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2024 (5) TMI 950
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....on the statement recorded and materials gathered, it was found that Shri Mukesh Banka was the key person who looked after day to day financial affairs and accommodation entry business of Banka Group. It was found that M/s. Kotiratan Commosales Pvt. Ltd. (KCPL) is one of the entity which was providing accommodation entries in the form of unsecured loan which was controlled by Shri Mukesh Banka. As per Investigation Wing report the assessee company availed unsecured loan from M/s. KCPL a sum of Rs. 1,00,00,224/- during the Financial Year. Therefore a notice u/s. 148 of the I.T. Act was issued on 28.03.2021, calling upon the assessee to file its Return of Income within 30 days of receipt of the notice through ITBA. In response, the assessee filed Return of Income on 23.12.2021 declaring total income at Nil. Thereafter the assessee sought for reasons recorded for reopening the assessment, the A.O. furnished the reasons vide its letter dated 11.01.2022. 2.1. The assessee filed its objection that the reasons recorded for reopening are absolutely vague, scanty and non-specific and no escapement of income chargeable to tax emanates from the "reasons recorded" and therefore the reopening....
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....idity of the assessment order passed by the Assessing Officer u/s. 147 of the Income Tax Act 1.1 in law and in the facts and circumstances of the appellant's case, the Ld. CIT (A) ought to have appreciated that having regard to the following, the order passed u/s. 147 was bad in law:- (a) The Assessing Officer had not passed an order disposing of the objections filed before him challenging the validity of the proceedings u/s 147 and thus, his action of passing the assessment order u/s. 147 was not valid. (b) The re-assessment proceedings u/s 147 were initiated merely on the basis of report received from DDIT. Kolkatta without application of his own mind before issue of notice u/s. 148. This can be appreciated from the fact that he had considered the cash credit of Rs 1,00,00,000/- which includes duplication to the extent of Rs. 50,00,000/- (c) The appellant was having its office at Bhavnagar and was being assessed at Bhavnagar. No notice for centralization of case providing an opportunity u/s. 127 (1) and 127 (2) was provided, even the order u/s. 127 was not received by the appellant. In the circumstances, the jurisdiction assumed by the Asse....
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.... arguments. Thus Ld. Counsel pleaded the reasons recorded by the Assessing Officer are absolutely vague, scanty and non-specific. The Assessing Officer merely relied upon investigation report of Banka Group supplied by the Investigation Wing of the Income Tax Department. There is no independent application of mind by the A.O. and no reason to believe was recorded by the Assessing Officer before initiating the reassessment proceedings. Thus it is to be held that the reopening of assessment is merely on the basis of "borrowed satisfaction" which is not justified under the law. On merits of the case, the A.O. failed to consider that the above loan was repaid by the assessee in the Assessment Year 2018-19 that too before the date of search in the case of Banka Group. The very same Assessing Officer has accepted the repayment of loan in A.Y. 2018-19 while framing assessment. Thus no addition is to be made in the present Assessment Year 2013-14 on account of cash credit and relied upon Jurisdictional High Court Judgment in the case of CIT vs Ayachi Chandrashekhar Narsangji (2014) 221 Taxmann.146 and PCIT vs Ambe Tradecorp (P.) Ltd. (2022) 145 taxmann.com 27. Thus Ld. Counsel pleaded that....
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....dation entries in the nature of bogus unsecured loans or in other forms. Following the lead as obtained from the statements of Sh. Mukesh Banka and the materials seized during the course of search operation, the bank accounts of the paper/ shell companies, controlled and managed by Sh. Mukesh Banka was requisitioned from respective banks and analysed. On verification of the bank accounts of paper /shell companies of Banka Group, various beneficiaries have been identified who have obtained accommodation entry in the nature of bogus unsecured loan or in other forms, from the paper / shell companies of Banka Group. 3. Analysis of the information collected/received: The above information has been analysed personally by the undersigned. In this case, while analyzing the above information, I have reason to conclude that the assessee had entered into High Value financial transactions of Rs. 1,00,00,224/- facilitating bogus accommodation entries provided during the year, as reported in the investigation report of Banka group. Thus, the modus operandi in information analysed by the undersigned prima facie proved existence of 'live like' in respect of the informatio....
