TaxTMI 
TaxTMI 
2018 (12) TMI 912
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....s. Supersonic Technologies Pvt. Ltd., Delhi. 3. The facts of the case are that original return of Income in this case was filed on 20.10.2007 at NIL income. The notice under section 148 of the Income Tax Act, was issued on 25.03.2014 after recording the reasons and taking prior approval from the competent authorities. The assessee in response to the statutory notice vide letter dated 10.04.2014 submitting therein that the original return filed may please be treated as return filed in response to the notice under section 148 of the I.T. Act and also requested to provide reasons recorded, which were duly provided to it. The assessee also filled its objections which were disposed off. The A.O. issued statutory notice which were complied by the assessee and filed details as called for. The A.O. after discussing the case with the assessee, accepted the returned income and completed the re-assessment order under section 147/143(3) of the I.T. Act, 1961, on Dated 30.06.2014. 3.1. The Ld. Pr. CIT on examining the assessment record noticed that though the assessment was reopened under section 148 of the I.T. Act on the allegation of accommodation entry taken from Shri S.K. Jain gro....
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....zed material not only at the time of re-assessment but also at the time of recording reasons for re-assessment. The Learned Counsel for the Assessee referred to the reasons recorded by the A.O. wherein there is a mention of accommodation entries provided by the group of Shri S.K. Jain who had floated hundreds of bogus companies to provide accommodation entries in lieu of cash. 3.2. The assessee-company also submitted that during the course of assessment proceedings, assessee-company was asked to furnish income tax returns, confirmations, financials and bank statements, which were duly complied with by the assessee-company. The assessee-company has proved the creditworthiness of the Investors before A.O. Independent notices were issued under section 133(6) of the I.T. Act to the Investor companies by the A.O. The facts were examined based on information provided by the assessee-company. The proceedings under section 263 would amount to the consideration of material which has already been considered by the A.O. during the assessment proceedings under section 147 read with section 143 of the I.T. Act, and if in case the documents are not available in the files of A.O, then, there i....
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....various beneficiary companies were tabulated for the charge of CIT-8. The A.O. has made mentioned details/table as the basis for reopening of the assessment which is clear from the reasons recorded for issue of notice under section 148 of the I.T. Act. From the entry No.230, the name of the assessee-company an amount of Rs. 22 lakhs have been mentioned. It would shows that A.O. did not verify or examine the seized material relating to the assessee. The Ld. Pr. CIT also noted that as there is no statutory notice under section 143(2) prescribed in the Act and only non-statutory notice is prescribed, the purpose of which is to intimate the assessee that the case has been selected for scrutiny and the notices issued on dated 11.06.2014 and 19.06.2014 clearly proves that the case of the assessee has been selected for scrutiny, such show cause notices are nothing but notice under section 143(2). of the I.T. Act. It is also noted by the Ld. Pr. CIT that even though no formal notice under section 143(2) was issued by the A.O, in the letters dated 11.06.2014 and 19.06.2014 it was specifically mentioned that in the absence of the requisite details the assessment would be completed under sect....
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....eneficiary of accommodation entries provided by the group of Shri Surendra Kumar Jain, Shri Rakesh Gupta, Shri Vishesh Gupta, Shri Navneet Jain and Shri Vaibhav Jain. The accommodation entries have been provided to various assessees who were re-routing their unaccounted cash through these accommodation entries. Therefore, all the relevant details were before A.O. at the time of reopening of the assessment. PB-17 to 24 are the information called by the A.O. from all Investor Companies under section 133(6) of the I.T. Act at re-assessment stage. PB-25 is objections filed by assessee for reopening of the assessment under section 148. PB 26-27 is queries raised by the A.O. at re-assessment stage along with documents of Investor companies. PB-35 is details of share applicant companies filed. PB-36 is objection decided under section 148 by the A.O. PB-37 to 139 are replies with documents filed by Investor Companies directly to the A.O. under section 133(6) of the I.T. Act. If the CD is not considered by the A.O. at the time of re-assessment order as per notice under section 263 of the I.T. Act, the re-assessment order is bad in law. Learned Counsel for the Assessee relied upon the ....
