TaxTMI 
TaxTMI 
2020 (6) TMI 469
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....e of convenience and brevity. 3. First, we shall take assessee's appeal in ITA No. 231/Kol/2018 for A.Y. 2009-10, wherein the grievances raised by the assessee are as follows: 1. For that the ld. CIT(A) ought to have held that the re-opening proceedings u/s 147 were bad in law and, as such, ought to have quashed the same. 2. For that the ld. CIT(A) ought to have held that as per proviso to section 147, the issue of notice u/s 148 was barred by limitation and, as such, the assessment framed u/ s143(3) was a nullity in the eyes of law. 3. For that the ld. CIT(A) ought to have quashed the assessment order passed u/s 147 r.w. section 143(3) on the ground of change of opinion. 4. For that on the facts and in the circumstances of the case, the ld. CIT(A) grossly erred in confirming the addition of Rs. 14,85,00,000/- made by the Assessing Officer u/s 68, on account of sale proceeds of investments made in shares in the relevant year by wrongly treating the same as undisclosed income. 5. The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing. 3. Although, in this appeal the assessee has raise....
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....oned in the first proviso to section 147 of the Act, therefore, the proceeding u/s.147 against the assessee should be dropped. It was further required by the assessee to provide the reason for re-opening the case which was duly provided by the assessing officer. The assessee further filed written submission dated 25.07.2016 in which assessee objected the reason for re-opening the assessment for the assessment year in question. The objection was apparently raised by the assessee on two grounds. The first ground was that the director of M/s, Mandapam Commercial Ltd., Shri Manoj Sharma had retracted from his statement given on oath u/s. 131 of the Act before the Income tax investigation authorities and second was that the assessee had received the amount of Rs. 14,85,00,000/- on account of sale proceeds of shares of two companies , i.e. M/s. Prudential Sugar corporation Ltd. and (ii) M/s. Bag Infotainment Pvt. Ltd. According to the assessee, the shares of the said companies were sold to M/s. Mandapam Commercial Ltd. during the relevant previous year. These objections of the assessee were rejected by the AO by passing a speaking order dated 12.08.2016 as per the extant guidelines of....
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....ged shares has declared the transaction as bogus and was solely for the purpose of providing bogus gain to the assessee. In response, the assessee filed a written submission dated 03.11.2016 stating that its transaction as discussed above was genuine. It was pleaded by the assessee that the transaction was recorded in its books of account for the relevant previous year. The assessee produced copy of delivery instruction by clients containing specific remark "This is a delayed submission could lead to failed trades and will be entirely at client's risk", copy of transaction statement, evidence of banking transaction. From the details filed by the assessee it was noted by AO that 5,00,000 number of shares of M/s Bag Infotainment Pvt. Ltd. was purchased for Rs. 50 lakhs on 18.12.2008 which was sold for Rs. 2.50 crore and 13,00,000 number of shares of M/s prudential Sugar Corporation was purchased on 26.12.2008 for Rs. 1.30 crore which was sold on 19.03.2009 & 27.03.2009 at Rs. 12.35 crore. Therefore, AO noted that the assessee brought Rs. 14.85 lakhs (Rs. 2.50 crore+Rs. 12.35 crore) in its books in just within 3 months in trading in shares in the companies of Prudential Su....
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....s to see whether there was prima facie material justifying notice. Sufficiency or correctness of material not to be considered at this stage. vii) Reasonable grounds for ITO to the believe, sufficient to give jurisdiction, whether grounds are adequate or nor is not for H.C. RAYMOND WODLLENS : 207 ITR 929 (BOM) LAKHMANI MEVAL DAS : 103 ITR 437, 445, 446(SC) viii) Subsequent information of concealment definite, specific, sufficient reasons not for court to decide, Reassessment notice valid. PHOOLDCHAND BAJRANGLAL : 203 ITR 456 (SC) MIDLAND FRUIT &VEG : 208 ITR 266 (DELHI ix) New Amendment merges the provision of 147(a), 147(b). Only condition now is that the Assessing Officer should have reason to believe that income has escaped assessment, this reason to believe can be reached in any manner- it is not prequalified by the precondition of full and true disclosure of material by an assesse. RAKESH AGL 225 ITR 496 (DEL) RANCHI HANDLOOM EMPORIUM : 235 ITR 604 x) 246 ITR 173 (Delhi)- Assessing Officer should have reasonable belief that income has escaped assessment conclusive proof of escapement at this stage is not necessary. ....
