TaxTMI 
TaxTMI 
2023 (8) TMI 632
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....e amounts] in both the assessment years:- "(1) That the commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting Rs. 14,50,66,141/-which was added to the income of the assessee on account of unexplained share application money. (2) That the commissioner of Income Tax (Appeals) has erred in law and on facts of the case in not discussing the issue and facts of unexplained share application money raised by the AO in his assessment order on basis of which addition of Rs. 14,50,66,141/- was made. (3) That the commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting Rs. 16,45,11,241/- which was added to the income of the assessee on account of as unexplained deposits. (4) That the commissioner of Income Tax (Appeals) has erred in law and on facts of the case in ignoring that the submissions made by the assessee during the assessment proceedings were incomplete and inadequate and that they were not authentic and weren't able to prove creditworthiness of the parties from which investments/deposits were made. (5) That the commissioner of Income Tax (Appeals) has erred in law and in facts in relying on the subm....
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..... Aggrieved by the said assessment order, the assessee filed an application under 264 of the Act before the Commissioner of Income Tax Central-2 New Delhi who vide order dated 20/03/2014 held as under:- "Jurisdiction u/s 153C for assessing 6 years preceding the year in which search was initiated can be invoked only when impugned documents are seized u/s 132 or requisitioned u/s 133A. It cannot be invoked in the case of impounding of documents u/s 133A. The very foundation for instituting the proceedings u/s 153C is missing. It has been held by ITAT. Chennai in the case of ACIT vs. M.N. Rajaramah (2010) 5 TTR (TRIB) 261 Chennaihand High Court of Gujarat in the case of CIT vs Meghmani Organics Ltd. (2014) 221 Taxman 25 (Guj.) that where the very foundation for instituting the proceedings by A.O. was missing, the consequential actions and orders must fail and that assessment made pursuant to such proceedings would have to be annulled. Since in the present cases there is no proper assumption of jurisdiction, the assessments made pursuant to such proceedings are annulled herewith. No submissions have been filed on other grounds. However, since the assessment is being treated as null a....
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.... the assessment year. The assessee hasn't filed any documentary evidence to establish the identity and capacity of the persons who have allegedly given Share application money or to establish the genuineness of these transactions. Hence, sum to the tune of Rs. 1,94,45,100/- is required to be treated as unexplained other deposits, which has escaped assessment on protective basis in interest of revenue. D) From perusal of the bank statements and other documents is its seen that there are unexplained deposits other than cash to the tune of Rs. 14,61,64,641/-. These deposits are unexplained even after considering the unexplained other liabilities, share capital & share premium. Hence, sum to the tune of Rs. 14,61,64,641/- is required to be treated as unexplained other deposits which has escaped assessment on protective basis in interest of revenue. It is further stated that assessee was one of the intermediary companies used by Shri Aseem Kumar Gupta for providing accommodation entries as admitted by Shri Aseem Gupta. I, therefore, have reasons to believe that this amount of Rs. 16,65,49,431/- represents income of the assessee chargeable to tax which has escaped assessment fo....
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.... erred in law and on facts in confirming the action of the Ld. A.O. in framing impugned reassessment order without assuming jurisdiction as per law and without applying mandatory conditions of Section 147 to 151 of the Act and contended that since the Assessment was originally completed u/s 143(3)/153C was annulled, hence, assessment u/s 147 could not have been done by the A.O. The Ld. Counsel for the assessee relied on several case laws in support of the contention and also the order passed by the coordinate Bench in the following cases:- (i) DCIT vs. M/s Shrey Infradevelopers (P) Ltd. - ITA 6229/Del/2015, (ii) DCIT vs. Shushree Securities Pvt. Ltd.- ITA No. 6225/Del/2015 (iii)DCIT vs. Chotti Leasing & Finance Pvt. Ltd.- ITA No. 6211/Del/2015 & other appeals, wherein the Coordinate Bench has relied on the order in Assessee's own case for the A.Y. 2008-09 in ITA No.6218/Del/2019 & CO No. 403/Del/2015. Thus, the Ld. AR submitted that the Assessee's Cross Objections deserves to be allowed. 13. Per contra the Ld. DR argued that, originally the AO passed an order u/s 143(3) r.w.s. 153C of the Act, the said order was challenged u/s 264 of the Act by the assessee before the Ld. CI....
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....thin his exercising of his jurisdiction since period of four years had not passed from the end of relevant assessment year. Going through the reasons of the AO, it is seen that the AO was right in issuing note u/s 147 of the Act as there is no embargo to the A.O. since the period of 4 years had not passed from the end of the Assessment Year, as various judgments of the Hon'ble the Apex Court and High Courts have time and again held so. 15. The Hon'ble High Court of Gujarat in the case of In the case of Krishna Developers & Company Vs. Deputy Commissioner of Income-tax, Circle-7(2) in Special Civil Application No. 8352 of 2017, dated 25-07-2017, held that merely the reasons recorded by the Assessing Officer proceeded on same basis on which Assessing Officer initially desired to make additions but which failed on account of setting aside order of assessment, it would not preclude the Assessing Officer from carrying out exercise of reopening of assessment. It has been held that since the original assessment order was quashed on technical grounds, which means the original order does not survive in the eye of law. Thus, there is no original assessment remained valid and therefore the l....
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....of notice, the order does not survive in eye of law. There is thus no original assessment. There is no opinion of the Assessing Officer on record. There is no question of the assessee's return having been scrutinised. There is therefore, no change of opinion. 14. We may test the petitioner's contention regarding merger. Section 147 of the Act, as is wellknown, permits the Assessing Officer to assess or reassess the income chargeable to tax which has escaped assessment. The proviso to section 147 of the Act however provides that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. The essence of this proviso is that the income involving the matters which are the subject matters of appeal, reference or revision, cannot be a subject matter of reopening of the assessment. In other words, on same subject matter, there cannot be parallel consideration by the Assessing Officer in the reopened assessment and by higher officer or authority in appeal, reference or revision. For applicability of this proviso and the p....
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.... to call for a reference. Supreme Court confirmed the view rejecting the assessee's contention that the order of adjudicating authority having merged with that of the appellate authority, the Tribunal should have examined the issue on merits. 17. We may now refer to the decisions cited by the learned counsel for the petitioner of this Court in support of his contention regarding merger. (a) Radhawami Salt Works case (supra) and connected matter, judgment dated 14.6.2017), was a case where an issue on which the Assessing Officer wanted to reopen the assessment was pending in appeal before the Commissioner. It was in this context, it was observed that there cannot be two separate considerations to the same subject matter relatable to the income, one by the appellate authority or forum and another by the Assessing Officer in fresh assessment. (b) In case of United Phosphorus Ltd. (supra), the Court on facts held that in respect of items for which assessment is sought to be reopened has merged with the order of Commissioner (Appeals) and as such there is no independent existence of the assessment, the assessment therefore could not be reopened in respect of such items. (c) ....
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....ment therefore requires a formation of belief on part of the Assessing Officer that income chargeable to tax has escaped assessment. Such belief should be formed bona fide and on the basis of tangible material on record. If these requirements are satisfied, it would be open for the Assessing Officer to assess or reassess the income of an assessee after issuing the notice under section 148 of the Act. 20. Nothing contained in the language of section 147 would permit us to hold that even if all the parameters to enable the Assessing Officer to assess or reassess the income by reopening the assessment are present, same may not be permitted in cases where the original assessment framed by the Assessing Officer has failed on any technical ground, such as in the present case i.e. want of service of notice under section 143(2) of the Act. Once the original assessment is declared as invalid as having been completed without the service of notice on the assessee within the statutory period, there would be thereafter no assessment in the eye of law. The situation therefore, be akin to where return of the assessee has been accepted without a scrutiny. Reopening of the assessment, if the Asse....
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....ake additions but which failed on account of setting aside order of assessment, it would not preclude Assessing Officer from carrying out exercise of reopening of assessment in accordance with law. 17. The Hon'ble Supreme court in the recent Judgment in Civil Appeal No. 6580 OF 2021 in the case of Abhisar buildwell Pvt. Ltd. Vs. Principal Commissioner Income tax, Central-3, while holding that, in respect of completed/unabated assessments, no addition can be made by the AO in the absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961, however, observed that the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The portion of the said ratio laid down by the Hon'ble Supreme Court are as under: " iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning t....
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....:- 1 Specify the purpose for which there was need for additional funds and date of AGM/EGM when decision to Increase share capital was approved by shareholder, 2. The offer letter, proposal (terms of issue) information/voucher/booklet/project report etc. which was providing by you to the prospective investors in order to justify the decision of investment. 3. Furnish copy of complete share application form submitted by each investor alongwith Annexure, if any. 4. Furnish of copy of the annual return filed with ROC giving intimation in change of shareholding of the company. In reply the assessee company has accepted the increase but failed to give any explanation regarding the nature and source of the increase.. It is worthwhile to mention here. that no reply, whatsoever has been furnished by the assessee for the quarries raised vide this letter dated 01.01.2015 as specified in para above. Since, source of share application money and identity & creditworthiness of parties is not proved. The addition on account of share capital Rs. 6,48,170/- and share premium Rs. 1,87,96,930/- will be made as the assessee company as income from undisclosed sources. Satisfaction is hereby....
