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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI B.R.BASKARAN, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri M. Subramanian Department by: Shri Mahendra Bhishmi सुनवाई क� तार�ख / Date of Hearing: 13.05.2016 घोषणा क� तार�ख /Date of Pronouncement: 24.06.2016 आदेश / O R D E R PER AMARJIT SINGH, JM:
This is an appeal filed by the assessee against the order dated 01.03.2013 passed by the Commissioner of Income Tax (Appeals)- 12, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2009-10.
ITA No.7024/Mum/13 A.Y.2007-08
The facts of the case are that the assessee filed the return of income on 19.10.2007 declaring total income to the tune of Rs.1,55,546/-. The assessment u/s.143(3) of the Income Tax Act, 1961 ( in short “the Act”) was passed on 31.08.2009 accepting the same income. Thereafter the assessment was reopened u/s.147 of the Act. After recording the reason for reopening the assessment, the notice u/s.148 of the Act dated 26.07.2012 was issued to the assessee. In response to the said notice, the assessee requested to provide the reasons for the reopening of the assessment u/s.147 of the Act. The reasons for reopening the assessment u/s.147 of the act was given by the authority which is hereby mentioned below:-
“………Information in this case is received from the Addl. D.I.T. Unit-I, Mumbai, vide letter dated 12.09.2011, stating that a search and seizure action u/s.132 of the I.T.Act, 1961 was conducted in the case of M/s. Mahasagar Securities P. Ltd. (now known as M/s. Alag Securities P. Ltd. and its group companies. On the date of search, it was discovered that Shri Mukesh M. Choksi, a Chartered Accountant by profession had floated some 36 companies from his office at Shree Sadashiv CHS, Santacruz (East), Mumbai. Two of these companies M/s. Talent Infoway Limited (AACCT9444L) and M/s.Buniyad Chemicals Ltd.(AABCB6954G) were companies listed on the Ahmedabad and Pune Stock Exchanges respectively. There
ITA No.7024/Mum/13 A.Y.2007-08 was no genuine business being carried on by any of these concerns and they were all engaged in the business of issuing bogus bills for providing Long Term Capital Gains /Loss, Speculation Profit or Loss. In addition, some of the companies (in return for cash) and yet other concerns like M/s.Mihir Agencies P. Ltd. and M/s. Vijaylaxmi Corporation were engaged in issuing bogus sale bills to various entities. The companies run by Shri Mukesh Choksi were receiving commission for all these activities.
As per the information and enclosed list (Annexure B) received from the Investigation Directorate, during the previous year 2006-07 relevant to A.Y.2007-08 the assessee company had provided accommodation entry to M/s. Talent Infoway Ltd. for an amount of Rs.28,00,000/-. The assessee company did not provide with any details before the investigation wing regarding the said transaction.
On perusal of the Balance Sheet it is noticed that during the year under consideration the Assessee Company has issued 800 equity shares of Rs.8,00,000/- (800 shares x Rs.1000/- each share) at a premium of Rs.20,00,000 (800 share x Rs.2,500/- each share). In view of the specific information received from Investigation regarding bogus share transaction, I have reason
ITA No.7024/Mum/13 A.Y.2007-08 to believe that income chargeable to tax has escaped for A.Y.2007-08. Hence notice u/s.148 is sought to be issued……”
The assessee objected to reopen the assessment on the ground of that the assessee disclosed fully and truly all the material facts and thereafter the assessment was completed u/s.143(3) of the Act, therefore, the question of initiating the proceedings u/s.147 of the Act and issuance of notice u/s.148 of the Act does not arise. The assessee contested the matter by relying upon number of judgments but the assessing Officer declined the contentions of the assessee and completed the assessment by determining the total income to the tune of Rs.29,55,550/-. Thereafter, the assessee filed an appeal before the CIT(A) who dismissed the appeal of the assessee. Therefore, the assessee filed the present appeal before us.
The assessee has raised the following ground before us:-
On the facts and in the circumstances of the case and in law, the reassessment proceedings initiated by issuance of notice u/s.148 of the Income Tax Act, 1961 is invalid and bad in law.
