TaxTMI 
TaxTMI 
2021 (3) TMI 728
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....ar Jain and Virendra Kumar Jain namely M/s Hilfridge investments Ltd. and M/s Worldlink Telecom Ltd. during financial year 2007-08. It is found that during the course, of search & survey proceedings, it was revealed that Sh. Surendra Kumar 'Jain and Sh. Virendra Kumar Jain was engaged in the business of providing RTGS/cheques/PO/DD in lieu of cash through many dummy companies. The above two companies are found to be dummy companies of these persons. In view of the above, I have reasons to believe that M/s Space Chem Engineers Private Limited has plough back his own undisclosed money to be extent of. Rs. 30,00,000/- in the disguise of share capital/share application money during the financial year 2007-08. Thus, the income of the assessee, chargeable to tax for A.Y. 2008-09 has escaped assessment within the meaning of section 147 of the Act, being failure to disclose the correct income on the part of assessee." 3. Subsequently notice u/s 148 was issued after obtaining prior approval of Addl. CIT, Range-2, Ghaziabad on 27th March, 2015. However, none attended, nor any written submissions were filed in compliance to notice u/s 148 of the Income Tax Act. There ....
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....O invoking the provisions of section 68 of the I.T. Act treated the same as unexplained cash credit and made addition of Rs. 30 lacs to the total income of the assessee. 9. Before Ld. CIT(A), the assessee, apart from challenging the addition on merit challenged the validity of reassessment proceedings. The assessee also filed certain documents in shape of additional evidences since the AO had not given adequate opportunity of being heard to the assesee. However, the Ld. CIT(A) rejected the application filed for admission of the additional evidences under Rule 46A and sustained the addition on merit on the ground that no specific submissions have been made by the assessee during the appeal proceedings. 10. So far as the validity of the reassessment proceedings are concerned, the Ld. CIT(A) decided the same against the assessee by observing as under :- " Ground nos. 2, 3, 4, 5 and 7: The appellant has challenged the order contending that AO did not have reason to believe and appellant did not provide any material based on which AO made his belief. Examination of facts reveals that appellant e-filed return declaring an income of Rs. 20,420/-. The AO noted that the appel....
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....is case wherein he had information in his possession and it is not a case of change of opinion. The appellant failed to substantiate that the other case laws relied upon by it are factually and materially similar to its own case. Keeping in view above facts and position of law these grounds of appeal are not maintainable, accordingly, dismissed." 11. Aggrieved with such order of the Ld. CIT(A) the assessee is in appeal before the Tribunal by raising the following grounds :- 1. "Because, the order of learned lower authority is bad in law & against the facts and circumstance of the case. 2. Because, Id. CIT(A), erred in law in sustaining the validity of the notice u/s 148, which is issued on non-existing and wrong reasons on which no addition is made and so notice is without any foundation and proceedings are void ab initio. 3. Because, Id. C.l.T (Appeals) has further erred in not appreciating that neither there is any material nor any ' reasons to believe' based on any material and notice is issued without any application of mind and satisfaction of AO/approving authority to conduct roving enquiries and hence the same is beyond jurisdiction. ....
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....issue of notice u/s 148 of I.T. Act' . However, it is not known who has signed this, since there is no signature of any authority after such approval. Referring to page 31 of the paper book, he submitted that the AO vide letter dated 27th March 2015 addressed to the Addl. CIT Range 2, Ghaziabad has forwarded the proposal u/s 147 of the I.T. Act in case of the assessee. He submitted that had the Additional CIT applied his mind the so called typographical error as mentioned by the AO would have come to his notice and either he would not have given his approval or would have directed the AO to revise the proposal. He submitted that having not done so it is clearly discernable that the Addl. CIT has not at all applied his mind and has given his approval in a mechanical manner. Referring to the following decisions, he submitted that when the notice issued u/s 148 of the I.T. Act was without any satisfaction or application of mind by the approving authority, such notice and subsequent proceedings become "void" :- A.YUM REST. ASIA PTE LTD. VS DCIT [2018]99 TACMANN,COM 423 (DEL) B. CIT V. S. GOYANKA LIME & CHEMICALS LTD. (2015) 56 TAMNANN.COM 390 (MP)-SLP DISMISSED IN 64 ....
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.... come before your honour on the basic ground of minor technical defect in Recording the Reasons for reopening the case u/s 147 for A.Y. 2008-09. The fact of the case are - that AO while Recording the Reasons for Reopening the case u/s 147 of Income Tax Act in assessee's case (i.e. M/s Space Chem Engineers Pvt. Ltd. PAN-AALCS8969E) for A.Y. 2008-09, has mentioned the names of two companies i.e. M/s Hillridge Investment Limited & M/s World Link Telecom Ltd., from whom bogus Share Application money/Capital amounting to Rs. 30 lakhs were received by the assessee company, in entry operator case of Surender Kr. Jain and Virender Kr. Jain Group (on whom the Income Tax department conducted search and they accepted that they are entry operators as the document had been received by the A.O. from the Directorate of Income Tax, Investigation-il, New Delhi). They had also named 3 companies by whom the amount of Rs. 30 lakhs (Rs. 10 Lakhs by each co.) was paid to the assessee company by way of Share Application/Capital in lieu of cash received and cheques issued and necessary documents were created to prove Creditworthiness, genuineness of transaction and Identity was created of the Bog....
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....paid. Whereas copy of 3rd company's 1TR (i.e. M/s Lotus Realcon Private Limited) has not been filed. Further as per latest Company Master Data from MCA site shows that in the case of M/s Lotus Realcon Private Limited the last Balance Sheet was filed on 31.03.2015 and Status of the company is being shown as that it has got 'Converted to LLP'. Hence, the Creditworthiness of 3 companies is doubtful. 5. The many cases Laws mentioned by the assessee's representative are not similar on facts of the present case and issues involved are of facts and hence not applicable in this case. Even Ld. CIT(A) in his order has clearly identified this issue & discussed (see- Para-5.2.1 Page- 24,25). 6. The dishonest intent of the assessee is clearly visible as mentioned in the Asstt. Order, that assessee was given so many opportunities to appear before A.O. by issuance of Notices u/s 142(1) & penalty notices (Page-2 of Asstt. Order) but none appeared on behalf of the assessee. Just at the fag end of the Time Barring month of Assessment (i.e. on 31.03.2016), the assessee appeared and objected to the reasons recorded by the A.O. The assessee was given an opportunity to prod....
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.... Telecom Ltd. has inadvertently written in the reasons recorded u/s 147. I find the Addl. CIT while giving approval has simply mentioned " Yes. I am satisfied that this is a fit case for issue notice of u/s 148 of the I.T. Act" Under these circumstances, I have to see the validity of such reassessment proceedings. 21. A perusal of the reasons recorded shows that the name of the companies from whom the assessee company is alleged to have accepted share capital / share application money are different from the companies mentioned in the assessment order from whom the assessee company has actually taken the share capital / share application money. Even the Ld. DR in his written synopsis has also admitted the mistake stating that the same is a typographical error. This clearly shows that neither there was any independent application of mind by the AO while recording reasons nor application of mind by the Addl. CIT while giving approval. The reassessment proceeding was made on wrong and incorrect facts and, therefore ,makes the reopening null and void. 22. The Hon'ble Delhi High Court in the case of PCIT vs. Meenakshi Overseas (P) Ltd. reported in 395 ITR 677 (Delhi) has held that ....