TMI Blog2016 (5) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be based only on tangible material to justify the conclusion that there is escapement of income. The Assessing Officer recorded wrong facts in the reasons as mentioned above and, thus, has not applied his mind before forming belief of escapement of income. The information dated March 5, 2007, was not a pointer and did not indicate the escapement of income. The Assessing Officer did not examine the information which was nothing and did not speak of escapement of income before recording his own satisfaction of escaped income initiating the reassessment proceedings. Thus, the Assessing Officer acted only on the basis of suspicion and the same could not be said that it was based on belief that income charged to tax has escaped assessment. - Decided in favour of assessee - I. T. A. No. 316/Chd/2012, I. T. A. No. 317/Chd/2012, I. T. A. No. 318/Chd/2012 - - - Dated:- 19-1-2016 - Bhavnesh Saini (Judicial Member) And Rano Jain (Accountant Member) For the Petitioner : Sudhir Sehgal For the Respondent : Manjit Singh ORDER Bhavnesh Saini (Judicial Member) 1. All the appeals by different assessees are directed against the different orders of the learned Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings, the assessee submitted that the Assessing Officer made the wrong addition and has not accepted the genuine gift which is confirmed by the donor. Copy of the affidavit was filed and the source of the same was also explained. The additional evidences were forwarded to the Assessing Officer for his comments in which the Assessing Officer objected to the admission of the same and also explained that there was valid reason for reopening of the assessment under section 148 of the Income-tax Act. 6. The learned Commissioner of Income-tax (Appeals), considering the merit, record, submissions of the assessee and remand report, noted that the information was received from the Assessing Officer, Central Circle, Ludhiana, about the gift received by the assessee from Shri Sunil Duggal and Shri Gaurav Duggal and after recording the reasons, assessment was reopened under section 148 of the Income-tax Act and addition was made in the assessment order. The learned Commissioner of Income-tax (Appeals) did not accept the contention of the assessee that there was no application of mind or that reasons were recorded in mechanical manner. The contention of the assessee that there were no incr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paper book pages 3 to 8 are the affidavit of gift and affidavit of the donor with his details of Income-tax return filed along with the cash-flow statement and paper book page 9 is the assessment order dated November 15, 2007, in the case of the donor, Shri Sunil Duggal, in which no adverse view have been taken either against the donor or the donee. Paper book page 12 is a letter of the Deputy Commissioner of Income-tax, Central Circle, Ludhiana, under section 131 for appearance of the assessee. Paper book page 13 is replies of the assessee authorising Shri Gautam Jain to appear before the Deputy Commissioner of Income-tax, Central Circle, Ludhiana, in the group case and others. He has submitted that the Assessing Officer received information in this case for reopening of the assessment from the Deputy Commissioner of Income-tax, Central Circle V, Ludhiana, dated March 5, 2007, in the group cases in which nothing is mentioned if there is any escapement of income for the purpose of reopening of the assessment. He has submitted that in this case, several other assessees have been mentioned but no actions have been taken against any of them by the Assessing Officer except the three a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC), the decision of the hon'ble Supreme Court in the case of Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC), decision of the Supreme Court in the case of Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC), the decision of the Supreme Court in the case of ITO v. Puroshottam Das Bangur [1997] 224 ITR 362 (SC), the decision of the Delhi High Court in the case of Rajat Export Import India Pvt. Ltd. v. ITO [2012] 341 ITR 135 (Delhi), the decision of the Supreme Court in the case of A. L. A. Firm v. CIT [1991] 189 ITR 285 (SC) and the decision of the Supreme Court in the case of ITO v. Saradbhai M. Lakhani [2000] 243 ITR 1 (SC). The learned Departmental represent ative also submitted that the addition on the merits have been rightly made which is supported by several decisions of the hon'ble Punjab and Haryana High Court. 