TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 577
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.... That on the facts and in the circumstances of the case and in law the ld. CIT (A) grossly erred in confirming the proceeding u/s 148 of the Act initiate by the ld. Assessing Officer when the assessee was already assessed u/s 143(3) of the Act and all material were provided before the ld. Assessing Officer. 3. That on the facts and in the circumstances of the case and in law the ld. CIT (A) grossly erred in re-opening and confirming the assessment on the basis of information received from Investigation wing, without providing the material evidence and statement recorded u/s 132 of the Act of Shri Mukwesh Banka during the search proceeding and without providing the opportunity of cross examination to the assessee appellant. 4. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing." 3. The brief facts of the case are that the assessee company filed its Return of Income under section 139(1) of the Income Tax Act, 1961 declaring income at Rs. (-) 9464/- on 21.03.2014 which was assessed under section 143(3) on 26.11.2014 at returned income. Later on, specific information was received from DDIT (Inv.) Unit 1(3), Kolkata regarding accom....
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....ng face value of Rs. 10/share at a premium of Rs. 140 per share thus the assessee company has introduced its own undisclosed income Rs. 55,00,000/- in the garb of share capital of including share premium from the following five companies which are proven paper/shell companies as per the reports of the investigation wing : S. No. Name of Company Shares Allotted Amount 1 Harsharatna Finance & Investment Pvt. Ltd 10,000 15,00,000 2 Liberal Infrastructure Private Limited 6,666 10,00,000 3 ShowfallimpexPvt. Ltd. 6,666 10,00,000 4 Newedge Realtors Pvt Ltd 6,666 10,00,000 5 Agrani Credit and Finvest Pvt Ltd 6,666 10,00,000 Total 36,664 55,00,000 During the reassessment proceedings the AO considered various documents available with him and completed the assessment under section 147/143(2) of the IT Act, 1961 vide his order dated 21.11.2019 by making an addition of Rs. 55,00,000/- and assessed the total income at Rs. 54,90,536/- against returned income of Rs. (-) 9,464/-. Being aggrieved by the order of AO, the assessee filed an appeal before the ld. CIT (A), who dismissed the appeal of the assessee by observing in para 6.1.1 of his order, as under :- "....
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....hich the case is reopened i.e. share capital raised during the year, was duly raised in the questionnaire issued dated 04.11.2014 (Point No.8) (Copy at PB Page 15-16). The assessee duly replied (along with the documentary evidences such as share application form, bank account statement and financial statements of the applicants) for the same in reply dated 11.11.2014 and 24.11.2014 (Copy at PB Page 17-20). During the course of original assessment proceedings, the following documents relating to the identity, genuineness and creditworthiness of all the share investor companies were duly submitted: - (i) Share application containing the name/address/PAN of share Applicant Company and detail of payment received etc., which is itself a confirmation of finds given to the assessee company. (ii) Bank statement of share applicant showing the entry of payment made to assessee company. (iii) Acknowledgement of ITR of AY 2012-13. (iv) Audit report, audited balance sheet along with its annexure of 31.03.12. After examination of the documents filed by the assessee and being satisfied with that the ld. AO did not raise any further query on this issue and accepted the share application ....
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....proceedings which has been done by the assessee during the course of assessment proceedings u/s 143(3) of Income Tax Act, 1961. The assessee has fulfilled its duties by disclosing fully and truly all material fact and documents/books necessary for assessment. It is not obligation of the assessee to indicate and state what the legal inference can be drawn from such facts. In the present case, there was no indication that the assessee had failed or omitted to disclose the material or primary facts and all these facts were already available on record. There is no allegation in the reasons so recorded that there was any subsequent factual information on the basis of which it was found that the assessee had not fully disclosed the primary facts or had falsified or disclosed incorrect primary facts. 4. Though, in the reasons recorded by ld. AO for reopening of the case he considered this aspect also but there is certain inconsistency in the facts narrated by ld. AO, which shows that the ld. AO was in complete mindset to reopen the case of the assessee and for which he disregarded the actual facts of the case of assessee and twisted with it as per his own sweet will. Such inconsistency ....
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....hat disclosure in balance sheet also amounts to disclosure. c) From the assessment record of original assessment proceedings and as submitted in forgoing paras in is apparent that during the course of original assessment proceedings this issue by duly raised by ld. AO, replied by assessee and verified by then AO. Thus, this issue was duly examined during the course of original assessment proceeding and the finding of ld. AO that "It is evident from the above discussion that in this case, the issues under consideration were never examined by the AO during the course of regular assessment/reassessment." is completely perverse, dehors the material available in the assessment record of original proceedings and perhaps made without actually examining the assessment record of original proceedings. 5. Thus, the re-opening after expiry of four years in absence of failure on the part of the assessee to truly and fully disclose all material facts required for making assessment and in absence of any fresh material is illegal, unjustified and bad in law. The information received from some other authority without making own inquiry cannot constitute the new material. In this regard the reli....
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.... been dismissed as having become infructuous. - Decided in favour of assessee ii) Parashuram Pottery Works Co. Limited Versus Income-Tax Officer, Circle I, Ward A, Rajkot [1977] 106 ITR 1 (SC) Hon'ble Supreme Court has specifically considered the issue and has held that the responsibility of the assessee is only to place the materials before the assessing officer and the assessee would not be responsible for the inferences made by the assessing authority on the basis of the materials that he has placed before the concerned authority. As further held by the Apex Court that a change in the opinion or a later decision on the legal aspects cannot be a reason for re-opening an assessment which has been concluded on the basis of the material which is made available in cases where the re-opening is attempted after 4 years, unless the assessee failed to disclose relevant information. iii) In the case of Calcutta discount Co. Ltd. vs. Income-tax Officer, Companies District I, Calcutta, (1961) 41 I.T.R.191 (SC), the Hon'ble Supreme Court while dealing with the ambit and scope of the provisions of Section 34 of the Indian Income Tax, 1922, which were similar to the provisions of Secti....
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....neous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. 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 the grounds which induce the Income-tax Officer to act is, therefore, not a justiciable 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 non-disclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. The expression "reason to believe" does not mean a purely subjective satisfaction on the part of the Income-tax Officer. The reason must be held in good faith....
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....Section 147 of the IT Act does not allow the reassessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to re-assess and not the power to review. To check whether it is a case of change of opinion or not one has to see its meaning in literal as well as legal terms. The word change of opinion implies formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection." vi) In, Vijay Power Generators ltd vs. Assistant Commissioner of Income Tax I.T.A. No. 4086/Del/2013, the learned Appellate Tribunal held that mere change of opinion is not permissible under the law and reopening of assessment was incorrect and invalid as the reopening had been done merely on change of opinion and the Assessing Officer had n....
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....uch escapement was by reason of the assessee had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to be struck down as invalid." (v) CIT V/s Bhanji Lavji [1971] 79 ITR 582 (SC), Held that:-Reassessment under s. 34(1)(a) of 1922 Act-Full and true disclosure-In original assessment, all primary facts were disclosed-It was stated that payments were received by cheques and transferred to Porbandar-ITO had passed an order in effect holding that assessee had no income in British India chargeable to tax-He could not now seek to reassess the assessee on the ground of failure to disclose fully and truly the facts necessary for assessment (vi) DCIT v/s Purolator [2012] 343 ITR 155 (Del), Held:- Reassessment-Income escaping assessment-Disclosure of material facts-Obligation of assessee-Extent of that obligation-Held, it is the obligation of the assessee to disclose fully and truly the primary or material facts but it is not his obligation to indicate and state what legal inference can be drawn from such facts-In the present case, there w....
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....A and 80-I was not fully examined are quashed and set aside. (ix) Bhot Industries Ltd V/s ACIT (2004) 267 ITR 161 (Bomb.), Reassessment-Full and true disclosure-Notice after expiry of four years-Assessments for the relevant years were completed under s. 143(3) after detailed investigation-Reliefs under ss. 80HH, 80HHA and 80-I were granted on the basis of particulars furnished by the assessee- Reasons recorded do not allege any failure on the part of the assessee to disclose fully and truly all material facts required for the assessments in question-Basic requirement for reopening of assessments beyond the period of four years from the end of the relevant assessment years thus not satisfied-Therefore, impugned notices under s. 148 issued on the basis that the claim for deduction under ss. 80HH, 80HHA and 80-I was not fully examined are quashed and set aside (x) CIT (Addl) V/s IFCI (2001) 248 ITR 192 (Del.) Reassessment-Validity-Change of opinion-Factual position noted by AAC and the Tribunal clearly goes to show that assessee had not failed or omitted to disclose the primary facts and that the ITO had considered the entire material at the time of original assessment-Therefo....
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....illegal, unjustified. The re-opening after expiry of four years in absence of failure on the part of the assessee to truly and fully disclose all material facts required for making assessment and in absence of any fresh material is illegal, unjustified and bad in law. The information received from some other authority, which is not backed with any evidence and without making own inquiry on part of ld. AO cannot constitute the new material. It is well settle position of law that the ld. AO cannot be guided for his decisions by what the other officer preparing the report/information says. As per section 119 (1) (a) even the CBDT cannot issue directions or instructions to an AO so as to require any income tax authority to make a particular assessment or to dispose of a particular case in a particular manner. 2. In this regard the reliance is placed on latest judgement of Hon'ble Delhi High court in the case of SABH Infrastructure Limited [2017] 398 ITR 198, wherein the court gave the following finding: - "Analysis and Findings 10. The law on this subject is well settled. As held in Kelvinator (supra), the powers under Section 147 of the Act have to be exercised after a period of....
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....s are `paper companies' without further facts is by itself insufficient to reopen assessments that stand closed after passing of orders under Section 143 (3) of the Act. 15. The assessment proceedings, especially those under Section 143 (3) of the Act, have to be accorded sanctity and any reopening of the same has to be on a strong and sound legal basis. It is well settled that a mere conjecture or surmise is not sufficient. There have to be reasons to believe and not merely reasons to suspect that income has escaped assessment. In this case, the reasons failed to mention what facts or information was withheld by the Petitioner. Merely relying upon the statement of Mr. Navneet Kumar Singhania that the companies in question were 'paper companies', by itself, is insufficient to reopen the assessment, unless the AO had further information that these companies were non-existent after making further inquiries into the matter. It is clear that the AO did not make any inquiry or investigation, if these companies were in fact 'paper companies'. No effort has been made to establish the connection between the statement of Mr. Navneet Kumar Singhania and the five companies. 16. Mr. Ch....
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....the Court would like to observe that on a routine basis, a large number of writ petitions are filed challenging the reopening of assessments by the Revenue under Sections 147 and 148 of the Act and despite numerous judgments on this issue, the same errors are repeated by the concerned Revenue authorities. In this background, the Court would like the Revenue to adhere to the following guidelines in matters of reopening of assessments: (i) while communicating the reasons for reopening the assessment, the copy of the standard form used by the AO for obtaining the approval of the Superior Officer should itself be provided to the Assessee. This would contain the comment or endorsement of the Superior Officer with his name, designation and date. In other words, merely stating the reasons in a letter addressed by the AO to the Assessee is to be avoided; (ii) the reasons to believe ought to spell out all the reasons and grounds available with the AO for re-opening the assessment especially in those cases where the first proviso to Section 147 is attracted. The reasons to believe ought to also paraphrase any investigation report which may form the basis of the reasons and any enquiry co....
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....s. However, neither in the notices or the assessment orders, nor in the counter affidavit is it stated that the assessee had failed to disclose any relevant information or had produced any fraudulent material during the assessment proceedings. The Apex Court in Parashuram Pottery Works Co. L.t.d v. Income Tax Officer [1976 (11) TMI 1 - SUPREME COURT] has specifically considered the issue and has held that the responsibility of the assessee is only to place the materials before the assessing officer and the assessee would not be responsible for the inferences made by the assessing authority on the basis of the materials that he has placed before the concerned authority. As further held by the Apex Court that a change in the opinion or a later decision on the legal aspects cannot be a reason for re-opening an assessment which has been concluded on the basis of the material which is made available in cases where the re-opening is attempted after 4 years, unless the assessee failed to disclose relevant information. In the cases before us the respondents have no case that the income chargeable to tax during the relevant assessment years had escaped assessment because of the failure on t....
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....es addition - Held that:- In the present case, the Court is unable to discern the link between the tangible material and the formation of the reasons to believe that income had escaped assessment. In the present case too, the information received from the Investigation Wing cannot be said to be tangible material per se without a further inquiry being undertaken by the AO. In the present case the AO deprived himself of that opportunity by proceeding on the erroneous premise that Assessee had not filed a return when in fact it had. To compound matters further the in the assessment order the AO has, instead of adding a sum of Rs. 78 lakh, even going by the reasons for reopening of the assessment, added a sum of Rs. 1.13 crore. On what basis such an addition was made has not been explained. This Court is satisfied that no error was committed by the ITAT in holding that reopening of the assessment under Section 147 of the Act was bad in law. - Decided in favour of assessee. 2. It is further submitted that the validity of initiation of reassessment proceedings has to be judged with regard to the material available with the assessing officer and that too by framing the opinion stric....
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.... of Hon'ble High Court it is unambiguous clear that 'reason to believe' that income chargeable to tax has escaped assessment should be of Assessing Officer. It is Assessing Officer's 'reason to believe' that taxable income has escaped assessment that forms bedrock for reopening assessment u/s. 147 of the Act. Information from other authority cannot in any manner be construed as Assessing Officer's 'reason to believe' for initiating reassessment proceedings. The provisions of section 147 in unambiguous terms mandates that the 'reason to believe' for reopening assessment should be of Assessing Officer. In other words, the Assessing Officer should carryout independent exercise to examine fresh material in his possession to come to a conclusion that the assessment warrants reopening on account of escapement of income. In the present case, a perusal of reasons for initiating reassessment proceedings clearly show that they are against the sprit of provisions of section 147 of the Act. The Assessing Officer has issued notice u/s. 148 on the basis of report of DDIT. Therefore, the notice issued u/s. 148 is bad in law and thus, the subsequent proceedings arising there from are vitiated 3.....
