Keshav Chander & Sons V. I.T.O.

ITA/618/2010

AI Insights

The case involves Keshav Chander & Sons, who appealed against the order of the Income Tax Appellate Tribunal concerning the reassessment of their income for the year 1994-95. The reassessment was initiated following a notice under Section 148 of the Income Tax Act, 1961, alleging that income had escaped assessment due to investments in gold ginnies. The Tribunal had previously remanded the matter to the Assessing Officer, who added the income to the assessee's declared income. The High Court's decision focused on whether the reassessment was legally sustainable and whether the Tribunal had erred in its decision to remand the case rather than annulling the assessment.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 796476 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 13-12-2010
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: T S DHINDSA
• Keywords: Escapement of income; Jurisdiction; Reassessment; Gold ginnies
• Section: 147; 148; 143; 260-A

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.618 of 2010 & other connected cases being ITA Nos.584, 603, 605, 606, & 619 of 2010 Date of decision: 13.12.2010 Keshav Chander & sons. -----Appellants. Vs. I.T.O. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. T.S. Dhindsa, Advocate for the appellant. --- ADARSH KUMAR GOEL, J. 1. This order will dispose of I.T.A. Nos. 584, 603, 605, 606, 618 and 619 of 2010, as all the six appeals arise from common order of the Tribunal. 2. I.T.A. No.618 of 2010 has been preferred by the assessee under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh dated 31.3.2009 in C.O. No.12/CHANDI/ 2002 in I.T.A. No.303/CHANDI/2002 for the assessment year 1994-95 proposing to raise following substantial questions of law:- “a. Whether the impugned order dated 31.3.2009 is legally sustainable as the same has upheld the wrong assumption of jurisdiction at the hands of the Assessing Authority u/s 147/148 of the Act? I.T.A. No.618 of 2010 b. Whether the Tribunal has misdirected itself in law as well as on facts in remanding the case to the Assessing Officer instead of annulling the assessment? c. Whether on account of the peculiar facts of the case the Tribunal order is vitiated by reason of not having taken into consideration the order passed in the case of Smt. Anju Jain one of the co-sharers along with the appellant whose assessment so framed on the basis of 1600 gold ginnies u/s 143 of the Act had attained finality? d. Whether in the facts and circumstances of the case the Tribunal was legally correct in holding the proceedings u/s 147 of the Act to have been rightly and validly initiated?” 2. Assessment of income of the assessee for the assessment year 1994-95 was finalised, after which notice under Section 148 of the Act was served, alleging escapement of income on account of investment in gold ginnies. After consideration of the matter, addition to the declared income was made. The CIT(A) in the first round, remanded the matter but in the second round, upheld the addition. On further appeal of the assessee to the Tribunal, the matter has been remanded to the Assessing Officer on the ground that the assessee was not given due opportunity. 3. We have heard learned counsel for the appellant. 4. Contention raised on behalf of the assessee is that the reassessment itself was without jurisdiction being based on 2 I.T.A. No.618 of 2010 alleged memorandum dated 13.11.1993 which was never signed by the assessee. 5. We are unable to accept the submission. The Tribunal considered this aspect and held as under:- “12. A perusal of the above reveals that the Assessing Officer noted that the assessee had purchased rights in the litigation in RSA No.1882 of 1985 from Shri Kuldip Singh Sidhy/Shamesher Singh Saroj. The assessee had shown 88 gold ginnies received on the distribution of the movable properties from the above litigation rights. The claim was that in all 1600 gold ginnies were found from the box containing the movable properties in the above case and the share of the assessee was declared at 88 ginnies. The Assessing Officer found that Shri Sat Pal Grover, who was another co-purchaser of the litigation rights claimed that only 16 gold ginnies were found from the above box and in support of the same a Distribution Memo dated 13.11.1993 was produced by him. On account of this information and material the Assessing Officer observed that the assessee did not furnish the correct particulars of his income as the number of gold ginnies declared was overstated. The Assessing Officer formed a belief that the value of the overstated gold ginnies had escaped assessment, as according to him, such overstated gold ginnies appear to have been introduced by the assessee in the garb of the above case property. It is evident that the Assessing Officer had justifiable cause to suppose that certain income had escaped income. The information and material in the form of Distribution Memo dated 13.11.1993 obtained form Shri Sat Pal 3 I.T.A. No.618 of 2010 Grover reflected a prima-facie evidence that the gold ginnies declared by the assessee were not correct. Therefore, the formation of belief regarding escapement of income, in this case, cannot be labeled as bereft of any reason or ground. The plea of the assessee that there are no reasons to form a belief for escapement of income from assessment, is untenable. The other argument of the assessee that the material sought to be relied upon to form a belief of escapement of income from assessment is not established to the credible, in our view, also does not impinge on the action of the Assessing Officer in invoking section 147 of the Act. The ultimate establishment of the fact of escapement of income is not required to be made at the time of formation of belief to initiate proceedings under section147 of the Act. As explained by the Hon’ble Supreme Court in the cases of Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra) and Raymond Woollen Mills Ltd. (supra), the final outcome of the proceedings is not relevant. At the initiation stage, what is required is only a prima- facie justification about escapement of income from assessment but not an established fact of escapement of income. The crucial aspect to be considered at the stage of initiation of notice under section 147/148 is as to whether there was relevant material on which a reasonable person could have formed the requisite belief. In other words, whether the material sought to be relief upon by the Assessing Officer at the stage of initiation would conclusively prove the escapement is not the concern at that stage. Considered in this light we find no justification to uphold the plea of the assessee on this aspect. 4 I.T.A. No.618 of 2010 The material available with the Assessing Officer at the stage of initiation was relevant, it came from the relevant person and was sufficient prima-facie evidence enabling the Assessing Officer to entertain a belief about escapement of income form assessment in the hands of the assessee on account of variation in the number of gold ginnies declared in the return of income vis-à-vis the number of ginnies claimed to be received by Shri Sat Pal Grover. We therefore hold that having regard to the facts and material on record, the ingredients of section 147 are fulfilled in this case and the Assessing Officer was justified in initiating proceedings under section 147 of the Act by issuance of notice under section 148 of the Act dated 20.04.1998.” 6. View taken by the Tribunal after due appreciation of material on record that there was valid formation of opinion for reassessment, is not shown in any manner to be perverse. As held by the Tribunal, the Assessing Officer had material to justify formation of opinion for reassessment. The statement of the assessee in the return that he received 88 ginnies and all others received equal amount of ginnies was found to be erroneous calling for reassessment. This being the factual position, no substantial question of law arises. 7. The appeals are dismissed. 8. A photocopy of this order be placed on the file of each connected case. (ADARSH KUMAR GOEL) 5 I.T.A. No.618 of 2010 JUDGE December 13, 2010 (AJAY KUMAR MITTAL) ashwani JUDGE 6 "