TMI Blog2023 (8) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... ld CIT(A) or the AO in remand proceeding are it liberty to carry out the inquiries as deemed fit for verification of the work done by the said party. The ground No. 2 of appeal of the assessee is accordingly allowed for statistical purposes. Validity of assessment u/s 153C - Assessee submitted that on the basis of information received from Shri Pravin Aggarwal, reassessment could have been initiated only u/s 153C of the Act and not u/s 148 - HELD THAT:- The Hon ble supreme court in the case of ITO vs Vikram Sujitkumar Bhatia [ 2023 (4) TMI 296 - SUPREME COURT] held the amendment brought to section 153C of the Act by way of finance Act, 2015 as retrospective. Since, the information received from search at the Shri Pravin Aggarwal was based on his statement and other material, which were pertaining to Shri Pravin Aggarwal only and therefore, proceedings u/s 153C of the Act could not have been initiated/invoked in the hands of the assessee on said material. The challenge of the Ld. Counsel of the assessee for invalidating the present proceedings u/s 153C on this reason is accordingly rejected. In our opinion on such information from Pravin Aggarwal only valid recourse was to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09. The grounds raised by the assessee are reproduced as under: 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in validating the action of the Assessing Officer ('AO') in issuing of an invalid notice us 153C of the Act and in passing order dated 29.03.2016 u/s 153C r.w.s. 143(3) of the Act. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the AO in issuing notice u/s 148 of the Act and holding that the payment of Rs. 10,53,83,193/- made by the Appellant on account of capital work in progress was an accommodation entry and no depreciation allowance is allowable on the said amount in the subsequent years. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the AO in rejecting the claim of the Appellant to treat the subsidy of Rs. 8,12,15,141/- under Technology Upgradation Fund Scheme as capital in nature and not chargeable to tax. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the AO in rejecting the claim of the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -which was subsequently revised to ₹ 2612,46,19,627/-on 17/11/2009. The return of income was processed under section 143(1) of the Income-tax Act, 1961 (in short the Act) and thereafter scrutiny assessment under section 143(3) of the Act was completed on 25/03/2010 determining total income at ₹ 2779, 86, 88, 325/-. Thereafter, on receipt of information from the investigation wing of Income-tax department Kolkata, the reassessment proceedings were initiated by way of issue of notice dated 03/01/2014 under section 148 of the Act. 3.1 Thereafter, consequent to the search action u/s 132 of the Act at the premises of M/s Aditya Birla Management Corporation Pvt. Ltd. (ABMCPL) i.e. a group concern, on 16th October 2013, certain incriminating material pertaining to the assessee was found and seized by the Assessing Officer of the searched person. Accordingly, he intimated to the Assessing Officer of the assessee. Thereafter, the Assessing Officer treated the reassessment proceedings as got abated and he issued notice u/s 153C r.w.s. 153A of the Act, on 26.11.2014 requiring the assessee to file return of income for the assessment year under consideration along with other asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claimed that M/s Taral Wincom Pvt. Ltd (in short the Taral ) had rendered certain professional services to the assessee in relation to Cement plant at Kotputali Rajasthan. In support of services of M/s Taral for infrastructure work of land development and leveling at the site of the assessee s cement plant, the assessee submitted a comparative sheet of quotations invited, decision for awarding contract, ledger account of the party, invoices, management sheet, bank payment vouchers, certificate of lower deduction of tax, TDS return etc. It was claimed by the assessee that the transaction was genuine and properly disclosed in the books of accounts. The assessee company further submitted that there was no failure on the part of the assessee company to disclose all material facts necessary for assessment fully and truly. The assessee company contended that proviso to section 147 is applicable in the case of the assessee and therefore notice under section 148 of the Act is bad in law. The objections raised by the assessee company against the notice under section 148 of the Act were disposed off by the Assessing Officer on 17/06/2014, wherein he stated that the fact of entry of profes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceeding are no more valid and any order passed with reference to notice under section 148 of the Act would be