TMI Blog2022 (4) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... as reopened the assessment. Therefore, the very initiation of proceedings by invoking clause (b) of Explanation-2 of section 147 renders the reassessment proceedings invalid and consequently, such reassessment proceedings have to be quashed on account of non-application of mind before reopening of the assessment. AO after analyzing the various details filed by the assessee, passed the order u/s 143(3) of the Act without drawing any adverse inference in respect of amount of ₹ 15 lakhs brought from M/s Shalini Holdings Ltd. find the AO in the reasons recorded had merely stated that there is failure to disclose fully and truly all material facts necessary for the completion of the assessment for the AY 2008-09, However, he has not specifically mentioned which particular has not been disclosed by the assessee. This in our opinion does not satisfy the statutory pre-conditions provided in section 147 of the Act. As held in various decisions that the reasons must indicate how and why the assessee has failed to make the full and true disclosure of all material facts necessary for completion of assessment and mere repetition or quoting the language of the proviso is not sufficie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) has erred both in law and in facts of the case in upholding the impugned reassessment proceedings ignoring the fact that the sanction u/s 151 of IT Act has been mechanically accorded by the sanctioning authority which is evident from the application of clause (b) of the Explanation 2 to section 147 of the Act initiating action u/s 147 implying that the AO failed to consider the fact that the appellant is already assessed u/s 143(3) of the Act and in such a case that the said clause has no application. 4. The Ld. CIT(A) has erred both in law and 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated on 20th March 1997 under the Companies Act, 1956 and is engaged in the business of sale/purchase of shares and providing finance to corporate and other parties. It has two directors namely Sh. Manoj Kumar and Sh. Anuj Gupta. It filed its return of income on 28.09.2008 declaring total income of ₹ 18,230/-. The return was selected for scrutiny and noticed u/s 143(2) and 142(1) were issued and served upon the assessee. The AO in the order passed u/s 143(3) dated 03.12.2010 completed the assessment determining the total income at ₹ 48,360/-, wherein, he made disallowance out of preliminary expenses at ₹ 17,603/-, disallowance out of general expenses at ₹ 1,060/- and disallowance u/s 14A r.w.r 8D at ₹ 11,465/-. 3.1. Subsequently, the AO reopened the case u/s 147 of the Act by recording the following reasons. Reasons for the belief that income has escaped assessment in the case of M/s Nishit Fincan Pvt, Ltd. (PAN-AAACN3687M) PUC is a proposal for reopening the case u/s 147 of the I.T. Act for the A.Y. 2008-09 in the prescribed proforma. A search and seizure action u/s 132/133A of the I.T. Act, 1961, was conducted at the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have perused the information received from the Investigation Wing, New Delhi. The Investigation Wing of the Department has sent comprehensive details comprising inter alia the Beneficiary s Name, Value of entry Taken, Date on which Entry taken etc. In the aforesaid case return of income was filed on 14.10.2008 declaring income of ₹ 18,230/-. Subsequently, after receipt of information of accommodation entries taken by the beneficiaries, it is noticed that the assessee company M/s Nishit Fincap Pvt. Ltd. received accommodation entries to the tune of ₹ 15,00,000/- during the F.Y. 2007-08 relevant to assessment year 2008- 09 lrom the companies of entry operators as mention in the chart above. Having perused and considered the information, I have reason to believe that income of the assessee company to the extent of ₹ 15,00,000/- has escaped assessment for the A.Y. 2008-09 on account of failure on part of the assessee company to disclose fully and truly all material facts/particulars of its income necessary for its assessment for the A.Y. 2008-09. Therefore, proceedings u/s 147 i.e. Clause (b) of explanation 2 of provisions of Sec. 147 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India and declared that the said order is a binding order within the meaning of Article 141 of the Constitution of all Courts, Tribunals and authorities. Further, the Hon ble Apex Court in the final order dated 23.09.2021 in MA No.655/2021 in SMW(C) No.3/2020 held that the period from 15.03.2020 till 02.10.2021 shall stand excluded in computing periods of limitation prescribed under various laws for instituting proceedings under respective laws. Relying on various decisions, he submitted that the delay in filing the present appeal of 133 days is not intentional and the same was beyond the control of the assessee and therefore the delay in filing the appeal should be condoned. 8. After hearing both the sides and considering the totality of the facts of the case, the delay in filing the appeal is condoned. 