DCIT- CC-16, NEW DELHI V. BULLION INFRASTRUCTURE PVT. LTD., NEW DELHI

ITA 1877/DEL/2021

AI Insights

The case involves cross appeals by the Assistant Commissioner of Income Tax and M/s. Bullion Infrastructure Pvt. Ltd. concerning the reassessment of income for the Assessment Year 2011-12. The reassessment was initiated based on information that the assessee had received unsecured loans from entities that did not record these transactions in their books. The Tribunal found that the reassessment was invalid as the necessary procedural requirements under section 147 of the Income Tax Act, 1961, particularly the first proviso, were not met. The Tribunal relied on the precedent set by the Bombay High Court in Hindustan Lever Limited Vs. R B Wadkar, emphasizing that the reasons for reopening an assessment must clearly state the assessee's failure to disclose material facts.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34752 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Other Referred Cases: Hindustan Lever Limited Vs. R B Wadkar
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH UPNEJA
• Assessee Lawyers: BALDEV RAJ
• Keywords: Set aside; Reassessment proceedings; Search and seizure; Reason to believe
• Section: 147; 148; 143(3); 142(1); 143(2); 143(1)

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 1877/Del/2021 (Assessment Year: 2011-12) The Asstt Commissioner of Income Tax, Central Circle-16, New Delhi Vs. M/s. Bullion Infrastructure Pvt. Ltd, D-13, Defence Colony, New Delhi- 110024 (Appellant) (Respondent) PAN: AADCB0826F ITA No. 1886/Del/2021 (Assessment Year: 2011-12) M/s. Bullion Infrastructure Pvt. Ltd, D-13, Defence Colony, New Delhi- 110024 Vs. The Asstt Commissioner of Income Tax, Central Circle-16, New Delhi (Appellant) (Respondent) PAN: AADCB0826F Assessee by : Shri Baldev Raj, CA Revenue by: Shri Manish Upneja, CA Date of Hearing 21/01/2025 Date of pronouncement 29/01/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No. 1877/Del/2021 filed by the revenue and ITA No. 1886/Del/2021 for AY 2011-12, arise out of the order of the Commissioner of Income Tax (Appeals)-28, New Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No. 344/19-20/1636 dated 27.09.2021 against the order of assessment passed u/s 147/143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 28.12.2018 by the Assessing Officer, ACIT, Central Circle-16, New Delhi ITA No. 1877/Del/2021 ITA No. 1886/Del/2021 M/s. Bullion Infrastructure Pvt. Ltd Page | 2 (hereinafter referred to as ‘ld. AO’). As these are cross appeals, they are taken up together and disposed of by this common order for the sake of convenience. 2. Though the assessee has raised several grounds before us, we find that the preliminary issue to be decided first is challenging the validity of assumption of jurisdiction under section 147 of the Act in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the materials available on record. The original return of income was filed by the assessee company on 30-9-2011 declaring total income of Rs 10,46,677/-. A search and seizure operation was conducted under section 132(1) of the Act on 17-9-2010 on Sanya group of companies. The assessee is one of the group companies of the same group and accordingly the assessee was also covered in the search. The jurisdiction of the entire group was transferred to central circle vide order passed by the Learned Principal Commissioner of Income Tax under section 127 of the Act dated 9-1- 2013. Prior to the search in respect of the original return filed by the assessee, the return was processed under section 143(1) of the Act. The learned AO issued notice under section 142(1) of the Act on 17-1-2013 for Assessment Year 2011-12. Return was filed in response to this notice by the assessee on 23-1-2013 declaring total income of Rs 40,14,330/-. Thereafter, notice under section 143(2) of the Act stood issued to the assessee on 6-2-2013. The assessment was completed under section 143(3) of the Act on 25-3-2013 accepting the returned income of Rs 40,14,330/-. 4. The Learned AO received information from the ITO investigation wing, Unit V that assessee has received unsecured loan from two entities ITA No. 1877/Del/2021 ITA No. 1886/Del/2021 M/s. Bullion Infrastructure Pvt. Ltd Page | 3 who had not recorded the fact of giving unsecured loan to the assessee in their respective books. Based on this, the assessment of the assessee was sought to be reopened vide issuance of notice under section 148 of the Act. The reasons recorded by the learned AO for reopening the assessment are as under:-. \"Reasons for reopening of the assessment in the case of M/s. Bullion Infrastructure Pvt. Ltd for A.Y. 2011-12 u/s 147 of the Act. A search and seizure operation u/s 132(1) of the Income Tax Act, 1961 was conducted by the Director of Income Tax (Investigation)-i, of the Department on 17.09.2010 in the M/s Sanya Group of cases. The assessee company is one of the group case of Sanya Group and its case was also covered u/s 132(1) of the I.T. Act. The Sanya group is engaged in various fields ranging from Real Estate