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Dhanuka Agritech Ltd. (Formerly known as Dhanuka Pesticides Ltd.) Versus ACIT Circle -10 (1) , New Delhi

2016 (6) TMI 214 - ITAT DELHI

Validity of the reassessment proceedings u/s 147 - unaccounted loan received - Held that:- AO in the reasons recorded mentioned that it had come to his knowledge that the persons from whom amount was received were entry operator and provided the entries to the assessee after receiving the amount in cash, however, nothing was brought on record that how and in what manner the persons from whom the assessee received the loans were entry operator and that as to how the cash was paid by the assessee. .....

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f the Act was not valid and accordingly the subsequent assessment framed by the AO was void-ab-initio and therefore the same is quashed. - Decided in favour of assessee - ITA No. 1003/Del./2014 - Dated:- 11-5-2016 - Sh. N. K. Saini, AM For the Appellant : Sh. Hiresh Mehta, CA For the Respondent : Sh. N. J. Singh, Sr. DR ORDER Per N. K. Saini, A. M. This is an appeal by the Assessee against the order dated 25/11/2013 of the C.I.T.(A)-XVII, New Delhi. Following grounds has been raised in this appe .....

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in law, the CIT(A) was not justified in holding that the reassessment proceedings was not illegal and void-ab-initio even though there was absence of reasons to believe that there was escapement of income and moreover the case of the assessee falls in first proviso to section 147 of the Income-tax Act. 4. That on the facts and circumstances of the case and in law, the CIT(A) was not justified in upholding the addition of ₹ 11,00,000/- under sction 68 as unexplained credit in respect of lo .....

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of the reassessment proceedings u/s 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 3. Facts of the case in brief are that the assessee filed its return of income after setting off the brought forward losses of ₹ 80,29,450/- against the gross total income, on 27.11.2014. However, the tax was paid on the Book Profit u/s 115JB of the Act at ₹ 8,136/-. The return of income was processed u/s 143(1) of the Act at the same figure. Later on, the case was selected for .....

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d notice u/s 148 of the Act within the stipulated time and asked the copy of reasons recorded for re-opening the assessment. The AO observed that in this case, a specific information was received from the Investigation Wing and that the AO had reason to believe that the assessee had received amounts through cheques / pay orders totalling to ₹ 11,00,000/- i.e. 5 lacs from M/s. Shastri Eincapvest Pvt. Ltd. on 13.6.2002, ₹ 2 lacs from M/s. ABN Aluminimum Industries on 04.09.2002 and  .....

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the assessment and he was within his competence while invoking the powers contained in section 147 of the Act. He also observed that there was no provision in section 148 of the Act that reasons for re-opening should also be given within the limitation period. Now the assessee is in appeal. 5. The ld. Counsel for the assessee submitted that the earlier assessment was framed u/s 143(3) of the Act by the AO who made the inquiries relating to the loans raised and framed the assessment after applyi .....

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ns were received were the entry operator and no report of the investigation was confronted to the assessee, therefore, the assessment re-opened under presumption by the A.O. was not tenable. The reliance was placed on the order dated 8.10.2015 of the Hon ble Jurisdictional High Court in ITA no. 545/2015 in the case of Principal Commissioner of Income-tax vs. G & G Pharma India Ltd. copy of the said order was furnished which is placed at page no. 88 to 95 of the assessee s paper book. It was .....

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g the assessment u/s 147 of the Act. 7. We have considered the submissions of both the parties and carefully gone through the material available on the record, to resolve the present controversy, it is necessary to see the reasons recorded by the AO for reopening the assessment u/s 147 of the Act. In the present case, the AO recorded the reasons on 30.3.2010 copy of which is placed at page no. 8 of the assessee s paper book and read as under : 30.03.2010- In this case it was gathered that the As .....

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m the entry operator are as under : S l . No . Name of the asses see/Beneficiary Beneficiary Bank name Value of entry taken Date of the entry Name of the Operator Operator s Bank Opera tor s Account No. 1 Dhanuka Pesticides Ltd. SBBJ , Faiz Road 5,00,000 12.06 .2002 Shrastri fincapvest Pvt . Ltd. JAILAXMI COOP BANK FATEHP URI 3027 2 Dhanuka Pesticides Ltd. SBP 2,00,000 04.09 .2002 ABN Aluminium Industries JAILAXMI COOP BANK FATEHP URI 3033 3 Dhanuka Pesticides Ltd. SBP road 4,00,000 05.09 .2002 .....

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were entry operator and have provided entries to the assessee, after receiving amount in cash from the assessee. However, nothing was brought on record that the assessee paid cash to the persons from whom the loans were taken and these were entry operator. It is also noticed that the assessee repaid the loans in the year itself which is evident from schedule D attached to the balance sheet in respect of unsecured loans as mentioned in the submissions of the assessee placed at page no. 75 of the .....

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pal Commissioner of Income-tax vs. G. & G. Pharma India Ltd. (supra) observed in para 12 & 13 of the order dated 8th October, 2015 as under : 12. In the present case, after setting off four entries, stated to have been received by the Assessee on a single date i.e. 10th February, 2003 from four entities which were termed as accommodation entries, which information was given to him by the Directorate of Investigation, the AO stated: I have also perused various materials and report from In .....

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n fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November, 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: it is evident that the assessee company has introduced its own unaccounted money in its b .....

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during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped a .....

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