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2015 (10) TMI 2574 - ITAT DELHI

2015 (10) TMI 2574 - ITAT DELHI - TMI - Validity of reassessment proceedings - Held that:- The assessee had furnished evidences, which have been thrown by the assessing officer without making any enquiry thereupon. We find that there is a vast difference between the cases, where there is substantial material to establish collusive arrangement and where the evidences furnished have been thrown without any enquiry. - Thus we find that the Assessing Officer has not applied his mind independentl .....

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67/Del./2013 - Dated:- 30-10-2015 - SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : Shri Ved Jain, C.A. For The Respondent : Shri Rajeev Ranka, Sr. DR ORDER Per L.P. Sahu, Accountant Member: This appeal is directed by assessee against the order dated 29.11.2012 passed by the ld. CIT(A)-VIII, New Delhi for the assessment year 2001-02 on the following grounds : 1. On the facts and circumstances of the case, the order passed by the Ld. A.O. is bad, both i .....

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has erred in initiating re-assessment proceedings u/s. 148 without application of mind in a mechanical manner. 3. On the facts and circumstances of the case, the Ld. CIT(A) has erred both on the facts and in law, in confirming the action of Ld. AO making additions of ₹ 5,00,000/- u/s. 68 of the Income Tax Act, 1961. 4(a). That the above additions are untenable in the eyes of law, having been made without providing opportunity to cross examine the person on the basis of whose statement the .....

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ed its return of income declaring loss of ₹ 5,74,328/- on 23.10.2001, which was processed u/s. 143(1). Subsequently, on the basis of information received from Investigation Wing, New Delhi that certain persons, including Rajjan Jassal, Mukesh Gupta and Surinder Pal Singh group, were engaged in providing accommodation entries, the case of the assessee was reopened u/s. 147 of the Act. Statements of these three persons were also recorded by Investigation wing which were forwarded to the AO. .....

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various beneficiaries through the above companies and the assessee is one of the beneficiaries and no real transactions of share application money took place. The AO further observed that the assessee has failed to discharge its onus to prove the creditworthiness of the entities from where the credits had being appearing in its books of account. Therefore, the AO made an addition u/s. 68 of the Act vide order dated 10.01.2008 passed u/s. 143(3)/147 of the IT Act. The assessee challenged this ord .....

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the shape of share applications, confirmations, identity proof, bank statements, PAN cards, ITRs of the creditors etc. The authorities below have made no independent enquiry nor commented upon these documentary evidences nor issued summons u/s. 131 or 133(6) to the creditors. The identity of the shareholders is not disputed. The reassessment proceedings have been initiated only on the general information received from Investigation wing without any independent application of mind for the belief .....

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thora of decision. Some of which are as under : (i). CIT vs. SFIL Stockbroking Co. (2010) ITR 285 (Del.) (ii). Sarthak Securities Company Pvt. Ltd. vs. ITO(2009) 329 ITR 110 (iii). Signature Hotels (P) Ltd. vs. IT (2011) 338 ITR (Del.) (iv). CIT vs. Fair Finvest Ltd.(2013) 357 ITR 146 (Del.) (v). Caneron Concrete Industries P. Ltd. vs. ACIT ITA No. 4114/De./11 dated 03.05.2013 (Delhi Tribunal) (vi) ACIT vs. Panchnan International P. Ltd. ITA No. 50/Del./2011 dated 23.11.2012 (vii). CIT vs. Gange .....

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sustainable. The ld. DR, on the other hand, submitted that in view of the information of Investigation Wing and the statements of accommodation entry providers, recorded by Investigation wing, the ld. Assessing Officer was justified to initiate the proceedings u/s. 147 after recording the reasons that the income of assessee chargeable to tax has escaped assessment. He submitted that the assessee failed to discharge its onus which lay upon him u/s. 68 of the IT Act that the alleged share applica .....

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e ld. AO after expiry of four years from the end of relevant assessment year. In the present case, it is not in dispute that the impugned share capital money raised by the assessee is properly recorded in the books of account of the assessee, as detected by the Assessing Officer itself. As such, it cannot be said that there was failure on the part of the assessee to make disclosure of all material facts, necessary for assessment. Besides, the Assessing Officer has failed to comment upon the docu .....

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d by the Assessing Officer for forming the belief that the income chargeable to tax has escaped assessment. A perusal of the impugned order shows that the ld. CIT(A) has affirmed the conclusion of the Assessing Officer after relying upon the decision of Hon ble Delhi High Court in the case of CIT vs. Nova Promoters and Finlease P. Ltd. (supra). We have gone through this decision and we find that this case does not help the cause of revenue in the present case. In this decision the Hon ble Court .....

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Investment P. Ltd. (2003) 262 ITR 493 and CIT v. Achal Investment Ltd. (2004) 268 ITR 211.To put it simply, in these cases, the decision was based on the fundamental rule of law that evidence or material adduced by the assessee cannot be thrown out without any enquiry. The ratio does not extend beyond that. The boundaries of the ratio cannot be, and should not be, widened to include therein cases where there exists material to implicate the assessee in a collusive arrangement with persons who a .....

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urther be seen in the subsequent decision of Hon ble Delhi High Court in the case of CIT vs. Fair Finvest Ltd. (supra), wherein the Hon ble jurisdictional High Court held as under : 7. Having regard to the entirety of facts and circumstances, the Court is satisfied that the finding of the Tribunal in this case accords with the ratio of the decision of the Supreme Court in Lovely Exports (supra). The decision in this case is based on the peculiar facts which attract the ratio of Lovely Exports (s .....

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