ITA NOS. 330 to 332 & 334/Del/2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "E", NEW DELHI
BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER
AND
SHRI H.S. SIDHU, JUDICIAL MEMBER
I.T.A. Nos. 330, 331, 332 & 334/Del/2015
A.Yrs. : 2007-08, 2008-09, 2009-10 & 2011-12
M/s Modinagar Rolls Ltd., Addl. Commissioner Of
C/o M/s SS Gupta & Co, VS. Income Tax,
165, Sardhana Road, Range-1,
B.C. Lines, Ghaziabad
Meerut Cantt- 250001
(PAN: AABCM0137C)
(APPELLANT) (RESPONDENT)
Assessee by : Sh. OP Sapra, Adv. & Sh. Pankaj
Gupta, CA
Department by : Sh. P. Dam Kanunjna, Sr. DR
Date of Hearing : 13-05-2015
Date of Order : 29-05-2015
ORDER
PER BENCH
Assessee has filed these appeals against the separate Orders
passed by the Ld. Commissioner of Income Tax (Appeals),
Ghaziabad pertaining to assessment years 2007-08, 2008-09, 2009-
10 & 2011-12. Since the issues involved in these appeals are
common and identical, we are therefore, proceeding to dispose of
these appeals by passing this consolidated order, by dealing with
the ITA No. 330/Del/2015 (A.Y. 2007-08) for the sake of convenience.
2. The grounds raised in the assessment year 2007-08 are
reproduced hereunder:-
1. That the Learned Additional Commissioner of
Income Tax, Range-1, Ghaziabad has erred in law by
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making an addition of Rs. 1,50,00,000/- to the Income of
the Assessee's company being issued capital U/S 68 of
the Income Tax Act, 1961.
2. That the Learned A.O. has erred in law and facts of
the case in not considering the various details, pleadings
and written submissions made from time to during the
course of assessment proceedings.
3. That the interest as charged under Section 234B
and 234C is illegal on various factual and legal grounds.
4. That the demand of Rs. 91,38,760/- created,
pursuant to this assessment which is a disputed demand,
be kindly stayed till disposal of the Appeal.
5. That the several observations as made and
inferences drawn are untenable, incorrect, unwarranted
and uncalled for.
6. That the Appellant may take any other Ground or
Grounds at the time of hearing of Appeal with the kind
permission of the learned I.T.A.T.
3. The grounds raised in the assessment year 2008-09 are
reproduced hereunder:-
1. That the Learned Additional Commissioner of
Income Tax, Range-1, Ghaziabad has erred in law by
making an addition of Rs. 1,50,00,000/- to the Income of
the Assessee's company being issued capital U/S 68 of
the Income Tax Act, 1961.
2. That the Learned A.O. has erred in law and facts of
the case is not considering the various details, pleadings
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and written submissions made from time to during the
course of assessment proceedings.
3. That the interest as charged under Section 234B
and 234C is illegal on various factual and legal grounds.
4. That the demand of Rs. 88,51,260/- created,
pursuant to this assessment which is a disputed demand,
be kindly stayed till disposal of the Appeal.
5. That the several observations as made and
inferences drawn are untenable, incorrect, unwarranted
and uncalled for.
6. That the Appellant may take any other Ground or
Grounds at the time of hearing of Appeal with the kind
permission of the learned I.T.A.T.
4. The grounds raised in the assessment year 2009-10 are
reproduced hereunder:-
1. That the Learned Additional Commissioner of
Income Tax, Range-1, Ghaziabad has erred in law by
making an addition of Rs. 2,30,00,000/- to the Income of
the Assessee's company being issued capital U/S 68 of
the Income Tax Act, 1961.
2. That the Learned A.O. has erred in law and facts of
the case is not considering the various details, pleadings
and written submissions made from time to during the
course of assessment proceedings.
3. That the interest as charged under Section 234B
and 234C is illegal on various factual and legal grounds.
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ITA NOS. 330 to 332 & 334/Del/2015
4. That the demand of Rs. 1,22,93420/- created,
pursuant to this assessment which is a disputed demand,
be kindly stayed till disposal of the Appeal.
