TaxTMI 
TaxTMI 
2024 (4) TMI 259
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncelled. 2. The CIT(A) erred in law and on facts in confirming the action of reopening the assessment u/s 147 of the Act by the AO without independent application of mind to the facts of the case and without verification of the material placed on his record during the original assessment proceedings completed u/s 143(3) of the Act. Thus the reopening of the assessment is bad in law and the assessment order so made should be cancelled. 3. The CIT(A) erred in law and on facts in confirming the addition of Rs. 1,51,00,000/- u/s 68 of the Act for the amount received as share application money by alleging the same as accommodation entries ignoring the evidences placed on record and submissions made to prove the same as genuine. Thus the addition should be deleted. 4. The CIT(A) erred in law and on facts in confirming the addition without confronting the evidence and statements gathered / taken at its back by the revenue and thus violating the principles of natural justice. Therefore the assessment order should be cancelled. 5. The CIT(A) erred in law and on facts by making an addition of Rs. 3,02,000/- u/s 69C, alleging unexplained expenditure on taki....
X X X X Extracts X X X X
X X X X Extracts X X X X
....raised is a legal ground and involves no investigation into facts except those already on record the same be admitted for adjudication on merits. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT 229 ITR 383. 4. We have heard rival contentions and perused the additional grounds and the relevant facts on record. The additional ground raised by the assessee is legal ground going to the root of the matter i.e. very jurisdiction of making assessment and, therefore, following the decision of the Hon'ble Supreme Court in the case of National Thermal Power Company Vs. CIT (supra), we admit the additional grounds. 5. The Ld. Counsel for the assessee, at the outset, submits that the assessment was reopened u/s 147 of the Act and reassessment was completed on 28.03.2016 u/s 143(3) r.w.s. 147/148 of the Act and an addition of Rs. 1,51,00,000/- has been made u/s 68 of the Act in respect of share capital received by the assessee from various parties/companies. Ld. Counsel submits that the addition was made based on search conducted on 14.09.2010 by the Investigation Unit of the Income Tax Department on Jain Brothers....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Act based on incriminating material found in a search conducted on S.K. Jain Group and the Tribunal sustained the order of the Ld.CIT(Appeals) in quashing the reassessment order passed u/s 143(3) r.w.s. 147 of the Act and upholding the view of the Ld.CIT(A) that once reassessment proceedings are initiated on the basis of incriminating material found in the search of third party then the provisions of section 153C of the Act are applicable which exclude the application of provisions of section 147 and 148 of the Act. While holding so the Tribunal observed as under: - "6. It is pertinent to mention that at the time of arguments, ld. AR made an endorsement in the appeal memo not pressing ground no. 4 and argued the matter on the basis that the reopening was invalid and in any case the assessment should have been u/s 153C instead of Section 147 and 148 of the Act. 7. Ld. DR however submitted that Ld. CIT(A) has fallen in error in considering the Income Tax return of the creditor to conclude about genuineness. It was submitted that there is no error in the assessment u/s 147. 8. Appreciating the submissions it comes up that Ld. AO has primarily examined t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her enquiries with the beneficiaries and other persons, Investigation Wing prepared report in respect of each and every beneficiary and forwarded the information to the relevant assessing officers for further enquiry and assessment. It is not the case where incriminating document or information was found independently for each and every beneficiary, rather, after making an examination and further enquiry, in the case of these beneficiaries, Investigation Wing reached to the conclusion that these beneficiaries have taken accommodation entries in lieu of cash deposited by them from undisclosed sources. On the basis of such reports, the AO has initiated the reassessment proceedings u/s 147 of the Act in the case of the appellant which is valid and tenable in law. The several decisions, as mentioned above, of Jurisdictional High Court as 'Well as other Courts also substantiate this fact that the information received from Investigation Wing is a tangible material for initiating the reassessment proceedings in the case of any assessee. In view of this, the objection raised by AO is not acceptable and deserves to be rejected." 10. We are of the considered view that Ld. Tax Au....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tionale mind would arrive at. After going behind the transactions on paper and after lifting the corporate veil, as discussed in earlier paragraphs, it has been proved that the apparent was not real." 13. Further, in ITA No. 2668/DEL/2019 [Assessment Year: 2010-11] City Life Projects Pvt. Ltd. Vs. The I.T.O SMC Bench at Delhi vide order dated 17/9/2021, has dealt with similar issue involving similar facts and alleged entries given by SK Jain Group and held as follows: "10. I have given thoughtful consideration to the orders of the authorities below and have carefully perused the decisions relied upon ld. counsel for the assessee. I find that the decision of the coordinate bench in the case of Naval Oil and Containers Pvt. Ltd [supra] squarely applies on the facts of the case in hand, in as much as, in that case also, information was received out of the search operation carried out in S.K. Jain group of cases which is evident from the facts extracted at Para 4 of the order and the same are as under: "4. The brief facts of the case are that assessee filed its return of income on 30.9.2009 declaring income of Rs. 2,73,720/-. The AO processed the same u/s. 14....