Income Tax Appellate Tribunal - Chandigarh
Sh. Amit Chaudhry, Ludhiana vs Ito, W-1(1), Ludhiana on 18 June, 2021
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "एकल सद यीय', च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH
BENCH 'SMC' CHANDIGARH
ीमती दवा संह, या#यक सद य
BEFORE: SMT. DIVA SINGH, JM
आयकर अपील सं./ ITA No. 1152/CHD/2019
नधा रण वष / Assessment Year : 2011-12
Shri Ashish Chaudhry, बनाम The ITO,
C-12, Focal Point, VS Ward 1(1),
Phase-V, Ludhiana. Ludhiana.
थायी लेखा सं./PAN No: AASPC4446N
अपीलाथ /Appellant यथ /Respondent
नधा रती क! ओर से/Assessee by : Shri Vibhor Garg, C.A.
राज व क! ओर से/ Revenue by : Smt. Meenakshi Vohra, Addl. CIT
आयकर अपील सं./ ITA No. 1154/CHD/2019
नधा रण वष / Assessment Year : 2011-12
Shri Suresh Chaudhry, बनाम The ITO,
C-12, Focal Point, Ward 1(3),
VS
Phase-V, Ludhiana. Ludhiana.
थायी लेखा सं./PAN No: AASPC4450C
अपीलाथ /Appellant यथ /Respondent
नधा रती क! ओर से/Assessee by : Shri Vibhor Garg, C.A.
राज व क! ओर से/ Revenue by : Shri Ashok Khanna, Addl. CIT
आयकर अपील सं./ ITA No. 1156/CHD/2019
नधा रण वष / Assessment Year : 2011-12
Shri Amit Chaudhry, बनाम The ITO,
C-12, Focal Point, Ward 1(1),
VS
Phase-V, Ludhiana. Ludhiana.
थायी लेखा सं./PAN No: AASPC4449D
अपीलाथ /Appellant यथ /Respondent
नधा रती क! ओर से/Assessee by : Shri Vibhor Garg, C.A.
राज व क! ओर से/ Revenue by : Smt. Meenakshi Vohra, Addl. CIT
सन
ु वाई क! तार&ख/Date of Hearing : 16.06.2021
उदघोषणा क! तार&ख/Date of Pronouncement : 18.06.2021
ITA 1152,1154 & 1156/CHD/2019
A.Y. 2011-12
Page 2 of 10
Hearing conducted via Webex
आदे श/ORDER
Th e s e t h r e e a p p e a l s o f t h r e e d i f fe r e n t a s s e s s e e s a r e be i n g t a k e n u p t o ge t h e r a s i n e a c h o f t he se a p p e a l s pe r t a in i n g t o 2 0 1 1 - 1 2 a s se s sm e n t ye a r s , t h e i s s u e s a n d a r gu m e n t s r e m a i n identical. A c c o r d i n g l y , o n t h e r e q ue s t o f t he p a r t i e s , c o m m o n o r d e r i n a l l the se a p pe a l s i s be in g p a s se d .
2. For the sake of c o n ve n ie n c e , t he i s s ue s as found a d d r e s se d i n I TA 1 1 5 2 / C H D / 2 0 1 9 a r e b e in g ta k e n u p f i r s t . H e r e i n t h e a s s e s s e e i s a gg r i e v e d b y t h e o r d e r p a s se d b y th e C I T( A ) - I L u d h i a n a . V a r i o u s g r o un d s h a ve b e e n r a i se d t h e r e i n , h o we ve r , t h e p a r t i e s a r g u e d g r ou n d N o . 2 & 3 i n t h e p re se n t a p p e a l . Th e s e r e a d a s u n d e r :
"2. Tha t in th e fa cts & circumstan ces o f th e case, th e re-open ing of the a ssessment p ro ceeding s u /s 147 /148 are illeg a l, with out ju risd ictio n an d withou t app lica tion o f min d a s add itio n is mad e on pro tective ba sis an d fu rth er igno red th e fact th a t th e investmen t was mad e in AY 2012 -13 an d no t in AY 2 011-12.
3. Tha t th e Ld Ap pella te Autho rity wro ngly & illega lly co n firmed the pro tective assessmen t with o u t a clea r fin d ing rega rd ing th e additio n on pro tective ba sis."
