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2019 (4) TMI 357

r two reasons :-(i) the notice is issued for the purpose of verification of genuineness, identification and creditworthiness of the transaction, which is not permissible; - (ii) the Assessing Officer has recorded his satisfaction on the basis of mere report from the Investigation Wing. There is no crucial link between the information made available to the Assessing Officer and the formation of belief of escapement of income. There is no basis for coming to the conclusion that the assessee received accommodation entries. The Investigation Wing alleged that the companies which issued cheques to the assessee company are companies of Shri S.K. Jain group and they are entry providers. However, the basis for such conclusion is missing. There is no mention that any document was seized from Shri S.K. Jain group or any director of the 12 companies which have given cheques to the assessee has given the statement that they have provided accommodation entries to the assessee. The Assessing Officer has simply reopened the case on the basis of information provided by the Investigation Wing without any independent application of mind. There is no tangible material which formed the basis for t .....

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the Act was a mechanical approval and hence initiation of proceedings u/s 147 of the Act on this ground is invalid. 3. At the time of hearing before us, it is stated by the learned counsel that in this case, the assessee has filed the return on 20th September, 2009 which was processed under Section 143(1) on 17th January, 2011. The assessment was reopened under Section 148 vide reasons recorded on 20th September, 2015. He has taken us through the reasons recorded and stated that the assessment has been reopened for the verification of the amount received by the assessee from Shri S.K. Jain group of cases. That the assessment cannot be reopened for the purpose of verification for which there is already a specific provision under the Income-tax Act i.e., Section 143(2). If the Assessing Officer has failed to make necessary verification under Section 143(2), the same cannot be done under the garb of Section 148. He also alleged that there is no independent application of mind by the Assessing Officer. The assessment has been mechanically reopened on the basis of some information claimed to have been received from DIT(Investigation). In the reasons recorded, no reason has been given f .....

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Gujarat). (iv) Pushpak Bullion (P) Ltd. Vs. DCIT - [2017] 85 taxmann.com 84 (Gujarat). (v) Ankit Financial Services Ltd. Vs. DCIT - [2017] 78 taxmann.com 58 (Gujarat). (vi) Aaspas Multimedia Ltd. Vs. DCIT - [2017] 83 taxmann.com 82 (Gujarat). 5. We have carefully considered the arguments of both the sides and perused the material placed before us. The reasons recorded for issue of notice under Section 148 read as under :- Name of the assessee : M/s SBS Realtors P.Ltd. A.Y. 2009-10 PAN : AALCS5106R Assessment Year : 2009-10 Reasons for Issue of Notice u/s 148 of the Income Tax Act, 1961 The return of income for the A.Y. 2009-10 has been filed by the assessee company on 20.09.2009 declaring NIL total income. The same was processed u/s 143(1) on 17.01.2011. No assessment u/s 143(3) for the A.Y. 2009-10 has been made in this case. In this case information has been shared by DIT(Investigation)-II (letter flagged as Annexure A) on the basis of search in the case of Sh. Surendra Kr. Jain group of cases (entry operator) New Delhi that during the financial year 2008-09 the aforementioned assessees has introduced its own money by way of taking bogus accommodation entries provided by Sh. S.K. .....

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ed and paid up share capital has increased by ₹ 23,50,000/- and securities premium has increased by ₹ 2,11,50,000/- i.e., both totalling to ₹ 235,00,000/-. The same has escaped assessment on account of failure on the part of the assessee to truly and fully disclose all material facts necessary for assessment for the AY 2009-10. In order to verify the genuineness, identification and creditworthiness of the aforesaid transaction the case needs to be reopened u/s 147 of the I.T. Act 1961. Since more than four year have been elapsed from the end of the relevant A.Y. i.e. 2009-10, necessary statutory approval u/s 151(2) of the I.T. Act may kindly be accord to issue notice u/s 148 for the A.Y. 2009-10 for the purpose of reopening of the case u/s 147 of the I.T. Act, 1961. Sd/- (R.O. Bhutia) Income Tax Officer Ward-22(4), New Delhi 6. From a perusal of the above reasons, it is seen that the Investigation Wing has supplied certain information to the Assessing Officer with regard to receipt of cheques by the assessee from various companies who are considered to be S.K. Jain group companies by the Investigation Wing. As per the Investigation Wing, the above cheques paid by .....

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remains whether an assessment can be reopened under Section 147 for the purpose of verification of genuineness, identification and creditworthiness of any transaction. In our opinion, the reply is clearly NO. There is Section 143(2) of the Income-tax Act under which the Assessing Officer can issue notice for the purpose of verification. The said Section reads as under :- 143(2). Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the re .....

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gh Court in the case of PCIT Vs. Paramount Communication Pvt.Ltd. - [2017] 392 ITR 444 (Delhi), wherein on the basis of report of the Investigation Wing, Hon'ble Jurisdictional High Court has upheld the issue of notice under Section 148. Their Lordships held as under :- Held, that having regard to the contents of the notice issued under section 148 of the Income-tax Act, 1961, the findings of the Appellate Tribunal were not sustainable. It constituted reference to tangible material outside the record which was information based upon the investigation of the Commissioner of Central Excise. To have required the Revenue to disclose further details regarding the nature of documents or of contents thereof would be rewriting the conditions in section 147 which merely authorised the issuance of notice to reopen with conditions. For the assessment years 2004-05 and 2005- 06, the notes disclosed the source of information, the Directorate of Revenue Intelligence, which had sent information based upon the Commissioner of Central Excise s investigations. To add further conditions to be nature of discussions or reasons that the Officer authorizing the notice would have to discuss in the not .....

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on the basis of DIT(Investigation) has been quashed. It is a settled law that when there are two views, the view in favour of the assessee is to be followed and moreover, there are at least two decisions subsequent to the decision of Paramount Communication (P) Ltd. (supra), wherein their Lordships have quashed the notice issued under Section 148 on the basis of information from the Investigation Wing. The facts in the case of the assessee are almost identical to the facts in the case of RMG Polyvinyl (I) Ltd. (supra) and Meenakshi Overseas Pvt.Ltd. (supra). Therefore, they would be squarely applicable to the case of the assessee. Consequently, we hold the notice issued under Section 148 of the Act to be invalid for two reasons :- (i) the notice is issued for the purpose of verification of genuineness, identification and creditworthiness of the transaction, which is not permissible; (ii) the Assessing Officer has recorded his satisfaction on the basis of mere report from the Investigation Wing. There is no crucial link between the information made available to the Assessing Officer and the formation of belief of escapement of income. There is no basis for coming to the conclusion t .....

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