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Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI N.K. BILLAIYA & MS. SUCHITRA KAMBLE
ORDER
PER N. K. BILLAIYA, AM:
This appeal by the revenue is preferred against the order of the CIT(A)-1, New Delhi dated 18.07.2017 pertaining to A.Y. 2012-13.
The sum and substance of the grievance of the revenue is that the CIT(A) erred in quashing the notice u/s. 148 of the Act by holding there was change of opinion.
Briefly stated that facts of the case are that the assessee filed its return of income on 29.10.2012. The return was selected for scrutiny assessment under CASS and accordingly statutory notices were issued and served upon the assessee. The assessment was completed u/s. 143 (3) of the Act. vide order dated 30.01.2015 and the income was assessed at Rs. 607215/-.
On the basis of some information received from office of the Additional CIT Range-4, Ludhiana dated 14.05.2015. The completed assessment was reopened as the AO had reason to believe that income has escaped assessment. Accordingly notice u/s. 148 was issued and served upon the assessee.
It would be pertinent to refer to the information received which triggered the reassessment proceedings.
On the basis of the aforesaid reasons the AO started the reassessment proceedings and the information gathered by the Addl. CIT Ludhiana were used against the assessee and the AO came to the conclusion that the credits of Rs. 1.75 crores and 2.40 crores are directly hit by section 68 of the Act since the assessee failed to prove the genuineness of the transactions and the credit worthiness of the person who has given the credit to the assessee. The company had failed to discharge its onus and accordingly the AO made the addition of Rs.4.15 crores u/s. 68 of the Act.
Assessee challenged the assessment before the CIT(A) questioning the validity of the notice u/s. 148 of the Act. It was vehemently contended that reassessment proceedings initiated by the AO is nothing but change of opinion. After considering the facts and the submissions and after discussing certain judicial decisions the CIT(A) has held as under :-
“In the instant case assessment was completed u/s 143(3) of the Act vide order dated 30.01.2014. The notice u/s 148 was issued on 18.06.2015. The AO was required to demonstrate that appellant has failed to make a return u/s 139 or in response to the notice issued under sub-section 1 of section 142 of section 148 or to disclose fully and truly all material facts necessary for its assessment for the year under consideration. The Assessing Officer has examined the complete accounts of appellant during the original assessment proceedings. The complete details of investment in shares and share application money received and their confirmation were filed before the AO during the course of original assessment proceedings and such receipt of the share application money was examined by the AO as discussed above. The AO after being satisfied did not make any addition on the issue of share application money and investment in shares. All these facts goes to prove that notice issued u/s 148 of the Act is only based on change of opinion on the same set of facts which is not permissible in the law as held by Hon’ble Supreme Court and Hon’ble Delhi High Court in the judgments discussed above. Consequently, the proceedings initiated u/s 148 is not valid in the eyes of law and the issue of notice u/s 148 is quashed and the ground no. 2 is allowed.”
Since the first appellate authority has quashed the notice issued u/s.
He did not find it necessary to adjudicate the appeal on merits.
Aggrieved by this the revenue is before us.
10. The DR strongly supported the findings of the AO. It is the say of the DR that the information received from Addl. CIT, Ludhiana was sufficient enough for reopening the assessment as the information was very specific and definitely a new tangible material evidence for the issue of notice u/s. 148 of the Act.
The DR further stated that the issues raised in the notice for reopening the assessment were never examined by the AO in the original assessment proceedings since the information was received after the completion of the assessment and, therefore, his new material evidence was sufficient to initiate reassessment proceedings. In her written submission the DR relied upon the several judicial decisions to support the case of the revenue.
Per contra the Counsel for the assessee supporting the order of the CIT(A) stated that in the original assessment proceedings specific queries were raised by the AO and specific replies were filed. It is the say of the counsel that whatever is mentioned in the information has been part of the scrutiny assessment proceedings and after considering the same the AO has framed the assessment order u/s. 143 (3) of the Act and, therefore, this is nothing but change of opinion.
We have given a thoughtful consideration to the orders of the authorities below. The entire quarrel is in respect of the loan given by the assessee to one M/s. A.P. Refinery Private Limited, Ludhiana and the quarrel also relates to the shares allotted by M/s. A.P. Refinery Private Limited to the assessee at a premium totalling to Rs.1.75 crores.
We find that during the course of the original assessment proceedings vide reply date 26.08.2014 vide point No.4 the assessee has mentioned “during the year under consideration the company has raised some fund on account of unsecured loans”. The requisite detail in respect of the parties is enclosed. We are also enclosing the confirmation, bank statement and copy of income tax return of the party concerned”. Further the assessee has also furnished the details of share application money received which is as under :-
We further find that vide reply dated 05.01.2015 the assessee has explained the justification of the share premium received during the year which is as under :-
How borrowed funds were utilised for the purpose of investment in shares and the same read as under :-
In the light of the aforementioned discussion let us now see the concluding paragraphs of the reasons for reopening the assessment this “9. Such true nature of the transaction undertaken by the assessee company has come to light only after the detailed investigation carried by the Addl. Commissioner of Income Tax, Range-iv, Ludhiana. This tantamount to fresh information. The transaction involving Rs.1,75,00,000/-, mentioned above, constitutes fresh information in respect of the assessee who has provide bogus accommodation entries to the above mentioned group could not explain the source. It represents the undisclosed income/income from other sources of the assessee company, which has not been offered to tax by the assessee in its return filed.
Having perused and considered the information received from the Addl. Commissioner of Income Tax, Range-1V, Ludhiana and on the basis of this new information, I have reason to believe that the income of Rs. 1,75,00,000/- has escaped assessment as defined by sec. 147 of the IT Act.” In view of the above, I am satisfied that this is a fit case for issuance of notice u/s 148 of the IT Act. submitted for perusal and necessary sanction, as per section 151(1) for issuance of notice u/s 148 of the IT Act.”
As can be seen from the above the AO seeks to reopen the completed assessment on the issues which were thoroughly examined during the course of the original assessment proceedings.
Merely because in the assessment proceedings of M/s. A.P. Refinery Private Limited that AO made some adverse remarks against that assessee would not allow the AO to invoke jurisdiction u/s 148 of the Act and reopen the completed assessment on the very same facts and issues which were thoroughly examined by the AO in the original assessment proceedings.
The facts discussed herein above speaks for themselves and need no reference to any judicial decisions relied upon by both the sides on the strength of the facts discussed elsewhere. We do not find any reason to interfere with the findings of the CIT(A).
In the result, the appeal filed by the revenue is accordingly dismissed. Order pronounced in the open court on 25.08.2020.