CAPRI GLOBAL ADVISORY SERVICES P. LTD, MUMBAI V. DCIT 1(1)(1), MUMBAI

ITA 170/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8621 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 06-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHI RAMA KARTIKEYANLD
• Keywords: Reopening of assessment; Unexplained cash credit; Question of law; Tangible material; Difference of opinion; Valuation report; Change of opinion; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 142(1); 260A; 147; 68; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.170/MUM/2017 ( / ASSESSMENT YEAR:2009-10) M/S. CAPRI GLOBAL ADVISORY SERVICES PVT. LTD. 1B, 1 ST FLOOR, COURT CHAMBERS 35, SIR V.T. ROAD, NEW MARINE LINES MUMBAI-400 020. / VS. DY. COMMISSIONE R OF INCOME TAX - 1(1)(1) MUMBAI-400 020. ./ ./PAN/GIR NO. AACCP-2478-C ( ! /APPELLANT ) : ( '#! / RESPONDENT ) & ./ I.T.A. NO.515/MUM/2017 ( / ASSESSMENT YEAR:2009-10) ASSTT. COMMISSIONER OF INCOME TA X - 1(1)(1) 579, AAYKAR BHAVAN MUMBAI-400 020. / VS. M/S. CAPRI GLOBAL ADVISORY SERVICES PVT LTD 1B, 1 ST FLOOR, COURT CHAMBERS 35, SIR, V.T. ROAD, NEW MARINE LINES MUMBAI-400 020. ./ ./PAN/GIR NO. AACCP-2478-C ( ! /APPELLANT ) : ( '#! / RESPONDENT ) A SSESSEE BY : JITENDRA JAIN/MAHESH RAJORA-LD.ARS R E VENUE BY : ABHI RAMA KARTIKEYAN - LD.DR / DATE OF HEARING : 18/03/2019 / DATE OF PRONOUNCEMENT : 10/04/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1.1 THESE CROSS APPEALS FOR ASSESSMENT YEAR [AY] 20 09-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEAL S)-2, MUMBAI, [CIT(A)], APPEAL NO. CIT(A)-2/IT-111/2015-16 DATED 25/10/2016. 2 1.2 THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDE R: - 1(A) THE COMMISSIONER OF INCOME TAX (APPEALS)-2, M UMBAI [CIT(A)] ERRED CONFIRMING THE REOPENING OF THE ASSESSMENT BY THE A O INVOKING THE PROVISIONS OF SECTION 147READ WITH SECTION 148 OF T HE INCOME TAX ACT, 1961. THE APPELLANT SUBMITS THAT THE NOTICE ISSUED U/S 14 8 AND REOPENING OF ASSESSMENT U/S 147 IS BAD IN LAW, ILLEGAL, ULTRA-VI RES AND CONTRARY TO THE PROVISIONS OF THE I.T.ACT AND SHALL BE QUASHED. (B) THE CIT(A) ERRED IN CONFIRMING THE ACTION OF AO IN REOPENING THE ASSESSMENT U/S 148 OF THE ACT RECORDING FACTUALLY INCORRECT RE ASONS FOR REOPENING THAT THE ISSUE OF SHARE PREMIUM WAS NOT SUBJECT MATTER OF VE RIFICATION BY THE A.O. AND THEREFORE NO OPINION HAS BEEN FORMED ON THE ISSUE I N ORIGINAL ASSESSMENT U/S 143(3). THE APPELLANT SUBMITS THAT THE ISSUE OF SHARE PREMI UM HAS BEEN VERIFIED BY THE AO DURING ASSESSMENT PROCEEDINGS U/S 143(3) HEN CE THE REASONS FOR REOPENING IS FACTUALLY INCORRECT WHICH RENDERS THE ASSESSMENT PROCEEDINGS AS BAD IN LAW, ULTRA VIRES AND SHALL BE QUASHED. (C) THE CIT(A) ERRED IN CONFIRMING THE REOPENING TH E ASSESSMENT U/S 148 MERELY ON THE BASIS OF CHANGE OF OPINION ON SAME SET OF FA CTS WHICH RENDERS THE ASSESSMENT PROCEEDINGS AS BAD IN LAW, ULTRA VIRES A ND SHALL BE QUASHED. (D) THE CIT(A) ERRED IN CONFIRMING THE REOPENING T HE ASSESSMENT MERELY ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING WIT HOUT HAVING ANY SATISFACTION OF AO WHICH CONSTITUTES A 'BORROWED SATISFACTION' REND ERING REASSESSMENT PROCEEDING AS BAD IN LAW AND ULTRA VIRES AND HENCE SAME SHALL BE QUASHED. 1.3 THE GROUNDS RAISED BY THE REVENUE READ AS UNDER : - I. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, WHILST IT IS TRUE THAT IT IS THE OBLIGATION OF THE AO TO CONDUCT PROPER SCRUTINY OF THE MATERIAL, GIVEN THE FACT THAT THE AO DID NOT EXAMIN E WHETHER THE TRANSACTIONS OF RECEIPT OF SHARE CAPITAL / SHARE PREMIUM ARE GEN UINE, THE OBLIGATION TO CONDUCT PROPER INQUIRY ON FACTS WOULD SHIFT TO LEAR NED CIT(A) IN VIEW OF THE HON'BLE DELHI HIGH COURT DECISION IN THE CASE OF CI T VS JANSAMPARK ADVERTISING AND MARKETING (P) LTD (ITA NO. 525/2014 )? II. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DIRECTING THE DELETION OF THE SUM BROUGHT TO TAX BY THE AO AS UNEXPLAINED INCOME UNDER SECTION 68 OF THE INCOME T AX ACT, 1961 IN RESPECT OF MONEYS CREDITED IN THE BOOKS AS SHARE CAPITAL, I NCLUDING SHARE PREMIUM, OF RS 5,20,00,000? III. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE PROVED I DENTITY, CREDIT-WORTHINESS AND GENUINENESS OF MONEYS CREDITED IN THE BOOKS AS SHARE CAPITAL, INCLUDING SHARE PREMIUM, OF RS.2,85,00,000, JUST BY SUBMITTIN G PAN, ACKNOWLEDGMENT OF INCOME-TAX RETURNS FILED, BANK STATEMENTS, THE M ODE OF PAYMENT ETC OF SHARE HOLDERS, AND THAT THE SHARE PREMIUM HAS BEEN RECEIVED THROUGH BANKING CHANNEL ?' IV. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITIONS OF RS. 5,20 ,00,000/-, IGNORING THE FACTS BROUGHT OUT BY THE AO THAT THE INVESTOR WAS MERELY A CONDUIT HAVING NO FIXED ASSETS AND NO CREDIT WORTHINESS AND HAD RECEIVED TH E SAID AMOUNT OF 3 RS.5,20,00,000/-ON 17/03/2009 WHICH WAS GIVEN TO TH E ASSESSEE COMPANY ON SAME DATE? V. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) WAS CORRECT IN DECIDING THE ISSUE IN FAVO UR OF ASSESSEE BY RELYING ON THE DECISION OF HON'BLE ITAT IN THE CASE OF M/S. GREEN INFRA VS. ITO (ITA NO 7716/MUM/2012),WITHOUT APPRECIATING THE LEGAL PO SITION THAT THE SAID ISSUE HAD NOT ATTAINED FINALITY SINCE DEPARTMENTS A PPEAL FILED U/S 260A AGAINST THE SAID DECISION WAS STILL PENDING BEFORE HON'BLE BOMBAY HIGH COURT? VI. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN ALLOWING THE APPEAL OF THE ASSESSE E BY RELYING ON THE DECISION OF APEX COURT IN THE CASE OF CIT VS LOVELY EXPORTS PVT LTD 216 CTR 195(SC) WITHOUT APPRECIATING THAT THE FACTS IN THE INSTANT CASE WERE DIFFERENT THAN THOSE IN THE CASE RELIED UPON, AS IN THE INSTANT CA SE, THE AO DID NOT SIT IDLE BUT MADE INVESTIGATIONS WITH THE SHARE HOLDER BEFOR E MAKING AN ADVERSE INFERENCE AND HENCE THE CASE LAW RELIED UPON IS NOT APPLICABLE IN THIS CASE?' AS EVIDENT FROM RESPECTIVE GROUNDS OF APPEAL, THE A SSESSEE IS CHALLENGING THE REASSESSMENT PROCEEDINGS ON LEGAL G ROUNDS WHEREAS THE REVENUE IS CHALLENGING THE RELIEF GRANTED BY LD . FIRST APPELLATE AUTHORITY, ON MERITS, AGAINST QUANTUM ADDITIONS. 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ENTITY STATED TO BE ENGAGED IN FINANCIAL ADVISORY SERVICES, TRADING AND INVESTMENT IN SHARES WAS SUBJECTED TO REASSESSMENT PROCEEDINGS FOR THE IMPUGNED AY U/S 143(3) READ WITH SECTION 147 ON 20/03/2015 BY LD. DEPUTY COMMISSIONER OF INCOME TAX-CIRCLE-1(1)(1), M UMBAI [AO] WHEREIN THE ASSESSEE WAS SADDLED WITH CERTAIN ADDIT ION OF RS.520 LACS ON ACCOUNT OF SHARE PREMIUM AND SHARE CAPITAL. 2.2 THE ORIGINAL ASSESSMENT FOR IMPUGNED AY WAS ALR EADY COMPLETED U/S 143(3) ON 30/12/2011 WHEREIN THE INCOME WAS DET ERMINED AT RS.88.43 CRORES AS AGAINST RETURNED INCOME OF RS.87 .69 CRORES E-FILED BY THE ASSESSEE ON 26/09/2009. THE SAME WAS RE-DETE RMINED AT RS.87.75 CRORES ON 05/09/2013 AFTER GIVING EFFECT T O THE APPELLATE ORDER OF FIRST APPELLATE AUTHORITY. 4 2.3 SUBSEQUENTLY, THE REASSESSMENT PROCEEDINGS WERE TRIGGERED AGAINST THE ASSESSEE BY ISSUANCE OF NOTICE U/S 148 DATED 27/03/2014 ON THE GROUND THAT THE ASSESSEE WAS IN RECEIPT OF S HARE PREMIUM DURING THE YEAR WHICH WAS NOT JUSTIFIED BY THE ASSESSEE AN D THEREFORE, THE SAME WAS BELIEVED TO BE THE ASSESSEES UNDISCLOSED INCOM E. IN RESPONSE, THE ASSESSEE OFFERED ORIGINAL RETURN FILED U/S 139(1) A ND ALSO REQUESTED FOR THE REASONS RECORDED FOR REOPENING THE ASSESSMENT, WHICH WERE DULY FURNISHED TO THE ASSESSEE. SUBSEQUENTLY, STATUTORY NOTICES U/S 143(2) & 142(1) WERE ISSUED DIRECTING THE ASSESSEE TO FILE T HE REQUISITE DETAILS. 2.4 DURING REASSESSMENT PROCEEDINGS, IT TRANSPIRED THAT THE ASSESSEE ISSUED 52000 EQUITY SHARES OF FACE VALUE OF RS.100/ - EACH AT A PREMIUM OF RS.900/- PER SHARE TO AN ENTITY NAMELY ORBIT LIFELINE PRIVATE LIMITED WHICH LED TO AN AGGREGATE INCREASE OF RS.520 LACS I N SHARE CAPITAL & SHARE PREMIUM. UPON GOING THROUGH THE FINANCIALS OF THE SAID ENTIT Y, LD. AO CAME TO A CONCLUSION THAT THE SAID ENTITY WAS ME RELY AN ACCOMMODATION ENTRY PROVIDER WITH NO GENUINE BUSINE SS. THE VALUATION REPORT FURNISHED BY THE ASSESSEE TO JUSTIFY THE SHA RE PREMIUM WAS ALSO DISREGARDED ALLEGING THE SAME TO BE BOGUS PIECE OF DOCUMENT TO COVER UP REAL NATURE OF THE TRANSACTION. RELIANCE WAS PLA CED ON THE DECISION OF HONBLE BOMBAY HIGH COURT RENDERED IN MAJOR METALS LTD. VS. UNION OF INDIA [19 TAXMANN.COM 176] TO UPHELD THE APPLICABILITY OF SECTION 68 TO SUCH TRANSACTIONS. IT WAS ALSO CONCLUDED THAT THE A SSESSEE FAILED TO JUSTIFY HIGH PREMIUM OF RS.900/- PER SHARE AND ALSO FAILED TO PROVE THE CREDITWORTHINESS OF THE INVESTOR COMPANY. FINALLY, NOT CONVINCED WITH ASSESSEES EXPLANATIONS & SUBMISSIONS, THE AFORESAI D AMOUNT OF RS.520 LACS WAS ADDED BACK TO THE INCOME OF THE ASSESSEE U /S 68 AS UNEXPLAINED CASH CREDIT. 5 3.1 AGGRIEVED, THE ASSESSEE CONTESTED THE REASSESS MENT PROCEEDINGS ON LEGAL GROUNDS AND QUANTUM ADDITIONS ON MERIT BEF ORE LD. FIRST APPELLATE AUTHORITY WITH PARTIAL SUCCESS VIDE IMPUG NED ORDER DATED 25/10/2016. ON LEGAL GROUNDS, IT WAS SUBMITTED THAT THE SUBJECT MATTER OF REASSESSMENT PROCEEDINGS WAS ALREADY BEEN EXAMINED BY LD. AO DURING SCRUTINY ASSESSMENT PROCEEDINGS U/S 143(3) W HEREIN THE ASSESSEE SUBSTANTIATED THE TRANSACTIONS WITH PROPER DOCUMENTARY EVIDENCES AND THEREFORE, THE REASSESSMENT PROCEEDIN GS WAS NOTHING BUT REVIEW BY LD. AO AND THEREFORE, THE SAME WERE BAD I N LAW. ANOTHER PLEA WAS THAT THE REASSESSMENT PROCEEDINGS WERE INITIATE D MERELY ON BORROWED SATISFACTION. HOWEVER, THESE SUBMISSIONS O N LEGAL GROUNDS COULD NOT FIND FAVOR WITH LD. FIRST APPELLATE AUTHO RITY, WHO UPHELD THE ACTION OF LD. AO IN REOPENING THE ASSESSMENT SINCE THE REASSESSMENT PROCEEDINGS WERE TRIGGERED UPON RECEIPT OF INFORMAT ION FROM THE INVESTIGATION WING. 3.2 HOWEVER, AFTER CONSIDERING ASSESSEES SUBMISSIO NS ON MERITS, LD. FIRST APPELLATE AUTHORITY CAME TO A CONCLUSION THAT THE ASSESSEE DISCHARGED THE ONUS OF PROVING IDENTITY, CREDITWORT HINESS & GENUINENESS OF THE TRANSACTIONS AND THEREFORE, THE IMPUGNED ADD ITIONS COULD NOT BE SUSTAINED IN THE EYES OF LAW. RELIANCE WAS PLACED, INTER-ALIA, ON THE JUDGMENT OF THIS TRIBUNAL RENDERED IN GREEN INFRA LTD. VS ITO [159 TTJ 728] & HONBLE APEX COURT RENDERED IN CIT VS. LOVELY EXPORTS P. LTD. [216 CTR 195] TO ARRIVE AT THE SAID CONCLUSION. RELIANCE WAS ALSO PLACED ON CBDT INSTRUCTION NO. 2/2015 DATED 29/01/2015 AND JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN VODAFONE INDIA SERVICES PVT. LTD. VS. UNION OF INDIA [368 ITR 1] TO CONCLUDE THAT THE RECEIPT OF SHARE 6 CAPITAL WAS CAPITAL IN NATURE AND THEREFORE, THE SA ME COULD NOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. 3.3 THE AFORESAID CONCLUSIONS DRAWN BY FIRST APPELL ATE AUTHORITY HAS GIVEN RISE TO CROSS-APPEALS BEFORE US. THE ASSESSEE , IN ITS APPEAL, IS CONTESTING THE VALIDITY OF REASSESSMENT PROCEEDINGS WHEREAS THE REVENUE IS CONTESTING THE DELETION OF ADDITIONS, ON MERITS. 