Sh. Krishan Bansal,, Chandigarh v. JCIT,, Chandigarh

ITA 278/CHANDI/2006 | 2001-2002
Pronouncement Date: 30-07-2010 | Result: Partly Allowed

Appeal Details

RSA Number 27821514 RSA 2006
Assessee PAN AAQPB6772K
Bench Chandigarh
Appeal Number ITA 278/CHANDI/2006
Duration Of Justice 4 year(s) 3 month(s) 10 day(s)
Appellant Sh. Krishan Bansal,, Chandigarh
Respondent JCIT,, Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 30-07-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 30-07-2010
Date Of Final Hearing 27-01-2010
Next Hearing Date 27-01-2010
Assessment Year 2001-2002
Appeal Filed On 19-04-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI G.S.PANNU ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NOS. 275 TO 278/CHD/2006 ASSESSMENT YEARS: 1997-98 TO 1999-2000 & 2001-02 & ITA NOS. 423 TO 426/CHD/2009 ASSESSMENT YEARS: 1997-98 TO 1999-2000 & 2001-02 SHRI KRISHAN BANSAL VS. THE JOINT A.C.I.T> PROP. M/S VIDEO VISION RANGE-VI HOUSE NO.1729 SECTOR 34D CHANDIGARH. CHANDIGARH. PAN NO. AAQPB6772K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAVINDER BINDLISH RESPONDENT BY: SMT.SUNITA PURI ORDER PER SUSHMA CHOWLA JM OUT OF THESE 8 APPEALS FILED BY THE ASSESSEE 4 AP PEALS ARE AGAINST THE CONSOLIDATED ORDER OF CIT(A) DATED 20.3.2006 RE LATING TO ASSESSMENT YEARS 1997-98 TO 1999-2000 AND 2001-02 AGAINST THE ORDER PASSED U/S 143(3) R.W.S. 147 OF THE I.T. ACT AND THE BALANCE F OUR APPEALS ARE AGAINST THE CONSOLIDATED ORDER OF CIT(A) DATED 16.3.2009 RE LATING TO THE SAME ASSESSMENT YEARS AGAINST PENALTY LEVIED U/S 271(1)( C) OF THE ACT. 2 2. ALL THE ABOVE-SAID EIGHT APPEALS RELATING TO THE SAME ASSESSEE ON THE SAME ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOS ED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE IN THE QUANTUM APPEALS RELATING TO THE YEARS UNDER APPEAL HAS CHALLENGED THE JURISDICTION OF THE ASSES SING OFFICER IN ISSUING THE NOTICE U/S 148 OF THE ACT. THE ISSUE IN GROUN D NO.2 RAISED BY THE ASSESSEE IS AGAINST THE INITIATION OF RE-ASSESSMENT PROCEEDINGS U/S 148 OF THE I.T. ACT. THE GROUND NO.3 IS AGAINST THE MERIT S OF ADDITION MADE BY THE ASSESSING OFFICER IN THE RESPECTIVE YEARS. WE PROCEED TO ADDRESS THE ISSUE OF INITIATION OF THE RE-ASSESSMENT PROCEEDING S U/S 147/148 OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF CARS AND HAD FILED HIS RETURN OF INCOME FOR THE RESPECTIVE YEARS IN DUE COURSE. THE INCOME DEPARTMENT CAME TO THE KNOWLEDGE THAT ONE SHRI N.K.GARG A PRACTICING CHARTERED ACCOUNTANT WAS INDULGING IN GIVING BOGUS ACCOMMODATION ENTRIES BY INTRODUCING UNACCOUNTED MONEY IN CASH OF DIFFERENT PARTIES IN S EVERAL BANK ACCOUNTS MAINTAINED IN THE NAME OF SHRI N.K.GARG HIMSELF H IS FAMILY MEMBERS AND OTHER ACQUAINTANCES. SHRI N.K.GARG HAD CLAIME D REFUND ON THE BASIS OF FAKE TDS CERTIFICATE. A FIR WAS LODGED AGAINST SHRI N.K.GARG FOR HAVING COMMITTED FRAUD AND FORGERY AND HE WAS TAKEN IN CUSTODY BY THE POLICE. DURING THE COURSE OF INVESTIGATION HE CON FESSED THAT HE WAS NOT IN A CAPACITY TO ADVANCE MONEY AND WAS ONLY GIVING ACCOMMODATION ENTRIES TO THE PARTIES. AS PER THE INVESTIGATION IT WAS REVEALED THAT SHRI N.K.GARG & HIS GROUP HAD GIVEN BOGUS ENTRIES OF UN SECURED LOANS TO THE ASSESSEE WHO WAS RELATED TO THE ASSESSEE ALSO. 3 5. THE ASSESSING OFFICER ON RECEIPT OF THE ABOVE SA ID INFORMATION INVOKING THE JURISDICTION U/S 147 OF THE ACT RECORD ED REASONS FOR REOPENING THE ASSESSMENT AND ISSUED NOTICE U/S 148 OF THE ACT. IN REPLY THE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN FIL ED MAY BE TREATED TO HAVE BEEN FILED IN RESPONSE TO NOTICE ISSUED U/S 148 OF THE ACT. THE BOOKS OF ACCOUTS WERE PRODUCED AND EXAMINED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER REQUISITIONED THE ASSESSEE TO PRO DUCE THE SAID CREDITORS ALONGWITH THEIR BANK ACCOUNTS. THE ASSESSEE IN REP LY STATED THAT HE WAS NOT ON SPEAKING TERMS WITH THE SAID CREDITORS AND H ENCE THEIR BANK ACCOUNTS OR SOURCE OF DEPOSITS IN THE SAID ACCOUNTS COULD NOT BE EXPLAINED. THE ASSESSING OFFICER IN THE ABSENCE OF THE DETAILS BEING SUBMITTED BY THE ASSESSEE MADE ADDITION U/S 68 OF THE I.T.ACT IN RES PECT OF UNSECURED LOANS RAISED FROM SHRI N.K.GARG GROUP AND ALSO DISALLOWE D INTEREST ON THE ABOVE-SAID UNSECURED LOANS AS UNDER :- A.Y. 1997-98 - ADDITION U/S 68 IN RESPECT OF UNSECURED LOANS OST ENSIBLY RAISED DURING THE PRESENT YEAR FROM THE N.KGARG GROUP RS. 7 82 000/-. - DISALLOWANCE OF INTEREST ON THE ABOVESAID UNSECURED LOANS RS.2 70 312/-. - DISALLOWANCE OF INTEREST PAID DURING THE YEAR ON TH E UNPROVED B/F BALANCES IN THE LOAN ACCOUNTS RS.8 65 742/-. A.Y. 1998-99 - ADDITION U/S 68 IN RESPECT OF UNSECURED LOANS OST ENSIBLY RAISED DURING THE PRESENT YEAR FROM THE N.K.GARG GROUP RS. 17 10 000/-. - DISALLOWANCE OF INTEREST PAID DURING THE YEAR ON THE ABOVEMENTIONED LOANS AND UNPROVED B/F BALANCES IN T HE LOAN ACCOUNTS RS.3 99 444/-. 4 A.Y. 1999-2000 - ADDITION U/S 68 IN RESPECT OF UNSECURED LOANS OST ENSIBLY RAISED DURING THE PRESENT YEAR FROM THE N.K.GARG GROUP RS. 50 000/- - DISALLOWANCE OF INTEREST PAID DURING THE YEAR ON TH E ABOVEMENTIONED LOANS AND UNPROVED B/F BALANCES IN T HE LOAN ACCOUNTS : RS.2 49 000/-. A.Y. 2001-2002 - ADDITION U/S 68 IN RESPECT OF UNSECURED LOANS OST ENSIBLY RAISED DURING THE PRESENT YEAR FROM THE N.K.GARG GROUP RS. 3 00 000/-. 6. THE CIT(A) IN VIEW OF EXPLANATION- 2 UNDER CLAU SE (B) TO SECTION 147 OF THE ACT WAS OF THE VIEW THAT IF THE ASSESSMENT FOR ANY ASSESSMENT YEAR FOR AND FROM ASSESSMENT YEAR 1989-9 0 HAS NOT BEEN MADE IN TERMS OF SECTION 143(3) AND ONLY AN INTIMAT ION HAS BEEN SENT TO THE ASSESSEE IN PURSUANCE OF THE RETURN FILED BY HIM REOPENING BY ISSUE OF NOTICE U/S 148 OF THE ACT CAN BE MADE IN A CCORDANCE WITH THE PROVISIONS OF SECTION 147 OF THE ACT. RELIANCE WAS PLACED ON THE RATIO LAID DOWN IN RANCHI CLUB VS. CIT (214 ITR 643 (PAT )). THE SECOND OBJECTION OF THE LEARNED COUNSEL FOR ASSESSEE THAT ASSESSING OFFICER HAS NO REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESS MENT WAS ALSO REJECTED AS ACCORDING TO THE CIT(A) THE INFORMATION WITH THE ASSESSING OFFICER WAS ADEQUATE TO CREATE EXFACIE BELIEF IN TH E MIND OF THE ASSESSING OFFICER THAT INCOME CHARGEABLE TO TAX MAY HAVE ESCAPED ASSESSMENT. THE CIT(A) FURTHER HELD THAT THE EXPRE SSION REASON TO BELIEVE POSTULATES BELIEF AND THE EXISTENCE OF REA SON FOR THAT BELIEF WHICH MUST BE IN GOOD FAITH. THE CIT(A) UPHELD THE INVOKING OF JURISDICTION BY THE ASSESSING OFFICER UNDER THE PRO VISIONS OF SECTION 5 147 EXPLANATION-2 OF THE ACT. THE ASSESSEE IS IN APPEAL AGAINST THE SAME. 7. THE LD. AR FOR THE ASSESSEE MADE VARIOUS SUBMIS SIONS WITH REGARD TO THE REOPENING OF THE RE-ASSESSMENT PROCEE DINGS IN THE CAPTIONED ASSESSMENT YEARS. THE LD. AR FOR THE ASS ESSEE DREW OUR ATTENTION TO THE REASONS RECORDED FOR REOPENING OF THE RE-ASSESSMENT BY THE ASSESSING OFFICER WHICH ARE FURNISHED AT PAGES 6 TO 9 OF THE PAPER BOOK FURNISHED BY THE DEPARTMENT. OUR ATTENTION W AS DRAWN TO PARA-2 OF THE REASONS RECORDED UNDER WHICH IT HAS BEEN OBS ERVED THAT CASH HAD BEEN DEPOSITED IN THE BANK ACCOUNTS WHICH HAVE NOT BEEN DISCLOSED TO THE DEPARTMENT AND THUS HAD ESCAPED ASSESSMENT. T HE LD. AR FOR THE ASSESSEE FURTHER POINTED OUT THAT IN THE ASSESSMENT PROCEEDINGS NONE OF THESE REASONS HAVE BEEN FOUND OR ALLEGED. THE QUER IES WERE RAISED DURING THE ASSESSMENT IN RESPECT OF THE TRANSACTION OF TAKING THE LOAN AND REPAYMENT THROUGH ACCOUNT PAYEE CHEQUES. THE LD. AR FOR THE ASSESSEE STRESSES THAT THERE WAS NO CASH TRANSACT IONS INTRODUCED BY THE ASSESSEE IN ANY OF THE BANK ACCOUNTS NOR THE AS SESSEE HAD GIVEN LOAN TO ANY PERSON IN CASH. THE LD. AR FOR THE ASS ESSEE THUS SUBMITTED THAT THE ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF REASONS WHICH DOES NOT EXIST IN THE CASE OF THE ASSESSEE. FURTH ER IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT SIMILAR LOANS W ERE RECEIVED BY THE ASSESSEE DURING ASSESSMENT YEAR 2000-01 AND THE ASS ESSING OFFICER IN THE ORDER PASSED U/S 143(3) R.W.S. 147 OF THE ACT H AD MADE NO ADDITION ON THIS ACCOUNT. FURTHER NO CROSS-EXAMINATION OF SHRI N.K.GARG WAS ALLOWED TO ASSESSEE. THE LD. AR FOR THE ASSESSEE A LSO STRESSED THAT THE PRESENT PROCEEDINGS HAD BEEN REOPENED BY THE ADDL. CIT WHO WAS NOT THE AUTHORIZED ASSESSING OFFICER UNDER SECTION 2 (7 A) OF THE ACT. THE 6 LD. AR FOR THE ASSESSEE PLACED RELIANCE ON (16 DTR 63 (SC)) AND (277 ITR 278). THE LD. AR FOR THE ASSESSEE FURTHER SUBM ITTED THAT IN VIEW OF THE RATIO LAID DOWN BY THE TRIBUNAL IN THE CASE OF SHRI RAJNEESH BANSAL ( ITA NO.55 TO 57/CHD/2009) REOPENING U/S 14 7/148 OF THE ACT IS INVALID AS THE REASONS RECORDED FOR REOPENING O F BOTH CASES WERE SIMILAR. THE LD. DR FOR THE REVENUE POINTED OUT T HAT THE RE- ASSESSMENT PROCEEDINGS WERE VALIDLY INITIATED BASED ON THE INFORMATION RECEIVED DURING THE ENQUIRIES IN THE CASE OF SHRI N.K.GARG WHO CONFESSED TO HAVE GIVEN BOGUS CASH ENTRIES TO VARIO US CHANDIGARH PARTIES. IT WAS FURTHER POINTED OUT BY THE LD. DR FOR THE REVENUE THAT THE NOTICE U/S 148 OF THE ACT WAS ISSUED AFTER DUE APPROVAL OF THE COMPETENT AUTHORITY AND THE DETAILS WERE CALLED FRO M THE ASSESSEE WITH REFERENCE TO THE BANK ACCOUNTS AND THE UNSECURED LO ANS RAISED DURING THE YEAR. AS THE ASSESSEE HAD FAILED TO EXPLAIN TH E LOANS SATISFACTORILY THESE WERE ADDED BACK AS INCOME OF THE ASSESSEE. THE LD. DR FOR THE REVENUE FURTHER SUBMITTED THAT FOR INITIATING RE-AS SESSMENT PROCEEDINGS WHAT IS TO BE SEEN IS WHETHER THERE WAS SOME MATERI AL OF PRIMA FACIE NATURE WHICH WOULD CONSTITUTE INFORMATION ENABLING THE ASSESSING OFFICER TO HAVE REASON TO BELIEVE THAT INCOME HAD E SCAPED THE ASSESSMENT. RELIANCE WAS PLACED ON (304 ITR 325 (D EL)) BY THE LD. DR FOR THE REVENUE. FURTHER RELIANCE WAS PLACED O N THE RATIO LAID DOWN IN RAJESH JHAVERI STOCK BROKERS P. LIMITED (29 1 ITR 500 (SC)) BY THE LD. DR FOR THE REVENUE FOR INTERPRETING THE MEANING REASON TO BELIEVE AND RAYMOND WOOLLEN MILLS LTD. V. ITO ((19 99) 236 ITR 34 (SC)). THE LD. DR FOR THE REVENUE FURTHER POINTED OUT THAT THE FACTS OF THE CASE OF SHRI RAJNEESH BANSAL (SUPRA) ARE DIF FERENT FROM THAT OF THE ASSESSEE AND THE ONLY SIMILARITY BETWEEN THE TW O WAS THAT BOTH ARE RELATED TO BOGUS CREDIT ENTRIES GIVEN BY SHRI N.K. GARG. THE LD. DR 7 FOR THE REVENUE PLACED RELIANCE ON THE DECISION OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF DR.PAWAN SHARM A VS. ITO (ITA NO.1077 TO 1079/CHANDI/2008) WHERE IN IT HAS BEEN O BSERVED THAT THE COURT IS ONLY REQUIRED TO SEE WHETHER SOME PRIMA-FA CIE MATERIAL OR INFORMATION EXISTS FOR ESCAPEMENT OF INCOME ON THE BASIS OF WHICH THE REVENUE COULD REOPEN THE CASE. IN THIS CASE THERE WAS INFORMATION IN POSSESSION OF THE DEPARTMENT THAT THE ASSESSEE WAS BENEFICIARY OF BOGUS ENTRIES GIVEN BY SHRI N.K.GARG BASED ON WH ICH THE CASES WERE RE-OPENED. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE FIRST ISSUE BEING ADDRESSED BY US IS IN RESPECT OF INITIATION OF PROCEEDINGS U/S 147 OF THE ACT. THE PRECONDITION FOR ASSUMING JURISDICTION U/S 147 OF THE ACT IS THAT THERE MUST BE RELEVANT MATERIAL AVA ILABLE ON THE BASIS OF WHICH A REASONABLE PERSON COULD HAVE FORMED A REASO NABLE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. THE PREREQUISITE FO R INITIATING THE PROCEEDINGS FOR THE RE-ASSESSMENT U/S 147 OF THE AC T IS EXISTENCE OF MATERIAL WHICH SHOULD HAVE A DIRECT LINK WITH THE F ORMATION OF BELIEF THAT INCOME HAD ESCAPED ASSESSMENT WHICH IN TURN FORMS T HE BASIS OF BELIEF OF THE ASSESSING OFFICER. THE MATERIAL MUST BE AVAILA BLE ON THE RECORD FOR THE ASSESSING OFFICER TO HAVE FORMED THE BELIEF OF ESCAPEMENT OF INCOME AND THE REASONS FOR SUCH BELIEF SHOULD HAVE NEXUS T O THE MATERIAL AVAILABLE ON RECORD. 9. THE ASSESSING OFFICER IN THE PRESENT CASE FOR IN ITIATING THE RE- ASSESSMENT PROCEEDINGS HAD RECORDED THE UNDERMENTIO NED REASONS U/S 147 OF THE ACT :- ASSESSMENT YEARS 1997-98 & 1998-99 8 SH.N.K.GARG A CHANDIGARH BASED CHARTERED ACCOUNTA NT CLAIMED REFUNDS WHICH WERE ON INVESTIGATION FOUND CLAIMED AT THE STRENGTH OF FAKE TDS CERTIFICATES AS THE PAR TY ISSUED THE CERTIFICATE HAS DENIED OF ISSUE. ALSO TDS RETU RN OF THE SAID PARTY HAS NOT REFLECTED SUCH PAYMENT TO THE GO VT. ACCOUNT. SH.N.K.GARG WAS SYSTEMATICALLY CHEATED DE FRAUDED THE GOVERNMENT BY CLAIMING FALSE REFUNDS. AS A RES ULT OF A FIR LODGED BY THE DEPARTMENT AND SH.N.K.GARG WAS AR RESTED AND IS NOW ON BAIL. THE CASE U/S 420 467 468 47 1 474 & 120B OF THE INDIAN PENAL CODE ARE PENDING AGAINST SH.N.K.GARG BEFORE THE JUDICIAL MAGISTRATE CHANDIG ARH. DURING THE COURSE OF INVESTIGATION IT WAS FOUND THA T APART FROM CLAIMING THE REFUNDS FROM THE DEPARTMENT HE WAS ALSO INDULGING IN PROVIDING ENTRIES IN LARGE SCALE BY IN TRODUCING UNACCOUNTED MONEY IN DIFFERENT BANK ACCOUNTS IN HIS NAME IN THE NAME OF HIS FAMILY MEMBERS IN THE NAME OF H IS KNOWN PERSONS ETC. COPIES OF ACCOUNTS WERE OBTAINED AND EXAMINED. ALSO DURING THE COURSE OF INCOME-TAX INVESTIGATION PROCEEDINGS IT CAME TO NOTICE THAT THE CASE OF SH. KRISHAN BANSAL PROP.M/S VIDEOVISION H.NO.2 SECTO-27A CHANDIGARH FOR THE ASSESSMENT YEAR 1997-98 IS CONNE CTED WITH THE GROUP CASES OF SH.N.K.GARG AND HIS ASSOCIA TED CONCERN IN WHICH EITHER BOGUS REFUNDS HAVE BEEN CRE DITED OR ACCOMMODATING ENTRIES WERE GIVEN BY INTRODUCING UNACCOUNTED CASH. PERUSAL OF THE BANK ACCOUNTS IND ICATES THAT CASH WAS DEPOSITED WHICH HAVE NOT BEEN DISCLOS ED TO THE DEPARTMENT AND THUS HAS ESCAPED ASSESSMENT. THE QU ANTUM OF ESCAPED INCOME IS ABOVE RS.1 00 000/- I.E. 6 49 891/- (APPROX) IN VIEW OF THE SAME I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE 1997-98 AND NO ASSESSMENT HAS BEEN MADE. SINCE THE TRANSACTIONS PERTAINS THE PERIOD FOR MORE THAN FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR 1997-98 PRIOR APPROVAL OF COMMISSIONER INCOME TAX HAS BEEN OBTAINED UNDER PROVISO 9 TO SECTION 151(1) OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR 1997-98 RELEVANT TO THAT FINANCIAL YEAR 1996-9 7 IN THIS CASE TO REOPEN THE CASE VIDE LETTER NO.CIT-II/CHD/ 2003- 4/JUDL/4444 DATED 25/3/2004. NOTICE U/S 148 FOR THE ASSESSMENT YEAR 1997-98 MAY BE ISSUED FOR MAKING ASSESSMENT U/S 147 OF THE INCOME- TAX ACT 1961 IN WHICH THE INCOME HAS ESCAPED ASSESSMENT. ASSESSMENT YEAR 1999-2000 PARA-1 SAME AS IN ASSESSMENT YEAR 1997-98 AND 19 98-99 ALSO DURING THE COURSE OF INCOME-TAX INVESTIGATION PROCEEDINGS IT CAME TO NOTICE THAT THE ABOVE NOTED CASE IS CONNECTED WITH THE GROUP CASES OF SH.N.K.GARG AND H IS ASSOCIATED CONCERN IN WHICH EITHER BOGUS REFUNDS HA VE BEEN CREDITED OR ACCOMMODATING ENTRIES WERE GIVEN BY INT RODUCING UNACCOUNTED CASH. PERUSAL OF THE BANK ACCOUNTS IND ICATES THAT CASH WAS DEPOSITED WHICH HAVE NOT BEEN DISCLOS ED TO THE DEPARTMENT AND THUS HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 1999-2000 RELEVANT TO THE FINANCIAL YEAR 1998-99. IN VIEW OF THE SAME I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 1999-2000 RELEVANT TO FINANCIAL YEA R 1998- 99. NOTICE U/S 148 FOR THE ASSESSMENT YEAR 1999-2000 MAY BE ISSUED FOR MAKING ASSESSMENT U/S 147 OF THE INCO ME-TAX ACT 1961 IN WHICH THE INCOME HAS ESCAPED ASSESSMEN T. ASSESSMENT YEAR 2001-02 PARA-1 SAME AS IN ASSESSMENT YEAR 1997-98 AND 1998-99. THIS IS ONE OF THE CASES CONCERNING WITH SH.N.K.GROUYP OF CASES CLAIMING FRAUDULENT REFUNDS INDULGING IN PROVIDING ACCOMMODATING ENTRIES BY INT RODUCING UNACCOUNTED INCOME AND THUS ESCAPED ASSESSMENT. IN VIEW OF THE SAME I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2001-02 AND NO ASSESSMENT HAS BEEN MADE. THE ASSESSEE HAS UNDERSTATED THE INCOME AND CLAIMED UNDUE REFUNDS IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02. IN VIEW OF THE REASONS MENTIONED ABOVE NOTICE MAY BE ISSUED U/S 148 OF THE INCOME-TAX ACT 1961 FOR MAKI NG 10 ASSESSMENT U/S 147 FOR THE ASSESSMENT YEAR 2001-200 2 IN WHICH THE INCOME HAS ESCAPED ASSESSMENT. 10. THE PERUSAL OF THE REASONS RECORDED FOR REOPENI NG OF ASSESSMENT REVEALS THAT THE BASIS OF INITIATING THE PROCEEDING S U/S 147/148 OF THE ACT WAS THE CONNECTION OF THE ASSESSEE WITH THE GROUP C ASES OF SHRI N.K.GARG AND ITS ASSOCIATED CONCERNS IN WHICH EITHER BOGUS REFUNDS HAD BEEN CREDITED OR ACCOMMODATING ENTRIES WERE GIVEN BY INT RODUCING UNACCOUNTED CASH. IT IS FURTHER MENTIONED BY THE ASSESSING OFF ICER IN THE REASONS THAT THE PERUSAL OF THE BANK ACCOUNTS OF THE ASSESSEE IN DICATES CASH DEPOSITS WHICH AS PER THE ASSESSING OFFICER HAVE NOT BEEN DI SCLOSED TO THE DEPARTMENT AND HAD ESCAPED THE ASSESSMENT. THE QUA NTUM OF ESCAPED INCOME WAS CALCULATED BY THE ASSESSING OFFICER AT R S.6 49 891/-(APPROX.) IN ASSESSMENT YEAR 1997-98 AND RS.54 73 539/-(APPRO X.) IN ASSESSMENT YEAR 1998-99. NO SUCH QUANTUM OF ESCAPEMENT OF INC OME WAS PRIMA FACIE REFERRED BY THE ASSESSING OFFICER IN THE REAS ONS RECORDED FOR ASSESSMENT YEAR 1999-2000. IN ASSESSMENT YEAR 200 1-02 IN THE REASONS RECORDED FOR REOPENING THE BELIEF OF THE ASSESSING OFFICER WAS THAT THE CASE OF THE ASSESSEE WAS ONE OF THE CASES CONCERNIN G SHRI N.K.GROUP OF CASES CLAIMING FRAUDULENT REFUNDS AND INDULGING IN PROVIDING ACCOMMODATING ENTRIES BY INTRODUCING UNACCOUNTED IN COME AND THUS ESCAPEMENT OF INCOME. THE COPY OF THE SAID REASO NS RECORDED ON 25.3.2004 IN RELATION TO ASSESSMENT YEARS 1997-98 T O 1999-2000 WERE FURNISHED ON RECORD IN THE PAPER BOOK FILED BY THE LD. DR. THE REASONS FOR REOPENING THE ASSESSMENT RELATING TO ASSESSMENT YEAR 2001-02 WERE RECORDED ON 27.10.2003 AND THE COPY OF THE SAME IS ALSO FURNISHED ON RECORD IN THE PAPER BOOK FILED BY THE REVENUE. 