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2016 (7) TMI 946

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..... V, New Delhi. 2. During the course of hearing, the assessee pointed out that the assessee s appeal is in respect of legal issue that the reassessment proceeding u/s 148 and 147 is bad in law and this main issue should be decided first. Therefore, the grounds of appeal are as follows:- ITA NO. 2806/Del/2012 1. That the order of the Commissioner of Income-tax (Appeals)-VI, New Delhi, dated 30/3/2012, is wrong on facts and bad in law in respect of the issues in the present Appeal; 2. That the Commissioner (Appeals) failed to appreciate that the provisions of Section 147 of the Ct were not applicable and the reassessment proceedings were void, illegal and invalid; 3. That the Commissioner of Income-tax (Appeals)- erred in holding that the initiation of the reassessment proceedings u/s 148 of the Ct was valid. He failed to appreciate that the Assessing Officer had no jurisdiction, competence and/or authority to initiate the reassessment proceedings; 4. That the Commissioner of Income-tax (Appeals)- failed to appreciate that there was no new/fresh information/material in the possession of the Assessing Officer justifying that the income liable to tax has esca .....

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..... e was no specific reference anywhere to the fact that income in the case of assessee has escaped assessment. There were references to statements recorded and affidavits submitted by some of the persons in the reason recoded during the course of investigation carried out in a general manner by directorate of income tax (investigation), New Delhi. Accordingly, the assessee vide its letter dated 21.05.2009 requested the Assessing Officer to provide for copies of statements and affidavits along with report received by the assessing officer to enable assessee company to appreciate reference therein to the case of the Assessee and make its submissions in regard to validity of reassessment proceedings initiated in its case. The Assessees also specifically requested the Assessing Officer to make available a copy of proposal put-up for approval of reopening the assessment and copy of approval of joint commissioner of income tax. It was not apparent from the reasons that necessary approval had been sought. Copy of reason is given in the paper book on pages 13 to 15. Copy of letter dated 21.05.2008 of the assessee company is on pages 16 to 17. 6. Pursuant to the request made to the Assessi .....

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..... d by the Assessing officer, which is as mandatory requirement. Reasons have been recorded without reference to the facts and the return of income filed by the assessee company and therefore allegation for escapement of income could not be levied. There was no basis or reason for arriving at the conclusion that there was escapement of income. Just on the basis of credit entries appearing in the bank account it can be said that there was escapement of income. Reasons recorded by the Assessing Officer also do not bear any date. Statements of Shri Mahesh Garg and Shri Trilok Chand Bansal were recorded in 2003 whereas the notice has been issued to the Assessee Company on 30.03.2009. Accordingly, it can be said that the Assessing Officer was not confident about the correctness of the allegation of the escapement of income in the case of the Assessee on the basis of the available material and therefore, the notice had not been issued earlier. Same had been issued only on 30.03.2009 as the limitation of time was expiring on 31.03.2009. Copy proposal put up to the Jt. Commissioner of Income Tax for approval for reopening of Assessment and his approval have not been provided to t .....

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..... ter dated 16.1 1.2009. Copies of the aforesaid letter with the enclosures are given in the paper book on pages 76-80. 10. The Assessing Officer also asked the Assessee Company to explain the transactions with M/s S J Capital Limited, which have been referred to in the reasons recorded. The Assessee company vide its letter dated 25/11/2009 explained to the assessing officer that the transactions with M/S S.J. capital Limited, having the membership of Delhi stock Exchange, were relating to the share trading undertaken by the Assessee company through them. Copy of ledger account of M/S S.J. capital Limited in the books of the Assessee Company along with the copies of bills and contract notes regarding the share trading transactions were submitted to the Assessing officer. A copy of the aforesaid letter along with copies of ledgers accounts and copies of bills and contract notes are given in the paper book on pages 81-163. 11. The Assessing Officer had not appreciated the nature of transactions and genuineness thereof. He, has mentioned in the assessment order, noted on 25 11 2009 That Shri Trilok Chand Bansal had stated in the statement recorded before Addl. DIT (Inv) that entri .....

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..... ng the opportunity to the Assessee Company for cross examination of above mentioned persons. Therefore Ld.AR submitted that the principles of natural justice were not followed by the Assessing Officer. 15. The Ld. AR further submitted that the Assessing Officer had recorded reasons for issuing notice under Section 148 of the Act. The Assessing Officer in the reasons recorded, in Para-1 refers to the investigation made by Directorate of Investigation, Delhi New Delhi into accommodation entries given by entries operators and copy of report received by CIT. Delhi-1, N w Delhi which was subsequently forwarded on 13.0,0.2006 to the Assessing Officer. It is also submitted that investigations had commenced on the basis of survey in the case of M/s Gurcharan Jewellers. In paras 2 to 4 Modus Operandi adopted by the entry providers has been discussed. Para 5 of the reasons recorded by the Assessing Officer states that investigation carried out by DIT, Investigation. New Delhi has assailed genuineness of transactions, whether shown by beneficiaries as inflow of share capital or receipt of gifts or consideration for sale - purchase. It has also dealt with a body blow to the credit worthines .....

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..... Bench. The reasons have to be sufficient and just. In light of this, the reassessment proceedings are not just and valid. 18. The Ld. DR submitted that as per the decision in case of Nova Promoters. The contentions of the assessee are not applicable in this case and the case is fully covered by Nova Promoters. 19. We have perused all the records and heard both the parties, the submissions made by the A.R that there was no new material given are produced before the Assessing Officer to start reassessment proceedings is right while going through the reasons annexed to the paper book. There was no mention of a superior authority in the assessment order as well as in the order for rejecting the assessee s objections related to re-opening. Thus, the Assessing Officer prima facie has not acted upon as per the statute. As relates to Nova Promoters though the submissions made by DR related to Nova Promoters. The said judgment was not produced before this Bench and was not properly justified how it is applicable in the present case. While going through Nova Promoters, the basic difference that the reasons were provided to the assessee in that particular case along with all the documen .....

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