Subhash Chand Goyal, Hansi v. ITO, Hisar

ITA 4859/DEL/2010 | 2004-2005
Pronouncement Date: 27-10-2016 | Result: Allowed

Appeal Details

RSA Number 485920114 RSA 2010
Assessee PAN AAEPG7860L
Bench Delhi
Appeal Number ITA 4859/DEL/2010
Duration Of Justice 5 year(s) 11 month(s) 18 day(s)
Appellant Subhash Chand Goyal, Hansi
Respondent ITO, Hisar
Appeal Type Income Tax Appeal
Pronouncement Date 27-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 27-10-2016
Date Of Final Hearing 25-10-2016
Next Hearing Date 25-10-2016
Assessment Year 2004-2005
Appeal Filed On 08-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI G.D. AGRAWAL VICE PREISDENT AND SHRI KULDIP SINGH JUDICIAL MEMBER ITA NO.4859/DEL./2010 (ASSESSMENT YEAR : 2004-05) ITA NO.4860/DEL./2010 (ASSESSMENT YEAR : 2005-06) SHRI SUBHASH CHAND GOYAL VS. ITO WARD 4 495/10 GOYAL BHAWAN HISAR (HARYANA). DELHI GATE HANSI 125 033 (HARYANA). (PAN : AAEPG7860L) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH ADVOCATE AND SHRI V. RAJ KUMAR ADVOCATE REVENUE BY : SHRI N.K. BANSAL SENIOR DR DATE OF HEARING : 25.10.2016 DATE OF ORDER : 27.10.2016 O R D E R PER KULDIP SINGH JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN BOTH THE AFORESAID APPEALS THE SAME ARE BEING D ISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DI SCUSSION. 2. THE APPELLANT SHRI SUBHASH CHAND GOYAL (HEREINA FTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESE NT APPEALS SOUGHT TO ITA NOS.4859 & 4860/DEL./2010 2 SET ASIDE THE IMPUGNED ORDERS BOTH DATED 19.08.2010 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ROHTAK QUA TH E ASSESSMENT YEARS 2004-05 AND 2005-06 ON THE GROUNDS INTER ALIA THAT:- GROUNDS OF APPEAL (AY 2004-05) 1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND UNDER LAW LEARNED ASSESSING OFFICER IN INITIATING PROCEEDINGS UNDER S.147 OF INCOME TAX ACT 1961 IS WITHOUT JURISDICTION AND VOID AS AFTER DROPPING PR OCEEDINGS INITIATED UNDER S.154 OF THE ACT HAS ASSUMED JURIS DICTION UNDER S.147 OF ACT. 2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND UNDER LAW LEARNED COMMISSIONER OF INCOME TAX(APPEAL S) ERRED IN SUSTAINING ORDER OF LEARNED ASSESSING OFFI CER THAT THE EXPENDITURE INCURRED BY ASSESSEE AS AN MLA WAS NOT AN ALLOWABLE DEDUCTION UNDER S.57(III) OF INCOME TAX A CT 1961 OUT OF ALLOWANCES RECEIVED BY ASSESSEE. 3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND UNDER LAW LEARNED COMMISSIONER OF INCOME TAX(APPEAL S) ERRED IN REJECTING THE APPLICABILITY OF RULE OF CON SISTENCY TO THE FACTS OF THE CASE. 4) THAT LEARNED ASSESSING OFFICER ERRED IN CHARGING INTEREST UNDER S.234D AND S.244A OF THE ACT. GROUNDS OF APPEAL (AY 2005-06) 1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND UNDER LAW LEARNED ASSESSING OFFICER ERRED IN INITIA TING PROCEEDINGS UNDER S.147 OF INCOME TAX ACT 1961 WI THOUT PROPERLY APPLYING HIS MIND TO THE FACT THAT THE PRO CEEDINGS LEADING TO THE REASSESSMENT ARE WITHOUT JURISDICTIO N AND VOID AS THE CONDITIONS PRECEDENT FOR ACQUIRING JURI SDICTION UNDER S.147 OF INCOME TAX ACT 1961 ARE ABSENT. 2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND UNDER LAW LEARNED COMMISSIONER OF INCOME TAX(APPEAL S) ERRED IN SUSTAINING ORDER OF LEARNED ASSESSING OFFI CER THAT THE EXPENDITURE INCURRED BY ASSESSEE AS AN MLA WAS NOT AN ITA NOS.4859 & 4860/DEL./2010 3 ALLOWABLE DEDUCTION UNDER S.57(III) OF INCOME TAX A CT 1961 OUT OF ALLOWANCES RECEIVED BY ASSESSEE. 3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND UNDER LAW LEARNED COMMISSIONER OF INCOME TAX(APPEAL S) ERRED IN REJECTING THE APPLICABILITY OF RULE OF CON SISTENCY TO THE FACTS OF THE CASE. 4) THAT LEARNED ASSESSING OFFICER ERRED IN CHARGING INTEREST UNDER S.234D AND S.244A OF THE ACT. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE INVOLVED IN BOTH THE AFORESAID APPEALS ARE : THE ASSESSEE BEING AN MLA AND MINISTER OF THE HARYANA GOVERNMENT DERIV ED INCOME FROM SALARY AND ALLOWANCES ALONG WITH INCOME FROM O THER SOURCES. ASSESSEE FOR THE ASSESSMENT YEARS 2004-05 AN 2005- 06 COMPUTED HIS TOTAL INCOME AT RS.2 61 583/- (SALARY INCOME RS.4 84 680/- + INCOME FROM OTHER SOURCES RS.2 23 0 97/-) AND RS.2 64 262/- (SALARY INCOME RS.4 73 913/- + INCOME FROM OTHER SOURCES RS.2 09 648/-) RESPECTIVELY. 3. AO NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION A GAINST SALARIED INCOME WHICH IS NOT ALLOWABLE AND THE DEDU CTION CLAIMED UNDER THE HEAD INCOME FROM OTHER SOURCES ON ACCOU NT OF EXPENSES CLAIMED WAS ALSO NOT FOUND TO BE IN ACCORDANCE WITH LAW AND CONSEQUENTLY NOTICE U/S 148 OF THE INCOME-TAX ACT 1961 (FOR SHORT THE ACT) WAS ISSUED ON 03.12.2008 AFTER RECORDING REASONS U/S 147 OF THE ACT. DUE TO NON-FILING OF THE RETURN OF INC OME WITHIN ITA NOS.4859 & 4860/DEL./2010 4 PRESCRIBED PERIOD OF 30 DAYS NOTICE U/S 142(1) OF THE ACT WAS ISSUED ON 02.03.2009 TO WHICH REPLY WAS FILED CLAIM ING THAT ORIGINAL NOTICE U/S 148 DATED 03.12.2008 WAS NOT SE RVED UPON/ RECEIVED BY THE ASSESSEE. SO FRESH NOTICE WAS SER VED AND IN RESPONSE THEREOF ASSESSEE PLEADED TO TREAT THE AFO RESAID RETURN OF INCOME AS REPLY TO THE NOTICE ISSUED TO HIM. 4. CONSEQUENT UPON THE ISSUE OF NOTICE U/S 143 (2) OF THE ACT ASSESSEE PUT IN APPEARANCE THROUGH HIS AUTHORIZED R EPRESENTATIVE AND HE WAS CALLED UPON TO SHOW-CAUSE TO DISALLOW TH E CLAIM OF EXEMPTION OF RS.24 000/- U/S 10(17)(III) AND EXPENS ES OF RS.4 53 180/- CLAIMED AGAINST ALLOWANCES RECEIVED B EING MLA. ASSESSEE RELIED UPON NOTIFICATION NO.S.O.744(E) DAT ED 07.08.2000 TO CLAIM EXEMPTION U/S 10(17)(III). 5. FINDING THE SUBMISSIONS MADE BY ASSESSEE NOT TEN ABLE AO REJECTED THE CLAIM OF THE ASSESSEE U/S 57(III) OF T HE ACT AND ASSESSED THE NET TAXABLE INCOME AT RS.7 06 733/- FOR AY 2004 -05 AND RS.6 94 628/- FOR AY 2005-06 RESPECTIVELY. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING AN APPEAL WHO HAS AFFIRMED THE ASSESSMENT OR DER BY DISMISSING THE APPEAL. FEELING AGGRIEVED THE ASSE SSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. ITA NOS.4859 & 4860/DEL./2010 5 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER CONTENDED INTER ALIA THAT AO BY APPLYING HIS INDEPE NDENT MIND ISSUED LETTER DATED 24.07.2008 AVAILABLE AT PAGE 6 OF THE PAPER BOOK-2 CONSIDERED THIS CASE NOT FIT FOR REOPENING BUT LD. ADDL.CIT COERCED THE AO TO ISSUE THE NOTICE FOR REOPENING TH E CASE; THAT AFTER RECEIPT OF LETTER FROM ADDL.CIT AO RECORDED THE RE ASONS TO REOPEN THE ASSESSMENT WHICH ARE NOT SUSTAINABLE IN THE EYE S OF LAW. HOWEVER ON THE OTHER HAND LD. DR TO REPEL THE ARG UMENTS ADDRESSED BY THE LD. AR CONTENDED THAT AO HAS NEVER BEEN COERCED BY THE LD. ADDL.CIT RATHER HE WAS MADE AWARE OF HIS DUTIES AND THE REASON TO REOPEN THE ASSESSMENT HAS BEEN INDEPENDEN TLY RECORDED BY THE AO AND RELIED UPON THE ORDER PASSED BY THE A O AS WELL AS LD. CIT (A). 9. NOW BEFORE PROCEEDING FURTHER WE WOULD LIKE TO PERUSE THE REASONS RECORDED BY THE AO FOR REOPENING OF THE ASS ESSMENT U/S 147 OF THE ACT WHICH ARE REPRODUCED FOR READY PERUS AL AS UNDER :- THE ASSESSEE HAS FURNISHED RETURN OF INCOME FOR T HE ASSESSMENT YEAR 2005-06 VIDE RETURN RECEIPT NO. 155 36 DATED 31.03.2006 DECLARING TOTAL INCOME OF RS.2 64 440/- ITA NOS.4859 & 4860/DEL./2010 6 DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE W AS AN MLA AND MINISTER OF THE HARYANA GOVT. AND DERIVE D INCOME FROM SALARY AS WELL AS ALLOWANCES ARID ALSO INCOME FROM OTHER SOURCES. HOWEVER THE ASSESSEE IN THE RETURN FILED AS AGAINS T THE TAXABLE INCOME AFTER GROSSING UP NET INCOME SHOWN I N THE TDS CERTIFICATE ISSUED BY THE UNDER SECRETARY (GENE RAL) TO GOVT. OF HARYANA FOR THE ASSESSMENT YEAR 2005-06 AT RS.8 13 136/- IN HIS COMPUTATION HAS OFFERED INCOME OF RS.2 64 264.71 FOR TAX AS COMPUTED HEREUNDER:- SALARY INCOME : 4 73 913.00 INCOME FROM OTHER SOURCES : (-) 2 09 648.29 TOTAL INCOME : 2 64 264.71 THE DEDUCTIONS ARE CLAIMED AGAINST SALARY INCOME WH ICH ARE NOT ALLOWABLE AS PER LAW. FURTHER THE DEDUCTIONS C LAIMED UNDER THE HEAD 'INCOME FROM OTHER SOURCES' ON ACCOU NT OF EXPENSES CLAIMED ARE ALSO NOT IN ACCORDANCE WITH LA W. THEREFORE I HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE AS SESSMENT YEAR 2005-06. ISSUE NOTICE U/S 148 OF THE I.T. ACT FOR THE ASSTT . YEAR 2005- 06. 10. IN THE BACKDROP OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ARGUMENTS ADDRESSED BY THE LD. AR FOR THE PARTI ES TO THE CASE THE SOLE QUESTION ARISES FOR DETERMINATION IS :- AS TO WHETHER AO CAN INITIATE PROCEEDINGS U/S 147/ 148 OF THE ACT ON THE BASIS OF DIRECTIONS ISSUED BY HIS SUPERIOR REVENUE AUTHORITIES WITHOUT APPLYING HIS O WN MIND? 11. UNDISPUTEDLY IT IS SETTLED PRINCIPLE OF LAW TH AT THE AO IS REQUIRED TO REACH AT AN INDEPENDENT CONCLUSION BY A PPLYING HIS OWN MIND THAT HE HAS REASON TO BELIEVE THAT THE INCOME OF THE AS SESSEE ITA NOS.4859 & 4860/DEL./2010 7 HAS ESCAPED ASSESSMENT