2018 (12) TMI 1409 - AT - Income Tax

Reassessment proceedings u/s 147 v/s assessment u/s 153C - assessment barred by limitation - Held that - Revenue has not challenged the order of the CIT(A) quashing the reassessment proceedings by invoking the 1st proviso to section 147 of the IT Act, i.e., barred by limitation. Once the CIT(A) has quashed the reassessment proceedings on account of limitation and the Revenue has not challenged the same, the order of the CIT(A) has attained finality so far as the same is barred by limitation. Once the reassessment proceedings are quashed, the other grounds raised by the Revenue in the appeal and the grounds raised by the assessee in the CO become infructuous and academic in nature. Addition u/s 68 - non independent application of mind - report of the Investigation Wing of the Department relied upon - Held that - We find from the various details furnished by the assessee that it has received share application money aggregating to ₹ 9.27 crore from various share applicants. The assessee company has issued shares @ ₹ 100/- with a premium of ₹ 400/- out of which share amount of ₹ 75/- and premium amount of ₹ 300/- has been received by the company during the year as share application money. The assessee has issued 230000 shares out of which 56800 shares have been issued to the five parties in question. Assessee during the course of assessment proceedings u/s 143(3) as well as during the course of proceedings u/s 147 of the Act filed various documents in order to prove the identity and credit worthiness of the parties as well as the genuineness of the transactions by filing documents such as financial statements of the parties, bank statements of the parties, income-tax returns of the parties, PAN nos. of the parties, confirmation of accounts and master data of the companies as per the ROC records. The Assessing Officer has not pointed out any discrepancy in the documents so filed and not made any further enquiries and simply made the addition on the basis of the report of the Investigation Wing of the Department. It is the settled proposition of law that addition u/s 68 of the Act cannot be made when the assessee has discharged the initial onus cast on it by furnishing necessary documents to prove the identity and credit worthiness of the share applicants/loan creditors and genuineness of the transaction. Once the assessee satisfies the initial onus cast on it, the burden shifts to the Revenue. However, in the instant case, it appears that the Assessing Officer has not done his job properly. No infirmity in the order of the CIT(A) deleting the addition on merit especially when no contrary material was brought before us by the ld. DR. - Decided in favour of assessee

Summary

Issues Involved:
1. Validity of reassessment proceedings initiated under section 147 of the Income Tax Act, 1961 instead of section 153C.
2. Deletion of the addition of ?2,13,00,000/- made by the Assessing Officer under section 68 of the Income Tax Act, 1961.
3. Non-disposal of objections by the Assessing Officer by passing a speaking order.
4. Barred by limitation for reassessment proceedings under section 147.

Issue-wise Detailed Analysis:

1. Validity of Reassessment Proceedings under Section 147 Instead of Section 153C:
The CIT(A) quashed the reassessment proceedings on the ground that since the documents were seized during the search under section 132 of the Income Tax Act, the assessment proceedings should have been initiated under section 153C. The CIT(A) further held that since all the details with regard to share application received by the assessee were on record during the original assessment under section 143(3), the reassessment proceedings initiated after four years were barred by limitation. The Tribunal upheld this decision, noting that the Revenue did not challenge the CIT(A)'s finding that the reassessment proceedings were barred by limitation.

2. Deletion of the Addition of ?2,13,00,000/- under Section 68:
The CIT(A) deleted the addition made by the Assessing Officer under section 68, observing that the assessee had provided sufficient evidence to prove the identity, creditworthiness, and genuineness of the transactions. The assessee had submitted the names, confirmation letters, bank statements, PANs, and ROC records of the share applicants. The Assessing Officer, however, did not issue any notices or summons to the alleged accommodation entry providers and relied solely on the Investigation Wing's report. The Tribunal found that the Assessing Officer did not make any independent inquiries and merely rejected the evidence provided by the assessee, which was not sufficient to sustain the addition under section 68.

3. Non-disposal of Objections by Passing a Speaking Order:
The CIT(A) decided against the assessee on the ground relating to the non-disposal of objections by the Assessing Officer. The Tribunal did not find it necessary to address this issue in detail as the reassessment proceedings were already quashed on other grounds.

4. Barred by Limitation for Reassessment Proceedings under Section 147:
The CIT(A) quashed the reassessment proceedings initiated under section 147 as they were barred by limitation. The original assessment was completed under section 143(3), and there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The reassessment proceedings were initiated beyond the permissible period of four years. The Tribunal upheld this decision, noting that the Revenue did not challenge this specific finding, and therefore, the order of the CIT(A) attained finality on this ground.

Conclusion:
The Tribunal dismissed the appeal filed by the Revenue and the cross-objection filed by the assessee. The reassessment proceedings were quashed due to being barred by limitation, and the addition of ?2,13,00,000/- under section 68 was deleted on merit. The Tribunal emphasized that the Assessing Officer did not conduct proper inquiries and relied solely on the Investigation Wing's report without independent verification.