TaxTMI 
TaxTMI 
2025 (6) TMI 1987
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....ut giving any factual finding on the genuineness of M/s Truthful Devcon (P) Ltd. and M/s SaranshDevelopres Pvt. Ltd., both of which are shell entries as per by the AO. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring detailed enquiries of DDIT(Inv.), Unit-4(I), Kolkata, bank account analysis and statement of the assessee where he has himself admitted his inability to prove the genuineness and creditworthiness of the company M/s Truthful Devcon (P) Ltd. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the para 9.30 of the assessment order wherein adverse findings with respect to the transfer of shares of M/s Saransh Developers, Pvt. Ltd. to M/s Truthful Devcon (P) Ltd. has been discussed to have been shared by ACIT, Central Circle-6, Delhi. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the established position of law that the onus to establish the genuineness, creditworthiness and identity of the transacting party is on the assessee. In the extant case, the assessee has failed to satisfactorily di....
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....3,63,040/- during financial year 2012-13 relevant to assessment year 2013-14. 3.2 The proceedings u/s 148 of the Act were initiated vide notice dated 30.3.2019 u/s 148 of the Act after recording of reasons on in writing u/s 148(2) of the Act and obtaining sanction of the learned Pr. CIT(Central)-3, New Delhi in accordance with provisions of section 151 of the Act. The assessee vide letter dated 24.4.2019 filed before AO submitted that the assessment u/s 153A/153C of the Act in the case has already been completed as such return of income originally filed by the assessee may please be treated as return u/s 148 of the Act and, further requested to provide copy of reasons recorded. Thereafter assessee vide letter dated 28.11.2019 had filed objections against reopening of assessment, which was disposed off by AO on 29.11.2019. Thereafter reassessment proceedings was culminated in order of assessment wherein addition amounting to Rs. 7,13,63,040/- was made u/s 68 of the Act. 4 In appeal preferred by the assessee, the Ld. CIT(A) by and under the impugned order dated 10.10.2022 has been pleased to allow the appeal partly by deleting the addition on merit with following observations: ....
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.... dully declared in the Income Tax Return filed by him and the tax due on the Long-term Capital Gain has been duly paid which was verified and accepted by the assessing officer in the assessment u/s 153A/143(3) of the Income Tax Act. The appellant has submitted that shares of M/s Saransh Developers Pvt. Ltd. were transferred alongwith the management of the company which is visible from the MCA filings of company. 10.2 On perusal of the assessment order and the submission of the appellant it is noted that the amount of Rs. 7,13,63,040/- was received by the appellant from M/s Truthful Devcon Pvt. Ltd. as sale consideration of shares of M/s Saransh Developers Pvt. Ltd, a group company and the appellant has earned Long-term Capital Gain of Rs. 5,90,39,068/-. The appellant reported the said transaction in the ITR which is evident from the computation of taxable income and annexure of Long-term Capital Gain submitted by the appellant (paper book page-24/25). The appellant in his statement recorded u/s 131 of the Act has also clearly explained the nature of the transaction and the Long Term Capital Gain earned by him. The appellant in his statement has stated that the management w....
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....03.2019 was nothing but the change of opinion of the Assessing Officer. AO did not independently verified/examined the transactions reported to be accommodation entry by the Investigation Wing, Kolkata and proceeded solely on the basis of their report, therefore, the reassessment suffers from the lacunae of "borrowed satisfaction". 9.1 The Assessing Officer has noted that the information was received from DDIT, Investigation Wing Unit 4(1), Kolkata vide F.NO.DDIT/U- 4(1)/TruthfulDevcon/S-15/Kol/2018-19/11139, dated 02.03.2019 that the appellant received credits from M/s Truthful Devcon Pvt. Ltd. It was further noted by him that the bank account of M/s Truthful Devcon Pvt. Ltd. was credited through sudden RTGS/NEFT from the bank accounts of various shell companies controlled and managed by entry operators. The Assessing Officer has stated that he had perused the ITR, MCA data and information available on ITD module of these shell companies from which fund was transferred to the bank account of M/s Truthful Devcon Pvt. Ltd. and these companies were shell companies with no worth on record. These companies as per the departmental data-base were controlled and maintained by Shr....
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....le Supreme Court. In ITO v. LakhmaniMewal Das [1976] 103 ITR 437, the Hon'ble Supreme Court held that the "reasons to believe" must be based on objective materials, and on a reasonable view. The court held as follows: "The grounds or reasons which lead to the formation of the belief contemplated by section 147(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income-tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the Court to investigate. The sufficiency of grounds which induce the income-tax Officer to act is, therefore, not a justifiable issue. It is, of course, open to the assessee to contend that the Income-tax Officer did not hold the belief that there had been such nondisclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of reasons for the belief. The expression "reason to believe does not mean a purely subjec....
