TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 594
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....ounds of appeal." 3. The assessee is a general commission agent and has shown income under the heads Salary (remuneration from Pvt. Ltd. co.), business, capital gains and other sources. Original return of income was filed on 5/9/2003 declaring an income of Rs. 1,73,980/-. Subsequently, information was received from Directorate of Revenue Intelligence, Mumbai vide letter dated 10.06.2009 intimating that assessee had financed a sum of Rs. 1 crores in cash in the imports made by one Mr. Shri Bhagwan Tulsian R/o of Faridabad in the name of a non-existent firm M/s Lord Empire International. A perusal of financial statements i.e. capital account and balance sheet of the assessee as on 31.03.2002 and 31.03.2003 as per Assessing Officer revealed that no such investment of Rs. 1 crore was recorded and therefore, the Assessing Officer on the basis of this information initiated proceedings u/s 147 of the I.T Act and issued notice u/s 148 of the I.T Act on 29/3/2010. In response to the said notice, assessee vide letter dated 16.04.2010 filed reply and stated that return filed on 05.09.2003 may be treated as having been filed in response to notice u/s 148 of the Act. Notice u/s 143(2) and 142(....
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....ith the permission of the hon'ble Court in Mumbai Central Jail n the presence of the Jailor wherein he confirmed of having financing a sum of Rs. 1 crore. It is important to note that he never retracted from his this statement which was recorded before the Jailor and never denied of having not signed or given before the competent authorities. Hence the role of the assessee in having financed the sum of Rs. 1 crore cannot be denied and the above amount is added to the income of the assessee on the following grounds:- (i) The case filed by the Directorate of Revenue Intelligence (MZU), Mumbai before the Court is still continuing and there is no final verdict (as per the information provided by the Directorate vide its letter dated 22.12.2010 (supra); (ii) The assessee has himself admitted in the presence of the jailor of having conducted the act and has not filed any rebuttal to his final statement before any court; (iii) Mr. Shri Bhagwan Tulsian, as per the annexure provided by the Directorate of Revenue Intelligence (MZU), Mumbai, has never retracted from his statement to the effect that the assessee had financed Rupees One Crore for the imports in the Shri Bhagwan Tulsian to....
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....basis of fake, fabricated and mis-declared documents. Shri Bhagwan Tulsian stated that scrap imports were financed by Shri Sajjan Kumar Goel and Shri. Rajesh Dua. Shri Sajjan Kumar Goel, in his statements recorded on 05.04.2008 and 06.04.2008 admitted that he was a broker and used to arrange finance for private business for which he would get 0.6% to 1% brokerage mostly in cash and sometimes by cheques. He gave a loan of Rs. 1 cr in cash in 2002 to Shri Bhagwan Tulsian for import activities of M/s Lord Empire International. Shri Tulsian had also taken him to Mumbai for this purpose. Shri Sajjan Kumar Goel filed a retraction letter dated 17.04.2008 of the statements made on 5th & 6th April, 2008 which was received by the CMM Court on 2nd May, 2008. However, the Ld. DR pointed out that the statements of Shri Sajjan Kumar Goel dated 5th & 6th April. 2008 were in his own handwriting. Moreover, statements dated 09.04.2008 & 04.05.2009 have not been retracted by him. Shri Bhagwat Singh, in his statement recorded on 26.04.2008, stated that he knew Shri Sajjan Kumar Goel and identified his photograph. He confirmed that he had met Shri Sajjan Kumar Goel several times at various hotels in Mu....
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.... confirmed. * Bhaqirath Aqqarwal Vs CIT (31 taxmann.com 274, 215 Taxman 229, 351 ITR 143) * Smt Dayawanti Vs CIT f20161 75 taxmann.com 308 (Delhi)/[2017] 245 Taxman 293 (Delhi)/r20171 390 ITR 496 (Delhi)/r20161 290 CTR 361 (Delhi). * M/s Pebble Investment and Finance Ltd Vs ITO (2017-TIQL-238- SC-IT). * M/s Pebble Investment and Finance Ltd Vs ITO (2017-TIOL-188-HC- MUM-IT) Bombay High Court confirmed. * Rai Hans Towers (P.) Ltd. Vs CIT (56 taxmann.com 67. 230 Taxman 567. 373 ITR 9). * PCIT Vs Avinash Kumar Setia T20171 81 taxmann.com 476 (Delhi). * Order of CESTAT dated 08.02.2013 in the case of Sajjan Kumar Goel and Ors. Vs. Commissioner of Customs. 7. The Ld. AR submitted that the assessee filed return of income declaring total income of Rs. 1,73,980/-. The same was assessed u/s 143(1) on 27.10.2003 at an income of Rs. 1,73,980/-. Thereafter, assessment in the case of the assessee was re-opened u/s 147 vide notice dtd. 29.3.2010 by recording reasons on the basis of information received from Directorate of Revenue Intelligence vide letter F.No. DRI/BZU/F/7/06/5087, Mumbai alleging that assessee in his statement recorded by them admitted that in financial year 2002-....
