SMT. ASHA CHHABRA,BATHINDA vs. INCOME TAX OFFICER, WARD - 1(1), BATHINDA

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER

I.T.A. No.695/Asr/2017 Assessment Year: 2013-14

Smt. Asha Chhabra, C/o M/s Vs. ITO-Ward 1(1), Chhabra Resorts, Opposite Bathinda. Sports Stadium, Bathinda. [PAN: AJPPC5593G] (Respondent) (Appellant)

Appellant by Sh. P.N. Arora, Adv. Respondent by Ms. Amanpreet Kaur, Sr.DR

Date of Hearing 20.09.2022 Date of Pronouncement 26.09.2022

ORDER Per:Anikesh Banerjee, JM:

The instant appeal of the assessee is filed against the order of the ld. Commissioner of Income Tax(Appeals), Bathinda, [in brevity the CIT(A)] bearing appeal no.152/15-16, date of order 11.09.2017, the order passed u/s 250(6) of the

Income Tax Act 1961, [in brevity the Act] for A.Y. 2013-14.The impugned order

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was originated from the order of the ld.Income Tax Officer, Ward-1(1) Bathinda,

(in brevity the AO) order passed u/s 143(3) of the Act date of order 28.07.2015.

The hearing of the appeal is fixed as per the order of the ITAT, Amritsar Bench bearing Miscellaneous Application No.24/Asr/2019 which is emanated from ITA

695/Asr/2017. 2. The brief fact of the case is that the appeal of the assesseewas adjudicated by

the ITAT, Amritsar Bench bearing ITA 695/Asr/2017 date of order 30.05.2019.

The assessee filed miscellaneous application before the bench for not considering

ground no. 1. The miscellaneous application of the assessee was adjudicated and

matter is refixed in consideration for hearing of the ground no. 1 of the assessee.

The said ground no. 1 of the assessee is extracted as follows: “1. That the id. CIT(A), Bathinda erred on facts and law in upholding the initiation of proceedings u/s 147 of the IT Act, 1961 by the AO on account of the following reasons:- a) Summons u/s 131 by the AO were issued to the assessee despite the fact that no proceedings were pending in the case of the assessee b) In the reasons recorded to issue notice u/s 148, it has been stated by the AO that the assessee failed to prove the identity and capacity of the donors as well as the genuineness of the gifts despite the fact that in the statement of the assessee recorded by the AO

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before initiating the reassessment proceedings the assessee had stated the names of the donors and also filed the evidence regarding source of gifts by the donors. c) From the reasons recorded it is apparent that the reassessment proceedings were initiated to verify the source of investment in the purchase of plot and construction of house. Hence, the reasons to believe as recorded by the AO were infact reasons to suspect. d) The finding of the CIT(A) in para-3.2 that "At the stage of notice, it is 'the believe' of the AO based on facts in front of him which if proven to be correct would result in taxation of additional income is factually wrong in the present case because the reasons recorded by the AO are reasons to suspect and not reasons to believe.”

assessment u/s 147 of the Act. The assessee received the gift Rs.4 lac from his real

brother. After due verification and recorded the statement u/s 131, the reasons were

recorded, and reopening was done by the ld. AO. Only the legal ground is point of

adjudication before the Bench.

ld. Counsel first point out the recorded reason which is extracted here as below: - “Reasons for initiating proceedings u/s 147 of the Income Tax Act, 1961

I.T.A. No.695/Asr/2017 4 Assessment Year: 2013-14

I.T.A. No.695/Asr/2017 5 Assessment Year: 2013-14

assessee also failed to explain the source of Rs. 4,00,000/- on account of investment made in the construction of house. 2.3 From the foregoing facts, it is held that the assessee has made unexplained investment in purchase of the property as well as in the construction thereon. 3.1 Accordingly, I have reasons to believe that the income of Rs.23,84,500/- ( Rs 18,37,500/-+ Rs.1,47,000/- + Rs. 4,00,000/-) of the assessee has escaped assessment for the assessment year 2013-14 within the meaning of section 69 of I.T.Act, 1961 besides any other income chargeable to tax which would have escaped assessment and would come to notice subsequently in the course of assessment proceedings under this section, within the meaning of section 147 of the I T. Act.” The ld. Counsel argued that the entire reopening u/s 148 is arbitrary and

illegal.

authorities.

record. The only ground no. 1 is challenged before us. The other ground of the

assessee is already adjudicated in earlier order of ITAT.

