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2021 (1) TMI 123 - AT - Income TaxReopening of assessment u/s 147 - Validity of reasons recorded by acquiring jurisdiction u/s.147 - Addition u/s. 68 being share capital received during the year - HELD THAT:- On careful perusal of reasons, it emerges that assessing officer received detailed information from DCIT Circle 2(2), Mumbai as per which search action was undertaken on Shrish C Shah and it was found that the said person engaged in the business of providing accommodation entries. The reasons also make reference to impounded material wherein the name of assessee has been mentioned as beneficiary. In addition to above, the assessing officer also examined the return of the appellant company to corroborate the information from Investigation Wing and only thereafter the reasons were recorded - fact that M/s. Prraneta Industries Ltd. (now known as M/s. Aadhaar Ventures India Ltd.) is a listed company has no relevance as being listed on a stock exchange is not a certificate of sainthood and even the listed companies have been found to be engaged in unholy practices. The argument of the appellant tat reasons are based on borrowed satisfaction is devoid of any merits as the assessing officer has recorded the reasons only after analysing the information from investigation wing and matching the same with return of income filed by the appellant. Even though we agree that assessing officer should have also carried out preliminary enquiry vis-à-vis M/s. Prraneta Industries Ltd. (now known as M/s. Aadhaar Ventures India Ltd.) so as to verify the allegations of accommodation entry, however, in our view, non carrying of out such exercise will have little effect on validity of notice u/ 147 which is based on specific information from investigation wing. In view of above, we find that the reasons recorded for issue notice u/s 148 satisfies the jurisdictional requirement of section 147 of the Act and as such the validity of notice u/s 147 is upheld. AO has not properly disposed off the objections to notice u/s 148 - It is also the contention of Ld. AR that assessing officer has not properly disposed off the objections to notice u/s 148 of the Act. On examination of order disposing objections, it is evident that assessing officer has para-wise dealt with the objections of the appellant. We do not feel the need to delve into the issue of sufficiency of reasoning given by the assessing officer while rejecting the objections as the same is of academic nature since we have already upheld the validity of notice u/s 148. Addition u/s. 68 - Issuance of share at premium is prerogative of the board and wisdom of the investor. Moreover, in absence of any prohibition with regard to share premium in the Income tax Act, 1961 as relevant for the year under reference i.e. AY 2010-11, no adverse inference is warranted. In any case, the assessing officer having not disputed the value of shares or premium, we fail to see any merit in the contention of Ld DR particularly when the identity, creditworthiness and genuineness of transaction stood established - Appellant has discharged the onus u/s 68 to prove the identity, genuineness and creditworthiness of investor company M/s. Prraneta Industries Ltd. (now known as M/s. Aadhaar Ventures India Ltd.). Accordingly, the assessing officer is directed to delete the addition u/s 68. Reassessment proceedings - Addition u/s 68 - bogus share capital - Whether CIT(A) has grossly erred in confirming the addition even though the same is neither part of reasons nor in respect of which any evidence or material is on record in support of allegation of any undisclosed income - HELD THAT:- In the present case, in respect of share capital of ₹ 5,12,40,000/- received from 18 parties, the assessing officer initiated fresh enquiry during the course of reassessment proceedings on the basis of books of account of the appellant. There is no dispute that very same material was in existence when assessing officer recorded reasons and it is neither the case of the assessing officer that there was any failure or omission on part of the appellant in disclosing any information nor any case of fresh information coming to the notice of the assessing officer. The original action u/s 148 was on the basis of some information which was has already been affirmed by us. However, in respect of other items, the assessing officer himself made random enquiry which is absolute misuse of power in the context of scope of section 147 as well as settled legal principle. There is no iota of material or information with regard to share capital of ₹ 5,12,40,000/- received from 18 parties. In fact the assessing officer gathered the information after calling for bank statement from the bank as evident from para 10 of the assessment order. It is classic case of roving enquiry where the assessing officer is exceeding its jurisdiction in total disregard to scheme and intent of section 147 of the act. Such action of the assessing officer not only renders the purpose of approval u/s 151 otiose but also strikes at the root of section 147 of the Act. We are of the view that assessing officer was not justified in expanding the scope of reassessment proceedings u/s 147 without following the due course and as such the addition is in the teeth of provisions of section 147.
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