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TMI Blog2018 (12) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... eal filed by the assessee is directed against the order passed by the CIT(A)-4, Mumbai, dated 20.06.2016, which in turn arises from the order passed by the A.O under Sec.143(3) r.w.s. 147 of the Income Tax Act, 1961 (for short I.T Act ), dated 27.03.2015 for A.Y. 2007-08. The assessing assailing the order of the CIT(A) has raised before us the following grounds of appeal : On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition on account of bogus share capital. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in ignoring that none of the 16 shareholders have responded to the summons and that six of the sixteen shareholders have accepted that these are accommodation entries. 3. On the facts and in the circumstances of the cases and in laws, the Ld. CIT(A) grossly erred in concluding that the conf irmation given by the three cur rent shareholders in AY 2012-13 would substantiate the genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r: Sr. No. Name Number of Shares Amount Date of allotment 1. Alka Diamond Industries Ltd. 5000 5,00,000/- 07.03.2007 2. Alpha Chenie Trade Agencies P. Ltd. 5000 5,00,000/- 07.03.2007 3. Buniyad Chemicals 15,000 15,00,000/- 07.03.2007 4. Creative World Telefilms Ltd. 5000 5,00,000/- 07.03.2007 5. Glider Holdings Ltd. 5000 5,00,000 07.03.2007 6. Nakshatra Business P. Ltd. (hema Trdg. Co. P. Ltd) 5000 50,00,000/- 07.03.2007 7. Jagmandari Finvest P. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rating on the facts of the case observed that all the shares allotted to the new investors were subsequently bought back by three shareholders of the assessee company viz. (i) M/s Chamatkar Properties and Investment Pvt. Ltd; (ii) M/s Swapnasundari Holding Estate Development Pvt. Ltd; and (iii) M/s Aashees Properties Pvt. Ltd. On the basis of the aforesaid facts the A.O held a conviction that the whole exercise of issuing fresh share capital and its subsequent buy back at a miniscule price which was even below the par value was carried out by the assessee company to introduce its own unaccounted money in the form of share capital. The A.O was of the view that the aforementioned sixteen new share applicant investor parties were used as a tool to introduce the unaccounted money of the assessee company. The A.O in order to fortify his aforesaid conviction issued summons under Sec.131 to the aforementioned three major shareholders viz. (i) M/s Chamatkar Properties and Investment Pvt. Ltd; (ii) M/s Swapnasundari Holding Estate Development Pvt. Ltd; and (iii) M/s Aashees Properties Pvt. Ltd who had repurchased the shares at below the par price from the original shareholders. On the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares by the aforementioned three major shareholders from some of the sixteen parties was also submitted in the course of the assessment proceedings. The CIT(A) was of the view that as it was a matter of record that the information relating to investment in shares was obtained by the A.O along with confirmations of the investors, therefore, now when the assessee company had proved the genuineness of the transactions, identity of the investors and their creditworthiness no addition could have been made under Sec.68. Further, it was observed by the CIT(A) that the A.O had also failed to demonstrate and place on record any such evidence which could irrefutably prove to the hilt that the assessee had obtained accommodation entries from Shri Pravin Kumar Jain group entities. The CIT(A) was of the view that as the investor companies were regularly filing their returns of income and the transactions were routed through banking channel, thus no addition could have been made by the A.O de hors any cogent evidence in his possession. In order to fortify his aforesaid view the CIT(A) relied on a host of judicial pronouncements including that of the Hon ble Supreme Court in the case of CIT Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention drew our attention to the Objections , dated 16.02.2015 which were filed by the assessee with the A.O. The ld. A.R took us through Para-5 of the said objections at Page 40 of the assesses Paper book (for short APB ), wherein the fact that assessment under Sec.143(3) was framed vide order dated 18.12.2009 was clearly stated by the assessee. Insofar the merits of the case are concerned, the ld. A.R relied on the order of the CIT(A). It was submitted by the ld. A.R that the CIT(A) had rightly appreciated that as the complete details of the share allottee parties was available with the A.O, therefore, no addition in respect of the share capital was liable to be made in the hands of the assessee. 8. Per contra, the ld. Departmental Representative (for short D.R ) relied on the assessment framed by the A.O. It was submitted by the ld. D.R that as the assessee had obtained accommodation entries from the aforementioned 16 parties, therefore, the same had rightly been assessed as an unexplained cash credit under Sec.68 in the hands of the assessee. Insofar the validity of the reopening of the case under Sec.148 was concerned the ld. D.R could not successfully rebut the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Return filed-Ack No. 2486790241007 27/10/2007 143(1) 25.10.2008 Notice U/s 143(2) 19.09.2014 Assessment order U/s143(3) 18.12.2009 Notice U/s 148 21.03.2014 Letter for return in response to 148 21.04.2014 11. We find that the A.O while rejecting the objections raised by the assessee as regards the validity of the reassessment proceedings had erroneously observed that as no scrutiny assessment order was earlier passed in its case for A.Y. 2007-08, therefore, as per the I.T Act the approval of the competent authority i.e. the Additional CIT, Range-2(1) was rightly obtained for issuing the notice under Sec. 148 of the I.T Act (Page 52 of APB ). In a similar manner, while rebutting the contentions of the assessee on certain other aspects also the A.O had observed that no original assessment order was passed in the case of the assessee under Sec.143(3) for A.Y. 2007-08. Insofar the fact that the A.O while reopening the case of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eded with the reassessment proceedings without valid assumption of jurisdiction, hence the notice issued by him under Sec.148 of the I.T Act cannot be upheld and is liable to be vacated. Our aforesaid view that a notice issued under Sec. 148 without obtaining the approval of the appropriate authority as contemplated under Sec.151 of the I.T Act cannot be sustained and is liable to be vacated is fortified by the judgment of the Hon ble High Court of Bombay in the case of Shri Ghanshyam K. Khabrani Vs. ACIT, Circle-1, Thane Others Vs. ACIT Ors. (2012) 346 ITR 443 (Bom). In the aforesaid case the Hon ble High Court had observed that in the absence of the approval of the appropriate authority as contemplated under Sec. 151 of the IT Act, the notice for reopening issued under Sec. 148 could not be sustained. It was held by the Hon ble High Court as under: 6 . The second ground upon which the reopening is sought to be challenged is that the mandatory requirement of Section 151(2) has not been fulfilled. Section 151 requires a sanction to be taken for the issuance of a notice under Section 148 in certain cases. In the present case, an assessment had not been made under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular manner, it has to be done in that manner. In a similar situation the Delhi High Court in Commissioner of Income Tax Vs. SPL'S Siddhartha Ltd. (ITA No.836 of 2011 decided on 14 September 2011) held that powers which are conferred upon a particular authority have to be exercised by that authority and the satisfaction which the statute mandates of a distinct authority cannot he substituted by the satisfaction of another. We are in respectful agreement with the judgment of the Delhi High Court. 7. In view of the findings which we have recorded on submissions (I), (ii) and (iv), it is not necessary for the Court to consider submission (iii) which has been urged on behalf of the Assessee, Once the Court has come to the conclusion that there was no compliance of the mandatory requirements of Section 147 and 151(2), the notice reopening the assessment cannot be sustained in law. Further, a similar view had again been taken by the Hon ble High Court of Bombay in the case of D.S.J. Communication Ltd. Vs. DCIT, Circle-2(1) and Anr. (C.W.P. No. 722 of 2011; dated 13.09.2012) . In the said case before the Hon ble High Court the A.O who was supposed to have ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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