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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
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. 318/Asr/2018 Assessment Year: 2006-07
Sh. Gurcharan Singh, Vs. Income Tax Officer, S/o Sh. Ram Singh, Ward-1, Hoshiarpur Ward-9, Garhshankar [PAN: ACPPS 4470H] (Appellant) (Respondent)
Appellant by : Sh. S. K. Chopra, Adv. Respondent by: Sh. Trilochan Singh PS Khalsa, Sr DR Date of Hearing: 17.02.2022 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 28.03.2018 passed u/s 250(6) of the Income Tax Act, in respect of Assessment Year 2006-07.
The assessee has raised the following grounds of appeal:-
On the facts and in the circumstances of the case the Ld. Commissioner of Income Tax(Appeals) is wholly unjustified and has erred in law in not vacating the order of the AO- When the appellant has been admittedly assessed to income tax for the asstt. year (a) under reference by the ITO ward-1, Rampur (UP) then the AO at Hoshiarpur (Punjab)
2 ITA No. 318/Asr/2018 Gurcharan Singh v. ITO acted in defiance of law in reopening the assessment by application of section 147 without jurisdiction;
When at page 2 of the assessment order AO admits that no copy of return of (b) income is traceable in his office and he has acted upon the basis of the intimation dt 12- 12-2006 issued by ITO ward-1, Rampur, clearly proves beyond any doubt that the AO Hoshiarpur initiated proceedings u/s 147 by hitting in the dark with hoax claims to have "independently examined the assessment and the other related records of the assessee" and recorded reasons on suspicions;
When without independently calling for any information from the assessee, (c) concluded in the recorded reasons, "Sh. Gurcharan Singh failed to explain the source of Rs. Seven Lac paid on 05/05/2005."
When the AO failed to supply the source and the information in possession and (d) relied upon and place it on record. Recorded reasons as well as the assessment order is also silent on it;
When the AO failed to comply with the mandatory provisions of sec. 144(1), in (e) view of his claim to have finalized the assessment ex-parte to the best of his judgement in the meaning of section 144;
When the A.O. failed to discharge the onus that lay upon the revenue to prove (f) that the assessee had earned undisclosed income.
That the CIT(A) is wholly unjustified in dismissing the 1st and 2nd grounds of 2. appeal on extraneous considerations overlooking the submissions and various grounds of appeal so raised. The order under reference deserves to be set aside.
That the CIT(A) failed to consider the withdrawal of the notices issued u/s 143(2) and 142(1) along with the questionnaire by the AO as well as by his predecessor, at the fake end and again restoration of the assessment proceedings without any valid and proper notice under force of law as the law does not authorize and permit its withdrawals, which renders the entire proceedings null and void.
That the CIT(A) is wholly unlawful and unjustified in confirming the addition of Rs.3,95,000/-, by arbitrarily and baselessly treating the good evidence as no evidence, regarding the availability of Rs 15 Lakhs cash receipt evidenced by the agreement to sell dt 24-08-2005 supported by the statement filed by Shri Gurdial Singh on 13-01-2014, and confirmed by him on summoning u/s 131 vide order sheet entry dt. 05-02-2014. The
3 ITA No. 318/Asr/2018 Gurcharan Singh v. ITO copies available in the assessment records were also filed before the CIT(A). Therefore the addition of Rs. 3,95,000/- deserves to be deleted.
That the order of the CIT(A) confirming the addition of Rs. 3,95,000/-without going into the merits is a denial of and is against the principles of natural justice, which deserves to be vacated.
That the appellant seeks leave to add or amend any of the grounds of appeal on or before the appeal is finally heard and disposed off.
That the appeal is filed with in time.”
At the time of hearing, the jurisdiction ground was not pressed by the counsel of the Assessee, Vide his application dated 17.02.2022. Therefore, this is dismissed as non-pressed. We are now considering the grounds related to proceedings U/s 147 of the Income Tax Act, 1961 (in brevity the Act).
