2014 (12) TMI 95

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....iled to dispose of the objections of the assessee, against the initiation of proceedings u/s 147/148 in writing." 2. Briefly stated the facts fiving rise to this appeal are that the assessee filed return for AY 2003-04 declaring nil income on 12.1.2004 and the same was processed u/s 143(3) of the Income Tax Act. Subsequently, information was received from the Investigation Wing of the department that the assessee has received bogus accommodation entries. Accordingly, proceedings u/s 147 of the Act were initiated and a notice u/s 148 of the Act dated 29.3.2010 was issued. The assessee, vide its letter dated 06.08.2010, submitted that the return of income already filed may be treated as return filed in response to notice u/s 148 of the Act. The AO also provided a copy of the reasons recorded for reopening of the assessment to the assessee. On 14.9.2010 the assessee filed objections to the reopening of the assessment which were duly disposed of vide order dated 17.9.2010. 3. The AO proceeded to frame reassessment and held that the assessee has received bogus accommodation entries and the assessee has arranged funds through prohibited means. Accordingly, the assessee was denied b....

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.... not an income of the assessee from the property held under the trust where the same was in the nature of voluntary contributions but the impugned amount was income of the assessee from undisclosed sources which was certainly chargeable to tax. The DR further contended that in this situation, the AO was right in initiating the proceedings u/s 147 and 148 of the Act. 6. On careful consideration of above submissions and contentions, from reassessment order dated 10.12.2010 completed u/s 144/147 of the Act, we observe that the reasons recorded by the AO for issuance of notice u/s 148 of the Act reads as under:- "'Information received from the Director of Income Tax (Investigation), New Delhi vide his letter dated 2.03.2006 that M/s Monarch Educational Society has received the following amounts in its bank a/c with Bank of Punjab, Rohini during the period 01.04.2002 to 31.03.2003 relevant to the asstt. year 2003-04. Date Amount Cheque No. Name of Entry Provider Bank of Entry Provider 20.09.2002 101000 00253218 Mestro Mkt. Ltd. SB Indore Rohini 20.09.2002 101000 00253120 Rabik Exports Ltd. -do- 20.09.2002 101000 9058 Shattarchi Fin & Leasing Ratnakar ....

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....d for benefits u/s 11 and 12 of the Act. We also note that the AO has made addition of Rs. 26,10,000/- with regard to unsecured loan by holding that the assessee has not furnished confirmation with the name and address of the parties from whom unsecured loans have been received. The issue of unsecured loan has not been mentioned in the reasons recorded for initiation of proceedings u/s 147 of the Act and for issuance of notice u/s 148 of the Act. 9. For the sake of clarity and transparency in our findings, we find it appropriate to reproduce relevant operative part of the assessment order at page 56 of the appeal folder which reads as under:- "In view of the above statement and modus operandi of the entry operators, information u/s 133(6) of the Act was called for from the bankers of the concerns from whom the assessee has received funds. The information i.e. bank statement received indicates that there are cash deposits, or credit entries of approx. similar amounts before the clearance of cheque issue to the beneficiaries. The companies from whom the assessee has received funds are controlled by Shri Mahesh Garg, whose statement has been incorporated above and who along with....

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....ct. 11. Ld. DR has not disputed this fact that the AO has recorded reasons in regard to donations received from 12 donors amounting to Rs. 16,61,000/- and the detail with regard to the same was furnished by the assessee along with the return of income in the statement of account. In this situation, it can safely be presumed that the detail of donors as alleged by the AO in the reasons recorded u/s 147 of the Act for issuance of notice u/s 148 of the Act, was very well available before the AO at the time of original assessment. We also observe that the AO has initiated proceedings u/s 147/148 of the Act on allegation of alleged donation of Rs. 16,61,000 but at the same time, we also observe from the reassessment order that the AO has not made any addition pertaining to the impugned donations as mentioned in the reasons recorded but the AO has made the additions in regard to unsecured loans of Rs. 26,10,000/- which was not mentioned in the reasons recorded. 12. Ld. DR has placed reliance on the decision of Hon'ble Jurisdictional High Court of Delhi in the case of Rajat Export & Import (P) India Ltd. vs ITO (2012) 341 ITR 135 (Del) and submitted that initiation of reassessment p....

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....ails of donations before the AO in the details filed along with return of income. 14. In view of above, we observe that the AO issued notice alleging the amount received from 12 donors amounting to Rs. 16,61,000 and in the reassessment order dated 10.12.2010 passed u/s 147/144 of the Act, the AO has not made any addition in this regard. Per contra, we also observe that the AO has made addition of Rs. 26,10,000 in the reassessment order (supra) with regard to unsecured loans shown by the assessee in the balance sheet but in the reasons recorded by the AO, the issue of unsecured loan has not been mentioned. In these circumstances, we can safely presume that the AO issued notice u/s 148 of the Act on the basis of same material which was before him during the assessment proceedings and the AO made additions on account of unsecured loans which has not been mentioned in the reasons recorded for issuance of notice u/s 148 of the Act. From bare reading of reasons recorded, we observe that the AO has simply reproduced details received from the Director of Income Tax, Investigation vide his letter dated 2.3.2006 and in the last operative part, the AO has recorded his satisfaction without ....