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TMI Blog2018 (8) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue against the order dated 02.12.2011 passed by the CIT(A)-XXII, New Delhi for the A.Y. 2003-04. 2. The grounds of appeal are as follows: 1. Whether on the facts and circumstances of the case the Ld. CIT(A) has erred in quashing of notice issued u/s 148 of the Income-tax Act, 1961 by the assessing officer on the basis of information received from the DRI, Mumbai. 2. Whether on the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 1 crore made by the assessing officer on the basis of the statements made by him before the DRI. 3. Whether on the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 5,00,000/-. 4. The appellant craves leave to amend or alter all or any of the aforesaid grounds of appeal. 3. The assessee is a general commission agent and has shown income under the heads Salary (remuneration from Pvt. Ltd. co.), business, capital gains and other sources. Original return of income was filed on 5/9/2003 declaring an income of ₹ 1,73,980/-. Subsequently, information was received from Directorate of Revenue Intelligence, Mumbai vide letter d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by the Assessing Officer of Shri Jitendra Tulsian s/o Shri Bhagwan Tulsian stating that Shri Bhagwan Tulsian i.e. his father is still suffering from spinal back pain and could not attend the proceedings. Alongwith the medical certificate of Shri Bhagwan Tulsian, the statement of Shri Bhagwan Tulsian denying that the assessee has made any investment was attached. In the Assessment Order, the Assessing Officer made an addition of ₹ 1 crore on account of import financed by the assessee and ₹ 5,00,000/- was added on account of profit earned on such financing by recording the following reasons: 6.3 The above mentioned facts clearly indicate that inspite of assessee s denial during the course of assessment proceedings here, it is found that he continued to accept his role in financing a sum of ₹ 1 crore in the statement recorded with the permission of the hon ble Court in Mumbai Central Jail n the presence of the Jailor wherein he confirmed of having financing a sum of ₹ 1 crore. It is important to note that he never retracted from his this statement which was recorded before the Jailor and never denied of having not signed or given before the compete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that quashing of Section 148 notice by the CIT(A) was not just and proper as the Assessing Officer issued the said notice on the basis of information received from the DRI, Mumbai. The Ld. DR further submitted that the CIT(A) totally ignored the statements made by the assessee before the DRI on basis of which the addition of ₹ 1 crore was made by the Assessing Officer. The Ld. DR further submitted that the CIT(A) also erred in deleting the addition of ₹ 5,00,000/- on account profit earned on financing. The Ld. DR submitted that M/s Lord Empire International had imported goods through JNPT. Investigations by DRI revealed that the said firm was floated by Shri. Surender Aggarwal along with Shri. Bhagwan Tulsian alias S.K.Gupta and Shri. Suresh Khandelwal. The said firm had applied to the Joint Director, DGFT, Mumbai for obtaining advance licence under DEEC scheme on the basis of fake, fabricated and mis-declared documents. Shri Bhagwan Tulsian stated that scrap imports were financed by Shri Sajjan Kumar Goel and Shri. Rajesh Dua. Shri Sajjan Kumar Goel, in his statements recorded on 05.04.2008 and 06.04.2008 admitted that he was a broker and used to arrange fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 of Income Tax Act and regarding the validity of statement recorded during search survey proceedings: PCIT Vs Paramount Communication (P.) Ltd. (2017-TIOL-253-SC-IT) . PCIT Vs Paramount Communication (P.) Ltd. f20171 79 taxmann.com 409 (Delhi)/2017/392 ITR 444 (Delhi). Indu Lata Rangwala Vs PCIT 2017180taxmann.com102(Delhi)/r20161 384 ITR 337 (Delhi)/20161 286 CTR 474 (Delhi). Yoqendrakumar Gupta Vs ITO (51 taxmann.com 383) (SC)/20141 227 Taxman 374 (SC). Raymond Woollen Mills Ltd. v. ITO And Others T236 ITR 341. ACIT Vs Raiesh Jhaveri Stock Brokers (P.) Ltd [2007]161 Taxman 316 (SC)/2007] 291 ITR 500 (SC)/r20071 210 CTR 30 (SC). Yuvraj v. Union of India 315 ITR 841 (SC). Ankit Financial Services Ltd. Vs DCIT T20171 78 taxmann.com 58 (Gujarat). Kishore Kumar Vs CIT (62 taxmann.com 215. 234 Taxman 771). Kishore Kumar Vs CIT (52 taxmann.com 449) Madras High Court confirmed. Bhaqirath Aqqarwal Vs CIT (31 taxmann.com 274, 215 Taxman 229, 351 ITR 143) Smt Dayawanti Vs CIT f20161 75 taxmann.com 308 (Delhi)/[2017] 245 Taxman 293 (Delhi)/r20171 390 ITR 496 (Delhi)/r20161 290 CTR 361 (Delhi). M/s P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer, the assessee went into appeal before the CIT(A) and the CIT(A) passed a well reasoned and speaking order adjudicating upon both the legal issues and merits of the case. The CIT(A) while passing the order rightly observed that the proceedings u/s 147 were unlawful to the extent that the Assessing Officer neither attached the letter of DRI dated 10.06.2009 nor any statement of the assessee to support the reasons recorded. Further the content of such information and statement of the assessee have neither been reproduced in the reasons recorded nor made a part of the reasons. The CIT(A) remarked that the Assessing Officer did not even mention in the reasons recorded whether the aforesaid letter received by him was accompanied by the statement of the assessee recorded by the DRI. It was also appreciated by the CIT(A) that the assessee in the statements which were mentioned above nowhere admitted that he had financed ₹ 1 Crore in the FY 2002-03. In the statements recorded on 05.04.2008 and again on 06.04.2008 the assessee only mentioned of meeting Mr. Tulsian in the year 2002 and thus can be seen that from the statements. There is no concrete proof of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the IT AT cannot be disturbed. - Decided in favour of the assessee The Ld. AR also relied upon the order of the ITAT Delhi in the case of DCIT Vs M/s Dharamapal Satyapal Ltd. ITA No. 5611 5581/Del/2013 wherein the coordinate bench held as under: 68. We find that on the format which has been reproduced, the Additional CIT and Commissioner has simply written Yes I am satisfied on the same day, i.e. which does not in any manner shed any light as to whether there was any application of mind at all by the aforesaid two senior officers, who were duty bound to have looked in to carefully the reasons recorded by the AO and seen the history behind the assessment which was proposed to be reopened by the AO. When a superior authority is given power by the legislature, to grant sanction to do an act by an authority below him, then that power needs to be exercised with due care and circumspection and after due application of min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport that any transaction took place between the two and nothing was found by the A.O apart from the allegation in the entire proceedings that the assessee has earned and paid such amount to such person. Thus the addition made in this regard is totally on surmises and was rightly deleted by the CIT(A) as the AO was not able to get anything on record to prove that any such transaction even transpired and the allegations made by him could not be substantiated by concrete proof. 11. As regards to Ground 3 relating to addition on estimate basis on account of profit earned on such finance amounting to ₹ 5,00,000/-, the Ld. AR submitted that the addition of ₹ 5 Lac has been made without any basis and has been arbitrarily made considering a hypothetical situation that the assessee must have earned a profit on the alleged amount of ₹ 1,00,00,000. The Ld. AR submitted that CIT(A) has rightly deleted the addition on the ground that since the amount of ₹ 1,00,00,000/- has not been financed by the assessee there is no question of making any addition of interest in this regard. Thus, the addition of ₹ 1,00,00,000/- is unsustainable. 12. We have heard both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to one Shree Bhagwan Tulsian, S/o late Sh. Murari Lai Tulsian, R/o House No. 4, Sector-37, Faridabad-3 for import in the name of a nonexistent firm M/s Lord Empire International, Bristo Building Complex, House No. 12, Second Floor, Hauz Khas Village, New Delhi. On going through the reasons, it is seen that the AO has neither attached letter of DRI dated 10/6/2009 nor any statement of the appellant to support the reasons recorded. Even the contents of such information and statement of the appellant have neither been reproduced in the reasons recorded nor made a part of the reasons. The AO has not even mentioned in the reasons recorded whether the aforesaid letter dated 10.06.2009 received by him was accompanied by the statement of the appellant recorded by DRI. On going through the statements recorded by the DRI, it is seen that DRI has recorded statement of the appellant on following dates:- 05-04-2008, 06-04-2008, 09-04-2008, 01-05-2008 and 04-05-2009 On going through the statement of dated 05-04-2008, it is seen that appellant in this statement at page-3 has stated that he met Mr. Shree Bhagwan Tulsian in the year 2002 at Hotel Surya Sofitel, Ashram Chowk, De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings u/s 147 can neither be substituted nor supplemented by further material. The above stated facts shows that formation of belief by the assessing officer that income to the extent of ₹ 1 crore for F.Y. 2002- 03 has escaped assessment was ab initio void. The courts have held that sufficiency of reason is not a matter which is to be decided by the writ court, but existence of belief is a subject matter of the scrutiny. A notice u/s 148 can be quashed if the belief is not bonafide, or one based on vague, irrelevant and non-specific information. The basis of belief should be discernible from the material on record which was available with the assessing officer when he recorded the reasons. There should be a link between the reasons and evidence available with the assessing officer. (Signature Hotels Pvt. Ltd. vs. Income Tax Officer Others 338 ITR 51 (Del.). In the instant case, the belief formed by the assessing officer was not bonafide and it was based on vague, irrelevant and non-specific information. From the statements received from DRI, it was not discernible that appellant had admitted to have arranged Rs.l crore to Mr. Shree Bhagwan Tulsian in the F.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and remand report alongwith the statement of Mr. Shree Bhagwan Tulsian recorded by the assessing officer in the remand proceedings. The appellant was taken into custody by the DRI on 05-04-2008 and his statement was recorded on 05- 04-2008, 06-04-2008 while in custody of DRI. Appellant s statement was again recorded on 09-04-2008 when he was in judicial custody at Bombay. In these statements, the appellant admitted that he had arranged Rs.l crore to Mr. Shree Bhagwan Tulsian for import of scrap. The appellant was released from jail on 16-04-2008 at Bombay and immediately after his release, he made a retraction of his statements before the Addl. Chief Metropolitan Magistrate, 3rd Court at Explanade, Mumbai. In this retraction statement, he has described the events of his arrest and statements recorded by the DRI and had stated that he was made to write that he had financed ₹ 1 crore to Mr. Shree Bhagwan Tulsian for his import business. After his release on 16-04-2008, the appellant was directed by the court to give daily attendance before DRI, Mumbai from 21-04-2008 for next 20 working days. On 01-05-2008, DRI again recorded appellant s statement wherein the appellant ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing officer wherein he reaffirmed the contents of his affidavit of dated 10.11.2010. He shown his inability to appear before assessing officer as he was suffering from spinal pain. Since Mr. Shree Bhagwan Tulsian did not appear before the assessing officer during the course of assessment proceedings, the assessing officer did not givd credence to the contents of the affidavit and his application dated 03.12.2010. On the basis of information received from DRI Mumbai and on the basis of statements again recorded on 01.05.2008 by the DRI, the assessing officer made addition of Rs.l,00,00,000/- on account of arranging finance to Mr. Shree Bhagwan Tulsian in cash. During the course of appellate proceedings, the AR of the appellant appeared before me on 01.09.2011 and filed written submission and relied upon the statements made by the appellant before assessing officer and his retraction before ACMM Mumbai on 17.04.2008. The AR also filed copy of affidavit of Mr. Shree Bhagwan Tulsian, his retraction before ACMM Mumbai and prescription papers related to his medical treatment. The AR of the appellant has also relied upon the affidavit filed by the appellant on 06.09.2010 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts which can establish that appellant had a meeting with Mr. Shree Bhagwan Tulsian in hotel Surya Sofitel or had financed ₹ 1 crore in cash to Mr. Shree Bhagwan Tulsian. The entire assessment is based on the statements of Mr. Shree Bhagwan Tulsian and appellant which has been retracted by them before the Court. The assessing officer independently recorded statements on oath of the appellant during the course of assessment proceedings and also of Mr. Shree Bhagwan Tulsian on oath in the remand proceedings. In these statements, both the persons have denied of having any business dealings with each other and financing of money. There is no evidence which can link the statements made before the DRI and establish that financing transaction of Rs.l crore had taken place between them. There is no iota of evidence which can support that transaction of Rs.l crore took place between appellant and Mr. Shree Bhagwan Tulsian. I am therefore of the considered view that no addition can be made on the basis of mere statements without having any corroborative evidence to support such statements which have been subsequently retracted before the Court. Hence, the addition made by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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