TMI Blog2017 (7) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice under Section 142(1) of the Act reveals what weighed with the AO when he issued the said notice dated 18th January, 2016. In this document with the sub-heading proceedings u/s 148/147 for AY 2008-2009, show cause notice - reg. . It is plain to understand that according to the AO, the notice dated 18th January 2016 under Section 148 of the Act was issued initiating afresh the proceedings. It was not merely in continuation of the earlier proceedings that commenced with the notice dated 23rd March, 2015. The entire proceedings under Section 148 of the Act stood vitiated since even according to the AO, he initiated proceedings on 18th January, 2016 on which date such initiation was clearly time barred. Secondly, the fresh initiation did not have the approval of the Additional CIT, as required by law. The Court has not been provided with any satisfactory explanation as to why the notice dated 23rd March, 2015 issued by the AO under Section 148 of the Act was not carried to its logical end. The mere fact that the AO who issued that notice was replaced by another AO can hardly be the justification for not proceeding in the matter. On the other hand, the AO did not seek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay, Mr Rahul Chaudhary, learned Senior Standing Counsel for the Revenue, informed the Court no other part of the file is available with the Department. The Court perused the file kept in the sealed cover and returned it to Mr Chaudhary. Background facts 5. The background facts are that the Petitioner filed its return of income for the Assessment Year ( AY ) 2008-09 on 28th September, 2008 declaring loss of (-) ₹ 6,10,314. The return was processed under Section 143(1) of the Act and an intimation was sent to the Petitioner. 6. Thereafter, on 18th January 2016, the AO issued a notice to the Petitioner under Section 148 of the Act in which he stated as under: Whereas I have reason to believe that your income in respect of which you are assessable to tax for the Assessment Year 2008-09, has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961, I, therefore, propose to re-assess/re-compute the income for the said Assessment Year. I hereby require you to deliver to me within 10 days from the date of service of this notice, a return in the prescribed form of your income/the income of the company in respect of which you are assessable for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .K. Group along with the report. It was stated that the Assessee appears to have taken accommodation entry amounting to ₹ 1.35 crores credit from various companies controlled by S.K. Jain Group through intermediary (A.K. Jain).... 8.5 In paras 20 to 22, the details of the assessment proceedings and the order of the CIT(A) in relation to Virendra Kumar Jain are set out. Paras 24 to 28 set out the conclusion. The analysis is set out in par 23 and the conclusion in para 25 that a sum of ₹ 1.35 crores unexplained credit under Section 68 of the Act in books of A/c of the Assessee. 8.6 In para 26, it was stated that the Assessee had obtained share capital from M/s Shalini Holdings Ltd. which was a company controlled by S.K. Jain Group and that the transaction in question have also failed to pass the test of creditworthiness of creditor since the company was dummy company and that since the entries had been created to create web of transaction to camouflage the true nature of transaction. In para 26, the Assessee was asked to show cause why the sum of ₹ 1.35 crores received by it during A.Y. 2008-2009 should not be treated as unexplained credit under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on material available. The reasons must show that the material has been received from a credible source and that material leads to a prima facie conclusion that income has escaped assessment. As per reasons cited by you, there is no mention of what are the entries alleged to be accommodation in nature. Who have they been received from? Is there any statement or allegation by the person who is claimed to have given accommodation entries? What are the accommodation entries and what are their particulars and how have they been treated by the assessee in its books of accounts? 