TMI Blog2023 (3) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... iary of accommodation entries. AO has accepted the objections of the assessee, and has not assessed or reassessed the income, which was the basis of the notice. Therefore, in light of the judgment of Jet Airways [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] it would not be open to the Assessing Officer to assess income under some other issue independently. No error or infirmity in the findings of the ld. CIT(A). Assessment order deserves to be quashed and has been rightly done so by the ld. CIT(A), which calls for no interference. Decided against revenue. - ITA No. 154/DEL/2020 - - - Dated:- 23-3-2023 - Shri N.K. Billaiya, Accountant Member, And Shri Anubhav Sharma, Judicial Member For the Assessee : Dr. Rakesh Gupta, Adv, Shri Somil Agarwal, Adv For the Department : Shri Anuj Garg, Sr. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the Revenue is preferred against the order of the ld. CIT(A), Faridabad dated 22.10.2019 pertaining to Assessment Year 2011-12. 2. The Revenue has raised the following grounds of appeal: (i) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and is aimed at garnering the escaped income of the assessee. 3. Briefly stated, the facts of the case are that as per the information received by the DDIT, INV, New Delhi, the Assessing Officer came to know that the assessee is engaged in the business of dummy companies and has received accommodation entries. 4. As per the information available with the department, it has been found that the assessee has received accommodation entries of Rs. 1,80,50,000/- dummy companies as under: S.No. Name PAN Bank A/c No. Name of Bank Total credit in Bank a/c 1. Varanasi Coomunication AADCV1243L 033205003280 ICICI Bank 39637000 2. Laxmi Traders AMEPB5766G 0148-AZ0139-050 Indusland Bank 33313212.14 3. Shivam Traders AMEPB5766G o 148-AZO 139-050 Indusland Bank 30218574.5 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies having various bank accounts with different bank / branches. After analyzing the transfer pattern it was noticed that the accounts gets credit mainly in the form of clearing and withdrawals are mainly in the form of transfer. Further, it was very clear pattern of money being credited and debited on the same day and quantum of money is credited and debited immediately in the accounts indicating that the money is being routed from one account to another account with a purpose of creating layers. In view of above observations, it is established that these companies with no genuine business other than giving accommodation entries. As per report of the DDIT(Inv.) New Delhi M/s Keshav Medichem Pvt. Ltd. 1104, The Sphinex Tower, Gurugram, Haryana has received accommodation entries as per following details:- 5. No. Paper/Shell company providing entries Amount Bank A/c no. 1. M/s White Lotus Securities 670320110000269 1,57, 00, 100/- 2. Blue Sphire Health Care Pvt. Ltd. Bank of India 10,00,050/- In view of the above, it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y from the above transactions. On going through the bank statement, it is noted that the assessee has made payment of Rs. 87 lakhs and Rs. 70 lakhs through RTGS on 31.01.2010 to M/s White Lotus Securities and Rs. 10 lakhs to Blue Spire Health Care Pvt Ltd on 22.06.2010. 11. These demonstrative facts clearly show that the Assessing Officer has reopened the assessment based upon wrong facts, wrong appreciation of facts and without any application of any mind, in as much as, the assessee has not taken any credit entry but, in fact, have made debit entries and, therefore, by no stretch of imagination provisions of section 68 of the Act can be applied. 12. Even if we assume that the reopening was done to know the sources of investment, then also provisions of section 69 cannot be made applicable, in as much as, the assessee has successfully shown the entries in its books of account vis a vis bank statements. 13. Surprisingly, the Assessing Officer has made addition of Rs. 1,80,50,000/- being unsecured loan taken from Varanasi Communication, Grey Heaven Health Care Pvt Ltd and Adbhutah Infratech Pvt Ltd., treating them to be sham transactions. 14. A perusal of the reasons rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me has escaped assessment, the Assessing Officer may assess or reassess the income in respect of any issue which has escaped assessment, when such issue comes to his notice subsequently in the course of the proceedings. The reasons for the insertion of Explanation 3 are to be found in the Memorandum explaining the provisions of Finance (No. 2)Bill of 2009. The Memorandum treats the amendment to be clarificatory and contains the following Explanation : Some courts have held that the Assessing Officer has to restrict the reassessment proceedings only to issues in respect of which the reasons have been recorded for reopening the assessment. He is not empowered to touch upon any other issue for which no reasons have been recorded. The above interpretation is contrary to the legislative intent. With a view to further clarifying the legislative intent, it is proposed to insert an Explanation in section147 to provide that the Assessing Officer may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under this section, notwithstanding that the reason for such issue has not been included in the reasons recorded u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady initiated. Suppose under two heads income has escaped assessment and those two heads are inter-linked and connected, the proceedings initiated or notice already issued under sub-section (2) of section 148 would be sufficient if the escaped income on the second head comes to the knowledge of the officer in the course of the proceedings. But if both the items are unconnected and totally alien then the assessing authority has to follow sub-section (2)of section 148 with regard to the escaped income which comes to his knowledge during the course of the proceedings. Hence, the view of the Punjab and Haryana High Court and the Kerala High Court was that, once the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment and proceeds to issue a notice under section 148, it is not open to him to assess or, as the case may be, reassess the income under an independent or unconnected issue, which was not the basis of the notice for reopening the assessment. 8. Parliament stepped in to correct what it regarded as an incorrect interpretation of the provisions of section147. The Memorandum explain-ing the provisions of Finance (No. 2) Bill of 2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which he has reason to believe had escaped assessment and also any other income chargeable to tax. The words and also cannot be ignored. The interpretation which the Court places on the provision should not result in diluting the effect of these words or rendering any part of the language used by Parliament otiose . Parliament having used the words assess or reassess such income and also any other income chargeable to tax which has escaped assessment , the words and also cannot be read as being in the alternative. On the contrary, the correct interpretation would be to regard those words as being conjunctive and cumulative. It is of some significance that Parliament has not used the word or . The Legislature did not rest content by merely using the word and . The words and , as well as also have been used together and in conjunction. The Shorter Oxford Dictionary defines the expression also to mean 'further, in addition, besides, too'. The word has been treated as being relative and conjunctive. Evidently, therefore, what Parliament intends by use of the words and also is that the Assessing Officer, upon the formation of a reason to believe under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in the case of Ranbaxy Laboratories Limited versus CIT, (2011) 336 ITR 136 (Delhi). In the said case, the Division Bench had also examined Explanation 3 to Section 147, which was inserted by Finance (No. 2) Act of 2009 with retrospective effect from 1st April, 1989. Reference was made to the decision of the Bombay High Court in CIT versus Jet Airways India Limited, (2011) 331 ITR 236 (Bom) in which it has been held as under: The effect of section 147 as it now stands after the amendment of 2009 can, therefore, be summarised as follows : (i) the Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year ; (ii) upon the formation of that belief and before he proceeds to make an assessment, reassessment or recomputation, the Assessing Officer has to serve on the assessee a notice under subsection (1) of section 148 ; (iii) the Assessing Officer may assess or reassess such income, which he has reason to believe, has escaped assessment and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section ; and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-section (2) of section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or recompute the escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Explanation 3 if during the course of these proceedings the Assessing Officer comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the Legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction under section 147 regarding assessment or reassessment of the escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
