TaxTMI 
TaxTMI 
2022 (9) TMI 769
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....bsequently, information was received from Investigation Wing, New Delhi vide Dy. Director of Income Tax(Inv), Unit 1(2), New Delhi and also from the office of CBI, New Delhi that Shri Tarun Goyal, M/s. Yogesh Trading Co and others were engaged in purchasing of existing companies and formation of new one. At least 35 companies were found operating on the same address, 13/34 WEA, 4th Floor, Main Arya Samaj Road, Karol Bagh, New Delhi. Mr. Tarun Goyal was suspected to be engaged in depositing of cash in various bank accounts and transactions were finally shown as subscription of equity in companies. The equity was mainly subscribed at high premium. The non group companies were found to be carrying out normal business activities. Some of the companies were found inducting capital/margin money to avail credit facilities from financial institution. In this process tainted money was converted into bonafide investment in equity resulting in evasion of tax. At least 35 companies along with details of 45 bank accounts were taken up by CBI for scrutiny and rest of same banks were found in facilitating money laundering activities. It was further informed that Shri Hari Das Securities and Credi....
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....preme Court in case of M/s. GKA Driveshaft (I) Ltd Vs. ITO (2003) 259 ITR 19 (SC).The ld. AO proceeded to complete the assessment on the basis of information available on record. During the assessment proceeding on 11.12.2017 the ld AR of the Assessee had submitted bank statement revealing an amount of Rs. 21.70 crores has mainly been carried out by M/s. Vertex Drugs Pvt. Ltd and the amount credited in above account of the Assessee has been credited by the company and filed all documentary evidence in this respect. The ld AR of the Assessee was asked to produce the Directors of M/s. Vertex Drugs Pvt. Ltd for verification on next date of hearing. But no such director was produced. The ld AO examined the bank statement of M/s. Vertex Drugs Pvt. Ltd A/c No. 223010200020323/- for the relevant period i.e. 01.04.2009 to 31.03.2010 and concluded that the amount has been received/ credited into the account from Yogesh Trading Company and subsequently transferred into the account of M/s. Shri Hari Das Securities Pvt. Ltd and subsequently into the account of M/s. Priya Tissues Pvt. Ltd i.e. These three entities were found to be situated at the same address. Accordingly, an addition u/s 68 of....
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....riginal assessment proceeding there cannot be said to be any failure on the part of the assessee to disclose fully and truly all material facts necessary for reassessment." 6. Resultantly the ld CIT(A) found that the assessment order tainted on aforesaid ground. Now the revenue has raised the following grounds of appeal:- "1. Whether the ld CIT(A) has erred in deleting the addition of Rs. 22,92,76,060/- merely on the basis of technical grounds without discussing the merits of the case and ignoring the apparent credible information and the fact that the Assessee is a beneficiary of accommodation entry to that extent? 2. Whether, the ld CIT(A) has erred in ignoring the fact that Pr. CIT has categorically recorded that there is a failure of the Assessee to disclose material is a accommodation entries?" 7. Heard and perused the record. 8. On behalf of the revenue the ld DR submitted that the first appellate authority has fallen an error in not considering the case on wholesome basis and merely on technical ground benefitted the Assessee. It was submitted that the ld CIT(A) has failed to take note of the fact that it was not a simple case of reopening of asses....
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....ation entry by collecting cash and issuing cheques and still he appeared as a representative of the present Assessee in the previous assessment proceeding on 29.10.2012 to 22.03.2013 and which shows that he had malafide intention to mislead the previous AO. 8.4 He submitted that the ld CIT(A) relied on certain decisions which were distinguishable and in that context he submitted that:- i. The decision of Hon'ble Delhi High Court in the case of Haryana Acrylic Manufacturing Ltd. v/s CIT (2009) 308 ITR 38 (Delhi) was considered and distinguished by the subsequent decision in the case of RDS Project Ltd. v/s ACIT, New Delhi 421 ITR 624 (Delhi). The Hon'ble Delhi High Court, in this case also referred to the recent decision of the Supreme Court in Pr. CIT v. NRA Iron & Steel (P.) Ltd. (2019) 412 ITR 161 and several other cases in respect of addition made u/s 68 on account of bogus share capital. ii. Also in the case of Aravali Infrapower Ltd. V DCIT [2017] 390 ITR 456(Delhi) and PCIT v Paramount Communication (P) Ltd [2017] 79 taxmann.com 409(Delhi), the decision of Haryana Acrylic Manufacturing Co(supra)has been considered and distinguished. iii. ....
