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TMI Blog2018 (5) TMI 2103X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) on 02.04.2009 determining the income at Rs. 66,590/-. Subsequently, search and seizure operation u/s 132 of the I.T. Act was conducted at various business and residential premises of M/s Jindal Group of cases. Survey u/s 133A was also conducted in the business premises of the assessee. The case was centralized with Central Circle- 14 through order dated 31.12.2012 passed u/s 127 of the I.T. Act by the CIT, Kolkata-II, Kolkata vide No. F.No. CIT-KOL-II/Cent./12-13/6708. With effect from 15.11.2014 erstwhile Central Circle-14, New Delhi was re-designated as Central Circle-30, New Delhi. 3. The Assessing Officer issued notice u/s 148 dated 20.02.2015 by recording the following reasons :- "Reasons for issue of Notice U/s 148 in the case of M/s Pavitra Trexim Pvt. Ltd. for the A Y 2007-08" A search and seizure action in Jindal group of cases was carried out on 14/11/2011. As part of the search action, a survey u/s 133A was carried out in the case of Assessee Company at 13, Aunarnava, BB Ganguli Street, Room No. 05, Ground Floor, Born Bazar, Kolkata. During the course of survey statement of one Sh Kamal Kumar Sharma who claimed to he service provider to the company on outsou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 companies which are paper companies & run by entry operators. Hence the source of funds is non genuine. The said amount is liable to be added u/s 68 of I. T. Act." 4. In response to the said notice, the assessee filed return of income declaring Nil income on 21.03.2014. The assessee asked for the copy of the reasons which was supplied to the assessee. The objection of the assessee vide letter dated 29.05.2014 was disposed of by the Assessing Officer after due consideration and its request to drop the proceedings was rejected. During the course of assessment proceedings, the Assessing Officer observed that the assessee has received share capital of Rs. 2,34,17,000/- along with share premium of Rs. 21,07,53,000/-. He observed that the shares having a face value of Rs. 10/- each has been allotted to 41 share applicants @ Rs. 100/- each including premium of Rs. 90/- per share. During the course of assessment proceedings, the Assessing Officer asked the assessee to furnish complete details of new share applicants in the company and to furnish the register of minutes of meetings of board of directors, Share allotment registers, correspondences between allottee & allotting company, ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completed assessment u/s 148 of the I.T. Act as well as reassessment u/s 147 of the I.T. Act is not as per law and, therefore, action of the Assessing Officer is void ab-initio. The relevant observation of the ld. CIT(A) from para 5.4 onwards read as under :- "5.4 I have carefully considered assessment order, written submissions, statements recorded by the Investigation Wing, case laws relied upon and oral arguments of Ld.AR. The objections/arguments of the appellant are discussed as under:- (i) In this case the original return of income was filed on 31.01.2008, declaring NIL income. The assessment u/s 143(3) of the Act was completed vide order dated 02.4.2009, at total income of Rs. 66,590/-. (ii) Subsequently, search and seizure action u/s 132 took place on 14.11.2011 in Shri B.C. Jindal group of cases and also survey u/s 133A of the Act, in the case of the appellant. Notice u/s 153C of the Act, was issued on 03.12.2013 and in response to this notice, return of income was filed on 20.12.2013, declaring NIL income, by way of filing a letter dated 20.12.2013 to consider the original return filed in response to this notice. However, the A.O. vide letter dated 14.3.2014, com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the written submission by the appellant, supra) on the following basis: * statement of Shri Kamal Kumar Sharma, was recorded on 14.11.2011 during the survey action u/s 133A of the Act, at the business premises of the appellant, who is a service provider, * statement of director of the appellant company, Shri Naval Bihari Bhoot, recorded u/s 131 of the Act, on 14.11.2011, since he does not know anything about the appellant company and simply signs the documents, * affidavit of Shri Vikas Khaitan, dated 09.2.2012, who is an entry operator, * the information gathered during search and afterwards in the case of S.S. Jindal group, regarding bogus share capital taken at premium from 41 paper companies and invested in the 53 companies, which do not have substantive business activities. On the basis of above facts, the A.O. was having reason to believe that the source of funds in share capital! share premium, is non genuine and therefore, issued the notice u/s 148 of the Act. (ix) In the appellate proceedings, the appellant has also submitted that the statement of Shri Kamal Kumar Sharma, was recorded during the survey action u/s 133A of the Act on 14.11.2011, taken on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Supreme Court and various High Courts, supports the above arguments, which are worth reporting: * M/s Haryana Acrylic Manufacturing Co. v Commissioner of Incometax [2008] 175 TAXMAN 262 (HC - Delhi) * M/s Calcutta Discount Co. Ltd. V. ITO [1961] 41 ITR 191 (Supreme Court) * Assistant Commissioner of Income-tax (OSD) v. M/s Parixit Industries (P.) Ltd. [2012] 25 taxmann.com 301 (Supreme Court) * Commissioner of Income tax v. M/s Multiplex Trading & Industrial Co Limited [2015] 63 taxmann.com 170 (HC - Delhi) * Commissioner of Income-tax v M/s Viniyas Finance & Investment Private Limited [2013] 33 taxmann.com 86 (HC - Delhi) * Commissioner of Income Tax v M/s Kelvinator of India [2010] (187 TAXMAN 312) (Supreme Court). (xi) It is further submitted by the AR that in the case of the appellant, the assessment u/s 143(3) of the Act, has already been completed vide order dated 02.4.2009 and the appellant has disclosed fully and truly all the material facts necessary for completion of assessment for the A.Y. 2007-08. It is further submitted by the AR that the A.O. has specifically mentioned in the assessment order u/s 143(3) of the Act, that AR filed necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted in the normal course of assessment proceedings. The