TaxTMI 
TaxTMI 
2023 (10) TMI 460
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..../s 68 of the Income Tac Act. Ld. CIT(A) erred in ignoring that reassessment proceeding are based on fresh facts/information rather than change of opinion. 2. Whether on the fact and in the circumstances of the case in law, the Ld.CIT(A) erred in ignoring that confirmation of concealment of income/disclosure made in statement recorded during Survey u/s 133A of Act is an information, though not conclusive, which may be used in regular assessment or reassessment proceedings. 3. Whether on the fact and in the circumstances of the case in law, the Ld.CIT(A) has over relied upon the outcomes of original assessment and completely ignored the fact that assessee had not disclosed fully and truly all the necessary facts during scrutiny assessment. This becomes evident from the detailed findings of assessment order dated 30.12.2018 u/s 143(3) r.w.s. 147 of act which makes it amply clear that the lender companies are merely paper companies which lacks' commercial/financial substance and also appear in the SEBI's list of shell companies. 4. Whether on the fact an in the circumstances of the case and in law, The Ld. CIT(A) erred incompletely ignoring the decisi....
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....sed companies in the year under consideration. The AO after intensive inquiries pertaining to funds received in the garb of share capital and by taking reference of the statements of Sri Shyam Sundar Agrawal held that the appellant failed to explain identity and credit worthiness of the investors as well as genuineness of the transaction. Therefore, the Ld AO after considering entire facts made addition in the hands of appellant on account of unexplained share application money under section 68 of the Act. Being aggrieved with the assessment order, the assessee preferred an appeal before Ld CIT(A), wherein the assessee succeeded to have its ground of appeal allowed, raised pertaining to legality of assessment passed u/s 147 r.w.s. 143(3) of the Act. Now the department is in appeal before us against the order of Ld CIT(A). 3. At the outset Ld CIT DR submitted that the case of the assessee was reopened u/s 148 of Act when the survey u/s 133A was conducted on the premises of the assessee company and it was noticed that the assessee has received an amount of Rs. 1,87,50,000/- in the form, of share application money from 19 Kolkata based companies, which are being identified as the p....
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....evidentiary value and as such, the entire basis of reopening of the assessments vitiated and as such, all these impugned assessments are ab-initio-void; the substratum to give a reason to believe that income chargeable to tax has escaped assessment, is vitiated in this case; the impugned reassessment is not sustainable in law; once the statements said to have been recorded u/s 132(4)/133A were withdrawn then there existed no material on record to warrant reopening of the case against the assessee u/s 148; if the very basis on which reopening was ordered did not exist, there was no que for reopening of the case; this material aspect of the matter has not been considered by the AO, who proceeded to direct reopening of the case, without there being any legally admissible evidence available on record; thus, the very issuance of notice u/s 148 is found to be illegal and absolutely without jurisdiction; (B) no additions could be made on the basis of those retracted statements, when the ld AO himself has accepted the retraction as such and not made addition in AY 18-19 (i.e., the survey year) as per the survey statement; Dr J Mohan (2012) (Chen-Trib) dt.23-4-122....
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.... 11. In Paul Mathews and Sons (2003) (Ker HC), after examining the facts of the case, the Court held that a power to examine a person on oath is specifically conferred on the authorised officer only u/s 132(4) in the course of any search or seizure. Thus, the IT Act, whenever it thought fit and necessary to confer such power to examine a person on oath, as expressly provided for it, whereas sec133A does not empower any ITO to examine any person on oath. Thus, in contradistinction to the power u/s 133A, sec132(4) enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the IT Act. The Court held that whatever statement recorded u/s 133A is not given an evidentiary value. 12. S Khader Khan Son (2008) (Mad) had considered the very same issue. The hon'ble HC has laid down the principles relating to sec 133A as follows: "(i) An admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper ....
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....erefore, by all means, it is necessary to hold that reopening of an assessment is not permissible in law on the basis of a statement obtained in the course of survey action u/s 133A, which has been later on retracted. Ashok Manilal Thakkar (2005) (Ahd-Trib) is squarely on this point. In that case, a statement was obtained in the course of survey and thereafter that was retracted and on that basis the Tribunal held that no addition can be made in the hands of the assessee. 15. Therefore, in the facts and circumstances of the case, we hold that the substratum to give a reason to believe that income chargeable to tax has escaped assessment, is vitiated in these cases. Therefore, the impugned reassessments are not sustainable in law. They are accordingly set aside." 2.2. It is submitted that Dr N Thippa Setty (2010) 322 ITR 525 (Kar) dt.9-4- 08, held as under: "39. It is further pertinent to mention here that once the statements said to have been recorded u/s 132(4) were withdrawn then there existed no material on record to warrant reopening of the case against the assessee u/s 148. If the very basis on which reopening was ordered did not ex....
