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2019 (9) TMI 371 - ITAT KOLKATARevision u/s 263 after reopening of assessment u/s 147 - Assessee filed its return in response to section 148 notice - unexplained cash credit u/s. 68 - whether the assessee could challenge validity of re-assessment itself in validity section 263 revision proceedings? - HELD THAT:- As relying on M/S. CLASSIC FLOUR & FOOD PROCESSING PVT. LTD. VERSUS C.I.T., KOL-IV, KOLKATA [2017 (5) TMI 631 - ITAT KOLKATA] the assessee is very much entitled to challenge validity of the above said re-assessment in collateral proceedings. Facts of re-opening reasons that the AO has nowhere formed his belief of assessee’s taxable income having escaped assessment of ploughing back of the undisclosed income. We wish to reempahsise on the above extracted reasons of re-opening are merely an “inference “ than a belief to this effect. AO had alleged that three of the entity operator’s entities had made investments in assessee’s stake. The same goes adjudicator facts on record since this taxpayer had received share application/share premium from one of the said entity M/s. Urch Traders P.Ltd only to the tune of ₹ 55 lakhs, which stood added as unexplained cash credit u/s. 68. Assessing Officer’s re-opening reasons have to be read on standalone basis and no substitution or deletion is permissible. Hon’ble jurisdictional high court’s decision in Equitable Investment [1988 (2) TMI 25 - CALCUTTA HIGH COURT] also holds that when section 148 notice is issued after the CIT’s approval is challenged only the reasons recorded for obtaining such an approval. It transpires during the course of hearing that Shri Pransukha was neither promoter nor director of the said entity. We also find that Assessing Officer’s reopening reasons formed do not satisfy the settled law as per hon’ble Delhi high court’s decision on the very issue in PCIT V/s. RMG Polyvinyl (I) Ltd. [2017 (7) TMI 371 - DELHI HIGH COURT] upholding the tribunal ‘s order quashing similar re-opeing based on investments, wherein the Assessing Officer had nowhere undertaken any independent enquiry. Thus lordships hold that mere such an information could not be treated as tangible material for the purpose of initiation of 148/147 proceedings. Assessing Officer has erred in initiating the impugned re-opening, which is aggrieved the assessee. We therefore quash the same as non est. That being the case the PCIT’s assumption of revision jurisdiction u/s. 263 of the Act must also follow the suit since it has no legs to stand. The assessee succeeds on the foregoing legal issue. All of its arguments on merits that PCIT has wrongly exercised sec 263 revision jurisdiction on various facts in the instant appeal are rendered infructuous. We make it clear that we have quashed the above stated re-opening/re-assessment to the extent of validity of PCIT revision jurisdiction exercise in the instant case only. Necessary consequences in pursuance to Assessing Officer’s re-assessment dated 30-11-2017 shall continue to follow.
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