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....age 8), comprising share capital & reserves Rs. 55,55,905/-, short term borrowings Rs. 4,00,000/- and trade payables Rs. 8,000/-, then how it can be beneficiary of the accommodation entry of Rs. 1,05,00,165/-. The ld. AO maintained the same reasons to believe during almost entire assessment proceedings and in each & every show cause notices, issued during re-assessment proceedings, he intended for the addition of Rs. 1,05,00,165/- on a/c of alleged bogus unsecured loans obtained in the form of accommodation entries, while actually no such unsecured loans were ever taken by the assessee company. This happened in spite when the assessment proceedings had already been completed u/s 143(3) of the Act and the record of such proceeding was available to ld. AO. This position continued till the issuance of last show cause notice dated 13.11.2019 (Copy at PB Page 136-138) and all the sudden in the assessment order passed on 21.11.2019 i.e. only after seven days of last show cause notice the addition of Rs. 55,00,000/- was made on accounted of alleged accommodation entries in the garb of investment made by the various companies. This resulted perhaps because the ld. AO only applied his own....
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....eived from the company M/s Liberal Infrastructure Private Limited but against this company there was no material with Ld. A.O. of whatsoever nature and despite to that this sum was added as income of the assessee. On the basis of information given to ld. AO by DDIT, it alleged that accommodation entry from 8 entities have been received by the assessee and on the basis of that ld. AO had formed a reasoned to believe that: "I have pursued the information received and material available on record and I am satisfied that assessee company has taken accommodation entries of Rs. 1,05,00,165/- for the purpose of tax evasion." This conclusion is unhelpful in understanding whether the Assessing Officer applied his mind to the materials that he talks about particularly since he did not describe what was those material was and what evidences were available therein to prove the reason to believe of ld. AO to be correct. Even the basis fact was not examined by ld. AO that whether any amount from such 8 entities were received to the assessee or not. From the material available on record, the fact crops out that out of from 8 entities listed & alleged in the reasons to believe the assessee recei....
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.... Ld. AO but the same reopened solely & blindly relying on the information received from some other authority, which is not backed with any evidences, and without further investigating the same. From the reasons it is clearly apparent that: - i) No exercise has been carried out at the end of ld. AO to find out that whether any direct evidence against the assessee was gathered or not. Even the statement of the Shri Mukesh Banka also not brought on record. ii) In the assessment order, ld AO mentioned about various companies and statement of Shri Mukesh Banka which is nowhere concerned with the case of the assessee. The assessee does not know Shri Mukesh Banka or other companies. From the reasons recorded as well as from the assessment order it is well apparent that there is no direct and conclusive evidence appears to be given by Shri Mukesh Banka or/and found to department as a result of search over him, which may prove that the share application money received by the assessee was not genuine. Therefore, this information may be sufficient to lead a suspicion and it is admitted fact that the reopening on the basis of suspicion is not permissible in the eyes of laws. For having t....
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.... in the case of M/s Ganesh Ganga Investments P. Ltd. Vs. ITO in ITA No. 1579/Del/2019 dated 07.11.2019 only in paras 8.5 to 9 are reproduced as under: "8.5. The statement of Shri Himanshu Verma is also filed on record which did not find mention if MIs. Shubh Propbuild Pvt. Ltd., as mentioned in the reasons belong to Shri Himanshu Verma. There is no investor exist in the name of MIs. Management Services Pvt. Ltd., and no addition in respect of the same company have been made by the A.O. The A.O, therefore, recorded incorrect facts in the reasons for reopening of the assessment. Thus the same cannot be approved under the Law. It is well settled Law if wrong facts and wrong reasons are recorded for reopening of the assessment, reopening of the assessment would be invalid and bad in Law. We rely upon Judgment of Hon'ble Punjab & Haryana High Court in the case of Atlas Cycle Industries 180 ITR 319 (P&H). It is well settled Law that note already filed with return disclosing nature of capital receipt and no other tangible material found, therefore, reopening of the assessment under section 148 was quashed. We rely upon Judgment of Hon'ble Delhi High Court in the case of CIT vs., Atul ....
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....oner of Income Tax vs., Meenakshi Overseas (P) Ltd., 395 ITR 677 (Del.), Pr. Commissioner of Income Tax vs., G and G Pharma India Ltd., 384 ITR 147 (Del.) and Sarthak Securities Co. (P) Ltd., 329 ITR 110 (Del.), clearly apply to the facts and circumstances of the case. Learned Counsel for the Assessee also relied upon Order of ITAT, Delhi Bench in the case of Pioneer Town Planners Pvt. Ltd., (supra) in which on identical facts reopening of the assessment have been quashed. The Ld. D.R. relied upon certain decisions in support of the contention that reopening of the assessment is justified, but, the same are distinguishable on facts of the present case. Considering the facts and circumstances of the case in the light of above discussion and decisions referred to in the Order, we are of the view that reopening of the assessment is bad in law and that sanction/approval granted by Pr. Commissioner of Income Tax is also invalid. We may also note that vide Order sheet Dated 23.08.2019 the case was re-fixed for hearing because the Ld. D.R. argued that approval have been granted by Commissioner of Income Tax after due discussion of the matter and perusal of the relevant information and the....
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....d." c) Hon'ble Delhi High Court in the case of Pr. CIT Vs. SNG Developers Ltd., [2018] 404 ITR 312 (Del.) held as under: "Held, dismissing the appeal, that the reasons recorded by the Assessing Officer for reopening the assessment under section 147, issuing a notice under section 148 did not meet the statutory conditions. As already held by the Appellate Tribunal, there was a repetition of at least five accommodation entries and the total amount constituting the so-called accommodation entries would therefore, not work out to Rs. 95,65,510. It was unacceptable that the Assessing Officer persisted with his "beliefI that the amount had escaped assessment not only at the stage of rejecting the assessee's objections but also in the reassessment proceedings, where he proceeded to add the entire amount to the income of the assessee. Therefore, there was non-application of mind on the part of the Assessing Officer. The Appellate Tribunal was justified in confirming the order of the Commissioner (Appeals) and holding that the reopening of the assessment was bad in law." d) Hon'ble Delhi High Court in the case of Shamshad Khan V/s. ACIT [2017] 395 ITR 265 (Del.) held as under: "He....