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....fact. To record in the reasons that this was discovered during survey is not factually correct. A disclosed fact already on record cannot be discovered. Similarly, the recording that information was received from the Inv. Wing is vague. No particulars are given. The director has sought for time to provide details. It is not a case of failure to prove the identity etc. identity, creditworthiness and genuineness of a transaction cannot be proved in spot enquiry during survey. Hence, as in the case of reasons recorded for reopening for AY 09-10, the reopening of assessment for AY 10-11 is also bad in law. 23. We also find that there is no independent application of mind by the AO to the information received from the Inv. Wing. Suspicion cannot take place of proof or evidence. Though it is true that conclusive evidences need not be brought on record at the time of recording of reasons, there should be some verification which should lead to the formation of belief that income subject to tax has escaped assessment. Vague statement, wrong recording of facts in the reasons recorded for reopening, render the reassessment bad in law. Applying the propositi....
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.... regard, I hereby humbly want to submit that all the investor companies, a list of which has been furnished by us to you are all existing and active companies. The address furnished to you was as per our records however the registered office address of some of the companies has changed over the period of time and the further the name of one those companies has also changed from "Rosemount Vanijya Pvt Ltd " to "Brightsun Equity Finvest Pvt Ltd." (name change certificate enclosed), which we also came to know when we enquired into the matter after we received your current notice. We are enclosing herewith a fresh list with current address of all the companies. We are also furnishing herewith a printout of master data from the website of ministry of company affairs and also a copy of the Income Tax Return of all the companies for A Y 2012-13. The documents as above sufficiently explain the identity of these companies and also prove beyond doubt that they are existent and functioning too. Hence, the amount of share capital subscribed by the company shall not be added to company. This view has been taken in a number of case by various courts including CG High Court in the case o....
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..... The appellant has vehemently contended that during original assessment proceedings specific queries were made with regard to share capital and premium received during the year under consideration from the appellant as well as from the investor companies. In compliance, the appellant as well as all the investor companies made necessary compliances before the AO from time to time. The sole reason for re-opening case of the appellant is statement of Shri Shyam Sunder Agrawal which has already been retracted during assessment proceedings vide letter dated 31.10.2018 and affidavit dated 14.06.2018. During assessment proceedings statement of Shri Shyam Sunder Agrawal was again recorded on oath wherein he has admitted that the statement given during survey proceedings was under coercion and pressure. Thus, reassessment proceedings has been initiated merely on the basis of statement of Shri Shyam Sunder Agrawal and the documents relating to subject issue were already available on the record of the AO and no new tangible material has been brought on record by the AO. Statements of Shri Shyam sunder Agrawal, Director in the appellant company were recorded during the survey proceedings by i....
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....ant facts brought in by the appellant. Thus, the statement recorded u/s . 131 during the course of survey looses its legal validity as credible evidence. Accordingly, such statement cannot be made basis of reopening of the assessment. Admission of undisclosed income should be based upon credible material found in the course of search / survey. CBDT has issued instruction in this regard vide letter F. No. 286/2/2003-IT (Inv) dated 10.03.2003 on "Confession of additional income during the course of search &seizure and survey operation" which says that: "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search &seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not ....
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....nt, in the instant case characterised as undisclosed and on the facts and circumstances of the case, we are of the view that mere statement without there being any corroborative evidence, should not be treated as conclusive evidence against the maker of the statement." Hon'ble ITAT, Indore in the case of ACIT Vs. Shri Yogesh Kumar Hotwani reported in 30 ITJ 353/380 (Ind-Trib) has also held that no addition can be made merely based on statement u/s . 132(4) without linking to the seized books of accounts, other documents, money, bullion, jewellery or other valuable articles or things. In view of the above discussion, the statement of Shri Shyam Sunder Agrawal cannot be treated as conclusive evidence which could be termed as fresh material on the record for the purposes of recoding reasons for reopening of assessment of the appellant under the provisions of section 147 of the Act. 3.1.4 The said transaction is fully recorded in audited books of account of the appellant and appellant has discharged its onus of proving identity & creditworthiness of the investors and genuineness of the transaction. Thus, as per appellant, there was no failure on the part of the as....
