TMI Blog2016 (4) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act is the specific mention of the AO in the reasons recorded, as to the failure on the part of the assessee. In the present case, there is not even a whisper of an allegation by the AO in the reasons recorded that 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 its assessment. - Decided in favour of assessee. - ITA Nos. 710 & 711(Asr)/2014, ITA No. 705(Asr)/2014 - - - Dated:- 25-2-2016 - A. D. Jain, JM And T. S. Kapoor, AM For the Appellant : Shri Salil Kapor, Adv. Shri Nirmal Mahajan, CA, Shri Samit Lal Chandani, Adv. Ananya Kapoor, Adv. For the Respondent : Shri S Kanwal, DR ORDER Per A D Jain, AM As the issue involved in all these appeals is common, the appeals are being decided together by this consolidated order. 2. First, we will take up appeal in ITA No.710(Asr)/2014 for the assessment year 2006-07. 3. In ITA No.710(Asr)/2014, the following grounds have been raised: 1. That the notice issued u/s 148 reassessment orders passed are illegal, bad in law, without jurisdiction and barred by time limitation. 2. That the CIT(A) has grossly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as completed under section 143(3) of the Income Tax Act, 1961; that the notice under section 148 of the Act was issued beyond a period of four years from the end of the assessment year and hence, the proviso to section 147 is applicable; that as per the proviso to section 147 of the Act, where an assessment under section 143(3) of the Act has been made for the relevant assessment year, no action shall be taken u/s 147 after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee, inter-alia, to disclose fully and truly all material facts necessary for his assessment, for that assessment year. It has been contended that in the reasons recorded for the reopening of the completed assessment of the assessee, there is no allegation regarding any failure on the part of the assessee to disclose any material facts relevant for the assessment; that in the absence of such allegation, the AO has no jurisdiction to issue any notice u/s 147 beyond four years from the end of the assessment year, where the assessment order was passed u/s 143(3). I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 0192. The comparison of the facts of the assessee's case with the case of Duli Chand Singhania on the face of it itself makes the comparison look ludicrously odious. The facts are delineated as under:- Facts of the case of Shri Duli Chand Singhania: In this case, the assessee, a legal practitioner, had claimed deduction under section 80-0 of the Income tax Act, 1951 at ₹ 1,76,54,480/- i.e. @ 50% of his gross professional receipts declared at ₹ 3,53,08,960/- declaring in the return of income for the assessment year 1995-96. The return was processed under section 143(1)(a) and necessary intimation was sent. Thereafter, the case was selected for scrutiny and requisite notices under ss. 143(2) and 142(1) of the Act, dt. 2nd Aug., 1996, were issued. Aquestionnaire dt. 2nd Aug., 1996 was also issued requiring the assessee to furnish various details. The assessment was ultimately completed under s. 143(3) of the Act vide order dt. 30th March, 1997 at a total income of ₹ 16,12,230. The difference in the returned income and the assessed income represented various disallowances made by the AO. However, deduction under s, 80-0 of the Act was allowed as cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement recorded on 12.05.2011 also admitted that his company M/s. Washington Software Ltd was involved in providing accommodation entries and also accepted the fact that he has provided accommodation entries to the Apeejay Group through his company M/s.WSL. As a result of this information, survey operations under section 133A were conducted on the business premises of the assessee group on 29.3.2011 during which statements of different persons actively involved in the management and running of the assessee group were recorded. During the course of survey, the most incriminating fact which came to light that no soft was installed at any of the institution of the assessee group but entries in the books of account of different institutions being run by the assessee group were found. The persons whose statements were recorded had deposed that they had received only bills for entering in the books of account and no software were ever installed or received by them. It was further found that M/s. WSL had been providing accommodation entries in such manner in various years from assessment year 2003-04 onwards till 2010-11 i.e. the year which closed before the date of search on M/s.WSL and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case that the facts disclosed by the assessee have been found to be false at any later stage. It may be mentioned that the assessee's counsel had relied upon one other judgment of the Hon'ble Punjab Haryana High Court in the case of Mahavir Spinning Mils Ltd. Vs CIT in 270 ITR 290. Again, the reliance is wholly misconceived. The factual matrix of the assessee's case has been delineated above and the factual matrix of this case has been delineated above and the factual matrix of this case has been delineated by the Hon'ble High Court as under:- M/s Mahavir Spining Mills Ltd. is a public limited company incorporated under the Companies Act,1956, and is regularly assessed to income -tax under the Act. If filed its return of income for the asst. year 1995-96 on 28th Nov., 1995, showing a total income of ₹ 23,85,28,960. The return was subsequently revised on 16th July, 1996, showing an ncome of ₹ 24,24,63,910. In the return filed by the assessee, it had claimed exemption under s. 10B of the Act in respect of profits and gains derived from one of its units, M/s Annant Spinning Mills (Unit I), which was a 100 per cent export-oriented unit, amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court is/empowered to give direction for completing assessment beyond the limitation period in order to/see complete justice is rendered. It is further submitted that the Hon'ble Supreme Court in the/case of Collector of Land Acquisition Vs Mst. Katiji reported at 167 ITR 0471 has held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred In view of the assessee's ground of appeal may kindly be rejected. 8. We have heard the rival contentions on this issue. Section 147 (relevant portion) reads as follows: Section 147: If the Assessing Officer has reason to believe] that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which has led to escapement of income from assessment, the assessee obviously, requires to be made aware of the fact of such non-disclosure on his part. This is clearly in accordance with the natural justice principle of audit alterem partem. The first proviso to section 147, thus, provides for: (i) the necessary opportunity to the assessee to explain his alleged failure to disclose fully and truly all material facts necessary for his assessment for the relevant assessment year. This opportunity shall be granted to him by issuance of a notice u/s 148(1); (ii) clarity obviating any arbitrariness or haziness on the part of the AO in conveying to the assessee, the exact nature of the assessee's default, as per the A.O. such a notice would emerge from the AO's reasons to believe escapement of income from assessment, as envisaged u/s 147. 12. The genesis of the reassessment proceedings, therefore, is the reasons to be recorded by the AO, of his belief of escapement of income from assessment and in compliance with the first proviso to section 147, such reasons to believe must comprise of the specific mention of the assessee's failure to disclose fully and trul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Washington Software Ltd., only issued sale bills and no actual sales took place and he accepted the fact that his company was providing accommodation entries to the assessee Society. In order to verify the genuineness of purchase of software from M/s Vashington Software Ltd., a survey u/s 133A was conducted in case of M/s Apeejay Education Society, at different premises of the assesses and during the course of survey it was found that no actual deliveries, of any goods or commodities or services: software have ever been provided by the company, M/s Washington Software Ltd, to be various institutes of the above Society, though bills were received and claimed in its account by the assessee Society. Principals and IT persons of the Institutes covered u/s 133A categorically stated that they only received bills from the head office of the Society and no software from the above company were ever supplied or installed in their institute. Statement of Sh. Vijay Kumar Berlia, Genera! secretary and authorized signatory of the Society was recorded on 29.03.2011 by DOIT (Inv.) Unit VI(3), New Selhi. Shri Vijay Kumar Berlia failed to produce anything in support of the actual transaction with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly all material facts necessary for his assessment. 16. In Dulichand Singhania (supra), 'Ess Ess Kay Engineering Co. Pvt. Ltd.', 137 ITR 446 (P H) was referred to on behalf of the department. The same was, however, held to be distinguishable. In 'Ess Ess Kay Engineering Co. Pvt. Ltd.' (supra), the proceedings had been initiated on the ground that the AO on the basis of subsequent information, had found that the facts disclosed at the time of original assessment were false, due to which, the assessee had failed to disclose truly all facts for its assessment. In Dulichand Singhania (supra), there was no allegation that the facts disclosed by the assessee had been found to be false at any later stage. Before us, on behalf of the Department, it has been contended that as supposed to in 'Dulichand Singhania' (supra), in the present case, the facts disclosed by the assessee have been found to be false at a later stage and so, in keeping with 'Ess Ess Kay Engineering Co. Pvt. Ltd.', (supra), it cannot be said that the assessee had disclosed fully and truly all the material particulars. 17. The contention of the department in this regard does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said firm by the assessee in the shape of commission had escaped assessment on account of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment: a) T.A. Bills of Sh. K.S.Khosla, managing partner of M/s. Kay Engineering Sales Corporation which were impounded u/s 131 were false to the extent that he was shown on tour on certain dates on which he was actually present in Kapurthala and attended the directors' and shareholders' meetings of the company. b) The receipt and despatch books of the company which were inspected during the course of proceedings for 1967-68 showed that no correspondence was exchanged between the so-called sole selling agents and the company. c) It was found that the existence of Sh. S.K. Puri and Yodha Ram, who are said to be the two traveling agents employed by the firm and submitted daily progress reports, was doubtful as the assessee had failed to furnish even the basic information about them. d) The assessee's claim that M/s. Kay Engineering Sales Corporation had issued circulars, letters, etc., to its distributors was doubtful and was not supported by any evide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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