2011-VIL-730-ITAT-DEL

Income Tax Appellate Tribunal DELHI

ITA No. 1522/Del/10, ITA No. 2727/Del/10

Date: 17.03.2011

M/s DEV DUTT PRASAD, RAJ KUMAR GARG

Vs

INCOME-TAX OFFICER, NEW DELHI

For Petitioner : V. K. Sabharwal
For Respondent : K. Ravi Ram Chandran

BENCH

R. P. Tolani (Judicial Member) And K. D. Ranjan (Accountant Member)

JUDGMENT

R. P. Tolani, J.M.

These are cross appeals, one by the assessee challenging validity of proceedings u/s 148 and the other by the revenue challenging the deletion of additions by the CIT(A). Respective grounds are as under:

In ITA no. 1522/Del/2010 the assessee has raised following grounds:

"1. That on the facts and circumstances of the case, the proceedings initiated u/s 147 by the Assessing Officer and upheld by the Ld. CIT(A) is against the law and to the facts of the case.

2. That the Assessing Officer was not justified and had erred in law for not passing any speaking orders on the objection raised by the assessee with regard to initiation of proceedings u/s 147 of the act.

In ITA no. 2727/Del/10, Revenue has raised following effective ground:

"In the facts and the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,01,00,000/- made u/s 69A of the I.T. Act."

3. Relevant observations of CIT(A) regarding validity of proceedings u/s 147/148 are as under:

"4.3. There is no merit in the contention of the appellant that the assessing officer failed to pass a speaking order on the objections raised by the appellant in respect of the 147 proceedings. It is noted that he appellant filed a letter dated 13- 12-2008 with the subject "objection for opening of the case of M/s Dev Dutt Parshad Raj Kumar for reassessment u/s 147/148 of the Income Tax Act for the Asst. year 2001-02". In the body of the said letter, the reason provided by the assessing officer for taking recourse to 147 proceedings is acknowledged and by way of objection, transaction with Brij Mohan Gupta is denied. It is also noted that the so called 'objection' to the reassessment proceedings was filed only towards the close of the assessment proceedings and after the issue of the show cause notice. Further, the denial of transactions with Brij Mohan Gupta constitute submissions made during the course of reassessment proceedings and cannot be said to be an 'objection to the reassessment proceedings'. In fact, the appellant never filed any objection to the reassessment proceedings and as such there was no obligation on the part of the assessing officer to pass a speaking order in connection with the issue of notice u/ 148. In other words, the ratio of GKN Drive shafts India Ltd. Vs. ITO [2003] 259 ITR 19 (SC) is not applicable here. Therefore, this argument of the appellant also fails.

4.4. In view of the above discussion, the reopening of the assessment u/s 147 is held to be valid."

4. On merits, the CIT(A) deleted the addition of Rs. 1,01,00,000/- made u/s 69A by following observations:

"5.1. It is contended by the appellant that the assessing officer proceeded to make an addition u/s 69A without discharging the burden to prove the ownership of the assessee over money etc. It was also contended that the addition was made merely on the basis of statements of third parties recorded during search on another person and that the appellant was never confronted with those statements, nor was any opportunity afforded for cross- examination, thus violating the principle of natural justice.

5.2. The submissions of the appellant are considered. On examination of the assessment record it is seen that the appellant categorically denied having any financial or business transaction with Sh. Brij Mohan Gupta. A request was also made to provide complete statements on the basis of which addition was being contemplated by the assessing officer. However, the assessing officer did not provide the copies of those statements. During the remand proceedings also, the assessing officer did not throw any light on any inquiry/ investigation carried out by him that could justify the additions made by him.

5.3. From the facts enumerated above, it is clear that the assessing officer failed to establish any case against the appellant. Further inquiry/ investigation was required to be carried out on the information passed by the DCIT, Central Circle 19, New Delhi, but no worthwhile or cogent work was done towards this end. No corroborative evidence to that found during search on Sh Brij Mohan Gupta was gathered in relation to the appellant. Copies of the averments/ statements, on the basis of which additions were made, were not provided nor was the opportunity to cross-examine given to the appellant. The assessing officer merely summarized the salient features of t eh assessment proceedings relating to Sh. Brij Mohan Gupta and thereafter summarily rejected the reply of the appellant as not satisfactory.

5.4. In view of the discussion above, the assessing officer was not justified in making the addition of Rs. 1,01,00,000/-. Accordingly, grounds 2,3,4,5,6 and 9 of the appeal are allowed."

