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Income Tax Appellate Tribunal, DIVISION BENCH ‘SMD’, CHANDIGARH
Before: MS. DIVA SINGH & MS. ANNAPURNA GUPTA
PER DIVA SINGH
The present appeal has been filed by the Revenue assailing the correctness of the order dated 30/06/2017 of CITA to Ludhiana pertaining to 2009 – 10 assessment year on the following grounds : 1. Whether on the facts 85 in the circumstances of the case, the Ld CIT(A) was right in deleting the disallowance of Rs. 43,00,000/- u/s 68 of the t.T. Act 1961 on account of unexplained cash credit, ignoring the finding recorded by the A.O. while passing assessment order u/s 144 of the I.T. Act, that the assessee has failed to prove the sources of cash deposits, by way of any documentary evidence. 2. That the order of CIT(Appeal)-2, Ludhiana the set aside and that of the A.O. be resorted. 2. At the time of hearing no one was present on behalf of the assessee. However on going through the record wherein it is noticed that the relief has been granted by the CIT(A) relying upon the report of the assessing officer, it was deemed appropriate to proceed with the present appeal ex- parte qua the assessee appellant on merits after hearing the Ld. Sr. DR. 3. The relevant facts of the case are that the assessee in the course of the assessment proceedings was required to explain the cash deposit of Rs. 43 lakh in her saving bank account number 12030100015639 with Bank of Baroda, Samrala. Since nothing was filed by the assessee in response to the notices, the assessing officer ultimately made the addition of the said
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amount in the hands of the assessee by an order passed under section 144 read with section 147 of the Income Tax Act,1961.
The assessee challenged the action before the CIT(Appeals). In the proceedings before the CIT(A), it was submitted that the assessee being a non-resident Indian, permanently settled in Canada was unaware of the proceedings. A prayer was made for admission of fresh evidences in terms of the precedent available in the case of CIT versus M/s Chittosho Motors (ITA 741 of 2010 dated 05.01.2011. The specific submissions extracted in the order in support of the prayer for admission of the evidences made is reproduced hereunder for ready reference :
“That a perusal of the assessment order which thereafter had been made available to the assessee, therein reveals that the 'Sale proceeds' of the ancestral rural 'Agricultural land' situated at Village : 'Rattipur, Tehsil: Samrala, Distt. Ludhiana, owned by the assessee and her sons S/Sh. Mandeep Singh and Sandeep Singh, in equal 1/3rd share each, which had been sold by the assessee during her visit to India, i.e. her share of ownership in the said land, as well as the respective share of ownership of her sons, namely S/Sh. Mandeep Singh AND Sandeep Singh, in her status as that of being the 'Power of attorney ' holder of her sons, vide 'Registered Sale deed' dated: 21.05.2008, for a total 'Sale consideration of Rs. 43 lacs, which sale proceeds were received by the assessee in cash at the time of execution of the 'Sale deed' and was deposited in her SB A/c No. 12030100015639 with Bank of Baroda, Samrala, as under- Date Particulars Amount 21-05-2008 Cash Deposited in Bank Rs. 15,00,000/- 21-05-2008 Cash Deposited in Bank Rs. 20,00,000/- 21-05-2008 Cash Deposited in Bank Rs. 8,00,000/- Total Rs. 43,00,000/-
Had been subjected to taxes by the Revenue/department in the course of the assessment proceedins, which were both initiated and framed in the absence of the assessee having any knowledge as regards the same. That as submitted hereinabove, as the assessee had no knowledge about the initiated and framing of the assessment in her case, therefore the letter could not participate in the assessment proceedings and thus remained absolutely divested of the opportunity of placing on 'record' of the A.O the 'documents' detailed as under, which therein irrebutably and rather inescapably establishes that the 'Cash deposits' of the Rs. 43 Lac (supra) in the 'Bank a/c' of the assessee represented the 'Sale proceeds' of the rural 'Agricultural Land' owned by her and her sons S/sh. Mandeep Singh and Sandeep Singh at Vill. Ratipur, Tehsl, Samrala, which being in the nature of rural agricultural land, which was neither situated within the 'Municipal limits' of any municipality having population of more than ten thousand, nor situated within the notified area limits of such municipality, therefore not being in the nature as the of a 'Capital asset', I was therefore not liable to be subjected to taxes:
Sr. Particulars Annexure/Page No. No. 1 Copy of the ‘Registered Saledeed’, dated: 21-05-2008, A-1 Page 5-10 Supporting the sale of rural ‘Agricultural land’ owned by the assessee and her sons S/sh. Mandeep Singh and Sandeep Singh at Vill. Rotipur, Tehsil: Samrala 2 Copy of the extract of ‘google map’, therein establishing that A-2 Page 11 village: Ratipur, Tehsil: Samrala was much beyond the notified distance of 2km from the ‘Municipal limits’ of Tehsil: Samrala or any other notified area committee.
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Thus in light of the aforesaid facts, now when the assessee had remained absolutely divested of the opportunity of placing on 'record' of the AO the aforesaid 'documents' which have been a strong bearing in the adjudication of the issue under consideration and determination of the tax liability of the assessee, it is therefore most humbly requested that the said 'documents' may therein in all fairness and in the interest of justice may kindly be admitted. That still further it is humbly submitted that as the aforesaid 'documents' (supra) being furnished before your goodself have a strong bearing on the assessing of the "True income' of the assessee, the same may kindly be , admitted specifically in light of the settled position of law so laid down by the Hon'ble High Court of Punjab & Haryana, wherein the Hon'ble High Court sizing on the fact that when 'Substantial justice' is pitted against Technicalities' there in the very interest of justice and fairness, the forever has to prevail, reliance is placed on the judgment of the Hon'ble High Court in the case of CIT Vs. M/s Chittosho Motors (ITA No. 741 of 2010; Dt. 05.01.2011)”
It is seen from the record that the said application alongwith evidences was forwarded by the CIT(A) to the AO. It is further seen that the AO vide report dated 27/06/2016 stated that as the assessee did not participate in the proceedings during the assessment stage, thus no further opportunity should be provided as the assessee has not cooperated. The CIT(A) taking note of the objection directed the AO to place his Remand Report on the merits of the evidence filed. It is seen that in response thereto, the assessing officer made another report dated 07/09/2016 which has also been extracted in the order at pages 7 and 8. For ready reference, same is reproduced hereunder : Dated 07.09.2016:- "In this connection, as directed by your goodself, the Comments on the additional evidence as produced by the counsel of the assessee and after verifying the facts and giving an opportunity to the assessee of being heard are submitted as under : The brief facts of the case are that the case of the assessee was responded u/s 147 of the Act, 1961 and Notice u/s 148 was issued on 26.03.2014. The assessment was completed u/s 144 on 18.03.2015 on the basis of information available on record as no compliance was made by the assessee. Therefore, an addition of Rs, 43,00,000/- was made in the absence of any documentary evidence regarding sources of cash deposits of Rs. 43,00,000/- in Bank of Baroda, Samrala. Further as per bank statement available with this office, the assessee has earned interest amounting to Rs. 18,687/- during the year which is also treated as income from Other Source u/s 56 of the I. T. Act, 1961 and added to the income of the assessee. As directed, the assessee was given an opportunity to file the documentary evidence relating to cash deposit of Rs. 43,00,000/- in Bank of Baroda Samrala during the F. Y. 2008-09. The Counsel of the assessee filed Written submission alongwith documentary evidence which is as under : That the assessee is a 'Non-Residece Indian' permanently settled in Canada who along with her sons S/sh. Mandeep Singh and Sandeep Singh, who too are citizens of Canada, owned 'Agriculture land' (through survivorship as legal heirs) measuring 47 Kanal-15 Marla at village: Ratipur, Tehsil Samrala, Distt. Ludhiana, wherein all three of them had equal 1/3rd share in that land. That during the Financial Year 2008-09 relevant to Assessment Year 2009-10, the assessee during her visit to India carried out sale of the aforesaid 'Agriculture land' (supra) i.e. her share of ownership in the said land, as well as the respective share of ownership of her sons. Namely Sh. Mandeep Singh and Sandeep Singh, in her status as
