Keshav Chander & Sons v. I.t.o

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.618 of 2010 & other connected cases beingITA Nos.584, 603, 605, 606, & 619 of 2010Date of decision: 13.12.2010 Keshav Chander & sons. -----Appellants. Vs. I.T.O. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. T.S. Dhindsa, Advocatefor the appellant. for the appellant. --- ADARSH KUMAR GOEL, J. 1. This order will dispose of I.T.A. Nos. 584, 603, 605,606, 618 and 619 of 2010, as all the six appeals arise fromcommon order of the Tribunal. 2. I.T.A. No.618 of 2010 has been preferred by theassessee under Section 260-A of the Income Tax Act, 1961 (forshort, “the Act”) against the order of the Income Tax AppellateTribunal, Chandigarh dated 31.3.2009 in C.O. No.12/CHANDI/2002 in I.T.A. No.303/CHANDI/2002 for the assessment year 1994-95 proposing to raise following substantial questions of law:- “a.Whether the impugned order dated 31.3.2009 islegally sustainable as the same has upheld the wrongassumption of jurisdiction at the hands of theAssessing Authority u/s 147/148 of the Act?legally sustainable as the same has upheld the wrongassumption of jurisdiction at the hands of theAssessing Authority u/s 147/148 of the Act? b. Whether the Tribunal has misdirected itself in law aswell as on facts in remanding the case to theAssessing Officer instead of annulling theassessment?well as on facts in remanding the case to theAssessing Officer instead of annulling theassessment? c. Whether on account of the peculiar facts of the casethe Tribunal order is vitiated by reason of not havingtaken into consideration the order passed in the caseof Smt. Anju Jain one of the co-sharers along with theappellant whose assessment so framed on the basisof 1600 gold ginnies u/s 143 of the Act had attainedfinality?the Tribunal order is vitiated by reason of not havingtaken into consideration the order passed in the caseof Smt. Anju Jain one of the co-sharers along with theappellant whose assessment so framed on the basisof 1600 gold ginnies u/s 143 of the Act had attainedfinality? d.Whether in the facts and circumstances of the casethe Tribunal was legally correct in holding theproceedings u/s 147 of the Act to have been rightlyand validly initiated?”the Tribunal was legally correct in holding theproceedings u/s 147 of the Act to have been rightlyand validly initiated?” 2. Assessment of income of the assessee for theassessment year 1994-95 was finalised, after which notice underSection 148 of the Act was served, alleging escapement ofincome on account of investment in gold ginnies. Afterconsideration of the matter, addition to the declared income wasmade. The CIT(A) in the first round, remanded the matter but inthe second round, upheld the addition. On further appeal of theassessee to the Tribunal, the matter has been remanded to theAssessing Officer on the ground that the assessee was not givendue opportunity. 3. We have heard learned counsel for the appellant. 4. Contention raised on behalf of the assessee is thatthe reassessment itself was without jurisdiction being based onthe reassessment itself was without jurisdiction being based on alleged memorandum dated 13.11.1993 which was never signedby the assessee. 5. We are unable to accept the submission. The Tribunal considered this aspect and held as under:- 3. We have heard learned counsel for the appellant. 4. Contention raised on behalf of the assessee is thatthe reassessment itself was without jurisdiction being based onthe reassessment itself was without jurisdiction being based on alleged memorandum dated 13.11.1993 which was never signedby the assessee. 5. We are unable to accept the submission. The Tribunal considered this aspect and held as under:- “12. A perusal of the above reveals that theAssessing Officer noted that the assessee hadpurchased rights in the litigation in RSA No.1882 of1985 from Shri Kuldip Singh Sidhy/Shamesher SinghSaroj. The assessee had shown 88 gold ginniesreceived on the distribution of the movable propertiesfrom the above litigation rights. The claim was that inall 1600 gold ginnies were found from the boxcontaining the movable properties in the above caseand the share of the assessee was declared at 88ginnies. The Assessing Officer found that Shri SatPal Grover, who was another co-purchaser of thelitigation rights claimed that only 16 gold ginnies werefound from the above box and in support of the samea Distribution Memo dated 13.11.1993 was producedby him. On account of this information and materialthe Assessing Officer observed that the assessee didnot furnish the correct particulars of his income as thenumber of gold ginnies declared was overstated. TheAssessing Officer formed a belief that the value of theoverstated gold ginnies had escaped assessment, asaccording to him, such overstated gold ginnies appearto have been introduced by the assessee in the garbof the above case property. It is evident that theAssessing Officer had justifiable cause to supposethat certain income had escaped income. Theinformation and material in the form of DistributionMemo dated 13.11.1993 obtained form Shri Sat Pal Grover reflected a prima-facie evidence that the goldginnies declared by the assessee were not correct.Therefore, the formation of belief regardingescapement of income, in this case, cannot belabeled as bereft of any reason or ground. The plea ofthe assessee that there are no reasons to form abelief for escapement of income from assessment, isuntenable. The other argument of the assessee thatthe material sought to be relied upon to form a beliefof escapement of income from assessment is notestablished to the credible, in our view, also does notimpinge on the action of the Assessing Officer ininvoking section 147 of the Act. The ultimateestablishment of the fact of escapement of income isnot required to be made at the time of formation ofbelief to initiate proceedings under section147 of theAct. As explained by the Hon’ble Supreme Court inthe cases of Rajesh Jhaveri Stock Brokers Pvt. Ltd.(supra) and Raymond Woollen Mills Ltd. (supra), thefinal outcome of the proceedings is not relevant. Atthe initiation stage, what is required is only a prima-facie justification about escapement of income fromassessment but not an established fact ofescapement of income. The crucial aspect to beconsidered at the stage of initiation of notice undersection 147/148 is as to whether there was relevantmaterial on which a reasonable person could haveformed the requisite belief. In other words, whetherthe material sought to be relief upon by the AssessingOfficer at the stage of initiation would conclusivelyprove the escapement is not the concern at thatstage. Considered in this light we find no justificationto uphold the plea of the assessee on this aspect. The material available with the Assessing Officer atthe stage of initiation was relevant, it came from therelevant person and was sufficient prima-facieevidence enabling the Assessing Officer to entertain abelief about escapement of income form assessmentin the hands of the assessee on account of variationin the number of gold ginnies declared in the return ofincome vis-à-vis the number of ginnies claimed to bereceived by Shri Sat Pal Grover. We therefore holdthat having regard to the facts and material on record,the ingredients of section 147 are fulfilled in this caseand the Assessing Officer was justified in initiatingproceedings under section 147 of the Act by issuanceof notice under section 148 of the Act dated20.04.1998.” 6. View taken by the Tribunal after due appreciation ofmaterial on record that there was valid formation of opinion forreassessment, is not shown in any manner to be perverse. Asheld by the Tribunal, the Assessing Officer had material to justifyformation of opinion for reassessment. The statement of theassessee in the return that he received 88 ginnies and all othersreceived equal amount of ginnies was found to be erroneouscalling for reassessment. This being the factual position, nosubstantial question of law arises. 7. The appeals are dismissed. 8. A photocopy of this order be placed on the file of eachconnected case. (ADARSH KUMAR GOEL) December 13, 2010ashwani JUDGE (AJAY KUMAR MITTAL) JUDGE