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Income Tax Appellate Tribunal, DELHI BENCH SMC NEW DELHI
Before: SHRI B.P. JAIN
सुनवाई क� तार�ख/Date of Hearing : 25/04/2017 घोषणा क� तार�ख /Date of Pronouncement: 28/04/2017 ORDER This appeal of the assessee arises from the order of learned CIT(A)-2, Gurgaon, vide order dated 22.03.2015 for the assessment year 2002-03. The assessee has raised the grounds of appeal as under:
1. That the order of Ld. CIT (Appeals) is against law and facts.
2. That the Ld. CIT (Appeals) erred in dismissing the ground of the appellant challenging the issuance of notice u/s 148 of the Act and in making the re- assessment which is without jurisdiction and invalid. .
3. That the Ld. CIT (Appeals) erred in confirming the addition of Rs.625000/- made by the Ld. AO on account of difference in the copy of account of M/s. Goel Traders, Narnaul.
4. That the Ld. CIT (Appeals) erred in confirming the addition of Rs. 131026/- made by the Ld. AO on account of four alleged benami firms bank account. The appellant has no concern with these firms or their bank accounts. Moreover the addition made were without confronting the material to the appellant.”
2. Ground Nos.1 and 5 are general in nature therefore do not require any adjudication.
3. As regards ground no.2 is legal in nature, is decided first as argued by the ld. counsel for the assessee, Mr. Naveen Gupta, Advocate. Learned AR, Mr. Naveen Gupta, at the outset, pointed out at paper book 5 the reasons recorded which is for the sake of convenience is reproduced hereinbelow:
“Reason for issue of notice u/s. 148 of the IT Act, 1961. During the course of completion of assessment proceedings for the AY. 2003-04 in the case of the assessee, it was noticed that the assessee Sh. Ramesh Chand Prop. M/s Ramesh Chand Prem Chand Narnaul has shown a liability of Rs6,25,000/- in the name of M/s. Goel Traders New Mundi Narnaul as on 3103.2002. nut as per copy of account obtained from Sh. Ramesh Chand Prop. Mrs Ramesh Chand Prem Chand in his books of account in the case of Mis Goel Traders Narnaul no opening balance of Rs6,25,000/- was shown by the assessee Sh. Ramesh Chand Prop. M/s Ramesh Chand Prem Chand Namaul. Thus an addition of Rs.6,25,000/- was made in the AY. 2003-04 in the case of M/s. Ramesh Chand Prem Chand holding that the liability was discharged out of books. In appeal the Ld. CIT(A) has observed that when the liability of Rs.6,25,000/-was not forwarded as on 01.04.2002 the addition could be best have been considered in the F.Y.2001-02 relevant to AY. 2002-03. Thus I am of the opinion that the income for the A.Y.2002-03 has escaped assessment to the tune of Rs.6,25,000/- During the course of completion of assessment proceedings for the 2. A.Y. 2001-02 and A.Y. 2003-04, the following firms were treated as benami firms of assessee and the peak amount alongwith profit earned on sales made through these firms were added in the income of the assessee Sh. Ramesh Chand Prop. M/s. Ramesh Chand Prem Chand Narnaul during the AY. 2001-02 and 2003-04 and this action of the AO. has been confirmed by the Ld. CIT(A) Rohtak in his appellate orders for the AY. 2001-02 and 2003-04. i) M/s. Satya narain Dinesh Kumar narnaul. A.Y.2001-02 ii) M/s. Santosh Kumar Vijay Kumar narnaul A.Y. 2001-02 iii) M/s. budh Mal & sons A.Y.2003-04 iv) M/s. Chittar mal Budh Ram A.Y.2003-04 From the hank accounts of these firms, it has been found that there are huge deposits in the bank accounts of these firms during the period 01.04.2001 to 31.03.2002. These deposits represents the sales of mustered seeds made through these benami firms by the assessee Sh. Ramesh Chand. The deposits made in the bank account of these concerns during the period 01.04.2001 to 31.03.2002 are as under: M/s. Satya narain Dinesh Kumar OBC NNI A/c. No.1353 Rs.160211/- Santosh Kumar Vijay Kumar SBOP NNL A/c. No.50269 Rs.7306634/- Budh Mal & Sons SBOP NNI a/c No.60392 Rs.119890857/- M/s. Chittar Mal Budh Ram OBC, Rewari A/c. No.2764 Rs.18226878/- Total Rs.145584580/-
The amount of Rs.145584580/- is sale of mustered seeds made by the assessee through these benami firms which has not been shown by the assessee in his books of accounts. The assessee has declared G.P. on mustered seeds at 0.09°/ in the A.Y. 200)2-03 and by applying the G.P. at 0.09% on sales of Rs.14,55,84,580/-, the Profit works out to Rs.1,31,026/- which has escaped assessment. " '" I Therefore have reasons to believe that income to the tune of Rs. 756126/- Rs.(625000 + Rs.131026) has escaped assessment. Issue Notice u/s.148 for the A. Y. 2002-03 to reassess the income of the assessee.
It was argued by the ld. counsel for the assessee that Assessing Officer has reopened the assessment on the basis of inquiries. He relied upon the decisions of various courts of law in this regard.
Learned DR, on the other hand, relied upon the order of both the authorities below.
I have heard the rival contentions and perused the facts of the case. From the reasons recorded at pages 5 and 6, it is evident that Assessing Officer has pointed out while recording the reasons that there was a difference in the opening balance amounting to Rs.6,25,000/- while making the assessment for the Assessment Year 2003-04. It was presumed by the Assessing Officer that the assessee is having escaped income in immediate preceding year, i.e., the impugned year and accordingly proceeded to reopen the assessment u/s.147 of the Act. This act of the Assessing Officer is on the basis of suspicion and without any material on record, therefore, such opening is bad in law and is liable to be quashed.
As regards the second limb of the reasons recorded, the Assessing Officer has mentioned four firms which were treated benami firms while making the assessment for the Assessment Years 2001-02 and 2003-04 where peak amount was added to the income of the assessee in those years and accordingly Assessing Officer presumed that the bank accounts of the firm is having deposits in the form of sale of mustard seeds through these benami firm as in the Assessment Years 2001-02 and 2003-04 and accordingly estimated the deposits and worked out the escaped income at Rs.1,31,026/-. This act of the Assessing Officer is again based on the suspicion and without any material on record, therefore, such reopening is bad in law and is liable to be quashed. Moreover, these four firms have been held not be benami firm by ITAT in their order in dated 30th August, 2016 by ITAT Bench ‘F’ New Delhi. In the circumstances and facts of the case, the Assessing Officer does not acquire jurisdiction to assess/re-assess u/s.147 of the Act and accordingly the assessment/re-assessement so made is directed to be quashed.
Since the assessee succeeds in the legal ground, therefore, the grounds on merit become academic in nature, and therefore, do not require any adjudication.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on this day 28th April, 2017