Development, Automobiles, Hospitality and FMCG goods. The jurisdiction over this case was assigned with this circle by order u/s 127 of the I.T Act, 1951. Accordingly, notice u/s 142(1) of the Income Tax, 1961 was issued on 17.01.2013 requiring the assessee to file his return of income on the basis of seized material, no return was filed suo motu in this case. In response to notice u/s 142(1), return was filed on 23.01.2013 declaring an income of Rs. 40,14,430/- Assessment was completed u/s 143(3) of the ! T Act, 1961 on 25.03.2013, accepting the returned income of the assessee. An information in this case has been received from ITO Unit-V, Delhi wherein it has been stated that audited balance sheet of M/s Bullion Infrastructure Pvt. Ltd. has received unsecured loans of Rs. 3,76,61,280/- and Rs. 3,43,40,000/- in the F.Y. 2010-11 from Sh. Roop Kishore Madan and M/s Rhea Distribution Co. respectively. However, in the balance sheet/statement of affairs of Sh. Roop Kishore Madan and M/s Rhea Distribution Company, no loans and advances has been noticed in the name of Bullion infrastructure Pvt. Ltd. Further, during the course of investigation the assessee has failed to explain the same. The records of the assessee as well as Sh. Roop Kishore Madan and Rhea Distributors Company were perused and it was found that there are no corresponding entries in the books of Sh. Roop Kishore Madan and Rhea Distributors Company, reflecting the said unsecured loans received by the assessee. Thus, Unsecured loans of Rs. 3,76,61,280/- and Rs. 3,43,40,000/- remains unexplained in the hands of M/s Bullion Infrastructure Pvt. Ltd. Hence, I have the reason to believe that taxable income to the extent of Rs. 7,20,01,280/- (3,76,61,280+3,43,40,000) has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. Further, this escapement was due to failure on part of the assessee to disclose true and correct facts relating to its income.\" ITA No. 1877/Del/2021 ITA No. 1886/Del/2021 M/s. Bullion Infrastructure Pvt. Ltd Page | 4 5. Admittedly, notice under section 148 of the Act stood issued in the instant case on 31-3-2018 for reopening the case, which is beyond the period of 4 years from the end of the relevant assessment year. Moreover the original assessment was completed under section 143(3) of the Act. Hence, the applicability of first proviso to section 147 of the Act would come into operation wherein the learned AO is duty bound to mention in the reasons recorded itself the failure committed by the assessee in not furnishing truly and fully all material facts that are relevant for the purpose of assessment. Admittedly on perusal of the aforesaid reasons, there is absolutely no whisper about the failure committed by the assessee in accordance with first proviso to section 147 of the Act. Hence non- mentioning of the fact in the reasons recorded regarding assessee's failure to disclose fully and truly all material facts that are relevant for the purpose of assessment would become fatal to the entire reassessment proceedings per se. This issue is no longer res integra in view of the decision of Hon’ble Bombay High Court in the case of Hindustan Lever Limited Vs. R B Wadkar reported in 268 ITR 332(Bom). The relevant operative portion of the said decision is hereby reproduced:- “20. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and ITA No. 1877/Del/2021 ITA No. 1886/Del/2021 M/s. Bullion Infrastructure Pvt. Ltd Page | 5 unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced. 21. Having recorded our finding that the impugned notice itself is beyond the period of four years from the end of the assessment year 1996-97 and does not comply with the requirements of proviso to section 147 of the Act, the Assessing Officer had no jurisdiction to reopen the assessment proceedings which were concluded on the basis of assessment under section 143(3) of the Act. On this short count alone the impugned notice is liable to be quashed and set aside.” 6. It is very clear that the Learned AO should record the reasons by duly mentioning the failure on the part of the assessee in not making full and true disclosure of all material facts that are relevant in the original assessment proceedings under section 143(3) of the Act in accordance with first proviso to section 147 of the Act. Since the same is not satisfied by the Learned AO in the reasons, respectively following the aforesaid decision, the reassessment proceedings are hereby declared as void ab initio. Hence the reassessment proceedings are hereby quashed. Since the entire reassessment is quashed, the other grounds raised by the assessee as well as by the revenue on merits need not be gone into as adjudication of the same would become academic in nature and they are left open. ITA No. 1877/Del/2021 ITA No. 1886/Del/2021 M/s. Bullion Infrastructure Pvt. Ltd Page | 6 7. In the result, the appeal of the assessee is allowed and appeal of the revenue is dismissed. Order pronounced in the open court on 29/01/2025. -Sd/- -Sd/- (VIMAL KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 29/01/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "