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TMI Blog2019 (4) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... o believe with the learned Assessing Officer that income of the appellant had escaped assessment and, in view thereof, the proceedings initiated were illegal, untenable and therefore, unsustainable. The reasons as noted by the Assessing Officer were mechanical on information received from Investigation Wing. The satisfaction of the Assessing Officer was borrowed satisfaction. 1.2 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that approval granted u/s 151 of the Act was a mechanical approval and hence initiation of proceedings u/s 147 of the Act on this ground is invalid." 3. At the time of hearing before us, it is stated by the learned counsel that in this case, the assessee has filed the return on 20th September, 2009 which was processed under Section 143(1) on 17th January, 2011. The assessment was reopened under Section 148 vide reasons recorded on 20th September, 2015. He has taken us through the reasons recorded and stated that the assessment has been reopened for the verification of the amount received by the assessee from Shri S.K. Jain group of cases. That the assessment cannot be reopened for the purpose of verification for which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has arrived at the conclusion that there is escapement of income. Therefore, reopening of assessment by the Assessing Officer was perfectly in accordance with law and the same has rightly been upheld by the learned CIT(A). In support of his contention, he relied upon the following decisions :- (i) PCIT Vs. Paramount Communication (P) Ltd. - 2017-TIOL-253-SCIT. (ii) PCIT Vs. Paramount Communication (P) Ltd. - [2017] 392 ITR 444 (Delhi). (iii) Aradhna Estate (P) Ltd. Vs. DCIT - [2018] 91 taxmann.com 119 (Gujarat). (iv) Pushpak Bullion (P) Ltd. Vs. DCIT - [2017] 85 taxmann.com 84 (Gujarat). (v) Ankit Financial Services Ltd. Vs. DCIT - [2017] 78 taxmann.com 58 (Gujarat). (vi) Aaspas Multimedia Ltd. Vs. DCIT - [2017] 83 taxmann.com 82 (Gujarat). 5. We have carefully considered the arguments of both the sides and perused the material placed before us. The reasons recorded for issue of notice under Section 148 read as under :- "Name of the assessee : M/s SBS Realtors P.Ltd. A.Y. 2009-10 PAN : AALCS5106R Assessment Year : 2009-10 Reasons for Issue of Notice u/s 148 of the Income Tax Act, 1961 The return of income for the A.Y. 2009-10 has been filed by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors Pvt.Ltd. Axis P.O. No.027123 04.08.2008 2,500,000/- Rajesh Aggarwal 11. Zenith Automotive P.Ltd. SBS Realtors Pvt.Ltd. Axis P.O. No.027201 18.03.2009 2,000,000/- Rajesh Aggarwal 12 Mega Top Promoters P.Ltd. SBS Realtors Pvt.Ltd. Axis P.O. No.027200 18.03.2009 2,500,000/- Rajesh Aggarwal I have reason to belief that the income pertaining to the Asstt. Year 2009-10 has escaped assessment to the extent of Rs. 23500000/- upon receipt of the above information, I have compared the figures in the balance sheets filed by the assessee vide e-return for AYs 2008-09 & 2009-10. It is found that in AY 2009-10 issued subscribed and paid up share capital has increased by Rs. 23,50,000/- and securities premium has increased by Rs. 2,11,50,000/- i.e., both totalling to Rs. 235,00,000/-. The same has escaped assessment on account of failure on the part of the assessee to truly and fully disclose all material facts necessary for assessment for the AY 2009-10. In order to verify the genuineness, identification and creditworthiness of the aforesaid transaction the case needs to be reopened u/s 147 of the I.T. Act 1961. Since more than four year have been elapsed from the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction of escapement of income. Any satisfaction with regard to escapement of income or otherwise can be recorded only after the verification of genuineness, identification and creditworthiness of the transaction and not earlier. Thus, we are of the opinion that the Assessing Officer has reopened the case under Section 147 for the purpose of verification of genuineness, identification and creditworthiness of the transactions mentioned in the information supplied by the DIT (Investigation) and this is what the Assessing Officer has concluded at the end of the reasons recorded for issue of notice under Section 148. Now, the question remains whether an assessment can be reopened under Section 147 for the purpose of verification of genuineness, identification and creditworthiness of any transaction. In our opinion, the reply is clearly NO. There is Section 143(2) of the Income-tax Act under which the Assessing Officer can issue notice for the purpose of verification. The said Section reads as under :- "143(2). Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of such allegation is not mentioned in the reasons recorded. Whether such conclusion is reached by the Investigation Wing on the basis of statement of director of any company or on the basis of some material seized during the course of search of those companies, is not mentioned in the reasons recorded. Whether there was any material with the Assessing Officer while issuing notice under Section 148 is not clear. Therefore, from the reasons recorded, we do not find any basis for reaching to the conclusion that there was escapement of income by the Assessing Officer. Learned DR has relied upon the decision of Hon'ble Jurisdictional High Court in the case of PCIT Vs. Paramount Communication Pvt.Ltd. - [2017] 392 ITR 444 (Delhi), wherein on the basis of report of the Investigation Wing, Hon'ble Jurisdictional High Court has upheld the issue of notice under Section 148. Their Lordships held as under :- "Held, that having regard to the contents of the notice issued under section 148 of the Income-tax Act, 1961, the findings of the Appellate Tribunal were not sustainable. It constituted reference to tangible material "outside" the record which was information based upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Meenakshi Overseas Pvt.Ltd. (supra) nor in the case of RMG Polyvinyl (I) Ltd. (supra), the decision of Paramount Communication (P) Ltd. (supra) was brought to the knowledge of their Lordships. Thus, there are two views by the Hon'ble Jurisdictional High Court. While in the case of Paramount Communication (P) Ltd. (supra), the issue of notice on the basis of information from Intelligence Wing of the Income Tax Department has been upheld, in the case of Sarthak Securities Co.P.Ltd. (supra), Signature Hotels P.Ltd. (supra), G And G Pharma India Ltd. (supra), RMG Polyvinyl (I) Ltd. (supra) and Meenakshi Overseas Pvt.Ltd. (supra), the notice issued on the basis of DIT(Investigation) has been quashed. It is a settled law that when there are two views, the view in favour of the assessee is to be followed and moreover, there are at least two decisions subsequent to the decision of Paramount Communication (P) Ltd. (supra), wherein their Lordships have quashed the notice issued under Section 148 on the basis of information from the Investigation Wing. The facts in the case of the assessee are almost identical to the facts in the case of RMG Polyvinyl (I) Ltd. (supra) and Meena ..... X X X X Extracts X X X X X X X X Extracts X X X X
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