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Income Tax Appellate Tribunal, “B” BENCH KOLKATA
Before: Shri Sanjay Garg & Shri Girish Agrawal
order : March 11, 2024 आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 30.03.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
The appeal is time-barred by 196 days. A separate application for condonation of delay has been filed. Considering the averments made in the application, the delay in filing the present appeal is hereby condoned.
The assessee in this appeal has taken the following grounds of appeal:
1. For that the Ld CIT(A) erred in deciding the appeal ex-parte when no proper and reasonable opportunity of being heard was granted.
Assessment Year : 2012-13 M/s Indovision Securities Ltd.
2. For that the Ld CIT(A) erred in dismissing the appeal for non-prosecution when it was incumbent on him to decide the appeal on merits on the basis of the records and looking into the submissions contained in the statement of facts and grounds filed with the appeal. The Ld. CIT(A) should have considered the said facts and evidences while passing the order but simply dismissed the appeal without considering on merits.
3. For that the assessment was otherwise bad in law since the proceedings initiated u/s 147 itself were bad in law. 4 . For that the Ld CIT(A) erred in confirming the order of AO in taking the figures of assessed income as per assessment order dated 31.3.2015 at Rs.3,26,54,590/-when such income was only Rs.12,67,700/- 5. For that the Ld CIT(A) erred in confirming the addition made by the AO when assessee duly denied having any transaction with Chitraksh Vintrade Pvt Ltd 6. For that the Ld CIT(A) erred in confirming the addition of Rs.4.75 crores when the assessee duly denied before the AO having received any such amount from the party and the Ld AO did not bring on record any evidence to prove his case.
7. For that the Ld CIT(A) erred in confirming the addition of Rs.9,51,000/- as commission without any basis.”
A perusal of the above grounds of appeal would reveal that the assessee, inter alia, has agitated against validity of the reopening of the assessment u/s 147 r.w.s 148 of the Act.
The brief facts of the case are that the assessee has filed its return of income for assessment year 2012-13 on 30.09.2012. The case was selected for scrutiny assessment and thereafter the scrutiny assessment order u/s 143(3) of the Act was passed on 31.03.2015 at an assessed income of Rs.3,26,54,590/-. Later on, information was received by the Assessing Officer from the Investigation Wing that the assessee was a beneficiary of Rs.4,70,50,000/- received by it through accommodation entry. The Assessing Officer therefore reopened the assessment of the assessee and issued notice u/s 148 of the Act 27.03.2019 and thereafter the ex parte assessment proceedings were completed by the Assessing
Assessment Year : 2012-13 M/s Indovision Securities Ltd. Officer vide impugned order dated 28.12.2019 making the impugned additions. The ld. CIT(A) also confirmed the additions so made by the Assessing Officer by an ex parte order dated 30.03.2023.
At the outset, the ld. counsel for the assessee has submitted that the assessment year under consideration is A.Y 2012-13 and the notice u/s 148 of the Act was issued on 27.03.2019 which was after the expiry of four years from the end of the relevant assessment year, thus the reopening of the assessee was hit by 1st Proviso to section 147 of the Act as applicable for the assessment year under consideration. The ld. counsel has further invited our attention to the reasons recorded for reopening of the assessment, the contents of which, for the sake of ready reference, are reproduced as under:
M/s. Indovision Securities Ltd. PAN: AAACI5310G, A.Y. 2012-13 The assessee company filed its return of income for the assessment year 2012-13 on 30.09.2012 which was duly processed u/s. 143(1) of the I.T. Act on returned income. Order u/s. 143(3) was passed on 31.03.2015 with assessed income of Rs.3,26,54,590/-. Subsequently, information was received from DDIT (Inv.), Unit -2(1), Kolkata that there were huge deposit of cash / credits in the accounts of entities which were transferred for layering purpose to other entities and finally to the beneficiaries. It was observed that the entities were engaged in providing accommodation entry. In this way, the beneficiary companies have brought back their unaccounted income into their regular books of accounts. The account of assessee company was credited by Rs. 4,70,50,000/- during the F.Y. 2011-12 relevant to the A.Y. 2012-13. There was no business rationale behind such transactions. The information as mentioned above was perused and further observations were made.
Assessment Year : 2012-13 M/s Indovision Securities Ltd. Considering the facts as stated above and the observations made, I have reason to believe that income of the assessee has escaped assessment within the meaning of Section 147 of the I. T. Act 1961 for the A.Y. 2012- 13. Sd/- 26.03.2019 ACIT(OSD), Ward-6(2), Kol.
