MILKY WAY CONSULTANTS LLP,NEW DELHI vs. ITO WARD - 37(1), NEW DELHI

The ld. counsel of assessee, pressing into service ground no. 1 to 4 of assessee the ld. counsel submitted that against the of the reasons recorded by the Assessing Officer copy available at pages 15 & 16, the assessee filed objections on 12.11.2018 and requested the Assessing Officer to adjudicate the objections by passing a well reason orders. The ld. counsel submitted that at the time of recording reasons for reopening of assessment the Assessing Officer picked up amount of six entities amounting to Rs. 1,70,00,000/- whereas in fact, the assessee received unsecured loans Rs. 85 lakh from three entities i.e. M/s Royal Mirage Financial Consultants P. Ltd., M/s. Mithila Investment & Finance P. Ltd. & M/s. Softpro Technologies P. Ltd. only and other three entities noted by the Assessing Officer in the reasons were the erstwhile name of said three companies which were not in existence at the time of taking unsecured loans by the assessee during assessment year 2011-12.

The ld. counsel submitted that even at the time of recordings of reasons the Assessing Officer was not aware about the actual nature of transaction and hence, there is no such mentioning in the reasons. The Assessing Officer has made double additions by taking names of erstwhile and non-existing entities and without making any inquiry about the actual nature of transaction therefore it is a clear case of non- application mind by the Assessing Officer therefore she submitted that in view of judgment of Hon’ble jurisdictional High Court of Delhi in the case of PCIT vs. SNG Developers Ltd. 404 ITR 312 (Del.) that the reopening of assessment has to be held as bad in law.

Replying to the above, the ld. Senior DR strongly supported the orders of the authorities below and submitted that at the time of recording reasons the Assessing Officer is not required to make a details inquiry on the entire material gathered by the investigation team hence non application of mind cannot be alleged to tag the reassessment order as invalid and bad in law. 5. On careful consideration of above submissions, first of all, since the assessee is alleging non application of mind by the Assessing Officer at the time of recording reasons for reopening of assessment therefore, we find it appropriate to reproduced the reason recorded by the Assessing Officer which is as follows:-

From the copy of the objection and request of assessee vide dated 12.11.2018 for dropping the proceedings we note that the assessee at the very first instance inform the Assessing Officer about the actual facts of the case. From the reasons recorded it is clear that at the time of recording reasons the Assessing Officer in para 2 recorded the letter received from the DDIT (Inv.) -1, Noida, in para 3 he reproduced a table showing debit and credit payment to the assessee by six entities and in para 4 he jumped to a conclusion that he has reason to believe that the assessee’s income for AY 2011-12 has escaped assessment without assigning any character or mode of alleged transactions. The ld. Senior DR has not disputed a factual position a merged from pages 62 to 67 of assessee paper book that M/s. Saunak Technologies P. Ltd. is the new name of M/s. Soffpro Technologies Pvt. Ltd. which was changed with effect from 03.01.2015. M/s. Bronz Star Techsoft Pvt. Ltd. is the new name of M/s. Royal Mirage Financial Consultants Pvt. Ltd. with effect from 24.03.2015. similarly, M/s. Shulini Realty Pvt. Ltd. is the new name of M/s Mithilanchal Investment & Finance Pvt. Ltd. with effect from 09.04.2015.

The Assessing Officer has not made any inquiry about the character or nature of transaction and proceeded to initiate reassessment proceedings to issue notice u/s. 148 3