Brief fact, the assessee filed its return in ITO, Ward-1, Rampur, UP copy of the ITR was duly filed in the paper book page no. 12. After receiving an information from available source, the Ld. Income Tax Officer, Ward-1, Hoshiarpur (in brevity, ITO) after examining the fact, issued the notice u/s 148 related assessment year 2006-07. The recorded reason of the proceedings u/s 148 of the Income tax Act, 1961 (in brevity the Act), was filed with the paper book bearing page no. 10 which is as follows:-
4 ITA No. 318/Asr/2018 Gurcharan Singh v. ITO
5 ITA No. 318/Asr/2018 Gurcharan Singh v. ITO After recorded the reasons the assessment was completed u/s 143(3) of the Act and the observation of the ld. Assessing Officer (in brevity AO) is as follows:-
“As per copy of intimation dated 12.12.2006 made under sec. 143(1) by the ITO, Ward 1, Rampur, the assessee filed return declaring total income of Rs. 2,33,480/- on 03.08.2006 at Rampur. Subsequently, proceedings under sec. 147 were initiated against and notice under sec. 148 issued to the assessee on 22.03.2013 was served upon him on 23.03.2013 with the previous sanction under sec. 151(1) obtained from the Ld. Joint Commissioner of Income Tax, Hsp. Range, Hoshiarpur conveyed vide his letter No. JCIT/Hsp/15/2012-13/1413 dated 22.03.2013, after recording in writing the reasons to believe for the income having escaped assessment for the year under asst. Although the return of income in pursuance to the notice under sec. 148 fell due to be made on or before 21.04.2013, yet no such return of income was furnished by the assessee. However, vide his letter dated 13.03.2014, it was stated by the assessee that as already stated by him vide his letters dated 14.11.2013 and 14.02.2014, the return of income already filed by him on 03.08.2006 be treated to have been filed in pursuance to the notice under sec. 148. In his letter dated 14.11.2013, the assessee nowhere stated that the return of income already filed by him be treated to have been filed in pursuance to notice under sec. 148 but was stated therein only to the effect that he has already filed the return of income for the year under asst, on 03.08.2006. However, vide his letter dated 14.02.2014, the assessee stated that the return of income has already been filed by him on 03.08.2006 and that the same 'be treated to it' which could be implied that the assessee meant to say that the return of income already filed by him on 03.08.2006 be treated to have been filed in pursuance to notices 148, too. Thus considering, although no separate return of income in pursuance to the notice under sec. 148 has been filed by the assessee, yet w.r.t. his letter dated 14.02.2014 read with his subsequent letter dated 04.03.2014, the return of income in pursuance to the notice under sec. 148 is treated to have been filed by the assessee on 14.02.2014 being late by 10 months. No copy of such a return of income claimed to have been filed on 03.08.2006 has been furnished by the assessee nor it is traceable in this office- However, as per copy of intimation under sec. 143(1)' dated 12.12.2006 referred to above according to which there was determined refund of Rs. 21,290/- including interest allowed thereon at Rs. 820/-, it was filed at Rampur. Consequently, statutory notice under sec. 143(2) was also issued and served upon the assessee on 13.03.2014. Since no return of income was furnished by the assessee in pursuance to notice under sec. 148, notices under sec. 143(2) already issued inadvertently on 30.10.2013 and 28.11.2013 were subsequently withdrawn vide this office letter No. 5103 dated 18.12.2013 as have never been issued. The assessee was finally issued notices under sec. 142(1) and 143(2) along with specific questionnaire dated 14.03.2014 for compliance at 11 AM on 18.03.2014 and was sent by regd. post vide
6 ITA No. 318/Asr/2018 Gurcharan Singh v. ITO postal receipt No. RP328841043IN dated 14.03.2014 itself. Neither anybody attended the asst, proceedings nor the requisite information was furnished even till the closing office hours on the date of hearing fixed for 18.03.2014. Being a time barring case, I am left with no other alternative but to finalise the asst, ex-parte to the best of my judgement in the meaning of sec. 144.
The assessee is the case of a bank employee. As per information in my possession, the assessee entered into an agreement dated 05.05.2005 for purchase of some agr. land at Vill. Bharatpur Rajputan, Teh. Garhshanker, Distt. Hoshiarpur with Sh. Gurdial Singh etc. of Jalandhar. Copy of the said agreement is placed on record. Although major part of the land was subsequently sold and registered in the name(s) of third persons with some land in his own name, too, on 09.04.2007, yet the assessee paid advance of Rs. 10,00,000/- at the time of entering into the agreement on 05.05.2005 to its seller as under which falls during the year under asst. :
(i) Vide DD No. 619408 datea 05.05.2005 issued by Rs. 9,00,000/- Punjab National Bank, Railway Road, Garhshanker. (ii) Cash payment 1,00,000/- Total 10,00,000/-
While explaining the source of payment of the above advance of Rs. 10,00,000/-, the assessee furnished copies of two bank certificates dated 15.05.2,013 from the Punjab National Bank, Main Br., Garhshanker to the effect of having sanctioned Krishi Card Limit of Rs. 4,00,000/- each in his name and also in the name of wife, Smt. Parminder Kaur against mortgage of their agr. land. Besides, copies of his accounts in Punjab National Bank, Main Br. & Railway Road, Garhshanker and Punjab & Sind Bank, Garhshanker were also obtained/filed during the course of asst, proceedings. Vide his letter dated 14.02.2014, It was explained by the assessee that out of the above advance of Rs, 10 lacs, Rs. 9,00,000/- was paid by DD made from his SB a/c No. 11450 in Punjab National Bank, Main Br., Garhshanker on 05.05.2005 while furnished no explanation to the remaining amount of Rs. 1,00,000/-. On again being asked vide questionnaire dated 04.03.2014, the assessee stated vide his letter dated 13.03.2014 that the advance of Rs. 1,00,000/- allegedly represented sale proceeds of two buffalows to one Sh. Amrik Singh; in support of which he furnished a copy of receipt dated 03.05.2005.” Against the order of assessment the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) uphold the order of the ld. AO. The observation of the ld. CIT(A) in page no. 3 of the impugned order is as follows:
7 ITA No. 318/Asr/2018 Gurcharan Singh v. ITO “3. Facts of the case and order made by Ld. Assessing Officer:
As per copy of intimation dated 12.12.2006 made under Sec. 143(1) by the ITO, Ward 1, Rampur, the assessee filed return declaring total income of Rs. 2,33,480/- on 03.08.2006 at Rampur. Subsequently, proceedings under Sec. 147 were initiated against and notice under Sec. 148 of the Income Tax Act, 1961 issued to the assessee on 22.03.2013 which was served upon him on 23.03.2013.
The assessee is a bank employee. As per information available with assessing officer, the assessee entered into an agreement dated 05.05.2005 for purchase of some agricultural Land at Vill. Bharatpur Rajputan. The Garhshanker, Distt. Hoshiarpur with Sh. Gurdial Singh etc. of Jalandhar.
Although major part of land was subsequently sold and registered in the name(s) of third persons with some land in his own name, too, on 09.04.2007, yet the assessee paid advance of Rs. 10,00,000/- to its seller as under which falls during the year under assessment:
(i) Vide DD No. 619408 dated 05.05.2005 issued by Rs. 9,00,000/- Punjab National Bank, Railway road, Garhshanker. (ii) Cash payment Rs. 1,00,000/- Total 10,00,000/-
While explaining the source of payment of the above advance of Rs. 10,00,000/-, the assessee furnished copies of two bank certificates dated 15.05.201 3 from the Punjab National Bank, Main Branch., Garhshanker to the effect of having sanctioned Krishi Card Limit of Rs. 4,00,000/'- each in his name and also in the name of wife, Smt. Parminder Kaur against mortgage of their agricultural Land. Besides, Copies of his account in Punjab national bank, Main Branch. & Railway Road, Garhshanker and Punjab & Sind Bank, Garhshanker were also obtained/tiled during the course of assessment, proceedings. Vide his letter dated 14.02.2014, it was explained by the assessee that out of the above advance of Rs. 10 lacs, Rs. 9,00,000/- was paid by DD made from his SB a/c No. 11450 in Punjab National Bank, Main Branch., Garhshanker on 05.05.2005 while he furnished no explanation to the remaining amount of Rs. 1,00,000/- . On again being asked vide questionnaire dated 04.03.2014, the assessee stated vide his letter dated 13.03.2014 that the advance of Rs. 1,00,000/- allegedly represented sale proceeds of two buffalows to one Sh. Amrik Singh. In support of which he furnished a copy of receipt dated 03.05.2005.
