TaxTMI 
TaxTMI 
2026 (5) TMI 1057
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....ll the three conditions and even the amount under consideration has been returned back to the creditor sin subsequent years. 3. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that the action u/s. 147 has been rightly and correctly taken by the Assessing Officer. 4. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that the AO has correctly taken action u/s. 147 by satisfying all the conditions necessary for initiating such action. 5. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that action u/s. 147 was not bad in law, illegal and void abinitio. 2. At the time of hearing, the Assessee has filed an application for admission of additional ground by stating as under:- "Most respectfully it is submitted that the above captioned Appeal No. ITA 8604/ DEL /2019 (AY 2011-12) filed by the appellant before the Hon'ble Tribunal against the order of Ld. CIT(Appeals) u/s. 250 of the Income Tax Act, 1961. Next date of hearing is fixed for 17.10.2023 (copy of case s....
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....ntitled to file objections to issuance of notice; and (iii) The Assessing Officer is bound to dispose of the same by passing a speaking order. (iv) However, during the assessment proceedings, Ld. without disposing of the objections of the appellant against 147/148, vehemently made additions with a pre-set mind. (v) The Ld. CIT (appeals) erred in law and on the facts of the case in upholding the above assessment which is liable to be set aside. Additional Ground: (i) That on the facts and in the circumstances of the case and in law, Ld CIT (Appeals) erred in sustaining the order passed by Ld AO u/s. 147/143(3) without appreciating that Hon'ble Supreme Court in the case of GKN Driveshafts India Ltd., Vs. ITO has laid down an elaborate procedure for dealing with objections raised against a notice under section-148 and the Ld. Assessing Office has to take note of these objections and dispose the same before commencing reassessment by passing a "speaking order". Assessment is liable to be set aside where Assessing Officer had acted arbitrarily and in a manner clearly contrary to law in passing an order without disposing of the objections of t....
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.....2019 was issued and served upon the assessee. The assessee did not comply with the above notices. Final show cause notice u/s. 144 of the Act was sent on 7.12.2018 and in response to the same, the assessee filed its part reply on 10.12.2018 and submitted as under:- "i) The assessee is engaged in business of real estate development since year 2005, an assessee has made an agreement to sale for land acquisition and paid certain percent of total consideration according to agreement of sale. Being a genuine real estate developer assessee also made some collaboration agreement for development of housing society with different entities and M/s Khushi Conbuild (P) Ltd. is one of those entities to develop the housing society. According to collaboration agreement between M/s Khushi Conbuild P Ltd. and assessee clearly state that Rs. 1.75 cr is the advance money to develop the housing society. ii) Accordingly the clause of collaboration agreement assessee is responsible to get LOI from Government of Haryana and if assessee fails to get LOI then assessee have to repay the advance amount received. iii) Due to some amendment in land acquisition rule assessee were not....
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....ivities have been shown at all in FY 2010 -11 and filed return for showing loss of Rs. 49,903/-. Thus, it is proved that the assessee did not have any self generated fund and it just passing entries under different heads of balance sheet and also inflating its balance sheet so that it could provide entries showing its fake creditworthiness. AO further noted that on perusing the complete pass bank statement of M/s Khushi Conbuild Pvt. Ltd. establish the story of that passing of funds to the companies owned and controlled by Sh. Ram Kishore Aggarwal. He further noted that Investigation Wing Kolkata in its detailed report proved that the assessee company has taken entries from the companies owned by Sh. Anand Kumar Sharma. In view of above, AO noted that assessee has received an accommodation entry of Rs. 1,75,00,000/-from M/s Khushi Conbuild Pvt. Ltd. which was an entity controlled and operated by Shri Anand Sharma. These facts have been brought by the Investigation Wing Kolkata in its report and also examined by the AO in the assessment order. He further noted that Ld. CIT(A) after examining the assessment order and replies of the assessee has found that M/s Khushi Conbuild Pvt. Ltd....
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....icense before the Director, Town and Country Planning Department, Haryana, Chandigarh. The project got delayed due to litigation and in the meantime the assessee entered into a collaboration agreement dated 18.3.2011 qua the above project with M/s KCPL to jointly develop the said land into housing project and share the revenue in the ratio of 76.24. The entire responsibility to obtain the requisite permissions was on the assessee. For the said purpose, M/s KCPL had already advanced Rs. 1,75,00,000/- and the next instalment of Rs. 1 crore was to be paid on obtaining the LOI by the assessee within a period of 24 months. The advance payment of Rs. 1.75 crores was received by the assessee from M/s KCPL on 4.3.2011 (Rs. 60 lacs and Rs. 40 lacs), and on 8.3.2011 Rs. 50 lacs and on 11.3.2011 Rs. 25 lacs which is apparent from the assessment order dated 30.12.2018. The transaction was well reflected in the ITRs of the assessee as well as M/s KCPL and the same were accepted by the department, thus shows that there is no suppression of any transaction either by the assessee or by KCPL. Later Sh. RK Agarwal and Sh. Vishal Agarwal became Directors of M/s KCPL on 18.2.2013, upon resignation of ....
