TaxTMI 
TaxTMI 
2025 (10) TMI 465
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....he facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer as the commission income at 2% without appreciating that the material found during the course of search, post search investigation and investment and assessment clearly established that the assessee is just into the business of providing accommodation entries in lieu of commission?" 3. The assessee has filed an application u/r 27 of the Income tax Tribunal Rules, 1963 ['the Rules" for short] raising additional grounds of appeal which read as under: "Additional Ground No. 1 That the learned Commissioner of Income Tax (Appeals) has grossly erred in law and on facts in sustaining the initiation o....
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....r this service, he has charged commission. The Assessing Officer further found that the assessee had provided accommodation entries amounting to Rs. 527.28 crores on which the assessee had earned 2% as commission. Accordingly, the Assessing Officer made addition of Rs. 10,54,57,820/- as undisclosed income of the assessee and added the same to the total income of the assessee company. 7. When the aggrieved assessee went in appeal before the ld. CIT(A), the ld. CIT(A) came to the conclusion that the assessee is a NBFC company and not a paper company providing accommodation entries and deleted the addition. 8. Now the Revenue is in appeal before us against the deletion of 2% commission income whereas the assessee has filed additional gro....
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....l for the assessee that the reasons recorded are materially different from the reasons for which assessment has been made. We find that the reopening has been made on account of receipt of amount of Rs 5 lakh from M/s RKG Finvest whereas the addition has been made on the commission received on amount paid by the assessee to various entities which were considered as accommodation entries which is emanating from Para 6 of the assessment order which reads as under: "6 On perusal of bank statement of Assessee Company, It is observed that the bank account number 65056415724 with State Bank of Patiala, 0270201006334 with Canara Bank and 106047 with Punjab National Bank are immediately debited (through cheque or RTGS), once an amount is c....
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....een Section 148A(b) and Section 148 A(d) of the Act are clearly not impacted by Explanation 3. As we read Sections 147 and 148 of the Act, we come to the firm conclusion that the subject of validity of initiation of reassessment would have to be independently evaluated and cannot be confused with the power that could ultimately be available in the hands of the AO and which could be invoked once an assessment has been validly reopened. 31. Explanation 3, or for that matter, the Explanation which presently forms part of Section 147, would come into play only once it is found that the power to reassess had been validly invoked and the formation of opinion entitled to be upheld in light of principles which are well settled. The Explana....
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.... assessment". Sections 148 is supplementary and complimentary to Section 147. Sub-section (2) of Section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or recompute escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per explanation (3) if during the course of these proceedings the Assessing Officer comes to conclusion that some items have escaped assessment, then notwithstanding tha....
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....ded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the Assessing Officer proceeded to reduce the claim of deduction under Section 80HH and 80I which as per our discussion was not permissible. Had the Assessing Officer proceeded not to make dis-allowance in respect of the items of club fees, gifts and presents, etc., then in view of our discussion as above, he would have been justified as per explanation 3 to reduce the claim of deduction under Section 80HH and 80I as well. 21. In view of our above discussions, the Tribunal was right in holding that the Assessing Officer had the jurisdiction to reassess issues other than the issues in respect of which pr....