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TMI Blog2017 (11) TMI 1588X X X X Extracts X X X X X X X X Extracts X X X X ..... ound 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” be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. - I.T.A. No.2158/DEL/2017 - - - Dated:- 25-10-2017 - SHRI G. D. AGRAWAL, PRESIDENT AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For The Applicant : Shri K.P. Garg, C.A. For The Respondent : Shri S.S. Rana, CIT (DR) ORDER PER BENCH: The aforesaid appeal has been filed by the assessee against impugned order dated 17/3/2017, passed by Ld. Pr. CIT- 8, New Delhi under section 263 of the Income Tax Act, 1961, for the assessment year 2009-10. In the grounds of appeal, the assessee has raised the following grounds:- 1. The impugned order of the learned Pr. CIT-8 passed u/s.263 setting aside the Assessment Order passed by ITO Ward-9(4), New Delhi u/s.147/143(3), is bad in law, is devoid of jurisdiction, without the authority of law and is against the principles of natural justice, inter alia, because: a. The initiation of procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izure action in S.K. Jain group of cases that the assessee was also one of the beneficiaries of accommodation entries for a sum of ₹ 1 crore. The relevant portion of the reasons recorded by the Assessing Officer for reopening the assessment are as under:- Information/documents in the form of CD, appraisal report alongwith relevant details has been received from the office of the CIT-III, New Delhi vide letter F.No. CITlll/ Confidential/2012-13 dated 28.03.2013 that the above assessee, M/S SURYA JYOTI SOFTWARE PRIVATE LIMITED has received and is a beneficiary of accommodation entries provided by the group of Sh. Surendra Kumar Jain, Sh. Rakesh Gupta Sh. Vishesh Gupta and sh. Navneet Jain Vaibhav Jain and hundreds of bogus companies of his group and many other related entry providers. These search and seizure operations unearthed the modus operandi of these entry operators. The various companies which do not have any business were being used for providing accommodation entries to various assessees who were rerouting their unaccounted cash through these accommodation entries. The assessees would pay cash to the entry providers. This cash would then be deposited in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent by the Investigation Wing to all the Assessing Officers through their respective CITs, have neither been looked upon by the Assessing Officer nor has been examined by him during the course of reassessment proceedings. Accordingly, he issued a show cause notice under section 263, the contents of which have been incorporated by him at pages 2 and 3 of the impugned order, wherein he has specifically brought out that the Assessing Officer has failed to consider the relevant seized material pertaining to the assessee-company, which was evident from Annexure A-27 of the seized material, wherein there is a categorical mention of an amount of ₹ 1 crore taken through cheque No.244595, dated 29/1/2009; and there was also a corresponding entry in the cash book on 27/1/2009 seized in the case of S.K. Jain showing that cash was given by the same person to S.K. Jain group. The relevant portion of the said show cause notice having a bearing on the present case is reproduced herein below for the sake of ready reference:- A search and seizure operation was carried out u/s 132 of the Act on 14/09/2010 at the premises of Shri Surender Jain and Shri Virender Jain. During the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the assessee stating that in the original assessment proceedings completed under section 143(3), details of squared up loans/accounts were verified by the Assessing Officer, wherein the name of M/s Shalini Holdings Ltd. was also included. The assessee further vehemently objected to the revisionary proceedings under section 263 on the ground that the assessment order u/s 143(3)/147 which has been sought to be revised, itself is erroneous in law, because the said assessment order should have been passed under section 153C and not under section 147 and, therefore, the assessment order which is subject of revision is non-est. It was further submitted that during the course of reassessment proceedings, the assessee was required to furnish income-tax returns, confirmations, financial bank statements to the Assessing Officer which was duly complied with and only that, notice under section 133(6) was issued to the investor companies by the Assessing Officer and, therefore, the material which has already been considered by the Assessing Officer during the course of assessment proceedings under section 147, cannot be considered within the scope of revision under section 263. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the assessee that the name of M/s Shalini Holdings Ltd. does not appear in the seized material, is incorrect and is borne out from the material confronted by him to the assessee. 9. Regarding assessee s challenge that proceedings should have been initiated under section 153C and not under section 147, because if any material has been found from the possession of the person searched , then the right recourse would have been that the proceedings should have been initiated under section 153C, the Pr. CIT rejected the said contention on the ground that during the course of search proceedings in the case of S.K. Jain group many documents showing the names of cheque issued and consolidated cash book of various companies controlled by S.K. Jain group were seized and in such documents the details of cheques issued in favour of beneficiaries including assesseecompany as well as details of cash deposit through intermediates on various dates were found to be noted. He held that the entries in the books of S.K. Jain group did not belong to the assesseecompany and, therefore, it cannot be held that any document of the assessee-company has been found in the course of search of S.K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o one of the beneficiaries of the accommodation entries given by the concerns of S.K. Jain group. The Assessing Officer was mainly trying to verify the existence of the parties, rather than to make enquiries