TaxTMI 
TaxTMI 
2022 (12) TMI 1210
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....dered therein would apply mutatis mutandis to the other appeal filed by the Revenue for the assessment year 2012-13. ITA No. 2339/Mum/2021 Revenue's appeal - A.Y. 2011-12 3. In this appeal, the Revenue has raised the following grounds: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), NFAC was correct in holing that notice issued u/s 148 of the Income Tax Act, 1961 for Assessment Year 2011-12 is bad in las' without appreciating the fact that reopening of assessment was based on new material and evidences available with the assessing officer to arrive at the reason indicating escapement of income". 2 "On the facts and in the circumstances of the case and in law, the Ld. CIT(A), NFAC was correct in quashing the assessment order without going into the merit of the case by treating the notice issued u/s 148 as 'bad in law ignoring the fact that the Assessing Officer has issued the notice u/s 148 after properly applying the provisions of section 147 of the Income Tax Act, 1961. 3. This appeal is filed consequent to CBDT Circular No.3 of 2019 dated 06.09.2019. 4. The appellant prays that the order of Ld. CI....
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....sued to the 5 entities, which have purchased the shares of Splash Media from the assessee. In this regard, a copy of the return of income with profit and loss account, balance sheet, capital account, audit report, DEMAT account details from the time of purchase of shares of Splash Media till its sale, period of holding of these shares and copy of bank statement was sought by the AO. As noted in the assessment order, reply from only 2 parties was received but complete details were not provided as required by the AO. After a detailed discussion on the mode of acquisition of shares and its sale by the assessee, the AO vide assessment order disallowed the long-term capital gain of Rs. 13,93,293, claimed as exempt under section 10(38) of the Act and made the addition of Rs. 14,91,647, under section 68 of the Act being the sale proceeds received by the assessee on sale of shares. The AO also disallowed commission at the rate of 3%, charged for providing arranged long-term capital gain, under section 69C of the Act. 6. In its appeal before the learned CIT(A), the assessee raised grounds challenging the invocation of jurisdiction under section 147 of the Act as well as the addition made....
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....e AO has not verified the facts and mere receipt of information from any source cannot tantamount to tangible material for the formation of reason to believe. The learned AR also placed reliance upon various decisions in support of its submission. 10. We have considered the rival submissions and perused the material available on record. As is evident from the record, in the present case return of income filed by the assessee was not selected for scrutiny. The AO based on the information received from the Directorate of Investigation, Kolkata initiated the reassessment proceedings. The reasons recorded by the AO, while reopening the assessment, are as under: "REASONS RECORDED FOR REOPENING OF ASSESSMENT U/S 147 OF THE I.T. ACT, 1961 The assessee has filed the return of income for A.Y.2011-12 on 28.06.2011. declaring total income at Rs. 1221449/-. As per the report/information available with this office that the Directorate of Investigation, Kolkata, has undertaken the accommodation entry of Long Term Capital Gain(LTCG) investigation and as a result, they have been able to identify a very large number of beneficiaries who have taken a huge amount bugs en....
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....disclose fully and truly all material facts necessary for assessment. 12. It is the plea of the learned AR that the reassessment proceedings have been initiated entirely based on the satisfaction borrowed from the Investigation Wing and no independent inquiry was conducted by the assessee to come to the aforesaid conclusion. In support of its plea, reliance has been placed upon various decisions. Before dealing with each decision, relied upon by the learned AR, it is relevant to note that such decisions have been rendered in their facts based on reasons recorded for initiating the reassessment proceedings, and thus no decision can be treated as direct precedent unless similar circumstances exist as in the present case. In Perfect Capital Services Ltd vs ITO, ITA No. 387/Del./2014, we find that SMC bench of the Tribunal set aside the reassessment proceedings on the basis that the reasons recorded by the AO do not demonstrate any application of mind on the material/information received from Director (Investigation). Further, in PCIT vs G & G Pharma India Ltd, in ITA No. 545 of 2015, vide judgment dated 08/10/2015, the Hon'ble Delhi High Court set aside the reassessment proceedings....
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....officer as having escaped assessment. This prima facie determination of income escaping assessment would indicate application of mind to arrive at the reason to believe that income chargeable to tax has escaped assessment." 14. Further, from the perusal of the decision in PCIT vs Shodiman Investment Private Limited, in ITA No. 1297 of 2015, we find that the Hon'ble jurisdictional High Court vide judgment dated 16/04/2018, set aside the reassessment proceedings as the assessing officer failed to establish the vital link between the material and the reason to conclude that income has escaped assessment. 15. Further in Shri Udit Kumar Dagar vs ITO, 2019 (5) TMI 430, the coordinate bench of the Tribunal set aside the reassessment proceedings as the same was initiated merely based on DIT (Investigation) report. 16. In the present case, it is pertinent to note that no scrutiny assessment was conducted in the case of the assessee and therefore the only data available with the AO was the data provided along with the income tax return and the report/information received subsequently from the office of Directorate of Investigation, Kolkata. The said information constitutes new and t....
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....entral Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction ITO v. Selected Dalurband Coal Co. (P.) Ltd. [1996] 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC)." 19. Therefore, if there is relevant material based on which a reasonable person can form a requisite belief that income chargeable to tax has escaped assessment, then proceedings under section 147 of the Act can be validly initiated. Further, it is also well settle....