TaxTMI 
TaxTMI 
2018 (11) TMI 478
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....h learned CIT(A) ought to have held that the initiation of proceedings u/s 148 of the Income Tax Act was without jurisdiction. 1.2. That the learned CIT(A) has failed to comprehend that, the learned ACIT had no "tangible material" at the time of initiation of proceedings and the alleged "information" which was stated to have been allegedly received from the Addl. CIT, too was without any supporting material and was not available with him, as such, reassessment proceedings initiated without any tangible material and upheld by the learned CIT(A) is unsustainable in law. 1.3. That, the finding of the learned CIT(A) that the A.O. has received 'authentic' information from another Statutory Authority about recovery of Pen Drive from Sh. Chetan Gupta during raid conducted by Punjab Vigilance Bureau, Ludhiana, was insufficient to enable the learned A.O. to form his reason to believe, as the learned A.O. was obliged in law to have the "material" and not a mere report before forming his reason to believe that the income of the assessee had escaped assessment. 1.4. That the learned CIT(A) has failed to appreciate the distinction between mere allegation, information and the ma....
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....That in any case and without prejudice, no reliance could have been placed on the statement of Shri Chetan Gupta since the said statement was allegedly made before Police authorities and had further never been confronted to the assessee and that even otherwise in the absence of any statement made by Shri Chetan Gupta that, the alleged credits appearing in his Pen Drive in any manner belongs to the assessee, there was no justification either on facts or in law to have sustained any such addition. 2.5. That the learned CIT(A) has failed to appreciate that, the burden which was on the revenue has not been discharged and there was not any material to establish that, what was credited in the account of Shri Chetan Gupta was the investment made by the assessee. The mere fact, there were certain credits in some abbreviated form does not lead to a conclusion that the assessee had made any such investment. 3. That the findings recorded by the CIT(A) in his order in para 5.4.7 that, he does not consider the case laws relied upon by the AR have any relevance to the facts of the case, are wholly misconceived and in disregard of the fact that, in identical facts and in identical circumsta....
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.... tangible material could not form the basis of the reopening of the assessment as such, the learned CIT(A) has erred in holding that the learned A.O. was justified both on facts and in law in having initiated the reassessment proceedings. 1.5. That the learned CIT(A) has failed to comprehend that, the alleged information was not available with the A.O. and had it been so available and was allegedly received before initiating the proceeding, the same would have found from his record, which was never found to be existing on the record of A.O. and in-fact, despite assessee's repeated request, no such material was either supplied to him or was even confronted. 2. That without prejudice to the aforesaid and otherwise too, the learned CIT(A) has failed to appreciate that, the addition made of Rs. 1,84,39,002/- was unsustainable. The assumption of the learned CIT(A) that the assessee had a clear business link and association between Sh. Chetan Gupta is fallacious, untenable and in any case any such link or association could not be held to be any ground at all to hold that, the assessee had made an investment with Shri Chetan Gupta, even if for the sake of an argument it is accep....
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....were based on no material. He thus ought to have held that the addition was made on the basis of suspicion and without any material and hence such an addition was liable to have been deleted by holding that addition made without any material was unsustainable in law. 4. That the findings recorded by the CIT(A) in his order in para 4.6.7 that, he does not consider the case laws relied upon by the AR have any relevance to the facts of the case, are wholly misconceived and in disregard of the fact that, in identical facts and in identical circumstances, it has consistently been held that, there were no credits made in the Pen Drive of Shri Chetan Gupta by the assessee's father, his mother and Shri Amrinder Singh, assessee's uncle and that of Shri Raninder Singh. Thus there was heavy burden on the CIT(A) to bring on record the facts which can distinguish the judgments relied by the assessee. 5. That the learned CIT(A) has grossly erred in sustaining the disallowance made by the learned AO of Rs. 30,000/- being the deduction allowable to the assessee on income from salary under the provisions of section 16(1) of the Income Tax Act, 1961. It is therefore prayed that, it ....
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....f Shri Chetan Gupta since the said statement was allegedly made before Police authorities and had further never been confronted to the assessee and that even otherwise in the absence any statement made by Shri Chetan Gupta that, the alleged credits appearing in his Pen Drive in any manner belongs to the assessee, there was no justification either on facts or in law to have sustained any such addition. 2.5. That the learned CIT(A) has failed to appreciate that, the burden which was on the revenue has not been discharged and there was not any material to establish that, what was credited in the account of Shri Chetan Gupta was the investment made by the assessee. The mere fact, there were certain credits in some abbreviated form does not lead to a conclusion that the assessee had made any such investment. 3. That the learned CIT(A) ought to have deleted the addition made by the learned AO in respect of the alleged low withdrawals. He ought to have held that the findings of the learned AO that the appellant's withdrawals were insufficient and low warranting an addition to be made under section 69C of the Act were erroneous both on fact and in law and were based on no materia....
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....n made of Rs. 10,46,032/- was totally unsustainable. 2.2. That the learned CIT(A) has failed to appreciate that, the burden was on the learned AO to establish that the assessee had made an investment and that there were credits in the books of the assessee, and without discharging such a burden, no addition was sustainable u/s 69 of the Income Tax Act. 3. The main appeal in this matter is for A.Y. 2001-02, therefore, we are taking the facts of the said year. In this case, notice u/s 148 of the Income Tax Act, 1961 was issued on 25/3/2008 with prior approval of CIT (C), New Delhi, after recording reasons to the satisfaction of the Assessing Officer. Information was received from the Investigation Wing that a search and seizure operation was conducted by Punjab vigilance Bureau at Ludhiana pertaining to the Ludhiana City Centre Scam. During this operation, the pen drive was recovered from Shri Chetan Gupta. The Assessing Officer observed that the study of the data in the said computer showed that Sh. Chetan Gupta was maintaining computerized accounts of about 148 odd people whose money and wealth he was administering. One of the names contained in this was that of assessee, as p....
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....n had been received from the ACIT, CC-2, New Delhi that a search and seizure operation was conducted by the Punjab Vigilance Bureau pertaining to Ludhiana City Centre Scam. The Ld. AR further submitted that this observation of the Assessing Officer is not supported by any documents. Thus the submission is that proceedings had been initiated not on the basis of any material but on the basis of mere alleged information. The Ld. AR submits that under section 147 of the Act, since the reasons to believe are to be of the Assessing Officer and not of any other person other than him, no valid proceedings could have been initiated by him without there being in existence of any sum tangible material for a formation of Assessing Officer's reason to believe that the income of the assessee has escaped assessment. The Ld. AR further submitted that even the addition has been made by the Assessing Officer not on the basis of any material but merely on the basis of the alleged information. The Ld. AR further reiterated that even till the assessment had been completed no such alleged material has seen the light of the day. 6. The Ld. AR submitted that it is thus apparent that the Assessing Officer....
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....gs could be held sustainable in law: i. ITO vs. Lakhmani Mewal Das (1976) 103 ITR 437 (SC) at 448 ii. Ganga Saran and Sons P. Ltd. Vs. ITO [1981] 130 ITR 1(SC) iii. Ashok Kumar Sen Vs ITO 132 ITR 707 (Del.) 7. The Ld. AR further submitted that it is well settled rule of law that existence of the tangible material with the Assessing Officer for the formation of the reasons to believe is pre-condition. In the instant case, in fact till March, 2015 when the Tribunal had disposed off the assessee's father's appeal, no material was found available other than the mere alleged information unsupported by any document or supportive evidence. The Hon'ble High Court of Delhi in the case of CIT vs. Supreme Polypropolene Pvt. Ltd. (ITA 266/2011 dated 30.10.2012) had struck down the notice issued to the assessee u/s 148 of the Income Tax Act on the ground that, there was no material on record with the Assessing Officer when he initiated the proceedings u/s 147 of the Act. In the judgment, it has been observed as under: "This court notices from the extract of the "reasons to believe" reproduced in the earlier part of the order that the A.O. adverted to a list, on the basis of which he wa....