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated facts, the coordinate bench held as under: "5. At the time of hearing, Ld. Counsel for the assessee stated that assessee has raised as many as 13 grounds of appeal which includes legal as well as on merits. But he draw my attention towards the ground no. 3 regarding jurisdiction of the AO ignoring the provisions of section 153C of the Act which ought to have been applied by the revenue instead of section 147 as the former provisions are non-obstantive provisions and exclude the operations of section 147 of the Act. He draw my attention towards a small paper book containing pages 1-62 in which he has attached various documentary evidences including various judgements on the issue in dispute and stated that the ground no.3 has already been adjudicated and decided in favour of the assessee by the various Benches of the ITAT including the ITAT, SMC, Delhi Bench decision dated 08.08.2017 passed in ITA No. 1500 & 1501/Del/2017 (AY 2007-08) in the cases of Sushil Gaur vs. ITO, Ward 2(3), Ghaziabad and Shelly Agarwal. Vs. ITO, Ward 2(3), Ghaziabad. He especially draw my attention towards the facts of the case and the decisions mentioned in para no. 8 at page 7 to 9 of the afo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ication of sections 147 and 148 of the Act. The ITAT held the notice issued under sec. 148 and proceedings under sec. 147 as illegal and void ab initio. It was held that Assessing Officer having not followed procedure under sec. 153C, reassessment order was rightly quashed by the Learned CIT(Appeals). I also draw my support from the ITAT, New Delhi decision in the case of Rajat Shubra Chatterji vs. ACIT, New Delhi ITA No. 2430/Del/2015 dated 20.5.2016, wherein the reassessment was quashed on the similar facts and circumstances by following the ITAT, Amritsar decision in the case of ITO vs. Arun Kumar Kapoor (supra). In the present case before me, it is an admitted fact, as also evident from the reasons recorded and the assessment order that the initiation of reopening proceedings was made by the Assessing Officer on the basis of information available with the AO. I thus respectfully following the decision of Co-ordinate Bench of the ITAT, Amritsar in the case of ACIT vs. Arun Kapur - 140 TTJ 249 vs. (Amritsar) and the ITAT, Delhi decision in the case of Rajat Shubra Chatterji vs. ACIT, New Delhi ITA No. 2430/Del/2015 dated 20.5.2016 hold that provisions of sec. 153C of the Act were....
X X X X Extracts X X X X
X X X X Extracts X X X X
....found in the case of S.K.Jain Group of Companies to make addition under 147/148. Consequently, we are inclined to decide the ground no.2 in favour of the assessee and which makes consequential other grounds superfluous. The appeal of assessee is allowed and impugned assessment is set aside." 9. We also observe that the Mumbai Bench of the Tribunal in the case of Neelesh Barani Vs. CIT in ITA No.612/Mum./2020 dated 28.02.2023 considered the issue of as to whether the assessment can be framed u/s 143(3) r.w.s. 147 of the Act based on the materials found in the course of search in the case of the assessee as well as on the search conducted on a third party. We observe that the Tribunal held as under: - "91. We have already observed in our earlier paragraphs that the entire procedure to make an assessment or reassessment of income of the alleged escaped income either u/s 148 or section 153C of the Act practically is the same except the jurisdiction and root cause which are different. The legislature has specifically carved out scope of assessment / reassessment of income of a person not searched of such alleged escaped income based on some incriminating information found du....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e AOs, which can be summed up, in the following manner: (i) It is mandatory for the AO of the person searched to make an assessment / reassessment of income of the said assessee u/s 153A of the Act for the 6 assessment years prior to the date of search and also for the extended 4 relevant assessment years, subject to fulfillment of the prescribed conditions for the same, on the basis of an income-tax search conducted on him. (ii) However, in the assessment / reassessment orders passed within the scope of section 153A of the Act, the AO cannot consider any undisclosed income detected by way of an incriminating information pertaining / relating to the said assessee, during an income-tax search conducted in the premises of some other assessee(s), even conducted at the same time or in some connected matter. In such a case where AO gets any information or material about any assessee from the search of some other person, he can, make assessment of the undisclosed income/ amount emanating from such information or material for the assessment / re assessment vide separate assessment / reassessment orders to be passed u/s 153A by taking recourse to the provisions of the sec....