TaxTMI 
TaxTMI 
2024 (11) TMI 228
X X X X Extracts X X X X
X X X X Extracts X X X X
....necessary for the assessment completed u/s 143(3) dt. 29-11-16; as per first proviso to sec 147, reopening u/s 147/ 148 would be invalid, is liable to be quashed; relied on Ananta Landmark (P) Ltd (2021) (Bom); Anil Raj Tuli (2022) (Ori HC); DSC Ltd (2023) (Del HC). 2. On the facts and circumstances of the case and in law, reopening of concluded assessment u/s 143(3) dt. 29-11-16 wherein 3% GP estimation made on sales of Rs. 10,02,02,884 which ultimately includes alleged 'deposits/ RTGS credits into bank' of Rs. 9,01,18,102; in absence of any fresh/ new material, be treated merely 'change of opinion' on the same material facts, is not permissible in the eyes of law, is liable to be quashed. 3. On the facts and circumstances of the case and in law, reassessment made u/s 147 is invalid as there is addition made of Rs. 45,05,905 on count of undisclosed business income (i.e., u/s 28) which is not the issue of the 'reasons recorded'; the 'very basis' of reopening was 'unverifiable/ unexplained deposits/ credits into bank' (i.e., u/s 69A/68) and no addition made on the 'very issue'; addition made on an 'independent issue' of 'busine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not disputed by the assessee; further addition Rs. 45,05,905 on the same count is not permissible in the eyes of law; addition mal merely on presumption & surmises, is not justified and liable to pe deleted. 7. On the facts and circumstances of the case and in law, Id CIT(A) has erred in sustaining addition of Rs. 45,05,905, is unjustified and is liable to be deleted. 8. The appellant craves leave, to add, urge, alter, modify or withdraw any grounds before at the time of hearing. Additional Gr. No. 1 (dated : 13.05.2024 submitted on 16.05.2024) "1. On the facts and circumstances of the case and in law, assessment made u/s 147 rws 144B dt. 26-3-22 is invalid as Id AO has not issued notice u/s 143(2) after filing letter dt. 8-3-22 enclosing original ROI filed on 30-3-15 showing income of Rs. 3,76,830 by mentioning that in response to notice issued u/s 148; in absence of a notice u/s 143(2), assessment made u/s 147 r.w.s. 144B would be invalid and is liable to be quashed." 3. Briefly stated, the assessee is an individual, who had filed his returned of Income for the AY 2014-15 on 30.03.2015 admitting total income at Rs. 3,76,830/-. The assessee is engaged in trading business o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s raised by the assessee could not convince the Ld. CIT(A), therefore, the appeal of the assessee has been dismissed with the following findings and decisions: Findings and Decisions: Revised Ground No. 1, 2, 3 & 4 The appellant in his revised ground of appeal, has challenged the reopening of the assessment, stating that the reason was recorded without having tangible material for escaped assessment of Rs. 9,01,18,102/- merely on presumption and surmise only based on information received from ITO (lnv), Raipur. The appellant further claimed that granting of approval on the same day (i.e. 30/03/2021) in most mechanical and routine manner without application of mind, without recording any subjective satisfaction. The above said claim of the appellant is not acceptable as the credible information in respect of mainly RTGS credits in the appellant's bank account and subsequently followed by cash withdrawals, was received from ITO(lnv), Raipur which was duly verified by the AO from the information available on record. The total credits was reported at Rs. 9,01,18,102 during the financial year under concerned in the bank account of the appellant's, out of which total cash....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ocuments. As the appellant had huge credit and subsequent cash withdrawals in the bank account during the year under concerned, notices u/s 142(1) of the I T Act were issued, calling „for details during the course of assessment proceedings. However, the appellant instead of submitting the same was nonresponsive. And when a final call was made by the AO by issue of a show cause notice, the appellant became responsive with insufficient details. Further, the appellant was given opportunity to furnish remaining details, which was called for vide notices u/s 142(1) of the I T Act in respect of huge credits in the bank account and subsequent cash withdrawals, in the form of a show cause notice, but unfortunately, the appellant failed to furnish the same. In fact, the appellant did not have any details & document in his possession which could be furnished as a substantial proof for consideration either before the AO or before the appellate authority. The appellant being aggrieved by the order o/ the AO, filed the present appeal with only written submissions with respect to revised grounds of appeal with various case law, as submission, followed by original grounds of appeal