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....perusal of the assessment record for A.Y. 2011-12, it is seen that no objection was filed by the assessee during the assessment proceedings. Case noting history is attached herewith. Assessee had filed letter dated 28.08.2018 vide which the assessee had asked for the reasons recorded for re-opening of the assessment proceedings for A.Y. 2011-12. The same was duly provided to assessee on 03.10.2018. Further, the same was again provided to assessee on 17.10.2018. Therefore, contention of the assessee that the assessment u/s. 147/143(3) of the Act has been completed by the AO without disposing objection of the assessee by passing speaking order is totally incorrect and false. 3. Assessee had never raised any objection in relation to re-opening of the assessment proceedings during the assessment proceedings. Therefore, no question of disposing off the objections of the assessee arises. It is also evident from case noting history that AR of the assessee appeared before AO on 10.12.2018 & 14.12.2018 and never raised objections regarding this issue. Further, from Form No. 35 also, it is seen that this issue was not raised before CIT(A) during the Appellate proceedings also. Furth....
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....hell Company. The appellant company has done transaction with this company and the transaction cannot be accepted as genuine by any stretch of imagination." b) Income Tax Appellate Tribunal - Mumbai Dy Cit 15(1)(2), Mumbai vs M/S Leena Power Tech Engineers Pvt Ltd., DOJ - 21 September, 2021 "It would thus appear that the learned counsel for the assessee is not really right in approaching the basis as if the onus is on the Assessing Officer to prove the alleged money laundering racket - an onus that may perhaps be relevant only when the money laundering racket is being prosecuted, but that is something we are not really concerned about. As far as we are concerned, we must remain confined to the narrow issue of onus on the assessee to prove 'bonafides' or 'genuineness' of the share application money credited in his books of accounts, and that is the call we have to take in the light of facts before us and the ground realities of the commercial world. As we proceed to deal with the genuineness aspect, it is also important to bear in mind the fact that what is genuine and what is not genuine is a matter of perception based on facts of the case....
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.....2 of Ld. CIT(A) order. Therefore, keeping in view the characteristics of shell companies as discussed above and finding of Ld. CIT (A) regarding this company being a paper/shell company, it is noted that appellant has failed to explain the credits of Rs. 1.75 Crore and therefore the AO was justified to make additions on account of unexplained credits. 6. In this case, Ld CIT (A) has upheld the addition made u/s. 68 by the AO. In this regard it is humbly submitted that the following decisions may kindly be considered with regard to addition made u/s. 68 of l.T. Act: 1. PCIT, Central ! Vs NRA Iron & Steel Pvt. Ltd. [2019] 103 taxmann.com 48 (SC)]. The principal that emerges when sums of money are credited as share capital/ premium are:- (i) Assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and creditworthiness of the investors who should have the financial capacity to make the investments in question, to the satisfaction of the Assessing Officer, so as to discharge the primary onus. (ii) The AO is duty bound to investigate the creditworthiness of the creditors/ subscr....
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.... SLP of assessee dismissed by Hon'ble Supreme Court issued under section 131, Tribunal was justified in confirming impugned addition 3. CIT VS Nipun Builders & Developers (P.) Ltd (30 taxmann.com 292, 214 Taxman 429, 350 ITR 407, 256 CTR 34) Where Hon'ble Delhi High Court held that where assessee failed to prove identity and capacity of subscriber companies to pay share application money, amount so received was liable to be taxed under section 68. It was held as follows: "12. A perusal of the order of the Tribunal shows that it has gone on the basis of the documents submitted by the assessee before the AO and has held that in the light of those documents, it can be said that the assessee has established the identity of the parties. It has further been observed that the report of the investigation wing cannot conclusively prove that the assessee's own monies were brought back in the form of share application money. As noted in the earlier paragraph, it is not the burden of the AO to prove that connection. There has been no examination by the Tribunal of the assessment proceedings in any detail in order to demonstrate that the assessee ....
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....t the assessee had discharged the basic onus which was cast upon it after considering the ruling in Lovely Exports (P) Ltd.'s case (supra). The matenal and the records in this case show that notice issued to the 5 of the share applicants were returned unserved. The particulars of returns made available by the assessee and taken into consideration in paragraph 3.4 by the AO in this case would show that the said parties/applicants had disclosed very meager income. The AO also noticed that before issuing cheques to the assessee, huge amounts were transferred in the accounts of said share applicants. This discussion itself would reveal that even though the share applicants could not be accessed through notices, the assessee was in a position to obtain documents from them. While there can be no doubt that in Lovely Exports (P) Ltd. (supra), the Court indicated the rule of "shifting onus" i.e. the responsibility of the Revenue to prove that Section 68 could be invoked once the basic burden stood discharged by furnishing relevant and material particulars, at the same time, that judgment cannot be said to limit the inferences that can be logically and legitimately drawn by the Revenue ....