5. That the several observations as made and
inferences drawn are untenable, incorrect, unwarranted
and uncalled for.
6. That the Appellant may take any other Ground or
Grounds at the time of hearing of Appeal with the kind
permission of the learned I.T.A.T.
5. The grounds raised in the assessment year 2011-12 are
reproduced hereunder:-
1. That the Learned Additional Commissioner of
Income Tax, Range-1, Ghaziabad has erred in law by
making an addition of Rs. 2,00,00,000/- to the Income of
the Assessee's company being issued capital U/S 68 of
the Income Tax Act, 1961.
2. That the Learned A.O. has erred in law and facts of
the case is not considering the various details, pleadings
and written submissions made from time to during the
course of assessment proceedings.
3. That the interest as charged under Section 234B
and 234C is illegal on various factual and legal grounds.
4. That the demand of Rs.1,22,93,420/- created,
pursuant to this assessment which is a disputed demand,
be kindly stayed till disposal of the Appeal.
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5. That the several observations as made and
inferences drawn are untenable, incorrect, unwarranted
and uncalled for.
6. That the Appellant may take any other Ground or
Grounds at the time of hearing of Appeal with the kind
permission of the learned I.T.A.T.
6. The brief facts of the case are that this case has been selected
for scrutiny on the information received from DIT(Inv.)-II, Delhi
regarding accommodation entries provided by Shri Surendra Kumar
Jain Group of cases to various beneficiary companies and other.
Accordingly, after obtaining approval for issuance of notice u/s. 148
read with section 147 of the I.T. Act, 1961, a notice u/s. 148 dated
25.3.2013 was issued and served upon the assessee fixing the date
for compliance within 15 days from the date of service of notice.
Subsequently notice u/s. 142(1) dated 4.10.2014 alongwith
questionnaire was also issued by the AO requiring various details
and information as considered necessary for scrutiny of the case. In
compliance to these notices assessee's counsel Sh. Ramit Kakkar,
Advocate attended the proceedings from time to time. He
requested for supply of reasons recorded before issuance of Notice
u/s. 148 which were duly supplied to him. The assessee is a Limited
Company specializing in the line of manufacturing rolls for various
industries. The main supply to the customers by the company
include Paper, Steel, Textile, Vinyl, Laminates, Packaging, Asbestos
Sheet manufacturers, Leather, Aluminum and Cooper Foils, Coating
Plants and Poly Films, related industries. As per AO the assessee
company has failed to prove existence of third party and ability to
advance money as books of account of said companies have not
been produced and what business activity they are conducting has
not been proved. The Investigation Wing of this Department has
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established that the said companies are dummy/ paper companies
used by Shri Surendera Kumar Jain and Shri Virendra Kumar Jain as a
conduit to provide accommodation entries to beneficiaries through
RTGS/cheques/PO/DD in lieu of cash and charging commission from
them. AO is of the view that the assessee has taken accommodation
entries from dummy firms/ paper companies. Therefore, an addition
of Rs. 1,50,00,000/- on account of bogus entries, treating it as
unexplained share application money, u/s. 68 is being made to the
income of the assessee and completed the assessment at a total
income of Rs. 1,77,41,068 u/s. 147/143(3) of the I.T. Act vide his
order dated 20.2.2014.
7. Against the order of the Ld. AO, assessee appealed before the
Ld. CIT(A), who vide impugned order dated 13.11.2014 has
dismissed the appeal of the assessee.
8. Aggrieved with the order of the Ld. CIT(A), Assessee is in
appeal before the Tribunal.
9. The aforesaid case came up for hearing before the Bench
many times and adjourned on one and another pretext. During the
pendency of the appeal, the assesee's counsel filed an additional
grounds of appeal. The contents of the additional ground are
reproduced as under:-
"Permission is hereby carved to raise the following
ground of appeal:
"On facts and under the law, notice u/s. 148
issued by the Ld. AO in this case is arbitrary,
unjust, illegal and consequently, the impugned
assessment order passed u/s. 147 by the Ld. AO
is liable to be quashed."
