TaxTMI 
TaxTMI 
2020 (2) TMI 772
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....r passed by the respondent illegally, violating the principles of natural justice, without fair and objective application of mind to the facts of the case and the law applicable and without being guided by the binding decisions of courts and tribunals and hence liable to be set aside and quashed and declared non est. in law. 2 On the facts and circumstances of the case, the learned Ld. CIT (A) New Delhi has erred, both on facts and in law, in sustaining the assessment of the appellant at income of Rs. 147,95,510/- as against the income of Rs. 3,20,260/- declared by the appellant. 3 On the facts and circumstances of the case, the learned Ld. CIT (A) New Delhi has erred, both on facts and in law, in sustaining the assessment that could not have been re-opened u/s 147/148 as no valid reasons have been recorded by the Assessing Officer to establish any satisfaction on his part that any income belonging to the appellant has escaped assessment. 4 On the facts and in the circumstances of the case Ld. CIT (A) New Delhi has erred both on facts and in law , in sustaining the action of AO as no incriminating material whatsoever was found/unearthed as a result of sea....
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.... has erred both on facts and in law in upholding the impugned order passed by the respondent illegally, violating the principles of natural justice, without fair and objective application of mind to the facts of the case and the law applicable and without being guided by the binding decisions of courts and tribunals and hence liable to be set aside and quashed and declared non est. in law. 2 On the facts and circumstances of the case, the learned Ld. CIT (A) New Delhi has erred, both on facts and in law, in sustaining the assessment of the appellant at income of Rs. 1,85,99,907/-as against the income of (Rs. 29,00,030/-) declared by the appellant. 3 On the facts and circumstances of the case, the learned Ld. CIT (A) New Delhi has erred, both on facts and in law, in sustaining the assessment that could not have been re-opened u/s 147/148 as no valid reasons have been recorded by the Assessing Officer to establish any satisfaction on his part that any income belonging to the appellant has escaped assessment. 4 On the facts and in the circumstances of the case Ld. CIT (A) New Delhi has erred both on facts and in law , in sustaining the action of AO as no inc....
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.... craves leave to add, amend or alter any of the grounds of appeal." 4. Brief facts of the case is that Kuber Khanpan Udyog Pvt. Ltd filed its return of income on 29.09.2011 for Rs. 320270/-. The assessment of the company was reopened u/s 148 of the Act on 31.03.2017. The Assessee filed return in response to that notice on 13.04.2017 declaring the same income. The assessment u/s 143(3) read with section 147 of the Act was passed on 12.05.2017 at Rs. 14795510/-. The addition of Rs. 1.35 crores was made in the hands of the Assessee u/s 68 of the Act. During the search and seizure u/s 132 of the Act on 09.10.2014 on Kuber Group of Cases details relating to companies with respect to share capital and unsecured loan came to the light. The statement recorded on oath on 15.12.2014 Shri Mulchand Mallu declared undisclosed income of Rs. 100 crores of the Kuber Group of Companies and its directors out of total undisclosed income of Rs. 150 crores. During the course of assessment proceedings statement of Mr. Malu was also recorded u/s 131 of the Act. The AO noted that the Assessee issued share capital of Rs. 1.35 crores from M/s. Pawmex Sales pvt. Ltd and same was added u/s 68 of the Act. A....
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....he case. Assessee Company has originally filed its ROI for the impugned year on 29.09.2011; the same was processed on 10.01.2012, after making some adjustments. Thereafter, the case of the assessee has been reopened on 31.03.2017; on the ground that material found in search of Kuber Group reveals that the assessee has alleged to have been received accommodation entries in the form of share allotment money. Assessee asked the AO to provide an opportunity of cross examination of the alleged entry operators during the course of assessment proceedings. However the AO could not provide the same, the assessee has also asked the CIT (A), when CIT (A) called for remand report the AO revealed the truth of addition made which is discussed in below paras. 3. Aggrieved with the order of the AO assessee filed appeal before the CIT (A) who vide his order dated 19.12.2018 affirmed the order of the AO. Now the Assessee is in appeal before this Hon'ble Bench. Finding of CIT(A) on legal ground of section 147 is at Page No*-29 of the CIT(A) order. 4. It is submitted that certain dates which goes to the root of the matter are being reproduced. These dates are important to adjudicate ....
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....arguments of the assessee are as under:- 6. Provisions of section 153C/153A are bypassed. It is submitted that perusal of the reasons recorded would show that in very first Para, it has been mentioned by the AO that "during search and post search proceedings", information relating to entities providing accommodation entries of share application money share premium.....etc came to light. The AO further mentioned that as per the information gathered it was found that during the AY 2011-12 assessee Company has received share capital and share premium from M/s Powmex Sales Pvt Ltd. 7. It is submitted that very source of alleged information gathered is to be attributable to those evidences found in search, means had the search would not have been taken, the alleged information could not have been found. It is pertinent to mention here that when search was conducted certain hard disc; tally server, containing books of account of assessee were found and seized by the revenue, as is evident from the Panchnama prepared at the time of search. In this tally server the books of account of the assessee company was there and when these books were opened it is found that the ass....
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....the case with that of searched person and the notice of 147 is always issued by the jurisdictional AO who has original jurisdiction. However in the case of the assessee the assessment is centralised this fact would further prove beyond doubt that the assessee matter ought to have been reassessed under section 153C of the Act. 13. All above facts in totality would show that AO has erred in initiating action under section 147 of the Act. He would have invoked the provisions section 153C, like he has initiated in the case of Marudhara, a sister concern whose books were also seized and found. These arguments were raised before the CIT(A). However he has summarily rejected the same. See page NO- 14. It is submitted that provisions of section 153C are non obstantive provisions and they override the provisions of section 147 of the Act. However the revenue instead of invoking these provisions has chosen to initiate action under section 147, which is illegal. It is submitted that both provisions are mutually exclusive and would not overlap each other. If the very source of information is search, as is happened in this case, then provisions of section 153C are applicable. ....
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.... to be false by the AO. 19. No Independent application mind of AO:- It is submitted that in the very first Para of reasons recorded the AO has used the expression "Kuber group of cases". Then he has mentioned that during search and post search proceedings information relating to entities providing accommodation entries of share application money.................to Kuber Group entities (a general observation which entity not specified) came to light. Then he has referred to that information gathered it was found that during AY 2011-12 M/s Kuber Khan Pan Udyog that is the assessee has received share capital and share premium from Powmex Sales Ltd. It is relevant to mention here that the source of this information was the Talley server of the assessee company seized in search wherein books of Assessee Company were present. 20. It is next submitted that at various places the AO has mentioned that enquiries were conducted in Kuber Group of Companies. However there is no specific mention of any Company, it is submitted that Kuber group of Companies is a generic term, which is used to describe so many. Neither the kuber group has been assessed as an AOP nor do such compa....
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....erial. i. In assessee case neither 131(1) nor 133(6) have been done. 24. Further assessee seeks to rely on the following judgments: - Wherein it has been held that reassessment is not permissible on the basis of borrowed satisfaction, where there is non application of mind. Where there is no live link between the reasons to believe and formation of belief. Where the conclusions drawn against assessee are not supported by tangible material. a. SBS Realtors Vs ITO- ITA No-7791/Del/2018 b. PCIT Vs Shodiman Investment Pvt Ltd Bombay High Court. c. Agaya Ram Vs CIT- 386 ITR 0545(Del) d. CIT Vs RMG Poly Vinayl- 396 ITR 5(Del) e. CIT vs Meenakashi Overseas 396 ITR 5 25. Period of Four Weeks not granted after the disposal of objections:- It is next submitted that the AO has not granted four weeks time after the disposal of objections filed by the assessee, and has framed the assessment in hurried manner. However, there is no delay on the part of assessee to file the objections before the AO. 26. A perusal of the above chart would show that the AO has framed the assessment without waiting for 4 weeks, despite t....