6.1 Referring to the aforesaid reasons, the ld. counsel has submitted that the Assessing Officer had received a false information that the assessee was beneficiary of Rs.4,70,50,000/- through accommodation entry. The Assessing Officer was supposed to correlate the aforesaid information with the accounts of the assessee to form the belief that the income of the assessee has escaped assessment. That the Assessing Officer on the basis of a false and general information reopened the assessment without referring to the records of the assessee and without pointing out in the reasons recorded as to in which bank account or otherwise the assessee had received the said amount of Rs.4,70,50,000/- , from whom the said amount was received by the assessee and on what account. That the reopening of the assessment has been made for fishing and roving enquiries without any information available to the Assessing Officer for forming belief that the income of the assessee has escaped assessment. The ld. counsel has further submitted that even otherwise, the reopening of the assessment is hit by 1st Proviso to section 147 of the Act. That the Assessing Officer has not pointed out any failure on the part of the assessee in disclosing fully and truly all material facts necessary for assessment under consideration. The ld. counsel has further invited our attention to the approval given by the ld. Pr. CIT for reopening of the assessment to submit that the same is given without application of mind and in a mechanical manner.
Assessment Year : 2012-13 M/s Indovision Securities Ltd.
The ld. DR, on the other hand, has submitted that the Assessing Officer had received information from the Investigation Wing that the assessee has received accommodation entry and, therefore, the Assessing Officer was justified in reopening of the assessment. He has further submitted that even otherwise, the assessee did not furnish any evidence either during the assessment proceedings or during the appellate proceedings before the CIT(A). Therefore, the assessee was estopped from agitating the merits of the additions.
In rebuttal, the ld. counsel for the assessee has submitted that even on merits, the impugned additions were not warranted as the Assessing Officer in the assessment order has alleged that the assessee had received accommodation entries of Rs.4,70,50,000/-, which was allegedly provided by a well-known entry operator namely Devesh Upadhyay through his managed account M/s Chitraksh Vintrade Pvt. Ltd. after layering of the accounts. The ld. counsel has submitted that the assessee did not receive any such sum from the said Devesh Upadhyay or M/s Chitraksh Vintrade Pvt. Ltd. and further that in the assessment order, there is no mention of any bank account etc. in which the assessee received the alleged entry. Further that the entire addition even on merits has been made on conjecture and surmises without any reference to the accounts of the assessee.
The assessee, in this appeal, inter alia, has taken legal ground regarding the validity of the reopening of the assessment. Such a legal ground hitting at the very validity of the reopening of the assessee, can be taken at any stage of the litigation. There is no bar to the assessee to agitate jurisdictional legal ground. This ground is, therefore, admitted for adjudication. Even otherwise, the assessee, in this appeal, has not Assessment Year : 2012-13 M/s Indovision Securities Ltd. furnished any additional evidence on merits and wants to adjudicate the appeal on merits on the basis of the assessment records only without furnishing any new evidence, therefore, there is no estoppel to the assessee to plead the jurisdictional legal grounds and contest the present appeal.
We have heard the rival contentions and gone through the record. In this case, the assessment has been reopened after four years from the relevant assessment year and the same is, therefore, hit by 1st Proviso to section 147 of the Act. In the reasons recorded as reproduced above, there is no mention of any failure on the part of the assessee to disclose fully and truly all material facts necessary for that assessment year. Even the reasons recorded would reveal that the only information received by the Assessing Officer from the Investigation Wing that the assessee was beneficiary of accommodation entries of Rs.4,70,50,000/-. We find that the Assessing Officer has reopened the assessment merely based on the information received from investigation wing without verifying the veracity and truthfulness of such information. As per the assessee, the information was wrong and that the Assessing Officer reopened the assessment on the basis of borrowed satisfaction without correlating the said information with the facts of the case. Even there is no allegation that the income of the assessee has escaped assessment due to non- disclosure of the facts necessary for the assessment and since the assessment has been reopened after four years of the end of relevant assessment year, hence, the exception provided under 1st Proviso to section 147 is attracted.
11. It has been held time and again that the reasons to believe regarding the escapement of the income should be based on certain tangible material and it should not be mere pretence of the Assessing
Assessment Year : 2012-13 M/s Indovision Securities Ltd. Officer. The reasons to believe does not mean reason to suspect. Reopening of the assessment is not permitted for making fishing and roving enquiries. The Assessing Officer, after receipt of alleged information received from the Investigation Wing was supposed to corelate the same with the records and other facts of the case and thereafter should have satisfied himself of escapement of income. Reopening is not permissible on the basis of borrowed satisfaction of the Assessing Officer.
12. Even otherwise, the ld. counsel has invited our attention to the approval given by the ld. PCIT for reopening of the assessee. Para 11 and 12 of the signed proforma vide which the approval has been given are relevant, which, for the sake of ready reference are reproduced as under:
Whether the Addl. CIT is satisfied on the reasons recorded by the ACIT(OSD), Ward-6(2), Kolkata that it is a fit case for issue of notice u/s 148. Ans. I am satisfied.
Whether the Pr. Commissioner/Commissioner is satisfied on the reasons recorded by the ACIT(OSD), Ward-6(2), Kolkata that it is a fit case for issue of notice u/s 148. Ans.. As per annexure. Sd/- Pr. Commissioner of Income Tax-2, Kol Jayant Diddi Commissioner of Income Tax-2, Kolkata
The Annexure as mentioned in reply to para 12 is reproduced as under: “M/s. Indovision Securities Ltd. PAN: AAACI5310G, A.Y. 2012-13