TaxTMI 
TaxTMI 
2022 (4) TMI 602
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....on entry, recorded the following reasons to reopen the assessment u/s. 147:- "As per the information received from ADIT(Inv), Unit-5(3), New Delhi vide letter No. ADIT(Inv.)/Unit-5(3)/Asharam/2016-17/278 dated 27.03.2017, M/s. GM Overseas has received credit of Rs. 4,00,00,112/- from M/s. Index Securities & Research Pvt. Ltd. During FY 2009-10 relevant to A.Y. 2010-11. As per the information received, the statement of one Sh. Devidas Tikamdas Chattani alias Dev Kumar was recorded u/s. 131A r.w.s. 131 of the I.T. Act, 1961 on 25th and 26th September 2015. He was one of the most confidant people of Asharam Bapu and on Asharam's instance he had conducted an audit of Cash loans account. Sh Devidas, while explaining the contents of the data identified the ledger bearing title "Bhagat" as that pertained to the funds managed by Shri Santlal Agarwal alias Bhagat amounting to Rs. 200 Crores. On the basis of the information, a survey action was conducted on office premises of Shri Santlal Agarwal on 09.03.2016 including 5586, Lahori Gate, Naya Bazar, Delhi and 802, Arnbadeep Building, Connaught Place, Delhi. Sh. Santlal Agarwal was one of the directors in M/S J....
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....earch Pvt. Ltd. Thus it is clear that it has routed its unaccounted income through M/s. Index Securities and Research Pvt. Ltd. Thus the amount of Rs. 4,00,00,112/- credited in the account of M/s. G M Overseas is the unaccounted income of the entity during FY 2009-10. The details of the amount credited in the account of M/s. G M Overseas from the account of M/s. Index Securities' and Research Pvt. Ltd. is as under:- Therefore, I have reasons to believe that the income of the assessee to the extent of Rs. 4,00,00,112/- has escaped assessment for A.Y. 2010-11. Hence, it is a fit case for initiation of proceedings in terms of section 147 of the IT Act, 1961. It is pertinent to mention that in the case of CIT v Nova Promoters & Finlease (P) Ltd. (ITA No. 342 of 2011) dated 15.02.2012, the Hon'ble Delhi High Court, which is the jurisdictional High Court, held that as long as there is a 'live link' between the material which was placed before the Assessing Officer at the time when reasons for reopening were recorded, proceedings u/s. 147 would be valid. The Court also held- "We are aware of the legal position that at the stage of issuing the not....
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....see which was earlier determined at Rs. 27,10,350/-. Accordingly, the AO determined the total income of the assessee at Rs. 4,27,10,350/-. 4. Before the CIT(A), the assessee, apart from challenging the addition on merit, challenged the validity of the reassessment proceedings. However, the ld. CIT(A) was not satisfied with the arguments advanced by the assessee and upheld the validity of the reassessment proceedings and also sustained the addition on merit. 5. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- "1. The impugned assessment is invalid and without jurisdiction as the said assessment is completed without complying with legal requirements of the provisions of section 147/148 of the Income Tax Act therefore such assessment is void ab initio and liable to be quashed. 2. The Ld. CIT(A) has erred both in law and circumstances of the case in upholding the reassessment proceedings-initiated u/s. 147 of the IT Act ignoring the contention of appellant that the proceedings have been initiated by the AO without application of independent mind on the material, if any, provided by the Inv.....
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....eave to add, delete, modify/amend the above grounds of appeal with the permission of the Hon'ble appellate authority." 6. The ld. counsel for the assessee, at the outset, submitted that the reopening of the concluded assessment has been undertaken u/s. 147 of the Act without application of mind by the AO, much less, independent application of mind. Relying on various decisions, he submitted that when the loan amount consists of Rs. 4 crores and bank charge was Rs. 112/- debited in the account of the remitter M/s. Index Securities & Research Pvt. Ltd., the AO has recorded the reason that the assessee has accepted unsecured loan of Rs. 4,00,00,112/-. Therefore, the above mistake of quantification makes the reassessment invalid. Relying on the following decisions, he submitted that incorrect quantification of income in the reason can be a valid ground for quashing of reassessment proceedings:- (i) Shamshad Khan vs ACIT 395 ITR 265 (Del); (ii) Pr CIT vs M/s. SNG Developers Ltd., 404 ITR 312 (Del); (iii) CIT vs Suren International Pvt. Ltd., 357 ITR 24 (Del); (iv) Pr. CIT vs. RMG Polyvinyl (I) Ltd. (2017) 396 ITR 5 (Del); (v) CIT vs. A....
