TMI Blog2011 (12) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... d 24.12.2009 is illegal, bad in law and is liable to be quashed. c) The proceedings u/s 147 of the Act were initiated without there being reason to believe that income of the appellant had escaped assessment and consequently, the impugned proceedings are illegal and bad in law. 2. That the CIT(A) erred on facts and in law in confirming the addition of ₹ 4,75,01,000/- on account of alleged unexplained share application money received by the appellant during the year as unexplained credit u/s 68 of the Act, alleging that no evidence were filed to substantiate the said amount. 2.1 That the CIT(A) erred on facts and in law in confirming the action of the Assessing Officer in this regard without considering the contemporaneous evidence furnished by the appellant and without appreciating that the transactions were supported by proper details/documents/vouchers. 2.2 That the CIT(A) erred on facts and in law in upholding the action of the Assessing Officer in this regard without appreciating that out of share application money of ₹ 4,75,01,000/-, a sum of ₹ 3,59,85,000/- was, in fact, returned to the parties from whom such share application was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Since the assessee failed to establish identity and creditworthiness of these share applicants as also genuineness of the transactions, the AO added an amount of ₹ 42 lacs as detailed on page 6 to 10 of the assessment order in respect of Neelam Batra (Rs. 5 lacs); Deepak Agarwal (Rs. 5 lacs); Mrs. Neelu (Rs. 2lacs); Ms. Rajkumari (Rs.5lacs);Mrs. Rukmani Devi Gupta (Rs. 5lacs); Shri Leela Dhar Gupta (Rs. 5lacs); Shri Ashok Kumar Gupta(Rs. 5lacs); Shri Pradeep Singh(Rs. 5lacs) and Shri Manish Kumar Garg(Rs. 5lacs) out of total share application money of ₹ 4,82,01,000/-. Accordingly, assessment was completed on an income of ₹ 72,18,779/- vide order dated 30.3.2005 with the aforesaid addition of ₹ 42 lacs u/s 68 of the Act on account of unexplained share application money. 2.1 On appeal, the ld. CIT(A) deleted the addition to the extent of ₹ 37, lacs while upholding the addition of ₹ 5 lacs in the name of Smt. Neelam Batra. Thereafter, the AO received information from DGIT( Investigation) that the assessee company was one of the beneficiaries of the entry operator shri Deepak Gupta s/o Late shri JN Gupta, who admitted that he took cash from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment, according to the ld. DR in the following terms:- During the course of appellate proceedings, it has been submitted that return of income declaring income of Rs. ₹ 30,18,779/- was filed on 31.3.2003 and not on 29.10.2002 for an income of Rs. ₹ 10,74,990/-. The claim of the assessee has been verified from the photo copy of the said return receipt. During the appellate proceedings, it has been pleaded that Assessing Officer did not give opportunity to cross examine Sh. Deepak Gupta, who allegedly provided accommodation entries. However, this claim of the assessee, holds no substance as the onus to establish the identity, genuineness and capacity lies on the assessee which the assessee failed to discharge. It is the assessee who had business dealings with Sh. Deepak Gupta. In view of the gist of the report forming the basis of investigation wing and detailed discussion on modus operandi, the Assessing Officer gave several opportunities to the assessee to establish the identity, genuineness and capacity of the share applicants. The assessee has also pleaded that as per reasons for issue of notice u/s 148, statement of Shri Deepak Gupta was recorded on 25.09.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decisions relied upon by both the sides. As is apparent from the facts narrated in the impugned orders and the reasons recorded by the AO before reopening the assessment, the assessment for the year under consideration in this case was initially completed on 30.3.2005 on an income of ₹ 72, 18,779.During the course of assessment proceedings , the AO raised a specific query with regard to share application money of ₹ 4,82,01,000/- and after necessary enquiries, added only an amount of ₹ 42,00,000/- u/s 68 of the Act on account of unexplained share application money. On appeal, the ld. CIT(A) deleted the addition to the extent of ₹ 37,00,000/-.Thereafter, the said assessment has been reopened after the expiry of four years from the end of relevant assessment year with the issue of a notice u/s 148 of the Act on 25.3.2009. No omission or failure on the part of the assessee has been attributed in relation to disclosure of material facts, fully and truly, relating to the assessment for the year under consideration in the aforesaid reasons recorded by the AO nor the ld. DR ascribed any such failure to the assessee, before us. We find that the facts mentioned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bly, the AO chose to reopen the assessment completed u/s 143(3) of the Act after recording reasons, wherein no such failure as has been envisaged in proviso to sec. 147 of the Act, has been attributed to the assessee. In Rakesh Aggarwal v. Asst. CIT [1997] 225 ITR 496, Hon ble Delhi High Court held that in view of the proviso to section 147, notice for reassessment under section 148 would be illegal if issued more than four years after the end of the relevant assessment year unless failure is ascribed to the assessee in disclosing fully and truly all material facts necessary for his assessment. Hon ble Gujrat High Court while adjudicating a similar issue held in Shree Tharad Jain Yuvak Mandal v. ITO [2000] 242 ITR 612 as under: A perusal of the aforesaid provision goes to show that under the proviso to section 147, the foundation of conferring jurisdiction on the Assessing Officer to assess or reassess the income for any assessment year beyond the end of four years from the end of relevant assessment year must be omission or failure on the part of an assessee to make a return under section 139 for any assessment year or to disclose fully and truly all material facts necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessments which were already finalised. In the circumstances, for the assessment years 1986-87, 1987-88 and 1988-89 in the light of the fact that the initiation by issuance of impugned notices is beyond the period of four years and the prerequisite conditions stipulated by section 147 of the Act are not fulfilled, there is no case made out for upholding the proposed reassessment. The notices for all the four years are, therefore, bad in law and are quashed and set aside. 5.2 In the case of Devidayal Rolling Mills Another Vs. Y.R. Saini, ACIT,285 ITR 514,Hon ble Bombay High Court held that where an assessment order passed u/s 143(3) of the Act is sought to be reopened beyond four years from the end of relevant assessment year, the Revenue must establish that there was failure on the part of the assessee to disclose fully and truly all material facts relevant for the purposes of the assessment. 5.3 In the case of Mercury Travels Ltd. Vs. DCIT Another,258 ITR 533(Cal.), Hon ble High Court in the light of facts of the case concluded that no income chargeable to tax had escaped assessment for those assessment years due to failure of the assessee to disclose fully and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee to fully and truly disclose all material facts relevant for the assessment of the assessment year in question, concluded that the impugned notice under s. 148 issued beyond a period of four years from the end of the relevant assessment year, is required to be quashed. 5.10 Likewise in Gujrat Fluoro chemicals Ltd. vs. DCIT [2009] 319 ITR 282 (Guj), Hon ble High Court concluded that the assessee having made full disclosure of material facts in the return which was accompanied by several enclosures, assessment could not be reopened beyond four years from the end of the relevant assessment year for the reason that certain income has been wrongly assessed under the head Capital gains instead of Profits and gains of business or profession . 5.11 In Nikhil K Kotak vs. Mahesh Kumar, AO [2009] 319 ITR 445 (Guj) also it was held that in the absence of any averment of the Revenue that there was any omission or failure on the part of the assessee to disclose fully and truly all material facts relevant for the assessment of the assessment year in question, impugned notice under s. 148 issued beyond a period of four years from the end of the relevant assessment year is bad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent for removing the bar against taking action after the said four year period remains unfulfilled. In our recent decision in Wel Intertrade (P.) Ltd.', 308 ITR 33(Del.) we had agreed with the view taken by the Punjab and Haryana High Court in the case of Duli Chand Singhania, 269 ITR 192 that, in the absence of an allegation in the reasons recorded that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing Officer under section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our viewpoint, we hold that the notice dated 29-32004 under section 148 based on the recorded reasons as supplied to the petitioner as well as the consequent order dated 2-3-2005 are without jurisdiction as no action under section 147 could be taken beyond the four year period in the circumstances narrated above. 6. In the instant case, as is apparent from the facts narrated in the impugned orders, the AO reopened the assessment completed on 30.3.2005 u/s 143(3) of the Act merely on the basis of facts already available befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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