Income Tax Appellate Tribunal - Delhi
Varun Tibrewal, New Delhi vs Assessee on 31 October, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH :SMC: NEW DELHI
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER
ITA No. 2301/Del/2012
Assessment Year: 2004- 2005
Varun Tibrewal, Vs. ITO
C/o Bubber Jindal & Co., CA 3072 Ward -26(4),
Pratap Street, Gola Market, New Delhi.
Behind Golcha Cinema,
Daryaganj
New Delhi
(PAN ADTPT5258M)
(Appellant) (Respondent)
AND
ITA No. 2302/Del/2012
Assessment Year: 2004- 2005
Vishal Tibrewal, Vs. ITO
C/o Bubber Jindal & Co., CA 3072 Ward -26(4),
Pratap Street, Gola Market, New Delhi.
Behind Golcha Cinema,
Daryaganj
New Delhi
(PAN ADTPT5258M)
(Appellant) (Respondent)
Appellant by : Shri R.S. Singhvi, Advocate
Respondent by : Mrs. Renuka Jain Gupta, Sr. DR
ORDER
PER I.C. SUDHIR, JUDICIAL MEMBER
The assessee has questioned first appellate order on the following grounds :-
1(i) That on the facts and circumstances of the case, the CIT(A) was not justified in upholding reassessment u/s 148 even though there is no evidence or requisite satisfaction for assuming jurisdiction
(ii) That impugned reassessment is not in conformity with provision of 2 ITA Nos. 2301/ 2302/Del/2012 section 148 and settled legal principles.
2. That decision of Delhi High Court in the case of A.G.R. Investment Ltd. and Rajat Export & Import India Pvt. Ltd. have been applied on mechanical basis without proper appreciation of facts.
3.(i) That even otherwise, there is no justification for any addition even on merits as Assessing Officer has made addition on mechanical basis without making reference to any evidence or material in support of allegation about accommodation entries.
(ii) That this is a case of reassessment and Assessing Officer has not discharged onus so as to establish that any income has escaped assessment and addition was merely made on presumption and surmises.
(iii) That genuineness of the gift is supported from the relevant documents and these documents have been disregarded on general and arbitrary basis.
2. The assessee has questioned validity of notice issued u/s 148 of the Act and the addition made on account of non-genuineness of the gift.
3. On the issue of validity of notice u/s 148, the Ld. AR submitted that the reasons to believe that the income has escaped assessment is merely based on the information received by the AO from the investigation wing of the department. In this regard he referred page No. 11 of the paper book. He contended that the AO neither supplied the details of the information as asked by the assessee nor allowed the request of the assessee to cross examine the person on the basis of whose information proceedings u/s 148 were initiated. In this regard he referred page No. 12 to 16 of the paper book filed on behalf of the assessee which is copy of the objections against the reassessment raised by the assessee before the AO. To support his 3 ITA Nos. 2301/ 2302/Del/2012 contention that proceedings u/s 148 of the Act for reopening cannot be initiated merely on the basis of information received from investigation wing of the department, Ld. AR placed reliance on the following decisions :-
Signature Hotels Pvt. Ltd. vs. ITO (2011) 338 ITR 51 (Delhi) CIT vs. Pradeep Kumar Gupta (2008) 303 ITR 95 (Delhi). CIT vs. Smt. Vinita Jain (2007) Taxman 325 (Delhi) CIT vs. Orient Craft Ltd. (2013 354 ITR 536 (Delhi) MMTC vs. ACIT 308 ITR 361 (AT) (Delhi).
4. Ld. DR on the other hand tried to justify the orders of the authorities below on the issue. She submitted that the information received from investigation wing of the department is sufficient material on the basis of which reasons to believe can be formed. There was nexus between information received and escapement of income. She placed reliance on the following decisions :
AGR Investment Ltd. vs. ACIT (2011) 333 ITR 146 (Delhi) Shalimar Buildcon (P) Ltd. Vs. ITO 136 TTJ 701 (Jaipur) Kalyanji Mavji And Co. v. Commissioner Of Income Tax, West Bengal II. 102 ITR 287 (Delhi).
5. In the rejoinder the Ld. AR pointed out that the decisions of Hon'ble Delhi High Court in the case of AGR Investment vs. ACIT (supra) has been considered by the Hon'ble Delhi High Court in its latest decision in the case of Signature Hotel (P) Ltd. vs. ITO (Supra). He submitted that existence of believe is the issue . The other decisions relied upon by the Ld. 4 ITA Nos. 2301/ 2302/Del/2012 DR having distinguishable facts are not helpful to the revenue. It is the question of sufficiency of believe and non application of independent mind by the AO.
6. When we peruse the reasons of believe recorded by the AO for initiation of reopening proceedings, made available at page No. 11 of the paper book we find substance in the above contention of the Ld. AR that reopening proceedings were initiated merely on the basis of information received from the investigation wing of the department. For a ready reference the contents of the said reasons recorded by the AO while issuing notice u/s 148 of the Act is being reproduced hereunder :-
"In this case an information is received from the O/o the (Inv. Unit-V). ARA Centre Jhandewalan Extn. New Delhi that VARUN TIBREWAL has taken bogus accommodation entries from the following parties in lieu of unaccounted money paid by the above named assessee.
As per Annexure enclosed with the above information of DIT(Inv. Unit-V), New Delhi the details of transaction made by him is as under :-
Date Amount Instrument No. Name of the party 30.12.03 150000/- TO CLG:00239219 SHANTI DEVI GUPTA
I am satisfied that VARUN TIBERWAL, resident of F-146, Vikas Puri, New Delhi has concealed his income of Rs. 1,50,000/-. The income of Rs. 1,50,000/- has escaped within the meaning of section 147 of the Income Tax Act, 1961 for the asstt. year 2004-05.
(Raghubeer Singh) Income Tax Officer, Ward 26(4) New Delhi - 110 002.
Notice under section 148 of the Income Tax Act, 1961 is issued for asstt. year 2004-05.
(Raghubeer Singh) 5 ITA Nos. 2301/ 2302/Del/2012 Income Tax Officer, Ward 26 (4) New Delhi - 110 002."
7. Having gone through the decisions relied upon by the parties, we find that in the case of Signature Hotels Pvt. Ltd. vs. ITO (supra) almost similar are the facts, wherein validity of notice issued u/s 148 was questioned. In that case also the various proceedings were initiated on the basis of information received from the investigation wing of the department that the assessee had introduced money amounting to Rs. 5 lacs during the financial year 2002-03 as stated in the annexure. According to the information the amount received from a company was nothing but an accommodation entry , the assessee was the beneficiary. The Hon'ble High Court held that the reasons did not satisfy the requirement of section 147 of the Act. There was no reference of any document or statement, except the annexure. It was held that the annexure could not be regarded as a material or evidence that prima facie shows or establishes nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. Further, the AO did not apply his own mind to the information and examine the basis and material of the information. The relevant extract of the above decision is reproduced hereunder :
"In these circumstances, we are examining the reasons given by the Assessing Officer in the proforma seeking permission/approval of the Commissioner and whether the same satisfy the pre-conditions mentioned in section 147 of the Act.6
ITA Nos. 2301/ 2302/Del/2012 Annexure attached to the said proforma placed on record of the petitioner reads as under :-
Beneficiary's Value of Instrument No. by Date on which name entry taken which entry taken entry taken Signature 500000 (AC No.21060) 09-Oct-02 Hotels Pvt.
Ltd.
Name of Bank from Branch of entry A/c. No. entry account which entry giving bank giving account holder of given entry giving account Swetu Stone SBP DG 50106" PV
The first sentence of the reasons states that information had been received from Director of Income-tax (Investigation) that the petitioner had introduced money amounting to Rs. 5 lakhs during the financial year 2002- 03 as per the details given in the annexure. The said annexure, reproduced above, relates to a cheque received by the petition on October 9, 2002, from Swetu Stone PV from the bank and the account number mentioned therein. The last sentence records that as per the information, the amount received was nothing but an accommodation entry and the assessee was the beneficiary.
The aforesaid reasons do not satisfy the requirements of section 147 of the Act. The reasons and the information referred to is extremely scanty and vague. There is no reference to any document or statement, except the annexure, which has been quoted above. The annexure cannot be regarded as a material or evidence that prima facie shows or establishes nexus or link which discloses escapement of income. The annexure is not a pointer and does not indicate escapement of income. Further, it is apparent that the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. The Assessing Officer accepted the plea on the basis of vague information in a mechanical manner. The Commissioner also acted on the same basis by mechanically giving his approval. The reasons recorded reflect that the Assessing Officer did not independently apply his mind to the information received from the Director of Income-tax (Investigation) and arrive at a belief whether or not any income had escaped assessment."
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ITA Nos. 2301/ 2302/Del/2012
8. We thus respectfully following the ratio laid down in the decision of Hon'ble Delhi High Court in the case of Signature Hotels P Ltd. vs ITO (supra) hold that the AO was not justified in initiating the reopening proceedings in the present case merely on the basis of information received from the investigation wing of the department, without reference to any document or statement in absence of which, the information could not be regarded as a material or evidence that prime facie showed or established nexus or link which disclosed escapement of income. We thus while setting aside the orders of the authorities below in this regard hold that the notice issued u/s 148 of the Act in the present case was not as per the requirement of section 47 of the Act and is thus invalid. The assessment framed in furtherance to the said notice u/s 148 of the Act is thus quashed as null and void in consequence. The related grounds are thus allowed in favour of the assessee. So far as the question of merits of the addition is concerned it is not required to be adjudicated upon as the assessment order itself has been quashed hereinabove on the question of the validity of notice u/s 148 of the Act.
In the result appeal is allowed.
The order is pronounced in the open court on 31st October. 2013.
sd/-
( I.C. SUDHIR ) JUDICIAL MEMBER Dated 31st October, 2013 Veena 8 ITA Nos. 2301/ 2302/Del/2012 Copy of order forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR By Order Deputy Registrar, ITAT