3. R e f e r r i n g t o t h e s u b m i s s i o n s a d va n ce d o n 0 6 . 0 5. 2 0 2 1 a n d 0 9 . 0 6 . 2 0 2 1 , t h e l d . S r . D R i n v i ted a t t e n t i o n t o th e r e p l y o f t h e department by way of information relatable to M/s KOC I n d u s t r i e s L t d . w h e r e i n t h e p o si t i o n a n d fa c t s r e q u i re d t o b e a d d r e s se d ha s b e e n cl a r i f ie d . It has been informed that this v e ry a d d i t i o n h a d b e e n m a d e o n a s u b s t a n t i v e b a s i s t h e r e i n a nd ITA 1152,1154 & 1156/CHD/2019 A.Y. 2011-12 Page 3 of 10 b y w a y o f a b u n d a n t c a u t i o n h a d a l s o be e n ma d e i n t h e c a se o f the a ss e s s e e on a p r o t e c t i ve basis so as to keep th e d e p a r t m e n t ' s i n te r e s t a l i ve . A c co r d i n g l y , e la b o r a t i n g he r s t a nd r e f e r r i n g t o s u b m i s s i o n m a d e o n e a r l ie r d a te s , i t w a s s u b m i t te d that t he p r e se n t a p pe a l can accordingly be d i s p o se d off. H o w e ve r , h e r o nl y c o n c e r n w a s t h a t t he a s se s se e h a d a r g ue d b e f o r e t he C I T( A ) t h a t ch e q u e o f R s . 2 0 l a c s d a te d 3 1 . 0 3 . 2 0 1 1 w a s c le a r e d i n th e ne x t a s s e ss m e n t ye a r . Th i s f a c t u a l p o s i t i o n i n e a c h o f t h e se c a se s m a y e i t he r b e d i r e c t e d t o b e ve r i f i e d or t h i s i s s u e m a y b e k e p t o pe n . As far as the present appeal is c o n ce r n e d , s h e a g r e e d t h a t s i n ce t h e s u b s t a n t i ve a d d i ti o n h a s b e co me f i n a l i n t h e h a n d s o f M / s K O C I n d u s t r i e s L t d . a s p e r R e p o r t of t he AO , a d d i ti o n i n th e p r e se nt c a se s o n p r ote c t i v e b a s i s , i n t he c i r cu m s t a n c e s m a y n o t b e m a i n t a i n a b l e u n l e s s th e facts vary.
4. Th e l d . A R M r . V i b h o r G a rg s u bm i t t e d t ha t t he a s se sse e w o u l d be a b l e t o s a t i s f y t he a ut h o r i t i e s o n t h e f a c t t h a t th e c h e q u e w a s c le a re d i n t h e n e x t f y i .e . a s se s s m e n t y e a r 2 0 1 2 - 1 3 a n d he w o u l d ha v e n o o b j e c t i o n i f t he s a i d i s s ue i s ke p t op e n a n d t h e he a r i ng i s c o n c l u d e d o n t h e b a s i s o f t h e f a c t t h a t th e a d d i t i o n o n s ub st a n t i ve b a s i s s t a n d s c o n c l u de d i n t h e h a nd s o f M/s KOC I n d u s t r ie s Ltd. as in these c i r c um s t a n c e s , th e p r o te c t i v e a d d i t io n i s n o t m a i n t a i n a b l e .
ITA 1152,1154 & 1156/CHD/2019 A.Y. 2011-12 Page 4 of 10
5. A f t e r he a r i n g t h e p a r t ie s , i t is se e n t h a t t h e f i n d in g o f t h e C I T( A ) in para 5 that t he p r o te c ti v e addition needs to be s u s t a i ne d, c a n n o t b e u p h e l d . Th e f a c t s a s co n s i de r e d a n d d e ci d e d b y t h e C I T( A ) i n t h e p r e se n t a p p e a l a re se t o u t i n p a r a 2 t o 5 o f t he o r de r. Th e se a r e e xt r a c te d he re u n de r f o r t h e s a k e o f c o mp l e te ne s s :
"2. The appellant had, for the year under consideration i.e. A.Y.2011-12, income from salary and other sources. However, on receipt of information by the AO regarding the investment of Rs.20 lakhs by the appellant as share application money with M/s KOC Industries Ltd., the jurisdictional AO formed a prima facie belief of escapement of income from taxation in the hands of the appellant and, therefore, assumed the jurisdiction to reassess the appellant by issuing the necessary notice under the provisions of section 148 of the Act, after following the necessary procedure in this regard in terms of recording his satisfaction obtaining the requisite approval from the competent authority. In the ensuing re-assessment proceedings, the appellant could not explain the sources of investment of Rs.20 lakhs as share application money with the aforesaid company. The said investment was thus considered as unexplained within the meaning of section 69 of the Act. However, it was noted by the AO that M/s KOC Industries Ltd. was assessed under the provisions of section 143(3)/263 for the A.Y.2011-12, in which the aforesaid investment of the appellant was considered as unexplained cash credit within the meaning of section 68 of the Act on substantive basis. Thus, to avoid double taxation, Rs.20 lakhs was added back by the AO in the hands of the appellant on protective basis.