11 11. FROM THE PERUSAL OF REASONS RECORDED FOR REOPEN ING OF THE ASSESSMENT RELATING TO ASSESSMENT YEAR 2001-02 ON 2 7.10.2003 THE PRESUMPTION OF THE ASSESSING OFFICER WAS THAT THE C ASE OF THE ASSESSEE WAS ONE OF THE CASES CONCERNING SHRI N.K.GROUP OF C ASES CLAIMING REFUNDS FRAUDULENTLY AND ALSO INDULGING IN PROVIDING ACCOMM ODATION ENTRIES BY INTRODUCING UNACCOUNTED INCOME. THE EXPLANATION OF THE ASSESSEE BEFORE US IS THAT IT HAD NOT GIVEN ANY LOANS WHAT-SO-EVER. HOWEVER IN THE COURSE OF CARRYING ON ITS BUSINESS OF SALE AND PURC HASE OF CARS IT HAD RECEIVED LOANS FROM VARIOUS PARTIES INCLUDING SHRI N.K.GARG & HIS ASSOCIATES AND THE SAME WERE REPAID WITH INTEREST T HROUGH CHEQUES. THE SAID BANK ACCOUNTS WERE REFLECTED IN THE BALANCE SH EET FOR THE YEAR ENDING 31.3.2001 WHICH ACCOMPANIED THE RETURN OF INCOME F ILED BY THE ASSESSEE. THE ASSESSING OFFICER WHILE RECORDING THE REASONS F OR REOPENING THE ASSESSMENT RELATING TO ASSESSMENT YEAR 1997-98 AND 1998-99 HAD PERUSED THE BANK ACCOUNTS AND FOUND THAT CASH WAS DEPOSITED IN THE SAID ACCOUNTS WHICH WAS NOT DISCLOSED TO THE DEPARTMENT AND HENCE THE ALLEGATION OF ESCAPEMENT OF INCOME FROM ASSESSMENT. 12. FROM THE PERUSAL OF RECORDS WE FIND THAT REAS ON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT BY THE ASSESSING OFFI CER WAS THE PRESUMPTION THAT CASE OF ASSESSEE WAS ONE OF THE CA SES OF N.K. GROUP OF CASES WHO WERE INDULGING IN PROVIDING ACCOMMODATIO N ENTRIES BY INTRODUCING UNACCOUNTED INCOME. THE MATERIAL AVAIL ABLE WAS THE BANK ACCOUNTS OF ASSESSEE WHERE CASH WAS DEPOSITED. THO UGH AT THE TIME OF RECORDING THE REASONS FOR REOPENING THE SATISFACTI ON OF THE ASSESSING OFFICER SHOULD BE PRIMA FACIE BASED ON THE MATERIAL AVAILABLE AND IT IS NOT THE REQUIREMENT OF LAW THAT ESCAPEMENT OF INCOME SH OULD BE ESTABLISHED. 12 HOWEVER SUCH A BELIEF SHOULD BE BONAFIDE BASED ON THE MATERIAL AVAILABLE. 13. THEIR LORDSHIPS OF HON'BLE SUPREME COURT IN ACI T VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (2007) 291 ITR 500 (SC) HAVE HELD THAT IN ORDER TO INVOKE THE PROVISIONS OF SECTION 147 OF TH E ACT IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT THEN JURISDICTION IS CONFERRED ON THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT. IT HAS BEEN FUR THER HELD AS UNDER :- SECTION 147 AUTHORISES AND PERMITS THE ASSESSI NG OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF H E HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESC APED ASSESSMENT. THE WORD REASON IN THE PHRASE REASO N TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSIN G OFFICER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCO ME HAD ESCAPED ASSESSMENT IT CAN BE SAID TO HAVE REASON TO BELIEV E THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE R EAD TO MEAN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCE RTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF T HE ASSESSING OFFICER IS TO ADMINISTER THE STATUTE WITH SOLICITUD E FOR THE PUBLIC EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS TO TAXPA YERS. AS OBSERVED BY THE SUPREME COURT IN CENTRAL PROVINCES MANGANESE ORE CO. LTD. VS. ITO [1991] 191 ITR 662 FOR INITIATION OF ACTION UNDER SECTION 147 (A) (AS THE PROVISION STOOD AT TH E RELEVANT TIME) FULFILLMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THAT STATE THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS AT THE INITIATION STAGE WHAT IS REQUIRED IS REASON TO BELIEVE BUT NOT THE ESTABLISHED FAC T OF ESCAPEMENT OF INCOME. AT THE STATE OF ISSUE OF NOTICE THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE P ERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERI ALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCER N AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE A SSESSING OFFICER IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION (SEE ITO V. SELECTED DALURBAND COAL CO. P. LTD. [1996] 217 ITR 597 (SC) ; RAYMOND WOOLEN MILLS LTD. VS. ITO [1999] 236 ITR 34 (SC). 13 THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM APRIL 1 1989 AS ALSO SECTIONS 148 T0 152 ARE SUBS TANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR T O SUCH SUBSTITUTION. UNDER THE OLD PROVISIONS OF SECTION 147 SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMSTANCES UND ER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDICTION UND ER SECTION 147 (A) TWO CONDITIONS WERE REQUIRED TO BE SATISFIED : FIRSTLY THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME PROFITS OR GAINS CHARGEABLE TO INCOME TAX HAVE ESCAPED ASSE SSMENT AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT S UCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER OMISSION OR FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIA L FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THESE CONDIT IONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE ASS ESSING OFFICER COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER SECTI ON 148 READ WITH SECTION 147 (A). BUT UNDER THE SUBSTITUTED SECTION 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE T HAT INCOME HAS ESCAPED ASSESSMENT IF CONFERS JURISDICTION TO REOPE N THE ASSESSMENT. IT IS HOWEVER TO BE NOTED THAT BOTH THE CONDITI ONS MUST BE FULFILLED IF THE CASE FALLS WITHIN THE AMBI T OF THE PROVISO TO SECTION 147. (UNDERLINE PROVIDED BY US) . 