4.1 THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE, TAKING US THROUGH THE DOCUMENTS PLACED IN THE PAPER-BOOK AND ON THE S TRENGTH OF CERTAIN JUDICIAL PRONOUNCEMENTS, AGITATED THE VALIDITY OF R EASSESSMENT PROCEEDINGS. THE PRIME ARGUMENTS REVOLVE AROUND THE FACT THAT THE STATED ISSUE OF INCREASE IN SHARE CAPITAL AND SHARE PREMIUM WAS ALREADY EXAMINED AND SUBSTANTIATED BY THE ASSESSEE DURING O RIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) AND SECONDLY, THERE WAS NO I NDEPENDENT APPLICATION OF MIND BY LD. AO TO INVOKE REASSESSMEN T PROCEEDINGS AGAINST THE ASSESSEE AND THE SAME WERE INITIATED ON BORROWED SATISFACTION ON INVESTIGATION WING SO AS TO MAKE FI SHING / ROVING INQUIRIES. IT HAS BEEN SUBMITTED THAT LD. AO WAS NOT EMPOWERED TO REVIEW THE ISSUES ALREADY EXAMINED DURING THE ORIGINAL ASSESSM ENT PROCEEDINGS AND THE REASSESSMENT PROCEEDINGS WERE INITIATED MER ELY ON CHANGE OF OPINION, WHICH WAS IMPERMISSIBLE UNDER LAW. ON MERI TS, OUR ATTENTION HAS BEEN DRAWN TO THE DOCUMENTARY EVIDENCES SUBMITTED B Y THE ASSESSEE DURING ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) T O PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE INVESTOR CO MPANY AND ALSO TO JUSTIFY THE SHARE PREMIUM COMMANDED BY THE ASSESSEE FROM THE INVESTOR COMPANY. RELIANCE HAS BEEN PLACED ON FOLLOWING JUDI CIAL PRONOUNCEMENT TO SUPPORT VARIOUS SUBMISSIONS: - I) HONBLE BOMBAY HIGH COURT IN NAVI TRADING LTD. V S UNION OF INDIA [375 ITR 308] 7 II) HONBLE BOMBAY HIGH COURT IN HINDUSTAN LEVER LT D. VS R.B.WADKAR [190 ITR 166] III) HONBLE BOMBAY HIGH COURT IN NYK LINE (INDIA) LTD. VS. DCIT [346 ITR 361] IV) HONBLE BOMBAY HIGH COURT IN PCIT VS CENTURY TE XTILES & INDUSTRIES LIMITED [167 DTR (BOM) 105] V) HONBLE DELHI HIGH COURT IN UNITECH HOLDINGS LTD . VS DCIT [240 TAXMAN 70] VI) HONBLE GUJARAT HIGH COURT IN CLIANTHA RESEARCH LTD . VS DCIT [35 TAXMANN.COM 61] 4.2 PER CONTRA, LD. DR SUBMITTED THAT RECEIPT OF IN FORMATION FROM INVESTIGATION WING WAS QUITE SUFFICIENT TO TRIGGER THE REASSESSMENT PROCEEDINGS AND THE SAME WERE INITIATED WITH DUE AP PLICATION OF MIND BY LD. AO AND THEREFORE, VALID PROCEEDINGS IN THE EYES OF LAW. IT HAS ALSO BEEN SUBMITTED THAT NO OPINION WAS FORMED BY LD. AO ON THE STATED ISSUE DURING ORIGINAL ASSESSMENT PROCEEDINGS AND TH EREFORE, THERE WAS NO QUESTION OF CHANGE OF OPINION. ON MERITS, THE RE LIEF GRANTED BY FIRST APPELLATE AUTHORITY HAS BEEN CONTESTED BY DRAWING O UR ATTENTION TO THE PERTINENT OBSERVATIONS MADE BY LD. AO IN THE ASSESS MENT ORDER WHICH LED TO THE CONCLUSION THAT THE ASSESSEE FAILED TO P ROVE THE CREDITWORTHINESS OF THE INVESTOR AND GENUINENESS OF THE TRANSACTIONS. RELIANCE HAS BEEN PLACED ON FOLLOWING JUDICIAL PRON OUNCEMENT TO BUTTRESS THE SUBMISSIONS: - I) HONBLE BOMBAY HIGH COURT IN DR. AMINS PATHOLOG Y LABORATORY VS JCIT [252 ITR 673] 5.1 WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED RELEVANT MATERIAL ON RECORD. SINCE THE ASSESSEES A PPEAL CONTEST THE VERY JURISDICTION ASSUMED BY LD. ASSESSING OFFICER TO REOPEN THE ASSESSMENT AND GOES TO THE ROOT OF THE MATTER, WE T AKE UP THE SAME FIRST. THE UNDISPUTED POSITION THAT EMERGES IS THAT AY UNDER APPEAL IS AY 2009-10 AND THE ORIGINAL ASSESSMENT WAS COMPLETED U /S 143(3). THE REASSESSMENT PROCEEDINGS HAVE BEEN INITIATED VIDE I SSUANCE OF NOTICE U/S 148 DATED 27/03/2014 WHICH SHOWS THAT THE REASS ESSMENT HAVE 8 BEEN TRIGGERED WITHIN A PERIOD OF FOUR YEARS FROM T HE END OF THE RELEVANT ASSESSMENT YEAR AND THEREFORE, THE RIGORS OF FIRST PROVISO TO SECTION 147 OF THE ACT VIZ. FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TR ULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASSES SMENT, WERE NOT APPLICABLE TO THE FACT OF THE PRESENT CASE. THE ONL Y REQUIREMENT TO BE FULFILLED IN SUCH A CASE WAS THAT LD. AO HAD REASONS TO BELIEVE THAT CERTAIN INCOME ESCAPED