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2016 (7) TMI 135 - ITAT KOLKATA

2016 (7) TMI 135 - ITAT KOLKATA - TMI - Validity of reopening proceedings u/s 147 - Held that:- It is the duty of AO to show prima-facie, and establish in the reason recorded, that income chargeable to tax has escaped assessment by the reason of failure on the part of assessee to disclose fully and truly all material fact necessary for assessment. - In the instant case there is no allegation or stipulation showing that income chargeable to tax has escaped assessment due to failure on the par .....

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y condition for overcoming the bar set up by the proviso to Sec. 147. If this condition is not satisfied, the bar would operate and no action under Section 147 could be taken. - In view of above, we are inclined to hold that AO did not assume valid jurisdiction for initiation of proceedings u/s 147 beyond 4 years. Hence, we quash the same - Decided in favour of assessee. - ITA No.1330/Kol /2013, ITA No.2699/Kol /2013 - Dated:- 22-6-2016 - Shri Waseem Ahmed, Accountant Member And Shri S.S.V .....

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year 2003-04. 2. Both the appeal are heard together and are being disposed of by way of consolidate order for the sake of convenience. First we take up assessee s appeal. The grounds raised by the assessee per its appeal are as under:- Assessee s appeal in ITA No.1330/Kol/2013 1. For that the assessment order dated 30.12.2010 is void and nullity in the eye of law as there are no recorded reasons to belief that income chargeable to tax has escaped assessment. 2. Without prejudice to ground no. 1 .....

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ssessment has been reopened on mere change of opinion on the same set of facts. 5. For that the CIT(A) ought to have quashed the entire reopening proceedings since the order was passed by the AO after expiry of the limitation period. 6. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition to the extent of ₹ 1,80,000/- out of the total addition of ₹ 42,87,937/- made by the AO on account of Commission paid to M/s Kripas .....

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of rs.22,51,457/- made by the AO on account of Commission paid to M/s Mafex (P) Ltd. 9. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition of ₹ 6,99,975/- made by the AO on account of Commission paid to M/s Dave Commercial Co. 10. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition of ₹ 1,04,84,824.50 made by the AO on account of Commission paid to .....

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During the course of original assessment a query with reference to the commission paid to M/s Umang Credit Capital Ltd. was raised but no reply was received till the completion of assessment under section 143(3) of the Act. However the reply was received by the AO, Circle-3 from M/s Umang Credit Capital Limited on dated 16.10.2008 which categorically denied for having any transaction with the assessee. Accordingly the proceedings under section 147 were initiated by issuing a notice under section .....

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he letter issued by the AO in the reasons to believe that escapement of income was because of failure on the part of assessee to disclose all necessary facts for assessment. The ld. AR has pointed out that in the absence of compliance of statutory condition render the initiation of re-assessment proceedings and issuance of notice, consequentially re-assessment order as void bad in law, illegal and without jurisdiction. Ld AR has drawn our attention towards the proviso to Sec. 147 of the Act and .....

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and stated that expenditure claimed by assessee by way of commission to M/s Umang Credit Capital Ltd. was categorically denied, therefore, Assessing Officer was justified and right in initiating the re-opening assessment proceedings u/s 147 of the Act. He has cited judgment of Hon ble High Court of Madras in the case of Sword Global India (P) Ltd. Vs ACIT, 60 taxmann.com 73 and order of Coordinate Bench of Cochin Bench in the case of Konthiyaparambil Coir Rubber Products v. ITO (2015) 54 taxman .....

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u/s. 147 of the Act which reads as under : Office of the Income Tax Officer, Ward-45(2), Kolkata 3 Govt. Place, West, Kolkata-1 No:ITO, Wd-45(2)/M/S Damani &Co/AACFD5802D/2010-11/427 Dated:25.08.2010 To M/s Damani & Co. 74 Kiran Shankar Roy Road, Kolkata-1, Sub: Proceedings u/s. 147-A.Y. 2003-04-Matter regarding Ref; Your letter no. nil dated 23.08.2010 Please refer to the above. As required, the Reasons to believe that income has escaped assessment for the A.Y. 2003-04 is as under:- Du .....

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the Trading, Profit & Loss Account of M/s Umang Credit Capital Limited for the Asst. Year 2003-04 that, although the assessee claimed to have paid commission of ₹ 1,04,84,824.50 to them during Asst. Year 2003-04, no such receipts of commission shown by M/s Umang Credit Capital Limited in their respective return of income. On the other hand, M/s Umang Credit Capital Limited submitted one letter before ACIT, Circle-3, Kolkata in this matter and denied having any such transaction with th .....

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s not allowable. I ve therefore reason to believe that income has escaped assessment for the Asst. year 2003-04 at least for an amount of ₹ 1,04,84,824/-. Hence, the case of the assessee for the Asst. Year 2003-04 is reopened U/s 147, after getting approval from CIT-XV, Kolkata on 31.03.2009. Sd/- S.Haldar (Sakar) Sikha Halder (Sarkar) Income Tax Officer, Ward-45(2), Kolkata As observed that assessee s income was first assessed u/s 143(3) on 31.03.2006 for the AY 2003-04 and further notice .....

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corded then it is ample clear that there is no allegation or stipulation showing that income chargeable to tax as escape assessment due to failure on the part of assessee to disclose fully and truly all material fact necessary for assessment. We find the case cited by Ld DR the case of Konthiyaparambil Coir Rubber Products (supra) is different from the facts of the present case. The issue for adjudication before the Coordinate Bench of Cochin in the above said case was that whether assessee has .....

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case also the issue was not based whether it is mandatory to mention in the reasons to believe that the assessee has failed to disclose all the material facts fully and truly necessary for the assessment in the case of reassessment beyond 4 years. The facts of the case Sword Global India (P) ltd. (supra) are reproduced below : Section 147, read with section 10B of the Income-tax Act, 1961 - Income escaping assessment -Non-disclosure of primary facts (Change of opinion) - Assessment year 2007-08 .....

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ear 2007-08 - Whether mere nonmentioning of sanction accorded by authority in notice issued under section 148 would in any way be fatal to process of reopening - Held, no [Para 20] [In favour of revenue] As we observed that the facts of the cases cited by the AO are different from the facts of the case on hand. Therefore such cases shall have no bearing on the instant case. In the light of the above noted pre-position, we analysis the reasons recorded by AO in the facts of the present case and f .....

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er, there is no whisper, what to speak of any allegation, that the petitioner had failed to disclose fully and truly all material facts necessary for assessment and that because of this failure there has been an escapement of income chargeable to tax. Merely having a reason to believe that income had escaped assessment is not sufficient to reopen assessments beyond the four year period indicated above. The escapement of income from assessment must also be occasioned by the failure on the part of .....

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