14. THE HON'BLE SUPREME COURT IN RAYMOND WOOLLEN MI LLS VS. ITO (SUPRA) HELD THAT WHAT IS REQUIRED TO BE SEEN IN A CASE SUCH AS THIS IS WHETHER PRIMA FACIE THERE WAS SOME MATERIAL BEFORE THE ASSESSING OFFICER ON THE BASIS OF WHICH HE COULD REOPEN THE CASE OF T HE ASSESSEE. THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT T O BE CONSIDERED BECAUSE IT IS OPEN TO THE ASSESSEE TO PROVE THAT THE FACTS ASSUMED BY THE ASSESSING OFFICER IN THE NOTICE WERE ERRONEOUS. 15. IN THE LIGHT OF THE ABOVE-SAID PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT AND IN THE FACTS OF THE PRESENT CASE WE MAY NOW TAKE A RECOURSE TO THE REASONS RECORDED BY THE ASSESSING O FFICER WHILE REOPENING 14 THE ASSESSMENT U/S 147 OF THE ACT. THE RETURN OF INCOME FILED BY THE ASSESSEE IN THE YEARS UNDER APPEAL WAS PROCESSED U/ S 143(1) OF THE ACT. THE BASIS FOR INITIATING THE RE-ASSESSMENT PROCEEDI NGS U/S 147 OF THE ACT WAS THE INVESTIGATION CARRIED OUT IN THE CASE OF N. K.GARG GROUP OF CASES WHO WAS FOUND TO HAVE GIVEN ACCOMMODATION ENTRIES T O VARIOUS PARTIES. THE ASSESSEE ADMITTEDLY HAD DEALINGS WITH SHRI N.K. GARG AND HIS ASSOCIATES AS IS EVIDENT FROM THE DETAILS FURNISHED IN THE BALANCE SHEETS FOR THE YEARS UNDER CONSIDERATION. THE ASSESSING O FFICER HAD PERUSED THE BANK ACCOUNTS AND FOUND CASH DEPOSITS IN THE SAID A CCOUNT WHICH LED TO THE BELIEF OF THE ASSESSING OFFICER THAT THE CASE O F THE ASSESSEE IS A CONNECTED CASE WITH GROUP CASES OF N.K.GARG AND CON SEQUENTLY THE REASON TO BELIEVE OF THE ESCAPEMENT OF INCOME. IN VIEW O F THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN RAYMOND WOOLLEN MIL LS LTD. VS. ITO (SUPRA) THE REQUIREMENT AT THE STAGE OF RECORDING THE REASONS IS THE EXISTENCE OF MATERIAL AND FORMATION OF PRIMA FACIE SATISFACTION OF ESCAPEMENT OF INCOME AND AT THAT STAGE THERE IS NO REQUIREMENT OF FULL PROOF SATISFACTION REGARDING ESCAPEMENT OF INCOME. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WE ARE OF TH E VIEW THAT THERE WAS MATERIAL AVAILABLE BEFORE THE ASSESSING OFFICER TO ARRIVE AT A PRIMA FACIE CONCLUSION OF ESCAPEMENT OF INCOME CHARGEABLE TO TA X. ACCORDINGLY WE HOLD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN IN ITIATING THE PROCEEDINGS U/S 147/148 OF THE ACT. 16. THE PLEA OF THE LD. AR FOR THE ASSESSEE THAT TH E FACTS IN THE PRESENT CASE ARE IDENTICAL AND STAND COVERED BY THE RATIO L AID DOWN BY THE TRIBUNAL IN THE CASE OF SHRI RAJNEESH BANSAL (SUPRA ) IS MISPLACED. IN THE FACTS OF THE CASE BEFORE THE TRIBUNAL IN THE CASE O F SHRI RAJNEESH BANSAL (SUPRA) THE FORMATION OF BELIEF WAS HELD TO BE NOT CORRECT AS THE BASIS FOR 15 THE BELIEF WAS THE PRESUMPTION ON PART OF THE ASSES SING OFFICER THAT NO RETURNS OF INCOME HAD BEEN FILED WHILE THE ASSESSE E IN THAT CASE HAD ACTUALLY FILED THE RETURNS OF INCOME. HOWEVER TH ERE IS NO SUCH PRESUMPTION OF NON-FILING OF RETURN OF INCOME BY TH E ASSESSING OFFICER WHILE INITIATING THE PROCEEDINGS U/S 147/148 OF THE ACT IN THE PRESENT CASE. IN VIEW OF OUR REASONS IN PARAS ABOVE WE UP HOLD THE ORDER OF THE CIT(A) IN CONFIRMING THE INVOKING OF JURISDICTION U NDER THE PROVISIONS OF SECTION 147/148 OF THE ACT. 17. THE ASSESSEE DURING THE COURSE OF HEARING HAD R AISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL :- (A) THE C.B.D.T. HAVE NOT EMPOWERED THE C.I.T. UND ER SECTION 120(4) OF THE INCOME TAX ACT BY GENERAL OR SPECIAL ORDER SUBJECT TO SOME CONDITIONS RESTRICTIONS OR LIMITATIONS AUTHORIZING HIM TO ACT UNDER CLAUSE (B) OF THE ACT THAT SECTION; AND (B) WITHOUT PREJUDICE TO CLAUSE (A) THE COMMISSION ER HAS NOT ISSUED ORDER IN WRITING THAT THE POWERS AND FUNCTIONS CONFERRED ON OR AS THE CASE MAY BE ASSIGN TO THE ASSESSING OFFICER BY OR UNDER THIS ACT IN RESPECT OF ANY SPECIFIED AREAS ARE PERSONS OR CLASS OF PERSONS OR INCOME OR CLASSES OF INCOME OR CASES OR CLASSES OF CASES SHALL BE EXERCISED OR PERFORMED BY ADDITIONAL COMMISSIONER OR JOINT COMMISSIONER OF INCOME TAX; AND (C) C.I.T. HAS ERRED IN NOT RECORDING HIS REASONS A S REQUIRED UNDER SECTION 127(1) READ WITH SECTION 127(3) FOR TRANSFER OF CASES FROM THE I.T.O. TO THE J.C.I.T. SUBORDINATE TO HIM WITHIN THE SAME AREA; AND 16 (D) LEARNED ADDITIONAL COMMISSIONER OF INCOME TAX HAS ERRED IN ISSUE OF NOTICES UNDER SECTION 148 OF THE INCOME TAX WHEN POWER HAS ALLEGED BEEN CONFERRED ON J.C.I.T.; AND (E) THAT THE LEARNED I.T.O. WHO CEASED TO GAVE JURISDICTION OVER THIS CASE AS A RESULT OF ORDER UNDER SECTION 127(1) HAVE ACTED WITHOUT JURISDICTION IN CONDUCTING THE ASSESSMENT PROCEEDINGS BY ISSUE OF NOTICES UNDER SECTION 143(2) OF THE INCOME TAX; AND (F) WORTHY J.C.I.T. HAVE FURTHER ERRED IN FRAMING ORDER UNDER SECTION 143(3) UNDER HIS SIGNATURE WITHOUT ADEQUATELY INVOKING TO THE MANDATORY PROVISIONS OF SECTION 143(2) OF THE INCOME TAX; AND (G) THAT THERE IS A INHERENT LACK OF JURISDICTION I N THE IMPUGNED ORDER FRAMED BY THE ASSESSING OFFICER THE SAME IS THEREFORE WITHOUT JURISDICTION. 18. THE SAID ADDITIONAL GROUNDS OF APPEAL BEING LEG AL GROUNDS ARE ADMITTED FOR ADJUDICATION IN VIEW OF THE RATIO LAID DOWN BY THE APEX COURT IN NTPC (229 ITR 383(SC)) . 19. THE ASSESSEE BY WAY OF ADDITIONAL GROUNDS OF AP PEAL RAISED DURING THE COURSE OF HEARING HAS CHALLENGED THE JURISDICTI ON OF THE ASSESSING OFFICER INITIATING THE PROCEEDINGS U/S 147/148 OF T HE ACT AND THEREAFTER COMPLETING THE ASSESSMENT PROCEEDINGS IN THE CASE. THE REASONS FOR REOPENING THE ASSESSMENT WERE RECORDED BY THE ADDL. CIT RANGE-VI CHANDIGARH AND THE ASSESSMENT ORDER HAS BEEN PASSED BY THE JOINT CIT RANGE-VI CHANDIGARH. THE ALLEGATION OF THE LD. A R FOR THE ASSESSEE 17 WAS THAT THE ADDL.CIT WAS NOT AN ASSESSING OFFICER AND HENCE THE ISSUE OF NOTICE U/S 148 OF THE ACT WAS INVALID AND CONSEQUEN TLY THE ASSESSMENT PROCEEDINGS. AS PER THE LD. AR FOR THE ASSESSEE T HE ADDL. CIT DOES NOT ASSUME THE POWER OF AN ASSESSING OFFICER IN THE ABS ENCE OF ORDER U/S 120(4) CLAUSE (B) OF THE ACT. ELABORATE SUBMISSION S WERE MADE BY THE ASSESSEE IN THIS REGARD. THE LD. DR FOR THE REVEN UE IN REPLY POINTED OUT THAT IN VIEW OF THE AMENDED PROVISIONS OF SECTION 2 (7A) OF THE ACT AS AMENDED BY FINANCE ACT 2007 W.R.E.F. 1.06.1994 & 0 1.10.1996 A JOINT CIT CAN EXERCISE THE POWERS OF AN ASSESSING OFFICER IN CASE THE SAME ARE CONFERRED U/S 120(4) (B) OF THE ACT. FURTHER U/S 2 (28C) OF THE ACT THE DEFINITION OF JOINT CIT WAS INSERTED IN THE ACT W.E .F. 1.10.1998 BY THE FINANCE ACT 1998 AND AS PER THE DEFINITION JOINT C IT INCLUDES ADDL.CIT U/S 117(1) OF THE ACT. THE CBDT VIDE NOTIFICATION NO.267/2001 UNDER F.NO.187/5/2001-ITA DATED 17.09.2001 DIRECTED THAT THE JOINT CIT AND JOINT DIT SHALL EXERCISE THE POWERS AND FUNCTIONS O F THE ASSESSING OFFICER WHERE SO AUTHORIZED BY THE BOARD OR CIT. FURTHER NOTIFICATION NO.732(E) DATED 31.7.2001 WAS ISSUED IN THIS REGARD BY THE CBDT. VIDE GAZETTE NOTIFICATION CBDT DIRECTED THE JOINT CIT T O ACT AS ASSESSING OFFICER U/S 120(4)(B) OF THE ACT. VIDE LETTER DATE D 15.10.2001 CIT-II CHANDIGARH CONFERRED THE JURISDICTION U/S 120 OF TH E ACT UPON THE ADDL./JOINT CIT. FURTHER RELIANCE WAS PLACED BY TH E LD. DR FOR THE REVENUE ON THE RATIO LAID DOWN IN BINDAL APPARELS L TD. 169 TAXMAN 49(DEL). THE LD. DR FOR THE REVENUE FURTHER POINT ED OUT THAT THE JURISDICTION IN THE INSTANT CASE VESTED IN ITO-4(1 ) AND VIDE ORDER DATED 27.2.2003 PASSED U/S 127 OF THE ACT THE CIT-II TR ANSFERRED THE CASE TO THE JOINT CIT RANGE-VI CHANDIGARH. THE COPY OF T HE SAID ORDER IS PLACED AT PAGE-2 OF THE PAPER BOOK FILED BY THE REV ENUE DATED 3.3.2008. THE LD. DR FOR THE REVENUE POINTED OUT THAT IN VIEW OF THE RATIO LAID 18 DOWN BY THE PUNJAB & HARYANA COURT IN THE CASE OF S MT.JASVINDER KAUR KOONER (291 ITR 80)(P&H) IF THE ASSESSEE IS AGGRIE VED BY AN ORDER OF TRANSFER U/S 127 OF THE ACT THE SAME IS TO BE CHAL LENGED BY WAY OF WRIT PETITION AND THE SAID ISSUE CANNOT BE RAISED IN AN APPEAL BEFORE THE TRIBUNAL. 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE HAS RAISED THE ISSUE OF INHERENT LACK OF J URISDICTION OF THE ASSESSING OFFICER INITIATING THE RE-ASSESSMENT PROC EEDINGS AND THEREAFTER COMPLETING THE SAME. THE ASSESSEE WAS BEING ASSES SED TO TAX BY ITO- 4(1) CHANDIGARH WHO HAD ISSUED THE INTIMATION U/S 143(1) OF THE ACT. ADMITTEDLY THE CASE OF THE ASSESSEE WAS TRANSFERR ED U/S 127 OF THE ACT FROM ITO-4(1) CHANDIGARH TO JOINT CIT RANGE-VI C HANDIGARH VIDE ORDERS PASSED BY THE CIT-II CHANDIGARH DATED 27.2. 2003. THE COPY OF THE SAID ORDERS ARE PLACED AT PAGES 1-4 OF THE PAPE R BOOK. THEREAFTER REASONS FOR REOPENING OF THE ASSESSMENT RELATING TO THE CAPTIONED YEARS WERE RECORDED BY ADDL.CIT RANGE-VI CHANDIGARH ON 27.10.2003/25.3.2004. THE ORDER OF RE-ASSESSMENTS IN THE RESPECTIVE YEARS THEREAFTER WERE PASSED BY THE JOINT CIT RAN GE-VI CHANDIGARH. 21. THE HON'BLE PUNJAB & HARYANA COURT IN JASVINDE R KAUR KOONER (SUPRA) HAD HELD AS UNDER :- IF THE ASSESSEE IS AGGRIEVED BY AN ORDER OF TRANSF ER THE REMEDY OF THE ASSESSEE IS TO CHALLENGE SUCH AS ORDER IN INDEPENDENT PROCEEDING EITHER BEFORE THE HIGHER ADMINISTRATIVE AUTHORITIES AS PER THE ACT OR IN ANY INDEPENDENT PROCEEDINGS BY WAY OF A WRIT PETITION O R OTHER WISE. IF NO SUCH CHALLENGE IS MADE AT THE INITIAL STAGE THE ISSUE CANNOT BE RAISED IN AN APPEAL AGAINST THE ASS ESSMENT ORDER. 19 22. IN VIEW OF THE ABOVE-SAID RATIO LAID DOWN BY TH E HON'BLE PUNJAB & HARYANA COURT THE ASSESSEE IF AGGRIEVED BY THE ORD ER OF TRANSFER OF JURISDICTION TO THE JOINT CIT RANGE-VI CHANDIGARH BY WAY OF ORDER PASSED U/S 127 OF THE ACT HAS TO CHALLENGE THE SAME EITHER BEFORE THE HIGHER ADMINISTRATIVE AUTHORITIES UNDER THE ACT OR IN INDEPENDENT PROCEEDINGS BY WAY OF WRIT PETITION OR OTHERWISE. THE ASSESSEE CANNOT RAISE SUCH ISSUE IN AN APPEAL FILED BEFORE THE TRIB UNAL. THE SECOND PLEA OF THE ASSESSEE IS NON COMPLIANCE TO THE PROVISIONS OF SECTION 120(4)(B) OF THE ACT UNDER WHICH FIRSTLY THE CBDT HAS TO EMPOWE R CIT AND SECONDLY THE CIT TO AUTHORIZE IN WRITING. THE CBDT VIDE NOT IFICATION NO.267/2001 DATED 17.9.2001 HAD ISSUED INSTRUCTIONS TO CIT IN CONNECTION WITH CONFERMENT OF JURISDICTION TO ADDL./JOINT CIT TO EXERCISE THE POWERS AND FUNCTIONS OF THE ASSESSING OFFICER WHEN SO AUT HORIZED. THE CIT VIDE LETTER NO. FNO.2/CIT/CHD-II/JURIS./2001-2002/7 52 DATED 15.10.2001 IN EXERCISE OF POWERS CONFERRED READ WITH CBDT NOTI FICATION NO.S.O. NO.732(E) DATED 31.7.2001 ORDERED AND AUTHORIZED AD DL./JOINT CITS TO EXERCISE THE POWERS AND PERFORM THE FUNCTIONS EITHE R INDIVIDUALLY OR CONCURRENTLY OR BOTH ALONGWITH THEIR DESIGNATED SUB ORDINATE AUTHORITIES (AOS). THE COPY OF THE SAID ORDER HAS BEEN FILED O N RECORD BY LD. DR FOR THE REVENUE. THE CIT-II VIDE ORDER PASSED UNDER SE CTION 127 OF THE ACT DATED 27.2.2003 TRANSFERRED THE CASE OF THE ASSESSE E FROM ITO-4(1) TO JOINT CIT RANGE-VI CHANDIGARH. THE COPY OF SAID ORDER IS PLACED ON RECORD. THE CBDT NOTIFICATION S.O. 732(E) DATED 31 .7.2001 S.O. 880(E) TO S.O. 882(E) DATED 14.9.2001 PUBLISHED IN THE GAZ ETTE OF INDIA PART II SECTION 3 SUB-SECTION (II) EXTRAORDINARY ALSO AUTH ORISED THE ADDL.CIT/JOINT CIT. IN VIEW OF THE VARIOUS NOTIFI CATIONS REFERRED TO IN PARAS ABOVE AND GAZETTE NOTIFICATION WE FIND SUFFI CIENT COMPLIANCE TO THE 20 PROVISIONS OF SECTION 120(4)(B) OF THE ACT. WE HOL D THE INVOKING OF JURISDICTION BY THE DESIGNATED OFFICER IN THE PRESE NT CASE. 23. THE NEXT OBJECTION OF THE LD. AR FOR THE ASSESS EE WAS THAT THE ADDL.CIT RANGE-VI CHANDIGARH HAS INCORRECTLY ASS UMED THE JURISDICTION THOUGH THE JURISDICTION WAS TRANSFERRED TO JOINT CI T RANGE-VI CHANDIGARH BY THE ORDER OF THE CIT-II CHANDIGARH. WE FIND NO MERIT IN THE PLEA OF THE LD. AR FOR THE