Wp/1838/2016 Of Shri Manish v. The Income Tax Officer1(1)

HIGH COURT OF MADHYA PRADESH : BENCH ATINDORE D.B.: Hon'ble Shri Pankaj Kumar JaiswalHon'ble Shri Alok Verma, JJ. W.P. No.1838/2016 MANISH KOTHARIVersus INCOME TAX OFFICER-1 (1)AAYAKAR BHAWAN, BHARAT PURI,UJJAIN, M.P. *************** Shri P.M. Choudhary, Advocate for the petitioner. Ms. Veena Mandlik, Advocate for the respondent(Deptt.) * * * * *O R D E R (Passed on this 25th day of April, 2016) Per P.K. Jaiswal, J. The petitioner being aggrieved by order dated 18.1.2016, passed by the respondent whereby,the Income Tax Officer has rejected the objections forreassessment on the ground that he being officebearer has no personal liability nor reassessmentproceedings can be initiated in his individual capacityfor assessing the income of a Co-operative Society viz.,M/s. Vardhman Sakh Sahakarita Maryadit, Ujjain,raised by the petitioner to the proceedings /reassessment initiated under Section 147 read withSection 142 (1) of the Income Tax Act, 1961 (hereinafter referred as 'the Act'). 2.Brief facts of the case are that on 29.9.2014survey under Section 133A of the Act was conducted.During survey a prima facie evidence of Hawala onlarge scale was found. They searched the bankaccounts of Axis Bank, Ujjain, ING Vaishya Bank Ujjain,ICICI Bank Ujjain and Bank of Baroda, Ujjain, for thefinancial year 2005-06 to 2014-15. During those periodan amount of Rs.3092895229/- was deposited ondifferent names and cheques were issued by thesociety on different names. It also came to theknowledge that all the accounts were opened by thepetitioner, president of the society in different banks.Statement was recorded. In financial year 2007-08, anamount of Rs.8,58,12,353 in Axis Bank, Ashray Hotel(Branch), Ujjain and Rs.6780875/- in the bank ofBaroda were found to be deposited in cash. Theyfound Rs.9,25,93,228/- cash on the bank accounts,which was in the name of the society. No material wasproduced by the society to prove that the amount wasdeposited by member of the society or any businessman in the name of the society. At that relevant pointof time, petitioner was president of the society.Considering the fact that cash amount of more than Rs.1,00,000/- was found on the banks account of thesociety, which was operated exclusively by thepetitioner and, therefore, notice under Section 148was issued for the assessment year 2008-09. Afterreceipt of objection, statements of all the officebearers were taken. A prima facie material was foundthat account was ran by the petitioner in his personalcapacity. The Department also came to the conclusionthat all those accounts were single handedly controlledby the petitioner and, therefore, directed the petitionerto explain the source of various cash deposited ofRs.9,25,93,228/-. The petitioner being the president ofof Co-operative society M/s.Vardhman Sakh SahakaritaMaryadit, Ujjain (in short 'VDCM') it is his responsibilityto file a return of the society and to get the account ofthe society audited. The department recorded thereasons for reopening of the assessment and rejectedthe objection by impugned order dated 18.1.2016.Thereafter, they issued notice under Section 142 (2) ofthe Act. 3.The present matter relates to theAssessment year 2008-09 in respect of which thepetitioner had filed his income-tax return on19.1.2009, declaring a total income of Rs.1,04,870/-. As per return the main source of income was brokageincome as real state agent. He has also been amember and the president of M/s. Vardhman SakhSahakarita Maryadit, Ujjain, duly registered andincorporated under the provisions of M.P. SwayattaSahakarita Adhiniyam, 1999. 4.On 29.9.2014, during survey proceedings 3.The present matter relates to theAssessment year 2008-09 in respect of which thepetitioner had filed his income-tax return on19.1.2009, declaring a total income of Rs.1,04,870/-. As per return the main source of income was brokageincome as real state agent. He has also been amember and the president of M/s. Vardhman SakhSahakarita Maryadit, Ujjain, duly registered andincorporated under the provisions of M.P. SwayattaSahakarita Adhiniyam, 1999. 4.On 29.9.2014, during survey proceedings under Section 133A of the Act, the departmentalauthorities have impounded the various record relatingto bank account etc at the registered office of thesociety as well as at the residential premises of thepetitioner, who was the president of the society. 5.Learned counsel for the petitioner has drawnour attention to various provisions of the SwayattaSahakarita Adhiniyam, 1999 and Section 2 (7), 2 (31)of the Act, so also the decision of the Kerala HighCourt in the case of Dr. Baby MathewV/s.-AgriculturalIncomeTax Officer & Ors. dated22.2.1994 page 967, decision of Apex Court in thecase of Chhugamal Rajpal V/s. S.P. Chaliha,1971(79) ITR 603 (SC), Garg Tading Co., Indore V/s.–Sales Tax Officer & Ors., 1983 (16) VKN 10,–Lakshmibai V/s. Income tax Officer,1972 86ITR 804 (MYS.), GKN Driveshafts (India) Ltd.V/s. -Incometax Officer,2002 (125) Taxman 963 (SC),-Allana Cold Storage Ltd. V/s. IncomeTaxOfficer,2006 287 ITR 1 (BOM). and AssistantCommissioner, Commercial Tax Department,Works Contract and Leasing, Kota V/s. Shukla &Brothers,2010 (16) STJ 689 (SC) and submitted thatthe impugned action is contrary to law laid down byvarious High Court and Hon'ble the Supreme Court. 6.It is well settled that to reopen assessmentunder Section 147 of the Act, there must a reason andthat reason must have a rational connection orrelevant bearing on the firmest of the belief that therewas income, which escaped assessment and theremust be a direct nexus or live link between materialcoming to the notice of the ITO and the formation ofhis belief that there has been escapement of theincome because of the failure of the assessee todisclose fully and truly all material facts. 7.Learned counsel for the petitioner hassubmitted that there should be “tangible material” tocome to the conclusion that income has escapedassessment. In the present case, there was notangible material before the assessing officer to enablehim to entertain a prima facie belief that income chargeable to tax has escaped assessment. 8.Placing the reliance on the decision, learnedcounsel for the petitioner has submitted that thepresent action to reopen the completed assessmentmerely on the basis of presumption and there was alsono tangible material in possessing of the assessingofficer to prove the live link of concealment of incomeand prayed for quashment of the same. 9.Per contra, learned counsel for therespondent – Deptt., has submitted that when a noticeis issued, the proper course of action for the noticee isto file a return and if, he so, desire to seek reasons forissuing the notice. The assessing officer is bound tofurnish a reason, within a reasonable time. In thepresent case vide Annexure P/9, the reasons havebeen furnished to the petitioner within a reasonabletime. Objection of the petitioner was disposed of bypassing a speaking order before proceeding for theassessment for financial year 2008-09 and thereafter,notice under Section 142 (1) of the Act was issuedvide Annexure P/2, no case to interfere in the matteras prayed is made out and prayed for dismissal of thewrit petition. 10.Order dated 18.1.2016 (Annexure P/1) reads as under :- 10.Order dated 18.1.2016 (Annexure P/1) reads as under :- “With reference to the above re-openingproceedings in your case for theassessment year 2008-09 has beeninitiated. The reason as recorded prior tothe issuance of the notice u/s 148 of theI.T Act has been provided to you. Thereason for re-opening the case isreproduced as under :- s^^es- c)Zeku lk[k lgdkfjrk ek;Zfnr ds izdj.k esa /kkjk 133 , dsrgr losZ dh dk;Zokgh fnukad 29@09@2014] dks dh xbZA losZdh dk;Zokgh ds nkSjku ik;k x;k fd fu/kkZfjr lkslk;Vh }kjk cM+siSekus ij gokyk O;kikj fd;k x;kA fu/kkZfjr lkslk;Vh }kjk,fDll cSad] mTtSu vkbZ-,u-th- oS'; cSad mTtSu] vkbZ-lh-vkbZ-lh-vkbZ- cSad] mTtSu ,oacSad vkWQ cM+ksnk] mTtSu esa cSad [kkrs esa j[ksx, bu cSad [kkrksa foRr o"kZ 2005&06 ls ysdj 2014&15 ¼losZdk;Zokgh rd½ :- 3092895229@& uxn :i esa tek fd, x;sFksaA fofHkUu ukeksa ls lkslk;Vh }kjk psd tkjh fd, x,A bl laLFkkds v/;{k Jh euh"k dksBkjh }kjk mijksDr lHkh [kkrs laLFkk ds ukels vyXk&vyx cSadksa esa [ksys x;sA losZ dh dk;Zokgh ds nkSjku Jheuh"k dksBkjh] v/;{k ,oa Jh furhu lSuh] ,dkaM.V eSustj ds'kiFk iwoZd cpku ntZ fd, x,s ftlds vuqlkj mUgksaus crk;kfd ;g jkf'k fofHkUu O;kikfj;ksa ls uxn :i esa ysdj muds }kjkcrk, x, O;fDr ds uke ls psd tkjh fd, x,A lacaf/kr foRr o"kZ2007&08 esa fu/kkZfjrh laLFkk }kjk ,fDll cSad] vkJ; gksVy]mTtSu ds [kkrk la[;k 329010100012287 esa :-85812353@& ,oa cSad vkWQ cM+kSnk ds ,dkmaV ua-5050200000269 esa :- 6780875@& uxn tek ik, x,A blizdkj dqy jkf'k laLFkk ds [kkrksa esa :- 92593228@& uxn :i esatek ik;h xbZ gSA tSlk fd c;ku esa dgk x;k gS] mijksDr jkf'klaLFkk ds lnL;ksa ,oa vU; O;fDr;ksa }kjk uxn :i esa tek djk;hxbZ Fkh] ijarq bl laca/k esa fu/kkZfjrh laLFkk }kjk dksbZ Hkh ,slk lk{;izLrqr ugha fd;k x;k ftlls ;g fl) gks fd ;k jkf'k laLFkklnL; ,oa vU; O;kikfj;ksa }kjk tek djkbZ x;h gSA mijksDrof.kZr laLFkk esa Jh euh"k dksBkjh] v/;{k ds in ij dk;Zjr Fks ,oamijksDr lHkh d`R; mudh ns[k&js[k esa laiUu fd, x,A D;ksafdbu lHkh d`R;ksa ds fy, Jh euh"k dksBkjh gh ftEesnkj gSa] ,oa muds}kjk ijks{k :i esa ykHk vftZr fd;k x;k gSA ;g jkf'k :-100000@& ls vf/kd gS ,oa laLFkk esa fd, x, d`R;ksa ds fy, Hkhogh ftEesnkj gSaA vr% eq>s fo'okl djus dk dkj.k gS fd mijksDrjkf'k fu/kkZfjrh Jh euh"k dksBkjh ds izdj.k esa fu/kkZj.k ls NwV xbZgSA mijksDr izdj.k esa fu/kkZj.k o"kZ 2008&09 ds fy, /kkjk 148 dsvarXkZr uksfVl tkjh fd;k tkrk gSA** With reference to the above reasonrecorded for re-opening of the case, youhave raised objection that, in the presentcase the reason as recorded for re-opening of the case was nothing but merepresumption in absence of detail of theperson who has deposited cash andobtaining cheques from the society. Theassessing officer collect informationregarding the issuance of the chequesfrom the bank, Hence, there was nojustification for issuance of the noticemore so when it is clear that the assesseehas neither deposit his cash nor obtainedany cheques from the bank. Thus, reasonas recorded for re-opening of theassessment was no correct one. Theproceeding as started U/s 148 of the Acttherefore requires to be dropped as notproper. In response to your objection it is to statethat all the office bearers have recordedhis statement that you run the VDCMBank in your personal capacity. Since thesociety as single handedly controlled byyou, therefore it your responsibility toexplain the source of various cashdeposits of Rs.9,25,93,228/-. Further information collected from thebank in respect of Cash deposit foundthat the cash deposit belongs to you. Further, your being the president of thesociety of VDCM, Ujjain it is yourresponsibility to file the return of incomeof the society and to get the accounts of the society audited. It s to submit that there is no change of opinionto re-opening the case as recorded earlier. 11.The reasons recorded by the Department isrelevant which reads as under :- Further information collected from thebank in respect of Cash deposit foundthat the cash deposit belongs to you. Further, your being the president of thesociety of VDCM, Ujjain it is yourresponsibility to file the return of incomeof the society and to get the accounts of the society audited. It s to submit that there is no change of opinionto re-opening the case as recorded earlier. 11.The reasons recorded by the Department isrelevant which reads as under :- es- o)Zeku lk[k ;gdkjfrk e;kZfnr ds izdj.k esa /kkjk 133, dsrgr losZ dk;Zokgh fnukad 29@09@2014 dks dh xbZA losZdk;Zokgh ds nkSjku ik;k x;k fd fu/kkZfjr lkslk;Vh }kjk cM+s iSekusij gokyk O;kikj fd;k x;k gSA fu/kkZfjfr lkslk;Vh }kjk ,fDllcSad] mTtSu] vkbZ-,u-th- oS'; cSad mttSu] vkbZ-lh-vkbZ-lh-vkbZ- cSadmTtSu ,oa cSad vkWQ cM+kSnk mTtSu esa cSad [kkrs j[ks x;s bu cSad[kkrksa es foRRk o"kZ 2005&06 ls ysdj 2014&15 ¼losZ dk;Zokghrd½ :- 3092895229@& uxn :i esa tek fd, x;s FksaA fofHkUuukeksa ls lkslk;Vh }kjk psd tkjh fd, x,A bl laLFkk ds v/;{kJh euh"k dksBkjh }kjk mijksDr lHkh [kkrs laLFkk ds uke lsvyXk&vyx cSadksa esa [ksys x;sA losZ dh dk;Zokgh ds nkSjku Jheuh"k dksBkjh] v/;{k ,oa Jh furhu lSuh] ,dkam.V eSustj ds 'kiFkiwoZd c;ku ntZ fd, x,s ftlds vuqlkj mUgksaus crk;k fd ;gjkf'k fofHkUu O;kikfj;ksa ls uxn :i esa ysdj muds }kjk crk, x,O;fDr ds uke ls psd tkjh fd, x,A lacaf/kr foRr o"kZ 2007&08esa fu/kkZfjrh laLFkk }kjk ,fDll cSad] vkJ; gksVy] mTtSu ds [kkrkla[;k 329010100012287 esa :- 85812353@& ,oa cSad vkWQ cM+kSnkds ,dkmaV ua- 5050200000269 esa :- 6780875@& uxn tek ik,x,A bl izdkj dqy jkf'k laLFkk ds [kkrksa esa :- 92593228@&uxn :i esa tek ik;h xbZ gSA tSlk fd c;ku esa dgk x;k gS]mijksDr jkf'k laLFkk ds lnL;ksa ,oa vU; O;fDr;ksa }kjk uxn :i esatek djk;h xbZ Fkh] ijarq bl laca/k esa fu/kkZfjrh laLFkk }kjk dksbZ Hkh,slk lk{; izLrqr ugha fd;k x;k ftlls ;g fl) gks lds fd ;gjkf'k laLFkk lnL; ,oa vU; O;kikfj;ksa }kjk tek djkbZ xbZ gSAmijksDr of.kZr laLFkk esa Jh euh"k dksBkjh] v/;{k ds in ij dk;ZjrFks ,oa mijksDr lHkh d`R; mudh ns[k&js[k esa laiUu fd, x,AD;ksafd bu lHkh d`R;ksa ds fy, Jh euh"k dksBkjh gh ftEesnkj gSa] ,oamuds }kjk ijks{k :i esa ykHk vftZr fd;k x;k gSA ;g jkf'k :-100000@& ls vf/kd gS ,oa laLFkk esa fd, x, d`R;ksa ds fy, Hkhogh ftEesnkj gSaA vr% eq>s fo'okl djus dk dkj.k gS fd mijksDrjkf'k fu/kkZfjrh Jh euh"k dksBkjh ds izdj.k esa fu/kkZj.k ls NwV xbZgSA mijksDr izdj.k esa fu/kkZj.k o"kZ 2008&09 ds fy, /kkjk 148 dsvarXkZr uksfVl tkjh fd;k tkrk gSA** 12.On due consideration of the aforesaid and for the reasons assigned by the department, we are of ss/- the view that there was a tangible material to proceedagainst the petitioner, we see no justifiable reason tointerfere with the order under challenge. The propercourse of action for the noticee is to file a return andthereafter, the assessing authority proceed with theassessment in respect of the above said assessmentorder and decide the same in accordance with law. Atthis stage, it cannot be said that the action is whollywithout jurisdiction. Looking to the huge transactionmade by the petitioner through the account of Co-operative society and as per the affidavit of themembers of the society, the petitioner has operatedthe aforesaid bank accounts and thus, we are of theview that the action is just and proper. No case tointerfere at the preliminary stage with the order underchallenge, as prayed is made out. 13.The petition fails and is hereby dismissed. (P.K. JAISWAL) JUDGE (ALOK VERMA) JUDGE