TaxTMI 
TaxTMI 
2022 (9) TMI 1421
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....he facts and under the circumstances of the case, the Ld CIT(A) has erred in law and facts in deleting the addition of Rs 2,40,00,000/- under section 68 of the Act by ignoring the Ratio decidendi in the case of CIT vs. M/s N. R. Portfolio Pvt. Ltd. (2014), 2 ITR-OL-68 and PCIT-7 vs. Bikram Singh in IT A NO. 55/2017 dated 25/08/2017 on identical issue of addition as unexplained Share Capital u/s 68 of the IT Act. 3 The appellant craves to be allowed to add and alter any fresh grounds(s) of appealand/or delete or amend any of the ground(s) of appeal." 3. The grounds of Cross Objection read as under:- "1. That on the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate both in law and on facts that notice u/s 148 was not issued within the stipulated period prescribed u/s 149(l)(b) read with proviso to section 147 of I.T. Act, hence the reassessment proceeding is invalid. 2. That on the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate both in law and on facts that 'reasons to believe' as recorded to initiate the re-assessment proceeding were not se....
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.... assessment order is invalid and bad in law and may please be annulled." Cross Objection of the Assessee 4. The ld. Assessee's Representative (ld. AR), by way of Cross Objections, has raised objections to the validity of assumption of jurisdiction for initiation of reassessment proceedings u/s 147 of the Income-tax Act, 1961 (for short, 'the Act') and issuance of notice u/s 148 of the Act on various grounds, which could be summarized as follows:- (i) Non-compliance by the AO of first proviso to section 147 of the Act as the assessment for AY 2009-10 has been reopened by way of recording reasons on 17.03.2016, i.e., beyond four years from the end of relevant assessment year; (ii) Passing of reassessment order within four weeks or before expiry of four weeks' time from the date of disposal of objections of the assessee challenging the validity of reassessment proceedings and notice u/s 148 of the Act. (iii) The jurisdiction u/s 147 of the Act was assumed by the AO on the basis of the material seized during the search and seizure operation on Shri S.K. Jain and his brothers and on the exactly identical facts and circumstances where re-assessment procee....
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....al of objections of the assessee to the initiation of reassessment proceedings. Therefore, this legal contention of the assessee being without any support from the law or any provisions of the Act, should be dismissed. On the validity of action u/s 147 in defiance of provisions of section 153C of the Act, the ld. Sr. DR submitted that both the courses are simultaneously available to the AO and, in a case where there is a new tangible material in the hands of the assessee received in the form of information from the Investigation Wing that the assessee has taken accommodation entries from Shri S.K. Jain and his brothers, then, the action of the AO of initiating reassessment proceedings u/s 147 of the Act and issuing notice u/s 148 has to be held as valid and permissible in the law. He also submitted that the AO cannot be debarred from initiating the proceedings u/s 147 of the Act merely because the material so gathered was outcome of a search and seizure operation. 7. On careful consideration of the above rival submissions, first of all, we find it just, proper and necessary to reproduce the relevant part of the reasons recorded by the AO wherein in paras 14-16, the AO has titled....
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....s during relevant but different time period. * Seizure of documents had revealed that commission- income was earned by Jain Brothers and mediator. d. It was further proved that evidence relating to all the steps involved in providing accommodation entries by entry provider companies in lieu of cash payment to Jain Brothers on charging commission were seized from custody and control of Jain Brothers. e. A perusal of documents as seized from the premises of Shri S.K. Jain Group has revealed that accommodation entry amounting to Rs. 2,40,00,000/-, (copy enclosed) was taken by the assessee Co., i.e. M/s Rukmini Iron Pvt. Ltd from S.K. .lain Group Companies. The particulars of which are as under:- Similarly, in the cash book maintained by Jain brothers, there is corresponding entry made against name of mediator of having received cash from him equivalent to the amount of cheques issued to same mediator. 15. A careful examination of information received from the Investigation Wing and subsequent analysis of report of invesugatron wing, copies of seized document and verification of assessment and appeal order in case of Jain Brothers lead to an....
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....assessment for assessment year 2009-10. Therefore, he has reason to believe that entry found and seized cash/cheque book of Jain Brothers is nothing, but, an accommodation entry and the assessee company is beneficiary thereof. At para 16, the AO noted that the assessment/reassessment proceedings for AY 2009-10 pertained to a period beyond four years, but, before the expiry of six years from the date of issuance of notice, necessary sanction has been obtained from the ld.PCIT and notice u/s 148 of the Act was issued. 9. The ld. AR placed vehement reliance on various judgements including the judgement of the Hon'ble jurisdictional High Court of Delhi in the case of BPTP Ltd. vs. PCIT dated 28.11.2019 in WP (C) 13803/2018 and other connected Writ Petitions and judgement of Hon'ble High Court of Bombay in the case of Anand Developers vs. ACIT, dated 18.02.2020 in WP No.17 of 2020 to submit that mere bald allegation against the assessee that the assessee has not truly and fully disclosed all material facts necessary for assessment is not sufficient to meet the requirement of first proviso to section 147 of the Act. The ld. AR has submitted that the compliance of proviso to section 14....
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....ded in that evidence which the AO could uncover, but did not do so. The aforesaid submissions may be correct proposition in law; however, each case has to turn on its own facts. In the present case, the details of the TDS and EDC charges paid to HUDA were brought to the notice of the AO. On this question, it would be sufficient to refer to the decision of this Court in Donaldson India Filters Systems Pvt. Ltd. vs. DCIT, (2015) 371 ITR 87 (Del. In the said case, the Court held that the explanation clarifies the general refrain by the words "not necessarily". Burden is equally placed on the AO to exercise due diligence in examining the record (account books or evidence) produced before him in light of the declarations made in the return or responses to the notices or questionnaires. This is necessary as the AO has to gather "tangible" material which is a pre-requisite for reopening the matter under Section 147 of the Act. In CIT v. Central Warehousing Corporation, (2015) 371 ITR 81 (Del.), the Court held that the expression "reason to believe" on which a reassessment under Section 147 of the Act can be validly ordered should necessarily be based on "tangible material" which an AO com....
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....t proceedings merely on his change of opinion on the basis of some facts and circumstances which has already been considered by him during the original assessment proceedings. Such could not be the intention of the legislature." The said judgment further held that "Section 147 of the IT Act does not allow the reassessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to reassess and not the power to review." 25. It becomes evident on perusal of the Scrutiny questionnaires issued by the AO and the information furnished in response thereto by the Assessee that there has been no failure on the part of the Assessee in furnishing the information. On the other hand, there appears to be non application of mind on such material on the part of the AO to make an appropriate determination in accordance with law. Thus, the AO cannot now review its decision, having failed to perform its statutor....
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.... AO is bound to follow the same as per the mandate of the provision. The escapement of income from assessment must also be occasioned by the failure on the part of the assessee to disclose the material facts fully and truly. This is a necessary condition for overcoming the rider set up by the proviso to section 147 of the Act. If this condition precedent is not satisfied, the bar would operate and no action u/s 147 of the Act can be initiated against the assessee for reassessment proceedings. At the cost of repetition, we may point out that the reasons supplied to the Petitioners, operative part of which has been reproduced hereinabove, does not contain any such allegation. Consequently, one of the conditions precedent for removing the rider against taking action u/s 147 of the Act after a lapse of four years remains unfulfilled and unsatisfied and in absence of any allegation in the reasons recorded that the escapement of income had occurred by the reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year, any action taken by the AO u/s 147 of the Act beyond the period of four years wo....