSMENT. THE FIRST CRIT ERION OF INVOKING THE 6 PROVISIONS OF SECTION 147 OF THE ACT THAT THERE HAS TO BE A REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAD ESCAP ED ASSESSMENT. IN THE FACTS OF THE PRESENT CASE, THE ASSESSING OFFICE R ON THE BASIS OF A STATEMENT RECORDED DURING THE MATRIMONIAL DISPUTE, WHICH WAS FORWARDED BY THE ASSESSING OFFICER IN DELHI TO THE CONCERNED ASSESSING OFFICER- INCHARGE OF THE ASSESSEE HAD RECORDED REASONS FOR R E-ASSESSMENT WHICH ACCORDING TO US DO NOT ESTABLISH THE PRIMARY CRITER IA OF INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT. THE ESCAPEME NT OF INCOME WHICH IS THE PRIMARY CONDITION, CANNOT BE ESTABLISHED ON THE BASIS OF A STATEMENT RECORDED DURING THE COURSE OF FILING OF F IR IN MATRIMONIAL DISPUTE AS WE ALL ARE AWARE THAT IN SUCH DISPUTES, FALSE CLAIMS ARE MADE BY THE PARTIES MANY TIMES, WHICH IN TURN ARE SETTLE D. WHEREAS UNDER THE INCOME TAX PROCEEDINGS, IT IS THE EXACT INCOME OF T HE ASSESSEE WHICH IS TO BE ASSESSED IN HIS HANDS AND WHERE THERE IS A RE ASON TO BELIEVE THAT SUCH INCOME HAS ESCAPED ASSESSMENT THEN THE ASSESSI NG OFFICER HAS THE AUTHORITY TO INVOKE THE PROVISIONS OF SECTION 147 O F THE ACT AND AFTER RECORDING REASONS FOR REOPENING THE ASSESSMENT, ISS UE NOTICE UNDER SECTION 148 OF THE ACT. IN THE FACTS AND CIRCUMSTA NCES OF THE CASE, WE FIND NO MERIT IN THE EXERCISE OF THE POWER UNDER SE CTION 147 OF THE ACT AND WE QUASH THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. IN ANY CASE, THERE IS NO MERIT IN ADDITION ON ACCOUNT OF T HE ALLEGED JEWELLERY GIVEN AT THE TIME OF THE MARRIAGE WHERE THERE IS NO CONCRETE EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER THAT CERTAIN ITEMS HAD EXCHANGED HANDS AND ALSO BECAUSE OF THE PLEA OF THE ASSESSEE THAT HIS FAMILYS INHERITED JEWELLERY WAS PASSED ON DURING THE MARRIA GE. IN THE ABSENCE OF CONCRETE EVIDENCE OF THE ASSESSEE HAVING INVESTED I N SO CALLED JEWELLERY OR ANY OTHER EXPENSES RELATING TO HIS MARRIAGE OR B Y HIS FAMILY, THERE IS 7 NO MERIT IN THE ADDITION AND WE DELETE THE SAME. T HE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF MARCH, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH MARCH, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH