BRIHPAL SINGH TOMAR,NEW DELHI vs. ITO, WAQRD-64(1), NEW DELHI

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ITA 2539/DEL/2019Status: DisposedITAT Delhi26 April 2019AY 2013-148 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reopening of assessment was bad in law as the AO had not independently applied his mind and relied solely on information from the Investigation Wing. The AO should have first sought clarification from the assessee using Section 133(6) before resorting to reopening.

What were the facts?

The Assessing Officer (AO) reopened the assessment based on information from the Investigation Wing regarding a cash donation of Rs. 18 lakhs paid by the assessee to a medical college for his daughter's admission. The AO issued a notice under Section 148 to reopen the assessment.

What were the issues?

Whether the reopening of assessment under Section 147 based on information from the Investigation Wing without independent application of mind by the AO is valid.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 133(6)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI ‘SMC’ BENCH,

Before: SHRI N.K. BILLAIYA

For Appellant: Shri Suresh K. Gupta, FCA
Hearing: 25.04.2019Pronounced: 26.04.2019

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:

1.

This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] – 32, New Delhi dated 05.03.2019 pertaining to A.Y 2013-14.

2.

Vide Ground Nos. 1 to 4, the assessee has challenged the validity of notice u/s 148 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'], thereby questioning the jurisdiction of the assessment order framed u/s 147 of the Act and vide Ground Nos. 5 and 6, the assessee has challenged the additions on merits.

3.

Representatives of both the sides were heard at length and case records carefully perused.

4.

Briefly stated, the facts of the case are that the assessee filed return of income showing total income of Rs. 4.96 lakhs on 18.07.2013. Return was processed u/s 143(1) of the Act. On the basis of information received from the Investigation Wing of the department, the Assessing Officer came to know that the assessee has paid capitation fee/donation of Rs. 18 lakhs over and above the regular fees in cash to Santosh Medical College, Ghaziabad for his daughter Priyanka Tomar. On the basis of this information, notice u/s 148 was issued and reasons recorded for reopening assessment read as under:

“In this connection, please refer to the letter dated 30.11.2015 filed by your Authorized Representative, Shri Suresh K Gupta in this office on 01/12/2015. In this regard, it is stated that the reason recorded for issuance of notice u/s 148 is as under:-

“ A letter was received from DDIT(Inv.), Unit-V(l), New Delhi dated 11.03.2015 informing that a search & Seizure action u/s 132 of the I.T. Act, 1961 was carried out on 27.06.2013 in Santosh Group of Institutions and Dr. P. Mahalingam. During the search certain documents/ books of accounts were seized from the premises H-l to H-6, Santosh Nagar, Pratap Vihar, Ghaziabad, the main administrative block of the college which reveals receipts of donation/capitation fee over and above the regular course fee, paid in cash by the parents of the students taking admission in various medical courses. Vide above mentioned letter, it was further informed that the following person, the jurisdiction over which lies with the office has given donation in cash [which is likely to be unaccounted and disclosed] as per the details below s. No. Name of Father’s Name Date of Total the And Address payment donation/ C1T Course candidal of Capitation e Capitation fee paid in pursue Charge / donation cash amount 1. Dr. Shri Brijpal Singh 08.06.2012 18,00,000/ 19 MBBS Tomar, C- 11/178, Priyanka Near DDA Tomar - Nursery, Yamuna Vihar, Delhi-53.

5.

In my considered view, instead of issuing notice u/s 148 of the Act and reopening assessment, the Assessing Officer could have issued notice u/s 133(6) of the Act and asked the assessee to furnish the details of cash paid, if any, as capitation fee to Santosh Medical College. Moreover, a perusal of the reasons extracted hereinabove clearly show that the Assessing Officer has not independently applied his mind and has simply extracted the information received from the DDIT, INV Unit VI, New Delhi dated 11.02.2015. In fact, the Assessing Officer himself has observed that the donation in cash is likely to be unaccounted and disclosed.

6.

In my considered view, reopening cannot be done on suspicion unless the Assessing Officer has reason to believe that income has escaped assessment. As mentioned elsewhere, the assessee has returned income of Rs. 4.76 lakhs and the Assessing Officer could have easily asked the assessee regarding the source of capitation fee paid, if any, by issue of notice u/s 133(6) of the Act. However, the Assessing Officer chose to reopen the assessment, which, in my considered opinion, is bad in law.

7.

The Hon'ble Delhi High Court in the case of Shamshad Khan in 395 ITR 265, while allowing the writ petition of the assessee, observed that the initiation of case for reopening of the assessment was erroneous and without application of mind especially since the Assessing Officer had not examined the return filed, which if he had, would have revealed that the assessee had filed regular returns, had sufficient opening balance in his account and withdrawals therefrom, substantiated the donation made.

8.

The co-ordinate bench in the case of SBS Realtors Pvt. Ltd in had the occasion to consider a case where assessment was reopened on the basis of information from INV Wing and the co-ordinate bench observed that the Assessing Officer has reopened the case u/s 147 of the Act for the purpose of verification of genuineness, identification and creditworthiness of the transactions mentioned in the information supplied by the DIT(INV) and this is what the Assessing Officer has concluded at the end of the reasons recorded for issue of notice u/s 148 of the Act was invalid for two reasons – (i) Notice is issued for the purpose of verification of genuineness, identification and creditworthiness of the transactions which is not permissible and (ii) the Assessing Officer has recorded his satisfaction on the basis of mere report from the INV Wing. There is no crucial link between the information made available to the Assessing Officer and formation of belief of escapement of income.

9.

Considering the facts of the case in hand in light of the judicial decisions discussed hereinabove for reopening the assessment mentioned elsewhere, I am of the considered view that the assumption of jurisdiction by issue of notice u/s 148 of the Act is bad in law and assessment so framed deserves to be quashed. Accordingly, I set aside the assessment order and allow Ground Nos. 1 to 4 of the appeal.

10.

Since I have quashed the assessment order, I do not find it necessary to dwell into the merits of the case.

11.

In the result, the appeal filed by the assessee in is allowed.

The order is pronounced in the open court on 26.04.2019.

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