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2015 (6) TMI 37 - ITAT DELHI

2015 (6) TMI 37 - ITAT DELHI - TMI - Reopening of assessment - Addition u/s 68 - Held that:- while recording the reasons by the AO, the AO has mentioned the names of three firms namely Hillridge Investment Ltd; Nisha Holdings Ltd and Shalini Holdings Ltd. and stated that the AO had issued notice u/s 148 in respect of the share application money of M/sShalini Holdings Ltd. We also find that vide the order sheet entry 27.10.2009 and 4.11.2009, the AO called the details of three parties and in resp .....

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ss of the transactions and identity of the creditor, hence, in view of the above, the reassessment proceedings initiated u/s. 147/148 are illegal and is liable to be quashed - Decided in favour of assesse. - I.T.A. Nos. 330, 331, 332 & 334/Del/2015 - Dated:- 29-5-2015 - SHRI N.K. SAINI AND SHRI H.S. SIDHU, JJ. For the Appellant : Sh. OP Sapra, Adv. & Sh. Pankaj Gupta, CA For the Respondent : S h. P. Dam Kanunjna, Sr. DR ORDER PER BENCH Assessee has filed these appeals against the separate Or .....

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l Commissioner of Income Tax, Range-1, Ghaziabad has erred in law by making an addition of ₹ 1,50,00,000/- to the Income of the Assessee's company being issued capital U/S 68 of the Income Tax Act, 1961. 2. That the Learned A.O. has erred in law and facts of the case in not considering the various details, pleadings and written submissions made from time to during the course of assessment proceedings. 3. That the interest as charged under Section 234B and 234C is illegal on various fac .....

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ced hereunder:- 1. That the Learned Additional Commissioner of Income Tax, Range-1, Ghaziabad has erred in law by making an addition of ₹ 1,50,00,000/- to the Income of the Assessee's company being issued capital U/S 68 of the Income Tax Act, 1961. 2. That the Learned A.O. has erred in law and facts of the case is not considering the various details, pleadings and written submissions made from time to during the course of assessment proceedings. 3. That the interest as charged under Se .....

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ed in the assessment year 2009-10 are reproduced hereunder:- 1. That the Learned Additional Commissioner of Income Tax, Range-1, Ghaziabad has erred in law by making an addition of ₹ 2,30,00,000/- to the Income of the Assessee's company being issued capital U/S 68 of the Income Tax Act, 1961. 2. That the Learned A.O. has erred in law and facts of the case is not considering the various details, pleadings and written submissions made from time to during the course of assessment proceedi .....

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on of the learned I.T.A.T. 5. The grounds raised in the assessment year 2011-12 are reproduced hereunder:- 1. That the Learned Additional Commissioner of Income Tax, Range-1, Ghaziabad has erred in law by making an addition of ₹ 2,00,00,000/- to the Income of the Assessee's company being issued capital U/S 68 of the Income Tax Act, 1961. 2. That the Learned A.O. has erred in law and facts of the case is not considering the various details, pleadings and written submissions made from ti .....

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ime of hearing of Appeal with the kind permission of the learned I.T.A.T. 6. The brief facts of the case are that this case has been selected for scrutiny on the information received from DIT(Inv.)-II, Delhi regarding accommodation entries provided by Shri Surendra Kumar Jain Group of cases to various beneficiary companies and other. Accordingly, after obtaining approval for issuance of notice u/s. 148 read with section 147 of the I.T. Act, 1961, a notice u/s. 148 dated 25.3.2013 was issued and .....

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ch were duly supplied to him. The assessee is a Limited Company specializing in the line of manufacturing rolls for various industries. The main supply to the customers by the company include Paper, Steel, Textile, Vinyl, Laminates, Packaging, Asbestos Sheet manufacturers, Leather, Aluminum and Cooper Foils, Coating Plants and Poly Films, related industries. As per AO the assessee company has failed to prove existence of third party and ability to advance money as books of account of said compan .....

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companies. Therefore, an addition of ₹ 1,50,00,000/- on account of bogus entries, treating it as unexplained share application money, u/s. 68 is being made to the income of the assessee and completed the assessment at a total income of ₹ 1,77,41,068 u/s. 147/143(3) of the I.T. Act vide his order dated 20.2.2014. 7. Against the order of the Ld. AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 13.11.2014 has dismissed the appeal of the assessee. 8. Aggrieved w .....

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bitrary, unjust, illegal and consequently, the impugned assessment order passed u/s. 147 by the Ld. AO is liable to be quashed. The above additional ground of appeal was not raised before the Ld. CIT(A) by assessee s counsel through oversight. Though the issue of notice u/s. 148 of the I.T. Act by the Ld. AO on the basis of information received from Investigation Wing is wholly unjustified and illegal. A Certificate of the Counsel who had prepared and filed the appeal before the Ld. CIT(A) Sh. P .....

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& Co. Chartered Accountants Sd/- Partner Place: Meerut Date: 18/03/2015 The appellant relies on the following case laws on the admission of additional ground of appeal by the ITAT: - 229 ITR 383 National Thermal Power Corpn. Co. Ltd. VS CIT [SC] - 30 ITD, Indo Java & Co. vs. IAC (Delhi ITAT, Special Bench) - 193 ITR 624 CIT vs. Kerala State Coop. Marketing Federation Ltd. (Kerala High Court) - 194 ITR 448 Inventors Industrial Corporation Ltd. vs. CIT (Bombay High Court) - 198 ITR 3 Tayl .....

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though objected to the request of the assessee s counsel, but could not controvert the factual matrix narrated by the Ld. Counsel for the assessee. 12. We have heard both parties on the admission of additional grounds, as aforesaid. After going through the written submissions filed by the assessee on admission of additional grounds in which the Ld. Counsel of the assessee has cited various decisions on the legal issues raised by the assessee, we are of the view that in the interest of justice, t .....

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s and under the law, notice u/s. 148 issued by the AO in this case is arbitrary, unjust, illegal and consequently, the impugned assessment order passed u/s. 147 by the AO is liable to be quashed. In support of his contention assessee s counsel filed the Written Synopsis. For the sake of convenience, we are reproducing herewith the Written Synopsis filed by the Assessee as under:- Synopsis with regard to additional ground of appeal against the validity and legality of reassessment order passed u/ .....

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Court in the case of GKN Driveshafts(lndia) Ltd. Vs. Income-tax Officer and Others - 259 ITR 19 (SC) in which it was held that the AO had to dispose of the objections, if filed, by passing a speaking order before proceeding with the assessments for those years. Failure to pass such an order has vitiated the impugned reassessment order uls 147/148 of the I.T. Act which deserves to becancelled/quashed/annulled. 4. The impugned reassessment is also illegal because in the reasons recorded, there wa .....

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here was no mention of the assessee not having made a full and true disclosure of the material facts necessary for assessment. - 357 ITR 330 CIT vs. Insecticides India Ltd. (Delhi H.C.) - 338 ITR 51, Signature Hotels Pvt. Ltd. Vs. ITO (Delhi H.C.). In this case, it was held that the reassessment proceedings initiated on the basis of information received from the DIT (Inv) that the petitioner had introduced money amounting to ₹ 5 Lacs from a Co. S was nothing but an accommodation entry and .....

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this Range, M/s Modi Nagar Rolls Ud. has taken entries from the concern entry provider Shri Surender Kumar Jain Group of cases. During the year under consideration Mls Modi Nagar Rolls Ltd. has taken an entry of ₹ 1,45,OO,000/- from Hillridge Investment Ltd. Nisha Holdings Ltd . and Shalini Holdings Ltd. by check through UTI, HDFC and Axis Bank through Shri Pankaj of Meerut. I have verified the record. It is pertinent to mention here that in A.Y. 2010-11 assessment of above referred compan .....

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ir own unaccounted money introduce by way of bogus share application money. Hence, I have reason to believe that income has escaped assessment". From the above, it is evident that the Id. AO had issued notice uls 148 in respect of the share application money of Mls Shalini Holdings Ltd. which had invested share application of ₹ 25,OO,000/- only and therefore, the Id. AO was not justified in making additions of ₹ 1,50,00,000/- by adding the share application money provided by the .....

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e Synopsis, relevant portion of which is reproduced below at pages 6-7 "Attend Sh. Pankaj Gupta CA. He files asked details. Please file the following details: (i) Complete details of receipts of share application money, giving names and complete addresses, PAN, ward /circle of the investor. File confirmations, copy of bank Alc and their ITR. b) Copies of order sheet entry dated 04/11/2009, attached as Annexure I to these Synopsis, relevant portion of which is reproduced below at pages 7-8 & .....

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t pages 96-100 of the paper book. (ii) Complete copies of share application money, board resolutions, copy of bank certificates, confirmation letter with copy of incorporation certificate and income-tax acknowledgement are enclosed from page no. 504-543". Copies of the share applications Forms, bank statements, balance sheets etc. are placed at pages 101-176 of the paper book. Therefore, the impugned reassessment proceedings initiated are illegal for which, reliance is placed on the followi .....

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tion 147 pertaining to the assessment years 1999-2000, 2001-02, 2002-03 and 2003-04 were not valid". - 363 ITR 603, NOT Systems and Another vs. ITO dated 04/12/2012 (Bombay High Court), in which at page 611 & 612, it was held as under: "Therefore, the impugned notice and the reasons in support thereof clearly indicates that it has been issued merely on the basis of change of opinion and would amount to a review of the Assessment Order dated 11/12/2003. Further, the reasons for reop .....

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ecords that radiography charges and labor charges were made to various persons like Senior Technicians, Senior Radiographer and Jr. Technicians etc. from the chart submitted in the regular assessment proceeding leading to order dated 11/12/2009. Therefore, it is very clear that impugned notice for reassessing the assessment year 2007-08 has been issued merely on change of opinion and in fact seeks to review the assessment which is already completed. ……………&helli .....

