Commissioner Of Income Tax -9 vs Narain Dass Taneja
2014 Latest Caselaw 6949 Del

$~12
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

                                  Date of Decision: December 18, 2014

+     ITA 769/2014
      COMMISSIONER OF INCOME TAX -9
                                                              ..... Appellant
                         Through:      Mr.Rohit Madan, Sr.Standing
                                       Counsel with Mr.Ruchir Bhatia,
                                       Advocate

                         versus

      NARAIN DASS TANEJA
                                                            ..... Respondent
                         Through:      Mr.Salil Aggarwal and Mr.Prakash
                                       Kumar, Advocates

      CORAM:
      HON'BLE MR. JUSTICE SANJIV KHANNA
      HON'BLE MR. JUSTICE V. KAMESWAR RAO

SANJIV KHANNA, J. (ORAL)

This appeal by the Revenue under Section 260A of the Income Tax

Act, 1961 ('Act' in short) pertains to assessment year 2004-05. The Income

Tax Appellate Tribunal (Tribunal, for short) by the impugned order dated

14.08.2014 has allowed the appeal of the respondent assessee, an individual,

and has quashed the reassessment proceedings on the ground that the

jurisdictional preconditions specified in Section 147 of the Act were not

satisfied for two reasons; firstly the assessee had made full and true

disclosure of material facts that he had made investment of Rs.1,66,23,750/-

in the share capital of a company namely M/s Ishwar Dass Sahni & Brothers

Ltd. Further this fact was raised and examined during the course of the

original assessment proceedings and informed to the Assessing Officer in

response to his query/questionnaire dated 17.05.2006. The Tribunal in this

connection has quoted reply given by the assessee to question No.4 before

the original assessment order was passed.

3. Learned Senior Standing Counsel for the Revenue does not dispute

the said position but submits that it appears that the aforesaid investment

was not reflected in the books of M/s Ishwar Dass Sahni & Brothers Ltd.

4. The aforesaid submission does not carry any weight and is without

substance because this is not the reason recorded by the Assessing Officer

before issue of notice under Section 148 of the Act. The reasons recorded by

the Assessing Officer for issue of notice under Section 148 of the Act read

as under:-

"Reasons recorded u/s 147 of the I. T.Act, 1961

1. Unexplained investment

The assessee filed return of income declaring loss of Rs.6,21,629!- for assessment year 2004-05 on 01.11.2004.

The assessment in this case was completed u/s 143(3) on 17.11.2006 at an income of Rs.6,21,629/-.

It was observed from the records that the assessee has invested as share capital a sum of Rs.1,66,23,750/- in M/s lsher Dass Sahni and Bros. Pvt. Ltd. But the accounts of the assessee did not reflect this investment and therefore had to be added in the Income of assessee as unexplained investment u/s 69 however, the above point was not taken in consideration while framing the assessment.

2. Recommendation ln view of the above facts, I have reason to believe that the income of the assessee, Sh. Narain Dass Taneja has escaped assessment within the meaning of section 147 of the I.T. Act 1961 to the tune of Rs.1,66,23,750/- for assessment year 2004-05 by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. "

5. When we read the aforesaid grounds or reasons, it is apparent that the

Assessing Officer had proceeded on the basis that the respondent assessee

had not reflected investment of Rs.1,66,23,750/- in his books and, therefore,

addition under Section 69 of the Act was warranted. The Assessing Officer

did not proceed or record the reason that M/s Ishwar Dass Sahni & Brothers

Ltd. had not recorded this investment by the respondent assessee in their

books of accounts. The plea now taken by the Revenue is contrary to the

reasons recorded.

6. In the present case, the return of income originally filed was made

subject matter of regular assessment under Section 143(3) dated 17.11.2006.

In the course of original assessment proceedings as recorded and held by the

Tribunal, queries with regard to investment were raised by the Assessing

Officer and reply and submissions were made by the assessee. The Tribunal

has also recorded that the records of the Assessing Officer were incomplete

and some papers were missing. However, it has given a categorical finding

that the assessee had disclosed the factum of investment of Rs.1,66,23,750/-.

The present case was reopened after 4 years of the end of the assessment

year in which return of income was filed and, therefore, the reopening must

also satisfy the additional requirement that the assessee had failed to make

full and true disclosure of material facts. In the reasons to believe, it is

recorded that the assessee had not made full and true disclosure because he

had not disclosed the investment of Rs.1,66,23,750/- and, therefore, Section

69 of the Act should have been invoked. The finding of the Tribunal is that

the assessee had made this disclosure at the time of original assessment by

responding to question No.4. The answer given by the assessee to question

No. 4 reads :-

"Q.No.4. The assessee has not made any investment in immovable properties during the year under consideration. Further, the assessee is submitting herewith details of investment made in unquoted shares in the following companies :

      Name of Company                   No. of shares            Amount
      a) Deluxe Properties & Ind. Ltd.   300                     3000.00
      b) lsherdas Sahni & Bros.Pvt.Ltd. 2500                16623750.00

Regarding investment in 2500 shares of M/s lsherdas Sahni & Bros. Pvt.Ltd., the assessee has already submitted the relevant details before your goodself in assessment proceedings for assessment year 2003-04."

The said factual position is not disputed. The reason to believe, therefore, is

factually incorrect and without foundation. In fact, they were contrary to the

record and ignore the query raised during the original assessment and

answered.

7. In view of the aforesaid factual matter, we do not see any reason to

interfere with the impugned order and the appeal is accordingly dismissed.

SANJIV KHANNA, J

V. KAMESWAR RAO, J DECEMBER 18, 2014/km