DCIT, NEW DELHI vs. M/S. SATYA PRAKASH & BROS PVT. LTD., NEW DELHI

The present appeal and the cross objection filed by 1. revenue and assessee respectively, arises out of orders dated & CO No. 197/Del/10 (AY2002-03)

The appellant craves to amend modify, alter, add or forego any ground of appeal at any time before or during the hearing of this appeal. CO No. 197/del/2010

The information that was received from investigation wing was that assessee was involved in giving and taking accommodation entries and assessee had received entries which represent unaccounted money in the hands of assessee from various parties. Notice under section 143(2) of the Act was issued to assessee and our assessee was asked to prove the genuineness of transactions. Assessing officer did & CO No. 197/Del/10 (AY2002-03)

Aggrieved by order of Ld. AO, assessee filed an appeal before Ld. CIT(A). The primary objection raised by assessee was regarding the jurisdiction of assessing officer, and validity of assessment under section 148. It was contention of the assessee that due process of law was not followed, as Ld. AO before reopening the assessment had not obtained the satisfaction as required under law. Ld. CIT(A) has recorded a finding at page 12 of his order which is as under:

Ld. CIT(A) however deleted the addition made by Assessing Officer in respect of the undisclosed income.

Aggrieved by the order passed by Ld. CIT(A), the revenue as well as assessee is in appeal before us. The cross objection filed by the assessee is in respect of the validity of reopening, which has been upheld by Ld. CIT(A). Per contra the appeal filed by revenue deals with the addition that has been deleted by Ld. CIT(A). As the cross objection raises the legal issue regarding the validity of the re-assessment proceedings, we are inclined to deal with the cross objection first.

At the outset Ld. AR has submitted that there is no satisfaction recorded by JCIT/Pr. CIT/CCIT, as the case may be, as per the mandate of section 151 of the Act. He submitted that on one breath Ld. CIT(A) has agreed that there is no proper satisfaction that has been recorded in lieu of which the reassessment proceeding is liable to be quashed, on the other breath Ld. CIT(A) has upheld the reopening of assessment. He submitted that this is a fit case for quashing of the notice issued under section 148 as it has not been issued as per law.

On the contrary, Ld. DR places reliance upon the orders of the authorities below. & CO No. 197/Del/10 (AY2002-03)

We have perused the submissions advanced by both the sides in the light of the records placed before us.

It is observed that Ld. CIT(A) has not verified from the records regarding whether satisfaction has been recorded or not, and if at all satisfaction has been recorded, then by whom. Section 151 categorizes 3 different situations and the authority whose satisfaction needs to be recorded has been specifically mentioned therein in cases where the reopening of assessment is made beyond 4 years.

In the facts before us, reopening of the assessment has been admittedly made beyond 4 years. As there is no adjudication on this issue by Ld. CIT(A), we are inclined to send this issue back to the files of Ld. CIT(A) to verify from the records as to whether any satisfaction has been recorded, if yes by whom, and whether the satisfaction if at all has been recorded is as per section 151 of the Act.

The only issue that has been raised by revenue is in respect of addition being deleted in respect of undisclosed income.

Ld. DR submits that the materials placed before Ld. CIT(A) has not been investigated upon by Ld. AO, and & CO No. 197/Del/10 (AY2002-03)

On the contrary, Ld. DR submitted that all the necessary details were filed before the authorities below which are apparent from assessment records. He submitted that Ld. CIT(A) has considered the addition made by Ld. AO in favour of assessee, based on these documents. He placed reliance upon the order passed by Ld. CIT (A).

We have perused the submissions advanced by both the sides in the light of documents placed on record.

It is observed that assessee has been alleged to have received huge amounts by way of share application money. However, notices issued by assessing officer have not been complied with yet. We are, therefore, unable to ascertain the veracity of the documents filed in the paper book. Merely because assessee has filed relevant documents, it does not discharge assessee from onus of proving genuineness and creditworthiness of the creditors. Assessee has not made any efforts to bring the parties before the authorities, to prove the genuineness of the transactions. He has also not produced ROC returns which could prove the shares being actually issued to the subscribers. In the absence of all these details we are unable to ascertain that shareholders have been established as per requirement of Hon’ble Supreme Court in the case of CIT vs. lovely exports reported in 299 ITR 268. We & CO No. 197/Del/10 (AY2002-03)