M/S. SHRI RANG INFRASTRUCTURE PVT. LTD.,,GANDHINAGAR vs. DCIT, GANDHINAGAR CIRCLE, GANDHINAGAR

This appeal is filed by the Assessee against order dated 15.03.2019 passed by the CIT(A), Gandhinagar, Ahmedabad for the Assessment Year 2012-13.

The original Assessment Order under Section 143(3) of the Income Tax Act, 1961 was passed on 30.03.2015 and income was assessed at Rs.2,83,71,720/-. Thereafter, subsequent to certain discrepancies, the assessment was reopened by way of issuance of notice under Section 148 of the Act after recording reasons for reopening the case and obtaining statutory approvals. Notice under Section 148 of the Act was issued on 21.11.2016 which was duly served on 22.11.2016. In response to notice under Section 148, return of income was filed by the assessee on 05.10.2017. Copy of reasons was supplied to the assessee on 18.09.2017. Notice under Section 143(2) of the Act dated 06.10.2017 was issued. The Assessing Officer observed that the assessee company is primarily engaged in the business of construction and as part of Profit & Loss account and Balance Sheet as well as notes on items of Balance Sheet, 3CD report and submission of the assessee in respect of work-in-progress revealed that the assessee has debited Rs.1,02,88,690/- in Profit & Loss account as AUDA fees and Rs.1,11,82,000/- as land development expenditure. The same were allowed by the Assessing Officer but as per Section 68 of the Act wherein any sum found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory to the Assessing Officer, the sum so credited may be charged to income tax. The Assessing Officer further observed that the assessee though furnished confirmations, bank statements and copy of returns of all the parties from which it had obtained unsecured loans to prove the genuineness of the transactions, with respect to Shukan Developers Pvt. Ltd. and Shukan Finance & Investment, assessee failed to establish the genuineness of the transactions. Thus, the claim of the assessee that it has loan balance of Rs.6,10,00,000/- (Rs.1,35,00,000 + Rs.4,75,00,000) as on 31.03.2012 of new loans and advances obtained from two Sukan Group of entities were not verifiable. Thus, the Assessing Officer, after issuing notice under Section 142(1) dated 10.11.2017 and taking into account assessee’s

Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

As regards additional ground, the Ld. AR submitted that the Assessing Officer while reopening the assessment has reviewed the original assessment order and, therefore, the review of the original assessment order is not permissible and the assessment itself is bad in law. The Ld. AR further submitted that the reasons recorded itself was dealt with the original assessment proceedings and, therefore, as decided by the Hon’ble Supreme Court in the case of Ajantha Industries (1976) 102 ITR 281, the same should not be reopened and the order of reopening becomes bad in law. The Ld. AR further submitted that there was no order under Section 127 of the Act passed/communicated for transfer of jurisdiction from ITO, Circle-I, Gandhinagar to DCIT, Circle Gandhinagar.

The Ld. DR submitted that there was an internal transfer for which no communication is required and in fact reassessment is not review and, therefore, the decision of Hon’ble Apex Court will not be applicable in the present case in the facts and circumstances which was distinguishable from the present assessee to that of decision of Hon’ble Supreme Court.

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the contention of the Ld. AR that no order under Section 127 of the Act was passed/communicated for transfer of jurisdiction, but the same is there mentioned in the Assessment Order which categorically does not require any communication to the assessee as it is an internal transfer for the administrative purpose of the Assessing Officer and the powers are envisaged with the concerned authorities. The decision of Hon’ble Supreme Court in case of Ajantha Industries will

The Ld. AR further submitted that the CIT(A) has erred in law and on facts in upholding valid reopening of assessment in absence of valid sanction as required under Section 151 of the Act for which it is pertinent to note that the assessee has not objected the satisfaction at the relevant time and, therefore, the following decisions cannot be applicable in assessee’s case. Thus, ground nos.1 & 2 are dismissed.

Delhi HC in the case of Central India Electric Supply Co. Ltd. vs. Income Tax Officer (2011) 333 ITR 237 15. Delhi HC in the case of Pr. CIT vs. N C Cables Ltd. (2017) 391 ITR 11 16 Delhi HC in the case of United Electrical Co. Pvt. Ltd. vs. CIT 258 ITR 317 17. High Court of Punjab & Haryana in the case of Commissioner of Income tax vs. Smt. Attridevi (2005) 276 ITR 0532 18. Delhi High Court in the case of Principal Commissioner of Income Tax- 6 vs Meenakshi Overseas (P) Ltd. [2017] 82 taxmann.com 300 (Delhi) 19. Delhi High Court in the case of Principal Commissioner of Income Tax vs RMG Polyvinyl (1) Ltd. [2017] 83 taxmann.com 348 (Delhi).

As regards to ground no.4 which is on merit, the Ld. AR submitted that the addition made by the Assessing Officer to the extent of Rs.4,75,00,000/- under Section 68 of the Act was passed ignoring the evidences on record. The Ld. AR has given details as follows :-

Hon'ble Gujarat High Court in the case of Ranchhod Jivabhai Nakhave [2012] 208 taxman 35 (Guj.). 3. Hon'ble High Court of Gujarat in the case of Deputy Commissioner of Income Tax Vs. Rohini Builders (2002) 256 ITR 360 4. Hon'ble High Court of Gujarat in the case of Commissioner of Income Tax vs. Jagdish B. Agarwal (2010) 45 DTR (Guj) 197. 5. Hon'ble ITAT Ahmedabad Bench 'C' in the case of Claris Lifesciences Ltd. vs. Assistant Commissioner of Income-tax, Circle 1, Ahmedabad, 112 ITD 307. 6. Hon'ble Ahmedabad ITAT in the case of Sarjan Corp. vs ACIT [2012] 25 taxmann.com 426 (Ahmedabad - Trib.).

The Ld. DR relied upon the Assessment Order and the Order of the CIT(A).

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has given the details related to Shukan Finance & Investment and also has given the details related to the identity of Shukan Finance & Investment as relates to genuineness and credit worthiness. The assessee submitted ITR, computation of income and confirmation from Shukan Finance & Investment for which the assessee also submitted the details about loan

In the result, appeal of the assessee is partly allowed.