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Income Tax Appellate Tribunal, DELHI BENCH “G”, NEW DELHI
Before: SH. N. K. SAINI & SMT. BEENA A. PILLAI
Date of hearing : 15.02.2017 Date of Pronouncement: 23.02.2017 ORDER
PER BEENA A. PILLAI, JM:
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)
26.11.2009 passed by Ld. CIT(A)-X for assessment year 2002- 03 on the following grounds of appeal:
1. Ld. Commissioner of Income Tax (Appeal) erred, in law and on the facts and circumstances of the case, in deleting the addition of Rs.1,52,00,000/- made by the AO as income from undisclosed sources.
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
1. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that assessment made by the AO by reopening u/s 147 is bad and liable to be quashed as conditions and procedure prescribed under section 147 read with Section 148 have not been complied with.
2. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the reassessment made by AO u/s 147 is bad in law as the same has been made on the basis of reasons which are vague and are contrary to the facts of the case. " 3. On the facts and circumstances of the case, the reassessment order passed by learned A.O is bad and liable to be quashed as the same has been passed on the basis of material collected at the back of the & CO No. 197/Del/10 (AY2002-03)
assessee without giving him an opportunity to rebut the same. 4. On the facts and circumstances of the case, the reassessment order passe*} by learned A.O is bad and liable to be quashed as the reopening u/s 147 has been made on the basis of statement of some person, recorded at the back of the assessee without giving him an opportunity to cross examine the same. 5. That the appellant craves leave to add, amend or alter any of the grounds of appeal
2. Brief facts of the case are as under:
Assessee filed its return of income on 24.02.2003 declaring a total income of Rs.1,22,48,359/-. The original return filed by assessee was processed under section 143(1) on 09.03.2003. Subsequently on the basis of information received from investigation wing, the case of assessee was reopened as per the provisions of section 147 on 09.04.2007, requiring assessee to file its returns in view of notice issued under section 148.
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)
not accept the arguments put forth by assessee because it has been admitted during the course of the statement recorded by investigation wing that, assessee had accepted the adjustment entries from the persons who are involved in providing entries to a number of persons therein where cash is taken and cheque or draft is given by floating different companies. He thus completed the assessment under section 143(3) read with section 147 of the Act on 26.12.2008 at a taxable income of Rs.2,74,48,360/-.
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:
“moreover the notice issued under section 148 of the I T Act, 1961 was without proper sanction in terms of the provisions contained in the income tax act, 1961 and hence liable to be quashed.” However while concluding the findings in respect of the validity of reassessment proceedings, Ld. CIT (A) upheld the initiation of reopening of assessment.
& CO No. 197/Del/10 (AY2002-03)
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.
CO No. 197/del/2010
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.
Accordingly the ground raised by the assessee in the cross objection stands allowed for statistical purposes.
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)
assessee has therefore not discharge the onus under section 68 of the Act.
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)
are, therefore, inclined to set aside the addition back to the files of Ld. CIT(A) in order to ascertain all the relevant documents necessary for establishing the alleged money received by the assessee to be in the nature of share capital. Ld.CIT(A) may call for all necessary/relevant documents as per law and gave a categorical finding regarding the genuineness and creditworthiness of the alleged applicants being shareholders.
In the result appeal filed by the revenue and cross objection filed by assessee stands allowed for statistical purposes.
Order pronounced in the open court on 23rd February, 2017.