RAJ SONS,HISAR V. DCIT, HISAR CIRCLE, HISAR

ITA 1212/DEL/2022

AI Insights

The case involves M/s Raj Sons, who appealed against the order of the Commissioner of Income Tax (Appeals), Hisar, which upheld the additions made by the Deputy Commissioner of Income Tax, Hisar. The additions were based on alleged unaccounted receipts from a banquet hall/marriage palace, which the assessee contested as being unsupported by credible evidence. The Tribunal examined the legality of the reopening of the assessment under section 147 of the Income Tax Act, 1961, and the validity of the additions made. The Tribunal concluded that the reopening was not based on tangible material and the additions were made without proper verification, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 22873 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Other Referred Cases: M/s Supreme Polypropolene P. Ltd vs. ITO ITA No.4622/D/2009, CIT vs. Pradeep Kumar Gupta 303 ITR95(Del), CIT vs. Sarab Cosulate Marine Products (P) Ltd. 294/ITR 444(Del), SABH Infrastructure Ltd. vs ACIT 398 ITR 198 (Del), Tata Capital Financial Services Ltd. vs ACIT 443 ITR 127 (Bom), Andaman Timber Industries Vs CCE 62 taxmann.com 3(S.C), CIT vs. Oden Builders (P) Ltd. 418 ITR 315, Income Tax officer V. Lakhmani Mewal Das [1976] 103 ITR 437 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Keywords: Reassessment proceedings; Reason to believe; Tangible material
• Section: 148; 143(3); 143(2); 143(1)

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN: ACCOUNTANT MEMBER AND SHRI SUDHIR KUMAR: JUDICIAL MEMBER ITA No.1212/Del/2022 Assessment Year: 2012-13 M/s Raj Sons Delhi Road Near Jindal Club, Hisar PAN No.AAHFR2688C Vs Deputy Commissioner Of Income Tax, Hisar Circle, Hisar (APPELLANT) (RESPONDENT) Appellants by Sh. Pulkit Saini Advocate Sh. Parth Singhal Advocate Respondent by Ms. Harpreet Kaur Hansra Sr. DR Date of hearing: 20/11/2024 Date of Pronouncement: 03/01/2024 ORDER PER SUDHIR KUMAR: JUDICIAL MEMBER: The above captioned appeal by the assessee is directed against the order of the NFAC/Commissioner of Income Tax (Appeals), Hisar [hereinafter referred to as “CIT(A)”], vide order dated 31.03.20223 pertaining to A.Y.2012-13 arises out of the order passed by the Assessing 2 Officer dated 13.12.2019 u/s 143(3) r.w.s 147 of the Income Tax Act,1961[hereinafter referred as ‘the Act’] 2. The assessee has raised the following grounds of appeal: 1. That the learned Commissioner of income Tax (Appeals), National faceless Appeal Centre (NFAC) has grossly erred both in law and, on facts in upholding the determination of income made by the learned deputy Commissioner of Income Tax, Hisar Circle, Hisar of the appellant at Rs 7897530/- as against declared income of Rs7530/- in an order of assessment dated 31-03-2022u/s 147/143(3) of the Act. 2.That the learned Commissioner of income Tax (Appeals), -3 Gurgaon has further erred both in law and on facts in upholding the initiation of proceedings under section 147 of the Act and, completion of assessment under section 147/143(3) of the Act without appreciating that the same were without jurisdiction and hence deserved to be quashed as such. 2.1. That in the absence of any valid approval obtained under section 151 of the Act initiation of proceedings u/s 147 of the Act and assessment framed u/s 147/143(3) of the Act are invalid and deserved to be quashed. 3. That the learned Commissioner of income Tax (Appeals), has further erred both in law and on facts and in law in confirming an addition of Rs 7890000/- representing the alleged unaccounted receipts from the banquet hall/marriage palace, based on loose sheets of paper, which have no evidentiary value. 3.1. That the learned Commissioner of income Tax (Appeals), has failed to appreciate that loose sheets were neither confronted to the appellant and nor cross examination was allowed of the 3 complainant addition upheld in disregard of the evidence placed on record is illegal, invalid and untenable. 