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....ts recorded on 05.04.2008 and again on 06.04.2008 the assessee only mentioned of meeting Mr. Tulsian in the year 2002 and thus can be seen that from the statements. There is no concrete proof of the date of either the meeting or the so called arrangement of funds. Further statements recorded on 09.04.2008, 1/5/2008 and 04.5.2009 nowhere mentioned that money was arranged by the assessee in F.Y. 2002-03. Thus, the CIT(A) rightly held that the Assessing Officer had substituted the word FY 2002-03 in place of year 2002. This substitution was done without any basis or information in his possession. The CIT(A) also held that the reasons recorded must show that Assessing Officer had prima facie reasons to believe that income for the FY 2002-03 had in fact escaped assessment and there is no material with the Assessing Officer to justify his prima facie belief that Income of Rs. 1 Crore pertaining to F.Y. 2002-03 has escaped assessment. Thus, the CIT (A) held that formation of the belief by the Assessing Officer that income to the extent of Rs. 1,00,00,000/- has escaped assessment was ab initio-void. The CIT(A) while quashing the notice issued u/s 148 after passing a well speaking order rem....
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....by the legislature, to grant sanction to do an act by an authority below him, then that power needs to be exercised with due care and circumspection and after due application of mind. Mechanical manner of giving sanction like in this case have not been approved by the Hon'ble Supreme Court in a similar case in Chhugamal Rajpal vs. S. P. Chaliha & Ors. - 79 ITR 603 (SC) and Hon'ble High Court of Madhya Pradesh in Arjun Singh vs Asstt. Director of Income Tax (M.P.) reported in (2000) 246 ITR 363 (MP). Thus, we are not satisfied that AO had any material before him which satisfies the requirements of section 147. Therefore, he could not have issued notice u/s 148. Further, the report submitted by him u/s 151 does not mention any reason and does not mention which facts were not disclosed by the assessee. We are also of the opinion that the commissioner has mechanically accorded permission. If only he had read the report and seen the history of the original assessment, he would not have granted permission. The safeguard against reopening u/s 151 of the Act has been done by both the superior authorities very lightly and as held by the Hon'ble Supreme court in Chugamal Rajpal (supra), the ....
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....o question of making any addition of interest in this regard. Thus, the addition of Rs. 1,00,00,000/- is unsustainable. 12. We have heard both the parties and perused all the relevant records. The CIT(A) has given a finding regarding Section 147 proceedings that the proceedings u/s 147 were unlawful as the Assessing Officer neither attached the letter of DRI dated 10/6/2009 nor any statement of the assessee to support the reasons were recorded by the Assessing Officer. The CIT(A) held as under: "5.3. Decision I have considered the reasons recorded by AO which are placed at page 14 of the paper book filed by the appellant, observation of the assessing officer, statement recorded by the DRI and submission filed by the appellant during the course of appellate proceedings. It is seen that on the basis of information received from DRI assessing officer recorded reasons for reopening the assessment for A.Y. 2003-04 which are as under:- "Reasons for the belief that income has escaped assessment In this case return declaring income of Rs. 1,73,980/- was filed on 05.09.2003. This was processed U/S 143(1) on 27.10.2003 at the returned amount. The asses see has shown income under the....
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....t he met Mr. Shree Bhagwan Tulsian in the year 2002 at Hotel Surya Sofitel, Ashram Chowk, Delhi. In this meeting, Mr. Shree Bhagwan Tulsian told him that he was engaged in the business of import and he was in need of money for his import business. He asked Mr. Shree Bhagwan Tulsian as how much money he needs for his business. Mr. Shree Bhagwan Tulsian told him that he needs about Rs.l crore. The appellant assured him of arranging money within next 15-20 days which was arranged in next 20 days. In the statement recorded on 06-04-2008 at page-1, again appellant stated that he met Mr. Shree Bhagwan Tulsian in 2002 and gave him Rs.l crore in 2002. On going through the contents of the statements which have been mentioned above, it is seen that appellant has nowhere admitted that he had financed Rs. 1 crore to Mr. Shree Bhagwan Tulsian in the F.Y. 2002-03. In the statement recorded on 05-04-2008 and again on 06-04-2008 he has mentioned that he met Mr. Shree Bhagwan Tulsian in year 2002 and after his meeting money was arranged within next 20 days of the said meeting. In these statements, there is no concrete date of either the meeting or the arrangement of funds that it was given in t....
