TMI Blog2011 (4) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was reopened u/s 147 on the basis of information received from the Directorate of Investigation Wing, Income Tax department that the assessee has taken accommodation entry of share capital money from M/s Fair N Square Export Pvt.Ltd. It was also found that the assessee company received share capital money from three companies i.e. Fair N Square Export Pvt.Ltd, Onyx Exim Sales P.Ltd., B.T.Technet Ltd. of ₹ 400,000/-, ₹ 300,000/- and ₹ 400,000/- respectively. In the assessment proceedings the A.O. treated the said share capital money as unexplained investment of the assessee on the basis of statement made by directors of this company and added the same u/s 68 of the Income Tax Act, 1961. Before the Ld.CIT(A) the assessee agitated on the issue of reopening of assessment and has submitted the following. That the Notice u/s 148/147 (expired on 31.3.2006) issued after four years from the end of relevant assessment year (2001-2002) in which original assessment was made u/s 143(3) of the Income Tax Act, 1961 is not in accordance with the law. The notice was issued on 25.3.2008. The time was expired on 31.3.2006. The proceedings u/s 147 can be init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) of the Income Tax Act, 1961. These all facts were discussed and duly brought to the notice of Ld.ITO in assessment proceedings u/s 147/148 that there was no failure on our part to disclose all material facts in the original assessment and as such there is no escapement of income. Hence, therefore it was requested to withdraw the notice issued after passing of four years from the end of relevant A.Y. While disposing the objection by the Ld.ITO, vide order received on 12.12.2008, no where it has been stated that whether there was any failure on our part to disclose all material facts before then Ld.ITO or whether these alleged transactions were subject matter of the original assessment or not. The cases cited by Ld.ITO while disposing objection are not relevant in our case because there was no other material before the Ld.AO which has not taken into consideration in the original assessment u/s 143(3). The following pronouncements are given in support of our contention:- In case CIT vs. Premier Mills Ltd. (T.C.A.) Nos. 603 and 604 of 2007 (2009) 179 Taxman 13 (Mad.) High Court of Madras stated that the case can not be reopened after four years without establishin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the I.T.Act. Further, as per the provisions of section 147 of the I.T.Act, mere production of account books from which material evidence could have been discovered by the A.O. will not necessarily amount to disclosure. Therefore, mere production of balance sheet, profit and loss account or account books will not necessarily amount to disclosure within the meaning of the provisions of section 147 of the I.T.Act. Reliance in this regard is also placed on the decision of Hon ble Mumbai High Court in the case Dr.Amin s Pathology Laboratory vs. JCIT (2001) 252 ITR 673 (Bom.) The A.O. has followed all the procedures laid down in the Act and recorded reasons which had live link with the material in possession. The belief formed by the AO was rational and on the basis of relevant material and it was not based on gossip/rumours. The A.O. recording his satisfaction, on the basis of information received from Investigation Wing of the Department and after satisfying himself with the contents of the information. Therefore, the case laws relied upon by the appellant are not applicable in the instant case. The appellant has taken the plea that assessment has been r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the relevant assessment year) : Provided that where an assessment under sub section (3) of section 143 or this section has been made for the relevant A.Y, no action shall be taken under this section after the expiry of four years from the end of the relevant A.Y, unless any income chargeable to tax has escaped assessment for such A.Y. by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that A.Y. Explanation 1 : Production before the A.O. of account books or other evidence from which material evidence could with due diligence have been discovered by the AO will not necessarily amount to disclosure within the meaning of the foregoing proviso. 6. We find that in this case the assessment order has been reopened after expiry of 4 years from the end of relevant assessment year. Under the circumstances the proviso to the section is applicable. The proviso states that where an assessment under sub section (3) of section 143 or this section has been made for the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Entry giving bank Account no. from which entry was given Fair N Square Exports P.Ltd. Indraprastha Sehkari Bank Ltd., Wazirpur group indl.area 400000 429141 dt. 30.6.2000 Vijaya bank, Ram Nagar 2785 The assessee has received unexplained sums from the entry operators as per the above details as per information available with the undersigned. As explained above, the identity, credit worthiness and genuineness of transactions with the persons found to be entry operators cannot be established. I therefore have reasons to believe that on account of failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment for above A.Y., the income chargeable to tax to the extent of accommodation entry mentioned above, ahs escaped assessment within the meaning of Section 147 of the Act. Since four years has since expired from the end of the relevant year, and assessment u/s 143(3) was completed in the case of the assessee for the said assessment year, the reasons recorded above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee through banking channel. The identity of the companies was not disputed. Under these circumstances, the initiation of proceedings u/s 147 and issuance of notice u/s 148 of the Act were to be quashed. We further frefer to JSRS Udyog Ltd. and another vs ITO, 313 ITR 321 (Delhi) :In this case the original assessment of the assessee was framed u/s 143(3) on March 5, 2003. In the course of assessment proceedings the assessee had furnished details of share application money received by it from S. It was also stated that all the share application money had come from companies which were duly registered under the Companies Act, 1956, and that each one of them was a legal entity. It was also stated that the applicants had confirmed their investments through duly attested affidavits. The statements were accepted, but subsequently the A.O. issued notice u/s 148 on March 28, 2008. In the reasons recorded in writing for reopening the case u/s 148 of the Act, there was no allegation that the assessee did not make a full and true disclosure of all the material facts. The assessee objected to the notice but the AO rejection the objection. On a writ petition against the order : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r proceeding u/s 147/148 of the Act. As the first part was only an information and the second and the third parts of the reasons were mere directions, it was not at all discernible as to whether the AO had applied his mind to the information and independently arrived at a belief that, on the basis of the material which he had before him, income had escaped assessment. There was no substantial question of law for consideration. 10. In the present case the original assessment was framed u/s 143(3) of the Income Tax Act, 1961. Subsequently information was received from Investigation Wing of the I.T.department that the assessee is a beneficiary of an accommodation entry received from certain established entry operators identified by the Investigation Wing during the period relevant to A.Y. 2001-2002. We find that at the time of original assessment the assessee has disclosed all particulars regarding share capital money. A.O. had also obtained confirmation from the investors by sending letter u/s 133(6). In the reasons recorded there is no mention that assessee did not make a full and true disclosure of material facts. The reopening was done merely on the basis of information receive ..... X X X X Extracts X X X X X X X X Extracts X X X X
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