Sh. Subhash Chander Maheshwari, Hoshiarpur V. The ACIT, Jalandhar

ITSSA 3/ASR/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8758 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-08-2015
• Assessment Year: misc
• Appeal Filed On: 20-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Assessee Lawyers: J S BHASIN
• Keywords: Gift; Question of law

Judgement Text

IT(SS)A.NO.03(ASR)/2010 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.(SS) NO.03 (ASR)/2010 BLOCK PERIOD:01.04.1986 TO 30.08.1996 PAN : SH. SUBHASH CHANDER MAHESHWARI VS. ASSTT. COMMR. OF INCOME-TAX, C/O M/S. MAHESHWARI ROSIN & TURPENTINE, CENTRAL CIR CLE-1, WORKS, HOSHIARPUR. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.J.S.BHASIN, ADVOCATE RESPONDENT BY:SH.R.L.CHHANALIA, DR DATE OF HEARING: 28/02/2013 DATE OF PRONOUNCEMENT:19/03/2013 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE ASSESSING OFFICER, DATED 31.12.2009 FOR THE BLOCK PERIOD 01.0 4.1986 TO 30.08.1996. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. THAT THE IMPUGNED ORDER IS A NULLITY PER FORCE INASMUCH AS NO DEMAND NOTICE SPECIFYING THE SUM PAYABLE TOWARDS TAX, INTEREST OR ANY OTHER SUM IN CONSEQUENCE OF THE SAID ORDER PASSED ON 31.12.2009, HAS BEEN SERVED ON THE ASSESSEE. 2 2. THAT WITHOUT PREJUDICE TO FIRST GROUND OF APPEAL, I F THE DEMAND NOTICE DATED 30.12.2009 SERVED ON ASSESSEE SPECIFYI NG A SUM OF RS.11,96,580/- AS PAYABLE, IS EITHER CLAIMED OR HEL D TO HAVE BEEN ISSUED IN CONSEQUENCE OF THE ORDER UNDER APPEA L, THEN THE SAID ORDER (PURPORTEDLY PASSED ON 30.12.2009), IS A GAIN VOID INASMUCH AS IN THAT SITUATION, IT IS CONTRARY TO TH E MANDATE OF SECTION 158BG WHICH ENVISAGES PRIOR APPROVAL OF T HE CIT AS A MANDATORY REQUIREMENT WHEREAS THE SAID APPROVAL AS ADMITTED AND CONFIRMED BY THE A.O. ON LAST PAGE PARA 24 OF THE ORDER, WAS OBTAINED ONLY ON 31.12.2009. 3. THAT THE AO WAS NOT JUSTIFIED IN SUBTLY IGNORING TH E ASSESSEES CONTENTION THAT THE IMPUGNED GIFTS, ALREADY DISCLOS ED BEFORE SEARCH, WERE NOT CAPABLE OF BEING ASSESSED AS UNDI SCLOSED INCOME IN THE BLOCK PERIOD. 4. THAT THE AO FELL INTO GRAVE ERROR IN HOLDING THE GI FTS AMOUNTING TO RS.19,94,300/- RECEIVED DURING THE BLOCK PERIOD FROM REAL NON RESIDENT BROTHER, AS BOGUS AND IN TREATING THE SAME AS UNDISCLOSED INCOME, ENTIRELY OF THE ASSESSEE IGNORI NG THE FACT ON RECORD,, AS BROUGHT TO THIS NOTICE, THAT GIFTS O F RS.8,80,000/- WERE PERTAINING TO HUF OF ASSESSEE, AN INDEPENDENT ASSESSEE. 5. THAT WHILE HOLDING AS ABOVE, THE AO EVEN ON THIRD O CCASION, FAILED TO BRING ANY EVIDENCE ON RECORD THAT THE AMO UNTS CREDITED IN THE NRE ACCOUNTS OF THE NON-RESIDENT BROTHER, HA D ANY NEXUS WITH THE ASSESSEE, SO AS TO HOLD THE SAME AS BOGUS. 6. THAT THE FRESH FINDINGS NOW GIVEN BY THE AO IN HIS ORDER, BY MAKING ROVING ENQUIRIES, ARE WITHOUT JURISDICTION I NASMUCH AS HE WAS NOT EXERCISING HIS ORIGINAL JURISDICTION, BU T ONLY TO THE EXTENT DIRECTED BY THE HONBLE ITAT IN ITS REMAND O RDER. 7. THAT THE CREDITS IN THE NRE ACCOUNT OF THE DONOR WE RE ATTRIBUTABLE TO SOME OTHER NRE ACCOUNT, AS INFERRED BY THE L. AO IN PARA 16.1 FOR WANT OF ANY EVIDENCE BROUGHT ON RECORD, IS PER SE MALICIOUS AND UNFOUNDED. 