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ITA NOS. 330 to 332 & 334/Del/2015
The above additional ground of appeal was not
raised before the Ld. CIT(A) by assessee's counsel
through oversight. Though the issue of notice u/s.
148 of the I.T. Act by the Ld. AO on the basis of
information received from Investigation Wing is
wholly unjustified and illegal. A Certificate of the
Counsel who had prepared and filed the appeal
before the Ld. CIT(A) Sh. Pankaj Gupta is
reproduced below:-
"To whom it may concern"
This is to certify and confirm that I had
prepared the grounds of appeal in the appeals
of M/s Modinagar Rolls Ltd., Modinagar for the
assessment years 2007-08, 2008-09 and
2009-10 filed before the Ld. CIT(A),
Ghaziabad. It was through oversight that I did
not raise the additional ground of appeal as
mentioned in the accompanying application
though objections to the issue of notice u/s.
148/147 were duly filed before the AO.
For S.S. Gupta & Co.
Chartered Accountants
Sd/-
Partner
Place: Meerut
Date: 18/03/2015"
The appellant relies on the following case
laws on the admission of additional ground of
appeal by the ITAT:
- 229 ITR 383 National Thermal Power Corpn.
Co. Ltd. VS CIT [SC]
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ITA NOS. 330 to 332 & 334/Del/2015
- 30 ITD, Indo Java & Co. vs. IAC (Delhi ITAT,
Special Bench)
- 193 ITR 624 CIT vs. Kerala State Coop.
Marketing Federation Ltd. (Kerala High
Court)
- 194 ITR 448 Inventors Industrial
Corporation Ltd. vs. CIT (Bombay High
Court)
- 198 ITR 3 Taylor Instrument Co. (India) Ltd.
CIT (Delhi High Court)
- 200 ITR 275 CIT vs. Mahalakshmi Sugar
Mills Co. (Delhi High Court)
It is prayed that the above additional ground
may kindly be entertained and disposed of on
merits after hearing the appellant's Counsel."
10. At the time of hearing i.e. on 13.5.2015, Ld. Counsel of the
assessee requested that before proceeding on merit in the case of
the assessee, first the additional ground raised by the assessee may
be considered and decided.
11. Ld. DR although objected to the request of the assessee's
counsel, but could not controvert the factual matrix narrated by the
Ld. Counsel for the assessee.
12. We have heard both parties on the admission of additional
grounds, as aforesaid. After going through the written submissions
filed by the assessee on admission of additional grounds in which
the Ld. Counsel of the assessee has cited various decisions on the
legal issues raised by the assessee, we are of the view that in the
interest of justice, the additional grounds raised by the assessee
mentioned in para no. 9 at page no. 6-7 of this order are purely legal
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ITA NOS. 330 to 332 & 334/Del/2015
and do not require fresh facts which is to be investigated and go to
the root of the matter. In the interest of justice, we admit the
additional ground raised by the assessee, in view of the decision of
the Hon'ble Supreme Court of India in the case of NTPC Limited 229
ITR 383 and proceed to decide the additional ground first.
13. Ld. Counsel of the assessee stated that on the facts and
under the law, notice u/s. 148 issued by the AO in this case is
arbitrary, unjust, illegal and consequently, the impugned
assessment order passed u/s. 147 by the AO is liable to be quashed.
In support of his contention assessee's counsel filed the Written
Synopsis. For the sake of convenience, we are reproducing
herewith the Written Synopsis filed by the Assessee as under:-
"Synopsis with regard to additional ground of appeal
against the validity and legality of reassessment
order passed u/s 147/148 of LT. Act
1. The AO had recorded his reasons for issuing
notice u/s 147 of IT. Act as per copy placed at page
41 of the paper book.
2. The appellant had filed its objections against
the issue of notice u/s 148, copy placed at pages 42-
49 of the paper book.
3. The AO had not passed any order on the
objections raised by the Assessee and consequently
the impugned r:eassessment order as passed u/s
147/148 is illegal and void ab-initio. Appellant relies
on the decision of Hon'ble Apex Court in the case of
GKN Driveshafts(lndia) Ltd. Vs. Income-tax Officer
and Others - 259 ITR 19 (SC) in which it was held that
the AO had to dispose of the objections, if filed, by
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ITA NOS. 330 to 332 & 334/Del/2015
passing a speaking order before proceeding with the
assessments for those years.
Failure to pass such an order has vitiated the
impugned reassessment order uls 147/148 of the I.T.
Act which deserves to becancelled/quashed/annulled.
4. The impugned reassessment is also illegal
because in the reasons recorded, there was no
specific allegation that the appellant had failed to
truly disclose any material facts at the time of
assessment and consequently, the impugned
reassessment proceedings are illegal and without
jurisdiction. Reliance is placed on Delhi H.C.
judgment in 357 ITR 24 CIT vs. Suren International P
Ltd.
5. Reliance is also placed on the following case laws:
- 357 ITR 646, CIT vs. Viniyas Finance & Investment
P Ltd (Delhi H.C.), in which it was held that in the
reasons for the notice uls 147, there was no mention
of the assessee not having made a full and true
disclosure of the material facts necessary for
assessment.
- 357 ITR 330 CIT vs. Insecticides India Ltd. (Delhi
H.C.)
- 338 ITR 51, Signature Hotels Pvt. Ltd. Vs. ITO (Delhi
H.C.). In this case, it was held that the reassessment
proceedings initiated on the basis of information
received from the DIT (Inv) that the petitioner had
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ITA NOS. 330 to 332 & 334/Del/2015
introduced money amounting to Rs.5 Lacs from a Co.
S was nothing but an accommodation entry and the
Assessee was a beneficiary. The reasons did not
satisfy the requirement of section 148 of the LT. Act.
The AO did not apply his own mind to the information
and examine the basis and material of the
information. The reassessment proceedings were not
valid and were liable to be quashed.
6. There is yet another aspect of the matter. In
the reasons recorded, copy placed at page 41 of the
paper book, the Id. AO had issued notice uls 148 by
making the following observations:
"The assessee of this Range, M/s Modi Nagar Rolls
Ud. has taken entries from the concern entry
provider Shri Surender Kumar Jain Group of cases.
During the year under consideration Mls Modi Nagar
Rolls Ltd. has taken an entry of Rs.1,45,OO,000/-
from Hillridge Investment Ltd. Nisha Holdings Ltd .
and Shalini Holdings Ltd. by check through UTI,
HDFC and Axis Bank through Shri Pankaj of Meerut. I
have verified the record. It is pertinent to mention
here that in A.Y. 2010-11 assessment of above
referred company M/s Modi Nagar Rolls Ltd. was
passed by the undersigned. On enquiry made by
undersigned and non furnishing of complete detail of
capacity, credit worthiness and genuineness could
not be proved and addition of uls 68 was made in
case of entry receive from Mls Shalini Holdings and
Mls Apoorva Leasing Finance & Investment Pvt. Ltd.
Mls Shalini Holdings finds name in the list of entry
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provider. Hence, I have reason to believe that the
share application money taken by company is
nothing but their own unaccounted money introduce
by way of bogus share application money. Hence, I
have reason to believe that income has escaped
assessment".
From the above, it is evident that the Id. AO had
issued notice uls 148 in respect of the share
application money of Mls Shalini Holdings Ltd. which
had invested share application of Rs.25,OO,000/- only
and therefore, the Id. AO was not justified in making
additions of Rs.1,50,00,000/- by adding the share
application money provided by the other two limited
Cos. besides S/Sh. Aditya Gupta and Ashish Gupta.
7. Moreover, the reasons have been recorded on
the basis of mere change of opinion because the Id.
AO had duly examined the share capital provided by
all the three limited Cos. and also by S/Sh. Aditya
Gupta and Ashish Gupta by proper application of his
mind in the course of original assessment
proceedings which stands proved from the following:
a) Copies of the order sheet entry dated
27/10/2009, attached as Annexure I to these
Synopsis, relevant portion of which is reproduced
below at pages 6-7
"Attend Sh. Pankaj Gupta CA. He files asked details.
Please file the following details:
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ITA NOS. 330 to 332 & 334/Del/2015
(i) Complete details of receipts of share
application money, giving names and complete
addresses, PAN, ward /circle of the investor. File
confirmations, copy of bank Alc and their ITR.
b) Copies of order sheet entry dated 04/11/2009,
attached as Annexure I to these Synopsis, relevant
portion of which is reproduced below at pages 7-8
"Attend Sh. Pankaj Gupta CA. He files the details......
c) Copy of the covering letter filed before the AO to the
above order sheet entry attached as Annexure 11 to
these Synopsis, relevant portion of which is
reproduced below: at page 10.
(i) Complete detail of share application money as
allotted is enclosed with Form No. 2 and Board
Resolution, name and addresses of allottees and
copy of challans from pages No. 544 to page No. 549.
Copy of Form No. 2 as filed with ROC is placed at
pages 96-100 of the paper book.
(ii) Complete copies of share application money,
board resolutions, copy of bank certificates,
confirmation letter with copy of incorporation
certificate and income-tax acknowledgement are
enclosed from page no. 504-543".
Copies of the share applications Forms, bank
statements, balance sheets etc. are placed at pages
101-176 of the paper book.
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ITA NOS. 330 to 332 & 334/Del/2015
Therefore, the impugned reassessment proceedings
initiated are illegal for which, reliance is placed on
the following case laws:
- 360 ITR 380, NTPC Ltd. vs. Dy. CIT dated 07/03/2013
(Delhi H.C.), Head notes are reproduced below:
"The issue of change of opinion is equally relevant for
matters in which the reopening is sought to be done
beyond four years, as it is to cases where the
reopening is within four years of the end of the
relevant assessment year.
Held, allowing the petitions, that notices issued under
section 148 of the Income-tax Act, 1961, seeking to
reopen the concluded assessments under section
147 pertaining to the assessment years 1999-2000,
2001-02, 2002-03 and 2003-04 were not valid".
- 363 ITR 603, NOT Systems and Another vs. ITO
dated 04/12/2012 (Bombay High Court), in which at
page 611 & 612, it was held as under:
"Therefore, the impugned notice and the reasons in
support thereof clearly indicates that it has been
issued merely on the basis of change of opinion and
would amount to a review of the Assessment Order
dated 11/12/2003. Further, the reasons for reopening
as communicated by the petitioner is not on the basis
of any tangible material but merely on verification of
the material and primary facts already on record
that the Assessing Officer has duly considered while
passing the order dated 11/12/2003 for Assessment
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Year 2007-08. There is no fresh tangible material
which would warrant taking a view different from the
one taken during the regular assessment
proceedings. In fact even the order dated 15/10/2012
disposing of the objections clearly records that
radiography charges and labor charges were made to
various persons like Senior Technicians, Senior
Radiographer and Jr. Technicians etc. from the chart
submitted in the regular assessment proceeding
leading to order dated 11/12/2009. Therefore, it is
very clear that impugned notice for reassessing the
assessment year 2007-08 has been issued merely on
change of opinion and in fact seeks to review the
assessment which is already completed.
...................................
In view of the above, we find that the impugned
notice dated 28/3/2012 is bad in law as the same has
been issued merely on account of change of opinion
and amounts to review of assessment order dated
11/12/2009. In the circumstances, the petition is
allowed and the notice dated 28/3/2012 issued under
Section 148 of the Act is quashed and set aside".
- 362 ITR 72, Sidhi Vinayak Transport vs. ACIT dated
22/04/2013 (Gujarat High Court), Head notes are
reproduced below:
"Held, Allowing the petition, that this was not a case
where the' Assessing Officer, while framing the
original scrutiny assessment, did not examine the
assessee's claim to deduction. He was actually
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conscious of such a claim and was also of the opinion
that the entire claim was not required to be granted.
He called for an explanation of the assessee and
after taking into consideration the explanation, made
disallowance to the extent he was convinced it was
necessary. If, in the process, he made a legal error,
the succeeding Assessing Officer could not correct
such an error, through the process of reopening of
the assessment. The notice was not valid".
The above case laws apply to the facts of appellant's
case also because at the time of original assessment
proceedings, the amounts received from the
shareholder Cos. were duly examined and accepted
by the AO by proper application of mind.
In view of the above facts and the legal position, the
reassessment proceedings initiated u/s 147/148 are
illegal and it is, therefore, prayed that the same may
kindly be quashed/annulled."
14. On the other hand, Ld. DR relied upon the order passed by the
Ld. CIT(A). He stated that assessee has not filed any evidence
regarding its filing the objections before the AO on the issuance of
notice u/s. 148 of the I.T. Act. Secondly, he stated that the AO
should have decide the objections if any, but on this account
assessment cannot be declared void ab initio. In support of his
contention, he relied upon the Division Bench decision of the
Hon'ble Delhi High Court in the case of CIT vs. Nova Promoters and
Finlease (P) Ltd. (2012) 342 ITR 169 (Del).
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15. We have heard both the parties and perused the records,
specially the Paper Book filed by the assessee, orders of the
Revenue authorities, Written Submissions filed by the Ld. Counsel of
the asessee. As regards the effective ground in this appeal relating
to reassessment proceedings u/s. 148 of the I.T. Act is concerned,
we are of the view that the AO has issued notice u/s. 148 of the I.T.
Act, after recording the following reasons which is at page 41 of the
Paper Book.
"Reasons for the belief that income has escaped
assessment
Information received from DIT(Inv.)-II, ARA Centre
Jhandewalan Extn., New Delhi letter F.No.DIT(Inv.)-
II/U/s.148/2012-13/240, Dated 15.03.2013 Regarding
accommodation entries provided by Shri Surendra Kumar
lain Group of Cases to various beneficiary companies &
others.
The assessee of this Range. M/s. Modi Nagar Rolls Ltd.
has taken entries from the concern entry provider Shri
Surendra Kumar Jain Group of cases. During the Year
under consideration M/s Modi Nagar Rolls Ltd. has taken
an entry of Rs. 1,45,00,000/- from Hillridge Investment
Ltd.,Nisha Holding Ltd and Shalini Holdings Ltd. by check
through UTI, HDFC and Axis Bank through Shri Pankaj of
Meerut. I have verified the record. It is pertinent to
mention here that in A.Y. 2010-11 assessment of above
referred company M/s. Modi Nagar Rolls Ltd. was passed
by the undersigned, On enquiry made by undersigned
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and non furnishing of complete detail the capacity,
creditworthiness and genuineness could not be proved
and addition of uls 68 was made in case of entry received
from M/s. Shalini Holding and MIs, Apoorva leasing
Finance & Investment Pvt. Ltd. M/s Shalini Holding finds
name in the list of entry provider. Hence, I have reason to
believe that the share application money taken by
company is nothing but their own unaccounted money
introduce by way of bogus share application money.
Hence, I have reason to believe that income has escaped
assessment.
25.03.2013
Sd/-
(Radhey Shyam)
Addl. Commissioner of Income-Tax,
Range-I. Ghaziabad..
15.1 After examining the Paper Book filed by the assessee
alongwith Written Submissions, we find that the assessee has also
filed its Objections dated 22.1.2014 to the AO on the issuance of
notice u/s. 148 of the I.T. Act copy of which is placed at page 42 of
the Paper Book, those were not decided by the AO till the
completion of the assessment. In our view, this is contrary to the
prescribed law and the assessment completed by the AO is void ab
initio and deserve to be quashed and accordingly, we quash the
assessment. Our view is supported by the judgment of the Hon'ble
Apex Court in the case of GKN Driveshafts(lndia) Ltd. Vs. Income-tax
Officer and Others - 259 ITR 19 (SC) in which it was held that "the
AO had to dispose of the objections, if filed, by passing a speaking
order before proceeding with the assessments for those years.
