M/s. Quality Sales Promotion Pvt. Ltd., Kolkata V. ACIT, New Delhi

CO 80/DEL/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3791 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 20-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus Share capital; Depreciation; Search and seizure; Source of fund; Difference of opinion; Accommodation entries; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 133A; 133(6); 147; 131; 68; 148; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.5962/DEL/2016 ASSESSMENT YEAR : 2007-08 ACIT, CENTRAL CIRCLE- 30, NEW DELHI. VS. QUALITY SALES PROMOTION PVT. LTD., 13, GROUND FLOOR, ROOM NO.5, B.B. GANGULI STREET, PUNARNAVA, KOLKATA. PAN : AAACQ0466F (APPELLANT) (RESPONDENT) C.O. NO.80/DEL/2017 (IN ITA NO.5962/DEL/2016) ASSESSMENT YEAR : 2007-08 QUALITY SALES PROMOTION PVT. LTD., 13, GROUND FLOOR, ROOM NO.5, B.B. GANGULI STREET, PUNARNAVA, KOLKATA. VS. ACIT, CENTRAL CIRCLE- 30, NEW DELHI. PAN : AAACQ0466F (APPELLANT) (RESPONDENT) DEPARTMENT BY : MS. RACHNA SINGH, CIT-DR, ASSESSEE BY : SHRI AJAY VOHRA, SR. ADV. MS. DEEPASHREE RAO, CA MR. VIBHU GUPTA, CA DATE OF HEARING : 08-05-2018 DATE OF PRONOUNCEMENT : 24-05-2018 O R D E R PER R. K. PANDA, AM : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 16.09.2016 OF CIT(A)- 30, NEW DELHI RELATING TO ASS ESSMENT YEAR 2007-08. THE 2 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 ASSESSEE HAS ALSO FILED THE CROSS OBJECTION AGAINST THE APPEAL FILED BY THE REVENUE. FOR THE SAKE OF CONVENIENCE, THESE WERE H EARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF INVESTMENT & FINANCE. I T FILED ITS RETURN OF INCOME ON 17.10.2007 DECLARING INCOME OF RS.12,347/-. THE RE TURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 ON 11.08.2008 AND THER EAFTER THE ASSESSMENT WAS COMPLETED VIDE ORDER PASSED U/S 143(3) ON 22.04.200 9 DETERMINING THE TOTAL INCOME AT RS.20,978/-. SUBSEQUENTLY, SEARCH AND SE IZURE OPERATION U/S 132 OF THE I.T. ACT WAS CONDUCTED AT VARIOUS BUSINESS AND RESIDENTIAL PREMISES OF M/S JINDAL GROUP OF CASES. THE BUSINESS PREMISES OF TH E ASSESSEE WAS SURVEYED U/S 133A OF THE I.T. ACT, 1961. THE CASE WAS CENTRALIZ ED WITH CENTRAL CIRCLE- 14 THROUGH ORDER DATED 31.12.2012 PASSED U/S 127 OF TH E I.T. ACT BY THE CIT, KOLKATA-II, KOLKATA VIDE NO.F.NO.CIT-KOL-II/CENT./1 2-13/6708. WITH EFFECT FROM 15.11.2014 ERSTWHILE CENTRAL CIRCLE-14, NEW DE LHI WAS RE-DESIGNATED AS CENTRAL CIRCLE-30, NEW DELHI. 3. THE ASSESSING OFFICER ISSUED NOTICE U/S 148 DATE D 20.02.2015 BY RECORDING THE FOLLOWING REASONS :- REASONS FOR ISSUE OF NOTICE U/S 148 IN THE CASE OF M/S PAVITRA TREXIM PVT. LTD. FOR THE A Y 2007-08' A SEARCH AND SEIZURE ACTION IN JINDAL GROUP OF CASE S WAS CARRIED OUT ON 14/11/2011. AS PART OF THE SEARCH ACTION, A SURVEY U/S 133A WAS CARRIED OUT IN THE CASE OF ASSESSEE COMPANY AT 13, AUNARNAVA, BB GANGU LI STREET, ROOM NO. 05, 3 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 GROUND FLOOR, BORN BAZAR, KOLKATA. DURING THE COURS E OF SURVEY STATEMENT OF ONE SH KAMAL KUMAR SHARMA WHO CLAIMED TO BE SERVICE PROVID ER TO THE COMPANY ON OUTSOURCING BASIS FOR GENERAL ADMINISTRATIVE WORK L IKE E-FILING OF ROC RETURNS ETC WAS RECORDED. HE INFORMED THAT ONE OF THE DIRECTORS OF THE COMPANY WAS SHRI NAVAL BIHARI BHUT. THEREAFTER STATEMENT OF SH. NAVAL BIHA RI BHUT THE DIRECTOR OF THE COMPANY WAS ALSO RECORDED ON THE SAME DATE. HE STAT ED THAT HE DOES NOT KNOW ABOUT THE NATURE OF ACTIVITIES OF THE COMPANY AND HAVE NE VER ATTENDED BOARD MEETINGS. HE ALSO DID NOT KNOW ABOUT THE SHARE HOLDING OF THE CO MPANY. HE WAS ALSO ASKED ABOUT THE MANNER IN WHICH THE SHARE CAPITAL OF THE COMPAN Y WAS RAISED. IN RESPONSE TO THAT HE STATED THAT HE DID NOT KNOW ANYTHING ABOUT THIS MATTER. HE FURTHER STATED THAT HE SIMPLY SIGNS WHATEVER DOCUMENTS ARE GIVEN TO HIM LI KE AUDITED ACCOUNT REPORTS, CHEQUE BOOKS ETC. THE DOCUMENTS WERE STATED TO HE S ENT BY SH. SS JINDAL THROUGH HIS EMPLOYEE SH. VASUDEV AGGARWAL HAVING MOBILE NO. 987 3113888 & A DIRECTOR OF M/S SAGAR FINTRADE PVT. LTD. M/S SAGAR FINTRADE PVT. LT D IS A COMPANY IN WHICH SS JINDAL HAS SUBSTANTIAL INTEREST. DURING SIMULTANEOUS SEARCH AT HIS RESIDENCE AT P-10 6, C-BLOCK, BANGUR AVENUE, STATEMENT OF SH. BABU LAL BANK AN ENTRY OPE RATOR STATED THAT HE WAS DIRECTOR OF M/S QUALITY SALES PROMOTION CO. PVT. LTD. AND HA D ARRANGED ACCOMMODATION ENTRIES IN THE FORM OF SHARE CAPITAL FOR JINDAL GRO UP OF COMPANIES ON COMMISSION BASIS. HE FURTHER STATED THE SALE OF SHARES OF JIN DAL GROUP WAS ONLY ACCOMMODATION ENTRY. DURING THE SEARCH & AFTERWARDS INFORMATION WAS GATH ERED THAT THE VARIOUS COMPANIES INCLUDING THE ASSESSEE COMPANY WERE ACQUI RED BY SS