5. The learned counsel for the assessee at the out set contends that notices u/s 148 were issued in the name of "Shri Dev Dutt Raj, M/s Dev Dutt Prasad Raj Kumar", which are placed on paper book page nos. 30 & 31. Shri Dev Dutt had expired on 6-3-1994, copy of death certificate is enclosed in paper book at page no. 38. Learned counsel further contends that this fact was brought to the notice of AO and a ground was taken before CIT(A) under Rule 46A. CIT(A) had called a remand report on this issue, however, this ground has been summarily decided.

6. Learned DR on the other hand, vehemently argues that the original notices u/s 148 placed on paper book page nos. 28 & 29 do not refer to the word "proprietor", the approval obtained by AO refers to the same pertaining to registered firm, copy thereof is placed on paper book page no. 27, therefore, the assumption of jurisdiction u/s 148 is valid. The notices being pointed out by the assessee on paper book pages 31 & 32 are subsequent notices of assessment, AO having assumed valid jurisdiction u/s 147/148 a mere mistake in subsequent notices calling for attendance by inadvertently putting the word "proprietor" will not make the proceedings invalid and the mistake is clearly curable u/s 292B. The assessee has not raised any ground about the validity of notices u/s 143(2) and 142(1), therefore, Cit(A) has validly upheld the validity of reassessment proceedings. His order is relied on.

7. We have heard rival contentions and perused the material available on record. Coming to the first issue raised by the assessee, i.e. assumption of wrong jurisdiction by issuing a notice on the dead person, is concerned, we see no merit in the argument of the assessee inasmuch as 148 notice did not refer to the word "proprietor" and such word is mentioned on some notice issued u/s 143(2) or 142(1). Assessee has not raised the issue about these notices. Besides, we are in agreement with the learned DR that having assumed a valid jurisdiction inadvertent mentioning of word "proprietor" will not be of much significance and is to be read u/s 292B. Besides, the assessee instead of bringing it to the notice of AO has filed the return of income of the firm, meaning thereby, the assessee had no objection on 148 notice and filed a proper return and attended the proceedings thereto. Therefore, this plea of the assessee is rejected.

8. Coming to the assessee's plea that there was no material on record to come to a reasonable plea that assessee's income had escaped assessment also cannot be accepted. On a departmental search in the case of a finance broker Shri Brij Mohan Gupta, a diary was found reflecting entry no. 177 in the name of the assessee. As per information received, the broker had facilitated this transaction. In our view AO had reasonable material in his possession to come to a satisfaction that income had escaped assessment. On this aspect also, issuance of notice u/s 148 read with section 147 is upheld. Assessee's grounds are dismissed.

9. Coming to the revenue's appeal against the action of CIT(A), on merit, deleting the addition of Rs. 1,01,00,000/- made u/s 69A, learned DR contends that since the name of the assessee was appearing in the diary, CIT(A) ought not have deleted the addition. Order of AO was relied on.

10. Learned counsel for the assessee, on the other hand, contends that neither the said Shri Brij Mohan Gupta was allowed to be cross-examined nor a copy of his statement was given despite several requests. The AO's contention to the effect that the contents of the statement were made known to the assessee, is not a compliance of mandatory requirement to provide the assessee incriminating material to defend its case. CIT(A) ahs categorically held that:

(i) Complete statement of Brij Mohan Gupta was never given.

(ii) No adverse observations were made by AO on remand report called upon by the CIT(A).

(iii) Beyond the belief of presumption on the information supplied by the DCIT-19, New Delhi, no further inquiry or investigation was carried out by the AO to sustain this addition.

(iv) Cross-examination of Shri Brij Mohan Gupta was never allowed despite CIT(A)'s direction and remand of the matter.

(v) The assessee firm had strongly denied having any financial transaction with Mr. Brij Mohan Gupta.

10.1. In view of these findings, CIT(A) has rightly held that the addition made by the AO, without any corroborative evidence, what-so-ever, was unjustified.

11. We have heard rival submissions. The above observations of the CIT(A) have not been controverted by learned DR. It is clear that CIT(A) called for a remand report from the AO wherein nothing adverse except a bald reliance on the statement of Shri Brij Mohan Gupta, which was not supplied to the assessee, no corroborative evidence has been brought on record. In view of these factual exigencies we see no infirmity in the order of CIT(A) deleting the addition in question. Thus, order of CIT(A) is upheld.

12. In the result, both the appeals, filed by the assessee as well as the revenue are dismissed.

 

DISCLAIMER: Though all efforts have been made to reproduce the order accurately and correctly however the access, usage and circulation is subject to the condition that VATinfoline Multimedia is not responsible/liable for any loss or damage caused to anyone due to any mistake/error/omissions.