ASSESSEE IN VIEW OF THE AMENDED PROVISIONS OF SECTION 2(7A) OF THE ACT AND IN VIEW OF THE RATI O LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN BINDAL APPARELS (SUPRA ) WHEREIN THE ISSUE BEFORE THE HON'BLE COURT WAS AS UNDER :- WHETHER TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING T HAT IN VIEW OF ABSENCE OF THE IT AUTHORITY I.E. ADDL. CIT IN THE DEFINITION CONTAINED IN S. 2(7A) OF THE ACT AN ADD L. CIT CANNOT BE AN AUTHORITY TO EXERCISE OR PERFORM ALL O R ANY OF THE POWERS AND FUNCTIONS OF AN AO TO MAKE AN ASSES SMENT OF INCOME AND THEREBY QUASHING THE ASSESSMENT MADE BY THE ADDL.CIT. THE HON'BLE DELHI HIGH COURT HELD AS UNDER :- IT IS BROUGHT TO OUR NOTICE THAT S. 2(7A) OF THE A CT 1961 HAS BEEN AMENDED WITH RETROSPECTIVE EFFECT FRO M 1 ST JUNE 1994 BY FINANCE ACT 2007. IN VIEW OF THIS AMENDMENT LEARNED COUNSEL FOR THE PARTIES SUBMIT THAT THE QUESTION IS REQUIRED TO BE ANSWERED IN THE NEGATIVE IN FAVOUR OF THE REVENUE AND AGAINS T THE ASSESSEE. 24. THE LD. AR FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN 19 DTR 50. WE FIN D THAT IN THE FACTS OF CASE BEFORE HON'BLE SUPREME COURT THE ISSUE WAS IN VIEW OF THE EXERCISE OF POWERS BY CIT U/S 132B OF THE ACT THE QUESTION WAS WHETHER ADDL.DIT HAD THE POWER TO ISSUE ANY AUTHORIZATION OR WARRANT TO EFFECT SEARCH AND SEIZURE. THE COURT HELD THAT THE QUESTION HAD BECO ME ACADEMIC AS THE 21 CIT HAD ISSUED ORDERS U/S 132B OF THE ACT FOR RELEA SE THE CASH JEWELLERY ETC. THE LD. AR FOR THE ASSESSEE FURTHER PLACED R ELIANCE ON THE PROPOSITION LAID DOWN BY THE HON'BLE DELHI HIGH COU RT IN 19 DTR 63(DEL) WHEREIN IT WAS HELD THAT JOINT DIT IS NOT EMPOWERED TO ISSUE WARRANT OF AUTHORIZATION U/S 132(1) OF THE ACT. THE SAID PROPOSITION HAS NO CONNECTION WITH THE ISSUE BEFORE US AND THE RELIANC E PLACED BY THE LD. AR FOR THE ASSESSEE IS MISPLACED. 25. IN VIEW OF OUR REASONING IN THE PARAS HEREINABO VE WE HOLD THAT THE JURISDICTION VESTED IN THE CONCERNED OFFICERS FOR R ECORDING THE REASONS FOR REOPENING U/S 147 OF THE ACT AND IN ISSUING THE NOT ICE U/S 148 OF THE ACT. FURTHER THE CONCERNED OFFICERS WERE AUTHORIZED IN P ASSING THE ORDERS U/S 143(3) R.W.S. 147 OF THE ACT. IN VIEW THEREOF THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THIS REGARD ARE DI SMISSED. 26. NOW COMING TO THE MERITS OF THE ADDITION IN THE PRESENT CASE WE FIND THAT SIMILAR ISSUE OF ACCOMMODATION ENTRIES BE ING PROVIDED BY SHRI N.K.GARG GROUP OF CASES AROSE BEFORE THE CHANDIGARH BENCH OF TRIBUNAL IN THE CASE OF BALJIT TRIKHA IN ITA NO.203/CHANDI/2 008 THE TRIBUNAL VIDE ORDER DATED 28.11.2008 HAD CONSIDERED THE ISSU E OF ACCOMMODATION ENTRIES BEING INDULGED IN BY SHRI N.K.GARG & HIS C ONCERNS AND THE TRANSACTIONS WITH THE ASSESSEE (BALJIT TRIKHA) AND HAD REMITTED THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER WITH DIRECTIO NS. 27. THE GRIEVANCE OF THE ASSESSEE BEFORE US IS SIMI LAR TO THE GRIEVANCE RAISED BY THE ASSESSEE IN THE CASE OF BALJIT TRIKHA (SUPRA). THE FIRST PLEA RAISED BY THE ASSESSEE BEFORE US WAS NON-CONFRONTAT ION OF THE STATEMENT OF 22 SHRI N.K.GARG WHICH WAS THE BASIS FOR MAKING THE A FORESAID ADDITION. THE TRIBUNAL VIDE PARAS 9 AND 10 HELD AS UNDER :- 9. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. IN THIS CASE THE SINGULAR DISPUTE RELATES TO THE VERACITY OF RS.10 00 000/- RECEIVED BY WAY OF A BANK DRAFT FROM M/S ASISH LEASING & FINANCE LTD. THE ASSESSEE CLAIMS TO HAVE RECEIVED THE AMOUNT AS A LOAN ON WHICH INTEREST EXPENDITURE WAS ALSO INCURRED. THE SAID AMOUNT HAS BEEN HELD TO BE UNEXPLAINED ON THE GROUND THAT THE SAME REPRESENTED A BOGUS ACCOMMODATION ENTRY PROVIDED BY THE SAID COMPANY WHICH WAS CONTROLLED BY ONE SHRI N.K.GARG. ACCORDING TO THE REVENUE THE ASSESSEE HAD INVESTED AN AMOUNT OF RS.10 066 000/- TO PROCURE THE SAID BANK DRAFT FROM SHRI N.K.GARG. IN SUPPORT OF THE TRANSACTION OF LOAN THE ASSESSEE RELIED UPON THE CONFIRMATION FROM M/S ASISH LEASING & FINANCE LTD. AND ALSO THE DEBITS IN HIS BANK ACCOUNT EVEN IN THE SUBSEQUENT PERIODS EVIDENCING PAYMENT OF INTEREST ON SUCH LOAN. NOW THE ASPECT TO BE CONSIDERED IS AS TO WHETHER THE SAID TRANSACTION WAS BY WAY OF ACCOMMODATION ENTRY OR NOT? THE CASE OF THE REVENUE IS THAT THE TRANSACTION IS NOT REAL AND THAT CONSIDERATION HAS FLOWN BACK FROM THE ASSESSEE TO ONE SHRI N.K.GARG (WHO CONTROLLED THE BANK ACCOUNT OF M/S ASISH LEASING & FINANCE LTD. ) AGAINST THE LOANING OF SUCH AMOUNT TO THE ASSESSEE. THE MATERIAL ON THE BASIS OF WHICH IT IS SO CONTENDED IS THE ALLEGED STATEMENT OF SHRI N.K.GARG RECORDED ON 20.5.2004 BY ADDITIONAL CIT RANGE VI CHANDIGARH A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 32 TO 37. IN THE SAID STATEMENT SAID SHRI N.K.GARG ADMITTED THAT VARIOUS BANK ACCOUNTS WERE MAINTAINED/CONTROLLED BY HIM THROUGH WHICH HE WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTIES. IT WAS ADMITTED THAT CASH WAS OBTAINED FROM VARIOUS PERSONS AND DEPOSITED IN THE BANK ACCOUNTS AND IN RETURN CHEQUES/DRAFTS WERE GIVEN TO THE CONCERNED PERSONS AND HE EARNED COMMISSION ON THE SAID TRANSACTIONS. THE ASSESSEE HAS CHALLENGED THE SO CALLED DISCLOSURE AND IT ARGUED THAT THE SAME IS BEREFT OF ANY EVIDENTIARY VALUE BECAUSE IT HAS NOT BEEN TESTED UNDER CROSS EXAMINATION. 