TaxTMI 
TaxTMI 
2020 (12) TMI 255
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.... as well as on facts. With this, we take ITA 795/Chd/2017 as the lead case. This lead appeal raises the following substantive grounds of appeal: "1. That the Ld. Assessing Officer has erred in law in framing the assessment under section 148 of the Act which in fact was to be framed under section 153C of the Act as the documents found at the premises of the person who was searched has been the base of re-opening of the case of the assessee and the assessment can be framed only under section 153C being a code in itself and as such the assessment framed under a wrong statutory provision is void ab initio and thus illegal. 2. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in law in upholding the action of the assessing officer resorting to the provisions of Section 148 in as much as there has been no escapement of income warranting issuance of notice under Section 148 thereby re-opening the already completed assessment and as such the assessment framed is illegal, arbitrary and unjustified. 3. That the re-opening is based on some borrowed information without there being a reason to believe which is mandatory and as such....
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....000/- in the registered sale deed dated 05.06.2009. Assessing Officer after making independent enquiries recorded reasons that unaccounted receipts were involved in the transaction and the assessee as his share of sale consideration has received 1,87,50,000/- out of total sale consideration for the said property of Rs. 11,25,00,000/-. His share being 1/6th in the said property and therefore, capital gains amounting to Rs. 95,83,334/- have escaped assessment. Assessing Officer initiated re-assessment proceeding by issue of notice u/s. 148 dated 15.01.2015. 5.2 Appellant reiterated his submissions made before assessing officer. It was submitted that assessing officer rejected the objections of the assessee which is not warranted for the reasons as under:- i) With regard to the assessing officers opinion that there was failure on the part of assessee to disclose fully and truly all the material facts necessary for framing the assessment, it was submitted that assessee had filed his return of income on 26.05.2011 declaring capital gains on the sale of impugned property and hence disclosed fully and truly all the material facts. ii) It was submitted that the s....
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....e of the beneficiaries of the accommodation entries. In the instant case specific and relevant documents pertaining to the said property sold by the assessee with 5 others were found and on that basis and after independent enquiries, A.O. formulated his reason to believe that income of the assessee has escaped assessment. 5.3.1 Based on the information in his possession, assessing officer formed his reason to believe that some income had escaped assessment and so issued notice u/s. 148 of the Act. It has been held by Hon'ble Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (291 ITR 500) that at the stage of issue of notice u/s. 148 the only question to be seen is whether there was relevant material, on the basis of which a reasonable person could have formed the requisite belief. Whether material would conclusively prove escapement of income is not the concern at the stage of issue of notice u/s. 148. It is so because the formation of belief is within the realm of the subjective satisfaction of the Assessing Officer. In view of the judgment of Hon'ble Supreme Court (supra) and by respectfully following the same, the action of the assessi....
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....omputed long term capital gains of the share of the assessee on the sale consideration on Rs. 11,25,00,000/- and made addition of Rs. 81,53,086/- on account of long term capital gains. 6.2 Appellant made submissions as under:- i. It was submitted that assessing officer has based the addition on the photostat copies of sum documents found from the premises of the third person which were only shown during the course of assessment proceeding and copies of the same were not given to the assessee. The contents in the alleged receipts and agreement to sell are denied as it does not appear to have been signed by the appellant. The minutes of the meetings does not mentioned that the property is being purchased at the higher amount then that mentioned in the sale deed. The GPA in the name of Sh. Vijay Sahu is not being denied which in any way does not support the contention of the AO. Additions cannot be made on the basis of photocopies. Appellant placed reliance on the decision of Apex Court in the case of Moosa S Madha and Azam S Madha (supra) which has been followed by Hon'ble ITAT, Chandigarh Bench in the case of DCIT vs. Nand Lal Babu Ram ITA 780/Chd/2008. ....
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....greed that the documents related to general power of attorney are true copies and he was involved in getting clearance and doing other formalities related to sale of impugned property on behalf of the assessee. Therefore, it is clear that the above documents seized which are photocopies but are genuine documents related to the transaction of the said property. The photocopies of these documents have been corroborated by the surrounding circumstances, other related documents like demand draft etc and the admission of Sh. Vijay Sahu who was instrumental in the sale of this property and hence these documents are self explanatory and not dumb documents as argued by the appellant. Therefore the reliance of the appellant on the decision of ITAT Chandigarh Bench, in the case of Nand Lal Babu Ram is not relevant as in this case the addition were made on the basis of documents which were not in the possession of the assessing officer. Therefore the case of Hon'ble Supreme Court in the case of Moosa S Madha and Aazam S Madha (supra) is distinguishable on facts in the case of the assessee. In the instant case the documents have been seized from a relevant source which has been corroborate....
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....0 Sq. Yards to M/s. Great Value Infrapromotors Pvt. Ltd. Meerut (U.P.) through Registered Sale Deed dated 5.6.2009. As per the said Registered Conveyance Deed, the total Sale consideration received for the said property was Rs. 5,50,00,000/- (Rupees Five Crore Fifty Lacs only). The said property was purchased by the assessee alongwith 5 other co-owners on 27.01.2006 from M/S. Electrofab Engineering Pvt. Ltd., Mumbai vide R.P. No. 332 dated 27.01.2006. ii) It is clear that the property under consideration i.e. Residential House No. 11, Built on Plot No. 83, Sec-9A, Chandigarh is a capital asset within the meaning of section 2 (14) of the I T Act 1961-residential in nature and covered within Municipal Limits of City Chandigarh. iii) Amongst the documents forwarded by the O/o ACIT, Central Circle, Meerut a receipt which has been duly signed by the assessee Sh. Amarjit Sing Randhawa on behalf of all the sellers has also been received. As per the said receipt, the assessee has admitted to have received an amount of Rs. 7,74,00,000/- (Rupees-Seven Crore & Seventy Four Lacs only) from Sh. Bhupinder Singh Bajwa, Representative of M/s. Great Value Infrapromoters P....
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....lved in this transaction. It is also clear that the assessee i.e. Sh. Amarjit Singh Randhawa has received total sale consideration of Rs. 1,87,50,000 (i.e. 11,25,00,000/-) with respect to his share in the property House No. 11, Built on Plot No. 83, Sec-9A, Chandigarh as against Rs. 91,66,666 (Rs. 5,50,00,000/-) his share as per registered sale deed dated 05.06.2009 of the said property. Further, a perusal of the ITR of the assessee for the period under consideration (i.e. A.Y. 2010-11) reveals that the assessee has declared capital loss of Rs.-(1430247) during the year. In view of the above, the case of the assessee is required to be examined in depth as I have reasons to believe that the amount of Rs. 95,83,334/- (i.e. Rs. 1,87,50,000-Rs. 91,66,666) has escaped the ambit of Capital Gain Tax. Thus, after verification of records with respect to the above mentioned assessee, I have reason to believe that an income of Rs. 95,83,334/- and any other income which may subsequently come to the notice of the AO during the course of assessment proceedings, has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961. The escapement....
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....t is well settled law that validity of re-assessment proceedings to be determined with reference to reasons recorded u/s. 148 of the I.T. Act. Copy of the reasons as supplied by the Ld. DR dated 25.3.2010 are reproduced as under:- "Name of the Assessee: M/s. J.M.D. Astrological Consultancy Services (P)Ltd. PAN No.: AABCJ 4419N Address: House No. 1456, Sector 4, Panchkula Assessment Year: 2008-09 The Information was received from Addl. DIT, UNIT-IV, New Delhi vide his office letter No. Addl, DIT(Inv)/Unit IV/Beneficiaries/2008-09/7, dated 06-04-2009 in which it was mentioned that: A search u/s. 132 of the IT, Act, 1961 was conducted at the office premises of Shri Tarun Goyal, CA at 13/34, WEA, Arya Samaj Road, Karol Bagh, New Delhi by the Investigation Wing on 15-09-2008. During the course of search and later inquiries it was established that Sh. Tarun Goyal had floated nearly 90 Private Limited companies and firms for providing accommodation entries. The directors of these companies were his employees who worked in his office as peons, receptionists etc.. All the documents were got signed from these employees. A number of Bank A....
