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Income Tax Officer, Ward 33 (1) , New Delhi Versus Sh. Vivek Markan

2016 (5) TMI 406 - ITAT DELHI

Reopening of assessment - reasons to believe - Held that:- We find from the facts of the assessee that not only the notice was containing wrong address but the reasons recorded clearly showed that no satisfaction of having income escaped assessment, was recorded by the AO and the proceedings were initiated only for carrying out enquiries in respect of credits in the bank accounts. We agree with the finding of the ld. Commissioner of Income-tax(Appeals) that the information which was received fro .....

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) in annulling the assessment passed by the AO being not in accordance to law. The ground of the appeal is, thus dismissed. - Decided against revenue. - ITA Nos. 663 & 664/Del/2010 - Dated:- 30-3-2016 - SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : Sh. Sarabjeet Singh, Sr. DR For The Respondent : Sh. Virender Chauhan, CA ORDER PER O.P. KANT, A.M.: These two appeals filed by the Revenue are directed against two separate orders, both dated 23rd November, .....

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ake up the appeal in ITA No. 663/Del/2010. The ground of appeal in ITA No. 663/Del/2010 for assessment year 2004-05, reads as under: Ld. CIT(A) has erred in annulling the assessment for the AY 2004-05 without considering the fact that the AO has followed all the statutory procedures for reopening the case under section 147 of the IT Act and framing the assessment under section 144 of the IT Act. 4. The facts in brief are that the assessee, an individual, derived its income from business. The ass .....

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nk, Naya Bazaar, Delhi. According to the AO, the notice was duly served on the assessee, however, there was no compliance from the assessee. Thereafter, the AO issued notice under section 142(1) and notice under section 143(2) of the Act. For non-compliances of the notices, the AO also initiated penalty proceedings under section 271(1)(b) of the Act, accordingly, the AO completed the assessment under section 144 of the Act. In the assessment, the AO held entire gross credits of ₹ 2,26,31,8 .....

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147 of the Act were not valid. Aggrieved with the finding of the Ld. Commissioner of Income-tax( Appeals), the Revenue is in appeal before the Tribunal. 5. The Ld. Senior Departmental Representative (DR) relying on the order of the AO submitted that the assessee did not participate in the reassessment proceedings, which were initiated in accordance to law, and therefore, the Ld. Commissioner of Income-tax(Appeals), was not justified in questioning the reassessment proceedings. 6. On the other ha .....

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e unsigned, fourthly the reasons recorded were not sufficient to form a belief that income has escaped assessment. In support of his claim, the Ld. AR relied on the order of the Ld. Commissioner of Income-tax(Appeals). 7. We have heard the rival submissions and perused the material on record. In the case of the assessee, the AO received a request from ITO Ward 18(1) for verification of the fact of the payment of ₹ 5 lakhs towards share application money in Unique Plus Agro & Expo priva .....

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se credits. He did not mention any reason how the income escaped the assessment. In the reasons recorded the AO has mentioned as income of ₹ 12 lakh had escaped assessment, but from where and how the figure of ₹ 12 lakh came was not mentioned. The Ld. Commissioner of Income-tax(Appeals) has dealt the objections of the assessee in respect of non-service of the notice as well as lack of credible information on the basis of which he could have a reason to believe that income escaped ass .....

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/6/2007 for confirming the fact of purchase of draft by the appellant and also sought copy of his bank statement for the period 114/2002 to 31/3/2004. This inquiry was conducted by the AO not in pursuance of any ongoing lawful proceedings. Vide letter dated 7/7/2007, the bank had, in fact, confirmed the fact of payment of ₹ 5 Lacs by demand draft drawn by the appellant on the same bank account for towards the share application of Unique Plus Agro & Expo. A copy of the hank statement fo .....

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, I observe that the learned AO did not inform the ITO, Ward 18(1) about this fact subsequently even though that was the only purpose of inquiry behind information sought U/3 133(6). Instead of doing the same and closing the matter, the AO went ahead to inquire the credit balances in the bank account of the appellant even when the prescribed time for issue of notice u/s. 143(2) is expired by issue of notice u/s 148. 4.3 The reasons as recorded by the learned AO clearly show that the learned AO w .....

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session of any information that could be inferred in any possible manner as escapement of income in respect of credit entries, while in the admission of the AO, in the assessment order, the proceedings were initiated for the purpose of carrying out inquiry of credit entries. Since there was no credible 'information', whatsoever that could infer any escapement, obviously the AO could not have any 'reason to believe'. Provisions of section 147 cannot be used for making roving inqui .....

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iable to use the information gathered u/s. 133(6), -even though was not adverse, for recording the reasons for issue of notice u/s. 148 of the Income-tax Act, when the proceedings u/s. 133(6) themselves were not lawfully correct. 4.4 The learned AR has produced the copy of notice u/s. 148 which was unsigned. It is not explainable as to how while on inspection the appellant was provided a copy of the notice which was unsigned but also showing receipt of notice by one "Nirmal" on '21 .....

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is since the notice was not issued for the right address, there is absolutely no likelihood that it would have ever been served upon the appellant. Moreover, AR on inspection found both copies of the notices 148, lying unsigned in the file, which clearly shows that the notice was void and not served. 4.5 In view of the above, I hold that the proceedings initiated by the learned AO by issue of notice u/s. 148 in' itself were invalid being not based on any information that could infer any kind .....

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