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TMI Blog2024 (1) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... that only go to show that Ld. AO has fallen in error in invoking powers of Section 147/148 in the absence of reasons of satisfaction being drawn u/s 153C by the Assessing Officer of the searched person. CIT(A) has fallen in error is not examining the assessment order to see as to how the AO exclusively and extensively relied only the alleged incriminating material found in the case of S.K. Jain Group of Companies to make addition under 147/148. Appeal of assessee allowed. - SH. M. BALAGANESH, ACCOUNTANT MEMBER AND SH.ANUBHAV SHARMA, JUDICIAL MEMBER For the Appellant : Sh. Vinod Kumar Bindal, CA, Sh. Saurabh Sharma, Adv. Ms. Rinky Sharma, AR For the Respondent : Shri Alok Bhura, Sr. DR ORDER Per Anubhav Sharma, JM : The appeal is preferred by the Assessee against the order dated 19.11.2018 of Commissioner of Income Tax (Appeals)-28, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. FAA ) in appeal no. 214/17-18 arising out of an appeal before it against the order dated 20.12.2016 passed u/s 143(3)/147 of the Income Tax Act, 1961 (hereinafter referred as the Act ) by the ITO, Ward-16(1), New Delhi (hereinafter refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 and 148. Thus, the assessment so framed u/s 147 should be cancelled. 3. The CIT(A) erred in law and on facts in confirming the reopening of the assessment as valid ignoring that the sanction for reopening the assessment has been granted in mechanical manner without application of mind by the sanctioning authority. Thus the assessment so framed should be cancelled. 4. The CIT(A) erred in law and on facts in confirming the reopening of the assessment as valid ignoring that the valid notice u/s 148 was not served on the assessee and subsequent notices u/s 148 which were served on the assessee were not valid. Thus the assessment so framed without service of a valid notice should be cancelled. 5. The CIT(A) erred in law and on facts in confirming an addition of Rs. 61,00,000/- u/s 68 as unexplained credit for share application money received from a company ignoring the facts, evidences and submissions placed on record. Thus, the addition so made should be deleted. 6. The CIT(A) erred in law and on facts in confirming an addition of Rs. 61,00,000/- on the basis of material seized during the course of search from the premises of Surendra Kumar Jain group without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idences furnished by the assessee in the Form of PAN, Income Tax Return etc of the Investor Company. 8.1 It comes up from the order of ld. AO in para 10.3 that regarding the claim of assessee that assessment of investee companies has been completed u/s 153A on return income was also one of the explanations of assessee but the same was not considered by the Ld. AO observing that the same has no bearing on the merits of transactions. 9. The CIT(A) has dealt with the issue that reopening of the assessment u/s 148 on the basis of incriminating material found in the search of the third party is erroneous and provisions of Section 153C alone could be applied to the exclusion of Section 147 and 148 of the Act. In this context his observations have been recorded in para 7.3 as follow : 7.3 It has been further pleaded by appellant that there was search proceedings u/s 132(1) of the Act in the case of S. K. Jain Group, on the basis of which, the proceedings in the case of appellant have been initiated, therefore, AO should have initiated the proceedings u/s 153C of the Act, not u/s 147 of the Act. The plea taken by appellant is misplaced. During the search proceedings in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only go to show that Ld. AO has fallen in error in invoking powers of Section 147/148 in the absence of reasons of satisfaction being drawn u/s 153C by the Assessing Officer of the searched person. 12. It will be appropriate to reproduce para 11.2 of assessment order below and to conclude that the aforesaid observations of this bench make the assessment order void ab initio ; 11.2 It is indeed surprising to note that the assessee has made unsuccessful efforts to prove, that these transactions were genuine. It is quite possible that the assessee could have succeeded in its scheme but for the search in the case of Jain Brothers where complete evidence of scheme of tax evasion used by the assessee were seized. The incriminating seized documents are self-speaking and give graphic picture of the modus operandi adopted by the parties involved. It is quite disturbing to note the ease with which the assessee has been conducting its affair by laundering its unaccounted money at into regular transactions. The law allows the Assessing Officer to lift the corporate veil to unmask the real from the apparent and also to go behind the transaction to understand their true import. The law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO issued notice u/s. 148 of the Act dated 8.3.2016 after recording the reasons in writing and after obtaining sanction u/s. 151(1) of the Act from PCIT, Delhi-6, New Delhi which was served upon the assessee on 10.3.2016 by speed post. In response to the same, assessee filed a letter dated 06.4.2016 wherein it was submitted that the original return filed earlier may be treated as returned filed in response to the notice u/s. 148 of the Act. The Assessing Officer issued notice u/s. 143(2) of the Act and u/s. 142(1) of the Act along with questionnaire to the assessee. In response to the same, assessee appeared and filed required documentary evidences and answer the query raised by the AO, but the AO did not agree with the explanation given by the assessee and finally made the addition u/s. 68 of the Act of Rs. 25 lacs as discussed in para 15 of the assessment order and completed the assessment at Rs. 28,23,720/- u/s. 147/148 read with section 143(3) of the Act vide order dated 15.12.2016. Against the assessment order dated 15.12.2016, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 30.11.2018 has dismissed the appeal of the assessee. Aggrieved with the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi Benches including the ITAT, SMC, Delhi Bench decision dated 08.08.2017 passed in ITA No. 1500 1501/Del/2017 (AY 2007-08) in the cases of Sushil Gaur vs. ITO, Ward 2(3), Ghaziabad and Shelly Agarwal. Vs. ITO, Ward 2(3), Ghaziabad, which was passed by the undersigned by respectfully following the various orders mentioned in para no. 8 of the order at page no. 7 to 9 of the order. For the sake of convenience, the relevant para no. 8 is reproduced as under:- 8. I have heard both the parties and perused the records, especially the impugned order as well as the Paper Book. On having gone through the decisions cited above especially the decision of Amritsar Bench in the case of ITO vs. Arun Kumar Kapoor (supra), I find that in that case as in the present case before me, 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiated on the basis of incriminating material found in the search of 3rd party then the provisions of section 153C of the I.T. Act were applicable which exclude the application of section 147 and 148 of the I.T. Act and notice u/s. 148 of the Act and proceeding u/s. 147 are illegal and void ab initio. Therefore, respectfully following the aforesaid order of the Tribunal dated 08.08.2017, the reassessment in question is accordingly quashed. Since I have already quashed the reassessment, there is no need to adjudicate the other grounds. Ld. DR has not brought to my notice any contrary decision on exactly similar facts and circumstances of the case mentioned in para no. 8 of the Tribunal order dated 08.08.2017, as reproduced above. Therefore, there is no help can be given to the revenue on the issues mentioned in the written submissions by the Ld. DR 12. On finding parity in the facts of the case in hand with the facts of Naval Oil and Containers Pvt. Ltd [supra] respectfully following the decision of the coordinate bench, I direct the Assessing Officer to delete the impugned addition. 14. Thus Ld. CIT(A) has fallen in error is not examining the assessment order to see ..... X X X X Extracts X X X X X X X X Extracts X X X X
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