ASSESSMENT IN THE HANDS OF T HE ASSESSEE. AT THE SAME TIME, LD. AO IS NOT EMPOWERED TO REVIEW TH E ALREADY CONCLUDED ISSUES U/S 143(3) AND REVIEW IN THE GARB OF REASSESSMENT WAS NOT PERMISSIBLE UNDER THE LAW. FURTHER, MERE REASONS TO SUSPECT COULD NOT SUBSTITUTE REASONS TO BELIEVE . THE HONBLE APEX COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. [320 ITR 561] HAS SUCCINCTLY PUT THE LEGAL PROPOSITION IN THE FOLLOWING MANNER: - ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS T HE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERT AIN PRECONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTE NDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSE SSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPI NION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENC E, AFTER 1ST APRIL, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS E SCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. 5.2 PROCEEDING FURTHER IN THE ABOVE BACKDROP, AT TH E OUTSET, WE DEEM IT FIT TO REPRODUCE THE REASON RECORDED BY LD. AO TO R EOPEN THE ASSESSMENT WHICH HAVE BEEN PLACED ON PAGE NO. 204 OF THE PAPER-BOOK : - REASONS FOR RE-OPENING M/S. CAPRI GLOBAL ADVISORY SERVICES PVT. LTD. (EARLIER KNOWN AS MONEY MATTERS ADVISORY SERVICES L TD.) PAN NO. AACCP2478C A.Y.2009-10 9 THE ASSESSEE, M/S CAPRI GLOBAL ADVISORY SERVICES PR IVATE LTD. (EARLIER KNOWN AS M/S MONEY MATTERS ADVISORY SERVICES LTD) HAVING PAN AAA CI7387P, IS AN ASSESSEE OF THIS CIRCLE. THE ASSESSEE FOR THE A.Y.2009-10 HAS FILED A RETURN OF INCOME ON 26.09.2009 DECLARING INCOME AT RS.87,69,58,332/-. IN THIS CASE , ASSESSMENT U/S 143(3) OF THE I.T. ACT WAS COMPLETED ON 30.12.2011 ASSESSING TOTAL INCOME AT RS.88,43,36,030/- FROM THE RECORDS, IT IS SEEN THAT DURING THE F.Y.20 08-09 RELEVANT TO A.Y.2009-10 ASSESSEE HAS SHOWN RECEIPT OF SHARE APPLICATION MONEY AMOUNT ING TO RS. NIL. WHERE AS INFORMATION HAS BEEN RECEIVED FROM INVESTIGATION WING THAT SHAR E PREMIUM WAS RS.46,800,000/-. THE ISSUE OF SHARE PREMIUM WAS NOT A SUBJECT MATTER OF VERIFICATION BY THE A.O. AND THEREFORE NO OPINION HAS BEEN FORMED ON THE ISSUE IN ORIGINAL ASSESSMENT U/S 143(3). AT THE SAME TIME THE, THE ASSESSEE HAS ALSO NOT FILED COMPLETE DETAILS SHOWING THE NATURE OF THIS SHARE PREMIUM (JUSTIFICATION FOR THE EXCESS PREMIUM RECEIVED IN C OMPARISON TO THE INTRINSIC VALUE OF THE SHARE). IN VIEW OF THE ABOVE FACTS, I HAVE REASON TO BELIEV E THAT INCOME, IN THE GARB OF SHARE APPLICATION MONEY RECEIVED IN THIS CASE HAS ESCAPED ASSESSMENT IN TERMS OF PROVISIONS OF SECTION 147 OF THE I.T.ACT. NOTICE U/S 148 IS THEREFORE, ISSUED IN THIS CASE. THE PERUSAL OF ABOVE REVEAL THAT THE LD. AO WAS NOT CLINCHED WITH ANY NEW TANGIBLE MATERIAL SO AS TO INITIATE THE REASSES SMENT PROCEEDINGS AGAINST THE ASSESSEE SINCE UPON PERUSAL OF RECORDS, LD. AO CAME TO A CONCLUSION THAT SHARE APPLICATION MONEY WAS REFLECT ED AS NIL IN THE FINANCIAL STATEMENTS AS AGAINST THE INFORMATION REC EIVED FROM THE INVESTIGATION WING THAT THE ASSESSEE RECEIVED CERTA IN SHARE PREMIUM DURING THE IMPUGNED AY. HOWEVER, THE FACTUM OF MERE RECEIPT OF SHARE PREMIUM BY ASSESSEE DURING IMPUGNED AY COULD NOT LE AD TO A CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME IN T HE HANDS OF THE ASSESSEE UNLESS SOME BASIC MATERIAL ON RECORD SUBST ANTIATE THE SAME. NO PRIMA-FACIE CASE WAS MADE OUT BY LD. AO AS TO HOW THE RECEIPT O F SHARE PREMIUM CONSTITUTED UNEXPLAINED CASH CREDIT I N THE HANDS OF THE ASSESSEE WHICH HAS LED TO ESCAPEMENT OF INCOME FOR THE IMPUGNED AY. THE REVENUE HAS PLACED ON RECORD FORM FOR RECORDING THE REASONS FOR INITIATING PROCEEDINGS UNDER SECTION 148 AND FOR OB TAINING THE APPROVAL