AI Drafter 
TaxTMI 
TaxTMI 
2024 (12) TMI 1046
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....2 dated 30th March, 2024 passed under section 263 of the Income Tax Act. In this revisional order, ld. PCIT has observed that assessment order dated 30.03.2014 passed under section 143(3) is erroneous, which has caused prejudice to the interest of revenue and, therefore, deserves to be set aside. 2. First we take ITA No. 637/KOL/2024. The assessee has taken seventeen grounds of appeal. However, perusal of these grounds reveals that grievances of the assessee revolve around two-folds, namely- (a) ld. CIT(Appeals) has erred in confirming reopening of the assessment by issuance of a notice under section 148 of the Income Tax Act. (b) Ld. CIT(Appeals) has erred in confirming the addition of Rs. 1,55,00,000/-, which was added by the ld. Assessing Officer with the aid of section 68 in a re-assessment order passed under section 147 of the Income Tax Act. (c) The revenue authorities have erred in charging interests under sections 234A, 234B and 234C of the Income Tax Act. 3. First we take the issue challenging reopening of the assessment. 4. Brief facts of the case are that the assessee has filed its return of income under section 139(1) of the Income Ta....
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....he investigation proceeding in the case of M/s. Samrat Udyog (proprietor Shri Abhay Sultania PAN AVQPS4386L) and related beneficiaries that the assessee M/s. ANCH1TA PROPERTIES PVT. LTD has taken accommodation entry and brought back its unaccounted money into its regular books of accounts during the financial year 2012-13 through layering of i) M's. Rudramukhi Builders Pvt Ltd. Rs. 65,00,000/- ii) M/s. Ever shine Dealtrade Pvt. Ltd., Rs. 30,00,000/- iii) M/s. Fantom Dealers Pvt. Ltd Rs. 50,00,000/- totaling Rs. 1,45,00,000/- Subsequently, another information has been disseminated by ITO, Ward-10(4), Kolkata vide its communication No. ITO/Wd- 10(4)/Kol/Information/2018-19/13101 did 11/03/2019 in relation to the investigation proceeding in the case of M/s. Hitendra Commercial Pvt. Ltd. that the assessee M/s. ANCHITA PROPERTIES PVT. LTD has taken accommodation entry and brought back its unaccounted money to the tune of Rs, 10,00,000/- into its regular books of accounts during the financial year 2012- on 24/12/2012. Accordingly with Prior approval of the Ld. Pr.CIT-4, Kolkata for necessary enquiries by issuing notice u/s 133(6) of the IT Act has been carried out. ....
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....uch sale of investments are found recorded. Further no trading of shares are also found recorded except income from interest. Similarly it is noticed that M/s. Hitendra Commercial Pvt. Ltd. maintained a bank account bearing no. 040505005901 with ICICI Bank Chandannagar. During the period since inception i.e. 21.07.2011 to closure of account on 25.03.2013 there were large value non cash transactions noted. Funds credited, either same day or next day the amount was found transferred to another accounts including the account of the assessee M/s. ANCHITA PROPERTIES PVT. LTD to the tune of Rs. 10,00,000/-. Effort of finding out the physical existence of M/s. Hitendra Commercial Pvt. Ltd. at its registered address and its business activities using the departmental instrument has also gone in vain. As per ROC data base the status of M/s. Hitendra Commercial Pvt. Ltd. is strike off. Further the name of Shri Manoj Kumar & Shri Sanjay Kumar Agarwala, two office directors are found in the list of dummy director at the departmental data base of paper/shell companies controlled by entry operator, Shri Pankaj Agarwal. As such the transaction is remained unverified. In view of t....
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....faction u/s 147 of the Act be direction issued by CBDT on 10.01.2018. (iv) From the perusal of the reasons provided it is clear that formation of your reason to believe that our income has escaped assessment for the A.Y. 2013-14 is nothing but change of opinion. (v) There is no fresh tangible material coming to the possession of the Id. AO which could reasonably give rise to believe that our income has escaped assessment. (vi) The reasons recorded are vague, scanty and non-specific and there are not reasons to believe but reasons to suspect. Copy of full information was not supplied. (vii) The satisfaction recorded in the instant case is not the AO's own satisfaction but a borrowed satisfaction and without application of mind. (viii) There is no live link between the reasons recorded u/s 148 of the Act and belief of escapement of income as the facts recorded in the reasons are incorrect. 7. The ld. Assessing Officer has not disposed of the objections separately in terms of the judgment of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Limited -vs.- ITO & Others reported in [2003] 259 ITR 19 (SC), rather alleged to ha....
