TaxTMI 
TaxTMI 
2023 (12) TMI 210
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....mstances the action of the Ld. CIT(A) in affirming the action of the Ld. AO in such respect is bad in law and it may be held accordingly. 2. For that in view of the facts and in the circumstances, the Ld. CIT(A) was wholly unjustified in upholding the validity of the notice u/s. 148 and the consequential proceedings u/s. 147 without appreciating the fact that the reasons recorded for the reopening of the assessment were not provided to appellant and hence such proceeding is bad in law and in view of the facts and in the circumstances it may be held accordingly. 3. Without prejudice to Grounds No.1 & 2 above, the Ld. CIT(A) had initiated such proceedings u/s. 147 merely on the alleged information from the Investigation Wing without conducting any enquiry of his own and as such the reopening is void ab initio and is liable to be set aside I quashed I cancelled and it may be held accordingly. 4. For that in view of the facts and in the circumstances, the Ld. CIT(A) erred in upholding the validity of the impugned order u/s.147/263/1441 263/143(3) when a simultaneous proceedings u/s. 144/263/143(3) was carried on by the Ld. AO and in view of the facts and in t....
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.... the right to put additional grounds and/or to alter/ amend/ modify the present grounds at the time of hearing." 3. There are several events which took place prior to passing of the impugned assessment order and the appellate proceeding thereon. To have a bird's eye views of these several events, chronology of the same is tabulated as under: Sl. No. Order Date 1. Original Assessment order u/s. 143(3) 20.03.2015 2. First Revision Order u/s. 263 17.10.2016 3. First effect giving Assessment Order u/s. 263/143(3) 30.12.2016 4. Second Revision Order u/s. 263 12.03.2019 5. Notice u/s. 148 for initiating reassessment proceeding 26.03.2019 6. Second effect giving Assessment order u/s. 263/144 06.12.2019 7. Reassessment order u/s. 143(3)/147 16.12.2019 8. Appellate order by ITAT in ITA No. 495/Kol/2022 quashing the second revision order passed u/s. 263. 06.03.2023 3.1. By keeping the above table in perspective, we take note of the brief facts of the case according to which assessee is a private limited company. Loss of Rs. 74,252/- was reported in the e-return filed on 06.02.2013. Case selected for scruti....
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....ders & also the genuineness of transactions relating to share capital that was intended to be carried out and merely accepted the submission of the assessee in this regard. (ii) That A.O. has also failed to carry out detailed investigation of the shareholders on the very issue that how they decided to invest in such a company which was never known for its line of business and also they invested at huge premium without verifying the financial position. (iii) The A.O. further failed to examine the rationale behind raising the said share premium and also did not verify the method adopted by assessee for determining such abnormally huge premium specially keeping in view that prima facie there was no material in the balance sheet of the assessee warranting/justifying such huge premium. (iv) The A.O. failed to collect the relevant evidences in order to reach a logical conclusion regarding the genuineness of controlling interest. (v) The A.O. failed to examine all the bank accounts for the entire period in the course of verification to find out the money trail of the share capital. (vi) The A.O. failed to adequately trace out the money trail to....
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....is erroneous in so far as it is prejudicial to the interest of revenue in accordance with the Explanation 2(c) below section 263 (1) of the Act. Accordingly, the assessment is set aside to the table of A.O on the issue as outlined in para- 2 above. The A.O. is directed to provide reasonable opportunity to the assessee company to produce documents & evidences which it may choose to rely upon for substantiating its own claim The AO is further directed to adjudicate the said Issue de novo and pass a fresh assessment order in accordance with the relevant provisions of law." 4. Aggrieved, assessee went in appeal before the Tribunal. 5. In the said appeal, Co-ordinate Bench took note of the findings of the Ld. AO arrived at in the first effect giving assessment order passed u/s. 263/143(3) of the Act, dated 30.12.2016 which is extracted below: "15. The finding of ld. AO in itself makes it amply clear that complete details were filed and the directors of the investor companies personally appeared before ld. AO on being called for by issuing summons u/s 131 of the Act. Their statements were recorded u/s 131 of the Act on oath and they also referred to various books of accoun....
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....come tax return and all of these companies have been assessed to tax. The bank statements of these share applicant companies are available on record which justifies the source to make investment. Revisionary proceedings cannot give power to ld. Pr. CIT to direct ld. AO to examine again and again the same issues which have already been properly enquired for by ld. AO and satisfactory reply has been given by the assessee along with the documentary evidences which ld. AO has thoroughly examined all these details and made proper application of mind and taken a view permissible under the law. It is well settled that if the view taken by ld. AO is permissible under the law then it may or may not be prejudicial to the interests of the Revenue." 5.1. By considering the above merit based factual finding of the Ld. AO as extracted above, the Co-ordinate Bench arrived at its conclusion to hold that Ld. Pr. CIT has grossly erred in assuming the jurisdiction u/s. 263 of the Act and holding the assessment order dated 30.12.2016 as erroneous and prejudicial to the interest of the revenue, thus the second revision order passed u/s. 263 of the Act dated 12.03.2019 was quashed. The relevant findi....
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....der Ld. AO observed that case of the assessee is reopened u/s. 147 based on credible information which was received on 12.03.2019 from DDIT (Inv.) Unit-4(2), Kolkata according to which assessee had taken accommodation entry and brought back its unaccounted income of Rs. 2,48,50,000/- into its regular books of account through banking channel from Mr. Sandeep Roy, proprietor of Sarika Trading Co. (PAN: APGPR1616A), a shell entity. The observations made by the Ld. AO in this respect are as under: "The Assessing officer passed order u/s. 263/144 of the Income Tax Act , 1961 on 06.12.2019 determining total income at Rs. 79,15,95,340/-. The case has been transferred from ITO Ward 12(3), Kol vide order u/s. 120 of I. T. Act, 1961 dated 24.09.2019. Again, the case has been reopened u/s. 147 with a credible information was received on 12.03.2019 from DDIT (Inv.), Unit-4(2), Kolkata vide his letter bearing No. F. No. DDIT(Inv.)/Unit-4(2)/Info/2018-19/75091 dated 27.02.2019, that M/s. Pearl Tracom Pvt. Ltd., whose current jurisdiction is with this end, has taken accommodation entry and brought back its unaccounted income to the tune of Rs. 2,48,50,000/- into its regular book....
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....of several events tabulated above to point out that reliance placed by the Ld. AO on the second effect giving assessment order passed u/s. 263/144 dated 06.12.2019 is baseless since the second revision order u/s. 263 dated 12.03.2019 has been quashed by the Coordinate Bench making it non-est. According to Ld. Counsel, ld. AO is absolutely wrong in taking total assessed income from this second effect giving assessment order and making further addition in the impugned reassessment proceeding. 7.1. Ld. Counsel strongly submitted on the jurisdictional aspect of the impugned reassessment proceedings by contending that during the pendency of an assessment proceeding, reassessment notices cannot be issued. According to him, the impugned notice u/s. 148 has been issued when the set aside assessment proceedings by way of second revisionary order were pending. Accordingly, the entire reassessment proceeding and consequent order u/s. 147 read with section 143(3) is bad in law. To buttress his contention, he placed reliance on the decision of Hon'ble Supreme Court in the case of S. M. Overseas Pvt. Ltd. Vs. CIT (2023) 450 ITR 1 (SC) and Trustees of HEH Nizam Supplemental Family Trust Vs. CI....
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....income from assessment in the hands of the assessee, thus assumption of jurisdiction by the Ld. AO to initiate reassessment proceeding is void ab initio. 7.4. According to him, the reasons to believe recorded by the Ld. AO failed to demonstrate the link between the tangible material and the formation of reason to believe that income has escaped assessment. Ld. Counsel also raised the contention that despite repeated request made to the Ld. AO, certified copy of reasons to believe recorded before issuing notice u/s. 148 have not been supplied to the assessee. What Ld. AO furnished is by way of show cause notice dated 15.11.2019 wherein it was stated that assessee had made an accommodation entry of Rs. 2,48,50,000/- from Mr. Sandeep Roy, proprietor of Sarika Trading Co. (PAN: APGPR1616A) in the year under consideration through banking channel. Thus, taking clue from this piece of information available in the show cause notice issued by the Ld. AO, it was strongly and very categorically refuted that assessee had not undertaken any transaction with any person named Mr. Sandeep Roy or any concern named M/s. Sarika Trading Co. for the stated amount. In this respect it was submitted th....
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....43(3) dated 30.12.2016. 7.6. For ease of reference the Balance Sheet and Profit & Loss Statement referred by the Ld. Counsel are extracted below : 7.7. Ld. Counsel thus contended that even on merits, the reasons to believe recorded by the Ld. AO do not have any legs to stand and are devoid of facts on record. According to him, the addition so made is ought to be deleted. 8. Per contra, Ld. CIT, DR placed reliance on the orders of the authorites below. 9. We have heard the rival contentions and perused the material available on record. We have given our thoughtful consideration to the submissions made by the Ld. Counsel, both on the jurisdictional issues as well as mertis of the case. From the chronology of events tabulated above, we take note of the fact that second revision order passed u/s. 263 dated 12.03.2019 has been quashed by the Coordinate Bench making the second effect giving assessment order dated 06.12.2019 as non-est. Reference made by the Ld. AO in the impugned assessment order of this proceeding and basing it to arrive at the assessed total income is not justified. From the perusal of the reasons to believe recorded by the Ld. AO and as contended by the Ld....
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....31 was issued to the banks for obtaining relevant bank statements. Also, summon notice was issued to the subject, Sandeep Roy at his address as mentioned in the information. But the same was returned back by the postal authority. It is seen that Sandeep Roy (PAN:APGPRA1616A), is a non-filer (Source-ItD/E-filing). On examination of above bank statements mentioned above, it is observed that cash is deposited in the account and simultaneously followed by debits to various accounts. These accounts have frequently been used for layering the fund through the several bank accounts of jamakharchi/shell concerns and immediately transferred to the interlinked bank accounts and then ultimately to the bank accounts of the concerned beneficiary. From the analysis of the above mentioned bank accounts and interlinked bank accounts, beneficiaries have been identified. The details of such beneficiary are as follows: Sl. No. Beneficiary Beneficiary amount (Rs.) F .Y PAN 1. Pearl Tracom Pvt. Ltd. 2,48,50,000.00 2011-12 AABCP9934G 9.2. We also find ourselves in agreement with the contention of the Ld. Counsel that there is nothing specific stated in the reason....
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....um is concerned which has been raised during the year, elaborate detailed examination and verification exercise has already been conducted by the Ld. AO and has been accepted vide first effect giving assessment order u/s. 263/143(3) dated 30.12.2016. The Coordinate Bench has already taken note of factual findings given in this assessment order and remains uncontroverted. Thus, on the merits of the case also, we do not find any reason to sustain the addition made by the Ld. AO. Accordingly, the grounds taken by the assessee are allowed. 10. In the result, appeal of the assessee is allowed. Order is pronounced in the open court on 10th November, 2023 ============= Document 1 PEARL TRACOM PRIVATE LIMITED Balance Sheet as at 31st March, 2012 Particulars Note No As at 31.03.2012 (Amounts) As at 31.03.2011 (Amounts) I. EQUITY AND LIABILITIES (1) Shareholder's Funds (a) Share Capital (b) Reserves and Surplus (2) Current Liabilities (a) Other Current Liabilities (b) Short-term Borrowings (b) Short-term Provisions II.Assets (a) Non-Current Investments (1) Non-current assets (b) Other Non-Current Assets (2) Current ass....