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DATE: October 23, 2019 (Date of pronouncement)
DATE: December 28, 2019 (Date of publication)
AY: 2012-13
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CITATION:
S. 147 Reopening for taxing bogus share application money: One is known by the company one keeps. As the investors have dubious character & are known to have engaged in the business of providing accommodation entries., the genuineness of their transactions with the assessee has come under serious cloud, giving rise to reasonable belief in the mind of the AO that the assessee may have indulged in a dubious transaction to launder its undisclosed income. The fact that the assessee produced evidence during assessment is neither here nor there (NRA Iron & Steel 412 ITR 161 (SC) followed). Costs of Rs. 2L imposed on assessee for wasting Court's time

It is true that during the course of the assessment proceedings, the Assessing Officer had required the assessee to disclose information pertaining to the share applicants, the amounts and their source, the mode in which payment was made and confirmatory letters together with PAN details. But it is also trite law that for such cases three important aspects have to be considered by the Assessing Officer, namely (i) the identity of the investors; (ii) the credit worthiness of the applicants; and (iii) the genuineness of the transaction. Ex-facie, the order of assessment which was passed by the Assessing Officer under Section 143(3) does not indicate that the Assessing Officer had brought his mind to bear on either of these aspects

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DATE: May 31, 2018 (Date of pronouncement)
DATE: June 13, 2018 (Date of publication)
AY: 1995-96
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CITATION:
S. 282/ 292B: Entire law on "service of notice" and difference between "issue" and "service" of notice explained. S. 147 proceedings are initiated when the notice is "issued". Though "service" of notice u/s 147/148 is not a mere procedural requirement, but a condition precedent for initiation of proceedings, the service upon a person who was not authorized to receive notice does not render the proceedings null and void if the assessee complied and entered appearance

A company being a juristic and a legal person, service cannot be in person on the Company, and has to be affected by sending the notice to the registered office or at the place of business. In the context of the present case, we would only observe that the object and purpose of service of notice was to inform and make the company aware that proceedings under Section 147/148 of the Act had been initiated. Initiation of proceedings under Section 147/148 of the Act was upon recording of reasons to believe and upon necessary approvals. Initiation to this extent was valid and not disputed and challenged.

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DATE: March 8, 2018 (Date of pronouncement)
DATE: March 21, 2018 (Date of publication)
AY: 2006-07
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CITATION:
S. 143(2) Notice: The issue of a s. 143(2) notice by an AO not having jurisdiction over the assessee is irrelevant. If the proper AO does not issue the notice within the time limit, the assessment is null and void. The argument that the non-jurisdictional AO issued the s. 143(2) notice as per PAN or computerized system or internal procedure is not relevant as it violates the law

The contention of the Ld. D.R. has no merit that ITO, Ward-1(1), Faridabad was empowered to issue notice as per PAN or it was issued as per Computerized System of the Department because it is against the provisions of Law. As such the issue would be in violation of the principles of law and as such the internal procedure provided by the department would not justify the illegality committed by the ITO, Ward-1(1), Faridabad

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DATE: January 5, 2018 (Date of pronouncement)
DATE: January 20, 2018 (Date of publication)
AY: 2013-14
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CITATION:
S. 56(2)(vii) Taxability of gifts as income: Meaning of the term "relative" in the context of a Hindu Undivided Family (HUF), and whether if the donor is the mother of the Karta of the HUF, a gift by the mother to the HUF is a gift from a "relative" so as to avoid attracting tax liability explained. All judgements on the subject considered

As per explanation (d) in the definition of “property”, several types of assets are listed including shares and securities. It is not denied that assessee is an HUF, during the year it has received from mother of the Kaka of the assessee HUF a gift of 75,000 shares of a private limited company. Therefore, apparently the provisions of section 56 (2) applies in the case of the assessee. However, proviso to the above section provides that the above clause shall not apply to any sum of money or any property received from any “relative”. Therefore, if such sum or property is received from a “relative” it will not be chargeable to tax under that section. The explanation (e) defines “relatives” in case of a Hindu undivided family as any member thereof. Therefore, if the above assessee, HUF, receives any sum from any member of the HUF then such sum or property received by the HUF assessee will not be chargeable to tax. Therefore, the simple issue that arises to be examined that whether Mrs. Sneh Gupta is a member of the assessee HUF. If she is, then the gift of share is not chargeable to tax in the hands of assessee as income

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DATE: January 11, 2017 (Date of pronouncement)
DATE: January 23, 2017 (Date of publication)
AY: 2001-02
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CITATION:
S. 147/ 151: The mere appending of the word "approved" by the CIT while granting approval u/s 151 to the reopening u/s 147 is not enough. While the CIT is not required to record elaborate reasons, he has to record satisfaction after application of mind. The approval is a safeguard and has to be meaningful and not merely ritualistic or formal

Section 151 of the Act clearly stipulates that the CIT (A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression ‘approved’ says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer

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