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TMI Blog2018 (1) TMI 1446X X X X Extracts X X X X X X X X Extracts X X X X ..... oid. - Decided in favour of assessee. - I.T.A No. 268/Agra/2016 - - - Dated:- 8-1-2018 - SHRI A. D. JAIN, JUDICIAL MEMBER For The Assessee : Shri Navin Gargh, AR For The Revenue : Shri Waseem Arshad, Sr. DR. ORDER This is assessee s appeal for assessment year 2004-05, taking the following effective grounds: 1.1- Because in any view, the Id. CIT (A) has grossly erred in holding the initiation of Re - Assessment proceedings u/s 147/148 as valid, which is highly perverse, wrong, illegal, and bad in law. 1.2- Because in any view, the reasons recorded is mere suspicion and vague, hence not valid. 1.3- Because in any view, in proceedings u/s 147 the onus is on the revenue to prove income escape assessment . 1.4- Because in any view, the Assessment Order passed u/s 143(3)/148 is wrong, illegal, perverse and bad in law. 2.1- BECAUSE in any view, the CIT(A) has grossly erred in confirming the addition of ₹ 5,01,250/- made by the A.O. is arbitrary, wrong, illegal, and against the fact and law of the case. 2.2 BECAUSE in any view, the CIT(A) has grossly erred in confirming the addition of ₹ 5,01,250/- without prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has provided bogus entries of Gift/sale proceeds of shares to the assessee. Enquiries have been conducted by the Addl. DIT (Inv.), Agra and it has been found that no genuine transaction in sale / purchase of shares has taken place through this bank account. The beneficiaries have taken entries by paying in cash an amount equivalent to the beneficiaries deposited the same in the bank account and then issued draft/cheque to the beneficiaries. Addl. DIT (Inv.), Agra has provided has provided a list of such beneficiaries. In the same list, name of the assessee Shri Priyank Mittal W/o Sh. Ashok Kumar Mittal, 121, Chaubeji Ka Bagh, Firozabad exists who falls under the jurisdiction of the undersigned. The assessee has taken bogus entry amounting to ₹ 5,01,250/- on 13.06.2003. In view of the information received from the Investigation Wing and the adverse material in possession of the Department as mentioned above, 1 have reasons to believe that income to the tune of ₹ 5,01,250/- shown as bogus sale proceeds of shares has escaped assessment in the case Shri Priyank Mittal W/o Sh. Ashok Kumar Mittal, 121, Chaubeji Ka Bagh, Firozabad . As a result of the said re-ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard both the parties and have perused the material on record. As available on record, the assessee, vide ground no.1, has challenged the AO's action in re-opening the assessee's case under sections 147/148 of the Act. The assessee had objected to the proposed re-opening of its case by submitting before the AO that he had not received any such alleged gift from Sri Deepak Gupta 1756, Nai Basti, Naya Bazar, Delhi and further objected that the reasons recorded were false and the notice issued u/s 148 of the Act was illegal. However, the AO, after duly considering the objections raised by the assessee had rejected the same by stating as under :- With regard to your objection, it is clarified that in your case proceedings u/s 147 of the I. T. Act, 1961 for the assessment year 2004-05 were initiated on the basis of definite information received from the Investigation Wing of the department that you have received bogus entry of ₹ 5,01,250/- from Sri Deepak Gupta, 1756, Nai Basti, Naya Bazar, Delhi, which formed the basis of reason to believe for issue of notice u/s 148 of the I.T Act, 1961. It is also clarified that at the time of initiation of proceedings u/s 147, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been made with respect to gift, which itself goes to show that the reasons recorded are vague, farfetched. The A.O. himself belies the reasons recorded. That before initiating the proceedings u/s 147/148 vide letter dt. 01.12.2009 (Copy enclosed, Pg. 2) issued by ITO 5(3), Firozabad in verification of transaction of ₹ 5,00,000/- has alleged that the appellant is entered into the transaction of sale/purchase of shares. The appellant vide letter dt.10.12.2009 (Copy enclosed, Pg. 3/1), that is much before the issue of notice u/s 148 dt.16.03.2010 has categorically submitted w.r.t. above the appellant begs to submit that he has not entered any transaction of purchase/sale of shares. That it is a settled law that to see the validity of reopening only the reasons recorded have to be seen and not any event thereafter. Reliance Placed: 69 1TR 461 (Allahabad High Court) Jamna Lal Kabra vs. ITO. That further reliance is placed on the decision of Id. CIT (A) - II vide order dt. 15.01.2014 in 1TA No. 139/CIT(A)- II/Agra/ACIT-4(1)/Agra/2005-06/118 dt. 15.01.2014 in the case of Smt. Brij Lata Mittal, Agra (Copy enclosed, Pg. 9/1 to 9/9). While relying on various decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The reassessment order is liable to be quashed. 1 accordingly, set aside and quash the reassessment proceedings under section 148 of the Act. Therefore, all the resultant addition made by the AO would stand deleted. In view of the above, there is no need to consider the additions on merit. In the result, appeal of the assessee is allowed. 5.2 Consider ing the legal pos i t ion of reopening of assessment proceedings u/s 147 as laid down by the Hon'ble Supreme Court in the case of Income Tax officer Vs. Lakhnami Mewal Das (Supra) and further similar view taken by the Hobble ITAT, Agra Bench, Agra in case of Ramesh Prasad (HUF) Vs income tax officer ward 1(3), Agra, I hold that the reasons recorded by the AO for reopening of the assessment proceedings u/s 147 in the present case under appeal is only based on a general information and there is no material in possession of the AO to show that the shares transaction declared by the assessee to have been done through the broker Sh. S.K. Garg company is the bogus shares transact ions and hence, reopening of the assessment proceedings u/s 147 has not been found to be legally valid and consequently, assessment order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of definite and detailed information, the AO formed his belief that the assessee had arranged bogus entry and, therefore, initiated proceedings u/s 147 by issuing notice u/s 148 of the Act. After 1/4/1989, the AO has power to reopen and assessment, provided there is 'tangible material' to come to his conclusion that there was escapement of income from assessment. Therefore, while respectfully following the aforementioned judicial decisions as rendered by the Hon'ble jurisdictional High Court and the Hon'ble Supreme Court decisions, notably the decisions in the cases of Purshottam Das Bangur and Raymond Woolen Mills ( supra), I find there is no substance or credence in the assertions as put forth by the Ld AR of the appellant that the information as sent from the Investigation wing was vague and general in nature and which was not based upon any relevant material. Rather, as seen from the AO's order the has had in his possession definite information which was supplied by the Investigation Wing, and which per its contents, was quite sufficient to come in the aid of the AO to arrive to his satisfaction that assessee's income had escaped assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for ₹ 5,01,250/-, even before initiating the re-assessment proceedings. The appellant, in reply to the above letter, vide letter dt.10.12.2009 (Paper Book Pg.17) categorically submitted that he had not entered into any transaction of purchase/sale of shares. No new adverse information has been brought on record which could suggest any justification for satisfaction to initiate proceedings u/s 147/148, in spite of specific request of the appellant vide letter dt. 24.11.2010, (Paper Book Pg.l8 19). In the proceedings u/s 147, the burden is on the A.O. to prove income escaping assessment as it is the belief of the A.O. for income escaping assessment which can trigger such proceedings. 10. This onus has not been discharged by the AO herein, rendering the initiation of the reassessment proceedings void. In these circumstances, in the present case, the decisions relied on by the Department are not applicable. 11. In view of the above, the initiation of the reassessment proceedings, culminating in the order under appeal, is held to be bad in law. Nothing further survives for adjudication. 12. In the result, the appeal is allowed. Order pronounced in the open court on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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