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10-01-2020, Budhiya Agencies, Section 68, 147, 148, Tribunal Kolkata

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8 months 2 weeks ago #12034 by amit
Section - 68, 147, 148, 152
Order Date - 10-01-2020
Favouring - Assessee
Court - Tribunal Kolkata
Appellant - Budhiya Agencies Pvt . Ltd.
Respondent - DCIT
Justice - A.T. VARKEY, JM & DR. A.L.SAINI, AM
Citation - 120Taxpundit98
Appeal No. - ITA No.1231/Kol /2017
Asstt. Year - 2008-09


PER : Dr. A. L. Saini, AM

The captioned appeal filed by the assessee, pertaining to assessment year 2008-09, is directed against the order passed by the Commissioner of Income Tax (Appeal)-Durgapur, in appeal no. 83/CIT(A)/DGP/2015-16, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short the ‘Act’) dated 30/03/2015.

2. The grounds of appeal raised by the assessee are as follows:

1. That the ld. CIT(A) has erred in not giving further time considering specific facts and circumstances of the case.

2. That the ld. CIT(A) has further erred in not given any decision on ground no. 7 as to validity of the reopening u/s 147 of the I.T. Act, 1961.

3. That the ld. CIT(A) has further erred in confirming addition of Rs. 20,00,000/- as made by Assessing Officer u/s 68 of the I.T. Act, 1961.

4. That the assessee craves leave to add, to withdraw or amend all or any of the grounds aforesaid on or before the hearing of he appeal.

3. Facts of the case which can be stated quite shortly are as follows: The assessee filed its return of income for the A.Y. 2008-09 declaring a total income of Rs. 760/-. Later on, assessment was reopened and notice u/s 148 of the Act was issued on 21.03.2014. On perusal of income tax return for the A.Y. 2008-09, the AO noticed that the assessee c mpany kept liability of Rs. 10,73,30,000/- towards Securities Premium Account in the Balance Sheet, whereas returned income of the assessee company during the A.Y. 2007-08 was to the tune of Rs. 760/- only. The assessing officer noticed that the information “to whom shares of the assessee company were allotted during the F.Y. 2007-08” had not been furnished by the assessee. Since the assessee company did not respond the notice u/s 142(1) of the Act, therefore the necessary verification of share premium could not be done. The assessee`s case was re-opened on the basis of deposit of a cheque of Rs. 20 lakh at the bank account of assessee company at ABN Bank, Kolkata by M/s Neelkanth Fiscal Services. Since the assessee company did not furnish the information before the AO during the reassessment proceedings therefore, the Assessing Officer left with no other option but to treat Rs. 20 lakh as unexplained cash credit under section 68 of the Act.

4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the addition made by theAssessing Officer.Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us.

6. The ld. Counsel for the assessee submitted before the Bench that reasons recorded by the assessing officer is based on suspicion therefore bad in law and hence reassessment proceedings initiated by AO under section 147 of the Act should be quashed. On the other hand, ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity.

7. We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. The main grievance of the assessee is against the action of the AO in reopening assessment completed u/s. 143(1) of the Act. According to Ld. Counsel for the assessee, the AO without application of mind after receipt of information from ITO,wd.6(3), Kolkata has simply reopened the assessment. According to Ld. Counsel, before the AO decides to reopen the assessment, he has to satisfy the condition precedent to assume jurisdict on nd for that he took our attention to the expression used in sec. 147 of the Act which states that AO should have ‘reason to believe’ escapement of income. According to ld Counsel, even after there is a foundation based on information is there, still there must be some reasons warrant holding a belief that income chargeable to tax has escaped assessment, which expression used by Parliament is stronger than the expression ‘satisfied’ and in the present case such requirement as contemplated by law has not been met in the ‘reason recorded’ by the AO before venturing to re-open the assessment which vitiates the re-opening itself. According to Ld. Counsel, even if the information given by the ITO,wd.6(3), Kolkatais adverse against the assessee, at the most it may trigger “reason to suspect”; then AO has to make reasonable enquiry and collect material which would make him believe that there is in fact an escapement of income. Without doing so, the jurisdictional fact necessary to usurp jurisdiction
to reopen the regular assessment cannot be made by the AO. For the said proposition, the Ld. AR drew our attention to following case laws:

i).PCIT Vs. Meenakshi Overseas Ltd. 395 ITR 677(Del.) (referred to para 19 till para 37).

ii).DCIT Vs. Greal Wall Marketing Pvt. Ltd. ITA No.660/Kol/2011 (referred to page 10 para 11)

iii).Shri Raj Kumar Goel Vs. ITO ITA No.1028/Kol/2017 (referred to page 5-8 para 11)

(iv).Classic Flour & Food Processing Pvt. Ltd. Vs. CIT ITA Nos. 764 to 766/Kol/2014 (page 7 para 12 to 16)

v).PCIT Vs. Shodiman Investments (P) Ltd. (2018) 93 153 (Bom) page 4 para 12 to 14)

vi).KSS Petron Pvt. Ltd. Vs. ACIT ITA No. 224/Mum/2014 (referred to page 3 para 8- 11)

vii).PCIT Vs. Tupperware India Pvt. Ltd. (2016) 236 Taxman 494 (referred to page 3 para 6 and 9)

viii).DCIT Vs. National Ba k for Agriculture and Rural Development ITA No.4964/Mum/2014 (referred to page 10- 13 para 12)

8. We note that the coordinate bench of this Tribunal in ITA No. 660/Kol/2011 for AY 2002-03 in the c se of DCIT Vs. Great Wall Marketing (P) Ltd. vide order dated 03.02.2016 has held as under:

“9. We have given a careful consideration of the submissions made by the learned counsel for the assessee. It is clear from the reasons recorded by the AO that the AO acted only on the basis of a letter received from Investigation Wing, New Delhi. The reasons recorded does not give as to who has given the bogus entries to the assessee. The reasons recorded also does not mention as to on which dates and through which mode the bogus entries were made by the assessee. The reasons recorded which are extracted in the earlier part of the order does not show, what was the information given by DIT(Inv.),New Delhi. The date of the information received by the AO were not spelt out in the reasons recorded. The involvement of the assessee is also not spelt out, except mentioning the corporate bodies who had subscribed to the share capital of the assessee were non-existent and not creditworthy. On identical facts the Hon'ble Delhi High Court in the case of CIT vs Insecticides (India) Ltd (supra) has taken a view that the reasons recorded were vague and uncertain and cannot be construed as satisfaction on the basis of the relevant material on the basis of which a reasonable person can form a belief that income has escaped assessment. The Hon'ble Delhi High Court has also come to the conclusion that the reasons recorded did not disclose the AO's mind regarding escapement of income. The Hon'ble Delhi

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