Income Tax Appellate Tribunal - Amritsar
Shri Jashandeep Singh Sidhu, Bathinda vs Income Tax Officer Ward-1(1), Bathinda on 9 September, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR.
BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER
AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER
I.T.A. No.345/Asr/2023
Assessment Year: 2010-11
Jashandeep Singh Sidhu Patti Vs. ITO, Ward-1, (1),
Jani Ke, VPO Bhairupa The. Bathinda.
Rampura Phul Bathinda.
[PAN:CBPPS9297F] (Respondent)
(Appellant)
Appellant by Sh. Sudhir Sehgal, Adv.
Respondent by Sh. Ravinder Mittal, Sr. DR
Date of Hearing 03.07.2024
Date of Pronouncement 09.09.2024
ORDER
Per: Udayan Das Gupta, JM This appeal is preferred by the assessee against the order of the Ld. CIT (A) NFAC, dated 26/09/2023, passed u/s 250 of the Act 61, which has emanated from the order of the AO ward 1(3), Bhatinda, dated 27/12/2017, passed u/s 144 of the Act 61.
2. Condonation of delay four days: It is pointed out by the registry that this appeal is belatedly filed by four days. The assessee has filed an explanation regarding the delay stating that the last date of filing of the appeal was 25/11/2023, I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 2 and the appeal has been received by the office of the tribunal vide post, on 29th November, 2023, is delayed due to postal delivery from Bhatinda, and since the delay was not intentional, the same may please be condoned and the appeal may be admitted to be heard on merits. The Ld. DR, has no objection to the condonation of the delay. It is seen that the tribunal appeal fees are paid on 21.11.2023, which is within stipulated time of sixty days, and considering the explanation of the assessee the postal delay of four days is condoned and the appeal is admitted to be heard on merits.
3. The grounds of appeal of the assessee as per form 36, are as follows:
"1. The Ld. CIT(A), NFAC has erred on facts and law in confirming the action of the AO vide order u/s 144 of the Act Dt. 27.12.2017, vide order u/s 250 r.w.s. 254 of the Act Dt. 26.09.2023,in pursuance of order of the Hon'ble Amritsar Bench of the ITAT Dt. 20.09.2022 in ITA No. 310/Asr/2019 in which the grounds of - Appeal No. 4&5 challenging the validity of proceedings u/s 147/148 of the Act has been set aside with the directions to decide to adjudicate the same, despite the fact that the CIT(A), NFAC has been well informed vide letter e- filed on 22.09.2023 that the Amritsar Bench of the Ho n'ble ITAT has further set aside the grounds of appeal no. 6 and 7 also vide order dated 20.09.2023 to adjudicate the issue afresh the CIT(A) disposed off the matter vide order 250 of the Act I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 3 Dt.26.09.2023 which is in complete violation of principles of natural justice.
2. The Ld. CIT(A), NFAC has erred on facts and law in confirming the action of the AO of initiating invalid proceedings u/s 147/148 of the Act& issue of invalid notice u/s 148 of the Act Dt. 30.03.2017, vide order u/s 250 r.w.s. 254 of the Act Dt. 26.09.2023, which has been challenged alongwith the assessment order u/s 144 of the Act Dt. 27.12.2017 in the appeal, as the proceedings were initiated solely on the basis of information regarding cash deposits in the bank account by the assessee, in the AIR, which has been treated by the AO as escaped income without making any independent inquiry/ application of mind and corroboration of the information.
3. The Ld. CIT(A), NFAC has erred on facts and law in confirming the action of the AO of initiating invalid proceedings u/s 147/148 of the Act& issue of invalid notice u/s 148 of the Act Dt. 30.03.2017, vide order u/s 250 r.w.s. 254 of the Act Dt. 26.09.2023, which has been challenged alongwith the assessment order u/s 144 of the Act Dt. 27.12.2017 in the appeal, without rebutting the orders of the Amritsar Bench/Delhi Bench of the Hon'ble ITAT, cited before the CIT(A) NFAC, and the decision of the Hon'ble P&H High Court.
