TMI Blog2022 (9) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... n for overcoming the rider set up by the proviso to section 147 of the Act. If this condition precedent is not satisfied, the bar would operate and no action u/s 147 of the Act can be initiated against the assessee for reassessment proceedings. Reasons supplied to the Petitioners, does not contain any such allegation. Consequently, one of the conditions precedent for removing the rider against taking action u/s 147 of the Act after a lapse of four years remains unfulfilled and unsatisfied and in absence of any allegation in the reasons recorded that the escapement of income had occurred by the reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year, any action taken by the AO u/s 147 of the Act beyond the period of four years would be without assumption of valid jurisdiction. Therefore, respectfully following the proposition rendered in the case of BPTP Ltd. ( 2020 (1) TMI 56 - DELHI HIGH COURT ), in the case of Haryana Acrylic Manufacturing Company Ltd. [ 2008 (11) TMI 2 - DELHI HIGH COURT] and Anand Developers ( 2020 (2) TMI 995 - BOMBAY HIGH COURT ), we hold that the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve as recorded to initiate the re-assessment proceeding were not served within the stipulated period prescribed u/s 149(l)(b) read with proviso to sec 147 of I.T. Act, 1961, hence the re-assessment proceeding is invalid. 3. That on the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate both in law and on facts that re-opening is without independent application of mind by the A.O. and is based on borrowed satisfaction. 4. That on the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate both in law and on facts that the reasons recorded by the A.O. were vague therefore, initiation of reassessment proceeding is bad in law and may please be annulled. 5. That on the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate both in law and on facts that there was no material having live nexus with the foundation of belief, therefore, initiation of re-assessment proceeding is bad in law and may please be annulled. 6. That on the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceedings were initiated based on the material seized in the search operation on Shri S.K. Jain and his brothers, were quashed in view of specific powers available to the AO to take action u/s 153C of the Act; (iv) No valid notice u/s 148 was issued and served on the assessee; (v) Non-application of independent mind by the AO while assuming jurisdiction to proceed with reassessment before supply of reasons which were based on mistakes of facts; (vi) The AO has initiated action u/s 147 of the Act based on the information forwarded by the Investigation Wing on 14.03.2013 related to search operation in the case of Shri S.K. Jain group on 14.09.2010 and the material found in search indicated involvement of the group in the activities of providing accommodation entries through bogus/benami entities, but, the AO did not apply his mind to the material and did not discuss how prima facie belief of accommodation entry is reached when no evidence/material regarding the payment of cash in lieu of cheques to searched group is discussed which clearly shows non-application of mind by the AO and in absence of any specific discussion of material on the basis of which independent pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as Reason to believe. This operative portion is as follows:- 4. Reason To Believe: After considering the return of income of the assessee, information received from Investigation Wing, copies of incriminating documents seized from custody and control of Jain Brothers, copies of assessment order and appeal order as discussed along with evidences related to the assessee and taking them into accounts have reached the following conclusion: a. That S.K.. Jain Group was engaged in the business of providing accommodation entries to beneficiaries in lieu by entities controlled by them in cash. This has been held by the CIT(Appeal) in his case recently and the same has been discussed as above. b. During the course of search operation, on S,K. Jain Group cases, various incriminating documents were been seized which showed that all the companies entities controlled by the group do not have any known business activities, and lack of independent existence as separate entity and were a part of group of companies engaged in providing accommodation entries. The above conclusion was corroborated with the following evidences found and seized during the course of search from their c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from companies/entities engaged in business of providing accommodation entries by charging commission in lieu of cash payment by beneficiary assessee, accordingly, an amount of Rs.2,40,00,000 represents unexplained credit u s 68 of the Act in books of A/c of the assessee. 15.1 In view of the facts narrated above, it is clear that the assessee has not disclosed fully truly all material facts necessary for its assessment for the assessment year 2009-10. I have therefore, reasons to believe that entry found in seized cash/ Cheque book of Jain brothers is nothing but an accommodation entry assessee Company is beneficiary thereof. I have reason to believe that income of Rs. 2,40,00,000/- has escaped assessment in the A.Y. 2009-10, which includes commission @ 2%. 16. Since, the assessment/re-assessment proceedings in this case for A.Y. 2009-10 pertain to a period beyond four years but before the expiry of six years from the date of issue of notice, necessary sanction has to be obtained from Pr. Commissioner of Income Tax. in view of the amended provision of section 151 w.e.f 01.06.2015. The necessary sanction in this regard is being obtained separately from Pr. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings, but, there is no discussion in the reasons recorded by the AO. He further submitted that the ld.CIT(A) has given a finding that the appellant had made full disclosure of all material facts on the impugned share subscription received from nine entities, therefore, the bald allegation of the assessee cannot be taken into consideration as compliance to proviso to section 147 of the Act. On this legal issue, the ld. DR submitted that the mentioning in para 15.1 of the reasons is sufficient to comply with the requirement of first proviso to section 147. 10. On careful consideration of the above submissions, in the judgement of the jurisdictional High Court of Delhi in the case of BPTP Ltd. vs. PCIT (supra), in operative paras 22-25, it has been held that the recorded reasons except of using the expression failure on the part of the assessee to disclose fully and truly all material facts do not specify as to what is the nature of default or failure on the part of the assessee. The relevant paras read as follows:- 22. Reading of the proviso to Section 147 and the decisions of this Court discussed above makes it amply clear that after a period of four years from the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation (supra) and CIT vs Kelvinator of India Ltd., (2002) 256 ITR 1and CIT vs. Usha International Ltd., 348 ITR 485 (Del.) and several other decisions wherein it has been repeatedly held that reopening initiated without any failure on the part of the Assessee in fully and truly disclosing all material facts without any fresh tangible material deserves to be quashed. In view of the aforesaid test laid down by this Court for re-opening of the assessment in cases where proviso to Section 147 of the Act is attracted, we find that in the present case, the test is not met. It is well settled proposition under the Income Tax Act that merely a change of opinion would not give the AO the jurisdiction to reopen the assessment under Section 147/148, as the same would amount to reviewing the earlier decision. There has to be some relevant tangible material for the AO to come to the conclusion that there is escapement of income from assessment, and there must be a live link with such material for the formation of the belief. The reasons should also disclose due application of mind as reopening of the assessment proceeding is not an empty formality. On a perusal of the recorded reasons, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putedly, rather admittedly, the AO, in the reasons at para 16, noted that since the re-assessment in this case for AY 200910 pertained to a period beyond for years, but before the expiry of six years from the date of issue of notice, therefore, the proviso to section 147 is applicable to the facts of the present case and from the reasons recorded by the AO as reproduced above, we are unable to see any allegation or assertion by the AO as to which fact or the material was not disclosed by the assessee leading to its income escaping assessment pertaining to the impugned amount of alleged accommodation entries. It is not the case of the AO that the assessee did not disclose the impugned amount in its books of account or did not provide the details to the AO on being asked during the assessment proceedings. In the similar facts and circumstances, the Hon ble Bombay High Court in the case of Anand Developers vs PCIT (supra) held that mere bald observation by the AO that the assessee did not disclose fully and truly all the material facts is not sufficient, the AO has to give the details as to which fact or the material fact was not disclosed by the assessee leading to its income escapin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of BPTP Ltd. (supra); in the case of Haryana Acrylic Manufacturing Company Ltd. vs. CIT, 308 ITR 38 (Del), order dated 1st July, 2020 (supra); and judgement of the Hon ble Bombay High Court in the case of Anand Developers (supra), we hold that the notice dated 28.03.2016 u/s 148 of the Act based on the reasons recorded on 17.03.2016 and the consequent reassessment order dated 30.12.2016 are without jurisdiction as no action u/s 147 of the Act could be taken beyond the period four years in absence of compliance of proviso to section 147 of the Act. We hold so. 13. Therefore, the Cross Objection No.1 of the assessee is allowed and the impugned initiation of reassessment proceedings u/s 147 of the Act, notice u/s 148 of the Act dated 28.03.2016 and the consequent reassessment order u/s 143(3) r.w.s.147 of the Act dated 30.12.2016 are quashed being bad in law and passed without assuming valid jurisdiction. 14. Since, in the earlier part of this order, we have allowed Cross Objection of the assessee and have quashed initiation of reassessment proceedings u/s 147 of the Act, notice u/s 148 of the Act and reassessment order dated 30.12.2016 passed u/s 143(3)/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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