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....the Act on 28.12.2011. Subsequently, the assessee`s case was re-opened u/s 147 of the Act on the basis of a report/ information from the Investigation Wing and notice under section 148 of the Act was issued to assessee on 31.12.2016. In the assessee`s case the relevant assessment year is 2009-10, therefore the assessee`s case was reopened after the expiry of 4 Years from the end of the relevant assessment year. The settled position of law is that if an assessment for any year has been completed u/s 143(3) or u/s 147, then no action shall be taken u/s 147 after the expiry of 4 years from the end of relevant assessment year unless income chargeable tax has escaped assessment by reason of the failure on the part of the assessee. That is, there is no allegation that the assessee has failed to disclose fully and truly, all material facts necessary for assessment. As we noted that the re-opening is beyond a period of four years and the original assessment was completed u/s 143(3) of the Act and in the light of the decision of the Hon'ble Calcutta High Court in the case of Amiya Sales and Industries vs. ACIT reported in 274 ITR 25 (Cal.), the reopening of assessment is bad in law. W....
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....e investment in shares was to be treated as capital investment and any expenditure/loss thereon was to be treated as capital expenditure/loss and was not allowable as deduction. d. Records reveal that turnover of the Co. was Rs, 12,26,32,884/- whichincluded sales of 38,693.832 MT valued at Rs. 118,89,78,581/-. End cutting/scraps of 1344.982 MT value Rs. 1,98,51,278/- totaling 40,038.812 MT valued at Rs. 1,20,88,29,859/- apart from conversion charges and other items of sales. Scrutiny of T.AR (Annexure IX) and 13G of notes on accounts revealed that consumption of raw materials was 43,651.894 MT valued at Rs. 844053010 which included inter process transfer (incoming) of 2958.637 MT of raw materials. Further sale value of finished goods did not' include value of inter process transfer (outgoing) of 2958.637 MT of raw materials. Further sale value of finished goods did not include value of inter process transfer (outgoing) of 2958.637 MT of finished goods. As the consumption to raw materials was debited to P&L A/c, at least, cost value of interprocess transfer (outgoing) of finished goods was required to be credited to be credited to P& L A/c, which was not done. ....
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....t. Ltd. prior to issue of such notice and such fact was also made known to the Revenue. Under such circumstance, it is required to re-issue a notice u/s 148 to M/s BEEKAY STEEL INDUSTRIES LTD.(AABCB3205A), who have taken over M/s Radice Ispat Ltd, w.e.f. 114/2005. The earlier proceedings against M/s Radice Ispat Ltd, shall be dropped as it has merged with M/s BEEKAY STEELINDUSTRIES LTD. (AABCB3205A) w.e.f. 1/4/2005". 4.1.1 A perusal of these reasons clearly demonstrate that the Assessing Officer has not made any allegation that there is failure on part of the assessee to disclose fully and truly all material facts necessary for assessment for this assessment year under consideration. The reopening is done after the lapse of four years and the original assessment is completed u/s 143(3) of the Act. 4.2. The Hon'ble Calcutta High Court in the case of Amiya Sales and Industries vs. ACIT (supra) has held as follows: "8. In the case in hand, it has nowhere been recorded that there was failure or improper disclosure on the part of the assessee. However, the Assessing Officer, as already noted, sought to reopen the assessments as there was "inc....
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....ase of Calcutta Discount Co. Ltd. [1961] 41 ITR 191. Thus, wrong interpretation of accounts by the Assessing Officer and grant of excess benefit cannot be a ground for reopening. The ratio of the judgment in Parashuram Pottery equally applies in the case in hand. The reasons recorded, as noted, do not warrant assumption of jurisdiction by the Assessing Officer to issue notices under Section 148." 4.3. The Hon'ble Bombay High Court in the case of Voltas Ltd. v. ACIT (2012) 349 ITR 656 / 70 DTR 433 (Bom.)(HC)has held as follows: "even otherwise even the above reasons given subsequently do not satisfy the jurisdictional requirements of Section 147(1) of the Act inasmuch as they do not undertake that there was a failure by the assessee to disclose fully and truly all material facts necessary for the assessments." 4.4. The Hon'ble Bombay High Court in the case of Tao Publishing (P) Ltd. v. Dy.CIT reported in (2015) 370 ITR 135 (Bom.), has held as follows:- "10. As stated above, the reasons supplied to the Petitioner do not disclose that there was any failure on the part of the Petitioner to provide all the material facts. That being the position, this....
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.... if the following conditions are satisfied: (a) an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year; and (b) unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee: (i) 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 (ii) to disclose fully and truly all material facts necessary for his assessment for that assessment year. Condition (a) is admittedly satisfied inasmuch as the original assessment was completed under section 143(3) of the said Act. Condition (b) deals with a special kind of escapement of income chargeable to tax. The escapement must arise out 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. This is clearly not the case here because the petitioner did file the return. Since there was no failure to make the return, the escapement of income cannot be attributed to such failure. This leaves us with the escapement o....
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.... the four year period in the circumstances narrated above. 4.8. Applying the propositions laid down in the above case law to the facts to this case, we have to necessarily hold that the re-opening of the assessment proceedings is not valid that there is not even a whisper in the reasons recorded for the reopening of the assessment that there is a failure on the part of the assessee to disclose fully and truly all the necessary material facts required for assessment in view of the 1st proviso to Section 147 of the Act. In this case no tangible materials have come to the possession of the Assessing Officer subsequent to the Assessment Order u/s 143(3). Re-opening is done based on the same material and record and hence it is bad in law. As far as the contention, that there is a change in opinion is concerned, we are unable to agree with the ld. Counsel for the assessee as there was neither a query on this issue by the Assessing Officer during the original assessment proceedings, nor there was a reply by the assessee. Hence there was no opinion formed. Thus, the question of change of opinion does not arise. 4.9. In any event, as we have held that the re-opening is bad....
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....e heads of the income. 3. On the facts and circumstances of the case and in law, ld. CIT(A) erred in directing the Assessing Officer to allow set off of derivative loss against the addition on account of cash credit against the spirit of the law as amended subsequently. 4. That the appellant craves leave to add, amend, modify, rescind, supplement, or alter ground stated hereinabove, either before or at the time of hearing of this appeal. 16. Brief facts qua the issue are that the assessing officer while making assessment stated that unexplained cash credit u/s 68 of the Act to the tune of Rs. 14,85,00,000/- cannot be treated as business income because it is not an income classifiable under any heads of income as per section 14 of the Act. Therefore, such income is not eligible to be set off with brought forward business losses and unabsorbed depreciation. 17. Aggrieved by the stand so taken by the Assessing Officer the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer observing the following: " 5.3. I have perused the assessment order, submissions of the assessee, report of the A.O....
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....tion made of unexplained cash credit." 18. Aggrieved by the order of ld. CIT(A), the revenue is in appeal before us. The ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand the ld. Counsel for the assessee has relied on the order of the ld CIT(A). We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note that the entire amount has been credited in the books of the assessee. Therefore, it can be implied that these receipts are in the nature of business receipts. This view is supported by the decision of Hon'ble Supreme Court in the case of Lakhmichand Baijnath vs. CIT 35 ITR 415 where sums found credited in the books of the assessee were treated as business profits. We do not find any infirmity in the order passed by the CIT(A).That being so, we decline to interfere with the order of Id. C.I T.(....