TaxTMI 
TaxTMI 
2023 (6) TMI 760
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....143(3) of the Act by the learned AO on 28.02.2015. Later the assessment was sought to be reopened under section 147 of the Act by the learned AO vide issuance of notice under section 148 of the Act on 28.03.2018. The reasons recorded by the learned AO for reopening the assessment under section 147 of the Act are as under: - REASONS FOR REOPENING OF ASSESSMENT u/s 147 OF THE IT ACT 1961 In connection to the above following information have been received from ADIT Unit 6. Kolkata vide latter dated 05/03/2018(copy enclosed): - This office was in receipt of an information that the company M/s Anunay Sales Pvt Ltd (Account no 020606700000361 of Dhanlaxmi Bank Ltd) was engaged in routing of funds during the FY 2011-12 as observed on perusal of the statement of its bank account. The fund so received by the company had been immediately transferred to other concerns bank accounts. From the said bank account it is further gathered that the account was mainly utilized for routing of funds and finally for providing entries to beneficiaries by crediting its account with the routed funds. On this count a trail has been prepared and on the basis of the same the....
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....evant assessment year. Therefore, it is requested that approval for reopening of this case u/s 147 of the IT Act for AY 2011-12 may be accorded to bring the above transactions into taxation 3.1. From the perusal of the aforesaid reasons, it is clear that reopening was sought to be made by the learned AO to further investigate / analyse / verify the veracity of receipt of funds of Rs. 15 lakhs from Anunay sales private limited during the year under consideration. This goes to prove that the learned AO indeed had only 'reason to suspect' and not 'reason to believe'. During the course of reassessment proceedings, the assessee was asked vide notice u/s 142(1) of the Act dated 11.10.2018 regarding the receipt of funds of Rs. 55 lakhs and Rs. 15 lakhs mentioned in the reasons recorded. The assessee furnished the details that the following amounts on account of sale of shares :- 03.02.2012 Rs. 15,00,000/- from Anunay Sales Pvt Ltd (subject matter of Reasons recorded) 04.02.2012 Rs. 30,00,000/- from Tejaswini Vincom Pvt Ltd 08.02.2012 Rs. 25,00,000/- from Tejaswini Vincom Pvt Ltd 3.2. The assessee also furnished the entire bank statements for the peri....
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..../s 147 of the Act by the ld. AO itself becomes subject to challenge. But this was not done by the assessee as there was ultimately no grievance for the assessee pursuant to re-assessment proceedings. 3.5. This re-assessment order framed on 20.11.2018 was sought to be revised by the ld. PCIT by invoking revision jurisdiction u/s 263 of the Act. The show cause notice dated 19.03.2021 issued by the ld. PCIT is as under:- Notice for the Hearing M/s/Mr/Ms Subject Notice for Hearing in respect of Revision proceedings is 263 of the THE INCOME TAX ACT, 1961 Asst Year 2012-13. In this regard a hearing in the matter is fixed on 23/03/2021 at 12:30 PM. You are requested to attend in person or through an authorised representative to submit your representation if any alongwith supporting documents/ information in support of the issues involved (as mentioned below) if you wish that the Revision proceeding be concluded on the basis of your written submissions/representations filed in this office on or before the said due date then your personal attendance is not required You also have the option to file your submission from the e-lling portal using the link inc....
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....filed all the evidences in support of its contentions thereon. It has been accepted by the ld. AO as genuine transactions. Hence it cannot be a case of 'lack of enquiry'. In any case, a plausible view has been taken by the ld. AO in the reassessment proceedings itself. Hence the same cannot be the subject matter of revision proceedings u/s 263 of the Act by the ld. PCIT. Hence the revision order passed by the ld. PCIT u/s 263 of the Act fails on this count itself. 3.6.1. Moroever, the provisions of Explanation 2 to section 263 of the Act were not invoked by the ld. PCIT in the show cause notice and hence the same cannot be directly applied in the revision order u/s 263 of the Act. Reliance in this regard is placed on the decision of Hon'ble Gujarat High Court in the case of PCIT vs Shreeji Prints (P) Ltd reported in 130 taxmann.com 293 (Guj) wherein it was held as under:- 5 The Tribunal has found that in the order passed by the PCIT, Explanation 2 of section 263 of the Act, 1961 is made applicable. The Tribunal observed that the PCIT has not mentioned in the show cause notice to invoke the Explanation 2 of section 263 of the Act 1961. Therefore, by invocation of Explana....
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....d at any time during the appellate proceedings. Hence we proceed to address this issue now. 4.1. We have already held that the reasons recorded by the ld. AO for reopening merely gives him 'reason to suspect' and not 'reason to believe'. Firstly the ld. AO says that the receipt of Rs. 15 lacs on sale of shares from Anunay Sales Pvt Ltd was not disclosed by the assessee. This has been proved to be factually incorrect as the ld. AO himself had accepted the fact that the entire purchase and sale transactions of Aditi & Finance Pvt Ltd had been duly disclosed by the assessee in the balance sheet. Hence it could be safely concluded that the entire reasons for reopening were recorded by incorrect assumption of fact. 4.1.1. Moreover, the law is very well settled that an assessment could not be reopened for the purpose of making fishing and roving enquiries. In this regard, we find that the ld. AR had rightly placed reliance on the decision of Hon'ble Jurisdictional High Court in the case of PCIT vs Shodiman Investments (P) Ltd reported in 422 ITR 337 (Bom). The relevant operative portion of the said decision is reproduced as under:- 12. The re-opening of an Assessment is an....
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....ition in law that re- opening notice has to be issued by the Assessing Office on his own satisfaction and not on borrowed satisfaction. 4.1.2. Similarly the Hon'ble Gujarat High Court in the case of PCIT vs Manzil Dinesh Kumar Shah reported in 95 taxmann.com 46 (Guj) had held that a notice u/s 148 of the Act cannot be issued by the ld. AO to verify validity of information received. The SLP preferred by the revenue against this judgement before the Hon'ble Supreme Court has been dismissed which is reported in 101 taxmann.com 259 (SC). Hence the reopening suffers from this legal infirmity. 4.2. We find that for the purpose of reopening, the ld.AO had duly obtained the approval u/s 151 of the Act from the ld. PCIT. The proforma for seeking approval is enclosed in page 166 of the paper book filed before us. In the said proforma, in response to question numbers 7 & 8, the ld. AO had given incorrect replies, which has been approved by the ld. PCIT while granting approval u/s 151 of the Act. For the sake of convenience, the relevant question numbers 7 & 8 are reproduced hereunder:- 7. Whether the provisions of section 147(b) applicable - Answer given by AO is Yes 8....
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....f that income has escaped assessment in the case of M/s, Omkam Developers Pvt. Ltd. A.Y. 2009-10 (Pan: AAACQ5036B) Name & Address of the Assessee M/s Omkam Developers Ltd, 702, Aruachal Building, 19, Barakhamba, Road, Connaught Place, New Delhi Assessment Year 2009-10 Financial Year 2008-09 PAN AAACO05036B PUC is a proposal for reopening the case u/s 147 of the Act for the A.Y 2009- 10 in the prescribed Performa. The information received from ADIT (Inv ), Unit-3{4), Kolkata vide his letter dated ADIT/U-3(4)/FIU-IND/MJS/15-16/4l1 dated 22.06.2015.wherein it is mentioned that; in the suspicion transaction report of 1000010583 in the name of Manohar Jaykishan Shah was received and it was reported in the I said FIU-IND-STR No. 1000010583 that there were 311 linked entities amongst whom fund transfers were made and in few accounts there were deposits also. In pursuance to the said report. Bank Statements of various entities have been obtained and on investigation, it has been noticed that Omkam Developers Pvt. Ltd (Pan AAACO5036B] was one of the beneficiaries during the F.Y 2008-09 relevant A.Y.2009-10 and the amount brought through I a....
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....discussed in Annexure-C, C1 and Annexure-1 and the same was swiftly transferred to the other entities (Mostly Companies). The details of 6 such companies are given in Annexure -5 V. The fund was transferred to the entities which are the real beneficiary of the funds from the companies mentioned in Annexure-S. The details of such, companies are given in Annexure -B. Modus operandi of providing accommodation entry The summons u/s 131 were issued to the individuals and entities mentioned in the STR. The field verification from the inspector was also done. In most of the cases either the summons could not he served or there was no compliance. The facts of immediate source of the beneficiaries being shell companies have already been established and recorded u/s 131 of the Income Tax Act-1961 during the investigation in other cases. The fact as also corroborated by the non-compliance to the summons as well as non-existence of real business of most of the entities mentioned in Annexure-C, C1 and l and S. Flow Chart of Cash Flow Cash deposit in proprietorship concerns Layering of funds through dummy Proprietorships and Shell companies ....
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.... ITD, return of income was filed on declaring Rs. 2,389/- income, it is noticed that the assessee company M/s Omkam Developers Ltd, received accommodation entries to the tune of Rs. 1.93,crores during the F.Y. 2008-09 relevant to assessment year 2009-10 from the entry operators as mentioned in the chart above and same was not offered for taxation. Having perused and considered the information, I have reason to believe that income of the assessment company to the extent of Rs. 193 Lakh has escaped assessment for the A.Y. 2009-10. Therefore, proceedings u/s 147 i.e. clause (b) of Explanation 2 of the provisions of section 147 of the I.T. Act, 1961 is proposed to be initiated for the A.Y. 2009-10. As per ITD record, Return of Income has filed on 30.03.2010 at an income of Rs. 2,389/- for the A.Y. 2009-10. Since four years has been expired from the end of the relevant assessment year in this case for the said assessment year, it is therefore I requested that the reasons recorded above for the purpose of reopening of assessment is put up for kind satisfaction of Pr. CIT, Delhi-7, New Delhi in terms of proviso, to Section 151 of the Income Tax and approval for ....
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....ssue is covered by the Order of ITAT, Delhi G-Bench, Delhi in the case of VRC Township Pvt. Ltd., Delhi (supra) in which reopening of the assessment in identical circumstances was held to be bad in law and sanction accorded by the Sanctioning Authority was also found invalid, therefore, reopening of the assessment was quashed. In the present case, the Learned Counsel for the Assessee has pointed-out that assessee has raised this issue before the Ld. CIT(A), but, he has rejected the submissions of the assessee holding that Section 147(b) as mentioned in the reason and Format is a typographical human error which is curable under section 292B of the I.T. Act, 1961. This issue is also considered in the Order of VRC Township Pvt. Ltd., (supra) following the decision of Hon'ble Bombay High Court in the case of Kalpana Shantilal Haria vs. ACIT [2017] 100 CCH 165 (Bom.). Following the same reasons for decision, we set aside the Orders of the authorities below and quash the reopening of the assessment in both the assessment years under appeals. All additions stand deleted. Accordingly, appeals of the Assessee are allowed." 10.3. In the instant case before us, also the Learned DR ha....