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TMI Blog2022 (9) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... ,143/-. 3. On the facts and the circumstances of the case, the learned Assessing Officer erred in initiating the penalty proceeding under section 271(1)(c) of the Act made by learned AO shall be dropped." 3. The brief facts of the case, as emanating from the record, are: The assessee is a private limited company incorporated in India and is engaged in the business of operating and maintaining the infrastructure facility etc. to Indian Railways. For the year under consideration, assessee filed its return of income on 30/09/2012 under section 139(1) of the Act declaring net loss at Rs. 21,79,30,180 and book profit at Rs. 7,67,96,699. The case of the assessee was selected for scrutiny and notice under section 143(2) was issued to the assessee on 06/08/2013. Thereafter, notice under section 142(1) of the Act was issued on 12/01/2015 along with a detailed questionnaire and various details, including details of sundry debtors, were sought from the assessee. The assessee, inter-alia, provided the details of sundry debtors as well as details of ageing of sundry debtors. After considering the submission of the assessing, the Assessing Officer vide order dated 28/03/2015 passed under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Silverson Logistics Private Ltd. Further, in respect of Kalyani Vincom Private Ltd, Assessing Officer held that the funds were transferred from the said entity to Highland Transport Private Ltd and Neelanchal Roadways Private Ltd, who had in turn transferred Rs. 1,49,62,890 and Rs. 2,77,75,322 to the assessee company. Thus, the Assessing Officer held the aforesaid transactions to be not genuine in absence of documents supporting the creditworthiness and genuineness of the said transaction and accordingly, added an amount of Rs. 49,08,007 by applying the gross profit rate of the assessee. In appeal, learned CIT(A) vide impugned order upheld the assessment order both on jurisdiction as well as on merits. Being aggrieved, the assessee is in appeal before us. 6. During the course of hearing, learned Authorised Representative ("learned AR‟) submitted that all the details were furnished by the assessee during the course of original assessment proceedings and thus, there is no failure on behalf of the assessee to disclose truly and fully all material facts. Learned AR further submitted that assessment has been completed twice in the case of the assessee i.e. under section 143(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astructure facilities which consist of PAN India Rail Freight Operation on India Railway Network. 2. Subsequently, information has been received from the office of the Deputy Director of Income Tax (Inv.), Unit 2(), Kolkata that on perusal and analysis of the Bank Statement of Account No.695205127912 with Kolkata-NS Road branch which was opened on 20.08.2010 in the name of Silverson Logistics Private Limited [AAOCS6924L], it was noted that the said account was being frequently credited followed by immediate transfer of funds to various parties. It was further observed by the Investigation Wing that though a huge amount of credit entries is observed from its bank account, Silverson Logistics Private Limited has shown to have turnover and fixed assets at ZERO and has shown to have profit before tax only to the tune of Rs.3,259/- and Rs.2,462/- for A. Ys. 2012-13 & 2013-14 respectively. Summons were issued to the Principal Officer of the company by the DDIT but the same was returned unserved by the postal authorities. Further, it was learnt that the said company and the other inter-linked companies did not manufacture any product or deal in any product or render any services. Prima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dummy Directors. In some of the cases, Summons returned back unserved and in some other cases, none appeared. Further, it has been communicated by the DDIT that these companies have no actual business activity and shows very meager income and that the companies also have no fixed assets in their Balance Sheets, thus, having attributes akin to shell companies and once existed on paper only. The DDIT, after having made analysis of the bank accounts of various entities including that of Kalyani Vincom Private Limited, identified the beneficiaries of such transactions of layering of funds through the bank accounts, which also included the name of the present assessee, Arshiya Rail Infrastructure Limited [AAGCA96488], which has been benefitted by a sum of Rs. 1,49,62,890/- Rs.2,77,75,320/-, thus, totaling Rs.4,27,38,210/-. 3.1 Though the assessment has been carried out in the instant case before as well as after the search action, the assessee has failed to disclose truly and fully material facts necessary for its assessment. In view of these facts, I have reason to believe that the income amounting to Rs.4,27,38,210/- chargeable to tax has escaped assessment within the meaning of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 142(1) or section 148; or (ii) due to failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. In the present case, from the facts it is evident that assessment was completed in the case of the assessee under section 143(3) of the Act. Further, notice under section 148 of the Act was issued on 27/03/2019 i.e. beyond a period of 4 years from the end of the relevant assessment year i.e. 2012 - 13. Therefore, it needs to be examined whether the conditions prescribed in 1st proviso to section 147 of the Act are satisfied in the present case. There is no dispute that return of income was filed by the assessee under section 139(1) of the Act. Thus, in order to determine the validity of the impugned reassessment proceedings, in the present case, now it needs to be examined whether there is any failure on the part of the assessee to disclose fully and truly all material facts. 12. Vide reasons recorded for reopening the assessment, Assessing Officer has alleged that assessee is a beneficiary in transaction of layering of funds through the bank account of Silverson Logistics Private Ltd. and in this regard, the assessee has failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Private Ltd to Highland Transport Private Ltd and Neelanchal Roadways Private Limited, which were later on transferred to the assessee. In this regard, it is pertinent to note that the reasons recorded by the Assessing Officer while reopening the assessment did not have mention of assessee‟s transaction with these entities. It is evident from record that it is only during the course of reassessment proceedings Assessing Officer alleged the transfer of funds from Kalyani Vincom Private Ltd to these 2 entities, which were subsequently transferred to the assessee. It is settled that the reasons recorded for reopening the assessment are to be read as they were recorded by the Assessing Officer and same cannot be supplemented. In this regard, following observations of Hon‟ble jurisdictional High Court in Hindustan Lever Ltd vs ACIT, [2004] 268 ITR 332 (Bombay) become relevant: 20. ........It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were provided by the assessee during the course of scrutiny assessment proceedings and said details were accepted by the Assessing Officer under section 143(3) of the Act. Therefore, in view of the details available on record it cannot be said that assessee has failed to provide fully and truly all material facts necessary for his assessment in the present case. Further, as is evident from the record the amount due from these entities pertains to the previous financial year and assessee being an Indian company has already paid the taxes thereon, since it follows the mercantile system of accounting. Therefore, we are of the considered view that conditions laid down in 1st proviso to section 147 of the Act are not satisfied in the present case. Thus, the reassessment proceedings under section 147 of the Act, in the present case, are set aside being bad in law. Accordingly, the impugned order passed by the learned CIT(A), inter-alia, upholding the order passed under section 143(3) r.w.s. 147 of the Act is set aside. As a result, ground No. 1 raised in assessee‟s appeal is allowed. 17. Since, challenge to jurisdiction under section 147 has been decided in favour of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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