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Failure to pass such an order has vitiated the impugned
reassessment order uls 147/148 of the I.T. Act which deserves to be
annulled /quashed."
15.2 Ld. Counsel for the assessee argued that the AO reopened the
assessment of the assessee on the basis of the evidence already on
record with the AO which the assessee has filed during the course
of assessment proceedings meaning thereby AO has not brought
any fresh evidence which was not on record or in other words, no
fresh evidence was available with the AO for reopening the
assessment in dispute. He requested that assessment in dispute
may be cancelled, because the AO has wrongly reopened the case
of the assessee by issuing the notice u/s. 148 of the I.T. Act without
any fresh evidence and similarly the Ld CIT(A) has also upheld the
invalid assessment by passing the impugned order which deserves
to be cancelled. He also filed the synopsis, as mentioned above in
which he has raised various issues for declaring the assessment
order invalid and also mentioned various decisions rendered by the
Hon'ble Supreme Court of India, Hon'ble High Court of India and the
Tribunal. Ld. Counsel of the assessee further requested that the
notice u/s. 148 is illegal and assessment may be cancelled.
15.3 After perusing the Written Submissions filed by the assessee
alongwith various decisions rendered by the Hon'ble Supreme Court
of India and the Hon'ble High Court on the issue in dispute. We have
perused the order sheet of the AO and we find that while recording
the reasons by the AO, the AO has mentioned the names of three
firms namely Hillridge Investment Ltd; Nisha Holdings Ltd and
Shalini Holdings Ltd. and stated that the AO had issued notice u/s
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148 in respect of the share application money of M/sShalini Holdings
Ltd. We also find that vide the order sheet entry 27.10.2009 and
4.11.2009, the AO called the details of three parties and in
response thereto the assessee filed complete details of share
application money as allotted, Board Resolution, name and address
of allottees and copy of challans, copy of Form No. 2 as filed with
ROC, copy of bank certificate, confirmation letter with copy of
incorporation certificate and income tax acknoweldgement, balance
sheets etc. before the AO., The AO examined the same and
completed the assessment u/s. 143(3) of the I.T. Act, meaning
thereby the AO has examined all the details, creditworthiness of the
transactions and identity of the creditor, hence, in view of the
above, the reassessment proceedings initiated u/s. 147/148 are
illegal and is liable to be quashed. Our view is supported by the
following judgments / decisions viz. :-
- Hon'ble Jurisdictional High Court in the case of
Signature Hotels P. Ltd. vs. Income Tax
Officer [2011] 338 ITR 0051 wherein the
Hon'ble High Court has held matter as under:-
"Held, allowing the petition, that the
reassessment proceeding were initiated on the
basis of information received from the Director
of Income Tax (Investigation) that the
petitioner had introduced money amounting to
Rs. 5 lacs during the financial year 2002-03 as
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stated in the Annexure. According to the
information, the amount received from a
company, S, was nothing but an
accommodation entry and the assesee was
the beneficiary. The reasons did not satisfy
the requirements of Section 147 of the Act.
There was no reference to any document or
statement, except the annexure. The
annexure could not be regarded as a material
or evidence that prima facie showed or
established nexus or link which disclosed
escapement of income. The annexure was
not a pointer and did not indicate escapement
of income. Further, the Assessing Officer did
not apply his own mind to the information and
examine the basis and material of the
information. There was no dispute that the
company, S, had a paid-up capital of Rs. 90
lakhs and was incorporated on January 4,
1989, and was also allotted a permanent
account number in September, 2001. Thus, it
could not be held to be a fictitious person.
The reassessment proceedings were not valid
and were liable to be quashed.
- 357 ITR 646, CIT vs. Viniyas Finance &
Investment P Ltd (Delhi H.C.), in which it was
held that in the reasons for the notice uls 147,
there was no mention of the assessee not
having made a full and true disclosure of the
material facts necessary for assessment.