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....is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. 7. One must treat the concept of "change of opinion as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief.' In this case AO has tangible and reliable material to case his reasons to believe'. There is neither, a case of 'change of opinion' have nor 'borrowed satisfaction' nor 'non-application of mind'. In view of the above facts and discussions, therefore, I find that the assumption of jurisdiction by the Assessing Officer is legally sustainable. Accordingly, these grounds of appeal raised by the appellant are rejected." 5 Being aggrieved by the said order passed the Ld. CIT(A), Revenue is in appeal before us. 6 At the time of hearing of the matter, the Ld. Senior Advocate Shri Salil Aggarwal relied upon the order of the Ld. CIT(A) deleting t....
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....he assessee at an income of Rs. 7,15,41,203/-. In the said return of income the assessee had declared long term capital gain on sale of shares more particularly of M/s Saransh Developers Pvt. Ltd. and had paid due taxes thereon @ 20% (kindly see pages 1, 2 to 4 and 7 of PB - І). 2. 26.09.2018 Search was conducted on assessee under section 132(1) of the Act. 3. - Reply filed by assessee during search proceedings u/s 153A, wherein, complete details were filed with regards to sale of shares and long term capital gain declared on M/s Saransh Developers (P) Ltd. (kindly see pages 31 to 32 of PB-I). 4. 30.12.2018 Assessment was finalized by learned AO under section 153A of the Act after calling for the aforesaid details and duly accepting the same, wherein, return of income stood accepted by learned AO. 4. 30.03.2019 Learned AO issued notice under section 148 of the Act after recording reasons record for reopening of assessment: * Notice u/s 148 (Pg 36 of PB-I) * Approval of PCIT u/s 151(2) (Pg 5 to 7 of impugned AO order) * Reasons recorded (Pg 7 to 8 of impugned AO order) Following factual/ legal inaccuracies are g....
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.... objections subjectively by only relying on case laws without rebutting and adverting to the arguments raised by assessee. 7. 27-12-2019 Learned AO passed the reassessment order u/s 147/153A of the Act and makes addition of Rs. 7,13,63,040/- under section 68 of the Act on account of alleged unexplained long term capital gain. 8. 10.10.2022 Learned CIT (A) gave relief to assessee on merits by holding that since assessee had duly disclosed the aforesaid transaction by paying due taxes @ 20%, as such, no addition is called for, however, learned CIT (A) sustained the reopening of assessment. 9. - Revenue is in Appeal before Hon'ble ITAT with regards to merits and Assessee has filed Rule 27 Application with regards to reopening of assessment. CONTENTIONS IN BRIEF - PROPOSITION WISE: PROPOSITION 1: THAT APPROVAL GRANTED IS A MECHANICAL APPROVAL AND HENCE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT ON THIS GROUND IS INVALID. (i) Learned PCIT while according approval u/s 151 of the Act has failed to appreciate the fact that foundational and mandatory entries in approval u/s 151(2) have not been filled or wrongly filled by learned ....
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....ementioned approval order. While elaborate reasons may not have been given, at least there has to be some indication that the approving authority has examined the material prior to granting approval. Mere appending the expression "Yes I am satisfied" says nothing. The entire exercise appears to have been ritualistic and formal rather than meaningful, which should be the rationale for the safeguard of an approval by a high ranking official. Reasons are the link between material placed on record and the conclusion reached by the authority in respect of an issue, since they help in discerning the manner in which the conclusion is reached by the concerned authority. * Bhaijee Commodities (P) Ltd. vs ACIT (Delhi ITAT) reported in 202 ITD 757 (pages 163 to 78 of PB-IV). 26. On appraisal of the reasons recorded under section 148(2) and approval thereon under section 151 of the Act and in the light of contentions raised on behalf of the assessee, it is noticed that the case has been reopened on the last date of the limitation period for two reasons, namely, accommodation entry of Rs. 50 lakh in the form of share capital from M/s. Shalini Holdings Pvt. Ltd. and allegation ....
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....nformation and the belief is found. Noticeably, the objection of the Assessee has also been disposed in a summary manner disregarding the points raised by the assessee. The order disposing objections does not utter a single word on the nature of material available or transaction carried at NMCE platform. The assessee thus boy sufficiently demonstrated that neither there is any relevant material to make wide ranging allegations towards accommodation entry and earning fictitious profits nor the reasons recorded spells out the exact particulan of transactions giving birth to such allegations. No culpability can be inferred at the stage of reopening notice based on quality of information gathered against the assessee. This apart, the approval granted under section 151 is also clearly demonstrated to be out of sync with the duty cast under section 151 of the Act, In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer The Pr.CIT has granted approval without observing the inconsistency and glaring inadequacy in the approval memo placed before him wherein the s....
