New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (11) TMI 1535 - ITAT DELHI

2015 (11) TMI 1535 - ITAT DELHI - TMI - Reopening of assessment - reasons to believe - Held that:- AO has merely relied on the report of the investigation wing but it is apparent that he has not applied his mind to the materials which were before him. In our view, without forming a prima facie opinion on the basis of only the report of the Investigation Wing of the Income Tax Department, it was not legal for the AO to have simply concluded that he has reason to believe that income chargeable to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent year is bad in law and we accordingly quash the reassessment proceedings. - Decided in favour of assessee - ITA No 3103/Del/2013 - Dated:- 27-11-2015 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For the Appellant: Dr. Rakesh Gupta & Shri Tarun Kumar, Advocate For the Respondent: Ms. Rakhi Vimal, Sr.DR O R D E R PER SUDHANSHU SRIVASTAVA JUDICIAL MEMBER Assessee has filed this appeal against the impugned order dated 25.3.2013 passed by the Ld. CIT(A) - .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

case was processed u/s 143(1). Information has been received from the Investigation Wing of the Income Tax Department that the above named assessee is a beneficiary of accommodation entries received from certain established entry operator identified by the Wing during the period relevant to A.Y. 2004-05. A comprehensive investigation was carried out by the Investigation wing for identification of entry operators engaged in the business of money laundering for the beneficiaries and on the basis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

operators. Entry operators were identified after thorough investigation on the basis of definite analysis of their identity, creditworthiness and the source of the money ultimately received by beneficiaries. These entry operators are found to be mostly absconding/ non-complying after the unearthing of the 'Money Laundering Scam' leaving the said money at the disposal of the beneficiaries without any associated cost or liability. In the instant case, the assessee is found to be the benefi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

0,000/-, which is the assessee's own income, has escaped assessment within the meaning of Section 147 of the Act. Since four years have since expired from the end of the relevant assessment year, and no scrutiny assessment was completed in the case of the assessee for the said assessment year, the reasons recorded above for the purpose of reopening of assessment are put up for kind satisfaction of Addl. CIT, Range -15, New Delhi in terms of Section 151 of the Act. Beneficiary bank name Benef .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d Corpn Bank Kamla nagar Parivartan Capital & Financial Services Pvt Ltd 3317 02-Sep-03 Rasalika Tr. 270902 500,000 Rasalika Trading & Investment Co'Pvt Ltd Corpn. Bank Kamla nagar Parivartan Capital & Financial Services Pvt Ltd 3317 11-Dec-03 R Trading & investment 338500 400,000 Rasalika Trading & Investment Co Pvt Ltd Corpn. Bank Kamla Nagar Parivartan Capital & Financial Services Pvt Ltd 3317 29-Nov-03 Rasalika Trading & investments 270911 300,000 Rasalika Tra .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the meaning of Section 147 of the Act. Since four years have since expired from the end of the relevant assessment year, and no scrutiny assessment was completed in the case of the assessee for the said assessment year, the reasons recorded above for the purpose of reopening of assessment are put up for kind satisfaction of Addl. CIT, Range -15, New Delhi in terms of Section 151 of the Act. 3. As per the AO, the reasons as reproduced above were provided to the assessee along with the notice u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

copies of the bank account of these parties, it was the AO s view that their creditworthiness could not be proved. The AO also gave a finding that these companies were dormant as they had not filed the prescribed returns with the Registrar of Companies for the last several years. The AO also observed that a perusal of the bank statements of the parties from whom the assessee had received funds revealed that these entries were cleared after deposit of equivalent amount in cash or transfer just p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

onus to produce legally acceptable evidence of creditworthiness of the companies and accordingly the addition made by the AO was confirmed. 5. In the present appeal before us the main ground of appeal is as under:- i) that having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned reassessment order u/s 147/143(3) and that too without complying with other mandatory conditions as envisaged u/s 147 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ubmitted that the so called information said to be received from the investigation wing had not been duly processed by the AO and that there was no material on record to show that the AO had applied his mind in forming a belief which would result in the reason to believe as required to proceed u/s 147 and 148 of the Income Tax Act, 1961. Ld. Counsel vehemently contended that the copy of the reasons recorded given to the assessee clearly shows that the AO simply proceeded in a mechanical manner a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Pharma India Ltd. of the Hon ble Delhi High Court which has affirmed the judgment of the ITAT Delhi C Bench in ITA No. 3149/Del/2013. 7. Ld. DR on the other hand supported the order of the Ld. CIT(A) and stated that the AO had reopened the case on the basis of various documentary evidences relating to the assessee and submitted that the AO has rightly reopened the case of the assessee on the basis of such documentary evidences. Ld. DR also submitted that the decisions relied on by the Ld. AR ar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ax Act, 1961 on the basis of information received by him from the investigation wing of the Income Tax Department. Therefore, we are of the considered view that the AO has not applied his mind so as to give an independent conclusion that he had reason to believe that income had escaped assessment during the year under consideration. We draw our support from the judgment of the Hon ble High Court of Delhi in ITA No. 545/2015 dated 8.10.2015 in the case of Pr. Commissioner of Income Tax -4 vs. G&a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eived certain communications from the Commissioner of Income Tax showing that the alleged creditors of the Assessee were namelenders and the transactions are bogus. The AO came to the conclusion that there were reasons to believe that income of the Assessee had escaped assessment. The Supreme Court disagreed and observed that the AO had not even come to a prima facie conclusion that the transactions to which he referred were not genuine transactions. He appeared to have had only a vague felling .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ithstanding that there has been no omission or failure as mentioned above on the part of the assessee, the ITO has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. Unless the requirements of cl. (a) or cl. (b) of S. 147 are satisfied, the ITO has no jurisdiction to issue a notice under S. 148. The Supreme Court concluded that it was not satisfied that the ITO had any material before him which could sat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mind to the information, if any, collected and must form a belief thereon. In the circumstances, there is no merit in the civil appeal. The Department was not entitled to reopen the assessment. 11. The above basic requirement of Sections 147/148 has been reiterated in numerous decisions of the Supreme Court and this Court. Recently, this Court rendered a decision dated 22nd September 2015 in ITA No. 356 of 2013 (Commissioner of Income Tax I I v. Multiplex Trading and Industrial Co. Ltd.) where t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Act brought about a material change in law w.e.f. 1st April, 1989. Section 147(a) as it stood prior to 1st April 1989 required the AO to have a reason to believe that (a) the income of the Assessee has escaped assessment and (b) that such escapement is by reason of omission or failure on the part of the Assessee to file a return or to disclose fully and truly all material facts necessary for his assessment for that year. After the Amendment, only one singular requirement is to be fulfilled un .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

all material facts necessary for his assessment. Thus, in order to reopen an assessment which is beyond the period of four years from the end of the relevant assessment year, the condition that there has been a failure on the part of the Assessee to truly and fully disclose all material facts must be concluded with certain level of certainty. It is in the aforesaid context that this Court in M/s Haryana Acrylic Manufacturing Co. (P) Ltd. (supra) explained that the ratio of the decision in Phool .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money it its bank account by way of above accommodation entries. The above conclusion is unhelpful in understanding whether the AO applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the AO, if he had in fact .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ay of accommodation entries . In the considered view of the Court, in light of the law explained with sufficient clarity by Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the assessee escaped assessment is missing in the present case. 13. Mr. Swhney took the Court through the order of the CIT (A) to show how the CIT (A) discussed the materials produced during the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version