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Income Tax Appellate Tribunal, DELHI BENCH ‘F’ : NEW DELHI
Before: SHRI H.S. SIDHU & SHRI PRASHANT MAHARISHI
ORDER PER H.S. SIDHU, JM
The Assessee has filed the Appeal against the Order dated 04.2.2014 of the Ld. CIT(A)-XVII, New Delhi pertaining to assessment year 2004-05. In the Appeal, the Assessee has raised as many as 16 grounds, but Ld. Counsel of the assessee has only argued the ground no. 1 which reproduced as under:-
“In the facts and circumstances of the case, the Ld.
CIT(A) erred in confirming the action of the AO in framing the reassessment at an income of Rs.
1,01,71,582/- as against the loss returned by the appellant at Rs. 5,60,88,663/- which is arbitrary, illegal and against the provisions of law.”
The brief facts of the case are that the assessee filed the return decalring loss of Rs. 5,60,88,663/- on 30.10.2004 and the same was processed on 15.3.2005. The case was assessed u/s. 143(3) of the I.T. Act, 1961 on 27.12.2006 at NIL income after adjustment of b/f losses amounting to Rs. 35,21,582/-. Subsequently, the AO after recording reasons in writing and taking approval from the competent authority issued notice u/s. 148 of the I.T. Act, 1961 on 25.3.2011.
In response thereto, the assessee raised some objections vide letter dated 25.3.2011. Subsequently, notice u/s. 143(2) of the Act was issued on 30.9.2011. The said objections were rejected vide order dated 30.92.011. A detailed questionnaire alognwith notice u/s. 142(1) of the I.T. Act, 1961 was issued on the assessee on 14.10.2011 and in response to the same, the A.R. of the assessee attended the proceedings from time to time and submitted the details and documents. During the previous year, the assessee company was engaged in the business of manufacturing of PVC film and sheets. Subsequently, certain investigations were carried out by the Director of Income Tax (Inv.), New Delhi in respect of the bogus / accommodation entries provided by certain individuals/ companies.
The name of the assessee figures as one of the beneficiaries of these alleged bogus transactions found by the Directorate after making deep enquiries. Thereafter, the AO completed the assessment vide order 30.12.2011 by assessing the income of the Assessee at NIL u/s. 143(3)/147 of the I.T. Act, 1961.
Against the assessment order, assessee preferred an appeal before the Ld.CIT(A) who vide his impugned order dated 4.2.2014 has dismissed the appeal of the assessee.
Aggrieved with the aforesaid order of the Ld. CIT(A), Assessee is in appeal before the Tribunal.
At the time of hearing Ld. Counsel of the assessee has stated that although the assessee has raised so many grounds but he has only pressed the ground no. 1 i.e. legal ground which is squarely covered in favour of the assessee by the ITAT decision dated 09.01.2015 in the case of G&G Pharma India Limited vs. ITO passed in (AY 2003-04) in which the Judicial Member is the Author. He further stated that the above decision of the ITAT dated 09.01.2015 has been upheld by the Hon’ble Jurisdictional High Court in its Decision dated 08.10.2015 in ITA No. 545/2015 in the case of Pr. CIT-4 vs. G&G Pharma India Ltd. In this regard, he filed the copies of the aforesaid decisions before the Tribunal. In view of the above, he requested that by following the aforesaid precedents the reassessment proceedings of the AO may be quashed by accepting the Appeal filed by the Assessee.
On the contrary, Ld. DR relied upon the order passed by the authorities below and stated that the AO has properly recorded the reasons for reopening by due application of mind, hence, the appeal of the Assessee may be dismissed.
We have heard both the parties and perused the relevant records available with us, especially the orders of the revenue authorities and the case law cited by the assessee’s counsel on the issue in dispute. We are of the view, it is very much necessary to reproduce the reasons recorded by the AO before issue of Notice to the Assessee u/s. 148 of the I.T. Act, 1961 which is reproduced hereunder:-
"11. Reasons of the belief that income has escaped assessment:
“Information was received from the Director of Investigation Wing that certain persons were indulged in providing accommodation entries / bogus share application money/ bogus capital gain. In the course of enquiries before investigation wing these persons had provided the details of various persons to whom such accommodation / bogus entries were provided. Based on the enquiries made, the Directorate of Investigation has provided the details of persons who were beneficiaries / entry operators of such accommodation
/ bogus entries in Delhi in the last 5-6 years.
The investigation wing on the basis of enquiries conducted / information collected has sent the name and address and bank account of the beneficiary and the value of entry taken from different persons giving the accommodation entry. The names of the entry giver and bank accounts through which the entry was given has also been informed by the investigation wing, M/s
The assessee has introduced his own undisclosed income in the garb of share application money through
Division Trading Pvt. Ltd., Right Choice Construction Pvt. Ltd. Labh Tronices Overseas Pvt Ltd., Webnet System Pvt. Ltd., Mestro Mart and Pvt. Ltd., Tashi Contractors Pvt. Ltd. Fair N. Square Export Pvt. Ltd., Arun Finvest Pvt. Ltd., Ethnic Creation Pvt. Ltd. Rajkar
Ltd. and Ramesh Kumar. Therefore, the assessee has deliberately furnished wrong facts at the time of filing of return, the details of which are enclosed as per
Annexure ‘A’.
In view of the above discussions, I have reason to believe that income at least to the extent of Rs.
1,28,00,000/- for asstt. Year 2004-05 had escaped assessment within the meaning of the provisions of section 147© of the I.T. Act, 1961.
Further, I am also satisfied that on account of failure on the part of the assessee to disclose truly and fully all the materials, fact necessary for above assessment year, the income chargeable to tax to the tune of Rs.
1,28,00,000/- escaped assessment within the meaning of section 147 of the I.T. Act, 1961.