JINDAL GROUP IN ORDER TO REALIZE AND MAKE USE OF BOGUS CAPITAL CREDITED I N THIS COMPANY. THIS COMPANY WAS A PAPER COMPANY WITHOUT HAVING ANY TANGIBLE ASSETS AND ITS INVESTMENTS WERE ALSO IN PAPER COMPANIES. SO THE SHARE CAPITAL & SHARE PREMI UM WAS INTRODUCED IN BOOKS WAS BOGUS. AFTER RAISING SHARE CAPITAL & SHARE PREMIUM THE INVESTMENTS WERE MADE IN 46 PAPER COMPANIES WHICH DID NOT HAVE ANY SUSTENTATIVE BUSINESS ACTIVITIES AND SOME OF THEM WERE FOUND NONEXISTENT AT THE ADDRESSES GIVEN. FROM THE EXAMINATION OF ACCOUNTS OF THE COMPANY, IT IS FOUND THAT THE SHARE CAPITAL OF THE COMPANY INCREASED FROM RS. 1,29,30,0 00/- TO RS. 1,88,22,500/- ALONGWITH SHARE PREMIUM OF RS.22,98,07,500/- DURING FINANCIAL YEAR 2006-07 AND IN AGGREGATE RS.23.57 CRORE WERE RAISED DURING THE YEA R. THE FUNDS BY WAY OF SHARE CAPITAL & PREMIUM ARE SHOWN TO BE RECEIVED FROM 20 COMPANIES WHICH ARE PAPER COMPANIES & RUN BY ENTRY OPERATORS. HENCE THE SOUR CE OF FUNDS IS NON-GENUINE. THE SAID AMOUNT IS LIABLE TO BE ADDED U/S 68 OF I.T. AC T. 4. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FIL ED RETURN OF INCOME ON 21.03.2014 DECLARING INCOME OF RS.12,347/-. THE AS SESSEE ASKED FOR THE COPY OF THE REASONS WHICH WAS SUPPLIED TO THE ASSESSEE. TH E OBJECTION OF THE ASSESSEE VIDE LETTER DATED 29.05.2014 WAS DISPOSED OF BY THE ASSESSING OFFICER AFTER DUE 4 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 CONSIDERATION AND ITS REQUEST TO DROP THE PROCEEDIN GS WAS REJECTED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER OBSERVED THAT THE ASSESSEE HAS RECEIVED NEW SHARE CAPITAL OF RS.58,92 ,500/- ALONG WITH A SHARE PREMIUM OF RS.22,98,07,500/-. HE OBSERVED THAT THE SHARES HAVING A FACE VALUE OF RS.10/- EACH HAS BEEN ALLOTTED TO 20 SHARE APPLI CANTS @ RS.400/- EACH INCLUDING PREMIUM OF RS.390/- PER SHARE. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESS EE TO FURNISH COMPLETE DETAILS OF NEW SHARE APPLICANTS IN THE COMPANY AND TO FURNISH THE REGISTER OF MINUTES OF MEETINGS OF BOARD OF DIRECTORS, SHARE AL LOTMENT REGISTERS, CORRESPONDENCES BETWEEN ALLOTTEE & ALLOTTING COMPAN Y, BANK STATEMENTS OF ALL SUCH SHARE APPLICANTS TO PROVE THE GENUINENESS OF T HE FUNDS CREDITED IN ITS BOOKS OF ACCOUNTS AS SHOWN IN THE BALANCE SHEET. THE ASS ESSEE FILED THE REQUISITE DETAILS. HOWEVER, REJECTING THE VARIOUS EXPLANATIO NS GIVEN BY THE ASSESSEE AND OBSERVING THAT THE ASSESSEE WAS UNABLE TO JUSTIFY T HE INGREDIENTS OF SECTION 68 OF THE I.T. ACT AND FURTHER OBSERVING THAT THESE COMPA NIES ARE PAPER COMPANIES WHO HAVE INVESTED IN THE SHARES OF THE COMPANY, THE ASSESSING OFFICER MADE ADDITION OF RS.23,57,00,000/- TO THE TOTAL INCOME O F THE ASSESSEE BEING SHARE APPLICATION MONEY AND SHARE PREMIUM RECEIVED DURING THE YEAR. 5. BEFORE THE LD. CIT(A), THE ASSESSEE APART FROM C HALLENGING THE ADDITION ON MERIT CHALLENGED THE VALIDITY OF THE INITIATION OF RE-ASSESSMENT PROCEEDINGS. IT 5 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 WAS ARGUED THAT DURING THE COURSE OF ORIGINAL ASSES SMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED FULL DETAILS TO JUSTIFY THE ISSUE OF 5,89,250 SHARES EACH HAVING FACE VALUE OF RS.10 WITH PREMIUM OF RS.390 T O 20 COMPANIES AMOUNTING TO RS.23,57,00,000/-. THE ASSESSING OFFICER HAS IS SUED NOTICE U/S 133(6) TO THE SHARE APPLICANTS ON RANDOM BASIS WHICH WERE DULY CO MPLIED WITH. AFTER DUE SATISFACTION, THE ASSESSING OFFICER HAD ACCEPTED SU CH SHARE CAPITAL RAISED DURING THE YEAR. SUBSEQUENTLY, DURING THE SEARCH AND SEIZ URE ACTION U/S 132 THAT TOOK PLACE ON 14.11.2011 IN THE B.C. JINDAL GROUP OF CAS ES, SURVEY WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE. NOTICE U/S 153C WAS ISSUED ON 18.12.2013 AND THE ASSESSEE IN RESPONSE TO SUCH NOT ICE U/S 153C FILED A LETTER DATED 30.12.2013 TO CONSIDER THE ORIGINAL RETURN FI LED AS RETURN FILED IN RESPONSE TO THIS NOTICE. HOWEVER, THE ASSESSING OFFICER VID E LETTER DATED 14.03.2014 COMMUNICATED TO THE ASSESSEE FOR DROPPING THE PROCE EDINGS INITIATED U/S 153C OF THE I.T. ACT BY WITHDRAWING THE ABOVE NOTICE. 5.1 IT WAS SUBMITTED THAT THE NOTICE ISSUED U/S 148 ON 20.03.2014 FOR THE ASSESSMENT YEAR 2007-08 WAS VOID AB-INITIO SINCE TH E ASSESSMENT WAS COMPLETED U/S 143(3) AND THERE WAS NO ALLEGATION BY THE ASSES SING OFFICER THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT. VARIOU S DECISIONS WERE ALSO CITED. 