3. Appeal against the aforesaid order of assessment was preferred on 24/01/2019, in which the solitary ground against the impugned assessment was that the appellant had given a cheque of Rs.20 lakhs, which was not declared before the close of the F.Y.2010-11
4. In the appellate proceedings, the appellant merely stated the following:
The Assessing Officer has made an addition of Rs. 20,00,000/- on protective basis in the hands of the assessee, also the said amount has been treated as unexplained credits in the hands of KOC Industries Limited on substantive basis. The Assessee has filed his income tax return on 29-02-2012 vide acknowledgement number-345125000290212 consisting of Salary income from M/s KOC Industries Limited and interest income.
The assessee has issued a cheque of Rs. 20,00,000/- dated 31-03-2011 as share application money in M/s KOC Industries Limited. The cheque was cleared in the next financial year having assessment year 2012-13 out of proceeds of long term capital gain earned by the assessee.
The assessee has not earned any long term capital gain during the assessment year 2011-12 and the assessee has not made any investments of any kind during the assessment year 2011-12.
On the basis of above mentioned facts, your honour is requested to delete the addition of Rs. 20,00,000/- made as unexplained investments u/s 69 of the Income Tax Act, Income Tax Act, 1961."
ITA 1152,1154 & 1156/CHD/2019 A.Y. 2011-12 Page 5 of 10
5. From the aforesaid submissions of the appellant, the sources and genuineness of the purported investment remained unexplained. Besides, the AO has been reasonable enough to make the assessment protective basis. The appellant should not have any grievance inst such assessment, the substantive assessment having been 'made in the hands of the company. Considered in this background, the instant appeal is dismissed on account of inability of the appellant to explain the sources and genuineness of the purported investment either at the assessment stage or at the appellate stage. It is ordered accordingly."
6. The ld.Sr.DR Ms. Vohra has placed the following reply of the department dated 07.06.2021 which is reproduced hereunder for the sake of completeness and clarity:
ITA 1152,1154 & 1156/CHD/2019 A.Y. 2011-12 Page 6 of 10
7. S p e c i f i c p a r a s 2 (v i ) t o ( v i i i ) a n d P a r a 3 o f the a b o ve Re p o r t c l e a r l y a d dr e s s th e d e p a r t m e n t a l p o s i t i o n . I n t he l i g h t o f t he s e f a c t s a n d s u b m i s s i o n s , i t i s d e e m e d a p p r o p r i a te t o a l l o w t h e appeal of t he a s se s se e on the a f or e s a i d g r ou n d s as the s u b s t a n t iv e a d d it i o n h a s a t t a i ne d f i n a l i t y . A t t he s a m e t i m e , i t i s c l a r i f i e d t h a t t h e f a c tu m o f t h e c he q ue d a te d 3 1 . 0 3 . 2 0 1 1 o f R s . 2 0 l a c s i n f a v o u r o f M / s K O C I n d u s t r i e s L t d . s t a te d t o b e cleared in 2 01 2 - 1 3 a s se s s me n t year is kept op e n for c o n s i d e r a t i o n i n t h e s a i d a p p e a l a n d i s n o t b e i n g c o n s i d e r e d or d e ci d e d i n t h e p r e s e n t a p p e a l a s t he p r e se n t a p pe a l i s be in g d e ci d e d o n l y o n t h e b a s i s o f t he f a c t t h a t s u b s t a n t i ve a d d i t io n h a s a t ta i n e d f i n a l i t y . I n t h e c i r cu m s t a n c e s , p r ote c ti ve a d d i t io n cannot be sustained. S a i d o r d e r w a s p r o n o u n ce d a t t h e ti m e o f v i r t u a l h e a r i n g i ts e l f i n t he p r e se n c e o f t he p a r t ie s v i a W e b e x .
ITA 1152,1154 & 1156/CHD/2019 A.Y. 2011-12 Page 7 of 10
8. Th e a p p e a l , a c c or d i n g l y , i s a l l o w e d .
9. In ITA 1154/CHD/2019, t he facts and c i r c um s t a n c e s r e m a i n i d e n t i c a l, h o we ve r , in t h e p r e se n t a p p e a l th e C I T( A ) h a s c o n s i d e r e d a n d d e c i d e d t h e i s s u e d i s m i s s i n g th e a p pe a l o n l i m i t a t i o n a s we ll a s o n p r o te c ti ve b a s i s .
10. Th e r e le v a n t f i n di n g s u n d e r c h a l l e n ge a r e s e t o u t i n p a r a 3 w h i c h r e a d s a s un d e r :
"3. Appeal against the aforesaid order of assessment was preferred belatedly on 29/03/2019 and the reasons for the delay have been stated to be the non- linking of mobile number of the appellant with the Aadhar No. This explanation was also not substantiated either in the Appeal Memo or during the appellate proceedings. The aforesaid ground for condonation of delay in filing the instant appeal is not satisfactory enough or sufficient cause for this Appellate Authority to condone the delay. In addition to that, the appellant has also not explained the sources of making the aforesaid investment in the share capital of M/s KOC Industries. Besides, the AO has been reasonable enough to make the assessment on protective basis. The appellant should not have any grievance against such assessment, the substantive assessment having been made in the hands of the company. Considered in this background, the instant appeal is dismissed on both counts, not being maintainable on account of inability of the appellant to show sufficient cause for filing the appeal late as also on account of no grievance occurring to him. In addition to that, as stated earlier, the appellant has neither explained the sources of the purported investment at the assessment stage nor at the appellate stage."
11. Th e g r o u n d s r a i s e d by t h e a s se s s e e i n t h e s a id a p p e a l reads as under :
1. That the impugned order of penalty is bad both on facts and Law.
2. That in the facts & circumstances of the case, the re-opening of the assessment proceedings u/s 147/148 are illegal, without jurisdiction and without application of mind as addition is made on protective basis and further ignored the fact that the investment was made in AY 2012-13 and not in AY 2011-12.
ITA 1152,1154 & 1156/CHD/2019 A.Y. 2011-12 Page 8 of 10
3. That the Ld Appellate Authority wrongly & illegally confirmed the protective assessment without a clear finding regarding the addition on protective basis.
4. That Ld Appellate Authority wrongly & illegally held that the Appellant has neither explained the sources of purported investment of Rs .20,00,000/-at the assessment stage nor at the appellate stage ignoring the detailed explanation in its reply dated 18.12.2018 reproduced in assessment order.
5. That the Ld Appellate Authority has wrongly & illegally rejected the application for condonation of delay in filing appeal on account of technical glitches of Income Tax portal being in infancy stages of new e-filing procedure.
6. That the Appellant craves permission to add, amend, elucidate any ground of appeal at the time of hearing
12. B o t h t h e p a r t ie s h a v e b e e n he a r d . A d d r e s s i n g t h e sp e c i f i c r e a s o n i n g i n t he c o n te x t of g r o u n d N o . 