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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI Before Sh. N. K. Saini, AM and Smt. Beena A. Pillai, JM Asstt. Year : 2000-01 Mehar Chand Mittal & Sons HUF Vs Income Tax Officer, A-3/122, Paschim Vihar, Ward-25(4), New Delhi-110063 New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AAEHM6953Q Assessee by : Sh. S. C. Garg, CA Revenue by : Sh. Rajesh Kumar, Sr. DR Date of Hearing : 15.05.2017 Date of Pronouncement : 18.05.2017 ORDER Per N. K. Saini, AM:
This is an appeal by the assessee against the order dated 13.02.2012 of ld. CIT(A)-XVIII, New Delhi.
Following grounds have been raised in this appeal: “1. The Commissioner of Income Tax (A) erred in law and on facts in confirming that the Ld AO had assumed proper jurisdiction for framing the assessment pursuant to notice u/s 147/148 in the facts and circumstances of the case.
2. The Commissioner of Income Tax (A) erred in law and on facts in observing that the assessee had not filed any objections particularly when the paper book submitted with the CIT(A) contained objections filed by the assessee vide letter dated 23/29-11-2007 at page 12-13.
Mehar Chand Mittal & Sons 3. The Ld AO erred in law and on facts in passing the reassessment order without disposing of the objections of the assessee to the issue of notice u/s 147/148 in the facts and circumstances of the case and the Ld CIT(A) erred in confirming his action in the facts and circumstances of the case.
4. The Ld. A.O. erred in law and on facts in observing that the Ld AO had provided the assessee with a copy of "reasons to believe" specifically when the paper book at page 6 contained letter of the AO dated 04.10.2007 wherein the AO states that he was providing only "a brief of the reasons recorded for initiating the proceedings u/s 148".
5. The Commissioner of Income Tax (A) erred in law and on facts in observing that the appellant was unable to produce any evidence to prove the genuineness of the share transaction contrary to the facts on record. The CIT(A) further erred in observing that the. appellant filed additional evidence in the form of share certificates to prove the genuineness of the share transaction also contrary to the facts on record, the fact being that photocopies of the share certificates were furnished with the AO during assessment proceedings.
6. The Commissioner of Income Tax (A) erred in law and on facts in finding that the appellant was unable to produce any evidence to prove the genuineness of the purchase and sale of the shares even during appellate proceedings particularly when the copies of account, statement of affairs, computation of income, sale bill etc had been furnished during assessment proceedings itself and were submitted in the paper book filed with CIT(A).
Mehar Chand Mittal & Sons 7. The Commissioner of Income Tax (A) erred in law and on facts in finding that the appellant failed to discharge the primary onus of proving the identity, capacity of the purchaser and the genuineness of transaction in terms of section 68 of the Act. The ld. CIT(A) further erred that the appellant has offered no creditable explanation about the amount of Rs. 225600A in the facts and circumstances of the case.
8. The Commissioner of Income Tax (A) erred in law and on facts in confirming the addition of Rs. 2 lac u/s 68 being the amount repaid by the borrower Mehtab Singh Mittal on the plea that the appellant was unable to produce any evidence to confirm his identity and creditworthiness. The CIT (A) further erred in law and on facts in finding that provisions of 68 applied to the repayment of assessee's loan given to a borrower in the earlier period. The CIT (A) having confirmed genuineness of transaction of loan given by the assessee was not justified in confirming the addition in the facts and circumstances of the case.
The Commissioner of Income Tax (A) erred in law and on facts in confirming the addition of Rs. 149500/- being the amount received by account payee cheque from the jeweler on account of jewellary sold by the assessee. The CIT(A) has confirmed the addition on flimsy ground that the purchase bill issued by the jeweler did not bear the cheque number. The CIT (A) further erred in law and on facts in observing that the assessee had not shown any income / loss from sale of jewellary in its return filed before initiation of reassessment proceedings in the face of computation of long term capital gains placed at page 33 of the paper book submitted before her.
Mehar Chand Mittal & Sons 10. The appellant craves leave to amend or alter all or any of the aforesaid grounds of appeal and amend, alter or add any other ground of appeal.”
3. The main grievance of the assessee in this appeal relates to the jurisdiction u/s 147/148 of the Income Tax Act, 1961 (hereinafter referred to as the Act) in reopening the assessment.