4. The Ld. CIT(A), NFAC has erred on facts and law in confirming the action of the AO of initiating invalid proceedings u/s 147/148 of the Act& issue of invalid notice u/s I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 4 148 of the Act Dt. 30.03.2017, vide order u/s 250 r.w.s. 254 of the Act Dt. 26.09.2023, which has been challenged alongwith the assessment order u/s 144 of the Act Dt. 27.12.2017 in the appeal, while relying on the various judgments/ case laws without providing an opportunity to the assessee to prove that all the case laws relied upon by the CIT(A) NFAC are distinguishable on facts.
5. That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal."
4. The brief facts are that , an appeal against the assessment order dated 27 th December, 2017, was carried in appeal before the Ld. CIT (A), Bhatinda, who dismissed the appeal vide order dated 13/02/2019, which was agitated by the assessee before this Tribunal, and this Tribunal, vide order dated 20/09/2022, (in ITA No : 310/ASR/2019), has set aside the issue to the file of the first appellate authority , on the matter of initiation of proceedings u/s 147 / 148 of the Act 61, on the basis of AIR information , a ground which was taken for the first time before the Tribunal, and the Hon'ble Bench, set aside the matter to CIT (A) for adjudication on the same.
5. The Ld. CIT (A) after considering the written submissions of the assessee, along with supporting case laws relied upon, has dismissed the appeal of the assessee by observing as follows:
I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 5 "3.26.It is pertinent to highlight that the new information received was not attributable on a rumour or gossip or some disreputable source or a nameless, unidentified one. After preliminary examination, many information is not required to be transmitted and many are deemed important enough to be transmitted to the Assessing Officer concerned for utilization in assessment/re- assessment/rectification/revision proceedings in an appropriate manner and in suitable cases. A large number of information is forwarded and on application of mind, re-
assessment proceedings may or may not be initiated. In this case, the Assessing Officer has taken note of the AIR information and has deemed it fit to do so. The concerned authority has performed his duty of collecting information having a tax ramification and forwarding the fit ones to the Assessing Officer. The latter has performed his statutory duty under the Act of examining the same and initiating remedial action in deserving cases. This is the statutory scheme engrafted in the Act. Merely because the information was received as AIR information, the same would be insufficient to repel the initiation of re-assessment proceedings, since the same was material, new, relevant and pertained to the appellant indicating an escapement of income.
3.27. In light of the facts and the legal position delineated above, it is apparent that the initiation of re-assessment proceedings by the Assessing Officer was not whimsical or capricious. He had new, credible, tangible and relevant material I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 6 before him, emanating from record which formed the bedrock of his action and cannot possibly be characterized as extraneous. This, therefore, is not a case of jurisdictional error or of jurisdictional excess. Consequentially the action of the Assessing Officer does not require any interference and is, accordingly, upheld.
3.28 The direction of Hon'ble ITAT is accordingly dealt with as above and the action of the Assessing Officer is upheld."
6. Now the assessee is in appeal before the Tribunal on the grounds contained in the memorandum of appeal, but the same relates to only one single issue challenging the validity of reassessment notice issued u/s 148 of the Act 61, recording wrong or incorrect facts, solely on the basis of AIR information.
7. The factual aspect of the matter is that the assessee has not filed his return of income in normal course, and the AO on the basis of information obtained from AIR data base, that the assessee has deposited cash in ICICI bank account, Bhatinda, amounting to Rs. 40,17,500/-, during FY 2009-10, proceeded to initiate re assessment proceedings u/s 148, and finally after analyzing the entries of cash deposits and withdrawals, contained in the alleged ICICI bank account, completed the assessment proceedings on a total income of Rs. 15,17,500/-, considering the PEAK deposit in the said account as the total income.
I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 7
8. The Ld. CIT (A) NFAC, in his order (page - 3, paragraph- 3) has reproduced the recorded reasons u/s 148 of the Act 61, which reads as follows:
"As per record of this office the assessee Sh. Jashandeep Singh Sidhu, Patti Jani Ke, VPO. Bhai Rupa, Rampura Phul has not filed his return of income for the A.Y. 2010-11. As per information available on the system of the department, the assessee has made following transactions: -
1. Deposit cash of Rs. 1000000/- or more in a saving Bank Account.
2. CIB-184 Share transaction of Rs. 38,28,000/- or more.
The assessee was required to disclose source of income of cash deposit Rs. 40,17,500/- in his bank A/c maintained with ICICI Bank, but the assessee has not declared such transactions to the department. Moreover, and enquiry letter No. 4640 dated 24.03.2017 was issued through registered post and Letter dated 08.02.2017 duly served upon assessee on 18.02.2017. but assessee has not reply to till date. Hence such investment/cash deposit of Rs. 40,17,500/- has escaped the income/assessment as evident from the record available.
In view of the above, I have reasons to believe that an amount of Rs. 40,17,500/- which was chargeable to tax in the case of the assessee for the assessment year 2010-11 has escaped income or any other income which comes to the notice subsequently has escaped assessment within the meaning of section 147 of the LT. Act, 1961"
I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 8
9. Now the main contention of the assessee is that, the reassessment proceedings issued by the AO is legally not sustainable because the same has been issued on the basis of recording of incorrect facts or wrong facts which is clearly visible from the recorded reasons.
10. The Ld. AR of the assessee, argued that the reasons recorded, speaks of share transactions CIB-184, of an amount of Rs.38,28,000/- and cash deposits of Rs.10,00,000/- or more in SB account, but in the assessment order there are no discussion of any share transactions and no additions in respect of share transactions, has been made, which proves that the recorded reasons, itself is incorrect. He further submitted that in the instant case the AO has acted on the basis of reasons to SUSPECT and had no reasons to believe, and that too on the basis of in sufficient, vague and unsubstantiated reasons. He further pointed out from the first paragraph of the assessment order , that the AO has been very candid enough to admit that on the basis of information flowing from the AIR data base, it was presumed that the income has escaped assessment within the meaning of section 147, and further pointed out to page No - 3 of the assessment order to point out that the alleged ICICI bank statement was also not before the AO, at the time of recording of reasons ( because admittedly the same has only been obtained in course of assessment proceedings ) which proves beyond doubt that there has been I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 9 no independent application of mind by the AO at the time of recording of reasons , and the proceedings has been initiated only on the basis of AIR information, without any tangible material on record and in the instant case the vital link between the tangible material and formation of belief is missing . In support of his contention he relied on the case of Meenakshi Overseas 395 ITR 677 ( Delhi HC ) and also on Delhi ITAT in the case of Mahavir Prasad vs ITO in ITA No 924/Delhi/2015 order dated 03/10/2017.
11. The Ld. AR has also filed a brief synopsis, where he has distinguished the facts of the case laws relied upon by the Ld. CIT (A) in the appellate order and argued that the same are not applicable to the assessee on facts, the summary is reproduced for easy reference:
Ld. CIT (A) has relied upon certain judgement which are being distinguished as per the following submissions:
1. Rajesh Stock broker, (P) LTD: This judgement has been discussed and distinguished by the Chandigarh Bench of the ITA in the case of Shiva Exports, (ITA Nos.7 and 8/CHD/2008), copy of judgement is enclosed at page no 87 to page no 107 of the Judgement set.
2. The Ld. CITA has relied upon the judgement in the case of Phool Chand Bajrang Lal and others (203 ITR 456) at page 15 & 16 of the order, it is submitted that the judgements are not applicable, because there is a reasons to believe on the basis of I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 10 some valid information and also none of these cases were subjected to 148 on the basis of AIR information and hence such cases are not applicable.
3. The various decisions cited by Ld. CIT(A)at pages 17 to 21 are on account of re-assessment proceedings, initiated on the basis of some tangible information received from Investigation Wing, regarding, bogus share capital, received from shell Companies, material seized from the third parties, information regarding bogus purchases. In our case, none of such facts is applicable at all. Since, there is wrong "reasons to believe" and information based on AIR and no tangible material at all was there. It is also submitted that the AIR Information was itself vague and incorrect and Assessing Officer without applying his mind had initiated the re-
assessment proceedings and finally, at the time of framing assessment, no such cognizance was taken of the share transactions. The judgement of the Jurisdiction High Court, in the, case of Paramjit Kaur, as cited 'supra' for vague reasons and "reasons to suspect" is clearly applicable to the facts and circumstances of the case."
11.1 The Ld. AR concluded his arguments by praying that the reassessment proceedings issued are on wrong and incorrect facts as well as on the basis of reasons to suspect, which is clearly evident from the reasons recorded and as such I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 11 the same may please be quashed, and he relied on the following judgments for support:
"1. Sh. Gaurav Joshi Vs. ITO Ward-1 (5), in ITA No.274/ASR/2018 order dated 16.01.2019 (Amritsar Bench).
2. M/s. Fortune Metaliks Limited Vs. DCIT in ITA No. 1090/CHD/2019 order dated 12.01.2021
3. Smt. Monika Rani Vs. ITO in ITA No. 582/CHD/2019 order dated 28.02.2020(Chd- Trib.).
4. CIT Vs. Smt. Paramjit Kaur as reported in [2008] 168 taxman 39 (Punjab & Haryana).
5. Mahavir Parsad Vs. ITO in ITA No. 924/Del/2015 order dated 03.10.2017."
12. The Ld. DR relied on the order of the Ld. CIT (A), and retreated the arguments contained in the appellate order and further argued that in this case the assessee is a non-filer, and as such there is nothing wrong in initiating reassessment proceedings on the basis of AIR information and prayed for sustaining the appellate order.
13. We have heard the rival submissions and considered all the materials on record and the reasons recorded by the AO for initiating the proceedings vide issue of notice u/s 148 of the Act 61. In our opinion the AO has initiated the proceedings on the basis of information available in the AIR database, without any application of mind and without any verification in respect of the share transactions alleged to I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 12 have been carried out by the assessee amounting to Rs. 38,28,000/- CIB-184, which in fact does not exist at all, and the AO has also not made any discussion of the said transaction in the body of the assessment order, nor does he makes any enquiry during the course of the assessment proceedings. 13.1 Similarly, in the matter of cash deposits in bank account, it was observed by the AO in the order itself , that the transactions of deposits and withdrawal in the said bank account are business transactions and peak credit has been considered as income and it is clear from the assessment order itself that the bank account statement was not before the AO when the reasons for reopening were recorded, because the same was obtained from bank during assessment proceedings, and as such there was no possibility on the part of the AO to have applied his mind to such materials on record, at the time of recording of reasons. In other words, both the grounds on which re -assessment notices issued, were not found to exist the figures.
14. On this issue we would like to refer to the decision of the Hon'ble Jurisdictional High court in the case of CIT vs Atlas Cycle Industries 180 ITR 319, where it has been held as under:
"Adverting to the question referred regarding the reassessment proceedings, we are of the view that the Tribunal was right in cancelling the reassessment as both the grounds on which I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 13 reassessment notice was issued were not found to exist, and the moment such is the position, the Income-tax Officer does not get the jurisdiction to make a reassessment. This view of ours finds support from the Supreme Court decisions in CIT v. A. Raman and Co. [1968] 67 ITR 11 and Bankipur Club Ltd. v. CIT [1971] 82 ITR 831. Similar view has been taken by the Rajasthan High Court in Addl. CIT v. Ganeshilal Lal Chand [1985] 154 ITR 274. On behalf of the Revenue, CIT v. Ahmedabad Manufacturing and Calico Printing Co. Ltd. [1977] 106 ITR 159, a decision of the Gujarat High Court was cited. On a consideration of the matter, we are of the view that in view of the aforesaid Supreme Court decisions, the view taken by the Rajasthan High Court is correct and the view taken by the Gujarat High Court is not, correct. Accordingly, we dissent from the view taken by the Gujarat High Court and in view of the decisions of the Supreme Court and Rajasthan High Court, we hold that the Income-tax Officer did not have the jurisdiction to proceed with the reassessment, the moment he found the two grounds mentioned in the reassessment notice incorrect or non-existent. Accordingly, we answer the referred question in favour of the assessee, in the affirmative, that the Tribunal was right in cancelling the reassessment."
15. In the instant case we are also of the opinion that the reasons recorded by the AO does not factually exist, and as such respectfully following the observation of I.T.A. No.345/Asr/2023 Assessment Year: 2010-11 14 the Hon'ble Jurisdictional High court in the case of Atlas Cycle Industries (supra), we are of the view that the reassessment framed in the instant case deserves to be quashed, because the same is not legally justified.
16. In the result, the appeal of the assessee bearing ITA No. 345/Asr/2023 is allowed.
Order pronounced in the open court on 09.09.2024 Sd/- Sd/-
(Dr. M. L. Meena) (UDAYAN DAS GUPTA)
Accountant Member Judicial Member
AKV
Copy of the order forwarded to:
(1)The Appellant
(2) The Respondent
(3) The CIT
(4) The CIT (Appeals)
(5) The DR, I.T.A.T.
True Copy
By order