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TMI Blog2016 (6) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... y reason of either omission on the part of the assessee to disclose fully and truly all material facts for assessment. It is a settled law that in the absence of omission or failure on the part of the assessee to disclose fully and truly all material facts, the time limit to issue notice u/s. 148 expired on 31.3.2008, therefore, the notice u/s. 148 dated 30.3.2010 is time barred. Therefore, we are of the considered view that Notice issued u/s. 148 of the Act is illegal and deserve to be quashed - Decided in favour of assessee - ITA No. 1565/Del/2014 - - - Dated:- 3-6-2016 - Shri H. S. Sidhu, Judicial Member And Shri O. P. Kant, Accountant Member For the Assessee : Sh. SB Gupta, CA For the Department : Sh. T. James Singson, SR. ORDER Per H. S. Sidhu, JM Assessee has filed this Appeal against the Order dated 08.2.2013 passed by the Ld. Commissioner of Income Tax (Appeals)-VII, New Delhi pertaining to assessment year 2003-04 on the following grounds:- 1. That the notice under section 148 is illegal and void ab initio and is, therefore, liable to be quashed. 2. That there was no reason to believe that petitioner's income has escaped assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to total income on this account ought to be deleted. 11. That the assessee-company craves leave to add, modify, alter, delete or raise any other ground at the time of hearing of appeal. 2. The brief facts of the case are that the original return was filed on 28.11.2003 declaring loss of ₹ 1,21,87,176/-. The return was duly processed under section 143(1)(a) of the Act on 15.3.2004. The assessee company is engaged in the business of manufacturing of yarn. The assessment was completed under section 143(3) on 30.3.2006 at a loss of ₹ 96,87,176/- after making an addition of ₹ 25,00,000/- under section 68 of the Income Tax Act, 1961. The Ld. CIT(A) vide order dated 15.5.2007 in appeal No. 37/06-07 deleted the addition of ₹ 25,00,000/- and the said deletion was subsequently confirmed by the ITAT vide order dated 17.10.2008 and the Hon ble High Court vide order dated 8.7.2009. Accordingly, the AO by giving effect the order of the ITAT, passed order u/s. 254/143(3) on 7.12.2009 assessing total loss of RS. (-) 1,91,37,726/-. Subsequently, the case of the assessee was reopened u/s. 147 as information was received from Investigation Wing of the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the end of the relevant assessment year. He further stated that there was no omission or failure on part of the assessee to disclose fully and truly all material facts relating to share application money because the assessee had submitted details of share application money in initial assessment proceedings which was verified by the Assessing Officer by way of issue of summons to the share applicant who duly responded to the summons. He further stated that in the reason recorded to issue notice u/s. 148, the AO has nowhere alleged that escapement of income has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for assessment of that year. In order to support his contentions, he relied upon the following judgments of the Hon ble Delhi High Court by filing the copies thereof with the Paper Book and requested to quash the reassessment. - CIT v. Suren International P. Ltd. (2013) 357 ITR 24 (Del) - Haryana Acrylic Manufacturing Company v. CIT (2009) 308 ITR 38 (Del) - JSRS Udyog Limited v. ITO (2009) 313 ITR 321 (Del) - Wel Intertrade P. Ltd. ITO (2009) 308 ITR 22 (Del) 6. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him. The assessee was asked to substantiate the identity, genuineness, and creditworthiness of the share application money of ₹ 7 lacs received by it from M/s Garg Petroleum Private Limited. Subsequently notice u/s. 143(2) was issued to the assessee. Assessee filed objections to the reopening of the assessment and issuing of notice u/s. 148 by his letter filed on 10.12.2010 which were rejected vide order sheet entry dated 10.12.2010. Thereafter, AO observed that the assessee has shown receipt /credit of ₹ 7 lacs as share application money through transaction where no real transaction took place, hence, the same was treated as unexplained funds and added back to the income of the assessee and assessed the same at loss of ₹ 1,84,37,726/- passed u/s. 147/143(2) of the I.T. Act, 1961 vide his order dated 24.12.2010 and Ld. CIT(A) vide order dated 8.2.2013 dismissed the appeal of the Assessee. 7.1 For the sake of clarity, we are reproducing the reasons recorded by the AO as under:- The above assessee filed return of income on 28/11/2003 at return loss of Rs, 1,21,87,176/.The return was processed u/s 143( 1) at returned income. The assessment was completed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ranging from ₹ 1000 to 2000 per month. These account holders were masons, plumbers, electricians, peons, drivers etc, whose earnings are not sufficient for a living. They earned normally ₹ 3 to 5 thousand per month in their normal work and by working for the entry operators earned extra income of ₹ 2 to 4 thousand per month, Their signatures were taken on blank gift deeds, cheque books, share application money etc. In fact these persons signed all types of papers they were asked to sign. They were made directors of companies, partners of firms and proprietor of different concerns solely for operation of these accounts. Actually, many of them were not even aware of the tax implications etc. Their only concern was with the few thousand rupees given to them by the entry operators. 3. Summing up, the report as a result of these extensive enquiries carried out by the DIT(Inv.), New Delhi has established e non-genuineness of transactions, whether shown by beneficiaries as inflow of Share Capital or receipt of Gifts or consideration for sale-purchase. The creditworthiness of the persons/persons controlling the concerns who have given these credit entries/share ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIRCLE 5(1)), NEW DELHI 7.2 We have perused the reasons recorded by the AO and we find that the AO issued notice u/s. 148 of the Act on 30.3.2010 for the assessment year in dispute i.e. 2003-04 which is after the expiry of 4 years from the end of the relevant assessment year. We are of the view that the case of the assessee is governed by the first proviso to section 147 of the Act and in the original assessment made u/s. 143(3) vide assessment order dated 30.3.2006 the AO had made detailed enquiry of the share application money received by the assessee company. We find that there is no omission or failure on the part of the assessee to disclose fully and truly all material facts relating to share application money because the assessee had submitted details of share application money in initial assessment proceedings which was verified by the AO by way of issue of summons to the share applicant who duly responded to the summons. We further find that in the reasons recorded the AO has nowhere alleged that escapement of income has occurred by reason of either omission on the part of the assessee to disclose fully and truly all material facts for assessment. It is a settled law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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