TaxTMI 
TaxTMI 
2019 (9) TMI 2
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...."1. The learned Commissioner of Income Tax (Appeals) [Ld. CIT(A)] has erred in law and on the facts of the case in confirming the action of Assessing Officer in reopening the assessment. The action is unjustified and unwarranted." 3. Briefly stated facts are that the assessee is a private limited company engaged in the business of trading in shares and securities. Original return of income was filed by assessee on 31.10.2007 for AY 2007-08. This return was processed under section 143(1) of the Act and subsequently the assessment was completed under section 143(3) of the Act dated 20.10.2009. Thereafter, the AO issued notice under section 148 of the Act dated 28.03.2014, which was received by assessee on 31.03.2014. The relevant assessment year involved is 2007-08 and notice under section 148 of the Act was issued on 28.03.2014. It means that the notice under section 148 of the Act was issued beyond four years. Admittedly original assessment was completed under section 143(3) of the Act. At this point, the learned Counsel for the assessee drew our attention to page No. 136 of assessee's paper book wherein the assessee has enclosed the reasons record for reopening of assessment und....
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.... the stamp duty expenses under section 35D of the Act in respect of raising of this equity shares and consequently raising of share capital by the company during the year. The learned Counsel for the assessee stated that the assessee has submitted the following documents during the original assessment proceedings: - Sr. No. Particulars of Documents submitted 1. Details of shares allotted giving names, address and PAN of the shareholders and number of shares allotted 2. Copies of PAN Card and relevant extract of the bank statement of shareholders listed in the reasons recorded evidencing contribution towards share capital 3. Details of share of investments of the shareholders listed in the reasons recorded 4. Copies of letters from shareholders listed in the reasons recorded explaining source of their investments into the share capital of our client along with their acknowledgement of Income Tax Return. 5. Copies of share certificates issued to the parties listed in the reasons for re-opening. 5. As regards to non-service of notice issued under section 133(6) of the Act in subsequent re-assessment, the learned Counsel for the assessee stated that these were issued ....
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....0,000 11. Vanguard jewels Ltd. 15,00,000 12. Vanguard Jewels Ltd. 15,00,000 13. Lexus Infotech Ltd. 30,00,000 Total 2,10,00,000 7. We find from the records and the arguments of the learned Counsel for the assessee that during the course of original assessment proceedings, the AO issued notices under section 133(6) of the Act on these parties and then, the AO after verifying the details submitted by these parties, have accepted the transactions as genuine and passed the assessment order under section 143(3) of the Act after satisfying himself about the genuineness of the transactions. The learned Counsel now before us, argued that the AO is just tried to justify his action of reopening of assessment that investigation wing has rebutted point wise retraction of the affidavit filed by Shri Praveen K Jain but the statement made by the Praveen K Jain was not provided to the assessee and no opportunity was given to cross examination to these parties on whose statements the AO have relied. Further, the learned Counsel has filed complete details of documents even during reassessment proceedings as well as original assessment proceedings. In such submissions, the ....
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....Jhaveri Stock Brokers (P.) Ltd.'s, case (supra), only means whatever the material, the reasons recorded must indicate the reasons to believe that income has escaped assessment. This is so as reasons as recorded alone give the Assessing Officer power to re-open an assessment, if it reveals/indicate, reasons to believe that income chargeable to tax has escaped assessment. 12. The re-opening of an Assessment is an exercise of extra-ordinary power on the part of the Assessing Officer, as it leads to unsettling the settled issue/assessments. Therefore, the reasons to believe have to be necessarily recorded in terms of Section 148 of the Act, before re-opening notice, is issued. These reasons, must indicate the material (whatever reasons) which form the basis of re-opening Assessment and its reasons which would evidence the linkage/nexus to the conclusion that income chargeable to tax has escaped Assessment. This is a settled position as observed by the Supreme Court in S. Narayanappa v. CIT [1967] 63 ITR 219, that it is open to examine whether the reason to believe has rational connection with the formation of the belief. To the same effect, the Apex Court in ITO v. Lakhmani Merwa....
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....on 143(3) of the Act. We also noted from the reasons recorded that the AO in reasons record nowhere pointed that there is a failure on the part of the assessee to disclose fully and truly all material facts relating to this assessment and due to that reason the income has escaped assessment. 9. To support our view, we follow the decision of Hon'ble Supreme Court in the case CIT vs. Foramer France (2003) 264 ITR 566 (SC), wherein it has taken the view that the first proviso to section 147 of the Act lays down an exception whereby the AO is not permitted to exercise his jurisdiction in reopening the assessment beyond a period of four years from the end of the relevant assessment year. Once the exception carved out by proviso to s. 147 of the Act comes into play, the case would fall outside the ambit of s. 147 of the Act. As per proviso to s. 147 of the Act, no action under this section can be taken after expiry of four years from the end of the relevant assessment year, unless inter alia, income chargeable to tax had escaped assessment by reason of failure of the assessee to make full and true disclosure of all material facts necessary for assessment. In case, there being no whisper....
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.... any income chargeable to tax has escaped assessment for such assessment year by reason of the failure 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 necessary for his assessment, for that assessment year." This new section has made a radical departure from the original section 147 inasmuch as clauses (a) and (b) of the original section 147 have been deleted and a new proviso added to section 147. 10. In Rakesh Aggarwal v. Asstt. CIT[1997] 225 ITR 4961, the Delhi High Court held that in view of the proviso to section 147 notice for reassessment under section 147/148 should only be issued in accordance with the new section 147, and where the original assessment had been made under section 143(3), then in view of the proviso to section 147 the notice under section 148 would be illegal if issued more than four years after the end of the relevant assessment year. The same view was taken by the Gujarat High Court in Shree Tharad Jain Yuvak Mandal v. ITO[2000] 242 ITR 612. In our opinion, we have to see the law prevailing on the d....
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....#39;s case was not a direction necessary for the disposal of the appeal relating to the petitioner. The eligibility of income of the petitioner from manning and management contracts was never an issue directly or indirectly involved in the case of Boudier Christian. Moreover, the Tribunal in the appeal relating to the assessment of the petitioner's own case, vide Dy. CIT v. O.N.G.C. As agent of Foramer France[1999] 70 ITD 468 (Delhi), has considered the decision of the Tribunal in Boudier Christian's case. It is settled law that an appeal is a continuation of the original proceedings and, hence, when the Tribunal in the appeal relating to the petitioner has considered the decision of the Tribunal in Boudier Christian's case, the impugned notice under section 147/148 would obviously be on the basis of a mere change of opinion by the income-tax authorities, which would not be valid as held by the Supreme Court in Indian & Eastern Newspaper Society v. CIT[1979] 119 ITR 996 1 ;Gemini Leather Stores v. ITO[1975] 100 ITR 1 (SC) and Jindal Photo Films Ltd. v. Dy. CIT[1998] 234 ITR 1702(Delhi), etc. 12. In the decision of the Tribunal in the assessee's own case O.N.G.C.....