S. 147 : Reassessment-After the expiry of four years-Accommodation entries-Shell companies-Borrowed satisfaction-Information from investigation wing-Natural justice- Search-Survey-No failure to disclose material facts-Without the application of mind-Opportunity for cross-examination was not provided-Reassessment was quashed. (Tribunal has passed 359 pages order dealing with all issues on reassessment proceedings.) [S. 131, 132, 132(4), 133(6), 133A, 148, 153A, 153C]
Allowing the appeal of the assessee the Tribunal held that the reasons recorded for the formation of belief of escapement of income chargeable to income tax are found to be wrong and irrelevant for the reopening of the completed assessment of the assessee company. Company formed for real estate development purposes, purchased land, obtained license from the Government of Haryana for the proposed commercial project, and invested Rs. 28.29 crore under the said project, it cannot be alleged to be a shell entity for the reasons recorded for the formation of belief of escapement of income chargeable to income tax as it has no income earning apparatus. that the learned Commissioner of Income Tax (Appeals) has gone wrong in upholding the initiation of the re-opening of the completed assessment on the basis of information contained in the search material found during the search of a third party, since there was no incriminating material; that so, the initiation, completion and consequential upholding of the re-assessment proceedings is not sustainable in law; that the reasons recorded for the formation of belief of escapement of income chargeable to income tax by the Assessing Officer are based solely on the Investigation Wing’s report and the statement of Shri Himanshu Verma; that the report of the Investigation Wing only suggested to the Assessing Officer to examine the details and to only thereafter determine whether there could be any justification for initiating the re-assessment proceedings; that the statement of Shri Himanshu Verma does not implicate the assessee in any manner that the information received from Income Tax Officer, Ward 1(5) Chandigarh was denied to be confronted to the assessee, and not providing the copy of the statement of Shri Himanshu Verma to the assessee is in violation of the principles of natural justice, as well as the provisions of section 142(3) of the Income -tax Act; that therefore, such information and statement of Shri Himanshu Verma cannot be used against the assessee for making addition that it is also patent that the learned Commissioner of Income Tax (Appeals) erroneously upheld the re-opening, which was based on wrong and irrelevant facts recorded under reasons recorded for the formation of belief of escapement of income chargeable to income tax for reopening by Assessing Officer; that we were, therefore cancelling the assessment, as the grounds on which the re-assessment notice was issued were not found to exist or were found to be irrelevant and that the reopening of the assessment under section 147 of the Act is based on wrong and irrelevant facts and the reopening is held to be bad in law. (Tribunal has passed 359-page order dealing with all issues on reassessment proceedings). (ITA No. 718/Chd/2022 dt. 15-9-2023)(AY. 2012-13)
Evershine Recreation Private Limited v. DCIT (Chd)(Trib) www.itatonline.org
[Coram : Hon’ble Shri A.D. Jain, VP & Hon’ble Shri Vikram Singh Yadav, AM]