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TMI Blog2025 (1) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... see filed the return of income on 29.09.2018, declaring total income of Rs. 3,24,05,910/-, which was selected for scrutiny and assessment was completed vide order dated 23.04.2021 passed u/s 143(3) by assessing the total income at Rs. 4,75,81,150/-. Thereafter, search operation u/s 132 of the Act was conducted on 07.12.2021 on Diach Group. M/s Diach Chemicals & Pigments Pvt. Ltd. is a Kolkata based manufacturer and supplier of pure lead and lead alloys such as Antimonial Lead Alloy, Calcium Lead Ally, High Tin Lead Alloy, Lead Oxide, High Antimonial Lead and Lead tin Alloy. The notice u/s 148 of the Act was issued on 31.03.2022, after the prior approval of the competent authority the said notices were complied with by filing the return of income on 04.05.2022. Therefore, the statutory notices issued u/s 142(1) of the Act dated 29.09.2022 along with questionnaire. Finally, the assessment was completed u/s 147 of the Act vide order dated 28.03.2023, making an addition of Rs. 9,68,45,467/- and addition on account of PF and ESI contribution Rs. 7,34,624/-. The assessee challenged the validity of the reassessment proceedings for which CIT (A) after taking into consideration the contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee submitted that it had no transactions as mentioned in the notice. Hence, reassessment proceedings may kindly not be initiated against the assessee. However, the ld. AO thereafter noted that the sum of Rs. 1,69,40,316/- as escaped assessment in the hands of the assessee and accordingly, issue notice u/s 148 of the Act. The ld. AR vehemently submitted that notice u/s 148A(b) and order u/s 148A(d) of the Act would show that the ld. AO has clearly taken different issues. In 148A(b) the AO states that Savitri Ispat India Pvt. Ltd has taken accommodation entries and brought back own money in the form of share capital/share premium into the books of accounts and thus the income has escaped assessment whereas in 148A(d) the assessee has taken accommodation entries through bogus billing amounting to Rs. 1,69,40,316/- and accordingly the income has escaped assessment. Therefore, the AO now seeks propose reassessment on the reasons which was not subject matter of the original notice issued u/s 148A(b). 05. After hearing the rival contentions and perused the materials available on record. We find that undisputedly the notice u/s 148AB of the Act has been issued by the ld. AO on the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 in the hands ofM/s Savitri Ispat India Pvt. Ltd. 8. You are therefore requested to show cause as to why a notice u/s 148 of the I.T. Act should not be issued on the basis of the above narrated evidence-based information which suggests that income chargeable to tax has escaped assessment in your case for the A.Y. 2018-19 amounts to Rs. 50,00,000/-. 9. Your reply should reach this office by 21.03.2022 positively failing which it will be presumed that you have no objection if notice u/s 148 of the Income-tax Act, 1961 (the Act) be issued on the basis of the above stated reasons." 07. Therefore, the order u/s 148A(d) of the Act was passed dated 31.03.2022, wherein the ld. AO noted as under:- "8. Necessary enquiry has already been made in these cases and information nis available on INSIGHT portal and since in the instant cases, the information flagged in respect of the assessee for the relevant assessment year is in accordance with the Risk Management Straegy, enquiry u/s 148A(a) is not considered necessary. 9. Based on the information received as stated above a show cause notice uls 148A(b) of the IT Act was issued to the assessee on 17.03.2022 with the prior approval of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme of demergers, merger and amalgamation is done with a sole intention of avoiding tax liability and that the transactions were independently verified to be nothing but 'round trip financing lacking commercial substance and not for bonafide purposes'. This finding is clearly well beyond what is contained in the notice issued under Section 148A(b) and could not have been rendered without giving the petitioners adequate opportunity to rebut the assertion. In fact, coming to a definitive conclusion that there is avoidance of tax liability through independent verification but not disclosing the reasons or materials based on which such findings could be rendered and without giving an opportunity to the petitioners to put their case clearly. Thus, there is a gross violation of the principles of natural justice. (iv) It hardly needs to be stated that the order to be passed under Section 148A(d) cannot transcend the scope of proposal notice under Section 148A(b) inasmuch as such a notice happens to be the foundation on the basis of which such an order can be passed, and not otherwise. That is how the statutory scheme is devised. Definitive conclusions as to grounds that are not indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.' Referring to said decision, Krishna Iyer J., in MOHINDER GILL supra, has wittily observed: 'Orders are not like old wine becoming better as they grow older. "(I) AS TO WHETHER MATTER MERITS REMAND OR CLOSURE HERE ITSELF: (i) Both the sides having argued at length have also filed the Written Submissions touching merits of the matter that would belong to the domain of Assessing Officer. There is no need for this court to undertake a deeper examination of the aspects argued at the Bar namely whether the transactions in question amounted to transfer at all in view of section 47(vid) of the 1961 Act which enacts a fiction as to what is not a 'transfer' which otherwise in common parlance would have amounted to. Similarly, it was also debated at the Bar that as to whether the transactions in question were chargeable to income tax under the head 'income from other sources' under section 56(2). In addition, it was also fiercely argued as to whether the subject transactions amounted to shor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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