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....lue financial transactions of Rs. 1,00,00,224/- facilitating bogus accommodation entries provided during the year, as reported in the investigation report of Banka group. Thus, the modus operandi in information analysed by the undersigned prima facie proved existence of 'live like in respect of the information received in this case with regard to assessee's involvement in bogus accommodation entries and escapement of income for the year under consideration. The assessee is identified as beneficiaries and details of the transactions ACCT -Name of Mukesh Banka Company ACCT_NUM BANK TRAN_DATE TRANSACTION AMOUNT BENEFICIARY NAME BENEFICIARY PAN BENEFICIARY ACC NO. IFSC KOTIRATAN COMMOSALES PVT LTD 01900210012406 UCO BANK 22-02-2013 2000056 NARMADA CONCAST PVT LTD AAECN1728P 032401601000292 CORPORATION BANK (CORP0 000324) KOTIRATAN COMMOSALES PVT LTD 01900210012406 UCO BANK 22-02-2013 2000056 NARMADA CONCAST PVT LTD AAECN17 28P 03240160100029 CORPORATION BANK (CORP 0000324 KOTIRATAN COMMOSALES PVT LTD 01900210012406 UCO BANK 22-02-2013 3000056 NARMADA CONCAST PVT LTD AA....
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....n perusal of the above "reasons recorded" by the Assessing Officer makes it very clear that the he had reason to conclude that the assessee had entered into high value financial transactions of Rs. 1,00,00,224/- facilitating bogus accommodation entries during the year as reported in the investigation report of Banka Group. Thus the Assessing Officer though he recorded reason to conclude but accepted the report of the Investigation Wing of the Department in the case of Banka Group. The Assessing Officer has failed to verify the transaction recorded by the Investigation Wing which are double entries made for the same transactions of Rs. 20,00,056/- and Rs. 30,00,056/-. Though the A.O. records the unsecured loan of Rs. 50,00,000/- received by the assessee from M/s. KCPL, however upheld the double entry addition of Rs. 1,00,00,224/ as the undisclosed income of the assessee. The Ld. A.O. failed to consider the repayment of above loan by the assessee during the assessment year 2018-19 which was not disputed, while framing the assessment order for the assessment year 2018-19 by the very same Assessing Officer. Thus in our considered view, the Ld. A.O. has simply accepted the information g....
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....f powers under sections 147 and 148 of the Income Tax Act, 1961, there has to be a greater thrust for necessity of recording reasons. The entire exercise of reopening hinges on the reasons recorded by the Assessing Officer. It is the 'reasons' which weigh with him. 7.1 When the concluded assessment is to be revisited with by the Assessing Officer, recording of reasons for exercise of such powers has to be viewed as vested rights for the assessee. While exercising powers under the Act to reopen the assessment, the Assessing Officer would harbour reasons to believe that on particular set of facts, the income had escaped assessment and tax was not paid in relation to the year under consideration. 7.2 All the reasons which hold good in the eye of and with the Assessing Officer must be made known to the assessee. Assessee has right to refute the reasons for reassessment by filling objections. Unless the Assessing Officer appropriately delineates and communicates the reasons for reassement, right of the assessee to file objections would remain an eye- wash. 7.3 Whether the reassessment powers are adverted to on objective basis, whether the element of assessment....
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....nt has tried to improvise by referring to the original file of the Department to emphasize that there is tangible material on record to show that the petitioner Company has made purchase transaction of Rs. 26,42,027/- and has availed accommodation entry by way of bogus sales/purchases/fictitious loans etc. with Disman Group of Company. In our opinion, in absence of specific details as regards particulars of nature of transaction basic details of information, clarity with regard to name of person with whom such transaction has been entered into, goes to the very root of the matter. The sole object of providing reasons for reopening of the assessment is to prima facie supply the relevant material to the assessee to meet with his case and at the same time, it reflects the basic ingredients of "reason to believe" for Assessing Officer to assume the jurisdiction under sections 147 and 148 of the Income-tax Act. At the same time, such non- recording of specific details lead us to belief that without proper application of mind, the Assessing Officer has solely and mechanically relying upon the information received from Investigation Wing, has issued impugned notice. Thus we are not convin....
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....t in the absence of any details available on record, Assessing Officer could not initiate assessment proceedings merely on the basis of information supplied by DGIT (Inv.) that assessee had made certain bogus purchases and, to said extent, income had escaped assessment observing as follows: "......13. On a plain reading of the reasons recorded, what emerges is that the Assessing Officer, on verification of the details available on record, has noticed that there were bogus purchases. However, there is no assertion as regards on the basis of which material on record he has come to such conclusion. A perusal of the order rejecting the objections raised by the petitioner, shows that the reopening is based, not upon the material on record, but on the basis of material received from an external source viz., the DGIT (Inv.), Mumbai, pursuant to inquiries made by him (the DGIT). Therefore, the material on the basis of which the Assessing Officer seeks to assume jurisdiction under section 147 of the Act, is the information received from an external source viz., from the DGIT and not the material on record as reflected in the reasons recorded. Under the circumstances, on the basis o....