claimed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to income of the appellant by the AO. The AO, had no option but to pass the order u/s 147 r.w.s 144 r.w.s 144B of the I T Act on the basis of insufficient submission of the appellant and other material available on record. The appellant has not submitted any substantial details/documents with respect to the subject matters on huge credits and subsequent followed by cash withdrawals, except written submission with regard to reopening of assessment which was raised under revised grounds of appeal, during the course of appellate proceedings. Therefore, the undersigned sees no reason to interfere with the orders of the Assessing Officer. Hence the appeal of the appellant is dismissed. In the result, the appeal is dismissed. 5. The aforesaid findings and decision of Ld. CIT(A) was not found justified by the assessee; therefore, the matter is carried by way of present appeal before us. 6. At the outset, the Authorized Representative representing the assessee, Shri Sunil Agrawal, CA (in short "Ld. AR"), assailed the first ground of the appeal averring the legal contention that the case of the assessee was selected for reopening assessment after the expiry of 4 years from the end ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....analyzed and I have framed my opinion after due application of all the facts in mind. 4. Findings of the AO:- Total deposits made in the bank accounts of the assessee for the A.Y. 2014-15 were of Rs. 9,01,18,102/-, out of which total cash withdrawals were for Rs. 4,32,20,840/-. The assessee has not made any compliance to the notices issued by the Investigation Wing of Raipur and thus the sources of deposit made in the bank accounts of Rs. 9,01,18,102 /- are unverifiable and thus unexplained. Therefore, the deposits made in the bank accounts maintained in the name of the assessee for Rs, 9,01,18,102/- has escaped assessment. 5. Basis of forming reason to believe and details of escapement of income:- On the basis of information available on record and the above facts and findings as discussed in para-2, 3 & 4, I have reason to believe that income of the assessee to the tune of Rs. 9,01, 18,102 /- has escaped assessment. 6. Applicability of the provisions of section 147/151 to the facts of the case:- ln this case the return of income was filed for the year under consideration & assessment for the relevant year has been made. The above income chargeable to tax has escaped assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the time of original assessment u/s 143(3). On this aspect, Ld. AO placed his reliance on various judgments, out of which following relevant judgment along with findings therein are extracted for better appreciation and interpretation on the issue under consideration: Shourya Infrastructure (P) Ltd vs. ITO [2023] 157 taxmann.com 730 (Delhi) [04.12.2023] 19. It was contended by SIPL that since reopening was triggered after four (4) years from the end of relevant AY, as per the first proviso appended to section 147 of the Act, a case had to be made out that there was a failure on the part of SIPL to disclose fully and truly all material facts which were relevant for assessment. 20. This assertion was sought to be supported by referring to the following judgements: (i) Haryana Acrylic Manufacturing co. v. CIT [2008] 175 Taxman 263/[2009] 308 ITR 38 (Delhi). (n) Wei Intertrade Ltd. v. ITO [2009] 178 Taxman 27/308 ITR 22 (Delhi). (iii) CITv. Suren International (P.) Ltd., [2013] 35 taxmann.com 398/[2014] 225 Taxman 88/(Mag.)/[2013] 357 ITR 24 (Delhi). 21. Since the issue that triggered reassessment was an aspect that was inquired into by the AO while framing the assessment....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... following submissions: (i) The arrangement between SIPL and STPL constituted a sham transaction. SIPL had sold the land and remitted almost the entire consideration to its flagship company, i.e., STPL. STPL, because of the loss incurred in the period in issue, showed the nominal amount received from SIPL as profit, which was set off against its losses, resulting in a large part of the revenue being lost. (ii) The AO had not examined the subject arrangement while framing the original assessment order, from the perspective of it being a sham transaction. This aspect has been brought to the fore in the reasons recorded by the AO, once he received the report of the OCM Cell. In support of this plea, Mr Agrawal placed reliance on the judgment rendered by the Supreme Court in Phool Chand Bajrang lal v. ITO [1993] 69 Taxman 627/203 ITR 456 (SC) 4 scc 77. (iii) Both the Additional Commissioner of Income-tax [in short, "ACIT"] and PCIT had applied their mind before approving the initiation of the reassessment proceeding against SIPL. The fact that PCIT clearly stated that the action was approved was sufficient for the purposes of Section 151 of the Act. [See Pr. CIT v. Meenakshi Over....
X X X X Extracts X X X X
X X X X Extracts X X X X
....caped income at Rs. 57,30,000/-. 33. Although Mr Agrawal vehemently argued that the provisions of section 50C of the Act were not the foundation of the reasons that were recorded, the plain text reads otherwise. 34. Quite obviously, Mr Agrawal wanted to move away from this aspect of the matter, as section 50C of the Act has no application in the facts of this case. Section 50C applies only when there is a transfer of a capital asset. However, it is clear that the subject land was a stock-in-trade, since SIPL was involved in the real estate business. This fact emerges from a perusal of the assessment order dated 28-2-2014 as well, wherein the AO has observed the following: "The assessee company is engaged in the business of real estate and land development." 34.1 This conclusion is buttressed by the fact that the subject land was treated as stock-in-trade in the hands of SIPL as well as STPL. Thus, the AO, according to us, committed an error in taking recourse to Section 50C ofthe Act. 34.2 Because the AO took recourse to section 50C of the Act, he proceeded to arrive at the escaped income by calculating the value of the land based on the then prevailing circle rate, after....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he mandate of the "first proviso" to section 147 the concluded assessment of the assessee could not have been validly reopened beyond a period of four years from the end of the relevant assessment year. Our aforesaid view is supported by the judgments of the Hon'ble High Court of Delhi in the case of Pn CIT v. Superior Films (P.) Ltd. [IT Appeal No. 153 of2020, dated 19-7-2021] and in the case of CIT v. Viniyas Finance & Investment (P.) Ltd. [IT Appeal No. 271 of 2012, dated 11-2-2013]. Also, a similar view had been taken by the Hon'ble High Court of Bombay in the case of Ananta Landmark (P.) Ltd. v. Dy. CIT [2Q21] 131 [email protected] 52/283 Taxman 462/432 ITR 168/[WP No. 2814 of 2019, dated 14-9- 2021]. 14. At this stage, we may herein observe that the Hon'ble High Court of Delhi in the case of Haryana Acrylic Manufacturing Co. v. CIT [2008] 175 Taxman 262/[2009] 308 ITR 38, had observed, that in any case where the reasons did not even contain an allegation that the escapement of income had occasioned due to failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, then, the A.O would be barred from reopening the assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecord by the ld. AO that there was a failure on the part of assessee during the original assessment u/s 143(3) for the relevant year as all the primary facts and information sought from the assessee were submitted to the Ld. AO, therefore, the mandate of first proviso to section 147 that the reopening is not permissible unless any income chargeable to tax has escaped assessment by reason of the failure on the part of assessee to disclose fully and truly all material facts necessary for his assessment. Dehors establishing such facts in the present case the reopening exercised by the Ld. AO u/s 147/ 148 is without the mandate of law, invalid, void ab initio and therefore, is liable to be quashed. 11. Contradicting the aforesaid contentions of the assessee, Ld. Sr. DR, Dr. Priyanka Patel representing the revenue, strongly supported the orders of the revenue authorities stating that, as certain information from the Investigation Wing was come to the knowledge of the Ld. AO after the completion of assessment u/s 143(3), therefore, there was sufficient cause with him to reopen assessment. It is further argued that the Ld. AO had made the allegation in reasons recorded that there was fai....