TaxTMI 
TaxTMI 
2018 (5) TMI 2103
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....sment was completed vide order passed u/s 143(3) on 02.04.2009 determining the income at Rs. 66,590/-. Subsequently, search and seizure operation u/s 132 of the I.T. Act was conducted at various business and residential premises of M/s Jindal Group of cases. Survey u/s 133A was also conducted in the business premises of the assessee. The case was centralized with Central Circle- 14 through order dated 31.12.2012 passed u/s 127 of the I.T. Act by the CIT, Kolkata-II, Kolkata vide No. F.No. CIT-KOL-II/Cent./12-13/6708. With effect from 15.11.2014 erstwhile Central Circle-14, New Delhi was re-designated as Central Circle-30, New Delhi. 3. The Assessing Officer issued notice u/s 148 dated 20.02.2015 by recording the following reasons :- "Reasons for issue of Notice U/s 148 in the case of M/s Pavitra Trexim Pvt. Ltd. for the A Y 2007-08" A search and seizure action in Jindal group of cases was carried out on 14/11/2011. As part of the search action, a survey u/s 133A was carried out in the case of Assessee Company at 13, Aunarnava, BB Ganguli Street, Room No. 05, Ground Floor, Born Bazar, Kolkata. During the course of survey statement of one Sh Kamal Kumar Sharma wh....
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....The funds by way of share capital & premium are shown to be received from 41 companies which are paper companies & run by entry operators. Hence the source of funds is non genuine. The said amount is liable to be added u/s 68 of I. T. Act." 4. In response to the said notice, the assessee filed return of income declaring Nil income on 21.03.2014. The assessee asked for the copy of the reasons which was supplied to the assessee. The objection of the assessee vide letter dated 29.05.2014 was disposed of by the Assessing Officer after due consideration and its request to drop the proceedings was rejected. During the course of assessment proceedings, the Assessing Officer observed that the assessee has received share capital of Rs. 2,34,17,000/- along with share premium of Rs. 21,07,53,000/-. He observed that the shares having a face value of Rs. 10/- each has been allotted to 41 share applicants @ Rs. 100/- each including premium of Rs. 90/- per share. During the course of assessment proceedings, the Assessing Officer asked the assessee to furnish complete details of new share applicants in the company and to furnish the register of minutes of meetings of board of directors, Share a....
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....n the argument advanced by the assessee, ld. CIT(A) held that the reopening of the completed assessment u/s 148 of the I.T. Act as well as reassessment u/s 147 of the I.T. Act is not as per law and, therefore, action of the Assessing Officer is void ab-initio. The relevant observation of the ld. CIT(A) from para 5.4 onwards read as under :- "5.4 I have carefully considered assessment order, written submissions, statements recorded by the Investigation Wing, case laws relied upon and oral arguments of Ld.AR. The objections/arguments of the appellant are discussed as under:- (i) In this case the original return of income was filed on 31.01.2008, declaring NIL income. The assessment u/s 143(3) of the Act was completed vide order dated 02.4.2009, at total income of Rs. 66,590/-. (ii) Subsequently, search and seizure action u/s 132 took place on 14.11.2011 in Shri B.C. Jindal group of cases and also survey u/s 133A of the Act, in the case of the appellant. Notice u/s 153C of the Act, was issued on 03.12.2013 and in response to this notice, return of income was filed on 20.12.2013, declaring NIL income, by way of filing a letter dated 20.12.2013 to consider the....
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....e Act, by issuing notice u/s 148 of the Act on 20.3.2014, on the change of opinion for the reasons recorded (which have been reproduced in the written submission by the appellant, supra) on the following basis: • statement of Shri Kamal Kumar Sharma, was recorded on 14.11.2011 during the survey action u/s 133A of the Act, at the business premises of the appellant, who is a service provider, • statement of director of the appellant company, Shri Naval Bihari Bhoot, recorded u/s 131 of the Act, on 14.11.2011, since he does not know anything about the appellant company and simply signs the documents, • affidavit of Shri Vikas Khaitan, dated 09.2.2012, who is an entry operator, • the information gathered during search and afterwards in the case of S.S. Jindal group, regarding bogus share capital taken at premium from 41 paper companies and invested in the 53 companies, which do not have substantive business activities. On the basis of above facts, the A.O. was having reason to believe that the source of funds in share capital! share premium, is non genuine and therefore, issued the notice u/s 148 of the Act. (ix) In ....
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....the Act, only on the basis of change of opinion or reviewing his own assessment, is bad in law and reassessment u/s 147 of the Act, is liable to be quashed. The AR has submitted that the following decisions of Hon'ble Supreme Court and various High Courts, supports the above arguments, which are worth reporting: * M/s Haryana Acrylic Manufacturing Co. v Commissioner of Incometax [2008] 175 TAXMAN 262 (HC - Delhi) * M/s Calcutta Discount Co. Ltd. V. ITO [1961] 41 ITR 191 (Supreme Court) * Assistant Commissioner of Income-tax (OSD) v. M/s Parixit Industries (P.) Ltd. [2012] 25 taxmann.com 301 (Supreme Court) * Commissioner of Income tax v. M/s Multiplex Trading & Industrial Co Limited [2015] 63 taxmann.com 170 (HC - Delhi) * Commissioner of Income-tax v M/s Viniyas Finance & Investment Private Limited [2013] 33 taxmann.com 86 (HC - Delhi) * Commissioner of Income Tax v M/s Kelvinator of India [2010] (187 TAXMAN 312) (Supreme Court). (xi) It is further submitted by the AR that in the case of the appellant, the assessment u/s 143(3) of the Act, has already been completed vide order dated 02.4.2009 and the appellant has ....
