SHRI SHISH PAL SINGH,JALANHDHAR vs. INCOME TAX OFFICER, WARD 1(4) JALANDHAR

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. 309/Asr/2017 Assessment Year: 2008-09

Shish Pal Singh, Vs. Income Tax Officer, S/o Sh. Assa Singh, Ward-1(4), Jalandhar Prop. M/s Imperial Furniture, Nakodar Road, Jalandhar [PAN: ABNPS 8286Q] (Appellant) (Respondent)

Appellant by : Sh. J. S. Bhasin, Adv. Respondent by: Sh. Trilochan Singh PS Khalsa, Sr DR Date of Hearing: 14.02.2022 Date of Pronouncement: 28.02.2022

ORDER Per Anikesh Banerjee, JM:

The aforesaid appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-1, Jalandhar [in brevity the CIT(A))] dated 30.03.2017 passed u/s 250(6) of the Income Tax Act, in respect of Assessment Year 2008-09.

“1. That the impugned assessment, having been framed pursuant to a document found in search of one M/s Movie Box Records Pvt Ltd. conducted on 05.12.2012, was assessable under section 153C and not under section 148 and therefore, the same is void ab initio.

2 ITA No. 309/Asr/2017 Shish Pal Singh v. ITO 2. That the impugned assessment, was seemingly brought u/s.148 when it had become barred by time qua the provisions of section 153C. Hence it is a nullity in the eyes of law.

“That the impugned assessment, having been framed pursuant to a document found in search of one M/s Movie Box Records Pvt. Ltd, conducted on 05.12.2012, was assessable under section 153C and not under section 148 and therefore, the same is void ab initio.”

3 ITA No. 309/Asr/2017 Shish Pal Singh v. ITO

First the technical ground was raised by the counsel which is resolved as follows:- The ld. ITO took the following observations in the assessment order which is as follows: “Assessment Order Return declaring income of Rs. 2,25,860/- was filed on 31.03,2009. The same was processed u/s 143(1). Later on information was received from the o/o DCIT Central Circle-ll, Jalandhar that the assessee had purchased a Car Lexus for Rs. 31,70,000/- from one Sh. Jaswinder Singh Bains Alias Jazzy ‘B” during the financial year 2007-08 relevant to assessment year 2008-09. Accordingly, notice u/s 148 was issued after getting prior approval from the Joint Commissioner of Income-Tax, Range-I, Jalandhar, which was granted vide his office letter No.6472 dated 30.3.2015. In response to notice u/s 148, the assessee filed written reply dated 26.5.2015 stating therein that return originally filed on 31.3.2009 be treated to have been filed in compliance to notice under reference. Vide this reply, the assessee also requested for supply of reasons recorded for reopening of assessment u/s 147 / 148. A copy of the reasons recorded was supplied to the assessee on 13.7.2015. Notice u/s 143(2) & 142(1) along with questionnaire were issued on 4.6.2015 duly served upon the assessee on 17.6.2015.

The counsel of the assessee pointed out the issue that the ld. ITO completed the assessment u/s 147/143(3) of the Act without considering section 153C of the Act. In this respect, the assessee placed the judgment of ITO v. Arun Kumar Kapoor 140 TTJ 0249 [2011], G. Koteswara Rao v. Dy. CIT [2015] 64 taxmann.com 159, ACIT vs Vidit Kumar Agarwal (2012) 150 TTJ 640 (Agra), P.amballabh Gupta v.

4 ITA No. 309/Asr/2017 Shish Pal Singh v. ITO ACIT & Ors. 288 ITR 347 (M.P.) and Cargo Clearing Agency Gujrat v. JCIT, 307 ITR 1 (Guj.) 5. The Ld. Senior Departmental Representative (in brevity Sr. DR) vehemently argued in this issue he mentioned that this particular issue of additional ground was never raised before the Ld. CIT(A). The counsel also accepted the fact. The issue is raised first time before the Bench for adjudication. The bench is first adjudicating the issue, raised through Additional Ground by assessee. The Sr. DR referred two judgments related this additional ground (i) Pepsico India Holdings P. Ltd. v. ACIT 370 ITR 295 (Delhi), (ii) Sh. Shailesh S. Patel, Palanpur v. ITO, Ward-5, in ITA No. 3063/Ahd/2016 order dated 31.08.2018. The ld Sr DR submitted a written statement which read as follows:-

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6.2. Here the observation of Hon’able High Court of Delhi in the case of Pepsico India Holdings (P.) Ltd. v. Assistant Commissioner of Income-tax, [2014] 50 taxmann.com 299 (Delhi) read as follows:- “14. First of all we may point out, once again, that it is nobody"s case that the Jaipuria Group had disclaimed these documents as belonging to them. Unless and until it is established that the

8 ITA No. 309/Asr/2017 Shish Pal Singh v. ITO documents do not belong to the searched person, the provisions of Section 153C of the said Act do not get attracted because the very expression used in Section 153C of the said Act is that "where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A ...." In view of this phrase, it is necessary that before the provisions of Section 153C of the said Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e., the searched person). In the Satisfaction Note, which is the subject matter of these writ petitions, there is nothing therein to indicate that the seized documents do not belong to the Jaipuria Group. This is even apart from the fact that, as we have noted above, there is no disclaimer on the part of the Jaipuria Group insofar as these documents are concerned. 15. Secondly, we may also observe that the finding of photocopies in the possession of a searched person does not necessarily mean and imply that they "belong" to the person who holds the originals. Possession of documents and possession of photocopies of documents are two separate things. While the Jaipuria Group may be the owner of the photocopies of the documents it is quite possible that the originals may be owned by some other person. Unless it is established that the documents in question, whether they be photocopies or originals, do not belong to the searched person, the question of invoking Section 153C of the said Act does not arise.”

“Facts of the case:

9 ITA No. 309/Asr/2017 Shish Pal Singh v. ITO

“RECEIPT

I, Shishpal Singh son of Sh. Assa Singh resident of 664, Urban Estate, Phase-ll, Jalandhar having today received the physical delivery of car make Toyota, bearing Registration No.PB-02-AQ-1414 from Sh. Jaswinder Singh Bains Son of Gurmail Singh r/o 87-A, Seth Hukam Chand Colony, Jalandhar, after paying the total sale consideration of the said Car. From today onwards, I shall be solely responsible for all the liabilities, if any, on the said Car for any reason. The said car will be got transferred by me in due course but from today onwards I will be treated as its owner and will be fully responsible for all the acts, taxes, challan or any liability arising out of use of said car i.e. accident" etc. and Jaswinder Singh will not be held responsible from today onwards. Jaswinder Singh Bains Shishpal Singh” 9. During the hearing, the ld. counsel indicated the recorded reasons of the ld. ITO which is in page-2 of the assessee’s paper book. The recorded reason is as follows:

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11 ITA No. 309/Asr/2017 Shish Pal Singh v. ITO 10. Against this reasons of reopening the assessee submitted the objection. The letter of objection dated 04/08/2015 is annexed in assessee’s paper book vide page nos-5 & 6 which are reproduced as under: “Kumar Ashwani & Associates, Chartered Accountants 85 Green Park, Cool Road, Jalandhar Phone: 0181-5080270

To,

The Income Tax Officer, 1(4), Jalandhar

Sir,

Subject: Assessment proceedings in the case of Sh. Shish Pal Singh, Prop Imperial Furniture, Nakodar Road, Jalandhar. Asstt Year 2008-09

This has the reference to your questionnaire issued in the above case and subsequent to that the copy of reasons supplied for reopening of assessment. In reply to the same it is submitted as under:-

At the very outset it is submitted that the assessee strongly objects to the issue of notice u/s 148 and submits that after 1-4-1989 the AO has power to reopen, provided there is “tangible material” to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of belief.

