TMI Blog2022 (9) TMI 769X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and after having honest response of the Assessee, the then assessing officer concluded the assessment proceedings drawing all reasonable inferences. There is no substance in the propositions and submissions casted out by AR and judicial precedents he has relied are distinguishable on facts. Thus, the ground raised by revenue in the present appeal questioning the order the ld First Appellate Authority for deleting the addition merely on the basis of technical ground without discussing the merits of the case deserves to be sustained. Appeal is allowed for statistical purposes. - ITA No.5143/Del/2019 - - - Dated:- 15-9-2022 - Shri N. K. Billaiya, Accountant Member And Shri Anubhav Sharma, Judicial Member For the Assessee : Shri Hiren Mehta, CA, Shri Nirbhay Mehta, Adv For the Revenue : Shri Rajesh Kumar, CIT DR ORDER PER ANUBHAV SHARMA, J. M.: 1. The appeal has been preferred by the revenue against the order dated 26.03.2019 of CIT(A)-08, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. FAA ) in appeal No. 10391/17-18 arising out of an appeal before it against the order dated 30.12.2017 passed u/s 147 r.w.s. 143(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eopened u/s 148 of the Act by obtaining due approval of the competent authority and statutory notice was issued on 31.03.2017. The Assessee submitted the return filed by the Assessee on 26.03.2012 may be treated as return filed in response to notice u/s 148 of the Act. The Assessee had claimed that the scrutiny assessment in his case for Assessment Year 2010-11 has already been passed by DCIT, Central Circle-4, New Delhi already on 22.03.2013 by accepting the returned income of Rs. 500/- and reopening of the assessment u/s 148 cannot be continued. The Assessee also approached the Hon ble High Court vide writ petition No. 9286/2017 in which ultimately writ petition was dismissed as withdrawn. The extract of order dated 10.11.2017 of Hon ble High Court available in the assessment order mentioned that ld counsel petitioner seeks permission to withdraw the present writ petition and states that he will contest the reassessment proceedings and, if, required, raise contentions in appeal . The assessment order shows that in compliance to statutory notices u/s 148/143(2)/ 142(1) and detailed questionnaires only objection of the Assessee had taken was in respect to the reopening of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion recorded by the assessing officer is borrowed satisfaction and that there is non-existence of live link between formation of belief tangible material. There is an absence of failure on the part of the assessee in disclosing truly and fully all material facts necessary for his assessment, since the re-opening is beyond a period of 4 years. There is non-application mind by the assessing officer while recording reasons. It is a case of change of opinion on the part of the assessing officer in the absence of any tangible material. 5. The ld CIT(A) observed in concluding part of para 4.8 at page No. 15 of 16 that 4.8 .. Because A.O. did not appreciate that increase in share capital can be disclosed in the balance sheet only and the same was duly disclosed. There was no column in the return of income for disclosure of increase in share capital. The assessment for A.Y. 2010-11 was completed u/s 143(3) vide order dated 22.03.2013. During these assessment proceedings questionnaire dated 17.10.2012 specifically required the assessee to furnish details of increase in share capital with confirmation of parties PAN and source of funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld DR relied on the judgment of Hon'ble Supreme Court Raymond Wollen Mills Ltd Vs. ITO (1999) 236 ITR 34 (SC), ITO Vs. Selected Dalurband Coal Co. (P) Ltd (1996) 217 ITR 597 (SC) heavily relied on the judgment of RDS Project Ltd Vs. ACIT, New Delhi 113 taxamann.com 534 (Delhi) to contend that the fact of RDX Project Ltd case are squarely applicable where also in respect of notice 143(3) assessment being completed the Hon ble Delhi high Court had considered it to be a fit case which require reopening by virtue of section 148 and there was no limitation of virtue of proviso to section 147 of the Act. 8.1 He relied the Hon ble Delhi High court judgment in the case of PR. COMMISSIONER OF INCOME TAX -6, NEW DELHI versus NDR PROMOTERS PVT. LTD. 410ITR379(Delhi) to contend that under this case Hon ble High Court has set aside the order of Tribunal and found many suspicious circumstances which establish that Sh. Tarun Goyal was operating bogus entries firms. He submitted same circumstances are in present case. 8.2 The ld DR relied on the judgment of the Hon'ble Supreme Court in case of ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd 291 ITR 500 to contend that the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown independent application of mind in respect of information received from Investigation Wing and live link between the tangible material and reason to believe was shown. And for the same reasons, the decision of the Delhi High Court in Pr. CIT v. RMG Polyvinyl (I) Ltd. [20171 83 taxmann.com 348/249 Taxman 610/396 ITR 5 (Delhi) does not carry the petitioner's case further. v. In the case of AGR Investment Ltd. v/s Addl. CIT [2011] 197 Taxman 177 (Delhi) and in Rakesh Gupta v CIT [2018] 93 taxmann.com 271(P H), the decision of Hon'ble Delhi High Court in the case of CIT v/s SFIL Stock Broking Ltd (2010) 325ITR 285 was duly considered and distinguished. 