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The ld. AO recorded statement u/s 131 of the assessee. The assessee declared the

gift received from his real brother in the statement. The ld. AO reopened the

assessment u/s 148 for escapement of income related to Rs.4 lac. The ld Counsel

has mentioned in court that recorded reason is the “reason to suspect” but not

“reasons to believe”, ITO v. LakhmaniMewal Das [1976] 3 SCC 75.With

respectful observation of the apex court that the vague reason should not be

accepted. But the reason recorded by the ld. AO is not factually incorrect. The

recent judgment of Hon’ableSupreme Court of Indiain the case of Principal

Director of Income-tax (Investigation) v. LaljibhaiKanjibhaiMandalia, [2022]

140 taxmann.com 282 (SC), the observations of Lordship are as follows: -

“10. Mr. Balbir Singh referred to the judgments of this Court N.K. Jewellers v. CIT [2017] 85 taxmann.com 361/251 Taxman 7/398 ITR 116, CIT v. Vindhya Metal Corpn. [1997] 91 Taxman 192/224 ITR 614, ITO v. Seth Brothers [1969] 2 SCC 324 and Director General of Income Tax (Investigation) v. Space wood Furnishers (P.) Ltd. [2015] 57 taxmann.com 292/232 Taxman 131/374 ITR 595 to contend that though it is open to the Court to examine the question whether "reasons to believe" have any rational connection or a relevant bearing to the formation of the belief and that such reasons are not extraneous or irrelevant as the officer has to produce relevant evidence to sustain his belief in case the reasons to believe are questioned in court,

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however, it was argued that the jurisdiction of the High Court is to examine the existence of reasons not the legality of the same.”

“33. We would like to restate and elaborate the principles in exercising the writ jurisdiction in the matter of search and seizure under section 132 of the Act as follows: (i) The formation of opinion and the reasons to believe recorded is not a judicial or quasi-judicial function but administrative in character. (ii) The information must be in possession of the authorised official on the basis of the material and that the formation of opinion must be honest and bona fide. It cannot be merely pretence. Consideration of any extraneous or irrelevant material would vitiate the belief/satisfaction. (iii) The authority must have information in its possession on the basis of which a reasonable belief can be founded that the person concerned has omitted or failed to produce books of accounts or other documents for production of which summons or notice had been issued, or such person will not produce such books of account or other documents even if summons or notice is issued to him; or (iv) Such person is in possession of any money, bullion, jewellery or other valuable article which represents either wholly or partly income or property which has not been or would not be disclosed. (v) Such reasons may have to be placed before the High Court in the event of a challenge to formation of the belief of the competent authority in which event the Court would be

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entitled to examine the reasons for the formation of the belief, though not the sufficiency or adequacy thereof. In other words, the Court will examine whether the reasonsrecorded are actuated by mala fides or on a mere pretence and that no extraneous or irrelevant material has been considered. (vi) Such reasons forming part of the satisfaction note are to satisfy the judicial consciousness of the Court and any part of such satisfaction note is not to be made part of the order. (vii) The question as to whether such reasons are adequate or not is not a matter for the Court to review in a writ petition. The sufficiency of the grounds which induced the competent authority to act is not a justiciable issue. (viii) The relevance of the reasons for the formation of the belief is to be tested by the judicial restraint as in administrative action as the Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made. The Court shall not examine the sufficiency or adequacy thereof. (ix) In terms of the explanation inserted by the Finance Act, 2017 with retrospective effect from 1-4-1962, such reasons to believe as recorded by income tax authorities are not required to be disclosed to any person or any authority or the Appellate Tribunal.”

We find that no infirmity in the processing of reopening u/s 148 and in the order of

the ld. AO u/s 147 of the Act. The issue was properly discussed by the ld. CIT(A)

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in his order. We find no infirmity in the order of the ld. CIT(A). The Ground No.1,

of the assessee is not sustainable. In the result, the ground no.1 of appeal of the assessee bearing ITA 7. No.695/Asr/2017 is dismissed.

Order pronounced in the open court on 26.09.2022

Sd/- Sd/-

(Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member

AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.