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TMI Blog2018 (12) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... Dinesh Kumar Goel [2010 (10) TMI 287 - DELHI HIGH COURT] and arguments from both sides including the decision in the case of A.F.Ferguson & Co. [2014 (7) TMI 1285 - BOMBAY HIGH COURT] another decision from Hon’ble P&H High Court in the case of CIT vs. Punjab Tractors Co-operative Multi-purpose Society Ltd. [1997 (8) TMI 37 - PUNJAB AND HARYANA HIGH COURT], affirmed the stand of the ld.CIT(A). Reopening of assessment - reason to believe that income has escaped assessment - incorrect claim of expenditure as a revenue expenditure towards the pension paid to retired partners - Held that:- ase was reopened with the issuance of notice u/s,.148 on 13.3.2015 as the ld. A.O found that the assessee incorrectly claimed the expenditure as a revenue expenditure towards the pension paid to retired partners. As per the partnership deed also, it was found that money received from the clients has been shown as advances from clients instead of offering the same as income. Thereafter, the assessee in response to the notice offered the total taxable income of Rs,13,56,49,603/- on 29.4.2015. The ld.AO communicated the reasons for reopening. The assessee filed its objections vide letter dated 18.2.2016. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal No.71/CIT(A)-2/2015-16 dated 28.03.2017 against the order passed by the ACIT, Non-Corporate Circle-1, Chennai [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short "the Act") dated 31.03.2015 for the Assessment Year 2012-13. 2. The only issue to be decided in the appeal of the revenue is as to whether the ld CITA was justified in deleting the disallowance made in respect of payment of ₹ 1,58,56,741/- made to retired partners in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is a firm of chartered accountants and had filed its return of income for the Asst Year 2012-13 on 28.9.2012 declaring total income of ₹ 10,70,28,740/-. Later the assessee filed a revised return of income on 31.3.2014 declaring total income of ₹ 10,70,28,740/- i.e same as original return and claimed TDS credit of ₹ 12,65,52,009/- as against the original TDS credit of ₹ 10,16,17,748/- and claimed consequential refund thereon of ₹ 9,34,80,130/- in the revised return. In the course of assessment proceedings, the ld AO sought to disallow the payment to retired partners in the sum of ₹ 1,58,56,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s where the income never reaches the assessee as his income. Whereas in the instant case the assessee had received the income and diverted it and therefore it was mere application of income. 3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld. CIT(A) may be set aside and that of the AO restored. 4. The ld DR argued that this tribunal while deleting the addition made for Asst Year 2011-12 had placed reliance on the coordinate bench decision of Mumbai Tribunal in the case of C.C.Chokshi & Co. vs JCIT in ITA Nos. 492 to 495/Mum/2003 for the Asst Years 1995-96 to 1997-98 , wherein on identical facts, it was held that the payment is by overriding title but not an application of income. The ld DR argued that this decision has been distinguished by yet another decision of Mumbai Tribunal in the case of S.B.Billimoria & Co. vs ACIT reported in (2010) 125 ITD 122 (Mum) dated 19.12.2008. Accordingly he pleaded that the latest decision of Mumbai Tribunal dated 19.12.2008 would hold the field as on date and prayed for restoration of the order of the ld AO in this regard. 5. In response to this, the ld AR submitted that the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions of Hon'ble Bombay High Court supra and respectfully following the same, we do not find any infirmity in the order of the ld CITA in this regard. Accordingly, the grounds raised by the revenue are dismissed." 3.1 We find that on identical issue /facts with respect to payment made to retired partners that too in the case of the assessee the Tribunal considered the factual matrix and considered the decision of the Tribunal on identical facts / issue for ay 2011-12, wherein the payment of expenditure allowable u/s.37(1) of the Act has been considered. The Tribunal also considered the partnership deed wherein identical reference has been made in various clauses with respect to determination and the payments to retiring partners or the spouse /nominees of the deceased partners and thereafter reached to the particular conclusion considering the another decision from the Mumbai Bench in the case of M/s.C.C.Chokshi & Co., Vs JCIT in ITA Nos. 492 to 495/Mum/2003. The Tribunal also reproduced the relevant portion of the order in the case of M/s.C.C.Chokshi & Co., and considered various decisions including from Hon'ble Bombay High Court. No contrary decision was brought to our noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al before the Tribunal. 