9. The ld. Counsel for the assessee, at the outset, submitted that the original assessment was completed u/s 143(3) of the Act on 03.12.2010 for AY 2008-09. The case of the assessee was reopened vide notice u/s 148 of the Act dated 18.03.2015, which is after a period of four years from the end of the relevant assessment year. Referring to the reasons recorded, he s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that after independent verification of the evidences furnished by the share applicant in response to notice u/s 133(6) of the Act, copy of which is placed at pages 30 and 31 of the paper book, the AO had completed the original assessment u/s 143(3) of the Act by accepting the credits as genuine. However, a perusal of the reasons recorded shows that no such exercise has been done by the AO and he has simply relied on the information from the Investigation Wing to invoke section 147 of the Act. 10.1. Referring to the decision of the Hon ble Delhi High Court in the case of CIT vs Viniyas Finance Investment Pvt. Ltd. in ITA No.271/2012 (Del.) dated 11.02.2013, the ld. Counsel for the assessee submitted that under identical situation the reassessment proceedings were quashed. Referring to the decision of the Hon ble Supreme Court in the case of NDTV vs DCIT, reported in 424 ITR 607 (2020) (SC), he submitted that the reassessment proceedings were quashed for not mentioning first proviso in the reason recorded. He submitted that the above identical fact is also present in the instant case. He submitted that similar view has been taken in following cases and the reassessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(2) renders the assessment order void even if the assessee has participated in the proceedings and the provisions of section 292BB does not save complete absence of notice. He submitted that the provisions of section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the section seeks to cure. The section is not intended to cure complete absence of notice itself. Referring to the following decisions, he submitted that non-issuance of notice u/s 143(2) makes the earlier assessment proceedings a nullity. i. ACIT vs. Hotel Blue Moon (2010) 321 ITR 362 (SC); ii. Pr. CIT vs. Shri Jai Shiv Shankar Traders Pvt. Ltd. ITA No.519 of 2015, Dated 14/10/2015(Del); iii. Pr CIT vs M/s Paramount Biotech Industries Ltd In ITA No.887, 888/2017 Dated 24.10.2017 (Del); iv. DIT v. Society for Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249 (Del); v. PCIT v. Silver Line (2016) 383 ITR 455 (Delhi) (HC) vi. Pr CIT vs Staunch Marketing Pvt Ltd 404 ITR 299 (Del) vii. Alpine Electronics Asia Pvt. Ltd. Vs. DCIT 341 ITR 247 (Del) 13. The ld. Counsel for the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the assessee has filed the return of income in the instant case on 28.09.2008 declaring total income of ₹ 18,230/-. The original assessment was completed u/s 143(3) on 03.12.2010 determining the total income at ₹ 48,360/-. I find the assessment in this case was reopened on the basis of information obtained from the Investigation Wing, according to which, during the search and seizure operations u/s 132/133A in the case of Mr. Surender Kumar Jain and group of cases and post search enquiries/verification, it is established that the Sh. S.K. Jain, who is known entry provider and also in the business of providing accommodation entries to various beneficiaries companies, had given accommodation entry of ₹ 15 lakhs from his company namely M/s Shalini Holdings Ltd. to the assessee. Accordingly, the case of the assessee was reopened by recording reasons which have been already reproduced in the preceding paragraph. A perusal of the reasons so recorded shows that the AO has reopened the assessment by invoking the provision of clause (b) of Explanation-2 of section 147 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, a perusal of the paper book filed on behalf of the assessee shows that the original assessment has been completed u/s 143(3) on 03.12.2010 by the Income Tax Officer, Ward-13, New Delhi for the impugned assessment year. Therefore, it is clear that the AO without application of mind and on the basis of report of the Investigation Wing and without verifying the assessment records wherein, the original assessment was completed u/s 143(3), has reopened the assessment. Therefore, the very initiation of proceedings by invoking clause (b) of Explanation-2 of section 147 renders the reassessment proceedings invalid and consequently, such reassessment proceedings have to be quashed on account of non-application of mind before reopening of the assessment. 18. Even otherwise also, we find the AO after analyzing the various details filed by the assessee, passed the order u/s 143(3) of the Act without drawing any adverse inference in respect of amount of ₹ 15 lakhs brought from M/s Shalini Holdings Ltd. I find the AO in the reasons recorded had merely stated that there is failure to disclose fully and truly all material facts necessary for the completion of the assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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