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re reproduced below: "Held, Allowing the petition, that this was not a case where the' Assessing Officer, while framing the original scrutiny assessment, did not examine the assessee's claim to deduction. He was actually conscious of such a claim and was also of the opinion that the entire claim was not required to be granted. He called for an explanation of the assessee and after taking into consideration the explanation, made disallowance to the extent he was convinced it was nece .....

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eassessment proceedings initiated u/s 147/148 are illegal and it is, therefore, prayed that the same may kindly be quashed/annulled. 14. On the other hand, Ld. DR relied upon the order passed by the Ld. CIT(A). He stated that assessee has not filed any evidence regarding its filing the objections before the AO on the issuance of notice u/s. 148 of the I.T. Act. Secondly, he stated that the AO should have decide the objections if any, but on this account assessment cannot be declared void ab init .....

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.T. Act is concerned, we are of the view that the AO has issued notice u/s. 148 of the I.T. Act, after recording the following reasons which is at page 41 of the Paper Book. Reasons for the belief that income has escaped assessment Information received from DIT(Inv.)-II, ARA Centre Jhandewalan Extn., New Delhi letter F.No.DIT(Inv.)- II/U/s.148/2012-13/240, Dated 15.03.2013 Regarding accommodation entries provided by Shri Surendra Kumar lain Group of Cases to various beneficiary companies & o .....

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above referred company M/s. Modi Nagar Rolls Ltd. was passed by the undersigned, On enquiry made by undersigned and non furnishing of complete detail the capacity, creditworthiness and genuineness could not be proved and addition of uls 68 was made in case of entry received from M/s. Shalini Holding and MIs, Apoorva leasing Finance & Investment Pvt. Ltd. M/s Shalini Holding finds name in the list of entry provider. Hence, I have reason to believe that the share application money taken by co .....

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at page 42 of the Paper Book, those were not decided by the AO till the completion of the assessment. In our view, this is contrary to the prescribed law and the assessment completed by the AO is void ab initio and deserve to be quashed and accordingly, we quash the assessment. Our view is supported by the judgment of the Hon ble Apex Court in the case of GKN Driveshafts(lndia) Ltd. Vs. Income-tax Officer and Others - 259 ITR 19 (SC) in which it was held that the AO had to dispose of the objecti .....

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t any fresh evidence which was not on record or in other words, no fresh evidence was available with the AO for reopening the assessment in dispute. He requested that assessment in dispute may be cancelled, because the AO has wrongly reopened the case of the assessee by issuing the notice u/s. 148 of the I.T. Act without any fresh evidence and similarly the Ld CIT(A) has also upheld the invalid assessment by passing the impugned order which deserves to be cancelled. He also filed the synopsis, a .....

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e High Court on the issue in dispute. We have perused the order sheet of the AO and we find that while recording the reasons by the AO, the AO has mentioned the names of three firms namely Hillridge Investment Ltd; Nisha Holdings Ltd and Shalini Holdings Ltd. and stated that the AO had issued notice u/s 148 in respect of the share application money of M/sShalini Holdings Ltd. We also find that vide the order sheet entry 27.10.2009 and 4.11.2009, the AO called the details of three parties and in .....

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hiness of the transactions and identity of the creditor, hence, in view of the above, the reassessment proceedings initiated u/s. 147/148 are illegal and is liable to be quashed. Our view is supported by the following judgments / decisions viz. :- Hon ble Jurisdictional High Court in the case of Signature Hotels P. Ltd. vs. Income Tax Officer [2011] 338 ITR 0051 wherein the Hon ble High Court has held matter as under:- Held, allowing the petition, that the reassessment proceeding were initiated .....

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xure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid-up capital of ₹ 90 lakhs and was incorporated on January 4, 1989, and was als .....

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IT dated 22104/2013 (Gujarat High Court), Head notes are reproduced below: "Held, Allowing the petition, that this was not a case where the' Assessing Officer, while framing the original scrutiny assessment, did not examine the assessee's claim to deduction. He was actually conscious of such a claim and was also of the opinion that the entire claim was not required to be granted. He called for an explanation of the assessee and after taking into consideration the explanation, made d .....

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nt years 1999-2000, 2001-02, 2002- 03 and 2003-04 were not valid. - 363 ITR 603 NDT Systems and another vs ITO dated 4.12.2001 (Bombay High Court) (Supra). "Therefore, the impugned notice and the reasons in support thereof clearly indicates that it has been issued merely on the basis of change of opinion and would amount to a review of the Assessment Order dated 11/12/2003. Further, the reasons for reopening as communicated by the petitioner is not on the basis of any tangible material but .....

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r Technicians, Senior Radiographer and Jr. Technicians etc. from the chart submitted in the regular assessment proceeding leading to order dated 11/12/2009. Therefore, it is very clear that impugned notice for reassessing the assessment year 2007-08 has been issued merely on change of opinion and in fact seeks to review the assessment which is already completed. …………………………….. In view of the above, we find that the impug .....

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