TaxTMI 
TaxTMI 
TaxTMI 
2025 (1) TMI 1593
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....e Learned Assessing Officer in resorting to initiation of proceedings u/s 148. 3. That the Learned CIT(A) further gravely erred in upholding the action of the Learned Assessing Officer in proceeding with the re-assessment u/s 148 despite the fact that the entire reliance has been made by the Learned Assessing Officer on some alleged documents found during the course of search u/s 132 at the premises of the third party and it at all any action was warranted, Should have been by resort to Section 153-C." 4. The brief facts are that a search & seizure operation was conducted on Bakshi Group of cases including the assessee on 10.12.2012 under Section 132 of the Act and consequent to the same, assessment under Section 153A r.w. section 143(3) of the Act was framed vide order dated 31.03.2015 originally. Subsequently, second search under Section 132 of the Act was conducted on the business and residential premises of the assessee on 09.08.2018. Post search proceedings, in consequent to second search, the AO noted that the assessee has created a web of sub-contractor firms having its registered offices either at the residence or office premises of its Chartered Accounts, one Shri Gurin....
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....rgument of Ld. AR that assessment in this case should have been framed, if at all, u/s 153A of the Act by invoking 4th provisio as the income escaping assessment was more than 50 lacs; therefore proceedings u/s 147 of the Act were bad in law, void ab initio has been examined. In order to decide this ground of appeal it is relevant to refer to 4th proviso to section 153A of the Act which is reproduced as under:- Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the assessing officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years. (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. From the perusal of the above, it is evident that in order ....
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....ting of pages 630-1776. 8. Before us, ld. Counsel for the assessee drew our attention to notice issued under Section 148 of the Act dated 20.03.2019 which is enclosed with assessee's Paper Book page No.131. He also drew our attention to the reasons recorded which are enclosed at assessee's Paper Book pages 133 to 138. The relevant reasons recorded were referred by ld. counsel and the same are being reproduced as under: Reasons recorded for initiating proceedings ids 148 of the I.T. Act, 1961, Reasons recorded in the case of Ms. S P Singla Constructions Pvt. Ltd. A.Y 2012-13 in respect of initiation of re-assessment proceedings u/s 147/148 of the Income- tax Act, 1961 1. The Return of income for A.Y. 2012-13 was originally e-filed vide acknowledgement no. 507755821300912 by the assessee company on 30.09.2012 declaring total income of Rs,32,82,24,450/. Later the revised return was e-filed by the assessee company vide acknowledgement No. 180747961070514 declaring the same income as in original return i.e. Rs. 32,82,24,450/- The assessment proceedings u/s 153A/143(3) was completed on 31.03.2015 by the DCIT, Central Circle- 26, New Delhi by determining income of Rs. 32,82,2....
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....gla Constructions Pvt. Ltd............... 7. On further analysis of the Income Tax returns it was observed that the said sub-contractor firms have filed their returns by declaring extremely low profits who do not commensurate with the scale of turnover and general prevailing net profit rates of sub-contractors. Further it was also noticed that the last year of filing of returns of the above stated firms is assessment year 2012-13 corresponding to financial year 2011-12 which matches with the year up to which Sh. Gurinder Kumar Garg was involved in the auditing of Sat Paul Singla group. This corroborates the statement of Sh. Gurinder Kumar Garg that he had filed the returns of the above stated bogus firms as the said firms become non-operative on the same year in which he left SP Singla Constructions Pvt. Ltd. as auditor. 8................. 9............... 10.............. 11. In order to further reaffirm the genuineness of the said firms, summons were issued on 05.10.2018 to partners of these firms seeking personal deposition and also asking to furnish the copy of agreement signed between their sub-contractor firms with SP Singla Constructions Pvt. Ltd and SPS Structures....
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....struction AAFFJ0221R 30,75,446 24 SS Construction Engineering ABCFS4260N 25,88,301 25 Hind Construction Engineers Contractors AADFH9919A 42,00,000 26 India Engineers and Contractors AABF1869E 53,08,069 27 Balaji Engineers and Contractors AAIFB1217A 38,17,244 28 Sunshine Construction ABCFS4473L 39,34,091 29 Anand Engineers and Contractors AANFA8994L 36,67,059 30 Rk Construction and Engineers AAIFR2538Q 39,50,000 31 Bharat Construction AAFGB9151M 42,21,036 32 Adarsh Construction and Engineers AANFA8995M 39,35,164 33 Tirupati Engineers and Contractors AAEFT9240M 34,40,288 34 Ganga Constructions AAGFG1512M 41,19,600 35 Maaa Bhagwati enterprises AAMFM0246L 58,20,821 36 Omkar Engineers and Contractors AABFD6378E 42,83,134 37 Gupta Constructions and Engineers AAGFG1480L 40,00,000 38 Himland Construction and Engineers AAEFH6688K 40,45,000 39 Himalayan Construction and Engineers AADFH9910K 40,18,435 TOTAL 36,10,58,438 15. Taking into consideration all the above facts an opportunity was given to SP Singla Constructions Pvt. Ltd. and SPS Structures Ltd. vide this office letter No. 838 dated 16.11.2018 to ....
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.... following expenses: Sl.No. Head of Expense Amount (In Crore) 1 Purchases Rs. 265.04 2 Freight Rs. 4.76 3 Duties Rs. 4.48 4 Consumption of stores and spare parts Rs. 10.29 5 Other Expenses Rs. 174.23 On analysis of report of. the investigation wing and the return of income, it is clearthat bogus expense of Rs. 36,10,58,438/- has been booked by the assessee companyduring the year under consideration. 6. Considering the above referred credible information, have reason to believe that an amount of atleast Rs. 36,10,58,438/- has escaped assessment in case of M/s SP Singla Constructions Pvt. Ltd., PAN: AAGCS5773B for A.Y. 2012-13 within the meaning of Section147/148 of the Income Tax Act, 1961. The case is covered by clause (c) of Explanation 2 to Section 147.Therefore, it is a fit case for the issuance of notice u/s 148 of the I T Act, 1961to re-assesss such income in the course of proceedings u/s 147 of the Income Act, 1961. 7. This escapement of income of atleast Rs. 36,10,58,438/- by way of bogus expenses during the F.Y. 2011-12 relevant to A.Y. 2012-13 has been clearly due to failure of the assessee company to disclose truly & fully these material facts rega....
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....e to whom the assessee has paid a sum of Rs.36,10,58,438/- as Sub Contractor Charges. The ld. counsel pointed out to relevant para 6, 7, 8 & 9 of the reasons recorded and stated that for reaching a conclusion that these are bogus expenses being sub contractor expenses for the reason that during original assessment proceedings, these expenses remain unverified/unexplained. The ld. counsel argued that in the very reasons, the AO has admitted that these sub contract expenses are part of the case records i.e. part of financials of the assessee. He stated that the entire financials were declared by assessee in the original return of income and entire reasons recorded on the basis of either the statement of the Chartered Accountant Shri Gurinder Kumar Garg or the financials of the assessee filed alongwith the return of income for assessment year 2012-13 filed on 30.09.2012. The ld. counsel explained that all information relating to these sub contract expenses were enquired into by the AO during the course of original assessment proceedings and all details were filed by assessee. The ld. Counsel for the assessee took us through various notices issued by AO during original assessment proce....
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....e AO originally under Section 153A read with Section 143(3) for the relevant assessment year 2012-13 vide order dated 31.03.2015. Further, admittedly the four years have elapsed from the relevant assessment year till the issuance of notice under Section 148 of the Act. Hence, ld. counsel stated that the assessee's case is fully covered by the proviso to Section 147 of the Act. Further, ld. Counsel stated that in the reasons recorded, there is no iota of evidence that there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for this assessment year. The ld. counsel stated that this issue is covered by various decisions of Hon'ble Supreme Court including CIT Vs Foramer France (2003) 264 ITR 566 (S.C.). Further, ld. Counsel for the assessee also relied upon decision of Hon'ble Bombay High Court in the case of Rajshree Realtors Pvt. Ltd. V UOI (2023) 457 ITR 354 (Bom). 10. On the other hand, the ld. CIT DR argued that the assessee has tried to argue that it had discharged the onus by filing confirmations or the copy of account of these parties but actually this has not been examined by the AO while c....
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....s filed complete details in respect to these 39 parties i.e. sub contractors on behalf of whom the assessee has claimed sub contract expenses amounting to Rs.36,10,58,438/-. The assessee has replied these details and also filed the details of all work done by these sub contracts during original assessment proceedings vide questionnaire dated 11.11.2014, particularly Question No.10. The details filed by the assessee before us now in Paper Book at pages 1638 to 1776 clearly show that these details were made available to the AO during original assessment proceedings and the details include these 39 parties on behalf of the assessee who has carried out the sub contract work. Accordingly, the assessee has made sub contract payment to these 39 parties and genuineness was explained during original assessment proceedings. The original assessment was completed under Section 143(3) read with Section 153A of the Act dated 31.03.2015, which was carried out in consequent to search conducted under Section 132 of the Act on the assessee group of cases i.e. first search. The only basis made by AO treating the same as incriminating material i.e. the statement of Shri Gurinder Kumar Garg, Chartered ....
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....sessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this Section and in sections 148 to 153 referred to as the relevant assessment year) : 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 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." 15. This new Section has made a radical departure from the original Sect....
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....case, that is to say, in respect of the particular assessee and in relevance to a particular assessment year. To be a necessary finding it must be directly involved in the disposal of the case. To be a direction as contemplated by Section 153(3)(ii) it must be an express direction necessary for the disposal of the case before the authority or court vide Rajinder Nath v. CIT [1979] 12 CTR (SC) 201 : (1979) 120 ITR 14 (SC); Gupta Traders v. CIT [1982] 28 CTR (All) 270 : (1982) 135 ITR 504 (All); CIT v. Tarajan Tea Co. (P.) Ltd. [1999] 152 CTR (SC) 1 : (1999) 236 ITR 477 (SC) and CIT v. Goel Bros. [1982] 28 CTR (All) 274 : (1982) 135 ITR 511 (All), etc. The case of an expatriate employee was to be decided on the basis of the provisions of article XIV of the treaty, whereas corporate income was to be decided on the basis of either article III or article XVI of the treaty or Section 44BB of the Act. Hence, the observations of the Tribunal in Boudier Christian's case was not a direction necessary for the disposal of the appeal relating to the petitioner. The exigibility of income of the petitioner from manning and management contracts was never an issue directly or indirectly involve....
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..... v. Deputy CIT (supra) and other decisions." 14. Similarly, Hon'ble Bombay High Court in the case of Rajshree Realtors Pvt. Ltd. (supra) has considered this issue and noted that the reasons in support of the notice issued under Section 148 of the Act does not contain even an allegation about the assessee's failure to disclose fully and truly all material facts necessary for his assessment for the relevant assessment year. Hon'ble High Court has categorically held for assuming crucial jurisdiction under the provisions of Section 147 of the Act, there are parameters prescribed in the proviso to Section 147 i.e. assessee's failure to disclose fully and truly all material facts necessary for its assessment was not fulfilled and once it is fulfilled, the notice under Section 148 has to be annulled. Hon'ble Bombay High Court finally considering the facts of that case held as under : "17. In the circumstances, the issue regarding subscription of shares by SHPL and SCPL in petitioner has been thoroughly examined by the AO, who also in fact, did not accept petitioner's explanation and added the amount of Rs. 3,00,00,000/- to petitioner's income. That addition....