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....filed all the details before the AO and has asked for cross examination of the alleged entry provider, which request of the assessee has been denied by the AO. 30. The assessee has filed following documents before the AO during the course of proceedings- a. Copies of share application forms. b. Informations given to ROC for allotment of shares. c. Confirmations- d. Bank statements. e. ITR acknowledgments f. Annual Financial Statements g. MCA data available in public domain- Perusal of which would show that M/s Powmex has paid up share capital of Rs. 1,93,00,000/-. 31. It is next submitted that finding of the AO starts from Para-6.5 of the assessment order, prior to that the AO has just reproduced the contents of reasons recorded, and has again referred to the investigation carried out by investigation wing in some other case. 32. After filing the above mentioned details assessee has asked for the cross examinations of the persons, whose statements were relied upon by the AO. However the request of the assessee was discarded. Before CIT(A) also assessee requested the cross examination of the wi....
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....ts were incriminating in nature. Therefore, provisions of section 153C could not have been invoked. She further relied on the decision of coordinate bench in ITA No 2915/Del/2017 dated 08.01.2018, wherein, the reopening u/s 147 of the Act was upheld. She further stated that perquisite to invoking section 153C of the Act could not have been invoked. She further relied upon the decision of the coordinate bench in case of Mannat Hospitality pvt. Ltd vs. ITO ITA No. 7348/Del/2018 dated 07.06.2019, wherein the objection of the Assessee against the order passed u/s 147 was rejected. Therefore, she submitted that there was no ambiguity in initiating the proceedings u/s 147 of the Act. 9. We have carefully considered rival submissions and perused the orders of lower authorities. Main issue raised in this appeal is whether the AO should have invoked the provision of section 153C of the act or section 147 of the act, as done by LD AO. It is necessary to first look at the provision of section 153C of the act which is as under :- Income-tax Act, 1961 153C. ASSESSMENT OF INCOME OF ANY OTHER PERSON (1) Notwithstanding anything contained in section 139, section 147, ....
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....notwithstanding anything contained in sections 139, 147, 148, 149, 151 and 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to any person, other than the person in respect of whom the search was conducted, the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess income of such other person in accordance with the provisions of section 153A if he is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A. Therefore, it is important that the documents found during the course of search from 1/3 person or any other material should belong to the assessee (pertinent to the assessee after amendment) and the AO must be satisfied that such books of accoun....
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....f the Act was not met in the case of the two Assessees." Merely because regular books, of other persons are found with searched persons assumption of jurisdiction by AO of Other persons may be justified but since these are generally the regular books of account on the basis of which returns are prepared, there cannot be any undisclosed income arising from them. In view of expression, "books of account/documents/assets seized have a bearing on the determination of total income" appearing in section 153C(1), proceedings u/s. 153C will not be valid. In view of this, we are of the opinion that assessing officer did not have any jurisdiction to invoke the provisions of section 153C of the income tax act and therefore it has not been rightly invoked by him. Thus, action of AO for reopening of the assessment u/s 147 of the act is upheld. Accordingly ground NO. 11 of ITA No. 322/Del/2019 and Ground no. 10 of ITA NO. 580/Del/2019 of the appeal of the assessee are dismissed. 11. Now we come to the other issues of the reopening of the assessment challenged by the assessee. The reopening has been challenged by the assessee stating that initiation of proceedings u/s 147 of the income tax ....
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....de cross-examination or the information to show that the amount of share capital taken by the assessee from the above stated company is an accommodation entry. None of the statements of the investigation wing, though referred to many of the companies, however the name of this company from womb the assessee has taken share capital is appearing. In para number 8 of the remand report, the learned assessing officer has categorically stated that during the assessment proceedings commission u/s 131 (1) (D) of the income tax act, 1961 was issued to the Calcutta investigation wing. A list of 27 companies was sent for necessary enquiry. As per report of Calcutta wing, 9 companies are such companies, which are used for routing, and providing accommodation entry to the beneficiaries as per the statement of the directors/to persons of respective companies admitted during both during the previous enquiry survey/searches. For balance 18 companies, as per inspector report, no such companies existed at the addresses mentioned. The name of the company who deposited money with the assessee appears in the list of 18 companies where the inspector has gone to the incorrect address as held above. Furthe....