TaxTMI 
TaxTMI 
2018 (8) TMI 594
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appellant craves leave to amend or alter all or any of the aforesaid grounds 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to accept his role in financing a sum of Rs. 1 crore in the statement recorded with 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... firm had applied to the Joint Director, DGFT, Mumbai for obtaining advance licence under DEEC scheme on the 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 identif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....DCIT T20171 78 taxmann.com 58 (Gujarat). * Kishore Kumar Vs CIT (62 taxmann.com 215. 234 Taxman 771). * Kishore Kumar Vs CIT (52 taxmann.com 449) Madras High Court 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 reco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ompanied by the statement of the assessee recorded by the DRI. It was also appreciated by the CIT(A) that the assessee in the statements which were mentioned above nowhere admitted that he had financed Rs. 1 Crore in the FY 2002-03. In the statements 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of mind at all by the aforesaid two senior officers, who were duty bound to have looked in to carefully the reasons recorded by the AO and seen the history behind the assessment which was proposed to be reopened by the AO. When a superior authority is given power 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 s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al situation that the assessee must have earned a profit on the alleged amount of Rs. 1,00,00,000. The Ld. AR submitted that CIT(A) has rightly deleted the addition on the ground that since the amount of Rs. 1,00,00,000/- has not been financed by the assessee there is no 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt recorded by DRI. On going through the statements recorded by the DRI, it is seen that DRI has recorded statement of the appellant on following dates:- 05-04-2008, 06-04-2008, 09-04-2008, 01-05-2008 and 04-05-2009 On going through the statement of dated 05-04-2008, it is seen that appellant in this statement at page-3 has stated that 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.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... link between the reasons and evidence available with the assessing officer. (Signature Hotels Pvt. Ltd. vs. Income Tax Officer & Others 338 ITR 51 (Del.). In the instant case, the belief formed by the assessing officer was not bonafide and it was based on vague, irrelevant and non-specific information. From the statements received from DRI, it was not discernible that appellant had admitted to have 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on statement, he has described the events of his arrest and statements recorded by the DRI and had stated that he was made to write that he had financed Rs. 1 crore to Mr. Shree Bhagwan Tulsian for his import business. After his release on 16-04-2008, the appellant was directed by the court to give daily attendance before DRI, Mumbai from 21-04-2008 for next 20 working days. On 01-05-2008, DRI again recorded appellant's statement wherein 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dings, the AR of the appellant appeared before me on 01.09.2011 and filed written submission and relied upon the statements made by the appellant before assessing officer and his retraction before ACMM Mumbai on 17.04.2008. The AR also filed copy of affidavit of Mr. Shree Bhagwan Tulsian, his retraction before ACMM Mumbai and prescription papers related to his medical treatment. The AR of the appellant has also relied upon the affidavit filed by the appellant on 06.09.2010 before 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,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ish that financing transaction of Rs.l crore had taken place between them. There is no iota of evidence which can support that transaction of Rs.l crore took place between appellant and Mr. Shree Bhagwan Tulsian. I am therefore of the considered view that no addition can be made on the basis of mere statements without having any corroborative evidence to support such statements which have been subsequently retracted before the Court. Hence, the addition made by the assessing officer on 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....