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TMI Blog2025 (1) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... 737/Del/2024 CIT(A),Kanpur-4/10372/2019-20 Dated 18.12.2023 147/144 8. 2010-2011 738/Del/2024 CIT(A),Kanpur-4/10373/2019-20 Dated 19.12.2023 271(1)(C) 9. 2011-2012 739/Del/2024 CIT(A),Kanpur-4/10374/2019-20 Dated 18.12.2023 147/144 10. 2011-2012 740/Del/2024 CIT(A),Kanpur-4/10375/2019-20 Dated 19.12.2023 271(1)(C) 11. 2012-2013 741/Del/2024 CIT(A),Kanpur-4/10376/2019-20 Dated 18.12.2023 147/144 12. 2012-2013 742/Del/2024 CIT(A),Kanpur-4/10377/2019-20 Dated 19.12.2023 271(1)(C) 13. 2013-2014 743/Del/2024 CIT(A),Kanpur-4/10378/2019-20 Dated 18.12.2023 147/144 14. 2013-2014 744/Del/2024 CIT(A),Kanpur-4/10379/2019-20 Dated 19.12.2023 271(1)(C) 15. 2014-2015 745/Del/2024 CIT(A),Kanpur-4/10380/2019-20 Dated 18.12.2023 147/144 16. 2014-2015 746/Del/2024 CIT(A),Kanpur-4/10381/2019-20 Dated 19.12.2023 271(1)(C) 17. 2015-2016 747/Del/2024 CIT(A),Kanpur-4/10382/2019-20 Dated 18.12.2023 147/144 18. 2015-2016 748/Del/2024 CIT(A),Kanpur-4/10383/2019-20 Dated 19.12.2023 271(1)(C) 2. Heard both the parties at length. Case files perused. 3. Both the parties are ad-idem during the course of hearing the Assessee(s) instant eighteen appeals in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representing assessee has further filed his written submissions dated 19.12.2024 reading as under: The present Appeal has been preferred by Mr. Sanjeev Wadhwa (hereinafter referred to as the "Appellant/Assessee") against the Impugned Orders passed by the Ld. AO and the Hon'ble CIT(A). I. The re-assessment proceedings are non-est. No order ought to have been passed in pursuance of the proceedings u/S. 147/148 of the IT Act. a. The re-assessment proceedings ought to have been initiated under Section 153C IT Act as the same have been initiated on the basis of statements made by third party and the material allegedly seized during the search and seizure at the premises of third party. b. Case as set up the Ld. AO in the Impugned Order, though not admitting, warrants initiation of proceedings u/s. 153C IT Act as the satisfaction of twin conditions is complete. c. Applicability of Section 147/148 IT Act is unwarranted in the present facts and circumstances as laid down by the Ld. AO himself. d. The present proceedings have been initiated in a mechanical manner without any application of mind and no reasons have been given for the same. e. The non-application of mind on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. AO while affirming the same. b. The addition of income by the Ld. AO is grossly incorrect and against the set principles of law. c. No reasons to believe for initiation of proceedings have been given by the Ld. AO. d. Grave prejudice has been caused to the Appellant by way of the Impugned Orders. e. The Impugned Orders have been passed based upon the assumptions raised from the material made available to the Ld. AO from the search and seizure along with the statements of third party. 5. We next note that the learned CIT(A) herein has affirmed the Assessing Officer action initiating under Section 148/147 proceedings against the assessee thereby making the impugned additions on merits as under: "5. In this case, search u/s 132 was carried out at the residential & office premises of Swarn Overseas (Sh. Manish Kumar Jain & Others) group of cases on 09.09.2010 by Investigation Wing Ghaziabad. It was revealed during the search that Sh. Manish Kumar Jain was engaged in the business of transfer of Foreign exchange. It was further revealed that Sh. Manish Kumar Jain had opened various bogus and Benami firms registered from different addresses at Ghaziabad. It has further b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities on the basis of forged documents. The statement before the Enforcement Directorate referred in the assessment order clearly reveals the complete details/modus operandi of collection of cash from various places and deposition of cash in various accounts before being remitted out of the country. Statement of Sh. Rakesh Jain was also recorded u/s 50 of PMLA of 2002 wherein, he admitted that cash was collected from Sh. Sanjeev Wadhwa and others and the said money was remitted abroad as per the instructions of Sh. Sanjeev Wadhwa and others. He clearly admitted to collection of cash by Sh. Manish Kumar Jain from 5h. Sanjeev Wadhwa and others, deposition of cash by Sh. Manish Kumar Jain in various bank accounts and remittances outside India in the shape of Foreign exchange. 6.1.5 Analysis From the above discussion, it is apparent that absolutely similar nature of evidence has been collected by the three Investigation agencies i.e., Income Tax, The Customs and the Enforcement Directorate, It is further important to emphasize that the statements recorded before the Income Tax Authorities and Enforcement Directorate Authorities are admissible as evidence in the court of law. No d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provide exempt LTCG/Short Term Capital Loss and assessee was one such operator - Whether thus, there was sufficient material available on record for Assessing Officer to form a reasonable belief and there was a live link existing of material and income chargeable to tax that escaped assessment - Held: yes - Whether therefore, it could not be said that Assessing Officer, on absolutely vague or unspecific information, initiated proceedings of reassessment without taking pains to form his own belief in respect of such materials - Held, yes Para 18) [In favour of revenue)* It has further been held by the Ld. ITAT Agra Bench 'SMC' In the case of Anil Kumar Singhal vs. Income-tax Officer, Ward 1(4), Agra reported at [2013) 33 taxmann.com 434 (Agra - Trib.) as under: Section: 68, read with section 147, of the Income-tax Act, 1981 - Cash credits (Gifts|& Assessment year 2001-02 - Assessing Officer reopened assessment on receiving information from Investigation Wing regarding bogus entries of gifts and capital gains - Whether, intonation from enquiry by Investigation Wing formed reason 10 believe that income had escaped assessment and reopening of assessment under section 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I [In favour of revenue" Also, in the judgment of Hon'ble High Court of Delhi in the case of AGR Investment Ltd. vs. Additional Commissioner of Income-tax reported at [2011|197 Taxman 177 (Delhi) it has been held as under15 *Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment year 2003-04 - Whether in exercise of power under article 226 of Constitution, Court can adjudge sufficiency of material for reopening assessment under section 147 - Held, no. - Whether whore Assessing Officer had specific information from office of DIT (Investigation) as regards transactions entered into by assessee-company with a number of concerns which had made accommodation entries and they were not genuine transactions, it could be said that there was material on basis of which notice under section 148 could be issued - Held, yes Hence, the AO was well within his rights to reopen the assessment proceedings even on the basis of information received from other agencies, though the Assessing Officer has reopened the case on the basis of documents on record as well as the information received from the Investigation Wing. 6.1.8 As hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pears that the Assessing Officer is justified prima facie in arriving al conclusion to reopen the assessment. A liberty is always available to the assessee to justify or to deal with the same, but this is not the stage where the process of reopening based upon aforesaid material is to be intercepted." Thus, it is a settled principle of law that at the time of issue of notice u/s 148 E pot necessary for the AO to establish beyond doubt that income has escaped assessment. As per law, at this stage there should only exist reason to believe' that income has escaped assessment and the case needs re-opening. It may or may not ultimately result into addition depending upon the outcome of the inquiries. Hence, these contentions of the appellant do not carry any merit. 6.1.9 Notice not served on the assessee within prescribed time The AR has further contended that the proper notice was not served on the assessee within the prescribed time. The AO in his remand report dated 20.10.2023 has clearly conveyed that all the notices were duly served upon the assessee at his declared and last known addresses. The AO has further contended that the assessee did not intimate/update any change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , service of notice to the sole respondent which has returned as unclaimed is considered as deemed to be served but none has entered appearance.* Further, the Hon'ble Supreme Court of India in the case of Atulbhai Hiralal Shah vs: DCT 2016 73 taxmann.com 325 has held that "where notice u/s 148 sent to assessee at the address contained in his PAN Card is returned back with the remark "left", reassessment proceedings could not be terminated merely on ground of non-service of notice". The case of the appellant is similar to the issues which were under consideration before the Hon'ble Supreme Court in the cases cited above, Hence, this contention of the appellant also does not carry any merit. 6.1.10 Notice u/s. 143(2) not issued The AR has contended that notice u/s 143(2) was not issued by the Assessing Officer. The AO in his remand report dated 20.10.2023 has submitted that no return was filed by the assessee in response to notice u/s 148 meaning thereby that in absence of return, notice u/s 143(2) could not be Issued to the assessee. The contention of the AO is found to be correct and the submissions of the appellant on this count also does not carry any merit. 6.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f cash and the credits in the accounts of various bogus entitles being managed by him under his directions through Sh. Manish Kumar Jain. Also AO disallowed 20% of the expenses in absence of furnishing of the books of accounts, bills & vouchers which is held to be very nominal and genuine. In view of above discussion, the additions made by the AO are upheld and these grounds of appeal are dismissed. 6.3 Ground of Appeal No. 12: In this ground of appeal the AR has submitted that the opportunity of cross examination was not provided to the appellant. In the present case, the volume of documentary evidence against the appellant is huge and the statements of various persons only acted as a corroborative evidence to the substantive evidence in the nature of bogus entities, bogus voter (Ds, deposit of unexplained cash, remittances abroad and absence of genuine imports. Cross-examination not allowed 6.3.1 The AR bas contested that the cross-examination of the persons whose statements were recorded by the Department and other Agencies was not allowed to the appellant. it is not a compulsive requirement to allow cross-examination of the persons whose statements have been recorded agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of each particular case. The basic requirement is that there must be fair play in action and the decision must be arrived at in a just and objective manner with regard to the relevance of the materials and reasons. We must reiterate again that the rules of natural justice are flexible and cannot be put on any rigid formula. In order to sustain a complaint of violation of principles of natural justice on the ground of absence of opportunity of cross-examination, it has to be established that prejudice has been caused to the appellant by the procedure followed. See in this connection the observations of this Court in the case of Jankinath Sarangi v. State of Orissa. Hidayatullah, C.J., observed there at page 394 of the report "there is no doubt that if the principles of natural justice are violated and there is a gross case this Court would interfere by striking down the order of dismissal, but there are cases and cases. We have to look to what actual prejudice has been caused to a person by the supposed denial to him of a particular right." Judged by this principle, in the background of the facts and circumstances mentioned before, we are of the opinion that there has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings under Section 148/147 have been initiated against the assessee based on the seized material; the only recourse available to departmental authorities is to invoke Section 153C proceedings as the appellant herein happens to be a person other than the searched assessee and therefore, section 148/147 process is not sustainable in law. 6. We have given a thoughtful consideration to the assessee(s) instant first and foremost substantive ground seeking to quash section 148/147 proceedings and find no merit therein. This is for the precise reasons that case law PCIT Vs Naveen Gupta (2024) 168 Taxman 574(Delhi) holds that even if section 153C contains a non-obstate clause, the same does not bar a learned assessing authority to invoke re-opening u/s 148/147 of the Act. This is also coupled with the fact that the assessee has not filed the corresponding search records and panchanama so as to satisfy the rigor of Section 153C of the Act. Suffice to say, a perusal of the case file suggests that the learned Assessing Authority herein had recorded the corresponding reasons based on tangible material comprising of the evidence collected in post such enquiries and statements recorded f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to accept instant concluding argument as well once the impugned disallowance/additions are not merely based on the said statement but also the other relevant tangible material(supra). We thus affirm both the learned lower authorities' respective findings