INCOME TAX ACT, 1961

Section 147 Section 148

Reassessment - Reason to believe - No independent satisfaction by AO - Addition under section 68

On the basis of STRs and upon further investigation conducted by the investigation wing, it was noticed by the AO that the assessee company had taken share capital of Rs. 465.98 lac from Investee companies, but identity, genuineness and creditworthiness of the investors remained doubtful, in view of the various reasons mentioned by the AO in the assessment order. AO recorded the reasons under section 147 for reopening of the case. After examining all the documentary evidences filed by assessee and objections filed by the assessee, the AO had made the addition of Rs. 4,60,00,000 under section 68 on the basis of the details forwarded by the investigation wing, vide order dated 30-6-2014 passed under section 143(3) read with section 147. CIT(A) deleted the addition.Held:From the reasons recorded it was very clear that AO had not made any enquiries about the suspicion and doubt raised by the Investigation Wing. He had simply reproduced the letter under the column reasons recorded under section 147 and also written that 'since the share capital was not scrutinized, AO had not applied his mind on the information received from the Investigation Wing. There was no reason to believe for escapement of any income.AO had not formed its own reason of belief and he had only believed the content of the letter of the investigation wing. The mismatch of the figure of share capital, of Rs. 4,65,98,000 had not been looked into by the Addl. CIT, at the time of giving approval for issuing the notice under section 148. AO had also not applied his mind to find out how there is an escapement of income in the form of share capital and share premium. After considering these facts, AO had wrongly assumed the jurisdiction under section 147. AO had not given proper opportunity to the assessee to file the objection against the issue of notice under section 148. The objections disposed of by the AO were also not a speaking one. After considering the facts as narrated above, CIT(A) rightly observed that the AO had wrongly assumed the jurisdiction under section 147 and also not given proper opportunity to the assessee during the assessment proceedings.

Relied:GKN Driveshafts (India) Ltd. v. ITO (2003) 259 ITR 19 (SC) : 2003 TaxPub(DT) 734 (SC) and Pr. CIT v. Meenakshi Overseas (P) Ltd. v. ITO (2017) 395 ITR 677 (Del) : 2017 TaxPub(DT) 1791 (Del-HC). Distinguished:Pr. CIT v. Paramount Communication (P) Ltd. in (Special Leave to Appeal (C) No (s). 16930/2017, dt. 14-7-2017) : 2017 TaxPub(DT) 4022 (SC), Pr. CIT v. Paramount Communication (P) Ltd. (2017) 79 Taxmann.com 409 (Del) : (2017) 392 ITR 444 (Del) : 2017 TaxPub(DT) 794 (Del-HC), Pr. CIT v. NDR Promoters (P) Ltd. (2019) 102 Taxmann.com 182 (Delhi) : (20191 410 ITR 379 (Del) : 2019 TaxPub(DT) 886 (Del-HC), Aradhna Estate (P) Ltd. v. P CIT (2018) 91 taxmann.com 119 (Gujarat) : 2018 TaxPub(DT) 968 (Guj-HC), Pushp Bullion (P) Ltd. v. Dy. CIT (2017) 85 taxmann.com 84 (Gujarat) : 2017 TaxPub(DT) 3914 (Guj-HC), Ankit Financial Services Ltd. v. Dy. CIT (2017) 78 taxmann.com 58 (Gujarat) 18 (Guj) : 2017 TaxPub(DT) 461 (Guj-HC), Indu Lata Rangwala v. Dy. CIT (2017) 80 Taxmann.com 102 (Del) : (2016) 384 ITR 337 (Del) : 2016 TaxPub(DT) 2519 (Del-HC), Aravali Infrapower Ltd. v. Dy. CIT [Special Leave to Appeal (C) No. 2776/2017, dt. 27-1-2017], Pr. CIT v. NRA Iron & Steel (P) Ltd. (2019) 103 Taxmann.com 48 (SC) : 2019 TaxPub(DT) 1628 (SC), Pr. CIT v. NDR Promoters (P) Ltd. (2019) 102 Taxmann.com 182 (Del) : (20191 410 ITR 379 (Del) : 2019 TaxPub(DT) 886 (Del-HC), Pr. CIT v. NDR Promoters (P) Ltd. (2019) 102 Taxmann.com 182 (Del) : (20191 410 ITR 379 (Del) : 2019 TaxPub(DT) 886 (Del-HC), ITO v. Synergy Finlease (P) Ltd. [ITA No. 4778/Del/2013], CIT v. Navodaya Castle (P) Ltd. (2014) 367 ITR 306 (Del) : 2014 TaxPub(DT) 3789 (Del-HC), Navodaya Castle (P) Ltd. v. CIT (2015) 56 Taxmann.com 18 (SC) : (2015) 230 Taxman 268 (SC) : : 2015 TaxPub(DT) 1868 (SC), Pratham Telecom India (P) Ltd. v. Dy. CIT [ITA No. 316 of 2016, dt. 17-9-2018] : 2018 TaxPub(DT) 6453 (Bom-HC), CIT v. Nipun Builders & Developers (P) Ltd. (2013) 30 Taxmann.com 292 (Del) : (2013) 350 ITR 407 (Del) : 2013 TaxPub(DT) 526 (Del-HC), CIT v. Nova Promoters & Finlease (P) Ltd. (2012) 18 Taxmabnn.com 217 (Del0 : (2012) 342 ITR 169 (Del) : 2012) TaxPub(Dt) 1558 (Del-HC), CIT v. Ultra Modern Exports (P) ltd. (2013) 40 Taxmann.com 458 (Del) : 220 Taxman 165 (Del) : 2013 TaxPub(DT) 917 (Del-HC), CIT v. Frostair (P) Ltd. (2012) 26 taxmann.com 11 (Del) : 2012 TaxPub(DT) 3185 (Del-HC), CIT v. N R Portfolio (P) Ltd. (2014) 42 taxmann.com 339 (Delhi) : (2014) 222 Taxman 157 (Delhi)(MAG) : 2014 TaxPub(DT) 501 (Del-HC), CIT v. Empire Builtech (P) Ltd. (2014) 366 ITR 110 : 2014 TaxPub(DT) 1850 (Del-HC), CIT v. Focus Exports (P) Ltd. (51 Taxmann.com 46 (Del) : (2015) 228 Taxman 88 (Del) : 2014 TaxPub(DT) 4283 (Del-HC) and Pr. CIT v. Bikram Singh (2017) 85 Taxmann.com 104 (Del) : 2017) 399 ITR 407 (Del) : 2017 TaxPub(DT0 3937 (Del-HC)