bad in law. 5.4 The Assessing Officer accordingly, treated the proceedings u/s 147 of the Act as got abated under second provisio of section 153A(1) of the Act. Thereafter, during proceedings under section 153C of the Act, the Assessing Officer again questioned the assessee vide notice under section 142(1) dated 29/12//2015, as why the alleged professional fee of ₹10,53,83,193/-shown to have been paid to M/s Taral is treated as bogus expenditure and why the same should not be disallowed. The assessee vide submission dated 18/01/2016 relied on its submissions made earlier and further submitted that payment of ₹10,53,83,193/- to M/a Taral was accounted in the books of account under the head Capital Work-in-Progress and disclosed as asset in the balance sheet for financial year 2007-08, thus there was no impact on the profit of the assessee company for the assessment year under consideration on account of that transaction. The Assessing Officer rejected the contention of the assessee observing as under: (i) The notice issued under section 133(6) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e genuineness of the transaction. However, the Appellant Company has failed to Sea a produce, the said party for examination, before the A.O. 22.18 Also, the findings of the AO are duly buttressed by the statement of Mr. Praveen Aggarwal recorded by the Investigation Wing, which revealed that the transaction was just an accommodation entry. It is also noted that the copy of the said statement of Mr. Praveen Aggarwal was duly provided to the Appellant along with the reasons recorded for comments. Hence, there is no violation of the principles of natural justice during the course of the assessment proceedings, on this issue. 22.19 In view of these facts and circumstances of the case, this ground of appeal is decided in favour of Revenue and thus, the action of the AO is upheld. Accordingly, the Ground of Appeal No. 3 of the Appellant Company is dismissed. 7. Before us, the Ld. Counsel of the assessee referred to the details/documents filed during the course of the assessment proceedings, a copy of which is available on page 92 to 464 of the factual paper book. A copy of the statement of Mr. Pravin Aggarwal was also referred in the reason recorded, available on page 85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances. He submitted that the documents in the case along with bills/invoices are without any proper verification by the field staff and genuineness is doubtful. The learned DR referred to page 94 and 95 of the assessee s factual paper book and submitted that one of the quotations is even handwritten. The learned DR further submitted that there is no reference of VAT number or works contract tax number on said invoices. The learned DR further referred to pages 101, 102 of the assessee s paper-book and submitted that those papers only represent approval for road construction/leveling and there was no work completion certificate, therefore the documents submitted by the assessee do not subscribe to genuineness of the work by the said party. 9. We have heard rival submission of the parties and perused the relevant material on record. As far as merit of the additions is concerned, we find that the Assessing Officer has mainly held the party as non-verifiable in view of the reason that notice u/s 133(6) issued remained unserved and the assessee also failed to produce the said parties for verification of the claims of work carried out by it. Since, before us, the assessee has filed c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax u/s 151 for issuance of notice u/s 148 of the Act. He submitted that assessee has requested for the same before the Assessing officer in the course of 153C proceedings and also before the Ld. CIT(A). He referred to page No. 90, 459, 460 465 631 and 676 of the factual Paper Book. The learned Counsel relied on the decision of the Hon ble High Court of Allahabad in the case of Deepak Gupta Vs ACIT reported in (2020), 120 taxmann.com 431 (Allahabad), wherein it is held that the assessee is fully entitled to a copy of order passed under section 151 of the Act and correspondingly, Assessing Officer is obliged to hand over a copy of the same, as and when, the assessee seeks for it. He submitted that in absence of approval u/s 151, the proceedings u/s 147 are invalid and hence assessment for the year would not abate, thus, no addition could have been made without aid of incriminating material. 9.4 Secondly, the Ld. Counsel of the assessee referred to the reasons recorded for issuance of notice u/s 148 of the Act available on page 85 to 86 of the factual paper book and submitted that reopening was resorted pursuant to the search conducted at the premises of one Mr. Pravin Agarwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the assessee: Karthik Krishna v. DCIT (146 taxmann.com 466) (Kar HC) M/s Chirchind Hydro Power Ltd. v. ACIT (I.T.