TaxTMI 
TaxTMI 
TaxTMI 
2015 (2) TMI 1246
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....basis of a letter forwarded from Addl. CIT, Range 10, noted the alleged accommodation entries obtained by assessee on page 2 of assessment order and, therefore, assessee was asked to file proper confirmation of share applicants along with bank statements and income tax particulars and assessee was also required to produce individual share applicants in person. In response, the assessee filed copies of acknowledgements of I T Returns, confirmation copies and bank statements but did not produce the concerned persons from whom entries were obtained. The A.O. held that in the absence of examination of persons who had given share application money the creditworthiness of share applicants and genuineness of transaction could not be established. He held on the basis of certain statements of Shri Mukesh Gupta, Shri Rajan Jassal, and Shri Surender Pal Singh that alleged shares holders were used for providing accommodation entries, therefore, in the absence of examination of those share holders, the A.O. made addition of Rs. 10.50 lacs u/s 68 of the Act. Aggrieved the assessee filed appeal before Ld. CIT(A). Ld. CIT(A), relying upon the case law of Lovely Exports Ltd. and also on the basis o....
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....to support the contention that I had received share application money and A.O. without making comments on those documents insisted upon producing of shareholders. It was submitted that it was not fair on the part of A.O. to insist for producing the shareholders as the assessment was being framed u/s 148 and at the time of reassessment, the said shareholders were no more shareholders of the assessee company and they were not under the control of the assessee who would agree with the request of assessee to appear before A.O. Moreover, it was submitted that shareholders at their own had directly communicated with the A.O. and had confirmed about their investment in assessee company and in this respect our attention was invited to paper book pages 52, 67, 87 and 93 where copies of such confirmations were placed. It was further submitted that assessee had also requested to issue summons to shareholders for examination but A.O. did not choose to do that and merely continued to ask the assessee for producing the shareholders. Ld. A.R. submitted that Hon'ble Delhi High Court in similar circumstances has decided a similar issue in favour of the assessee in the case of CIT Vs Goel Sons P....
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....e find that since the assessee has taken legal grounds against reopening of assessment, therefore it is appropriate for us to first decide the C.O. We find that the Tribunal vide order dated 22nd Oct. 2014 in C.O. 388 in I.T.A. No. 4122 under similar facts and circumstances wherein similar reasons were record and similar satisfaction was recorded u/s 151, it had decided in favour of the assessee by holding as under: " 10. We first take up the arguments on reopening of assessment. On the issue of reopening, we find that the reasons recorded for reopening are as under. "Reasons for issuing notice u/ s 148 of the Act in the case of M/ s N. C. Cables Limited, for the A. Y. 2001-02-reg . Information has been received from the Investigation Wing of the Income Tax Department that the above named assessee is a beneficiary of accommodation entries received from certain established entry operators identified by the Wing during the period laundering for the beneficiaries and on the basis of investigation carried out and evidences collected, a report has been forwarded. I have perused the information contained in the report and the evidences gathered. The report provides details of the m....
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....ome chargeable to tax to the extent of accommodation entry mentioned above, has escaped assessment within the meaning of S. 147 of the Act. Since four years has been expired from the end of the relevant year, and assessment u/ s 143(3) of the Act was made in the case of the assessee for the said A Y, the reasons recorded above for the purpose of reopening of assessment is put up for kind satisfaction of the CfT, Delhi V, New Delhi in terms of the Proviso to Section 151 of the Act. Sd/- (ITO) Ward 13(1). The ACIT, Range 13, New Delhi For kind approval of CIT- V, New Delhi CIT- V, Delhi: "Approved" Sd/-" 10.1. A perusal of the above demonstrates that the Ld.CIT(A)-V, Delhi has written "approved" on 25.3.2008. The issue is whether such approval would meet the requirements prescribed u] s 151 of the Act. 10.2. The Mumbai 'E' Bench of the Tribunal in ITA 611/Mum/2004 Amarlal Bajaj (supra) order dt. 24.7.2013 has considered the legal position and held as follows. "5. We have considered the rival submissions and carefully perused the orders of the lower authorities and also the material evidences brought on record from both sides. We have also the benefit of peru....
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....sioner against the question "whether the Commissioner is satisfied that it is a fit case for the issue of notice under section 148 merely noted " Yes" and affixed his signature there under. On these facts, the Hon'ble Supreme Court observed that the important safeguards provided in sections 147 and 151 were lightly treated by the officer and the Commissioner. The Hon'ble Supreme Court further observed that the ITO could not have had reason to believe that income had escaped assessment by reasons of the appellant-firm's failure to disclose material facts and if the Commissioner had read the report carefully he could not have come to the conclusion that this was a fit case for issuing a notice under section 148. The notice issued under section 148 was therefore, invalid. It would be pertinent here to note the reasons recorded by the AO. "Intimation has been received from DCIT-24(2), Mumbai vide his letters dt. 22nd February, 2002 that one Shri Nitiri 1. Rugmani assessed in his charge had arranged Hawala entries in arranging loans, expenses, gifts. During the year Shri Amar G. Bajaj, Prop. Of Mohan Brothers, 712, Linking Road, Khar (W), Mumbai-52 was the beneficiary of su....
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.... in the case of United Electrical Co. Pvt. Ltd. Vs CIT 257 has held that "the proviso to sub-section (l) of section151of the Act provides that after the expiry of four years from the end of the relevant assessment year, notice under section 148 shall not be issued unless the Chief Commissioner or the Commissioner, as the case may be, is satisfied, on the reasons recorded by the Assessing Officer concerned, that it is a fit case for the issue of such notice. These are some in-builts safeguards to prevent arbitrary exercise of power by an Assessing Officer to fiddle with the completed assessment". The Hon'ble High Court further observed that "what disturbs us more is that even the Additional Commissioner has accorded his approval for action under section 147 mechanically. We feel that if the Additional Commissioner had cared to go through the statement of the said parties, perhaps he would not have granted his approval, which was mandatory in terms of the proviso to sub-section (1) of section 151 of the Act as the action under section 147 was being initiated after the expiry of four years from the end of the relevant assessment year. The power vested in the Commissioner to grant ....