7. On behalf of the assessee, Senior Counsel, Shri Percy J. Pardiwala appeared and presented the case. In his argument, the Senior Counsel stated that the assessee is a firm of Chartered Accountants rendering auditing, tax advisory and compliance as well as financial advisory services to its clients. The partners of the firm play pivotal role in rendering professional services. As a professional firm, the method of accounting adopted by the firm is cash method of accounting. As a matter of practice, memo of fees is raised on the client on completion of engagement. The income in respect of professional fees gets booked only on receipt of professional fees from the client. Similarly, at any given point of time, there are several ongoing professional engagements for which professional time has been spent and efforts are made. Such work in progress is not reflected in the accounts because of the cash method of accounting. In view of the above, there is considerable amount of income either unbilled or billed but not received and work in progress to be received from the clients for which costs are incurred, time is devoted and efforts are made during the period w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng: i) amounts bills, but not received, work completed, but not billed, and work partly completed and not billed as at the date of death or retirement, as the case may be, having regard to the fact that the Partnership follows the cash system of accounting. ii) In consideration of the Retiring Partner or the spouse or nominee of the deceased Partner, as the case may be, permitting the continuing partners the use of the Firm name of Deloitte Haskins & Sells., to carry on the profession, along with the clientele and the attendant rights of the Firm; Determination and payment of amounts under clause 10.m iii) the contribution made by the surviving Partner or the deceased Partner as the case may be, during his association with the Firm, in increasing the future income earning potential of the Firm, the benefits whereof are likely to be reflected in the receipts of the Firm for a reasonable number of years immediately following the retirement or death of the Partner; and/or iv. In consideration of the assuming of the liability of the Retired Partners of the Legacy Firms consequent to the acquisition of the clientele and employees together with the substantial business of the Legac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or dies. In such case the Qualifying Period will not be considered. In case of death of a Partner or retirement of a Partner due to incapacity before completion of three years as a Partner, then the average annual amount received in the previous year would be worked out with reference to the Amount Received in the Previous Years in absolute terms for the period he served as a Partner. Provided that a Partner who retires on attainment of the normal Retirement age after completing at least five continuous years as a Partner but without completing the Qualifying Period of 20 years shall be entitled to the payments of ₹ 6,00,000 per annum for a period of ten years from the date of the retirement. The absolute amount referred to above will be indexed as per the Cost Inflation Index specified in section 48 of the Income Tax Act, 1961 and the base year for the Indexation being 2007-08 or increased every year at the simple rate of 5% per annum, whichever is higher. iv. Notwithstanding anything contained above the amounts payable under clause 10.n iii to a Retiring Partner of the Spouse or nominee of a deceased Partner in any financial year (on or after 1 April 2007) shall not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by them as a partner during their tenure in the partnership-firm. Further the Senior Counsel further submitted that the method and manner of payment is determined as per clause 10(m) of the partnership deed which is reproduced in the earlier paragraph. 10. Referring to the decision of 1TAT Mumbai Bench in the case of associated concern of the assessee-firm M/s C.C Chokshi & Co. vs JC1T in I.T.A.No.s 492 to 495/Mum/2003 for the A.Y 1995-96 to 1997- 98 the Id. Senior Counsel submitted that on identical facts, the ITAT Mumbai, Bench held that the payment is by overriding title but not an application of income. He further submitted that clauses 22 and 28 of partnership deed of M/s C.C. Chokshi & Co. are identical to the clauses 10(m), 10(n) and 7(e) of assessee's partnership deed and a comparative chart was submitted by the Senior Counsel which reads as under: Clause in the Partnership Deed of Chokshi & Co. Clause in Partnership deed of the Appellant Description Details Clause 22 Clause 10m Right to receive payments on retirement or death. The list of sums entitled to be received determined based Clause 10n of the deed. Clause 10 n Determination and payment of amounts un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case may be, shall be entitled to receive the further sum speared in clause 23, in respect of the following: (a) (I) amounts billed, but not received, (ii) work completed, but not billed, and (iii)work partly completed and not billed as at the date of death of retirement, as the case may be, having regard to the fact that the partnership follows the cash system of accounting, and (b) (i) in consideration of the retiring partner or the