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Income Tax Appellate Tribunal, DELHI BENCH “SMC” NEW DELHI
Before: SHRI B.P. JAIN
PER B.P. JAIN, ACCOUNTANT MEMBER:
This appeal of the revenue arises from the order of ld. CIT(A)-4, New Delhi vide order dated 31.5.2016 for the A.Y. 2007-06. The revenue has raised the following grounds of appeal:- 1. “On the fact and circumstances of the case in law the Id. CIT (A) erred in deleting the addition u/s 68 amounting to fys. 48,00,000/- made by the AO on account of unexplained cash credit in the form of share capital.
2. The Ld. CIT (A) has quashed the re-assessment order passed u/s 147stating that Page 1 of 8 reopening of the assessment u/s 147 is not valid. 3. The appellant craves leave for reserving the right to amend, modify, add or forego any ground(s) of appeal at any time before or during the hearing of appeal.
The brief facts of the case are that the assessee company received share application money amounting to Rs. 48 lac from two companies M/s. Tours Iron Steel Pvt. Ltd. and M/s. Tejswi Investment Pvt. Ltd. The order u/s 143(3) was made on 6.11.2009 where identity, creditworthiness and genuineness of the share capital examined and accepted. Thereafter the notice u/s 147 of the Act was issued which was quashed by the ld. CIT (A) vide his order dated 31.5.2016.
The ld. DR argued that in the statement given by the Sh. Tarun the names of 19 persons were given which included the name of the assessee company and therefore that makes sufficient material and therefore the ld. CIT (A) is not justified in quashing the assessment.
The ld. AR on the other hand relied upon the order of the ld. CIT(A) are for the sake of convenience the same is reproduced herein below:-
“The appellant objected the reopening u/s 147 on the ground that in the absence of any fresh evidence the AO could not change his opinion having accepted the share capital earlier on Page 2 of 8 the same set of facts and evidence. It has been contended by the appellant that during the course of original assessment u/s 143(3), information received from the Investigation wing regarding the statement of Shri Tarun Goyal was available with the Assessing officer while framing the original assessment u/s 143(3) of the Income Tax Act. I have considered the assessment order, the submission made and the document filed before me which was also filed before the Assessing officer. The appellant filed necessary evidence to establish the identity of the companies and genuineness of the subscription to the share capital both during the earlier proceeding u/s 143(3) and in the present proceeding u/s 147. In the assessment completed u/s 147, a reference has been made to the statement of shri Traun Goyal recorded on 15/09/20Q8 and based on which it has been concluded by the revenue that the appellant received share capital by way of accommodation entries from companies controlled by the said Shri Goyal. I have considered the statement of Shri Tarun Goyal. In the statement so recorded Shri Tarun Goyal admitted to have provided accommodation entries to various groups viz. Bes^roup, Tfri|tal group, Basant Bansal Group, and Katin Group of Companies. However in the statement so recorded, Shri Goyai nowhere named the appellant company or the K L Gupta Group or any related entity. It is further seen from the bank statements of subscribing companies that there is no cash deposit preceding the cheques issued by M/s Tauras Iron & Steel Pvt Ltd and M/s Tejaswi Investments Pvt. Ltd. No case have been made out that cash had been deposited in the bank accounts of the subscribing companies before transferring the funds to the appellant company. The reason recorded for reopening the assessment is also based on information received from the Investigation wing that Tarun Goyal has given accommodation entry and the same was Page 3 of 8 available with the Assessing officer while framing the original assessment. As such I agree with the contention of the appellant that the action of the Assessing officer is merely change nf opinion and is not sustainable in view of the decision of Honble Delhi Highcourt in the case of CIT v. Usha International Ltd. [348 ITR 485 (Del)] Undisputedly, in this case, notice u/s 148 of the Act was issued beyond four years from the end of the relevant assessment year and the first proviso to section 147 is applicable, since the assessment was already concluded u/s 143(3) of the Act. In the proviso, for taking action under section 147 of the Income Tax the Assessing officer must have a reason to believe that the escapement of income from assessment must be occasioned by the failure on the part of the assessee to, inter alia, disclose material facts fully and truly. If this condition is not satisfied, there would be a bar on taking any action under section 147 of the Act. In the instant case, reason recorded for reopening the assessment is placed in the paper book. Oma-peiusal of the reasons recorded, it is evident that while the assessing officer mentioned that income had escaped assessment because of the failure on the part of the assessee to fully and truly disclose the material facts for assessment, he has not indicated as to which material fact had not been fully and truly disclosed. As mentioned earlier in the course of original assessment proceeding, the Assessing officer was aware of the share application money received of Rs 48,00,000 and the information received from the investigation wing of the department. Therefore, when all the necessary details were filed and taken note of by the Assessing officer during the course of original assessment proceeding the, reopening of the assessment was merely based on change of opinion of the AO. The Judgments of the Hon'ble Jurisdictional High Court in the case of Global Signal Cables (India) Pvt. Ltd v. DCIT reported in (2015) 54 taxmann.com 114 (Delhi) goes in favour of the Page 4 of 8 appellant. I also agree with the contention of the assessment was framed by Assessing Officer on the basis of borrowed satisfaction. As in the instant case the assessment was framed by Income Tax officer, Ward -10(4), New Delhi on the basis of reasons recorded by Income Tax officer, Ward -12(3), New Delhi. This was judicially held in the case of Hyoup Food and Oil Industries Ltd. vs. ACIT (2008) 307 ITR 115 (Guj and CIT & Anr vs. Aslam Ullakhan (2010) 321 ITR 150 (Kar). I also agree with the contention of the AR that the report of the investigation wing which has been relied on by the department for re-opening of the assessment under section 148 of the Act was not a fresh or valid material which can lead to reopening of an assessment and the judgment in the case of ACIT v. Dhariya Construction Co - 328 ITR 515 (SC); and Mahashay Chunnilal v. DCIT 362 ITR 314 (Dgjjc^ip favour of the appellant.
Therefore in view of the above said I hold that reopening of assessment u/s 147 is not valid and this re-assessment order is quashed.
The appeal is allowed.”
On perusal of the record and all arguments of ld. counsel for the assessee Mr. Salil Aggarwal, Advocate and arguments of the ld. DR, I am of the view that no new information has been flown to the Assessing Officer after the order passed u/s 143(3) dated 6.11.2009 i.e. original assessment. He brought to my notice at page P.B. 7 the reasons recorded and the statement of the Mr. Tarun Goyal recorded on 2.8.2009 much before the date of the original assessment is a matter of record at P.B. 2 and 3. The first provision of the section 147 shall come into play when there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that assessment year. In the present case as pointed out earlier the Assessing Officer and the ld. DR has not on record any new fact while recording the reasons u/s 147/148 of the Act. Therefore there is change of opinion. Moreover during the enquiries made in response to u/s 133(6) which was complied with there is no observation on the said compliance by the assessee and therefore in the circumstances and facts of the case the notice issued is lacking the reasons to believe and assessee having disclosed all the material facts in the original assessment and no new facts have been recorded in the reassessment proceedings and therefore the assessment/reassessment made has rightly made by the ld. CIT (A) is directed to be quashed. The reliance is placed on the decision of Hon’ble High Court of Delhi reported in 365 ITR 447, 378 ITR 351 in the cae of CIT vs. Multi Plex 386 ITR 8708, 717 Prahlad B. (Calcutta) and decision of ITAT Delhi “E” Bench in ITA 6087/De/2013 vide order dated 3.6.2016 Page 6 of 8 in the case of Narendra Polycap Pvt. LTd. vs. ITO.
In the circumstances and facts of the case and decisions cited herein above as held by us herein above ld. CIT(A) having rightly quashed the assessment, all the grounds of the revenue are dismissed.
In the result the appeal of the Revenue is dismissed.
Pronounced in the open court on 09.03.2017.