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10-07-2019, BLA Power Holding, Section 148, 147, 68, 133(6), Tribunal Mumbai

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5 months 3 days ago #10053 by amit
Section - 148, 147, 68, 133(6)
Order Date - 10-07-2019
Favouring - Assessee
Court - Tribunal Mumbai
Appellant - BLA Power Holding Pvt. Ltd.
Respondent - ITO
Justice - RAJESH KUMAR AM & RAM LAL NEGI JM
Citation - 719Taxpundit149
Appeal No. - ITA No.217/M/2019
Asstt. Year - 2010-11

Order

PER : Rajesh Kumar

The present appeal has been preferred by the assessee against the order dated 14.12.2018 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2010-11.

2. The various grounds raised by the assessee are as under:

“1. On the facts and circumstances of the case, The Ld. CIT(A) legally erred in confirming the assessment order passed us 143(3) r.w.s 147 of the Act which is invalid, without jurisdiction, bad in law and void ab initio.

1.1 On the facts and circumstances of the case, the Ld. CIT(A) legally erred in confirming reopening the assessment u/s 148 of the Act which was purely done by relying on the unsubstantiated information and that too without verifying the contents of the information. The impugned order being bad in law as the basis of the reopening is on the borrowed satisfaction.

1.2 On the facts and circumstances of the case, the Ld, CIT(A) legally erred in confirming the assessment order passed which is bad in law as the statement relied on of the alleged parties, were never supplied to the appellant. The appellant asked for the copies of the statement and cross examination of the parties vide letter dated 20/12/2017 filed on 21/12/2017, hence on that count itself, in absence of natural justice the order is bad in law.

2. On the facts and circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs. 18,00,00,000 as unexplained cash credit u/s 68 of the Act made during the re-assessment proceedings. The amount was received by account payee cheque(s) on account of the share capital; the Ld. CIT(A) erred in ignoring the judgment of the Hon'ble Apex Court in Lovely Exports Pvt Ltd [216 CTR 195] and host of other judgments including Jurisdictional High Court judgment in the case of Creative World Telefilms Ltd.[333 ITR 100| and Paradise Inland Shipping Pvt Ltd. (unreported)

3. On the facts and circumstances of the case, the Ld. CIT(A) legally erred in confirming the addition of Rs.18,00,000 being 1% of the share capital money raised (not share application) u/s 69C of the Act made by the AO during the re-assessment proceedings.

4. On the facts and circumstances of the case, the Ld CIT(A) legally erred in confirming the charging interest u/s 234B of the Act.

5. On the facts and circumstances of the case the Ld. CIT(A) legally erred in dismissing the penalty initiated under sec. 271(l)(c) of the Act on the ground being premature.

6. Your appellant craves leave to alter, modify, amend or delete any of the above grounds of appeals or to add one or more additional ground(s), at or before the hearing of the appeal, as may be necessary.”

3. The issue raised in ground No.1 is against the order of ld CIT(A) upholding the order of the AO in re-opening the assessment of the assessee and thus challenges the jurisdiction of the AO which was exercised without fulfilling the conditionalities precedents to issuing notice u/s 148 of the Act.

4. The facts in brief are that the assessee filed the return of income on 28.09.2010 declaring a loss of Rs.7,16,956/- which was processed under section 143(1) of the Act. Thereafter, the assessment was reopened u/s 147 of the Act by issuing notice under section 148 of the Act dated 21.03.2017. The reasons recorded by the AO for reopening the assessment proceedings are reproduced as under:

“1. The assesses filed its return of income for A.Y. 2010-11 dated 20.09,2010 declaring total income at Rs. NIL which has been processed u/s. 143(l) of the Acton 17.04.2011.

2. In this case, an information has been received from ADIT(lnv.), Unit -3(4), Mumbai vide letter no. ADIT-3(4)/BLA Power Holding/2016-17 dated 08.03.2017 regarding investment in shares of BLA Power Holdings Pvt. Ltd. of Rs. 3,00,00,000/- by M/s. Lifetime Financial Services Ltd which appears to be a paper/fake company set up for the purpose of routing funds.

3. As per the information from Investigation Wing, the account of M/s. Lifetime Financial Services Ltd. (A/c. No, 909020043666920) was opened at Axis Bank, Diamond Harbour Branch in the month of December, 2009 with the initial funding of Rs.l,00,000/-. Since then this account is frequently credited with high value funds received through various modes like clearings, inter-branch transfer and RTGS, Subsequently, the entire money is getting moved out of the account on the same or succeeding days. The information has been received in respect of 4 entities, including M/s, BLA Power Holdings P Ltd. regarding high value of transfer
transactions with the account of M/s Lifetime Financial Services Ltd.

4. It is observed that M/s. Lifetime Financial Services Ltd. is the Principal Company. M/s. Lifetime Finan ial Services Ltd. has invested in shares of the companies, including an amount of Rs. 3,00,00,000/- in shares of M/s. BLA Power Holding Pvt. Ltd. as on 31.03.20W (3,00,000 shares Rs. 100 each). It had also advanced loans, on which it is earned i terest income of Rs. 1,95,740/- during the F.Y. 2009-10. Apart from this interest income, M/s. Lifetime Financial Services Ltd. has no other business income. Hence, the huge investment in shares made by M/s. Lifetime Financial Services Ltd. is not justifiable. Also, M/s. Lifetime Financial Services Ltd. had not filed any details with regard to shareholders or other relevant information to substantiate the source of funds in its hand.

5. In view of above, it is clear that M/s. Lifetime Financial Services Ltd. is paper/fake company set up for the purpose of routing funds to M/s. BLA Power Holdigns Pvt. Ltd. Under these circumstances, J have reasons to believe that the transaction to the tune of Rs. 3,00,00,0007- made by M/s. BLA Power Holdings P. Ltd. with M/s. Lifetime Financial Services Ltd. or any other income chargeable to tax. which comes to my notice subsequently in the course of proceedings for reassessment has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. Accordingly, this is a fit case to reopen the assessment by issue of notice u/s. 148 of the Income Tax Act, 1961.”

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