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....f law. However, opportunity to show cause was given to the petitioner as to why the loss claimed should not be disallowed to be carried forward. On a writ petition : Held, allowing the petition, (i) that it would be clear from the reasons given that the authority proceeded on the presumption that the law applicable was the law after the amendment and not the law in respect of which the petitioner had filed the return for the year 1999-2000. This by itself clearly demonstrated that there was total non-application of mind on the part of the authority and consequently, the notice based on that reason would amount to non-application of mind. (ii) That the income derived by the assessee from an industrial undertaking to which section 1 0A applies could not be included in the total income of the assessee. Therefore, the petitioner was right infiling the return by excluding the income in terms of section 10A." 6. In view of above submission it is clear that the vague belief has been framed on the basis of presumptions drawn by the DDIT, without establishing the allegation in any manner. No positive evidence had been brought on record to prove the fact that whether the assessee was p....
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....on, howsoever strong cannot take the place of legal proof. Further there is no whispering in the reasons so recorded that what sort of information was receive and what were the evidences from which it can be seen that the share application money taken by assessee is non-genuine. The ld. AO did not give his own remark that what short of analysis was did by him at his own end and as such, no separate inquiries were also made. Except to the information received from DDIT, Inv, Kolkata which is apparent from the reasons so recorded, the ld. AO was not having any other evidences and instead of collecting the evidences and making the inquiries at his own end, he adopted the short cut method and the case was reopen in mechanical manner. As such, because of blind belief on the report of DDIT the ld. AO recorded the wrong, incorrect and non-existing reasons. This resulted that in the reasons so recorded the amount of alleged escapement has mentioned wrong. This eventually led to wrong reasons to believe of ld. AO. The ld. AO did not make any independent inquiries either prior to reopening of the case or during the re-assessment, proceedings and he solely relied on the information submit....
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....1976) 105 ITR 212,218 (SC). But in our case, the ld AO has brushed aside all the principles of law and framed a high-pitched assessment purely based on presumption and assumption without applying his independent mind in judicial perceptions and making proper inquiries, therefore, the assessment order deserves to be declared bad in law and deserves to be annulled. Being a quasi judicial authority, the ld. AO is duty bound to assess the income on the basis of material, documents and evidences available with him. For treating an amount credited in books of accounts as income of the assessee he is required to disprove the contention of the assessee and to prove his contention to be correct with full proof documentary evidence which has not been done in the instant case and merely on the basis of certain presumptions/assumptions, the huge additions were made in the returned income of the assessee. The finding in the assessment order confirms the belief of the assessee that the order was not made in according to law because no positive evidence was given by ld. AO to prove his finding to be correct. The A.O appears to have either been guided by the information given by some other authori....
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....have come to the conclusion on the basis of these very lease deeds about the lessor being continuing as owner it is not in dispute that the reassessment proceedings would not have been initiated here. This obviously makes it clear that reassessment proceedings had been initiated only on account of the opinion arrived at by the Assessing Officer at Mum- bai. Thus, question No.1, as framed in three appeals is answered in the affirmative, i.e., against the Revenue and in favour of the assessee." b) Pr. Commissioner Of Income Tax vs. G & G Pharma India Ltd- ITA 545/2015 (Delhi HC)-08.10.2015 "12 Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the AO, if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: "it is evident that the assessee company has int....
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....R 51 (DHC) "15. Further, it is apparent that the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. The Assessing Officer accepted the plea on the basis of vague information in a mechanical manner. The Commissioner also acted on the same basis by mechanically giving his approval. The reasons recorded reflect that the Assessing Officer did not independently apply his mind to the information received from the Director of Income-tax (Investigation) and arrive at a belief whether or not any income had escaped assessment." e) Sarthak Securities Pvt. Ltd. vs. ITO [2010] 329 ITR 110 (DHC) "23. "Reassessment - Notice - Condition precedent - Formation of belief that income escaped assessment - Assessing Officer treating share application money as bogus accommodation entries - Payments through banking channel and companies investing money genuine -No independent application of mind by Assessing Officer but acting under information from investigation wing - Notice to be quashed -Income Tax Act, 1961, ss. 147, 148." f) In the case of ACIT v. Dhariya Construction Co ( 2010) 328 ITR 515 (SC) it was held that the opinion of D....
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....have a link with an objective fact in the form of information or materials on record..." It was further emphasized that "mere allegation in reasons cannot be treated equivalent to material in eyes of law. Mere receipt of information from any source would not by itself tantamount to reason to believe that income chargeable to tax has escaped assessments." k) Kolkata ITAT bench 'SMC' in Subodh Chandra Das vs. ITO, ITA no. 2246 & 2247/Kol/2019, Mar 4, 2020 has held that reopening is bad in law, where there is non application of mind by Assessing Officer to information received from investigation wing l) Delhi ITAT bench 'SMC' in Goel was (P) Ltd. vs. ITO, ITA no. 2075/del/2018, Jan 7, 2020 has held that mere information received from DDIT(Inv) cannot constitute valid reasons for initiating reassessment proceedings in the absence of anything to show that AO had independently applied his mind to arrive at a belief that the income had escaped assessment. m) The Hon'ble Delhi High in case of Yum Restaurants Asia Pte. Ltd. vs. Deputy Director Income Tax, W.P.(C) 614/2014, Aug 31, 2017; 397 ITR 0665 (Delhi), has held that where authorities appeared to have concurred with reasons for r....
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.... 395 ITR 677(Del.) (referred to para 19 till para37). ii) DCIT Vs. Greal Wall Marketing Pvt. Ltd. ITA No.660/Kol/2011 (referred to page10 para 11) iii) Shri Raj Kumar Goel Vs. ITO ITA No.1028/Kol/2017 (referred to page 5-8 para 11) (iv) Classic Flour & Food Processing Pvt. Ltd. Vs. CIT ITA Nos. 764 to 766/Kol/2014(page 7 para 12 to 16) v) PCIT Vs. Shodiman Investments (P) Ltd. (2018) 93 taxmann.com 153 (Bom) page 4para 12 to 14) vi) KSS Petron Pvt. Ltd. Vs. ACIT ITA No. 224/Mum/2014 (referred to page 3 para 8-11) vii) PCIT Vs. Tupperware India Pvt. Ltd. (2016) 236 Taxman 494 (referred to page 3para 6 and 9) viii) DCIT Vs. National Bank for Agriculture and Rural Development ITA No.4964/Mum/2014 (referred to page 10- 13 para 12). p) In the case of Smt. Kanta Chaudhary v/s ITO, Ward 7(3), Jaipur (ITA No. 878/JP/2018 vide order dated 06.12.2018) it was held that: - "5. We have heard the rival contentions and perused the material available on record. On perusal of the reasons so recorded by the AO before issuance of notice u/s 148 of the Act, we find that on the basis certain information received from the Investigation Wing Mumbai, the AO has not just formed an opinion....
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....rib). (iv) Dynacraft Air Controls Vs. Sneha Joshi &ors. (2013) 355 ITR 102 (Bom)(HC). (v) CIT Vs. Eco Media (P) Ltd. (2012) 81 CCH 85 (Mad.)(HC) 1.4 The sanction of higher authority as required u/s 151 of the Act either not granted or if granted, it was without examining the record and in mechanical manner. 1. As apparent from the submission made hereinabove, it is apparent that the reasons recorded by the ld. AO are wrong, incorrect and non-existent reasons in the reasons recorded for reopening of the assessment and, as such, did not apply his mind. As per provisions of section 151 of Income Tax Act, 1961 the mandatory sanction for issue of notice is require to take from the higher authority. In the instant case such sanction had been taken or not is not provided to the assessee, therefore in the interest of justice it is requested that the copy of such sanction may kindly be obtained from ld. AO. In the copy of reasons recorded, as provided by ld. AO at last para (Copy at PB Page 144-149) it is mentioned that "----necessary sanction to issue notice u/s 148 is being obtained separately from Pr. Commissioner of Income Tax as per provisions of section 151 of the Act." Theref....
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....nder the heading "Enquiries made by the A.O. as sequel to information collected/received" wherein he held that since the enquiry has already been made by Investigation Unit, no further enquiry is required at this stage. As such, because of blind belief on the report of DDIT the ld. AO recorded the wrong, incorrect and non-existing reasons. This resulted that in the reasons so recorded the amount of escapement has mentioned wrong, the amount alleged to be received from certain entities was actually did not received and form & nature of alleged accommodation entries not mentioned. This eventually lead to wrong reasons to believe of ld. AO which is "I have perused the information received and material available on record and I am satisfied that assessee company has taken accommodation entries of Rs. 1,05,00,165/- for the purpose of tax evasion." Before granting the sanction by the higher authorities the above mention vital issues were not ever taken into consideration and even its appears that the record of proceeding was not bother to be examined. Had before granting the sanction the assessment record or/and other evidences placed on record would have been examined, called for and ....
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....ase for the issue of a notice under Section 148. We are also of the opinion that the Commissioner has mechanically accorded permission. He did not himself record that he was satisfied that this was a fit case for the issue of a notice under Section 148. To Question 8 in the report which reads "whether the Commissioner is satisfied that it is a fit case for the issue of notice under Section 148", he just noted the word "yes" and affixed his signatures thereunder. We are of the opinion that if only he had read the report carefully, he could never have come to the conclusion on the material before him that this is a fit case to issue notice under Section 148. The important safeguards provided in Sections 147 and 151 were lightly treated by the Income Tax Officer as well as by the Commissioner. Both of them appear to have taken the duty imposed on them under those provisions as of little importance. They have substituted the form for the substance. " b) Judgment of the Division Bench of this Court in The Central India Electric Supply Co. Ltd. vs. Income Tax Officer, Company Circle - X, New Delhi &Anr., (2011) 333 ITR 237. "19. In respect of the first plea, if the judgments in Chugg....
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....his is completely absent in the present case. Thus, we find force in the contention of learned Counsel for the Appellant that there has not been proper application of mind by the Board and if a proper application had taken place, there would have been no reason to re-open the closed chapter in view of what we are setting out hereinafter." 1.5 The material/statements so relied are not forming part of the reasons so recorded, even of assessment order and also the copies of the same was not provided to the assessee. 1. In the reasons so recorded for re-assessment proceeding, the ld. AO replied on certain information received from DDIT. However, the contents of such information in detailed are not forming part of the reasons so recorded, therefore the reasons so recorded cannot be considered as complete and thus not a valid reasons in the eye of law. In the reason so recorded the ld. AO simply mention that "Detailed report has been prepared by these units after making investigation and inquiry and it has been proved that certain paper/shell companies and their bank accounts have been used for providing accommodation entries in the nature of bogus unsecured loan for in other forms. ....
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....sessee, he must disclose the substance of all such material, though not the sources thereof (Dal Chand & Sons v CIT (1944) 12 ITR 458 (Lah)) to the assessee and if this is not done, the principles of natural justice stand violated (KishinchandChellaram v CIT (1980) 125 ITR 713 (SC); ITO (Addl) v Ponkunnam Traders (1976) 102 ITR 366 (Ker); International Forest Co. V. CIT (1975) 101 ITR 721 (J&K); STO v Uttareswari Rice Mills (1973) 89 ITR 6 (SC); Motipur Zamindari Co. Pvt. Ltd. v. Ag ITO (1972) 83 ITR 778 (Pat); CIT v East Coast Commercial Co. Ltd. (1967) 63 ITR 449 (SC), HarmukhraiDulichand v CIT (1928) 3 ITC 198 (Cal.). This requirement of pre-communication to the Assessee did not find mention in the pre- 1961 Act, but courts had held on principles of equity, justice and good conscience that the material gathered behind the back of the Assessee should be communicated the assessee (Gunda Subbayya v CIT (1939) 7 ITR 21 (Mad). Under the 1961 Act, this requirement is statutorily enacted. (See Section 142 (3). The object is to give the assessee an opportunity of giving his explanation and disabusing the Assessing Officer of any wrong impression that he might have formed against the a....
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....gh Court of Andhra Pradesh in E. Vittal and another & Rajan B. Patel Vs. Appropriate Authority and Others (1996) 221 ITR 760 (AP) that where a Statutory Authority relies upon a document in a proceeding but denies a copy of the same to the affected party, he violates the principles of natural justice as the opportunity of being heard should be an effective opportunity but not an empty formality. That it is well settled that no evidence of document can be relied upon unless it is shown to the Assessee, as held by Hon'ble Apex Court in KishanchandChellaram V. CIT (1980) 125 ITR 713 (SC). Similarly, the requirement of cross-examination as the requirement of rule of natural justice has also been underlined by the Hon'ble High Court of Bombay in VasanjiGhela and Co. V. CST (1977) 40 STC 544. It is trite law that cross-examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplied the contents of all such evidence, both oral and documentary, so that he can prepare to meet the case against him. This necessarily also postulates that he should cro....
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....ons was made in the income of the assessee is only based on some incomplete & incorrect information given by some other authorities. Thus, the ld. AO made the addition only on the basis of some inquiries/analysis/conclusion made by some other authorities. The SC in the case of Rajesh Kumar vs DCIT (2006) 157 Taxman 168 (SC) has said that an assessment order is the result of a judicial proceedings. According to the Apex Court, an assessment proceeding is a judicial proceeding. Obviously, no one can have influence or say in the course of judicial proceedings that a particular decision should be taken in a particular way or manner affecting the independence of the decision-making authority. The AO must decide the issue before him on a proper appreciation of evidence adduced during the course of assessment proceedings and not to be swayed and carried away under some report. Hon'ble Apex Court has held in the case of Dakeshwari Cotton Mills Ltd Vs CIT 26 ITR 775-"that one who hears must decide the case." 7. The reliance is also paced on the following judgements: - a) Signature Hotels Pvt. Ltd. vs. ITO &Anr. [2011] 338ITR 51 (DHC) "15. The aforesaid reasons do not satisfy the require....
