Case Law Details
M/s Balaji Health Care Pvt. Ltd. Vs ITO (ITAT Jaipur)
Conclusion: Reopening of assessment by AO on basis of report of Investigation Wing that assessee was beneficiary of accommodation entries in the form of share capital/premium/loan during the financial year was not justified as AO had not carried out any further examination and analysis in order to establish the nexus between the material and formation of belief that income had escaped assessment and there was no linkage which could be said to have been established by AO between assessee’s undisclosed income which was routed back in form of share capital.
Held: AO found from the report of the Investigation Wing that assessee had obtained accommodation entries in the form of share capital/premium/loan during the financial year, therefore, he had reason to believe that income to the tune o f Rs. 25,00,000/- for the AY 2006-07 had escaped assessment within the meaning of section 147 on account of failure on the part of assessee to disclosure fully and truly all material facts in respect of the share capital/premium. He added the amount as undisclosed income of assessee. It was held AO could rely on the report of DIT, Investigation Wing but at the same time, where he was assuming jurisdiction u/s 147, he was required to carry out further examination and analysis in order to establish the nexus between the material and formation of belief that income had escaped assessment and in absence thereof, the assumption of jurisdiction u/s 147 had no legal basis and resultant reassessment proceedings deserved to be set-aside. In the present case, there was no independent application of mind by AO to tangible material which formed the basis of the reasons to believe that income had escaped assessment indeed it was a ‘borrowed satisfaction’. Coming to the merits of the addition made by AO, assessee had discharged the initial onus cast on it in terms of identity, creditworthiness and genuineness of the transaction. There could not be a situation where the same transaction was held to be genuine in hands of Investor Company and disputed in the hands of the Investee company. Further, there was no mention of either the assessee company or the investor company in the statements so recorded of Surendra Jain and Virendra Jain. Therefore, there was no linkage which could be said to have been established by Revenue between assessee’s undisclosed income which was routed back in form of share capital. Merely relying on the report of the Investigation Wing without any further examination or investigation or disputing the documentation submitted by assessee company, addition could not be sustained in the hands of assessee company and was hereby directed to be deleted.
FULL TEXT OF THE ITAT JUDGMENT
These are two appeals filed by the assessee against the respective orders of ld. CIT(A), Jodhpur (Camp at Jaipur) dated 16.03.2018 for the Assessment Year 2006-07 and dated 19.03.2018 for the assessment year 2007-08 respectively.
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