SJM International Ltd. Vs DCIT (ITAT Delhi)
The conclusion of the Assessing Officer at the end of the reasons recorded as noted above is contradictory. In the first two lines, the Assessing Officer has recorded the finding that the sum of Rs.2,35,00,000/- has escaped assessment but in the last two lines, he has recorded that the case is being reopened to verify the genuineness, identification and creditworthiness of the aforesaid transactions.
Any satisfaction with regard to escapement of income or otherwise can be recorded only after the verification of genuineness, identification and creditworthiness of the transaction and not earlier. Thus, we are of the opinion that the Assessing Officer has reopened the case under Section 147 for the purpose of verification of genuineness, identification and creditworthiness of the transactions mentioned in the information supplied by the DIT (Investigation) and this is what the Assessing Officer has concluded at the end of the reasons recorded for issue of notice under See/ion 148.
Now, the question remains whether an assessment can be reopened under Section 147 for the purpose of verification of genuineness, Identification and creditworthiness of any transaction
The assessment framed in this case is not sustainable since the very jurisdiction assumed by the AO u/s 147 of the Act is bad in law and assessment framed on the basis of “change of opinion” u/s 147/143 (3) is void ab initio and is not sustainable in the eyes of law, hence quashed.
Since assessment framed is not sustainable in the eyes of law on legal grounds, grounds raised on merits are not required to be disposed off.
FULL TEXT OF THE ITAT JUDGEMENT
Appellant, M/s. SJM International Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the impugned order dated 08.03.2018 passed by the Commissioner of Income-tax (Appeals)-28, New Delhi qua the assessment year 2009-10 on the grounds inter alia that :-
“1. That the order of CIT(A) is bad in law and on facts.
2. On the facts and under the circumstances of the case, the assessment framed by the AO u/s 147/143(3) is void ab initio as the jurisdiction assumed by the AO u/s 147 is bad in law and on facts.
3. On the facts and under the circumstances of the case, the jurisdiction assumed by the AO u/s 147, is bad in law, as the AO has presumed existence of non-existing facts/ incorrect facts.
4. On the facts and under the circumstances of the case the AO has erred in relying on the statement of Sh. Aseem Gupta, ignoring that statements recorded on oath under survey have no evidentiary value.
5. The AO has further erred in overlooking the guidelines of CBDT vis-a-vis relying on the statement of third party without there being any cross examination.
6. The Jurisdiction assumed by the AO u/s 147 read with 148 after the expiry of four years from the end of relevant assessment year, is bad in law as there is no whisper in the reasons recorded that there is failure on the part of assessee to disclose the material facts fully and truly, particularly where original assessment has been made u/s 143(3) of the Act. .
7. The Jurisdiction assumed by the AO u/s 147 read with 148 is bad in law as it is a case reopened after the expiry of four years from the end of relevant assessment year, and hence it is incumbent on AO to satisfy the requirements of the proviso of section 147.
8. On the facts and circumstances of the case the AO has failed to appreciate that for assuming jurisdiction u/s 147 there must be reason to believe and the jurisdiction cannot be assumed for scrutinising the returns filed u/s 139(1) of the Act.
9. Without prejudice to the above it is settled position of law that jurisdiction u/s 147 cannot be assumed for reappraisal of the already examined facts, as per the principle of change of opinion.
10. Without prejudice to the above the sanction accorded by the CIT was mechanical as is evident from the sanction granted u/s 151 of the Act.
11. The CIT (A) has erred in sustaining the addition of Rs.50,00,000/- as unexplained cash credit u/s 68 ignoring that the assessee has successfully discharged his burden and the AO failed to enforce the attendance as per the provisions of section 131 of the Act.
12. The CIT (A) has erred in law and on facts in sustaining the additions made by the AO ignoring that AO has failed to refute the documentary evidence filed by assessee vis-a-vis establishing the ingredients of section 68.
13. The CIT (A) has erred in sustaining the direction to charge interest u/s 234B and 234A.”
2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee company filed return of income for AY 2009-10 on 29.09.2009 which was processed under section 143 (1) of the Income-tax Act, 1961 (for short ‘the Act’). Thereafter, assessee’s case was reassessed at the returned income of Rs.58,49,432/- on 27.03.2014 u/s 147/143(3) of the Act. Again, AO received information from Investigation Wing vide letter dated 15.03.2012 that assessee had obtained accommodation entries amounting to Rs.50,00,000/- under the garb of share capital/share premium from Aseem Gupta group, whose residential and business premises were searched/surveyed by the Investigation Wing on 26.03.2010. Details of share capital/share premium are as under :-
