AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 43
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....reby it was alleged that during the course of the search / survey operation u/s 132 / 133A incriminating documents were found in the case of Mr. Surrender Kumar Jain and his Brother Virender Kumar Jain. It was alleged that during investigation Mr. SK Jain has admitted that he is engaged in the business of accommodation entries. On this basis, the AO was of the view that the share capital of Rs. 35 Lakh received by the assessee represents its undisclosed income. The assessee submitted the return in response to the notice issued by the AO under Section 148 and also filed its objection for reopening of the assessment. The AO thereafter called the assessee to submit the evidence in support of the share capital raised. The assessee submitted the documents. However, the AO was not satisfied with the reply of assessee and accordingly he added a sum of Rs. 35 lakh as income from undisclosed sources in the hands of the assessee. 3. Aggrieved by the order of the AO the assessee filed appeal before the CIT(A). The CIT(A) vide order dated 23rd March, 2017 rejected the contention of the assessee on the issue of reopening of the assessment. However, she deleted the addition on merit holding t....
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.... 5. The assessee has also filed cross objection and has raised following grounds of appeal: 1. That on facts and in the circumstances of the respondent's case, the learned CIT(A) erred in law in holding assumption of jurisdiction by the Ld. AO to reopen the case of the respondent u/s of the Act as valid, which was barred by limitation i.e. after the expiry of four years from the end of the relevant assessment year, whereas the case of the respondent as enumerated in first proviso of Section 147 of the Income tax Act, 1961. 2. That on the facts and in the circumstances of the respondent's case, the Ld. CIT(A) erred in law in holding the validity of initiation of reassessment proceedings u/s 147 of the Income Tax Act, 1961 in the case of respondent, only on the basis of information received from the investigation wing without making any independent enquiry on the same and without having any cogent, definite material on record in support of reason to believe of the Ld. AO that certain income has escaped assessment. The respondent / cross objector craves leave to add, amend or alter any of the grounds of cross objections. 6. Taking the cross objection f....
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....on going through the reasons recorded by the AO for reopening the assessment the issue arising and the allegation can be summarized as under: a) Para 1: Introduction about investigations conducted by Investigation Wing b) Para 2: Modus operandi of entry providers c) Para 3: Information received by the AO from Investigation Wing in a Chart d) Para 4: Conclusion reached by AO that amount of Rs. 35,00,000/- is undisclosed income of assessee which has escaped assessment e) Para 5: Statement that income of assessee has escaped assessment 9. A perusal of the above reasons would show that the AO has straight away concluded that the assessee has taken accommodation entries without any reference to assessment record and application of his own mind. The AO has not brought any record or material on the basis of which any nexus could have been established between the material and the escapement of income. 10. In the instant case, the reasons recorded do not show any application of mind nor the same show any belief independently arrived at by the AO, which is the basic pre-requisite for issuing notice u/s 148. The law postulates the AO (and not....
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....at the allegation of the AO that the assessee has not produced the bank statements of the parties is factually incorrect, and this contention of the assessee company has also been appreciated by the Ld. CIT(A) in Para 7.1.4 of its order where it has been stated by the CIT(A) that the appellant has filed the relevant portion of bank statement of these shareholders, duly showing the amount issued as share application money during the year under consideration. 16. The Ld. AR further submitted that the AO had also issued notices u/s 133(6) of the Act to the parties, which had been duly replied to directly by the parties. This fact has also been stated by the AO in its order at Page 4 where the AO has observed that these parties in reply to notice under Section 133(6) have merely submitted the set of documents which the assessee had already submitted. 17. The AO, in the assessment order after making the above addition has nowhere pointed out any defect or error in any of the documents or evidences furnished by the assessee or by the parties directly in response to the notices issued u/s 133(6) of the Act. 18. The Ld. AR submitted that it is a settled law that if the assessee ha....
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....Versus Rajesh Jhaveri Stock Brokers P. Limited 291 ITR 500. 22. On the issue of merit, the Ld. DR submitted that it is a case of accommodation entry. The assessee has failed to discharge its onus about identity, creditworthiness and genuineness of the shareholders. It was submitted that mere submission of documents is not sufficient to establish the three ingredients of Section 68. In the present case, there is a statement on record admitting that these are accommodation entries provided to the assessee company and hence heavy onus lied upon the assessee to substantiate the genuineness of the transactions. 23. I have considered the rival submissions and perused the assessment order, the order passed by the CIT(A) and the Paper Book filed by the assessee. In the cross objection filed by the assessee, the only issue is reopening of the assessment. In the present case it is an admitted fact that original assessment was completed under Section 143(3). Thereafter, the AO has reopened the assessment on the allegation that assessee has received accommodation entry as per the information provided by the Investigation Wing. This assessment has been reopened after a period of 4 years f....
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.... bar that no reassessment framed under Section 143(3) will be reopened after a period of 4 years unless AO record a satisfaction that on the basis of the information received that he is of the view that there is a failure on the part of the assessee. Not mentioning of this formation of belief that there is a failure on the part of the assessee, in the reasons, means that AO has not applied his mind on this aspect and merely on the receipt of the information from Investigation Wing, he has straight away reopened the assessment. The application of mind by the AO on this aspect of failure on the part of the assessee is of paramount importance after receipt of the information so as to overcome the period of limitation from 4 years to 6 years. The information per se cannot be a reason for reopening of the assessment after 4 years. It is the satisfaction of the AO and such satisfaction is to be gathered only from the reasons recorded. In the present case, in the absence of any such satisfaction being recorded that there was a failure on the part of the assessee to disclose fully and truly all material and facts which led to escapement of income, I am of the view that reopening of the ass....
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....ring the course of the hearing before me the Ld. DR also could not point out any adverse feature or inconsistency in the documents submitted by the assessee in support of the share capital received by it. 27. In view of these documents and evidences filed by the assessee, I am of the opinion that these are sufficient to discharge its onus regarding the identity, creditworthiness and genuineness as required under Section 68 of the Act. The assessee having discharged its onus, it was upon the AO to bring material or evidence to discredit the same. In the present case, from the assessment order, it is evident that no adverse material has been brought on record except the allegation and the information received from the investigation Wing about the accommodation entry. It may be relevant to point out that except mentioning of this fact, nothing further has been elaborated after considering the reply and the evidences submitted by the assessee. The information per se received by the AO cannot be a ground for sustaining the addition. On receipt of such information, the AO can put the same to the assessee to rebut the same. The assessee having submitted explanation and evidences, rebut....
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....d creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises." 29. It is also a settled law that doubt howsoever strong cannot take place of proof as submitted by the Ld. AR relying upon the judgment of the Supreme Court in the case of Umacharan Shaw & Bros Vs. CIT [1953] 37 ITR 271. The relevant observations of the Hon'ble S....