TMI Blog2014 (5) TMI 1169X X X X Extracts X X X X X X X X Extracts X X X X ..... 007-08. Since the common issues are involved in these appeals and the appeals were heard together, so these are being disposed off by this consolidated order for the sake of convenience. 2. Common legal issue raised vide ground No. 1 in each of the appeal read as under:- 1. The Ld. CIT(A) has erred on facts and in law in confirming the action of the Assessing Officer in reopening of assessment proceedings u/s 147 of the Income Tax Act, 1961. 3. Facts related to this issue in brief are that the assessee filed the return of income for the assessment year 2006-07 on 31/7/2006 declaring an income of ₹ 15,930/-, which was processed u/s 143(1) of the I.T. Act, 1961 (hereinafter referred as the Act). Thereafter the Assessing Officer received information from the investigation wing that a search was conducted in M/s Mahasagar Securities Pvt. Ltd. group of companies on 25/11/2009. Shri Mukesh Choksi and Shri Jayesh K. Sampat are Directors in these companies. It was found that above persons had entered into bogus transactions for giving entries of speculation profit/loss, short term/long term gain/loss, share application money, commodities profit/loss on commodity trading (t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diateries Networks Pvt. Ltd., Mumbai and M/s Talent Infoways Ltd, Mumbai on 29.03.2006. 2. The assessee filed the return u/s 139 (1) on 31.07.2006 at a loss of ₹ 15,930/-. No business activity was carried out during the year. Thereafter, AO issued notice u/s 148 dated 23.03.2011. (P.B 1) by recording the following reasons:- On perusal of the assesses company's return of income for assessment year 2006-2007, which was filed on 31.07.2006 in ITS-1 declaring total loss ₹ 15,930; it reveals that the assesses company has incorporated on 16.03.2006 and introduced share capital including share premium i.e. ₹ 15,00,000/- to the tune of ₹ 31,40,000/-. In due course, the information have received from the DDIT (lnv.-2), Udaipur alongwith report of the DDIT (Inv.), Unit-1 (4), Mumbai that search seizure action under section 132 of the Income Tax Act, 1961 was undertaken in the case of Mahasagar Group of Companies Mumbai on 25.11.2009 on the basis of information received in an FIU alert from New Delhi regarding suspicious transactions taking place in the bank accounts of M/s Mahasagar Securities Private Limited and its related companies. The dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. In view of the above facts and circumstances, such share application money introduced out of undisclosed source of income, to the extent of such sum, has escaped assessment should be chargeable to tax under section 147 of the Income Tax Act, 1961. I, therefore, have reasons to believe that the assessee has concealed the particulars of his income for the above mentioned year. Therefore, notice under section 148 of the Income Tax Act, 1961 is being issued for initiating the escaped assessment proceedings under section 147 of the Income Tax, Act, 1961. 3. From the plain reading of above it can be noted that notice u/s 148 is issued as per the direction of DDIT(Inv.)-UDR DDIT(Inv.), Mumbai. The primarily condition of section 148 is that AO must have reason to believe that income has escaped assessment. This satisfaction should be of AO himself and not a borrowed satisfaction. The AO has not considered the fact that the assessee was incorporated on 16.03.2006, it has not carried any business activity and therefore no question of generation of income in the hands of assessee arises. Therefore the share money received cannot be income of assessee. Therefore the notice so iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions of the assessee observed that the contention of the assessee that the satisfaction of the Assessing Officer was the borrowed satisfaction was not apparent from the facts of the case as the Assessing Officer had received the specific information regarding the bogus share capital introduced in the name of M/s Alliance Intermediateries Ltd. and M/s Talent Infoways Ltd. Mumbai by Shri Mukesh Choksi, who admitted the same during the search in the case of above concerns and that the Assessing Officer had recorded detailed reasons for reopening the case u/s 147 of the Act and the escaped income of ₹ 10.00 lacs had been held to be the income of the assessee as per the specific provision of the Act. The ld. CIT(A), therefore, upheld the action of the Assessing Officer for issuance of notice u/s 148 of the Act and assessment proceedings initiated u/s 147 of the Act. A reference was also made to his earlier decision dated 27/2/2012 in the case of M/s Madhu Sulzcon Pvt. Ltd. Bhilwara in appeal No. 335/11-12 for the assessment year 2007-08. Now the assessee is in appeal. 6. The Ld. counsel for the assessee reiterated the submissions made before the authorities below and furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had merely referred to certain investigation carried out by the DDIT (Inv.), Mumbai and Udaipur in respect of bogus/accommodation entries provided by M/s Alliance Intermediateries Networks Pvt. Ltd. and M/s Talent Infoways Ltd.. The reading of these reasons clearly indicates that the Assessing Officer has not applied his own mind to the issue or carried out any independent verification before issuing the notice. - The assessee company was incorporated only on 16/03/2006. It has not carried any business activity and therefore no question of generation of income in the hands of assessee arises. - So far as the order of Ld. CIT(A) in case of M/s Madhu Sulzcon Pvt. Ltd. is concerned, the Hon'ble ITAT has set aside this order to the file of the Assessing Officer as this case was decided ex-parte. Therefore, the order of Ld. CIT(A) in this case do not survive. It was, accordingly, submitted that the assessment made by the Assessing Officer deserves to be set aside being illegal and bad in law. 7. In his rival submissions, the Ld. D.R. strongly supported the impugned order passed by the Ld. CIT(A) and reiterated the observations made by the Ld. CIT(A) in the said ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the escapement of income, was not of the Assessing Officer, therefore, without applying his mind, the Assessing Officer was not justified in invoking the provisions of Section 147 of the Act by issuing notice u/s 148 of the Act. On the similar issue, Hon'ble Delhi High Court in the case of CIT Vs. SFIL Stock Broking Ltd. (2010) 325 ITR 285 (Del.) held as under:- The assessee in his original return of income had shown a longterm capital gain of ₹ 40,953/-. The return was processed under section 143(1) of the Income Tax Act, 1961. Subsequently, on the basis of the information given by the Deputy Director of Income-tax (Investigation) that the assessee was allegedly the beneficiary of a bogus claim of long-term capital gain shown on sale/purchase of shares a notice under section 148 of the Act was issued by the Assessing Officer to the assessee. In the reassessment proceedings, the Assessing Officer made an addition of ₹ 20,70,000/- holding that the assessee could not explain the source of the entries. The Commissioner (Appeals) confirmed the order passed by the Assessing Officer. The Tribunal quashed the entire reassessment proceeding. On appeal: Held, di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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