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.... has been made in this case for A Y 2010-11 u/s 143(3) or u/s 147..." (para 8 page 5 of reasons) 2. Reasons state that the authorised share capital or share application money has been shown at NIL, relevant portion of the reasons recorded is reproduced herewith: " the company filed its original return of income on 26.03.2012 for the A Y 2010- 11 declaring total income of Rs. 500/-. Perusal of the return of income reveal that during the year under there is no purchase or sale or even authorised share capital or share application money has been shown at NIL... "(page 4 of reasons) 3. Reasons recorded by the AO nowhere state that income escaping assessment is on account of receipt of share capital from M/s Vertex Druga Pvt. Ltd. In fact on the contrary it has been concluded in the reasons that "at least an income of Rs. 4,54,01,200/- (approx.) i.e 20% of Rs. 22.70 crores chargeable to tax has escaped assessment for A Y2010-11 "(para 11 page 5 of the reasons). 4. Reasons state that - "copy of the bank statement has been called for from the Axis Bank and as per the above information from the Investigation Wing there are huge cash deposits to the exten....
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....re capital aggregating Rs. 22,70,06,000/- and Rs. 22,70,060/- as commission incurred on obtaining share capital. Thus, no addition has been made of the alleged escaped income as per reasons recorded. PROPOSITION-5 Where assessee had disclosed all material facts in support of transactions at time of making assessment, initiation of reassessment proceedings after expiry of four years from end of relevant assessment year merely on basis of report of investigation wing, was not sustainable. FACTS In the original assessment proceedings the assessee had furnished all material facts viz. Copy of share application form (41-43 P/B), copy of bank statement of investor company (44- 53 P/B), audited balance sheet of investor company as on 31.03.2010 (54-64 P/B), scrutiny assessment order of investor company for A.Y. 2010-11 (65- 67 P/B), ITR of investor company for A.Y. 2009-10 (74 P/B). 10. He also relied following judgments in support of his submissions; 1. As for first proposition he relied on the following judgments/ order; a. Pr. CIT Vs. Meenakshi Overseas Pvt. Ltd 395 ITR 677 b. Pr. CIT Vs. RMG Ployvinyl (I) Ltd 396 ITR 5 ....
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..../s 147 before 31.03.2017 i.e. within three days only and before that he had to process the information requiring statutory approval of Pr. CIT. Therefore the verification must have been done by the Ld. AO with regard to assessment completed earlier and available in ITD system and DCR and the assessment of Assessee was not updated. So Ld AO may have presumed that no previous assessment has been concluded. 11.1 The bench is of considered opinion that when such incorrect fact was recorded in the reasons then Ld. AO deserved an opportunity to explain, possible and reasonable explanation, if any, available with the Ld. AO. Then ld CIT(A) could have sought a remand report from Ld. AO as to if there was any reason for recording this fact that no assessment u/s 143(3) was done in the case of the Assessee company. 11.2 Further, when any authority is working within the time bound manner such a mistake of fact is likely to occur due to rush of work. The Assessee is under an obligation to impress the appellate authority that such mistake of fact has caused grave prejudice, which certainly is not so, in the present case in hand. 12. In regard to alleged second incorrect facts recorded ....
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....Drugs Pvt. Ltd in particular. The reason recorded u/s 147/148 of the Act cannot be encyclopedic nature. In Assistant Commissioner of Income tax v Rajesh Jhaveri Stock Brokers (P.) Ltd (SC) [2007] 291 ITR 500, Hon"ble Supreme Court has held: "16. Section 147 authorises and permits the AO to assess or reassess income chargeable to tax if he has reason to believe that income far any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification, if the AO has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot he read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion". 16. Thus the, final outcome of the proceeding was not relevant. In other words, at the initiation stage, what was required is "reason to believe", but not the established fact of escapement of income. The issue raised by the Ld AR in present case about mention of "cash deposit" or " that there was only cash deposit of Rs 5000/-" are not such as can be said to discredit the satis....
