TaxTMI 
TaxTMI 
2018 (11) TMI 478
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....rovisions of section 147 of the Income Tax Act and as such 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....
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....hetan Gupta, having not been provided, no addition was sustainable in the hands of the assessee. 2.4. 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 ....
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....iate the distinction between mere allegation, information and the material. He has failed to appreciate that the information by itself, which is not in the nature of 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 o....
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....e findings of the learned Assessing Officer 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 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 t....
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....to rebut the allegation that, there was credits in the books of Shri Chetan Gupta, having not been provided, no addition was sustainable in the hands of the assessee. 2.4. 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 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 respe....
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....ta. 2.1 The learned CIT(A) has failed to appreciate the distinction between unexplained credits falling u/s 68 and unexplained investment u/s 69 of the Income Tax Act. He has failed to appreciate that the learned A.O. made Rs. 10,46,032/- u/s 69 of the Act, which had absolutely no application and thus the addition 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....
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....nt year 2001-2002 and 2007-2008 and 25.11.2014 for assessment year 2005- 2006 furnished by the Assessing Officer before the CIT (A). For which the Ld. AR pointed out page 81-82 of the paper book for 2001 - 2002 and 53-55 for assessment year 2005-2006 paper book - I. The Ld. AR submitted that, 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. 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 h....
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....ven the initiation of the reassessment proceedings u/s 148 of the Act for the AYs 2001- 2002, 2005-2006 & 2006-2007 deserves to be held as having not validly initiated. The Ld. AR supported his submissions from the following judicial pronouncements wherein it has been held that in the absence of any tangible material, no valid proceedings 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 ....
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....een properly recorded by relying on a list which is not found in the assessment record. The prime requirement for the validity of a notice issued under section 148 of the Income Tax Act is that the reasons recorded should have a live link or nexus with the material on record. This Court on an examination of the assessment record did not find therein the list on the basis of 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 tha....
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..... who has disposed off the aforesaid appeals, the CIT(A) has not followed the order of his colleagues namely CIT (A) - 20 and CIT (A) - 26 respectively, on very flimsy grounds as has been stated by him in the order impugned in para 5.4.7 at page 70 for the AY 2001-2002 which otherwise too is based on misreading of the said order of the CIT (A). The Ld. AR submitted that the findings recorded by the 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 ....
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....eported in 241 ITR 363. (d) Rajpal Singh Ram Avtar vs. ITO 39 TTJ544 (e) Ghanshyam Dass HasaNand 28 Taxman 219 (Mag) (Mum) (f) Ashok Kumar Rastogi vs. CIT 100 CTR 204 (All) (g) Neena Syal vs. ITO 70 ITD 62 (Chd) (h) ACIT vs. Lakshmi Printing Co. 46 TTJ 177 (Chd) (i) Jai Sharda Rice Mills vs. ITO 36 ITD 254 (Asr) G) ITO vs. Har Preet Industries 59 ITD 346 (Chd) (k) Ramnik Lai & Bros vs. ITO 81 Taxman 26 (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....
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....he assessee. It is really surprising that on what basis the Assessing Officer proceeded to assume from the expression Jagat C/o BIBA Ji to be the name of the assessee or the accounts pertain to the assessee or that he has made such investment. At this stage it is necessary to submit that if there are credits in the books of the assessee then it is for that assessee to explain the nature and source of the credit as is provided u/s 68 of the Act. In such circumstances, the Ld. 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 ....
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....ong when he held that there is a difference between the case of the assessee and four others in whose cases, the additions has been deleted which additions have been made in identical manner and for similar reasons. The status of the additions made and deleted are tabulated below: Status of additions made in the cases of K. Natwar Singh Heminder Kumari Amrinder Singh Ranender Singh A.Y Page of PB III A.Y Pag e of PB III AY Pag e AY Pag e 2003-04 Rs. 30,50,000/- 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 ....
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....mother Smt. Heminder Kumari, the addition sustained are entirely unsustainable and deserves to be deleted. In fact in the cases of Shri K Natwar Singh, the amount is reflected under the name NS, whereas in the case Heminder Kumari it is reflected in the ledger account as per pen drive under the name of Kiran/BIBA and allegedly for the assessee in the name of 'Jagat c/o Biba Ji'. In fact this itself shows that there are no credit entry at all in the name of assessee Shri Jagat Singh. The Ld. AR submits that the Assessing Officer seriously believes Jagat and Kiran are the 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 ....
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.... done but grossly erred in sustaining the addition on flimsy grounds i.e. the assessee has since both social and business/financial relationship. Even assuming that it was so, then how does the same can be made any basis to assume, conclude and even suspect that it was the assessee who had made investment. The Ld. AR submitted that not only it is arbitrary but is hilarious. Thus, the Ld. AR prays that in view of the orders of the Tribunal in the cases of Sh. Raninder Singh, Maharaja Amrinder Singh, Smt. Heminder Kumari and Shri K. Natwar Singh, the addition sustained by the CIT (A) 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 rec....
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....Shri Kishan Chand had the consequence of not proving that the said person was tilling the land on their behalf. This failure cannot inexorably lead to the conclusion that no agricultural income had been generated by the assessee. Such an inference can only be drawn from the statement of Shri Anand Prakash to the effect that the transactions between him and the assessees were bogus. Therefore, it was mandatory for the Revenue to produce Shri Anand Prakash for crossexamination by the assessee on their specific demand in this regard. The facts on which the decision to invoke section 147/148 is predicated may in some cases 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 b....
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....imed. Such claim was disallowed by holding that there is no employer employee relationship and hence salary from Rajasthan Vidhan Sabha for member of the house of Rs. 2,60,262/- was treated as income from other sources. The Ld. AR submitted that such disallowance is wholly misplaced as salary received from Rajasthan Vidhan Sabha is taxable under the head salary. The Ld. AR submitted that if the theory of CIT (A) is accepted, then the salary received by the judges of the Hon'ble High Court and Hon'ble Supreme Court would also be not entitled for the claim of deduction u/s 16/17 of the Act. The Ld. AR therefore submitted that disallowance of standard 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 ....
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....that the entire case of the assessee rests on the decision of the Hon'ble Delhi High Court in the case of S. Ravinder Singh dated 28.02.2011. The same decision has been followed in the case of Smt. Heminder Kumari vide order dated 29.08.2014 of the Tribunal, Delhi Benches as stated in para 16 of the order "The ld. DR in the course of hearing before us has not pointed out or shown any fact or material, so as to enable us, to come to a different opinion. In view of the above and the order of the coordinate bench and the order of the High Court, we are not inclined to interfere with the reasoned order of ld. CIT(A)." The said decision of Smt. Heminder 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 thi....
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....x Act, whereas for the AY 2007-2008, the assessment was made on the basis of return of income filed u/s 139(1) of the Income Tax Act. In the present appeals filed by the assessee, the assessee is challenging the initiation of the reassessment proceedings u/s 148 of the Act as the same is initiated without any material for forming a reasons to believe that the income of the assessee has escaped assessment as well as on the merits of the additions made. The proceedings were initiated by invoking the provisions of Section 147 of the Act. The contentions of the Ld. AR that the material found by the Revenue was never supplied to the assessee till the framing 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 ....
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....on'ble High Court which is on the basis 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. It was primarily for this reason that the Hon'ble High Court granted relief. In fact, this supports the case of the assessee that the assessee's case is identical with the facts of the cases decided by the tribunal in case of Heminder Kumari and Shri K. Natwar Singh (ITA No. 4212, 4213, 4211, 4210/DEL/2013 order dated 29.08.2014 and ITA No. 3290, 3258, 4168/DEL/2013 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 ....