8 ITA No. 318/Asr/2018 Gurcharan Singh v. ITO As a perusal of his.SB a/c No. 11450 in PNB, MB, Garhshanker revealed, that the source of advance to the tune of Rs.9,00,000/- made by DD on 05.05.2005 was found to have been explained by the assessing officer. However, Rs. 1,43,088/- (90,000 +53,088) deposited in the above said bank account of the assessee on 04.05.2005 remained unexplained, which were claimed to be assessee’s Horticulture and agriculture income.
This apart, the KC Account No. 254 of the assessee maintained in PNB Garhshanker also revealed a cash deposit of Rs. 3,95,000/- made on 27.08.2005/-.
During the appeal proceedings, the assessee failed to produce the alleged purchasers etc. as was asked for vide questionnaire dated 14.03.2014, the assessee failed even to make any compliance to the said questionnaire on the date fixed for hearing nor any evidence was furnished in support of agricultural Income of Rs. 53,088/- nor any such income from horticulture and agriculture has been declared by him in the relevant return of income. Therefore, the assessing officer, treated the deposits amounting to Rs.6,38.088/- as unexplained and added to the income of the assessee.”
Being aggrieved against the order of the ld. CIT(A), the assessee has filed an appeal before us. The counsel of the assessee vehemently argued the matter before us. He has placed the issue of reopening u/s 148 of the Act and specifically mentioning page no. 10 of the paper book and recorded reasons of the ld AO. In the recorded reasons the total amount of escaped assessment was amount to Rs.7 lac. The counsel pointed out the point no. 3 of the recorded reasons. The ld. AO added back the total amount of Rs.6,38,088/- in the assessment order. But the in recorded reason amount of escapement is mentioned Rs 7lac. So, the observation of the ld.AO was not proper as per the counsel.
The Departmental Representative of Revenue (in brevity DR) argued vehemently in favour of the Revenue and he relied on the order of the ld. ITO and ld. CIT(A) which are available on record.
9 ITA No. 318/Asr/2018 Gurcharan Singh v. ITO 7. The counsel referred a judgment, Shamshad Khan v. Asstt. CIT 395 ITR 0265 (Delhi) 2017 which is annexed in his paper book page no. 14. The observation of the Hon’able High Court reads as follows:- “7. It is settled law that 'reasons to believe' have to be substantive and cogent. They cannot merely be reasons to suspect. The Petitioner's returns for the relevant AY and the earlier AYs were available for examination before the issuance of the impugned notice. The Form for recording the reasons for initiating the proceedings under Section 148 of the Act for obtaining approval of the CIT/Additional CIT itself proceeds on the erroneous basis that the quantum of income which had escaped assessment was Rs.28,75,000/- whereas the assessee had filed income returns of merely Rs.20,56,145/- and it is on this basis that the Additional CIT and the CIT granted their approval. However, the CIT's date of approval is not recorded in the Form even though it is mentioned in the letter dated 28th January, 2016. The Petitioner had highlighted this fundamental error at the initiation of the case by stating that his income was mentioned as Rs.20,56,145/- instead of Rs.69,71,191/-. This was summarily rejected by the Respondent by an order dated 14th October, 2016 stating that the amount of Rs.20,56,145/- instead of Rs.69,71,191/- being mentioned as the income of the Petitioner was a clerical mistake and that the latter figure would be treated as his income.”
The observation of Hon’ble Supreme Court of India, Commissioner of Income- tax, Delhi v. Kelvinator of India Ltd (2010) 320 ITR 561 (SC) reads as follows:- “Therefore, post 1-4-1989 , power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1-4-1989 , Assessing Officer has power to
10 ITA No. 318/Asr/2018 Gurcharan Singh v. ITO 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 the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987 , Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re-introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer.”
We have heard both the parties. The reopening was made only on basis of some available record but the reason to believe was not formed by the ld. AO. correctly. The ld. AO, only took cognizance of documents which are available in record. There is no live nexus in between material & formation of belief on escapement of income. There is no factual similarity in between recorded reason & addition of amount. The reason to belief of the ld AO is no acceptable.
Accordingly the impugned order of the ld. AO dated 20.03.2014 is dismissed.
In the result, the appeal of the assessee is allowed.
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*
11 ITA No. 318/Asr/2018 Gurcharan Singh v. ITO 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