Income Tax Appellate Tribunal - Delhi
Nishchal Sethi, Ghaziabad vs Ito, Ghaziabad on 13 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'SMC' BENCH,
NEW DELHI
BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER
ITA No. 3086/DEL/2015 [A.Y. 2008-09]
Shri Nischal Sethi Vs. The I.T.O
Plot No. D - 47, B-3, Ward 1(4)
Kaushambi, Ghaziabad New Delhi
PAN : BRHPS 4671 N
[Appellant] [Respondent]
Date of Hearing : 09.10.2017
Date of Pronouncement : 13.10.2017
Assessee by : Shri Sushil Jain, CA
Shri Deepak, Adv
Revenue by : Shri T. Vasanthan Sr. DR
ORDER
This appeal of the assessee arises from the order of the ld. CIT(A)-Ghaziabad, vide order dated 27.03.2015 for A.Y. 2008-09.
2. At the very outset, I find that the assessee has filed an application for admission of additional ground. I have heard the rival submissions and have perused the relevant material on record on the admission of additional grounds which read as under:
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"1. That on the facts and circumstances of the case and in law, the ld. CIT(A) erred in upholding the reopening action u/s 148 of the Act of the Assessing Officer which stand vitiated due to lack of tangible material, jurisdiction, absence of nexus between alleged information received and non application of mind.
2. That the assumption of jurisdiction u/s 148 of the Act is without authority of law and therefore, the assessment so framed in furtherance of such invalid jurisdiction is illegal, arbitrary, bad in law and deserve to be quashed."
3. The ld. AR submitted that it is well settled that an assessee is entitled to raise a legal ground at any stage of the proceedings including on a reference or an appeal before the Hon'ble High Court. The ld. AR placed reliance on the decision of the Hon'ble Supreme Court, in the case of National Thermal Power Corporation Limited v. CIT reported in 229 ITR 383 wherein it has been held that where all the material facts are on record and an additional ground raised is purely legal in nature, such ground should be admitted at any stage of the proceedings. The assessee also placed reliance on the judgment of the Apex Court in the case of CIT vs Varas International (P) Ltd. reported in 284 ITR 80, wherein their lordships had held that a question of law can be raised even if not 3 taken before the lower authority. In view of the aforesaid, the ld. AR prayed that the assessee may be permitted to argue the aforesaid additional grounds of appeal.
4. Replying to the above, the ld. DR strongly opposed the admission of additional ground and submitted that when this ground was not raised before the authorities below, the same cannot be raised at this belated stage before the Tribunal.
5. The ld. AR placing rejoinder to the above submission of the ld. AR, submitted that the assessment order is bad in law which also covers the legal contention of the assessee raised in additional grounds. The ld. AR also submitted that where all material facts are on record and additional grounds raised by the assessee are purely legal in nature, then such grounds should be admitted at any stage.
6. On consideration of above legal submissions on admission of additional grounds raised by the assessee, we find that the additional grounds are of legal nature and for adjudication on these grounds, all material facts are on record and, therefore, additional grounds raised by the assessee are admitted for adjudication by respectfully following the ratio of the Hon'ble Supreme Court decision in the case of NTPC [supra].
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7. First I take up the additional grounds of appeal which go deep into the root of the matter. I have heard the rival contentions and perused the relevant material on record. The reasons which are recorded dated 16.11.2012 are reproduced hereinbelow:
"The assessee is an individual. As per record of this office, the return of income for A.Y. 2008-09 has not been filed by the assessee. Further, the assessee has failed to furnish any information in this regard as required vide this office letter F.No. ITO/Ward-l(4)/GZB/ 2012-13/ Non filers/3879 dated 22.10.2012. In this case an information has been received from the ADIT (Inv.), Unit-Ill (3), New Delhi that the assessee has purchased a commercial property at ground floor measuring 800 Sq. ft. in Nehru Vikas Minar Project on 08.11.2007 for a total consideration of Rs.40,00,000/.-. Out of this total consideration, the amount of Rs.20,00,000/- has been paid by the assessee in cash, which has not been accounted for by the seller in its books of account which forms part of unaccounted- money received against purchase of this property.
Thus, I have information in my possession that the assessee has paid unaccounted money of Rs.20,00,000/- in cash for purchase of property measuring 800 Sq. ft. in Nehru Vikas Minaar Project on 08.11.2007. In view of the above, I have reason to believe that he income of the assessee chargeable to tax for A.Y. 2008-09 has escaped assessment within the meaning of section 147 of the Act being failure to file his true and correct return of income on the part of the assessee. Further, the rest 5 amount of investment of Rs. 20 lakhs in purchase of property shall be examined during the assessment/reassessment proceedings. Hence, notice u/s 148 of the Act is hereby issued."
8. It was argued by the ld. counsel for the assessee that the assessee has not purchased any property and the allegation in the reasons recorded is simply an allegation which is based on the information with regard to 'other persons'. Therefore, the Assessing Officer is required to apply his mind to the materials and then to conclude that he has reason to believe that income of the assessee has escaped assessment. In the present case, it was argued by the ld. counsel for the assessee that the assessee has not purchased any property either in his own name or in the name of any of his family member. A search and seizure operation was carried out on the A to Z group on 17.8.2011 where during the course of search, computer hard disk and loose papers were found wherein it has been mentioned that the said company had constructed various projects and sold commercial spaces to various parties receiving part payments. Such cash payments were not accounted for in the books of accounts of the relevant companies and were also not found recorded in the books of investors who were 6 to be investigated. Moreover, on the basis of search on third person, the case of the assessee cannot be reopened u/s 147/148 of the Act.
9. Moreover, the issue is squarely covered by the decision of the Hon'ble Delhi High Court in the case of Principal CIT Vs. G & G Pharma Pvt. Ltd in ITA No. 545/2015 order dated 08.10.2015. In the facts and circumstances of the case, reopening is bad in law and the Assessing Officer does not acquire any jurisdiction to assess or reassess the issue in hand and the assessment/reassessment so made is directed to be quashed.
10. Since the assessee succeeds on the legal additional ground, therefore, the other grounds are not decided. Accordingly, the grounds of appeal raised by the assessee are allowed.
11. In the result, the appeal of the assessee is allowed.
The order is pronounced in the open court on 13.10.2017.
Sd/-
[B.P. JAIN]
ACCOUNTANT MEMBER
Dated: 13th October, 2017
VL/
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Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi