TaxTMI 
TaxTMI 
2021 (9) TMI 620
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....onvenience. 2. Let us take up the cross objections of assessee and revenue appeal for A.Y.2006-07. The assessee raised the following grounds challenging the validity of reopening of assessment in its cross objections. "1. On the facts and in the circumstances of the case and ion law, the Commissioner of Income Tax (Appeals) erred in upholding the validity of reopening of assessment u/s.148 of the Act. Respondent hereby reserves right to add, alter or amplify the above grounds of cross objection" 2.1 The revenue has raised the following grounds of appeal:- "1.Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 2,99,98,000/- u/s.69 of the I.T. Act, 1961 made by the AO holding that the statement of Shri Aniruddha V, Phadke, as relied upon by the AO, did not mention the name of the assessee without appreciating that the alleged modus operandi as admitted by Shri Aniruddha Phadke in the statement and assessee's involvement in such modus operandi was established only when Shri Phadke was confronted with documents showing the name of the assessee with details of cash acceptance. ....
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....me at Rs. 120,31,65,190/-. The ld. AO observed in para 2 of his assessment order as under:- "2. An information was received on 28.03.2013 from the office of the DDIT(Inv.)-1(3), Pune vide letter No.PN/DDIT(Inv.)/U-I(3)/PIL-BHL/2012-13/1020 dated 26.03.2013. As per this information a search & seizure action u/s.132 of the IT. Act was conducted in the case of M/s. Praj Industries Ltd. on 03,04.2012. The M/s. Praj Industries Ltd. is engaged in the business of designing, development and installation of distillery equipment and carrying out turnkey projects in brewery and distillery sectors. Further, it has been informed that this company has provided services of installation or modernization of distillery plants in the case of the assessee company i.e. M/s, Bajaj Hindustan Ltd. 3. As per intimation, during the course of Search and Seizure proceedings certain incriminating documents were found and seized. As per these documents M/s, Praj Industries Ltd. has indulged in inflating the cost of project as per the needs of the clients and returning the inflated amount in cash. These documents further revealed that the assessee is a beneficiary of such a modus operand! of in....
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....o tax the entire cash of Rs. 2,99,98,000/- in its return of income and ought not to have claim depreciation on said Plant & Machinery acquired/installed from M/s. Praj Industries Ltd. This has resulted into' escapement of income to the tune of Rs. 2,99,98,000/- which exceeds Rs. 1,00,000/- and involves short levy of tax. Explanation 1 to first proviso to Sec. 147 is very clear in this regard, which reads as under : "Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso." Therefore, the assessee has itself failed to disclose fully and truly all material facts relevant to the assessment year under consideration. In view of the above, I have reason to believe that the income chargeable to tax exceeding Rs. 1,00,000/- has escaped assessment, resulting into short levy of tax. Hence, the assessee's case is hereby reopened for reassessment u/s. Z47 of the I.T. Act, 1961 for AY 2006-07. The necessary prior approval in this regard has ....
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....edings, which was duly verified by the ld. AO and assessment completed accordingly by the ld. AO allowing the claim of depreciation. 3.5. The ld. AO disposed of these objections by way of a separate speaking order dated 27/02/2014 by stating that the proviso to Section 147 of the Act would be applicable only when (a) assessment is completed u/s.143(3) or 147 of the Act (b) period of four years from the end of the relevant assessment has lapsed (c) income for the assessment year was escaped by reason of failure on the part of the assessee to disclose fully and truly all material facts to make the return u/s.139 /142(1) /148. The ld. AO observed that when all the aforesaid three conditions are cumulatively satisfied, the first proviso could be invoked. The ld. AO further proceeded to state that the first condition stipulated hereinabove get satisfied in as much as the fact that the original assessment was completed u/s. 143(3) of the Act. The ld. AO further stated that the original assessment was completed on 22/12/2008 and the pre-requisite stipulated in second condition should be reckoned from the end of the relevant assessment year in which assessment was completed. Since the n....
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....cts before the ld. AO in the original assessment proceedings. The law is very well settled that the assessee is absolutely under no obligation to inform the ld. AO about the possible inferences which might be raised against him. Hence, it could be safely concluded that there was no failure on the part of the assessee to disclose the material facts that are material for the purpose of assessment in the original assessment proceedings, by giving full and true disclosure. With regard to the failure on the part of the assessee, the ld. AR rightly placed reliance on the decision of the Hon'ble High Court in the case of Sesa Sterlite Ltd., vs. ACIT reported in 417 ITR 334(Bom). The relevant operative portion of the said order is reproduced as under:- "21. The other main objection of the Assessee is that there was no belief on the part of the Assessing Officer that escapement of income had arisen by reason of any 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 or to disclose fully or truly all material facts necessary for the assessment. It is not good enough for the Asses....
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....municated to the petitioner reads thus:- "Reasons for reopening u/s 148 for A.Y.2-011-12 is provided as under : 1. The information has been received from DDIT (Inv) Unit 8 (3) Scindia House, Mumbai-38 vide their letter dated 23-3-2018 which is received in this office on 28-03-2018. 2) The DDIT (Inv) Mumbai has received information that M/s Nivyah Infrastructure & Telecom Services Ltd is a penny stock listed do in BSE with scrip code (517634) and this company has been used to facilitate introduction of unaccounted income of members of beneficiaries in the form of exempt capital gain or short term capital loss in their books of accounts. It was noticed that share price of M/s Nivyah Infrastructure & Telecom Services Ltd rose from Rs. 39 in 21st July 2009 to Rs. 2050 on January 2011 and dipped to Rs. 47.20 on 18th July 2012. However, the financials of the company for the relevant period do not show any substantial change so as to support such huge share price movement. The company does not have business worth while to justify the sharp rise in market price of shares. The sharp rise in market price of this entity is not supported by the fundamentals of the co....
