TaxTMI 
TaxTMI 
2019 (1) TMI 854
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....nder section 147 of the Act and, further completion of assessment under section 143(3)/147 of the Act' without satisfying the statutory pre-conditions for initiation of the proceedings and, completion of assessment under the Act. 2.1 That the learned Commissioner of Income Tax (Appeais) has further erred in law and on facts in sustaining the initiation of proceedings u/s 147 of the Act as there was no tangible material to form a belief that the income of Assessee Company had escaped assessment. 2.2 That further, the reasons recorded were mere reasons to suspect and were just to make fishing and roving enquiries, as no independent enquiry was conducted by the assessing officer before issuing such notice under section 148 and as such the proceeding so, initiated under section 148 was a mere pretence and was liable to be quashed as such. 3. That the learned Commissioner of income Tax (Appeals) has further erred in law and on facts in sustaining an addition of Rs. 2. 07. 040/- on account disallowance of loss on account of future and option transactions through stock exchange. 3.1 That in doing so, the learned Commissioner of Income Tax (Appeals) ....
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....reasons recorded were mere reasons to suspect and were just to make fishing and roving enquiries, as no independent enquiry was conducted by the assessing officer before issuing such notice under section 148 and as such the proceeding so, initiated under section 148 was a mere pretence and was liable to be quashed, as such. 4. In ground No. 1 and 2 in both the appeals are directed against the order of the CIT(A) holding the initiation of reassessment proceedings by the Assessing Officer as valid. 5. At the time of hearing both the Ld. AR submitted that the facts and issue involved in the case of M/s. Prashant Agencies Pvt. Ltd and M/s. PPN Properties Private Limited are identical and therefore, he will be arguing the appeal in the case of M/s. Prashant Agencies Pvt. Ltd. and the same arguments should be considered in the case of M/s. PPN Properties Private Limited also. 6. The Ld. DR also concurred with the above submissions of the AR of the assessee. 7. Hence, I am considering the facts in the case of M/s. Prashant Agencies Pvt. Ltd. for disposing of the ground No. 1 and 2 of the appeal in both the appeals. 8. The AR of the assessee argued and submitted that the ass....
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....r had introduced money amounting to Rs. 5 lakhs during financial year 2002-03 as stated in the annexure. According to the information, the amount received from a company, S, was nothing but an accommodation entry and the assessee was the beneficiary. The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid-up capital of Rs. 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September, 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to be quashed. 10. He relied on the decision of Hon'ble Delhi High Court in the case of Principal Commissioner of Income Tax Vs. Meenakshi....
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....on their behalf could not inexorably lead to the conclusion that no agricultural income had been generated by the assessees. Such an inference could only be drawn from the statement of A to the effect that the transactions between him and the assessees were bogus. Therefore, it was mandatory for the Revenue to produce A for cross examination by the assessees on their specific demand. Once section 147 or 148 was resorted to, the Assessing Officer must first discharge the burden of showing that income had escaped assessment. It was only thereafter that the assessees had to provide all the answers. The Tribunal arrived at the correct conclusion. Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 (SC) (para 4) referred to." 12. He then relied on the decision of the Delhi D Bench of the Tribunal Jiten Gurnami Vs. ITO vide ITA No. 4908/Del /2012 dated 31.03.2015 where it was held as under :- 4. We have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 5. As noted by a coordinate bench of this Tribunal, in the case of ITO Vs Vi jendra Kumar (67 DTR 283) , "No doubt suffi cien....
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.... the statement made by the assessee at the time of the original assessment was different from drawing a fresh inference from the same facts and material available with the Income-tax Officer at the time of the original assessment proceedings. This decision, however, does not empower the AO to rely only on the deposition of a third party in order to upset the Return filed by an Assessee. 5. This is where the failure of the Revenue to produce Shri Anand Prakash for cross-examination by the Assessees, assumes fatal consequences. Reassessment proceedings have been initiated after several years of the acceptance of the Return under Section 143(1) of the IT Act. The Assessees have themselves relied on the banking transactions between themselves and Shri Anand Prakash; secondly on bills issued by them to Shri Anand Prakash, and on the unassailed payment of rent to Shri Mool Chand. It is true that the Assessees failure to produce Shri Kishan Chand had the consequence of not proving that the said person was tilling the land on their behalf. This failure cannot inexorably lead to the conclusion that no agricultural income had been generated by the Assessees. Such an inference can on....
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....reme Court in the case of Cit Vs. Sun Engineering Works Private Limited 198 ITR 297 (SC) where it was held that :- "It would be seen that whereas in the case of Anglo-French Textile Co. Ltd.'s case [1953] 23 ITR 82 (SC), the question as to the rights of an assessee to claim "redoing", "revising" or "recomputing" the entire income during the reassessment proceedings was left open, that question did not come up for consideration in the case of H. R. Sri Ramulu [1977] 39 STC 177 (SC) or H. M. Esufali's case [1973] 90 ITR 271 (SC) or even in V. Jaganmohan Rao's case [1970] 75 ITR 373 (SC). Some of the High Courts, therefore, fell in error in reading those judgments, divorced from the context in which the precise questions came up for consideration in those cases, and to hold that the assessee could " reagitate " the concluded issues and claim relief in respect of items finally concluded in the original assessment proceedings, during the reassessment proceedings, unconnected with the escapement of income. We cannot, therefore, approve the broad proposition laid down in that regard in Deputy Commissioner of Commercial Taxes v. Indian Refrigeration Industries P. Ltd. ....
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....I have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. The undisputed facts of the case are that the assessee M/s. Prashant Agencies Pvt. Ltd. filed its return of income u/s 139 of the Act for the A. Y. 2009-10 on 01.08.2009. The said return of income was assessed u/s 143 (1) of the Act. Similarly the assessee M/s. PPN Properties Private Limited filed its return of income u/s 139 of the Act for the A. Y. 2009-10 on 01.08.2009. The said return of income was assessed u/s 143 (1) of the Act. Thereafter the said assessments were reopened by invoking the provisions of section 147 of the Act recording the following as reasons to believe:- M/s. Prashant Agencies Pvt. Ltd. Dated : 03.06.2016 "Information has been received from Investigation wing Ahmedabad vide letter F No ADIT(Inv.) I (BVAHD/CCM/Dissemination-mail 15-16 dt. 11.03.2016 forwarding of survey report in respect of client code modification. Vide the letter it has been informed that client codes is a practice under which brokers change the client codes in safe and purchase orders of securities after the trades are conducted. In this regard. SEBI has co....
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....s necessary for assessment for the above assessment year the income chargeable to tax to the tune of Rs. 2,07,040/- has escaped assessment within meaning e; Section 147 of the l.T. Act 1961. Since, four years has been expired from the end of the relevant assessment year, the reasons recorded above for the purpose of reopening of assessment is put up for kind satisfaction or Pr Commissioner of Income Tax -07, New Delhi in terms of the proviso to Section 151( 1 ) of the IT Act 1961." M/s. PPN Properties Pvt. Ltd. Dated : 23.06.2016 "Subject: Providing reasonsrecordedfor re-opening of case u/s. 147 of the IT Act, 1961for A.Y. 2009-10-reg. Please refer to your letter dated 03.06.2016 on the subject mentioned above. In this regard, as requested by you the reasons recorded before issuance of notice u/s. 148 are reproduced as under:- Information has been received from Investigation wing Ahmedabad vide letter No. ADIT (inv.) l(3)/AHD/CCM/Dissemination/email/ l5-16 dated 11.03.2016 forwarding of survey report in respect of client code modification. Vide the letter it has been informed that client codes is a practice under which brokers change ....