TMI Blog2021 (4) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... are already declared illegal and bad in Law in A.Y. 2009- 2010 in the case of assessee on the same reasons, therefore, in assessment year under appeal also initiation of reassessment proceedings is illegal and bad in Law. Therefore, the same cannot be subject to proceedings under section 263 of the I.T. Act, 1961. This issue is, therefore, covered by Order of the ITAT, Delhi G-Bench, New Delhi in the case of M/s. Shahi Exports Pvt. Ltd., New Delhi vs., The Pr. CIT, Circle-1, New Delhi [ 2021 (3) TMI 1008 - ITAT DELHI ] In view of the above, we set aside the Order of the Learned Pr. CIT-8, New Delhi and quash the Order passed under section 263 of the I.T. Act, 1961 and restore the Order of the A.O. Accordingly, appeal of the Assessee is allowed. - ITA.No.2996/Del./2017 - - - Dated:- 6-4-2021 - Shri Bhavnesh Saini, Judicial Member And Shri N.K. Billaiya, Accountant Member For the Assessee : Shri Kapil Goel, Advocate For the Revenue : Shri H.K. Choudhary, CIT-DR ORDER PER BHAVNESH SAINI, J.M. This appeal by Assessee has been directed against the Order of the Ld. Pr. CIT-8, New Delhi, Dated 24.03.2017, for the A.Y. 2008-2009. 2. We have heard the Learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material found during the course of search in the case of Shri S.K. Jain Group have not been considered by the A.O. The explanation of assessee was called for as to why the re-assessment order Dated 30.06.2014 cannot be set aside. The assessee submitted reply and also submitted that assessee filed documentary evidences which have been examined by the A.O. which prove that the Investors are existing parties and have creditworthiness. Shares have been allotted to them, therefore, the transaction is genuine. The assessee filed copy of share application form, resolution of Investor Companies, confirmation of Investor companies, their PAN Card, Certificate of Incorporation and Memorandum and Article of the Company, bank statements, present address of the Investor Companies, copy of Form No.2 held by the assessee-company with Registrar of Company, list of share allotment etc. The A.O. made detailed enquiry with reference to the search conducted in the case of Shri S.K. Jain Group of cases and information received from DIT (Inv.)-II, New Delhi. The Learned Pr. CIT, however, did not accept the explanation of assessee and noted that though the A.O. has referred to Appraisal Report, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings under section 147 of the Act and, completion of assessment u/s 147/143(3) of the Act which were without jurisdiction and deserves to be quashed as such. 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, there was no tangible, relevant, specific and reliable material on record on the basis of which, it could be held that, there was any reason to believe with the learned Assessing Officer that income of the appellant had escaped assessment and, in view thereof, the proceedings initiated were illegal, untenable and therefore, unsustainable. The reasons as noted by the Assessing Officer were mechanical on information received from Investigation Wing. The satisfaction of the Assessing Officer was borrowed satisfaction. 1.2 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that approval granted u/s 151 of 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 Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was gathered that various companies of Shri S.K. Jain group have provided accommodation entries to the extent of ₹ 2,35,00,000/-. The Investigation Wing has supplied the complete information i.e., the name of the company who provided the entry, the cheque numbers, name of the bank, date of cheque and names of middlemen. The Assessing Officer has verified the above entries from the assessee s balance sheet and thereafter has arrived at the conclusion that there is escapement of income. Therefore, reopening of assessment by the Assessing Officer was perfectly in accordance with law and the same has rightly been upheld by the learned CIT(A). In support of his contention, he relied upon the following decisions :- (i) PCIT Vs. Paramount Communication (P) Ltd. 2017-TIOL-253-SC-IT. (ii) PCIT Vs. Paramount Communication (P) Ltd. [2017] 392 ITR 444 (Delhi). (iii) Aradhna Estate (P) Ltd. Vs. DCIT [2018] 91 taxmann.com 119 (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.co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SBS Realtors Pvt.Ltd. Axis P.O. No.023905 17.04.2008 1,000,000/- Rajesh Aggarwal 2 Shakini Holding Ltd. SBS Realtors Pvt.Ltd. Axis P.O. No.025624 10.06.2008 3,000,000/- Rajesh Aggarwal 3 Mani Mala Delhi PRO Pvt.Ltd. SBS Realtors Pvt.Ltd. Axis P.O. No.025623 10.06.2008 2,500,000/- Rajesh Aggarwal 4 Euro Asia Mercantile Pvt.Ltd. SBS Realtors Pvt.Ltd. Axis P.O. No.025622 10.06.2008 2,500,000/- Rajesh Aggarwal 5 Virgin Capital Services P.Ltd. SBS Realtors Pvt.Ltd. Axis P.O. No.025711 13.06.2008 1,000,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lure 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 S.K. Jain group companies were accommodation entries to M/s SBS Realtors Pvt.Ltd. i.e., the assessee. However, what is the material found during the course of search of S.K. Jain group ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subsection (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 underpaid 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 return is furnished. 7. Thus, if the Assessing Officer considered it necessary to ensure that the assessee has not understated the income, he can issue the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation 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 note or decision was beyond the purview of the courts and was not justified. The orders of the Appellate Tribunal could not be sustained. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that the assessee received accommodation entries. The Investigation Wing alleged tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced as under : IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI G BENCH, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA No. 2170/DEL/2017 [Assessment Year: 2008-09] ITA No. 2171/DEL/2017 [Assessment Year: 2010-11] M/s Shahi Exports Pvt Ltd F -88, Okhla Industrial Area Phase 1, New Delhi Vs. The Pr. C.I.T Circle- 1 New Delhi PAN: AADCD 8448 F [Appellant] Respondent] Date of Hearing : 18.03.2021 Date of Pronouncement : 24.03.2021 Assessee by : Shri M.P. Rastogi, Adv, Shri Deepal Malik, Adv Revenue by : Shri Amitabh Kumar Sinha, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, The above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 has assessed the income of the Assessee at ₹ 5,27,78,840/-. A.Y 2010-11 Perusal of the submissions filed by the Assessee and information available in the record shows that the case of the Assessee for Assessment Year under consideration was taken up u/s^ 143(3). The Addl. Commissioner of Income Tax, Range-8, New Delhi vide Order dated 20.12.2010 has assessed the income of the Assessee at ₹ 32,64,73,560/-. 10. The ld. PCIT invoked the provisions of section 263 of the Act and set aside the assessment order dated 30.03.2015 holding that because after the merger of M/s Sarla Fabrics Pvt Ltd with M/s Shahi Exports Pvt Ltd, whatever additions were made in the hands of M/s Sarla Fabrics Pvt Ltd were to be assessed in the hands of M/s Shahi Exports Pvt Ltd and accordingly, order of M/s Shahi Exports Pvt Ltd, as passed by the Assessing Officer u/s 153C of the Act, amounts to erroneous and prejudicial to the interest of the Revenue. 11. As per the facts mentioned hereinabove, additions made u/s 143(3) of the Act were repeated in the assessment order framed/s 153A r.w.s 153C of the Act. This means that no additions had any link with any incriminating mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the re-assessment order is illegal and bad in Law and is covered by the Order of the Tribunal Dated 01.04.2019 in the case of assessee on the same issue, therefore, the Learned Pr. CIT cannot exercise jurisdiction under section 263 of the I.T. Act, 1961 in collateral proceedings. Therefore, the Order passed by the Learned Pr. CIT under section 263 of the I. T. Act, 1961 is invalid and bad in Law. 5. On the other hand, the Ld. D.R. relied upon the impugned Order of the Learned Pr. CIT and submitted that since assessee did not challenge the reopening of the assessment, therefore, it cannot be challenged in proceedings under section 263 of the I.T. Act, 1961. 6. After considering the rival submissions, we are of the view that the Learned Pr. CIT has wrongly assumed the jurisdiction under section 263 of the I. T. Act, 1961. It is an admitted fact that in A.Y. 2009-2010 the A.O. has recorded similar reasons for reopening of the assessment. However, the same have been quashed by the Tribunal vide Order Dated 01.04.2019 (supra). The A.O. in the impugned re-assessment order has mentioned the information received from DIT (Inv.)-II, New Delhi that assessee has received accommodat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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