TMI Blog2022 (10) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... allenged by the assessee, all the grounds incidental thereto are available to the assessee to challenge the validity of impugned reassessment proceedings. Therefore, respectfully following the aforesaid decision [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] we are of the considered view that reassessment proceedings initiated by the AO are not in conformity with the provisions of 1st proviso to section 147 of the Act. Where 4 years, but not more than 6 years, have elapsed, no notice under section 148 can be issued unless the income chargeable to tax which has escaped assessment is Rs. 1 lakh or more. We find that while dealing with the issue whether failure on the part of the AO to mention the amount of income which has escaped assessment will result in nullifying the notice issued under 148 of the Act, the Hon‟ble Karnataka High Court in Novo Nordisk India (P) Ltd [ 2018 (9) TMI 352 - KARNATAKA HIGH COURT] as held material aspect for invoking the extended period of limitation under Section 149 (1)(b) not being forthcoming, further proceedings in pursuance to the said notice cannot be sustained. The notice issued being not in conformity with the provisions of the Act, it being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing loan creditors - Sr. no. Name of the party Amount (Rs.) 1. Rajhans Mercantile Pvt. Ltd. 50,00,000 2. Turn Key Steel India P. Ltd. 1,00,00,000 Total: 1,50,00,000 The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in making the impugned addition inasmuch as all the relevant details have been furnished with the CIT(A) and that he has not appreciated the facts of the case in its entirety and as such. the impugned addition ought to be deleted. The appellants further, contend that the CIT(A) ought not to have upheld the action of the Assessing Officer inasmuch as the Assessing Officer has violated the principles of natural justice in making the impugned addition and hence, the impugned addition ought to be deleted. 3. The CIT(A) erred in upholding the action of the Assessing Officer in making the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed grounds pertaining to invocation of jurisdiction under section 147 of the Act as well as on merits of various additions made by the Assessing Officer ( AO ). Therefore, we have first dealt with the issue of invocation of jurisdiction under section 147 of the Act, as raised in the assessee s appeal. 4. The brief facts of the case, as emanating from the record, are: the assessee is engaged in business of trading in shares, goods and merchandise. For the year under consideration, assessee filed its return of income on 30/10/2005 declaring loss of Rs. 1,28,78,463. The return of income filed by the assessee was selected for scrutiny and notice under section 143(2) was issued and served on the assessee. Thereafter, detailed questionnaire along with notice under section 142(1) of the Act was issued and same was attended by the assessee and submissions were filed. The AO, upon scrutiny of details submitted by the assessee, vide order dated 28/12/2007 passed under section 143(3) of the Act, computed the total loss at Rs. 65,28,333, after making certain disallowances. 5. Subsequently, vide notice dated 29/03/2012 issued under section 148 of the Act, reassessment proceedings were ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee. While initiating the reassessment proceedings, the Assessing Officer recorded following reasons for reopening the assessment: The ROI for A.Y.2005-06 was filed on 30-10-2005. In this case, an order u/s.143(3) of the Act 1961 was passed on 28-12 2007 assessing its total loss at Rs.65,28,333/-. The ADITInv.), Unit VII-I II, Mumbai vide letter dated 28.12.2011 has intimated that the assessee company, is one of the group Companies formed by Shri Arun Harsh Dalmia and is engaged in providing accommodation entries to various persons. The report of the ADICT (Inv.) is based on the report of ACB, CBI, Mumbai where in it is reported that the CBI, ACB, Mumbai has conducted investigation in the affairs of Shri Harsh Dalmia and Shri Arun Lal Saini, who are directors of M/s. Satya Securities P. Ltd. It is reported that they operate 20 dummy concerns which have entered into bogus transactions with several concerns and provided accommodation entries. The relevant part of the scrutiny report along with the covering letter of S.P., CBI and ACB, Mumbai is as under: SP's Report: Shri Dalmia's floated 20 companies has never paid taxes to the Government s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r expiry of 4 years from the end of the relevant assessment year, in case where an assessment under section 143(3) of the Act has been made. 11. At this stage, it is relevant to analyse the provisions of 1st proviso to section 147 of the Act, as it stood prior to its substitution by Finance Act 2021, which reads as under: Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason 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 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. 12. Thus, as per 1st proviso to section 147 of the Act, in a case where assessment was completed under section 143(3), reassessment under section 147 can be done after the expiry of 4 years from the end of the relevant assessment year, only if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced. 14. Thus, in view of the aforesaid decision rendered by Hon‟ble Jurisdictional High Court, we find no merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1 lakh or more. We find that while dealing with the issue whether failure on the part of the AO to mention the amount of income which has escaped assessment will result in nullifying the notice issued under 148 of the Act, the Hon‟ble Karnataka High Court in Novo Nordisk India (P) Ltd vs DCIT, [2018] 95 Taxmann.com 225 (Karn.) observed as under: It is mandatory for the Assessing Officer in his reasons recorded, to state that the escaped assessment amounts to, or is likely to be Rs.1,00,000/- or more, to bring it within the ambit of Section 149(1)(b) of the Act. It is based on the reasons assigned by the Assessing Officer, the Commissioner/Sanctioning Authority on application of mind can take a decision whether it is a fit case for issuance of notice under Section 148. The material aspect for invoking the extended period of limitation under Section 149 (1)(b) not being forthcoming, further proceedings in pursuance to the said notice cannot be sustained. The notice issued being not in conformity with the provisions of the Act, it being the base or the foundation, edifice built upon it, has to fall. 17. Similar view was also expressed by Hon‟ble Allahabad High ..... X X X X Extracts X X X X X X X X Extracts X X X X
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