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TMI Blog2020 (1) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010 in name of Badaya Ispat Private Limited (PAN No. AADCB4084H). Therefore, it is a strange to note that the same legal entity has been holding two PAN numbers though in two different names and both continue to exist in Income Tax Department database as on the date of issuance of notice u/s 148 and passing of the assessment order u/s 143(3) r/w 147 of the Act. Under section 139A of the Act, it has been provided that No person who has already been allotted a permanent account number under the new series shall apply, obtain or possess another permanent account number. Therefore, where the assessee is prohibited from applying for a new PAN where a PAN has already been issued to it, the fact that such a new PAN has been applied and thereafter issued, to our mind, the new PAN and filing of return of income doesn t confer any jurisdiction to the Assessing officer over such matter with such new PAN and the Assessing officer with earlier PAN continues to exercise jurisdiction over the assessee company. In the present case, therefore, the ITO Ward 4(1), Jaipur continues to exercise jurisdiction over the assessee company and not ITO Ward 1(1), Jaipur. Therefore, we donot find any infirmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order that the assessee has introduced its unaccounted cash in the form of share capital through racket of entry providers operated in New Delhi, however the said finding has not been corroborated by any material on record and therefore, the said finding recorded by the Assessing Officer cannot be accepted in absence of clear linkage/nexus established by the Revenue that the money belonging to the assessee company has been advanced and routed back in the form of share capital. Addition so made by the Assessing Officer u/s 68 of the Act is hereby directed to be deleted - Decided in favour of assessee. - ITA No. 1418/JP/2018 - - - Dated:- 7-1-2020 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Sh. Dileep Shivpuri (Adv.) For the Revenue : Sh. K. C. Gupta (JCIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-2, Udaipur dated 28.09.2018 wherein the assessee has taken the following grounds of appeal:- 1. The Ld. CIT(A) has erred on facts and in law in upholding the validity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that a perusal of the notice u/s 148 issued on 27.03.2015 to reopen the assessment of M/s Rajshree Alloys India Ltd. for A.Y. 2008-09 shows the following name and address: M/s Shree Silica Products Pvt. Ltd., Shree Silica Products, F 947, Road No. 14, VKIA Area, Jaipur, Rajasthan 302013 It was submitted that the Assessing Officer had verified from the Registrar of Companies and confirmed that the name of M/s Shree Silica Products Pvt. ltd. was changed first to 'M/s Badaya Ispat Pvt. Ltd' and then to 'M/s Rajshree Alloys India Ltd.' The AO himself admits that the notice u/s 148 of the Act was served by affixture on 31.03.2015 at the address given above. A copy of the notice u/s 148 was received by the A/R of the Appellant only on 27.10.2015. It is pertinent to mention here that the return for A.Y. 2009-10 was filed with ITO, Ward 1(1), Jaipur on 30.03.2010 showing the following name and address: Badaya Ispat Limited, 17, Near Hotel Aakash, I.C. Bose Road, Howrah, West Bengal 711101 Therefore, it was within the knowledge of the AO, had he tried to verify the name and address before issue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is seen that both are the name of the assessee company and therefore on this procedural defect, the order can't be said to be illegal. Accordingly this ground of appeal is dismissed. In other words, he treated this to be a mere procedural defect, and dismissed the objection accordingly. It is pertinent, at this juncture to refer to the case of Spice Entertainment Ltd. v. Commissioner of Service Tax 2012 (280) ELT 43 (Del.), in which at para 11 it has been so stated: 11. After sanction of the scheme on 11th April, 2004, the Spice ceased to exist w. e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income-Tax Authorities to substitute the successor in place of the said 'dead person'. When notice under section 143(2) was sent, the appellant/ amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of M/s Spice which was non-existing entity on that day. In such proceedings assessment order passed in the name of M/s Spice would clearly be void. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 293 dated 15th March, 2013. Therefore , looking to the facts mention above, it is seen that the above person is liable to pay tax on bogus accommodation entries of share capital/ Share premium/ loan. Hence, I have reason to believe that income of ₹ 45,00,000/ - has escaped from assessment within the meaning of section 147 of the I.T. Act, 1961. Therefore, it is a fit case for issue notice u/ s 148 of the I.T. Act, 1961. 8. It is clear from the language of the reasons recorded that the Assessing Officer did not have in his possession any material other than a letter of the DIT(Inv.) dated 15.03.2013. Hence, he carried out no independent verification at his end, but blindly accepted whatever had been written in the said letter dated 15.03.2013. His satisfaction, therefore, is a case of 'borrowed satisfaction'. Attention is drawn to the decision of the Hon'ble Gujarat High Court in the case of Harikishan Sunderlal Virmani v. Dy. CIT [2017] 394 ITR 146 (Gujarat) wherein it was stated as under: 5.3 Thus from the reasons recorded, the reopening of the assessment is on the information/ data supplied by the office o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Kumar Jain have explained his modus operandi (see page 7 of the assessment order). Further, he has also stated in the last para on page 8 that statement of Shri Ravinder Goel, one of the brokers, was also recorded. None of this finds mention in the reasons recorded. Moreover, it is clear that copies of statements were not with the AO. The AO has also mentioned about enquiries made before and during search. This also does not find mention in the reasons recorded. Hence, it is clear from the reasons recorded, that except for the letter of the DIT(Inv.), Delhi, the AO did not have any other evidence with him to support or authenticate what was written in the letter of the DIT(Inv.), Delhi. The Hon'ble Delhi High Court in the case of Sabh Infrastructure Ltd. has stated as follows: 11. Thus it is also now well settled that the reasons to believe have to be self-explanatory. The reasons cannot be thereafter supported by any extraneous material. The order disposing of the objections cannot act as a substitute for the reasons to believe and neither can any counter- affidavit filed before this court in writ proceedings. Thus we have to confine o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. There is enough evidence in the nature of share application form, ITR acknowledgment, bank accounts etc. to prove that the creditors were genuine, their identity was proved, and that they had the financial wherewithal to advance the credits, and that such a credit was indeed given. 2. The assessment of these companies were framed u/s 153C/ 153A on 28.03.2013 wherein their genuineness was accepted and no addition or adverse finding was recorded in their cases. A perusal of the assessment orders passed after the search prove this fact. The notices u/s 148 were issued on 26.03.2015 full 2 years after the said companies had been accepted as genuine. Once, the companies are treated as genuine, their financial capability is proved, and they are assessed to tax even after the search, the credits given by them cannot be doubted. 3. The payment of the credits were by cheque and each of the company has enough capital in their financials to have the capacity to advance the credit: i) VIP leasing Finance Pvt. Ltd. Share capital + reserves 17,14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Lovely Exports P. Ltd. is of 2003; ii) It is a decision of the Delhi High Court while the decision in the case of Lovely Exports P. Ltd. is a decision of the Hon'ble Supreme Court and overrides the decision of the High Court; 15. In addition to the case of Lovely Exports P. Ltd. supra, other cases cited in support are: 1. CIT v. Supertech Diamond Tools Pvt. Ltd. 229 Taxman 62 (Rajasthan); 2. CIT v. Shree Barkha Synthetics Ltd. 270 ITR 477(Raj.); 3. CIT v. Pooja Agarwal [2011] ,D.B.ITA No. 603/2011 delivered on 11.0.2017 4. CIT v. First Point Finance Ltd., 286 ITR 477 (Raj); 5. CIT v. Nipuan Auto (P.) Ltd. [2013] 89 DTR 342(Del HC); 6. CIT v. Vacmet Packaging (India) Pvt. Ltd., 367 ITR 217(A11.). In view of the above, the addition of ₹ 45,00,000/- made by the AO and confirmed by the CIT(A) needs to be deleted both in law and on facts. 