AI Drafter 
TaxTMI 
TaxTMI 
2018 (2) TMI 1640
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....(i) The lower authorities had erred in treating the share application moneys of Rs. 12,50,000 from three Private Limited Companies, viz. (a) Rs. 5,00,000 from Victoria Advertising Pvt Ltd., (ii) Rs. 5,00,000 from Parivartan Capital & Financial Services Pvt. Ltd. and (iii) Rs. 2,50,000 from I.G. Properties Pvt. Ltd. as being the alleged undisclosed income of the appellant for this year. (ii) The lower authorities had erred in not appreciating that the said share application moneys had been received by account payee cheques and as such the appellant had discharged the burden on this account in the light of the judgment of Patna High Court in the case of Additional CIT V s Bahri Brothers Pvt. Ltd. (1985) 154 ITR 244 and the judgment o....
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....0 had been dismissed by the Tribunal. 4. The CIT (A) had erred in upholding the stand of the Assessing Officer and had dismissed the appeal of the appellant for this year." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee company has originally filed return of income for AY 2000-01 on 30.11.2000 declaring income of Rs. 54,470/- which was processed on 25.01.2002. Subsequently, assessment was reopened on the basis of investigation report received from Directorate of Income-tax (Inv.), New Delhi regarding accommodation entries provided by some entry operator. AO proposed to reopen the assessment and after taking necessary approval, issued notice u/s 148 of the Income-tax Act, 1961 (fo....
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....ings u/s. 148 are illegal and invalid in the absence of recording of proper satisfaction and existence of any tangible material." 6. Since the additional ground sought to be raised by the assessee is a legal ground which goes to the roots of the case, the assessee is allowed to raise the additional ground challenging the reassessment proceedings u/s 148 of the Act as illegal, null and void. 7. First of all, we would discuss the sustainability of the legal ground that : "On the facts and circumstances of the case, reassessment proceedings u/s. 148 are illegal and invalid in the absence of recording of proper satisfaction and existence of any tangible material." raised by the assessee company as an additional ground. The ld.....
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.... basis of investigation report prepared by the Directorate of Income-tax (Inv.) and the AO has not laid hand on any tangible or incriminating material on the basis of his own enquiry. AO has also relied upon some enquiries conducted for AY 1999-00 in case of assessee company and proceeded to have reason to believe that the amount of Rs. 12,50,000/- chargeable to tax has escaped assessment for AY 2000-01. 10. The ld. AR for the assessee company also drew our attention towards decision rendered by the coordinate Bench of the Tribunal in assessee's own case for AY 1999-00 in ITA No.4670/Del/2007 order dated24.10.2008 which was also reopened on the same investigation report by the Directorate of Income-tax (Inv.) wherein the assessment was q....
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.... the company was credited in the account and that the shares were issued. On appeal: Held, dismissing the appeal, that if the shareholders had acquired the money illegally, the assessee could not 'be held liable. There was nothing on record to show that the money belonged to the assessee itself and the Department could only proceed against the shareholders. No question of law arose." 13. So, the ratio of the judgment in CIT vs. K.C. Pipes Pvt. Ltd. (supra) is in case illegal money of the shareholder is invested with the assessee company, the assessee company cannot be made liable and the Revenue authorities can proceed against the shareholder. 14. So, in view of what has been discussed above, we are of the considered view....