TaxTMI 
TaxTMI 
TaxTMI 
2012 (12) TMI 128
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.... escaped assessment. It is also mentioned that there is no nexus or live link between the information and the factum of escapement of income. Ground no. 1 is that no notice u/s 143(2) has been issued and that notice dated 30.11.2009 is not in the nature of a notice u/s 143(2). As the cross objection involves preliminary issues, we decide the same at the outset. 2. We start with ground nos. 2, 3 and 4, which challenge the issuance of notice u/s 148. The facts mentioned in the assessment order are that the return declaring loss of Rs. 12,442/- was filed on 29.10.2002. The same was processed u/s 143(1). Subsequently, a report was received from Investigation Directorate in respect of enquiries conducted into some bank accounts which were used for issuing cheques to the beneficiaries against cash paid by them to the entry operators, i.e., the persons who operated these accounts. In this connection, a survey was conducted in the case of M/s Gurcharan Jewellers, Proprietor Shri Ashok Kumar Chauhan, who admitted to have taken cheques under the garb of gifts after paying cash. Further enquiries were conducted and a number of bank accounts were located which were used for giving accommoda....
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.... and the bank account of the assessee in which the amounts were deposited have been narrated. These entries aggregate to Rs. 14.45 lakh. In paragraph no. 6, it is mentioned that the enquiries reveal that Shri Ishwar Sharma, Smt. Babita, Shri Rohit Rana, Shri Sachin Gupta, Shri Pramod Kumar, Shri Sanjay Sharma, Ms. Preeti Arora, Shri Sudhir Sachdeva, Ms. Geeta Rajouria, Shri Surinder Pal Singh, Shri Mukesh Gupta, Ms. Pallavi Negi, Shri Rajesh Kumar Gupta, Ms. Rani Sharma and Ms. Sarita Gupta have given entries to the assessee. The return of income of the assessee for this year was perused, which showed that the capital increased from Rs. 1.80 lakh to Rs. 16.20 lakh. In paragraph no. 8, it is mentioned that these entries cannot be verified from the return of income. The information is that these entries are in the nature of accommodation entries. Therefore, it has been recorded that there is reason to believe that income of Rs. 14.45 lakh has escaped assessment. 2.3 The case of the ld. counsel is that the AO was in the knowledge of the identity of the persons. However, he relied on the report of Investigation Directorate. Thus, there was no application of mind. 2.4 In reply, the ....
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....0 lakh to Rs. 16.20 lakh. However, details of the subscribers are not available. Therefore, it was recorded that in the light of enquiries conducted by investigation wing, he has reason to believe that income of Rs. 14.45 lakh has escaped assessment for this year. Thereafter, approval has also been taken from the Additional Commissioner of Income-tax. The question is whether notice issued in pursuance to these reasons is valid or not? 2.6 In the case of Narnudia Financial Services (P.) Ltd. in IT Appeal No. 4094(Del)/2009 for assessment year 2001-02 dated 20.04.2011, relied upon by the ld. counsel, the cross objection of the assessee was allowed. The facts of this case are that original assessment had been framed u/s 143(3). Subsequently, information was received from the investigation wing that the assessee is a beneficiary of accommodation entry. The Tribunal found that the assessee had disclosed all particulars regarding share money at the time of original assessment. The AO had also obtained confirmation from the investors. The reopening was done merely on the basis of information received from investigation wing. It was held that the case is covered by the decision of juris....
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....e information by comparing it with the information available in the return of income. Extensive enquiries by the investigation wing led them to certain conclusion which if perused by a person of ordinary prudence would lead to a conclusion that certainly there was something amiss. The information had a direct bearing on assessment of the income. Therefore, it cannot be said on the basis of this decision that the AO did not apply his mind to the information or that he was obliged to make any independent enquiry. 2.8 In the case of Chhugamal Rajpal v. S.P. Chaliha [1971] 79 ITR 603 (SC), the facts are that on the basis of information received from the Commissioner that loan transactions required investigation, reasons were recorded and the assessment was reopened. The Hon'ble Court found that the affidavit filed by the ITO was vague and indefinite, therefore, the records were directed to be produced. However, only a report submitted by the ITO to the Commissioner was produced. The reasons recorded u/s 148(2) were not produced. The facts of this case are also distinguishable because detailed reasons recorded by the AO are there on record, to which we have already referred to. In ....