Perusal of the reasons recorded show that your good-self has issued the notice u/s 148 just on basis of a information wherein it has been stated that an amount of Rs.3170000/- has been paid by the assessee to Jaswinder Singh Bains for purchase of car Lexus which is totally misplaced. The said car had never been purchased by the assessee and even on date the car in question is owned and is in the name of Jaswinder Singh Bains. It is therefore prayed that the copy of the document in your possession be kindly supplied for filing specific comments on the same and it is also desired to kindly confront us with the registration number of the car lexus which has been stated to have been purchased by the assessee from Jaswinder Singh Bains, which the assessee maintains has never been purchased by him. The assessee in order to justify his contention arid claim has made an inquiry from the transport department and has collected the information from the office

12 ITA No. 309/Asr/2017 Shish Pal Singh v. ITO of the District Transport Officer, Amritsar, who while providing B-Register Extract which is dated 13/4/2015 has shown Sh. Jaswinder Singh resident of 87 Seth Hukam Chand Colony, Jal and 17 Katra Jaimal Singh, Amritsar as the legal and lawful owner of the Car, which thus means that the car in question has never been sold. Thus in no terms Shish Pal Singh the assessee can be said to have made an investment of 3170000/- in purchase of the car. Thus since the very basis for issue of notice u/s 148 is misplaced there was no cause to issue the notice under reference without verification of facts of the case. Your good self in the reasons recorded have stated that I have independently gone through the record and after independent verification have come to such a conclusion that I have reasons to believe that income has escaped assessment. It appears that your good office has issued the notice under reference on assumption and presumption without any concrete material on record. The information for purposes of issue of notice u/s 148 should be credible and have live nexus and link with belief about escapement of Income. The AO cannot go ahead in reopening of the assessment, issue a notice and then search for the material. The reason should be of belief and not suspect. Whatsoever the strong suspicion it may be. Attention in this regard is drawn to the following

90 ITD Patna(TM) 90 (DCIT vs Narendra Mohan Bagrev) The Honorable Bench has held that AO did not have sufficient material in forming the belief that income has escaped assessment, hence reopening is bad. 104 TTJ (ASR) 353 (Pyramid Software & Technologies vs DCIT) The jurisdictional Amritsar Bench has held that the reason to belief u/s 147 has special significance. It does not mean reason 10 suspect. The reason to belief requires higher level of evidence and material than requirement of satisfaction by the AO which essentially means that the material which comes to the notice of the AO must be direct, specific and definite and not vague or unspecific.

Thus in view of the submissions made here in above the proceedings initiated be kindly dropped Thanking you,

The facts of this case are that notice u/s 148 of the I.T. Act, 1961 was issued in this case on 30.3.2015 after recording the reasons in writing. In response to I notice u/s 143, the assessee vide his reply dated 26.5.2015 stated that the return originally filed on 31.3.2009 be treated to have been filed in compliance to the notice u/s 148. Vide this letter, the assessee also requested for supply of copy of reasons recorded u/s 147/148. The same were supplied to the assessee on 13.7.2015. Thereafter, the assessee vide his reply dated 4.8.2015 raised certain objections to the issue of notice u/s 148 and requested for dropping of proceedings u/s 148 of the Act.

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Brief facts of the case are that as per the information available with this office, the assessee Sh. Shish Pal Singh has purchased a Car Lexus for Rs 31,70,000/- from Sh. Jaswinder Singh Bains alias Jazzy ‘B’. The car was purchased by the assessee during the financial year 2007-08 relevant to assessment year 2008-09. Thereafter after independently going through and verifying the facts cf the case, notice u/s 148 was issued to the assessee by the AO.

In his objections, the assessee mainly contended as under-

(a) That the assessee had never purchased any car from Sh. Jaswinder Singh Banins anc even on date the car in questions is owned and is in the name of Sh. Jaswiinder Singh Bains.

(b) That the assessee in order to justify his contention and claim, has made an inquiry from the transport department and has collected the information from the office of District Transport Officer, Amritsar and as per the information received from DTO Amritsar, Sc. Jaswinder Singh R/o 87, Seth Hukam Chand Colony, Jalandhar and 17 Katra Jaimal Singh, Amritsar is legal and lawful, owner of the car.”

During the course of argument the ld Sr. DR relied on the order of the Ld. CIT(A) which read as follows:

“12. The assessee in appellate proceedings has challenged the initiation of reassessment proceedings. The assessee has submitted that the loose document seized at page 17 of annexure LI in the course of search at the business premises of M/s Movie Box Records Pvt. Ltd was the basis of initiation of reassessment. He stated that loose document did not indicate the amount of money that exchanged hands and there was no evidence with the Assessing Officer that the assessee had paid the amount for purchase of the Lexus car.