initiating Section 148/147 proceedings culminating in the impugned disallowance /additions, as the case may be. The assessee(s) "lead" quantum filed ITA No.695/Del/2024 fails therefore. The outcome would hardly be different in his assessee(s) corresponding penalty file ITA No.694/Delhi/2024 wherein both the learned lower authorities have held him to have concealed and furnish inaccurate particulars of income. The CIT(A)'s corresponding impugned lower appellate discussions reads as follows:- 6. In this case, search u/s 132 was carried out at the residential & office premises of Swarn Overseas (Sh. Manish Kumar Jain & Others) group of cases on 09.09.2010 by Investigation Wing Ghaziabad. It was revealed during the search that Sh. Manish Kumar Jain was engaged in the business of transfer of foreign exchange. It was further revealed that Sh. Manish Kumar Jain had opened various bogus and Benami firms registered from different addres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1.2 Show cause notice was not served on the appellant. The AR has further contended that the show cause notice was not served on the assessee. The AO in the penalty order has clearly mentioned that the show cause notices were issued to the assesses. The Issue of service of notices also arose during the quantum appeal proceedings in the case of the assessee for the same year in Appeal No. CIT(A), Kanpur-4/10366/2019-20. The AO in the quantum case during the remand proceedings had clearly reported that the notices were duly served upon the assessee at his declared and last known addresses. The AO had further contended that the assessee did not intimate/update any change of address in the database of the department and it was expected of the AO to issue the notices at the last known addresses of the in the Departmental Database. The Hon'ble Supreme Court In the case of Priyanka Kumari vs. Shailendra Kumar in IA No. 126261/2019 in order dated 13.10.2023 has held as under: "As per the office report the notice issued to the sole respondent has returned with the remarks *unclaimed". As it was held by the Hon'ble Supreme Court in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is similar to the issues which were under consideration before the Hon'ble Supreme Court in the cases cited above. Hence, this contention of the appellant also does not carry any merit. 7.1.3 That levy of penalty is bad in law In these grounds the AR has challenged the levy of penalty on the addition made by the AO in the assessment order. During the appeal proceedings in the quantum case, the addition made by the AO has been confirmed in Appeal No: СТА:Кадpur-4/10366/2019-20 vide order dated 18.12.2023. Looking Into the of the addition made and the penalty levied, it is seen that the AO had before him details of transactions in accounts of multiple bogus entities from where the said money was layered into accounts of 4 or 5 entities before finally being remitted outside the country to Hong Kong. Apart from the evidence in the nature of bank account transactions, use of bogus Voter IDs and bogus PAN Cards for opening of bank accounts, the statement of various persons recorded by different agencies clearly brings on record the fact that the appellant was laundering unexplained money through bank accounts of bogus entities before being remi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alment or furnishing of inaccurate particulars and penalty proceeding would be justified - Hold, yes" Further, the Hon'ble High Court of Delhi in the case of CIT Vs Zoom Communication (P.) Ltd, Delhi High Court reported at [2010] 191 Taxman 179 (Delhi)/(2010) 327 ITR 510 (Delhi)/[2010] 233 CTR 465 has held as under: "If assessee makes a claim which is not only incorrect in law, but is also wholly without any basis and explanation furnished by him for making such a claim is not found to be bona fide, Explanation 1 to section 271(1(c) would come into play and assesses will be liable to penalty" Further, the Hon'ble Supreme Court of India in the case of Mohan Steels Ltd. Vs CIT reported at 2017-TIOL- 159-SC-IT has held as under: "SLP dismissed after concurring with the views expressed by High Court that penalty for concealment would become leviable if it was discovered that allowances claimed were not bona fide in nature." In view of above discussion, factual evidences and stated legal position, the penalty imposed by the AO is confirmed and the various grounds of appeal of the appellant are dismissed. 7.2 Ground of Appeal No. 15 has not been argued by the AR durin ..... 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