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Facts
The Revenue appealed against the deletion of an addition of Rs. 9.70 Crore, made on account of bogus share capital and premium, by the CIT(A). The assessee challenged the legality of the reopening of assessment under Section 147/148.
Held
The Tribunal found that the CIT(A) had not properly adjudicated the issues of legality of reopening and the merits of the addition. Therefore, the Tribunal set aside the appeals and remanded the matter back to the CIT(A) for a fresh adjudication.
Key Issues
Whether the reopening of assessment under Section 147/148 was legally valid and whether the addition on account of share capital and premium was justified on merits.
Sections Cited
147, 148, 68, 143(3), 132, 133A, 153A, 153D, 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘G’ BENCH,
Before: SHRI SATBEER SINGH GODARA, & SHRI NAVEEN CHANDRA
assessee are directed against the order of the ld. CIT(A)-27, New Delhi dated 28.02.2017 for A.Y 2007-08 respectively.
Since both the appeals were heard together and pertain to same assessee, they are being disposed of by this common order for the sake of convenience and brevity.
The Revenue has raised the following grounds of appeal:
“1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 9,70,00,000/- made on account of bogus share capital and share premium received by the assessee company without examining and adjudicating upon the merits of the case.
2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 9,70,00,000/- made on account of bogus share capital and share premium received by the assessee company overlooking the provisions of section 68 of the Act as the identity, genuineness and creditworthiness of the parties remained unverified in spite of repeated attempts made by the AO.
3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 9,70,00,000/- made on account of bogus share capital and share premium received by the assessee company overlooking the ratio laid down by Hon'ble Delhi High Court in the case of M/s N.R. Portfolio Pot. Ltd. in and 1019/2011.
Page 2 of 7 Stonewell Developers Pvt Ltd [A.Y. 2007-08] 4. (a) The order of the Ld. CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”
4. The assessee has raised the following grounds of appeal:
1. The Hon'ble Commissioner of Income Tax (Appeal) - 27, Delhi has not followed the law of natural justice while confirming reopening U/s 148/147 by the Learned Assessing Officer.
2. That the Hon'ble Commissioner of Income Tax (Appeal) - 27, Delhi has erred in confirming the action with regard to reopening of the case without having valid reasons recorded by the Assessing officer to establish any satisfaction on his part that any income belonging to the appellant has escaped assessment such proceeding u/s 148 are bed in law and order passed by the Ld. Assessing Officer U/s 143(3) r.w.s. 147 is bad both in eyes of law and on facts.
3. That the Appellant craves leave to add/alter any/ all ground of appeal before or at the time of hearing of the Appeal.”
5. The assessee has filed additional Grounds of Appeal before us as under:
1. The judgment of Hon'ble Supreme Court of India judgment in case of Assistant Commissioner Of Income Tax Vs. Pramod Jain [2025] 176 taxmann.com 762 (SC) is squarely applicable in case of the Assessee Since, provisions of section 153A to 153D have prevalence over regular provisions for assessment or reassessment under section 148 & 147/148 is bad both in eyes of law and on facts.
Page 3 of 7 Stonewell Developers Pvt Ltd [A.Y. 2007-08] 6. Brief facts of the case are that search and seizure and survey operations u/s 132/133A of the Income-tax Act, 1961 [the Act, for short] were conducted on 17.08.2011 in the Aerens Group along with the other cases of the Group at various residential and business premises.
Consequent upon search and seizure, it came to the notice that M/s Stonewell Developers Pvt. Ltd. is also a concern of Aerens Group. M/s Stonewell Developers Pvt. Ltd had received accommodation entry in the form of share capital and share premium amounting to Rs.9.70 Crore during F.Y. 2006-07 relevant for A.Y under consideration and share premium of Rs. 9,21,50,000/- was received by the assessee during the relevant F.Y.
Notice u/s 133(6) of the Act was issued to the parties from whom Share Capital/Share Premium was received and all the letters were returned un-served with the remarks "No such Firm." Inspector of Income Tax was deputed to make Field enquiry in case of all these investor companies and it was reported by the Inspector that none of these companies were found present in their addresses. The Assessing Officer, on the basis of field inquiries, held that the assessee was not able to establish the identity, credit worthiness and genuineness of the transactions of the shareholders and accordingly held the receipt of Rs.
Page 4 of 7 Stonewell Developers Pvt Ltd [A.Y. 2007-08] 9,70,00,000/- to be unexplained cash credit u/s 68 of the Act in the hands of the assessee.
Aggrieved, the assessee went in appeal before the ld. CIT(A) who deleted the addition made by the Assessing Officer by a cryptic order.
The CIT(A) also decided the issue of issuance of notice u/s 148 as bad in law in a very cryptic manner.
Aggrieved, the Revenue is before us against deletion of addition on merits and the assessee is before us on legality of reopening the assessment u/s 148.
We have heard the rival submissions and have perused the relevant material on record. We find that the ld. CIT(A) has not adjudicated the issue of legality of reopening u/s 148 as well as on merits of the addition made, coherently. In fact, the CIT(A) has cryptically dismissed the grounds of the assessee regarding validity of the reopening of assessment.
With respect to the additional ground taken by the assessee, the same can be adjudicated only when the facts regarding the reopening is established. The facts whether the notice u/s 148 on the assessee was based on incriminating materials found during the search on Aerens Group, is not clear.
Page 5 of 7 Stonewell Developers Pvt Ltd [A.Y. 2007-08] 12. In that view of the matter, we find it appropriate to set aside the appeals to the file of the ld. CIT(A) to adjudicate afresh the issue of legality of reopening of assessment as well as the merits of the additions made. The ld. CIT(A) is directed to conduct proper enquiries/examination with regard to the share capital obtained by the assessee as well as the legality of issuance of notice u/s 148. Needless to add that the CIT(A) shall afford adequate and reasonable opportunity of being heard to the assessee. The assessee is directed to furnish all necessary documents and details as required by the ld. CIT(A).
In the result, the appeal of the Revenue in and the appeal of the assessee in are allowed for statistical purposes.
The order is pronounced in the open court on 04.11.2025.