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.... which the reasons were recorded." 8. The Ld. AR further submitted that apart from the issue pertaining to the initiation of proceedings u/s 148 of the Act, the main issue involved in all the four appeals pertains to the addition made of the following sums: Assessment Year Addition made 2001-2002 Rs. 11,53,200/- 2005-2006 Rs. 1,84,39,002/- 2006-2007 Rs. 1,73,61,108/- 2007-2008 Rs. 12,97,079/- The aforesaid sums have been added to the income returned by the assessee by invoking the provisions of section 69 of the Act and on the ground that the assessee has made investment of the aforesaid sum as is reflected in a pen drive found from the possession of one Shri. Chetan Gupta by Punjab Vigilance Bureau. The Ld. AR submitted that it has been alleged that said pen drive reflects that Shri. Chetan Gupta had received the aforesaid sums from the assessee. Apart from the assessee, it had been alleged that there are 147 more account holders. In other words, on the basis of a pen drive allegedly found from Shri. Chetan Gupta by SPE of Punjab Police, it had been alleged that since the name of the assessee appears as 'Jagat c/o Biba Ji' the amounts reflected therein are the deposi....
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....e CIT (A) in the impugned order in para 5.4.7 shows that he has assumed as if the additions had been deleted by the Tribunal and Hon'ble High Court in the cases of Sh. Raninder Singh, Maharaja Amrinder Singh and Smt. Heminder Kumari etc. on the ground that as there was no business link/ nexus between Sh. Chetan Gupta and the respective assessee having been brought on record, the additions are being deleted, whereas fact of the matter is that it has been held that the additions made per se are without any basis or material and the revenue has failed to even establish that any investment was made by any of the assessee as was allegedly reflected in the said pen drive. He in view thereof i.e. on his assumptions held that there is a difference between the facts of the case of the assessee and the facts in the cases of those four assessee's in whose cases, the additions have been deleted. The Ld. AR submitted with respect that the CIT (A) has not at all appreciated the facts of the instant case which are absolutely identical to the facts of the aforesaid four cases. There are no distinguishing facts. In fact, he has completely overlooked that there is no iota of any evidence that th....
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.... (All) (Mag) 10. The Ld. AR further submitted that it has likewise been held by the Hon'ble Orissa High Court in the case of Aurobindo Sanitary vs. CIT, 276 ITR 549, that for applying section 69 of the Act, the Assessing Officer must first come to a finding that the assessee made investments which were not recorded in the books of account and thereafter call for an explanation from the assessee about the nature and source of the investments. It is thus implicit that the Assessing Officer has to firstly bring evidence on record to establish that an investment has been made by the assessee. It is only upon having established that investment having been made by the assessee, the question arises to calling upon the assessee to explain the nature and source of such investment. The Ld. AR submitted that in the instant case, no such material has been brought on record to establish that the assessee has made an investment which is sought to be added. Further, the Hon'ble Gujarat High Court in its judgment in the case of Ushakant N. Patel vs. CIT 282 ITR 553, have held that section 69 opens with the words 'where in the financial year immediately preceding the assessment year, the assessee ....
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.... AR submitted that the CIT (A) went into an error in sustaining the addition which is a complete misdirection in law. The Ld. AR further submits that the CIT (A) has misconstrued the provisions of sections 68 and 69 of the Income tax Act. The findings recorded therein are result of complete misdirection in law. His finding that there are certain entries reflected in the alleged account of the assessee shows that he i.e. assessee had made investment. However, he ignores that there is no material to establish that it was this assessee who had made such an alleged investment. Thus statutorily the law enjoins by deeming provision and not to be taxed in the hands where appears to be credit and not a deemed income of the person in whose name credits are shown or reflected. Thus the fact, it has been alleged, there are credits in the accounts of the assessee as per the pen drive, but the same does not establish that it was this assessee who has made such investment. The finding of the CIT (A) that addition u/s 68 of the Act is made always because of the concerned assessee having failed to substantiate the credits. It shows the legislative intend to treat the credit of the person where the....
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....,50,000/- 273- 279 2002-03 Rs. 34,83,206 1-7 20012002 Rs. 8,12,000 - 2001-02 Rs. 76,45,000 - 2004-05 Rs. 280- 283 2003-2004 Rs. 23,06,00 8- 15 NA - NA - 1,02,66,159/- 0/- 2005-06 Rs. 2,10,01,194 /- 284- 290 2004-05 Rs. 44,56,000 16- 21 NA - - 2005-06 Rs. 2,33,86,194 22- 29 11. The Ld. AR further submitted that the CIT (A) in his order has incorrectly stated that there exists a clear link both social and business/financial between Sh. Chetan Gupta and assessee. The Ld. AR submitted that there is absolutely no link much less close link either socially or financially. The CIT (A) erred in observing in para 5.4.8 that the assessee is having a regular business relationship with Sh. Chetan Gupta, since the assessee was in control and had utilized the Mercedes and Pajero vehicles of Chetan Gupta's concerns. The Ld. AR further submitted that the assessee had taken on lease the two vehicles from M/s Trans Air and M/s Nikunj Agro and not from Shri. Chetan Gupta wherein Sh Chetan Gupta was either a shareholder or a partner. The mere fact that the assessee had take....
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....he names of business concerns which were run by Shri Chetan Gupta and his family. This is evident from the order of the Tribunal dated 21.06.2013 in the case of Shri. Chetan Gupta [2013] 144 ITD 344 (Delhi - Trib.). The Ld. AR submitted that before any addition could have been made at least it had to be identified that Jagat c/o Biba Ji is the assessee. The assumptions & presumptions have no role to play for making any addition which is well known to be an arbitrary and vindictive act. Thus even the allegation that there were credits in the alleged pen drive of Shri Chetan Gupta does not establishes that there was any credit from the assessee i.e. Shri Jagat Singh who is a sitting member legislative assembly of Rajasthan. 12. The Ld. AR further submitted that wherever there are credit appearing in the books of an assessee, the onus is on him to establish whether the credit are genuine by establishing the identity and creditworthiness of the creditor as is envisaged u/s 68 of the Act. In fact it is for Shri. Chetan Gupta in whose books of accounts there were alleged credits, to have established by cogent evidence that the credits appearing in his books of accounts are genuine both ....
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.... is evidently is a result of perversity. The CIT (A) has failed to comprehend that burden rests on the Assessing Officer and not on the assessee to establish that the assessee had made an investment. The burden shifts on the assessee only when it has been established by him with positive evidence that assessee has made investment to explain the nature and sources thereof. The Ld. AR submitted that in the instant case, had the assessee made any such investment as is alleged, obviously there would have been disinvestment too, for which no evidence has been brought on record which shows that assessee had received any sum on making such disinvestment. Thus, the Ld. AR submitted that the burden lay upon the revenue to establish that the amount reflected in the pen drive of Shri Chetan Gupta was the investment made by the assessee. The Ld. AR submitted that such a burden has not been discharged and the addition has been sustained in an arbitrary manner with no logic. 14. The Ld. AR submitted that the CIT (A) has further failed to appreciate that section 68 of the Act is applicable only where there are credits in the books of the assessee and not elsewhere. In fact the Hon'ble Bombay....
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....be sufficient both for decision to carry out a reassessment as well to justify or sustain the fresh assessment. However, there may well be instances where the former said reopening may pass muster in the light of some facts, but those facts by themselves may turn out to be insufficient to preserve the assessment itself. Once sections 147 and 148 are resorted to, the Assessing Officer must first discharge the burden of showing that income has escaped assessment. It is only thereafter that the assessee has to provide all the answers. We find no reason why the initial burden of proof should not rest on the Assessing Officer even where the assessment has gone through under section 143(3) of the Act. The Tribunal has, therefore, arrived at the correct conclusion. (Emphasis supplied) 16. The Ld. AR submitted that in the instant case revenue has never brought any adverse statement against the assessee of Shri Chetan Gupta much less having produced him for assessee's examination so that assessee could have established in rebuttal the allegation of the revenue that such investment has been made by the assessee which has been the sum added in the hands of the assessee. The Ld. AR submitted....
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....tandard deduction by holding that the salary received from Rajasthan Vidhan Sabha is taxable as income from other sources is unsustainable in law. ITA No. 3039/Del/2015 AY 2007-2008 19. As regards to Ground No. 6, the Ld. AR submitted that assessee owned two properties, first property is a farm house situated at Dera Mandi, New Delhi and second property is Gobind Mension, Bharatpur. It is submitted that farm house situated at Dera Mandi, New Delhi is self occupied property, and second property at Bharatpur is in dilapidated condition, and not liavable as such. ALV of such property is NIL. The Ld. AR submitted Assessing Officer treated the Bharatpur property as self acquired property and computed the ALV of the Delhi property and brought to tax a sum of Rs. 7,44,055/-. However, the Ld. AR submitted that CIT (A) negated the approach of the Assessing Officer to the extent of treatment by the Assessing Officer of Bharatpur property as self acquired property, by holding that Assessing Officer cannot impose the Bharatpur property as self acquired property, and upheld the contention of the assessee that Delhi property is self acquired property. However, in respect of the Bharatpur prop....
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....er Kumari has in turn followed in the order dated 05.03.2015 in the case of Shri K. Natwar Singh. Therefore, the basis for relief in all the decisions is the finding of Hon'ble High Court which is on the presumption of certain facts as correct as stated by Shri Chetan Gupta in his statement dated 26.03.2009 before the Assessing Officer wherein he declined any association with the Pendrive and also denied the fact that he was managing the funds of 148 odd people. The said statement is on page 1 & 2 of the paper book. It was primarily for this reason that the Hon'ble High Court granted relief. The following observation of Hon'ble High Court are reproduced (page 14 of the paper book) "..Neither the report of S.P. Ludiana is available to the Assessing Officer much less to be assessee nor any statement was recorded by ADIT (Investigation) from Shri Chetan Gupta to corroborate that any cash was paid by the assessee to Shri Chetan Gupta. On the contrary, Shri Chetan Gupta on his deposition clearly denied having received any cash. Shri Chetan Gupta also denied having given any statement admitting receipt of cash. Therefore, in absence of any evidence of record, be addition was not sustaina....
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....aming of the order of assessment was never refuted by the Revenue/Ld. DR at any point of time. From the perusal of the record it can be seen that the Assessing Officer merely stated that his reasons to believe are based on the basis of the information received from the ADIT (inv.). These facts are apparent from the remand report dated 29.10.2013 for assessment year 2001-2002 and 2007-2008 and 25.11.2014 for assessment year 2005- 2006 furnished by the Assessing Officer before the CIT (A). The remand report stated that information had been received from the ACIT, CC-2, New Delhi that a search and seizure operation was conducted by the Punjab Vigilance Bureau pertaining to Ludhiana City Centre Scam. This observation of the Assessing Officer is not supported by any documents. Thus the proceedings had been initiated not on the basis of any material but on the basis of mere alleged information. As per Section 147 of the Act, the Assessing Officer should have reasons to believe for initiating the proceedings in support of material found as regard to the escapement of the income. But in the present case addition was made by the Assessing Officer on the basis of the information only and no ....
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....013 order dated 05.03.2015). Further it can be seen that the Tribunal in case of Shri Raninder Singh vs. ITO (ITA No. 2965/DEL/2009 A.Y. 2001-02 order dated 29.08.2009) held as under: "7. As regards merits of the addition, there is no evidence in the possession of the revenue authorities to prove that the assessee ever paid cash to Shri Chetan Gupta except the so called report of ADIT (Investigation), Ludhiana, which in turn is based on the report of Superintendent of Police, Ludhiana. However, neither the report of SP, Ludhiana is available to the Assessing Officer much less to the assessee nor any statement was recorded by ADIT (Investigation) from Sh. Chetan Gupta to corroborate that any cash was paid by the assessee to Sh. Chetan Gupta. On the contrary Sh. Chetan Gupta on his deposition before the Assessing Officer clearly denied having received any cash. Shri Chetan Gupta also denied having given any statement admitting receipt of cash. Therefore, in absence of any evidence on record, the addition was not sustainable. It is strange to note that the Assessing Officer having recorded the statement of Sh. Chetan Gupta chosen to remain silent. This proves that in the statement o....