TMI Blog2021 (1) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... f the earlier assessment proceedings is misplaced. If the assumption of jurisdiction is held to be valid, the Appellant cannot place undue credence on the earlier assessment proceedings. Once an assessment is reopened, the initial order for assessment ceases to be operative and the proceedings start afresh. The Appellant s contention that since the AO had originally accepted the donations to be genuine, he is precluded from treating them to be bogus and making additions, is untenable. Tribunal has noted that though the Assessee had initially submitted the confirmation of donation at the time of original assessment, however during investigation by the CBI, some of the donors have confessed that they have not given any such donation. Under interrogation of the donors it was unearthed that the donation detail submitted by the Assessee in the original assessment proceedings was false. The genuineness of the donors could not be established. This case invited deeper scrutiny owing to the discovery of facts during CBI investigation that adversely impinged the findings determined in the earlier round of assessment. However, the Appellant failed to discharge the onus of proof cast upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessee then preferred further appeal before the ITAT, whereupon, vide order dated 29th January, 2010 the assessment order was set aside and the Assessing Officer [hereinafter referred to as AO ] was directed to decide the case afresh, after taking into account all the documentary evidence and affording the Appellant an opportunity of hearing. In accordance with the direction of the Tribunal, statutory notices were served upon the Appellant and a fresh assessment order dated 9th June, 2011 under Section 254/143(3) of the Act was framed by assessing the total taxable income as nil. 5. Subsequently, on 28th March, 2013 the Additional Commissioner of Income Tax, Range 1, Ghaziabad issued a notice under Section 148, for reopening of assessment, followed by notices under Section 143(2) of the Act. The reason to believe that the income of the Appellant chargeable to tax has escaped assessment, emanated from the information received from the Deputy Director of Income Tax (Inv.) II, vide letters dated 22nd June 2012 and 21st January 2013, which in turn stemmed from a report of Central Bureau of Investigation (CBI). The Joint Director of Income tax (Investigation) informed that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn of income on 24th August 2008 declaring nil income. Assessment was completed u/s 143(3) on 29 th December, 2009 and total income was assessed as NIL. Subsequently, on 23rd March, 2014, the Additional Commissioner (Appeals) issued a notice under Section 148 for reopening the assessment. This action also originated from the information received from the Joint Director of Income Tax vide letter dated 21st January, 2013, which, in turn was based on the above noted CBI report. 8. Re-assessment was completed on 20th March 2015, under Section 147 r/w 143(3) of the Act. It was held that the Appellant had failed to explain the donation of ₹ 95,00,000/- in terms of Section 68 of the Act. Accordingly, addition of ₹ 60,00,000/- was made on account of unexplained cash credit, thereby determining the total taxable income as ₹ 60 Lakhs. Aggrieved with the aforesaid order, the Assessee preferred an appeal before the CIT(A) on the issue of reopening of assessment as well as on the merits of the addition of ₹ 60 lacs on account of unexplained cash credit. The CIT(A), vide order dated 16th March 2017, upheld the reopening of the assessment. It was observed that while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endered on the same set of facts of its coordinate bench for AY 2006-07 in the Appellant s own case wherein the Tribunal had categorically observed that the Appellant had furnished evidences that the donations were not bogus. The CBI report had no nexus or connectivity with the case of the Appellant and the AO has thoughtlessly followed the CBI report which was baseless and devoid of any merit. It was also argued that the Tribunal, as a last fact-finding authority, was required under law to verify the authenticity of the CBI report, based on which the entire purported action of reopening an assessment, and consequent reassessment, was undertaken. He alleged that the Tribunal confirmed the order of the CIT(A) in a cyclostyle manner, endorsing the findings of the Tribunal, without any independent application of mind. The Tribunal failed to appreciate that the reopening of the assessment for AY 2006-07 was illegal and erroneous, in light of the fact that the AO issued the notice under Section 148 without any basis, on mere information, without making any independent enquiry. D. Questions proposed before the Court 11. We have duly considered the submissions advanced by Mr. Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it till 31/7/2006 and assessee received the same through 38 credit entries ranging from INR 500,000 to ₹ 25,00,000 from various persons. Such persons were repaid after borrowing by the assessee. Further, the amount of INR 3,500,000 received from accommodation entry provider Shri Mahesh Garg was also noted. Further, all the 22 witnesses examined by the central bureau of investigation have clearly stated that they have not given any donation to the Appellant. Further, the chartered accountant of Sri SK Sharma clearly confessed before the CBI that all these 22 persons obtained permanent account number through him and these evidences were used for giving an accommodation entry by depositing the huge amount in the account of Appellant. Though assessee has initially submitted the confirmation of the donors, at the time of original assessment, however during the investigation by the central bureau of investigation, in interrogation all the donors have confessed that they have not given any such donation. Therefore, the donation details submitted by the assessee in the original assessment proceedings were false. Thus, assessee has failed to disclose fully and truly material facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e carefully considered the rival contentions and perused the orders of the lower authorities. During the year, the assessee has received a donation from 122 persons amounting to INR 9,500,000. The assessee has given the name, address, permanent account number of those persons as per 7 pages list placed on the paper book at page number 12 - 18. This year also the assessee has credited the same amount to general fund. The opening balance of general fund at the beginning of the year on 01 /04/2006 was ₹ 40,00,000 and at the end of the year on 31/03/2007 is INR 13,500,000. The above donation of INR 9,500,000 also was not credited to the income and expenditure account but directly carried to the balance sheet. Thus, the above amount was not shown as income in the income and expenditure account. Except placing the list on record, the assessee could not furnish any other information with respect to the genuineness of the donation. The learned assessing officer made the addition u/s 68 of the income tax act and the learned CIT- A confirms the above addition as per para number 5.2 of his order. The main reason for the confirmation of the addition is that examination of the fact reveal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses stated that they had not given any donation to the Appellant. This revelation controverted the factual foundation set up by the Appellant, and falsified the information disclosed by the Appellant during the course of the prior assessment. The AO thus had specific information about cash deposits, supported by statement of witnesses which confirmed that the donors were bogus. These facts disclose a vital link and nexus between the information received by the AO and the reason to believe for reopening the assessment, which fulfilled the threshold required for assuming jurisdiction by the AO in order to reopen the assessment. There was, thus, some tangible material with the AO to form a prima facie opinion that the income of the Appellant had indeed escaped assessment, thereby justifying the action under Section 147. There is no perversity in the reasoning given by the Tribunal, based on findings of fact which would give rise to the questions of law numbered (i) and (ii), as noted in para 11 above. 14. In fact, during the course of arguments, Mr. Chandani to some extent relented that the information with AO justified initiation of the action u/s 147 of the Act, but he argued th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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