6 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 6. BASED ON THE ARGUMENT ADVANCED BY THE ASSESSEE, LD. CIT(A) HELD THAT THE REOPENING OF THE COMPLETED ASSESSMENT U/S 148 OF TH E I.T. ACT AS WELL AS RE- ASSESSMENT U/S 147 OF THE I.T. ACT IS NOT AS PER LA W AND, THEREFORE, ACTION OF THE ASSESSING OFFICER IS VOID AB-INITIO. THE RELEVANT OBSERVATION OF THE LD. CIT(A) FROM PARA 5.4 ONWARDS READ AS UNDER :- 5.4 I HAVE CAREFULLY CONSIDERED ASSESSMENT ORDER, WRITTEN SUBMISSIONS, STATEMENTS RECORDED BY THE INVESTIGATION WING, CASE LAWS RELIE D UPON AND ORAL ARGUMENTS OF LD.AR. THE OBJECTIONS/ARGUMENTS OF THE APPELLANT AR E DISCUSSED AS UNDER:- (I) IN THIS CASE THE ORIGINAL RETURN OF INCOME WAS FILED ON 17.10.2007, DECLARING TOTAL INCOME AT RS.12,347/-. THE ASSESSMENT U/S 143 (3) OF THE ACT WAS COMPLETED VIDE ORDER DATED 22.4.2009, AT TOTAL INCOME OF RS. 20,97 8/-. (II) SUBSEQUENTLY, SEARCH AND SEIZURE ACTION U/S 13 2 OF THE ACT, TOOK PLACE ON 14.11.2011 IN SHRI B.C. JINDAL GROUP OF CASES AND A LSO SURVEY U/S 133A OF THE ACT, IN THE CASE OF THE APPELLANT. NOTICE U/S 153C OF THE A CT, WAS ISSUED ON 18.12.2013 AND IN RESPONSE TO THIS NOTICE, RETURN OF INCOME WAS FILED ON 03.01.2014, DECLARING TOTAL INCOME OF RS.12,347/-, BY WAY OF FILING A LETTER DA TED 03.01.2014 TO CONSIDER THE ORIGINAL RETURN OF INCOME FILED IN RESPONSE TO THIS NOTICE. HOWEVER, THE A.O. VIDE LETTER DATED 14.3.2014, COMMUNICATED TO THE ASSESSEE FOR D ROPPING THE PROCEEDINGS INITIATED U/S 153C OF THE ACT, BY WITHDRAWING THE ABOVE NOTIC E. (III) HOWEVER, THE A.O. RECORDED THE REASONS FOR R EOPENING THE ASSESSMENT U/S 147 OF THE ACT ON 19.3.2014 AND ISSUED THE NOTICE U/S 1 48 OF THE ACT ON 20.3.2014, AFTER OBTAINING APPROVAL FROM COMMISSIONER OF INCOME TAX. IN RESPONSE TO THIS NOTICE, ASSESSEE VIDE LETTER DATED 21.3.2014, SUBMITTED TO THE A.O. TO CONSIDERED THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT, AS FILED IN RES PONSE TO THIS NOTICE, I.E. DECLARING TOTAL INCOME AT RS.12,347/-. (IV) THE ASSESSEE VIDE LETTER DATED 21.3.2014, REQ UESTED THE A.O. TO PROVIDE THE REASONS RECORDED BEFORE ISSUING NOTICE U/S 148 OF T HE ACT AND IN RESPONSE TO THIS REQUEST, THE A.O. VIDE LETTER DATED 22.4.2014, COMM UNICATED THE REASONS RECORDED. SUBSEQUENTLY, ASSESSEE VIDE LETTER DATED 29.5.2014, FILED VARIOUS OBJECTIONS BEFORE THE A.O. AND THE A.O. DISPOSED OFF THESE OBJECTIONS BY A SPEAKING ORDER DATED 18.3.2015 AND REJECTED ALL THE OBJECTIONS. (V) REASSESSMENT U/S 147/143(3) OF THE ACT WAS COM PLETED VIDE ORDER DATED 27.3.2015, AT TOTAL INCOME OF RS. 23,57,12,347/-, A FTER MAKING THE FOLLOWING ADDITION ON ACCOUNT OF: (A) SHARE APPLICATION MONEY/SHARE PREMIUM U/S 68 O F THE ACT : RS.23,57,00,000/- (VI) IN THE APPELLATE PROCEEDINGS, THE APPELLANT H AS SUBMITTED THAT AT THE TIME OF ORIGINAL ASSESSMENT U/S 143(3) THE ACT, THE A.O. HA D OBTAINED NECESSARY DOCUMENTS AND EVIDENCES IN SUPPORT OF FRESH SHARE CAPITAL SUB SCRIBED DURING THE PERIOD RELATING TO A.Y. 2007-08, BY RAISING SPECIFIC QUERIES. SUBSE QUENTLY, ON TEST CHECK BASIS, A.O. 7 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 ISSUED NOTICES U/S 133(6) OF THE ACT, TO SOME OF TH E SHARE APPLICANTS AND REPLIES WERE RECEIVED FROM ALL OF THEM. (VII) IN THE APPELLATE PROCEEDINGS, THE APPELLANT HAS ALSO SUBMITTED THAT A.O. FIRST ISSUED NOTICE U/S 153C OF THE ACT, ON 18.12.2013 AN D CONTINUED THE ASSESSMENT PROCEEDINGS TILL THE DATE OF WITHDRAWAL OF THIS NOT ICE VIDE LETTER DATED 14.3.2014. ACCORDINGLY, AR HAS SUBMITTED THAT THIS ACTION OF T HE A.O. SHOWS THAT THERE WAS NO MATERIAL WAS FOUND AT THE TIME OF SEARCH ACTION U/S 132 OF THE ACT, IN THE CASE OF ANY OTHER PERSON. (VIII) IN THE APPELLATE PROCEEDINGS, THE APPELLANT HAS ALSO SUBMITTED THAT SUBSEQUENTLY, A.O. INITIATED THE PROCEEDINGS U/S 14 7 OF THE ACT, BY ISSUING NOTICE U/S 148 OF THE ACT ON 20.3.2014, ON THE CHANGE OF OPINI ON FOR THE REASONS RECORDED (WHICH HAVE BEEN REPRODUCED IN THE WRITTEN SUBMISSION BY T HE APPELLANT, SUPRA) ON THE FOLLOWING BASIS: STATEMENT OF SHRI KAMAL KUMAR SHARMA, WAS RECORDED ON 14.11.2011 DURING THE SURVEY ACTION U/S 133A OF THE ACT, AT TH E BUSINESS PREMISES OF THE APPELLANT, WHO IS A SERVICE PROVIDER, STATEMENT OF DIRECTOR OF THE APPELLANT COMPANY, SHR I NAVAL BIHARI BHOOT, RECORDED U/S 131 OF THE ACT, ON 14.11.2011, SINCE HE DOES NOT KNOW ANYTHING ABOUT THE APPELLANT COMPANY AND SIMPL Y SIGNS THE DOCUMENTS, STATEMENT OF SHRI BABU LAL BANKA, WAS RECORDED U/S 132(4) OF THE ACT, AT THE TIME OF SEARCH ACTION AT HIS RESIDENCE ON 14 /15.11.2011, WHO IS AN ENTRY OPERATOR, THE INFORMATION GATHERED DURING SEARCH AND AFTERWAR DS IN THE CASE OF S.S. JINDAL GROUP, REGARDING BOGUS SHARE CAPITAL TA KEN AT PREMIUM FROM 20 PAPER COMPANIES AND INVESTED IN THE 46 COMP ANIES, WHICH DO NOT HAVE SUBSTANTIVE BUSINESS ACTIVITIES. ON THE BASIS OF ABOVE FACTS, THE A.O. WAS HAVING RE ASON TO BELIEVE THAT THE SOURCE OF FUNDS IN SHARE CAPITAL/ SHARE PREMIUM, IS NON GENUINE AND THEREFORE, ISSUED THE