TaxTMI 
TaxTMI 
2023 (10) TMI 1586
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.... the Ld. CIT(A) has erred in law and on facts by erroneously dismissing the appeal in limine alleging that the appellant failed in furnishing the documentary evidence as well as details available on records. 5. That the Ld. CIT(A) has erred on law and on facts by upholding the addition of Rs. 5,96,25,000/- u/s 68 on account of unexplained credit without considering the submissions along with confirmations, balance sheet, ITR and bank statements of different cash creditors. 6. That the Ld. CIT(A) has erred in law and on facts by upholding the adhoc addition of Rs. 4,89,600/- u/s 69C of the Income tax Act, 1961 on account commission @ 1.8% has been eared on providing accommodation entries. 3. We have heard arguments on the application of assessee dated 13.06.2023 seeking admission of additional ground no. 3 u/s. 253 of the Act r.w.r 11 of Income Tax (Appellate Tribunal) Rules 1963. The ld. counsel submits that the proposed additional ground 3 is being raised before the Tribunal are pure legal plea which goes to the root of the matter and legitimately available to the appellant as per provisions of the Act and the same can be adjudicated on the basis of material a....
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....reme Court in the case NTPC vs CIT (supra) and Jute Corporation vs. CIT (supra) the application of assessee is allowed and additional ground no. 3 is admitted for adjudication. 3.3 The ld. counsel on ground no. 3 submitted that the initiation of proceedings u/s. 147 of the Income Tax Act 1961 (for short the 'Act') and issuance of notice u/s. 148 of the Act has been done by the Assessing Officer without application of mind only on the basis of report of Investigation Wing without having his own reason based an application of mind, to believe that income has escaped assessment and thus the reopening has been initiated only on the basis of borrowed satisfaction based on Investigation Wing report without evaluating, verifying and examining the said report and material before recording reasons for forming believe that income has escaped assessment as per mandatory requirement of law. The ld. counsel precisely reiterated the written submissions/synopsis which is as follows :- Facts, as narrated in the Reasons recorded (Enclosed as Annexure-1) Information was received from DIT(Inv.), New Delhi vide letter dated 12.03.2013 that the assessee company was allegedl....
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....mation in his possession can lead to reason to believe judicially. Also, the phrase "Reason to believe" and its due compliance has been considered to be the most salutary safeguard on the exercise of power by the officer concerned before initiating action/assuming jurisdiction. 4. The ld. counsel has also relied on following case laws in support of said legal contentions :- Case laws relied upon :- (1) Mere statement of an entry operator that the companies in question were paper companies', by itself, was insufficient to reopen the assessment, unless the Assessing Officer had further information after making further inquiries into the matter that these companies were non-existent. It was clear that the Assessing Officer did not make any inquiry or investigation, if these companies were in fact 'paper companies'. That being a jurisdictional issue, the assumption of jurisdiction under sections 147 and 148 was erroneous. [Sabh Infrastructure Limited v Asst. Commissioner of Income-tax [(2017) 398 ITR 198 (Delhi)] (i) Where information was received from investigation wing that assessee was beneficiary of accommodation entries, ....
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....d to be valid some of which are listed below: - Commissioner of Income-tax v. Smt Paramjit Kaur [2009) 311 ITR 38 (Punjab & Haryana)]; Commissioner of Income-tax v. SFIL Stock Broking Ltd [(2010) 325 ITR 285 (Delhi)]; PCIT v. N C Cables Pvt Ltd [2017) 391 ITR 11 (Delhi)] Mrs. Sejal J. Panchal v. Income-tax Officer [2018] 90 taxmann.com 305(Ahmedabad - Trib.) In addition to above noted citations, the ld. counsel has also placed vehement reliance on the judgment of Hon'ble High Court of Delhi in the case of CIT vs. Insecticides (India) Ltd. [(2013) 38 taxmann.com 403 (Delhi)] 5. Replying to the above, the ld. Senior DR strongly opposed to the above submissions of ld. counsel of assessee and submitted that the copy of the reasons recorded for initiation of proceedings available at pages 1 & 2 of assessee paper book clearly reveals that the Assessing Officer received report of Investigation Wing New Delhi dated 12.03.2013 and thereafter evaluated contents thereof. The ld. Senior DR also submitted that from the report of Investigation Wing and alleged incriminating material found and seized during the course of search and seizure operation o....
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....he above noted reasons, we clearly observe that in the first paragraph of reasons the Assessing Officer noted the fact of receipt of report of Investigation Wing vide dated 12.03.2013 and modus operendi of Shri S K Jain for providing accommodation entry based on said report and post search investigation. In the second part of para 1 the Assessing Officer further mentions that during the course of search action vast number of incriminating documents were found and seized which includes date wise hand written cheque books and cash books maintained by Shri Jain and his brother over a period of six years. The Assessing Officer also mentioned that these cheque books and cash book details of cheque provided to the beneficiary company/entity/person were recorded. Therefore in para 1 the Assessing Officer has mentioned only about receipt of Investigation Wing report based on search and seizure operation on Jain Brothers and details of material found and seized in form of cheque books and cash book but there is no mentioning of name of any company/person with whom transaction has taken place and date of transaction etc. 9. In para 2, the Assessing Officer mentions that from the verificat....
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....id not mention the details of transactions that represented unexplained income of the assessee company. The information on the basis of which the AO has initiated proceedings u/s 147 of the Act are undoubtedly vague and uncertain and cannot be construed to be sufficient and relevant material on the basis of which a reasonable person after application of his mind to said material could have formed a belief that income had escaped assessment. 11. The reasons recorded by the AO do not disclose the AO's mind as to what was the nature and amount of transaction or entries, which had been given or taken by the assessee in the relevant year. The reasons recorded by the AO also do not disclose his mind as to when and in what mode or way the bogus entries or transactions were given or taken by the assessee. From the reasons recorded, nobody can know what was the date, amount and nature of bogus entries or transactions given and taken by the assessee in the relevant year and with whom the transaction had taken place. As already noted above, it is well settled that only the reasons recorded by the AO for initiating proceedings u/s 147 of the Act are to be looked at or examined for susta....
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....ssment proceedings and reassessment order dated 28.03.2016 passed u/s. 147 r.w.s. 143(3) of the Act, and ld. representatives both the sides have not placed any arguments on the other grounds of assessee on merits therefore we don't deem it justified and proper to adjudicate those grounds in absence of any arguments. 13.1 In the result, the appeal of assessee for AY 2008-09 is allowed in the manner as indicated above. ITA No. 8309/Del/2019 for AY 2011-12 14. We have heard arguments on the application of assessee seeking admission of additional grounds u/s. 253 of the Act r.w.r 11 of Income Tax (Appellate Tribunal) Rules 1963. The ld. counsel submits that the proposed additional grounds 4 to 6 are being raised before the Tribunal are pure legal plea which goes to the root of the matter and legitimately available to the appellant as per provisions of the Act and the same can be adjudicated on the basis of material already available on record. The ld. Counsel thus submits that in view of judgment of Hon'ble Supreme Court of India in the case of National Thermal Power Company Ltd. vs. CIT 229 ITR 383 (SC) and in the case of Jute Corporation of India vs. CIT 187 ITR 688 ....
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....#39;ble Supreme Court in the case NTPC vs CIT (supra) and Jute Corporation vs. CIT (supra) the application of assessee is allowed and additional grounds no. 4 to 6 are admitted for adjudication. 18. Apropos additional grounds the ld. counsel of assessee submitted that the basic details of the case, as per the Ld. AO, are that an information was received from the DDIT, Gurugram vide letter dated 20.03.2018 that the assessee was a beneficiary of accommodation entries amounting to Rs. 1.30 crore during FY 2010-11 from the Skylark Group of Companies. (Para 2 of reasons for reopening the case). He also submitted that out of Rs. 10,90,17,480/-, being the share application money received by the assessee during the F.Y. 2010-11 only an amount of Rs. 1.30 crore belongs to the company related to Skylark Group i.e. the amounts are credited from the Skylark Group. (Para 5 of the reasons for reopening the case). He also contended that the Ld. AO further reiterates in the reasons for formation of belief, at Para 6(a), that during the relevant financial year, the assessee has raised share application money from the skylark group of companies. 19. Thereafter, the ld. counsel submitted that t....
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....ion of reassessment proceedings may kindly be quashed on this count. 21. The ld. counsel, further drawing attention towards copy of the reasons available at pages 1 to 7 of assessee paper book dated 20.05.2023 submitted that at page 6 in 5th para the Assessing Officer alleges that the requirement to initiate proceedings u/s. 147 of the Act are reason to believe that income for the year under consideration has escaped assessment because of the failure on the part of assessee to disclose fully and trully all materials facts necessary for his assessment for AY 2011-12 but there is no details or description pertaining to said allegation as to which documentary evidence, material fact or transaction was not fully and trully disclose by the assessee. He further submitted that from para 5 of reasons the Assessing Officer noted that the return of income filed and 360 degree profile were examined and found that during the relevant financial period the assessee has raised share application money of Rs. 10,90,17,480/- out of said amount share application money amounting to Rs. 1.30 crores belongs to the company related to Skylark Group from which the assessee has taken accommodation entry ....
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....hri Anirudh Joshi. But there is no mentioning of the fact that the assessee has taken entries or any transaction with any company of Skylark Group. Therefore the basis taken by the Assessing Officer in the reasons was not in consonance with the actual factual position which was noted by him in relevant paras of assessment order. Thus we are inclined to hold that since the Assessing Officer proceeded to initiate reassessment proceedings u/s. 147 of the Act and to issue notice u/s. 148 of the Act for AY 2011-12 by recording factually incorrect allegations without any evaluation and examination and the report of Investigation Wing Gurugram and other relevant material which shows non application of mind as in the reasons Assessing Officer alleged that the assessee has taken accommodation entry from the Skylark Group companies but while passing assessment order he could not establish any link between the assessee and any company controlled and owned by Skylark Group therefore we safely accept the contention of ld. counsel of assessee that the assessee had not undertaken any transaction with any company of Skylark Group. It is pertinent to note that in the assessment order same amount an....
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....d AO treating the loss claimed by the assessee as capital loss invoking the provision of section 71 of the Act. 4. (i) On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the addition of an amount of Rs. 25,00,000/- made by AO on account of share application money treating the same as unexplained invoking the provisions of section 68 of the Act. (ii) That the said addition has been confirmed rejecting the detailed explanation and evidences brought on record by the assessee to prove the identity and creditworthiness of the share applicant as well as the genuineness of the transaction. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the application made by the assessee submitting additional evidences under rule 46A of the income tax rules, 1962. 6. (i) On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the disallowance of Rs. 43,124/- made by the AO invoking the provision of section 14A read with rule 8D of the Income Tax Rules. (ii) That the learned CIT(A) ....
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.... same before the Assessing Officer. The ld. Senior DR thus, submitted that addition made by the Assessing Officer has rightly upheld by the ld. CIT(A) therefore no interference is warranted in the first appellate order. 28. On careful consideration of above submissions we note that the assessee filed copy of Appellant's ITR acknowledgment for AY 2012-13, copy of appellant's auditor's report, balance sheet, statement of P&L account, notes on accounts & other notes, shareholding patters details, unsecure loan details for the period ending 31st March 2012, copy of appellant's bank book (Bank of Baroda) for the period 1st April 2011 to 31st March 2012, copy of appellant's trial balance account for the period of 1st April 2011 to 31st March 2012. However except above noted documentary evidence the assessee has not filed any other documents before the Assessing Officer. During first appellate proceedings the assessee filed application under rule 46A of the I.T Rules seeking admission of additional evidence pertaining to investor M/s. Forefront Buidcon P Ltd. i.e. copies of name change certificate to M/s. Complete Equity P Ltd dated 14.10.2011, copies of confirmatio....
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.... no. 4 after allowing due opportunity of hearing and without being influenced with the earlier assessment and first appellate order. Needless to mention that the assessee shall be eligible to raise all the contentions and submissions in support of its claim to discharge onus as per mandate of section 68 of the Act. Accordingly, ground no. 4 of assessee is allowed for statistical purposes. 30. In the result, the appeal of the assessee for AY 2012-13 is partly allowed only on ground no. 4 for statistical purposes. Order pronounced in the open court on 17.10.2023. ============= Document 1 19-37 INCOME TAX DEPARTMENT Reasons for reopening the case of M/s Shark Packaging (India) Pvt Ltd. A.Y, 08-09. 46 147/148 of the Income tax Act, 1961 ;- Information/documents along with relevant details has been received from the office of Director of Income Tax (Investigation)-H, New Delhi vide their letter P.No. DIT(Inv.)- 11 L//s148/2012-13/196 dated 12.03.13 and DDIT (Inv); Unit-VI(2). New Delhi vide their letter F.No. DDIT (Inv)/U-VI(2)/Information sharing/2012-13/141 dated 12.03.2013 "that the above assessee. M/s Shark Packaging (India) Pvt Ltd has received and is a benefici....