9. On the other hand the ld AR had filed written submissions and also argued on the five propositions as under:- PROPOSITION - 1 Where reasons are recorded on incorrect facts without application of mind, the reassessment proceedings are required to be quashed. FACTS The reasons, in present case, have been recorded on incorrect facts without application of mind as would be discernible from the following:- 1. It has been stated in the reasons that no assessment u/s 143(3) was done in the case of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is failure on the part of the assessee to disclose fully and truly all material facts, the reassessment proceedings are vitiated. FACTS In this case pertaining to A.Y. 2010-11, original assessment order u/s 143(3) was passed on 22.03.2013 (copy enclosed at Page 149 of P/B). The notice u/s 148 proposing reassessment is dated 31.03.2017. Therefore, the reassessment has been opened after expiry of four years form the end of the assessment year and a scrutiny assessment u/s 143(3) has been carried out. Such a case would be covered by proviso to section 147 which casts a duty on the assessing officer to establish that escapement of income is on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. An examination of the reasons recorded would show that the there is no whisper about any failure on the part of the assessee. PROPOSITION -4 If income which has escaped assessment which was the basis of reopening of assessment was not assessed or reassessed, the AO cannot independently assess any other income which comes to his notice subsequently in course of reopening proceedings as having escaped assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltiplex Trading Industrial Co. Ltd 63 taxman.com 170 11. After taking into consideration the submission and appreciating the matter on record, the bench is of considered opinion that the foundation of the arguments on behalf of the Assessee, as narrated in proposition No. 1 above, are with regard to recording of incorrect facts in the reasons recorded u/s 147 of the Act and that same have been recorded without application of mind. In this context the reasons recorded by the Ld. AO are available at page Nos. 155-159 of the paper book and when they are considered it appears that some facts have been recorded which are inchoate and only fact which can be said to be recorded incorrectly is that no assessment u/s 143(3), was done in the case of the Assessee company. While in fact there was a previous assessment which was concluded and assessment order was passed on 22.03.2013. The copy of which is available at page No. 149 of the paper book. But the submissions of Ld DR in this regard cannot be ignored that this mistake may have crept into the reason, out of bonafide and not due to non application of mind. Ld DR has impressed that as the Ld. AO has received information from CBI onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons recorded under section 147 in itself cannot be fatal. 14. Coming to the alleged non application of mind in not recording that income escaping assessment is on account of reason of share capital from M/s. Vertex Drugs Pvt. Ltd and that only a cash deposit of Rs. 5,000/- was made during the relevant Financial year, while in the reasons the ld AO mentioned about huge cash deposit to the extent of Rs. 22.70 crores . It can be observed that at page Nos. 36 to 40 the bank statement of the relevant bank account with Axis Bank is available and same shows that there are numerous credit entries and almost 22 from M/s. Vertex Drugs Pvt. Ltd. These are credit entries based on bank transactions and not cash and there is only one cash entry of Rs. 5,000/- on 29.04.2009. However, that as such does not benefit the Assessee because if at one place AO mentioned about cash deposits then at relevant other place he also mentioned of huge deposit during the FY 2009-10. That included cash or other credit entries of bank coming from transfer of cash. 15. Then it was an infant stage where primarily on the basis of information received from Investigation Wing and CBI, the Ld. AO process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, it appears that two conditions precedent which are required to be satisfied before an Income Tax Officer can acquire jurisdiction to proceed under Clause (a) of Section 147 read with Sections 148 and 149 of the Act, beyond the period of four years but within a period of eight years, from the end of the relevant year, are: (a) that the Income Tax Officer must have reason to believe that the income, profits or gains chargeable to tax had either been under assessed or escaped assessment and (b) that the ITO must have reason to believe that such escapement or under-assessment was occasioned by reason, of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Both these conditions must co-exist in order to confer jurisdiction on the Income Tax Officer. The Income Tax Officer is obliged, before initiating proceedings under Section 148 of the Act to record the reasons for the formation of his belief to reopen the assessment. 18. In this context reference can be made to Hon ble Madras High Court judgment dated 19/8/21, in Writ Appeal No.1616 of 2018; DCIT Versus M/s. Daimler India Commercial Vehicles Private Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut was not in fact so obtained, it would not affect the jurisdiction of the Income Tax Officer to initiate reassessment proceedings, if the twin conditions prescribed under Section 147 of the Act are satisfied. 20. Approaching the grounds raised, on the basis of aforesaid settled principles, it can be observed that the reasons specifically mentioned the fact that on 28/3/2017 the information from Investigation wing was received and that CBI also informed that, Shri Tarun Goyal associated with the firm Yogesh Trading Co. others were found to be providing bogus entries. His firm was apparently in association with the Assessee company, as is exhibited by the fact that all of them shared the same address and in fact more than 35 companies were found to be operating from the said address. The reasons discuss at length the modus operandi used and which was actually under investigation. 21. However, the ld CIT(A) concluded that it was a simple case of concluded assessment. It seems he lost sight of fact that it is not a mere case of reopening of assessment due to change of opinion by assessing officer, but a case where Assessing Officer found it to be covered by Proviso to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of assessee to disclose fully and truly all material facts necessary for assessment, for that assessment year. It is a case where the concluded assessment proceedings u/s 143(3) were of such nature that the Assessee was able to camouflage the return with documents and evidence by means of misrepresenting facts, if not strictly calling it by way of deceit, so the bar of reopening of the assessment u/s 147/148 of the Act cannot be justified. 24. When the judgment of Hon ble Jurisdictional High Court in RDS Project Ltd case (supra), as relied by Revenue, is considered it leaves no doubt, in the mind of this bench, that the present case is squarely covered on facts and law. Hon'ble Delhi High Court in this case was dealing with same set of facts of reopening. Though in that case some better particulars were available in the reasons as recorded, but substantially the back drop was same. Hon ble Delhi High Court had thoroughly gone into the modus operandi of Shri Tarun Goyal, CA and did not hesitate to observe for him as He has been judicially recognized as an accommodation entry provider. In RDS Project Ltd case (supra) Hon'ble Delhi High Court, while dealing with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply furnished by the assessee to the notice under Section 142(1). The assessee had indicated the names of the companies, their addresses, the application money date of payment, mode of payment and PAN details. But it is also trite law that for such cases three important aspects have to be considered by the Assessing Officer, namely (i) the identity of the investors; (ii) the creditworthiness of the applicants; and (iii) the genuineness of the transaction. Ex-facie, the order of assessment which was passed by the Assessing Officer under Section 143(3) on 2 December 2008 does not indicate that the Assessing Officer had brought his mind to bear on either of these aspects. In fact there is nothing in the reply filed by the assessee to the notice under Section 142(1) that would indicate a full disclosure of facts in regard to either the credit worthiness of the companies which made the investments or the genuineness of the transaction. A cloud was cast on the genuineness of the transaction once a search took place at the premises of the Chartered Accountant who, according to the Department, has stated that he had set up 90 bogus companies, all within his control and in which the Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct for that the Ld. AO observed in the impugned assessment It is quite possible that the assessee could have succeeded in its design but for the search in the case of Jain Brothers where complete evidence of colorable mechanism used by the assessee has been seized. So the present case is not a case where the impugned notice and reasons suffers from non application of mind or change of opinion, rather, rightly argued by Ld DR, it is the previous assessment order, which suffered from non application of mind and escapement occasioned by reason, of overt omission and failure on the part of the assessee to disclose fully and truly all material facts as were necessary for the assessment 27. Thus, the bench is of considered opinion that the ld CIT(A) had fallen an error in setting aside the assessment order merely by citing jurisdictional defect in recording of reasons and issuance of notice u/s 147/148 of the Act. In fact, in the present facts and circumstances, without going on the merits of the impugned assessment, it was not possible for the first appellate authority to give a finding as to if in the previous assessment proceedings the ld AO was actually having complete and reas ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