5 , f i r s t i t i s s e e n th a t t h e i m p u g n e d or d e r i s n o n - s p e a k i n g a n d v a g ue a s t h e l d . C I T( A ) h a s n o t e ve n c a r e d t o s e t ou t th e sp e c i f i c n u m b e r o f d a y s b y w h i c h t he a p p e a l w a s f o u n d t o b e d e l a ye d. A s p e r l a w , th e a d j u d i c a t i n g a u th o r i t y i n a l l f a i r n e ss i s f i r s t r e q u i r e d t o p u t t h e a p p e l l a n t to s p e c i f i c n o t i ce o f t h e f a c t o f d e l a y n o t i c e d , i f a n y i n the filing of the appeal. Th e a d j u d i c a t i n g a u t h o ri t y ne c e s s a r il y needs to set out t he nu m b e r of d a ys by which th e p e ti t i o n / a p p l i ca ti o n is found to be d e l a ye d and t h e r e a f te r a f f o r d t h e p a r t y a n o p p o rt u n i t y a n d r e a s o n a b l e t im e t o e x p l a i n the delay. I t i s o n l y a f te r c o n s i de r i n g t he s ub m i s s i o n s , th e a d j u d i c a t i n g a u th o r i t y i s t o p a s s a s p e a k i n g o r d e r se tt i n g o u t t h e r e a s on s a s t o w h y t he de l a y i s b e i n g c on d o n e d o r t h e a p p l i c a t i o n i s b e i n g d i s m i s se d . I n t h e f a c t s o f th e p r e se nt c a se , i t i s s e e n t h a t t h e a d j u d i c a t i n g a u t h o r i t y h a s pa s se d a v a gu e ITA 1152,1154 & 1156/CHD/2019 A.Y. 2011-12 Page 9 of 10 g e ne r a l i s t i c o rd e r w he r e it is not c le a r w he t h e r any such o p p o r t u n it y i n c l e a r te r m w a s a ff o r de d t o t he a ss e sse e . It is s e e n t h a t n o c a r e w a s t a k e n e v e n t o s e t o ut t he nu m b e r o f d a y s b y w h i c h t he a p p e a l w a s no t i c e d to b e de l a ye d . 12.1 A c c o r d i n g l y , a f te r h e a r i ng t h e p a r t i e s , i t w a s d e e me d a p p r o p r i a te t o se t a s i de t h e i m p u g n e d o r de r r e s t o r i n g t h e i s su e b a c k t o t h e f i l e o f t h e C I T( A ) w i t h d i r e c ti o n t o f i r s t se t o u t th e s p e c i f i c n u m b e r o f d a y s b y w h i c h t he a p p e a l w a s n o t i c e d t o b e l a te a n d t h e r e a f t e r a ff o r d a s p e c if i c o p p o r t u n it y t o t h e a s se s se e t o e x p l a i n t he d e l a y . O n m e r i t s a l s o , i t i s se e n t h a t n o s p e ci f i c r e a s o n , i t i s se e n , h a s a l s o be e n g i v e n t o p r oc e e d t o u p h o l d t h e p r o te c t i v e a d d i t i o n . I n t he l ig h t o f t h e s u b mi s s io n s o f th e A O a s c o n s id e r e d i n I TA 1 1 5 2 / C H D / 2 0 1 9 w h i c h a r e s t a te d t o b e i d e n t i c a l i n t h e p r e se n t c a se a l s o , i t i s s e e n t h a t t h u s e v e n o n m e r i t s , th e a d d i ti o n c a n n ot b e s us t a i n e d . I n t he a b se n ce of a n y c h a n g e i n f a c t s a n d c i r c u m s t a n ce s a s a v a i l a b l e on r e co r d , i t i s d e e me d a p p r op r ia t e t o se t a s i d e t h e i m p u g ne d or d e r d i r e c t in g t h e C I T( A ) t o ve r i f y th i s f a c t u a l p o s i t i o n o f f i n a l i t y a n d p a s s a s p e a k i n g o r de r in a c c o r da n ce w i th l a w a f te r g i v i ng t he a s se sse e a r e a s o n a b l e o p po r t u n i t y o f b e i n g h e a r d .
13. A c c o r d i n g l y , I TA 1 1 5 4 / C H D / 2 0 1 9 i s r e s to r e d b a c k t o t h e f i l e o f t he C I T( A ) .
14. In t he result, a p pe a l of the assessee is allowed f or s t a t i s t ic a l p u r p o s e s .
ITA 1152,1154 & 1156/CHD/2019 A.Y. 2011-12 Page 10 of 10
15. In ITA 1156/CHD/2019, it was common stand of the parties before the Bench that the facts, circumstances and the reasoning of the CI T(A) is identical to the facts, circumstances a nd reasoning as considered in the case of Shri Ashish Chaudhry (I TA 1152/CHD/2019). Similar submissions dated 07.06.2021 on facts have been placed by the concerned AO before the ITAT. Accordingly, in the light of the decision as set out in I TA 1152/CHD/2019, the appeal of the assessee is allowed.
16. In the result, I TA 1152/CHD/2019 and I TA 1156/CHD/2019 are allowed and ITA 1154/CHD/2019 is allowed for statistical purposes.
17. Order pronounced on 18 t h June,2021.
Sd/-
( दवा संह ) (DIVA SINGH) या#यक सद य/Judicial Member "पन ू म"
आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु / CIT
4. आयकर आयु (अपील)/ The CIT(A)
5. िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, च डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar