TaxTMI 
TaxTMI 
2025 (1) TMI 1593
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.... further gravely erred in upholding the action of the 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....
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....e-opening assessment by observing in para 8.14 and 8.15 as under : 8.14 The argument 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....
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.... order of CIT(A). We have also perused the case laws, Paper Books filed by assessee consisting of pages 1-629 and second Paper Book consisting 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. 32,82,24,45....
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....at the registered addresses of these firms are either the residential or office address of Sh. Gurinder Kumar Garg or the residential address of Sh. Manoj Kumar, Accountant of SP Singla 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....
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....Shivalaya Construction ABVFS1790F 1,30,40,920 18 Shivalik Engineers & Contractors ABCFS4475N 28,10,920 19 Sabhavana Infrastructure ABVFS1190H 1,10,96,388 20 Surya Construction Eng. & Contractor ABCFS4474P 3,06,63,625 21 Swastik Construction ABFFS5101G 4,99,85,804 22 Unique Construction AABFU7844B 23,78,145 23 Jai Durga Engineering and Construction 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 enterpr....
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....a Constructions Pvt. Ltd. has e-filed its original return of income for A.Y. 2012-13 vide acknowledgement no. 507755821300912 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. 32,82,24,450/-. On perusal of P & L Account of the assessee for AY 2012-13 filed in e-filed return. Assessee has debited 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 atleas....
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.... the reasons recorded has reproduced same information but nowhere it is mentioned that the independent information or any incriminating material was found during the course of search conducted on assessee on 09.08.2012. It is only the statement of Shri Gurinder Kumar Garg, Chartered Accountant who was auditor of the S.P. Singla Group of Cases and that all these alleged bogus firms were at the address of the Chartered Accountant Shri Gurinder Kumar Garg or at the address of Accountant Shri Manoj Kumar. The ld. counsel contended that the AO while recording reasons presumed that the sub contractor expenses booked by assessee are bogus and in the reasons he narrated 39 parties who are sub contractors of the assessee 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....
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....ame was enclosed at assessee's Paper Book pages 1638-1776. The ld. Counsel for the assessee stated that there are so many sub contractors and as per the alleged documents found from the premises of the Chartered Accountant Shri Gurinder Kumar Garg, the total parties are more than 150 which include the alleged parties noted by AO in reasons recorded in No.39. In view of the above, ld. Counsel for the assessee demonstrated before us that the assessee has filed complete details before AO during original assessment proceedings on being enquired into the sub contractors and AO, originally, completed assessment without making any addition on this account after due verification. The ld. Counsel for the assessee stated that the assessment was completed by the 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 reco....
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....ted that the assessee's case falls under the proviso but subsequently in para 9, they invoked clause (c) of Explanation-2 to Section 147 of the Act as deemed escapement of income which is not the case of the assessee. He argued that assessee's case is fully covered by the proviso to Section 147 of the Act, which has been interpreted by Hon'ble Supreme Court in the case of Foramer France (supra) and various case laws of Hon'ble Bombay High Court and Delhi High Court including Rajshree Realtors Pvt. Ltd. (cited supra). 12. After considering both the sides and going through the facts of the case and going through the reasons and the information submitted by assessee before AO originally during assessment proceedings, we noted that the assessee has 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....
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.... Section 147 of the Act. In our view, w.e.f. 01.04.1989, the entire position of Section 147 changed and this has been explained by Hon'ble Supreme Court in the case of Foramer France (supra) wherein Hon'ble Supreme Court has affirmed the decision of Hon'ble Allahabad High Court in the case of Foramer Vs CIT (2001) 247 ITR 436 (All), wherein Hon'ble Allahabad High Court has considered this issue as under : "14. It may be mentioned that a new Section substituted Section 147 of the Incometax Act by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989. The relevant part of the new Section 147 is as follows : "147. If the Assessing Officer, has reason to believe that any income chargeable to tax has escaped assessment for any assessment 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 (hereafte....
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....gree. Section 153 relates to passing of an order of assessment and it does not relate to issuing of notice under Section 147/ 148. Moreover, this is not a case where reassessment is sought to be made in consequence of or to give effect to any finding or direction contained in the order of the Tribunal in Boudier Christian's case. As already stated above, Boudier Christian's case related to the employees of the company, whereas the impugned notice has been issued to the company. Hence, it cannot be said that the proposed reassessment in consequence of the impugned notice would be in consequence of or to give effect to any findings of the Tribunal in Boudier Christian's case. 19. A direction or finding as contemplated by Section 153(3)(ii) must be a finding necessary for the disposal of a particular 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 ....
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.... be given on the mere change of opinion as held in numerous cases of the Supreme Court, some of which have been mentioned above. Since the Tribunal in the appeal relating to the assessee-company had considered the Tribunal's earlier decision in Boudier Christian's case, it will obviously amount to mere change of opinion, and hence the notice under Section 147/148 would be illegal. 23. As regards alternative remedy, we are of the opinion since the notice under Section 148 is without jurisdiction the petitioner should not be relegated to his alternative remedy vide Calcutta Discount Co. Ltd. v. ITO (1961) 41 ITR 191 (SC); Smt. Jamila Ansari v. Income-tax Department [1997] 137 CTR (All) 587 : (1997) 225 ITR 490 (All); Govind Chhapabhai Patel v. Deputy CIT (1999) 156 CTR (Guj) 353 : [1999] 240 ITR 628 (Guj) and Jindal Photo Films Ltd. 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 fu....