2023 (9) TMI 1741

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.... jurisdiction to initiate reassessment proceedings u/s 147 of the I.T. Act, 1961 (for short 'the Act') and to issue notice u/s 148 of the Act on following counts: i. The AO initiated reassessment proceedings based an incorrect facts and without application of mind while recording reasons; ii. No independent enquiry was made by the AO on the facts of the information and alleged adverse material regarding such companies characterized as bogus entry; iii. The Assessing Officer completed assessment proceedings and frame reassessment order u/s 143(3)/147 of the Act by issuing notice u/s 143(2) of the Act before supply of reasons thereby debarring appellant to file objection to the assumption of jurisdiction for initiation of reassessment proceedings. 4. The Ld. AR raising above legal contentions submitted that since the AO did not assume valid jurisdiction to initiate the reassessment proceedings and to issue notice u/s 148 of the Act, therefore, initiation of reassessment proceedings and all constant proceedings an order including impugned reassessment order may kindly be quashed. 5. Replying to the above, the Ld. Sr. DR strongly supported the o....

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....assessment year 2008-09 for a total amount mentioned against their names. These bogus share capital and premium has cleanly escaped taxation in these assessment years therefore these amounts are required to be taxed in the hands of these companies by initiating action under section 148 of the Income Tax Act, 1961. Details of the company/ entity/ person and cheque/ pay orders issued in the name of this company/ entity/ person are reproduced below in a tabular: Bank Book Date From To Bank Cheque / RTGS Choque Date Amount Through Annx No. Page No. 24.12.2007 Finage Lease & Finance India Ltd Namah Shivaya Marketing P. Ltd Axis 098462 24.12.2007 '500000 Y.K. Gupta A-75 37 24.12.2007 Mani Mala Delhi Pro. P.Ltd. Namah Shivaya Marketing P. Ltd Axis 098216 24.12.2007 500000 Y.K. Gupta A-75 37 25.12.2007 Lotus Realcon P. Ltd Namah Shivaya Marketing P. Ltd Axis 094140 26.12.2007 500000 Y.K. Gupta A-75 40 26.12.2007 Mega Top Promoters P Ltd Namah Shivaya Marketing P. Ltd Axis 094320 26.12.2007 500000 Y.K. Gupta A-75 40 14.01.2008 ....

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....he said rejection order dated 05.08.2015 the Assessing Officer reframed the table by changing names of first four entries from Namah Shivah Marketing Pvt. Ltd. to M/s Namah Shivah Trading Pvt. Ltd. i.e. the assessee which clearly shows that the AO himself noticed mistake crept in the reasons recorded by him. The above noted facts and conclusion clearly show that the initiation of reassessment proceedings are based on incorrect facts taken from the information supplied by the Investigation Wing without the same being verified either from the bank or from the assessee prior to initiation of reassessment proceedings u/s 147 of the Act and issuance of notice u/s 148 of the Act. Therefore, I am inclined to hold that the AO recorded reasons based on incorrect facts which clearly show non-application of mind and such perverse action of the AO for assuming jurisdiction leads to invalidation of reassessment proceedings. 7. To support first legal contention, the Ld. AR has relied on the various judgments and orders including recent judgment of Hon'ble Jurisdictional High Court of Delhi in the case of Shamshad Khan Vs. ACIT (395 ITR 265) and PCIT Vs. SNG Developers Ltd. (404 ITR 312) (....

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.....05.2015 and the reasons were supplied to the AO on 05.06.2015. After narrating the above facts the Ld. AR submitted that the for framing reassessment order the AO is mandatorily required to issue notice u/s 143(2) of the Act only after providing copy of the reasons recorded to the assessee but in the present case the AO issued said notice u/s 143(2) of the Act on 19.05.2015 before supplying reasons which means that the AO proceeded to assume jurisdiction to make reassessment before allowing appellant to file objection for assumption of jurisdiction as on 05.06.2015 i.e. subsequent to the issuance of notice u/s 143(2) of the Act. Hence, issuing notice u/s 143(2) of the Act before allowing appellant to file objection and subsequent disposal of the same is nothing but gross non-compliance at mandatory requirement of law and thus, non-application of mind by the AO is vivid. 11. Ld. AR has placed reliance on the decision of Hon'ble Jurisdictional High Court of Delhi in the case of Mastech Technologies Pvt. Ltd. Vs. DCIT WP(c) 2858/2016 dated13.07.2017, wherein para 30 of judgment, it was held that the issuance of notice u/s 142(1)/143(2) of the Act before supplying the reasons t....