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....n. The assessee in his objections had clearly stated that the companies had bank accounts and payments were made to the assessee company through banking channel. The identity of the companies was not disputed. Under these circumstances, it would not be appropriate to require the assessee to go through the entire gamut of proceedings. It is totally unwarranted." c) ANDAMAN TIMBER INDUSTRIES V/S COMMISSIONER OF CENTRAL EXCISE,KOLKATA-II 2016 (15) SCC 785 (SC). d) Commissioner of Income Tax v. Ashwani Gupta, 2010 322 ITR 396 (Del). e) H.R. Mehta V. Assistant Commissioner of Income Tax v. Ashwani Gupta, 387 ITR 561 f) KISHINCHAND CHELLARAM V. COMMISSIONER OF INCOME-TAX [1980] 125 ITR 713 (SC) g) T.S. VENKATESAN V. ASSISTANT COMMISSIONER OF NCOME-TAX [2000] 74 ITD 298 (CAL.) In view of above submission this is to submit that initiation of reassessment proceedings and also order passed u/s 143(3) r.w.s. 147 of Income Tax Act, 1961 is bad in law, void-ab initio and deserve to be annulled or/and quashed. 2. Ground No 2: - On the facts and in the circumstances of the case and in law the ld. AO erred in making addition of Rs. 55,00,000/- by treating the share capital and premiu....
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....ial website of Income Tax and MCA. The ld. AO also not doubted the identity of the above-named parties. ii) Creditworthiness All the investors are Income Tax assessee and duly filing the Income Tax return and Balance sheets. There is sufficient source of funds with all the investors to investment share capital/share application in the assessee company. The assessee submitted the copies of bank account/their balance sheets. The bank statement shows the huge transaction of high value in the accounts of the companies and high other investment in their balance sheets. These companies were having sufficient shareholder funds, from earlier years, in their audited balance sheet and funds in their bank account to purchase the shares of the assessee company. These companies were having their own independent funds and having their independent source to invest in the shares of the assessee company. Apart from the investment made in the shares of assessee company, the investor parties were also having investments in shares of other companies or loans & advances or advance assets/investments which is much more than to the amount invested in the assessee company, therefore from the bank stat....
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....he companies, from whom the share application money was received by assessee, was made either by Ld. A.O. or any other authority. The inquiry appears to be made by some other authority in the case of other companies from whom the assessee did not receive any share application and also not in the case of companies from whom such shareholder companies received the funds. From the chain of source of funds as provide in the assessment order, it is apparent that even there is no cash deposit in bank account of any of the company and there is no evidence of routing of alleged undisclosed income of the assessee in the form of share application. Under section 68 of Income Tax Act, 1961 the onus of the assessee is to prove the source of credit entry and there is no onus of assessee to prove the source of source or source of all channel sources. The Ld. AO in the assessment order discussed the financial statement of some other companies from which no share application money was received nor any transaction were carried out with them. These financial statements/transactions are not relevant with the case of the assessee. Further it is settled law source of source is not required to be exp....
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....nd creditworthiness is proved, the assessee submitted the necessary details, in respect of incorporation/existence of investors and details of cheques vide which amounts were received. The capacity of shareholders is verifiable from the copy of the balance sheet of the shareholders. The shareholders have funds on a prior date from the allotment of shares given by the assessee company and such funds were more than the amount of share application. The Ld. A.O. did not point out any defects therein and merely on the basis of surmises and conjecture and blindly replying on the uncorroborated report of some other authority made the huge addition. Therefore, the addition on share application received to the assessee cannot be made. 7. The Ld. A.O. doubted the creditworthiness of the investor companies for the reasons of not having any business activities and not having any source of income. However, the Ld. A.O. failed to appreciate the fact that the assessee company was also not having any source of income as well as business activities and in such a situation the assessee company cannot be have any source of undisclosed income. Therefore, the allegation of having been undisclosed inc....
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....e case of Kota Dall Mill (supra) has examined all the relevant details including the funds available with Teac Consultants Pvt. Ltd., which is sufficient for advancement of loan to the assessee. Further the ld. CIT(A) has deleted the addition on the basis that the Assessing Officer has not brought any material on record to controvert the documentary evidence filed by the assessee even the statement of alleged entry operator was not in possession of the Assessing Officer. The finding of the ld. CIT(A) in the case under consideration is identical as in the case of Kota Dall Mill (supra), therefore, following the earlier order of this Tribunal, we do not find any error or illegality in the order of the ld. CIT(A)qua this issue. Hence, the appeal of the revenue is dismissed." 9. On this issue the assessee also places the reliance of following judgements: - Rajasthan High Court: - (i) CIT-1, Jaipur V/s M/s. ARL Infratech Ltd, wherein Hon'ble Rajasthan High Court has recently confirmed the findings of Hon'ble ITAT by deciding the appeal of revenue in DB ITA No 24/2014 vide order dated 28/09/2016 regarding deletion of addition made u/s 68 of Income Tax Act, 1961. (ii) Commissioner....
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....ading to any substantial question of law. This Court noticed, observed, and held as under:- "7. Learned counsel for the appellant (Revenue) contended that firstly Tribunal erred in accepting the explanation offered by assessee in relation to source of income. His second submission was that what was offered by assessee was no explanation and hence should not have been accepted and lastly learned counsel made sincere attempt on his part after taking us through factual scenario of the explanation and contended that it can never be taken as satisfactory explanation for deleting the addition made by AO. We do not agree to this submission for more than one reason. 8. In the first place, it is a pure question of fact, what to say question of law, much less substantial question of law. Secondly, this Court cannot again in this appeal undertake the examination of factual issues nor can draw factual inferences on the basis of explanation offered by assessee. Thirdly, once the explanation is accepted by the two appellate Courts i.e. CIT(A) and Tribunal in this case, then in such event, a concurrent finding recorded on such explanation by two appellate Courts is binding on the High Court. ....
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....tence of investors and their confirmation has been obtained, were found to be satisfactory. All these conclusions are conclusions of fact based on material on record and, therefore, cannot be said to be perverse so as to give rise to question of law, which may be required to be considered in this appeal under s.260A of the IT Act." 14. The ratio of the decisions aforesaid directly applies to the present case too. Herein, as noticed, the appellate authorities have returned the findings of fact in favour of the assessee after due appreciation of the evidence on record, on relevant considerations, and on sound reasonings. These findings have neither been shown suffering from any perversity nor appear absurd nor are of such nature that cannot be reached at all. Thus, no case for interference in the findings of the appellate authorities is made out. In the result, the appeal fails and is, therefore, dismissed." (iii) Barkha Synthetics Ltd. vs. Asstt. CIT (005) 197 CTR (Raj) 432. Substantial question of law-Cash credit vis-a-vis share application money-Tribunal found that 6 out of 7 companies from which the share application money had been received were genuinely existing and no ....