legal representative of the deceased partner, as the case maybe, permitting the continuing partners the use of the firm name of C. C. CHOKSHI & Co. to carry on the profession, along with the clientele and the attendant rights of the firm, (ii) the contribution made by the surviving partner or the deceased partner as the case may be during his association with the Firm, in increasing the future income earning potential of the Firm, the benefits thereof are likely to be reflected in the receipt of the Firm for a reasonable number of years following the retirement or death of the partner, and (iii) the restrictive covenants contained in clause 26 thereof from engaging in any gainful occupation or in the practice of the profession of accountancy i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned DR are not applicable to the facts of the case." 12. The Senior Counsel also relied on the decision of 1TAT Mumbai in the case of M/s C.C. Chokshi & Co for the assessment years 200-01 to 2001-02 which held the issue in favour of the assessee following decision of the Coordinate Bench in I.T.A.Nos. 492 to 495/Mum/2003 and observed that the 1TAT has referred to several judgments in the above case including the judgment of Hon'ble Supreme Court in the case of CIT vs Sitaldas Tirathdas, 41 ITR 367 which was relied upon by the Assessing Officer in the assessment order as well as by the CIT(A) in his appellate order. The appeal filed by the Revenue against the above order of the Tribunal was dismissed by the Hon'ble Bombay High Court in ITA No.209 of 2008 dated 25.7.2008. The Bombay High Court followed its judgment in the case of CIT vs Mulla and Mulla and Craigie, Blunt and Caroe 1991 1TR 198. The Id. Senior Counsel relied on the following decisions also on identical facts: 1. CIT vs Punjab Tractors Co-op. Multipurpose Society Ltd, 95 Taxman 579 2. GFA Anlagenbau GmbH vs ITO, 57 lTD 81 (Hyd) 3. S. Priyadarsan vs JC1T, 73 TTJ 378 (Chennai) 4.AC1T 11(2) vs M/s A.F. Ferguson ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i in the case of the associate concern of the assessee, M/s C.C. Chokshi & Co. (supra), hold that the payment is a diversion by overriding title and cannot be included in the total income. 16. The assessee also raised the ground for allowance of expenditure u/s 37(1) of the Act. Since we held that the payment made to retiring partners is diversion of income by overriding title, the ground raised by the assessee became infructuous and hence dismissed. 17. The next ground is related to the TDS credit of1,98,27,735/- which has been suffered by the assessee in connection with the professional fees received from clients. 18. The CIT(A) in her appellate order, has directed the Assessing Officer to verify the claim of the assessee vis-à-vis Form 26AS and give for the correct amount of T.D.S. Giving correct amount of payment of taxes is the duty of the assessing officer. The assessee should not be made to suffer for getting the refund of taxes paid. We direct the assessing officer to allow the correct amount of TDS without any further delay. This ground is allowed for statistical purposes. 19. The next ground is related to levy of interest u/s 234D to the extent of 6,10,636. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee further submitted that the advance is a very small amount as compared to the aggregate professional fees. Apart from the above, alternatively the Id. AR submitted that the advance received during the assessment year under consideration was only 2,79,161/- which may be added to the income of the assessee if the assessee's contentions are not accepted. Further Ld. A.R submitted that on identical facts in the case of A.F. Ferguson &Co in ITA No.7792/M/04 dated 30/01/2008 Mumbai 1TAT has dismissed the appeal of the revenue. 28. We heard the rival submissions and perused the material placed before us. The assessee-firm is a Chartered Accountants rendering professional services. As per Balance Sheet as on 31.3.2011 the advance outstanding was 64,39,989/-. The assessee contended that the amount of advances were received from clients for the services not yet rendered, therefore, the income is not accrued and accordingly, the advance cannot partake the character of income. Further, the assessee submitted that all advances cannot be held as income. In other words, the receipt resumes the character of income only when the services are rendered. The assessee is following the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial /evidence with the ld.A.O and the reopening was made merely on change of opinion and it was merely due to the reason to meet out the audit objections. It was furht5er contended that necessary details/information was furnished by the assessee during the assessment proceedings. However, the ld.D.R strongly defended the re-opening by inviting our attention to the finding contained in the assessment order /impugned order. 