3 8. THAT THE DONOR WAS NOT A MAN OF MEANS TO AFFORD THE ABOVE GIFTS, IN A FINDING DE HORS THE FACTS AND EVIDENCE PLACED ON RECORD. 9. THAT EVEN THE BENEFIT OF TELESCOPING, ALTERNATELY S OUGHT TO BE ALLOWED, AGAINST THE UNDISCLOSED INCOME ASSESSED IN THE HANDS OF FAMILY BUSINESS CONCERNS, HAS BEEN WRONGLY DENIE D ON HAZY AND OBTUSE LOGICS, OBLIVIOUS OF THE ITAT DIRECTIONS . 10. THAT THE ASSESSEE HAVING BEEN PUT INTO UNDUE LITIGA TION THIRD TIME, BY WAY OF AN ARBITRARY AND ILLEGAL ORDER, THE APPELLANTS SEEKS TO BE ALLOWED APPROPRIATE COST IN THE MATTER. 11. THAT THE ORDER UNDER APPEAL IS ENTIRELY AGAINST THE FACTS AND LAW AND DOES NOT DESERVE TO BE SUSTAINED. 2. THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO T HE FACTS IN THE CASES OF SH. RAVINDER KUMAR MAHESHWARI AND SH. VIJAY PARKASH MAHESHWARI, WHICH HAVE BEEN DECIDED BY THIS BENCH IN IT(SS)A.NO.1(ASR )2010 AND IT(SS)A.NO.2(ASR)/2010 VIDE ORDER DATED 29.11.2012, WHERE THE APPEALS OF BOTH THE ASSESSEES HAVE BEEN ALLOWED. THIS FACT HAS NOT BEEN CONTROVERTED BY ANY OF THE PARTIES AND BOTH THE PARTIES AGREED TO T HE ISSUE BEING IDENTICAL IN THE PRESENT APPEAL OF THE ASSESSEE, AS MENTIONED HE REINABOVE, IN THE CASES OF SH. RAVINDER KUMAR MAHESHWARI AND SH. VIJAY PARKASH MAHESHWARI (SUPRA). 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF SH. RAVINDER KUMAR MAHESHWARI AND SH. VIJAY PARKASH MAH ESHWARI,(SUPRA), 4 WHERE WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE AS SESSEE WHICH FOR THE SAKE OF CLARITY IS REPRODUCED AS UNDER: 10. WE HAVE OBSERVED FROM THE GROUNDS OF APPEAL BEFORE US IN THE PRESENT APPEALS IN SPECIFIC GROUNDS 3 TO 10 IN BOT H THE APPEALS, WHICH ARE IDENTICALLY WORDED EXCEPT THE QUANTUM OF GIFTS . THE SAID GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE, IN THE FIRST ROUN D, BEFORE THE ITAT, AMRITSAR BENCH, EITHER IN THE FROM OF GROUNDS OR I N THE FORM OR ARGUMENTS WHICH HAVE BEEN DECIDED BY THE ITAT VID E PARA 6.7 & 7 VIDE ITS ORDER DATED 04.12.2000 WHICH HAS BEEN REP RODUCED HEREINABOVE. IN THE FIRST ROUND THE ASSESSES MATTE R ON MERIT WAS REFERRED TO THE FILE OF THE AO TO GRANT OPPORTUNIT Y OF BEING HEARD AND TO DECIDE THE ISSUE WHETHER GIFTS HAVE COME FROM N RE ACCOUNT ON THE BASIS WHEN THERE WERE ARGUMENTS BEFORE THE ITAT IN THE FIRST ROUND THAT THERE WAS A LACK OF OPPORTUNITY TO THE ASSESS EE. ACCORDINGLY, THE OPPORTUNITY WAS GIVEN AND IN THE SECOND ROUND, THE ITAT VIDE ORDER DATED 16.03.2009 HAD OBJECTED TO THE ASSESSMENTS MADE BY THE AO BEING PROTECTIVE ASSESSMENTS WHICH SHOULD HAVE BEE N DONE ALONGWITH THE FIRM SINCE THE MATTER IS INTER-CONNECTED. ACCO RDINGLY, THE AO IN THE PRESENT PROCEEDINGS AFTER CONSIDERING THE ASSE SSMENT OF THE FIRM AND GIVING OPPORTUNITY TO THE ASSESSEE PASSED THE ORDER VIDE PARA 21.1 & 21.2 AT PAGES 7 & 8 WHICH FOR THE SAKE OF CLARIT Y IS REPRODUCED AS UNDER: 21.1 THE ASSESSEES SUBMISSION HAS BEEN DULY CONSI DERED VIS--VIS THE RECORDS AVAILABLE AT THIS END. IN THIS CONNECTI ON, IT MAY BE MENTIONED HERE THAT ASSESSMENT ORDER WAS PASSED ON 27.03.2002 KEEPING IN VIEW THE FINDINGS OF LD. ITAT, AMRITSAR IN ITS ORDER DATED 04.12.2000. THE ASSESSEE FILED APPEAL BEFORE THE SA ME TRIBUNAL AGAINST THIS ORDER DATED 27.03.2002 WHICH RESULTED IN ISSUANCE OF FRESH ORDER ON 16.03.2009, NATURALLY IN SUPERCESSIO N OF EVERYTHING ELSE IN THE SUBJECT, IN WHICH IT WAS OBSERVED THAT THE ISSUE OF GIFT BE DECIDED KEEPING IN VIEW THE DECISION PASSED IN THE CASE OF THE FAMILY FIRMS OF THE ASSESSEE. THUS THE FINDINGS CONTAINED IN LD. ITATS ORDER DATED 04.12.2000 SHOULD HAVE NO BEARING ON THE PRES ENT ASSESSMENT ORDER. 5 21.2. NOW COMING TO THE MERIT OF THE ASSESSEES SUB MISSION REGARDING BENEFIT OF TELESCOPY, IT MAY BE MENTIONED HERE THAT THE MATTER WOULD GET CLEAR IF THE SEQUENCE AND CHRONOLOGY OF EVENTS ARE METICULOUSLY FOLLOWED. HERE THE ASSESSEE FIRST RECEIVED SOME FUN DS IN THE FORM OF ALLEGED GIFS. AFTER THIS, IN HIS OWN VERSION, HE IN VESTED THIS FUND OR A PORTION THEREOF THROUGH INTRODUCTION OF CAPITAL IN HIS FAMILY FIRMS. NOW, THESE FIRMS ON USING THIS FUND, GENERATED INCO ME, A PORTION OF WHICH MIGHT HAVE BEEN UNDISCLOSED IN AS MUCH AS THE SAME WERE NOT BROUGHT TO TAX. IT IS APPARENT FROM THE ABOVE MENTI ONED SEQUENCES THAT THE GENUINENESS OF OTHERWISE OF THE ALLEGED GI FTS HAVE NOTHING TO DO WITH ITS END USE WHEN IT MAY OR MAY NOT HAVE GEN ERATED INCOME, WHICH MAY OR MAY NOT BE DISCLOSED AT THE HAND OF T HE FIRMS. FOR THE SAKE OF ARGUMENT, IF IT IS PRESUMED THAT THE GIFTS ARE PROVED NON- GENUINE BUT THE INCOME GENERATED AT THE HAND OF THE FIRM ON USING THIS FUND IS DULY DISCLOSED FOR TAX PURPOSE, EVEN TEN THIS ALLEGED GIFT WILL BE TREATED AS INCOME AT THE HAND OF THE RECIPIENT- INDIVIDUAL. ON THE SAME ANALOGY, THE SAME IS TRUE CONVERSELY. THAT IS TO SAY, DETERMINATION OF UNDISCLOSED INCOME AT THE HAND OF THE FIRMS IS ONE THING AND GENUINENESS OR OTHERWISE OF THE ALLEGED G IFS RECEIVED BY ITS PARTNERS IS TOTALLY DIFFERENT ONE. ONE HAS GOT NO R ELATIONSHIP WHATSOEVER WITH THE OTHER ONE. 10.1 THE AO VIDE PARA 8 WHICH HAS BEEN REPRODUCED HEREINABOVE HAS MENTIONED THAT THE DEPARTMENT IS IN APPEAL AG AINST THE FIRST ORDER OF THE ITAT FOR WHICH QUESTION OF LAW HAS BEEN FRA MED AND REPRODUCED IN THE ASSESSMENT ORDER, IS REPRODUCED HEREINABOVE. 10.2 IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND IN VIEW OF OUR ORDER OF ITAT, AMRITSAR BENCH, IN BOTH THE ASSESSES I.E. SH. VIJAY PARKASH MAHESHWARI IN ITA NO.38/ASR/1997 DAT ED 04.12.2000 AND IN THE CASE OF RAVINDER KUMAR MAHESHWARI, WHIC H IS ALSO DATED 04.12.2000 IN ITA NO.36/ASR/1997, WE ARE OF THE VI EW THAT SINCE THE ISSUES RAISED BEFORE THE ITAT IN THE FIRST ROUND A RE ALSO THE ISSUES BEFORE US IN THE THIRD ROUND AND MATTER HAS ALREAD Y BEEN DECIDED BY THE ITAT VIDE ITS ORDER DATED 04.12.2000 IN THE CA SE OF SH. VIJAY PARKASH MAHESHWARI AND SH. RAVINDER KUMAR MAHESHWA RI, WHICH RELEVANT PARAS HAVE BEEN REPRODUCED HEREINABOVE, W HERE THE GIFTS RECEIVED BY BOTH THE ASSESSES HAVE BEEN TREATED AS GENUINE. THE RELEVANT DIRECTIONS OF THE ITAT IN THE SECOND ROUN D VIDE ORDER DATED 16.03.2009 HAVE BEEN COMPLIED WITH BY THE PRESENT AO VIDE ORDER 6 DATED 31.12.2009 (VIDE PARA 21.1 & 21.2 REPRODUCED HEREINABOVE). THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, ALL THE ISSUES HAVE ALREADY BEEN DECIDED BY THE ITAT IN THE FIRST ROUND WHERE ALL THE GROUNDS OF THE ASSESSEE RAISED IN THE FIRST ROUND IN ORDER DATED 04.12.2000 AND ALSO BEFORE US DECIDED IN FAVOUR OF THE ASSESSEE WHICH ARE SUBJECT MATTER BEFORE THE HONBLE PUNJAB & HAR YANA HIGH COURT EXCEPT THE OPPORTUNITY WHICH WAS TO BE GIVEN TO TH E ASSESSEE HAD BEEN GIVEN IN THE FIRST ROUND AND IN THE PRESENT ROUND. THE NECESSARY DIRECTIONS HAVE BEEN COMPLIED WITH BY THE AO IN B OTH THE ROUNDS. THEREFORE WE DO NOT COMMENT UPON OUR APPEAL ORDER DATED 04.12.2000 AND DATED 16.03.2009 EXCEPT THE OPPORTU NITIES TO BE GIVEN BY THE AO HAVE BEEN COMPLIED WITH BY THE AO AND AC CORDINGLY ALL THE GROUNDS RAISED BEFORE US WHICH HAVE ALREADY BEEN ALLOWED BY THE ITAT IN THE RESPECTIVE ORDERS MENTIONED HEREINABOV E ARE ALLOWED, AS IT IS AND OUR ORDER DATED 04.12.2000 IS APPLICABLE IN THE PRESENT CASE EXCEPT THE DIRECTIONS WHICH HAVE BEEN GIVEN BY THE ITAT IN BOTH THE ORDERS HAVE BEEN COMPLIED WITH BY THE AO IN BOTH R OUNDS , AS MENTIONED HEREINABOVE AND WE CANNOT COMMENT OR AME ND OUR ORDER IN VIEW OF THE MATTER IS SUB-JUDICE BEFORE THE HO NBLE PUNJAB & HARYANA HIGH COURT, AS MENTIONED BY THE AO IN THE PRESENT ROUND VIDE PARA 8 OF HIS ORDER MENTIONED HEREINABOVE. TH US, THE GROUNDS NO. 3 TO 10 IN ITA NOS.1 & 2(ASR)/2010 IN BOTH THE ASSESSEES ARE ALLOWED. 12. AS REGARDS GROUNDS NO. 1 & 2 WITH REGARD TO DE MAND NOTICE , THESE GROUNDS WERE NOT BEFORE THE ITAT IN THE FIRS T AND SECOND NOR WERE DIRECTED BY ITAT IN BOTH THE ROUNDS TO BE DE CIDED BY THE AO. ALSO THESE GROUNDS HAVE NOT BEEN PRAYED TO BE ADMI TTED AS ADDITIONAL GROUNDS BEFORE US. THEREFORE, WE ARE NOT ADMITTING THESE GROUNDS AND ACCORDINGLY NO DECISION IS BEING MADE. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE ES IN ITA NO. 01 (ASR)/2010 & ITA NO.02(ASR)/2010 ARE ALLOWED. 3.1. THUS, FOLLOWING OUR EARLIER ORDER IN THE CASE OF SH. RAVINDER KUMAR MAHESHWARI & SH. VIJAY PARKASH MAHESHWARI, IN IT(SS )A.NO.01(ASR)/2010 & IT(SS)A.NO.2(ASR)/2010 , DATED 29.11.2012 WHERE IDENTICAL ISSUE HAS BEEN DECIDED VIDE PARA 10 TO 13 AS REPRODUCED HEREI NABOVE, SHALL BE 7 APPLICABLE IN THE PRESENT APPEAL BEING ON IDENTICAL FACTS AND ACCORDINGLY, WE ALLOW ALL THE GROUNDS OF APPEAL IN THE PRESENT CASE RAISED BY THE ASSESSE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT (SS)A.NO.03(ASR)2010 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH MARCH, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19TH MARCH, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. SUBHASH CHANDER MAHESHWARI, HOSHIA RPUR. 2. THE ACIT, CC-1, JALANDHAR. 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.