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.... done at the instructions of Sh. Tarun Goyal. One of the auditors has stated that proper records for transactions and contracts of shares, held as investment or purchased or sold could never be verified. In most cases, share certificates, shares allotment advises and/or other related documents were not available for the auditor's verification and it could not be verified/ascertained whether the shares were actually allotted to the company and whether they were held in the name of the company. g. During the course of search, it was revealed that all the passbooks, cheque books, PAN cards etc. were always in possession of Shri. Tarun Goyal. h. All the bank account opening forms are the handwriting of Sh. Tarun Goyal, and thus Sh. Tarun Goyal controlled and managed these companies as also operated all the bank accounts. i. All the books of accounts of all the companies have been retrieved from the computers/laptop of Sh. Tarun Goyal j. Sh. Tarun Soyal has given letters for the release of bank accounts of companies put under restraint after search. No such application was received from the so called directors of the companies. k. Sh. Tar....
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.... that he has provided accommodation entries to various companies by creating number of private limited companies and firms. All his employees were involved in the same to provide bogus accommodation entries. The list of beneficiaries companies were attached with this letter and request was made to CIT-I Panchkula to transmit the same information to the respective Assessing officer of his charge so that further invigilation may be carried out by them and necessary action may be initiated against these beneficiaries. In the list/annexure of this letter for assessment year 2008-09, name of the assessee has been mentioned. Copy of the statement of Shri Tarun Goel is placed on record. However, in his statement there is no mention of name of the assessee company to whom he has allegedly provided any bogus accommodation entry. How the Additional DIT (Inv), New Delhi prepared the list of beneficiaries naming the assessee therein is not established. No basis is discussed as to how the list/annexure to the letter of ADIT (Inv.) was prepared. It is virtually a direction issued in the letter of Addl. DIT (Inv.) New Delhi to the Assessing officer to make further investigations so as to initiate....
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....for reopening of the assessment and independently arrived at a belief that income has escaped assessment, therefore, Assessing officer did not get jurisdiction to make re-assessment. There is, thus, no material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The re-assessment proceeding were invalid and are liable to be quashed. 13.1 The Hon'ble Delhi High Court in the case of CIT Vs. Atul Jan & Smt. Vaniti Jain [2008] 299 ITR 383(Delhi) held as under:- "Held, dismissing the appeals that the only information was that the assessee had taken a bogus entry of capital gains by paying cash along with some premium for taking a cheque for that amount. The information did not indicate the source of the capital gains which in this case were shares. There was no information which shares had been transferred and with whom the transaction had taken place. The Assessing Officer did not verify the correctness of the information received by him but merely accepted the truth of the vague information in a mechanical manner. The Assessing Officer had not even recorded his satisfaction about the correctness or otherwise of t....
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....escaped assessment. There was no substantial question of law for consideration." 13.4 The Hon'ble Delhi High Court in the case of Sarthak Securities Co. P. Ltd. [2010] 329 ITR 110 (Delhi) held as under:- "Held, allowing the petition, that the formation of belief was a condition precedent as regards the escapement of the tax pertaining to the assessment year by the Assessing Officer. The Assessing Officer was required to form an opinion before he proceeded to issue a notice. The validity of reasons, which were supposed to sustain the formation of an opinion, was challengeable. The reasons to believe were required to be recorded by the Assessing Officer. Once the ingredients of section 147 were fulfilled, the Assessing Officer was competent in law to initiate the proceedings under section 147. The Assessing Officer was aware of the existence of the four companies with whom the assessee had entered into transaction. Both the orders showed that the Assessing Officer was made aware of the situation by the investigation wing and there was no mention that these companies were fictitious companies. Neither the reasons in the initial notice nor the communication provid....
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....ling of the return for the assessment year 1991-92 had weighed with the respondent for arriving at the satisfaction about the failure on the part of the assessee and escapement of assessment of income. However, the material on record showed that the return had been filed. In such circumstances, it could not be said with certainty as to which fact would have weighed with the officer concerned and once it was shown that an irrelevant fact had been taken into consideration, to what extent the decision was vitiated would be difficult to say. Moreover the Income-tax Officer had stated that the payment which was stated to be undisclosed income relevant for the assessment year 1991-92 could have been made during the financial year 1990-91 relevant to the assessment year 1991-92 and hence, "to cover up that probability, protective addition was made in the assessment year 1992-93". The first appellate authority decided the appeal for the assessment year 1992-93 on January, 1996, and the reasons had been recorded thereafter on August 18, 1997. The notice of reassessment was not valid and was liable to be quashed." 13.7 The Hon'ble Punjab & Haryana High Court in the case of CIT V....