2. On the facts and in the circumstances of the case and in law, the assessment passed u/s.144 r.w.s. 147 of the Income Tax Act, 1961 is invalid and bad in law. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the assessing office and determining the income at Rs.29,55,546/- as against the returned income of Rs.1,55,546/-
ITA No.7024/Mum/13 A.Y.2007-08
4. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in confirming the action of the assessing officer by making an addition of Rs.28,00,000/- as disallowance u/s.68.
ISSUE NO.1 & 2:-
Issue no.1 and issue no.2 are interconnected therefore are being taken up together for adjudication. Under these issues the assessee challenged the notice u/s148 of the Act and assessment u/s.144 r.w.s 147 of the Act. It is argued by the learned representative of the assessee that notice has been issued by the Assessing Officer after the expiry of four years and there is no failure on the part of the assessee to disclosed any material facts necessary for assessment, therefore notice u/s.148 of the Act as well as assessment under the provision of section 147 of the Act are against law and facts and are liable to be set aside. In support of these contentions the learned representative of the assessee has placed reliance on the law settled by Hon’ble Bombay High Court in case titled as Godrej Industries Ltd. Vs. Deputy commissioner of Income Tax & Ors. (2015) 126 DTR (Bom) 417 and Talati and Panthaky Associated P. Ltd. Vs. Deputy Commissioner of Income Tax & Ors. (2014) 362 ITR 326 (Bom).
4.1 On the other hand learned representative of the department has placed reliance upon the order passed by the learned CIT(A) in question. Keeping in view and arguments advanced by the learned
ITA No.7024/Mum/13 A.Y.2007-08 representative of the parties and perusing the material on record, it came into notice that the assessment of the assessee was completed u/s.143(3) of the Act accepting the income to the tune of Rs.1,55,546/-. The present assessment was reopened on the basis of information received from the Addl. DIT, Mumbai vide which it was disclosed that the assessee company had provided accommodation entry to M/s.Talent Infoway Ltd. for an amount of Rs.28,00,000/- for the A.Y.2007-08. Thereafter, it was noticed that under the year consideration, the assessee company had issued 800 equity shares of Rs.8,00,000/-(800 shares x Rs.1000/- each share) at premium of Rs.20,00,000/- (800/- shares x Rs.2500/- each share). Therefore, it was the reason to arrive at this conclusion that the income chargeable to tax is the escaped income for the A.Y.2007-08, therefore the notice u/s.148 of the Act was issued. The assessment year is of 2007-08 and the notice u/s.148 of the Act was issued to the assessee on 26.07.2012 which was served upon the assessee on 27.07.2012. Undoubtedly, the notice was issued after expiry of four years, therefore the case of the assessee is to be seen in view of the provision of section 147 of the Act. In view of the said provision the assessment can only be reopened after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make return u/s.139 of the Act or in response to a notice issued under sub-section 1 of section 142 or section 148 or to ITA No.7024/Mum/13 A.Y.2007-08 disclosed fully and truly all material facts necessary for his assessment for the relevant assessment year.
4.2 In the instant case the assessee has shown the transaction in his return. The assessment of the assessee was completed u/s.143(3) of the Act. There is no failure on the part of the assessee to disclose any desired information. The case of the assessee was reopened on the basis of the statement of Shri Mukesh Chokshi. Assessee was not given an opportunity to cross examine the Shri Mukesh Chokshi. The statement of Shri Mukesh Chokshi is not itself sufficient to falsify the transaction of assessee which has been shown while completing his assessment u/s.143(3) of the Act. There is no other record on the file to falsify the transaction shown by the assessee in his return. There is no concealment of any transaction on the part of assessee. No doubt, in the said circumstances the assessment under proviso of section 147 of the Act is not justifiable in view of the law settled in Godrej & Talathi (Supra) & Talati and Panthaky Associated P. Ltd.(Supra) The reasons for reopening has already mentioned above, therefore, there is no need to repeat the same but the reasons nowhere shows any failure on the part of the assessee. However the assessee had shown the details of transaction in his return in accordance with law. In view of the said discussion and in view of the law settled in i.e. Godrej Industries Ltd. Vs. Deputy commissioner of Income Tax & Ors. (2015) 126 DTR (Bom) 417 and Talati and ITA No.7024/Mum/13 A.Y.2007-08