5.1 We have considered the rival submissions and perused the material available on record. So far as, reopening of assessment u/s 147/148 of the Act on the plea that the Ld. Assessing Officer ignored the fact that there was no reason to believe that income has escaped assessment as there was no tangible material with the Assessing Officer and independent application of mind. In this background, we shall analyze whether the Ld. Assessing Officer was right in re-opening the assessment u/s.147 of the Act. It is our bounded duty to examine Sec.147 of the Act which is reproduced hereunder for ready reference and analysis. "If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E; (c) where an assessment has been made, but- (i) income chargeable to tax has been under assessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed; (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the powers with effect from 01/04/1989 are contextually different and the cumulative conditions spelt out in clauses (a) and (b) of section 147, prior to its amendment are not present in the amended provision. The only condition for action is that the Assessing Officer "should have reason to believe" that income chargeable to tax has escaped assessment. Such belief can be reached in any manner and is not qualified by a pre-condition of faith and true disclosure of material facts by an assessee as contemplated in pre-amended section 147. Viewed in that angle, power to reopen assessment is much wider under the amended provision. Our view is fortified by the decision from Hon'ble Delhi High Court in Bawa Abhai Singh vs DCIT (2001) 117 taxman 12 and Rakesh Agarwal vs ACIT (1996) 87 taxman 306 (Del.). The Hon'ble Apex Court in CIT vs Sun Engineering works Pvt. Ltd. 198 ITR 297 (SC) clearly held that proceedings u/s 147 are for the benefit for the Revenue, which are aimed at gathering the 'escaped income'. At the same time, We are aware that powers u/s 147 and 148 of the Act are not unbridled one as it is hedged with several safeguards conceived in the interest of eliminating room for ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases:- i. Epica Laboratories Ltd. vs DCIT 251 ITR 420, 425-426 (Bom.), ii. Vishnu Borewell vs ITO (2002) 257 ITR 512 (Orissa), iii. Central India Electric Supply Company Ltd. vs ITO (2011) 333 ITR 237 (Del.), iv. V.J. Services Company Middle East ltd. vs DCIT (2011) 339 ITR 169 (Uttrakhand), v. CIT vs Abhyudaya Builders (P. ) Ltd. (2012) 340 ITR 310 (All.), vi. CIT vs Dr. Devendra Gupta (2011) 336 ITR 59 (Raj.), vii. Emirates Shipping Line FZE vs Asst. DIT (2012) 349 ITR 493 (Del.). viii. Reference may also made to following judicial decisions:- ix. Safetag international India P. Ltd. (2011) 332 ITR 622 (Del.), x. CIT vs Orient Craft Ltd. (2013) 354 ITR 536 (Del.) xi. Acorus Unitech Wirelss Pvt. Ltd. vs ACIT (2014) 362 ITR 417 (Del.). xii. Praful Chunilal Patel: Vasant Chunilal Patel vs Asst. CIT (1999) 832, 843-44, 844-45 (Guj.), xiii. Venus Industrial Corporation vs Asst. CIT (1999) 236 ITR 742, 746 (Punj.), xiv. Srichand Lalchand Talreja vs Asst. CIT (1998) 98 taxman 14, 19 (Bom.), xv. Usha Beltron Ltd. vs JCIT (1999) 240 ITR 728, 736-37, 739 (Pat.) xvi. Kapoor Brothers vs Union of India (2001) 247 ITR 324, 331, 332-33 xvii. Vippy Processors Pvt. Ltd. vs CIT (20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure to disclose fully and truly material facts necessary for assessment. The reassessment proceedings were held to be valid. This view was also confirmed in following cases:- a. Dalmia P. Ltd. v. CIT, (2012) 348 ITR 469 (Del); b. CIT v. K. Mohan & Co. (Exports), (2012) 349 ITR 653 (Bom); c. Remfry & Sagar v. CIT, (2013) 351 ITR 75 (Del); d. OPG Metals & Finsec Ltd. v. CIT, (2013) 358 ITR 144 (Del). 5.9. In the case of Venus Industrial Corporation v. Asst. CIT, (1999) 236 ITR 742, 746 (P & H) [Where initiation was started within four years for re-examining the deduction under section 80HHC, was held to be wrongly allowed in the original assessment. Identically, in the case of Happy Forging Ltd. v. CIT, (2002) 253 ITR 413,416-17 (P & H), where excise duty paid in advance was shown as an asset in the balance sheet and was allowed as a deduction, reassessment notice on the ground that excise duty was shown as an asset in the balance sheet and was not routed through the profit and loss account. The reopening at this stage was held to be valid. In the case of Vipan Khanna v. CIT, (2002) 255 ITR 220, 230 (P & H), where from the facts it was clear that the assessee had claimed de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ols & Forgings P. Ltd., (2008) 306 ITR 209 (P & H), where, the assessee in the regular assessment had been allowed deduction more than actually allowable under section 80HHC. Therefore, the action initiated by the AO for reassessment under section 147(b) could not be held to be invalid. 