(SS).A. Nos. 171, 172 and 174/Ind/2008) Janki Exports International v. UOI (278 ITR 296) (Del HC) 9.7 The Ld. Counsel of the assessee submitted that in absence of a copy of the satisfaction note and a copy of the Commissioner s approval being not furnished to the assessee, adverse inference should have been drawn against assessment completed u/s 153C of the Act. 10. On the other hand, the Ld. DR submitted that the fact of approval of the relevant authority taken for the purpose of issuing notice u/s 148 of the Act is already mentioned in the said notice itself. He further submitted that while filing objection to the 148 proceedings, the assessee nowhere challenged this fact that notice issued was without any approval under section 151 of the Act. He further submitted that it is the assessee, who asked the Assessing Officer to treat the reassessment proceeding under 147 of the Act as abated. The DR also submitted that at the stage of issue of notice u/s 153C of the Act, the proceedings u/s 148 were pending before the AO and he can t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. We find that 153C proceedings could be initiated only when during search at third party, any cash jewellery or any valuable article is found to be belonging to assessee or any material documentary evidence or other material found to be pertaining to the assessee or any information contended therein is found related to the assessee. The Hon ble supreme court in the case of ITO vs Vikram Sujitkumar Bhatia in Civil Appeal No. 911 of 2022 held the amendment brought to section 153C of the Act by way of finance Act, 2015 as retrospective. Since, the information received from search at the Shri Pravin Aggarwal was based on his statement and other material, which were pertaining to Shri Pravin Aggarwal only and therefore, proceedings u/s 153C of the Act could not have been initiated/invoked in the hands of the assessee on said material. The challenge of the Ld. Counsel of the assessee for invalidating the present proceedings u/s 153C on this reason is accordingly rejected. In our opinion on such information from Pravin Aggarwal only valid recourse was to issue notice u/s 148 of the Act. The decisions relied upon by the learned counsel are distinguishable as same are on the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dity of notice u/s 148 of the Act has been raised for the first time before us and not raised before the lower authorities. We note that in view of the additional evidence furnished by the assessee on the issue of the merit, we have restored the matter back to the file of the ld. CIT(A), therefore in the interest of the substantial justice, we feel it appropriate to restore this issue, which is a matter of determination of fact, to the file of the Ld. CIT(A) for adjudication. He may call for a report from the assessing officer and verify copy of the approval granted under section 151 of the Act. If such an approval is found to be in existence, then he shall provide a copy of the same to the assessee. If no such approval for issue of notice under section 148 of the Act is found, then Ld. CIT(A) may decide validity of the assessment proceedings under section 153C of the Act in accordance with law. 15. In view of our discussion, ground No. one of the appeal of the assessee is partly allowed for statistical purposes. 16. The ground No. 3 and 4 of the appeal were not pressed by the assessee and therefore same are dismissed as infructuous. 17. The Revenue in its appeal in ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court. We find that the Hon ble Supreme Court has already adjudicated and upheld the finding of the Hon ble Bombay High Court in the case of CIT v. Continental Warehousing Corporation (supra), in the decision in the case of PCIT Vs AbhisarBuildwell P Ltd (149 taxmann.com 399). But as far as applicability of the decision of the Hon ble Bombay High Court is concerned, same depends on the factual finding of whether the assessment was abetted or not. Since said issue has already been restored by us to the file of the Ld. CIT(A), while adjudicating appeal of the assessee, therefore, the ground No. 3 and 4 of the appeal of the Revenue are accordingly allowed for statistical purposes. 20. The other grounds raised by the Revenue are general in nature and therefore same are dismissed as infructuous. 21. Both the parties agreed that the grounds raised by the assessee and Revenue in cross appeals for assessment year 200910 and 2010-11 are identical or consequential to assessment year 2008-09 and therefore, same are decided mutatis mutandis. 22. In the result, the appeals of the Revenue are dismissed whereas appeal of the assessee are allowed partly for statistical pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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