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....an four years have lapsed from the end of assessment year under consideration. Hence, necessary sanction to issue the notice u/s148 has been obtained separately from the Pr. Commissioner of Income Tax as per the provisions of section 151 of the Act. 5. Notice u/s 148 was issued with prior approval of Pr. Commissioner of Income Tax-6 Mumbai." 3.9. We find that the Hon'ble High Court dealt with the above in the following manner:- "5. On receipt of above reasons on 9.8.2018, the petitioner filed its objections to the reasons in support of the impugned notice and in particular pointed out that the assessee had dealt with a company called "S.V.Electricals Ltd" and not with M/s Nivyah Infrastructure & Telecom Services Ltd. The name of company "S.V.Electricals Ltd" had subsequently changed on 14.2.2012 to M/s Nivyah Infrastructure and Telecom Ltd. It had also pointed out in its objection that during the regular assessment proceedings, details of the petitioner's dealing in scrip namely "S.V.Electricals Ltd" had been submitted during the regular assessment proceedings. The objections primarily proceeds on the basis, that the reasons as recorded, display total non-a....
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....s escaped assessment. In this case, the reasons indicate that the Assessing Officer has not carried out such exercise and accepted the report of the Deputy Collector of Income Tax (Investigation) Mumbai to conclude that the petitioner had dealt with Nivyah Infrastructure and Telecom Services Ltd during the previous year relevant to the assessment year 2011-12. Admittedly, there was no company by name "M/s Nivyah Infrastructure & Telecom Services Ltd" in existence during that year for consideration. This clearly shows that the Assessing Officer acted on the satisfaction of the Deputy Collector of Income Tax (Investigation) that income chargeable to tax has escaped assessment. It must also be borne in mind that the impugned notice is issued beyond the period of four years from the end of the relevant assessment year in a case, where the assessment was completed under section 143 (3) of the Act. Therefore, the Assessing Officer would have to examine the information received in the context of the facts on record. If such an exercise were to be done, it is likely that the Assessing Officer would have come to the conclusion that there was no failure to disclose truly and fully all materi....
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....Ministry of Corporate Affairs (MCA) are enclosed. From the financials, Supreme Energy Pvt.Ltd., is prima facie a shell entity. 3. Further, as per the annual returns filed by Supreme Energy Pvt. Ltd. at MCA, the details of debenture holder/unsecured loan lender of Rs. 64 crore are not disclosed. The annual returns filed are enclosed. 4. Thus, the creditworthiness of the lender and genuineness as well as nature of the transaction is not explained as a supposedly shell company Supreme Energy Pvt. Ltd. has borrowed Rs. 64 crores to invest in debenture of Nu Power Renewables Ltd. and it has done no other business apart from this." 6. The above facts are the very reasons recorded by the Assessing Officer for issuing of the impugned notice. The only words added to the above letter in the recorded reasons are "In this case information received from the Office of the DIT (Investigation) Unit-4, Mumbai on 23rd March, 2017 vide letter dated 22nd March, 2017". This, of course, besides the introductory para and the concluding para where he records that he has reasons to believe that income chargeable to tax has escaped assessment. Thus, prima facie, there has been no ....
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....on "BHL" which was used in the said inflow excel sheet statement which was alleged by the ld. AO to be 'Bajaj Hindusthan Ltd'. This allegation was absolutely without any basis and assessee had categorically denied the same. In any case, the same was not even referred by the Pr. Commissioner of Income Tax in his Rule-9 report before the Settlement Commission in the case of Praj Industries Ltd. We find that the ld. CIT(A) in the instant case before us had deleted the additions on merits showing that the seized documents of Praj Industries Ltd., are dumb documents as there are no corroborative evidences involving the assessee thereon. The ld. DR by placing the order of the Settlement Commission and Rule-9 report of Pr. Commissioner of Income Tax in the case of Praj Industries Ltd., was trying to drive home the point that those seized documents are not dumb documents and accordingly, order of the ld. CIT(A) was wrong on merits of the addition. But as stated earlier, we find that in the entire Rule-9 report of PCIT in the case of Praj Industries Ltd., and the order of the Settlement Commission u/s.245D(4) of the Act, name of the assessee does not figure at all. 3.12. More importantly....
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....td., had engaged itself in inflation of sale bills only with EID Parry India Ltd., and Rhino Agencies Ltd., and another statement dated 04/06/2012, wherein he had explained modus operandi to inflation of purchases made by Praj Industries Ltd., We find in none of these places, the name of the assessee is involved. We find that the department had clubbed both the statements and alleged that assessee had taken accommodation bills from Praj Industries Ltd., and made payments by cheque and got back the money in cash from them as per the reasons recorded. This allegation is simply without any basis at all and is not emanating from the facts available on record. The statement recorded from Shri Aniruddha V Phadke dated 04/04/2012 and 04/06/2012 are enclosed in pages 21 to 31F of the paper book filed by the assessee before us. Even otherwise, we find that on merits, the addition has been made by the ld. AO in the sum of Rs. 2,99,98,000/- u/s.69 of the Act which talks about unexplained investment. We are unable to persuade ourselves to accept to this proposition of the ld. AO in as much as there is absolutely no investment made by the assessee so as to invoke the provisions of Section 69 of....