Raj Birbal v. Assistant Commissioner Of Income Tax Circle -61(1) & Ors

$~79 * IN THE HIGH COURT OF DELHI AT NEW DELHI %Date of decision : 17.05.2023 + W.P.(C) 11910/2018 RAJ BIRBAL ..... Petitioner Through: Ms Prem Lata Bansal, Senior Standing Counsel with Ms Kavita Jha, Advocate versus ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE -61(1) & ORS. ..... Respondents Through: Mr Abhishek Maratha, Sr. Standing Counsel with Mr Akshat Singh, Jr. Standing Counsel. CORAM:HON'BLE MR. JUSTICE RAJIV SHAKDHERHON'BLE MR. JUSTICE GIRISH KATHPALIA [Physical Hearing/Hybrid Hearing (as per request)] RAJIV SHAKDHER, J.: (ORAL) 1. This writ petition concerns Assessment Year (AY) 2011-2012. 2. The writ petition is directed against notice dated 31.03.2018 issued under Section 148 of the Income Tax Act, 1961 [in short, “the Act”] and the order dated 01.10.2018 passed by the Assessing Officer (AO), whereby objections preferred by the petitioner, qua the commencement of the reassessment proceeding, were disposed of. 3. Pertinently, Ms Prem Lata Bansal, Senior Advocate and Ms Kavita Jha, Advocate, who appear on behalf of the petitioner, say that the reassessment proceeding triggered against the petitioner for the AY in issue, i.e., AY 2011-12, are completely flawed. 4. Ms Bansal and Ms Jha submit that the reassessment proceeding was triggered Pg. 1 of 5 Signature Not Verified based on a Tax Evasion Petition (TEP), with no tangible material made available to the AO for forming an opinion that there was reason to believe that income chargeable to tax has escaped assessment. 5. Furthermore, Ms Bansal and Ms Jha say that the other ground, which has presumably, triggered reassessment proceeding is that certain expenses claimed by the petitioner, on account of salary and other heads, had been disallowed in AY 2014-15 by the AO on the ground that they were bogus. 5.1 Ms Bansal and Ms Jha inform us that although the AO had made addition(s) on that ground in AY 2014-15 by disallowing 50% of the expenses claimed by the petitioner, in an appeal preferred by petitioner, this decision was reversed. 6. In support of this plea, Ms Bansal and Ms Jha have placed on record a hard copy of the decision of the Commissioner of Income Tax (Appeals) [in short, “CIT(A)”] dated 19.02.2019. A copy of the said decision has been furnished to Mr Abhishek Maratha, learned senior standing counsel, who appears on behalf of respondent/revenue. 7. Ms Bansal and Ms Jha, on instructions of petitioner, who is present in the court, say that no appeal has been preferred by the respondent/revenue against the said order of the CIT(A), with the Income Tax Appellate Tribunal. 8. Mr Maratha, in defense of the impugned notice and order, submits that the same are sustainable, in view of the fact that there was no material available which would have substantiated the expenses claimed by the petitioner against salaries and under other heads. In other words, it was Mr Maratha’s submission that the reassessment triggered againstthe petitioner qua AY in issue ought not to be interdicted. 9. We have heard learned counsel for parties. 10. The crucial issue which arises for consideration is: whether, in the instant case, based on the material which was available on record, the reassessment proceeding could have triggered against the petitioner? 11. It is not in dispute that the reassessment proceeding was triggered on account of the TEP. There is no other material available on record, based on which the AO formed an opinion, that there was reason to believe that income chargeable to tax had escaped W.P.(C) 11910/2018 assessment. This is evident upon a bare perusal of the reasons furnished by the AO for reopening the assessment for the AY in issue, i.e., 2011-12. 12. For the sake of convenience, the relevant portion of the said document which is dated 02.08.2018, is set forth hereafter: Signature Not Verified 10. The crucial issue which arises for consideration is: whether, in the instant case, based on the material which was available on record, the reassessment proceeding could have triggered against the petitioner? 11. It is not in dispute that the reassessment proceeding was triggered on account of the TEP. There is no other material available on record, based on which the AO formed an opinion, that there was reason to believe that income chargeable to tax had escaped W.P.(C) 11910/2018 assessment. This is evident upon a bare perusal of the reasons furnished by the AO for reopening the assessment for the AY in issue, i.e., 2011-12. 12. For the sake of convenience, the relevant portion of the said document which is dated 02.08.2018, is set forth hereafter: Signature Not Verified 13. A careful perusal of the aforesaid extract would show, as indicated above, that the basis for forming an opinion, which is, there was reason to believe that income chargeable to tax had escaped assessment was only the TEP, and the fact that in the AY 2014-15, the AO had disallowed 50% expenses claimed by the petitioner, against salaries and other heads. 14. As indicated in the narration above, the addition made in 2014-15 by the AO was reversed by the CIT(A) via order dated 19.02.2019. The petitioner has, in no uncertain terms, made a statement before us, that the revenue has not carried the matter in appeal. Pg. 4 of 5 W.P.(C) 11910/2018 15. If even we were to ignore this state of the facts, we are of the opinion that merely because expenses claimed were disallowed in AY 2014-15, could not have formed the basis for triggering reassessment in the AY in issue, i.e., AY 2011-12. 16. It is well established that income in each AY is to be assessed independent of the circumstances which obtain in other AYs. The only exception is that where issues are common, the courts have at times adopted the principle of consistency. In this case, that principle surely would not apply. 17. As alluded to hereinabove, the AO had no material available with him for triggering the reassessment proceeding against the petitioner. The only material, if it can be called that, which was available with the AO, was the TEP. There were no documents available which could have formed the basis for initiating reassessment proceeding against the petitioner. 17. Bald assertions in the TEP that the petitioner had claimed bogus expenses towards salary and other heads, in our view, was not sufficient for commencement of the reassessment proceeding under Section 147 read with Section 148 of the Act. 18. Thus, for the foregoing reasons, we are inclined to set aside the impugned notice and order. 19. It is ordered accordingly. The petition is, thus, disposed of in the aforesaid terms. RAJIV SHAKDHER (JUDGE) MAY 17, 2023/as GIRISH KATHPALIA (JUDGE) Click here to check corrigendum, if any Pg. 5 of 5