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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘B’
Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD – BENCH ‘B’
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No.970/Ahd/2017 �नधा�रण वष�/Asstt. Year: 2005-06 Dhanvidhya Impex P.Ltd. Vs. ITO, Ward-1(4) F/2, Tushar Centre Ahmedabad. Statdium Circle Navrangpura Ahmedabad 380 009. PAN : AAACD 7729 E
अपीलाथ�/ (Appellant) �त् यथ�/ (Respondent)
Assessee by : Shri A.L. Thakkar, AR Revenue by : Richa Rastogi, Sr.DSR सुनवाई क� तार�ख/Date of Hearing : 04/04/2019 घोषणा क� तार�ख /Date of Pronouncement: 30/04/2019 आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-1, Ahmedabad dated 23.2.2017 passed for the Asstt.Year 2005-06.
In the first ground of appeal, the assessee has pleaded that the ld.CIT(A) has erred in reopening of the assessment.
Brief facts of the case are that the assessee has filed its return of income on 31.10.2005 declaring total income at Rs.2,44,890/-. An order was passed under section 143(3) on 27.12.2006 accepting the returned income. The AO thereafter
ITA No.970 /Ahd/2017 2 issued notice under section 148 of the Income Tax Act on 29.3.2012. He has recorded the following reasons for reopening of the assessment: “TO, The Principal Officer, M/s. Dhanvidhya Impex Pvt. Ltd., F-2, Tushar Centre, Stadium Circle, Navrangpura, Ahmedabad-380009
Sir,
Sub: Notice u/s. 148 of the I.T. Act, 1961 Assessment Year 2005-06 -
Please refer to your letter dated nil received by this office era 21/12/2012 on the subject mentioned above.
As desired, the reason recorded for reopening the assessment is given hereunder :
“In this case assessment u/s.143(3) was passed on 27/12/2006 determining the income at Rs.2,44,890/-being the income returned.
Information has been received from the ITO, Wd 8(3), Ahmedabad that during the course of assessment proceeding in the case of Shantisuri Securities Pvt. Ltd, (SSPL) for A.Y.20050-06 it was found that said company had received Rs.4,06,95,000/- as share capital from various entities during previous year relevant to A.Y.2005-06. During the course of assessment proceeding, a detailed inquiry had also been carried out as a result of which it was revealed that the source companies were mere paper companies, having no real business or profession. The concerns had been merely floated and channelize the introduction of unaccounted cash into books of various benefit seekers.
Further, the statement on oath of one of the director of Shantisuri Securities Pvt. Ltd. was also recorded during the assessment proceedings wherein he admitted to the effect that the parties who had allegedly contributed to the share capital of the company were either bogus or were entry givers only. In his statement he further disclosed modus operandi of such entries giving by stating that when such entry seekers approached him to provide accommodation entries to them either in the form of share capital or as loans and advances for a fixed percentage of commission. Since he did not have the cash to provide the same, he accepted cash from these parties and handed over to the various parties who had deposited the cash in their own companies and in turn invested in his company as share capital This money was forwarded by Shantisuri Securities Pvt. Ltd. (SSPL) as loans and advances to various parties who had given him cash in the first place.
ITA No.970 /Ahd/2017 3 Through above modus operandi, Dhanvidya Impex Pvt. Ltd- PAN~AAACI)7706R had made investment of Rs.5,00,000/- as share capital of Shantisuri Securities Pvt. Ltd. in A.Y. 2005-06.
On the basis of return of income so filed, it is found that the assesses company has declared said investment of Rs.500000/- made in acquiring share of SSPL in its balance sheet. However, Considering the deposition of the director of Shantisuri Securities Pvt. Ltd. as discussed above, the source of investment of Rs.500000/- made in acquiring shares of said company requires to be verified in the case of Dhanvidya Impex Pvt. ltd. for AY 2005-06.-
In view of the above, I am of the considered opinion that the income of Rs.500000/- has escaped assessment by the assessee company and has not disclosed fully and truly all material facts necessary for his assessment for assessment year 2005-06, and the case is therefore, required to be reopened U/s.147 of the LT. Act by way of issuing notice u/s.148 of the IT Act."
Please note that the notice u/s.148 has been issued within the prescribed time limit with the previous approval of the concerned higher authority, and therefore, it is perfectly in order. Yours faithfully, Sd/- (UMESH PATHAK) Income-tax Officer Ward-1(4), Ahmedabad.”
The assessee objected to the reopening on the basis of the above reasons. But the ld.AO did not accept the objections of the assessee. On appeal, the ld.CIT(A) has upheld the reopening. Before us, the ld.counsel for the assessee contended that a perusal of the reason would indicate that the AO nowhere pointed out as to how the income has escaped assessment on account of failure of the assessee to disclosure all the material facts fully and truly. In support of his contentions he relied upon the following decisions: i) Pr.CIT Vs. Manzil Dinesh Kumar Shah, 101 taxmann.com 259 (SC); ii) Sunrise Education Trust Vs. ITO (Exemption) 92 taxmann.com 74 (Guj); iii) Krupesh Ghanshyambhai Thakkar Vs. DCIT, 77 taxmann.com 293 (Guj)’
ITA No.970 /Ahd/2017 4 iv) Harikishan Sunderlal Virman Vs. DCIT, 394 ITR 146 (Guj)
On the other hand, the ld.DR relied upon the orders of the Revenue authorities. He pointed out that after conclusion of the assessment proceedings in the case of the assessee fresh material was found indicating that some of the claims made by the assessee were incorrect which amounts to non-disclosure of facts fully and truly.
We have duly considered rival contentions and gone through the record carefully. Admittedly, a scrutiny assessment order was passed in the case of assessee on 27.12.2006. The notice under section 148 has been issued on 29.3.2012. The assessment year involved therein is Asstt.Year 2005-06. Four years from the end of the assessment year would end on 31.3.2010 whereas the notice has been issued on 29.3.2012. It means that notice under section 148 has been issued after expiry of four years from the end of the relevant assessment year. In this factual background let us examine section 147 of the Income Tax Act. The proviso appended to this section puts an embargo upon the power of the AO to reopen any assessment order where original assessment order was passed under section 143(3) and four years have expired from the end of the relevant assessment year. In such cases unless it is shown that he income has escaped assessment on account of failure of the assessee to disclose all material facts fully and truly, the AO cannot reopen the assessment. A perusal of the reasons would indicate that the assessee has declared the said investment of Rs.5.00 lakhs in Shantisuri Securities P.Ltd. This was subject to scrutiny in the original assessment order.
ITA No.970 /Ahd/2017 5 From the accounts of the assessee or from any other material, it has not been demonstrated that which material facts was not fully and truly disclosed by the assessee. The AO in the reason has observed that source of Rs.5.00 lakhs invested in Shantisuri Securities P.Ltd. was required to be inquired into. Now this is not something which revealed during the assessment proceedings of Shantisuri Securities P.Ltd. The assessee itself disclosed the investment and its source, which ought to have been inquired when scrutiny assessment was undertaken in the case of assessee. There is nothing new possessed by the AO which can demonstrate the fact about the investment so disclosed by the assessee was not made. If the source of such investment requires to be investigated, it could be examined in the scrutiny assessment. The manipulation at the end of Shantisuri Securities P.Ltd. would not brand the investment of the assessee as bogus or non-genuine and therefore, it is required to be investigated. Therefore, in view of the above discussion, we are of the view that the AO failed to demonstrate any fact that assessee has not disclosed all material particulars of its income fully and truly. Therefore, the reassessment order under section 147 is bad in law. It is quashed.
In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 30th April, 2019.
Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 30/04/2019