NOTICE U/S 148 OF THE ACT. (IX) IN THE APPELLATE PROCEEDINGS, THE APPELLANT H AS ALSO SUBMITTED THAT THE STATEMENT OF SHRI KAMAL KUMAR SHARMA, WAS RECORDED DURING THE SURVEY ACTION U/S 133A OF THE ACT ON 14.11.2011, TAKEN ON OATH, WHICH IS INVALID, AS THERE IS NO PROVISION U/S 133A OF THE ACT TO RECORD THE STATEME NT ON OATH. THEREFORE, IT IS SUBMITTED BY THE AR THAT THIS ALLEGED STATEMENT ON OATH CANNOT BE CONSIDERED AS EVIDENCE AGAINST THE APPELLANT FOR ACTION U/S 148 O F THE ACT. IN THE CASE OF SHRI NAVAL BIHARI BHOOT, STATEMENT RECORDED U/S 131 OF THE ACT , ON 14.11.2011, NOTHING ADVERSE WAS STATED, EXCEPT IGNORANCE OF ACTIVITIES OF THE A PPELLANT COMPANY. (X) IN THE CASE OF SHRI BABU LAL BANKA, STATEMENT WAS RECORDED U/S 132(4) OF THE ACT, AT THE TIME OF SEARCH ON 14/15.11.2011, WHO HA D STATED THAT SHARES OF THE APPELLANT COMPANY AND M/S CANTON TRADERS PVT. LTD., WERE SOLD AROUND 3 YEARS BACK TO JINDAL GROUP OF COMPANIES. THEREFORE, IT IS SUB MITTED BY THE AR THAT PERIOD RELATING TO YEAR UNDER CONSIDERATION IS F.Y. 2006-0 7, WHEREAS THE TRANSACTIONS REFERRED IN THE STATEMENT PERTAIN TO F.Y. 2008-09 A ND THEREFORE, THIS STATEMENT IS OF NO RELEVANT TO THE PERIOD UNDER CONSIDERATION. FOR THE ABOVE ARGUMENTS, FOR REOPENING THE ASSESSME NT AFTER EXPIRY OF 4 YEARS U/S 147 OF THE ACT READ WITH PROVISO TO SECTION 151 (1) OF THE ACT, THE CASE OF THE 8 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 APPELLANT HAD ALREADY ASSESSED U/S 143(3) OF THE AC T AND THERE IS NO FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE FULLY & TRULY ALL THE MATERIAL FACTS TO COMPLETE THE ASSESSMENT. THEREFORE, REOPENING OF ASSESSMENT U/S 148 OF THE ACT, ONLY ON THE BASIS OF CHANGE OF OPINION OR REVIEWING HIS OWN ASSESSMEN T, IS BAD IN LAW AND REASSESSMENT U/S 147 OF THE ACT, IS LIABLE TO BE QUASHED. THE AR HAS SUBMITTED THAT THE FOLLOWING DECISIONS OF HON'BLE SUPREME COURT AND VARIOUS HIGH COURTS, SUPPORTS THE ABOVE ARGUMENTS, WHICH ARE WORTH REPORTING: M/S HARYANA ACRYLIC MANUFACTURING CO. V COMMISSIO NER OF INCOME- TAX [2008] 175 TAXMAN 262 (HC - DELHI) M/S CALCUTTA DISCOUNT CO. LTD. V. ITO [1961] 41 I TR 191 (SUPREME COURT) ASSISTANT COMMISSIONER OF INCOME-TAX (OSD) V. M/S PARIXIT INDUSTRIES (P.) LTD. [2012] 25 TAXMANN.COM 301 (SUPREME COURT) COMMISSIONER OF INCOME TAX V. M/S MULTIPLEX TRADI NG & INDUSTRIAL CO LIMITED [2015] 63 TAXMANN.COM 170 (HC - DELHI) COMMISSIONER OF INCOME-TAX V M/S VINIYAS FINANCE & INVESTMENT PRIVATE LIMITED [2013] 33 TAXMANN.COM 86 (HC - DELH I) COMMISSIONER OF INCOME TAX V M/S KELVINATOR OF IN DIA [2010] (187 TAXMAN 312) (SUPREME COURT). (XI) IT IS FURTHER SUBMITTED BY THE AR THAT IN THE CASE OF THE APPELLANT, THE ASSESSMENT U/S 143(3) OF THE ACT, HAS ALREADY BEEN COMPLETED VIDE ORDER DATED 22.4.2009 AND THE APPELLANT HAS DISCLOSED FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESSMENT FOR THE A.Y. 2007-08. IT IS FURTHER SUBMITTED BY THE AR THAT THE A.O. HAS SPECIFICALLY MENTIONED IN THE ASSESSMENT ORDER U/S 143(3) OF THE ACT, THAT AR FILED NECESSARY DOCUMENTS AND EVID ENCES IN SUPPORT OF FRESH SHARE CAPITAL RECEIVED DURING THE YEAR AND SUBMISSION OF THE AR HAS BEEN CROSS CHECKED WITH REFERENCE TO THE BOOKS OF ACCOUNTS PRODUCED DU RING THE COURSE OF HEARING. THE A.O. FURTHER MENTIONED THAT NOTICES U/S 133(6) OF T HE ACT, WERE CROSS CHECKED WITH SUBMISSIONS OF THE AR AND SAME WERE FOUND IN ORDER. THEREFORE, IT IS SUBMITTED BY THE AR THAT THE A.O. HAD VERIFIED ALL THE DETAILS / DOC UMENTS / EVIDENCES FURNISHED BY THE APPELLANT WITH THE DETAILS DOCUMENTS FURNISHED BY T HE SHARE APPLICANTS IN RESPONSE TO NOTICES ISSUED U/S 133(6) OF THE ACT AND THEN PASSE D THE ASSESSMENT ORDER, AFTER SATISFYING HIMSELF THAT SHARE. CAPITAL RAISED DURIN G THE YEAR, IS FROM GENUINE SOURCES AND ACCEPTED THE SHARE CAPITAL/SHARE PREMIUM, AS EX PLAINED, AFTER DUE APPLICATION OF MIND. THE FACTS OF THE APPELLANT'S CASE ARE IDENTIC AL TO THE FACTS IN THE CASE OF M/S HARYANA ACRYLIC MANUFACTURING CO. V CIT [2008] 175 TAXMAN 262, AND RATIO OF THIS JUDGMENT IS SQUARELY APPLICABLE IN THE CASE OF THE APPELLANT, IN WHICH ITS HELD THAT IF THE ASSESSEE HAD DISCLOSED FULLY AND TRULY ALL MATE RIAL FACTS NECESSARY FOR ITS ASSESSMENT, THEN NO ACTION UNDER SECTION 147 OF THE ACT, COULD HAVE BEEN TAKEN AFTER EXPIRY OF 4 YEARS PERIOD. RELEVANT PORTION OF THIS JUDGMENT IS REPRODUCED AS UNDER: '...... WE HAVE ALREADY NOTED ABOVE THAT IN THE ASS ESSMENT ORDER ITSELF THE ASSESSING OFFICER HAS RECORDED THAT THE DETAILS AS REQUIRED W ERE FILED AND VERIFIED. THIS IN ITSELF INDICATES THAT THE ASSESSING OFFICER HAD APPLIED HI S MIND TO THE ISSUE OF THE SHARE APPLICATION MONEY AND HAD ACCEPTED THE ASSESSEE'S C LAIM AFTER DUE VERIFICATION. FURTHERMORE, IN THE IMPUGNED ORDER DATED 2-3-2005 I TSELF THE ASSESSING OFFICER HAS INDICATED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE PETITIONER HAD FILED 9 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 DETAILS IN RESPECT OF SHARE APPLICATION MONEY OF RS . 5 LAKHS IN THE NAME HALLMARKS HEALTHCARE LIMITED. HOWEVER, THE ASSESSING OFFICER HAS NOW SOUGHT TO W RIGGLE OUT OF HIS REMARKS IN THE ASSESSMENT ORDER BY STATING THAT ONLY PHOTOCOPIES FOR THE APPLICATION FOR EQUITY SHARES WERE FILED AND THAT T HE COPY OF THE BANK ACCOUNT WITH THE INDIAN BANK WHICH WAS AVAILABLE DID NOT INDICATE TH AT VERIFICATION HAD BEEN DONE INCORRECTLY AND THAT THE FACTS AS PRESENTED BY THE PETITIONER HAD BEEN ACCEPTED IN THE NORMAL COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESS ING OFFICER CANNOT BE PERMITTED TO RETRACT FROM THE POSITION THAT HE DID ASK FOR SP ECIFIC INFORMATION AND THAT THE INFORMATION WAS SUPPLIED BY THE PETITIONER. AND, MO RE IMPORTANTLY, THAT THE ASSESSING OFFICER HAD EXAMINED AND VERIFIED THE INFORMATION B EFORE FINALIZING THE ASSESSMENT UNDER SECTION 143(3) OF THE SAID ACT. IN THIS BACKG ROUND ALSO, WE FEEL THAT THE PETITIONER HAD NOT FAILED TO DISCLOSE FULLY AND TRU LY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT IN RESPECT OF THE ASSESSMENT YEAR 1998-9 9. ' (XII) IT IS FURTHER SUBMITTED BY THE AR THAT IT WIL L NOT BE OUT OF PLACE TO MENTION HERE THAT EVEN DURING REASSESSMENT PROCEEDINGS U/S 153C OF THE ACT, TILL DROPPING ON 14.3.2014, IN ORDER TO VERIFY THE GENUINENESS OF TH E FRESH SHARE CAPITAL, THE INFORMATION WAS DIRECTLY COLLECTED BY THE PRESENT A .O. BY ISSUING NOTICES U/S 133(6) OF THE ACT, FROM ALL THE SHARE APPLICANT. IT IS FURTHE R SUBMITTED THAT ALL THESE SHARE APPLICANTS HAVE CONFIRMED THE TRANSACTIONS, WHICH W ERE ALSO VERIFIED BY THE ERSTWHILE A.O. IN THE ASSESSMENT PROCEEDINGS. THE COPIES OF I NFORMATION COLLECTED BY THE A.O. FROM ALL THE SHARE APPLICANTS, HAVE BEEN FILED BY T HE APPELLANT, IN THE PAPER BOOK VOLUME - III (PAGES FROM 1 TO 334), AFTER OBTAINING THE SAME FROM THE A.O. IN VIEW OF THE ABOVE FACTS, IT IS SUBMITTED BY THE AR THAT THE A.O. DROPPED THE PROCEEDINGS U/S 153C OF THE ACT, AFTER NOT FINDING ANY ADVERSE MATERIAL COLLECTED DURING SEARCH AND SURVEY ACTION AND ALSO SUBSEQUENT LY. (XIII) IT IS FURTHER SUBMITTED BY THE AR THAT THE ACTION INITIATED BY THE A.O. U/S 148 OF THE ACT, BY FORMING REASON TO BELIEVE IS NOT AS PER LAW AND AT THE BEST, CAN BE CONSIDERED AS REASON TO SUSPECT, IN ABSENCE OF ANY SPECIFIC INFORMATION/ MATERIAL. FOR THIS ARGUMENT, APPELLANT HAS RELIED UPON THE FOLLOW ING DECISIONS OF HON'BLE SUPREME COURT, WHICH SUPPORT THE CONTENTION OF THE APPELLAN T:- M/S GANGA SARAN & SONS PRIVATE LIMITED V INCOME T AX OFFICER [1981] 130 ITR 1 (SUPREME COURT) INCOME TAX OFFICER V LAKHMANI MEWAL DAS [1976] 10 3 ITR 437 (SUPREME COURT) COMMISSIONER OF INCOME TAX V M/S KELVINATOR OF IN DIA [2010] (187 TAXMAN 312) (SUPREME COURT) IN VIEW OF THE ABOVE, THE AR HAS SUBMITTED THAT THE SUBJECT MATTER OF ALLEGED ACTION U/S 148 OF THE ACT, I.E. FRESH SHARE CAPITAL , WAS ALREADY INQUIRED BY THE A.O. IN THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT AN D THE SAME WERE CONSIDERED AS GENUINE/EXPLAINED. HOWEVER, THE SUBSEQUENT ACTION I NITIATED BY THE A.O. U/S 148 OF THE ACT, FORMING REASON TO BELIEVE ON THE BASIS OF STAT EMENTS AND IN ABSENCE OF ANY COGENT MATERIAL, IS NOT AS PER LAW AND AT THE BEST, CAN BE CONSIDERED AS REASON TO SUSPECT, IN ABSENCE OF SPECIFIC INFORMATION/ MATERIAL. FROM THE ABOVE, FOLLOWING FACTS EMERGED: THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT, WAS COMPLETED VIDE ORDER DATED 22.4.2009, AT TOTAL INCOME OF RS. 20,978/-, 10 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 IN THE ORIGINAL ASSESSMENT COMPLETED U/S 143(3) OF THE ACT, THE A.O. WAS SATISFIED FOR THE FRESH SHARE CAPITAL SUBSCRIBED, O NLY AFTER GETTING CONFIRMATIONS, OTHER EVIDENCES AND ALSO COLLECTING INFORMATION DIRECTLY U/S 133(6) OF THE ACT, FROM SOME OF THE SHARE APPLICANT S, THE A.O. RECORDED THE REASONS U/S 148 OF THE ACT, O N 19.3.2014 AND ISSUED THE NOTICE U/S 148 OF THE ACT, ON 20.3.2014, ON THE BAS IS OF STATEMENTS/AFFIDAVIT RECORDED DURING SEARCH AND SURVEY ACTION, AND INFORMATION U/S 133(6) OF THE ACT, WAS ALSO COLLECT ED BY THE A.O. DURING PENDENCY OF PROCEEDINGS U/S 153C OF THE ACT, FROM A LL THE SHARE APPLICANTS. FROM THE ABOVE, IT IS CLEAR THAT THE PERIOD FOR ACT ION U/S 148 OF THE ACT, PERTAINS BEYOND 4 YEARS FOR A.Y. 2007-08, WHICH IS UNDER CON SIDERATION AND THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY, ALL TH E MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THEREFORE, THE A.O. HAS WRONGLY RESORTE D TO RE-OPENING U/S 148 OF THE ACT, WHEREAS ASSESSMENT U/S 143(3) OF THE ACT, HAD ALREA DY COMPLETED, WHERE FRESH SHARE APPLICATION MONEY/SHARE PREMIUM WAS FOUND AS GENUIN E. IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINIO N THAT THE A.O. WAS NOT HAVING ANY COGENT AND DEFINITE MATERIAL ON RECORD T O FORM THE REASON TO BELIEVE ON THE INFORMATION IN HIS POSSESSION, FOR RE-OPENING OF TH E COMPLETED ASSESSMENT AND FURTHER, THERE WAS NO FAILURE ON THE PART OF THE APPELLANT T O DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESSME NT. THEREFORE, THE ACTION OF THE A.O. FOR INITIATING REASSESSMENT PROCEEDINGS U/S 14 8 OF THE ACT, IS NOT CORRECT AND THIS VIEW IS ALSO SUPPORTED BY THE DECISION OF JURISDICT IONAL HIGH COURT OF DELHI IN THE CASE OF M/S HARYANA ACRYLIC MANUFACTURING CO. VS. CIT [2 008] 175 TAXMAN 262. IN THESE FACTS AND CIRCUMSTANCES, THE RE-OPENING OF THE COMP LETED ASSESSMENT U/S 148 OF THE ACT, AS WELL AS REASSESSMENT U/S 147 OF THE ACT, IS NOT AS PER LAW AND THEREFORE, ACTION OF THE A.O. IS VOID AB-INITIO. ACCORDINGLY, GROUND NO. 2,3 AND 4, ARE HEREBY ALLOW ED. 7. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL AND THE ASSESSEE HAS FILED THE CROSS OBJECTION AGAI NST THE APPEAL FILED BY THE REVENUE BY RAISING THE FOLLOWING GROUNDS :- ITA NO.5962/DEL/2016 (REVENUE) : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT REASSESSMENT U/S 1 47/143(3) OF THE 1.T. ACT, IS VOID AB-INITIO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT NOTICE U/ S 148 OF THE ACT WAS ISSUED AFTER RECORDING REASONS U/S 147 OF THE ACT AND FOLLOWING PROPER PROCEDURE OF LAW AND THE 11 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 OBJECTIONS RAISED BY THE ASSESSEE COMPANY WERE DULY DISPOSED OFF DURING ASSESSMENT PROCEEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ASSES SEE COMPANY IS A PAPER COMPANY WITHOUT HAVING ANY TANGIBLE ASSETS WITH INVESTMENTS IN PAPER COMPANIES AND ALSO FAILED TO PROVE THE CREDITS IN THE BOOKS OF ACCOUNT IN THE SHAPE OF SHARE CAPITAL. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE DIREC TORS OF THE COMPANY WERE NOT TRACEABLE AND DURING THE ENQUIRIES OF BANK ACCOUNT OF ASSESSEE/ INVESTOR COMPANIES, CASH DEPOSITS WERE FOUND IN BANK ACCOUNTS. 5. THAT THE ORDER OF THE CIT(A) IS PERVERSE, ERRONE OUS AND IS NOT TENABLE ON FACTS AND IN LAW. 6. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, A LTER OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF T HE APPEAL. C.O. NO.80/DEL/2017 (ASSESSEE) : 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, TH E GROUNDS OF APPEAL PREFERRED BY THE DEPARTMENT DOES NOT ARISE OUT OF THE ORDER O F THE CIT(A). 2. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE ASSESSING OFFICER DOES NOT OBTAIN PROPER SANCTION A S REQUIRED UNDER SECTION 151 OF THE ACT. 8. THE LD. DR STRONGLY CHALLENGED THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT ALL THE PRECONDITIONS FOR INVOKING THE PROVISI ONS OF SECTION 147 ARE FULFILLED IN THE INSTANT CASE. RELYING ON VARIOUS DECISIONS, SHE SUBMITTED THAT LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THE RE-ASSESSMENT PROC EEDINGS AS VOID AB-INITIO. SO FAR AS MERIT OF THE CASE IS CONCERNED, SHE SUBMITTE D THAT THAT THE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED THE IDENTITY AND CREDITWOR THINESS OF THE SHAREHOLDER AND THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSING OFFICER HAD GIVEN JUSTIFIABLE REASONS FOR MAKING THE ADDITION U/S 68 OF THE I.T. ACT. SHE ACCORDINGLY 12 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 SUBMITTED THAT THE ORDER OF THE LD. CIT(A) BE REVER SED AND THAT OF THE ASSESSING OFFICER BE SUSTAINED. 9. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT THE ORI GINAL ASSESSMENT WAS COMPLETED U/S 143(3) WHEREIN THE ASSESSING OFFICER AFTER SATISFYING HIMSELF REGARDING THE ISSUE OF 5,89,250 SHARES OF RS.400/- WITH PREMIUM OF RS.390/- TO 20 COMPANIES HAD ACCEPTED THE SHARE CAPITAL OF RS.2 3,57,00,000/- RAISED DURING THE YEAR. REFERRING TO THE NOTICE ISSUED U/S 148, HE SUBMITTED THAT THERE IS NO ALLEGATION OF ANY FAILURE ON THE PART OF THE ASSESS EE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSE SSMENT. THEREFORE, THE PROVISO TO SECTION 147 OF THE I.T. ACT IS APPLICABL E. RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. VS. CIT REPORTED IN 308 ITR 38 AND VARIOUS OTHE R DECISIONS, HE SUBMITTED THAT THE RE-ASSESSMENT PROCEEDINGS ARE VOID AB-INIT IO. 10. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE LD. CIT(A) BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISS ED. 