M/s Eagal Seeds & Biotech Limited, Indore V. The ACIT, 5(1), Indore

ITA 285/IND/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5894 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-07-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 14-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus Share capital; Income from undisclosed sources; Period of limitation; Difference of opinion; Accommodation entries; Reason to believe; Change of opinion
• Section: 143(3); 133A; 115JB; 147; 148; 10; 139

Judgement Text

M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, INDORE BEFORE SHRI D.T. GARASIA, JM & SHRI N.S. SAINI, AM ITA NO. 285/IND/2012 A.Y.2003-04 EAGLE SEEDS & BIOTECH LIMITED INDORE PAN AAACE 8528L ::: APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX 5(1) INDORE ::: RESPONDENT APPELLANT BY SHRI AJAY TULSIYAN & SHRI GIRDHAR GARG RESPONDENT BY SHRI RAJIV JAIN DATE OF HEARING 14.7.2016 DATE OF PRONOUNCEMENT 1 . 8 .2016 O R D E R THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-II, INDORE, DATED 20.2.2 012. M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 2 2. THE FIRST GROUND OF APPEAL IS AGAINST ISSUANCE OF NO TICE U/S 148 OF THE ACT WHICH WAS ISSUED ON 29.3.2010 WI THIN SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFIC ER ISSUED NOTICE AFTER RECORDING SPECIFIC AND DETAILED R EASONS AT PAGES 1 AND 2 OF THE ASSESSMENT ORDER REGARDING BOGUS SHARE CAPITAL CONTRIBUTION RECEIVED AS EXTRACTED HEREUND ER :- DURING THE COURSE OF SURVEY U/S 133A OF THE IT ACT CONDUCTED BY THE DEPARTMENT ON 2.5.2006 IN THE LUNKAD GROUP OF CASES IT HAS BEEN NOTICED THAT THE ASSESSEE THROUGH COMPANIES OF LUNKAD GROUP BRINGING BACK ITS UNACCOUNTED INCOME IN THE BOOKS OF ACCOUNT S BY WAY OF ACCOMMODATION ENTRIES. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS RECEIVED RS. 1,05,00,000/- AS SHARE APPLICATION MONEY FROM THE VARIOUS COMPANIES OF LUNKAD GROUP. A REPORT DATED M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 3 15.2.2007 OF THE SAID TRANSACTION HAS BEEN RECEIVED FROM THE ADDL. CIT, RANGE-3, INDORE, FROM WHICH IT IS REVEALED THAT THE ASSESSEE IS ROUTING ITS OWN MONEY THROUGH THE COMPANIES OF LUNKAD GROUP. ON THE BASIS OF ABOVE DISCUSSION, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX TO THE EXTENT OFRS.1,05,00,000/- FOR A.Y. 2003-04 HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE IT ACT. ACCORDINGLY, NOTICE UNDER SECTION 148 OF INCOM E TAX ACT, 1961 IS TO BE ISSUED. 4. COPY OF REASONS RECORDED WAS SUPPLIED TO THE ASSES SEE WHO FILED OBJECTION WHICH WAS EXAMINED BY THE ASSESSI NG OFFICER AND THE ASSESSING OFFICER PASSED A SPEAKING ORD ER AS UNDER :- 5.1 AS REGARDS THE ASSESSEES OBJECTION MENTIONED IN PARA 1 THE ADDL CIT RANGE-3 HAS INFORMED THE MODUS OPERAND I ADOPTED BY LUKAD GROUP FOR ACCOMMODATION OF THE ENT RIES AND M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 4 ON THE BASIS OF REPORT AND MODUS OPRENDI THE AO HAS RECORDED THE REASONS AS SUCH HE USED THE REPORT OF THE ADDL CIT RANGE-3 AS PIECE OF INFORMATION. THE PRESUMPTION THAT NO AP PROVAL HAS BEEN OBTAINED AS THE APPROVAL OF CIT-II HAS BEEN TA KEN ON 29.03.2010. FURTHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3), THE ASSESSEE HAD FURNISHED ONLY THE CONFIRMATORY LETTERS AND NO OTHER DETAILS WERE FURNISHED. HERE IT HAS TO BE REITERATED THAT SUBSEQ UENT TO THE ORDER PASSED U/S 143(3), THE MODUS-OPERANDI ADO PTED BY THE LUNKAD GROUP OF COMPANIES IN PROVIDING THE ACCOMMODATION ENTRIES TO THE BENEFICIARIES CAME ON SURFACE. ADMITTEDLY ALL THESE CHRONOLOGICAL DEVELOP MENTS HAVE REVEALED THAT THE MODUS OPERANDI ADOPTED BY TH E ASSESSEE CAME TO THE KNOWLEDGE OF THE AO SUBSEQUENT TO THE COMPLETION OF THE ASSESSMENT PROCEEDINGS U/S 14 3(3) AS A RESULT OF THE EXAMINATION OF DOCUMENTS FOUND D URING THE COURSE OF SURVEY PROCEEDINGS U/S 143(3)CARRIED OUT IN THE CASE OF LUNKAD GROUP OF COMPANIES. M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 5 5.2 IN THE BACKDROP OF THE FACTS EMERGED SUBSEQUEN T TO THE COMPLETION OF THE ASSESSMENT PROCEEDINGS U/S 14 3(3) IT CAN BE CONCLUSIVELY HELD THAT THE AFORESAID FACT S NECESSARY FOR THE COMPLETION OF THE ASSESSMENT PROCEEDINGS WERE NOT FULLY AND TRULY DISCLOSED BY T HE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS. THEREFORE, IT WOULD RATHER BE INCORRECT ON THE PART OF THE ASSESSEE TO ASSERT THAT IT HAD DISCLOSED FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESSMENT PROCEEDINGS. 5.3 AS REGARDS THE ASSESSEED MUCH RELIANCE ON THE DECISIONS OF THE HONBLE SUPREME COURT AND VARIOUS HIGH COURTS, IT WOULD BE REITERATED THAT IN ALL THE CASES RELIED UPON BY THE ASSESSEE, THE ASSESSEE HAD DISCLOSED THE FACTS OF THE INCOME FULLY AND TRULY BEFORE THE AO AND ACCORDINGLY THE HONBLE COU RTS HAVE DECIDED THE MATTER IN THEIR FAVOUR LARGELY ON THE G ROUND THAT THE DEPARTMENT HAD INTERPRETED ITS STAND DIFFERENTLY ON LEGAL ISSUES INVOLVED IN THEM AND ACCORDINGLY THE HONBLE COURTS HELD THAT THE DEPARTMENTS SUBSEQUENT ACTION OF INITIATION OF PROCEEDINGS U/S 147 WAS A MERE CHANGE OF OPINION. HOWEVER, IN THE M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 6 INSTANT CASE IN VIEW OF THE FACTS DISCUSSED SUPRA I T IS APPARENT THAT THE ASSESSEE HAD NOT DISCLOSED THE EN TIRE FACTS ESPECIALLY WITH REGARD TO THE MODUS OPERANDI ADOPTED BY THE ASSESSEE IN INTRODUCING ITS INCOME I N THE NAME OF COMPANIES OF LUNKAD GROUP BY TAKING ACCOMMODATION ENTRIES DURING THE COURSE OF ASSESSME NT PROCEEDINGS U/S 143(3) OF THE IT ACT. THEREFORE THE FACTS OF THE INSTANT CASE ARE ENTIRELY DIFFERENT TO THAT OF THE CASE LAWS RELIED UPON BY THE ASSESSEE. IN VIEW OF T HIS I FOUND THAT THE CASE-LAWS RELIED UPON BY THE ASSESSE E WERE TOTAL MISPLACED. HENCE I HOLD THAT THE REASONS RECO RDED BY THE AO FOR INITIATION OF PROCEEDINGS U/S 147 OF THE IT ACT DOES NOT TANTAMOUNT TO CHANGE OF OPINION AS ASS ERTED BY THE ASSESSEE. (EMPHASIS SUPPLIED) 4.1.2 THE BASIC FACT REMAINS THAT NOTICE U/S 148 WAS ISSUED WITHIN 6 YEARS FROM THE END OF RELEVANT AY, ON ACCOUNT OF DEFINITE MATERIAL COMING ON RECORD SUBSE QUENT TO ORIGINAL ASSESSMENT, LEADING THE AO TO FORM BEL IEF THAT M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 7 INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. TH US THE APPELLANTS CASE IS SQUARELY COVERED BY PROVIS IONS OF SECTION 147 READ WITH EXPLANATION 2 (C) CLAUSE(I). THUS THERE IS NO MERIT IN SUCH GROUND RAISED BY THE APPE LLANT IN THIS BEHALF CHALLENGING THE NOTICE U/S 148 ISSUED. THE HONBLE SC IN THE CASE OF CIT VS. ALA FIRM REPORTE D AT 189 ITR 285 (SC) HAS CATEGORICALLY HELD THAT EVEN ON T HE BASIS OF INFORMATION AVAILABLE ON RECORD THE AO WOULD BE JUSTIFIED IN ISSUING NOTICE U/S 148, IF SUCH INFOR MATION WAS EARLIER NOT TAKEN NOTE OF OR OVER LOOKED AT THE TIME OF ORIGINAL ASSESSMENT. THE APPELLANT CANNOT DRAW SUPP ORT FROM VARIOUS DECISIONS CITED IN VIEW OF ABOVE DISCU SSION AS FACTS NOTICED IN THOSE CASES IN THIS BEHALF WHERE C LEARLY DISTINGUISHABLE. THE APPELLANT APART FROM PLACING R ELIANCE ON VARIOUS JUDICIAL DECISIONS HAS NOT MADE A CASE BY CITING SPECIFIC FACTS NOTICED IN THOSE CASES LEADIN G TO THE DECISION ARRIVED VIS--VIS FACTS OF THE APPELLANTS CASE SO AS TO ESTABLISH THAT RATIO OF ANY SUCH DECISION WAS SQ UARELY APPLICABLE TO THE APPELLANTS CASE. HENCE THE APPEL LANT M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 8 CANNOT DRAW ANY SUPPORT FROM ANY OF JUDICIAL DECISI ON CITED. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER REOPENED THE ASSESSMENT ON FLIMSY GROUND BASED ON SUSPICION. THE S OLE BASIS OF REOPENING IS THE REPORT RECEIVED FROM ADDIT IONAL COMMISSIONER OF INCOME-TAX, RANGE-III, INDORE. THERE FORE, THE CASE HAS BEEN REOPENED WITHOUT APPLICATION OF MIND AND ALSO CHANGE OF OPINION. THE SOCALLED REPORT HAS NOT BEEN PROVIDED TO THE ASSESSEE. THERE IS NO BASIS FOR FIGURE OF RS. 1,05,00,000/- AS MENTIONED IN THE REASONS. THE REASONS, AS SUPPLIED, DO NOT SHOW AS TO WHICH INCOME H AS ESCAPED ASSESSMENT AND HOW THE AMOUNT OF RS.1,05,00,000/- HAS COME. THERE IS NO POSITIVE MATER IAL ON THE BASIS OF WHICH REASONABLE BELIEF COULD BE FORME D THAT CERTAIN INCOME HAD ESCAPED ASSESSMENT. THE ALLEGATION THAT THE ASSESSEE IS BRINGING BACK THE M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 9 UNACCOUNTED INCOME IN THE BOOKS OF ACCOUNTS IS ALSO WITHOUT ANY BASIS. THE REASONS DO NOT EVEN MENTION THE NAMES OF COMPANIES AND A GENERAL TERM LUNKAD GROUP OF COMPANIES IS USED WHICH IS VAGUE. THE ASSESSEE HAS FILE D THE RETURN SHOWING TOTAL INCOME OF RS.81,68,189/-. T HE BOOK PROFIT U/S 115JB OF THE ACT WAS COMPUTED AT RS.97,32,173/-. THE STATUTORY AUDIT REPORT UNDER THE COMPANIES ACT AND AUDIT REPORT U/S 44AB OF THE ACT WAS SUBMITTED. THE CASE WAS SELECTED FOR SCRUTINY U/S 14 3(3) OF THE ACT. THE DETAILS OF SHARE APPLICATION MONEY WER E SPECIFICALLY EXAMINED AND THE ASSESSEE SUBMITTED DETAILE D SUBMISSIONS. THE MATTER TRAVELLED UP TO ITAT AND THE MATTER WAS DECIDED IN THE ASSESSEES FAVOUR. THE LEARN ED COUNSEL FOR THE ASSESSEE SUBMITTED THAT PROVISO TO SE CTION 147, WHICH STATES THAT WHERE AN ASSESSMENT UNDER SUB- SECTION (3) OF SECTION 143 HAS BEEN MADE FOR RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 10 SECTION AFTER EXPIRY OF FOUR YEARS FROM THE END OF TH E RELEVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE R ETURN U/S 139 OR NOTICE ISSUED UNDER SUB-SECTION (1) OF S ECTION 142 OR SECTION 148 TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR ASSESSMENT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THIS CASE THE ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT U/S 143 OF THE ACT. THE ASSESSMENT WAS COMPLETED AFTER DU E DELIBERATION AND ALL THE MATERIAL FACTS WERE DISCLOSED AND DISCUSSED DURING THE COURSE OF ASSESSMENT PROCEEDING S. THEREFORE, THE ASSESSMENT FOR THIS YEAR HAVING BEEN COMPLETED U/S 143(3) AND THERE BEING NO FAILURE ON TH E PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, NOTICE U/S 148 OF THE ACT I S NOT CALLED FOR. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 11 THAT AFTER REOPENING OF ASSESSMENT THE ASSESSEE HAS SUBMITTED LETTER TO THE ASSESSING OFFICER ON 6.12.2 010 WHICH IS AT PAGE 87 OF THE PAPER BOOK WHEREIN THE ASSES SEE HAS CONTENDED BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE DURING THE YEAR HAS RECEIVED SHARE APPLICATION MONEY AMOUNTING TO RS. 1,05,00,000/- FROM VARIOUS PARTIES. COPIES OF SHARE APPLICATION FORMS FILED BY THE PARTIES, INCOME TAX RETURNS, BALANCE SHEET AND BANK STATEMENTS REFLECTING THE PAYMENTS MADE ARE ENCLOSED AT PAGES 1 TO 190. THIS SHARE APPLICATION MONEY CONTAINS FU LL DETAILS OF SHARE APPLICANTS, THEIR COMPLETE NAMES, PAN AND DETAILS OF CHEQUES THROUGH WHICH THE AMOUNT HAS BEEN RECEIVED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSING OFFICER WHILE SCRUTINISING THE ASSESSMENT U/S 143(3) OF THE ACT FOR THE YEAR UNDER CONSIDERATION HAS SPECIFICALLY MADE QUERIES IN RESPECT O F SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. THE M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 12 ASSESSING OFFICER BEING SATISFIED WITH THE DETAILS FI