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ITA NOS. 330 to 332 & 334/Del/2015
- 362 ITR 72, Sidhi Vinayak Transport vs. ACIT
dated 22104/2013 (Gujarat High Court), Head
notes are reproduced below:
"Held, Allowing the petition, that this was not
a case where the' Assessing Officer, while
framing the original scrutiny assessment, did
not examine the assessee's claim to
deduction. He was actually conscious of such a
claim and was also of the opinion that the
entire claim was not required to be granted.
He called for an explanation of the assessee
and after taking into consideration the
explanation, made disallowance to the extent
he was convinced it was necessary. If, in the
process, he made a legal error, the succeeding
Assessing Officer could not correct such an
error, through the process of reopening of the
assessment. The notice was not valid
- 360 ITR 380 NTPC ltd, vs. DCIT dated
7.3.2013 (Delhi HC) (Supra).
Held, allowing the petitions, that notices issued
under section 148 of the Income-tax Act, 1961,
seeking to reopen the concluded assessments
under section 147 pertaining to the
assessment years 1999-2000, 2001-02, 2002-
03 and 2003-04 were not valid.
- 363 ITR 603 NDT Systems and another
vs ITO dated 4.12.2001 (Bombay High Court)
(Supra).
22
ITA NOS. 330 to 332 & 334/Del/2015
"Therefore, the impugned notice and the
reasons in support thereof clearly indicates
that it has been issued merely on the basis of
change of opinion and would amount to a
review of the Assessment Order dated
11/12/2003. Further, the reasons for
reopening as communicated by the petitioner
is not on the basis of any tangible material
but merely on verification of the material and
primary facts already on record that the
Assessing Officer has duly considered while
passing the order dated 11/12/2003 for
Assessment Year 2007-08. There is no fresh
tangible material which would warrant taking
a view different from the one taken during the
regular assessment proceedings. In fact even
the order dated 15/10/2012 disposing of the
objections clearly records that radiography
charges and labor charges were made to
various persons like Senior Technicians, Senior
Radiographer and Jr. Technicians etc. from the
chart submitted in the regular assessment
proceeding leading to order dated 11/12/2009.
Therefore, it is very clear that impugned
notice for reassessing the assessment year
2007-08 has been issued merely on change of
opinion and in fact seeks to review the
assessment which is already completed.
...................................
In view of the above, we find that the
impugned notice dated 28/3/2012 is bad in
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ITA NOS. 330 to 332 & 334/Del/2015
law as the same has been issued merely on
account of change of opinion and amounts to
review of assessment order dated 11/12/2009.
In the circumstances, the petition is allowed
and the notice dated 28/3/2012 issued under
Section 148 of the Act is quashed and set
aside".
16. In view of above, we are of the considered view that above
issue is exactly the similar to the issue involved in the present
appeal and squarely covered by the aforesaid decisions of the
different Hon'ble High Courts. Hence, respectfully following the
above precedents, we decide the legal issue in dispute in favour of
the Assessee and against the Revenue and accordingly quash the
reassessment proceedings. The other issues are not dealt with as
the same have become academic in nature.
17. The legal issue in dispute in the other 3 appeals (ITA No. 331-
332 & 334/Del/2015 (A.Yrs. 2008-9, 2009-10 & 2011-12) is identical
to ITA No. 330/Del/2015 (AY 2007-08), as admitted by both the
parties. Since we have decided the issue in dispute i.e. relating to
issuance of notice u/s. 148 of the I.T. Act in favor of the assessee
and quashed the assessment, in ITA No. 330/Del/2015 (A.Y. 2007-
08), following the same reasoning as aforesaid, we quash the
assessment in the other 03 Appeals i.e. ITA No. 331, 332 &
24
ITA NOS. 330 to 332 & 334/Del/2015
334/Del/2015 (AYrs. 2008-09, 2009-10 & 2011-12 also and decide
the issue relating issuance of notice u/s. 148 in favor of the
assessee.
18. In the result, all the four Appeals filed by the Assessee stand
allowed.
Order pronounced in the Open Court on 29/05/2015.
Sd/- Sd/-
[N.K. SAINI] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 29/05/2015
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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