AI Drafter 
TaxTMI 
TaxTMI 
2018 (3) TMI 1521
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....e meaning of sec. 147 of the Act. Thereafter, the assessment order u/s. 147/143(3) of the Act was passed on 25.02.2011 assessing the total income at Rs. 60,410/-. Thereafter, the CIT on perusal of the assessment record observed that the issue of share capital of Rs. 9,02,50,000/- (including huge share premium), had not been properly examined by the AO inasmuch as no independent inquiries had been carried out. Later on, on 25.03.2013, an order u/s. 263 of the Act was passed by the CIT-3, Kolkata setting aside the order passed u/s. 147/143(3) of the Act on 25.02.2011 directing the AO to do assessment afresh since according to CIT the assessment order passed by the AO was erroneous and prejudicial to the interest of the revenue. 4. In the reassessment proceedings taken up in consequence to the order u/s. 263 of the Act, the AO found that the assessee had raised share capital of Rs. 9,02,50,000/- during the year. Thereafter, the AO issued summons to the directors of the shareholder/subscriber companies to examine the identity, creditworthiness and genuineness of the alleged shareholders and genuineness of the transactions, to which there was no response. Therefore, according to the ....
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.... had not given to the assessee proper opportunity of being heard." That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of setting out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Incometax Officer had not given a proper opportunity of hearing to the assessee ?" In our opinion, there can only be one answer to this question which is inherent in the question itself : in the negative and in favour of the assessee. ....
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....them on oath to verify their credentials as director and reach a logical conclusion regarding the controlling interest. xxxvi) The AO is directed examine the source of realization from the liquidation of assets shown in the balance sheet after the change of Directors, if any after conducting the inquiries & verification as directed above, the AO should pass a speaking order, providing adequate opportunity of being heard to the assessee." 8. We note that the AO pursuant to the order of Ld. CIT while giving effect to the order of CIT has given notices to the assessee company initially on 07.11.2013 which could not be served on the assessee company for change of address and the AO acknowledges the fact that Shri Alok Jain, CA, the AR of the assessee company appeared on 26.11.2013 and furnished the new address of the assessee company. Thereafter a notice was issued on 06.02.2014 which AO notes was not complied with by the assessee company. However, the AO acknowledges that the A.R of assessee had written a letter to him on 26.02.2014 furnishing various details including a list of share holders showing allotment of shares. Thereafter, the AO has issued summons u/s. 131 of th....
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....nt payee cheques. As such, identity, genuinity and creditworthiness - all the three ingredients required were proved in the instant case." We note that despite filing voluminous documents running from pages 19 to 292 of paper book, the AO has made a passing remark that details were submitted with list of shareholders, clearly exposes the non-application of mind. Moreover, it was brought to our knowledge, notices were not issued to the existing directors of the shareholder companies and the AO did not even bother to inform the assessee company at any stage about the alleged non-compliance on the part of the directors, which fact was also pleaded before ld CIT(A) and have been recorded at page 8 of his order. We note that only on March, 2014, the AO issued summons u/s. 131 of the Act against the directors of the assessee company and too (NOT TO THE EXISTING DIRECTORs) and thereafter he framed assessment against the assessee on 31.03.2014. 9. We also note that Ld. CIT while setting aside the order of the AO which was passed u/s. 147/143(3) of the Act, the Ld. CIT gave certain guidelines to follow for conducting deep investigation. We also note that similarly placed assessees had....
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....ss and creditworthiness of the share subscribers. We note that the Hon'ble Supreme Court in three judges bench in the case of Tin Box, (supra), has held that since there was lack of opportunity to the assessee at the assessment stage itself, the assessment needs to be done afresh and thereby reversed the Hon'ble High Court, Tribunal and CIT(A)'s orders and remanded the matter back to AO for fresh assessment. So, since there was lack of opportunity as aforestated it has to go back to AO. We also note that the Hon'ble Delhi High Court in the case of CIT Vs. Jansampark Advertising & Marketing Pvt. Ltd. in ITA No. 525/2014 dated 11.03.2015 wherein after noticing inadequate enquiry by authorities below have held as under: "41. We are inclined to agree with the CIT(Appeals), and consequently with ITAT, to the extent of their conclusion that the assessee herein had come up with some proof of identity of some of the entries in question. But, from this inference, or form the fact that the transactions were through banking channels, it does not necessarily following that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would a....