Income Tax Appellate Tribunal - Amritsar
Gopi Chand Prem Kumar vs Income-Tax Officer on 30 March, 2001
Equivalent citations: [2001]77ITD43(ASR)
ORDER
S. Grover, Judicial Member
1. Though this second appeal is directed against the common order dated 15-1-1991 passed by the Commissioner of Income-tax (Appeals), Jalandhar, hereinafter referred as the CIT(A), in respect of assessment years 1981-82 to 1985-86 but for the sake of convenience and expediency we are first deciding the appeal in respect of assessment year 1981-82 because it shall have the effect of resolving the controversy in the later years also. Further, the ITO also passed separate order in respect of assessment year 1981-82 and a common order for the later four years.
2. Though there are as many as six grounds enumerated in the memorandum, we are first taking primary contention that re-assessment proceedings under section 147(a), read with section 148 of the Income-tax Act, 1961, hereinafter referred as the Act, were invalid and void ab initio. It must, however, be clarified in the beginning that the assessee had challenged the merits also, which formed the basis of the re-opening of (he assessment originally.
3. Considering the peculiar facts involved reasons for issuing of notice under section 148 of the Act for re-assessment are first reproduced in their entirety, a copy of which is given to us at page 38 of the paper book:-
"Reasons for issue of notice u/s 148.--A search was conducted at the residence of Shri Parshotam Dass resident of Saraswati Model School, Jaitu on 31-1-1989 as also at the business premises of the associated concerns of this person under section 132 of the Income-tax Act, 1961. A large number of incriminating documents as well as books of account were found and seized during the course of search, it was gathered that certain parties of Moga had introduced their own money in their books of account in the names of Shri Parshotam Dass, his family members and other associated concerns.
I have information in my possession that M/s. Gopi Chand Prem Kumar, Moga have introduced following bogus cash credits during the relevant account period in the names of the above-mentioned persons/concerns as under :-
M/s. Ram Kumar Parshotam Dass, Jaitu Rs. 1,40,000.
1 have, therefore, reasons to believe that by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, income chargeable to tax amounting to Rs. 1,40,000 has escaped assessment for the assessment year 1981-82.
Permission to issue notice under section 148 is, therefore, sought to bring the escaped income under assessment for the said assessment year.
Sd/-
28-3-89.
(R.L. Gupta) Income-tax Officer, Ward-1, Moga.
(Rubber Stamp) Yes, it is a fit case.
Sd/-30-3-89.
Commissioner of Income-tax, Jalandhar."
It must be stated that the "Rubber Stamp", wordings are "Yes, it is a fit case."
4. Before proceeding further, a copy of the order-sheet in respect of re-assessment proceedings under section 147 for which return dated 28-4-1989 was the basis is also being reproduced. In the first entry it is mentioned that in compliance to notice under section 148 of the Act returns were filed for the assessment years 1981-82to1985-86. Though we have already mentioned above, the reasons, which arc prompting us to take up the appeal for the later four years separately, in the reassessment interest additions were originally sought to be made in relation to the addition made in the re-assessment for the assessment year 1981-82;
"M/s. Gopi Chand Prem Kumar, Moga.
Copy of order sheet in respect of proceedings under section 147.
1-12-00.
In response to notices issued under section 148 for the assessment years 1981-82 and 1985-86 assessee has filed returns of income. Issue notice under section 143(2) for all the years 8-2-1990.
8-2-90.
Present Shri Prem Kumar partner Assessee to produce books of account for all the relevant a/c years. To furnish copies of a/c of the creditors with evidence to prove genuineness thereof.Case adjd. to 15-2-90.
Present Shri Prem Kumar Partner with Shri P.P. Kansal,of a/c with confirmations of the creditors have already been filed with the original returns. Assessee to produce Ram Kumar Parshotam Dass Jailu creditor for examination.
Case is sdid. to 22-2-90.
22-2-90.
Present Shri Pem Kumar Partner with Shri P.P. Kansal , Advocate. Written arguments filed. It has been stated that the proceedings initiated under section 147(a) are bad in law.
Creditor Ram Kumar Parshotam Dass not produce. . Following credits appear in the a/c of Ram Kumar Parshotam Dass Jaitu :
1st Period 14-4-80 5-5-80 31-10-80 40,000 20,000 40,000 2nd Period 30-1-81 40,000 It has been pointed out to the assesses that M/s. Ram Kumar Parshotam Dass is known name lender and that search conducted at the business premises of the creditors and residential houses of its associates have revealed that they are not men of means. Assessee is given another opportunity to prove genuineness of the creditors.
28-2-90 Present Shri P.P. Kansal. Advocate. Request for another date. Adjd.to 16-3-90.
16-3-90 Assessee to deposit diet money for calling the creditors. Case adjd. to 23-3-90.
23-3-90 Present Shri P.P. Kansal, Advocate. The address of the creditor has been furnished as under :- M/s. Ram Kumar Parshotam Dass, Jaitu, Distt. Faridkot. Assessee to deposit diet monev of Rs. 50 so that summons be issued and case is adjd. to 26-3-90.
26-3-90.
Present Shri Prem Kumar partner with Shri P.P. Kansal, diet money not deposited nor creditor has been produced. Assesscc states that the case be decided on merits. Keeping in view the objections filed on 22-2-90 and 16-3-90."
5. Before the Assessing Officer, the assessee resisted the re-assessment proceedings by submitting that since all the necessary facts had been submitted before the original assessment was completed on 25-9-1982 on an income of Rs. 1,31,175 notice issued under section 148 of the Act dated 30-3-1989 was totally invalid and unjustified because in the very nature of things proceedings were sought to be initiated under section 147(a) of the Act. The assessce referred to several judicial precedents but the ITO held the re-assessment proceedings to be valid and in the re-assessment order which was framed on 26-3-1990 not only addition of Rs. 1,40,000 which represented credits in the name of M/s. Ram Kumar Parshotam Dass, Jaitu, were added but some other additions were also made.
6. Before the ITO in the re-assessment proceedings the assessee had made written communications dated 26-4-1989, 22-2-1990 and 16-3-1990. In the first of the said three communications, the ITO was requested to issue copies of reasons recorded for issuing the notices. Such request was made on the basis of some decision of the Hon'ble Supreme Court of India. In the second communication i.e., of 22-2-1990, the asscssee specifically submitted that copy of account of M/s. Ram Kumar Parshotam Dass, Jaitu had been submitted along with the confirmation during the course of original assessment proceedings and thus the assessee had disclosed fully and truly all material facts and accordingly, the provisions of section 147(a) could not be invoked. In support of his assertion, reliance was placed on the judgment of the Hon'ble Supreme Court of India in the case of ITO v. Mewalal Dwarka Prasad [1989] 176 ITR 529'. The asscssee also relied on another decision of the Hon'ble Supreme Court of India in the case of ClT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 782. Reference was also made to the following judgments of the jurisdictional Punjab and Haryana High Court:--
(1) Shiv LalKanhaya Lal v.CIT [l986] 162 ITR 548.
(2) Jai Singh v. CIT [1982] 136 ITR 895.
7. The communication of 16-3-1990 is considered important because the assessee brought to the notice of the ITO that M/s. Ram Kumar Parshotam Dass, Jaitu was regular income-tax assessee with the ITO, C-Ward, Bhatinda and that the deposits had been received and repaid through a Hundi Broker, namely, Shri Bhagwan Dass Goyal of Moga and further that the amounts had been received and repaid through account-payees cheques and that the creditors were well-known. Since it has been brought on record that M/s. Ram Kumar Parshotam Dass, Jaitu had its bank accounts and huge credit balances in several Bank accounts the relevant parts of the communication are reproduced as follows :
"To The Income-tax Officer.
Ward-2, Moga.
Sub.:- Re-assessment proceedings in case of
M/s. Gopi Chand Prem Kumar, Moga -Asstt.
years 1981-82 to 1985-86.
Dear Sir,
At the time of last hearing, your honour had asked the assessee to produce the creditor namely M/s. Ram Kumar Parshotam Dass of Jaitu. In this connection, your honour's kind attention is invited to the following facts :--
1. that the creditor was a regular income-tax assessee with the Income-tax Officer, C-Ward, Bhatinda.
2. That the amount was received and repaid through hundi broker namely Sh. Bhagwan Dass Goyal, resident of Mohalla Vidya Rattan Goel Moga.
3. That the amount was received and repaid through payees account cheques issued by the creditor.
4. That the hundi commission was also paid to the Hundi Broker through payees account cheque.
5. That the confirmation regarding genuineness of the credit from the creditor has also been submitted.
In view of the above submission, it is crystal clear that there is no doubt regarding the identity of the creditor and the genuineness of the creditor.
The identity of the creditor is also well known to the bank, in which he has a saving account, from which account the cheque has been issued, because any account in the bank is identified by some other person who is known to the bank. Further the creditor has also admitted having advance the amount as per our books of account."
8. Before the CIT(A), in addition to the cases cited before the Assessing Officer, various other judicial precedents were also relied, which have been noted by the CIT(A) in paras 2, 3, 4, 5 and 6 of his order but did not accept the assessee's contention that there was no case for resorting to reassessment proceedings much less any justification for making addition. The contentions regarding the validity of re-assessment proceedings and that there was no case for making the addition were alternative in character. In para 6, the C1T(A) also has noted that M/s. Ram Kumar Parshotam Dass, Jaitu had advanced large amounts of loans and that the firm and his family members had large bank balances and had advanced loans to other parties also. All the transactions were routed through various banks. The CIT(A), however, opined that M/s, Ram Kumar Parshotam Dass did not have the necessary means. It may be emphasised hero that search at the business premises of M/s. Ram Kumar Parshotam Dass was concluded on 31-1-1989 whereas the transactions of advancing loans as far as the present case goes had been in the accounting year, relevant to the assessment year 1981-82. Further there were two periods in respect of assessment year 1981-82 and since there is no dispute in that regard, we do not propose to go into that aspect of the case.
9. Shri N.K. Sud, Advocate, appearing with Shri P.P. Kansal, Advocate, firstly emphasised that it is not a case where the creditor had at any time denied transactions with the assessee. On the contrary, confirmation had been filed in the course of original proceedings, which necessarily followed that enquiries had been made and the credits accepted as genuine after satisfaction.
10. Next, Shri Sud referred to the authorities, which had been cited before the Assessing Officer and the CIT(A) and in addition filed a copy of the judgment of the Hon'blc Allahabad High Court in the case of Raj Kishore Prasad v. ITO, judgment dated 2-5-1990. This judgment, Shri Sud relied after bringing to our notice the factual aspect that the ITO, Ward-I, Moga had recorded reasons on 28-3-1989 and the Commissioner of Income-tax, Jalandhar, under the rubber stamps had signed without making his comments much less there being any indicationthathe had applied his mind. In the Allahabad High Court case there were more than one issues involved but we arc bringing in close focus by reproducing only that part of the judgment which dealt with section 151 of the Act which requires sanction of the CIT before issue of notice under section 147(w) of the Act. The said decision is contained in paras 1 & 8 ol the judgment dated 2-5-1990 of the Allahabad High Court (supra):--
"7. In view of section 151, there was required sanction of the CIT before issue of the impugned notice under section 148 of the Act for purpose of reassessment under section 147. In the instant case the petitioner has challenged that proper sanction as required under law was not given by the Commissioner Extracts of the form and the report of the ITO on which sanction was obtained from the CIT for issue of notice for reopening assessment under section 148 read with section 151(a) of the Act, has been filed. In it against the entry 'whether CIT is satisfied', there is written a word 'yes' and below that the CIT has put down his signature and date. Their Lordships of the Supreme Court have held that the sanction to be accorded by the Commissioner should not be mechanical. Simply noting down the word 'yes' against the column of sanction without applying his mind to the facts of the case cannot be considered to be a proper or valid sanction. In this connection the respondent was afforded sufficient opportunity to place the relevant papers but the papers were not produced before the court. It cannot he held to a proper and valid sanction within the meaning of section 151 of the Act, for this reason also the impugned notice under section 148 falls to the ground and proceedings for reopening of the assessment in the absence of valid sanction of the CIT cannot be initialed.
8. The writ petition is allowed. The impugned notice dated 5th March, 1983 under section 148 of the Act is quashed. It is further directed that no proceedings for reopening the assessment or making reassessment in pursuance of the impugned notice under section 148 can be taken against the petitioner. The petitioner is to get his cost from the respondent."
11. There can be considered no other view possible than the one taken by the Hon'ble Allahabad High Court and accordingly, we accept the contention raised for the assessee that in flowing from rubber stamp's sanction of the learned Commissioner of Income-tax, the re-assessment proceedings were void ab initio.
12. Next, and independent of the above, we would like to refer to the decision of the Amritsar Bench of the Income-tax Appellate Tribunal in which Shri N.K. Sud, Advocate, had appeared in the case of Kirpa Ram Ramji Dans [1983] 14 TLR 553. A golden principle was reiterated and emphasised that the onus is on the assessee to prove the genuineness of the entries in his books of account but this is so only when the proceedings are under section 143(3) of the Act for regular assessment. When the assessment is re-opened under section 147 of the Act and that too in order to bring to tax certain alleged bogus credit the onus shifts to the Revenue. In that case, the assessee had raised credits from some parties on the basis of Hundies, amounting to Rs. 95,000. The ITO had examined the entries in the books of account and also the Khokas and he had accepted the credits as genuine. After the assessments were completed, the ITO had felt misgiving about his earlier findings and issued notice under section 148 of the Act. The assessee complying with the re-assessment notices filed returns declaring original income. The ITO once again looked into the discharged Hundi, the bank account whether amounts were credited and whether the payments were made. After examining such details he dropped the proceedings by communication dated 14-12-1962. After country-wide rates of bankers, who were indulging in making bogus entries in their books and after certain persons had made sweeping admissions and lists were issued, the ITO once again felt that the credits appearing in the assessee's books had not been correctly appreciated, and resorted to re-assessment proceedings once again under section 147 of the Act by issue of notice, which was served on the assessee on 4-12-1967.
