TMI Blog2022 (1) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Tribunal) Rules is accordingly allowed. - ITA No.4944/Del/2018 - - - Dated:- 7-1-2022 - Shri R.K. Panda, Accountant Member And Shri Kul Bharat, Judicial Member For the Assessee : Shri V.K. Agarwal, AR For the Revenue : Shri Parikshit Singh, Sr. DR ORDER PER R.K. PANDA, AM: This appeal filed by the Revenue is directed against the order dated 24.11.2017 of the CIT(A)-38, New Delhi relating to assessment year 2009-10. 2. Facts of the case, in brief, are that the assessee is a company engaged in the business of designing, fabrication and erection of heavy structural steel work/hydro project and other construction work. It filed its return of income on 29th September, 2009 declaring an income of ₹ 4,07,74,020/-. Original assessment proceedings u/s 143(3) of the Act was completed in this case on 23.11.2011 at an income of ₹ 4,12,74,020/-. Subsequently, based on the information received from the Investigation Wing, Chandigarh, the AO reopened the assessment under the provisions of section 147 of the Act and issued notice u/s 148. 3. The AO in this case received information from the Dy. Director of Incometax (Investigation)-II, Chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03,82,000/- is bogus and, accordingly, added the same u/s 68 of the IT Act. 6. Before the CIT(A), the assessee, apart from challenging the addition on merit, challenged the validity of the reassessment proceedings. The assessee also challenged the validity of the assessment in absence of issue of notice u/s 143(2) of the IT Act. The ld.CIT(A), deleted the addition on merit by observing as under:- 6.2 I have considered the facts of the case, the basis of addition made by the Ld. AO and the written as well as oral arguments of the Ld. AR. 6.2.1 The Ld. AO added ₹ 5,03,82,000/- on account of share application money received from M/s Sopan Merchants Pvt. Ltd. (₹ 1,16,00,000/-) and Olipha Trading and investment Pvt Ltd (₹ 3,87,82,000/-) on the ground that it is nothing but the assessee s own income from undisclosed sources. In response to the above, the ld. AR submitted following documents to prove identity, genuineness and creditworthiness of the investor: a) Confirmation from the investors b) Form 2 filed before ROC c) Statements of bank account of the investor companies showing rents towards share application money, d) Confirmation from investo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from the case laws relied upon by appellant have been reproduced at para 6.1 supra. Therefore, the contention of the Ld. AO that identity, genuineness and credit worthiness of the investors is not proved by assessee is not correct. 6.2.4 The Ld.AO has also taken adverse view observing that subsequently shareholders of M/s Sopan Merchant Pvt. Ltd. and M/s Olipha Trading Investments Pvt. Ltd. had transferred their entire shareholding to 4 group companies of the appellant. The Ld. AR submitted that subsequent sale of share does not hold the impugned share capital as unexplained by relying on decision of Delhi High Court in the case of CIT Vs SVP Builders (India) Ltd; 2015--TIOL-2912-HC-DEL-IT. 6.2.5 I have gone through the above case law wherein it is held that the fact that the shares of the asessee were subsequently sold at a reduced price is not germane 6.2.6 The Ld, AO has referred to the statement of Sh Pankaj Agarwai, who is controlling M/s Sopan Merchants Pvt Ltd and Sh. Subhash Kumar Agarwal, who is controlling M/s Olipha Trading Investments Pvt Ltd. The two entry operators have been investigated by Investigation Wing, Kolkata and have admitted on oath that they a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces to prove his case. The Ld. AO had not provided the report of investigation wing to the assessee. However, no negative inference can he drawn on the basis that such report was not confronted to appellant in view of the order of Apex Court in the case of M/s Pebble Investment And Finance Ltd Vs ITO 2017-TIOL-238-SC-1T. 6.2.11 The Ld. AO, on page 14 of the assessment order, has mentioned that the turnover and profit declared by the investor companies was meagre. In response to this Ld. AR submitted that the consideration for investment is not the income but the availability of funds. The bank statements of the investors filed before the Ld. AO clearly indicate the availability of funds in their hands. He emphasized that no addition could be made on the basis of low income of the investors by relying on the following case laws:- Prabhatam Investment Pvt. Ltd. vs. ACIT, 2017-TIOL-714-ITAT-DEL ITO Vs. R B Horticulture Animal Projects Co Ltd., 2016-TIOL-51O-ITATKOL 6.2.12 I have gone considered the case laws relied by the Ld. AR wherein it is clearly held that low income earned by investor companies by itself is no ground to treat the share application money received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CIT vs. Orchid Industries Pvt. Ltd., 2017-TIOL-1318-HC-MUM. 6.2.17 I have perused the above decision where it was held by the Hon ble High Court Mumbai that just because investors had not appeared before the Assessing Officer as summons could not be served on the addresses given, no adverse inference could be drawn on this account against the assessee. 6.2.18 The Assessing Officer has mentioned that creditworthiness of the transaction is doubtful. In reply to the above, the Ld. AR emphasised that no addition can be made if the adjudicating authority makes an observation by using the words doubtful, appear, possible etc. on the basis of surmises and conjectures and not the relevant evidence. He has relied on the Hon ble ITAT Mumbai s judgment dated 7/1/2011 in the case of Guruprerna Enterprises vs. ACIT; ITA No, 255,256 257/Mum/2010 and on another judgment from Hon'ble Delhi High Court in the case of Globus Infocom Ltd. vs. CIT, (2014) 108 DTR (Del) 363. 6.2.19 I have considered the decisions wherein it has been held that the use of word possible means no finding but only surmises and conjectures. Therefore, the Assessing Officer should have made the impugned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Rule 27 embodies a fundamental principal that a Respondent who may not have been aggrieved by the final order of the Lower Authority or the Court, and therefore, has not filed an appeal against the same, is entitled to defend such an order before the Appellate forum on all grounds, including the ground which has been held against him by the Lower Authority, though the final order is in its favour. In the instant case, the Assessee was not an aggrieved party, as he had succeeded before the CIT (A) in the ultimate analysis. Not having filed a cross objection, even when the appeal was preferred by the Revenue, it does not mean that an inference can be drawn that the Respondent assessee had accepted the findings in part of the final order, that was decided against him. Therefore, when the Revenue filed an appeal before the ITAT, the Appellant herein (Respondent before the Tribunal) was entitled under law to defend the same and support the order in appeal on any of the grounds decided against it. The Respondent assessee had taken the ground of maintainability before Commissioner (Appeals) and, therefore, in the appeal filed by the Revenue, it could rely upon Rule 27 and advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing case laws: - Pr. CIT vs. Shri Jai Shiv Shankar Traders Pvt Ltd, 2015-TIOL-2477-HCDel Held that, ++ .. For AO to make an order of assessment under Section 143 (3), it is necessary to issue a notice under Section 143 (2) and in the absence of a notice under Section 143 (2), the assumption of jurisdiction itself would be invalid. In the same decision in v. Salarpur Cold Storage (P.) Ltd., the Allahabad High Court noticed that the decision of the Supreme Court in ACIT v. Hotel Blue Moon where in relation to block assessment, the Supreme Court held that the requirement to issue notice under Section 143(2) was mandatory. It was not a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with; ++.... In other words, the failure of the AO, in re-assessment proceedings, to issue notice under Section 143(2), prior to finalising the re-assessment order, cannot be condoned by referring to Section 292BB.............. Greater Noida Industrial Development Authority vs. ACIT, 2015-TIOL- 227-ITAT-DEL, order dated 09/01/2015 7.3. The contention of the assessee is that the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiction u/s 292 BB of the Act. With respect to the argument of the Ld. D.R. that, this contention has not been raised by the assessee, before the A.O. or the Ld. CIT(A), we hold that this is a legal issue and as all the facts are on record, this contention can be raised before us, by the assessee for the first time, as this is a jurisdictional issue. Thus we dismiss this contention of the Ld.D.R. as devoid on merit. M/s New Okhla Industrial Development Authority vs. ACIT, 2015-TIOL- 1259-ITAT-DEL ++ where notice u/s 143(2) is not issued to the assessee before framing the assessment u/s 143(3) of the Act, the AO does not have, the jurisdiction to make the assessment. In the present case, the AO issued the notice u/s 148 of the Act and the assessee furnished the return of income in response to the said notice. Thereafter the AO asked the assesses to furnish certain details by issuing the questionnaire u/s 142(1) of the Act but nowhere issued the notice, u/s 143(2) of the Act. Therefore, the assumption of jurisdiction for framing the assessment was invalid. B R Arora vs. A CIT. 2014- TIOL-491 -ITAT-DEL Mohinder Kumar Chhabra vs. ITO, (2014) 31 ITR (Trib) 93 (Delhi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent on facts, is not applicable to the case of the assessee. So far as the merit of the case is concerned, he relied heavily on the order of the ld.CIT(A). 15. The ld. DR, on the other hand, heavily relied on the order of the AO so far as the addition u/s 68 of the Act is concerned. So far as the ground raised by the assessee by invoking the Rule 27 of the IT Rules is concerned, the ld. DR submitted that the ld.CIT(A) has given justifiable reasons while upholding the assessment order in absence of issue of notice u/s 143(2) of the IT Act. 16. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. Before proceeding to decide the merit of the case as per the grounds raised by the Revenue, we would first like to deal with the ground raised by the assessee as per Rule 27 of the ITAT Rules wherein the assessee has challenged the validity of the assessment order in absence of issue of notice u/s 143(2) of the IT Act. A perusal of the assessment order as well as the order of the CIT(A) shows that no noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the AO to serve a notice under sub-Section 2 of Section 143 assigning reason therein. In absence of any notice issued under sub-Section 2 of Section 143 after receipt of fresh return submitted by the Assessee in response to notice under Section, the entire procedure adopted for escaped assessment, shall not be valid. 15. In a subsequent judgment in CIT v. Salarpur Cold Storage (P.) Ltd. (2014) 50 Taxmann.com 105 (All) it was held as under: 10. Section 292 BB of the Act was inserted by the Finance Act, 2008 with effect from 1 April 2008. Section 292 BB of the Act provides a deeming fiction. The deeming fiction is to the effect that once the assessee has appeared in any proceeding or cooperated in any enquiry relating to an assessment or reassessment, it shall be deemed that any notice under the provisions of the Act, which is required to be served on the assessee, has been duly served upon him in time in accordance with the provisions of the Act. The assessee is precluded from taking any objection in any proceeding or enquiry that the notice was (i) not served upon him; or (ii) not served upon him in time; or (iii) served upon him in an improper manner. In other words, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that on the notice issued u/s 143(2) of the Act, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued u/s 148 of the Act and the Officer had also noted that the same would be considered for completing of assessment, would show that the AO has the duty of issuing the notice under Section 143(3) to lead on to the passing of the assessment. In the circumstances, with no notice issued u/s 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued u/s 143(2) of the Act. 18. As already noticed, the decision of this Court in CIT v. Vision Inc. proceeded on a different set of facts. In that case, there was a clear finding of the Court that service of the notice had been effected on the Assessee under Section 143 (2) of the Act. As already further noticed, the legal position regarding Section 292BB has already been made explicit in the aforementioned decisions of the Allahabad High Court. That provision would apply insofar as failure of service of notice was concerned and not with regard to failure to issue notice. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(2) of the Act has observed as under:- 7.3. The contention of the assessee is that the Assessing Officer has not issued notice u/s 143(2) for any of the impugned Assessment Years, subsequent to filing of a return by the assessee. The claim of the assessee that notice u/s 143(2) of the Act was not at all issued for all the impugned AYs, could not be factually controverted by the Revenue. During the hearing of the Stay Petition, the Revenue was specifically directed to produce the assessment record, for all these Assessment Years, during the final hearing. This was not done. During the course of final hearing the Bench has directed the Revenue to produce the assessment record within one week from the date of hearing. This is not done till date. The Revenue is silent on this factual matter till date. Hence we draw a conclusion that, the Revenue could not rebut the factual submissions of the assessee, that no notice u/s 143(2) was issued to the assessee, for any of these Assessment Years. 17.3 Similarly, the coordinate Bench of the Tribunal in the case of M/s New Okhla Industrial Development Authority (supra) while dealing with non-issuance of notice u/s 143(2) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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