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....ut the manner in which similar controversy have to be approached; "44. The Income Tax Officer is assessing the tax based on the returns filed by the assessee and the Officer scrutinise the returns filed by the assessee. So, to deal with the cases, where there is evasion or suppression or otherwise by the Assessee, reassessment may arise on several grounds. There is no bar to reopen the assessment and the authority has invoked that power of reopening, after giving the opportunities to the assessee. Therefore, the questions raised as to whether the same is based on the change of opinion or not, whether the reopen is based on the available materials or not and whether fresh tangible material is available or not and whether the reopening of the assessment is barred by limitation are all matters subject to facts and circumstances of each case. In all the cases, uniform method cannot be adopted. Every case is based on the facts and circumstances depending on the merits of its relevant particulars and the same has to be decided by the fact finding authority. The scope of the writ is very limited. Unless it is shown that there is violation of Fundamental Rights or infringement of ....
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....icer was devoid of actual facts by some overt and clandestine acts of Assessee and only due to some sort of investigation by expert agencies, true and new facts were unearthed and which were informed to the Assessing officer. It is exhibited from the previous assessment order u/s 143(3) as passed on 22.03.2013, the Assessee was in fact represented by none other than tainted Shri Tarun Goyal himself, as Representative and CA. That previous assessment order apparently is very summary order and it will be relevant to reproduce the same:- "The assessee company had filed its e-rectum of income for the A.Y. 2010-11 on 26-03-2012 declaring taxable income of Rs.500/-. 2. Notice u/s 143(2) of the Income Tax Act, 1961 was issued on 10-09-2012 and was duly served upon the assessee company. Notice u/s 142(1) dated 17-10-2012 along with detailed questionnaire was issued and was duly served upon the assessee company. In response to the notices issued, Sh. Tarun Goyal, CA and authorized representative of the assessee company attended the proceedings from time to time and submitted necessary details and clarifications and the same are placed on record. After discussion with the a....
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....para 40 as follows: "40. No doubt, on the one hand, sanctity of concluded assessment proceedings needs to be protected, and an assessee should be protected against undue harassment by the taxation authorities by resort to re-opening of the concluded assessment. However, when subsequently, it comes to light that the assessee has had financial/ monetary dealings with dubious entities/ persons - such as bogus accommodation entry providers, including of the kind noticed hereinabove, giving rise to a serious and well founded doubt about the creditworthiness of the investor and genuineness of the transaction, the endeavour of the Assessing Officer to re-open the assessment in terms of section 147/148 of the Act should normally not be thwarted by the Court, if the same is done within the limitation period, and the same is not merely a case of change of opinion on the same set of facts. A serious and well founded doubt about the genuineness of the transaction would justify formation of the reasonable belief that taxable income has escaped assessment in the light of the scheme of Section 68 of the Act, which provides that cash credits which, in the opinion of the Assessing Officer ....
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.... the purpose of providing accommodation entries in favour of various beneficiaries. Among the beneficiaries is the petitioner to whom a payment of Rs.2.21 crores was made through the four companies which created a conduit. Whether it is actually so, is a matter of fact which would have to be determined in the course of the proceedings after the assessment is reopened. At this stage, the only issue before the Court is to whether there was reason to believe that any income chargeable to tax had escaped assessment. From the reply which was furnished by the assessee during the course of the assessment proceedings, it does not emerge that the assessee had discharged the onus of establishing the credit worthiness of the Companies which had ostensibly invested the amount or in regard to the genuineness of the transaction. Hence, though the reopening of the assessment in the present case is beyond the period of four years but the Assessing Officer was satisfied that the condition stipulated in the first proviso to Section 147 was duly fulfilled" 26. What is established is that in the previous assessment order the Assessee was able to withhold and did not disclose all the facts in honest....