13. The Tribunal in para 6 held that it is an elementary law of evidence mat no attempt or statement can be used against a person unless that person has been given a right to cross-examine the deponent whose admission or statement is intended to be used against him and, therefore, the first appellate authority's view could not be accepted that it was the onus of the assessee to prove the credits in respect of the entries appearing in his books of account.
14. In the present case also after accepting the credits in the account of M/s. Ram Kumar Parshotam Dass the ITO wanted the assessee to produce that party in the re-assessment proceedings. It is not a case where there was even a whisper that the said party had denied transactions with the asses-see. We are making such observations because the lower authorities have also made a reference that some of the parties to whom M/s. Ram Kumar Parshotam Dass had given loans had made surrenders. We are surprised that surrender of some of the parties was made in the first place, as the basis for making addition of the credits as not genuine when transactions had been by account-payees cheques and that large depot-its in various banks in the account of M/s. Ram Kumar Parshotam Dass and its family members were noted in the orders during the period with which we are concerned.
15. We would also like to make observation that there are numerous cases which have been the subject-matter of appeals before this Bench where the Assessing Officer sometime make addition of part of purchases or sales as bogus accepting majority of transactions in the same assessee's case as genuine. Therefore, in the present case on the basis of surrender of some persons with whom M/s. Ram Kumar Parshotam Dass may not be having genuine transactions could not lead to any inference and conclusion that the transactions of that party with the assessee were also bogus.
16. Next, we come to the judgment of the Hon'ble Supreme Court of India in the case of Mewalal Dwarka Prasad (supra) judgment dated 10-2-1989, in which it came to be held that when cash credits were accepted as genuine in original assessment proceedings notice for re-assessment could be only in terms of section 147(b) i.e. within four years. In the present case, the primary facts were before the ITO at the time of regular assessment because the confirmation from M/s. Ram Kumar Parshotam Dass regarding advancing of loans of Rs. 1,40,000 was furnished in the original assessment proceedings. Another factor, independently of the above which is considered important but has not been appreciated is that even as on 30-3-1985 there were credit balance of Rs. 58,920 in the assessee's books in the account of M/s. Ram Kumar Parshotam Dass. If such credit has been accepted as genuine, we fail to sec any justification for treat ing transact ions made as early as in the financial year 1-4-1980 to 31-3-1981 as not genuine on the given facts of the case.
17. We are tempted I o reproduce a portion of last but one paragraph from the judgment of the Hon'ble Supreme Court in the case of Mewalal Dwarka Prasad (supra) because of the similarity of facts prevailing in that case as also in the case before us :--
"The Income-tax Officer accepted the documents produced and treated all the three transactions to be genuine and on that footing completed the assessment. The primary facts were before the Income-tax Officer at the lime of the regular assessment and he called upon the assessee to explain to his satisfaction that the entries were genuine and on the basis of materials provided by the assesses, satisfaction was reached. It was then open to the Income-tax Officer to make further probe before completing the assessment if he was of the view that the material provided by the assesses was not sufficient for him to be satisfied that the assessee's contention was correct. This Court, in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 held that the expression "material facta" used in clause (a) referred only to primary facts and the duty of the assessee was confirmed to disclosure of primary facts and he had nut to indicate what factual or legal inferences should properly be drawn from primary facts. In the facts appearing on the record, we are in agreement with Mr. Manchanda that clause (a) of section 147 did not apply to the facts of the asscssce as the alleged escapement of income from assessment had not resulted from failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. The notice in the instant case did not indicate whether it was a case covered by clause (a) or clause (b). On our finding that clause (a) was not invokable, the power under clause (b) could be called in aid under section 149(l)(b) of the Act within four years from the end of the relevant assessment year. Admittedly, the notice has been issued beyond a period of four years and, therefore, the notice itself was beyond the time provided under the law. On the facts appearing in the case, the High Court overlooked to consider this aspect of the matter. Since the proceedings before the High Court were under article 226 of the Constitution and not by way of reference under the Act the jurisdiction of this court is not advisory and confined to the questions referred for opinion on the facts, we are satisfied that the ends of justice require our intervention and we would accordingly allow the appeal of the assessee by holding that the notice under section 14S of the Act cannot be sustained in law for the reasons indicated above."
Therefore, on the basis of Mewalal Dwarka Prasad's case (supra) judgment which was cited before the ITO he should have dropped the proceedings and, therefore, on such score alone, the assessee succeeds before us.
18. In view of the Supreme Court judgment in Mewalal Dwarka Prasad's case (supra), we do not propose to deal at length with the judgment of the Hon'ble jurisdictional Punjab and Haryana High Court in the case of Jai Singh (supra).
19. We, however, rely on the order of the Calcutta Bench 'D' in the case of Smf. Chanda Devi saraf v. ITO [1990] 32 ITD 518, judgment dated 26-12-1988 in which on the basis of decisions in the cases of Govinda Choudhury & Sons v. ITO [1977] 109 ITR 370 (Ori.), Chanchal Kumar Chatterjee v. ITO [1974] 93 ITR 130 (Cal.) and Supreme Court decisions in the cases of Chhugamal Rajpal v. S.P. Chaliha [1971] 79 ITR 603 and CIT v. Burlop Dealers Lts. (1971] 79 ITR 609, where approval was given by means of a rubber stamp only above the signature of the officer concerned, it came to be held there was no valid sanction of the CBDT as laid down in section 151(1) of the Act and so the consequent initiation of the proceedings by the ITO were invalid.
20. For the Revenue, Shri Raj Kumar, D.R. very energetically and emphatically relied on theorder of the C1T(A) and since he further submitted that in the re-assessment which followed some other additions were also made besides the one on the basis of which notices were issued under section 148 of the Act, we must refer to the judgment dated 24-4-1989 in the case of CIT v. Alias Cycle Industries [1989] 180 ITR 319 of the Hon'ble jurisdictional High Court of Punjab and Haryana in which it has come to be held that if the grounds on which the re-assessment notices were issued were not. found to exist, the Assessing Officer did not gel jurisdiction to make reassessment.
21. The above said judgment, therefore, completely centralises the argument of the Revenue that certain other facts than the one mentioned in the reasons recorded gave valid jurisdiction for taking recourse to the reassessment proceedings.
22. In view of the above holding that the re-assessment proceedings were wholly void ab initio and bad, we cancel the re-assessment order. Independent of the above, on merits also, credit transaction with M/s. Ram Kumar Parshotam Dass could not be held to be non-genuine without any denial of that party and on the facts on record. Therefore, the assessee's appeal is allowed.
ORDER Per R.K. Bali, Accountant Member - 23. I have carefully gone through the proposed order of my Ld. Senior Colleague, Sh. S. Grover, J.M. but I am unable to persuade myself to agree with his conclusion that the reassessment proceedings initiated by the Assessing Officer were wholly void ab initio and bad.
24. Before, I take up for consideration the rival submissions made by the learned counsels for the parties and consider the authorities cited by them, it would be appropriate to first notice some of the provisions of the Act. The relevant provisions of sections 147, 148 and 149 as they stood at the relevant time for the purpose of this case read as under :--
"147. Income escaping assessment.--If (a) the Assessing Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Assessing Officer or to disclose fully and truly all material facts necessary for Ms assessment for that year, income chargeable to tax has escaped assessment for that year, or....
148. Issue of notice where income has escaped assessment.--(1) Before making the assessment, re-assessment or recomputation under section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice was a notice issued under that sub-section....
149. Time limit for notice.--(1) No notice under section 148 shall be issued,--
(a) in cases falling under clause (a) of section 147-
(i) for the relevant assessment year, if eight years have elapsed from the end .of that year, unless the case falls under sub-clause (ii)....
(b) in cases falling under clause (b) of section 147, at any time after the expiry of four years from the end of the relevant assessment year."
From the plain phraseology of the above sections of the Act, it appears that two conditions precedent which are required to be satisfied before an Income-lax Officer can acquire jurisdiction to proceed under clause (a) of section 147 read with sections 148 and 149 of the Act, beyond the period of four years bail within the period of eight years from the end of the relevant year are :
(a) that the Income-tax Officer must have reason to believe that the income, profits or gains chargeable to tax had either been underassessed or had escaped assessment and
(c) that the Income-tax Officer must have reason to believe that such escapement or under-assessment was occasioned by reason of omission or failure on the part of the assessee to disclose fully and truly alt material facts necessary for the assessment. [Emphasis supplied] Both these conditions must co-exist in order to confer jurisdiction on the Income-tax Officer. The Income-tax Officer is obliged, before initiating proceedings under section 148 of the Act to record the reasons for the formation of his belief to reopen the assessment.
25. My learned Sr. Colleague has reproduced the reasons recorded by the Assessing Officer before issue of notice under section 148 in para 3 at page 2 of his proposed order and the extract of the relevant entries in the Order Sheet have also been given in para 4 at pages 3 & 4 of the proposed order. However, certain factual details, which have been given by the Ld. CIT(A) in paras 6, 7 & 8 of his order dated 15-1-1991, have not been properly appreciated, which give the factual background of the case. To appreciate the factual position of the case, it is considered expedient to reproduce paras 6, 7 & 8 of the impugned order of the Ld. CIT(A), which gives the justification/basis for the reopening of assessment under section 147 by the Assessing Officer :--
"6. iN the impugned case, the facts were, a search and seizure operation was conducted on the various business/residential premises of all the persons related to one Sh. Parshotam Dass. During the course of search at the business premises of M/s. Jaishankar Kiryana Traders, Jaitu, the stocks found therein by the authorised officers were of nominal value. From the perusal of the inventory prepared along with the panchnama it was found that the stocks found in the shop were of the value of Rs. 9,623.25 and Rs. 3,175.25 P. as per the two inventory sheets. The availability of stocks of such a small value shows that the firm was not in a position to credit huge amounts to various persons and that the entries had been made merely with a view to give the transactions a semblance of reality. The search at the residence of Sh. Parshotam Dass showed that the standard of living of inhabitants was very mediocre which was corroborated by the fact that during the search cash of Rs. 760 only and jewellery of about 7 tolas approximately was found in spite of more than one lady residing in the house. The items did not contain any costly items including such essential items like fridge etc. M/s. Jaishankar Kiryana Traders has the following accounts where the primary deposits were more than a few lakhs of rupees :--
Name of the personand account number Name of the Bank and A/c No. Primary deposits M/s.Jaishankar Kii yana Traders State Bank of Patiala, Jailu Rs. 3,35.000
-do-
Bank of India, Moga Rs. 14,00,000
-do-
Central Bank of India. Moga Rs. 1,00,000
-do-
Central Bank of India. Jaitu Rs. 17,00,000 Similarly M/s. Ram Kumar Parshotam Dass had given loans to following parties (while its proprietor, as already staled above is almost a pauper) :
M/s.
Rain Kumar Pursholtam Dass Bank of India,Moga Rs. 18,25,000
-do-
Punjab National Bank, Jailu Rs. S,00,000
-do-
Central Bank of India, Moga Rs. 3,12,000
-do-
Union Bank of India. Moga Rs. 11,50,000 Sh. Parshatam Dass Bank of India, Moga Rs. 5.00,000 Snit. Savitri Devi w/o Parshotam Dass
-do-
Rs. 5,00,000 sSmt. Savitri Dcvi w/o Parshotam Dass Punjab National Bank, Moga Rs. 1,20,000
-do-
Union Bank of India, Moga Rs. 4,70,000 Yogesh Kumar S/o Sh. Parshotam Dass Central Bank of India, Moga Rs. 80,000
-do-
Union Bank of India, Moga Rs. 7,00,000
-do-
Bank of India, Moga Rs. 5,89,000.
7. The following parties assessed in Central Circle-I, Jalandhar, had disclosed the cash credits shown to have been received from the above parties as their income by revising the returns and paying the tax thereof:--
(i) M/s. Ram Lal Harbans Lal, Moga;
(ii) M/s. Ram Lal Harbans Lal (Ludhiana) Moga;
(iii) M/s. S.R. Vijay Kumar, Moga;
(iv) M/s. Gokal Chand Sadhu Ram, Moga;
(v) M/s. Punjab Machinery Store, Bagha Purana;
(vi) M/s. Vidya Sagar and Co., Moga.
Before the search was conducted at the premises of Sh. Parshotam Dass, a survey had already been conducted under section 133A of the Income-tax Act at the business premises of M/s. Ram Kumar Purshotam Dass, Jaitu on 31-1-1987. The survey was conducted in pursuance of the search at the premises of one Sh. K.L. Goyal c/o M/s. U.P. Cables, Delhi some loose papers were seized. In those papers page No. 101 is a letter written by Sh. Parshotam Dass to Sh. K.L. Goyal. An extract from that letter is reproduced as under :--
"I am herewith sending you the copy of account and photostat copy of gift tax asstt. order which I hope you will find in order. If you are interested to taking the Gift then the gift should he made to you, on the terms as decided in 24th March, with you. The gift will be made by income assessce. If you arc intend then send the amount and inform me the name and address of the person in which name the gift will be sent. If you find any weakness in gift-tax assessment order then write the letter."
8. Different sets of books of account were found there on 31-1-1987. The peculiar characteristic of cash books of these sets is that the most of the period the cash balances of each date arc not struck and enough space is kept blank so as to pass desired entries as and when required. Particulars of some cash books are given as under :--
(i) Cash Book Sr. No. 24 from 1-4-82 to 10-3-83, from 2-3-83 to 10-3-83, neither the opening balance nor closing balance of cash is struck. Space O.B. and C.B. are kept blank, enough space left for passing entries as and when required.
(ii) Cash Book Sr. No. 12 from 1-4-85 to 31-3-86 Sr. No. 25 Cash book for 31-3-S6 not closed.
(iii) Cash Book Sr. No. 12 from 1-4-85 onwards from 10-11-86 onwards O.B. of cash and closing balance not struck and space kept for entries.
(iv) Cash Book Sr. No. 10 (1-4-86 to 28-1-S7) from 10-10-86 onwards. O. Balance and closing balances not struck. Space kept for desired entries.
(v) Cash Book Sr. No. 17, from 1-4-86 to 13-11-86 from 1-4-86 to 15-11-86. O. Balance and C. Balance not struck. Space kept blank for desired entries.
(vi) Cash Book Sr. No. 16 from 10-10-86to1-1-87. Entries from 8-1-87 not closed.
From the above discussions it is apparent that, (Sh. Parshotam Dass was part-lime accountant and runs a petty kiryana shop under the name and style of M/s. Ram Kumar Parshotam Dass, Jaitu. In his petty shop there was not even a single chair and survey party had to carry out the survey operation standing.) Sh. Parshotam Dass and his associate concerns did not have the capacity to give such huge amounts of loans to other parties and they were giving only accommodation entries to facilitate the evasion of taxes by various parties who were introducing their own money in the garb of cheques issued by Sh. Parshotam Dass or his associate concerns."
26. From the above factual position, as noticed by the Ld. CIT(A) in the impugned order and reproduced above for facility of reference, it is clear that the original assessment in the case of the assessee was made accepting the loans taken by the assessee from M/s. Ram Kumar Parshotam Dass, Jaitu as genuine and it was only subsequenlly consequent to survey under section 133A as well as search and seizure operations conducted in the case of M/s. Ram Kumar Parshotam Dass, Jaitu on 31-1-1987, that it was found that the creditor Sh. Parshotam Dass Prop. M/s. Ram Kumar Parshotam Dass was a person of no means at all and during search cash of Rs. 760 only was found at his residence and the jewellery found was 7 tolas only in spite of more than one lady residing in the house of Sh. Parshotam Dass and yet Sh. Parshotam Dass has made huge deposits in various banks as noticed in para 6 of the impugned order and reproduced by me in para 25 supra.
27. It may also be mentioned that there was a search and seizure operation at the premises of one Sh. K.L. Goyal of M/s. U.P. Cables, Delhi when some loose papers were seized and in these loose papers there was a letter written by Sh. Parshotam DasstoSh. K.L. Goyal, an extract of which has been reproduced by the Ld. C1T(A) in para 7 of the impugned order, from which it appears that Sh. Parshotam Dass used to arrange gifts by A/c Payee Cheques to the persons desirous of converting their unaccounted income into white money by receiving gifts from persons associated with Sh. Parshotam Dass for a consideration. The Search Party also found that several set of books of account were maintained by Sh. Parshotam Dass where the opening and closing Cash Balances were not struck and enough space was left for passing entries as and when required to facilitate 3rd parties to introduce their unaccounted money in the form of loans given by Sh. Parshotam Dass and his associate concerns. As a result of this search and seizure operation conducted at the premises (business as well as residential) of Sh. Parshotam Dass and its associate concerns, the Assessing Officer having jurisdiction over the case of the present assessee i.e. M/s. Gopi Chand Prem Kumar, Moga, came in possession of information that the present assessee had received/introduced bogus credits of Rs. 1,40,000 in the name of M/s. Ram Kumar Parshotam Dass, Jaitu and since the creditor was not an actual money lender but was only a name lender, the Assessing Officer at Moga, having jurisdiction over the case of the assessee, prima facie formed the belief that the assessee had not stated the primary facts regarding the loan transaction 'fully and truly' during the original assessment proceedings. It was under these circumstances that the assessment was sought to be reopened and notice under section 148 of the Act, after obtaining the requisite permission of Commissioner of Income-tax, was issued.
28. The assessee challenged the reopening of the assessment on the plea that since the primary facts were before the ITO at the time of original assessment, the reopening could be resorted to only under clause (b) of section 147 and not under clause (a) of section 147. Reliance was placed on the decision of Hon'blc Supreme Court in the case of Mewa lal Dwarka Prasad (supra) as well as the decision of the Hon'ble Punjab and Haryana High Court in the case of Shiv Lal Kanhaya Lal (supra).
28.1 The Assessing Officer rightly held that the facts of the case of the assessee are distinguishable from the facts of both these cases as in both of these cases the assessee was called upon to substantiate the genuineness of the transactions at the time of original assessment and the assessee had produced material to support the same. In the case of Shiv Lal Kanhaya Lal (supra) the creditors were produced whereas in the case of the present assessee no such enquiries were made at the time of original assessment and the creditors were accepted as genuine on the basis of a mere confirmation letter filed by the assessee from Sb. Parshotam Dass Prop. M/s. Ram Kumar Parshotam Dass and it was only subsequently that it was found that the alleged creditor Sh. Parshotam Dass was merely a name lender and not a genuine creditor. Accordingly, the information furnished by the Assessing Officer, Bhatinda having jurisdiction over the case of M/s. Ram Kumar Parshotam Dass, which formed the basis for a reasonable belief on the part of the ITO, Moga that as a result of false representation made by the assessee as to his having borrowed money from the Jaitu Party namely M/s. Ram Kumar Parshotam Dass, that its income had escaped assessment, the ITO, Moga took action under section 147(u) of the Act and his action deserves to be upheld and was so upheld by the ld. CIT(A).
28.2 In almost similar set of circumstances, the Hon'ble Allahabad High Court in the case of Phool Chand Bajrang Lal v. ITO [1977] 110 ITR 834 upheld the reopending of assessment by the Assessing Officer under section 147(a). The assessee, however, applied for a certificate of fitness to file appeal to the Supreme Court under Article 133 of the Constitution of India and the Division Bench of Hon'ble Allahabad High Court while granting the certificate noted as under :--
"On one of the questions which arise out of our order in the writ petition, there is considerable divergence of views that in... the cases of loans borrowed by an assessee, if he has disclosed the details thereof to the Income-tax Officer at the time of original assessment, he (the assessee) is under no further obligation to inform the Income-tax Officer that such loans were bogus ones. Whether such loans are genuine or bogus according to this view, is a matter of inference which the Income-tax Officer has to draw on the facts disclosed after proper verification and that, if he has treated such loans as genuine, he cannot, later, reopen the assessment merely because he has subsequently reason to believe that such loans were not genuine.
A few other High Courts have taken a contrary view on the above question.
The aforesaid question is, in our opinion, a substantial question of law of general importance which needs to be decided by the Supreme Court."
28.3 Appeal in the above case has since been decided by the Hon'ble Supreme Court in the case of Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 wherein the reasoning and conclusion of Hon'ble Allahabad High Court has been upheld by the Hon'ble Supreme Court after referring to the various judicial decisions, including the decision of Hon'ble Supreme Court in the case of Chhugamal Rajpal (supra) as well ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 us also the decision in the case of CIT v. T.S.PL.P. Chidambaram Chhettiar [1971] 80 ITR 467. The Hon'ble Supreme Court at page 478 of the above referred decision specifically negatived the arguments of Sh. G.C. Sharma, Learned Sr. Counsel for the assessee in the following Words :--
"We are not persuaded to accept the argument of Mr. Sharma that the question regarding the truthfulness or falsehood of the transaction reflected in the return can only be examined during the original assessment proceedings and not at any stage subsequent thereto. The argument is too broad and general in nature and does violence to the plain phraseology of sections t47(a) and 148 of the Act and is against the settled law laid down by this court. We have to look to the purpose and intent of the provisions. One of the purposes of section 147 appears to us to be to ensure that a party cannot get away by wilfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say "you accepted my lie, now your hands are tied and you can do nothing". It would be a traversty of justice to allow the assessce that latitude."
29. The Hon'ble Supreme Court in the case of A.L.A. Firm v. CIT [1991] 189 ITR 285 have after an elaborate discussion of the subject opined that the jurisdiction of the Income-tax Officer to reassess the income arises, if he has, in consequence of specific and relevant information coming into his possession subsequent to the previous concluded assessment, reason to believe that income chargeabletotax had escaped assessment. It was held that even if the information be such that it could have been obtained by the Income-tax Officer during the previous assessment proceedings by conducting an investigation or an enquiry but was not in fact so obtained, it would not affect the jurisdiction of the Income-tax Officer to initiate reassessment proceedings, if the twin conditions prescribed under section 147 of theAct are satisfied.
30. Reliance of Sh. N.K. Sud, Advocate, learned representative of the asscssee, on the decision of Hon'ble Supreme Court in the case of Mewa lal Dwarka Prasad (supra) as well as the decision of Hon'ble Punjab & Haryana High Court in the case of Shiv Lal Kanhaya Lal (supra) as well as the case of Jai Singh (supra) is misplaced because of difference in facts.
31. The position quoted by my Ld. Sr. Colleague from page 534 of the judgment of Hon'ble Supreme Court in the case of Mewa lal Dwarka Prasad (supra) at pages 11 & 12 of the proposed order goes to show that the Hon'ble Supreme Court in that case held that jurisdiction of the Assessing Officer on the facts of that case could have been assumed under section 147(6) and not under section 147(a).
32. Another aspect of the case, on the basis of which my Ld. Sr. Colleague, has heldthatjurisdiction assumed by the Assessing Officer under section 147(a) in the present case as void ab initio is because of the fact that approval of the CIT granting permission to initiate the proceedings under section 147(a) was granted by way of affixing a Rubber Stamp over the proposal sent by the Assessing Officer to the effect that "yes, it is a fit case". Sd. 30-3-89 Commissioner of Income-tax, Jalandhar." From the above, my Ld. Sr. Colleague concluded that approval has been granted by the CIT in a mechanical manner without application of mind and for that purpose reliance was placed on the decision of Hon'ble Allahabad High Court in the case of Raj Kishore Prasad (supra) and relevant portion of that judgment has been reproduced/extracted at page 8 of the proposed order.
32.1 A perusal of the above portion of the order as well as the judgment clearly indicates that the above decision was given on the peculiar f acts of that case andthatloo on a writ petition filed by the assessee. A perusal of the operative part of the judgment, which has been extracted at page 8 of the proposed order of my Ld. Sr. Colleague, clearly indicates that the respondent Assessing Officer was afforded sufficient opportunity to place relevant papers before the Court to indicate the application of mind by the Commissioner of Income-tax and since these were not furnished before the Hon'ble Court it held that mere mentioning the word "Yes" against the relevant column will indicate that the ld. Commissioner of Income-lax has not applied his mind.
The above finding of the Hon'ble High Court was given as the factual aspect of working of Judicial Section in the offiec of Commissioner of Income-tax, which processes the applications received from the Assessing Officer was not brought to the notice of the Hon'ble High Court. Keeping in view the limitation prescribed under section 153 of the Act, the Assessing Officers working under the jurisdiction of a Commissioner, sends proposal for initiating of proceedings under section 147 after recording of the reasons to the Commissioner of Income-tax, which are processed in the Judicial Branch working under the administrative control of Income-tax Officer (Judicial). All these proposals are processed in a file and the ITO (Judicial) records noting in relation to all the proposals for the perusal and sanction of the GIT and the Commissioner after going through the proposals submitted by the Assessing Officer and applying his mind to the noting of the ITO (Judicial) records his satisfaction in that file and it is only after recording of the satisfaction that a Rubber Stamp is put over the proposals wherein sanction is granted and in respect of those proposals where the C1T is of the opinion that proceedings are not to be reopened on account of inadequacy of reasons or smallness of Revenue that proposals are returned to the Assessing Officer with a covering letter by the Income-tax Officer, Judicial. Accordingly to say that the Commissioner of Income-tax has not applied his mind merely because the sanction is recorded on the proposal sent by the Assessing Officer by means of a Rubber Stamp will not be quite correct because the real satisfaction and order of the Commissioner granting the sanction will be available in the Order Sheet of the Judicial file maintained in the Judicial Section under the administrative control of ITO (Judicial) in the office of the Commissioner of Income-tax.
33. The reliance of my Ld. Senior Brother on the judgment of Calcutta Bench :D' in the case of Sim. Chanda Devi Saraf (supra) which, in turn, is based onthedecisions in the case of Govinda Choudhury & Sons (supra) and Chanchal Kumar Chatterjee (supra) and Hon'ble Supreme Court decision in the cases of Chhugamal Rajpal (supra) and Burlop Dealers Ltd. (supra) are distinguishable on facts.
34. In the decision of Govinda Choudhury & Sons' case (supra), the findings of the Tribunal was given in a Writ Petition where the sanction of the Commissioner was given by a Rubber Stamp indicating the word 'Yes' and not the words 'Yes, it is a fit case', which is the indication in the present appeal before us. In the above case the respondent did not bring to the notice of the Hon'ble High Court other documents which the Commissioner of income-tax took into account when he disposed of the question of sanction and accordingly the High Court held that the sanction was granted in a mechanical way. In the above case the findings of the High Court was that the sanction of the CIT was obtained by the Assessing Officer on a false representation of facts and the court was of the opinion that if the CIT had only read the report carefully, he could not have agreed to the conclusion on the material before him that 'It is a fit case to issue notice under section 148'. The position in the case of Chhugamal Rajpal (supra) is also similar because at page 608 of the report theHon'ble Supreme Court observed that the Commissioner affixed his sanction in the word 'Yes' in a mechanical way and the Court noted that we are of the opinion that if only he read the report carefully he could never have come to the conclusion, on the material before him, that it is fit case to issue notice under section 148. The important safeguards provided in sections 147 and 151 were lightly treated by the Income-tax Officer as well as the Commissioner. Both of them appeared to have taken the duty imposed on them under these provisions as of little importance. They have substituted the form for the substance.
35. Almost to similar effect are the observations of the Hon'ble Supreme Court in the case of Burlop Dealers Ltd. (supra) and both of these decisions of the Hon'ble Supreme Court have been discussed by the Hon'ble Supreme Court in its latest decision in the case of Phool Chand Bajrang Lal (supra) and another cited as, to which reference has been made in the earlier part of this order.
36. Thus keeping in view the totality of facts and circumstances of the case and the judicial precedent discussed in the earlier paragraph, I am of the considered opinion that the Assessing Officer was perfectly justified in reopening the case of the assessee for the assessment year under consideration under section 147(a) of the Income-tax Act, 1961 after obtaining the approval of the Commissioner of Income-tax as required under section 151.
37. Corning to the merits of the case, a perusal of the copy of account of the alleged creditor Sh. Parshotam Dass Prop. M/s. Ram Kumar Parshotam Dass as appearing in the books of account of the present assessee M/s. Gopi Chand Pawan Kumar, for the assessment year under consideration and subsequent years, as given to us at pages 19, 20, 21, 22, 23 and 24, is as under:--
Page 66-A/8 10000/00 25-2-1993 10,00.000 25-2-1993 5000/00 10-10-1993 5,00,000 10-10-1993 5000/00 1-12-1993 5,00,000 1-11-1993 Debit Credit 2-4-1984 Old ledger 58.920.00 30-3-1985 1.080.00 30-3-1985 10% I.T. 540.00 30-3-1985 10%, I.T. 540.00 1080.00 60,000.00 Balance:
credit on 30-3-1985 Rs. 58.920.00
38. Admittedly, during the course of reassessment proceedings, the Assessing Officer requested the assessee to produce the creditor fur examination in view of the search and seizure operations having been carried on at the premises of the creditor. But the assessee failed to produce the same. At the fag end of the proceedings, a request was made by the assessee to summon the creditor but no diet money was deposited with the Assessing Officer for that purpose and as such the Assessing Officer did not issue notice under section 131 enforcing at tendance of the creditor and framed the assessment after treating the creditor as a bogus one and the deposit in the name of the credilor as income of the assessee.
39. The CIT(A) confirmed the action of the Assessing Officer on the footing that it was the duty of the assessee to produce the creditor and in case the creditor is hostile to the assessee necessary diet money has to be deposited with the Assessing Officer to enforce attendance of the creditor and since this was not done, the Assessing Officer was justified in treating the credit as the income of the assessee. In second appeal my Ld. Sr. Colleague, Sh. S. Grover, in para 22 of his proposed order held that the reassessment proceedings were wholly void ab inito and on merit also the credit transactions with M/s. Ram Kurnar Parshotam Dass could not be held to be non-genuine without any denial of that party and on the facts on record. I am unable to agree with the above view of my Ld. Brother with regard to the genuineness of the creditor on merits even because a perusal of the copy of account of the creditor in the books of the assessee, extracted above, will clearly indicate that except the credit entries of four cheques of Rs. 40,000, Rs. 20,000, Rs. 40,000 and Rs. 40,000, there is no other credit in the account and an amount of Rs. 80,000 is claimed to have been paid to the credit or on 21-8-1982. Besides these entries certain cash amounts namely Rs. 1,200 on 24-4-1981; Rs. 1,680 on 29-4-1982 and Rs, 982 on 4-5-1983 have been introduced the purpose of which is not at all clear and no light was thrown about the nature of these entries during the course of arguments before us. There is no entry with regard to the interest credited in this account, which is claimed to have been paid in cash. However, if the interest was paid in cash, then what was the necessity of taking the cash deposits in the account of the assessee on the date; mentioned above, purpose of which has not been explained to us.
40. While deleting the addition on merits, My Ld. Sr. Colleague at page 11 of t he proposed order has observed that as on 30-3-1985, there was a credit in the account of M/s. Ram Kumar Parshotam Dass and if such credit has been accepted as genuine then there was no justification for treating the transactions made as early as in the financial year 1-4-1980 to 31-3-1981 as not genuine on the given facts of the case.
40.1 The above observation of my learned Brother is clearly incorrect as the Assessing Officer has not treated the credit of Rs. 58,920 as on 31-3-1985 in the books of the assessee as genuine and he has reopend the proceedings for the Assessment year 1985-86 as well, which were the subject-matter of appeal before us in ITA Nos. 294 to 297/ASR/1991, which were also heard on the same date and for which also my learned Brother has proposed an order cancelling the reassessments.
41. In this view of the matter to serve the ends of justice, it is considered fair and reasonable to restore the matter with regard to the genuineness or otherwise of the loan transaction to the file of the Assessing Officer with the directions that he should summon the creditor under section 131 as a witness and record his statement with regard to the genuineness of the loan transaction with the assessee in the light of material gathered during search and seizure operations of the loan creditor Sh. Parshotam Dass Prop. M/s. Ram Kumar Parshotam Dass and then confront the assessee with that statement and thereafter readjudicate on the question of genuineness or otherwise of the credit introduced by the assessee in the name of Sh. Parshotam Dass Prop. M/s. Ram Kumar Parshotam Dass.
42. Accordingly, I will uphold the action of the Assessing Officer in initialing the proceedings under section 147(a) after taking necessary aproval from the Commissioner of Income-tax and restore the matter with regard to the genuineness of the loan transaction to the file of the Assessing Officer in terms of my directions contained in the earlier paragraph.
43. In the result, the appeal filed by the assessee is allowed for statistical purposes only.
ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 There being difference of opinion between us, who have heard the appeals, the following point of difference is framed for reference to the Hon'ble President of the Income-tax Appellate Tribunal under section 255(4) of the Income-tax Act, 1961:--
"Whether, on the facts and in the circumstances of the ease, the proposed order of the Judicial Member holding that the re-assessment proceedings were wholly void and bad ab initio and independent of the same on merits also loan transactions with M/s. Rarn Kumar Parshotam Dass, Jaitu, could not be held to be non-genuine, is justified, or the approach adopted by the Accountant Member upholding the action of the Assessing Officer in initialing proceedings under section 147(a) of the Income-lax Act, 1961 and restoring the matter back to the Assessing Officer with regard to the genuineness of the loan transactions with M/s. Ram Kumar Parshotam Dass, Jaitu is correct ?"
THIRD MEMBER ORDER
1. Per Shri V. Dongzathang, President -The following point of difference was referred to me under section 255(4) of the Income-tax Act, 1961:
"Whether, on the facts and in the circumstances of the case, the proposed order of the Judicial Member holding that the reassessment proceedings were wholly void and bad ab initio and independent ofthesame on merits also loan transactions with M/s. Ram Kumar Parshotam Dass, Jaitu, could not be held to be non-genuine, is justified, or the approach adopted by the Accountant Member upholding the action of the Assessing Officer in initiating proceedings under section 147(a) of the Income-tax Act, 1961 and restoring the matter back to the Assessing Officer with regard to the genuineness of the loan transactions with M/s. Ram Kumar Parshotam Dass, Jaitu is correct ?"
2. The facts leading to the above order were fully brought on record by the learned Judicial Member who held that the proceedings under section 147(a) initiated by the Assessing Officer were not proper rendering the reassessment wholly void ab initio. The learned Judicial Member also held that on merits also the transactions with M/s, Ram Kumar Parshotam Dass could not be held to be non-genuine without any denial of that party and on the facts on record.
3. On the other hand the learned Accountant Member held a different view and came to the conclusion that the proceedings under section 147(a) were validly initiated and, therefore, the same should be upheld and the matter should go back to the Assessing Officer for enquiring into the genuineness of the loan transactions as per the directions given by him.
4. At the time of hearing before me, Shri J.K. Sood, learned counsel appeared for the assessee and Shri S.C. Pahwa, learned Sr. D.R. appeared for the revenue. They were heard at length. Both the parties supported the respective orders of the learned Judicial Member and the Accountant Member and elaborated on the various decisions relied upon in the order. From a careful reading of the order of the learned Accountant Member, it is seen that all the points raised by the learned Judicial Member have been fully met and the same does not bear repetition. Eventually he came to the conclusion that the proceedings initiated by the Assessing Officer were valid. For this proposition, he relied on the decision of the Hon'ble o Supreme Court in the case of Phool Chand Bajrang Lal (supra) and further extracted the relevant portions. He also cited the decision of the Hon'ble Supreme Court in the case of A.L.A. Firm (supra). Having regard to the above decisions, I am of the view that the Assessing Officer was fully justified in initiating the proceedings under section 147(a) on the basis of the information received by him.
5. It is further seen that the learned Accountant Member found that the addition on account of this loan transactions were made without proper enquiry into the facts. It was also found that the creditors were not summoned in this regard. It was, therefore, held by him that the matter regarding genuineness or otherwise of the loan transactions should be restored back to the file of the Assessing Officer with the direction that he should summon the creditor under section 131 as a witness and record his statement with regard to the genuineness of the loan transaction with the assessee in the light of the material gathered during the search and seizure operations of the loan creditor Shri Parshotam Dass Prop, of M/s. Ram Kumar Parshotam Dass and then confront the assessee with the statement and thereafter readjudicate on the question of genuineness or otherwise of the credit introduced by the assessee in the name of Shri Parshotam Dass Prop, of M/s. Ram Kumar Parsholam Dass. Such direction also is quite fair and reasonable as the genuineness of the loan has not been fully enquired into either at the original assessment stage or at the re-assessment stage. I fully concur with the learned Accountant Member on the issue of legal as well as on merit.
6. The matter will now go back to the Division Bench for passing consequential order.
ORDER (DIVISION BENCH) S. Grover, Judicial Member
1. These four second appeals are directed against the common order dated 15-1-1991 passed by the Commissioner of Income-tax (Appeals), Jalandhar, hereinafter referred as the CIT(A), in respect of assessment years 1981-82 to 1985-86 for which there were two assessment orders of the 1TO, A-Ward, Moga - one in respect of assessment year 1981-82 and a common order in respect of four years with which we are dealing in this order.
2. As far as the assessment years 1982-83, 1983-84 and 1984-85 are concerned, the original assessments were framed as under:--
_____________________________________________________________________________________________________________ Asstt.Year Income assessed Date of order & section of the IT Act _____________________________________________________________________________________________________________ 1982-83 Rs. 2,08,000 u/s 143(3) dated 3-3-1983 1983-84 Rs. 1,18,514 -do- 30-1-1984 1984-85 Rs. 1,40,231 -do- 1-8-1984
3. For the above said three assessment years, notices under section 148 of the Act like the one for the assessment year 1981-82 were issued by a proposal dated 28-3-1989 which was sanctioned vide rubber stamps of CIT on 30-3-1989. The assessee's contention for these three years are the same as in respect of assessment year 1981-82. Therefore, by making our order of even date for the said year in ITA 293(ASR) 1991 as the basis and for the same reasons, we cancel the three years' order. The re-assessment for the year 1985-86 is cancelled on the ground that transactions with M/s. Ram Kumar Parshotam Dass on the facts of the case could not be said to be bogus. For this also, we make our order of even date in the assessee's own case in respect of assessment year 1981-82 (relevant portion) as the basis.
4. In the result, all the four appeals are allowed and the re-assessments cancelled.
ORDER R.K. Bali, A.M.
1. For the reasons recorded in my order of even date in ITA No. 293/ASR/199I in respect of assessment year 1981-82, I will uphold the action of the Assessing Officer in reopening these four assessments under section 147(a) after getting necessary approval from the Commissioner of Income-tax. But on merits, I will restore the matter back to the file of the Assessing Officer for fresh adjudication in the light of my observations contained in my order of even dale in ITA No. 2937 ASR/1991 in respect of assessment year 1981-82.
6. In the result, all the four appeals filed by the assessee are allowed for statistical purposes only.
ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961
1. There being difference of opinion between us, who have heard the appeals, the following point of difference is framed for reference to the Hon'ble President of the Income-tax Appellate Tribunal under section 255(4) of the Income-tax Act, 1961:--
"Whether, on the facts and in the circumstances of the ease, the view taken by the Judicial Member that in view of his proposed order in ITA No. 293 (ASR)/1991 in respect of assessment year 1981-82 the re-assessments for the assessment years 1982-83, 1983-84 and 1984-85 could not be sustained and thereby cancelling the same, and ordering cancellation of re-assessment order for the assessment year 1985-86 on the ground that transactions with M/s. Ram Kumar Parshotam Dass, Jaitu, could not be said to be bogus, is justified, or the approach adopted by the Accountant Member upholding the action of the Assessing Officer in initialing proceedings under section 147(a) of the Income-tax Act, 1961, and restoring the matter back with regard to the genuineness of the loan transactions with M/s. Ram Kumar Parshotam Dass to the file of the Assessing Officer by relying on his dissenting order in ITA No. 293 (ASR)/1991 is correct?' THIRD MEMBER ORDER Shri V. Dongzathang, President
1. The following point of difference of opinion was referred to me for decision under section 255(4) of the Income-tax Act:
"Whether, on the facts and in the circumstances of the case, the view taken by the Judicial Member that in view of his proposed order in ITA No. 293/ASR/1991 in respect of assessment year 1981-82 the reassessments for the assessment years 1982-83, 1983-84 and 1984-85 could not be sustained and thereby cancelling the same and ordering cancellation of reassessment order for the assessment year 1985-86 on the ground that transactions with M/s. Ram Kumar Parshotam Dass, Jaitu, could not be said to be bogus, is justified or the approach adopted by the Accountant Member upholding the action of the Assessing Officer in initiating proceedings under section 147(a) of the Income-tax Act. 1961 and restoring the matter back with regard to the genuineness of the loan transactions with M/s. Ram Kumar Parshotam Dass to the file of the Assessing Officer by relying on his dissenting order in ITA No. 293/ASR/1991 is correct?"
2. In this regard, it is seen that similar issue was decided by me in ITA No. 293/ASR/1991 wherein I have upheld the order of the learned Accountant Member. Consequently the order of the learned Accountant Member for these assessment years also is upheld whereby the action of the Assessing Officer in reopening these four assessment years under section 147(a) has been approved and the matter has been restored back to the file of the Assessing Officer for fresh adjudication in the light of the observation in ITA No. 293/ASR/1991 for assessment year 1981-82.
3. The matter will now go back to the Division Bench for passing consequential order.