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....arranged Rs.l crore to Mr. Shree Bhagwan Tulsian in the F.Y. 2002-03. In the statement the appellant has only stated that in the year 2002 he arranged Rs. 1 crore for Mr. Shree Bhagwan Tulsian. The mentioning of year 2002 cannot lead to presume that it was F.Y. 2002-03. Therefore, the reasons recorded by the assessing officer were based on vague and irrelevant information and there was no live link between the material in possession of the assessing officer and formation of belief. In view of the above, the notice issued for initiating the proceedings for F.Y. 2002-03 relevant to the A.Y. 2003-04 was issued on the basis of nonexistent information and therefore the notice issued u/s 148 is held to be I invalid for A.Y. 2003-04 and same is quashed." Thus, the reasons recorded by the Assessing Officer was only based on the statement recorded by DRI stating that the assessee has financed a sum of Rs. 1 Crore in the imports made by one Shri Bhagwan Tulsian which was later on retracted by both Shri Bhagwan Tulsian as well as by the assessee. The Assessing Officer while recording the reasons stated that the financial statements of the assessee reveals that no investment of the above am....
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....herein the appellant admitted that he had given Rs. 1 crore to Mr. Shree Bhagwan Tulsian out of which he had received Rs. 80 lacs in 2007. On the basis of above information, assessing officer issued a s*how cause notice to the appellant as to why Rs.l crore should not be added as his undisclosed income to the returned income for A.Y. 2003-04. The appellant submitted his reply vide his letter dated 03-09-2010 and denied of having financed any amount to Mr. Shree Bhagwan Tulsian. The appellant also filed an affidavit dated 06-09-2010 before the assessing officer wherein he again denied of having made any financial dealing with Mr. Shree Bhagwan Tulsian. On 18-10-2010 statement of the appellant was recorded by the assessing officer and in this statement the appellant in reply to question no. 2 had stated that he was engaged in arranging of finance business on brokerage and not carried out any other business from 01-04-2002 to till date. His attention was drawn to his statement recorded by the DRI in April 2008 at Mumbai wherein he had admitted of financing Rs.l crore to Mr. Shree Bhagwan Tulsian for import in the name of non-existence firm M/s Lord Empire International. In reply to ....
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....efore assessing officer and his statements recorded by the assessing officer on 18/10/2010 In the assessment, the assessing officer did not give credence to the affidavit and application of Mr. Shree Bhagwan Tulsian and made addition in the case of appellant. The contents of affidavit cannot be brushed aside unless same is controverted. Therefore, keeping the principle of natural justice in mind, the assessing officer was directed to examine Mr. Shree Bhagwan Tulsiar by issuing summons u/s 131 of the I.T. Act and submit his report before undersigned. In response to the above directions, assessing officer examined Mr. Shree Bhagwan Tulsian on 20.09.2011 and his statements was recorded. In the statements, in reply to question no. 9 Mr. Shree Bhagwan Tulsian has stated that he had never entered into any business or financial transaction with Sh. Sajjan Kumar Goel (appellant). In reply to question no. 10, he has stated that he never had any fianancial dealing or business with Sh. Sajjan Kumar Goel. Vide question no. 11, a pointed question was asked to Mr. Shree Bhagwan Tulsian whether he had taken Rs. 1 crore or any other amount during F.Y. 2002-03. In reply to the said question he h....
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....the basis of information and statements received from the DRI cannot survive and the same is deleted." We find that the CIT(A) held that there is no iota of findings that can support that any transaction to place between the two parties and nothing was found by the Assessing Officer, apart from the allegation in the entire proceedings that the assessee earned and paid such amount to such person. From the perusal of the Assessment order, it can be seen that the entire theory of financing of Rs. l crore to Shri Bhagwan Tulsian is based on the statements made before DRI on 05.04.2008 and 06.04.2008 which was subsequently retracted by the assessee. There is no independent evidence in the form of documents or other party statements which can establish that assessee had a meeting with Shri Bhagwan Tulsian in hotel Surya Sofitel or had financed Rs. 1 crore in cash to Shri Bhagwan Tulsian. The entire assessment is based on the statements of Shri Bhagwan Tulsian and the statement of the assessee which were retracted by them before the Court. Though the Assessing Officer independently recorded statements on oath of the assessee during the course of assessment proceedings and also of Shri Bh....