8. We have considered the rival submissions. The validity of the reassessment proceedings under section 148 of the Act shall have to be decided on the basis of the reasons recorded by the Assessing Officer under section 148 of the Act. In this case, the Assessing Officer recorded the reasons for initiating proceedings under section 148 of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a total income of ₹ 75,533. This fact is wholly incorrect because the assessee filed acknowledgment of filing of the return of income and computation of income in the paper book and, according to the same, return of income is filed by assessee on August 1, 2005, declaring total income of ₹ 1,46,513. The copy of the reasons filed in the paper book at page 19 as reproduced above, find mention the signature of the Assessing Officer thereon. However, the Assessing Officer, while reproducing the reasons in the assessment order, has noted the different reasons which did not match with the copy of the reasons filed in the paper book. The Assessing Officer in paragraph 2.4 of the assessment order has mentioned this reason explaining therein that while recording the reasons under section 148, returned income and the date of filing of the return were inadvertently mentioned as ₹ 75,533 and May 19, 2005, instead of ₹ 1,46,513 and August 1, 2005, respectively. The observations of the Assessing Officer in the assessment order clearly prove that the Assessing Officer has mentioned wrong facts and wrong information in the reasons recorded for reopening of the assessment. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was examined regarding the gifts in which he has confirmed having already issued the confirmation in support of the aforesaid gifts received from the donor, Shri Duggal. In this information, it was stated that since there is no relationship of the donor and the donee and there was no specific occasion for making gift, therefore, the case is hit by the judgment of the hon'ble Punjab and Haryana High Court in the case of Lall Chand Kalra (supra). This letter was containing the confirmations of the donees. It would, therefore, clearly reveal that in this information which is the sole basis of reopening of assessment, no information was provided by the Assessing Officer of the donors about any bogus gift given by the donors to the donee. No further information was provided to prima facie explain any escapement of income in the cases of the donor or the donees. The reference is made of the statement of Shri Gautam Jain recorded by the Assessing Officer of the donor, copy of which is placed on record in which Shri Gautam Jain have himself and for other assessees has confirmed the receipt of the gift and he has explained that Shri Sunil Duggal or Shri Gaurav Duggal are not related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of gifts have been examined by the Assessing Officer of the donor and no adverse inference have been drawn of giving any bogus gift for consideration. The Assessing Officer of the donor accepted the declared income even in the ex parte assessment order. It would, therefore, clearly prove on record that despite making specific enquiry with regard to the genuineness of the gift even in the case of the donor and examining one of the donees, Shri Gautam Jain, no adverse inference was drawn against the transaction of the gifts. Therefore, there was no material available with the Assessing Officer of the donors to give any information to the Assessing Officer of the assessee to make out a case of escapement of income in the case of the assessee. This fact is supported by the notice given by the Assessing Officer of the donor to the assessee under section 131 of the Act (paper book page 12) and reply of the assessee and others (paper book page 13), etc. It may also be noted here that except the present three assessees, the names of other donees have been mentioned in the letter dated March 5, 2007, issued by the Deputy Commissioner of Income-tax, CC-V, Ludhiana, which is the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing but an accommodation entry and the assessee was the beneficiary. The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid-up capital of ₹ 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September, 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to be quashed. 14. The hon'ble Delhi High Court in the case of CIT v. Atul Kumar Swami [2014] 362 ITR 693 (Delhi) held as under (headnote) : A valid reopening of assessment has to be based only on tangible material to justify the conclusion that there is escapement of income. Held accordingly, dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee received any bogus gift. The reasons did not satisfy the requirements of section 147 of the Income-tax Act. There is no reference to any document or statement except reference to the judgment of the High Court. The same could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income in the case of the assessee. There is nothing in the reasons recorded to show any tangible material had come into possession of the Assessing Officer subsequent to the issue of intimation. A valid reopening of assessment has to be based only on tangible material to justify the conclusion that there is escapement of income. The Assessing Officer recorded wrong facts in the reasons as mentioned above and, thus, has not applied his mind before forming belief of escapement of income. The information dated March 5, 2007, was not a pointer and did not indicate the escapement of income. 18. The Assessing Officer did not examine the information which was nothing and did not speak of escapement of income before recording his own satisfaction of escaped income initiating the reassessment proceedings. Thus, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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