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....the CIT must give and record a finding that the Order/Inquiry made is erroneous. An Order is not erroneous and prejudicial to the interests of Revenue, unless the CIT hold and records reasons why it is erroneous." Learned Counsel for the Assessee relied upon decision of Hon'ble Delhi High Court in the case of CIT vs. New Delhi Television Ltd., (2014) 360 ITR 44 (Del.) in which it was held that "once the claim was considered and examined by the A.O, Commissioner cannot set aside the Order without recording contrary finding. This will be contrary to Section 263 of the I.T. Act." The CIT did not make any investigation by examining the Investors. He has relied upon the Order of ITAT, Delhi Bench in the case of Tirupati Infraprojects Pvt. Ltd., vs. Pr. CIT, Central-II, New Delhi 2016-(5)-TMI-1290-ITAT-Delhi. He has also relied upon the Judgment of Hon'ble Delhi High Court in the case of Globus Infocom Ltd., vs. CIT-IV, Delhi (2014) 369 ITR 14 (Del.). Learned Counsel for the Assessee has also relied upon the Judgment of Hon'ble Delhi High Court in the case of Pr. CIT-8 vs. Shri Jai Shiv Shankar Traders Pvt. Ltd., 2015-(10)-TMI-1765-Delhi-High Court in which it was held that "no notice....
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....d several legal issues/objections before Pr. CIT challenging the validity of the re-assessment proceedings. Even before the Tribunal at the time of filing of the appeal, this issue has neither been raised in the grounds nor has any additional ground been raised so that Department could have got the opportunity to object or respond to such a plea after verifying the record in this regard. Therefore, request of Counsel for Assessee was rejected. It is also noted that the impugned order demonstrated that the issue was neither enquired into nor was verified by the A.O." The Ld. D.R. similarly relied upon decision of ITAT, Delhi Bench in the case of Surya Financial Services Ltd., vs. PCIT vide ITA.No.2915/Del./2017, Dated 08.01.2018 reported in 2018-TIOL-74-ITAT-Del. The Ld. D.R. also relied upon decision of ITAT, Delhi Bench in the case of Shankar Tradex Pvt. Ltd., Delhi vs. Pr. CIT-8, New Delhi, vide ITA.No.2999/Del.2017 Dated 16.04.2018 in which similar issue was decided against the assessee. The Ld. D.R. submitted that A.O. has not taken into consideration the material seized during search in the case of Shri S.K. Jain. Therefore, Explanation-2 to Section 263 of the I.T. Act i....
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.... proceedings under section 263 of the I.T. Act that A.O. has not issued notice under section 143(2) of the I.T. Act at re-assessment proceedings. The Ld. Pr. CIT mentioned in the impugned order that assessee was intimated by notices dated 11.06.2014 and 19.06.2014 that in the absence of requisite details assessment would be completed under section 144 of the I.T. Act. The Ld. Pr. CIT treated the same notices as notice issued under section 143(2) of the I.T. Act. The Ld. Pr. CIT, however, admitted that no formal notice under section 143(2) have been issued to the assessee before completion of the re-assessment proceedings. The Hon'ble Delhi High Court in the case of CIT vs. CPR Capital Services Ltd., (2011) 330 ITR 43 (Del.) held as under : "The Tribunal held that no notice under section 143(2) of the Income-tax Act, 1961 was prepared and served upon the assessee. On appeal: Held, dismissing the appeal, that mere noting in the order sheet would not suffice and the copy of the notice issued under section 143(2) of the Act was not available on record. Since the Department had failed to produce the copy the notice under section 143(2) of the Act there was no option bu....