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that of being a 'Power' of attorney holder of her sons vide "Registered Sale Deed" dated 21.05.2008, for a total sale consideration of Rs. 43 lac, which 'Sale consideration was received by the assessee in 'Cash' at the time of execution of the 'Sale deed' i.e. as on 21.05.2008 (supra). That the entire 'Sale consideration' of Rs. 43 lac so received by the assessee in cash from the 'Buyers' at the time of execution of 'Sale deed' i.e. on her behalf, as well as in behalf of her sons, was therein deposited by her in SB A/c No. 12030100015639 so held by her with Bank of Baroda, Samrala, as under:-
Date of deposit Particulars Amount Deposits 21-05-2008 Cash Deposited in Bank 15,00,000/- 21-05-2008 Cash Deposited in Bank 20,00,000/- 21-05-2008 Cash Deposited in Bank 8,00,000/-
The counsel of the assessee also submitted photocopy of the sale deed executed on 21.05.2008 alongwith other supporting documents & photocopies of the Passports of Smt. Kamaljit Kaur Dhillon, Sandeep Dhillon and Mandeep Dhillon, which were examined and placed on record. The information/documents submitted shows that the cash amounting to Rs. 43,00,000/- deposited in bank during the F,Y, 2008-09 appeared to be genuine as the assessee received Rs. 43,00,000/- from the sale proceeds of ancestral agricultural land on 21.05.2008. Keeping in view to above facts, the case of the assessee may kindly be decided on merits." (emphasis supplied)
The record shows that the remand reports were confronted to the assessee whose rejoinder dated 14/06/2017 is extracted in the order. For ready reference it is also reproduced hereunder : 3.4 The copy of remand report was provided to the AR of the appellant. The AR of the appellant filed rejoinder dated 14.06.2017 which is reproduced as under:- In Continuation of the above mention case it is hereby submitted as follows:- 1. That the ex-parte assessment was framed and the assessee availed the remedy by way of appeal. During the appeal proceedings the case has been remanded back to the ITO Ward 2 Khanna. 2. That during remand proceedings all the relevant documents and record were produced which has already been produced before your goodself in appeal proceedings with respect to the transaction deposit in the saving bank account No. 12030100015639 amounting to Rs. 15 Lac, 20 Lac and Rs. 8 Lac total Rs. 43 Lac forty Three Lac only. 3. That the AO examined the relevant record and after due verification he submitted his report dated 07.09.2016 and the same has been supplied to the assessee by the Office of Commissioner of Income Tax Appeal. 4. That the remand report was perused and it reveals that the AO himself admitted in the remand report that the transaction appeared in the Saving Bank Account mentioned above is genuine 5. That is therefore requested to kindly the appeal may kindly be accepted and obliged 7. Considering this the CIT(A) in para-3.5 and 3.6 referring to the facts concluded that there were justifiable reasons for admitting additional evidence and the appeal of the assessee was allowed taking into consideration the Remand Report of the assessing officer. Aggrieved by this the Revenue is in appeal before the ITAT.
