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TMI Blog2024 (12) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... n 263 of the Income Tax Act. In this revisional order, ld. PCIT has observed that assessment order dated 30.03.2014 passed under section 143(3) is erroneous, which has caused prejudice to the interest of revenue and, therefore, deserves to be set aside. 2. First we take ITA No. 637/KOL/2024. The assessee has taken seventeen grounds of appeal. However, perusal of these grounds reveals that grievances of the assessee revolve around two-folds, namely- (a) ld. CIT(Appeals) has erred in confirming reopening of the assessment by issuance of a notice under section 148 of the Income Tax Act. (b) Ld. CIT(Appeals) has erred in confirming the addition of Rs. 1,55,00,000/-, which was added by the ld. Assessing Officer with the aid of section 68 in a re-assessment order passed under section 147 of the Income Tax Act. (c) The revenue authorities have erred in charging interests under sections 234A, 234B and 234C of the Income Tax Act. 3. First we take the issue challenging reopening of the assessment. 4. Brief facts of the case are that the assessee has filed its return of income under section 139(1) of the Income Tax Act on 30th March, 2014 declaring total income of Rs. 55,10,070/-. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tania PAN AVQPS4386L) and related beneficiaries that the assessee M/s. ANCH1TA PROPERTIES PVT. LTD has taken accommodation entry and brought back its unaccounted money into its regular books of accounts during the financial year 2012-13 through layering of i) M's. Rudramukhi Builders Pvt Ltd. Rs. 65,00,000/- ii) M/s. Ever shine Dealtrade Pvt. Ltd., Rs. 30,00,000/- iii) M/s. Fantom Dealers Pvt. Ltd Rs. 50,00,000/- totaling Rs. 1,45,00,000/- Subsequently, another information has been disseminated by ITO, Ward-10(4), Kolkata vide its communication No. ITO/Wd- 10(4)/Kol/Information/2018-19/13101 did 11/03/2019 in relation to the investigation proceeding in the case of M/s. Hitendra Commercial Pvt. Ltd. that the assessee M/s. ANCHITA PROPERTIES PVT. LTD has taken accommodation entry and brought back its unaccounted money to the tune of Rs, 10,00,000/- into its regular books of accounts during the financial year 2012- on 24/12/2012. Accordingly with Prior approval of the Ld. Pr.CIT-4, Kolkata for necessary enquiries by issuing notice u/s 133(6) of the IT Act has been carried out. Effort of finding out the creditworthiness or physical existence of those Business entities, using th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilarly it is noticed that M/s. Hitendra Commercial Pvt. Ltd. maintained a bank account bearing no. 040505005901 with ICICI Bank Chandannagar. During the period since inception i.e. 21.07.2011 to closure of account on 25.03.2013 there were large value non cash transactions noted. Funds credited, either same day or next day the amount was found transferred to another accounts including the account of the assessee M/s. ANCHITA PROPERTIES PVT. LTD to the tune of Rs. 10,00,000/-. Effort of finding out the physical existence of M/s. Hitendra Commercial Pvt. Ltd. at its registered address and its business activities using the departmental instrument has also gone in vain. As per ROC data base the status of M/s. Hitendra Commercial Pvt. Ltd. is strike off. Further the name of Shri Manoj Kumar & Shri Sanjay Kumar Agarwala, two office directors are found in the list of dummy director at the departmental data base of paper/shell companies controlled by entry operator, Shri Pankaj Agarwal. As such the transaction is remained unverified. In view of the above I have reason to believe that the assessee company, M/s. ANCHITA PROPERTIES PVT. LTD, has brought back its own unaccounted money of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income has escaped assessment for the A.Y. 2013-14 is nothing but change of opinion. (v) There is no fresh tangible material coming to the possession of the Id. AO which could reasonably give rise to believe that our income has escaped assessment. (vi) The reasons recorded are vague, scanty and non-specific and there are not reasons to believe but reasons to suspect. Copy of full information was not supplied. (vii) The satisfaction recorded in the instant case is not the AO's own satisfaction but a borrowed satisfaction and without application of mind. (viii) There is no live link between the reasons recorded u/s 148 of the Act and belief of escapement of income as the facts recorded in the reasons are incorrect. 7. The ld. Assessing Officer has not disposed of the objections separately in terms of the judgment of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Limited -vs.- ITO & Others reported in [2003] 259 ITR 19 (SC), rather alleged to have dealt during the assessment proceedings. The ld. Assessing Officer has gone through the record and thereafter made the addition of Rs. 1,55,00,000/- on the ground that the account of the assessee has been credited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to be valid as it satisfies the requirement of law that prior to re-opening of the assessment the AO has to apply his mind to the tangible material available and conclude that he has reason to believe that income has escaped assessment. Copy of reasons recorded was duly provided to the Appellant. The Action of AO in reopening assessment u/s 147 is supported by following judgments. 9. The ld. CIT(Appeals) thereafter made reference to nine judgments and he then confirmed the addition without specifically dealing with reopening separately and as to how the quantum addition is to be made separately. 