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....viii) Commissioner of Income-tax - I, Jaipur Versus AL Lalpuria Construction (P.) Ltd (Raj HC) D.B. IT Appeal Nos. 256 of 2010 AND 26 & 39 of 2011 Dated: - 25 February 2013. (ix) Commissioner of Income-tax, Ajmer Versus HS. Builders (P.) Ltd. D.B. INCOME Tax (Raj HC) APPEAL NO. 48 OF 2006 Dated: - 03 March 2012. (x) CIT Vs Jai Kumar Bakliwal(2014) 101 DTR (Raj) 377 : (2014) 267 CTR (Raj) 396. No liability to prove source of source (xi) Aravali Trading Co Vs Income Tax Officer (2008) 8 DTR (Raj) 199.Burden of the assessee stands discharged when the identity of the creditors is established and he confirms the loans. (xii) CIT VsHeeraLalChaganLal Tank (2002) 157 ITR 281 (Raj) Burden of the assessee stands discharged when the identity of the creditors is established and he confirms the loans. B) ITAT Jaipur/Jodhpur i) Shalimar Buildcon (P) Ltd. vs ITO (2011) 128 ITD 0396 (Jaipur)In this case Hon'ble ITAT Jaipur Bench has relied on its old decision in the case of Hotel Gaudavan ITA No. 1162 and 1137/JP/2008 and addition on account of share capital was deleted. 28.5 On identical issue, the Tribunal, Jaipur Bench in the case of Hotel Gaudavan (P) Ltd. (supra) has held as und....
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....A No. 4670/Del/2007, dt. 3rd March, 2006. The copy of the said decision of Tribunal, Delhi Bench is placed on record. The learned counsel for the assessee Shri H.M. Singhvi, chartered accountant has also relied upon the decision of Hon'ble Supreme Court of India on the said issue in the case of CIT vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308 wherein it has been held that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of assessee company." 28.6 The Hon'ble Delhi High Court in the case of CIT vs. Divine Leasing & Finance Ltd. (supra) had an occasion to consider the addition on account of share application money. We are reproducing the held portion from the decision of Hon'ble Delhi High Court as mentioned in (2007) 207 CTR (Del) 38 (supra). "Income-Cash credit-Share application money-Burden of proof can seldom be discharged to the hilt by the assessee-If the AO harbours doubts of the legitimacy of any subscription he....
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....ssee's. 28.10 The Hon'ble Delhi High Court in the case of CIT vs. Samir Bio-tech (P) Ltd. (supra) held that if investments have been shown by the share applicants in their audited balance sheet then the addition cannot be made under s. 68 of the Act. 28.11 In view of the legal position as discussed above, the AO was not justified in making the addition of Rs. 1.10 crore without bringing on record any material for the addition. Simply on the basis of information which is not substantiated in the course of assessment proceedings against the assessee, the AO could not have added the amount. (ii) The Hon'ble ITAT, Jaipur Bench, Jaipur in its judgment the case of M/s JadauJewellers& Manufacturers Pvt. Ltd., B-1, Trimutri Circle, Govind Marg, Jaipur in ITA No. 686/JP/2014 dated 14.12.2015 gave the following findings:- ".6.1 On facts also, the assessee has produced before the Assessing Officer copy of share application, confirmation of the cash creditors, copy of PAN, copy of Board resolution, copy of Director's report, auditor's report, copy of balance sheet, copy of P&L account, copy of bank account in all the cases to prove the identity, genuineness and creditworthiness of the ....
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.... the shareholders which clearly show that the accounts were regularly maintained and the shareholders had made deposits-Further, the shareholders are also assessed to tax-Simply because scrutiny assessments were not made in the case of shareholders, such assessments could not be made in the course of assessment of the assessee-Having regard to the information collected by the AO from the banks, identity of the shareholders was fully established-If any shareholder is found to have made unexplained investment, then addition of such investment is required to be made in the hands of the shareholder and not in the account of the assessee-U had invested in the share capital through cheque except for a small sum which was returned to her-Her bank account shows several entries, both credit and debit, which have no relation with the amount invested with the assessee-company-Merely because she has not submitted her returns after the asst. yr. 1984-85, it cannot be said that she was not assessed to tax-Though V has not been shown to be assessed to tax, he had made major part of investments towards share capital through cheques and his identity is not doubted-Accordingly, share capital advance....
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.... Polymers (P) Ltd. vs. DCIT, (2006) 101 TTJ (Jd.) T.M. 126 = (2006) 284 ITR (AT) 1 Jodhpur.'' 2.6 Adverting, the facts of the given case, we are of the considered opinion that all the share applicants stand identified. The assessee has provided PANs of the share applicants. The mode of payment has also been made explained. There is no direct or indirect relation between the assessee company and the share applicants. The statements recorded during survey has got no evidentiary value and the law is very much settled on this issue. In any case, even under the provisions of Section 68 of the Act, the assessee cannot be forced to prove the source of the source. The law on this subject is also settled by numerous decisions. The alleged report of the Inspector of the Department who is stated to have visited at the given addresses of the share applicants was never put or confronted to the assessee. The cumulative effects of these reasons is that the impugned addition cannot be added in the hands of the assessee company. Accordingly, we order to delete the entire additions and allow the appeal of the assessee. 3.0 In the result, the appeal of the assessee stands allowed. The departmen....
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....ot be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices-Tribunal has noted that the assessee-company is a public limited company which had received subscriptions to the public issue through banking channels and the shares were allotted in consonance with the provisions of Securities Contract (Regulation) Act, 1956, as also the rules and regulations of Delhi Stock Exchange-Complete details were furnished-Tribunal has further found that the AO has not brought any positive material or evidence which would indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represented company's own income from undisclosed sources-As regards receipt of share capital on issue of rights shares to five companies, these companies were duly incorporated under the Sikkimese Companies Act and were assessed under the Sikkimese Taxation Manual-Their share subscriptions were also received through banking channels and found to be valid by the jurisdictional AO-Therefore, no addition could be made under s. 68 (iv) CIT v/s Value Capital services P Ltd. 307 ITR 334 (Delhi) held that there....
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....ed on basis of information received from Directorate of Income-tax (Investigation) without recording AO'S own satisfaction and information was accepted in mechanical manner-After reopening of assessment u/s 147, AO made addition of Rs. 40 lakhs received by assessee from various corporate entities-Addition was made by AO on account of bogus share application money under provisions of s 68- CIT(A) deleted addition made by AO-Held, in case of CIT vs. M/s. Lovely Exports (Pvt) Ltd, reported in [2008] 216 CTR 195 (SC), it was held that If share application money was received by assessee company from alleged bogus shareholders whose name were given to AO then department was free to proceed to reopen their individual assessments in accordance with law but it could not be regarded as undisclosed income of assessee company-It was submitted by assessee that AO had failed to appreciate statements of any person recorded u/s 143(3) r.w.s. 147-That assessee-company had fully discharged burden of proof, onus of proof and explained source of share capital and advances received by established identity, creditworthiness and genuineness of transaction by banking instruments with documentary evidences....