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The Ld. Sr.DR relies upon the assessment order, however was unable to justify the raising of the present ground in the face of the claim having been given up by the assessing officer in categoric terms as per his report dated 07/09/2016 extracted in the order itself. In the face of the claim having been given up by the assessing officer himself in the remand proceedings, the maintainability of the present appeal was questioned. The Ld. Sr.DR relied upon the assessment order without making any further submissions 9. We have heard the submissions and perused the material available on record. As is evident from record, there were justifiable reasons for admission of fresh evidence for which purposes apparently the Revenue also has refrained from raising any ground challenging the admission of additional evidence. We further find that the AO in his Remand Report in very categoric terms has stated that the source of cash deposits in the bank account have been verified and are found to be correct and true as per the claim of the assessee, which is the specific reasoning taken by the CIT(A)in para-3.7 wherein ultimately it is concluded as under : “From the aforesaid facts, it is apparent the appellant has been able to explain the source of cash deposits in the banks accounts. Apparently, all the entries in the bank accounts of the appellant have been satisfactorily explained with documentary evidence duly verified by the AO.” The AO has expressed satisfaction over source of cash deposit vide his report dated 07.09.2016, as it pertains to sale of land pertaining to her share and her sons share too. The AO after detailed enquiries and verification on this issue has reported his satisfaction over source of cash deposits in bank account of the appellant. 3.8 In view of the documentary evidence and the remand report of the AO, the addition on accounts of disallowance of Rs. 43,00,000/- u/s 68 of the Act on account of Unexplained cash credit is ordered to be deleted. Accordingly, these grounds of appeal (from No. 1 to 14 except 13) are allowed.” 9.1 Accordingly in the peculiar facts and circumstances of the present case we find that the Revenue by raising the present appeal has filed a frivolous appeal and thereby wasted the time of the Court. The procedures apparently set in place to ensure that frivolous appeals are not filed, appear to be not functioning. We have noted that the departmental grounds have been approved by Pr. CIT-2, Ludhiana on 28/07/2017 which approval, it appears, has been given mechanically. The insistence of the assessing officer to raise a ground relying upon the failure of the assessee to prove the cash deposits in the 144 proceedings wherein admittedly the AO on facts finds that the assessee has successfully demonstrated that the assessment was passed u/s 144 in peculiar facts where admittedly the assessee being a ‘Non Resident Indian'
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permanently settled in Canada, thus, remained unaware of the assessment proceedings during her absence from India. We find that the said issue despite the mechanical objections of the assessing officer dated 27/06/2016 extracted at pages 6 and 7 of the order, have not been accepted by the CIT(A) who has directed the assessing officer to place another report on merits which is report dated 07/09/2016 already extracted in his order. It is seen that considering this, the CIT(A) has given the following speaking findings : “3.5 I have carefully considered the appellant's submission. I have also gone through the remand report sent by the assessing officer vide dated 27.06.2016,wherein the assessing officer has also reported that despite best efforts the notices u/s 148 and u/s 142(1) could not be served upon the appellant as the proper address of the appellant was not available initially. Therefore, the appellant could not be contacted in the ordinary way of sending notices and letters. The assessing officer has stated that apparently sufficient opportunities were granted to the appellant, however since the appellant was not traceable and the notices could not be served upon the ordinary way, the AO was left with no alternative but to resort to servicing of notices by affixture. 3.6 In my considered view although the notices could not be not served through orderly manner to the appellant initially, therefore the time left for the assessment was lesser and the appellant had the case wherein it was sufficiently prevented to file the relevant submissions evidentiary document at the time of assessment proceedings, therefore, under rule 46A, the additional evidence filed by the appellant are admitted.” 