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....e in respect of which the Assessing Officer has raised the query dated 25 September 2017 during the assessment proceedings and the Petitioner had responded to the same by its letters dated 10 December 2017 and 21 December 2017 justifying its stand. The non-rejection of the explanation in the Assessment Order would amount to the Assessing Officer accepting the view of the assessee, thus taking a view/forming an opinion. Therefore, in these circumstances, the reasons in support of the impugned notice proceed on a mere change of opinion and therefore would be completely without jurisdiction in the present facts. Accordingly, the impugned notice dated 27 March 2019 is quashed and set aside. In the circumstances, we see no reason to interfere in the matter. This Special Leave petition is, accordingly, dismissed" Thus, the view taken by Hon'ble Bombay High Court was affirmed. The operative portion of the decision of Hon'ble Bombay High Court is reproduced as under:- 6. We have considered the rival submissions. It is a settled position in law that the power to reopen an assessment within a period of four years from the end of the relevant assessment year....
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....47.04 crones being claimed as book depreciation on intangibles should not be disallowed to determine book profits under Section 115JB of the Act. The above query of the Assessing Officer was responded to by the Petitioner in great detail by its letters dated 10 October 2017 and 21 December 2017. It justified its claim for deductions by placing reliance upon the decisions of the Courts. In support of its contention that they are entitled to deduction of the current years depreciation from the net profit to arrive at the book profits under Section 115JB of the Act. It was also explained that under subsection 6 of Section 211 of the Companies Act, reference to a balance sheet or profit and loss account would also include any notes thereto or documents annexed thereto. Thus the notes to the account should be taken into account to determine the net profits for working out the book profits in terms of Section 115JB of the Act. The Assessing Officer thereafter proceeded to pass an assessment order dated 30 January 2018 under Section 143(3) of the Act and did not make the proposed disallowance. 10. It is undisputed position before us, that query was raised on the very issue of reo....
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....ation of the fact that the Assessing Officer had during the regular assessment proceedings for Assessment Year 200203 sought information in respect of the allocation of expenses and the explanation offered by the Petitioner was found to be satisfactory. This is evident from query dated 27th December, 2004 and the Petitioner's response to the same on 25^th January, 2005 explaining the manner of distribution of common expenses for delaying the process of claiming deduction under Section 80IA/IB of the Act. All this would indicate that Assessing Officer had formed an opinion while passing the order dated 9^th March, 2005. This Court in Aroni Commercials Ltd. v/s. Assistant Commissioner of Income Tax 367 ITR 405 had occasion to consider somewhat similar submission made by the Revenue and negatived the same by holding that when a query has been raised with regard to a particular issue during the regular assessment proceedings, it must follow that the Assessing Officer had applied his mind and taken a view in the matter as is reflected in the Assessment Order. Besides, the manner in which an Assessing Officer would draft/frame his order is not within the control of an assessee. Moreo....
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.... the same by its letters dated 10 December 2017 and 21 December 2017 justifying its stand The non-rejection of the explanation in the Assessment Order would amount to the Assessing Officer accepting the view of the assessee, thus taking a view/forming an opinion. Therefore, in these circumstances, the reasons in support of the impugned notice proceed on a mere change of opinion and therefore would be completely without jurisdiction in the present facts. Accordingly, the impugned notice dated 27 March 2019 is quashed and set aside." 3.1.6 In the instant case, the impunged issue on which reassessment proceedings were initiated were already examined in depth by the AO during original assessment proceedings. The AO was satisfied on this issue during the original assessment proceedings and therefore, no adverse view had been taken. In such a scenario, ld. AO not having any fresh information/material in his possession which could be formed his belief about escapement of income. In view of the above judgment of Hon'ble Supreme Court and many other judicial pronouncements, it is well settled position that mere fresh application of mind to the same set of facts does not confer ....
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....action that income chargeable to tax has escaped assessment for the said assessment year by reason of the failure on the part of the assessee to make a return under section 139 of the Act or to respond to a notice under section 142(1) of the Act or section 148 of the Act or due to the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. The two key and crucial expressions appearing in section 147 of the Act are "reason to believe" and "failure to disclose fully and truly all material facts necessary for assessment". These two expressions were examined and interpreted in great detail by Hon'ble Supreme Court in ITO vs. Lakhmani Mewal Das, 103 ITR 437 (SC). Hon'ble Court in the said judgment has considered validity of notice u/s 148 of the Act in respect of an assessment beyond the period of four years but within a period of eight years (now six years) from the end of the relevant year, which is also a fact of the instant case. Hon'ble Court observed that in such a case, where notice was issued beyond four years but within period of eight years (now six years), two conditions would have t....
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....us, there is no failure on the part of the assessee to make full and true disclosure of material fact necessary for the original assessment. However, the Id AO has assumed jurisdiction, on the basis of statement of Shri Shyam Sunder Agrawal which has been retracted in later period of time stating the same to be given under coercion and pressure. Admittedly, survey proceedings are related to the affair of the year in which surveys are carried out unless and until any material relating to past year gets unearthed during the proceedings, which is completely missing in the instant case. The entire re-assessment proceedings revolves around statement of Shri Shyam Sunder Agrawal and without having any positive evidence on record. No other/fresh material/evidence has been mentioned in the reasons recorded which conclusively suggest such claim of the assessee was bogus and hence, there was income escaped from assessment. As discussed earlier the statement of Shri Shyam Sunder Agrawal is not a fresh material unearth in the source of survey proceedings. Thus, the AO had no material to reason to believe that there was income escaped from the assessment. Hon'ble Bombay High Court in the ca....
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....scapement of income which is not sustainable in law. Thus, assumption of jurisdiction by Id. AO for roving and fishing enquiries is not sustainable as per the provisions of section 147 of the Act. 3.1.7 In view of the above discussion, the AO was not justified in making addition of change of opinion. Therefore, appeal on these grounds is allowed. 6. The Ld AR of the assessee further submitted that since the assessment was reopened entirely on the basis of statement of Shri Shyam Sunder Agrawal, director of the assessee company during the survey u/s 133A conducted on 29.01.2018, which were later retracted on 14.06.2018 during the assessment proceedings in progress u/s 147 r.w.s. 143(3) of the IT Act. The basis for reopening of assessment is vitiated since the statement recorded on oath u/s 132(4)/133A were withdrawn then there was no material on record exists to form the basis for initiating the reopening proceedings. It was further submitted by the Ld AR that as the reopening proceedings were initiated assessment beyond the period of four years but within a period of eight years (now six years) from the end of the relevant year but no fresh material have been brought on....
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....of the Act that income chargeable to tax has escaped assessment for the assessment year 2012-13 by the reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. On perusal of the order of Ld CIT(A), it is clearly transpired that the issue pertaining to receipt of share capital by the assessee company in the relevant assessment year was exhaustively dealt with by the Ld AO in original assessment proceedings u/s 143(3) and all the facts were explained and disclosed by the assessee, therefore, the allegation of the department that the assessee failed to discharge its burden in establishing the identity, creditworthiness and genuineness of transaction u/s 68 of the Act and Ld CIT(A) erred in ignoring that reassessment proceedings are based on fresh facts/ information rather that change of opinion cannot be subscribed to. The contention of the department that statement recorded during the survey u/s 133A of Act is an information, though not conclusive, which may be used in regular assessment or reassessment proceedings is worth consideration and in compliance of 1st Proviso to section 147 that the assessee was failed to disclo....
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....dered as fresh material since such fact was not before the then Ld AO at the time of original assessment u/s 143(3), however, since the issue was already dealt with at length in the assessment u/s 143(3) and an opinion was formed by the Ld AO, moreover the reopening was beyond a period of 4 years from the end of the relevant assessment year, 1st proviso to section 147 was very much triggered and accordingly it was the required to satisfy the twin conditions i.e. (i) Ld AO have reason to believe that income chargeable to tax has escaped assessment; and (ii) have reason to believe that such income has escaped assessment by reason of the omission or failure on the part of the assessee to make a return under section 139 for the assessment year under consideration or to disclose fully and truly all material facts necessary for his assessment for that year. In the present case since a new fact was admitted by the assessee by way of statement which was not there before the Ld AO when the original assessment u/s 143(3) was framed, thus, the twin conditions mandated in 1st proviso to section 147 are satisfied and we hold that reopening u/s 147 was validly initiated by the Ld AO. We therefor....
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....hange of opinion only. Section 147 do not allow an AO to have a second look on the evidence which were already examined by the then AO when the assessment under section 143(3) was framed. Hon'ble Bombay High court in the case of Ananta Landmark (P) Ltd Vs. Deputy Commissioner of Income Tax & Other Reported in 439 ITR 168 (Bom) has held that: "Duty of the assessee is to fully and truly disclose all primary facts necessary for the purpose of assessment - it is not part of his duty to point out what legal inference should be drawn from the facts disclosed - where on consideration of material on record, one view is conclusively taken by the AO, it would not be open to reopen the assessment based on the very same material with a view to take another view". 10. Under such scenario, we are of the considered opinion that the AO has failed to explain how the appellant has not discharged the onus cast upon it u/s 68 of Act, while the primary information was already made available by the assessee, no new fact could be brought on the record by the department, the basis for reopening i.e. statement of the assessee was available only till the assessee had retracted from the same. Dep....