TaxTMI 
TaxTMI 
2018 (6) TMI 1176
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....akharchi/shell/paper companies was nothing but unaccounted income of the assessee which was brought back in the business in the guise of share capital. He accordingly reopened the assessment and issued a notice under section 148 after recording the reasons. In response to the said notice, the return of income was filed by the assessee on 26.04.2016. The assessee also obtained a copy of reasons recorded by the AO for reopening the assessment and raised its objection by filing a petition on 27.05.2016. The Assessing Officer did not find merit in the said objections and overruling the same by a speaking order passed on 04.07.2016, he proceeded to complete the assessment under section 143(3)/147. In the assessment so completed vide an order dated 20.09.2016, the total income of the assessee was determined by the AO of Rs. 47,06,220/- after making the addition of Rs. 40,00,000/- under section 68 by treating the share capital and share premium amounts as unexplained cash credit and made an addition of Rs. 80,000/- under section 69C on account of unexplained expenditure incurred on payment of commission for obtaining the accommodation entry. 3. Against the order passed by the AO under ....
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....e Income Tax Act, 1961. The AR has brought on record the case law of Orient Craft Ltd(supra) & Tupperware India (P) Ltd (supra) The Hon'ble High Court, Delhi in the case of Commissioner of lncome Tax- V v. Orient Craft Ltd [2013] 354 ITR 536 (Del) has held that The assessee's contention that even an assessment made under section 143(1) of the Act can be reopened under section 147 if the Assessing Officer has 'reason to believe' that income chargeable to tax has escaped assessment, is sound. It is true that no assessment order is passed when the return is merely processed under section 143(1) and an intimation to that effect is sent to the assessee. However, it has been recognized by the Supreme Court itself in Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd [2007] 291 ITR 500/161 Taxman 316 (SC), that even where proceedings under section 147 are sought to be taken with reference to an intimation framed earlier under section 143(l), the ingredients of section 147 have to be fulfilled; the ingredient is that there should exist 'reason to believe' that income chargeable to lax has escaped assessment. This judgment, does not give a carte blanche to the Assessi....
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....aimed by assessee is higher than what is found in a similar line of business - AY 2005-06 - Held that - No allegation has been made that that there was any failure on part of assessee to fully and truly disclose material facts necessary for assessment for that AY. This ex facie would amount merely to a change of opinion. Therefore, notice issued u/s 148 and impugned order of assessment is set aside. I have also considered the ratio decided by the Hon'ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. supra. In the said case also, there was no mention in the reasons recorded that there was failure on the part of the assessee to disclose fully and truly all material facts but, in the counter-affidavit filed before Hon'ble Delhi High Court, such assertion was made. Hon'ble Delhi High Court did not accept the Revenue's contention and held that the notice issued u/s 148 based on the reasons recorded supplied to the petitioner cannot be sustained. The finding of their Lordships reads as under:- "Held, allowing the petition, (i) that the reasons recorded did not indicate the failure on the part of the petitioner to disclose fully and truly all ....
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....ning of assessment beyond the period of four years from the end of the relevant assessment year was not justified because (i) there was no failure on the part of the assessee to disclose fully and truly all material facts and (ii) there was no whisper in the reasons recorded that there was any failure on the part of the assessee to disclose all material facts. In view of the above, respectfully following the above two decisions of Hon'ble Delhi High Court, we quash the notice issued u/s 148 of the Act. Since the notice issued u/s 148 is quashed, the assessment order passed in pursuance to such notice is also quashed. Once the assessment order itself has been quashed, the other grounds raised by the assessee in its appeal do not require any adjudication on merits". The AR has further brought on record the ratio decided by the Jurisdictional Kolkata bench of ITAT in the case of DCIT, Circle-43, Kolkata vs M/s Jaytee Exports Kolkata in ITA Nos.35 & 36/Kol/2011 dt.03-05-2013 In this case the assessee challenged the reopening of assessment before the Ld CIT(A) as bad in law on the ground that the assessment year in question was A.Y 2003-04 and the notice u/s 148 was is....
