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TMI Blog2021 (5) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Intelligence Criminal Investigation) Chandigarh - On a similar issue in M/S RAJSHIKHA ENTERPRISES PVT. LTD. VERSUS INCOME TAX OFFICER, WARD-15 (2) , NEW DELHI [ 2016 (6) TMI 1406 - ITAT DELHI] wherein held AO acted upon the report of the Investigation Wing only and on that basis initiated the proceedings for reopening the assessment by issuing the notice u/s 148 of the Act. Therefore, the reassessment proceeding was not valid. In the present case also since the AO acted upon the report of the investigation wing and on that basis initiated the proceedings for reopening the assessment by issuing the notice under section 148 of the Act therefore reassessment proceedings were not valid. In that view of the matter also the reassessment framed by the AO deserves to be quashed. In view of the aforesaid discussions legal issue raised by the assessee relating to the jurisdiction of A.O for reopening of the assessment is decided in favour of the assessee. Since we have decided the legal issue relating to the validity of the assumption of jurisdiction by the AO to reopening the assessment in favour of the assessee. - ITA No. 543/Chd/2019 ITA No. 548 /Chd/2019 ITA No. 549 /Chd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed its return of income on 20/09/2010 declaring income of ₹ 2,55,860/-. Later on the A.O. received the information from Director of Income Tax (Intelligence Criminal Investigation) Chandigarh that the assessee had received share premium at ₹ 1,17,00,000/- during the year under consideration and there was nothing in return to justify the receipt of share premium at such higher rate. The A.O. observed that the book value of share the assessee company was just ₹ 10 i.e; Face Value because prior to the receipt of premium, the assessee company had nothing in its balance sheet and that the assessee had shown NIL income during the year under consideration which could not justify such a large premium received. 5.1 The A.O. asked the assessee about the basis of charging the high premium, to file documentary evidence in support of working of premium thereof, to furnish the utilization of share premium alongwith documentary evidence including bank statement cash flow statement and to furnish the details of dividend declared and distributed by the assessee company during the financial year 2008-09 to 2011-12. 5.2 The A.O. observed that in response to the above, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of that year. Both these conditions were conditions precedent to be satisfied before the A.O. could have jurisdiction to issue notice under section 148 of the Act read with Section 147(a) of the Act. But under the substituted Section 147, existence of only the first condition suffices i.e; if the Assessing Officer for whatever reason has reason to believe that income had escaped the assessment, it confers the jurisdiction to reopen the assessment and that in the assessee's case the A.O. has formed his own belief for the issue of notice under section 148 of the Act after applying his mind independently which was evident from the reasons recorded for issuance of notice, therefore, the notice issued under section 148 of the Act, in the case of the assessee was neither illegal, arbitrary or bad in law, rather the jurisdiction had rightly been conferred by the A.O. within the provisions of the Act. 6. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under: This is with reference to an appeal filed by M/s Future Tech IT Systems (P.) Limited (herein after referred to as the appellant ) against the order U/s 143(3) read with Section 147 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153. assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) . In the instant case, the Ld. Assessing Officer did not mount a valid base for the reasons to come at a rational belief that, the income of the appellant has escaped assessment. Infact, there was no material either direct, or, indirect, on record, which could have corroborated that, the transactions between M/s Axis Technologies (P.) Limited (the appellant)and the persons, from, whom the share application money was received during the relevant assessment year under consideration, were not genuine. The Ld. Assessing Officer did not put forth, any material evidence and information, in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner (Appeals) as well as the Tribunal. II. The Hon ble High Court of Punjab and Haryana in the case of Commissioner of Income-Tax Vs. Smt. Paramjit Kaur reported at (2009) 311 ITR 38 has laid down as under: It was undisputed that the Assessing Officer had initiated reassessment proceedings on the basis of information received from the survey circle that the assessee had got prepared a demand draft which was not accounted for in the books of account of the assessee. But the Assessing Officer had not examined and corroborated the information received from the survey circle before recording his own satisfaction of escaped income and initiating reassessment proceedings. The Assessing Officer had, thus, acted only on the basis of suspicion and it could not be said that the same was based on belief that the income chargeable to tax had escaped assessment. The Assessing Officer has to act on the basis of 'reasons to believe' and not on 'reasons to suspect'. The Tribunal had, thus, rightly concluded that the Assessing Officer had failed to incorporate the material and his satisfaction for reopening the assessment and, therefore, the issuance of notice un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under those circumstances, it would not be appropriate to require the assessee to go through the entire gamut of proceedings. It was totally unwarranted. The Ld. Assessing Office rtook a recourse to Section 147 of the Income-Tax Act, 1961, however, such recourse could not be taken in lieu of the above. Thus, the initiation of proceedings U/s 148 is bad in law. 6.1 The Ld. CIT(A) after considering the submissions of the assessee observed that it was apparent from the reasons recorded by the A.O. that information received from the Director of Income Tax (Intelligence Criminal Investigation) Chandigarh that the assessee had received share premium of ₹ 1,17,00,000/- during the relevant assessment year under consideration, was specific information, the A.O. referred to the facts of information of receipt of share premium of ₹ 1,17,00,000/- which was abnormal and of suspicious nature as he noticed from the record filed by the assessee that there was nothing to justify the receipt of huge share premium at such higher rate. 6.2 The Ld. CIT(A) further observed that the A.O. noticed that the book value of the share of the company was ₹ 10/-and the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of the assessee. The reliance was placed on the following case laws: ACIT Vs. Rajesh Jhaveri Stock Brokers P. Ltd. 291 ITR 500 (SC) A.L.A Firm Vs. CIT (1991)189 ITR 285 (SC) Raymond Woolen Mills Limited Vs. ITO 236 ITR 34 (SC) Phool Chand Bajrang Lal And Another Vs. ITO 203 ITR 456 (SC) Gurera Gas Cylinders Pvt. Ltd. Vs. CIT 258 ITR 170 (P H) Rajat Export Import India Pvt. Ltd. Vs. ITO (2012) 341 ITR 135 (Del) ACIT vs. Kisco Casting P. Ltd. (2013) 152 TTJ 629(Chd). (Trib) Srinivasa Khandasari Udyog Vs. ITO 56 ITD 146 (ITAT, Bang) ITO Vs. Purushotam Das Bangur Anr. 224 ITR 362 (SC) Elphinstone Picture Palace Vs. Union of India Anr 74 ITR 115 (Pat) H.A. Nanji Co. Vs. ITO 120 ITR 593 (Cal) Sohan Singh Vs. CIT 158 ITR 174 (Del) Rattan Gupta Vs. CIT 234 ITR 220 (P H) CGT Vs. Susheela Shanmugasundaram 242 ITR 176 (Mad) ITO Vs. Gurinder Kuar 102 ITD 189 (ITAT Del) Sterlite Industries (India) Ltd. Vs. ACIT 302 ITR 275 (Mad) Rattan Gupta Vs. CIT 234 ITR 220 (Del) 6.4 The Ld. CIT(A) also observed that after initiation of proceedings, the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the AO in the notice issued under section 148 of the Act clearly mentioned that the information had been received from Director of Income Tax (Intelligence Criminal Investigation) Chandigarh that the assessee had received share premium to the extent of ₹ 1,17,00,000/- and also had received share application money to the extent of ₹ 13,00,000/- and accordingly initiated the proceedings under section 147 of the Act. 8.2 The Ld. Counsel for the assessee submitted that the AO while issuing the notice under section 148 of the Act doubted the share premium only and accepted the share capital received by the assessee, therefore, the initiation of the proceedings u/s 147 of the Act were based on suspicion only as such were bad in law. 8.3 It was further submitted that the assessee also filed all the documents before the A.O. vide letter dt. 26/08/2015 copies of which are placed at page no. 24 to 68 of the assesse's compilation. It was also submitted that the investor company explained the source and the assessee furnished relevant documents to the AO copies of which are placed at page no. 152 to 190 of the assessee's compilation, those documents furnished by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act in the case of M/s Indo Global Techno Trade Limited Vs. ITO, Ward-1(5), Ludhiana (supra)for the A.Y. 2010-11 in ITA No. 1616/Chd/2018, Ludhiana(supra) and submitted that verbatim reasons were recorded in the case of the assessee therefore the facts of the present case as far as reopening of assessment u/s 148 of the Act, is concerned are identical to the facts involved in the aforesaid referred to the case of M/s Indo Global Techno Trade Limited Vs. ITO, Ward- 1(5), Ludhiana (supra) which has already been adjudicated by this Bench of the ITAT in favour of the assessee. Accordingly it was submitted that the present case is squarely covered vide aforesaid referred to order dt. 15/06/2020 in ITA No. 1616/Chd/2018 for the A.Y. 2010-11 in the case of M/s Indo Global Techno Trade Limited Vs. ITO, Ward- 1(5), Ludhiana(supra). 9. In her rival submissions the Ld. DR strongly supported the orders of the authorities below and reiterated the observations made in their respective orders. However she could not controvert this contention of the Ld. Counsel for the Assessee that the reasons for reopening the assessment in the case of M/s Indo Global Techno Trade Limited Vs. ITO, War ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the share premium received has not been mentioned nor there is any allegation that those share applicants were not traceable or they were bogus / paper companies indulged in sham transactions. Mere information that the assessee had received a high premium, in our view, cannot be said to be a reason to form the belief that the income of the assessee had escaped assessment . The Ld. Assessing Officer raised a suspicion, as mentioned in the reasons itself, regarding the source of the capital being not genuine or that it may be a modus operandi by the assessee to introduce its undisclosed income by way of share premium , however, this was a mere suspicion of the Assessing Officer without even an iota of any incriminating tangible material against the assessee or even otherwise, the information received by the Assessing Officer was general and vague information, that of course, can be used to some extent by an Assessing Officer to make further enquiries to ascertain the true facts in a case of an ongoing assessment proceedings; however, in a concluded case of assessment , this general information without pointing out any incriminating information against the assessee, cannot be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the decision of the Coordinate Chandigarh Bench of the Tribunal in the case of 'D.D. Agro Industries Ltd v ACIT', ITA Nos. 349 350/Chd/2017 order dated 7.9.2017, wherein, on identical facts and circumstances, the Assessing Officer has recorded identical reasons to form belief for reopening of the assessment. The Coordinate Chandigarh Bench of the Tribunal has held that the Assessing Officer assumed jurisdiction relying upon the non- specific routine information blindly without caring to first independently consider the specific facts and circumstances of the case and that the assumption of jurisdiction by the Assessing Officer under the circumstances was wrong. The relevant part of the observations made by the Tribunal (supra) in the identical facts and circumstances of the case or to say in identical set of reasons recorded is reproduced as under:- In our considered view, considering the facts of the present case, we hold that the AO has assumed jurisdiction relying upon non specific routine information blindly without caring to first independently consider the specific facts of the assessee's case. The AO in his wisdom, instead of caring to refer to the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etent authorities, reopened the case of the appellant u/s 147 of the Act by way of issuing notice u/s 148 of the Act. 10.2 In the present case, the AO initiated the proceedings under section 147 r.w.s 148 of the Act on the basis of the information received from Director of Income Tax (Intelligence Criminal Investigation) Chandigarh. On a similar issue, the ITAT Delhi Bench, SMC in the case of M/s Rajshikha Enterprises Pvt. Ltd. Vs. ITO for the A.Y 2005-06 vide order dt. 23/02/2018 held as under: 11. From the aforesaid reasons recorded, it is noticed that the AO categorically stated that in view of the report received from DIT(Inv.) Unit-VI(2), New Delhi, it was clear that the assessee had not disclosed fully and truly all material facts necessary for its assessment and he had reasons to believe that a sum of ₹ 25,00,000/- chargeable to tax had escaped assessment. In the body of the assessment order also, the AO mentioned as under: Information in this case was received from the office of DIT(Inv.), New Delhi that the assessee has received accommodation entries .-.mounting to ₹ 25,00,000/- from following parties as detailed below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries were provided was known, it would not have been difficult for the Assessing Officer, if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the assessee, which must have been tendered along with the return, which was filed on November 14,2004 and was processed under section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material it was not possible for him to have simply concluded that it was evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries. The basic jurisdictional requirement was application of mind by the Assessing Officer to the material produced before issuing the notice for reassessment. Without analysing and forming a prima facie opinion on the basis of material produced, it was not possible for the Assessing Officer to conclude that he had reason to believe that income had escaped assessment. The order of the Tribunal was proper. 14. A similar view has been taken by the Hon'ble Jurisdictional High Court in the case of Pr. CIT Vs Meenakshi Overseas Pvt. Ltd. (2017) 395 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the applications, copies of balance-sheets, profit and loss accounts for the year under consideration and even bank statements showing the source of payments made by the companies to the assessee and their master debt with the Registrar of Companies particulars. The Assessing Officer failed to conduct any scrutiny of documents and was content to place reliance merely on a report of the Investigation Wing. This revealed disregard of an Assessing Officer's duties in the remand proceedings which the Department sought to inflict upon the assessee in this case. No substantial question of law arose. 16. A similar view has been taken by the Hon'ble Jurisdictional High Court in the case of Signature Hotels P. Ltd. Vs ITO Another (201 1) 338 ITR 51 (supra) held as under: That the reassessment proceedings were initiated on the basis of information received from the Director of Income-tax (Investigation) that the petitioner had introduced money amounting to ₹ 5 lakhs during financial year 2002-03 as stated in the annexure. According to the information, the amount received from a company, S, was nothing but an accommodation entry and the assessee was the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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