TMI Blog2018 (3) TMI 1948X X X X Extracts X X X X X X X X Extracts X X X X ..... for his assessment. There is not even a whisper in the reasons recorded for the reopening of the assessee relating to non disclosure of full and true facts by the assessee - See HARYANA ACRYLIC MANUFACTURING COMPANY [ 2008 (11) TMI 2 - DELHI HIGH COURT] Coming back to the reasons recorded for reopening of the assessment as mentioned elsewhere, it can be seen that there is no independent application of mind by the A.O. It appears that the A.O. has borrowed the investigation made by the Investigation Wing under the DIT (Investigation), New Delhi - we have no hesitation to hold that the notice issued u/s. 148 of the Act is without jurisdiction and the same is set aside. Assessment u/s 153A - Coming to the merits of the case as mentioned elsewhere, there is no dispute that no incriminating material has been found at the time of search and therefore it is now settled proposition of law that no assessment u/s. 153A of the Act can be framed in the absence of any incriminating material found at the time of search. For this proposition, we draw support from the decision of the Hon ble High Court of Delhi in the case of Kabul Chawla[ 2015 (9) TMI 80 - DELHI HIGH COURT] - Decided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaped assessment and it is proposed to assess/ reassess that income and such other income which comes to notice subsequently during course of investigation by DIT (Investigation). Therefore, notice u/s 148 is issued for A.Y. 2004-05 G.N. SINGH Asstt. Commissioner of IT, Circle-1(2), RAIPUR (36 Garh) 5. We are unable to understand when in the reasons so recorded, the A.O. himself is stating that the accommodation entries from the various parties mentioned above, which did not find place in the assessee s books of account, therefore, he has reasons to believe that the income chargeable tax has escaped assessment. When the entries are not found in the books of the assessee how the same could be made basis for reopening the completed assessment. In our understanding of the law, veracity of the notice u/s. 148 of the Act has to be tested on the basis of the notice itself. As mentioned elsewhere, the notice is issued after four years from the end of the relevant assessment years, First proviso to section 147 of the Act squarely apply and the same is as under:- Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing Officer under section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our viewpoint, we hold that the notice dated 29-3-2004 under section 148 based on the recorded reasons as supplied to the petitioner as well as the consequent order dated 2-3-2005 are without jurisdiction as no action under section 147 could be taken beyond the four year period in the circumstances narrated above. 8. A similar view was taken by the Hon ble High Court of Punjab and Harayana in the case of Dulichand Singhania 269 ITR 192, the relevant part reads as under:- 13. The entire thrust of the findings recorded by the AO in his order dt. 13th March, 2003 is to justify his satisfaction about escapement of income. According to him, it was a clear case of escapement of income as defined in Expln. 2 to Section 147 as the assessee had been allowed excessive relief under Section 80O of the Act. However, it is not necessary for us to go into the merits of this finding as the second requirement of the proviso has not been satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to do so would vitiate the notice and the entire proceedings. The relevant words in the proviso are, .......unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee..... Mere escape of income is insufficient to justify the initiation of action after the expiry of four years from the end of the assessment year. Such escapement must be by reason of the failure on the part of the assessee either to file a return referred to in the proviso or to truly and fully disclose the material facts necessary for the assessment. Whenever a notice is issued by the AO beyond a period of four years from the end of the relevant assessment year, such notice being issued without recording the reasons for his belief that income escaped assessment, it cannot be presumed in law that there is also a failure on the part of the assessee to file the returns referred to in the proviso or a failure to fully and truly disclose the material facts. The reasons referred to in the main paragraph of Section 147 would, in cases where the proviso is attracted, include reasons referred to in the proviso and it is necessary for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries . In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. 11. The Hon ble High Court of Delhi in 338 ITR 51 had the occasion to consider identical set of facts and observed as under:- 13 Annexure attached to the said proforma placed on record of the petitioner reads as under: Beneficiary s name Value of entry taken Instrument No. by which entry taken Date on which entry taken Signatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside. 13. ITA No. 98/Ahd/2012 is the appeal by the Revenue on merits of the case since we have quashed the re-assessment order itself, we do not find it necessary to dwell into the merits of the case. Appeal dismissed. 14. ITA No. 187/Raipur/2014 is appeal by the revenue preferred against the order of the ld. CIT(A), Raipur dated 05.06.2014 pertaining to 2004-05. 15. The sum and substance of the grievance of the revenue is that the ld. CIT(A) erred in deleting the addition of ₹ 1.50 crores made u/s. 68 of the Act. The revenue is further aggrieved that the ld. CIT(A) has overlooked the compliance of specific directions issued by the ITAT. 16. This is the second round of litigation. In the first round of litigation, the assessment travelled up to the Tribunal and the Tribunal vide order dated 10.02.2012 in IT(SS)A No. 08/BLPR/2010 had set aside the matter before the A.O. The relevant findings of the Co-ordinate Bench read as under:- However principles of natural justice demand that when the assessee wants to cross examine a person an opportunity should be granted to him so as to make the addition justified. Further the A.O. has not enquired from the alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. Strong reliance was placed in on the decision of the Hon ble High Court of Delhi in the case of Kabul Chawla 380 ITR 573 and the decision of the Tribunal Kolkata Bench in the case of Peerless General Finance and Investment Company Ltd. 21 SOT 440. 21. We have given a thoughtful consideration to the orders of the authorities below. We will first adhere to the challenge of the assessment on the ground that no incriminating material was found at the time of search. To this extent, there is no dispute because neither the Assessing Officer nor the First Appellate Authority has referred to any incriminating material found at the time of search. The additions made by the A.O. are on the basis of some material found during the course of survey operations in the premises of some third person. On the contrary, the First Appellate Authority has categorically held that no incriminating material was found at the time of search. 22. Now the question is whether this new ground can be taken up for the first time in set aside proceeding before the Tribunal. We find that the issue regarding the right of the assessee to challenge the legal validity of the order. In the second round of litiga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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