2017 (9) TMI 1782

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....redible information, a belief was formed that the assessee company has not disclosed investment made by way of renovation of Cup & Soccer Restaurant, Minto Road, New Delhi and New Shahnai Banquet Hall Opp. L.N.J.P. Hospital, New Delhi. Accordingly, the Assessing Officer issued notice u/s 148 of the I.T. Act by recording the following reasons:- "The Directorate of Investigation- Unit-IV(I), New Delhi, regarding had forwarded report in the case of M/s Ashima Securities Pvt. Ltd. In the said report it was mention that information was received from Addl. Commissioner (Revenue), M.C.D. Delhi regarding the above named assessee namely M/s Ashima Securities Pvt. Ltd., which was given CUP & SOCCER RESTURANT a Minto Road on a five years lease on a monthly rental of Rs. 4.38 Lacs from November 2001. According to the information received, the assessee company had claimed to have spent Rs. 65 Lacs on the renovation and construction of the premises. It was further mentioned in the letter that similarly, this group of assessee had also taken another restaurant "New Shahnai Banquet Hall" situated opposite L.N.J.P. Hospital for five years lease on a monthly rental of Rs. 4.21 Lacs and had claime....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... addition of Rs. 56,97,000/- to the total income of the assessee. 3. In appeal, the assessee challenged the validity of the re-assessment proceedings as well as the additions on merit. However, ld. CIT(A) rejected both the issues raised before him. 4. Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before us by raising following grounds:- "1. That the ld C.I.T.(Appeals) has erred both on facts and in law in mechanically upholding the reassessment proceedings u/s 147 r/w section 148 of the I.T. Act failing to appreciate that the conditions laid down for a valid assumption of jurisdiction u/s 147 had not been fulfilled before taking recourse to such proceedings. The finding that the AO has followed due procedure under the law is wholly incorrect and wrong. 1.2 That the Id C.I.T.(Appeals) has failed to appreciate that the assessee had not been provided with a copy of the reasons recorded till the completion of assessment proceedings. 1.3 That the reassessment proceedings as initiated are wholly illegal and without jurisdiction as the requisite approval has been granted in a mechanical manner without application of mind. ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the ld C.I.T.(Appeals) has grossly erred in not admitting the additional evidence sought to be furnished by the assessee u/r 46A of the LT. Rules. The finding that no reason was adduced for not producing the additional evidence before the lower authorities, is wholly incorrect and wrong and thus unsustainable. The Id C.I.T.(Appeals) has arbitrarily not admitted the fact that photocopy of seized documents by the CBI on 19/07/2008 was provided to the assessee only on 30/03/2011 of relevant documents by the CBI were provided to the assessee in March 2011. 5.1 That the finding of the ld C.I.T.(Appeals) that none of the document seized by the CBI had any bearing on the income tax matter and that the assessee deliberately did not produce the documents before the AO or before him, is wholly incorrect, wrong and un-sustainable. 6. That the ld C.I.T.(Appeals) has grossly erred passing the impugned order as well as in upholding the assessment order framed by the ld AO in violation of principles of natural justice and without granting to the assessee a fair, proper and meaningful opportunity. Even the ld. C.I.T.(Appeals) did not grant proper and reasonable opportunity of be....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....re duly recorded in books, reopening could not be sustained when the Assessing Officer had no tangible material. 8. Referring to the following decisions, he submitted that no proceedings u/s 147 can be initiated merely on the basis of the report of the Investigation Wing:- I. CIT vs. M/s. Indo Arab Air Services [2016] 283 CTR 92 (Delhi) II. Signature Hotels P. Ltd. Vs. Income Tax Officer reported in 2011 : [2011] 338 ITR 51 III. Commissioner of Income Tax versus SFIL Stock Broking Limited, reported in [2010] 325 ITR 285 (Delhi) IV. Sarthak Securities Company Private Limited versus Income Tax Officer, reported in 2010 : 329 ITR 110 (Delhi) V. PCIT vs. ShriGovindKripa Builders P. Ltd (ITA 486/2015 dated 04.08.2015) VI. CIT vs. Ashian needles pvt.LtD. (ITA 226/2015 dated 24.08.2015) HC (Delhi) VII. CIT Vs. Insecticides (India) Ltd. 2013 : 357 ITR 330 (Delhi) VIII. 2007 : 299 ITR 383 (Del) CIT vs Atul Jain dated 23.5.2007 IX. 2007 : 311 ITR 38 (P&H) CIT vs. PramjitKaur X. ITA No. 1395/2008 (Del) Smt. MeeraKapoor vs. CIT XI. 2013 : 357 ITR 24 (Del) CIT vs. Suren International (P) Ltd. ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the concern at that stage. The substantive satisfaction in that case of the Assessing Officer was therefore wrongly interfered with by the Gujarat High Court is the view taken by the Hon'ble Supreme Court. All these legal principles are undisputed. They go to show, as Mr. Gupta emphasizes, that there should be a reason to believe that in the relevant assessment year income chargeable to tax has escaped assessment. We are of the view that in the present case, the reasons recorded fall short of this test." 11. He accordingly submitted the order of the CIT(A) sustaining the validity of the reassessment proceedings should be upheld. 12. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer on the basis of information received from the Directorate of Income-tax (Investigation), New Delhi reopened the assessment u/s 147 to investigate the source of investment made by the assessee in assets leased to it. We find the ld. CIT(A) while deciding the appeal dismissed the ground....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ioner of Income-Tax [Supra], Division Bench of this Court has observed that for a mere verification of the claim, the power of reopening of assessment could not be exercised. It is further observed that the Assessing Officer under the guise of power to reopen an assessment, cannot seek to undertake a fishing or roving inquiry and seek to verify the claims, as if it were a scrutiny assessment. 12.1 Similar view has been expressed by the Division Bench in case of Deep Recycling Industries v. Deputy Commissioner of Income Tax - Circle 2 [Supra] wherein it has been held and observed that for mere scrutiny, reopening of the assessment would not be permissible. It is further observed that the reopening of the assessment could be made if the Assessing Officer had formed a belief that income chargeable to tax had escaped assessment. The Court has further observed that in order to do so, the Assessing Officer must have some tangible material having live link with the escapement of the income on the basis of which he can form a bona fide belief of escapement of income chargeable to tax. It has also been observed that reopening cannot be resorted to for fishing or roving inquiry on mere su....