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....her, learned AO has also not mentioned about the fact of earlier assessment under section 153A of the Act in reasons recorded, this all shows that learned AO has initiated reassessment proceedings on wrong edifice and on total non application of mind: i) CIT vs Rainee Singh (Delhi High Court) reported in 237 CTR 473 (Pages 120 to 133 of PB-IV). ii) Banyan Reas Estate, Mauritius vs ACIT (Delhi High Court) reported in 165 taxmann.com 210 (Pages 124 to 136 of PB-IV). iii) Sh. Tarlochan Lal Goel vs ACIT (Delhi High Court) in WP(C) No. 13342/2018 (Pages 47 to 52 of PB-I). A bare perusal of the reasons recorded would make it amply clear that the learned AO has not mentioned about any tangible material except the letter dated 02.03.2019 from DDIT (INV) that too pertaining to Truthful Devcon Pvt. Ltd. and not assessee, which suggests that the learned AO had no material in his possession to initiate the instant reassessment proceedings, as it has been held by various courts that mere receipt of letter/ information from another officer/ investigation wing does not constitute to be a tangible material and reopening on the basis of the same is not justified;....
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....NICAL APPROVAL) DELHI HC 422 ITR 355 8. ANDERSON BIOMED (P) LTD GUJARAT HC 129 TAXMANN.COM 135 9. SHRIKANT PHULCHAND BHAKKAD (HUF) VS JCIT BOMBAY HC 137 TAXMANN.COM 445 10. CHETAN SABHARWAL (CHANGE OF OPINION) VS ACIT DELHI HC 110 TAXMANN.COM 57 11. AMIT POLYPTINTS (P) LTD GUJARAT HC 95 TAXMANN.COM 393 12. ANKIT FINANCIAL SERVICES LTD GUJARAT HC 78 TAXMANN.COM 58 13. AASPAS MULTIMEDIA LTD VS DCIT GUJARAT HC 405 ITR 512 8 After hearing the rival contentions and perusing the material available on record, we find considerable cogency in the contention of the Ld. AR that in view of the Rule 27 of the Income Tax Act Appellate Tribunal Rules, 1962 and also in view of the settled position, in our view the Assesssee-Respondent is very much entitled to raise the aforesaid legal grounds at any stage of the proceedings, even though he may not have filed an appeal against such an order. Accordingly, in the interest of justice, we permit to raise the additional grounds raised by the Assessee and are being dealing in the forgoing paragraphs. 9 As regards the Additional Ground No. 2 is concerned, challenging the initiation of proceedings....
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....assessment year: 10 It is evident from aforesaid extract of First proviso to Section 148 of the Act as applicable at the relevant period, where an assessment under sub-section (3) of section 143 or 148 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 assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Thus if two conditions, first assessment has been made u/s 143(3)/148 of the Act and second, four years from the relevant assessment year expired then action u/s 148 can be taken only on failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Now in the i....
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.... 18. Which provisions of section : Sub-section (1) 3.43.63.040/- Order u/s 147/143(3) of the 6 Document 3 328 Sh. Manish Uppal A.Y. 2013-14 Order u/s 147/143(3) of the Act 151 is applicable? (a) Sub section (1) or (b) Proviso section (1) or (c) Sub section (2) 19 Name & designation of AO with signature : ( Ashish Chandra ) DCIT. Central Circle-29, New Delhi On the basis of the facts as put up on file by the AO, I concur with his satisfaction that the case of Sh. Manish Uppal (A.Y. 2013-14) is fit for reopening u/s 147 of the Act. Put up for kind perusal / approval. 20 Satisfaction of the Joint Commission of Income Tax. Central Range- 8, New Delhi. Sd/- (Kumar Avikal Manu) Joint. CIT. Central Range-8, New Delhi Perused reasons recorded, satisfied fit case for notice u/s 148 of the Act. Sd/- 21. Satisfaction of the Pr. Commission of Income Tax. Central - 3, New Delhi. (A. Misra) Pr. CIT (Central)-3, New Delhi Annexure 'A' Sh. Manish Uppal AAAPU3996P 2013-14 Name and address of the axsessee . PAN Assessment Year Reasons for reopening the cave nix 147 read with section 148 of the Income-fax Act, 1961 Information has been received....