OF THE ADDL. COMMISSIONER / PR. COMMISSIONER OF INC OME TAX ALONG WITH ANNEXURE CONTAINING REASONS RECORDED FOR RE-OPENING OF ASSESSMENT TO 10 SUBMIT THAT DETAILED REASONS WERE RECORDED TO INITI ATE THE REASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE FOR THE IMPUGNED A Y. HOWEVER, IN OUR OPINION, NO COGNIZANCE OF THE SAME COULD HAVE BEEN TAKEN IN VIEW OF THE FACT THAT THE SAID APPROVAL HAS BEEN SIGNED BY THE SANCTIONING AUTHORITY ONLY ON 31/03/2016 WHEREAS NOTICE U/S 148 WAS ALREA DY ISSUED TO THE ASSESSEE ON 27/03/2014 AND RE-ASSESSMENT WAS FRAMED ON 20/03/2015. SECONDLY, NOTHING COULD BE PLACED ON RECORD TO ESTA BLISH THAT THE DETAILED REASONS RECORDED BY REVENUE AS GIVEN IN TH E ATTACHED ANNEXURE WERE EVER SUPPLIED TO THE ASSESSEE. THEREFORE, THE ONLY REASONS RECORDED FOR RE-OPENING, WHICH WERE TO BE CONSIDERE D SO AS TO ADJUDICATE THE JURISDICTIONAL ISSUE, WERE THE REASONS DATED 27 /03/2014 AS SUPPLIED TO THE ASSESSEE AND AS EXTRACTED BY US HERE-IN-ABOV E. IT IS TRITE LAW THAT REASONS ONCE RECORDED COULD NOT BE ALTERED, MODIFIE D, SUBSTITUTED OR AMENDED SUBSEQUENTLY SO AS TO JUSTIFY THE REASSESSM ENT PROCEEDINGS SINCE THE PRIMARY REQUIREMENT THAT LD. AO HAD REASONS TO BELIEVE WAS TO BE SEEN ONLY WITH REFERENCE TO THE REASONS RECORDED AT THE TIME OF INITIATING THE REASSESSMENT PROCEEDINGS AND NOTHING ELSE. UPON CAREFUL PERUSAL OF REASONS, IT HAS ALREADY BEEN OBSERVED TH AT NO NEW TANGIBLE MATERIAL CAME INTO THE POSSESSION OF LD. AO WHICH S UGGESTED ESCAPEMENT OF INCOME IN THE HANDS OF THE ASSESSEE A ND SECONDLY, NO REASONABLE BELIEF WAS FORMED BY LD. AO TO ARRIVE AT A CONCLUSION THAT CERTAIN INCOME ESCAPED ASSESSMENT IN THE HANDS OF T HE ASSESSEE. 5.3 ANOTHER FACTOR TO BE NOTED IS THAT ORIGINAL ASS ESSMENT WAS ALREADY FRAMED IN SCRUTINY ASSESSMENT U/S 143(3) AND THE AS SESSEE, IN RESPONSE TO LD. AOS QUERIES RAISED DURING THOSE PROCEEDINGS , HAD VIDE ITS SUBMISSIONS DATED 29/11/2011 & 21/12/2011, FURNISHE D FOLLOWING DETAILS / DOCUMENTS IN SUPPORT OF THESE TRANSACTIONS: - 11 I) DETAILS OF ADDITION TO SHARE CAPITAL DURING THE IMPUGNED AY INCLUDING NUMBER OF SHARES ISSUED AND PREMIUM THEREUPON ALONG WITH N AME OF THE INVESTOR COMPANY, ADDRESS AND PAN II) ASSESSEES BANK STATEMENT FOR RELEVANT PERIOD E VIDENCING RECEIPT OF SHARE APPLICATION MONEY THROUGH BANKING CHANNELS III) RETURN OF ALLOTMENT FILED BY THE ASSESSEE IN F ORM NO. 2 WITH REGISTRAR OF COMPANIES INDICATING DATE OF SHARE ALLOTMENT AS 17/ 03/2009 IV) PAYMENT CHALLAN IN SUPPORT OF FILING OF FORM NO . 2 V) AUDITED FINANCIAL STATEMENT OF THE INVESTOR COMP ANY FOR THE IMPUGNED AY INDICATING INVESTMENT MADE BY THE INVESTOR IN ASSES SEE COMPANY IN THE FORM OF SHARE CAPITAL VI) ASSESSEES OWN AUDITED FINANCIAL STATEMENTS IN ITS FINANCIAL STATEMENTS, THE ASSESSEE HAD DULY REFLECTED THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM IN THE BALANCE SHEET AND SCHEDULES THERETO, WHICH IS EVIDENT FROM THE MATERIAL ON RECORD . AFTER PERUSAL OF ALL THESE DOCUMENTS, LD. AO, FRAMED ASSESSMENT U/S 143( 3) ON 30/12/2011 WITHOUT MAKING ANY ADDITION IN RESPECT OF SHARE CAP ITAL OR SHARE PREMIUM. THE PERUSAL OF AFORESAID FACTUAL MATRIX RE VEALS THAT LD. AO HAD RAISED SPECIFIC QUERIES ON THE ISSUE OF ADDITION IN SHARE CAPITAL AND SHARE PREMIUM AND HAD CALLED FOR VARIOUS DETAILS, WHICH W ERE DULY FURNISHED BY THE ASSESSEE WHICH IS QUITE EVIDENT FROM SUBMISSION S MADE BY THE ASSESSEE ON 29/11/2011 & 21/12/2011 DURING ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3). SINCE THE DETAILS CALLED FO R BY LD. AO WERE DULY FURNISHED BY THE ASSESSEE, NOTHING MORE COULD HAVE BEEN CALLED FROM THE ASSESSEE TO SUBSTANTIATE THESE TRANSACTIONS INC LUDING JUSTIFICATION OF SHARE PREMIUM AND THEREFORE, THE ONUS CASTED UPON H IM, IN THIS REGARD, WAS DULY DISCHARGED DURING ORIGINAL ASSESSMENT PROC EEDINGS ITSELF. THEREFORE, THE ARGUMENT THAT NO OPINION WAS FORMED BY LD. AO DURING ORIGINAL ASSESSMENT PROCEEDINGS, IN OUR OPINION, WO ULD HOLD NO LEGS TO STAND. TO EMPHASIS, REVIEW IN THE GARB OF REASSESSM ENT WAS NOT 12 PERMISSIBLE UNDER LAW AND REASSESSMENT PROCEEDINGS UPON MERE CHANGE OF OPINION COULD NOT BE SUSTAINED. 5.4 OUR OBSERVATIONS AS WELL AS CONCLUSION DRAWS ST RENGTH FROM VARIOUS CASE LAWS CITED BY LD. AR BEFORE US, WHICH HAVE ALR EADY BEEN ENUMERATED IN PARA 4.1 ABOVE . TO BE MORE PRECISE, ON SIMILAR FACTS & CIRCUMSTANCES, HONBLE BOMBAY HIGH COURT IN THE CAS E OF PCIT VS CENTURY TEXTILES & INDUSTRIES LIMITED [99 TAXMANN.C OM 205] OBSERVED AS UNDER: - 11. THE UNDISPUTED POSITION IN THE PRESENT CASE IS THA T THE REGULAR ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AND THE RE-OPENING HAS BEEN ISSUED WITHIN A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THUS, THE RIGOUR OF THE FIRST PROVISO TO SECTION 147 OF THE ACT IS NOT TO BE SATISFIED FOR I SSUE OF A REOPENING NOTICE I.E. FAILURE TO DISCLOSE ALL MATERIAL FACTS TRULY AND FULLY NECESSA RY FOR ASSESSMENT. IT IS ALSO NOT DISPUTED THAT IN THE REGULAR ASSESSMENT PROCEEDINGS, QUERIES WERE RAISED IN RESPECT OF CLAIM UNDER SECTION 80IC OF THE ACT AND THE SAME WERE RESPONDED TO BY THE RESPONDENT-ASSESSEE RESULTING IN REDUCTION OF CLAIM FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. IN THE ABOVE FACTS, IT IS SELF-EVIDENT THAT THE ASSESSING OFFICE R WAS CONSCIOUS OF THE CLAIM OF DEDUCTION MADE BY THE RESPONDENT-ASSESSEE UNDER SECTION 80IC OF THE ACT WHICH LED TO THE ENQUIRY. IT IS FOR THE ASSESSING OFFICER TO DECIDE THE EXTENT A ND NATURE OF ENQUIRY IN RESPECT OF CLAIM UNDER SECTION 80IC OF THE ACT. THEREFORE, WHEN THE ASSESSING OFFICER HAS TAKEN A CONSCIOUS DECISION OF MAKING ENQUIRY UNDER SECTION 80IC OF TH E ACT THEN IT IS NOT OPEN TO HIM TO TURN AROUND AND CLAIM THAT CERTAIN ASPECTS OF THE CLAIM UNDER SECTION 80IC OF THE ACT WERE NOT CONSIDERED BY HIM. IT IS UNDISPUTED AS POINTED OUT ABOVE, SECTION 80IC OF THE ACT WAS A SUBJECT MATTER OF ENQUIRY AND THIS RESULTED IN DISA LLOWANCE OF RS. 11.49 CRORES OUT OF THE CLAIM FOR RS. 33.67 CRORES MADE BY THE RESPONDENT U NDER SECTION 80IC OF THE ACT. THE DECISION OF THIS COURT IN EXPORT CREDIT GUARANTEE C ORPN. OF INDIA LTD. (SUPRA), IN OUR VIEW, WOULD HAVE NO APPLICATION TO THE PRESENT FACTS AS I N THAT CASE ADMITTEDLY DURING THE REGULAR ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS N OT APPLIED HIS MIND TO THE ISSUE SOUGHT TO BE RAISED IN THE RE-OPENING PROCEEDINGS. IN THE AFO RESAID DECISION, IT WAS HELD THAT THE ASSESSING OFFICER HAS IGNORED RELEVANT MATERIAL IN ARRIVING AT AN ASSESSMENT CONTRARY TO LAW. IT WAS ALSO FOUND AS A FACT IN THE ABOVE CASE OF EX PORT CREDIT GUARANTEE CORPN. OF INDIA LTD. (SUPRA) THAT NO QUERY WAS RAISED DURING THE COURSE OF THE REGULAR ASSESSMENT PROCEEDINGS. THUS, THE OCCASION FOR THE ASSESSING OFFICER TO APP LY HIS MIND TO THE CLAIM BY THE RESPONDENT-ASSESSEE IN THAT CASE, DID NOT ARISE. AS AGAINST THE ABOVE IN THIS CASE THE ASSESSING OFFICER CONSCIOUSLY CONSIDERED THE CLAIM FOR DEDUCTION UNDER SECTION 80IC OF THE ACT AS IS ADMITTEDLY EVIDENT FROM THE ISSUES RAISED DURING THE REGULAR ASSESSMENT PROCEEDINGS. THIS BY ITSELF WOULD BE EVIDENCE OF TH E FACT THAT THE ASSESSING OFFICER HAD OCCASION TO APPLY HIS MIND TO THE CLAIM FOR DEDUCTI ON UNDER SECTION 80IC OF THE ACT DURING THE REGULAR ASSESSMENT PROCEEDINGS AND HAD TAKEN A VIEW ON THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT. 12. MOREOVER, WE FIND THAT THE REASONS IN SUPPORT OF T HE IMPUGNED NOTICE IS NOT PREMISED ON THE FACT THAT HE HAD NOT APPLIED HIS MIND TO THE CL AIM FOR DEDUCTION UNDER SECTION 80IC OF THE ACT DURING THE REGULAR ASSESSMENT PROCEEDINGS IN RE SPECT OF THE INCOME/RECEIPTS WHICH WERE 13 NOT DERIVED FROM ITS PAPER AND PULP UNIT TO CLAIM B ENEFIT UNDER SECTION 80IC OF THE ACT. IT PROCEEDS TO EXCLUDE THE ABOVE INCOME FROM THE CLAIM FOR DEDUCTION ON ACCOUNT OF OMISSION BY THE ASSESSING OFFICER DURING THE REGULAR ASSESSM ENT PROCEEDINGS. THIS IS DIFFERENT FROM NON-APPLICATION OF MIND TO CLAIM FOR DEDUCTION UNDE R SECTION 80IC OF THE ACT. AS HELD BY THIS COURT IN HINDUSTAN LEVER V. R.B. WADKAR [2004] 268 ITR 339/138 TAXMAN 40 (BOM.), THE REASONS IN SUPPORT OF THE REOPENING NOTICE HAS TO B E READ AS IT IS. NO ADDITIONS AND/OR INFERENCES ARE PERMISSIBLE. MOREOVER, THE POWER UND ER SECTION 147/148 OF THE ACT IS NOT TO BE EXERCISED TO CORRECT MISTAKES MADE DURING THE RE GULAR ASSESSMENT PROCEEDINGS. 13. IN THE ABOVE FACTS, THE VIEW TAKEN BY THE IMPUGNED ORDER OF THE TRIBUNAL IS A VIEW IN ACCORDANCE WITH THE DECISION OF THE APEX COURT IN K ELVINATOR OF INDIA LTD. (SUPRA). THUS, THE QUESTION AS PROPOSED DOES NOT GIVE RISE TO SUBSTANT IAL QUESTION OF LAW. THUS, NOT ENTERTAINED. AS EVIDENT, THE AFORESAID DECISION OF JURISDICTIONA L HIGH COURT HAS BEEN RENDERED AFTER CONSIDERING THE DECISION OF HONBLE APEX COURT RENDERED IN CIT VS. KELVINATOR OF INDIA LTD. [320 ITR 561] & HINDUSTAN LEVER LTD. VS. R.B.WADKAR [268 ITR 339]. THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE ABOVE DECISION HAS ALREADY BEEN DISMISSED BY HONBLE APEX COURT AS REPORTED IN 99 TAXMANN.COM 206 DATED 05/10/2018. SIMILAR PROPOSITIONS HAVE BEEN LAID DOW N IN THE OTHER CASE LAWS BEING RELIED UPON BY LD. AR. SO FAR AS THE REV ENUES RELIANCE ON THE DECISION RENDERED IN DR. AMIN PATHOLOGY LABORATORY VS. JCIT [SUPRA] IS CONCERNED, WE FIND THE SAME TO BE DISTINGUISHABLE O N FACTS SINCE IN THAT CASE, IT WAS UNDISPUTED POSITION THAT LD. AO OVERLO OKED CERTAIN ITEMS DURING ORIGINAL ASSESSMENT PROCEEDINGS WHICH WERE N OTED SUBSEQUENTLY AND THEREFORE, IT WAS A CASE OF NO OPINION FORMED D URING ORIGINAL ASSESSMENT PROCEEDINGS. HOWEVER, IN THE PRESENT CAS E, SPECIFIC QUERIES WERE RAISED UPON THE ISSUES DURING ORIGINAL ASSESSM ENT PROCEEDINGS, WHICH WERE DULY EXPLAINED / DOCUMENTED BY THE ASSES SEE AND LD. AO, AFTER DUE APPLICATION OF MIND, ACCEPTED THE ASSESSE ES CLAIM. 5.5 THE TOTALITY OF ABOVE FACTS LEADS US TO AN INEV ITABLE CONCLUSION THAT THE REASSESSMENT PROCEEDINGS SUFFERED FROM JURISDIC TIONAL DEFECT AND LD. AO COULD NOT BE CLOTHED WITH SECOND INNING TO REVIE W THE ALREADY 14 CONCLUDED ISSUES IN ORIGINAL ASSESSMENT PROCEEDINGS . THEREFORE, THE REASSESSMENT PROCEEDINGS COULD NOT BE SUSTAINED UND ER LAW. WE ORDER SO. THE ASSESSEES APPEAL STANDS ALLOWED. 6. THE REVENUE, IN ITS APPEAL, HAS CHALLENGED THE D ELETION OF QUANTUM ADDITIONS ON MERITS. SINCE WE HAVE ALREADY QUASHED THE REASSESSMENT PROCEEDINGS ON LEGAL GROUNDS, DELVING INTO THE SAME WOULD BE MERELY ACADEMIC EXERCISE IN NATURE AND WOULD SERVE NO FRUI TFUL PURPOSE AND THEREFORE, NOT DELVED UPON. IN VIEW OF THE SAME, TH E APPEAL STANDS DISMISSED, BEING INFRUCTUOUS. 7. THE ASSESSEES APPEAL STANDS ALLOWED WHEREAS REV ENUES APPEAL STANDS DISMISSED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2019. SD/- SD/- (MAHAVIR SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 10/04/2019 SR.PS, JAISY VARGHESE !'#$ # / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +, '% , , / DR, ITAT, MUMBAI 6. ,./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.