TaxTMI 
TaxTMI 
2020 (4) TMI 289
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....3.2013 mentioning therein that a search operation was carried out in the case of Shri Surendra Kumar Jain group of eases whereby after intensive and extensive enquiry and examination of document seized during course of search it has been noticed that the said group is involved in providing accommodation entries to the persons which were named in the report. The assessee-company also figured in the list. The A.O. on the basis of material available on record and reasons recorded for reopening of the assessment, issued notice to the assessee under section 148 of the I.T. Act, 1961. The A.O. noted in the assessment order that perusal of the return of income filed shows that assessee has received share capital of Rs. 50,000/- and premium of Rs. 24,50,000/- during the assessment year under appeal. As per the information provided by Investigation Wing, the assessee-company has obtained accommodation entries amounting to Rs. 25 lakhs as tabulated in the assessment order. Copy of the relevant documents seized from Jain Brothers is also enclosed as Annexure-B to the assessment order. It shows that on 20.05.2010 assessee-company received Rs. 25 lakhs from M/s. Blue Bell Finance Ltd., through ....
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....essment proceedings u/s 148 were based on material found during search from third party and in the view of non-obstante clause in section 153C, the same is invalid and wholly without jurisdiction. (ii) That proceedings in respect of material seized from third party ought to have been framed u/s 153C and in absence of compliance of jurisdictional requirements of section 153C, the assessment order u/s 147 is illegal and void-ab-initio." 5.1. Learned Counsel for the Assessee submitted that the only issue in dispute in this appeal is addition based on material found from third party as a result of search under section 132(1) of the I.T. Act, 1961. This fact is as evident from the reasons recorded by the A.O. However, as a matter of an inadvertent omission, the legal ground relating to issue of jurisdiction and regarding validity of assessment proceedings under section 147/143(3) being based on material found during the course of search under section 132 from third party was not taken. He has, therefore, submitted that since it is a legal ground and based on facts already available on record and no new fact or evidence shall have to be considered, therefore, the same may be ....
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....ve been decided by ITAT, Delhi A-Bench in the case of ITO vs., L.R. Finvest Pvt. Ltd., ITA.No.4551/Del./ 2015, Dated 30.11.2018, in which Departmental appeal have been dismissed, in which the Ld. CIT(A) has deleted the similar addition. PB-149 is another reply before Ld. CIT(A) in which also assessee-company explained that the Investor Company has no relation with any entry provider, which fact have not been disputed. The report of Investigation Wing is not provided to the assessee-company. The authorities below have not doubted the documentary evidences produced by the assessee-company. He has submitted that since the entire re-assessment proceedings have been initiated on the basis of documents found during the course of search in the case of Jain Group, therefore, as a consequential to the search, A.O. could only assume jurisdiction under section 153C of the I.T. Act, 1961. In support of the contention, he has relied upon Order of ITAT, Delhi A-Bench, New Delhi in the case of Shri Meer Hassan & Shri Ali Hassan, Dehradun in ITA.Nos.1571 & 1573/Del./ 2015 Dated 28.02.2019, in which, in similar circumstances, it was held that "reopening of the assessment is invalid as A.O. shall ha....
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....In the instant case, undisputedly, originally assessment proceedings were initiated against the present assessees u/s 153C read with section 153A of the Act which was completed vide order dated 30.12.2011 but the same were annulled by ld. CIT (A) vide order dated 28.08.2012 on the ground that proper course in this case was to initiate proceedings u/s 147 of the Act and make assessment accordingly. The said assessment u/s 153C read with section 153A was completed on the basis of some seized material/document LP-103 A-1 pages 30, which is a memorandum of understanding alleged to have been entered into between the assessees and M/s. R.B. Enterprises. 18. So, we are of the considered view that when provisions contained u/s 153C are applicable in this case to initiate assessment proceedings on the basis of seized material seized in case of some third party, notice issued u/s 148 of the Act and subsequent assessment framed u/s 147 of the Act is void ab initio and as such, assessment framed u/s 147/143(3) of the Act is liable to be quashed. 19. Identical issue has been decided by the coordinate Bench of the Tribunal in case cited as Rajat Shubra Chatterji vs. ACIT - ITA ....
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....dings :- "Reassessment - Validity-Reassessment on the basis of incriminating material found in search of third party-Provisions of s. 153C are applicable which exclude the application of ss. 147 and 148 - Hence notice issued under s. 148 and proceedings under s. 147 are illegal and void ab initio - AO having not followed procedure under s. 153C, reassessment order was rightly quashed by the CIT (A)." 21. Following the mandate of section 153C and orders passed by the coordinate Bench of the Tribunal in cases of Rajat Shubra Chatterji vs. ACIT and ITO vs. Arun Kumar Kapoor (supra), we are of the considered view that assessment framed in this case u/s 147/143 (3) of the Act on the basis of incriminating material unearthed in case of a third party is not sustainable, hence ordered to be quashed without entering into the merits of the case. So, other grounds of appeal raised by the assessee have become infructuous. Consequently, both the appeals filed by the assessees are allowed." 9.1. The ITAT, Delhi A-Bench recently in the case of Shri Adarsh Agrawal, Delhi vs., ITO, Ward-61(1), New Delhi in ITA.No.777/Del./2019 for the A.Y. 2010-2011 vide Order Dated 14.01.2020 ....