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE LD. CIT (A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER IN THE OR DER PASSED U/S 143(3) ON 13 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 22.04.2009, COPY OF WHICH IS PLACED AT PAGE 50 AND 51 OF THE PAPER BOOK, HAS DISCUSSED THE ISSUE OF FRESH SHARE CAPITAL RECEIVED DURING THE YEAR. HE HAS CATEGORICALLY OBSERVED THE INCREASE IN PAID-UP SHAR E CAPITAL FROM RS.1,29,30,000/- TO RS.1,89,22,500/- WITH PREMIUM O F RS.22,98,07,500/- IN THE YEAR OF SCRUTINY. THE RELEVANT OBSERVATION OF THE ASSESSING OFFICER IN THE ORDER PASSED U/S 143(3) ON 22.04.2009 READS AS UNDER :- THE ASSESSEE FILED RETURN OF INCOME FOR THE A.Y. 2 007-08 THROUGH E-FILING ON 17.10.2007 SHOWING TOTAL INCOME RS.12,347/-. THE R ETURN WAS PROCESSED U/S 143(1) ON 19.08.2006. THE CASE WAS SELECTED FOR SCRUTINY AS PER CENTRAL ACTION PLAN. ACCORDINGLY NOTICE U/S 143(2) & 142(1) WERE ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICES, SHRI MANOHAR LAL NANGALIA, A.R. O F THE ASSESSEE COMPANY APPEARED TIME TO TIME AND EXPLAINED THE RETURN. THE A/R FIL ED NECESSARY DOCUMENTS AND EVIDENCES IN SUPPORT OF FRESH SHARE CAPITAL RECEIVE D DURING THE YEAR. SUBMISSION OF THE A/R HAS BEEN CROSS CHECKED WITH REFERENCE TO TH E BOOKS OF ACCOUNTS PRODUCED DURING THE COURSE OF HEARING. NOTICES U/S 133(6) W ERE ISSUED TO SOME OF SHARE APPLICANTS AND REPLIES RECEIVED FROM ALL OF THEM. THE SAME ARE ALSO CROSS CHECKED WITH THE SUBMISSION OF THE A.R., IT IS SEEN FROM TH E BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME THAT THE ASSESSEE-COMPANY INCREASE D PAID-UP SHARE CAPITAL FROM RS.1,29,30,000/- TO RS.1,88,22,500/- WITH PREMIUM O F RS.22,98,07,500/- IN THE YEAR OF SCRUTINY. .. 12. WE FIND THE ASSESSING OFFICER IN THE ORIGINAL A SSESSMENT ORDER HAS NOT MADE ANY ADDITION ON ACCOUNT OF RAISING OF SHARE CA PITAL DURING THE YEAR AMOUNTING TO RS.23,57,00,000/-. A PERUSAL OF THE N OTICE ISSUED U/S 148 WHICH HAS BEEN REPRODUCED IN THE PRECEDING PARAGRAPH DOES NOT SHOW ANY ALLEGATION BY THE ASSESSING OFFICER REGARDING ANY FAILURE ON T HE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR COMPLETION OF THE 14 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 ASSESSMENT. THEREFORE, THE 1 ST PROVISO TO SECTION 147 ARE CLEARLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. 13. WE FIND THE PROVISO TO SECTION 147 READS AS UND ER :- INCOME ESCAPING ASSESSMENT. 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INC OME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALL OWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTIO N AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT Y EAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT Y EAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON TH E PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT Y EAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDIN G FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAP ED ASSESSMENT FOR ANY ASSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUB JECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX A ND HAS ESCAPED ASSESSMENT. XXXXX 14. WE FIND THE HONBLE DELHI HIGH COURT IN THE CAS E OF WEL INTERTRADE P. LTD. AND ANOTHER VS. ITO REPORTED IN 308 ITR 22 HAS OBSERVED AS UNDER :- A PLAIN READING OF THE SAID PROVISO MAKES IT MORE THAN CLEAR THAT WHERE THE PROVISIONS OF SECTION 147 ARE BEING INVOKED AFTER T HE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IN ADDITION TO THE ASSESSING OFFICER HAVING REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT, IT MUST ALSO BE ESTABLISHED AS A FACT THAT SUCH ESCAPEMENT OF ASSES SMENT HAS BEEN OCCASIONED BY EITHER THE ASSESSEE FAILING TO MAKE A RETURN UNDER SECTION 139, ETC., OR BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS 15 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT Y EAR. IN THE PRESENT CASE, THE QUESTION OF MAKING OF A RETURN IS NOT IN ISSUE AND THE ONLY QUESTION IS WITH REGARD TO THE SECOND PORTION OF THE PROVISO, WHICH RELATES TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR ASSESSMENT. IN SO FAR AS THIS PRE-CONDITION IS CONCERNED, THERE IS NOT A WHISPER OF IT IN THE REASONS RECORDED BY THE ASSESSING OFFICER. IN FACT, AS INDICATED ABOVE, THE ASSESSING OFFICER COULD NOT HAVE MADE THIS A GROUND BECAUSE THE ASSESSING OFFICER HA D REQUIRED THE PETITIONER TO FURNISH DETAILS WITH REGARD TO LOSS OCCASIONED BY F OREIGN EXCHANGE FLUCTUATION WHICH THE PETITIONER DID BY VIRTUE OF THE REPLY DATED FEB RUARY 5, 2002. SINCE THE PETITIONER HAD FULLY AND TRULY DISCLOSED ALL THE MATERIAL FACT S NECESSARY FOR THE ASSESSMENT, THE PRE-CONDITION FOR INVOKING THE PROVISO TO SECTION 1 47 OF THE SAID ACT HAD NOT BEEN SATISFIED. IN THIS CONNECTION, IT MAY BE RELEVANT TO NOTE ONE DECISION, ALTHOUGH THERE ARE SEVERAL OTHERS. THE SAID DECISION IS THAT OF THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF DULI CHAND SINGHANIA V. ASST. CIT [2004] 269 ITR 19 2. IN THE SAID DECISION, THE HIGH COURT OF PUNJAB AND HARYANA WAS FACED WITH A SIMILA R SITUATION. THE COURT NOTED THAT THERE WAS NOT EVEN A WHISPER OF AN ALLEGATION THAT THE ESCAPEMENT IN INCOME HAD OCCURRED BY REASON OF FAILURE ON THE PART OF THE AS SESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. THE CO URT OBSERVED THAT ABSENCE OF THIS FINDING, WHICH IS THE SINE QUA NON FOR ASSUMING JUR ISDICTION UNDER SECTION 147 OF THE ACT IN A CASE FALLING UNDER THE PROVISO THERETO, MA KES THE ACTION TAKEN BY THE ASSESSING OFFICER WHOLLY WITHOUT JURISDICTION. WE A GREE WITH THESE OBSERVATIONS OF THE PUNJAB AND HARYANA HIGH COURT AND ARE OF THE VIEW T HAT IN THE PRESENT CASE ALSO, THE ASSESSING OFFICER HAS ACTED WHOLLY WITHOUT JURISDIC TION. THE INVOCATION OF SECTION 147, THE ISSUANCE OF THE NOTICE UNDER SECTION 148 A ND THE SUBSEQUENT ORDER ON THE OBJECTIONS ARE ALL WITHOUT JURISDICTION. THE IMPUGN ED NOTICE AS WELL AS THE PROCEEDINGS PURSUANT THERETO ARE QUASHED. 15. WE FIND THE HONBLE DELHI HIGH COURT IN THE CAS E OF HARYANA ACRYLIC MANUFACTURING CO. (SUPRA) HAS OBSERVED AS UNDER :- IN THE REASONS SUPPLIED TO THE PETITIONER, THERE I S NO WHISPER, WHAT TO SPEAK OF ANY ALLEGATION, THAT THE PETITIONER HAD FAILED TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THAT BECAUSE OF THIS F AILURE THERE HAS BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. MERELY HAVI NG A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE FOUR YEAR PERIOD INDICATED ABOVE. THE ESCAPEMENT OF INCOME FROM ASSESSMENT MUST ALSO BE OCCASIONED BY THE FAILURE ON THE PART OF TH E ASSESSEE TO DISCLOSE MATERIAL FACTS, FULLY AND TRULY. THIS IS A NECESSARY CONDITION FOR OVERCOMING THE BAR SET UP BY THE PROVISO TO SECTION 147. IF THIS CONDITION IS NOT SA TISFIED, THE BAR WOULD OPERATE AND NO ACTION UNDER SECTION 147 COULD BE TAKEN. WE HAVE AL READY MENTIONED ABOVE THAT THE REASONS SUPPLIED TO THE PETITIONER DOES NOT CONTAIN ANY SUCH ALLEGATION. CONSEQUENTLY, ONE OF THE CONDITIONS PRECEDENT FOR REMOVING THE BA R AGAINST TAKING ACTION AFTER THE 16 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 SAID FOUR YEAR PERIOD REMAINS UNFULFILLED. IN OUR R ECENT DECISION IN WEL INTER TRADE PRIVATE LTD. [2009] 308 ITR 22 (DELHI) WE HAD AGREE D WITH THE VIEW TAKEN BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF DULI C HAND SINGHANIA [2004] 269 ITR 192 THAT, IN THE ABSENCE OF AN ALLEGATION IN THE RE ASONS RECORDED THAT THE ESCAPEMENT OF INCOME HAD OCCURRED BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT, ANY ACTION TAKEN BY THE ASSESSING OFFICER UNDER SECTION 147 BEYOND THE FOUR YEAR PERIOD WOULD BE WHOLLY WITHOUT JURISDICTION. REITERATING OUR VIEW-POINT, W E HOLD THAT THE NOTICE DATED MARCH 29, 2004, UNDER SECTION 148 BASED ON THE RECORDED R EASONS AS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER DATED MARCH 2, 2005, ARE WITHOUT JURISDICTION AS NO ACTION UNDER SECTION 147 COULD B E TAKEN BEYOND THE FOUR YEAR PERIOD IN THE CIRCUMSTANCES NARRATED ABOVE. 16. SINCE THE ORIGINAL ASSESSMENT IN THE INSTANT CA SE WAS COMPLETED U/S 143(3) ON 22.04.2009 AND THE ASSESSING OFFICER HAD ACCEPTED THE RAISING OF SHARE CAPITAL TO THE TUNE OF RS.23,57,00,000/- ON T HE BASIS OF VARIOUS DETAILS FURNISHED BY THE ASSESSEE AND SINCE THE NOTICE HAS BEEN ISSUED AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND IN THE SAID NOTICE THERE IS NO ALLEGATION OF ANY FAILURE ON THE PART O F THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR COMPLETI ON OF THE ASSESSMENT, THEREFORE, IN VIEW OF THE DECISIONS CITED (SUPRA) W E DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN HOLDING THAT THE REO PENING OF THE COMPLETED ASSESSMENT U/S 148 AND RE-ASSESSMENT U/S 147/143(3) IS NOT AS PER LAW AND ARE VOID AB-INITIO. THE VARIOUS DECISIONS RELIED ON BY LD. DR AS PER WRITTEN SYNOPSIS ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE GROUNDS RAISED BY THE REVENUE ARE THEREFORE DISMISS ED. 17 ITA NO.5962/DEL/2016 C.O. NO.80/DEL/2017 C.O. NO.80/DEL/2017 (ASSESSEE) : 17. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS THE CROSS OBJECTION FILED BY THE ASSESSEE FOR WHICH LD. DR HAS NO OBJECTION. AC CORDINGLY, THE SAME IS DISMISSED. 18. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF MAY, 2018. SD/- SD/- (SUDHANSHU SRIVASTAVA) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24-05-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI