ITO, Faridabad v. Sh. Ramji Parsad, Faridabad

ITA NO. 3832/DEL/08 A.Y. 2001-02 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 3832/DEL/2008 ASSESSMENT YEAR : 2001-2002 INCOME-TAX OFFICER SH. RAMJI PRASAD WARD-II(3) FARIDABAD VS. D-1/5 SANJAY COLONY SECTOR-23 FARIDABAD (PAN: ABFPP7914C) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI HK LAL SR. DR ASSESSEE BY : SHRI ALOK KUMAR GUPTA CA O R D E R PER SHAMIM YAHYA ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 22.10.20 08 AND PERTAINS TO ASSESSMENT YEAR 2001-2002. ITA NO. 3832/DEL/08 A.Y. 2001-02 2 2. THE ISSUE RAISED IN THE APPEAL IS THAT THE LD. C OMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONCLUDING THAT PROCEEDINGS U/S 147 ARE BAD IN LAW AND ARE LIABLE TO BE QUASHED. 3. IN THIS CASE THE ASSESSMENT WAS REOPENED BY ISSU E OF NOTICE U/S 148 ON 21.3.2007. THE REOPENING WAS BASED UPON CERTAIN D OCUMENTS FOUND AT THE RESIDENTIAL PREMISES OF SHRI NAVNEET JHAMB RELATIN G TO THE SALE OF INDUSTRIAL PLOTS OF VILLAGE JHARSENTALI DISTT. FARIDABAD DURING SEA RCH. IT WAS REVEALED THAT ASSESSEE HAS PURCHASED AN INDUSTRIAL PLOT NO. A-4 MEASURING 2K-9-M FROM M/S INDO AMERCIAN ELECTRICALS LTD. THROUGH ITS M.D. SHRI MANMOHAN SINGH ON 12.9.2000. IN THE SALE DEED OF PLOT THE SALE CO NSIDERATION OF RS. 4 90 000/- WAS SHOWN TO HAVE BEEN RECEIVED BY CHEQUE. HOWEVER TH E DOCUMENTS SEIZED FORM THE RESIDENCE OF SHRI NAVNEET JHAMB REVEALED THAT ACTUA L SALE CONSIDERATION OF THE PLOT WAS RS. 1623600/- OUT OF WHICH RS. 4 90 000/- WAS M ADE BY CHEQUE AND BALANCE OF RS. 11 33 600/- WAS MADE IN CASH. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER INTER-ALIA MENTIONED TO THE STATEMENT OF SHRI NAVNE ET JHAMB WHO WAS THE BROKER OF THE DEAL AND THAT HE HAS ALSO AGREED TO PAY TAX ON THE COMMISSION RECEIVED BY HIM IN THIS REGARD. WHEN THE ASSESSEE WAS CONFRONTE D IN THIS REGARD NO COGENT EXPLANATION WAS RECEIVED. ASSESSING OFFICER PROCEED ED TO TREAT A SUM OF RS. 11 33 600/- AS INCOME OF THE ASSESSEE FROM UND ISCLOSED SOURCE. ITA NO. 3832/DEL/08 A.Y. 2001-02 3 4. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) ASSESSEE AGITATED THAT THERE WAS NO STATEMENT OF SHRI MANMOHAN SINGH THE MD OF THE SELLER COMPANY ON RECORD. HENCE IT WAS CLAIMED THAT THE SE LLER HAD NOT CONFIRMED THAT THE ACTUAL SALE PRICE OF RS. 1623600/-. IT WAS FURTHER CLAIMED THAT SHRI NAVNEET JHAMB HAS ALSO STATED THAT THE DOCUMENTS SEIZED REVEALED ONLY TENTATIVE /PROJECTED/ESTIMATED PRICE. HENCE IT WAS CLAIMED TH AT ASSESSMENT WAS BASED ON THE BASIS OF HEARSAY AND SUSPICION. LD. COMMISSIONER O F INCOME TAX (APPEALS) ACCEPTED THESE SUBMISSIONS OF THE ASSESSEE AND ALSO HELD THAT THE ASSESSING OFFICER HAD NOT PROPERLY APPRECIATED THE SEIZED PAPERS IN T HE PROPER PROSPECTIVE. HE PROCEEDED TO HOLD THAT THE PROCEEDINGS U/S 147 ARE BAD IN LAW AND HENCE HE QUASHED THE SAME. AS REGARDS THE MERITS OF THE CASE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT SINCE IN THE PROCEEDINGS SE CTION 147 ARE NULL AND VOID THE MERITS OF THE ADDITION ARE NOT DEALT WITH. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSMENT WAS BA SED UPON THE DOCUMENTS FOUND DURING SEARCH AT THE RESIDENTIAL PREMISES OF THE B ROKER. THE SEIZED DOCUMENTS REVEALED THAT THE ASSESSEE HAS PURCHASED LAND FROM INDO AMERCIAN ELECTRICALS LTD.. THE SEIZED DOCUMENTS CONTAINED THE NAME AND PARTI CULARS OF THE PLOTS NAME OF THE BUYERS AND SELLERS TOTAL PRICE AS WELL THE CAS H AND CHEQUE COMPONENTS THEREOF. ITA NO. 3832/DEL/08 A.Y. 2001-02 4 UNDER THESE CIRCUMSTANCES LD. DEPARTMENTAL REPRESEN TATIVE ARGUED THAT THE ASSESSMENT IS BASED UPON QUITE COGENT MATERIAL. HEN CE HE CLAIMED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS WRONGLY HE LD THAT THE ASSESSMENT IS BAD IN LAW. 6.1 ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). HE CLAIMED TH AT REOPENING WAS ONLY BASED UPON SUSPICION AND HEARSAY. THE SEIZED MAT ERIAL CANNOT BE THE BASIS OF REOPENING AS IT WAS MERELY A PROJECTION/ESTIMATION. HE CLAIMED THAT THE SAID DETAIL ALSO INCLUDED REFERENCE OF PLOTS NOT SOLD WHEREIN CHEQUE AND CASH COMPONENTS WERE ALSO MENTIONED. HENCE HE CLAIMED THAT LD. CO MMISSIONER OF INCOME TAX (APPEALS) IS QUITE CORRECT IN HOLDING THAT THE ASSE SSMENT IS BAD IN LAW. LD. COUNSEL OF THE ASSESSEE FURTHER CLAIMED THAT THE AS SESSEE HAS AGITATED AGAINST THE REOPENING BEFORE THE ASSESSING OFFICER VIDE HIS L ETTER DATED 19.11.2007 AND ASSESSING OFFICER HAS NOT DISPOSED OFF THE ASSESSE ES OBJECTION REGARDING THE REOPENING WHICH IS IN VIOLATION OF HONBLE APEX COURT DECISION RENDERED IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO & OR S. 259 ITR 19. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION AND PERUSED THE RECORDS. WE FIND THAT AS HELD BY THE HONBLE APEX COURT IN THE DECISION OF C.I.T. VS. KELVINATOR INDIA 320 ITR 561 REOPENING CAN BE DONE PROVIDED THERE IS TANGIBLE ITA NO. 3832/DEL/08 A.Y. 2001-02 5 MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ES CAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH T HE FORMATION OF BELIEF. 8. NOW WE HAVE TO SEE WHETHER REOPENING IS BASED UP ON SOME TANGIBLE MATERIAL. WE FIND THAT THE DOCUMENTS THAT HAVE BE EN SEIZED FROM RESIDENTIAL PREMISES OF THE BROKER CLEARLY CONTAIN THE PLOT N UMBER; NAME OF THE ASSESSEE; TOTAL AMOUNT PAID; AMOUNT PAID BY CHEQUE; AMOUNT PAID BY CASH; AND THE AREA OF THE PLOT. NOW AS PER ASSESSEE ALL THESE PARTICULARS A RE CORRECT EXCEPT THE CASH COMPONENTS THEREOF. THE SEIZED SHEET SIMILARLY CONTAINS THE NAMES OF OTHER BUYERS WITH SIMILAR DETAILS. IT IS ALSO TRUE TH AT THERE ARE ALSO FOUR PLOTS WITH SIMILAR DETAILS IN WHICH NOT SOLD IS MENTIONED. THE ENTIRE SHEET IS SAID TO BE BELONGING TO THE LAND SOLD BY M/S INDO AMERICAN ELE CTRICALS LTD. THROUGH SHRI NAVNEET JHAMB. IN OUR CONSIDERED OPINION IN THIS BA CKGROUND