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TMI Blog2023 (12) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... the action of the Ld. AO in such respect is bad in law and it may be held accordingly. 2. For that in view of the facts and in the circumstances, the Ld. CIT(A) was wholly unjustified in upholding the validity of the notice u/s. 148 and the consequential proceedings u/s. 147 without appreciating the fact that the reasons recorded for the reopening of the assessment were not provided to appellant and hence such proceeding is bad in law and in view of the facts and in the circumstances it may be held accordingly. 3. Without prejudice to Grounds No.1 & 2 above, the Ld. CIT(A) had initiated such proceedings u/s. 147 merely on the alleged information from the Investigation Wing without conducting any enquiry of his own and as such the reopening is void ab initio and is liable to be set aside I quashed I cancelled and it may be held accordingly. 4. For that in view of the facts and in the circumstances, the Ld. CIT(A) erred in upholding the validity of the impugned order u/s.147/263/1441 263/143(3) when a simultaneous proceedings u/s. 144/263/143(3) was carried on by the Ld. AO and in view of the facts and in the circumstances and particularly in view of the judgment of Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. There are several events which took place prior to passing of the impugned assessment order and the appellate proceeding thereon. To have a bird's eye views of these several events, chronology of the same is tabulated as under: Sl. No. Order Date 1. Original Assessment order u/s. 143(3) 20.03.2015 2. First Revision Order u/s. 263 17.10.2016 3. First effect giving Assessment Order u/s. 263/143(3) 30.12.2016 4. Second Revision Order u/s. 263 12.03.2019 5. Notice u/s. 148 for initiating reassessment proceeding 26.03.2019 6. Second effect giving Assessment order u/s. 263/144 06.12.2019 7. Reassessment order u/s. 143(3)/147 16.12.2019 8. Appellate order by ITAT in ITA No. 495/Kol/2022 quashing the second revision order passed u/s. 263. 06.03.2023 3.1. By keeping the above table in perspective, we take note of the brief facts of the case according to which assessee is a private limited company. Loss of Rs. 74,252/- was reported in the e-return filed on 06.02.2013. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act. Various details called for were filed by the assessee. Considering the submissions made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o failed to carry out detailed investigation of the shareholders on the very issue that how they decided to invest in such a company which was never known for its line of business and also they invested at huge premium without verifying the financial position. (iii) The A.O. further failed to examine the rationale behind raising the said share premium and also did not verify the method adopted by assessee for determining such abnormally huge premium specially keeping in view that prima facie there was no material in the balance sheet of the assessee warranting/justifying such huge premium. (iv) The A.O. failed to collect the relevant evidences in order to reach a logical conclusion regarding the genuineness of controlling interest. (v) The A.O. failed to examine all the bank accounts for the entire period in the course of verification to find out the money trail of the share capital. (vi) The A.O. failed to adequately trace out the money trail to ascertain the genuineness of source of fund invested by shareholders in the assessee company. (vii) On the whole the impugned order dated 30.12.2016 passed u/s 263/143(3) of the Income Tax Act, 1961 prima facie suffers from lack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected to provide reasonable opportunity to the assessee company to produce documents & evidences which it may choose to rely upon for substantiating its own claim The AO is further directed to adjudicate the said Issue de novo and pass a fresh assessment order in accordance with the relevant provisions of law." 4. Aggrieved, assessee went in appeal before the Tribunal. 5. In the said appeal, Co-ordinate Bench took note of the findings of the Ld. AO arrived at in the first effect giving assessment order passed u/s. 263/143(3) of the Act, dated 30.12.2016 which is extracted below: "15. The finding of ld. AO in itself makes it amply clear that complete details were filed and the directors of the investor companies personally appeared before ld. AO on being called for by issuing summons u/s 131 of the Act. Their statements were recorded u/s 131 of the Act on oath and they also referred to various books of accounts and other relevant documents. Ld. AO was satisfied with the source of funds, identity and creditworthiness of the share applicants and genuineness of the transactions. 16. The above finding clearly indicates that ld. AO conducted a complete enquiry and also examined a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and again the same issues which have already been properly enquired for by ld. AO and satisfactory reply has been given by the assessee along with the documentary evidences which ld. AO has thoroughly examined all these details and made proper application of mind and taken a view permissible under the law. It is well settled that if the view taken by ld. AO is permissible under the law then it may or may not be prejudicial to the interests of the Revenue." 5.1. By considering the above merit based factual finding of the Ld. AO as extracted above, the Co-ordinate Bench arrived at its conclusion to hold that Ld. Pr. CIT has grossly erred in assuming the jurisdiction u/s. 263 of the Act and holding the assessment order dated 30.12.2016 as erroneous and prejudicial to the interest of the revenue, thus the second revision order passed u/s. 263 of the Act dated 12.03.2019 was quashed. The relevant findings by the Co-ordinate Bench in this respect are reproduced as under: "21. We, therefore, respectfully following the judicial pronouncements stated herein above and also considering the fact that in a case where ld. AO conducted detailed enquiry and the assessee has filed complete docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account through banking channel from Mr. Sandeep Roy, proprietor of Sarika Trading Co. (PAN: APGPR1616A), a shell entity. The observations made by the Ld. AO in this respect are as under: "The Assessing officer passed order u/s. 263/144 of the Income Tax Act , 1961 on 06.12.2019 determining total income at Rs. 79,15,95,340/-. The case has been transferred from ITO Ward 12(3), Kol vide order u/s. 120 of I. T. Act, 1961 dated 24.09.2019. Again, the case has been reopened u/s. 147 with a credible information was received on 12.03.2019 from DDIT (Inv.), Unit-4(2), Kolkata vide his letter bearing No. F. No. DDIT(Inv.)