TaxTMI 
TaxTMI 
2025 (7) TMI 1687
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.... reassessment proceedings is as per law. The initiation of reassessment proceedings and assumption of jurisdiction by the AO invoking sec. 147 is illegal, bad in law and the consequent reassessment order passed by AO is unsustainable. Conditions of sec. 147 are not fulfilled in the case of assessee. 2. Ld. CIT(A) erred in upholding the order passed by AO without appreciating that initiation of reassessment is illegal and invalid inasmuch as copy of approval granted u/s 151 was not provided to appellant even after specific request in accordance with provisions of law. Reassessment proceeding is illegal and consequent reassessment order is liable to be quashed. 3. Ld. CIT(A) erred in confirming addition of Rs. 2,63,00,000/- made by AO on account of share application money received by appellant treating it to be unexplained cash credit invoking sec. 68. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, illegal and not justified. 4. The appellant reserves the right to amend, modify or add any of the ground/s of appeal. ITA No: 175/RPR/2024 (Gurushree Buildcon Pvt. Ltd.) 1. Ld. CIT(A) erred in upholding the reopening of case made by the AO resorting to sec. 147....
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....g sec. 68. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, illegal and not justified. 5. Ld. CIT(A) erred in confirming the addition of Rs. 1,15,00,000/- made by AO on account of payment made to Gurushree Minerals Pvt. Ltd., treating it to be unexplained expenditure invoking sec. 69C, without appreciating facts of case properly. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, illegal and not justified. 6. Ld. CIT(A) erred in confirming addition of Rs. 65,00,000/- made by AO on account of payment made to Keshav Township Pvt. Ltd., treating it to be unexplained expenditure invoking sec. 69B, without appreciating facts of case properly. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, illegal and not justified. 7. Ld. CIT(A) erred in confirming addition of Rs. 1,60,00,000/- made by AO on account amount received by appellant in its bank account from various parties, treating it to be explained cash credit u/s 68, without appreciating facts of case properly. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, illegal and not justified. 8. The appellant reserves the right to amend, modify or add any of the ground/....
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....in both the aforesaid appeals, therefore, ITA 174/RPR/2024 of Gurushree Minerals Pvt. Ltd. for the AY 2013-14 has been taken up as the lead case. The reasons in the lead case are therefore placed before us at paper book page no. 117-122. In order to point out the violation of provisions of Section 147, Ld. AR highlighted the issue that the reopening was initiated after 4 years beyond the expiry of the relevant assessment year and, therefore, the condition prescribed under 1st proviso to Section 147 was necessary to be fulfilled by the Ld. AO before invoking the said provisions. The relevant conditions are extracted (supra) stipulates that if the assessment u/s 143(3) in the case of an assessee has been made for the relevant assessment year, no action shall be taken u/s 147 after the expiry of 4 years from the end of the relevant AY, unless any income chargeable to tax has escaped assessment for such assessment year by the reasons of the failure on the part of assessee (i) to make a return u/s 139 or (ii) in response to notice issued u/s 142 or (iii) Section 148 or (iv) to disclose fully and truly all material evidence necessary for its assessment for that assessment year. Referring....
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....nt of income from assessment and that there has been a failure to fully and truly disclose material fact. After a period of four years even if the Assessing Officer has some tangible material to come to the conclusion that there is an escapement of income from assessment, he cannot exercise the power to reopen unless he discloses what was the material fact which was not truly and fully disclosed by the assessee. If we consider the reasons for reopening, except stating in paragraph 3 that a sum of Rs. 7,66,66,663/- which was chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary, there is nothing else in the reasons. In an unreported judgment of this Court in First Source Solutions Limited Vis. The Assistant Commissioner of Income Tax- 12(2)(1) and Anr. Writ Petition No.2762 of 2019 dated 31.08.2021 relied upon by Mr. Pardiwall a, the Court held that a general statement that the escapement of income is by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment is not enough. The Assessing Officer should indicate what was th....
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....s with the relevant provisions and become well versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. (ii) Hariom Ingots and Power Pvt. Ltd. vs. Principal Commissioner of Income Tax & Anr. (2022) 444 ITR 0 306 (Chhattisgarh) 6. Perusal of aforementioned provisions under Section 56 of the I.T. Act would reflect that Section 56 mentions about the income from other sources. Section 56(vii) talks about the income received by an individual or a Hindu undivided family in any previous year. Petitioner is a company and in view of specific provision under Section 56(2)(vii) of the I.T. Act, relied by the Assessing Officer for issuance of notice will not be applicable to the petitioner who is a company. For issuance of notice under Section 148 of the I.T. Act, there should be tangible material and mandatory compliance of Section 147 of I.T. Act. Proceedings of reassessment has been initiated against company after lapse of 4 years of submission of return, which is not in dispute. Under first proviso to Section 147 of the I.T. Act, for starting the reassessment proceedings after laps....
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....liable to be dismissed. 10. We have considered the rival submissions, perused the material available on record and the case law relied upon by the Ld. AR. Admittedly, the reopening in the present case is done after expiry the four years (on 31.03.2018) from the end of the relevant assessment year (2013-14), being the notice u/s 148 was issued on 31.03.2021 (copy furnished at page no. 104-106 of APB) and the assessment in the case of assessee u/s 143(3) was also completed on 18.02.2016 (copy of order furnished at page no. 198 of APB). Accordingly, as per the stipulated conditions of 1st proviso to section 147, it is obligatory for the Ld. AO to strictly comply with such mandate of law to bring the case of assessee within the ambit of section 147. Ld. AO invoked the last limb of 1st proviso that, there was a failure on the part of assessee in disclosing fully and truly all material available facts necessary for the assessment and formed the belief that the reopening is justifiable. While going through the facts in the present case, we have observed that it was a statement by the Ld. AO in general, however, the particulars or details establishing the failure on the part of assessee i....
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....he reasons recorded by the Ld. AO the assumption of jurisdiction u/s 147 & 148 of the Act itself is in violation of mandatory provisions of law, thus, stands ultra vires, exceeding to the jurisdictional restraints imposed by the 1st proviso to Section 147 of the Act, therefore, the entire proceedings initiated u/s 147 vitiates and the impugned assessment order passed u/s 147 dated 19.03.2022 on the foundation of such ultra vires or void ab initio proceedings does not have the lawful strength to sustain, accordingly, we quashed the same. 12. Since the assessment order passed u/s 147 dated 19.03.2022 is quashed by us, in terms of our aforesaid observations, we refrain ourselves to deliberate upon the other contentions raised by the assessee, may be on legal aspects or on merits of the facts, therefore, the same are left open. 13. In conclusion, ITA No. 174/RPR/2024 of the assessee stands allowed in terms of our aforesaid observations. 14. Adverting to ITA No. 175/RPR/2024 in the case of Gurushree Buildcon Private Limited, wherein the reopening was initiated under similar facts and circumstances and on identical reasons to believe recorded by Ld. AO, as they are in the case of Guru....
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....ecorded for reopening of the assessment though repeatedly asked by the assessee were furnished only after completion of the assessment. The Tribunal following the judgment of this Court in the case of CIT vs. Fomento Resorts & Hotels Ltd., IT Appeal No. 71 of 2006 decided on 27th Nov., 2006, has held that though the reopening of the assessment is within three years from the end of the relevant assessment year, since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of assessment, the reassessment order cannot be upheld. Moreover, special leave petition filed by the Revenue against the decision of this Court in the case of CIT vs. Fomento Resorts & Hotels Ltd. (supra) has been dismissed by the apex Court, vide order dt. 16th July, 2007. (ii) Pr. Commissioner of Income Tax vs. Jagat Talkies Distributors (2017) 398 ITR 00 13 (Delhi) - 27. The decisions of Bombay High Court in CIT v. Trend Electronics (supra) and CIT v. Videsh Sanchar Nigam Limited Manu/MH/1805/2011 support the case of the Assessee. In the last mentioned decision, the Bombay High Court held as under: "It is axiomatic that power to reopen a Completed assess....
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....Court in GKN Driveshaft v/s. ITO 259 ITR 219. The entire objects of reasons for re-opening notice as recorded being made available to an Assessee, is to enable the Assessing Officer to have a second look at his reasons recorded before he proceeds to assess the income, which according to him, has escaped Assessment. In fact, non-furnishing of reasons would make an Assessment Order bad as held by this Court in CIT v/s. Videsh Sanchar Nigam Ltd., 340 ITR 66. In fact, partial furnishing of reasons will also necessarily meet the same fate i.e. render the Assessment Order on re-opening notice bad. Therefore, on the above ground itself, the question as proposed does not give rise to any substantial question of law as it is covered by the decision of this Court in Videsh Sanchar Nigam Ltd., (supra) again f the Revenue in the present facts. 19. In backdrop of aforesaid submission, Ld. AR submitted that since the reasons recorded by the Ld. AO are never provided to the assessee, therefore, the mandate of law has not been followed and accordingly, the order passed by the Ld. AO u/s 147 and u/s 148 without complying the mandatory provisions of law is liable to be quashed. 20. Per contra, Ld.....
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....revenue are not supported with any corroborative evidence. And that such reasons were never supplied to the assessee, on the contrary the date of supply of such documents to the assessee, as claimed by the Ld. AO i.e., 07.02.2022, is not a correct fact as there was no proceeding recorded on the ITBA portal which have taken place on the said date. In support of such contention, Ld. AR drew our attention to the screenshots of e-assessment proceedings undertook in the present case placed before us at page no. 107 to 110 in the APB in the reverse order from which it is brought to our attention that there was no entry in the proceedings sheets showing any communication or notice issued by the Ld. AO on 07.02.2022. The communication before this date was for issuance of notice u/s 143(2) on 07.12.2021 and the next date of communication was issuance of notice u/s 142(1) on 17.02.2022, therefore, it is plainly clear that there was no proceeding or action undertaken on 07.02.2022 to justify the revenue's contention that the Ld. AO had furnished necessary documents to the assessee on that day. Accordingly, the claim of revenue that assessee has furnished a copy of reasons to believe and appro....
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.... or proceedings undertaken by the Ld. AO on 07.02.2022, as claimed by the revenue to be the date of supply of reasons and relevant material to the assessee. The issue as confronted during the hearing before us, however, no satisfactory answer to dislodge the aforesaid fact could be submitted by the revenue, neither any documentary evidence contradicting the aforesaid facts on record could be placed before us. Accordingly, we find substance in the contention raised by the Ld. AR that the reasons recorded, or any other relevant information was not furnished to the assessee which is mandatory in terms of settled legal principles by the Hon'ble Courts in the judgments referred to supra. 25. After giving a thoughtful consideration to the aforesaid facts and circumstances, respectfully following the principal of law and analogy of interpretation accorded by Hon'ble Bombay High Court in the case of Videsh Sanchar Nigam (supra), Hon'ble Delhi Court in the case of Jagat Talkies Distributors (supra), Hon'ble Mumbai High Court in the case of Shodiman Investments Pvt. Ltd. (supra), we are of the considered view that in absence of supply of the reasons recorded for reopening of assessment even....