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2015 (3) TMI 1030 - DELHI HIGH COURT

2015 (3) TMI 1030 - DELHI HIGH COURT - [2015] 375 ITR 460 (Del) - Reopening of assessment - notice under Section 148 challenged - Held that:- The reason to believe recorded by the Assessing officer is not based on any material that had come to the knowledge of the Assessing Officer. There is a mere suspicion in the mind of the assessing officer and the notice under section 147/148 has been issued for the purpose of verification and for clearing the cloud of suspicion. The reasons to believe reco .....

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me has escaped assessment. No such reasonable belief can be inferred from the purported reasons to believe recorded.

The words "reason to believe" indicate that the belief must be that of a reasonable person based on reasonable grounds emerging from direct or circumstantial evidence and not on mere suspicion, gossip or rumour. The "reason to believe" recorded in the case do not refer to any material that came to the knowledge of the Assessing Officer whereby it can be inferred that th .....

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reopening of the Assessment is thus clearly contrary to law and is unsustainable. - Decided in favour of assessee. - W.P.(C) No.5330/2014 - Dated:- 27-3-2015 - Badar Durrez Ahmed And Sanjeev Sachdeva,JJ. For the Petitioner : Mr K.R. Manjani, Advocate For the Respondent: Ms Suruchi Aggarwal with Mr Shashank Menon and Mr Aamir Aziz, Advocates. JUDGMENT Sanjeev Sachdeva, J. 1. The petitioner, by way of the present writ petition, has challenged the order dated 23.06.2014 passed by the Assistant Com .....

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was carrying ₹ 5 lakhs from Delhi to Ghaziabad for both the companies which have got separate factories at Ghaziabad and Head Office in Delhi for payment of wages and other normal expenses on the factories. This amount allegedly consisted of withdrawals made on 03/04.01.2012 of ₹ 4 lakhs i.e. ₹ 2 lakhs from each of the Bank Accounts of the company in Delhi and ₹ 1 lakh from cash balance from the books of M/s. Krown Bakers India Pvt. Ltd. 4. As per the petitioner, in the .....

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bad before whom the relevant copies of the bank accounts and extract of cash books were produced. 5. The petitioner on 27.09.2012 filed its return of income declaring a loss of ₹ 49,88,706/- for the relevant assessment year and filed the return under section 115JC of the Act declaring an income of ₹ 2725/-. 6. The respondent initiated proceedings under section 153(C) of the Act for Assessment Year 2006-07, 2007-08, 2008-09, 2009-10, 2010-11, 2011-12 and 2012-13. However, during the a .....

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income. The petitioner was also supplied the reasons for issuance of notice under section 148 alongwith the notice. The reasons for re-opening of the assessment as communicated to the petitioner are as under:- "Reasons recorded U/s 148(2) of the income Tax Act, 1961 M/s Krown Agro Foods Pvt. Ltd. H-78, Shivaji Park, Road No-45, Punjabi Bagh, New Delhi-110017 A.Y. 2012-13. Information has been received from ADIT (Inv.), Ghaziabad, that amount of ₹ 5,00,000/- has been found u/s 132A of .....

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ssment year 2012-13 vide Ack. No. 4977819612770912 on 27.09.2012 declaring total income of ₹ 2725/-. Appraisal report in the case of Anil Kumar Dhir who is the director of M/s Krown Agro Foods Pvt. Ltd. has been received from ITO, Ward 5(3), New Delhi on 25.11.2013. The information has been received after the expiry of twelve months specified in the proviso to sub-section (2) of section 143 of the IT Act. I, therefore, have reason to believe that the income of ₹ 2,00,000/- has escape .....

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ound on 05.01.2012 with Shri Anil Kumar Dhir, Director of the Companies. He was carrying the amount from Delhi Offices to Ghaziabad Offices of two companies M/s Krown Agro Food P. Ltd. and M/s Krown Bakers P. Ltd. Income Tax Department (DD Investigation-I Ghaziabad) had started action on 05.01.2012 and intimation for this was also sent to you before 26.10.2012, also confirmed by your CIT-II New Delhi vide his letter F. No. CIT/Delhi- II/Hq.-II/Grievance Misc./2013-14/448 dated 03.06.2013 stating .....

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annot be dispensed with. Still you did not take any action even though you knew it that the limitation for sending the notice u/s 143(2) was 30th Sept., 2013. This shows there is a clear lapse on the part of the Department and no one can be allowed to take the advantage of one's own wrong is settled law. The reason that because you did not take timely action, the assessee should suffer is wrong and against settled law. On this account alone, the action is arbitrary and bad in law. 2. THERE I .....

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h is supported by documentary evidence like copy of Bank Statements and also the Cash Book, does not in any way, lead to the proposition that this amount is unexplained especially because the amount was carried from Office in Delhi to Branch in Ghaziabad by the Director of two companies and for use of their companies in Ghaziabad. Even otherwise, it is settled law that mere possession of money does not lead to presumption of concealment which is especially true in this case because the assessee .....

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Shri Dhir." 9. The objections have been disposed of by the Impugned order and the reasoning given is as under: I have considered the various submissions made by the assessee in his letter dated 31.03.2014 and found no force in them. The assessee has filed a Return showing loss of Rs. (49,88,706/-) for the A.Y. 2012-13. The date of receipt of the information in the office of the Assessing Officer is not affecting the interest of the assessee adversely. The assessee is clearly accepting that .....

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d u/s- 143(3) or s-147/143(3). The issue raised by the assessee for the limitation is not legally tenable or valid as per the provisions of the Income Tax Act, 1961. The raising of this objection by the assessee is an attempt to escape assessment, so that it does not have to prove the genuineness of the cash seized during the election time in the hands of its Director, Mr. Anil K. Dhir. In the case of M/s Krown Bakers (India) Private Ltd. for A.Y. 2012-13, it was assessed u/s- 143(3) by ITO Ward .....

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purposes only. There is another addition of ₹ 9,43,279/- on account of discrepancy noted in the manufacturing results. Hence, it is evident that the information received in the case of M/s Krown Agro Foods Private Ltd. also needs to be examined and the credit worthiness of the assessee has to be proved beyond doubt to accept the claim of Mr. Anil K. Dhir. Therefore, the proceedings u/s- 147/148 have been initiated to safeguard the interest of revenue and in consideration of the assessment .....

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ssessee has also submitted that initiation of proceedings u/s 147 and the issuance of notice u/s 148 on the basis of the information received from the DDIT (Investigation), Ghaziabad is, without application of mind to the information and forming an opinion. This submission of the assessee is again not well founded and is untenable. In the case of ITO vs. Selected Balurband Coal Co. Pvt. Ltd. (1996) 217 ITR 597 (SC). It was held that as under:- "A letter was written by the Chief Mining Offic .....

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IT (1994) 208 ITR 266 (Del.), it has been held that there was adequate material for holding a belief that income had escaped assessment even when the assessee had given confirmatory letters of the creditors in whose names loans were shown in the assessee's books of account but however, later on when one of the creditors was examined he admitted that the loans shown to have been advanced were bogus. In view of the above, the assessee's submissions for dropping of the reassessment proceedi .....

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48 ITR 485 (DEL) FB, held as under:- 5. For reopening an assessment made under Section 143(3) of the Act, the following conditions are required to be satisfied:- (i) The Assessing Officer must form a tentative or prima facie opinion on the basis of material that there is under-assessment or escapement of income; (ii) He must record the prima facie opinion into writing; (iii) The opinion formed is subjective but the reasons recorded or the information available on record must show that the opinio .....

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books of accounts or other documents from which the Assessing Officer could have, with due diligence, inferred material facts, does not amount to full and true disclosure of material facts . (The proviso is not applicable where reasons to believe for issue of notice are recorded and notice is issued within four years from the end of assessment year.) 11. It would be the proximity of the reasons with the belief of escapement of income, which would be the determinative factor for reopening of the .....

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of M/s Krown Agro Foods Pvt. Ltd. on 04.02.2012. In the order, disposing of objections it has been held that, the information was received after 30.09.2013 and the information could only be verified by initiating assessment proceedings u/s 147/148 for A.Y. 2012-13. It is recorded that the interest of the assessee will not be adversely affected if the information received from the office of DDIT (Inv) is verified. It is further recorded that the information received needs to be examined and the .....

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