Reopening on the basis of alleged VDIS declaration information from CBDT quashed when AO was not having declaration / documents while recording reasons
ABCAUS Case Law Citation:
ABCAUS 2530 (2018) 09 HC
The appellant assessee had filed an appeal against the order of the CIT(A) challenging the initiation of proceedings u/s 147 and issue of notice u/s 148 on the ground that the reason to believe as mentioned in the reasons recorded was entirely based on information from CBDT and the Assessing Officer (A) was not having any documents to have reason to believe that particular income has escaped assessment.
The AO had reopened the assessee’s completed assessment on the basis of, as stated in the reasons recorded, information received from the CBDT that the assessee had filed a declaration under VDIS-1997.
The reasons recorded by the AO only speak all the information received from the CBDT regarding the alleged declaration by the assessee. In the first round of litigation, in his remand report, the AO submitted before the CIT(A) that the VDIS-1997 disclosure was needed in original, in order to verify such disclosure. The CIT(A), however, did not take any further steps in this regard.
It was only when the Tribunal, remanded the matter to the AO, directing him to supply the alleged VDIS declaration to the assessee, the alleged VDIS form, assessee’s affidavit, report of valuation of jewellery in the assessee’s name and copy of account for the disclosure made under VDIS 1997 , were supplied to the assessee much belatedly in stark contravention of the Tribunal’s direction that if the AO was not able to supply to the assessee, the VDIS declaration within three months, he would drop the reassessment proceedings.
Later, the Department filed an application before the Tribunal, seeking extension of time to supply copy of VDIS-1997 declaration to the assessee and, thereby, seeking modification of the Tribunal order. However, the Tribunal rejected the Department’s application.
Meanwhile, the AO passed an order under sections 143(3)/254 of the Act. The AO again rejected the assessee’s stand that the signatures on the declaration, letters and affidavit were not her. The AO held that the signatures on all these documents tallied with the assessee’s signature on her statement recorded before the ITO on oath and that the assessee, in her statement on oath, had categorically deposed that she used to change her signature.
In the impugned order, the CIT(A) observed that the AO had confronted the assessee with her different signatures on different documents and that so, the assessee’s contention that her signatures were not verifiable, was not correct. The CIT(A) further observed that from all the documents bearing the assessee’s signatures, as available with the Department, it was clear that she had, in fact, made a declaration under VDIS-1997 and that if it had not been so, her name could not have occurred in the list of the declarants. The CIT(A) also observed that she had herself gone through the different documents and had found the assessee’s signature on the declaration to be exactly the same as that on the statement given by the assessee before the ITO.
The CIT(A) also confirmed the validity of reopening of the assessee’s completed assessment.
The Tribunal observed that the reasons recorded by the AO only speak all the information received from the CBDT regarding the alleged declaration by the assessee. However, the alleged declaration were provided to the assessee in contravention of the ITAT order. The AO himself admitted before the CIT(A) that the VDIS-1997 disclosure in original was not with him. All these material had not been shown to have been in the possession of the AO at the time of recording of the reasons to believe escapement of income.
The Tribunal observed that it was only in the notice issued u/s 142(1) r.w.s. 254 of the IT Act, that Declaration Form and annexures thereto were mentioned by the AO for the first time. The CIT(A), thus, clearly erred in holding, that the reopening of the assessment was based on all such material which, according to the CIT(A), was in the possession of the AO. The CIT(A)’s order in this regard was based on a complete mis-reading and non-reading of the material available on record.
The Tribunal opined that the so called information, which was reproduced by the AO in the reasons recorded and he, without any further inquiry thereon, i.e., without any independent application of his own mind to it, formed his alleged reason to believe escapement of income. The reopening was, thus liable to be set aside and reversed on this score alone. Accordingly, the Tribunal cancelled the reopening of the assessee’s completed assessment on this count itself.
The Tribunal further observed that both the Authorities below had held the signature of the assessee on the alleged VDIS declaration to be that of the assessee, merely on their own respective conclusions, i.e., comparison of such signature with those on other documents. This was wholly unsustainable in law. The correct course was to refer the matter to a hand writing expert, rather than taking recourse to mere assumptions and surmises, as had been done by both the Authorities below.
The Tribunal opined that a signature appearing to the AO to be resembling others did not not Prove, in the absence of an opinion of a hand writing expert. Also, the CIT(A)’s opinion that the assessee’s signature on the VDIS declaration was exactly the same as that on her statement before the ITO, was no substitute for a hand-writing expert’s report.