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....ation was received to which the AO applied his mind and he came to the conclusion that income had escaped assessment. Therefore, we are in agreement with the ld. senior DR that the AO rightly reopened the assessment by adhering to the relevant provision and following the right procedure provided under the rule. 2.11 Thus, ground nos. 2, 3 and 4 of the cross objection are dismissed. 3. Now we take up ground no. 1 that no notice had been issued to the assessee u/s 143(2). In this connection, the ld. counsel for the assessee drew our attention to the notice u/s 143(2) issued by the AO, the operative portion of which reads as under:- "Sub:- Notice u/s 143(2) for Asstt. Year 2002-03-reg- Please refer to your letter dated 30.11.2009 in respect of the above subject. You are hereby intimated that a notice u/s 148 was issued by this office on 27.03.2009 for the assessment year 2002-03 and in response to the same vide your letter dated 30.11.2009, you have submitted that the return filed by you on 20.10.2002 may be treated as return filed in response to the notice u/s 148. This notice u/s 143(2) dated 30.11.2009 is in continuation to the assessment proceedings initiated u/s 148 for the....
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....n held that once a notice u/s 148 has been issued and a return has been filed in response thereto, the AO has to issue notice u/s 143(2) giving him an opportunity to produce or caused to be produced the evidence and material to support the income shown in the return. Such a notice cannot be waived and an acquiescence by participating in the proceedings cannot be accepted as such participation was to comply with requirement of section 142(1). Further, reliance has been placed on the decision in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC), in which it is mentioned that the view that Tribunal is confined only to issues arising out of the appeal before the CIT (Appeals) takes too narrow a view of the powers of the Appellate Tribunal. Undoubtedly, the Tribunal will have discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings, the court fails to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of the assesse....
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.... the Act and its intention is to give an opportunity to the assessee to substantiate his return by producing evidence as required u/s 143(2). The subject matter of the notice is section 143(2). The assessee has complied with this notice. Mere compliance to the notice may not validate a notice which is totally illegal. But where there is only an irregularity in the notice which is otherwise in substance in conformity with the intent and purpose of the Act, the notice cannot be deemed to be invalid in the first place. Otherwise also, the assessee is regularly assessed to tax. It is aware of various notices issued under the Act. The section under which notice is issued is mentioned both in the subject matter and in the content of the letter. Therefore, minor omission of some words, as mentioned above, does not invalidate the notice because of section 292B, which has not been taken into account in cases relied upon by the ld. counsel for the assessee. Accordingly, it is held that the notice is a valid notice. Thus, ground no. 1 is dismissed. 4. Now we proceed with the appeal of the revenue. As mentioned earlier, its grievance is only in respect of deleting the addition of Rs. 14.45 la....
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....lied upon certain statements recorded by the officers of the investigation wing. After relying on certain case law, it has been held that the AO has not really made out a case of taxing the share application money received through banking channels from the persons regularly assessed to tax. Thus, the addition has been deleted. 4.3 Before us, the ld. senior DR drew our attention towards the finding in the assessment order in paragraph nos. 2 to 5. These deal with the information received, certain persons using a large number of bank accounts for furnishing accommodation entries through bank accounts held by persons of no means, the details in respect of which have been narrated at length. Thereafter, he referred to the amounts allegedly received by the assessee from a number of persons through cheque or draft drawn on the same bank, i.e., Karur Vysya Bank, Delhi, and deposited by the assessee in his bank account with Federal Bank, Karol Bagh, Delhi. Finally, he referred to the conclusions drawn by the AO, which have already been summarized by us. It is his case that the entries have been received from persons of petty means who have been used by entry operators. The state of affair....