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TMI Blog2021 (4) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... ng powers under section 263 of the I.T. Act, 1961. Since the re-assessment proceedings are already declared illegal and bad in Law in A.Y. 2009- 2010 in the case of assessee on the same reasons, therefore, in assessment year under appeal also initiation of reassessment proceedings is illegal and bad in Law. Therefore, the same cannot be subject to proceedings under section 263 of the I.T. Act, 1961. This issue is, therefore, covered by Order of the ITAT, Delhi G-Bench, New Delhi in the case of M/s. Shahi Exports Pvt. Ltd., New Delhi vs., The Pr. CIT, Circle-1, New Delhi [ 2021 (3) TMI 1008 - ITAT DELHI ] In view of the above, we set aside the Order of the Learned Pr. CIT-8, New Delhi and quash the Order passed under section 263 of the I.T. Act, 1961 and restore the Order of the A.O. Accordingly, appeal of the Assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ntries and the material found during the course of search in the case of Shri S.K. Jain Group have not been considered by the A.O. The explanation of assessee was called for as to why the re-assessment order Dated 30.06.2014 cannot be set aside. The assessee submitted reply and also submitted that assessee filed documentary evidences which have been examined by the A.O. which prove that the Investors are existing parties and have creditworthiness. Shares have been allotted to them, therefore, the transaction is genuine. The assessee filed copy of share application form, resolution of Investor Companies, confirmation of Investor companies, their PAN Card, Certificate of Incorporation and Memorandum and Article of the Company, bank statements, present address of the Investor Companies, copy of Form No.2 held by the assessee-company with Registrar of Company, list of share allotment etc. The A.O. made detailed enquiry with reference to the search conducted in the case of Shri S.K. Jain Group of cases and information received from DIT (Inv.)-II, New Delhi. The Learned Pr. CIT, however, did not accept the explanation of assessee and noted that though the A.O. has referred to Appraisal R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come 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 there is already a specific provision under the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here 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-SC-IT. (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 assessee company on 20.09.2009 declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggarwal 10 Lotus Realcom P.Ltd. SBS Realtors 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 ₹ 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 ₹ 23,50,000/- and securities premium has increased by ₹ 2,11,50,000/- i.e., both totalling to ₹ 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/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. If the case is being reopened for the purpose of verification of the genuineness, how can there by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged that 12 companies who have given cheques to the assessee company were accommodation entries. However, the 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 sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) are subsequent to the decision of Paramount Communication (P) Ltd. (supra). However, it seems that neither in the 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pages 6 and 7 of the PB and submitted that same are identical as have been considered in A.Y. 2009-2010. He has submitted that the issue is covered in favour of the assessee and reopening of the assessment is bad in Law and is liable to be quashed. He has, therefore, submitted that the Learned Pr. CIT was not justified in setting aside the impugned re-assessment order under section 263 of the I.T. Act, 1961. He has further submitted that identical issue have been examined by ITAT, Delhi G-Bench, New Delhi in the case of M/s. Shahi Exports Pvt. Ltd., New Delhi vs., The Pr. CIT, Circle-1, New Delhi in ITA.Nos.2170 & 2171/Del./2017 for the A.Ys. 2008-09 and 2010-11 and the Tribunal vide Order Dated 24.03.2021 quashed the Order passed by the Learned Pr. CIT under section 263 of the I.T. Act, 1961. The Order of the Tribunal Dated 24.03.2021 is reproduced as under : "IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'G' BENCH, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA No. 2170/DEL/2017 [Assessment Year: 2008-09] & ITA No. 2171/DEL/2017 [Assessment Year: 2010-11] M/s Shahi Exports Pvt Ltd F -88, Okhla Industrial Area Phase - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: A.Y 2008-09 "Perusal of the submissions filed by the Assessee and information available in the record shows that the case of the Assessee for Assessment Year under consideration was taken up u/s^ 143(3). The Addl. Commissioner of Income Tax, Range-8, New Delhi vide Order dated 20.12.2010 has assessed the income of the Assessee at ₹ 5,27,78,840/-." A.Y 2010-11 "Perusal of the submissions filed by the Assessee and information available in the record shows that the case of the Assessee for Assessment Year under consideration was taken up u/s^ 143(3). The Addl. Commissioner of Income Tax, Range-8, New Delhi vide Order dated 20.12.2010 has assessed the income of the Assessee at ₹ 32,64,73,560/-." 10. The ld. PCIT invoked the provisions of section 263 of the Act and set aside the assessment order dated 30.03.2015 holding that because after the merger of M/s Sarla Fabrics Pvt Ltd with M/s Shahi Exports Pvt Ltd, whatever additions were made in the hands of M/s Sarla Fabrics Pvt Ltd were to be assessed in the hands of M/s Shahi Exports Pvt Ltd and accordingly, order of M/s Shahi Exports Pvt Ltd, as passed by the Assessing Officer u/s 153C of the Act, amounts to erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. the order u/s 153C has been removed, the super structure i.e. the order u/s 263 must fall. 13. In the result, both the appeals filed by the assessee in ITA Nos. 2170 & 2071/DEL/2017 are allowed". 4.2. Learned Counsel for the Assessee submitted that since the re-assessment order is illegal and bad in Law and is covered by the Order of the Tribunal Dated 01.04.2019 in the case of assessee on the same issue, therefore, the Learned Pr. CIT cannot exercise jurisdiction under section 263 of the I.T. Act, 1961 in collateral proceedings. Therefore, the Order passed by the Learned Pr. CIT under section 263 of the I. T. Act, 1961 is invalid and bad in Law. 5. On the other hand, the Ld. D.R. relied upon the impugned Order of the Learned Pr. CIT and submitted that since assessee did not challenge the reopening of the assessment, therefore, it cannot be challenged in proceedings under section 263 of the I.T. Act, 1961. 6. After considering the rival submissions, we are of the view that the Learned Pr. CIT has wrongly assumed the jurisdiction under section 263 of the I. T. Act, 1961. It is an admitted fact that in A.Y. 2009-2010 the A.O. has recorded similar reasons for reopening of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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