/Unit-4(2)/Info/2018-19/75091 dated 27.02.2019, that M/s. Pearl Tracom Pvt. Ltd., whose current jurisdiction is with this end, has taken accommodation entry and brought back its unaccounted income to the tune of Rs. 2,48,50,000/- into its regular books of accounts through banking channel from Mr. Sandeep Roy, Prop. of Sarika Trading Co. (PAN: APGPR1616A), a shell entity. As per the observation of the investigation wing, the cash is deposited in the accounts of the fictitious entity and simultaneously followed by debits to various accounts. These accounts have freque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong in taking total assessed income from this second effect giving assessment order and making further addition in the impugned reassessment proceeding. 7.1. Ld. Counsel strongly submitted on the jurisdictional aspect of the impugned reassessment proceedings by contending that during the pendency of an assessment proceeding, reassessment notices cannot be issued. According to him, the impugned notice u/s. 148 has been issued when the set aside assessment proceedings by way of second revisionary order were pending. Accordingly, the entire reassessment proceeding and consequent order u/s. 147 read with section 143(3) is bad in law. To buttress his contention, he placed reliance on the decision of Hon'ble Supreme Court in the case of S. M. Overseas Pvt. Ltd. Vs. CIT (2023) 450 ITR 1 (SC) and Trustees of HEH Nizam Supplemental Family Trust Vs. CIT (2000) 242 ITR 381 (SC). 7.2. His other legs of contention on the jurisdictional aspect relates to Ld. AO proceeded to issue notice u/s. 148 solely on the basis of some information received from Investigation Wing without even specifying as to which correspondence/document of the Investigation Wing received by him prompted to form a reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment. Ld. Counsel also raised the contention that despite repeated request made to the Ld. AO, certified copy of reasons to believe recorded before issuing notice u/s. 148 have not been supplied to the assessee. What Ld. AO furnished is by way of show cause notice dated 15.11.2019 wherein it was stated that assessee had made an accommodation entry of Rs. 2,48,50,000/- from Mr. Sandeep Roy, proprietor of Sarika Trading Co. (PAN: APGPR1616A) in the year under consideration through banking channel. Thus, taking clue from this piece of information available in the show cause notice issued by the Ld. AO, it was strongly and very categorically refuted that assessee had not undertaken any transaction with any person named Mr. Sandeep Roy or any concern named M/s. Sarika Trading Co. for the stated amount. In this respect it was submitted that it is merely on a wrong belief that such addition was proposed in the hands of the assessee. According to the Ld. Counsel, Ld. AO has neither examined such alleged person nor has provided any opportunity to the assessee to cross examine the said alleged person namely Mr. Sandeep Roy. Entire addition is without any material, without taking any exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ought to be deleted. 8. Per contra, Ld. CIT, DR placed reliance on the orders of the authorites below. 9. We have heard the rival contentions and perused the material available on record. We have given our thoughtful consideration to the submissions made by the Ld. Counsel, both on the jurisdictional issues as well as mertis of the case. From the chronology of events tabulated above, we take note of the fact that second revision order passed u/s. 263 dated 12.03.2019 has been quashed by the Coordinate Bench making the second effect giving assessment order dated 06.12.2019 as non-est. Reference made by the Ld. AO in the impugned assessment order of this proceeding and basing it to arrive at the assessed total income is not justified. From the perusal of the reasons to believe recorded by the Ld. AO and as contended by the Ld. Counsel in respect of the contents mentioned therein, we are in agreement with the facts narrated by the Ld. Counsel that Ld. AO never disclosed the details of layers through which alleged money has been routed into the bank account of the assessee. Ld. AO has also never shared the information in respect of documentary evidence for the alleged transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved that cash is deposited in the account and simultaneously followed by debits to various accounts. These accounts have frequently been used for layering the fund through the several bank accounts of jamakharchi/shell concerns and immediately transferred to the interlinked bank accounts and then ultimately to the bank accounts of the concerned beneficiary. From the analysis of the above mentioned bank accounts and interlinked bank accounts, beneficiaries have been identified. The details of such beneficiary are as follows: Sl. No. Beneficiary Beneficiary amount (Rs.) F .Y PAN 1. Pearl Tracom Pvt. Ltd. 2,48,50,000.00 2011-12 AABCP9934G 9.2. We also find ourselves in agreement with the contention of the Ld. Counsel that there is nothing specific stated in the reasons to believe as to the nature of the transaction of accommodation entry as alleged by the Ld. AO as to whether it is an income or an expense or an allowance or share capital or loan etc. Before the Ld. AO, assessee has evidently demonstrated by furnishing its books of account and bank statement that there is no such transaction or such amount of money which has routed into the books of the assessee or i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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