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....(Del); (iii) Haryana Acrylic Manufacturing Co. vs. CIT and Anr., 308 ITR 38; (iv) Wel Intertrade (P) Ltd. & Anr. Vs. ITO, 308 ITR 22 (Del); (v) CIT vs. Purolator India Ltd., 343 ITR 0155 (Del); BLB Limited vs. ACIT, 343 ITR 0129 (Del); (vi) JSRS Udyog Limited & Another vs. ITO, 313 ITR 321 (Del); and (vii) Atma Ram Properties Pvt. Ltd. Vs. DCIT, 203 Taxman 408 (Del). 8. Referring to the decision of the Hon'ble Supreme Court in the case of NDTV vs. DCIT, reported in 424 ITR 607, he submitted that the Hon'ble Supreme Court in the said decision has quashed the reassessment proceedings for not mentioning the first proviso in the reasons recorded. He submitted that facts of the instant case are identical to the facts of the cases decided by the Hon'ble Delhi High Court and the Hon'ble Apex Court. Therefore, on this count itself the reassessment proceedings are held to be void ab initio. 9. The ld. Counsel for the assessee, in his another plank of argument, submitted that a perusal of the reasons recorded would show that the AO does not dispute the fact that the transaction of loan of Rs. 4,00,00,112/- was part of the dis....
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....the persons making statements such additions cannot be sustained:- (i) Andaman Timber Industries vs CCE 281 CTR 241 (SC); (ii) Kishinchand Chellaram v. CTT [1980] 125 ITR 713 (SC); (iii) CIT v. Ashwani Gupta [2010] 322 ITR 396 (Delhi); (iv) CIT vs SMC Share Brokers Ltd. 288 ITR 0345 (Del); (v) Swadeshi Cotton Mills Company Ltd. vs UOI 51 ITC 210 (SC); (vi) Tin Box Company vs CIT 116 Taxman 419 (SC); (vii) AluDwyandra Kumar Bhattacharya vs Supdt. of Income Tax 1990 78 STC (393); & (viii) Pr CIT vs Best Infrastructure (India) Pvt. Ltd. in ITA No. 13, 11, 12, 20, 14, 15, 16, 17, 18, 19, 21 & 22/2017 dated 01.08.2017 (Del). 11. So far as the merit of the addition is concerned, he submitted that the assessee, during the course of assessment proceedings has filed various documents substantiating the identity and credit worthiness of the loan creditor and genuineness of the transaction. The assessee has accepted the loan amount of Rs. 4 crores in two tranches i.e., Rs. 2,50,00,000/- and Rs. 1,50,00,000/- on 05.01.2010 and 11.01.2011 respectively and repaid the entire loan on 18.01.2010 by paying interest of Rs. 1,7....
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....at when the the assessee has fulfilled all the three ingredients i.e., identity and creditworthiness of the loan creditors and the genuineness of the transaction by producing documentary evidence on record such as Copy of A/c of the lender for the succeeding financial year showing repayment of loan through banking channel and the TDS duly deducted on the interest paid on the unsecured loan and thus the unsecured loan stands explained. For the above proposition he relied on the following decisions:- (i) Subash Dali Mill vs. CIT 257 ITR 115 ITAT Agra Bench; (ii) CIT Vs. Metachem Industries (2000) 245 ITR 160 (All); (iii) CIT Vs Avant Grade Carpet Ltd. (2015) 54 taxman.com 216 (All); (iv) Pankaj Hospital Ltd. vs. C.I.T Writ Tax No. 83 of 2014- All. High Court; (v) Prem Casting Pvt. Ltd. vs C.I.T -ITA No. 34 of 2016 - All. High Court; (vi) M/s. Vimal Organics Ltd. vs CIT - ITA No. 22 of 2015 - All. High Court; (vii) CIT Vs. Shiv Dhooti Pearls & Inv. Ltd. (2015) 64 Taxmann 329 (Del) 14. Relying on various other decisions, he submitted that when the assessee having shown that the creditor had sufficient balance in his bank....
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....e notice issued u/s. 142(1), vide noticed dated 28th February, 2012 has also asked the assessee to furnish the details of unsecured loan. We find, the assessee, during the course of original assessment proceedings, vide various replies has given, the details of such unsecured loan. A perusal of the reasons recorded show that there is not even a whisper in the reasons recorded of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. As per first proviso to section 147 where an assessment u/s. 143(3) has been made for the relevant assessment year, no action shall be taken u/s. 147 of the Act after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year for the reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. Since the original assessment has been completed u/s. 143(3) and the reopening has been made after a period of four years from the end of the relevant assessment year and in the reasons recorded there is no....
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....er, there is no whisper, what to speak of any allegation, that the petitioner had failed to disclose fully and truly all material facts necessary for assessment and that because of this failure there has been an escapement of income chargeable to tax. Merely having a reason to believe that income had escaped assessment, is not sufficient to reopen assessments beyond the four year period indicated above. The escapement of income from assessment must also be occasioned by the failure on the part of the assessee to disclose material facts, fully and truly. This is a necessary condition for overcoming the bar set up by the proviso to section 147. If this condition is not satisfied, the bar would operate and no action under section 147 could be taken. We have already mentioned above that the reasons supplied to the petitioner does not contain any such allegation. Consequently, one of the conditions precedent for removing the bar against taking action after the said four year period remains unfulfilled. In our recent decision in Wel Intertrade (P.) Ltd.'s we had agreed with the view taken by the Punjab and Haryana High Court in the case of Duli Chand Singhania that, in the absence of....