LED BY THE ASSESSEE DID NOT MAKE ANY ADVERSE COMMENT ON IT. TH E LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2001-02 THE CAS E WAS REOPENED U/S 147 OF THE ACT ON THE GROUND THAT TH E ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES IN THE BOOKS OF ACCOUNTS FROM LUNKAD GROUP OF COMPANIES AND AFTER EXAMINING THE RECORD, THE REOPENING OF ASSESSMENT WAS DROPPED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMIT TED THAT IN THE ASSESSMENT YEAR 2001-02 ON EXACTLY SIMILAR FACTS, THE ASSESSING OFFICER HAS EXAMINED THE TRANSACTIO N WITH THE COMPANIES OF LUNKAD GROUP AND HE WAS SATISFIED WITH THE DETAILS SUBMITTED BY THE ASSESSEE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTEED T HAT THE ASSESSEE HAS RECEIVED THE SHARE APPLICATION MONEY FR OM THE FOLLOWING COMPANIES :- M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 13 NAME OF THE COMPANY AMOUNT RECEIVED COPIES OF SHARE APPLICATION FORM, BANK STATEMENTS, INCOME TAX RETURN AND ANNUAL ACCOUNTS LUNKAD SECURITIES LIMITED 13, RACE COURSE ROAD, INDORE 28,00,000 PAGE NO.____ TO PAGE NO.____ RAJVIR MARKETING & INVESTMENT LIMITED 13, RACE COURSE ROAD, INDORE 14,50,000 PAGE NO.____ TO PAGE NO.____ LUNKAD MEDIA & ENTERTAINMENT LIMITED 13, RACE COURSE ROAD, INDORE 44,50,000 PAGE NO.____ TO PAGE NO.____ WEST END MANAGEMENT TECHNOLOGIES PRIVATE LIMITED 13, RACE COURSE ROAD, INDORE 18,00,000 PAGE NO.____ TO PAGE NO.____ 1,05,00,000 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE DETAILED INQUIRIES AND FURNISHED NAMES AND ADDRESSES OF THE PERSONS WHO HAD APPLIED FOR SUBSCRIPT ION FOR SHARE CAPITAL AND NO ADDITION HAS BEEN MADE IN RESPE CT OF SHARE APPLICATION MONEY. THE OTHER ADDITIONS WERE ALS O MADE BUT IT WAS CHALLENGED IN HIGHER FORUM AND SUBSEQUENTLY THE MATTER WAS DECIDED IN THE ASSESEES FAVOUR. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTE D THAT M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 14 AFTER REOPENING OF THE ASSESSMENT ORDER, THE ASSESSIN G OFFICER HAS NOT MADE ANY INQUIRY WITH REGARD TO THE TRANSACTION WITH LUNKAD GROUP OF COMPANIES. NO FRESH MATERIAL WAS CALLED FOR BY THE ASSESSING OFFICER FROM T HE ASSESSEE. NO NEW MATERIAL WAS BROUGHT BY THE ASSESSING OFFICER TO SHOW THAT THE ASSESSEE HAD BROUGHT BACK HIS MONEY FROM LUNKAD GROUP OF COMPANIES. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED VARIOUS DETAILS IN SUPPORT OF GENUINENESS OF THE SHAR E APPLICATION MONEY RECEIVED BY THE ASSESSEE FROM THE RESPECTIVE PARTIES AS WOULD BE CLEAR FROM THE LETTER SUBMITTED TO THE ASSESSING OFFICER AT PAGES 75 TO 77 OF THE PAPER BOOK. THE LEARNED COUNSEL FOR THE ASSESSEE FUR THER SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED TO PRO VIDE ANY MATERIAL OR INFORMATION ALLEGEDLY RECEIVED FROM THE ADDITIONAL CIT RANGE 3, INDORE TO THE ASSESSEE WITH A V IEW M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 15 TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO HAVE HIS SAY IN THAT REGARD. HE FURTHER SUBMITTED THAT EVEN THE CONTEN TS OF DETAILS OF INFORMATION HAD NOT BEEN DISCUSSED BY THE ASSESSING OFFICER EXCEPT STATING THAT HE HAS RECEIVED INFORMATION FROM THE ADDITIONAL CIT, RANGE 3, INDORE, THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE IS IN THE NATURE OF ACCOMMODATION ENTRIES FROM LUNKAD GROUP OF COMPANIES. HE FURTHER SUBMITTED THAT THE EVIDENCE FOR COMING TO THE CONCLUSION THAT THE SHARE CAPITAL RECEIVE D BY THE ASSESSEE IS AN ACCOMMODATION ENTRY HAS NOWHERE BEEN DISCUSSED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER OR REASONS RECORDED FOR ISSUING THE NOTICE U/S 148 O F THE ACT. HE FURTHER SUBMITTED THAT THE ASSESSEE SPECIFICAL LY ASKED THE ASSESSING OFFICER THAT IF ANY ADVERSE MATERIAL IS AGAINST THE ASSESSEE, THE ASSESSEE MUST BE PROVIDED WIT H RELEVANT DETAILS AS ALSO A RIGHT OF CROSS EXAMINATION BUT THE ASSESSING OFFICER HAS NOT MADE ANY WHISPER IN THIS REG ARD. M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 16 THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ESTABLISHED THE GENUINENESS OF THE SHARE APPLICATION MONEY RECEIVE D FROM THE PARTIES. HE RELIED UPON THE DECISION IN THE CASES REPORTED AS 378 ITR 351, 338 ITR 51, 103 ITR 437 (SC ), 203 ITR 456 AND 319 ITR 290. 