10. Ld. Counsel for the assessee while impugning the orders of revenue authorities raised multiple submissions qua challenging the reopening of assessment. Before adverting to the reasons, he brought to our notice the judgment of the Hon'ble Delhi High Court in the case of Sabh Infrastructure Limited -vs.- ACIT reported in [2017] 398 ITR 198 (Del.). He submitted that Hon'ble Supreme Court has dismissed the SLP against this judgment. In this judgment, Hon'ble Delhi High Court has propounded the procedure, which ought to be followed by the revenue authorities while reopening of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the end of the Board, which was required to be followed by all the authorities. Though reproduction of this guidelines alongwith proforma would make this order a little bit lengthy, but this is a new school of thought propounded by the ld. Counsel for the assessee and we deem it appropriate to take note of these guidelines, which are mandatorily required to be followed by the field staff, which read as under:- Subject; - Standard Procedure for recording satisfaction u/s 147 of the Income Tax Act, 1361 -reg. Assessing Officers while recording satisfaction u/s 147 of the Income Tax Act, 1961 should follow the sequence as noted below: (i) 1st paragraph: Reasons recorded will include details of the assessee, nature of business activity, brief details of return of income filed earlier along with details of processing of return/ scrutiny assessment/ reassessment proceeding. (ii) 2na paragraph: It will contain details of information and material received/ collected/found by the AO subsequent to processing of original/ reopened assessment proceedings along with time period/ date of collection or receipt of information. In the cases where information is received from the Investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ph will include details of assets, nature of income earned in relation to the assets. The AO must highlight that since it is a case of escapement of income in relation to assets located outside India, first Proviso to the section will not apply". 12. In this above background, ld. Counsel for the assessee drew our attention towards the reasons. He submitted that in response to the notice received under section 133(6), the assessee has made a categorical reply in paragraph no. 4. The copy of this reply is available at page 17 of the paper book. The assessee has submitted to the ld. Assessing Officer that Company has sold its investment to (i) M/s. Rudramukhi Builders (P) Ltd., (ii) M/s. Evershine Dealtrade Pvt. Ltd., (iii) M/s. Fantom Dealers Pvt. Ltd. It was further submitted that the case of the assessee was selected for scrutiny assessment and this sale of investment must have been construed as gone into. So according to the ld. Counsel for the assessee at the close of earlier year, credit in the books represents the investment/ in the shape of shares, which were sold by the assessee to these companies in this A.Y. He drew our attention towards page no. 125 of the paper book, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his formation of belief that income has escaped assessment is without any basis and only on mere change of opinion. Therefore, according to him, this reopening is not in consonance with proposition of law laid down in various judgments. He made reference to a large number of judgments and placed their copies on the record. We take note of such citations from the index of paper book:- Sr. No. Particulars 1. GKN Driveshafts (India) Ltd. vs. Income Tax Officer and Ors. [2003] 259ITR 19 (SC) 2. New Delhi Television Ltd. vs. Deputy Commissioner of Income Tax (03.04.2020 - SC) : [2020] 424 ITR 607 (SC) 3. CIT v. Avadh Transformers (P.) Ltd. 51 Taxmann.com 369 (SC) 4. Calcutta Discount Company Limited vs. Income Tax Officer, Companies District, I and Ors. [1961] 41 ITR 191 (SC). 5. Commissioner of Income Tax, Delhi vs. Kelvinator of India Limited (18.01.2010 - SC) [2010] 320 ITR 561 (SC)] 6. Commissioner of Income Tax, Delhi-II vs. Kelvinator of India Ltd. (19.04.2002 - DELHC) reported in [2002] 256 ITR l(Delhi) 7. Income Tax Officer Ward No. 16(2) vs. Tech Span India Private Ltd. and Ors. (24.04.2018 - SC) : [2018] 404 ITR 10 (SC), 8. Sabh Infrastructure Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the rival contentions and gone through the record carefully. Original assessment in the present case was passed under section 143(3) on 16.12.2015. The assessment year involved herein is A.Y. 2013-14. The notice for reopening was issued to the assessee on 20.03.2020. In other words, it was issued after expiry of four years. Therefore, the assessee is protected by the proviso appended to section 147 of the Income Tax Act. Such proviso 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". 15. A perusal of this proviso would indicate that interdiction provided in it puts an embargo upon the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference to M/s. Samrat Udyog, vis-à-vis accommodation entries of the assessee. How both these situations are interlinked. It could be appreciated if ld. Assessing Officer has observed that in the investigation in the case of Samrat Udyog, it revealed that certain concerns operated by him gave accommodation entries to the assessee, but that type of finding has not been recorded in this paragraph. 17. Similar is the position in the next paragraph with regard to M/s. Hitendra Commercial Pvt. Ltd. The ld. Assessing Officer thereafter made reference about the prior approval of ld. PCIT, Kolkata-4 for necessary inquiries by issuance of notice under section 133(6) of the Act. This notice was issued to the assessee or it was issued to the alleged vendees of the assessee also not discernable. The assessee received the notice and it has replied. He further observed that effort of finding out the creditworthiness of physical existence of those business entities, using the departmental instrument has also gone in vain. Again, it is not discernable whether ld. Assessing Officer has deputed any Inspector or is harping upon data base of the revenue. The ld. Assessing Officer in the next ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and these circumstances, it would reveal that there is no interweaving of circumstances, which can demonstrate a complete chain of events and such chain of circumstances would goad the ld. Assessing Officer to form a belief that income has escaped assessment. He has narrated all these circumstances vaguely and without interconnecting the circumstances with each other. 19. At the time of hearing, ld. D.R. has emphasized that ld. Assessing Officer was not required to establish conclusively while forming a prima facie opinion about escapement of income and his reasons cannot be judged by the Appellate Authority. We agree to some extent that ld. Assessing Officer has to form a prima facie belief and not to prove conclusively about escapement of income, but it is always debatable before the Appellate Authority to demonstrate whether that prima facie belief is based on some tangible material. In other words, whether a man of prudent knowledge can believe on those circumstances that income has escaped assessment. A perusal of the reasons would indicate that no such circumstances have been highlighted, more so it is the ld. Assessing Officer, who has to establish which fact was not di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roneous as well as prejudicial to the interest of the revenue. 3. I, therefore, propose to revise the assessment order u/s. 143(3) on the above points. You are, therefore, requested to attend my office at the above-mentioned address either personally or through your A/R on 4.03.2024 at 1.30 p.m. at Room No. 6/4, 6th Floor, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 either personally or through your Authorized Representative. 4. Please note that in case of your non-compliance, it shall be presumed that you have no objection whatsoever to the proposed revision and the matter may be decided ex-parte on merits as per material on record without any further reference to you". . 22. A perusal of the above show-cause notice would reveal that ld. PCIT sought to revise the assessment order passed under section 143(3). The reasons assigned by the ld. PCIT is that the assessee has received total amount of Rs. 4,09,00,000/- from nine parties and the ld. Assessing Officer has failed to examine this issue in the impugned assessment order. 23. With the assistance of ld. Representatives, we have gone through the record carefully. The ld. Counsel for the assessee while impugning t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the higher sanctioning authority on the material possessed by the ld. Assessing Officer and if on a particular item on which information was collected, the Assessing Officer did not seek sanction from the PCIT-4 to reopen the assessment, then, how action under section 263 is justifiable. He took us through page no. 20 of the paper book, wherein copy of the show-cause notice dated 02.03.2020 is placed. In the last line of this notice, ld. Assessing Officer has observed that above information is being sought with the prior approval of ld. PCIT-4, Kolkata. It means that it was within the knowledge of the ld. Assessing Officer but he did not deem it fit to reopen the assessment and, therefore, no 263 can be sustainable. In the last fold of submission, he contended that the revisional action u/s 263 is subject to the grounds of appeal in the quantum appeal, wherein reopening is being challenged. 26. We have duly considered the rival contentions and gone through the record carefully. We find that in the show-cause notice, ld. Commissioner has not specified that assessment order dated 28th September, 2021 passed under section 147 is being sought to be revised. He proposed to revise the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to its amendment from 1st April, 2021 would indicate that this section authorizes to assess any other income, which came to the notice of ld. Assessing Officer during the reassessment proceeding. Had this information qua these nine parties was not in the knowledge of ld. Assessing Officer prior to reopening, then, it would have been construed that such information has come in the possession of the ld. Assessing Officer during reassessment proceeding. If ld. Assessing Officer failed to consider that probably ld. PCIT would be justified in taking action under section 263, but here is a case where the information whose non-consideration is being taken as a ground for exercising the powers under section 263 was already possessed by the ld. Assessing Officer before forming his prima facie opinion about escapement of income. In such a situation, it cannot be concluded by the ld. PCIT that assessment order is erroneous, which has caused prejudice to the revenue on account of non-consideration of an information for reopening. By this method, ld. PCIT is revising a second reopening on those very information. Therefore, otherwise on merit also, there is no ground to exercise powers und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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