2023 (10) TMI 1272 - AT - Income Tax

Reassessment of assessment u/s 147 - Reason to believe - unexplained credit - As per AO bogus entries or transactions were given or taken by the assessee - HELD THAT - We are unable to see any details of the company/entity through which the assessee received alleged accommodation entry, date of transaction, nature of transaction viz as to whether it was share application money or unsecured loan or any other kind of bogus transaction and from which entity or company the assessee received alleged entry or undertaken transaction. From the reasons it is also clear that the AO had proceeded to initiate reassessment proceedings u/s. 147 of the Act and to issue notices u/s. 148 without any examination, verification or evaluation of the facts and documentary evidence and report received from the officer/competent authority of search/survey operation during which alleged documentary evidence found and seized from Jain Brothers. In the reasons recorded, it is nowhere mentioned as to who had given bogus entries/transactions to the assessee or to whom the assessee had given bogus entries or undertaken alleged transactions. It is also nowhere mentioned as to on which dates and through which mode and entity/companies the bogus entries and transactions were made by the assessee. AO has vaguely referred to certain documentary evidences including a list of 195 companies found and seized during search/survey operation on Jain Brothers to allege that the assessee company (listed at S.No. 139) was involved in giving and taking bogus entries/transactions during the relevant financial year. The AO did not mention the details of transactions that represented unexplained income of the assessee company. Decided in favour of assessee.

Issues Involved:
1. Jurisdiction and compliance with mandatory conditions under Sections 147 to 151 of the Income Tax Act, 1961.
2. Validity and sustainability of the reassessment order under Sections 147/143(3).
3. Addition of Rs. 1,29,77,000/- under Section 68 as unexplained credit.
4. Addition of Rs. 2,33,586/- under Section 69C for alleged commission paid.
5. Charging of interest under Sections 234A, 234B, and 234C.

Summary:

Issue 1 & 2: Jurisdiction and Validity of Reassessment Order
The assessee argued that the reassessment order under Sections 147/143(3) was passed without proper jurisdiction and compliance with mandatory conditions under Sections 147 to 151. The Assessing Officer (AO) based his belief on vague observations and borrowed satisfaction from the Investigation Wing's report, without independent application of mind. The Tribunal found that the AO's reasons lacked specific details about the nature of accommodation entries, the entities involved, and the transaction dates. The reasons were deemed vague and insufficient to justify the belief that income had escaped assessment. Consequently, the reassessment proceedings and the reassessment order dated 28.03.2016 were quashed.

Issue 3: Addition under Section 68
The Tribunal did not adjudicate on the merits of the addition of Rs. 1,29,77,000/- under Section 68, as the reassessment proceedings were already quashed. The arguments on this issue were not presented by either side.

Issue 4: Addition under Section 69C
Similarly, the Tribunal did not address the addition of Rs. 2,33,586/- under Section 69C for alleged commission paid, due to the quashing of the reassessment proceedings.

Issue 5: Charging of Interest under Sections 234A, 234B, and 234C
The Tribunal did not discuss the issue of interest charged under Sections 234A, 234B, and 234C, as the reassessment order was invalidated.

Conclusion:
The Tribunal allowed the appeal, quashing the reassessment proceedings and the reassessment order dated 28.03.2016 for AY 2009-10, due to the AO's failure to provide valid reasons for reopening the assessment. The other grounds were not adjudicated due to the quashing of the reassessment order.

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