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.... entries filed by the appellant during the course of assessment proceedings, I find that clear narration was given against the credit entries. If the Assessing Officer had any doubt about the credit entries, he could have asked for further clarification from the appellant or confirmation from the concerned party. On perusal of the detail of the credit entries, such an action of the Assessing Officer was not at all justified. In view of the above facts and considering the evidence on record, I see no justification for the Assessing Officer in holding that the above transactions remained unexplained and making the impugned addition. Accordingly, the addition of Rs. 30,95,89,154/- made by the Assessing Officer is deleted. Ground raised in Appeal is allowed." 21. Aggrieved by the said deletion the Revenue preferred the present appeal on the grounds mentioned above. The Ld. Departmental Representative vehemently submitted that the CIT(A) has erred in law and on facts of the case ignoring the fact that the submission made by the assessee during the assessment proceedings which were incomplete and in-adequate and that they were not authentic and were not able to proved the creditworthine....
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....he Ld. Assessee's Representative which is highly in appropriate. On going through the order of the CIT(A), we are not in a position to find out how the assessee had satisfied the ingredients of Section 68 of the Act. It is further observed that the Ld. CIT(A) could have caused independent enquiry or could have called for Remand Report from the A.O., which the CIT(A) failed to do so, but proceeded to delete the addition made by the A.O. Hence, we are not in a position to uphold the order of the CIT(A) on the issue in hand and accordingly we vacate the order of the CIT(A) and remit the issues in dispute to the file of the A.O. with a direction to the assessee to proved the identity capacity of the parties and genuineness of the transaction as required u/s 68 of the Act. 24. In the result, the Appeal of the Revenue is partly allowed for statistical purpose. ITA No. 6220/Del/2015 (A.Y 2010-11) (Revenue) 25. The present appeal the assessment order u/s 147/143(3) of the Act came to be passed on 02/03/2015 by disallowing Rs. 1,01,33,791/-claimed as a loss on sale of investment and also made addition of Rs. 9,86,97,514/- as unexplained bank deposit in following manners:- "Claim of....
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....91/- . The appellant submits that the additions have been made by the Ld AO without application of mind and without making the proper verifications. The Ld AO without appreciating the correct facts of the case has simply copied paste the assessment order passed u/s 143(3) on 26/12/2011 whereby the same has been annulled by the CIT Central-II in the order passed u/s 264 of the act on 20.03.2014. In the order passed u/s 147/143(3) of the I.T.Act 1961, the Ld. AO has stated that, from the perusal of Balance sheet it is seen that assessee company has claimed loss on sale of investment/commodities amounting to Rs. 1,01,33,791/- during the previous year. The assessee had debit the loss in the P&L account. The assessee has not filed any documentary evidence to establish the sales & purchase of commodities/investments assessee in this regard. Hence, Rs. 1,01,33,791/- is required to be added to the income of the assessee as it has escaped assessment. 9.1 In this regard, it is humbly stated that there was no loss showing in the profit and loss account of the assessee. The Ld AO has just copied paste the order passed u/s 153C and made the bogus additions causing hardship on the assessee. It....
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....tification for the impugned addition made by the Assessing Officer. Accordingly, the addition of Rs. 9,86,97,514/- made by the Assessing Officer on account of explained deposits is deleted. Ground raised in appeal is allowed." 27. We have heard both the parties and perused the material available on record. The Ld. A.O. while making the assessment specifically asked to substantiate the claim of loss of Rs. 1,01,33,791/- but the assessee remained silent, therefore, without there being any material, the A.O. disallowed the loss claimed by the assessee. During the appellate proceedings the main reason for deleting the addition was the A.O. has not made proper verifications and the A.O. has just copied and pasted the order u/s 153C of the Act. The CIT(A) have only considered the submission of the assessee and came to conclusion that the A.O. has made the addition erroneously. The CIT(A) failed to make either independent enquiry or examining the facts by calling remand report from the A.O. Further, the Ld. A.O. while making the addition of Rs. 9.86,97,514/- on account of unexplained cash deposits on perusal of the bank reconcile statement for the year under consideration, found that the....