3.2. That the learned Commissioner of income Tax (Appeals),- has failed to appreciate that loose sheets obtained by the revenue were part of several false, frivolous and vexatious complaints filed by a person to various departments only to harass the partners and firm and therefore could not be validly relied upon in absence of corroborative evidence to sustain the instant addition. That the learned Commissioner of income Tax (Appeals), has further erred both on fact and in law in upholding the instant addition without appreciating that the learned Assessing Officer had made the addition mechanically and without conducting any independent enquiry is otherwise untenable and unsustainable. 3. Ld A.R. of the assessee has moved an application to raise the additional ground regarding the DIN. Ld. D.R. has filed the document in which the DIN was generated by the department. Ld. Counsel of the assessee is not pressing the application raising the ground of the DIN, hence the application is rejected. 4. The brief facts of the case are that the assessee has filed its return of income declaring total income at Rs 7530/- on 04-08-2012. The same was processed. The case was reopened for the reason that the assessee received rental/booking banquet charges of Rs 1,02,21,600/-. The assessee has shown the gross receipt at Rs 8,84,500/-only. The ld. AO 4 has initiated assessment proceedings u/s 147 based on some information from undisclosed sources/unknown persons. Accordingly, notice u/s 148 of the Act was issued. Subsequently, notices u/s 143(2) and 142(2) of the Act were issued. After considering the reply filed by the assessee the Assessing officer has made the addition of Rs 78,90,000/- to the taxable income of the assessee. 5. Aggrieved the order of the ld. Assessing officer the assessee has filed the appeal before the Ld. CIT(A), who vide his order dated 31-03- 2022 dismissed the appeal against which the assessee is in appeal before the Tribunal. 6. Ld. Counsel for the assessee has submitted that ld. Assessing officer has not disclosed what was the information based on which the assessment proceedings are being initiated. He has further submitted that notice u/s 148 of the Act was illegal. For reopening the case the A.O. must be satisfied and should have reason to believe that some income has escaped income. In this case the ld. A.O. has issued the notice on the basis of the available information and no satisfaction of escapement of income was recorded. The ld.AO has initiated the proceedings with pre 5 conceived mind. He has also submitted that the reasons to believe must be based on some tangible materials. The assessing officer has made the addition on the basis of surmises and conjecture. Ld. counsel has submitted that the copy of the documents on which the ld A.O has relied have not been provided to the assessee. Reliance placed on the following decisions: i. M/s Supreme Polypropolene P. Ltd vs. ITO ITA No.4622/D/2009; ii. CIT vs. Pradeep Kumar Gupta 303 ITR95(Del); iii. CIT vs. Sarab Cosulate Marine Products (P) Ltd. 294/ITR 444(Del); iv. SABH Infrastructure Ltd. vs ACIT 398 ITR 198 (Del) Vs. Tata Capital Financial Services Ltd. vs ACIT 443 ITR 127 (Bom) vi. Andaman Timber Industries Vs CCE 62 taxmann.com 3(S.C) CIT vs. Oden Builders (P) Ltd. 418 ITR 315 vii. Income Tax officer V. Lakhmani Mewal Das [1976] 103 ITR 437 (SC). 7. On the other hand, ld Sr D.R supported the order of the below authorities. 8. We have heard the parties and perused the materials available on record. 6 Ground Nos.1 & 2: 9. In the instant case, original assessment was processed u/s 143(1) of the Act. The Assessing officer reopened the case by showing the reason that “The assessee has received rental/ booking charges of Rs.1,0221600/- for the period from 01-01- 2011 to 31-03-2012 from persons/parties from various persons/parties. But as per ITR gross receipts has been shown at Rs.8,84.500/-only. The receipts/booking charges are disproportionate with the income/gross receipts shown in the ITR”. 10. Ld counsel has submitted that no enquiry was conducted by the ld. A. O. to form opinion that income has escaped income. Perusal of the order of the Ld CIT(A) reveals that ld AO has conducted the enquiry and the statement of the assessee was recorded. The A.O. has the information on which he has made the opinion of the escaped income. Ld CIT(A) has relied the decision of Raymond Woollen Mills Ltd. Vs Income tax officer and Ors (1999) 236 CTR SC 34, in this case the Hon’ble Supreme Court held as under: 7 “We have only to seen whether there was prima facia some material on the basis of which the Department could reopen the case. The Sufficiency or correctness of the material is not a thing to be considered at this stage. We are the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new fact opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The applicant will be entitled to take all the points before assessing authority.” 