RAKESH JINDAL,PANCHKULA, HARYANA vs. DY. COMMISSIONER OF INCOME TAX CIR, PKL, PANCHKULA, HARYANA

The facts of the case are that the assessee filed his return of income for Assessment Year 2012-13 on 10.07.2012 declaring total

Apart from the aforesaid addition, the Assessing Officer also made certain other additions/disallowances, namely, disallowance of deduction under section 24(b) of Rs.87,185/-, disallowance of Rs.7,472/- out of telephone and vehicle expenses, disallowance under section 80C of Rs.1,00,000/-, disallowance of depreciation of Rs.79,164/- and addition of Rs.3,41,150/- in respect of sale of agricultural land. Consequently, the total income was assessed at Rs.26,56,040/-.

Aggrieved, the assessee preferred an appeal before the learned CIT(A). During the appellate proceedings, the assessee specifically contended that the very basis of the reassessment was factually incorrect. It was submitted that the alleged loan of Rs.15,00,000/- had not been received during Financial Year 2011- 12 relevant to Assessment Year 2012-13. Rather, the relevant entry

The learned CIT(A), after considering the material, ultimately set aside the assessment and restored the matter to the file of the Assessing Officer for fresh assessment after providing proper opportunity to the assessee.

The learned AR submitted that the entire reassessment proceedings proceeded on an erroneous factual premise. It was submitted that the Assessing Officer had proceeded on the basis that the assessee had taken an unsecured loan of Rs.15,00,000/- from M/s Balaji Towers during Financial Year 2011-12 relevant to Assessment Year 2012-13. The learned AR submitted that the aforesaid assumption of the Assessing Officer was contrary to the actual documentary evidence available on record. Referring to the Bank Pass Book and Bank Statement, the learned AR submitted that there was no receipt of Rs.15,00,000/- from M/s Balaji Towers during Financial Year 2011-12 relevant to Assessment Year 2012- 13. It was submitted that the only corresponding entry of Rs.15,00,000/- appeared in the bank account during Financial Year 2012-13 relevant to Assessment Year 2013-14. Thus, according to the learned AR, the transaction relied upon by the

The learned AR further submitted that the factual position was also brought to the notice of the Assessing Officer during the proceedings and that the relevant bank records were available with the Department. The assessee had specifically pointed out that the transaction related to the subsequent Assessment Year and not to Assessment Year 2012-13. It was accordingly contended that there was no tangible material demonstrating escapement of income in Assessment Year 2012-13 on the basis of the alleged loan transaction. Consequently, the addition of Rs.15,00,000/- made in the year under consideration was not sustainable.

The learned AR further submitted that once the very basis of the reassessment did not pertain to Assessment Year 2012-13, the consequential addition could not be sustained merely because the transaction might have relevance in the subsequent Assessment Year. Reliance was also placed upon the decision of the Hon'ble Delhi High Court in Ranbaxy Laboratories Ltd. v. CIT, 336 ITR 136. Accordingly, the learned AR prayed that the addition made for Assessment Year 2012-13 be deleted and the appeal of the assessee be allowed.

The learned DR relied upon the order of the Assessing Officer

During the course of hearing before the Tribunal, I directed the learned DR to obtain verification from the Assessing Officer as to whether the transaction of Rs.15,00,000/- forming the basis of the reassessment actually pertained to Financial Year 2011-12 relevant to Assessment Year 2012-13 or to the subsequent Financial Year. The learned Assessing Officer joined the proceedings through virtual mode and, upon verification of the relevant record, confirmed that the transaction of Rs.15,00,000/- did not pertain to Financial Year 2011-12 relevant to Assessment Year 2012-13 and that the relevant entry pertained to Financial Year 2012-13 relevant to Assessment Year 2013-14.

The learned DR, however, submitted that the assessee had not furnished any explanation regarding the transaction for Assessment Year 2013-14 and, therefore, appropriate directions may be issued for taking necessary action in respect of the subsequent Assessment Year.

The learned AR, however, specifically disputed the aforesaid factual premise and submitted that no such transaction had taken place during Financial Year 2011-12. It was submitted that the relevant transaction was recorded only during Financial Year 2012-13 relevant to Assessment Year 2013-14 and that the same was duly supported by the Bank Pass Book and Bank Statement.

Considering the importance of the aforesaid factual issue, on the last date of hearing, I directed the learned DR to request the learned Assessing Officer to verify from the record as to the actual year in which the transaction of Rs.15,00,000/- had taken place. The relevant bank statements were admittedly available on the record. Pursuant to the aforesaid direction, the learned Assessing

I have also examined the Bank Pass Book and Bank Statement available on record. The documentary evidence supports the factual position stated by the learned AR. The relevant entry of Rs.15,00,000/- is reflected in Financial Year 2012-13 relevant to Assessment Year 2013-14. There is no corresponding transaction of Rs.15,00,000/- during Financial Year 2011-12 relevant to Assessment Year 2012-13. Therefore, there is no dispute left regarding the basic factual position. The Assessing Officer proceeded on the premise that the assessee had received the amount during Financial Year 2011-12. However, the Bank Pass Book and Bank Statement demonstrate that the amount was actually recorded in the subsequent Financial Year, i.e. Financial Year 2012-13 relevant to Assessment Year 2013-14.

In my considered opinion, the aforesaid factual discrepancy is not a mere technical or procedural defect. It goes to the very root of the reassessment proceedings. For making an addition in

I, therefore, find considerable force in the submission of the learned AR that the very transaction which triggered the reassessment proceedings does not pertain to the year under consideration. Consequently, the addition of Rs.15,00,000/- made in Assessment Year 2012-13 cannot be sustained. The learned DR submitted that since the transaction pertains to Assessment Year 2013-14 and the assessee has allegedly not explained the same, the Assessing Officer may be directed to reopen the assessment for that year and make the necessary addition. I am unable to accept the aforesaid request of the learned DR. The appeal before me

At the same time, I make it clear that if the Revenue, on the basis of the material available on record and in accordance with law, finds that any income chargeable to tax has escaped assessment for Assessment Year 2013-14, it is open to the Revenue to take such action as may be permissible under the Act. No direction from this Tribunal is required for the Revenue to exercise a statutory power available to it under law. Further, an assessee exercising his statutory right of appeal cannot be placed in a worse position merely because the appellate proceedings have brought to light that the relevant transaction pertains to another Assessment Year. Therefore, I do not deem it appropriate to issue any direction to the Assessing Officer for reopening Assessment Year 2013-14.

In view of the above discussion, I hold that the basis of the addition made in the hands of the assessee for Assessment Year 2012-13 was factually incorrect. The alleged receipt of Rs.15,00,000/- from M/s Balaji Towers, which was stated by the Assessing Officer to have been received during Financial Year 2011-12, is not found in the records for that year. The corresponding entry appears only in Financial Year 2012-13

As regards the other additions/disallowances made by the Assessing Officer, the same were also part of the assessment framed under section 144 read with section 147. However, since the learned CIT(A) had already set aside the assessment in its entirety for fresh assessment and the principal factual foundation of the reassessment itself has been found to be incorrect, the consequential additions cannot be sustained in the present form. The assessment for the year under consideration is accordingly liable to be decided afresh in accordance with law, subject to the observations made hereinabove.

In view of the peculiar facts of the present case, and particularly the categorical verification made by the Assessing Officer before me, I hold that no addition can be made in Assessment Year 2012-13 on the basis of the transaction of Rs.15,00,000/- which actually pertains to Assessment Year 2013- 14. The Assessing Officer shall give effect to this order by deleting the addition of Rs.15,00,000/- made on the basis of the alleged unsecured loan from M/s Balaji Towers for Assessment Year 2012- 13. It is clarified that my observations regarding the transaction pertaining to Assessment Year 2013-14 are confined to the issue

In the result, the appeal of the assessee is allowed in the terms indicated above.