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....contention of assessee and made addition of Rs. 1 crore on account of cash loan given to Shri Naresh Sabharwal as well as made addition on account of interest of Rs. 6,96,774/-. 3. The assessee challenged the reopening of the assessment as well as addition on merit before the Ld. CIT(A). The detailed written submissions of the assessee is reproduced in the appellate order. The Ld. CIT(A), however, dismissed the appeal of assessee. 4. The assessee in the present appeal has challenged the reopening of the assessment as well as both the additions on merit. 5. We have heard the Learned Representatives of both the parties and perused the material on record. 6. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and referred to PB-8 which is original return of income filed on 09.12.2010. PB-1 is notice under section 148 Dated 12.02.2015. PB-9 is letter of the A.O. extracting the reasons for notice under section 148. PB-10 is reply of the assessee denying giving any loan to Shri Naresh Sabharwal supported by the affidavit which was filed during the assessment proceedings in the case of Shri Naresh Sabharwal. PB-....
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....s., S.M. Aggarwal [2007] 293 ITR 43 [Del.] [HC]. 03. ACIT vs., Kences Foundation (P.) Ltd., [2007] 289 ITR 509 [Madras] [HC]. 04. Commissioner of Income Tax, Central-III vs., Suneet Verma [2007] 145 DLT 280 [DB] [Del.] [HC]. 05. Commissioner of Income Tax vs., Lubtec India Ltd., [2009] 311 ITR 175 [Del.] [HC]. 06. Order of ITAT, Delhi C-Bench, Delhi in the case of Amarjit Singh Bakshi (HUF) vs., ACIT [2003] 86 ITD 13 [Del.] [TM]. 07. Order of ITAT, Guwahati Bench, Guwahati in the case of M/s. Fantastic Buildcon Pvt. Ltd., Guwahati vs., ITO, Ward-2(1), Guwahati in ITA.No.104/Gau/2011 & SP.No.09/Gau/2011, Dated 07.02.2012. 08. Order of ITAT, Mumbai D-Bench-T.M. Mumbai in the case of S.P. Goyal vs., DCIT [2002] 82 ITD 85 [Mum.]. 09. Judgment of Hon'ble Supreme Court in the case of Commissioner of Income Tax vs., Smt. P.K. Noorjahan [1999] 237 ITR 570 [SC]. 7. On the other hand, Ld. D.R. relied upon the Orders of the authorities below and submitted that re-assessment proceedings have been rightly initiated based on the agreement found during the course of search in the case of Shri Naresh Sabharwal. 8. We have considered the r....
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....agreement is filed at page-25 of the PB. A.O. has also mentioned in the reasons that both the parties have denied to have given or taken any cash loan. Thus, Shri Naresh Sabharwal has never agreed that he has taken any cash loan from the assessee. Copy of the agreement is filed in the paper book which is signed by 02 witnesses, but, none have been examined by the A.O. to confirm the genuineness of the transaction in the matter. No original agreement have been brought on record or examined by the A.O. No report of handwriting expert have been obtained by the A.O. before recording the reasons for reopening of the assessment. Thus, only photo copy have been taken on record without examining the validity of the same agreement. Since Shri Naresh Sabharwal has denied to have taken any loan from the assessee, therefore, before recording the reasons, it is the duty of the A.O. to bring some concrete and corroborative material on record to justify his conclusion that there is escapement of income in this case. The Hon'ble Bombay High Court in the case of Indian Express Newspapers (Bombay) P. Ltd., & Another vs., Union of India & Others [2008] 300 ITR 351 [Bom.] held as under : "Hel....
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....nder section 147/148 of the I.T. Act and passed the Order under section 143(3)/148 of the I.T. Act, the same would be illegal and arbitrary and without jurisdiction. We rely upon the Order of ITAT, Visakhapatnam Bench in the case of G. Koteswara Rao (supra). In the case of ITO vs., Arun Kumar Kapoor [2011] 140 TTJ 249 (ASR-ITAT) [Paper Book at Page-71], the ITAT, Amritsar Bench held as under : "On a perusal of section 153C, it would be clear that the provisions of this section are applicable, which supersedes the applicability of provisions of sections 147 and 148. In the instant case, the documents were seized during the search under section 132 and the same were sent to the Assessing Officer of the assessee and, thus, the Commissioner (Appeals) has correctly observed that only the provision in which any assessment could be made against the assessee was section 153C, read with section 153A. It was also apparent from the record that the officer in the case of 'T' Ltd. had mentioned in his letter that the necessary action may be taken as per law under section 153C/148. Hence, notice issued under section 148 and proceedings under section 147 by the Assessing Officer ....
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....herefore, show that incriminating material was found during the course of search in the case of search operation carried out in the case of Shri S.K. Jain Group of cases. The same seized documents were relied upon by the A.O. while framing the assessment in the case of the assessee and initiating the re-assessment proceedings. It is well settled Law that validity of the re-assessment proceedings is to be determined with reference to the reasons recorded for reopening of the assessment. The Counsel for Assessee has filed copy of the reasons recorded for reopening of the assessment at pages 44 and 45 of the PB. The same is reads as under : In view of the above information I have reason to believe that the income pertaining to the Asstt. Year 2011-12 has escaped assessment to the extent of Rs.-25,00,000/-. The same has escaped assessment on account of failure on the part of the assessee to truly and fully disclose all material facts necessary for assessment for the AY 2011-12. In order to verify the genuineness, identification and creditworthiness of the aforesaid transaction the case needs to be reopened u/s 147 of the I.T. Act, 1961. Sd/- R.O. Butia, Income Tax Office....