ACIT, C.C. - 3(2), KOLKATA vs. SRI BIJAY KUMAR AGARWAL , KOLKATA

The Revenue raises the following sole substantive ground of appeal:- “1. That on the facts and circumstances of the case, whether the Ld. CIT(A) was justified in deleting the addition of Rs.7,23,97,500/- without appreciating the content of the seized documents marked AK/PDP/16 specially when the assessee acknowledged all entries in the said documents relating to payments / receipts by cheque but pleaded ignorance in respect of cash transactions embedded between the transactions in cheque.”

ACIT,CC-3(2), Kol Vs. Sh. Bijay Kr.Agarwal Page 2 3. It transpires during the course of hearing is that the CIT(A)’s order under challenge had not only reversed the Assessing Officer’s action adding the amount in dispute of ₹7,23,97,500/- but also he has quashed sec. 148 / 147 proceedings as not valid vide his following detailed discussion:- “Decision: The appellant has challenged the validity of the proceedings u/s. 147 and on a perusal of the documents as available on record and the submission of the appellant as well as the reasons recorded, it appears that the AO has initiated such proceedings u/s. 147 on the basis of the survey conducted in the case of M/s Salarpuria Properties Pvt. Ltd., wherein the assessee is a Managing Director. On going through the reasons recorded it was observed that the AO contends that payment of rs.10,18,97,500/- has been paid in cash to different parties and further mention that “circumstantial evidences” suggest that the payment was made by the assessee. Hence, the reopening u//s 147 by issuing of notice u/s.

The ape on its part has objected to the reasons so recorded for reopening and as such validity of notice issued u/s.148 and also contents that since the reopening is beyond 4 years and there being no failure on the part of the assessee to disclose any information, the reopening proceedings fails. The appellant on its part has also contended that there being no “reason to believe” nor “there being any tangible material” for reopening of the assessment as evident from the reasons recorded, the reopening proceedings fails. Having considered the appellant’s submissions and the AO's order and the material so available on record, I find that the matter needs detailed deliberation. Having gone through the order, I find that the AO in the order refers to such operation carried on at the premises to one Sri P. Dayanand Pai on 12.4.2011 at Bangalore and one such premises was of Mrs. Adlene Kagoo (employee of P. Dayanand Pai) wherefrom various incriminating documents detailing unaccounted transactions between such Mr. P. Dayanand Pai and various other parties were made. This particular documents were marked as AK-PDP-16 relating to transaction between Mr. P.Dayanand Pai and Salarpuria Group. Mrs. Adlene Kagoo had confirmed in her statement that she had recorded such transactions on the instructions of Mr. P. Dayanand Pai. The AO in the order has also enclosed copy of such documents marked as AK-PDP-16 from pages 187 to 207 which showed the detailed transactions carried between Mr. P. Dayanand Pai and Salarpuria Group (which is also attached as part of annexure to order u/s.147 by AO). In the order, the AO proceedings u/s 147 were initiated. However, the same does not tally with the “reasons recorded” once the same nowhere mentions about such document and it merely mention the survey being conducted and it does refer to the search o Nr. P. Dayanand Pai and other consequential event that is such recorded statement etc. Even if it is assumed that the transactions pertains to or belongings to the appellant, the reasons recorded do not support the same and since the reasons recorded itself on the basis of reopening which speak otherwise, hence the entire proceeding i.e. issue of notice u/s. 148 and the consequential proceedings becomes void and for the same I draw support from the following Courts’ decisions: i) Pransukhlal Brothers 229 Taxmann 444 (Bom) ii) Munshi Mini Rice Mill v. ITO – dt. 14.10.2014 iii) Northern Exim (P) Ltd. 337 ITR 586 (Del)