Income Tax Appellate Tribunal - Amritsar
Gopi Chand Prem Kumar vs Ito on 30 March, 2001
Equivalent citations: (2001)71TTJ(ASR)627
ORDER
S. Grover, J.M. Though this second appeal is directed against the common order dated 15-1-1991, passed by the Commissioner (Appeals), Jalandhar, (hereinafter referred to as the Commissioner (Appeals)), 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 Income Tax Officer 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 reassessment proceedings under section 147(a) read with section 148 of the Income Tax Act, 1961, (hereinafter referred to 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 reopening of the assessment originally.
3. Considering the peculiar facts involved reasons for issuing of notice under section 148 of the Act for reassessment are first reproduced in their entirety, a copy of which is given to us at p. 38 of the paper-book :
"Reasons for issue of notice under section 148.
A search was conducted at the residence of Shri Purshotam 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 Act. 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 Purshotam 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 Purshotam Dass Jaitu Rs. 1,40,000 I 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 assessment year.
Sd/ 28-3-1989.
(R.L. Gupta) Income Tax Officer, Ward- 1, Moga.
(Rubber Stamp) Yes, it is a fit case.
Sd/ 30-3-1989 CIT, 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 reassessment 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 1981-82 to 1985-86. Though we have already mentioned above, the reasons, which are 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 reassessment for the assessment year 1981-82 :
"M/s Gopi Chand Prem Kumar, Moga.
Copy of order sheet in respect of proceedings under section 147 1-12-1990 In response to notices issued under section 148 for the assessment year 1981-82 and 1985-86 assessee has filed returns of income. Issue notice under section 143(2) for all the years 8-2-1990.
8-2-1990 Present Shri Prem Kumar partner. Assessee to produce books of account for all the relevant accounting years. To furnish copies of account of the creditors with evidence to prove genuineness thereof.
Cash adjd. to 15-2-1990.
15-2-1990 Present Shri P.P. Kansal, Advocate. It is stated that copies of a/c with confirmations of the creditors have already been filed with the original returns. Assessee to produce Ram Kumar Purshotam Dass Jaitu creditor for examination.
Case adjd. to 15-2-1990 22-2-1990 Present Shri Prem 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 Purushotam Dass not produced. Following credits appear in the account of Ram Kumar Purshotam Dass Jaitu :
Ist Period Rs.
14-4-1980 40,000 5-5-1980 20,000 31-10-1980 40,000 2nd Period 30-1-1981 40,000 It has been pointed out to the assessee that M/s Ram Kumar Purshotam 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 credits.
Case is adjd. to 28-2-1990.
28-2-1990 Present Shri P.P. Kansal, advocate, Request for another date Adjd. to 16-3-1990.
16-3-1990 Present Shri P.P. Kansal, advocate. Written explanation filed. Assessee to deposit diet money for calling the creditors. Case adjd. to 23-3-1990.
23-3-1990 Present Shri P.P. Kansal, advocate. The address of the creditor has been furnished as under :
M/s Ram Kumar Purshotam Dass, Jaitu, Distt- Faridkot.
Assessee to deposit diet money of Rs. 50 so that summons be issued and case is adjd. to 26-3-1990.
26-3-1990 Present Shri Prem Kumar partner with Shri P.P. Kansal. Diet money not deposited nor creditor has been produced. Assessee states that the case be decided on merits. Keeping in view the objections filed on 22-2-1990 and 16-3-1990. "
5. Before the assessing officer, the assessee resisted the reassessment 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 assessee referred to several judicial precedents but the Income Tax Officer held the reassessment proceeding to be valid and in the reassessment 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 Purshotam Dass, Jaitu, were added but some other additions were also made.
6. Before the Income Tax Officer in the reassessment 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 Income Tax Officer 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 assessee specifically submitted that copy of account of M/s Ram Kumar Purshotam. 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 & Anr. v. Mewalal Dwarka Prasad (1989) 176 ITR 529 (SC). The assessee also relied on another decision on the Hon'ble Supreme Court of India in the case of CIT v. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC). Reference was also made to the following judgments of the jurisdictional Punjab & Haryana High Court :
(1) Shiv Lal Kanhaya Lal v. CIT (1986) 162 ITR 548 (P&H); and (2) Jai Singh v. CIT (1982) 136 ITR 895 (P&H).
7. The communication of 16-3-1990 is considered important because the assessee brought to the notice of the Income Tax Officer that M/s Ram Kumar Purshotam Dass, Jaitu, was regular income-tax assessee with the Income Tax Officer, 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 Purshotam Dass, Jaitu, had its bank accounts and huge credit balances is several bank accounts the relevant parts of the communication are reproduced as follows :
"To The Income Tax Officer, Ward-2, Moga.
Sub : Reassessment proceedings in case of M/s Gopi Chand Prem Kumar, Moga Assessment 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 Mr. Ram Kumar Purshotam 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 Shri 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 creditors.
4. That the hundi commission was also paid to the hundi broker through payees account cheques.
5. That the confirmation regarding genuineness of the credit from the creditor has also been submitted.
In view of the above submissions, 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 advanced the amount as per our books of account."
8. Before the Commissioner (Appeals), in addition to the cases cited before the assessing officer, various other judicial precedents were also relied, which have been noted by the Commissioner (Appeals) 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 reassessment proceedings and that there was no case for making the addition were alternative in character. In para 6, the Commissioner (Appeals) also has noted that M/s Ram Kumar Purshotam Dass, Jaitu, had advanced large amount 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 Commissioner (Appeals), however, opined that M/s Ram Kumar Purshotam Dass did not have the necessary means. It may be emphasised here that search at the business premises of M/s Ram Kumar Purshotam Dass was conducted 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 Sri 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 enqueries 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 Commissioner (Appeals) and in addition filed a copy of the judgment of the Hon'ble Allahabad High Court in the case of Raj Kishore Prasad v. ITO (1992) 195 ITR 438 (All) 15. This judgment, Shri Sud relied after bringing to our notice the factual aspect that the Income Tax Officer, Ward-I, Moga had recorded reasons on 28-3-1989, and the Commissioner, Jalandhar, under the rubber stamps had signed without making his comments much less there being any indication that he had applied his mind. In the Allahabad High Court case there were more than one issue involved but we are 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 Commissioner before issue of notice under section 147(a) of the Act. The said decision is contained in paras 7 and 8 of the judgment dated 2-5-1990, of the Allahabad High Court (supra):
"7... In view of section 151, there was required sanction of the Commissioner before issue or 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 Income Tax Officer on which sanction was obtained from the Commissioner 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 Commissioner is satisfied', there is written a word yes' and below that the Commissioner 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 be 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 fails to the ground and proceedings for reopening of the assessment in the absence of valid sanction of the Commissioner cannot be initiated."
8. The writ petition is allowed. The impugned notice dated 5-3-1983, 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 following from rubber stamp sanction of the learned Commissioner, the reassessment 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 Tribunal in which Sh. N.K. Sud, advocate, had appeared in the case of Kirpa Ram Ramji Dass, Jalandhar (1983) 14 TLR 553. A golden principle was reiterated and emphasised that the onus is on the assessee to prove that genuineness of the entries in his books of accounts but this is so only when the proceedings are under section 143(3) of the Act for regular assessment. When the assessment is reopened 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 Income Tax Officer had examined the entries in the books of accounts and also the Khokas and he had accepted the credits as genuine. After the assessments were completed, the Income Tax Officer had felt misgiving about his earlier findings and issued notice under section 148 of the Act. The assessee complying with the reassessment notices filed returns declaring original income. The Income Tax Officer 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 countrywide raids on bankers, who were indulging in making bogus entries in their books and after certain persons had made sweeping admissions and lists were issued, the Income Tax Officer once again felt that the credits appearing in the assessee's books had not been correctly appreciated, and resorted to reassessment 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 that 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 Purshotam Dass the Income Tax Officer wanted the assessee to produce that party in the reassessment proceedings. It is not a case where there was even a whisper that the said party had denied transactions with the assessee. We are making such observations because the lower authorities have also made a reference that some of the parties to whom M/s Kumar Purshotam 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 is not genuine when transactions had been by account payees cheques and that large deposits in various banks in the account of M/s Ram Kumar Purshotam Dass and its family members were noted in the order, 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 Purshotam 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 ITO & Anr. v. 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 reassessment could not be only in terms of section 147(b), i.e., within four years. In the present case, the primary facts were before the Income Tax Officer at the time of regular assessment because the confirmation from M/s Ram Kumar Purshotam Dass regarding advancing of loans of Rs. 1,40,000 was furnished in the original assessment proceedings. Another factor, independent of the above 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 Purshotam Dass. If such credit has been accepted as genuine, we fail to see any justification for treating transactions made as earlier 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 to reproduce a portion of last but one paragraph from the judgment of the Honble Supreme Court in the case of Mewalal Dwarka Prasad (supra) because of the similiarty 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 time 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 assessee, 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 assessee 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 (SC) held that the expression "material facts" used in clause (a) referred only to primary facts and the duty of the assessee was confined to disclosure of primary facts and he had not 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 assessee 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(1)(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 148 of the Act cannot be sustained in law for the reasons indicated above."
Therefore, on the basis of Mewalal Dwarka Prasad's judgment which was cited before the Income Tax Officer 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 case (supra), we do not propose to deal at length with the judgment of the Honble jurisdictional Punjab & Haryana High Court in the case of Jai Singh v. CIT (supra).
19. We, however, rely on the order of the Calcutta Bench "D" in the case of Smt. Chanda Devi Saraf v. ITO (1990) 32 ITD 518 (Cal-Trib) judgment dated 26-12-1988, in which on the basis of decisions in the cases of Govinda Choudhary & Sons v. ITO (1977) 109 ITR 370 (Ori), Chanchal Kumar Chatterjee v. ITO (1974) 93 ITR 130 (Cal) and Supreme Court decision in the cases of Chugamal Rajpal v. S.P. Chaliha (1971) 79 ITR 603 (SC) and CIT v. Burlop Dealers Ltd. (1971) 79 ITR 609 (SC), where approval was given by means of a rubber stamp only above the signatures of the officer concerned, it came to be held there was no valid sanction of the Central Board of Direct Taxes as laid down in section 151(1) of the Act and so the consequent initiation of the proceedings by the Income Tax Officer were invalid.
20. For the revenue , Shri Raj Kumar Departmental Representative very energetically and emphatically relied on the order of the Commissioner (Appeals) and since he further submitted that in the reassessment 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. Atlas Cycle Industries (1989) 180 ITR 319 (P&H) 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 reassessment notices were issued were not found to exist, the assessing officer did not get jurisdiction to make reassessment.
21. The above said judgment, therefore, completely neutralises 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 reassessment proceedings were wholly void and bad ab initio, we cancel the reassessment order. Independent of the above, on merits also, credit transaction with M/s Ram Kumar Purshotam. Dass could not be held to be non-genuine without any denial of that party and on the facts on records. Therefore, the assessee's appeal is allowed.
R.K. Bali, A.M. : 27-10-1993
23. I have carefully gone through the proposed order of my learned 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 his 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, reassessment 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 were a notice issued under that sub-section ..
149. Time limit for notice--(1) No notice under section 148 shall be issued,
(a) in cases failing 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 pharseology of the above sections of the Act, it appears that two conditions precedent which are required to be satisfied before an Income Tax 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 but 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
(b) that the Income Tax Officer must have reason to believe that such escapement or underassessment was occasioned by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.
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.
(emphasis, here italicised in print supplied)
25. My learned senior colleague has reproduced the reasons recorded by the assessing officer before issue of notice under section 148 in para 3 at p. 2 of his proposed order and the extract of the relevant entries in the order-sheet have also been given in para 4 at pp. 3 and 4 of the proposed order. However, certain factual details, which have been given by the learned Commissioner (Appeals) in paras 6, 7 and 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 and 8 of the impugned order of the learned Commissioner (Appeals), 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. Purshotam 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 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. Purshotam, 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 person and A/c No. Name of the Bank and A/c No. Primary deposits (Rs.) M/s Jaishankar Kiryana Traders State Bank of Patiala, Jaitu 3,35,000
-do-
Bank of India, Moga 14,00,000
-do-
Central Bank of India, Moga 1,00,000
-do-
Central Bank of India, Jaitu 17,00,000 Similarly M/s Ram Kumar Purshotam Dass had given loans to following parties (while its proprietor, as already stated above is almost a pauper) :
M/s Ram Kumar Purshotam Das Bank of India, Moga 18,25,000
-do-
Punjab National Bank, Jaitu.
8,00,000
-do-
Central Bank of India, Moga 3,12,000
-do-
Union Bank of India, Moga.
11,50,000 Sh. Purshotam Dass Bank of India, Moga 5,00,000 Smt. Savitri Devi W/o Purshotam Dass
-do-
5,00,000
-do-
Punjab National Bank, Moga 1,20,000
-do-
Union Bank of India, Moga 4,70,000 Yogesh Kumar S/o Sh. Purshotam Dass Central Bank of India, Moga.
80,000
-do-
Union Bank of India Moga 7,00,000
-do-
Bank of India, Moga 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 Ltd. (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; and
(vi) M/s Vidya Sagar & Co. Moga.
Before the search was conducted at the premises of Sh. Purshotarn 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. Purshotam Dass to Sh. K.L. Goyal. An extract from the letter is reproduced as under :
"I am herewith sending you the copy of account and photostat copy of gift-tax assessment order which I hope you will find in order. If you are interested to taking the gift then the gift should be made to you, on the terms as decided on 24 March, with you. The gift will be made by income assessee. If you 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 charaterstic of cash books of these sets is that the most of the period the cash balances of each date are 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 1-4-1982 to 10-3-1983, from 2-3-1983 to 10-3-1983, neither the opening balance nor closing balance of cash in struck. Space opening balance and closing balance are kept blank, enough space left for passing entries as and when required.
(ii) Cash book Sr. No. 12 from 1-4-1985 to 31-3-1986, Sr. No. 25 cash book for 31-3-1986 not closed.
(iii) Cash book Sr. No. 12 from 1-4-1985, onwards from 10-11-1986, onwards opening balance of cash and closing balance not struck and space kept for entries.
(iv) Cash book Sr. No. 10( 1-4-1986 to 28-1-1987) from 10-10-1986 onwards. Opening balance and closing balance not struck. Space kept for desired entries.
(v) Cash book Sr. No. 17 from 1-4-1986 to 13-11-1986 from 1-4-1986 to 15-11-1986. Opening balance and closing balance not struck. Space kept blank for desired entries.
(vi) Cash book Sr. No. 16 from 1-10-1996 to 1-1-1987. Entries from 8-1-1987 not closed.
From the above discussion it is apparent that, (Sh. Purshotam Dass was part-time accountant and runs a petty Kiryana shop under the name and style of M/s Ram Kumar Purshotam 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. Purshotam Dass and his association 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. Purshotam Dass or his associate concerns."
26. From the above factual position, as noticed by the learned Commissioner (Appeals) 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 Purshotam Dass, Jaitu as genuine and it was only subsequently consequent to survey under section 133A as well as search and seizure operations conducted in the case of M/s Ram Kumar Purshotam Dass, Jaitu on 31-1-1987, that it was found that the creditor Sh. Purshotam Dass Prop. M/s Ram Kumar Purshotarn 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. Purshotam Dass and yet Sh. Purshotam 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. Purshotam Dass to Sh. K.L. Goyal, an extract of which has been reproduced by the learned Commissioner (Appeals) in para 7 of the impugned order, from which it appears that Sh. Purshotam Dass used to arrange gifts by account payee cheques to the persons desirous of converting their unaccounted income into white money by receiving gifts from persons associated with Sh. Purshotam Dass for a consideration. The search party also found that several set of books of accounts were maintained by Sh. Purshotam 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 third parties to introduce their unaccounted money in the form of loans given by Sh. Purshotam 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. Purshotam 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 Purshotam Dass, Jaitu and since the creditor was not an actual moneylender 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 was issued.
28. The assessee challenged the reopening of the assessment on the plea that since the primary facts were before the Income Tax Officer 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'ble Supreme Court in the case of ITO & Anr. v. Mewa Lal Dwarka Prasad (1989) 176 ITR 529 (SC) as well as the decision of Honble Punjab & Haryana High Court in the case of Shiv Lal Kanahya Lal v. CIT (1986) 162 ITR 548 (P&H).
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 M/s Shiv Lal Kanahya Lal v. CIT (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 Sh. Purshotam Dass prop. M/s Ram Kumar Purshotam Dass and it was only subsequently that it was found that the alleged creditor Sh. Purshotam 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 Purshotam Dass, which formed the basis for a reasonable belief on the part of the Income Tax Officer, 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 Purshotam Dass, that its income had escaped assessment, the Income Tax Officer, Moga took action under section 147(a) of the Act and his action deserves to be upheld and was so upheld by the learned Commissioner (Appeals).
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 (All) upheld the reopening 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 the 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. " 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 (SC) 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 Raj Pal v. S.P. Chaliha (1971) 79 ITR 603 (SC) as well ITO v. Lakhmani Mewal Das (1976) 103 ITR 437 (SC) as also the decision in the case of CIT v. T.S.PL.P. Chidambaram Chettiar (1971) 80 ITR 467 (SC). The Hon'ble Supreme Court at p. 478 of the above referred decision specifically negatived the arguments of Sh. G.C. Sharma, learned senior 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 thereof. The argument is too broad and general in nature and does violence to the plain phraseology of sections 147(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 assessee that latitude. "
29. The Hon'ble Supreme Court in the case of A.L.A. Firm v. CIT (1991) 189 ITR 285 (SC) 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 chargeable to tax had escaped assessment. It was held that even it 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 the Act are satisfied.
30. Reliance of Sh. N.K. Sud advocate, learned representative of the assessee, on the decision of Honble Supreme Court in the case of CIT & Anr. v. Mewa Lal Dwarka Prasad (supra) as well as the decision of Honble Punjab & Haryana High Court in the case of Shiv Lal Kanahya Lal v. CIT (supra) as well as the case of Jai Singh v. CIT (1982) 136 ITR 895 (P&H) is misplaced because of difference in facts.
31. The position quoted by my learned senior colleague from p. 534 of the judgment of Honble Supreme Court in the case of Mewalal Dwarka Prasad (supra) at pp. 11 and 12 of the proposed order goes to show that the Honble 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(b) and not under section 147(a).
32. Another aspect of the case, on the basis of which my learned senior colleague, has held that jurisdiction assumed by the assessing officer under section 147(a) in the present cases as void ab initio is because of the fact that approval of the Commissioner 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/ 30-3-1989, Commissioner, Jalandhar." From the above my learned senior colleague concluded that approval has been granted by the Commissioner in a mechanical manner without application of mind and for that purpose reliance was placed on the decision of Honble Allahabad High Court in the case of Raj Kishore Prasad v. ITO (supra) and relevant portion of that judgment has been reproduced/extracted at p. 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 facts of that case and that too on a writ petition filed by the assessee. A perusal of the operative part of the judgment, which has been extracted at p. 8 of the proposed order of my learned senior 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 and since these were not furnished before the Honble court it held that mere mentioning the words "Yes" against the relevant column will indicate that the learned Commissioner has not applied his mind.
The above finding of the Honble High Court was given as the factual aspect of working of judicial section in the office of Commissioner, which processes the applications received from the assessing officer was not brought to the notice of the Honble 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, which are processed in the Judicial Bench working under the administrative control of Income Tax Officer (Judicial). All these proposals are processed in a file and the Income Tax Officer (Judicial) records nothing in relation to all the proposals for the perusal and sanction of the Commissioner, and the Commissioner after going through the proposals submitted by the assessing officer and applying his mind to the noting of the Income Tax Officer (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 Commissioner 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 has not applied his mind merely because the sanction is recorded on the proposal not 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 Income Tax Officer (Judicial) in the office of the Commissioner.
33. The reliance of my learned senior brother on the judgment of Calcutta Bench 'D' in the case of Smt. Chand Devi Saraf v. ITO (1990) 32 ITD 518 (Cal-Trib) which, in turn, is based on the decision of Hon'ble Orissa High Court in the case of Govinda Choudhary & Sons v. ITO (1977) 109 ITR 370 (Ori) and Chanchal Kumar Chatterjee v. ITO (1974) 93 ITR 130 (Cal) and Honble Supreme Court decision in the case of Chugamal Rajpal v. S.P. Chaliha (1971) 70 ITR 603 and CIT v. Burlop Dealers Ltd. (1971) 70 ITR 609 (SC) are distinguishable on facts.
34. In the decision of Govinda Choudhary & Sons v. ITO (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 appeals 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 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 Commissioner was obtained by the assessing officer on a false representation of facts and the court was of the opinion that if the Commissioner 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 Chugamal Rajpal v. S.P. Chaliha (supra) is also similar because at p. 608 of the report the Hon'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 CIT v. 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 Bajranglal v. ITO & Anr. (supra), 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 paragraphs, 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 as required under section 151.
37. Coming to the merits of the case, a perusal of the copy of the account of the alleged creditor Sh. Purshotam, Dass prop. M/s Ram Kumar Purshotam 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, is given to us at pp. 19, 20, 21, 22, 23 and 24 is as under :
Debit Credit Rs.
Rs.
"14-4-1980 B.O.I. 0094606 40,000 5-5-1980 0094608 20,000 31-10-1980 0094617 40,000 1-1-1981 960 At source Total 960 1,00,000 Credit balance Rs. 99,040 Old balance on 5-1-1981 99,040 3-2-1981 B.O.I. 0094629 40,000 31-3-1981 240 40,000 240 1,39,040 Credit balance on 31-3-1981 1,38,800 1-4-1981 old ledger 1,38,800 24-4-1981 By Comm.
1,200 31-3-1982 10 Per cent 1,680
-
1,680 1,40,000 Credit balance on 31-3-1982 1,38,320 1-4-1982 Old ledger 1,38,320 29-4-1982 By cash 1,680 21-8-1982 80,000 By U.B.I. 044734 31-3-1983 10% I.T. 982 80,982 1,40,000 Credit balance on 31-3-1983 59,018 1-4-1983 Old balance 59,018 4-5-1983 982 30-3-84 10% I.T. 1,080 1,080 Total 1,080 60,000 Credit balance on 31-3-1984 58,920 2-4-1984 Old ledger 58,920 30-3-1985 1,080 30-3-1985 10 % I.T. 540 30-3-1985 10% I.T. 540 1,080 60,000 Balance credit on 30-3-1985 58,920
38. Admittedly, during the course of reassessment proceedings, the assessing officer requested the assessee to produce the creditor for 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 attendance of the creditor and framed the assessment after treating the creditor as a bogus one and the deposit in the name of the creditor as income of the assessee.
39. The Commissioner (Appeals) 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 learned senior colleague, Sh. S. Grover, in para 22 of his proposed order held that the reassessment proceedings were wholly void ab initio and on merit also the credit transactions with M/s Ram Kumar Purshotam 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 learned 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 creditor on 21-8-1982. Besides these entries certain cash amounts namely Rs. 1,200 on 24-4-1981; Rs. 1,680 on 294-1982 and Rs. 982 on 4-4-1983 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 to taking the cash deposits in the account of the assessee on the dates mentioned above, purpose of which has not been explained to us.
40. While deleting the addition on merits, my learned senior colleague at p. 11 of the proposed order has observed that as on 30-3-1985, there was a credit balance of Rs. 58,920 in the assessee's books in the account of M/s Ram Kumar Parshoram 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 reopened the proceedings for the assessment year 1985-86 as well, which were the subject-matter of appeal before us in ITA No. 294 to 297/Asr/1991 [Gopi Chand Prem Kumar v. ITO (2001) 77 ITD 43 (Asr-Trib) (TM)] 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. Purshotam Dass prop. M/s Ram Kumar Purshotam 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. Purshotam Dass prop. M/s Ram Kumar Purshotam Dass.
42. Accordingly, I will uphold the action of the assessing officer in initiating the proceedings under section 147(a) after taking necessary approval from the Commissioner 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 purpose only.
28-10-1993 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 Tribunal 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 J.M. holding that the reassessment proceedings were wholly void and bad ab initio and independent of the same on merits also loan transactions with M/s Ram Kumar Purshotam Dass, Jaitu, could not be held to be non-genuine, is justified, or the approach adopted by the A.M. 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 Purshotam Dass, Jaitu is correct ?"
V. DONGZATHANG, PRESIDENT (AS THIRD MEMBER): 30-3-2001 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 J.M. holding that the reassessment proceedings were wholly void and bad ab initio and independent of the same on merits also loan transactions with M/s Ram Kumar Purshotam Dass, Jaitu, could not be held to be non-genuine, is justified, or the approach adopted by the A.M. 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 Purshotam Dass, Jaitu is correct ?"
2. The facts leading to the above order were fully brought on record by the learned J.M. 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 J.M. also held that on merits also the transactions with M/s Ram Kumar Purshotam 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 A.M. 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 senior Departmental Representative appeared for the revenue . They were heard at length. Both the parties supported the respective orders of the learned J.M. and the A.M. and elaborated on the various decisions relied upon in the order. From a careful reading of the order of the learned A.M, it is seen that all the points raised by the learned J.M. 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 Supreme Court in the case of Phool Chand Rajrang Lal v. ITO (1993) 203 ITR 456 (SC) 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 v. CIT (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 A.M. 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 Purshotam Dass prop. of M/s Ram Kumar Purshotam Dass and then confront the assessee with the statement and therefore, readjudicate on the question of genuineness or otherwise of the credit introduced by the assessee in the name of Shri Purshotam. Dass prop. of M/s Ram Kumar Purshotam 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 reassessment stage. I fully concur with the learned A.M. 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.