10. WE DO NOT HAVE ANY QUARREL WITH THE SAID LINE OF REASONING CANVASSED BY THE ASSESSEE IN PRINCIPLE. HOWEVER THE MOOT QUESTION IN THIS CASE IS CAN THE ADDITION IN QUESTION DELETED MERELY ON THE ABOVE SCORE ? IN OUR VIEW THE MERE ABSENCE 23 OF SHRI N.K.GARG FOR CROSS EXAMINATION BY THE ASSESSEE CANNOT BE MADE THE SOLE BASIS TO DELETE THE ADDITION ALL TOGETHER HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. IT CANNOT BE LOST SIGHT THAT THE SAID SHRI N.K.GARG ADMITTED ON OATH BEFORE THE INCOME TAX AUTHORITIES THAT HE WAS UNDERTAKING ACCOMMODATION BUSINESS. THE SUCH ADMISSION HAS THEREAFTER RESULTED IN ASSESSMENTS IN HIS HANDS AS ALSO IN THE ENTITIES CONTROLLED BY HIM TO CARRY OUT SUCH ACCOMMODATION BUSINESS. MOREOVER THE SAID ADMISSION HAS BEEN FOLLOWED UP BY SHRI N.K.GARG BY WAY OF APPLICATIONS BEFORE THE INCOME-TAX SETTLEMENT COMMISSION WHICH IS AN AUTHORITY INDEPENDENT OF THE INCOME-TAX DEPARTMENT. THE INCOME-TAX SETTLEMENT COMMISSION HAS PASSED A PRELIMINARY ORDER ADMITTING THE APPLICATION OF SHRI N.K.GARG IN TERMS OF SECTION 245D(1) OF THE ACT DATED 11.1.2007 WHICH IS ON RECORD. IN THE FACE OF SUCH MATERIAL WE THEREFORE ARE OF THE OPINION THAT MERELY BECAUSE SHRI N.K.GARG WAS NOT PRESENT FOR CROSS EXAMINATION IN THE CASE OF THE ASSESSEE CANNOT BE MADE SOLE BASIS TO DELETE THE ADDITION ALL TOGETHER. 28. WE ARE IN CONFORMITY WITH THE ORDER OF TRIBUNA L IN THE CASE OF BALJIT TRIKHA (SUPRA) AND ACCORDINGLY DISMISS THE PLEA OF ASSESSEE IN THIS REGARD. 29. THE SECOND PLEA RAISED BY THE ASSESSEE IS WITHO UT PREJUDICE TO ALL HIS EARLIER CLAIMS THAT ADDITION IF ANY ON ACCOUN T OF CASH CREDITS SHOULD HAVE BEEN CONSIDERED BY APPLYING THE PRINCIPLE OF P EAK CREDITS WHICH HAS NOT BEEN SO APPLIED BY THE ASSESSING OFFICER. FUR THER PLEA RAISED BY THE ASSESSEE WAS THAT SIMILAR CASH CREDITS FROM THE SAM E CREDITOR WERE ACCEPTED IN ASSESSMENT YEAR 2000-01 AND CONSEQUENTL Y THE TRANSACTION BEING VERIFIABLE AND ENTERED IN THE REGULAR BOOKS O F ACCOUNT MAINTAINED BY THE ASSESSEE DO NOT MERIT ANY ADDITION. THE TRIBUN AL IN BALJIT TRIKHA (SUPRA) VIDE PARA-11 HELD AS UNDER :- 11. ANOTHER REASON WHICH HAS WEIGHT WITH US TO INFER SO IS AS FOLLOWS. IN THIS CASE THE ASSESSEE CLAIMS TO HAVE RECEIVED THE AMOUNT SAME AS A LOAN FROM M/S ASHISH LEASING & FINANCE LTD. A 24 CONFIRMATION FROM THE LENDING COMPANY IN QUESTION HAS BEEN PRESSED INTO SERVICE WHICH IS PLACED AT PAGE 17 OF THE PAPER BOOK. THE CASE CANVASSED BY THE REVENUE IS CONTRARY TO THE ABOVE DOCUMENTED POSITION. IT IS CLEAR THAT THE MATERIAL WITH THE REVENUE IS OF A SUBSEQUENT DATE. WHEN THE MATERIAL IN THE SHAPE OF THE ADMISSION OF SHRI N.K.GARG BEFORE THE INCOME-TAX AUTHORITY AT CHANDIGARH WAS CONFRONTED BY THE ASSESSING OFFICER THE ASSESSEE RELIED UPON THE CONFIRMATION FROM M/S ASHISH LEASING & FINANCE LTD. THERE IS NOTHING ON RECORD TO ESTABLISH THAT SUCH CONFIRMATION ISSUED BY M/S ASHISH LEASING & FINANCE LTD. WAS SUBSEQUENT TO THE ADMISSION BY SHRI N.K.GARG BEFORE THE INCOME-TAX AUTHORITIES AT CHANDIGARH. THEREFORE FROM THE SIDE OF THE ASSESSEE THE CONFIRMATION IN QUESTION CANNOT CONSTITUTE A FOOLPROOF EVIDENCE SO AS TO NEGATE THE MATERIAL BROUGHT OUT BY THE ASSESSING OFFICER. THEREFORE UNLESS THE ASSESSEE REBUTS THE EVIDENCE BROUGHT FORTH BY THE ASSESSING OFFICER THE INSISTENCE OF CROSS-EXAMINATION OF THE CONCERNED PERSON BY ITSELF CANNOT WASH AWAY THE MATERIAL RELIED UPON BY THE ASSESSING OFFICER. AS WE HAVE SEEN IN THE PRESENT CASE THE MATTERS REGARDING THE ASSESSMENT IN THE CASE OF SHRI N.K.GARG AND HIS CONTROLLED ENTITIES HAS STILL NOT BEEN FINALIZED BEING PENDING BEFORE THE INCOME-TAX SETTLEMENT COMMISSION. THE ULTIMATE CONCLUSION IN THE CASE OF SHRI N.K.GARG AND HIS CONTROLLED ENTITLES IN OUR VIEW WOULD HAVE A RELEVANT BEARING ON THE CASE OF THE ASSESSEE TOO. MOREOVER THE MATERIAL AND EVIDENCE WHICH HAS BEEN BROUGHT OUT BY THE DEPARTMENT IN RESPONSE TO THE QUERY OF THE BENCH WAS NOT AVAILABLE EITHER BEFORE THE CIT(APPEALS) OR ASSESSING OFFICER. THE SAID MATERIAL HAS BEEN MADE AVAILABLE TO THE COUNSEL FOR THE RESPONDENT ASSESSEE DURING THE COURSE OF THE HEARING BEFORE US. THE COUNSEL FOR THE ASSESSEE HAS NOT MADE ANY SPECIFIC ARGUMENTS SO AS TO NEGATE THE RELEVANCE OF THE PROCEEDINGS IN THE CASE OF SHRI N.K.GARG AND HIS CONTROLLED ENTITIES SO FAR AS IT RELATES T O THEIR IMPACT ON THE IMPUGNED PROCEEDINGS. CONSIDERED IN THE OVERALL LIGHT WE ARE THEREFORE INCLINED TO SET ASIDE THE ORDER OF THE CIT(APPEALS) AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED AFRESH AFTER CONSIDERING ENTIRE MATERIAL INCLUDING THE MATERIAL NOW BROUGHT ON RECORD BY THE REVENUE. OF COURSE THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE ADEQUATE OPPORTUNITY TO EXPLAIN HIS POSITION WITH REGARD TO THE MATERIAL IN QUESTION AND TO REBUT THE SAME IF SO DESIRED BY THE ASSESSEE. THE ASSESSING OFFICER SHALL CONSIDER THE STAND OF THE ASSESSEE 25 AND THE RELEVANT MATERIAL AFRESH AND MAKE AN ASSESSMENT DENOVO IN ACCORDANCE WITH LAW. 30. WE FIND THAT THE ISSUE RAISED BEFORE US IS IDEN TICAL TO THE ISSUE RAISED IN BALJIT TRIKHA (SUPRA). IN LINE WITH THE RATIO LAID DOWN BY THE TRIBUNAL IN BALJIT TRIKHA (SUPRA ) WE REMIT THE ISS UE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE QUANTUM OF ADDITION IF ANY IN ACCORDANCE WITH THE DIRECTIONS OF THE TRIBUNAL AND IN LAW. A REASONABLE OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASSESSEE IN THI S REGARD. THE THIRD ISSUE RAISED BY THE ASSESSEE IS THUS ALLOWED FOR STATISTI CAL PURPOSES. 31. IN VIEW OF OUR SETTING ASIDE THE ORDERS OF QUAN TUM ADDITION WE REMIT THE ISSUE OF LEVY OF PENALTY U/S 271(1)(C) OF THE A CT ALSO TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME IN LINE WITH T HE ORDERS IN QUANTUM PROCEEDINGS. A REASONABLE OPPORTUNITY OF HEARING S HALL BE AFFORDED TO THE ASSESSEE IN THIS REGARD. THE GROUNDS OF APPEAL RAI SED BY THE ASSESSEE IN THE PENALTY APPEALS ARE ALLOWED FOR STATISTICAL PUR POSES. 32. IN THE RESULT APPEALS IN ITA NOS.275 TO 278/CH D/2006 ARE PARTLY ALLOWED AND IN ITA NOS.423 TO 426/CHD/2009 ARE ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF JULY 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH JULY 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR