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TMI Blog2016 (3) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... tain and cannot be construed as satisfaction on the basis of the relevant material on the basis of which a reasonable person can form a belief that income has escaped assessment. Also the reasons recorded did not disclose the AO’s mind regarding escapement of income. The Hon’ble Delhi High Court ultimately held that initiation of proceedings u/s 148 of the Act was not valid and justified in the eyes of law. Following the said decision we hold that initiation of re-assessment proceedings is not valid. On this ground, the assessment is liable to be annulled. - Decided in favour of assessee - ITA No.660/Kol/2011 - - - Dated:- 3-2-2016 - Shri N.V.Vasudevan, JM Shri M.Balaganesh, AM For the Appellant : None For the Respondent : Shri S.M.Surana, Advocate ORDER Per Shri N.V.Vasudevan, JM This is an appeal by the Revenue directed against the order dated 24.02.2011 of CIT(A)-VI, Kolkata relating to A.Y.2002-03. 2. The Assessee is a company. For A.Y.2002-03 the assessee filed return of income on 31.10.2002 declaring total loss of ₹ 1,53,241/-. Return was processed u/s 143(1)(a) on 31.03.2003 and assessed at a total income of ₹ 1,12,000/-. Thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Saviour Leasing Private Ltd. 5. Eco Star Securities Pvt. Ltd. 6. Welkin Commercial Pvt. Ltd. 7. Omni Present Credits Pvt. Ltd. 3.4. In the above circumstances, the AO came to the conclusion that the assessee has failed to provide any satisfactory explanation regarding receipt of money as share application money and/or source and/or creditworthiness of the following parties apart from the 4 parties which are found to be non-existent by investigating of I.Tax, New Delhi. Sl.No. Name of Assessee Address Amount of Investment 1. Kailash Chand Sharma 765, Chabiganj, Kash Mere gate, Delhi-110006. Rs.2,50,000/- 2. Argent Finvest (P)Ltd. SFS 256 4-5-B, Paschim Vihar, N.Delhi-110063. Rs.10,00,000/- 3. Nemi Chand Sawani Near MahadevTemple,Umed Chowk(Jodhpur),Rajasthan Rs.2,50,000/- 4. Welkin Commercials (P)Ltd. SFS 256 A-5/B-4, Gali No.7, Paschim Vihar, N.Delhi-110063. Rs.12,50,000/- 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n response to our notice u/s 133(6). The AO accordingly held that the existence and definitely the creditworthiness (the capacity to invest) is very much doubtful in respect of above mentioned 15 parties and the 4 parties reported by the DIT(Inv.) New Delhi. Therefore, ₹ 77,50,000/- introduced as share application money of such these 15 parties and ₹ 26,00,000/- introduced by 4 parties are treated as cash credit u/s 68 and added back to the income of the assessee. 4. Before CIT(A) the assessee challenged the validity of initiation of proceedings u/s 147 of the Act by the AO. It was submitted that the reasons recorded by the AO were vague and cannot be the basis on which the AO could have formed a belief that income of the assessee chargeable to tax has escaped assessment. The CIT(A) did not agree with the submissions so made by the assessee. CIT(A) held that the information received from the D.I.T.(Investigation), New Delhi that the assessee was a beneficiary of a racket involved in providing accommodation entries related to share capital was sufficient for the AO to initiate proceedings u/s 148 of the Act. CIT(A), however on merits of the addition made by the AO u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e advice of the assessee. The CIT(A) was of the view that this approach was wrong. The CIT(A) also observed that share application money was given in the year 2001-02 and hence it was about 7-8 years old matter. In such situation if the assessee asks the shareholders to send their confirmations there cannot be anything wrong in that. \ 4. As regards the companies listed at Sr.No. 2,4,5,6,7,8,12,13, 14 and 15 in the list on page 4 of the assessment order the AO and set out in the earlier part of this order, the CIT(A) was of the view that the notices sent to these parties were returned unserved. However, in respect of all the 26 parties the Assessee submitted a full set of documents containing different types of evidences such as identity proofs, address proofs I.T. returns, balance sheets and Profit loss account, confirmation letters, copies of bank statements etc. In these documents the evidence about these 10 companies were also available. Hence the CIT(A) held that by providing these documents the assessee discharged its onus to prove the genuineness of these share holders. It was not justified on the part of the AO to reject the genuineness of these share holders on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-10 Dated 22/04/2009 To The Principal Officer Greatwall Marketing (P) Ltd. clo Sri. S.M. Daga 11, Clive Row, Room No. 2 .z-. Fir. Kolkata- 700001. Sir. Sub: Recorded Reasons for Reopening in the case of Greatwall Marketing (P) Ltd. for Asst. Yr. 02-03 Ref: Your letter dated 02/04/09 Please refer to the above. As per information received from investigation wing New Delhi the introduced share capital during the year. had been received from corporate bodies which are non existent and whose capacity to invest ( credit worthiness ) could not be established . Therefore I have reasons to believe that unexplained cash credit had been introduced in your books of accounts in the name of introduction of share capital and receipt of share application money. In absence of satisfactory identity and credit worthiness of the other parties. the entire introduced capital and share application money will be treated as your income for that year. I will therefore continue the proceedings for reassessment of your return u/s 147. Statutory notices u/s 143(2) and 142(1) are enclosed herewith. Yours faithfully. Sd/- ( Sanjay Mukherjee) DCIT /Cir-6/Kol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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