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2017 (9) TMI 1782

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....he 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 claimed to have spent another Rs. 45 Lacs on its renova....

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....essee 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. 1.4 That the Id C.I.T.(Appeals) has failed to appreciate that there was no cogent material on record to form a reason to....

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....ding 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 being heard to present the case in a judicious manner. The ld C.I.T.(Appeals) has failed to appreciate that the assessee was prevented with a sufficient and reasonable cau....

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....dings 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. XII. Commissioner of Income-tax v. Multiplex Trading & Industrial Co. Ltd. [2015] 378 ITR 351 (Delhi) XIII. M/s Laureate Educational Vs. Income Tax Officer (ITA No. 1945/Del/2012 Assessment Year: 2004-05) dated 31.12.2013 9. Referring to the recent decision....

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....phasizes, 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 raised by the assessee challenging the validity of the reassessment proceedings. Ld. counsel for the assessee made two-fold submissions. The first plank of his argument is that the provisions of section 147 of the I.T. Act cannot be resorted only to verify or to make further enquiry. The ....

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.... 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 suspicion that income chargeable to tax may have escaped assessment. 13. Applying the aforesaid two decisions to the facts of the present two cases on hand and the reasons recorded to reopen the assessment, we are of the opinion that under the guise of reopening of the assessment, the Assessing Office....