7. IN REPLY TO THE ABOVE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE, THE LEARNED DR SUBMITTED TH AT THERE WAS SPECIFIC INFORMATION RECEIVED BY THE ASSES SING OFFICER FROM THE ADDITIONAL CIT RANGE 3, INDORE THAT T HE ASSESSEE HAS AVAILED THE BENEFIT OF ACCOMMODATION ENTRIES IN THE NATURE OF SHARE CAPITAL INTRODUCED FROM FOUR PART IES AGGREGATING TO RS.1,05,00,000/-. THE LEARNED DR SUBMIT TED THAT THE IDENTITY OF THESE PARTIES WAS NOT ESTABLISHED. THEREFORE, THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.1,05,00,000/- BEING SHARE CAPITAL INTRODUCED BY THE ASSESSEE IN THE NAMES OF CERTAIN PARTIES, NAMES WHEREOF HAVE BEEN MENTIONED IN THE ORDER OF THE LEARNED CIT( A). M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 17 8. RIVAL CONTENTIONS HAVE BEEN CONSIDERED AND THE MATERIAL ON RECORD HAS BEEN PERUSED. IN THIS CASE THE ASSESSING OFFICER HAS ISSUED NOTICE U/S 148 OF THE A CT ON THE BASIS OF INFORMATION RECEIVED FROM THE ADDITIONAL CIT RANGE 3, INDORE OF THE DEPARTMENT. IN THE REASONS RECO RDED THE ASSESSING OFFICER HAS STATED THAT THERE WAS SURVEY CONDUCTED U/S 133A OF THE ACT BY THE DEPARTMENT ON 2.5.2006 IN THE LUNKAD GROUP OF COMPANIES. IT HAS BEE N NOTICED THAT THE ASSESSEE THROUGH LUNKAD GROUP OF COMPANIES IS BRINGING BACK HIS UNACCOUNTED INCOME IN THE BOOKS OF ACCOUNTS BY WAY OF ACCOMMODATION ENTRIES. BAS ED ON SUCH INQUIRY, THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.1,05,00,000/- RECEIVED IN THE ASSESSME NT YEAR 2003-04 ON ACCOUNT OF SHARE APPLICATION MONEY. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS NOWHER E MENTIONED THE NAMES OF PERSONS CONCERNED WHO HAVE STATED BEFORE THE ADDITIONAL CIT RANGE 3, INDORE M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 18 THAT THE TRANSACTION ON RECEIPT OF SHARE APPLICATION MONE Y AMOUNTING TO RS.1,05,00,000/- IS IN THE NATURE OF ACCOMMODATION ENTRIES. THE NAMES AND IDENTITY OF THE PERSONS HAVE NOT BEEN DISCUSSED EITHER IN THE REASONS RECORDED OR IN THE ASSESSMENT ORDER. THE ASSESSING O FFICER HAS MERELY RELIED UPON THE CONCLUSION OF INFORMATION ARRIVED AT BY THE DIRECTOR OF INVESTIGATION WITHOUT RE FERRING TO ANY EVIDENCE OR THE MATERIAL ON THE BASIS OF WHICH I T COULD BE SAID THAT THE AMOUNT RECEIVED BY THE ASSESSEE WAS IN THE NATURE OF ACCOMMODATION ENTRY. THEREFORE, IN TH IS CASE THE ASSESSING OFFICER HAS MADE THE ADDITION MERELY FOR THE REASON THAT HE HAS RECEIVED INFORMATION FROM THE ADDITIONAL CIT RANGE 3, INDORE, THAT THE SHARE APPLICATI ON MONEY RECEIVED BY THE ASSESSEE OF RS.1,05,00,000/- I S IN THE NATURE OF ACCOMMODATION ENTRY. THE ASSESSING OFFI CER HAS NOT APPLIED HIS MIND OF THE MATERIAL OR EVIDENCE COLLECTED BY THE ADDITIONAL CIT RANGE 3, INDORE M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 19 THROUGH THEIR INQUIRY OR EVEN HAS NOT MENTIONED ANYTHI NG IN THE ASSESSMENT ORDER. THERE IS NO WHISPER BY THE ASSESSING OFFICER AS TO WHAT WAS THE EVIDENCE OR MATERI AL ON THE BASIS OF WHICH IT COULD BE SAID THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS IN THE NATURE OF ACCOMMOD ATION ENTRIES EXCEPT BY STATING THAT HE HAS RECEIVED INFORMAT ION FROM THE ADDITIONAL CIT RANGE 3, INDORE, THAT THE SHAR E APPLICATION MONEY RECEIVED BY THE ASSESSEE IS IN THE N ATURE OF ACCOMMODATION ENTRY. THE ASSESSING OFFICER HAS SIMP LY MADE THE ADDITION ON THE BASIS OF WHICH THE INFORMATION RECEIVED FROM THE ADDITIONAL CIT RANGE 3, INDORE AND THE INFORMATION PASSED OVER BY THE ADDITIONAL CIT RANGE 3, INDORE, TO THE ASSESSING OFFICER WITHOUT TH ERE BEING ANY REFERENCE TO ANY EVIDENCE OR MATERIAL ON THE BASIS OF WHICH THE INFORMATION OR CONCLUSION WAS ARRIVE D AT. M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 20 9. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS FURNISHE D FOLLOWING DETAILS IN RESPECT OF SHARE APPLICATION TO JU STIFY ITS CLAIM :- (I) COPIES OF SHARE APPLICATION MONEY (II) COPIES OF BOARD RESOLUTION, BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND SCHEDULES (III) COPIES OF BANK STATEMENT (IV) COPIES OF CHEQUES RECEIVED (V) COPIES OF INCOME RETURNS OF SHARE HOLDERS (VI) COPIES OF COMPUTATION OF TOTAL INCOME THE ASSESSEE HAS RECEIVED THE SHARE APPLICATION MONEY FROM THE FOLLOWING FOUR PARTIES :- NAME OF THE COMPANY A MOUNT RECEIVED RS. LUNKAD SECURITIES LTD. 13, RACE COURSE ROAD, INDORE 28,00,000 RAJVIR MARKETING & INVESTMENT LTD. 13, RACE COURSE ROAD,INDORE 14,50,000 LUNKAD MEDIA & ENTERTAINMENT LIMITED 44,50,000 M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 21 13, RACE COURSE ROAD, INDORE WEST END MANAGEMENT TECHNOLOGIES PVT. LTD. 13, RACE COURSE ROAD, INDORE 18,00,000 1,05,00,000 THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL TO CONTROVERT OR REBUT THE DETAILS FILED BY THE ASSESSEE . ALL THESE SHARE APPLICANTS ARE INCOMETAX PAYEES AND COPIES O F THEIR INCOMETAX RETURNS AND PERMANENT ACCOUNT NUMBERS WERE FURNISHED. WE FIND THAT THE ASSESSING OFFICER W HILE PASSING THE ORDER U/S 143(3) OF THE ACT HAS INQUIRED AS TO DETAILS OF SHARE APPLICATION MONEY RECEIVED BY THE ASSES SEE. THE ASSESSEE HAS FURNISHED NAMES AND ADDRESSES OF PERSONS WHO HAVE OFFERED FOR SUBSCRIPTION OF SHARE APPLICATION MONEY WHICH HAVE BEEN EXAMINED AND WERE KEPT ON RECORD. THE ASSESSING OFFICER BEING SATISFIE D WITH THE SUBMISSION OF THE ASSESSEE DID NOT MAKE ANY COMME NT ON THE SAME. DURING THE RE - ASSESSMENT PROCEEDINGS THE ASSESSEE AGAIN SUBMITTED ALL THE DETAILS AND IF THE M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 22 ASSESSING OFFICER WAS NOT SATISFIED HE SHOULD HAVE MADE INQUIRIES U/S 131/133(6) OF THE ACT. WE ARE, THEREFOR E, OF THE VIEW THAT THE ASSESSEE HAS RECEIVED THE SHARE APPLICATION MONEY, THERE IS NO IOTA OF EVIDENCE THAT TH E ASSESSEE HAS BROUGHT ITS OWN FUNDS BY WAY OF SHARE APPLICATION MONEY. THE ASSESSEE HAS DISCHARGED ITS ONUS OF PROVIDING IDENTITY, CAPACITY AND GENUINENESS OF THE TRANSACTION. THEREFORE, WE ARE OF THE OPINION THAT WHEN THE ASSESSMENT ORDER IS FRAMED U/S 143(3) OF THE ACT AND T HE ASSESSING OFFICER HAS ACCEPTED THE SHARE APPLICATION MONEY, IT IS THE DUTY OF THE ASSESSING OFFICER TO B RING ON RECORD IN THE REASONS RECORDED SUFFICIENT MATERIAL AND EVIDENCE THAT THE ASSESSEE DID NOT MAKE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FACTS FOR ASSESSMENT. IN THIS CASE THERE IS NO WHISPER IN THE R EASONS SUPPLIED TO THE ASSESSEE NECESSARY FOR ASSESSMENT. THE RE BEING NO WHISPER IN THE REASONS SUPPLIED TO THE ASSES SEE M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 23 THAT THE INCOME ESCAPED ASSESSMENT BY REASONS OF ASSESSEES FAILURE TO MAKE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, NOTICE U/S 148 ISSUE BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WAS BARRED BY LIMITATION UNDER PROVISO T O SECTION 147, HENCE WITHOUT JURISDICTION. WE ARE OF THE VIEW THAT IN THIS CASE THE ASSESSING OFFICER FAILED TO ESTAB LISH THAT THE ASSESSEE FAILED TO MAKE FULL AND TRUE DISCLOSUR E OF ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. 