14 ITA No. 309/Asr/2017 Shish Pal Singh v. ITO hold that the assessment was correctly reopened by the Assessing Officer on the basis of documents seized during search operation.”

“6. During assessment proceedings, vide his reply filed on 16.10.2015, the assessee denied having purchased any car from Sh. Jaswinder Singh Bains. The assessee further contended that as per the receipt, no amount has been mentioned on account of sales consideration of the car. The assessee further filed an affidavit denying having purchased the above car from Sh. Jaswinder Singh Bains. The contents of the affidavit are reproduced hereunder:

“I, Shish Pal Singh son of Assa Singh, resident of664, Urban Estate, Phase-II, Jalandhar and Prop of M's Imperial Furniture, Nakodar Road, Jalandhar, do hereby solemnly declare and affirm as under:-

That I have not made purchase of Toyota make car bearing Registration No.PB- 02-AQ- 1414 from Jassvinder Singh Bains son of Gurmail Singh resident of 87A, Seth JIukam Chand Colony, Jalandhar.

That as per the records of transport office as filed before your good self the ownership of the said Toyata car still lies with Jaswinder Singh Bains.

Shishpal Singh Deponent

Certified that the above deposition made by me are true and correct to the best of my knowledge and belief and that noting has been concealed there in.

Shishpal Singh Deponent”

15 ITA No. 309/Asr/2017 Shish Pal Singh v. ITO 12. We have heard both the parties. As per the assessment order page 3, point no-5 (mentioned above) the reason to belief of the ld ITO was formed from a receipt. In the course of argument the counsel had pointed out that in the receipt there is no amount is mentioned. The ld. Sr. DR relied on the ‘recorded statement’ of different parties which were summoned u/s 131 by the ld ITO. The ld. counsel argued that reopening was made on depending the documents which is not belong to assessee. 12.1. During argument the ld. counsel had placed three judgments which are as follows:- i) Commissioner of Income-tax, Jalandhar v. Smt. Paramjit Kaur [2008] 168 Taxman 39 (Punjab & Haryana):- “4. Section 147 of the Act defines the power and jurisdiction of the Assessing Officer for making an assessment or reassessment of escaped income. Section 148 of the Act, on the other hand, provides for initiation of the reassessment proceedings with issuance of a notice on the assessee concerned. Section 147 empowers the Assessing Officer to assess or re-assess income chargeable to tax if he has reasons to believe that the income for any assessment year has escaped assessment. The power conferred under this section is very wide, but at the same time it cannot be stated to be a plenary power. The Assessing Officer can assume jurisdiction under the said provision provided there is sufficient material before him. He cannot act on the basis of his whim and fancy, and the existence of material must be real. Further, there must be nexus between the material and escapement of income. The Assessing Officer must record reasons showing due application of mind before taking recourse to reassessment proceedings. Still further the Assessing Officer can assume jurisdiction for reassessment proceedings provided he has reasons to believe but the same cannot be taken recourse to on the basis of reasons to suspect.”

ii) Hindustan Lever Ltd. v. R.B. Wadkar [2004] 137 Taxman 479 / 268 ITR 332 (BOM.) “20. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No

16 ITA No. 309/Asr/2017 Shish Pal Singh v. ITO inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced.”

iii) Signature Hotels (P.) Ltd. v. Income-tax Officer, [2012] 20 taxmann.com 797 / 338 ITR 51 (Delhi):- “15. The aforesaid reasons do not satisfy the requirements of section 147 of the Act. The reasons and the information referred to is extremely scanty and vague. There is no reference to any document or statement, except the annexure, which has been quoted above. The annexure cannot be regarded as a material or evidence that prima facie shows or establishes nexus or link which discloses escapement of income. The annexure is not a pointer and does not indicate escapement of income. Further, it is apparent that the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. The Assessing Officer accepted the plea on the basis of vague information in a mechanical manner. The Commissioner also acted on the same basis by mechanically giving his approval. The reasons recorded reflect that the Assessing Officer did not independently apply his mind to the information received from the Director of Income-tax (Investigation) and arrive at a belief whether or not any income had escaped assessment.”

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Order pronounced in the open court on 28.02.2022

Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member

Date: 28.02.2022 *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File