TaxTMI 
TaxTMI 
2020 (12) TMI 1057
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....out application of mind, mechanical, on borrowed satisfaction, and on wrong facts, thus unwarranted in law as well as on merits. 3. That in the absence of any finding in the reasons that alleged escaped income has been there on account of failure on the part of the assessee to fully and truly disclose all material facts necessary for asstt., the reopening as well as all subsequent proceeding are illegal and without jurisdiction in view of 1st proviso to sec.147, as the earlier regular asstt. already stood completed u/s.143 (3 ). 4. That in the absence of disposing of the objections filed against initiation of reasstt. proceedings, the complete asstt. proceedings are illegal and unsustainable in law. 5. That under the facts and circumstances, the approval u/s.151 of Pr. CCIT/CIT is mechanical, non speaking and without application of mind, which approval cannot provide a valid jurisdiction to proceed u/s. 147 /148. 6. That under the facts and circumstances, addition of Rs. 5,00,000 /- u/s. 68 for alleged accommodation entry from M/s. Aasheesh Capital Services (P) Ltd., a company alleged to be related to Sh. S. K. Jain is illegal, unjustified and un....
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..... 8. The reasons recorded while issuing the notice u/s 148 are as under: " 3.3 As per information received, he entry of assessee found in the seized documents of Jain brothers corroborates with the Banking channel and during the year the following entries have been taken by the assessee from the entry operators: Cheque Book date From company name To company/ person name Name of the issuing Bank Cheque/ RTGS/ PO No./Cheque Date Amount ( Rs.) Name of the Middle Man Mediator Annexure No Page No. 30. 11. 2009 Aasheesh Capital Services Pvt. Ltd. Designarch Infrastructure Pvt. Ltd. Axis PO No. 030971 5,00,000 GL Gupta A- 17 Back Page- 47 4. The return of income of assessee company has been downloaded from the ITD system and the same was examined in the light of information received from Investigation Wing. On comparative examination of return of income of the assessee company for A.Y. 2009-10 & 2010- 11, the following has been observed with regard to the share capital and share premium of the assessee company: S. No. Particulars A. Y. 2009 - 10 A. Y. 2010 - 11 Increase (+)/ Decrease (-) 1. Aut....
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....y concluded from the above facts that the assessee company has given its own fund to Sh. S.K. Jain to introduce it in the form of share capital and share premium through the companies being controlled by Sh. S. K. Jain Group. 6. The above facts clearly establish that the assessee company M/s Designarch Infrastructure Pvt. Ltd. has taken accommodation entries in the form of share application money and share capital from the entry providing companies being controlled by S.K. Jain group. As per information available on record i.e. ITR filed for A.Y. 2010-11, the full and true disclosure with regard to the above transactions have not been made by the, assessee company as the fact that the Share Capital and Share Premium is being introduced through these dummy companies is nowhere disclosed by the assessee company. In view of explanation 2 to clause b of proviso of section 147 of the Income Tax Act, 1961, where a return of income has been furnished by the assessee but no assessment has been made and it is noticed that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return, deemed, to be cases where income chargeable t....
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.... that this direction does not entitle the revenue to summon or call for any details from the assessee as the revenue has already had 120 months from the date of filing of return and 43 months from the date of issue of notice u/s 148 at their disposal to come out with the details of the deposit. 15. Our above view in respect of Rs. 5,00,000 /- leads to examination of applicability of Explanation-3 to Section 147 of the IT Act inserted by the Finance (No. 2 of 2009 ) with regard to the ground no 7 of the appeal where it was contested that addition of Rs. 2. 2 cr. made by the Assessing officer for which no satisfaction has been recorded at the time of reopening or during the reassessment proceedings. 16. Explanation-3 to Section 147 reads as under: " Section 147 .......................... [Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons....
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....levy taxes on the entire income which has escaped assessment. The learned counsel relied upon the cases of Supreme Court in CIT v. Sun Engg. Works ( P.) Ltd. [1992 ] 198 ITR 297/ 64 Taxman 442 and V. Jaganmohan Rao v. CIT/CEPT [1970 ] 75 ITR 373. On the other hand learned counsel for the assessee submitted that the words, ' and also' in section 147 signify that unless the Assessing Officer assesses the income with respect to which he has formed reason to believe within the meaning of section 147, it would not be open for him to assess or reassess any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings. Learned counsel relied upon the case of Jet Airways ( I) Ltd. ( supra) and also CIT v. Shri Ram Singh[ 2008 ] 306 ITR 343 (Raj.) and CIT v. Dr. Devender Gupta [2008 ] 174 Taxman 438 (Raj.). Reliance was also placed in the case of C. J. International Hotels Ltd. v. ITO being IT Appeal No. 2736 / Del./ 2006 dated 24 - 10 -2008. 13. Similar contention was raised before the Division Bench of Bombay High Court in the case of Jet Airways ( I) Ltd. ( supra). The Court referred to the interpretat....
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....case of V. Jaganmohan Rao (supra) wherein it was held that the object of section 147 enures to the benefit of the revenue and it is not open to the assessee to convert the reassessment proceedings as an appeal or revision and thereby seek relief in respect of items which were rejected earlier or in respect of items not claimed during the course of the original assessment proceedings. 15. In Dr. Devender Gupta' s case ( supra), learned Tribunal has relied upon the judgment of the Punjab & Haryana High Court, in CIT v. Atlas Cycle Industries [ 1989 ] 180 ITR 319 / 46 Taxman 315, and concluded that the basic condition is, that the Assessing Officer has reason to believe, that any income chargeable to tax has escaped assessment, for any assessment year, and it was found, that the section puts no bar on the powers of the Assessing Officer, to put to tax, any other income, chargeable to tax, which has escaped assessment, and which subsequently comes to his notice, in the course of the proceedings, but then, the prefixing words "and also", which succeeded " any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sectio....
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....the correct interpretation would be to regard those words as being conjunctive and cumulative. It is of some significance that Parliament has not used the word "or". The Legislature did not rest content by merely using the word " and". The words " and" as well as " also" have been used together and in conjunction." ** ** ** Evidently, therefore, what Parliament intends by use of the words "and also" is that the Assessing Officer, upon the formation of a reason to believe under section 147 and the issuance of a notice under section 148 (2 ) must assess or reassess: ( i ). ' such income'; and also (ii) any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section. The words ' such income' refer to the income chargeable to tax which has escaped assessment and in respect of which the Assessing Officer has formed a reason to believe that it has escaped ....
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.... Engg. Works (P.) Ltd. [ 1992 ] 198 ITR 297, the Supreme Court dealt with the following question of law in the course of its judgment:- " Where an item unconnected with the escapement of income has been concluded finally against the assessee, how far in reassessment on an escaped item of income is it open to the assessee to seek a review of the concluded item for the purpose of computation of the escaped income?" The issue which arose before the Supreme Court was whether, in the course of a reassessment on an escaped item of income could an assessee seek a review in respect of an item which stood concluded in the original order of assessment. The Supreme Court dealt with the provisions of section 147, as they stood prior to the amendment on 1 - 4 - 1989. The Supreme Court held that the expression " escaped assessment" includes both "non- assessment" as well as " under assessment". Income is said to have escaped assessment within the meaning of the section when it has not been charged in the hands of an assessee during the relevant assessment year. The expression " assess" refers to a situation where the assessment of the assessee for a particular year is, for the ....
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....lanation is that once an Assessing Officer has formed a reason to believe that income chargeable to tax has escaped assessment and has proceeded to issue a notice under section 148, it is open to him to assess or reassess income in respect of any other issue though the reasons for such issue had not been included in the reasons recorded under section 148 (2 ). 14. The second l ine of precedent is reflected in a judgment of the Rajasthan High Court in CIT v. Shri Ram Singh [ 2008 ] 306 ITR 343. The Rajasthan High Court construed the words used by Parliament in section 147 particularly the words that the Assessing Officer 'may assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings' under section 147. The Rajasthan High Court held as follows: "... if is only when, in proceedings under section 147 the Assessing Officer, assesses or reassesses any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had " reason to believe" to be so, then, only in addition, he can also put to tax, the ot....
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....of the Punjab & Haryana High Court in CIT v. Atlas Cycle Industries [ 1989 ] 180 ITR 319. The decision in Atlas Cycle Industries' case ( supra) held that the Assessing Officer did not have jurisdiction to proceed with the reassessment, once he found that the two grounds mentioned in the notice under section 148 were incorrect or non- existent. The decisions of the Punjab & Haryana High Court in Atlas Cycle Industries' case (supra) and of the Rajasthan High Court in Shri Ram Singh' s case ( supra) would not be affected by the amendment brought in by the insertion of Explanation 3 to section 147. 16. Explanation 3 l ifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessment on another issue which came to his notice during the proceedi....