5.12. In the case of Markanda Vanaspati Mills Ltd. v. CIT, (2006) 280 ITR 503 (P & H), wherein, the information furnished by the assessee gave no clue to the payment of liability in regard of the sales tax collected in excess. The Assessing Officer was held to be validly initiated the reassessment proceedings under section 147 for both the years under consideration. In the case of Sat Narain v. CIT, (2010) 320 ITR 448 (P & H), the document did not form the sole basis for the Assessing Officer to initiate reassessment proceeding but he also took into consideration the letter written by the Assistant Commissioner as well as the fact that no return had been filed by the assessee for assessment year 1995-96. Thus, it was held that the Assessing Officer had rightly invoked the jurisdiction to initiate the reassessment proceedings under section 147. In the case of CIT v. Hukam Singh, (2005) 276 ITR 347 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT, (2002) 257 ITR 481, 489, 494- 95, special leave petition dismissed by the Supreme Court: (2002) 255 ITR (St.) 7-8 (SC), where the assessee was holding shares in an amalgamating company and he was allotted shares in the amalgamated company and such shares were sold by him and he has disclosed the market price of such shares as on the date of amalgamation as the cost of acquisition of such shares and has not disclosed the cost of acquisition of shares in the amalgamating company in accordance with section 49(2) read with section 47(vii), initiation of reassessment proceedings after four years has been sustained because there was failure on the part of the assessee to disclose material facts necessary for assessment. Likewise, in Suman Steels v. Union of India, (2004) 269 ITR 412,418-19 (Raj), where the return of the assessee for assessment year 1995-96 was processed under section 143(1)(a) accepting the net profit rate declared by the assessee, who carried on con- tract business, initiation of reassessment proceedings by issuing a notice dated 15- 5-2001 proposing to reassess petitioner-assessee at higher rate in view of the presumptive rate prescribed under section 44AD has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid and within time. In the case of CIT v. Uttam Chand Nahar, (2007) 295 ITR 403 (Raj), the notice requiring the assessee to file the return within 30 days was in accordance with section 148 as it must be deemed to be in force with effect from 1-4-1989, and in force as on the date notice was issued. There was no violation of section 148 in respect of the specified period within which the return is to be submitted. The reassessment proceedings were held to be valid. 5.18. In the case of CIT v. C. V. layachandran, (2010) 322 ITR 520 (Ker), where, the assessee did not concede the income on capital gain either under the un-amended provision or under the amended provision, the recourse open to the Department was to bring to tax income escaping assessment under section 147 which was not time barred or otherwise invalid. Likewise, in Atul Traders v. ITO, (2006) 282 ITR 536 (All), the account books or record and other material were all common which were being considered by the CIT(A) in the proceedings relating to three appeals. The petitioner had notice and opportunity of being heard. The reassessment proceedings were held to be validly initiated. In the case of Inductotherm (India) P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan from T and K, in which the assessee was one of the directors had not been disclosed nor a copy of the ledger account of the assessee maintained by the company filed. In view of the absence of these details, the Assessing Officer could not examine the taxability of advances or loan raised by the assessee. There was failure to disclose material facts necessary for assessment. The reassessment proceedings were held to be valid. In another case, the Hon'ble Allahabad High Court in Chandra Prakash Agrawal v. Asst. CIT, (2006) 287 ITR 172 (All), wherein, the Income-tax Department had sent a requisition on 27-3-2002, under section 132A requisitioning the books of account and other documents seized by the Central Excise Department. The record of the proceeding dated 18-4-2002, showed that the requisition was not fully executed as all the books of account and other documents had not been delivered to the requisitioning authority. The proceedings initiated under section 147 was held to be valid. 5.21. In Ramilaben Ratilal Shah v. CIT, (2006) 282 ITR 176 (Guj), held that the noting in the diary constituted sufficient information for the escapement of income by either nondeclaration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edits, they were invalid. On appeal, it has been held that the reassessments were to be valid. In Honda Siel Power Products Ltd. v. Deputy CIT, (2012) 340 ITR 53 (Del), there being omission and failure on the part of the assessee to disclose fully and truly material facts Thus reassessment proceedings were held to be valid. 5.23. In Atma Ram Properties Private Ltd. v. Deputy CIT, (2012) 343 ITR 141 (Del), as the books of account and other material were not produced and no letter was filed, the order passed by the Commissioner (Appeals) in the assessment year 2001-02 would constitute 'information' or material from any external source and, as such, the reassessment proceedings for the assessment year 2000-01 were held to be valid. Likewise, in the case of CIT v. Smt. R. Sunanda Bai, (2012) 344 ITR 271 (Ker), the reassessment in question were held to be valid on the fact that the assessee claimed and was given relief under section 80HHA for the three preceding year which disentitled her for deduction under section 80HH for the assessment years 1992-93 and 1993-94. 5.24. In the case of Aquagel Chemicals P. Ltd. v. Asst. CIT, (2013) 353 ITR 131 (Guj), since there being suffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rming the decision of Madras High Court in (2008) 300 ITR 157 (Mad.), the whole addition was made solely on the basis of statement u/s 133A and no other material was found, in that situation, it was held that the such statement has no evidentiary value. 5.26. In the case of Aradhna Estate Pvt. Ltd. vs DCIT (2018) 91 taxmann.com 119 (Gujarat), the Hon'ble High Court observed/held as under:- "In reasons recorded by the Assessing Officer for reopening the assessment. He pointed out that the information was received from the investigation wing of the department at Calcutta regarding shell companies which had given accommodation entries for share premium to Surat based companies. A list of 114 Calcutta based companies was provided which had given accommodation entries to such Surat based companies. Statements of many entry operators and dummy Directors recorded during various search and seizure operation, survey operation and investigation were checked. The Assessing Officer thereupon proceeded to record that "On perusal of data so provided by the Deputy Director (Investigation), it is noticed that during the period under consideration, the assessee company has accepted share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suggesting that sizeable amount of income chargeable to tax in case of the assessee had escaped assessment and that such escapement was on account of failure on part of the assessee to disclose truly and fully all material facts. The Assessing Officer formed such a belief on the basis of such materials placed before him and upon perusal of such material. This is not a case where the Assessing Officer was reexamining the materials and the documents already on record filed by the assessee along with the return or subsequently, brought on record during the assessment proceedings. It was a case where entirely new set of documents and materials was placed for his consideration compiled in the form of report received from the investigation wing. Such material was perused by the Assessing Officer and upon examination thereof, he formed a belief that the assessee company had received share application and share premium money from as many as 20 different investor companies who were found to be shell companies and indulging in giving accommodation entries. From this view point, since the Assessing Officer had sufficient material at his command to form such a belief. Such materials did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of accommodation entries and in reality, it was the funds of the assessee which was being re-routed. Undoubtedly. Section 68 would have applicability. Proviso added by the Finance Act, 2012 with effect from 1-4- 2013, does not change this position. [Para 14] As per this proviso, where the assessee is a company and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, explanation offered by the assessee company shall be deemed to be not satisfactory, unless the person in whose name such credit is recorded in the books of the company also offers an explanation about the nature and source of sum so credited and such explanation in the opinion of the Assessing Officer has been found to be satisfactory. Essentially, this proviso eases the burden of proof on the revenue while making addition under section 68 with respect to non genuine share application money of the companies. Even in absence of such proviso as was the case governing the periods with which we are concerned in the present case, if facts noted by the Assessing Officer and recorded in reasons are ultimately established, invocation of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstance of the aforesaid decision was that since the Assessing Officer was having sufficient material at his command to form a reasonable belief that income chargeable to tax had escaped assessment would not preclude him from reopening of assessment. Thus, the assessment notice/ re-opening was held to be justified. In the appeal before us, initially the assessment for assessment year 2010-11 was completed u/s.143(3) of the Act vide order dated 13.3.2013, accepting the returned income of ₹ 13.53 crores approximately. Thereafter the case was reopened with the issuance of notice u/s,.148 on 13.3.2015 as the ld. A.O found that the assessee incorrectly claimed the expenditure as a revenue expenditure towards the pension paid to retired partners. As per the partnership deed also, it was found that money received from the clients has been shown as advances from clients instead of offering the same as income. Thereafter, the assessee in response to the notice offered the total taxable income of Rs,13,56,49,603/- on 29.4.2015. The ld.AO communicated the reasons for reopening. The assessee filed its objections vide letter dated 18.2.2016. The ld.A.O disposed of the objections of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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