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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. N. S. Saini
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’, NEW DELHI Before Sh. N. S. Saini, Accountant Member ITA No. 6488/Del/2018 : Asstt. Year : 2003-04 Amit Pachauri, Vs Income Tax Officer, S/o Nand Kumar, Kothiyat, Ward-1, Court Road, Near Church, Bulandshahr, Bulandshahr, Uttar Pradesh (APPELLANT) (RESPONDENT) PAN No. AJZPP8114A Assessee by : Sh. Anoop Sharma, Adv. & Sh. Sanjay Prashar, Adv. Revenue by : Sh. S. L. Anuragi, Sr. DR Date of Hearing: 05.02.2019 Date of Pronouncement: 07.02.2019 ORDER This is an appeal filed by the assessee against the order of CIT(A), Ghaziabad dated 31.08.2018.
Ground No. 1 of the appeal of the assessee reads as under: “1. That the Ld. CIT(A), erred both on facts and in law in holding that the case of the Apex Court in GKN Drive Shaft India Ltd. did not apply to the facts in the present case thereby over-looking the crucial aspect that the assessee had, in fact, moved two applications dated 13.01.2010 and 30.06.2010 for conveying reasons, so much so, impugned notice u/s 148 of I.T. Act dated 03.12.2009 in blanket format also lacked vital information of income alleged to have been escaped assessment.” 3. The AR of the assessee submitted that this is the third round of appeal before the Tribunal. He submitted that in the first round of appeal, the Tribunal in ITA No. 6491/Del/2014, order dated 08.09.2015 restored the matter back to the file of
ITA No. 6488/Del/2018 2 Amit Pachauri the CIT(A) observing that the CIT(A) has not adjudicated all the issues raised before him and therefore, directed the CIT(A) to pass de-novo order in accordance with law on merits after allowing reasonable opportunity of hearing to both the parties.
In the second round of appeal, the Tribunal restored the matter back to the file of the CIT(A) in ITA No. 3273/Del/2017, order dated 01.03.2018 observing that the CIT(A) simply stated that ratio of Hon’ble Supreme court in the case of GKN Drive Shaft India Ltd. Vs ITO was not application to the facts of the assessee’s case without pointing out how the decision was not applicable to the assessee.
The AR of the assessee submitted that the CIT(A) both in the first round and in the second round has not followed the direction issued by the Tribunal and dismissed the appeal of the assessee.
He submitted that the Tribunal should decide the appeal of the assessee on the facts of its case and not restore it back to the file of the CIT(A) who has passed orders on two occasions in utter disregard of the order of the Tribunal.
The AR of the assessee filed copy of reasons recorded by the Assessing Officer for reopening the assessment of assessment year 2003- 04. He submitted that the reopening in the case of the assessee was done for the reason that Addl. CIT, Range Bulandshahr vide letter dated 05.12.2006 had written to the CIT, Meerut that Sh. Deepak Kumar Chhangia had advanced loan to the assessee Sh. Amit Pachauri of Rs.2,01,000/- on 02.01.2003 by way of draft of State Bank of Bikaner & Jaipur which has been credited in the bank account of the assessee in
ITA No. 6488/Del/2018 3 Amit Pachauri State Bank of Patiala. In order to verify the creditworthiness and genuineness of depositor, the assessee was required to produce Sh. Deepak Kumar Chhangia along with his original bank pass book of A/c no. 1090007053 with State Bank of Patiala, Dariya Ganj, Delhi on 17.10.2008. The assessee did not comply on the ground that Sh. Deepak Kumar Chhangia was sick and therefore, could not be produced. The Assessing Officer vide letters written on 06.11.2008, 13.02.2009, 04.09.2009 and 24.09.2009 required the assessee to produce Sh. Deepak Kumar Chhangia alongwith the Doctor’s certificate. Since the assessee did not produce Sh. Deepak Kumar Chhangia, the Assessing Officer was of the opinion that the loan shown by the assessee was accommodation and fake entry. Hence, he had reason to believe that sum of Rs.2,01,000/- is unexplained income escaped from assessment for financial year 2002-03 relating to assessment year 2003-04 within the meaning of explanation 2(b) of Section 147 of the Income Tax Act, 1961. Hence, notice u/s 148 of the Act was issued to the assessee. He submitted that from the above recordings of the Assessing Officer, it is clear that the Assessing Officer had no credible information that income chargeable to tax has escaped assessment rather the reason shows that the Assessing Officer wanted to enquire about the genuineness of loan of Rs.2,01,000/- taken by the assessee from Sh. Deepak Kumar Chhangia. Therefore, the reopening of assessment on account of the above recorded reason was bad in law and hence the reassessment order passed in pursuance to the above recorded reasons was also bad in law and is liable to be cancelled.
On the other hand, the ld. Departmental Representative argued and submitted that in the earlier two rounds of proceedings before the Tribunal, the assessee was claiming that the decision of Hon’ble Supreme Court GKN Drive Shaft India Ltd. (supra) was not followed and therefore, the Tribunal restored the matter back to the file of
ITA No. 6488/Del/2018 4 Amit Pachauri the CIT(A) for fresh adjudication in light of the decision of the Hon’ble Supreme Court. Now before Tribunal, the assessee is claiming that the reasons recorded by the AO are not valid reasons for reopening the assessment in the case of the assessee. This is a new ground of appeal raised by the assessee for the first time which should not be entertained.
In the rejoinder to the submission of the ld. DR, it was the submission of the AR of the assessee that challenging the reopening of assessment is a legal ground and can be raised by the assessee for the first time before the Tribunal for this he relied on the decision of Hon’ble Supreme Court in the case of National Thermal Power Corporation Vs CIT 229 ITR 383.
I have heard the rival submissions and perused the orders of the lower authorities and material available on record. I find that on the previous occasion, the Tribunal restored the matter back to the file of the CIT(A) for adjudicating the appeal of the assessee in light of the decision of Hon’ble Supreme Court rendered in the case of GKN Drive Shaft India Ltd. Vs ITO 259 ITR 90.
The CIT(A) has adjudicated that issue by observing that no evidence was filed by the assessee to substantiate that assessee had sought reasons for issuing notices and ever objected to issuance of notice u/s 148 of the Act before the AO and hence, the ratio of GKN Drive Shaft India Ltd. (supra) was not applicable to the facts and circumstances of the assessee’s case and therefore, the grounds are not maintainable and accordingly dismissed.
ITA No. 6488/Del/2018 5 Amit Pachauri 12. The AR of the assessee has not filed any material to controvert the findings of the CIT(A) and hence, this ground of assessee is dismissed.
Further, from a reading of ground no. 1 of the appeal of the assessee, it is observed that the assessee has stated that impugned notice u/s 148 of the Act dated 03.12.2009 in blanket format lacked vital information of income alleged to have escaped assessment and therefore, the notice was bad in law. I find that it is a legal issue going to the root of the matter and therefore, can be taken by the assessee before the Tribunal for the first time as held by the Hon’ble Supreme Court in the case of National Thermal Power Corporation Vs CIT (supra). I, therefore, admit the same and proceed to decide the same as under.
I find that the reasons recorded for reopening of assessment by the AO on 03.12.2009 are as under: “The assessee has filed his return of income for A.Y. 2003-04 on 31-03-2004 declaring an income at Rs. 62020/-. The case was processed u/s 143(1) on 31- 03-2004. The information received from the Ld. CIT Meerut which was passed on by Ld. Addl. CIT Range, Bulandshahr vide his endorsement F. No. CIB/ Information /Addl. CIT-GZB/ 2006-07 /519 dated 05- 12-2006. After seeking permission from Ld. CIT Meerut vide his letter F. No.CIT-MRT/ STAT/ 78(III)/2004-05 dated 26-02-2007 an enquery u/s 133(6) of IT ACT, 1961 were conducted in this case. It is found that a loan was taken from Shri Deepak Kumar Chhangia on 02-01-2003 at Rs.2,01,000/- through a draft of State Bank of Bikaner & Jaipur and payment was received by Shri Amit Pachauri from State Bank of Patiala. To verify credit worthiness and. genuineness of depositor. The assessee was required to produce Shri Deepak Kumar Chhangia alongwith his
ITA No. 6488/Del/2018 6 Amit Pachauri original Bank pass book of bank A/c No. 1090007053 laying with State Bank of Patiala Dariya Ganj, Dehli. Vide this office letter F.No. assessee/ 133(6)/9/ITO/W-l/BSR/2008-09/2010 dated 17-10- 2008. Letter is placed on record. Further a letter was written to the assessee to produce Shri Deepak Kumar Chhangia alongwith Doctor’s certificate vide letter even No. dt. 06-11-08, 13-02-09 & 04-09-2009 and 24-09-2009. Neither the assessee produced Shri Deepak Kumar Chhangia Nor any Doctor’s certificate regarding any desease of the depositor Finished. It is clear that the assessee is not interesting to produce the depositor. This loan shown by the assessee is accommodation and fake entry. I have reasons to believe that a sum of Rs.201000/- is unexplained income escaped from assessment for the F.Y.2002-03 relevant to A.Y. 2003-04 within the meaning of explanation 2(b) of section 147 of IT.ACT, 1961. Notice u/s 148 of IT.ACT, 1961 for A.Y. 2003-04 is therefore, issued with the approval of the Ld. Addl. CIT Range, Bulandshahr vide his office letter F.No. Approval/148/Addl. CIT/BSR/2009-10/503 dated 02.12.2009 placed on file.” 15. A reading of the above recorded reasons shows that CIT, Meerut received information from Addl. CIT, Range Bulandshahr on 05.12.2006 that the assessee received loan of Rs.2,01,000/- on 02.01.2003 from Sh. Deepak Kumar Chhangia. Thereafter, the AO conducted inquiry u/s 133(6) of the Act and required the assessee to produce Sh. Deepak Kumar Chhangia along with his bank pass book of A/c no. 109007053 with State Bank of Patiala, Dariya Gang, Delhi. The assessee failed to do so and further notices were also issued to the assessee on 06.11.2008, 13.02.2009 & 04.09.2009 and 24.09.2009. Since, the assessee could not produce Sh. Deepak Kumar Chhangia, the Assessing Officer had reason to the believe that income chargeable to tax had escaped assessment for assessment year 2003-04 on account of accommodation and fake entry of Rs.2,01,000/- received from Sh. Deepak Kumar Chhangia.
ITA No. 6488/Del/2018 7 Amit Pachauri 16. In the above facts, I am of the considered opinion that when the Assessing Officer conducted inquiry u/s 133(6) of the Act no proceedings were pending before him and therefore, the inquiry conducted by the AO is not proper inquiry as per law and hence cannot be held to be a valid inquiry.
Further, it is observed that the Assessing Officer issued notice u/s 148 of the Act to make inquiry from the assessee regarding the genuineness of loan of Rs.2,01,000/- taken by the assessee from Sh. Deepak Kumar Chhangia. In my considered opinion for making such an inquiry recourse cannot be taken by the AO to reopening of the concluded assessment. For this I am supported by the decision of Hon’ble Karnataka High Court in the case of C. M. Mahadeva Vs CIT (2018) 404 ITR 747 where it was held that Sections 147 & 148 of the Income Tax Act, 1961 are not meant for reopening an already concluded assessment by first issuing notice and then proceeding to investigate to find out if there was any lacuna in the accounts. If such further investigation, by reopening concluded assessment, is permitted, it would give rise to fishing and roving enquiries, because, in every case, the Assessing Officer can then issue notice for the purpose of investigation, and thus, reopen any concluded assessment. Therefore, I hold that the reopening of assessment in the instant case by recording the above quoted reasons is bad in law and consequently the reassessment order passed in pursuance to the above recorded reasons is also bad in law and I therefore, cancel the reassessment order and allow the ground of appeal of the assessee.
As I have cancelled the reassessment order passed by the AO dated 23.11.2010 u/s 148/143(3) of the Income Tax Act, 1961, the other grounds of appeal taken by the assessee on the merits have become only academic in nature and are therefore dismissed.
ITA No. 6488/Del/2018 8 Amit Pachauri
In the result, the appeal of the assessee is allowed. (Order Pronounced in the Open Court on 07/02/2019).
Sd/- (N. S. Saini) Accountant Member Dated: 07/02/2019 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5.DR: ITAT ASSISTANT REGISTRAR