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....before AO, then additions made by AO u/s 68 on account of share capital subscription received by assessee company was rightly deleted. (iii) Meera Engineering & Commercial Co. (P) Ltd. vs. Asstt. CIT (1997) 58 TTJ (Jab) 527 Income-Cash credits-Genuineness of share capital of company-All the 51 shareholders filed their affidavits and confirmatory letters and 24 of them filed their replies also to notice under s. 133(6)-Names of parties purchasing the shares with amount subscribed were furnished before AO-All documents clearly show that shareholders do exist- Assessee-company had discharged its onus of explaining the cash credits as required under law-If the company is able to establish that shareholders existed and they have invested money for purchase of shares burden of company to prove the credit is discharged-Identity of shareholders not in dispute- Assessee is not required to prove credit-worthiness of shareholders-Addition deleted (iv) Allen Bradley India Ltd. vs. Dy. CIT (2002) 74 TTJ (Del) 604 : (2002) 80 ITD 43 (Del);Income-Cash credit-Subscription to share capital and loan-In case of limited companies jurisdiction of AO would be limited only to see whether identity of ....
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....o the increased share capital of assessee-company were not genuine, the amount could not be regarded as undisclosed income of the assessee-company. (iii) CIT Vs Orissa Corporation (P) Ltd (1986) 159 ITR 79 (SC) 13. In the assessment order the section under which the addition made has not been mentioned. Therefore, the addition made by Ld. A.O. in sustainable in the eyes of law. In this regard the reliance in placed on the following cases: - i) 2021 (12) TMI 584 - ITAT JODHPUR MR. NEERAJ PALIWAL VERSUS I.T.O. WARD-2, RAJSAMAND. Unexplained cash credit - addition of cash deposit in bank account - non mentioning of relevant section to make addition - HELD THAT:- AO as well as that of the CIT(A) that they have not specifically mentioned as to under which section of the Act the additions have been made. As relying on SMT. SUDHA LOYALKA, C/O M/S RRA TAXINDIA VERSUS ITO, WARD 35 (2), NEW DELHI [2018 (7) TMI 1892 - ITAT DELHI] sustaining of impugned addition is not justified as non-mentioning the precise provision of law makes the impugned addition bad in law. ii) Shree Ramareddy Ramesh -vs.- ITO ITA No. 2027/Bang/2016 2020 (3) TMI 1385 - ITAT BENGALURE wherein it has been held as ....
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....9 169 18. Copy of Bank Statement of Agarani Credit and Finvest Pvt Ltd reflecting the payment to the Assessee company for purchase of Shares. 170 170 19. Copy of ITR and Audit Report of Agarani Credit and Finvest Pvt Ltd for the AY 2012-2013. 171 191 20. Copy of Assessment order passed u/s 143(3) of the Act dated 26.11.2014. 192 193 21. Retraction Statement of Shri Mukesh Banka dated along-with the affidavit. 194 200 22. Copy of Notice issued dated 30.03.2019 u/s 148 of the Act. 201 201 23. Copy of Show-cause notice dated 05.11.2019. 202 203 24. Copy of reply to the SCN dated 05.11.2019 filed on 07.11.2019. 204 204 25. Copy of Show-cause notice dated 13.11.2019. 205 207 26. Copy of Reply to the notice u/s 148 of the Act along with the ITR filed in compliance to notice issued u/s 148 of the Act. 208 211 27. Copy of notice issued u/s 143(2) dated 18.11.2019 along with the Reason Recorded for initiation of proceeding u/s 148 of the Act. 212 218 28. Copy of objection dated 24.11.2019 filed against the initiation of proceeding u/s 148 of the Act. 219 223 5. On the other hand, the ld. DR relied on the orders of the lower authorities. 6. We h....
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....28.02.2019, DDIT (Inv.) Unit 1(3), Kolkata vide his letter No. 9108 dated 28.02.2019 and from ITO (Inv.) Unit 2, Kolkata vide his letter No. 1894 dated 26.02.2019 regarding accommodation entries taken by the assessee during the year under consideration. Enquiries made by AO as sequel to information collected/ received : Since the enquiry has already been made by Investigation unit, no further enquiry is required at this stage. Based on the information received from the DDIT (Inv.) Unit 2, the ld. AO formed an opinion about concealment of income and notice u/s 148 was issued by him. Against the reasons the assessee objected before the AO that they have not obtained any unsecured loans as alleged in the reasons recorded but in fact companies referred subscribed to its share capital for which the necessary verification has been done after scrutinizing the details so filed, no adverse inference was drawn in respect of anyone. Thus, there was no failure on the part of the assessee to disclose any material, and accordingly, assessment has already been completed on 26.11.2014 and therefore, the said issue again cannot be taken up as settled by the legal precedents. The fact that the ....
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....case on the lack of jurisdiction with the AO who had merely adopted reasons to believe on the basis of the report of other authorities and that there is total non-application of mind in recording the reasons for assumption of jurisdiction. Reliance is placed on the decision of Coordinate Bench of the Tribunal, Jaipur in the case of Smt. Kanta Chaudhary vs. ITO, Ward 7(3) Jaipur in ITA No. 878/JP/2018 dated 06.12.2018 wherein it was held as under :- "5. We have heard the rival contentions and perused the material available on record. On perusal of the reasons so recorded by the AO before issuance of notice u/s 148 of the Act, we find that on the basis certain information received from the Investigation Wing Mumbai, the AO has not just formed an opinion but has finally concluded that the assessee has benefitted by obtaining accommodation entries from M/s New Planet Trading Co Ltd. Further, the AO has stated that since the assessee has not filed the return of income as per AST system of the department, he has reasons to believe that income has escaped assessment. To our mind, such an approach of the AO where, based on information received in context of a third party, even before iss....
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....and genuineness of the transaction the assessee has placed on record copy of Form of application for equity shares, copy of bank statement, copy of ITR, Computation and Audit Report for the year under consideration and earlier year, copy of financial statement of the investor company. Copies of bank statements evidencing the investment of share application money through banking channels. Thus, the assessee discharged its onus as per provision of section 68 of the IT Act. Now onus is on AO to disprove the genuineness of the investments on that aspect except statement of Shri Mukesh Banka, no contrary material is placed on record. Further, the AO did not point out any specific instance or any information in the statements recorded by the Investigation Wing in the case of Shri Mukesh Banka which reveals the alleged involvement of assessee in taking accommodation entries. In the absence of any specific information about the assessee against the evidence on record it is not correct to make addition merely on the basis surmises and presumptions of a statement of the third party Shri Mukesh Banka. The evidence placed on record clearly proves the identity, capacity and genuineness of the t....