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....iefly note that A.O. examined entire seized material at the time of recording reasons and re-assessment stage. The assessee produced sufficient evidences at the re-assessment proceedings to prove the identity of the creditors, their creditworthiness and genuineness of the transaction. The A.O. also made direct enquiry by issuing summons under section 133(6) of the I.T. Act to the Investors who have also replied directly to the A.O. Therefore, A.O. rightly accepted the credits as genuine. In view of the above finding, there is no need to give a finding in detail on merits. In view of the above, we allow the appeal of assessee. 7. In the result, ITA.No.2269/Del./2017 of the Assessee is allowed. ITA.No.2857/Del./2017 - M/s. SPJ Hotels Pvt. Ltd., New Delhi 8. This appeal by Assessee has been directed against the Order of the Ld. Pr. CIT-8, New Delhi, Dated 22.03.2017, for the A.Y. 2007-2008 under section 263 of the I.T. Act, 1961. 9. Briefly the facts of the case are that in this case similar information about entry operators and their beneficiaries of Delhi was received from the O/o. DIT, (Inv.)-II, Delhi, along with detailed report giving working of entry operators with a....
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....s. 1 crore. Show cause notice under section 263 of the I.T. Act was issued stating therein that assessee has received Rs. 50 lakhs each as accommodation entries from Hillridge Investments Ltd., and M/s. Vogue Leasing & Finance Private Limited. Explanation of assessee was called for because the assessment order was erroneous in so far as it is prejudicial to the interests of the Revenue because the A.O. has not examined the seized material and has failed to tax the amount of Rs. 1 crore as unexplained credit in the books of account of the assessee. The assessee filed reply in which it was briefly explained that the A.O. in the reasons for reopening of the assessment recorded that there is escapement of income of Rs. 10 lakhs. Therefore, entire proceedings are based on non-application of mind by the A.O. The assessee requested for crossexamination to the statement of Shri S.K. Jain. The Pr. CIT noted that correct amount of accommodation entries from both these companies are Rs. 50 lakhs each instead of Rs. 5 lakhs. The Ld. Pr. CIT also noted that A.O. failed to consider the seized material found during the course of search in the case of Shri S.K. Jain, therefore, A.O. passed t....
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....led at page-1 of paper book. Same reads as under : "Reasons for issue of notice u/s 148 of the I.T.Act, 1961 in the case of M/s. SPJ Hotels (PV Limited, PAN AAKCS7722C for the A.Y. 2007-08 - Reg. 25.03.2014 : Information about entry operators and their beneficiaries of Delhi has been received from the office of the DIT .(Inv.)-II, New Delhi vide letter F. No. DlT(Inv)-148/2011-12/7539 dated 21,03.2012 and F. No. DIT (Inv)-II/U/s 148/ 2012-13/196 dated 12.03.2013 along with detailed report giving working of entry operators with a list of beneficiaries. After making inquiries, the Addl. Directorate of Income Tax, Unit - VI of Investigation, in his report has established large amount of tax evasion in the transactions between entry operators and the beneficiaries. It is revealed from the list that the assessee company M/s. SPJ Hotels (P) Limited (termed as beneficiary) during the previous year 2006-2007 relevant to Assessment. Year 2007-2008 had taken accommodation entries totaling Rs.l0,00,000/- from the persons/parties (termed as entry operators). These entries have been investigated by the Investigation Wing and found to be given as accommodation entries ....
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....ount of accommodation entries of Rs. 5 lakhs each from M/s. Hillridge Investment Pvt. Ltd., and M/s. Vogue Leasing & Finance Pvt. Ltd., based on information and seized material received from Investigation Wing. However, the assessee explained before A.O. that amount in question is Rs. 20 lakhs from four parties. The A.O. in the re-assessment order made addition of Rs. 20 lakhs on account of unexplained credit on account of accommodation entries received from four parties and also made addition of Rs. 40,000/- on account of Commission paid to entry operators. On the basis of the same material, the Pr. CIT initiated the proceedings under section 263 of the I.T. Act on the reasons that amount in question is not Rs. 10 lakhs received from these two companies, but, it is Rs. 50 lakhs each i.e., Rs. 1 crore. Thus, the facts mentioned in the reasons for reopening of the assessment are incorrect and non-existent. The Hon'ble Punjab & Haryana High Court in the case of CIT vs. Atlas Cycle Industries (1989) 180 ITR 319 (P & H) held as under : "Held (i) that the Tribunal was right in cancelling the reassessment as both the grounds on which the reassessment notice was issued were not f....
