TMI Blog2017 (9) TMI 1782X X X X Extracts X X X X X X X X Extracts X X X X ..... O wants to have a roving inquiry; as observed hereinabove. Even as per the Assessing Officer in the reasons recorded has specifically mentioned that for the purpose of verification/ deep verification of the claim, it is necessary to reopen the assessment. Under the circumstances, it cannot be said that the Assessing Officer had any tangible material to form an opinion that the income chargeable to tax has escaped the assessment. Under the circumstances, the impugned action of reopening of the assessment in exercise of power under Section 148 for the reasons recorded hereinabove cannot be sustained. Reassessment proceedings cannot be initiated for the purposes of making verification in absence of any valuable material available with the Assessing Officer to show that the income has escaped assessment. - Decided in favour of assessee. - ITA No. 3400/DEL/2013 And ITA 3401/DEL/2013 - - - Dated:- 29-9-2017 - Mr R.K. Panda, Member (A) And Sudhanshu Srivastava, Member (J) For The Appellant : Rajeev Saxena and Sankalp A. Sharma, Advs For The Respondents : R.C. Danday, Sr. D.R. ORDER R.K. Panda, Member (A) 1. The above two appeals filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61. Dated : 20 March, 2009 Sd/- (Sarojini Xess) Income Tax Officer Ward 2(2), New Delhi. 2. In response to the notice u/s 148, the assessee did not file any return but filed a letter dated 27.04.2009 providing a copy of the original return filed u/s 139(1). The Assessing Officer subsequently issued notice u/s 142(1) of the I.T. Act. During the course of assessment proceedings, he noted that the assessee company has admitted having incurred expenditure of ₹ 65,00,000/- on renovation of the restaurant. The possession of the restaurant was taken over by the assessee on 28.02.2002 as admitted by the assessee. According to the Assessing Officer, entire expenditure of ₹ 65,00,000/- cannot be said to have been incurred in one month time. Further, the assessee has not given bifurcation of the expenditure so incurred. He, therefore, estimated that 10% of the expenditure to have been incurred during the previous year 2001-02 relevant for the assessment year 2002-03 and balance 90% of the expenditure as incurred in assessment year 2002-03 relevant for assessment year 2003-04. Since the assessee has not provided the names and addresses of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. In any case, such information was wholly inadmissible as the same had never been confronted to the assessee. 2. Without prejudice to the above, the Id C.I.T.(Appeals) has grossly erred in upholding the addition of ₹ 6,50,000/- made by the AO on account of alleged expenditure incurred on renovation of Cup-n-Saucer restaurant during the instant year. The Id C.I.T.(Appeals) has erroneously disregarded assessee's submission that no expenditure had been incurred on renovation of restaurant. 2.1 That the finding of the ld C.I.T.(Appeals) that the assessee had admitted of having incurred expenditure of ₹ 65 lakh is wholly wrong in as much as the said statement had wrongly been made by assessee's AR and even without obtaining assessee's instruction. Any such admission by assessee's AR is not corroborated with any evidence and on the contrary the books of account maintained by the assessee, prove it beyond doubt that no such expenditure had been incurred. 3. That the Id C.I.T.(Appeals) has erred both in law and on facts in upholding the addition of ₹ 27,71,000/- on account of alleged unexplained unsecured loans. No valid reason o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction. In any case, the addition as sustained be deleted or in the interest of justice, the matter may kindly be restored back to the AO for fresh adjudication. 5. Ld. counsel for the assessee at the outset drew the attention of the Bench to the reasons recorded by the Assessing Officer and submitted that the Assessing Officer has reopened the assessment to make investigation of the investments made by the Assessing Officer on assets leased to it. Referring to the decision of Hon'ble Supreme Court in the case of ChhugamalRajpal vs. S.P. Chaliha reported in 79 ITR 603 and the following decisions : (i) Madhya Pradesh Industries Ltd. vs. ITO reported in ITR 637 (SC); (ii) Ranbaxy Laboratories Ltd. vs. CIT reported in 2011 : 336 ITR 136 (Del) ; (iii) Vipan Khanna vs. CIT reported in 2001 : 255 ITR 220 (P H) and (iv) Travancore Cements Ltd. vs. ACIT reported in 2006 : 305 ITR 170 (Kerla), he submitted that the provisions of section 147 cannot be resorted to only to verify or to make further enquiry. 6. Referring to the decision of Hon'ble Bombay High Court in the case of Nivi Trading Ltd. vs. Union of India reported in 2015 : 375 ITR 308, he submitted that the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of accommodation entries but no further inquiry was undertaken by Assessing Officer, said information could not be said to be tangible material per se and, thus, reassessment on said basis was not justified. Hon'ble High Court while deciding the issue has relied on its earlier decision in the case of Pr.CIT vs. Meenakshi Overseas (P.) Ltd. reported in 2017 : 395 ITR 677. He accordingly submitted that the reassessment proceedings initiated by the Assessing Officer and upheld by the CIT(A) should be held as void ab initio. 10. Ld. DR on the other hand heavily relied on the order of the CIT(A) upholding the validity of the reassessment proceedings. Referring to para 18 of the decision of Hon'ble Bombay High Court in the case of Nivi Trading Ltd. (supra), he drew the attention of the Bench to the following paragraph:- 18. The Hon'ble Supreme Court thus held that section 147 authorises and permits the Assessing Officer to assess or reassess the income chargeable to tax, if he has reason to believe that income chargeable to tax has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, we find the Hon'ble Bombay High Court in the case of Nivi Trading Ltd. (supra) has held that where the assessee had shown gift of shares to a company, merely because the assessee had been called upon by the Assessing Officer for verification of value of shares in terms of section 47(iii), it would not enable the Revenue to resort to section 147 of the I.T. Act. We find the Hon'ble Gujarat High Court in the case of Krupesh Ghanshyambhai Thakkar (supra) has held that the reassessment cannot be initiated for the purposes of deep verification. The relevant observations of the Hon'ble High Court from para 11 to 14 of the order read as under:- 11. At the outset, it is required to be noted that by the impugned notice, the assessment for AY 2009-2010 is sought to be reopened in exercise of power under Section 147 of the I.T Act. The reasons recorded to reopen the assessment are already produced hereinabove. Thus, as per the reasons recorded, the notice has been issued and assessment is sought to be reopened for deep verification of the claims. Even in the order disposing of the objections, it has been specifically stated that to verify whether all the criteria are m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Under the circumstances, it cannot be said that the Assessing Officer had any tangible material to form an opinion that the income chargeable to tax has escaped the assessment. Under the circumstances, the impugned action of reopening of the assessment in exercise of power under Section 148 of the I.T Act for the reasons recorded hereinabove cannot be sustained. 14. Resultantly, both these writ petitions succeed. Impugned Notice issued by the Assessing Officer under Section 148 of the Income-tax Act, 1961 in each case is hereby quashed and set-aside. 13. Similar view has been taken by various other High Courts relied upon by the ld. counsel for the assessee. Therefore, we hold that reassessment proceedings cannot be initiated for the purposes of making verification in absence of any valuable material available with the Assessing Officer to show that the income has escaped assessment. In view of the above discussion, we hold that the re-assessment proceedings initiated by the Assessing Officer and upheld by the CIT(A) are not justified. Since the assessee succeeds on this preliminary issue, the various grounds on merit are not being adjudicated being academic in nature. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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