regarding the genuineness of the transactions whether cheque was issued in lieu of cash or not as was appearing in the seized material. Lastly, he held that from the perusal of the case records of the assessee for the relevant assessment year, there is nothing on record to show that the Assessing Officer has ever confronted the assessee on such seized documents and had the Assessing Officer examined the seized material, he should have made some noting either in the order sheet or in the questionnaire issued to the assessee or any kind of reference would have been made in the submissions made by the assessee before the Assessing Officer. Therefore, the decisions and the case laws relied upon by the assessee would not be applicable that the Assessing Officer had formed an opinion on the relevant seized material. Accordingly, he set aside the re-assessment order on the ground that the Assessing Officer has not made any proper verification/enquiries and, therefore, the said assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mind after verifying the records of the assessee. 13. Another contention raised by the Ld. Counsel was that the assessment framed under section 143(3) read with 147 is invalid also for the reason that no notice under section 143(2) has been served upon the assessee, hence the entire assessment order is bad in law and consequently, such an order could not be subject matter of revision under section 263 and for this proposition also he reiterated the same set of decisions. On the issue of nonservice of notice under section 143(2), he made his elaborate submissions and also filed a separate synopsis along with reliance placed on various decisions. 14. Lastly, he submitted that the order under section 147, which has been sought to be revised by the Ld. Pr. CIT, had been passed after considering some of the new material facts brought on record subsequently which has been referred and relied upon by him in the show cause notice as well as in the impugned order. These material facts neither does form part of the reasons recorded , nor was available with the Assessing Officer at the time of issuance of notice under section 148. No new material can be relied upon in revisionary pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations appearing in the impugned order as well as the material referred to before us. Here in this case, the original assessment was completed under section 143(3) vide order dated 30/11/2011, wherein admittedly the issue of loan or money received from M/s Shalini Holdings Ltd. was neither examined nor was enquired by the AO during the course of assessment proceedings, at least nothing has been brought on record before us by the assessee in the detailed paper book filed before us that any query or reply on this issue was raised by the Assessing Officer in the course of assessment proceedings. Even the assessment order merely speaks about accepting of the original return of income, when admittedly assessee had filed revised return of income on 14/9/2010. This shows completely lack of application of mind by the AO at the time of passing of original assessment order. Later on, assessee s case was reopened under section 147 by issuance of notice under section 148 dated 18/10/2013, which from the records before us shows that the said notice was withdrawn due to some technical reason and another notice under section 148 was issued on 25/3/2014. The reasons for reopening the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly passing of the re-assessment order, is dated 25/3/2014. Thus, the law contained in proviso to section 147 will not apply whereby ascribing of failure on part of the assessee by the AO is sine-qua-non to acquire the jurisdiction beyond the period of 4 years where assessments have been completed under section 143(3) or 147. Post acquiring of jurisdiction under section 147, it is nowhere borne out from the records that the Assessing Officer has verified the genuineness of the transaction based on the information received, specifically on the Annexures and the information as elaborately discussed by the Ld. Pr. CIT in the impugned order, which has been stated to be available to the Assessing Officer also at the time of re-assessment proceedings. There is no rebuttal of the categorical observation of the Ld. Pr. CIT that it is admitted by the ld. counsel for the assessee that no specific query was raised by the Assessing Officer regarding the seized material relating to M/s Shalini Holdings Pvt. Ltd. as mentioned in the show cause notice (para 7.3 of the impugned order). The Ld. Pr. CIT has further observed that he has perused the case records of the assessee for the relevant Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad in law. In support of this proposition Ld. Counsel, has relied upon certain decisions, firstly on the point that validity of reassessment or assessment order can be challenged in the revisionary proceeding under section 263; and secondly, if any material has been found pertaining to the assessee in the case of person searched or covered u/s 153A, then only recourse was to initiate proceedings under section 153C and not under section 147. At the outset, we do not find any quarrel to the proposition that the validity of assessment or reassessment cannot be challenged in the revisionary proceedings u/s 263, however, on the facts of the present case, the ratio laid down in such judgments would not be applicable at all, because here in this case no document or material belonging to the assessee was found in the course of search proceedings in the case of S.K. Jain group, albeit assessee s name appears as one of the beneficiaries of accommodation entries in the books of account maintained by one of the concern of S.K. Jain group. The entries in the books of account of S.K. Jain group cannot be reckoned as any material or document belonging to the assessee so as to constitute documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... times 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. 21. So far as the contention of the ld. counsel that no notice under section 143(2) has been issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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