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....d 24.03.2017, for the A.Y. 2007-2008 under section 263 of the I.T. Act, 1961. 16. The facts of the case are that notice under section 148, dated 28.03.2014 was issued to the assessee after recording the reasons and obtaining approval of CIT-3, New Delhi. In compliance to the notice under section 148, the assessee has furnished return on 01.05.2014. The assessee stated before A.O. that the income declared in the ITR under section 148 remain the same as declared in the original return of income filed under section 139 of the I.T. Act Dated 30.10.2007. It was further stated that income of Rs. 33,79,596/- as declared in the return of income under section 139 has been accepted and assessed to tax under section 143(3) vide Order dated 27.11.2009. The A.O. after considering the material on record and summons issued under section 131(1) of the I.T. Act and notice under section 133(6) and other material on record, accepted the return of income and passed the re-assessment order under section 143(3) r.w.s. 147 of the I.T. Act, Dated 30.03.2015. 17. The Ld. Pr. CIT found the said re-assessment order to be erroneous in so far as it is prejudicial to the interests of the Revenue. It is no....
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.... The re-assessment order was set aside and restored to the A.O. for passing the order afresh as per law. 18. The assessee in the present appeal has challenged the Order under section 263 of the IT. Act. The assessee also moved an application for admission of the following additional ground. "That having regard to the facts and circumstances of the case, Ld. CIT ought not to have revised reassessment order under section 147/143(3) as the said re-assessment order was void and bad in law due to illegal assumption of jurisdiction." 18.1. The Learned Counsel for the Assessee submitted that additional ground is legal in nature and no fresh facts are to be investigated. The additional ground goes to the root of the matter and therefore, prayed that the same may be admitted for disposal of the appeal. Learned Counsel for the Assessee relied upon the decision of Hon'ble Supreme Court in the case of NTPC Limited vs. CIT (1998) 229 ITR 383 (SC) and CIT vs. Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) and decision of Hon'ble Punjab & Haryana High Court in the case of VMT Spinning Co. Ltd., vs. CIT, Ludhiana and another (2016) 389 ITR 326 (P & H). 19. On the oth....
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....m two parties. However, in the reasons name of none of parties have been mentioned. In the original assessment proceedings an amount of Rs. 2.20 crores have been mentioned. Therefore, in the reasons the facts have been wrongly mentioned. All the facts available on record were considered in the re-assessment proceedings, therefore, no new material has been brought on record for reopening of the assessment. All incorrect and non-existing facts have been mentioned in the reasons for reopening of the assessment. The amount in question is also wrongly mentioned in the reasons. In the books of account of assessee, assessee has shown to have received share application money from two Investors in a sum of Rs. 2.20 crores and not Rs. 2.90 crores. Learned Counsel for the Assessee referred to various replies filed before A.O. at original assessment stage as well as in the reassessment proceedings in which it was clearly highlighted that there is application of mind from the side of the A.O. to frame the re-assessment order. PB-300 and 301 is report of the Inspector to show that notice under section 133(6) have been served upon M/s. Vogue Leasing & Finance Pvt. Ltd. PB- 319 is the report....
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....ch Ld. Pr. CIT should not assume jurisdiction under section 263 of the I.T. Act. 21. On the other hand, Learned D.R. reiterated the submissions made in the case of M/s. Supersonic Technologies Pvt. Ltd., Delhi. in ITA.No.2269/Del./2017 hereinabove. The Learned D.R. submitted that seized material was not considered by the A.O. Summons under section 131 were not complied with. All material facts were not disclosed. A.O. took the figure of Rs. 2.90 crores in the reasons based on information received from Investigation Wing. Therefore, Ld. Pr. CIT correctly invoked jurisdiction under section 263 of the I.T. Act. Assessee cannot challenge validity of re-assessment proceedings under section 263 of the I.T. Act. 22. We have considered the rival submissions and perused the material available on record. It is well settled that the Ld. Pr. CIT while exercising power under section 263 of the I.T. Act could not revise the assessment order which was illegal, bad in law and non-est in the eye of Law. The assessee can challenge the validity of the re-assessment order referred to under section 263 of the I.T. Act being non-est and illegal. The case Laws relied upon by the Learned Couns....
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.... assessment or to invoke jurisdiction under section 263 of the I.T. Act, which would also show that there is totally non-application of mind on the part of the A.O. to reopen the assessment in the matter. These facts are sufficient to hold that reopening of the assessment was bad in law, illegal and non-est, therefore, such order could not be revised in the proceedings under section 263 of the I.T. Act. We, accordingly set aside the Order of the Ld. Pr. CIT passed under section 263 of the I.T. Act and quash the same. In this view of the matter, there is no need to decide the issue on merit. However, we may note briefly that documentary evidences were filed before A.O. at original assessment stage as well as at the stage of re-assessment to prove genuine credit in the matter which have accepted by the A.O. after considering and examining the material on record and calling explanation from the Investors under section 133(6) of the I.T. Act. In this view of the matter, we allow the appeal of assessee. 24. In the result, ITA.No.2527/Del./2017 of the Assessee is allowed. ITA.No.3301/Del./2017 - M/s. Superior Buildwell Pvt. Ltd., Delhi. 25. This appeal by Assessee has been di....
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.... of the assessee wherein the shares were originally issued to Shalini Holdings Ltd on 25.08.2008 were transferred on 25.03.2010 in favour of Frank Merchantile Private Limited. Seized documents are reproduced in the impugned order. The Ld. Pr. CIT noted that as against the entry in the name of assessee, an amount of Rs. 2 crores have been mentioned. However, on verification of the seized material, it was found that total amount of Rs. 1 crore as per details given in the show cause notice is there and not Rs. 2 crores. It would show that A.O. did not verify and examine the seized material relating to assessee and accepted the explanation of assessee without examining the seized paper. The Ld. Pr. CIT, therefore, found that the seized documents have not been examined and verified by the A.O. Therefore, re-assessment order was set aside and matter was restored to the A.O. for passing the Order afresh as per provisions of Law. 27. The assessee in the present appeal challenged the Order under section 263 of the I.T. Act as well as filed an application for admission of additional grounds which reads as under : 7.(a) On the facts and circumstances of the case, the learned Pr....
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..... is filed at page 279 of the paper book to show that no notice under section 143(2) have been issued. He has referred to PB-20 which is reasons for reopening of the assessment in which A.O. has mentioned wrong facts of taking accommodation entry of Rs. 2 crores. However, assessee has received share capital/premium of Rs. 1 crore only in assessment year under appeal. No name of the person from whom assessee received Rs. 2 crores have been mentioned in the reasons. The show cause notice under section 263 have been issued for a lesser amount of Rs. 1 crore. If reasons were incorrect for reopening of the assessment, then, re-assessment proceedings would be invalid and non-est, therefore, Ld. Pr. CIT has no power to review the same under section 263 of the I.T. Act. Learned Counsel for the Assessee referred to several replies filed before A.O. to show all documentary evidences were examined by the A.O. at re-assessment proceedings. There is no co-relation of the seized documents with the assessee. Since the A.O. recorded incorrect reasons for reopening of the assessment and that no notice under section 143(3) have been issued, therefore, re-assessment order is invalid and as such, same....