TaxTMI 
TaxTMI 
2019 (4) TMI 623
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....being raised; Initiation of proceedings u/s 148 is void ab initio. 5. Prayer for interim relief: Since the case of this appeal are squarely covered by Hon'ble SC decision in the case of Calcutta knitwear and since on identical ground, stay has been granted by Hon'ble ITAT in earlier two years, hence it is prayed that stay of demand for this year also be granted. 2. The facts giving rise to the present appeal are that as per the assessment order the case of the assessee was reopened by issuing notice u/s 148 of the Income Tax Act, 1961 (hereinafter called as 'the Act') dated 17.12.2013. In response thereto, the assessee filed a return of income declaring total income at Rs. 1,80,870/-. Thereafter, the A.O. proceeded to frame assessment, thereby the A.O. made an addition of Rs. 4 lakhs. The basis of addition by the A.O. was that Shri Nilesh Ajmera had borrowed money in cash from the assessee. The A.O. made addition u/s 69D of the Act. Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A) taking various grounds. However, the Ld. CIT(A) sustained the finding of the A.O. Aggrieved by this, the assessee is in appeal before this Tribunal. 3. At the outset,....
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....f law. Therefore, same becomes void in the eyes of law. 5. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The issue which requires adjudication is whether the proceedings for reopening has been initiated in accordance with law or not. Admittedly, the assessment was framed u/s 143(3) r.w.s. 148 of the Act. The relevant provisions of the Act are reproduced for the sake of clarity. Section 147: Section 148: 6. From the conjoint reading of the above provisions, it is clear that the satisfaction by the A.O. is a condition precedent for issuing notice u/s 148 of the Act. In the absence of satisfaction by the A.O., notice issued u/s 148 of the Act would not be valid. In the present case, the satisfaction is recorded by the A.O. reads as under: "1. During the course of assessment proceeding in the case of Shri Nilesh Ajmera director/Shareholder of M/s. Phoenix Devcons Pvt. Ltd., Indore for the assessment year 2008-09, it is found that the assessee has borrowed money on hundi from one Shri Sunil Golecha, Further, statement of Shri Pankaj Joshi, employee of Shri Nilesh Ajmera (one of the main....
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....P 165 matches with corresponding entries at page 128, page 82 & page 120 of annexure BS-8 which further proves hundi borrowings from Shri Sushil Golecha. Thus, in view of the foregoing it is well established fact beyond doubt that Shri Nilesh Ajmera has taken loan on hundis in cash from Shri Sushil Golecha. 5. At para C of Chapter 5 of the Appraisal report in the "satellite Group" action under section 153 is proposed in the case of Shri Sushil Golecha, Barngar 153 is proposed in the case Sushil Golecha Barnagar as the maounts advanced by him hundi may represents his unaccounted money, I have duly examined the seized documents viz. LPS A/23 (page 140, 141, 142, 162, 164 & 165) LPS 50 (Page 27) and BS-8 (page 56, 82, 120 & 128), copies of which were received through Hon'ble CIT, Ujjain on 1.4.2012. I have verified the facts from the ITRS furnished by the assessee. I am satisfied that for the aforesaid reasons as discussed above further action under section 153C is attracted for assessment of his total income in accordance with law." 7. There is no doubt that the above satisfaction note by the A.O. relates to initiation of proceedings u/s 153C of the Act. It nowhere states t....
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....ed that he had not given any loan or any transaction in the nature of hundi with Shri Nilesh Ajmera. He further submitted that the transaction recorded in the diary of third party cannot be only basis for making addition in the hands of the assessee. Ld. Counsel for the assessee has placed reliance on the judgement of the Hon'ble jurisdictional High Court rendered in the case of the Principal Commissioner of Income Tax-1 Vs. Shri Pukhraj Soni in Income Tax Appeal No.53 of 2017. 10. On the contrary, Ld. D.R. opposed these submissions and supported the orders of the authorities below. 11. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the addition has been made on the basis of the statement of employee of one Shri Nilesh Ajmera recorded in relation to the certain transaction recorded in the diary of Shri Nilesh Ajmera. The assessee was not confronted with the employee of Shri Nilesh Ajmera nor any cross examination of Nilesh Ajmera or his employee was given to the assessee. The addition is based on a diary of a third party. Hon'ble Juris....
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.... any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year80, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure 80 on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts 80 necessary for his assessment, for that assessment year: Document 2 81 [Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year:] 82[Provided 83 [also] that the Assessing Officer may assess or reassess such income, ....