TO ASSUME THE JURISDICTION FOR REOPENING OF THE ASSESSMENT U/S 147 / 148 OF THE ACT. 12. BARE PERUSAL OF THE REASONS RECORDED BY THE AO QUA INITIATION OF PROCEEDINGS U/S 147 OF THE ACT APPARE NTLY GO TO PROVE INTER ALIA THAT HE HAS SIMPLY ACTED ON THE BASIS OF DIRECTIONS ISSUED BY ADDL.CIT DATED 29.07.2008 LYING AT PAGE 8 OF TH E PAPER BOOK-2; THAT WHEN THE AO VIDE LETTER DATED 24.07.2008 AVAI LABLE AT PAGE 6 OF THE PAPER BOOK-2 ADDRESSED TO ADDL.CIT HAS CATE GORICALLY HELD THAT IN VIEW OF THE DETAILED REPLY FILED BY THE ASSESSE E THE ACTION OF REOPENING OF ASSESSMENT WAS NOT CONSIDERED FIT THE QUESTION DOES NOT ARISE TO APPLY THE MIND AGAIN BY THE AO AT THE TIME OF RECORDING REASONS ON 03.12.2008 AVAILABLE AT PAGE 12 OF THE PAPER BOOK; THAT THE AO IN THE REASONS RECORDED FOR REOPE NING ASSESSMENT U/S 147 HAS NOWHERE DISCLOSED THE REASONS TO DEPART FROM HIS EARLIER SATISFACTION THAT THE CASE IS NOT FIT FOR REOPENING WHICH FACT GOES TO PROVE THAT THE REOPENING HAS MERELY BEEN MADE AT TH E DIRECTIONS OF ADDL.CIT WHICH IS NOT PERMISSIBLE UNDER LAW. 13. UNDISPUTEDLY WHEN THE AO HAS CAME TO THE CONCL USION THAT THIS CASE IS NOT FIT FOR REOPENING AS PER LETTER DA TED 24.07.2008 AVAILABLE AT PAGE 6 OF PAPER BOOK-2 WRITTEN TO ADDL .CIT THERE IS NO QUESTION OF INDEPENDENTLY RECORDING SATISFACTION TO INITIATE THE PROCEEDINGS U/S 147. AO HAS MERELY ACTED UPON THE DIRECTIONS ITA NOS.4859 & 4860/DEL./2010 8 ISSUED BY ADDL.CIT TO REOPEN THE ASSESSMENT U/S 147 WHEREAS AO WAS REQUIRED TO ARRIVE AT A PRIMA FACIE CONCLUSION THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT FOR AYS 2004 -05 AND 2005- 06. REASONS RECORDED BY AO EVEN DO NOT DISCLOSE AS TO HOW MUCH INCOME HAS ESCAPED ASSESSMENT FOR THE YEARS UNDER A SSESSMENT WHICH SHOWS THAT HE HAS NOT APPLIED HIS MIND WHAT T O TALK OF RECORDING SATISFACTION. FORMING AN OPINION MERELY ON THE BASIS OF INFORMATION OR DIRECTIONS ISSUED BY SUPERIOR AUTHOR ITIES DOES NOT AMOUNT TO SATISFACTION OF THE AO TO REOPEN THE CASE U/S 147 OF THE ACT. 14. SO WHEN INITIATION OF THE PROCEEDINGS U/S 147 OF THE ACT IN THIS CASE IS ITSELF BAD IN LAW THE CONSEQUENT ASSE SSMENT U/S 148/143(3) IS NOT SUSTAINABLE AND AS SUCH ARE LIABL E TO BE QUASHED. AT THE SAME TIME SINCE THE VERY INITIATION OF THE PROCEEDINGS U/S 147 OF THE ACT IS NOT SUSTAINABLE IN THE EYES OF LA W WE FIND NO NEED TO GO INTO THE MERITS OF THE DISALLOWANCE OF D EDUCTION U/S 57 (III) OF THE ACT MADE BY AO AND AFFIRMED BY LD. CIT (A) AS RECEIVED BY THE ASSESSEE. RESULTANTLY AFORESAID P RESENT APPEALS FILED BY THE ASSESSEE ARE HEREBY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS DAY 27 TH OF OCTOBER 2016. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) VICE PRESIDENT JUDICIAL MEMBER DATED THE 27 TH DAY OF OCTOBER 2016/TS ITA NOS.4859 & 4860/DEL./2010 9 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A) ROHTAK. 5.CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.