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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-2’ : NEW DELHI
Before: SHRI H.S. SIDHU
The Assessee has filed the Appeal against the Order dated 20.2.2015 of the Ld. CIT(A)-XXVI, New Delhi pertaining to assessment year 2008-09 and raised the following grounds:-
On the facts and circumstances of the case and in law,
the assessing officer erred in issuing notice u/s 148 of Income Tax Act 1961. The notice u/s 148 issued in this case is illegal, void without jurisdiction and barred by limitation and accordingly the assessment order passed on the foundation of such notice is liable to be quashed.
The Ld. Commissioner of Income Tax (Appeal) should have held the reassessment proceedings as illegal, void without jurisdiction and barred by limitation.
2. On the facts and circumstances of the case and in law,
the Commissioner of Income Tax (Appeal) erred in confirming the addition made by the assessing officer of share application money/share capital of Rs. 40,00,000/- as alleged unexplained cash credit u/s 68 of Income Tax
Act 1961. The addition made by the assessing officer is not sustainable and Commissioner of Income Tax
(Appeal) should have deleted the same.
On the facts and circumstances of the case and in law,
the Commissioner of Income Tax (Appeal) erred in confirming the addition of Rs.20,000/- made by the assessing officer as alleged commission paid. The addition made by the AO is not sustainable and Commissioner of Income Tax (Appeal) should have deleted the same.
4. The alleged reasons given by Assessing Officer and CIT(A) for making confirming the additions of Rs.40,00,000/- and Rs.20,000/-- are erroneous, both on facts and in law and, therefore, the additions of Rs.40,00,000/- and RS.20,000/- made by the assessing
officer and confirmed by CIT(A) are liable to be deleted.
The appellant craves leave to add, alter, modify or delete one or more ground of appeal before or at the time of hearing of appeal.
The aforesaid grounds of appeal are without prejudice of each other.
The brief facts of the case are that the assessee company filed its return of income on 25.9.2008 declaring loss of Rs. 3,94,575/-.
The return of income was duly processed u/s. 143(1) of the I.T. Act, 1961. The case taken up for scrutiny and assessment order u/s. 143(3) of the I.T. Act passed at a loss of Rs. 1,94,575/- by disallowing sum unverified expenses. Later the case was selected for scrutiny u/s. 147 r.w.s. 148 of the I.T. Act, 1961. The notice u/s. 148 of the I.T. Act was issued on 26.3.2013. In response to notice u/s. 148 of the I.T. Act assessee vide its reply dated 11.4.2013 has submitted that returned filed dated 25.2.2008 may be treated as return in response to notice issued u/s. 148 of the I.T. Act, 1961.
Thereafter, the AO assessed the income of the assessee at Rs. 36,25,425/- vide his order dated 20.3.2014 passed u/s. 148 r.w.s. 147 of the I.T. Act, 1961 and made the additions.
3. Against the Order of the Ld. AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 20.2.2015 has dismissed the appeal of the assesseee and affirmed the action of the AO on the legal issue i.e. reopening of the case u/s. 147/148 of the I.T. Act, 1961 as well as on merits.
Aggrieved with the aforesaid order of the Ld. CIT(A), Assessee is in appeal before the Tribunal.
Ld. Counsel of the assessee has filed the Paper Book containing pages 1 to 52 attaching therewith the copy of reasons recorded u/s. 148; copy of letter dated 21.2.2014 furnished before the AO alongwith documentary evidences in respect of share capital; copy of letter issued by AO to the share holder; copy of letter dated 6.3.2014 submitted by share holder to AO; copy of letter dated 10.3.2014 submitted by share holder to AO; copy of letter dated 18.3.2014 submitted to AO; copy of original assessment order u/s. 143(3); copy of judgments. He stated that Ld. CIT(A) has erred in confirming the action of the AO in assuming jurisdiction u/s. 147 and that too without complying with the mandatory conditions as prescribed under section 147 to 151 of the I.T. Act, 1961 and the reasons recorded are invalid and contrary to law and facts and there is no satisfaction as per law u/s. 151 of the Act. He further draw our attention towards the copy of reasons for reopening the case u/s. 148 and stated that no proper reasons were recorded; no nexus between the materials relied upon and the belief formed for escapement of income; no application of mind; no proper satisfaction was recorded before issue of notice u/s. 148; no independent conclusion that there was escapement of income. It was further stated that the case was reopened only on the basis of Investigation Wing information which suffers with serious debility and lacks definiteness, without describing the basic aspects of alleged transaction and in the absence of the same, whole action of the AO gets vitiated. To support his contention he submitted that the issue in dispute is squarely covered in favour of the assessee by the ITAT decision dated 09.1.2015 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 9.1.2015 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 dfor reopening by due application of mind, hence, the appeal of the Assessee may be dismissed.
I 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. In my 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:-
“The assessee company has filed income tax return for the asstt. Year 2008-09 declaring loss of Rs. 394578/-. Regular assessment was completed by the DCIT, CC-3, New Delhi by making an addition of Rs. 2,00,000/-. Being the information received from DGIT (Inv.), New Delhi.
I have reasons to believe that the assessee has understated the income has also failed to disclose truly and fully all material facts in his return of income for above assessment year, the income chargeable to tax for FY 2007-08 relevant to assessment year 2008-09 has escaped assessment within the meaning of Section 147 of the Act. Issue notice u/s. 148 of the I.T. Act, 1961.
I therefore, deem it, proper to initiate the proceedings under the provision of section 147 of the Act, 1961, notice u/s. 148 of the Act, is being issued.