TaxTMI 
TaxTMI 
2014 (10) TMI 431
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.... respectively through accommodation entry in its books of a/c. On the basis of this information, after recording reasons and obtaining approval of CIT(III), New Delhi, the case was reopened vide issue of notice u/s 148 dated 31-3-2008. 2.1. A copy of reasons recorded for reopening of the case was supplied to the assessee vide order-sheet entry dated 4-6-2008. As the assessee failed to discharge the onus to prove its stand and failed to produce the parties for verification, the assessing officer made addition of Rs. 7,50,000/-. 2.2. Before ld. CIT(A), the assessee, inter alia, took a ground, whether the assessing officer could lawfully assume jurisdiction to reopen the assessment u/s 147 of the act on the ground that initially the assessment was made u/s 143(3) and more than 4 years had elapsed from the end of the assessment year and, therefore, in terms of proviso to section 147, such reopening could only be done, if there was any failure on the part of the assessee to disclose fully and truly all material facts, necessary for the assessment, in that year. The assessee had also relied on various case laws in support of his submissions and submitted that 147 had been taken on mere....
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....ppreciate that there was no material on record which enabled the learned Officer to have reason to believe that income of the appellant had escaped assessment and therefore, even otherwise, assumption of jurisdiction was not in accordance with law and hence untenable. 2.3 That the learned Commissioner of Income Tax (Appeals) in upholding the illegality of the proceedings, has overlooked the various contentions raised by the appellant and has proceeded on surmises, conjectures and suspicion and as such, the findings so recorded are arbitrary, contrary to facts on record, legally unsustainable and thus unwarranted. 3. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and no facts in sustaining the addition of Rs. 7,50,000/representing share capital received by the appellant company and held to be unexplained cash credit under section 68 of the Act. 3.1 That the learned Commissioner of Income Tax (Appeals) while confirming the impugned addition, has failed to appreciate that appellant has led all the documentary evidence to discharge the burden which lay upon it under section 68 of the Act. 3.2 That the learned Commissioner of Income Tax (Appeals)....
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....hat in the said letter the assessing officer required the assessee to justify the genuineness of the transaction made with M/s Shekhawati Finance Pvt. Ltd. for Rs. 5,00,000/-; and with M/s Dinanath Luhariwal Spinning Mills Pvt. Ltd. on 5-3-2001 for Rs. 2,50,000/-. He further pointed out that in the said letter the assessing officer observed that this may be taken as reasons for reopening the case u/s 148 of the IT Act. With reference to this letter, ld. Counsel submitted that main object of assessing officer was to make fishing and roving inquiries in respect of concluded assessment. He further pointed out that in the reasons recorded, there is no whisper regarding non-disclosure of any information by the assessee, which was necessary in view of the proviso to sec. 147. He submitted that there is no allegation or whisper or finding in the reasons recorded that there is escapement of income on account of failure on the part of assessee to disclose fully and truly all material facts. Ld. Counsel for the assessee has relied on following decisions: - CIT v. Viniyas Finance & Investment (P) Ltd. [2013] 33 taxmann.com 86 (Del.); - Shivalik Binetal Controls Ltd. v. ITO in WP(C) no. 7087....
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....nd the genuineness of the transactions in relation to the share application money received by the assessee was established, then, on mere statement that the Department of Revenue, Intelligence had seized certain goods of the assessee and levied a penalty also could not be stated to be a reason for reopening of assessment of the assessee as the statement made was neither followed by the recording of a belief that the income escaped on that count or that the assessee had failed to disclose all relevant material, fully and truly, at the stage of the first assessment. Accordingly, it was held that notice of reassessment was not valid. 5.5. Ld. Counsel further referred to page 30 of the PB, wherein the written submissions, filed before CIT(A), dated 6-3-2009, are contained, in which, in para 7 it was stated that all the relevant information and documents etc., relating to the investments made, inter alia, by both the above mentioned shareholder companies for subscription and allotment of shares of Rs. 5,00,000/- in the name of M/s Shekhwati Finance Pvt. Ltd. and of Rs. 2,50,000/- in the name of M/s Dinanath Luhariwal Spinning Mills Pvt. Ltd., were filed at the time of original scrutiny....
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....the part of the assessee to disclose fully and truly all material facts, necessary assessment. Mere escapement of income is not sufficient, but it should be coupled with the omission on the part of assessee to disclose fully and truly all material facts. No doubt, once the information has been received by assessing officer regarding accommodation entries being taken by assessee from the Investigation Wing, then he has no course of action open except to resort to the provisions of section 147. However, in case of assessment completed u/s 143(3) after four years, mere escapement of income, cannot give jurisdiction to him to reopen the assessment. The reasons recorded by assessing officer have to be examined to find out whether the mandate of proviso to section 147 in such cases have been met or not. Unless the assessing officer demonstrates in the reasons recorded that there was failure on the part of the assessee to disclose fully and truly, all material facts, necessary for assessment, the reopening cannot be justified under law. The position of law on this issue is adumbrated in the decisions relied upon by ld. Counsel for the assessee noted earlier. 7.1. In the backdrop of above....