Yogesh Kumar U.S. ORDER
Yogesh Kumar U.S., Member (J)
1. The present appeal is filed by the assessee, challenging the order dated 07/09/2018, passed by the learned CIT(Appeals)-28, New Delhi.
2. The assessee has filed 'NIL' income on 29/10/2007. The return was duly processed u/s. 143(1) of the Act, the case of the assessee has been taken up for scrutiny and assessment order u/s. 153A read with 143(3) of the Act dated 29/12/2011 was passed at income of Rs. 3,65,75,000/- by making disallowance on account of unexplained cash credits of Rs. 3,50,00,000/-, on account of commission of Rs. 1,75,000/- and on account of unsecured loan of Rs. 14,14,00,000/-. Later, the case was selected for scrutiny u/s. 147 read with Section 148 of the Act. The notice u/s. 148 of the Act was issued on 26/02/2014, the representative of the assessee has participated in the assessment proceedings. The assessment order came to be passed on 20/03/2015 by making addition of Rs. 45,00,000/- on account of unexplained income from share applicants. As against the assessment order dated 20/03/2015 passed u/s. 148 read with 147 of the I.T Act, the assessee has preferred an appeal before the CIT(A). The Ld. CIT(A) by order dated 07/09/2018, dismissed the appeal filed by the assessee.
3. Aggrieved by the order impugned dated 07/09/2018, the assessee has preferred the present appeal on following grounds:-
1. That learned CIT(A) has erred both in law and on facts in dismissing the appeal of the appellant without appreciating the legal contention of the appellant that the additions u/s. 153A are not valid in law the absence of any incriminating material found in the course of search proceedings on the appellant and the additions are based on the material available in the return of income and this legal issue is decided by the Hon'ble ITAT in favour of the appellant for the AY under consideration.
2. The reassessment proceedings and the order of assessment u/s. 147/148 is not sustainable in law as the same has been passed without disposing off the objection of the appellant and the Ld. CIT(A) has accepted the contrary claim of the AO without verifying the facts from the relevant records of the AO.
2.1 The reassessment proceedings are not validly initiated in view of the proviso to section 147 being applicable, the reassessment proceedings are barred by limitation in the absence of the allegation by the AO in the reason recorded that there was failure on the part of the appellant to disclose truly and fully all material facts in original proceedings which had bearing on the assessment of income.
2.2 The Ld. CIT(A) has not annulled the assessment without appreciating the objection of the appellant that the assessment was completed without issue of notice u/s. 143(2) of the Act.
2.3 Without prejudice to the contention raised in Ground No. 2 above, the reassessment proceedings and the Assessment Order need be quashed on the ground that as per the stand taken by the AO too, the objection has been disposed of on 11.03.2015 denying the appellant reasonable time to take remedial action against the said order of minimum 4 weeks required to be given having regard to the judgment in case of Asian Paints Ltd. MANU/MH/1245/2007 : 296 ITR 90 (Bom).
2.4 The Ld. CIT(A) has, on the facts and circumstances of the case and also in law, erred in upholding the assessment order and the reassessment proceedings without appreciating the contention of the appellant that the sanction u/s. 151 is too mechanical and without application of mind by the authority according sanction u/s. 151 of the I.T. Act.
3. On the facts and circumstances of the case, both the authorities below have erred in taking adverse view against the appellant to support the addition of Rs. 45,00,000 u/s. 68 of the act for non-compliance/part compliance of the summons served on the share applicants and also in placing burden on the appellant to produce share applicants when the appellant discharged its initial burden under the Act to prove nature and source of cash credits of Rs. 45,00,000.
4. The appellant craves leave to add, delete, modify/amend the above grounds of appeal with the permission of the Hon'ble Bench.
4. The Ld. Counsel for the assessee submitted that, the impugned reassessment proceedings has been initiated on the basis of very same information available with the Assessing Officer at the time of original assessment order dated 29/12/2011, wherein the addition of Rs. 3,53,50,00,000/- was made u/s. 68 of the Act. Further submitted that, the said addition were also include the amounts received from two entities namely M/s. Oracle Cables P. Ltd. and M/s. Multi-Semi Conductors P. Ltd. out of three entities named in the reason. However, no addition was made for the third entity i.e. M/s. Indlon Hosiery P. Ltd. for Rs. 15,00,000/- being share capitation money received. Further submitted that, all the three additions have been deleted on merit by CIT(A) which has been confirmed by this Tribunal in ITA No. 565/Del/2014. The Ld. Counsel for the assessee further submitted that, the addition u/s. 153A has been made in the absence of any incriminating material found in the course of search proceedings. Therefore, submitted that the addition made by the Ld. A.O which has been confirmed by the Ld. CIT(A) is null and void. Further contended that, the assessee has discharged its initial burden as required under the Act to prove the nature and source of the cash credit of Rs. 45,00,000/- but the authorities erroneously taken adverse view against the assessee.
5. Per contra, the Ld. DR has relied on the orders of the Lower Authorities and contended that, the assessee has not proved the genuineness of the transaction and submitted that, no interference from the Tribunal is called for.
6. We have heard the Ld. Counsel for the assessee and also the Ld. AR, perused the material on record and gave our thoughtful consideration.
7. On hearing both the sides, we find force in the argument of the Ld. Counsel for the assessee, the Ld. A.O has made an addition of Rs. 45,00,000/- u/s. 68 of the Act, on the ground that the assessee failed to prove the identity and creditworthiness of share applicants i.e. Indlon Hosiery P. Ltd., M/s. Multi-tech Semi Conductors P. Ltd. and M/s. Oracle Cables P. Ltd. The above said information were very well in existence in the hands of the Ld. A.O when the original assessment order was passed on 29/12/2011. Therefore, we find that the reopening of assessment was without any fresh tangible material. It is well settled law that, in the absence of fresh tangible material, the action u/s. 147 of the Act by the A.O is not tenable under the law. In the case of Dushyant Kumar Jain Vs. DY CIT MANU/DE/0130/2016 : 381 ITR 0428 (Del) the Jurisdictional High Court held as under:-
"16. The reasons given by the Department in its counter affidavit do not in any way explain the patent illegality in invoking the powers under Section 148 of the Act for reopening the assessment of the Assessee for AY 2007-08. The mere fact that the definition of an AO in terms of Section 2(7-A) of the Act all includes a DCIT and other superior officers or an ITO of some other ward who may be vested with the relevant jurisdiction by virtue of orders issued under Section 120 (1) or Section 120 (2) of the Act will not make a difference to the above legal position. The reason is not far to seek. It is only the AO who has issued the original assessment order dated 13th April 2009 for AY 2007-08 under Section 143 (3) of the Act who is empowered to exercise powers under Section 147/148 to re-open the assessment. This is because he alone would be in a position to form reasons to believe that some income of that particular AY has escaped assessment. This again cannot be based on a mere change of opinion. Further, in terms of Section 151 of the Act such a move will have to have the prior approval of the CIT. Under the scheme of the Act, if a superior officer forms an opinion that the original assessment order is prejudicial to the interests of the Revenue, recourse can be had to Section 263 of the Act. In any event the question of an ITO who is not the AO who passed the original assessment order under Section 143 (3) of the Act for particular AY, exercising the powers under Sections 147/148 of the Act to re-open that assessment does not arise.
8. In view of the above discussion, reopening of the assessment is clearly bad in law and liable to be quashed, accordingly we allow the assessee's grounds of Appeal and set aside the order of Lower Authorities, resultantly, additions stands deleted.
9. In the result, Appeal of the assessee is allowed.
Order pronounced in the open court on 20th May, 2022.
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