TMI Blog2022 (4) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... ars from the end of the relevant assessment year and in the reasons recorded 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 are of the considered opinion that the reassessment proceedings initiated by the AO and upheld by the CIT(A) are not in accordance with the law. Thus in absence of any allegation of failure on the part of the assessee to disclose fully and truly all material facts necessary for the completion of the assessment, no reassessment proceedings can be initiated after a period of four years from the end of the relevant assessment year when the original assessment has been completed u/s. 143(3) of the Act. We, therefore, hold that the re-assessment proceedings initiated in the instant case by the AO is not in accordance with the law - Decided in favour of assessee. - ITA No. 1891/Del/2020 - - - Dated:- 21-3-2022 - R.K. Panda, Member (A) And N.K. Choudhry, Member (J) For the Appellant : Suresh Gupta, CA. For the Respondents : Hemant Gupta, Sr. DR. ORDER R.K. Panda, Member (A) 1. This appeal filed by the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... que or RTGS leaving a minimum balance. It was gathered that the DDIT (Inv.,) Unit-6(3), Delhi carried out search and seizure action at premises of M/s. KBRL, During this operation it was found that M/s. Index Securities Research Pvt. Ltd. has provided accommodation entry to KRBL Group of Companies. A survey u/s. 133A of the IT Act, 1961 was also carried out the business premise of M/s. Index Securities and Research Pvt. Ltd. Further search action was also conducted at the residence of the directors of M/s. Index Securities Research Pvt. Ltd. During the search operation, statements of the Directors of M/s. Index Securities and Research Pvt. Ltd. namely Sh. Vinod Kumar Taneja and Smt. Chanchal Taneja were recorded on oath. They have in statement on oath admitted that it is Paper Company and doing no business in actual and is involved in providing loans to various companies. Shri Santlal Aggarwal and Shri Satish Pahwa are the only persons who run this company. From the statement of Sh. Vinod Kumar Taneja and Chanchal Taneja, directors in M/s. Index Securities research Pvt. Ltd. it is clear that both of them did not have any knowledge about the financials of M/s. Index Secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we find there is nothing on record to support such a contention. There is a live link between the information which was available with the Assessing Officer and his formation of belief that income has escaped assessment. Sufficiency of such information cannot be gone into while deciding the issue of validity of reopening. The Assessing Officer can also not make enquiries as no proceedings were pending before him for the relevant assessment year. In the above view of the matter, we are in agreement with finding of the Ld. CIT(A) that the reopening of assessment u/s. 141 of the Act was valid. The live link between the material provided by the Investigation Wing and the reasons for belief that income has escaped assessment has been sufficiently demonstrated. Accordingly, necessary approval u/s. 151 of the IT act, 1961 is solicited to issue notice u/s. 148 of the IT act to re-open the assessment u/s. 147 of the IT act, 1961. 2.1. The assessee asked for supply of the reasons which were provided to the assessee. Thereafter, the assessee filed objections to the re-opening which was disposed of by passing a speaking order. The AO, thereafter, issued statutory notices u/s. 143(2). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case in upholding the reassessment proceedings u/s. 147 of the IT Act which is not properly initiated and therefore need be quashed as the appellants case is covered by proviso to section 147 of the IT Act and that being the case the AO has failed to give a finding as which material facts the appellant failed to disclose fully and truly during original proceedings and in the absence of any such finding, the initiation of reassessment proceedings and the impugned assessment order both are bad in law because such proceedings are as a result of change of mind by the successor incumbent on the same set of facts. 5. The Ld. CIT(A) on the facts and circumstances of the case has erred in upholding the validity of impugned assessment order passed u/s. 143(3)/147 of the Act on the ground that the AO was not entitled to take cognizance of the material seized from the third party by invoking provisions of sec. 147/148 of the Act ignoring the specific provision u/s. 153C of the Act dealing with such material. 6. The Ld. CIT(A) has erred both in law and circumstances of the cases in upholding the reassessment proceedings without confronting adverse material to the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infrastructure P Ltd. ITA No. 2527/Del/2017; (xiii) ITO vs Randeep Investment (P) Ltd. ITA No. 4365 4005/Del/2015 dt: 26.03.2019; and (xiv) Shree Balkrishan Aggarwal Glass Industries Ltd. ITA No. 5798/Del/2016 dt: 21.09.2020. 7. The ld. Counsel for the assessee submitted that the AO, in the reasons recorded omits to make any reference of return of income filed u/s. 139(1) of the Act and also of the assessment completed u/s. 143(3) at assessed income of ₹ 27,10,350/- vide order dated 01.02.2013 by the ACIT, Circle-28, New Delhi. He submitted that it is a case of reopening of a completed assessment and the reassessment proceedings are initiated after expiry of four years from the end of the relevant assessment year. Therefore, it is a case where the first proviso to section 147 is clearly applicable, according to which, the reassessment proceedings could not be initiated unless the AO is satisfied that income has escaped assessment due to the reason of the failure of the assessee to disclose all material facts fully and truly and such disclosure was necessary for his assessment. Referring to the reasons recorded, copy of which is placed at pages 42-45 of the paper b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n if it is assumed that confirmation from ISRPL was not available in assessment records and the Department feels that this enquiry was not made, the only course available with the Department was to invoke revisionary jurisdiction u/s. 263 of the Act and not under section 147 of the Act. He submitted that the absence of such action by the Department shows that the information provided in the course of original proceedings were adequate and assessment proceedings were completed after due enquiry. In such a case, the action u/s. 148 could not have been taken. For the above proposition, he relied on the decisions of the Hon'ble Delhi High Court in the case of Dushyant Kumar Jain vs. DCIT, reported in 381 ITR 428 and CIT vs. Usha International Ltd., 348 ITR 485. He also relied on the decision of the coordinate bench of the Tribunal in the case of M/s. AST Pipes Pvt. Ltd., vide ITA No. 8312/Del/2019, order dated 27th October, 2020. 10. The ld. Counsel for the assessee submitted that the assessee, during the course of assessment proceedings has requested the AO, vide letter dated 20th December, 2017, copy of which is placed at pages 61 and 62 for providing opportunity of cross-exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that 'when unsecured loans were paid back even in subsequent years, it shows that these were genuine loans taken by the assessee. Relying on various other decisions, he submitted that when the Department has accepted the factum of repayment, the additions under section 68 is not sustainable in law. For the above proposition, he relied on the decisions of (i) the Hon'ble Gujarat High Court in the case of CIT vs. Ayachi Chandrasekhar Narsangji, 42 Taxmann.com 251; and CIT vs. Mahavir Crimpers, 95 Taxman.com 323; (ii) the decision of the Hon'ble Punjab Haryana High Court in the case of CIT vs. Karaj Singh (2011) 15 taxmann.com 70 (P H); and (iii) the decision of the Hon'ble Bombay High Court in the case of Panna Devi Chowdhary vs. CIT, 208 ITR 849 (Bom.). 12. He submitted that the AO should have enquired from the AO of the loan creditor as to the genuineness of the transaction as to whether the loan creditor's AO has accepted the loan transactions as genuine or not. The AO, in the instant case, without doing this exercise made the addition u/s. 68 r.w.s. 115 BBE of the Act which is not justified. Referring to the decision of the Hon'ble Calcutta High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has failed to substantiate with evidence to the satisfaction of the AO regarding the identity and credit worthiness of the loan creditors and the genuineness of the transaction, therefore, the AO was fully justified in making the addition and the ld. CIT(A) was fully justified in sustaining the addition. So far as the validity of the reassessment proceedings are concerned, he submitted that due procedure has been followed for reopening of the case and, therefore, the same being in order has to be upheld and the grounds raised by the assessee on this issue are also required to be dismissed. 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. We find, the assessee, in the instant case, has filed the original return of income on 27th September, 2010 declaring an income of ₹ 25,85,610/-. The order u/s. 143(3) was passed on 01.02.2013 determining the total income of the assessee at ₹ 27,10,350/- and the assessment year involved is 2010-11. We find, the AO in the instant case, reopened the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment under sub-section (3) of section 143 or this section has been made for the relevant assessment year; and (b) unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee: (i) to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148; or (ii) to disclose fully and truly all material facts necessary for his assessment for that assessment year. Condition (a) is admittedly satisfied inasmuch as the original assessment was completed under section 143(3) of the said Act. Condition (b) deals with a special kind of escapement of income chargeable to tax. The escapement must arise out of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148. This is clearly not the case here because the petitioner did file the return. Since there was no failure to make the return, the escapement of income cannot be attributed to such failure. This leaves us with the escapement of income chargeable to tax which arises out of the failure on the part o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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