Income Tax Appellate Tribunal - Agra
Usha Agarwal, Agra vs Ito Ward-4(4), Agra on 11 September, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA (SMC) BENCH: AGRA
BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER
I.T.A No. 260/Agra/2018
(ASSESSMENT YEAR-1998-99)
Smt. Usha Agarwal, Vs.. ITO,-Ward 4(4),
G-693, Kamla Nagar, Agra. Agra.
PAN ABRPA5581G
(Assessee) (Revenue)
Assessee by Shri Shrawan Kumar Gupta, AR.
Revenue by Shri Waseem Arshad, Sr.DR.
Date of Hearing 18.06.2018
Date of Pronouncement 11.09.2018
ORDER
This is assessee's appeal for A.Y. 1998-99, taking the following grounds:
"1. Because the Ld. CIT Appeal has wrongly, illegally and arbitrarily rejected the appellants ground on the following main issues:-
1.1 Re:- Initiation of proceedings u/s 147 and issue of notice u/s 148
i) Reason to believe as is mentioned in the reasons recorded is entirely based on information from CBDT. At the time of recording reasons the Assessing Officer was not having any documents to have reason to believe that particular income has escaped assessment. Even uptil the I.T.A No. 260/Agra/2018 2 completion of reassessment proceedings there were no documents with the Assessing Officer. Thus there cannot be any reasons to believe.
ii) Reasons recorded are based on borrowed information/satisfaction and hence the entire proceedings started vide issue of notice u/s 148 and the assessment framed is bad in law and deserves to be quashed.
1.2 Re:- Assessment completed beyond time limit
i) Order passed u/ 143(3)/254 is without jurisdiction and beyond the time period as per the direction given by Hon'ble ITAT and hence the Ld. CIT Appeal should have quashed the assessment framed.
1.3 Re:- Addition of Rs.10,02,950/- as income from Undisclosed sources having been invested against jewellery and thus unexplained investment under the deeming provisions of the Act:-
i) Addition is wrong, illegal, arbitrary, against the facts of the case, legally without jurisdiction as since the start of the proceedings the assessee repeatedly submitted that she has not filed any declaration under VDIS-97 .
ii) Alternate ground that VDIS-97 was to make declaration upto A.Y. 1997-98 and hence no addition in A.Y. 1998-99 can be made.I.T.A No. 260/Agra/2018 3
iii) Considering the grounds as above either the assessment deserves to be quashed or the addition deserves to be deleted.
2. Because considering the facts of the case and legal position the assessment framed u/s 143(3)/254 deserves to be quashed. The Ld. CIT (Appeals) has erred in rejecting the appellant's grounds and submission.
3. Because the reasons recorded, reassessment framed and addition made is also wrong and bad in law as VDIS-97 was to make declaration upto A.Y. 1997-98 and hence there cannot be any satisfaction or reason to believe on the basis of VDIS-97 that income has escaped assessment for A.Y. 1998-99. The Ld. CIT Appeal has legally erred in rejecting the appellant's grounds and submission.
4. Because considering the facts of the case the addition of Rs.10,02,950/- deserves to be deleted. The Ld. CIT (Appeals) has erred in confirming the same."
2. The assessee has filed an application for admission of additional ground, which reads as under:
"The ld. AO has grossly erred in law as well as on the facts of the case in charging interest u/s 234A and 234B. The appellant totally denies it liability of charging of any such incorrect I.T.A No. 260/Agra/2018 4 interest. The incorrect interest, so charged, being contrary to the provisions of law and facts, may kindly be deleted in full."
3. The additional ground raised relates to a legal issue going to the root of the matter, requiring no fresh material to be gone into. Accordingly, the additional ground is admitted.
4. The assessee has also filed an application for additional evidence, which will be discussed at a later appropriate stage.
5. The assessee is an individual having income from other sources and capital gain. For the year, she had not filed her return of income, having no taxable income. The AO had issued a notice u/s 148 on 31.03.2005, on the basis, that "Information has been received from the CBDT, New Delhi that the above assessee had filed a declaration under the VDIS-1997, in which he had declared an amount of Rs.10,02,948/- on 31.12.1997 but had not paid the tax thereon and the certificate was also not issued to him. I, therefore, reason to believe income of Rs.10,02,948/- chargeable to tax had escaped assessment for the A.Y. 1998-99, within the provision of Section 147 of the IT Act. Permission u/s 151(1) was sought from the JCIT Range-4 Agra.
6. On 30.03.2006 assessee and her husband had appeared before the AO and statement of the assessee had been recorded u/s 131 of the Act, wherein she had stated that she had not declared any income under VDIS-1997. She also filed her I.T.A No. 260/Agra/2018 5 reply. However, the AO did not feel satisfied with the reply of the assessee and assessed the total income of the assessee at Rs. 10,02.948/- on the belief of information sent by the CBDT and completed the assessment u/s 143(3)/147 on 30.03.2006.
7. The assessee filed appeal before the ld. CIT(A), who confirmed the addition.
8. Against the order of the ld. CIT(A), the assessee filed appeal before the ITAT. The ITAT sent the matter back to the AO with the direction that:
"The matter requires reconsideration at the level of the AO. We accordingly set aside the orders of the Authorities below and restore both the issues of reopening of assessment and addition on merit to the file of the AO with the direction to re-
decide both the issues by giving reasonable and sufficient
opportunity of being heard to the assessee. The AO is
directed to supply copy of VDIS 1997 declaration alleged to have been filed by the assessee as per information of the CBDT within three months from the date of receipt of this order. Thereafter, the AO shall decide the objection of the assessee for reopening the assessment by a speaking order and shall pass a reasoned order. We make it clear that in case the AO is not able to supply the copy of VDIS, 1997 alleged to have been filled by the assessee with in such-period, the AO would drop the re-assessment proceedings against the I.T.A No. 260/Agra/2018 6 assessee." This order has been passed by the ITAT on 11.04.2012, in ITA No. 194/Agra/2011."
9. As per the assessee, the AO issued the first notice u/s 142(1) on 21.01.2013, i.e., after 8 months and also issued show cause notice on 06.03.2014, i.e., after 22 months, wherein, the AO asked to the assessee to produce the evidence regarding declaration under VDIS-1997 amounting to Rs.10,02,950/-, and details of income shown in VDIS 1997 with evidence and to produce the books of account. In response thereto, the assessee had submitted that it was for the AO to provide the copies of declaration under VIDS 1997, and not for the assessee, as per the direction of the ITAT. Thereafter, the AO supplied the photocopies of the alleged VDIS, 1997 declaration to the assessee on 18.02.2014 (PB-24) on 19.02.2012, i.e., after 22 months, as against three months, as per the mandatory direction of the ITAT. In response thereto, the assessee filed reply by stating that "on perusal of the documents as received, the same neither belongs to me, nor singed by me, nor filled by me. And as per direction of the ITAT, the reassessment proceedings are to be dropped". However, the AO did not feel satisfied with the reply and stated that the limitation is governed by the provisions of the section 153 of the IT Act. The AO also issued summon u/s 131 of the Act to the assessee on 24.02.2014 and her statement had been recorded u/s 131 on 26.02.2014. In the statement, the assessee again replied that the signature made on the application of declaration, letters and I.T.A No. 260/Agra/2018 7 affidavit, etc, are not hers. The AO observed that the signatures on the relevant papers tallied with those on the statements taken on oath. The AO had asked the assessee to explain the same on 07.03.2014. In response thereto, the assessee had again stated the same on 12.03.2014 and also challenged the legality of the notice, as well as the assessment. However, the AO summarily rejected the contention of the assessee, without passing any separate speaking and reasoned order. The AO further stated that the signatures on the declaration papers and on other documents like statements and returns, were resembling, without verifying the same from the independent Authority. The completed the assessment at the same income as original assessment. The AO had passed the assessment u/s 143(3)/254 for A.Y. 2009-10 in place of assessment u/s 147/143(3)/254 for A.Y.2009-10 in the demand notice u/s 156 and notice u/s 271 (1 )(c) also the A.Y. was mentioned as 2009-10. When the AO came to know that three months had passed in 03rd August 2012 for supplying the documents as per the mandatory direction of the ITAT, he filed an application before the ITAT on 26.02.2014 for extension of time to rectify his mistake and sought modification of the final order of the ITAT, dt.11.04.2012. In the hearing on this application the Revenue had admitted that it did not intend to move any application for rectification u/s 254(2) of the IT Act. The DR requested to extend the time limit and the AR had objected the same. The ITAT, vide order dated 29.04.2014 held that:
I.T.A No. 260/Agra/20188
"We do not find any justification to review the earlier order of the Tribunal dated 11.04.2012. The AY under appeal is 1998-99 and the appeal of the assessee was heard on 11.04.2012, also disposed off on 11.04.2012 itself. The orders of the Authorities below were set aside and the issue of reopening of the assessment and addition on merit were restored to the file of the AO with the direction to re-decide the issues afresh. The AO was directed to supply copy of VDIS 1997 declaration within three months from the receipt of the order dt. 11.04.2012. The assessee has placed on record copy of notice issued by AO u/s 142(1) rws 254 dt. 21.01.2013 for framing the assessment afresh. It would indicate that the order of the Tribunal was served upon the department on 02.05.2012 and, as such the order of the Tribunal dt. 11.04.2012 was not complied with till 18.02.2014 and the application dt. 26.02.2014 was filled for extension of time to supply copy of VDIS 1997 declaration. On the day when the impugned application dt. 26.02.2014 was filled, the time to comply with the order of the Tribunal has already lapsed and, as such for the mistake of the AO, in our view the order of the Tribunal should not be reviewed. It is well settled that the Tribunal has no power to review its order passed on merit. There is no provision to entertain the impugned application under law. We are of the considered view that the impugned application dt. 26.02,2014 is not maintainable and is devoid of any merit and is accordingly dismissed." In first appeal, the assessee again reiterated the I.T.A No. 260/Agra/2018 9 same arguments of validity of notice, assessment, time barred assessment and also that the documents relating to the alleged VDIS, 1997 declaration provided to her on 19.02.2014 had not been filled by her, neither they belonged to her nor she had signed on those documents, nor did she have any relation with those documents, nor was having such gold and jewellery, as mentioned in the Valuer's Report, etc. However, the ld. CIT(A) has ignored all these facts, legal position, validity and mandatory direction of the ITAT. She has confirmed the action as well as the addition made by the AO only and only on the basis of the finding given by the AO in the assessment order."
10. The ld. DR has placed strong reliance on the impugned order.
11. Heard. The Tribunal, vide its order dated 11.04.2012, had, inter alia, directed the AO to supply to the assessee, within three months from the receipt of the said Tribunal order, a copy of the VDIS -1997 declaration, alleged to have been filed by the assessee, as per the CBDT information forming the basis of the AO's reasons to believe escapement of income. The AO, thereupon, issued notice u/s 142(1) read with section 254 of the IT Act on 21.01.2013, asking the assessee to 'produce evidence regarding declaration filed by you under VDIS-1997', despite the Tribunal's specific observations in para 4 of its order that the assessee could not be put to prove the negative that she had not made any declaration under VDIS-1997, that since the AO wanted to rely on such declaration, it was his onus to prove such I.T.A No. 260/Agra/2018 10 declaration having been made by the assessee, and that in spite of no such verification having been made by the AO on remand, the CIT(A) dismissed the assessee's appeal without justification.
12. Then, when the assessee, vide reply dated 29.01.2013, pointed out to the AO the Tribunal's direction to supply to the assessee, the VDIS-1997 declaration, the AO supplied the VDIS declaration to the assessee on 18.02.2014, alongwith the assessee's purported affidavit, report of valuation of jewellery in the assessee's name and copy of accounts for disclosure made under VDIS-1997. The assessee was required to explain how she had been negating the declaration in the face of these documents.
13. On 26.02.2014, the Department filed an application before the Tribunal, seeking extension of time to supply copy of VDIS-1997 declaration to the assessee and, thereby, seeking modification of the Tribunal order dated 11.04.2012. It was stated before the Tribunal that the office of the CIT, Agra is divided into two offices and certain records had been transferred from one office to the other; that at two times, fire had broken out, due to which, the records had got mixed up and, as such, the directions issued by the Tribunal could not be complied within time, and that the VDIS declaration had been supplied to the assessee on 18.02.2014. I.T.A No. 260/Agra/2018 11
14. The Tribunal rejected the Department's application vide order dated 29.04.2014, observing, inter alia, that on the date the application was filed, the time to comply with the Tribunal order dated 11.04.2012 had already elapsed.
15. Meanwhile, on 18.03.2014, the AO passed an order under sections 143(3)/254 of the Act. This order is the genesis of the present appeal. In this order, the AO again rejected the assessee's stand that the signatures on the declaration, letters and affidavit were not her. The AO held that the signatures on all these documents tallied with the assessee's signature on her statement recorded before the ITO on 30.03.2006 on oath and that the assessee, in her statement on oath, had categorically deposed that she used to change her signature.
16. In the impugned order, the ld. CIT(A) observed (para 8.2) that the AO had confronted the assessee with her different signatures on different documents and that so, the assessee's contention that her signatures were not verifiable, was not correct. The ld. CIT(A) further observed that from all the documents bearing the assessee's signatures, as available with the Department, it was clear that she had, in fact, made a declaration under VDIS-1997 and that if it had not been so, her name could not have occurred in the list of the declarants. The ld. CIT(A) also observed that she had herself gone through the different documents and had found the I.T.A No. 260/Agra/2018 12 assessee's signature on the declaration to be exactly the same as that on the statement given by the assessee before the ITO in 2006.
17. On the issue of validity or otherwise of the reopening of the assessee's completed assessment, the ld. CIT(A) observed (para 9.1) that the AO had reopened the case on the basis of information in possession of the AO, as received from the CBDT, which information included the assessee's VDIS form, the assessee's affidavit, report of valuation of jewellery in the assessee's name and copy of account for the disclosure made under VDIS-1997. The ld. CIT(A) confirmed the reopening of the assessee's completed assessment.
18. The first question is whether the CIT(A)'s action in this regard is correct as per law.
19. The AO reopened the assessee's completed assessment on the basis of, as stated in the reasons recorded, information received from the CBDT that the assessee had filed a declaration under VDIS-1997. First of all, the reasons recorded on 31.03.2005 by the AO only speak all the information received from the CBDT regarding the alleged declaration by the assessee. The reasons were supplied to the assessee on 20.03.2006. No such alleged declaration was, however, provided to the assessee. In the first round, in his remand report (APB-36) dated 2.10.2006, the AO expressed before the CIT(A) that the VDIS-1997 disclosure was needed in I.T.A No. 260/Agra/2018 13 original, in order to verify such disclosure. The CIT(A), however, did not take any further steps in this regard. It was only when the Tribunal, vide order dated 11.04.2012, remanded the matter to the AO, directing him to supply the alleged VDIS declaration to the assessee, that the alleged documents, i.e., VDIS form, assessee's affidavit, report of valuation of jewellery in the assessee's name and copy of account for the disclosure made under VDIS 1997, saw, much belatedly, the light of day and were supplied to the assessee only on 18.02.2014, in stark contravention of the Tribunal's direction that if within three months of receipt of the Tribunal order dated 11.04.2012, the AO was not able to supply to the assessee, the VDIS declaration, he would drop the reassessment proceedings. All this material, as such, has not been shown to have been in the possession of the AO at the time of recording of the reasons to believe escapement of income. In para 4 of the original assessment order dated 30.03.2006, the AO stated that the reasons were recorded on the basis of the information, as above, received from the CBDT, that the assessee's contention that she had not declared any income in VDIS 1997, did not appear to be correct and that the total income was being assessed, believing the information sent by the CBDT. In the subsequent assessment year dated 18.03.2014, in the running para, on page 6 thereof, the AO has observed that:
".......................Lastly on other points i.e. No material was available with the AO to initiate proceeding u/s 147 R/W 148 of the Act, as has been contended by I.T.A No. 260/Agra/2018 14 the assessee.....................the same is found to be incorrect because of the fact that the information was available on the basis of declaration under the VDIS 1997, which came to be not accepted because of no tax was deposited on the basis of declaration made by the assessee. The subsequent information as to the assessee who had not complied with the terms of VDIS 1997, was circulated by the CBDT, New Delhi with the direction to take the remedial action to assess the undisclosed/unexplained income as alleged in VDIS 1997 and accordingly, the information (sic-was) in possession within the department and it could not be said that there was no information of income escaping assessment .....' (emphasis supplied). Hence, even as per the AO himself, none of the documents referred to by the CIT(A), i.e., the VDIS form, the assessee's affidavit, the report of the valuation of the jewellery in the assessee's name and the copy of account for the disallowance made under VDIS 1997, was in the possession of the AO at the time of the recording of the reasons. It was only in the notice (reproduced at pages 3-4 of the assessment order dated 18.03.2014) dated 18.2.2014, issued u/s 142(1) r.w.s.
254 of the IT Act, that all these documents were mentioned by the AO for the first time. The CIT(A), thus, has clearly erred in holding, in para 9.1 of the impugned order, that the reopening of the assessment was based on all such material which, according to the ld. CIT(A), was in the possession of the AO. The CIT(A)'s order in this regard is based on a complete mis-reading and non-reading of the material I.T.A No. 260/Agra/2018 15 available on record. As such, this conclusion of the CIT(A) is unsustainable. The AO based the reopening merely on the bare information received by him from the CBDT that the assessee had filed a declaration under the VDIS 1997, in which, he (sic-she) had declared an amount of Rs.10,02,948/- on 31.12.1997, but had not paid the tax thereon and the Certificate was not issued to him (sic-her). It was this bald so called information, which was reproduced by the AO in the reasons recorded and he, without any further inquiry thereon, i.e., without any independent application of his own mind to it, formed his alleged reason to believe escapement of income. The reopening is, thus liable to be set aside and reversed on this score alone. We hold so. The reopening of the assessee's completed assessment is cancelled on this count itself.
20. As for the alleged VDIS declaration attributed to the assessee, the mere information, which was the only material available with the AO at the relevant time, such declaration has been held to be that of the assessee. The basis for the CIT(A) to hold so is that the assessee's signature thereon is exactly the same as that on the assessee's statement given before the ITO in 2006.
21. In this respect, at page six of his order, the AO has merely observed that '.........................Thereupon, a statement on oath was recorded of the assessee, where she was shown all her signatures those which were signed by her during the I.T.A No. 260/Agra/2018 16 her statement on oath before the AO on 30.03.2006 and on her return of income filed for 1999-2000 and 2000-01 and those signed on declaration form and related documents of VDIS 1997, which has found to be resembling as below:
"Statement of the assessee during her statement on oath on 30.03.2006 and on 26.02.2014 and on her return of income for 1999-00 and 2000-01.................." (emphasis provided).
22. At page 9 of the assessment order, the AO has observed that in her sworn statement recorded on 26.02.2014, the assessee admitted that it was possible that she might have changed her sign earlier. From this the AO concluded that it was "..............................proved that the assessee keep changing her signature to her sweet will according to the requirement and then challenge her own signature made by her own different way. Thus, the denial made by the assessee having not signed the same cannot be entertained........................" and that "..........................The said devise is however, not acceptable once the assessee has made investment against jewellery from undisclosed sources and therefore, on the facts stated above and considering the declaration made under VDIS 1997...........................the facts stated above and considering the declaration made under VDIS 1997.......................................the declared amount..................is added back in the hands of the assessee....................". I.T.A No. 260/Agra/2018 17
23. Thus, both the Authorities below have held the signature of the assessee on the alleged VDIS declaration to be that of the assessee, merely on their own respective conclusions, i.e., comparison of such signature with those on other documents. Now, this is wholly unsustainable in law. The correct course was to refer the matter to a hand writing expert, rather than taking recourse to mere assumptions and surmises, as has been done by both the Authorities below. At this juncture, the remand report dated 02.10.2006, furnished by the AO before the ld. CIT(A) in the first round needs be adverted to. Therein, the AO requested that:
".......................................The evidence may be referred to the competent authority for verification of hand-writing". However, this request was not acceded too. It was also not so done in the second round. Now, substituting one's own judgment where the situation demands the opinion of an expert in the concerned field is not countenanced in law. A signature appearing to the AO to be 'resembling" others does not "Prove", in the absence of a studied expert opinion of a hand writing expert, the first stated signature to be that of one appending the others. Meanwhile, the CIT(A)'s opinion that the assessee's signature on the VDIS declaration is "exactly the same" as that on her statement before the ITO, is no substitute for a hand-writing expert's report.
24. However, be that as it may, since I have cancelled the reopening of the assessment on the ground of it having been initiated merely on the bare I.T.A No. 260/Agra/2018 18 information received from the CBDT, without any application of mind by the AO, any decision on this issue becomes otiose, as it, or anything else, no-longer survives. The assessee has filed an application, as noted, for additional evidence, seeking to bring on record, the report of a hand-writing expert. In view of my preceding observations, this application is infructuous.
25. In the result, the appeal is allowed.
Order pronounced in the open court on 11/09/2018.
Sd/-
(A.D. JAIN) JUDICIAL MEMBER *AKV* Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT ASSISTANT REGISTRAR