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Income Tax Appellate Tribunal, DELHI ‘SMC-1’ BENCH,
Before: SHRI BHAVNESH SAINI, & SHRI N.K. BILLAIYA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] -15, Delhi dated 25.10.2019 pertaining to Assessment Year 2012-13.
The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the order of the Assessing Officer rejecting the contention of the assessee that reopening of the assessment u/s 147 of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] and consequent reassessment without complying with the statutory conditions and the procedure prescribed under the law are bad and liable to be quashed.
On merits, the assessee is also aggrieved by the addition of Rs. 2 lakhs made by the Assessing Officer on account of share application money.
Representatives of both the sides were heard at length. Case records carefully perused.
Briefly stated, the facts of the case are that the assessee is engaged in the business of wholesale and trading of medicine. For the year under consideration, return of income was filed on 03.09.2012 declaring an income of Rs. 8,650/-. Search and seizure operation was carried out on the premises of Dera Sacha Sauda by the ADIT, Investigation, Rohtak and vide letter dated 25.01.2018, it was informed to the Assessing Officer that the assessee company is a company closely associated with Dera Sacha Sauda and Saint Gurmeet Ram Rahim Singh and has failed to explain the source of credits appearing in the bank statements as well as source of acquisition of movable and immovable assets of the company.
Notice was issued u/s 148 of the Act and alongwith reasons for reopening assessment. The reasons for initiating proceedings u/s 148 of the Act read as under:
A perusal of the reasons recorded for reopening the assessment mentioned hereinabove show that the re assessment proceedings were initiated for quantum of income which has escaped assessment amounting to Rs. 8,52,910/- and perusal of the assessment order shows that the Assessing Officer has made addition u/s 68 of the Act in respect of some share application money amounting to Rs. 2 lakhs.
This means that no addition has been made by the Assessing Officer in respect of the amount which the Assessing Officer had alleged in the reasons recorded to have escaped assessment and the Assessing Officer went on to independently assess some other income.
This issue is no more res integra in view of the settled position of law in the case of Ranbaxy Laboratories Ltd 336 ITR 136 wherein the Hon'ble High Court of Delhi has held that if after issuing a notice under Section 148 of the Act, the Assessing Officer accepts the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income.
The relevant findings of the Hon'ble High Court of Delhi read as under:
“Section 147 has this effect that the Assessing Officer has to assessee or reassess the income ("such income") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which comes to his notice during the course of the proceedings However, if after issuing a notice under Section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under Section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee.”
This judgement of the Hon'ble High Court was again followed by the Hon'ble High Court of Delhi in the case of Monarch Education Society 387 ITR 416 wherein it was held as under:
“6. However, in the course of the reassessment proceedings, as is evident from the assessment order dated December 10, 2010 passed by the Assessing Officer, the sum that was sought to be added to the income of the assessee was not the aforementioned sum of � 16,61,000 but a sum of 26,10,000 which according to the Assessing Officer represented the unsecured loans that were unable to be explained by the assessee. In other words, the addition sought to be made to the income of the assessee was not based on the accommodation entries which formed the subject matter of the reasons to believe for issuance of the notice under section 148 of the Act.”
The facts of the case in hand and in light of the judgment of the Hon'ble High Court of Delhi [supra] we do not find any merit in the assessment order and accordingly, we quash the assessment order and allow the appeal of the assessee.
In the result, the appeal filed by the assessee in is allowed.
The order is pronounced in the open court on 18.03.2021.