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....o decided by the Hon'ble Delhi High Court in the case of Pr.CIT-4, Delhi vs G & G Pharma India Ltd in ITA No.545/2015 dt.08-10-2015 in which the Hon'ble Delhi High Court has considered the ratio decided by the Honble Supreme Court in the case of Phool Chand Bajrang Lal vs Income-tax Officer (1993) 203 ITR 456 SC. In this case the main thrust of the submission of Mr Sawhney is that as was in the case of India Terminal Connector System (supra), in the present case as well, there was specific information regarding the name of the entry provider, the date on which the entry was taken, the cheque details as well as the amount credited to the account of the assessee. He accordingly submitted that this by itself constituted sufficient material for the AO to form an opinion that the assessee company has introduced his own unaccounted money in its bank account by way of accommodation entries. Mr Kapil Goel, learned counsel for the assessee, placed reliance on other decisions of this Court including CIT vs Pradeep Kumar Gupta (2008) 303 ITR 95; the decision dt.27-03-2015 in WP (C) No.5330 of 2014 (Krown Agro Foods Pvt. Ltd vs ACIT); the decision dt. 04-08-2015 in ITA No....
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.... applicable in this case. In its order The Hon'ble Kolkata bench of ITAT has held as under: The submissions of the learned counsel for the assessee before us was that the reasons recorded by the AO were mere information received from D.I.T.(Investigation), New Delhi. There was no independent application of mind by the AO based on which it can be said that he arrived at the satisfaction that the income of the assessee is chargeable to tax has escaped assessment. It was submitted in ITA No.660/Kol/2011 Great Wall Marketing (P) Ltd., in which initiation of proceedings u/s 148 was quashed. In this order, it was further held that in A.Yr.2002-03 information received by the AO was vague and uncertain and cannot be construed to be sufficient and relevant material on the basis of which reasonable person can form belief regarding escapement of income. Reliance was placed by the learned counsel for the assessee on the decision of the Hon'ble Delhi High Court in the case of CIT vs Insceticides (India) Ltd 357 ITR 330 and CIT vs SFIL Stock Broking Ltd. 325 ITR 285 (Delhi). In both the aforesaid decisions the reasons recorded by the AO for initiating proceedings u/s 148 of....
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.....O given/issued u/s 148 to the assessee. I have also considered reasons recorded by the A.O for issuance of the notice. I think this case is squarely covered by the ratio decided by the Jurisdictional Bench of ITAT in the case of DCIT, Circle-43 vs. Jaytee Exports (supra) and the ratio decided by the Jurisdictional Bench of ITAT in the case of Great Wall Marketing Pvt. Ltd. (supra) and the ratio decided by the Hon'ble Supreme Court in the case of Chhugamal Rajpal (supra) and Dharia Constructions Company (supra). Accordingly, respectfully following the ratio decided in above mentioned/discussed cases, assessee's appeal on Ground No.1 and 10 are allowed. 4. Keeping in view his decision rendered on the preliminary issue cancelling the assessment made by the AO under section 143(3)/147, the Ld. CIT(A) did not adjudicate upon the other grounds raised by the assessee challenging both the additions made by the AO under section 68 and 69C on merit. 5. Aggrieved by the order of the Ld. CIT(A), the revenue has preferred this appeal before the Tribunal on the following grounds: "1. That on the facts and circumstances of the case, the Ld. CIT(A) erred in law in allowing the tech....
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....43(3) and since the return of income filed by the assessee in the present case was processed by the AO under section 143(1) without there being any assessment under section 143(3), the first proviso to section 147 is not applicable in the present case. He has contended that the Ld. CIT(A) thus is not justified in holding the reopening of assessment by the AO to be invalid by relying on the said proviso and this position which is very clearly evident from the record is not disputed even by the learned counsel for the assessee. He however has invited my attention to the relevant portion of the impugned order of the Ld. CIT(A) to point out that the reopening of assessment was held by the Ld. CIT(A) to be invalid even on other grounds and the revenue has not challenged the same specifically in the grounds raised in the present appeal. He has also invited my attention to the reasons recorded by the AO for reopening as given on page no 45 and 46 of the Paper Book to contend that the assessment was reopened by the AO merely on the basis of information received and there was no independent application of mind by the AO based on which it could be said that he had arrived at the satisfaction....