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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 Sh. Amit Shukla, JM Asstt. Year : 2002-03 : Asstt. Year : 2004-05 Noor Saleem Rana, Vs Income Tax Officer, New Rana House, Ward-2(1), Muzaffarnagar Muzaffarnagar (APPELLANT) (RESPONDENT) PAN No. AGUPS4768H Assessee by : Sh. V. K. Tulsiyan, CA Revenue by : Sh. Rajesh Kumar, Sr. DR Date of Hearing : 20.04.2017 Date of Pronouncement : 26.04.2017 ORDER Per N. K. Saini, AM:
These appeals by the assessee are directed against the separate orders each dated 28.08.2012 of ld. CIT(A), Muzaffarnagar.
Since the issues involved are common and the appeals were heard together so these are being disposed off by this consolidated order for the sake of convenience and brevity.
First we will deal with the appeal in 2002-03, following grounds have been raised in this appeal:
2 & 5972/Del/2012 Noor Saleem Rana “1. Whether the Ld.CIT(A) was justified by upholding the jurisdiction u/s 147/148, which is without jurisdiction, illegal and bad in-law because it just based on general information.
2. Whether the Ld. CIT(A) was justified by upholding the Ld. A.O's order passed in mechanical way on disposal of the objection which raised against the jurisdiction of Sec.147.
3. Whether the Ld.CIT(A) was justified in law and facts by upholding the Ld. A.O.'s order on, the addition of Rs.500000/- made u/s 68, the following observations;- i) because of non - production of the lender (ii) again non - filing of the details of the lender already on record (iii) just because the matter came from the Investigation Wing . (IV) Admittedly, there is no adverse report on the documents filed by the appellant & on record. That the appellant craves leave to amend, alter or to raise any other ground at the time of the hearing of the appeal.”
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 on the basis of information received from Director of Income Tax (Investigation-1), New Delhi.
3 & 5972/Del/2012 Noor Saleem Rana 5. Facts of the case in brief are that the assessee filed his return of income on 31.03.2003 declaring an income of Rs.1,59,850/-, besides agricultural income of Rs.1,18,400/-. The said return was processed u/s 143(1) of the Act. Later on, the case was selected for scrutiny, pursuant to the information received from Director of Income Tax (Investigation-1), New Delhi that the assessee had received accommodation entries. On the basis of said information, the AO issued the notice u/s 148 of the Act. In compliance to the said notice, the assessee had stated that the original return so filed may be treated as return of income in compliance to the notice u/s 148 of the Act. The AO framed the assessment u/s 147/144 of the Act and made the addition of Rs.5,00,000/-.
Against the said addition 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 both the reopening of the assessment as well as the addition 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:
4 & 5972/Del/2012 Noor Saleem Rana � CIT Vs SFIL Stock Broking Ltd. 325 ITR 285 (Del.) � Pr. CIT-4 Vs G & G Pharma Ltd. 384 ITR 147 (Del.) 8. 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 2 of the assessment order dated 28.08.2012 as under: “Later on, the case was selected for scrutiny, pursuant to the information received from Director of Income Tax (Inv.)-1, New Delhi that the assessee has received accommodation entries. Accordingly, notice u/s 148 dated 14.12.2006 was issued by the then AO (Dy. CIT, Cir-2, MZR).”
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. (supra) vide order dated 08.10.2015 (now reported at 384 ITR 147) held as under:
5 & 5972/Del/2012 Noor Saleem Rana “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 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, 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
In for the assessment year 2004-05, the facts are identical as were involved in the assessment year 2002-03 in . The only difference is that the addition made for this year was of Rs.2,50,000/- instead of Rs.5,00,000/- in the assessment year 2002-03. Therefore, our findings given in the former part of this order shall apply mutatis mutandis.
In the result, both the appeals of the assessee are allowed. (Order Pronounced in the Open Court on 26/04/2017)