9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (11) TMI 1588 - AT - Income TaxInitiate proceedings under section 153C OR under section 147 - validity of reopening of assessment - Revisionary proceedings under section 263 - assessee being one of the beneficiary of the accommodation entry in the books of account of the concerns of S.K. Jain - Held that - In this case what has been found, is the regular entries in the books of account of the concerns of S.K. Jain group, in which name of the assessee is appearing. Such entries in the cash books depicting the details of cheques issued in favour of the assessee as well as cash deposit through intermediates on various dates cannot be reckoned as document or books of account of the assessee. This fact has been noted by the Pr. CIT in the impugned order right from pages 7 to 15, wherein one of the entries pertains to the assessee for a sum of ₹ 1 crore. Thus, the contention raised by the ld. counsel on this point is out rightly rejected that the proceedings under section 153C should have been initiated instead of under section 147. As regards the contention that material or information found during the course of search in the case of S.K. Jain group cannot be held to be a tangible material pertaining to the assessee, we are unable to accept such a contention for the reason that, firstly, there was a categorical information and material coming on record post passing of the original assessment order under section 143(3) that assessee was one of the beneficiaries of accommodation entries provided by one of the group concern of S.K. Jain and not only that, a specific amount (of ₹ 1 Crore) has been mentioned which prima-facie pertained to the assessee. This definitely constitutes a tangible and definite material having live-link nexus with the income chargeable to tax escaping assessment. Here in this case there was a definite information and material found qua the assessee which at least needed verification and examination and hence, in our opinion such a material and information does constitute a tangible and relevant material sufficient enough to form reason to believe that income chargeable to tax has escaped assessment. Apart from that, it is seen from the records that the assessee had raised similar objections after the receipt of reasons recorded before the Assessing Officer during the course of re-assessment proceedings, which have been amply dealt with and discussed by the Assessing Officer inn detail vide his separate order, copy of which has been placed in the paper book. Against the said order, assessee has not sought for any remedy nor has it challenged this issue in appeal after the passing of the assessment order. In any case, we have already held Assessing Officer has rightly acquired jurisdiction under section 147 based on the information/material referred to in the reasons recorded . Accordingly, this contention raised by the ld. Counsel is also rejected. So far as the contention that no notice under section 143(2) has been issued or served upon the assessee during the course of re-assessment proceedings, we find that assessee has neither challenged this issue after the passing of the re-assessment order nor has raised this issue before the Pr. CIT during the course of revisionary proceedings under section 263, wherein the assessee had raised several legal issues/ objections before the Pr. CIT challenging the validity of the reassessment proceedings. Even before the Tribunal at the time of filing of appeal, this issue has neither been raised in the grounds nor has any additional ground been raised so that department could have got the opportunity to object or respond to such a plea after verifying the record in this regard. Thus, such an oral plea at a last moment not arising from the impugned order and without any verification of record cannot be entertained. CIT has amply demonstrated in his impugned order that this issue was neither enquired into nor was verified by the Assessing Officer once the information and the material in hard copy and in form of CD was made available to him. AO should have verified the genuineness of the transaction and also should have carried out adequate enquiry to come to a logical conclusion that either there is no accommodation entry and the contents found qua the assessee being one of the beneficiary of the accommodation entry in the books of account of the concerns of S.K. Jain group are false or bogus; or assessee had amply demonstrated and substantiated before the AO regarding the genuineness of the transaction of the accommodation entry. In absence of such a mandate which was cast upon the AO, we are of the opinion that the assessment order is not only erroneous but also prejudicial to the interest of revenue, as this matter definitely requires proper enquiry and verification by the AO. Thus, we hold that the Ld. Pr. CIT has rightly exercised his jurisdiction under section 263 in setting aside the order of the Assessing Officer being erroneous - Decided against assessee.
Issues Involved:
1. Validity of the order under section 263. 2. Legality of the re-assessment proceedings under section 147. 3. Examination of seized material and its relevance. 4. Jurisdictional authority of the Assessing Officer (AO) and the Principal Commissioner of Income Tax (Pr. CIT). 5. Application of section 153C versus section 147. 6. Adequacy of the AO's enquiry and verification process. 7. Service of notice under section 143(2). Issue-wise Detailed Analysis: 1. Validity of the order under section 263: The assessee challenged the validity of the order passed under section 263 on the grounds that the re-assessment proceedings under section 147 were invalid. The Tribunal held that the Pr. CIT was correct in exercising his jurisdiction under section 263 as the AO did not properly examine the seized material relevant to the assessee. The Tribunal confirmed that the assessment order was erroneous and prejudicial to the interest of the Revenue, thus justifying the order under section 263. 2. Legality of the re-assessment proceedings under section 147: The assessee argued that the re-assessment proceedings under section 147 were invalid because the information was received from a third party and should have been initiated under section 153C. The Tribunal rejected this argument, stating that the entries in the books of S.K. Jain group did not belong to the assessee and thus section 153C was not applicable. The Tribunal upheld the validity of the re-assessment proceedings under section 147 based on the tangible material received from the investigation wing. 3. Examination of seized material and its relevance: The Pr. CIT noted that the AO did not examine the seized material, which indicated accommodation entries pertaining to the assessee. The Tribunal agreed with the Pr. CIT that the AO failed to consider the relevant seized material, which showed that the assessee was a beneficiary of accommodation entries. The Tribunal emphasized that the AO should have made proper verification and enquiries regarding the seized material. 4. Jurisdictional authority of the AO and the Pr. CIT: The assessee contended that the Pr. CIT lacked jurisdiction to revise the assessment order under section 263. The Tribunal held that the Pr. CIT had the authority to revise the order as the AO's failure to examine the seized material rendered the assessment order erroneous and prejudicial to the interest of the Revenue. 5. Application of section 153C versus section 147: The assessee argued that the proceedings should have been initiated under section 153C instead of section 147. The Tribunal rejected this argument, stating that the entries in the books of S.K. Jain group did not constitute documents belonging to the assessee. Therefore, section 153C was not applicable, and the re-assessment under section 147 was valid. 6. Adequacy of the AO's enquiry and verification process: The Tribunal found that the AO did not conduct adequate enquiries or verification regarding the seized material and the accommodation entries. The AO's failure to examine the seized material and verify the genuineness of the transactions rendered the assessment order erroneous and prejudicial to the interest of the Revenue. 7. Service of notice under section 143(2): The assessee contended that no notice under section 143(2) was served during the re-assessment proceedings, rendering the assessment order invalid. The Tribunal rejected this plea, noting that the issue was not raised before the Pr. CIT or in the grounds of appeal before the Tribunal. The Tribunal held that the assessee's oral plea could not be entertained without verification of the record. Conclusion: The Tribunal upheld the order of the Pr. CIT under section 263, confirming that the re-assessment proceedings under section 147 were valid and that the AO failed to conduct proper verification and enquiries regarding the seized material. The appeal of the assessee was dismissed.
|