12. By a letter dated 21st March, 2016, the AO informed the Assessee that its objections to the reopening of the Assessment had been rejected. Thereafter, the present writ petition was filed and as mentioned hereinbefore an interim order was passed on 1st April, 2016 and on that date, as already noted, the AO issued the assessment order pursuant to reassessment proceedings under Section 147/148 of the Act read with Section 143(3) of the Act. The file of the Department 13. It must be mentioned at this stage that when the file was produced before the Court it contained the order sheet which begins with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mastech Technologies Pvt. Ltd 15,00,000 080569 05.06.2007 UTI Shalini Holdings Ltd. 6 Mastech Technologies Pvt. Ltd 24,00,000 081321 11.10.2007 Axis Bank Shalini Holdings Ltd. 7 Mastech Technologies Pvt. Ltd 12, 00,000 190248 14.01.2008 Axis Bank Shalini Holdings Ltd. Total 1,35,00,000 There was thus failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for AY 2008 2009 which resulted into escapement of income of ₹ 1,35,00,000/- for assessment year 2008- 2009. In view of this, I have reasons to believe that the Income of ₹ 1,35,00,000/- chargeable to tax has escaped assessment in the case of M/s Mastech Technologies Pvt. Ltd. for the AY 2008 2009 within the meaning of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, 2015. Therefore, there was failure to comply with the mandatory requirement of Section 148 of the Act inasmuch as the reasons for reopening of the assessment were not communicated to the Petitioner. Mr Wadhwa pointed out that the second reopening of the assessment under Section 148 of the Act by issuing a second notice on 18th January, 2016, was clearly without approval of the Additional CIT and was, in any event, barred by limitation. Submissions of counsel for the Revenue 18. Countering the above submissions, Mr Rahul Chaudhary, learned Senior Standing Counsel appearing for the Revenue, submitted that on the strength of Section 129 (1) of the Act, the AO had merely continued the proceedings under Section 148 of the Act which were initiated by issuance of the notice dated 23rd March, 2015. The Revenue s case, in other words, is that the notice dated 18th January, 2016 did not constitute an initiation of fresh proceedings under Section 148 of the Act. 19. Mr Chaudhary further submitted that on the face of it the notice dated 18th January, 2016 could not be treated as initiation of proceedings under Section 148 of the Act since it had no approval of the Additional CIT. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice was issued by the incumbent AO. 23. A careful perusal of the notice dated 18th January, 2016 reveals that it does not state anywhere that it is in continuation of the earlier notice dated 23rd March, 2015. There is no noting even on the file made by the AO that while issuing the said notice he was proposing to continue the proceedings that already commenced with the notice dated 23rd March, 2015. Annexure- A to the notice under Section 142(1) of the Act reveals what weighed with the AO when he issued the said notice dated 18th January, 2016. In this document with the sub-heading proceedings u/s 148/147 of the Act for AY 2008-2009, show cause notice - reg. the AO states as under: Please refer to re-assessment proceedings u/s. 147/148 of Income-tax Act, 1961 pending against you for A.Y. 2008-09. A notice u/s. 148 of the Act was issued initiating the proceedings vide notice dated 18.01.2016 served upon you through speed post after duly recording the reasons for reopening the same u/s. 148. The case has been re- opened u/s. 148 of the Act on account of there being a reason to believe that at least an amount of ₹ 1,35,00,000 has escaped assessment for A.Y. 2008-09. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the said notice being time barred, it should not be taken to have been issued at all, is unacceptable. 29. The Court has not been provided with any satisfactory explanation as to why the notice dated 23rd March, 2015 issued by the AO under Section 148 of the Act was not carried to its logical end. The mere fact that the AO who issued that notice was replaced by another AO can hardly be the justification for not proceeding in the matter. On the other hand, the AO did not seek to proceed under Section 129 of the Act but to proceed de novo under Section 148 of the Act. This was a serious error which cannot be accepted to be a mere irregularity. 30. As regards the non-communication of the reasons as contained in Annexure-A to the proforma on which the approval dated 19th March, 2015 was granted by the Additional CIT, there is again no satisfactory explanation. The fact remains that what was communicated to the Petitioner on 23rd February, 2016 was only one line without any supporting material. There appears to be also no clarity of how the case had to be proceeded with by the Revenue. On one date i.e. 16th February 2016, the AO was issuing notice both under Section 142(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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