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TMI Blog2016 (5) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee against the order of the ld. CIT(A)-XVII, New Delhi, vide order dated 10th January, 2013 for assessment year 2004-05, on the following grounds of appeal:- 1. On facts and in the circumstances of the case and in law, the Id. Commissioner of Income Tax (Appeals)(CIT (A)) erred in confirming the addition of ₹ 1,06,06,355/- on account of income from undisclosed sources. 2. The CIT (A) erred in upholding the reassessment u/s 147/148 despite the fact that the AO did not have any valid reasons to believe that income chargeable to tax has escaped assessment which is sine qua non for framing assessment u/s 147/148. 3. That the reassessment proceeding initiated beyond four years from the end of the relevant assessment year was invalid in terms of the proviso to section 147 of the Act where there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. 4. That the A.O. had no material whatsoever for formation of any belief that income of the appellant chargeable to tax had escaped assessment since the appellant had not received accommodation entries by way of share capital/capital gains. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The expression the assessee offers no explanation means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. In this case the appellant has offered no creditable explanation about the amounts credited in its books, the receipt of ₹ 1,06,06,355/- therefore cannot be treated as explained. Considering the above facts, the addition of ₹ 1,06,06,355/- made by the AO u/s 68 is confirmed. 3. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us. 3.1. Grounds of appeal Nos.2, 3, 4 and 5 are directed against the reopening of the assessment u/s 147 as there was no failure on the part of the assessee to disclose fully and truly all materials for assessment and ground Nos.1, 6 and 7 are directed against the addition of ₹ 1,06,06,355/- on account of income from undisclosed sources. Since all the grounds are interconnected with each other, they are being discussed together. 3.2. The ld. AR submitted that the assessee is engaged in dealing in shares and advancing of loans. During the year under consideration, the assessee had entered into share trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1,06,05,440/-. The ld. AO, while passing the original assessment order has gone through these details and has applied his mind before accepting the submissions made by the assessee in lieu of the profits earned from trading in shares. It is further observed that the assessee has disclosed the amount in the Profit Loss Account under the head Profit and loss from trading in shares , thereby leading to the conclusion that the assessee has disclosed the said amount as income in the hands of the assessee for the relevant year under consideration. 5.2. The notice issued by the ld. AO for reopening is on the ground that the assessee has received accommodation entries to the tune of ₹ 1,06,06,355/- in the nature of share capital/capital gains which have escaped assessment. It is also noticed that the said notice of reopening has been issued by the ld. AO on 30.3.2011 which is beyond four years from the end of the relevant assessment order. The ld. AO has proceeded with the re-assessment proceedings merely on the information received from the Investigation Wing, without verifying the same. In the light of the above, we shall evaluate the provisions u/s 147 of the Act as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the AO received information that the assessee has received accommodation entries in the nature of share capital/capital gains. He has not verified the same before issuing the notice. The assessee has not received any amount by way of share capital or by way of capital gains. As already explained the assessee has carried out share trading transactions during the year and received the payment thereof by cheques. Such profit has been duly accounted, disclosed and assessed. Therefore the AO could not form a belief at the time of issue of notice that income to that extent has escaped assessment. Therefore the reassessment notice is invalid and void ab initio. Reopening invalid in terms of proviso to section 147: 5.8. The present proceedings as stated above, were initiated vide impugned notice dated 30.3.2011, i.e., much after the expiry of four years from the end of the assessment year 2004-05, the year under consideration. The assessment was framed u/s 143(3) vide order dated 24.11.2006. It is submitted that the assessee has duly disclosed the income/profit in its accounts and the same was specifically reflected in the Profit and Loss Account. During the course of assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is not permissible in law. The proceedings initiated are, therefore, clearly without jurisdiction, bad in law and void ab initio. 5.11. The ld.AR submits that the impugned reassessment proceedings are without jurisdiction and bad in law since the proceedings have been initiated on a mere change of opinion. It is submitted that Assessee Company has duly disclosed the income/profit in its accounts and the same was specifically reflected in the Profit and Loss Account. 5.12. During the course of assessment proceedings, the AO enquired about the same and raised a specific query. The assessee has filed detailed explanations along with supporting documents as detailed earlier. The AO after full application of mind passed the order u/s 143(3). In such a case, the reassessment notice is bad. The Supreme Court has in the case of Kelvinator of India in 320 ITR 561 has held that the concept of change of opinion on the part of Assessing Officer to reopen an assessment does not stand obliterated after the substitution of section 147 of the Income-tax Act, 1961, by the Direct Tax Laws (Amendment) Acts, 1987 and 1989. After the amendment, the Assessing Officer has to have reason to bel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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