10. WE RELY UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING COMPANY VS. CIT; 308 ITR 38 WHEREIN IT WAS HELD THE PROVISO TO S. 147 CARVES OUT AN EXCEPTION FROM THE MAIN PROVISIONS OF S. 147. IF A CASE WERE TO FA LL WITHIN THE PROVISO, WHETHER OR NOT IT WAS COVERED U NDER THE MAIN PROVISIONS OF S. 147 WOULD NOT BE MATERIAL . ONCE THE EXCEPTION CARVED OUT BY THE PROVISO CAME I NTO M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 24 PLAY, THE CASE WOULD FALL OUTSIDE THE AMBIT OF S. 1 47. EXAMINING THE PROVISO TO S. 147, ONE FINDS THAT NO ACTION CAN BE TAKEN UNDER S. 147 AFTER THE EXPIRY O F FOUR YESARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IF THE FOLLOWING CONDITIONS ARE SATISFIED : (A ) AN ASSESSMENT UNDER SUB-S. (3) OF S. 143 OR THIS SECTI ON HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR AND (B) UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE : (I) TO MAKE A RTURN UNDER S. 139 OR IN RESPONSE TO A NOTICE ISSUED UNDE R SUB-S. (1) OF S. 142 OR S. 148; OR (II) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT FOR THE ASSESSMENT YEAR. CONDITION (A) IS ADMITTEDLY SATISFIED INASMUCH AS THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER S. 143(3). CONDITION (B) DEALS WITH A SPECIAL KIND OF ESCAPEMENT OF INCOME CHARGEABLE TO TAX. M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 25 THE ESCAPEMENT MUST ARISE OUT OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER S. 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-S. (1) OF S. 142 OR S. 148. THIS IS CLEARLY NOT THE CASE HERE BECAUS E THE PETITIONER DID FILE THE RETURN. SINCE THERE WAS NO FAILURE TO MAKE THE RETURN, THE ESCAPEMENT OF INCOME CANNOT BE ATTRIBUTED TO SUCH FAILURE. THIS LEAVES ONE WITH TH E ESCAPEMENT OF INCOME CHARGEABLE TO TAX WHICH ARISES OUT OF THE FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT FOR THAT ASSESSMENT YEAR. IF IT IS ALSO FOUND THAT THE PETITIONER HAD DISCLOSED FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT THEN NO ACTION UNDER S. 147 COULD HAVE BEEN TAKEN AFTER THE FOUR YEAR PERIOD INDICATED ABOVE. SO THE KEY QUESTI ON IS WHETHER OR NOT THE PETITIONER HAD MADE A FULL AND T RUE DISCLOSURE OF ALL MATERIAL FACTS. M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 26 WE ALSO GET SUPPORT FROM THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. MULTIPLEX TRADING & INDUSTRIAL CO. LTD.; 378 ITR 351 WHEREIN IT WAS HELD REASSESSMENT NOTICE AFTER FOUR YEARS GENERAL PRINCIPLES UNSECURED LOANS AVAILED OF BY ASSESSEE ASSESSING OFFICER SCRUTINISING DURING REGULAR ASSESSMENT PROCEEDINGS AND ASSESSEE PROVIDING NECESSARY EVIDENCE TO ESTABLISH GENUINENESS OF TRANSACTIONS OBJECTIONS AGAINST REASSESSMENT NOT DISPOSED OF BUT ASSESSMENT FRAMED INFORMATION RECEIVED AFTER CONCLUSION OF ASSESSMENT THAT BOGUS ENTRIES BY ASSESSEE IN ITS BOOKS OF ACCOUNTS ASSESSING OFFICER CANNOT PROCEED ON THE BASIS THAT INCOME OF ASSESSEE ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON PART OF ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 27 REASSESSMENT NOT VALID INCOME TAX ACT, 1961, S. 147. WE ALSO RELY ON THE DECISION OF THE HON'BLE GUJARAT HI GH COURT IN THE CASE OF GUJARAT FLUOROCHEMICALS LTD. VS. D CIT; 319 ITR 282 WHEREIN IT WAS HELD IT IS RELEVANT TO NOTICE THAT THE COMMUNICATION DT. 28 TH APRIL, 2009 NOWHERE STATES THAT THE PETITIONER-ASSESSEE HAS FAILED TO DISCLOSE FULLY AN D TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT F OR THE RELEVANT ASSESSMENT YEAR. THERE IS NOT A WHISPER TO THIS EFFECT IN THE LETTER DT. 28 TH APRIL, 2008 AND THIS IS NOT ONE OF THE REASONS MENTIONED FOR REOPENING THE ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR. TO THE CONTRARY THE REASONS RECORDED SAY THIS INCOME HAS WRONGLY BEEN ASSESSED UNDER THE HEAD CAPITAL GAINS WHICH SHOULD HAVE BEEN ASSESSED UNDER THE HEAD PROFITS M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 28 AND GAINS OF BUSINESS OR PROFESSION. THUS IN FACT NOT ONLY THERE IS NO FAILURE ON PART OF THE ASSESSE E EVEN ALLEGED BUT IT IS ACCEPTED THAT AN INCORRECT ASSESSMENT IS FRAMED DUE TO AN ERROR ON PART OF A.O . THE ASSESSMENT OF TAX UNDER A WRONG HEAD BY THE A.O. CANNOT JUSTIFY THE IMPOSITION OF THE BURDEN OF TAX ON THE ASSESSEE BEYOND THE PRESCRIBED PERIOD OF LIMITATION, ESPECIALLY AS NONE OF THE CONDITIONS MENTIONED IN THE PROVISO TO S. 147 EXIST. THEREFORE , THE ASSESSMENT FOR THE YEAR IN QUESTION CANNOT BE PERMITTED TO BE REOPENED IN THE ABSENCE OF FULFILME NT OF THE PRE-REQUISITE CONDITIONS, AS CONTAINED IN TH E PROVISO TO S. 147. 11. IN THE PRESENT CASE, IT IS ALSO NOT IN DISPUTE TH AT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE BY WAY OF ACCOUNT PAYEE CHEQUE THROUGH NORMAL BANKING. ADMITTEDLY COPIES OF APPLICATIONS FOR ALLOTMENT OF SHAR ES M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 29 WERE PROVIDED TO THE ASSESSING OFFICER. IT IS NOT T HE CASE OF THE REVENUE THAT THE SHARE APPLICATIONS WERE RECEIVED O N BEHALF OF THE ASSESSEE COMPANY AND WERE FORGED DOCUMENTS. NO SUCH FINDING OR OBSERVATION HAS BEEN MAD E BY THE ASSESSING OFFICER EVEN IN THE LIGHT OF INFOR MATION RECEIVED FROM THE ADDITIONAL CIT RANGE-3, INDORE. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE SHARES WERE NOT ALLOTTED TO CONCERNED COMPANIES. THE ASSESSEE HAS ALSO FILED COPIES OF RESOLUTION PASSED BY THE BOARD OF DIR ECTORS AND ALSO INCOME TAX RETURNS AND DETAILS OF SHARE APPLICATIONS. IN THE PRESENT CASE THE ASSESSING OFFICE R DID NOT MAKE VERIFICATION IN THIS REGARD EITHER FROM THE I NTERNAL RECORD OF INCOME TAX DEPARTMENT OR FROM THE CONCERNE D ASSESSING OFFICER HAVING JURISDICTION OVER THE SHARE APPLICANTS OR FROM THE CONCERN BANKS. NOTHING PREVENTE D THE ASSESSING OFFICER FROM SUMMONING THE DIRECTORS OF THE SHARE APPLICANTS AFTER OBTAINING THEIR PRESENT ADDRESS FR OM M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 30 THE REGISTRAR OF COMPANIES BUT THE ASSESSING OFFICER HAS MADE THE ADDITION MERELY ON THE REASON THAT HE HAS RECEIVED INFORMATION FROM THE ADDITIONAL CIT RANGE 3, INDORE. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSE E HAS MADE FULL AND TRUE DISCLOSURE AND THE ASSESSING OFFICE R IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT HAS NOT BROUGHT ANY CONTRARY INFORMATION OR MATERIAL AGAINST THE ASSESSEE HOLDING THAT THE ASSESSEE FAILED TO DECLARE TRUE AND MATERIAL FACTS BEFORE THE ASSESSING OFF ICER WHILE MAKING THE ASSESSMENT ORDER. IN THIS VIEW OF TH E MATTER, WE HOLD THAT THERE WAS NO SCOPE FOR THE ASSESS ING OFFICER TO INITIATE PROCEEDINGS UNDER SECTION 147/1 48 OF THE ACT. WE, THEREFORE, VACATE THE ORDER PASSED U/S 143(3) READ WITH SECTION 147/148 OF THE ACT. HENCE, WE ALLOW THI S GROUND OF THE APPEAL OF THE ASSESSEE. 12. IN VIEW OF OUR ABOVE FINDINGS ON LEGAL GROUND AS W ELL AS ON MERIT, GROUND NO. 2 RELATING TO ADDITION OF M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 31 RS.1,05,00,000/- U/S 68 OF THE ACT IS ALSO DECIDED I N FAVOUR OF THE ASSESSEE. AS SUCH, THE ADDITION OF RS.1,05,00,000/- IS DELETED ON MERIT ALSO. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. PRONOUNCED IN OPEN COURT ON I AUG. 2016 SD/- SD/- (N.S. SAINI) (D.T . GARASIA) ACCOUNTANTMEMBER JUDICIAL MEMBER IST AUG. 2016 M/S EAGLE SEEDS & BIOTECH LTD. ITA NO.285/IND/2012 32