9.2 In the peculiar facts, we note the filing of the present appeal by the Revenue is a case of sheer harassment and abuse of the powers vested under the Act in the Assessing Officer/his administrative controlling authority and also resulting in wasting the time of the Courts; litigants and public money. Such an action cannot find judicial sanction. Recording our dissatisfaction about the manner in which the appeal of the revenue has been filed, the same is dismissed. It may not be out of place to refer to similar observations made in various other orders namely order dated 04.01.2018 in ITA 424/CHD/2017 in the case of ITO Vs Shri Jagdev Singh and order dated 10.01.2018 in ITA 599/CHD/2017 in the case of ITO Vs Shri Randhir Singh and order dated 12.01.2018 in ITO Vs Shri Kulwinder Singh in ITA 1193/CHD/2011 wherein it had been noticed that the issues had been given up by the AO in the remand proceedings despite which the Revenue without upsetting the facts had mechanically filed the appeal before the ITAT. In the facts and circumstances of the present case, we note that the occasion for the AO to file an appeal did not arise. It is noticed that for filing the present appeal, approval has been granted by Pr. CIT Ludhiana on 28.07.2017. There can be no two opinions to hold that the approval admittedly has also been granted mechanically which
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leads to the indelible conclusion that the Administrative checks and balances placed by the Department in place for not filing frivolous appeals admittedly are not working. Since the facts and evidences considered in the remand proceedings have not been rebutted by the AO in the present proceedings, the present appeal ought not to have been filed. As once the issues have been given up by the AO in the remand proceedings, the occasion to re-agitate the very same issue by filing an appeal in the absence of any rebuttal on facts and evidences can be easily said to be not only an irresponsible criminal waste of Government time, money and resources but also gives rise to the latent resentment in public consciousness that the tax authorities are callously heedless and uncaring vis-à-vis the pain and harassment caused by such obdurate acts to the public whom they are presumed to serve. Once the AO is satisfied in the remand proceeding, he cannot be said to be aggrieved by the order passed by the CIT(A) considering his own remand report. It need not be over emphasized that as far as the world at large is concerned, the Assessing Officer is an authority and is not a specific person. Thus, merely on account of change of the AO, presumably the incumbent cannot be allowed to file appeals willy nilly. Such rampant careless behaviour shakes the public trust and faith reposed in the authority of the AO to act fairly and impartially as has been noted by the Apex Court in the case of CIT Vs Mahalaxmi Sugar Mills Co. Ltd. (1986) 160 ITR 920 (S.C) “There is a duty cast on the ITO to apply the relevant provision of the Act for the purpose of determining the true figure of the assessee’s taxable income and the consequential tax liability”. It would not be out of place to extend this that so as to also mean that it is also the duty of the Assessing Officer to file appeals only if the AO is aggrieved by the finding. The conclusion arrived at on considering his own Remand Report cannot be such an instance unless the facts considered are assailed as incorrect facts. It is for this specific reason that checks and balances have been admittedly placed on record requiring that before the filing of appeal is permitted to the AO, the approval of Pr. CIT is necessary. The said exercise has a meaningful purpose as it not only enures the tax payer from defending frivolous appeals but even otherwise ensures that the Government time, money and funds are not frivolously frittered. Reference may also be made to the order dated 04.01.2018 in ITA 424/CHD/2017 in the case
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of ITO Vs Shri Jagdev Singh : 7. Though the ITAT has the powers to impose costs, however the exercise of the power is refrained from. However, it is hoped that the administration vigorously ensures that the Officers are advised and instructed to exercise their discretion fairly and judiciously in not filing appeals frivolously. It is noted that the administrative checks and balances put in place by the Department for ensuring that frivolous appeals are not filed, do not appear to be working. Care should have been taken to note that the issue had been given up in the Remand Proceedings by the AO. In these in the circumstances, without assailing the facts and evidences, appeal should not have been filed mechanically. It is seen that the present appeal has been filed with the approval of Pr. CIT-2 Ludhiana. It not only demonstrates that the approval has been given mechanically, it also erodes the trust reposed by the tax payer in the fairness of the administration. Filing of such frivolous appeals reflects poorly on the departmental mindset and gives unwanted strength to the ever increasing cynical belief that the administrative set up works mindlessly challenging any and every relief granted by an authority in accordance with law. Still more needs to be done to reign in the desire to show higher efficiency by concerned officials by filing a higher number of appeals. The mindless adherence to targets can cause irreparable havoc in the faith of the citizens