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10-01-2019, Blue Stock Investment, Section 147, 148, 132(4), Tribunal Mumbai

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2 months 1 week ago #8346 by amit
Section - 147, 148, 132(4), 133(6), 68
Order Date - 10-01-2019
Favouring - Assessee
Court - Tribunal Mumbai
Appellant - DCIT
Respondent - Blue Stock Investment Pvt. Ltd.
Justice - MAHAVIR SINGH, JM & MANOJ KUMAR AGGARWAL, AM
Citation - 119Taxpundit142
Appeal No. - ITA No. 3987/Mum/2017
Asstt. Year - 2007-08

Order

PER : MAHAVIR SINGH, JM:

In these two appeals, filed by Revenue and assessee, are arising out of the orders of Commissioner of Income Tax (Appeals)-48 &4, Mumbai [in short CIT(A)], in appeals No. CIT(A)-48/I.T-148/DCCC2(2)/2016-17, CIT(A)-4/IT-6/ITO-2(1)(2)/2015 16 vide orders dated 14.03.2017,23.01.2018. The Assessments were framed by the Dy. Commissioner of Income Tax, Central Circle 2(3), Income Tax Officer2(1)(2), Mumbai (in short ‘DCIT’ ‘ITO / AO’) for the A.Ys. 2008-09 & 2007- 08 vide order dated 23.03.2016,12 03.2015 under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2. The only issue in this appeal of Revenue is against the order of CIT(A) quashing the re-assessment proceedings and consequent reassessment framed under section 147 r.w.s. 143(3) of the Act. For this the Revenue has raised two grounds, which are on the issue of jurisdiction as well as on merits and the grounds are as under: -

“1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in quashing the proceedings u/s 148 of the Incometax Act; 1961 without appreciating that the information that M/s Alka Diamond Industries P. Ltd. was providing accommodation entries; was revealed during the course of search in the case of Praveen Kumar Jain and this particular information was not disclosed by the assessee either in the return of income or during the course of assessment proceedings under section 143(3) of the Income-tax Act, 1961 and the CIT(A) did not appreciate the ratio of the decision of Hon'ble Supreme Court in the case of Yogendra Kumar Gupta 51 taxmann.com 383 (SC)"

2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 1 Cr. Being unexplained share application money without appreciating that the assessee as well as M/s Alka Diamond Industries P. Ltd. failed to establish the genuineness of the transaction and the Ld CIT(A) further failed to appreciate that the circumstantial facts revealed in the search conducted at the various premises of Praveen Kumar Jain wherein this systematic racket of converting unaccounted income into purported share capital was detected which caused loss to the Nation by depriving the revenue on its unaccounted income.”

3. Brief facts are that the assessee is a private limited company engaged in the business of investment loans and advances. The original return was filed by the assessee on 17.10.2007 and assessment was completed under section 143(3) dated 28.11.2009. In the return of income the assessee has filed complete audited accounts wherein the investment of shares of Alka Industries Ltd. were disclosed. The AO issue notice under section 148 of the Act on the basis that during the course of search conducted in the case of Praven Jain Group of cases, Shri Praven Jain stated under section 132(4) of the Act that he was indulging proving accommodation entries like bogus share capital etc. Now, during the course of re-assessment proceedings the AO issued notice under section 133(6) to Alka Industries Ltd. for furnishing various evidences. In response to notice under section 133(6) of the Act, Alka Industries Ltd. submitted details of Income Tax return, copy of ledger account of the assessee in the books of Alka Industries Ltd., copy of bank statement showing relevant transaction, source of investment and also explained the factual position vide letter dated 30.01.2015. But the AO was not convinced and he added the share application money received from Alka Industries Ltd. not fully explained and added the same under section 68 of the Act amounting to ₹ 1 crore. Aggrieved, assessee preferred the appeal before CIT(A).

4. The CIT(A) after considering the submissions of the assessee quashed the re-assessment proceedings and also deleted the addition on merits by observing Para 3.3. to 3.5 as under: -

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