16. The ld. DR submitted that the jurisdiction of the assessee M/s Shree Silica Products Pvt. Ltd lies with ITO, Ward-4(1), Jaipur as per the information gathered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree Silica Products Private Limited, F-947, Road No. 14, VKI Area, Jaipur. Thereafter, on 13.01.2008, consequent upon change of name, a fresh certificate of incorporation was issued to the assessee company by the Assistant Registrar of Companies, Jaipur with corporate identity no. U24117RJ1988PTC004274 with name of Badaya Ispat Private Limited with mailing address of F-947-949, Road No. 14, VKI Area, Jaipur. The assessee company applied for a fresh PAN and was allotted PAN No. AADCB4084H with name and address of Badaya Ispat Private Limited, F-947, Road No. 14, VKI Area, Jaipur. Thereafter, the name of the company was changed to Badaya Ispat Limited and currently, the name of the company is Rajshree Alloys India Ltd with same corporate identity no. U24117RJ1988PTC004274 and mailing address of F-947-949, Road No. 14, VKI Area, Jaipur. We therefore find that there has been only a change in name of the entity and besides that, there is no change in the corporate identity of the assessee company. It is therefore not a case where the assessee company ceases to exist and/or amalgamated with any other existing/new entity. Therefore, it is not a case where the notice u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed tangible information from Investigation wing that the assessee has obtained accommodation entries basis which he has come to believe that income to the extent of ₹ 45 lacs has escaped assessment. There is a linkage between the material and formation of belief that income has escaped assessment. At the stage of recording reasons, the Assessing officer has to record his prima facie opinion that the income has escaped assessment. It is not the case of the assessee company that the details of the transaction recorded by the Assessing officer was not correct or false in terms of name of entity, nature of transaction and the amount involved. In the instant case, where the Assessing officer has received information that the assessee has obtained accommodation entries, the same constitute a tangible material and basis examination thereof, where he has held that income has escaped assessment, we donot see any infirmity in the action of the Assessing officer in exercising jurisdiction u/s 148 of the Act. 20. In the result, the ground no. 1 of assessee s appeal is dismissed. 21. Now coming to merits of the case. In this case, the assessment was compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fice on behalf of the assessee submitted the details clarifications which are placed on record. The case is discussed with him. 2. After discussion income of the assessee is assessed at income of ₹ 1,00,838/- u/s 153C/153A of the Act. Charge interest u/s 234 A/B/C/D as per law. Computation of income tax interest is as per ITNS 150 enclosed. Issue requisite documents. 3. This assessment order is being passed after obtaining the approval of the Additional Commissioner of Income Tax, Central Range-6, New Delhi, communicated vide his office letter Addl. CIT/CR-6/2012-13/419 dated 28.3.2013. 23. On similar lines, the assessment orders for AY 2008-09 have been passed in case of other two entities namely, Singhal Securities P. Ltd and Finage lease Finance India Ltd wherein again, there is no finding recorded by the Assessing officer to the effect that the said companies are involved in providing any accommodation entries. It is relevant to note that in all these three cases, the assessment proceedings were reopened basis the search and seizure operation in case of S.K. Jain Group on 14.09.2010, which is the same search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts and documents belonging to M/s Singhal Securities Pvt. Ltd. were found and seized and the AO on this basis that the assessee received an accommodation entry from M/s Singhal Securities Pvt. Ltd. issued the notice u/s 148 of the Act while recording the reasons on 28.03.2013 that the assessee received accommodation entry from M/s Singhal Securities Pvt. Ltd. (copy of the said reasons recorded is placed at page no. 8 of the assessee s paper book). It is also noticed that on same date i.e. 28.03.2013, the AO of M/s Singhal Securities Pvt. Ltd., framed the assessment u/s 153C/153A of the Act at the same figure of the loss amounting to ₹ 51,528/- which was declared by the said assessee in its return of income. It is also noticed that Sh. S.K. Jain in whose premises search took place was not a shareholder of M/s Singhal Securities Pvt. Ltd. and was also not connected with the assessee. In the present case, when the assessment of M/s Singhal Securities Pvt. Ltd. from whom the assessee received share application money was assessed at the same figure of the loss which was declared by the said assessee, on the same date when the AO recorded the reasons that the income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the ITA No. 491/Del/2016 Layak Fabrics Pvt. Ltd. 15 income of the Assessee escaped assessment is missing in the present case. 13. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT(A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analyzing materials produced subsequent to the reopening will not rescue an inherently defective reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X
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