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....otocopies for the application for equity shares were filed and that the copy of the bank account with the Indian Bank which was available did not indicate that verification had been done incorrectly and that the facts as presented by the petitioner had been accepted in the normal course of assessment proceedings. The Assessing Officer cannot be permitted to retract from the position that he did ask for specific information and that the information was supplied by the petitioner. And, more importantly, that the Assessing Officer had examined and verified the information before finalizing the assessment under section 143(3) of the said Act. In this background also, we feel that the petitioner had not failed to disclose fully and truly all material facts necessary for its assessment in respect of the assessment year 1998-99. " (xii) It is further submitted by the AR that it will not be out of place to mention here that even during reassessment proceedings u/s 153C of the Act, till dropping on 14.3.2014, in order to verify the genuineness of the fresh share capital, the information was directly collected by the present A.O. by issuing notices u/s 133(6) of the Act, from all th....
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....sons u/s 148 of the Act, on 19.3.2014 and issued the notice u/s 148 of the Act, on 20.3.2014, on the basis of statements/affidavit recorded during search and survey action, and • information u/s 133(6) of the Act, was also collected by the A.O. during pendency of proceedings u/s 153C of the Act, from all the share applicants. From the above, it is clear that the period for action u/s 148 of the Act, pertains beyond 4 years for A.Y. 2007-08, which is under consideration and the original assessment was completed u/s 143(3) of the Act and there was no failure on the part of the assessee to disclose fully and truly, all the material facts necessary for the assessment. Therefore, the A.O. has wrongly resorted to re-opening u/s 148 of the Act, whereas assessment u/s 143(3) of the Act, had already completed, where fresh share application money/share premium was found as genuine. In view of the above, I am of the considered opinion that the A.O. was not having any cogent and definite material on record to form the reason to believe on the information in his possession, for re-opening of the completed assessment and further, there was no failure on the part of....
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.... appeal." C.O. No.79/Del/2017 (Assessee) : "1. That on facts and circumstances of the case, the grounds of appeal preferred by the Department does not arise out of the order of the CIT(A). 2. That the CIT(A) erred on facts and in law in not appreciating that the assessing officer does not obtain proper sanction as required under section 151 of the Act." 8. The ld. DR strongly challenged the order of the ld. CIT(A) and submitted that all the preconditions for invoking the provisions of section 147 are fulfilled in the instant case. Relying on various decisions, she submitted that ld. CIT(A) was not justified in holding the re-assessment proceedings as void ab-initio. So far as merit of the case is concerned, she submitted that that the assessee has not satisfactorily explained the identity and creditworthiness of the shareholder and the genuineness of the transactions. The Assessing Officer had given justifiable reasons for making the addition u/s 68 of the I.T. Act. She accordingly submitted that the order of the ld. CIT(A) be reversed and that of the Assessing Officer be sustained. 9. The ld. counsel for the assessee on the other hand heavily relied on t....
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....ce u/s. 133(6) were issued to twenty-five share allottees randomly selected to verify the transaction. The case was heard and discussed. ....... ...... ......" 12. We find the Assessing Officer in the original assessment order has not made any addition on account of raising of share capital during the year amounting to Rs. 23,41,70,000/-. A perusal of the notice issued u/s 148 which has been reproduced in the preceding paragraph does not show any allegation by the Assessing Officer regarding any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. Therefore, the 1st proviso to section 147 are clearly applicable to the facts of the present case. 13. We find the proviso to section 147 reads as under :- "Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, 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 o....
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....e on the part of the assessee to disclose fully and truly all material facts necessary for assessment. In so far as this pre-condition is concerned, there is not a whisper of it in the reasons recorded by the Assessing Officer. In fact, as indicated above, the Assessing Officer could not have made this a ground because the Assessing Officer had required the petitioner to furnish details with regard to loss occasioned by foreign exchange fluctuation which the petitioner did by virtue of the reply dated February 5, 2002. Since the petitioner had fully and truly disclosed all the material facts necessary for the assessment, the pre-condition for invoking the proviso to section 147 of the said Act had not been satisfied. In this connection, it may be relevant to note one decision, although there are several others. The said decision is that of the Punjab and Haryana High Court in the case of Duli Chand Singhania v. Asst. CIT [2004] 269 ITR 192. In the said decision, the High Court of Punjab and Haryana was faced with a similar situation. The court noted that there was not even a whisper of an allegation that the escapement in income had occurred by reason of failure on the par....