THE REOPENING IS BASED UPON QUITE TANGIBLE MATERIAL WHICH ENABLE THE ASSESSING OFFICER TO FORM A BELIEF THAT THERE HAS BEEN ESCAPEMENT OF INCOME. IN THIS REGARD IT IS TO BE NOTED THAT WE ARE ONLY CONCERNED WITH IS THE RELEVANCE OF TH E REASONS FOR REOPENING. WE HAVE TO SEE WHETHER THE REASONS HAVE A LIVE LINK WI TH FORMATION OF BELIEF. IT IS A SETTLED LAW THAT AT THE TIME OF REOPENING THE ASSES SING OFFICER HAS ONLY FROM A PRIMA FACIE BELIEF. AS HELD BY THE HONBLE APE X COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD. VS. ITO & ORS. 236 ITR 34 AND I N THE CASE OF PHOOL CHAND BAJRANG LAN AND ANOTHER VS. ITO & ANR. 203 ITR 456 FOR REOPENING PRIMA-FACIE ITA NO. 3832/DEL/08 A.Y. 2001-02 6 THERE SHOULD SOME MATERIAL BEFORE THE ASSESSING OF FICER SUFFICIENCY AND CORRECTNESS ARE NOT MATERIAL FOR REOPENING. IN TH IS CASE WE FIND THAT THE SEIZED DOCUMENTS CAN BE SAID TO HAVE GIVEN A PRIMA-FACIE REASON TO THE ASSESSING OFFICER TO BELIEVE THAT THERE HAS BEEN ESCAPEMENT OF INCOM E. WHAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DONE IS THAT HE HAS OPI NED THAT THE MATERIAL FOR REOPENING IS NOT SUFFICIENT AND CORRECT AND ON THIS BASIS HAS QUASHED THE REOPENING. IN THIS REGARD WE ARE OF THE CONSIDERED OPINION LD . COMMISSIONER OF INCOME TAX (APPEALS) HAS COMPLETELY ERRED IN THIS REGARD AS RE OPENING CANNOT BE QUASHED BY HOLDING THAT THE REOPENING WAS NOT BASED UPON SUFFI CIENT AND CORRECT MATERIAL. THIS PROPOSITION IS DULY SUPPORTED BY THE APEX COU RT DECISION CITED ABOVE. 9. NOW APROPOS ASSESSEES COUNSEL CONTENTION THAT T HE ASSESSEE HAS OBJECTED TO THE REOPENING AND THE ASSESSING OFFICER HAS NOT DI SPOSED OFF HIS OBJECTION. 10. FROM THE READING OF THE ASSESSMENT ORDER IT I S EVIDENT THAT ASSESSEE HAS ASKED FOR THE REASON RECORDED FOR REOPENING. IT I S ALSO NOT DISPUTED THAT REASONS WERE DULY SUPPORTED. FROM THE COPY OF THE LETTER DA TED 19.11.2007 PLACED BEFORE US IT IS EVIDENT THAT THE ASSESSEE HAS OBJECTED TO THE REOPENING. IN THIS BACKGROUND IT WAS OBLIGATORY ON THE PART OF THE AS SESSING OFFICER TO DISPOSE OF THE OBJECTION OF THE ASSESSEE ON THE REOPENING BY A SPEAKING ORDER. THIS IS AS PER THE MANDATE OF HONBLE APEX COURT DECISION IN THE C ASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO & ORS. 259 ITR 19. HOWEVER WE FIND THAT ASSESSING OFFICER ITA NO. 3832/DEL/08 A.Y. 2001-02 7 HAS NOT DONE THE SAME. HENCE IN THE LIGHT OF ABO VE APEX COURT DECISION IN THE INTEREST OF JUSTICE WE REMIT THIS ISSUE OF DISPOSI NG OF THE ASSESSEE ADJUDICATION ON REOPENING TO THE FILES OF THE ASSESSING OFFICER TO DISPOSE OF THE SAME. 11. IN THE RESULT THE REVENUES APPEAL IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL 2010 UPON CONCLUSION OF THE HEARING. SD/- SD/- (I.P. BANSAL) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 TH APRIL 2010. *SRB* COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER DEPUTY REGISTRAR ITAT.