in the administrative set up which should be avoided and obhored at all costs. A positive affirmative atmosphere may need to be created encouraging the concerned officials to bloom in a fearless atmosphere of trust and confidence in their functioning balanced with clear and unambiguous instructions that filing of frivolous appeals shall be viewed strictly and negatively. The message has to be clearly sent that filing of appeals mindlessly would be viewed and considered to be an act of inefficiency or dereliction of duty and not higher efficiency. Forcing the tax payer to go through the trouble of engaging a lawyer and incurring unnecessary costs to defend a relief granted wherein the AO has unambiguously accepted the evidence in the Remand Report gives rise in the public mind to seeds of State alienation. Such an act severely erodes the trust and implicit faith which the tax payer generally reposes the Assessing Officer to always act fairly and impartially in a democratic India. The tax administration works for the government of India and cannot be allowed to be viewed as an agent of an alien State which was the case of pre independence India. 9.3. Thus, being aware and alive to the fact that the ITAT does have the power to impose costs, the exercise is refrained from in the hope that the administration vigorously ensures that the procedures laid down for filing of appeals are adhered to and the officers are advised, instructed and warned to exercise their discretion fairly, judiciously and not file appeals frivolously. It may not be out of place to refer to the decision of the Apex Court in the case of Union of India & ors Vs Pirthwi Singh & Ors. wherein vide their judgement dated 24.04.2018, the Apex Court imposed a cost of Rs. 1 lac noting that, “The couldn’t-care-less and insouciant attitude of the Union of India with regard to litigation, particularly in the Supreme Court, has gone a little too far as this case illustrates”. The Apex Court was critical of the conduct of Union of India in the face of the vision/mission of the ‘National Legal Mission to Reduce Average Pendency Time from 15 years to 3 years’ dated 23.06.2010 and articulated its pain questioning : “When will the Rip Van Winkleism stop and Union of India wake up to its duties and responsibilities to the justice delivery system? 9.4 The facts which led the Apex Court to express its anguish are
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extracted hereunder : 4. The Union of India had filed a batch of appeals which was dismissed by this Court by a judgment and order dated 8th December, 2017. The decision is reported as Union of India v. Balbir Singh Turn.l 5. After dismissal of the batch of appeals, the Union of India filed yet another appeal on the same subject being Civil Appeal No. (blank) of 2018 (Diary No. 4893 of 2018) entitled Union of India & Ors. v. Ex. Nk. Balbir Singh. That appeal came up for consideration before this Court on 9th March, 2018 and was dismissed following the decision in Balbir Singh Turn. While dismissing the appeal, it was noted that it was filed well after several similar matters were dismissed by this Court. The conduct of the Union of India in filing Civil Appeals/Special Leave Petitions after the issue is concluded by this Court was not appreciated. It was noted that the Union of India must take full responsibility for unnecessarily adding to the burden of the justice delivery system. 6. To ensure that the Union of India is far more circumspect, costs of Rs. 1,00,000/- were imposed and it was observed that the Union of India must shape up its litigation policy. Unfortunately, the Union of India has learnt no lesson and has continued its non- cooperative attitude. 7. The present appeal was filed on 8th March, 2018 which is also well after the decision in Balbir Singh Turn. We would have expected that with the dismissal of the appeal relating to Balbir Singh Turn and Ex. Nk. Balbir Singh, the Union of India would take steps to withdraw this appeal from the Registry of this Court so that it is not even listed and there is no unnecessary burden on the judges. But obviously, the Union of India has no such concern and did not withdraw its appeal from the Registry itself. 8. The Union of India must appreciate that by pursuing frivolous or infructuous cases, it is adding to the burden of this Court and collaterally harming other litigants by delaying hearing of their cases through the sheer volume of numbers. If the Union of India cares little for the justice delivery system, it should at least display some concern for litigants, many of whom have to spend a small fortune in litigating in the Supreme Court.” 10. Accordingly, with the above observations, we dismiss the present appeal. Said order was pronounced in the open court at the time of hearing itself.
In the result the appeal of the Revenue is dismissed Order pronounced in the Open Court on 28.06. 2018.
Sd/- Sd/- (ANNAPURNA GUPTA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ‘Poonam’ Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR Asstt. Registrar ITAT,Chandigarh.