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.... was tangible material on record in form of information from Directorate of Investigation Wing, Kolkata and the ITO, Ward- 10(4), Kolkata to form a 'reason to believe' that income has escaped assessment. The reopening of the assessment was found to be valid as it satisfies the requirement of law that prior to re-opening of the assessment the AO has to apply his mind to the tangible material available and conclude that he has reason to believe that income has escaped assessment. Copy of reasons recorded was duly provided to the Appellant. The Action of AO in reopening assessment u/s 147 is supported by following judgments. 9. The ld. CIT(Appeals) thereafter made reference to nine judgments and he then confirmed the addition without specifically dealing with reopening separately and as to how the quantum addition is to be made separately. 10. Ld. Counsel for the assessee while impugning the orders of revenue authorities raised multiple submissions qua challenging the reopening of assessment. Before adverting to the reasons, he brought to our notice the judgment of the Hon'ble Delhi High Court in the case of Sabh Infrastructure Limited -vs.- ACIT reported in [2017] 398 ITR 1....
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....ce to the direction of this judgment, Central Board of Direct Taxes has laid down the guidelines, which are to be followed by the field staff and replace on record, copy of Standard Procedure for recording satisfaction under section 147 of the Income Tax Act along with a proforma drafted at the end of the Board, which was required to be followed by all the authorities. Though reproduction of this guidelines alongwith proforma would make this order a little bit lengthy, but this is a new school of thought propounded by the ld. Counsel for the assessee and we deem it appropriate to take note of these guidelines, which are mandatorily required to be followed by the field staff, which read as under:- Subject; - Standard Procedure for recording satisfaction u/s 147 of the Income Tax Act, 1361 -reg. Assessing Officers while recording satisfaction u/s 147 of the Income Tax Act, 1961 should follow the sequence as noted below: (i) 1st paragraph: Reasons recorded will include details of the assessee, nature of business activity, brief details of return of income filed earlier along with details of processing of return/ scrutiny assessment/ reassessment proceeding. ....
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....in the cases where scrutiny assessment has been made and four years from the end of the relevant year had expired. (viii) 8th paragraph: This paragraph is required in cases involving income in relation to any assets (including financial interest in any entity) located outside India which is chargeable to tax and has escaped assessment. This paragrph will include details of assets, nature of income earned in relation to the assets. The AO must highlight that since it is a case of escapement of income in relation to assets located outside India, first Proviso to the section will not apply". 12. In this above background, ld. Counsel for the assessee drew our attention towards the reasons. He submitted that in response to the notice received under section 133(6), the assessee has made a categorical reply in paragraph no. 4. The copy of this reply is available at page 17 of the paper book. The assessee has submitted to the ld. Assessing Officer that Company has sold its investment to (i) M/s. Rudramukhi Builders (P) Ltd., (ii) M/s. Evershine Dealtrade Pvt. Ltd., (iii) M/s. Fantom Dealers Pvt. Ltd. It was further submitted that the case of the assessee was selected for scruti....
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....o the investigation proceeding in the case of M/s. Hintendra Commercial Pvt. Ltd and alleged that assessee has taken accommodation entry. The ld. Assessing Officer thereafter made reference under section 133(6) of the Act and other details. He took us through the objections of the assessee running into 28 pages under different heads. His emphasize was that this formation of belief that income has escaped assessment is without any basis and only on mere change of opinion. Therefore, according to him, this reopening is not in consonance with proposition of law laid down in various judgments. He made reference to a large number of judgments and placed their copies on the record. We take note of such citations from the index of paper book:- Sr. No. Particulars 1. GKN Driveshafts (India) Ltd. vs. Income Tax Officer and Ors. [2003] 259ITR 19 (SC) 2. New Delhi Television Ltd. vs. Deputy Commissioner of Income Tax (03.04.2020 - SC) : [2020] 424 ITR 607 (SC) 3. CIT v. Avadh Transformers (P.) Ltd. 51 Taxmann.com 369 (SC) 4. Calcutta Discount Company Limited vs. Income Tax Officer, Companies District, I and Ors. [1961] 41 ITR 191 (SC). 5. Commissioner of In....
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....o. 11 & 12 of the impugned order, namely Hon'ble Gujrat High Court in the case of Aradhana Estate Pvt. Limited -vs.- DCIT (2018) 91 taxmann.com 119 (Guj.), Hon'ble Punjab & Haryana High Court in the case of Rakesh Gupta -vs.- CIT (2018) 93 taxmann.com 271 (P&H); Hon'ble Supreme Court judgment in the case of ACIT -vs.- Rajesh Jhaveri Stock Brokers Limited reported in 291 ITR 500 (SC); and others. 14. We have duly considered the rival contentions and gone through the record carefully. Original assessment in the present case was passed under section 143(3) on 16.12.2015. The assessment year involved herein is A.Y. 2013-14. The notice for reopening was issued to the assessee on 20.03.2020. In other words, it was issued after expiry of four years. Therefore, the assessee is protected by the proviso appended to section 147 of the Income Tax Act. Such proviso reads as under:- "Provided that where an assessment under sub-section (3) of section-143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped a....
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....The ld. Assessing Officer thereafter observed that the assessee M/s. Anchita Properties Pvt. Limited has taken accommodation entries and brought back its unaccounted money into its regular books of accounts during the financial year 2012- 13 through layering of bank accounts and thereafter names of these three companies have been mentioned. What is the basis of reaching at this conclusion. There is no coherence in the first reference to M/s. Samrat Udyog, vis-à-vis accommodation entries of the assessee. How both these situations are interlinked. It could be appreciated if ld. Assessing Officer has observed that in the investigation in the case of Samrat Udyog, it revealed that certain concerns operated by him gave accommodation entries to the assessee, but that type of finding has not been recorded in this paragraph. 17. Similar is the position in the next paragraph with regard to M/s. Hitendra Commercial Pvt. Ltd. The ld. Assessing Officer thereafter made reference about the prior approval of ld. PCIT, Kolkata-4 for necessary inquiries by issuance of notice under section 133(6) of the Act. This notice was issued to the assessee or it was issued to the alleged vendees of ....
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....rtinent to observe that ld. Assessing Officer has referred three circumstances, namely- (a) letter received from the DDIT(Investigation); (b) discovery of fact during the search proceeding at the premises of M/s. Samrat Udyog (proprietor Shri Abhay Sultania that assessee has taken accommodation entry. (c) Reference to departmental inquiry about nonexistence of vendees of assessee's share. On a conjoint reading of such reasons and these circumstances, it would reveal that there is no interweaving of circumstances, which can demonstrate a complete chain of events and such chain of circumstances would goad the ld. Assessing Officer to form a belief that income has escaped assessment. He has narrated all these circumstances vaguely and without interconnecting the circumstances with each other. 19. At the time of hearing, ld. D.R. has emphasized that ld. Assessing Officer was not required to establish conclusively while forming a prima facie opinion about escapement of income and his reasons cannot be judged by the Appellate Authority. We agree to some extent that ld. Assessing Officer has to form a prima facie belief and not to prove conclusively about ....
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....ee received total amount of Rs. 4,09,00,000/- from the parties such as (i) Gangadham Suppliers Pvt Ltd.; (ii) Skyrise Vincom Pvt Ltd. (iii) Fastspeed Commosales Pvt Ltd., (iv) Leoline Commosales Pvt Ltd. (v) Galaxy Multicare Services Pvt Ltd. (vi) Fastspeed Sarees Pvt Ltd. (vii) Shivprivar Commercial Pvt Ltd (viii) Starpoint Dealmark Pvt Ltd & (ix) Devbhumi Mercantile Pvt Ltd. As the AO has not made addition of the aforesaid amount, this mistake made the assessment order erroneous as well as prejudicial to the interest of the revenue. 3. I, therefore, propose to revise the assessment order u/s. 143(3) on the above points. You are, therefore, requested to attend my office at the above-mentioned address either personally or through your A/R on 4.03.2024 at 1.30 p.m. at Room No. 6/4, 6th Floor, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 either personally or through your Authorized Representative. 4. Please note that in case of your non-compliance, it shall be presumed that you have no objection whatsoever to the proposed revision and the matter may be decided ex-parte on merits as per material on record without any further reference to you". . 22. A p....
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....formation about nine parties, which was duly submitted by the assessee and copy of the reply is available on pages no. 22 to 23 of the paper book. The ld. Assessing Officer after receipt of that reply recorded the reasons for reopening. He has issued the notice for collection of information with the approval of ld. PCIT-4, Kolkata. He has got the approval of the reasons from the higher authority. Thus, there must be a constructive application of mind by the ld. Assessing Officer, visà- vis the higher sanctioning authority on the material possessed by the ld. Assessing Officer and if on a particular item on which information was collected, the Assessing Officer did not seek sanction from the PCIT-4 to reopen the assessment, then, how action under section 263 is justifiable. He took us through page no. 20 of the paper book, wherein copy of the show-cause notice dated 02.03.2020 is placed. In the last line of this notice, ld. Assessing Officer has observed that above information is being sought with the prior approval of ld. PCIT-4, Kolkata. It means that it was within the knowledge of the ld. Assessing Officer but he did not deem it fit to reopen the assessment and, therefore,....