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....Hon'ble Delhi High Court held that even if a transaction of loan is made through cheque, it cannot be presumed to be genuine in the absence of any agreement, security and interest payment. Mere submission of PAN Card of creditor does not establish the authenticity of a huge loan transaction particularly when the ITR does not inspire such confidence. Mere submission of ID proof and the fact that the loan transactions were through the banking channel, does not establish the genuineness of transactions. Loan entries are generally masked to pump in black money into banking channels and such practices continue to plague Indian economy 8. PCIT-6, New Delhi vs NDR Promoters Pvt. Ltd. ITA 49/2018 (Delhi) Wherein the Hon'ble Delhi High Court has held that; "13. The second set of cases are those where there was evidence and material to show that the shareholder company was only a paper company having no source of income, but had made substantial and huge investment in the form of share application money. The assessing officer has referred to the bank statement, financial position of the recipient and beneficiary assessee and surrounding circumstances. The p....
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.... transactions were genuine. It was not for the Income- tax Officer to find out by making investigation from the bank accounts unless the assessee proves the identity of the creditors and their creditworthiness. Mere payment by account payee cheque is not sacrosanct nor can it make a non-genuine transaction genuine. In that view of the matter, the question before us is answered in the negative and in favour of the Revenue." 8. Further, Ld. DR also filed the following written submissions on the reopening of the case: "In the above case, it is humbly submitted that the following decisions may kindly be considered with regard to reopening of cases u/s. 147 of I.T. Act and more particularly relating to cases where the assesses have challenged the re-assessment proceedings as being initiated without any valid "Reason to Belief "; without reference to any fresh tangible material, and without any independent application of mind. In the following decisions, the Hon'ble courts have upheld the validity of re-assessment proceedings:- A. The reassessment has been held to be validily initiated where the AO has received information from the investigation wing and other ....
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....rial before the Assessing Officer is relevant for forming the prima facie belief that income chargeable to tax has escaped assessment. It is also well settled that at that stage, that is at the stage when reasons are recorded for reopening the assessment, the Assessing Officer is not required to build a fool proof or a fort-like case for making addition to the assessee's income; all that he is required at that stage is to form a prima facie opinion or belief that income has escaped assessment. The relevancy of the material before the Assessing Officer is to be judged only from that perspective and not from the perspective as to whether the material is sufficient or adequate to sustain the addition ultimately. That will be an aspect which the Assessing Officer will examine and decide in the course of the re-assessment proceedings after hearing the assessee in the manner required by law. These propositions are so well settled that they do not require citing of any authority." 3. AGR Investment Ltd. Vs Addl. CIT (333 ITR 146) (Delhi) The Hon'ble High Court upheld the notice u/s. 148 and held that there was material on the basis of which notice u/s. 148 could be issue....
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....lief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO vs. Selected Dalurband Coal Co. P. Ltd.[1996] 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC). The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied: firstly, the Assessing Officer must have reason to believe that income, profits or gains chargeable to income tax have escaped assessment, and secondly, he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for h....
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.... A.O., as mentioned above, could very well make him prima-facie have such reason to believe that income escaped assessment. Further, as the AO has initiated the proceedings on the basis of above-mentioned specific information it could not be said that the action of the A.O. was on the basis of certain surmises or conjectures only. It could also not be said that the material in possession of the A.O. could just make him have reason to suspect and not reason to believe that income escaped assessment. Moreover adequacy of satisfaction of AO is not justice-able as was held by Hon'ble Punjab & Haryana High Court in the case of Gurera Gas Cylinder Pvt. Ltd. Vs. CIT (258 ITR 170) and in case of Swaraj Engine Ltd. vs. ACIT (260 ITR 202) following the judgment of Hon'ble Supreme Court in cash of Phool Chand Bajrang Lal vs. ITO (203 ITR 456) (iii) ITO vs Lakhmani Mewai Das 1976 AIR 1753(SC)- "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 grounds which indu....
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....ollaboration agreement dated 18/03/2011 (page 54-56 of the paper book) between the assessee and M/s. KCPL. The finding of the AO as in assessment order dated 30/12/2018 clearly indicates that it ignored the reply dated 20/10/2018 of M/s. KCPL wherein, the entire details of its audited account of the relevant years, bank statements, list of directors etc. were mentioned. Both the authorities below not appreciated the requisite three tests for the purpose of Section 68 of IT Act, 1961 i.e. (a) identity, (b) creditworthiness, and (c) genuineness of M/s. KCPL was satisfied by the appellant on the basis of the material on record and thereafter, the onus to prove otherwise shifted upon the department which it failed to discharge. The identity of the referred entity is proved from the certificate of information issued by the Registrar of Companies, Kolkata. The PAN number, statement of accounts, ITRs filed by the said entity was also brought on record. However, ignoring all the documents the authorities below passed the order on the basis of the report dated 16/03/2018 of ADIT, Kolkata which is not sustainable. The transaction was on the basis of collaboration agreement between the two en....