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TMI Blog2020 (4) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... to assessee-company were found and seized and that M/s. Blue Bell Finance Ltd., has made investment in assessee-company. The A.O. has specifically referred to the seized documents during the course of search as Annexures B D and also attached various other documents found during the course of search to the assessment order. D.R. also admitted that the aforesaid Annexures were found during the course of search in the case of Jain Group. Therefore, when incriminating documents were found during the course of search, the same have been used in the case of the assessee-company. The proper course the A.O. should have adopted is to proceed against the assessee-company under section 153C of the I.T. Act instead of recording reasons for reopening of the assessment under section 147/148 of the I.T. Act. We are of the view that A.O. was not justified in initiating the re-assessment proceedings under section 147 of the I.T. Act, 1961. The A.O. should have proceeded against the assessee under section 153C -A.O. did not apply his mind to the facts and circumstances of the case and material on record. Therefore, we set aside the Orders of the authorities below and quash the reopening of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Blue Bell Finance Ltd., through Axis Bank through intermediary Shri Vijay Kumar Gupta through cheque. A.O. also noted that on the basis of the said seized documents from Jain Brothers, it has been noticed that Jain Brothers has received ₹ 1.20 crores in cash from intermediary Shri Vijay Kumar Gupta in lieu of accommodation entry to the assessee and other beneficiaries. This cash has been received during the same period when accommodation entries has been given to the assessee. Copy of the seized documents is available as Annexure-D to the assessment order which is also reproduced at page-3 of the assessment order. The A.O, thereafter, noted the modus operandi of Jain Brothers and other evidence on record. The order of the Ld. CIT(A) in the case of Shri S.K. Jain is also reproduced. Show cause notice was issued to the assessee before making the addition. The assessee filed detailed reply before the A.O. However, the A.O. did not accept the contention of assessee and noted that the evidence filed by assessee are self-serving documents because they do not stand on the test of truthfulness and genuineness in view of overwhelming evidence seized from Jain Brothers clearly es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be considered, therefore, the same may be admitted in the interest of justice. He has relied upon Judgment of Hon ble Supreme Court in the case of National Thermal Power Co. Ltd., vs., CIT [1998] 229 ITR 383 (SC). 6. After considering the rival submissions, I am of the view that since it is a legal issue and arise out of the Orders of the authorities below and no new facts or material shall have to be considered and it goes to the root of the matter and validity of the assessment order in the matter, therefore, same is admitted for disposal of the appeal. 7. Learned Counsel for the Assessee referred to PB- 44, which is copy of the reasons recorded for reopening of the assessment. PB-48 is reply of the assessee before A.O. in which it was explained that Shri S.K. Jain is not Director /Signatory in the Investor Company. Copy of the allotment of shares filed with the Registrar of Companies for allotment of share was also filed. It was, therefore, submitted that there was no willful concealment on the part of the assessee-company and all the details are provided on record. He has submitted that Jain Group has no connection with the Investor Company. Therefore, reasons recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pening of the assessment is invalid as A.O. shall have to proceed under section 153C only . Learned Counsel for the Assessee submitted that A.O. without applying his mind has reopened the assessment. He has relied upon several decisions in his written submissions and also submitted that addition on merits is also unjustified. He has submitted that additional ground of appeal of assessee may be allowed and all additions may be deleted. 8. On the other hand, Ld. D.R. relied upon the Orders of the authorities below and submitted that in the last page of the assessment order s finding, it is mentioned that all the Annexures-A, B, C and D which are part of the assessment record . Annexure-B and D have been referred to by the A.O. in the assessment order which clearly reveal that assessee-company has received accommodation entries, which were found during the course of search in the case of Shri S.K. Jain and Shri Virender Kumar Jain. The Ld. D.R. also referred to other seized documents filed as Annexures with the assessment order in support of the contention. The Ld. D.R. submitted that there is modus operandi to have cash for providing accommodation entry. He has submitted that add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajat Shubra Chatterji vs. ACIT - ITA No.2430/Del/2015 order dated 20.05.2016 by returning following findings :- 7. On having gone through the decisions cited above especially the decision of Amritsar Bench in the case of ITO vs. Arun Kumar Kapoor (supra), we find that in that case as in the present case before us, reassessment was initiated on the basis of incriminating material found in search of third party and the validity of the same was challenged by the assessee before the Learned CIT(Appeals) and the Learned CIT(Appeals) vitiated the proceedings. The same was questioned by the Revenue before the ITAT and the ITAT after discussing the cases of the parties and the relevant provisions in details has come to the conclusion that in the above situation, provisions of sec. 153C were applicable which excludes the application of sections 147 and 148 of the Act. The ITAT held the notice issued under sec. 148 and proceedings under sec. 147 as illegal and void ab initio. It was held that Assessing Officer having not followed procedure under sec. 153C, reassessment order was rightly quashed by the Learned CIT(Appeals). In the present case before us, it is an admitted fact, as als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide Order Dated 14.01.2020 held as under : IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES A : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA.No.777/Del./2019 Assessment Year 2010-2011 Shri Adarsh Agrawal, N-57, Naveen Shahdra, Delhi. PAN AACPA1775E vs., The Income Tax Officer, Ward-61(1), Room No.2007, 20th Floor, E-2 Block, Civic Centre, JLN Marg, New Delhi - 110002 (Appellant) (Respondent) For Assessee : Shri Ashwani Kumar, C.A. Shri Rohit Jain, Advocate, Shri Deepesh Jain, C.A. And Shri Arpit Goel, C.A. For Revenue : Shri Ved Prakash Mishra, Sr. DR Date of Hearing : 08.01.2020 Date of Pronouncement : 14.01.2020 ORDER PER BHAVNESH SAINI, J.M. This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-27, New Delhi, Dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 148 Dated 12.02.2015. PB-9 is letter of the A.O. extracting the reasons for notice under section 148. PB-10 is reply of the assessee denying giving any loan to Shri Naresh Sabharwal supported by the affidavit which was filed during the assessment proceedings in the case of Shri Naresh Sabharwal. PB-25 is copy of the loan agreement provided by the Department. PB-27 is assessment order in the case of Shri Naresh Sabharwal under section 153A r.w.s. 143(3) Dated 21.03.2014. PB-32 is reasons for reopening of the assessment. Learned Counsel for the Assessee submitted that since Shri Naresh Sabharwal as well as assessee have denied giving of any cash loan and that no evidence have been found giving loan by assessee to Shri Naresh Sabharwal, therefore, reopening of the assessment is bad in law. Further the loan agreement was found during the course of search in the case of Shri Naresh Sabharwal and assessment under section 153A have been completed in his case, therefore, assessment in the case of assessee should have been made under section 153C only which is a special provision. Therefore, re-assessment in the matter is wholly unjustified, invalid and bad in law. In support of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03] 86 ITD 13 [Del.] [TM]. 07. Order of ITAT, Guwahati Bench, Guwahati in the case of M/s. Fantastic Buildcon Pvt. Ltd., Guwahati vs., ITO, Ward-2(1), Guwahati in ITA.No.104/Gau/2011 SP.No.09/Gau/2011, Dated 07.02.2012. 08. Order of ITAT, Mumbai D-Bench-T.M. Mumbai in the case of S.P. Goyal vs., DCIT [2002] 82 ITD 85 [Mum.]. 09. Judgment of Hon ble Supreme Court in the case of Commissioner of Income Tax vs., Smt. P.K. Noorjahan [1999] 237 ITR 570 [SC]. 7. On the other hand, Ld. D.R. relied upon the Orders of the authorities below and submitted that re-assessment proceedings have been rightly initiated based on the agreement found during the course of search in the case of Shri Naresh Sabharwal. 8. We have considered the rival submissions. It is well settled Law that validity of the re-assessment proceedings are to be determined with reference to the reasons recorded for reopening of the re-assessment. Learned Counsel for the Assessee filed copy of the reasons recorded for reopening of the assessment as provided under RTI Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s signed by 02 witnesses, but, none have been examined by the A.O. to confirm the genuineness of the transaction in the matter. No original agreement have been brought on record or examined by the A.O. No report of handwriting expert have been obtained by the A.O. before recording the reasons for reopening of the assessment. Thus, only photo copy have been taken on record without examining the validity of the same agreement. Since Shri Naresh Sabharwal has denied to have taken any loan from the assessee, therefore, before recording the reasons, it is the duty of the A.O. to bring some concrete and corroborative material on record to justify his conclusion that there is escapement of income in this case. The Hon ble Bombay High Court in the case of Indian Express Newspapers (Bombay) P. Ltd., Another vs., Union of India Others [2008] 300 ITR 351 [Bom.] held as under : Held that it was the contention of the Revenue that subsequent to the finalization of the assessment of the petitioners for the assessment year 1980-81, it was found that one P was paid interest. When questioned about this, the petitioners had initially denied having any transaction with the party. However, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 TTJ 249 (ASR-ITAT) [Paper Book at Page-71], the ITAT, Amritsar Bench held as under : On a perusal of section 153C, it would be clear that the provisions of this section are applicable, which supersedes the applicability of provisions of sections 147 and 148. In the instant case, the documents were seized during the search under section 132 and the same were sent to the Assessing Officer of the assessee and, thus, the Commissioner (Appeals) has correctly observed that only the provision in which any assessment could be made against the assessee was section 153C, read with section 153A. It was also apparent from the record that the officer in the case of 'T' Ltd. had mentioned in his letter that the necessary action may be taken as per law under section 153C/148. Hence, notice issued under section 148 and proceedings under section 147 by the Assessing Officer were illegal and void ab initio. In view of the provisions of section 153C, section 147/148 stands ousted. In the instant case, the procedure laid down under section 153C has not been followed by the Assessing Officer and, therefore, assessment has become invalid. The Commissioner (Appeals) was justified in foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings. It is well settled Law that validity of the re-assessment proceedings is to be determined with reference to the reasons recorded for reopening of the assessment. The Counsel for Assessee has filed copy of the reasons recorded for reopening of the assessment at pages 44 and 45 of the PB. The same is reads as under : In view of the above information I have reason to believe that the income pertaining to the Asstt. Year 2011-12 has escaped assessment to the extent of Rs.-25,00,000/-. 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 2011-12. 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. Sd/- R.O. Butia, Income Tax Officer, Ward-22(4), New Delhi. 9.3. The above reasons for reopening of the assessment shows that during the course of search incriminating material pertaining to assessee-company were found and seized and that M/s. Blue Bell Finance Ltd., has made investment in assessee-company. The A.O. has specificall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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