11. In the instant case the Assessing officer had some material to investigate the matter. This material was received through a complaint as the assessee himself accepted this fact. To verify the information the Assessing Officer reopened the case. l.d. A.O has the reason to believe that some income has escaped income on which basis he reopened the assessment. Thus, the reopening proceedings cannot be treated as invalid. The grounds raised by the assessee are decided against the assessee. Ground No 3 & 4: 12. On the issue of reopening, we decided the issue against the assessee. However, when the assessment is reopened Assessing Officer proceeded with the assessment without sharing the basis of the information available with him to reopen the 8 assessment. Only during reassessment proceedings, while recording the statement from the assessee, the relevant information was shared with the assessee which clearly shows that the photocopy of booking register submitted by the complainant, it is not tallied with the actual register maintained by the Manager of the firm except having few bookings of similar nature with mobile numbers. Before satisfying the reasons for reopening, it is the duty of the Assessing Officer to first verify the genuineness of the photocopy of the booking register submitted by the complainant. We are aware that booking registers are recorded and maintained based on the availability of the hall for booking. If the assessee takes the bookings, it will be registered date-wise, name of the clients and on the basis of amount received/receipt basis. When duplicate register is produced before the Assessing Officer the order of booking and the amount has to tally except alleged amount to vary. In the given case from the information available on record, first the writing of the register is different and the order 9 of registration is different except having few common bookings. Therefore, the sanctity of the copy of the register submitted before the Assessing Officer is not correct and genuine. Merely relying on such documents, the Assessing Officer could not initiate the proceedings for making rowing enquiry. 13. Ld. A.R. has submitted that the A.O. has not provided the copy of the statement recorded to the assessee and the other material until the completion of assessment proceedings. In the present case the Ld. Assessing Officer relied on the loose sheets and documents were not provided to the assessee firm. The l.d. Assessing Officer has relied the fabricated papers which was not in the hand writing of the manager of the banquet hall. Complainant Sh. Dharmender Goyal was not the employee of the assessee but supervised the work in the absence of the assessee partner. The assessee has provided the details of the booking register, books of accounts, receipt vouchers bank statement, etc. which duly reconciles with the gross receipts offered for tax. The ld. Assessing officer should have made the 10 enquiry on those parties who have booked the marriage hall for the marriage purpose, but has not been done. 14. Further, we observed that the Assessing Officer merely recorded passing reference to the investments and expenditures incurred by one of the partners which does not have any bearing on the assessment of the partnership firm. Therefore, those passing comments are uncalled for. While considering the above information, we are inclined to decide the issue in favour of the assessee and the Assessing Officer has made the addition on the basis of presumption, surmises and conjectures. The addition made by the Assessing Officer and confirmed by ld. CIT (A) is liable to be deleted. Accordingly, grounds no.3 & 4 raised by the assessee are allowed. 15. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 03.01.2025. Sd/- Sd/- (S. RIFAUR RAHMAN) (SUDHIR KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER *Mohan Lal* Date: 03.01.2025 11 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(Appeals) ` 5.DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "