Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Rajiv Agarwal, Vijay Laxmi Agarwal Versus Assistant Commissioner of Income Tax & Another

Reopening of assessment - failure to consider the objections filed by the Assessees - Held that:- Revenue's contention that the AO is not required to apply his mind to the facts in relation to the escapement of income at the stage of considering objections is wholly without merit. Whilst, the AO is not expected to finally decide whether income of an assessee has escaped assessment at the stage of considering the objections he, nonetheless, has to consider the facts presented in support of the ob .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Dated:- 16-3-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr S. Krishnan, Advocate For the Respondents : Mr Dileep Shivpuri, Senior Standing Counsel and Mr Sanjay Kumar, Junior Standing Counsel ORDER 1. These petitions have been filed by the Assessees, inter alia, impugning separate notices dated 31st March, 2015 issued under Section 148 of the Income Tax Act (hereinafter the Act ) for Assessment Year (AY) 2008-09 and further proceedings initiated pursuant thereto. At the req .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d Vijay Laxmi Agarwal - Petitioner in W.P.(C) No.9661/2015) were at the material time - during the Financial Year 2007-08 - directors of a company, namely, M/s Scan Holdings (P) Ltd (hereafter SHPL ). The said Assessees filed their return of income for the AY 2008-09 disclosing income from salaries from SHPL as well as income under the heads 'Income from House Property' and 'Income from Other Sources'. 2.2 Apparently, there is some dispute between the company M/s SHPL and its ers .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ccountants Act, 1949 and his name was removed/suspended from the rolls of ICAI for a period of three months. The appeal against the said order was rejected by the Appellate Authority by an order dated 24th September, 2011. 2.3 It is contended on behalf of the Assessees that in view of disputes/animosity, Shri Naveen Chaudhary has made repeated complaints to various authorities in order to harass the Assessees; and the complaint made to the Income Tax Authorities is also one such complaint. 2.4 O .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessment. In response to the aforesaid request, the AO by separate letters dated 27th April 2015 provided the reasons as requested by the Assessees. In the case of Rajeev Agarwal, the Assessee/Petitioner in W.P. (C) No.9659/2015 the reasons recorded reads as under: "Income Tax Return Jar the A.Y 2008-09 was filed by the assessee on 29.07.2008 declaring income of ₹ 14,64,950/-. In this case, the information in the form of complaint of tax evasion dated 10.12.2014 pertaining to Sh. Raj .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

6 lakhs to its directors. It has been used to tooi to avoid tax and transferred the money to its directors without payment of tax. The exact amount of each director is still to be quantified. therefore, it is clear that un quantified income in this case but quantified income of ₹ 20,00,000/- (in the case of both the Directors of the company) has escaped assessment because the assessee has not disclosed fully and truly all material facts in the return of income and the same could not be ver .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e I. T. Act, 1961, therefore, the reason are put up before Addl. CIT, Range-22, New Delhi for necessary approval for issuing notice u/s 148 of the I. T. Act, 1961." 2.5 The reasons recorded in the case of Vijay Laxmi Agarwal, Petitioner/Assessee in W.P.(C) No.9661/2015, but for the figure of her returned income, is identical to the reasons as recorded in the case of Rajiv Agarwal. 2.6 The Assessees, by separate letters dated 15th May, 2015, filed their objections to the reasons recorded for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h his assessments were sought to be re-opened was factually erroneous. Insofar as Vijay Laxmi Agarwal is concerned, she stated that during the Financial Year 2007-08, a Keyman Insurance Policy (Policy No.122936684) was assigned to her against a consideration of ₹ 2,08,000/- (Rupees Two Lakhs and Eight Thousand) and the surrender value of the said policy at the material time was ₹ 2,07,236/- (Rupees Two Lakhs Seven Thousand Two Hundred and Thirty Six). Therefore, no income could be sa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d. They also sought a copy of the complaint dated 10th December, 2014 referred to by the AO in the reasons recorded by him. 2.8 The objections raised by both the Assessees were rejected by the AO by separate orders dated 11th September, 2015 which are more or less similarly worded. The AO held that the sufficiency or the correctness of the material for re-opening could not be questioned. The request of the Assessees to be provided a copy of the complaint on the basis of which the assessments wer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessments if there was omission or failure on the part of the Assessees. 3. Mr S. Krishnan, learned counsel appearing for the Assessees/Petitioners has contended that the entire exercise of initiating re-assessment proceedings is based on a mere suspicion and the AO had no material to form a reason to believe that income of the Assessees had escaped assessment. He contended that a mere complaint by a person could not possibly constitute tangible material on the basis of which the AO could for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e to Bawa Abhai Singh v. Deputy Commissioner of Income Tax (2002) 253 ITR 86 wherein it was observed that "reason to believe" postulates a foundation based on information and a belief based on reasons. In so far as "information" is concerned, a Division Bench of this Court held in L.R. Gupta v. Union of India : [1992] 194 ITR 32 (Delhi) that: The expression 'information' must be something more than a mere rumour or a gossip or a hunch. 17. Of course, this was in the c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

k Brokers Pvt. Ltd. (2007) 291 ITR 500 (SC) and contended that at the stage of issuing a notice under Section 148, the AO was not required to apply its mind to determine whether the income of the Assessee had escaped assessment but was only required to form a prima facie view. He contended that the question whether any taxable income arose in the hands of the Assessee which had escaped assessment would be finally determined during the re-assessment proceedings initiated by the AO. 5. We have hea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rwal is concerned, it is not disputed that no policy was assigned and no such transaction as recorded by the AO in the reasons to believe that the income had escaped assessment was entered into by Rajeev Agarwal with SHPL. In the circumstances, the fundamental premise on which the assessment of Rajeev Agarwal was sought to be re-opened is bereft of any factual foundation. We note that Rajeev Agarwal had specifically pointed out the said fact in his objections against the reasons recorded by the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessee for a consideration of ₹ 2,08,000/- and the surrender value of the said policy as on 23rd October, 2007 was ₹ 2,07,236/- and thus, there was no question of any income arising or accruing to the Assessee on account of that transaction. A perusal of the AO's order dated 11thSeptember,2015 rejecting the objections raised by the Assessees indicate that the AO had simply ignored the facts pointed out and simply proceeded on the basis that those were not required to be consider .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

scaped assessment and this is quite different from merely having a reason to suspect. The Supreme Court in the case of Income Tax Officer, Calcutta & Ors. v. Lakhmani Mewal Das (1976) 103 ITR 437 (SC) had explained the same in the following words: The powers of the Income-tax Officer to reopen assessment though wide are not plenary. The words of the statute are reason to believe and not reason to suspect . The reopening of the assessment after the lapse of many years is a serious matter. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

inality about orders made in judicial and quasi- judicial proceedings. It is, therefore, essential that before such action is taken the requirements of the law should be satisfied. 10. In the present case, it is doubtful whether the AO even had any ground to suspect that income had escaped assessment. Apparently, apart from an unsubstantiated complaint there was no material which could possibly lead the AO to suspect that income had escaped assessment. This is quite apparent from the fact that t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that it has. 11. Secondly, the AO s belief that income of an Assessee has escaped assessment must be based on tangible material. It has been explained in a number of decisions that there must be a 'close nexus' or live link between tangible material and the reason to believe that income has escaped assessment. It follows that the material on the basis of which re-assessment proceedings can be initiated must be credible material which could lead to such belief. Clearly, an unsubstantiate .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

elief. On the contrary, when it is pointed out to the AO that SHPL had not assigned any policy to Rajeev Agarwal, the said fact was completely overlooked. Similarly, in the case of Vijay Laxmi Agarwal, the AO failed to take into account the fact that the Assessee had paid a sum of ₹ 2,08,000/-, which was more than surrender value of the policy, for assignment of the policy in her favour. This too was completely ignored by the AO. 12. Thirdly, the procedure for providing reasons to believe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version