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TMI Blog2019 (3) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... ly served on them. Mere non production of share holder companies director is argued to be no valid reason for making addition u/s 68 of the Act dehors voluminous evidences filed which has not been objectively and lawfully controverted in manner known to law. For this Ld counsel for the assessee placed before us during the course of hearing a comprehensive chart of case laws from coordinate benches of ITAT where similar argument in identical circumstances of additions based on S.K.Jain group search has been deleted u/s 68 of the Act. - Decided in favour of assessee. - ITA.No.3555/Del./2015 - - - Dated:- 5-3-2019 - Shri Bhavnesh Saini, Judicial Member And Shri L.P. Sahu, Accountant Member For the Assessee : Shri Kapil Goel, Advocate. For the Revenue : Shri Sanjay Goyal, CIT-D.R. ORDER PER BHAVNESH SAINI, J.M. This appeal by assessee has been directed against the order of Ld. CIT(A), Ghaziabad, Dated 31st March, 2015 for the A.Y. 2011-2012. 2. Briefly the facts of the case are that a search under section 132 of the Income Tax Act was conducted in the case of Shri Pankaj Sharma and assessee (Shri Ajay Sharma) on 11th October 2010. It was informed that ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on protective basis on ₹ 34.67 crores. The A.O. passed the assessment order under section 143(3) dated 31st March 2013 and computed the total income of assessee at ₹ 35,72,04,017/-. The Ld. CIT(A) dismissed the appeal of assessee. 3. The assessee raised several grounds in appeal challenging the above additions. The assessee also filed the following additional grounds of appeal. That impugned assessment order passed by Ld. Assessing officer u/s 153A/143(3) of the Act is invalid and void ab initio for want of valid notice u/s 143(2) as per law as evident from fact that when return in response to notice u/s 142(1) dated 14/12/2012 was admittedly filed on 14/03/2013 notice u/s 143(2) is issued on very same day that is 14/03/2013 which shows non application of mind in issuing notice u/s 143(2) and thereafter in framing the assessment and accordingly all proceedings are nullity. That impugned assessment framed u/s 143(3) on basis of notice u/s 143(2) dated 14/03/2013 is invalid and void ab initio being made on basis of non est return filed u/s 153A/153C on 14/03/2013 as no return was there u/s 139/142 filed on 14/03/2013 to validly issue notice u/s 143(2) which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Tribunal may consider any new ground if facts are available on record. The additional ground is, therefore, admitted for deciding the appeal. 6.1. It is not in dispute that search was conducted in the case of the assessee and others on 11th October, 2010, therefore, the assessment year under appeal i.e., A.Y. 2011- 2012 is the year of search. It is not in dispute that assessee filed return of income on 14th March, 2013 and on the same day, notice under section 143(2) have been issued. This fact is mentioned in the assessment order. The assessee also filed copy of the notice under section 143(2) and copy of the order sheet on record, which also supports the same fact that notice under section 143(2) have been issued on the date of filing of the return of income itself. 6.2. Learned D.R. referred to page-22 of the Ld. CIT(A) Order. The A.O. in the assessment order has mentioned that notice under section 142(1) have been issued on 18th September, 2012. The Ld. CIT(A) noted in para 6.4 of the appellate order, as referred to by the Ld. D.R. that this notice issued under section 142(1) on 18th September, 2012 was received un-served. Another notice under section 142(1) with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary to law in the absence of any incriminating material to form reason to believe, as per the report of Investigation Wing AO relied on, which only directs the AO to examine the details and after this examination only to determine whether there could be any justification for initiation of action u/s 147. Thus, the issue of notice u/s. 148 and the consequent assessment u/s 147 is without the authority of law and do not provide jurisdiction to the AO to make re-assessment u/s 147. 5. That the assessment u/s 147 is unlawful, arbitrary and without jurisdiction on account of lack of application of mind and lack of approval u/s.151 from competent authority. 6. That the assessment u/s 147 is contrary to law laid down by the Hon'ble Supreme Court in GKN Driveshaft case, without following the procedure laid down by the Hon'ble Supreme Court. 7. That the assessment is bad in law being made without following the principles of equity and justice and denying the assessee of proper opportunity to defend, without supplying the copies of material relied on and cross examination of the witnesses whose statements have been relied upon to initiate action and complete assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.9.2009 declaring an income of ₹ 3,39,85,750/-. The assessment u/s. 143(3)/147 of the Income Tax Act, 1961 (in short Act) was made on 24.11.2016 at a total income of ₹ 5,24,85,750/-. In the assessment order, AO added ₹ 1,85,00,000/- on account of accommodation entries u/s. 68 of the I.T. Act. Aggrieved with the addition, the assessee appealed before the Ld. CIT(A), who vide its impugned order dated 8.3.2016 dismissed the appeal of the assessee. Now against the impugned order, assessee is in appeal before us. 4. Ld. Counsel for the assessee has submitted that the additional ground in identical facts has been accepted and assessment u/s. 143(3) of the Act was passed without proper issue and service of notice u/s. 143(2) of the Act, which was later quashed by the ITAT and the Hon ble High Court in the following cases:- i) Hon ble Delhi ITAT in case of Micron Enterprises Pvt. Ltd. Vs. ITO in I.T.A .No. 901/DEL/2016 (A.Y .2006-07) order dated 14/05/2018 ii) Hon ble Delhi ITAT in Harsh Bhatia case ITA Nos. 1262/ 1263/DEL/2017 [A.Ys. 2008-09 2009-10] order dated 17.10.2017. iii) Hon ble Delhi High Court in the case of Director of Income Tax Vs. Society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the AO that they were engaged in business of providing accommodation entries allegedly through certain companies. On the basis of said Investigation Wing information, reopening was made u/s 148 of the Act by the AO vide notice u/s 148 of the Act dated 28.03.2016. In response to the same, admittedly return was filed by letter dated 27.04.2016 which is specifically acknowledged by AO in assessment order at Para 2 of the assessment order. Notably, said return is expressly accepted by AO as valid return for purposes of assessment u/s 148 of the Act. As mentioned in assessment order itself, when the said return was taken on order sheet by AO vide order sheet entry dated 27.04.2016, at same time, notice u/s 143(2) of the Act was issued on very same date that is 27.04.2016 which is one of the major issue on which validity of the assessment is challenged before us. Copy of this return and notice u/s 143(2) of the Act dated 27.04.2016 are placed on records before us. We further note that AO supplied the reasons recorded (without approval) to assessee (as placed in paper book before us) which were objected before the AO in detailed manner vide objection letter dated 27.04.2016 in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere non production of said shareholders without anything more, as evident from pages 6 12 even though summon issued u/s 131 have been accepted to be served on them in the assessment order adverse inference u/s 68 of the Act is drawn by AO to make addition of ₹ 185,00,000 which is impugned here before us. In first appeal, before Ld CIT(A) confirmed the order of the AO has rejected assessee s detailed submissions challenging reopening action u/s 148 of the Act and while confirming the addition made by AO it is very glaring from ld CIT(A) s order page 16 that primary reason which has weighed on him to confirm said addition is mere non production of share holder companies directors in person. In this background, the assessee is before us challenging the orders of the authorities below. 7.1 At the outset Ld counsel for the assessee has drawn our attention to the additional ground application filed before us in terms of Rule 11 of ITAT rules. In said additional ground application it is stated as under: Quote Additional ground of Appeal That impugned assessment order passed by Ld. Assessing officer u/s 147/143(3) of the Act is invalid and void ab initio for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him in accordance with the provisions of the Act and the Assessee in those circumstances would be precluded from objecting that a notice that was required to be served upon him under the Act was not served upon him or not served in time or was served in an improper manner. It was held that Section 292BB of the Act is a rule of evidence and it has nothing to do with the mandatory requirement of giving a notice and especially a notice under Section 143(2) of the Act which is a notice giving jurisdiction to the AO to frame an assessment. The decision of the Allahabad High Court in Manish Prakash Gupta v. Commissioner of Income Tax (supra) is also to the same effect. 7.3 While arguing on above additional ground application, Ld. counsel for the assessee has drawn our attention to written submission filed in paper book of 218 pages (from page 1 to 27) that as noted in impugned assessment order at pages 5 6 that notice u/s 143(2) of the Act was issued on 27/04/2016 on return submitted u/s 148 of the Act vide order sheet entry dated 27/04/2016, (copy of return u/s 148 letter dated 27.04.2016 and notice u/s 143(2) dated 27/04/2016 are at pages 5 6 with additional ground application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such modifications have become necessary. The word necessary means indispensable, requisite; indispensably requisite, useful, incidental or conducive; essential; unavoidable; impossible to be otherwise; not to be avoided; inevitable. The word necessarymust be construed in the connection in which it is used. (See-Advanced Law Lexicon, 3rd Edition, 2005; P. Ramanatha Aiyar) 26. The formation of the opinion by the State Government should reflect intense application of mind with reference to the material available on record that it had become necessary to propose substantial modifications to the draft development plan. 7.4 Ld. Counsel for the assessee also stated that there is no application of mind in present case what to speak of intense application of mind where notice u/s 143(2) is ostensibly prepared before hand or hand in hand at same time when return u/s 148 is filed on 27/04/2016, hence, he requested to quash the assessment. 7.5 On careful consideration of the entire conspectus of the case, as per Hon ble Supreme court ruling in case of National Thermal Power Corporation Ltd Vs CIT [(1998) 229 ITR 383 SC)], we admit the additional ground raised above by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has stated that the return was filed by the assessee on 27th March, 2000 and the notice under s. 143(2) was served upon the Authorized Representative of the assessee by hand when the Authorized Representative of the assessee came and filed return. However, the date of the notice was mistakenly mentioned as 23rd March, 2000. Assuming the aforesaid to be true, the notice was served on the Authorized Representative simultaneously on his filing the return which clearly indicates that the notice was ready even prior to the filing of the return. The provisions of s. 143(2) make it dear that the notice can only be served after the AO has examined the return filed by the assessee. Whereas it is dear that when the assessee came to file the return, the notice under s. 143(2) was served upon the Authorized Representative by hand. Thus, it would amount to gross violation of the scheme of s. 143(2). 5.1. And the conclusion is as under : Assessment made in pursuance of a notice under section 143(2) issued on 23rd March, 2000 when the return was filed on 27th March, 2000 is invalid. 6. He has submitted that the same order have been followed by ITAT, Delhi Bench, in the case of Shri Harsh Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords have been explained by Hon ble Apex court in case of Bhikubhai Patel vs State of Gujarat (4 SCC 144) relevant extract of which is reproduced above where it is observed by Hon ble Apex court that The expression: so considered necessary is again of crucial importance. The term consider means to think over; it connotes that there should be active application of the mind. In other words the term consider postulates consideration of all the relevant aspects of the matter. A plain reading of the relevant provision suggests that the State Government may publish the modifications only after consideration that such modifications have become necessary. The word necessary means indispensable, requisite; indispensably requisite, useful, incidental or conducive; essential; unavoidable; impossible to be otherwise; not to be avoided; inevitable. The word necessarymust be construed in the connection in which it is used. (See-Advanced Law Lexicon, 3rd Edition, 2005; P. Ramanatha Aiyar).. which fits in present case fully. Guided by these felicitous observation of Hon ble Supreme court we have no hesitation in our mind in accepting the legal plea raised by Ld AR before us and thus holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, then simply harping on non production of director in person before the AO cannot be justified ground to draw adverse inference without adequate discharge of secondary burden lying on AO u/s 68 of the Act. Burden u/s 68 of the Act as it is settled law keeps shifting. Also held that Even if there was any doubt if any regarding the creditworthiness of the share applicants was still subsisting, then AO should have made enquiries from the AO of the share subscribers as held by Hon ble High Court in CIT vs DATAWARE (supra) which has not been done, so no adverse view could have been drawn. ) Heat Flex Cables P Ltd ITA: 2376/Del/2018 SMC 1/8/2018 ITAT Delhi (Held in crux that Since the investor companies have confirmed the transaction with the assessee-company which were conducted through banking channel and entire evidence were brought on record, thereafter, if the A.O. was not satisfied with the documents on record and explanation of the assessee- company and the Investors, the A.O. should have made further enquiry on the same. However, it is a case where the A.O. has failed to conduct necessary enquiry, verification and deal with the matter in depth. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere. It is not the case of the Revenue that cash was found to be deposited in the accounts of five companies prior to subscribing the shares of the appellant company. It is also not the case of the Revenue that the assessee has produced cheques from the five companies by giving cash. No doubt there is a contradiction in the statement of Shri Waseem Gupta, but that alone cannot be a deciding factor once the corroborative evidences in the form of bank statements have been filed by the assessee. The Assessing Officer did not make any effort to examine the bank statement furnished by the assessee. ) SRM Securities Pvt Ltd ITAT G bench ITA 7825/Del/2017 11/12/2018 (Held in crux that When assessee has discharged its initial burden of proving the identity, creditworthiness of the parties and genuineness of the transactions. Ld AO must reach to the submission of the assessee by conducting exhaustive inquires to throw back the onus on the assessee. Further non receipt of the details u/s 133 (6) should be the trigger point to make further inquires; it is not the resting point. In the present case, the fact shows that the assessing officer has merely relied upon the enqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as mentioned above. Moreover, our stated decision is supported by decision of honourable Delhi High Court against which the SLP has been dismissed by the honourable Supreme Court recently in [2018] 99 taxmann.com 45 (SC) in Principal Commissioner of Income Tax, Central-1 v. Adamine Construction (P.) Ltd; honourable Supreme Court has also dismissed the Special Leave Petition of the revenue in [2018] 98 taxmann.com 173 (SC) Principal Commissioner of Income Tax v. Himachal Fibers Ltd.; Hon'ble Delhi High Court in the case of Oriental International Company Pvt. Ltd 401 ITR 83 which decisions are relied in decisions mentioned above in arguments of Ld AR. We thus reverse the finding of Ld AO as confirmed by Ld CIT(A) in this regard. On basis of this discussion we find no merit in addition of ₹ 1,85,00,000 made u/s 68 of the Act, hence, we delete the same and allow the appeal of the assessee accordingly. 8. In the result, the appeal of the Assessee is allowed. 6.3. Similar view have been taken by ITAT, SMC Bench in the case of Shri Satish Kumar, Delhi vs. ITO, Ward-2(3), Faridabad (supra). Following the above orders, we set aside the orders of the authorities below and qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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