Assessing Officer cannot be permitted to retract from the position that he did ask for specific information and that the information was supplied by the petitioner. And, more importantly, that the Assessing Officer had examined and verified the information before finalizing the assessment under section 143(3) of the said Act. In this background also, we feel that the petitioner had not failed to disclose fully and truly all material facts necessary for its assessment in respect of the assessment year 1998-99. " (xii) It is further submitted by the AR that it will not be out of place to mention here that even during reassessment proceedings u/s 153C of the Act, till dropping on 14.3.2014, in order to verify the genuineness of the fresh share capital, the information was directly collected by the present A.O. by issuing notices u/s 133(6) of the Act, from all the share applicant. It is further submitted that all these share applicants have confirmed the transactions, which were also verified by the A.O. in the assessment proceedings. The copies of information collected by the A.O. from all the share applicants, have been fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, it is clear that the period for action u/s 148 of the Act, pertains beyond 4 years for A.Y. 2007-08, which is under consideration and the original assessment was completed u/s 143(3) of the Act and there was no failure on the part of the assessee to disclose fully and truly, all the material facts necessary for the assessment. Therefore, the A.O. has wrongly resorted to re-opening u/s 148 of the Act, whereas assessment u/s 143(3) of the Act, had already completed, where fresh share application money/share premium was found as genuine. In view of the above, I am of the considered opinion that the A.O. was not having any cogent and definite material on record to form the reason to believe on the information in his possession, for re-opening of the completed assessment and further, there was no failure on the part of the appellant to disclose fully and truly all the material facts necessary for completion of assessment. Therefore, the action of the A.O. for initiating reassessment proceedings u/s 148 of the Act, is not correct and this view is also supported by the decision of jurisdictional High court of Delhi in the case of M/s Haryana Acrylic Manufacturing Co. vs. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A) and submitted that all the preconditions for invoking the provisions of section 147 are fulfilled in the instant case. Relying on various decisions, she submitted that ld. CIT(A) was not justified in holding the re-assessment proceedings as void ab-initio. So far as merit of the case is concerned, she submitted that that the assessee has not satisfactorily explained the identity and creditworthiness of the shareholder and the genuineness of the transactions. The Assessing Officer had given justifiable reasons for making the addition u/s 68 of the I.T. Act. She accordingly submitted that the order of the ld. CIT(A) be reversed and that of the Assessing Officer be sustained. 9. The ld. counsel for the assessee on the other hand heavily relied on the order of the ld. CIT(A). He submitted that the original assessment was completed u/s 143(3) wherein the Assessing Officer after satisfying himself regarding the issue of 23,41,700 shares of Rs. 10/- with premium of Rs. 90/- to 41 companies had accepted the share capital of Rs. 23,41,70,000/- raised during the year. Referring to the notice issued u/s 148, he submitted that there is no allegation of any failure on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not show any allegation by the Assessing Officer regarding any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. Therefore, the 1st proviso to section 147 are clearly applicable to the facts of the present case. 13. We find the proviso to section 147 reads as under :- "Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reply dated February 5, 2002. Since the petitioner had fully and truly disclosed all the material facts necessary for the assessment, the pre-condition for invoking the proviso to section 147 of the said Act had not been satisfied. In this connection, it may be relevant to note one decision, although there are several others. The said decision is that of the Punjab and Haryana High Court in the case of Duli Chand Singhania v. Asst. CIT [2004] 269 ITR 192. In the said decision, the High Court of Punjab and Haryana was faced with a similar situation. The court noted that there was not even a whisper of an allegation that the escapement in income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The court observed that absence of this finding, which is the sine qua non for assuming jurisdiction under section 147 of the Act in a case falling under the proviso thereto, makes the action taken by the Assessing Officer wholly without jurisdiction. We agree with these observations of the Punjab and Haryana High Court and are of the view that in the present case also, the Assessing Officer has acted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as completed u/s 143(3) on 02.04.2009 and the Assessing Officer had accepted the raising of share capital to the tune of Rs. 23,41,70,000/- on the basis of various details furnished by the assessee and since the notice has been issued after a period of four years from the end of the relevant assessment year and in the said notice there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment, therefore, we do not find any infirmity in the order of the ld. CIT(A) in holding that the reopening of the completed assessment u/s 148 and re-assessment u/s 147/143(3) is not as per law and are void ab-initio. The various decisions relied on by ld. DR are distinguishable and not applicable to the facts of the present case. The grounds raised by the Revenue are therefore dismissed. C.O. No.79/Del/2017 (Assessee) : 17. The ld. counsel for the assessee did not press the Cross Objection filed by the assessee for which ld. DR has no objection. Accordingly, the same is dismissed. 18. In the result, the appeal filed by the Revenue and the Cross Objection filed by the assessee are dismissed. Order prono ..... X X X X Extracts X X X X X X X X Extracts X X X X
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