TMI Blog2019 (11) TMI 1748X X X X Extracts X X X X X X X X Extracts X X X X ..... that addition was deleted by ld CIT(A) and since AO has not issued a fresh notice under section 148 of the Act to reassess the other income therefore, the reassessment proceedings initiated by the assessing officer to reassess other income ( as noted by us above) is null and void in the eye of law, hence we quash the reassessment proceedings under section 147/148 of the Act. - Decided in favour of assessee. - ITA No. 1863/Kol/2019 - - - Dated:- 13-11-2019 - Shri S.S. Godara, JM And Dr. A.L. Saini, AM For the Appellant : Shri S.K. Tulsiyan, Advocate. For the Respondent : Smt. Ranu Biswas, Addl. CIT. ORDER Per Dr. A.L. Saini, AM: The captioned appeal filed by the assessee, pertaining to assessment year 2009-10 is directed against the order passed by the Commissioner of Income Tax (Appeal)-25, Kolkata, in appeal No. 16/CIT(A)-25/Kol/2016-17, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) /147 of the Income Tax Act, 1961 (in short the Act ) dated 28/12/2016. 2. The grounds of appeal raised by the assessee are as follows: 1. That, the Ld.A.O. erred and the C.I.T.(A) wrongly held with material irregularity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le ITAT, Kolkata in the case of Hooghly Engg. Technology College Society (ITA No.l579/Kol/2016 dated 04/.07.2018) and further the trustees and directors are not common and hence confirmation of reopening of assessment is against the settled facts and bad in law. 6. That, without any prejudice to the above grounds, the Ld. C.I.T.(A) on mere surmise and conjecture has upheld the addition of Rs.37,50,000/- u/s.69A r.w.s. 115BBE of the Act solely on the basis of statements of some guaredians obtained at the back of the appellant about their giving capitation fees in cash to some persons in the management when they could not even mention or recall the name of the concerned person to whom the money was claimed to have paid or any receipt thereof was produced. 7. That, therefore, when the allegation of taking cash from students in the guise of capitation fees has not been substantiated by the statements taken u/s.131 by any tangible evidence in that regard, the denial of claim of exemption u/s 11 on the allegation of charging extra money outside the books on conjecture, suspicion and surmises is liable to be quashed. 8. That, therefore, as the order of the Ld. C.I.T.(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 147 of the Act stating that reassessment proceedings are bad in law. However, the ld CIT(A) held that reassessment proceedings initiated by the assessing officer was valid. In this regard, the main observations of the ld CIT(A) (to the extent applicable for our discussions) is reproduced below: 5.1.9 .At the appellate stage the appellant was challenging as the substantiality of reasons recorded by the AO. The substantiality of reasons can not be challenged at reopening stage, what was required for reopening the case was the bonafide belief regarding violation of 11(5) read with section 13(1)(d) and 13(1)(c) and new information. These two conditions were present before the AO due to result of survey u/s 133A conducted at the premises of the appellant. Therefore, I hold that the action of the AO for reopening the case is valid, and the ground of appeal on this issue is dismissed. This way, ld CIT(A) deleted the addition of Rs.59,42,709/-, (this is the amount the assessee had deposited with Nissan Developers Properties Pvt. Ltd.(NDPPL) for which the AO has reopened the assessment under section 147 of the Act). However, the AO made other additions, which were not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Income Tax Act, 1961. A copy of the ledger folio is attached herewith. In view of all above, the income of Rs.59,42,709/- has escaped assessment. This is the prima facie reason to re-opening the assessment. We note that solitary reason to reopen the assessment is that the assessee had deposited money with Nissan Developers Properties Pvt. Ltd. for an amount of Rs.59,42,709/- and this company is a specified person of the assessee, therefore AO was of the view that the assessee has violated the provisions of sections 13(l)(c)(ii) and 13(l)(d) of the Act and hence the said amount is to be taxed separately at Maximum Marginal Rate. On appeal by the assessee, the ld CIT(A) deleted the said amount of Rs.59,42,709/-, observing the following: 5.2.6. I have perused the share holding pattern of M/s Nissan Developers Properties Pvt. Ltd. and it is seen that total equity shares of M/s Nissan Developers Properties Pvt Ltd. is 2,48,760/-. The share holding in this concern pertaining to Shri Arun Kr. Poddar one of the trustee and its family members are as under: (Note M/s. Dheeraj Promoters Ltd is not shareholder in case of M/s. Nissan Developers Properties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be in violation of Sec.l3(l)(d) of the Act, inasmuch as in all the subclauses of clause (d) of sec.13(1), the words are any funds of the trust or institution invested or deposited . In the case of the appellant, as explained above, the money given to NDPPL was repayment of credit balance not investment with that company for earning any income. That being so, Sec.11(5) can also not be applied for the above reason. Thus the entire facts and circumstances narrated above shows that in case of M/s. Nissan Developers Properties Pvt Ltd , the trustees and directors are not common. Substantial interest referred in 13(3)(e ) has not been qualified. The payment was made for repayment of outstanding loan of M/s NDPPL taken by the trust and it was not invested with the company for earning any income. Therefore M/s. NDPPL was neither covered in section 13(l)(d) nor it was covered in section 11(5). Therefore provision of section 13 was not applicable in terms of advances given to NDPPL. Hence section 164(2) was not applicable. Therefore the action of the AO on this account is not sustainable. The ground on this issue is allowed. 12. We note that it is abundantly clear that the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under s. 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under s. 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. 13. This view has also been ventilated by the Hon`ble Delhi High Court in the case of Ranbaxy Laboratories Ltd,336 ITR 136 (Del), wherein it was held as follows: 18. We are in complete agreement with the reasoning of the Division Bench of Bombay High Court in the case of Jaganmohan Rao (supra) [sic-Jet Airways (I) Ltd. (supra)]. We may also note that the heading of s. 147 is Income escaping assessment and that of s. 148 Issue of notice where income escaped assessment . Sec. 148 is supplementary and complimentary to s. 147. Subs. (2) of s. 148 mandates reasons for issuance of notice by the AO and sub-s. (1) thereof mandates service of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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