Facts of the case in brief are that the assessee was issued a notice u/s 148 of the Act on 27.03.2007 on the basis of information received from DIT(Inv.)-I, New Delhi intimating that an amount of Rs.1,00,000/- and Rs.1,25,600/- were found credited on 02.02.2000 and 04.02.2000. The AO noted that above transaction were only accommodation entry and the assessee was the ultimate beneficiary of the same. After recording the reasons and obtaining the approval of the Addl. CIT-Range-25, New Delhi a notice u/s. 148 of the Act was issued and served upon the assessee on 27.03.2007. In response thereto, the Assessee’s AR vide his letter dated 23.04.2007 responded that assessee had filed its return of income on 30.08.2000 and the same may be treated as filed in response to notice u/s. 148 of the Act. Further, a notice u/s. 142(1) of the Act was issued for hearing on 13.08.2007, but nobody attended the hearing. However, on 01.10.2007, a letter was received by the AO from the A.R. of the Assessee requesting therein to supply the copy of the reasons recorded for issuing the notice u/s 148 of the Act which was supplied
Mehar Chand Mittal & Sons to the assessee and time was allowed to give response upto 06.11.2007, but again on 06.11.2007 nobody attended nor any written submission was filed. Another notice u/s. 143(2) of the Act issued for 29.11.2007, on the said date the A.R. of the assessee attended the proceedings and filed a letter alongwith some details and raised some objections. The AO, after considering the details submitted by the Ld. counsel of the assessee, assessed the income at Rs.12,29,450/- u/s 143(3)/147 of the I.T. Act, 1961 vide his order dated 26.12.2007.
Against the additions made by the AO, the assessee preferred an appeal before the ld. CIT(A) and also challenged the action of the AO in reopening the assessment. The ld. CIT(A) confirmed the reopening of the assessment made by the AO and partly allowed relief out of the additions made by the AO.
Being aggrieved the assessee is in appeal. The ld. Counsel for the assessee submitted that the reopening u/s 147 of the Act was based on a general information received from Director of Income Tax (Investigation-1), New Delhi and the AO had not applied his own mind. Therefore, the reopening was not valid. The reliance was placed on the following case laws: � Pr. CIT-4 Vs G & G Pharma Ltd. 384 ITR 147 (Del.) � Pr. CIT-09 Vs Tupperware India Pvt. Ltd. in ITA 415/2015 order dated 10.08.2015 (Del.) � Pr. CIT-06 Vs M. B. Jwellers (P) Ltd. in ITA 615/2015 order dated 19.08.2015 (Del.)
Mehar Chand Mittal & Sons � CIT-II Vs M/s Multiplex Trading & Industrial Co. Ltd. in ITA 356/2013 order dated 22.09.2015 (Del.) � Suresh Chandra Vs ITO, Ward-44(1), New Delhi in order dated 13.03.2015 � CIT & Anr. Vs Smt. Laxmi Mehrotra in ITA No. 156/2005 order dated 17.12.2012 � Shri Inderjeet Singh Sachdeva Vs DCIT, Range-I, Moradabad in ITA No. 6611/Del/2013 order dated 03.06.2016 7. In his rival submissions the ld. DR strongly supported the orders of the authorities below.
We have considered the submissions of both the parties and perused the material available on the record. In the present case, the AO himself noted in para 1 of the assessment order dated 04.09.2009 as under: “The information in this case was received from DIT(Inv.- I), new Delhi intimating that an amount of Rs.1,00,000/- and Rs.1,25,600/- were found credits on 02.02.2000 & 04.02.2000 respectively the bank A/c No. 8781 of the assessee maintained with Corporation Bank, Paschim Vihar, New Delhi which was received from M/s Omyx Exim & Sales Pvt. Ltd. & Aay Kay Investments respectively during the course of investigation. It has been noted that the above transaction are only accommodation entry and the assessee is the ultimate beneficiary of the same. After recording the reasons and obtaining the approval of Addl. CIT-range-25, new Delhi a notice u/s 148 read with section 147 was issued and served upon the assessee on 27.03.2007.”
Mehar Chand Mittal & Sons 9. From the above noting of the AO, it is crystal clear that the reopening by issuing notice u/s 148 of the Act dated 14.12.2006 was done by the AO only on the basis of the information received from the Director of Income Tax (Inv.)-1, New Delhi and the AO did not apply his independent mind to come to the conclusion that the income of the assessee has escaped assessment.
On a similar issue the Hon’ble Jurisdictional High Court in the case of Principal Commissioner of Income Tax- 4 Vs G & G Pharma Ltd. 384 ITR 147 (supra) held as under: “The basic requirement of law for reopening an assessment is application of mind by the Assessing Officer, to the materials produced prior to reopening the assessment, to conclude that he has reason to believe that income has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing materials produced subsequent to the reopening will not make an inherently defective reassessment order valid.” It has further been held as under: “Without forming a prima facie opinion, on the basis of such material, it was not possible for him to have simply concluded that it was evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries. The basic jurisdictional requirement was application of mind by the Assessing Officer to the material produced before issuing the notice for reassessment. Without analysing and forming a prima facie opinion on the basis of material produced, it was not possible Mehar Chand Mittal & Sons for the Assessing Officer to conclude that he had reason to believe that income had escaped assessment.”
In the present case also the AO simply acted upon the information received from the Investigation Wing and did not apply his own mind. Therefore, in view of the ratio laid down by the Hon’ble Jurisdictional High court in the aforesaid referred to cases, the reopening u/s 147 by issuing the notice u/s 148 of the Act only on the basis of information received from the Investigation Wing was not valid. Accordingly, the reassessment framed by the AO is held to be invalid and quashed.
In the result, the appeal of the assessee is allowed. (Order Pronounced in the Open Court on 18/05/2017)