DCIT, Central Circle - 1(4), Kolkata , Kolkata V. M/s. Samarth Fablon Pvt. Ltd., , Kolkata

ITSSA 160/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5615 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: R P AGARWALLA; NIRAV SETH
• Keywords: Reopening of assessment; Unexplained cash credit; Search and seizure; Reason to believe; Reassessment proceedings; Set aside
• Section: 143(3); 142(1); 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH, KOLKATA (BEFORE SRI S.S. GODARA, JUDICIAL MEMBER & DR. A.L. SAINI, ACCOUNTANT MEMBER) I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 & I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(4), KOLKATA.................................APPELLANT VS. M/S. SAMARTH FABLON PVT. LTD..............................RESPONDENT 16, GANESH CHANDRA AVENUE KOLKATA 700 013 [PAN : AAKCS 7663 N] C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 & C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD...................................APPELLANT 16, GANESH CHANDRA AVENUE KOLKATA 700 013 [PAN : AAKCS 7663 N] VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(4), KOLKATA.............................RESPONDENT APPEARANCES BY: SHRI R.P. AGARWALLA, SR. ADVOCATE & SHRI NIRAV SETH, C.A., APPEARED ON BEHALF OF THE ASSESSEE . SHRI RADHEY SHYAM, CIT D/R. APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : FEBRUARY 21 ST , 2019 DATE OF PRONOUNCING THE ORDER : MAY 17 TH , 2019 ORDER PER S.S. GODARA, JM :- THESE TWO REVENUES APPEALS AND ASSESSEES CROSS-OBJECTIONS FOR ASSESSMENT YEARS 2008-09 & 2009-10 ARISE AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS) - 20, KOLKATAS SEPARATE ORDERS DATED 02/08/2017 & 10/08/2017 PASSED IN CASE NOS. 97/CIT(A)-20/KOL/CC-1(4)/16-17 & 11604/CIT(A)-20/CC-1(4)/16-17, INVOLVING PROCEEDINGS U/S U/S 147/143(3) AND 153C/144C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) RESPECTIVELY; 2 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD 2. IT TRANSPIRES AT THE OUTSET THAT THE INSTANT LIS COMPRISING OF FOUR CASES PERTAINS TO THE DEPARTMENTS VERY SEARCH ACTION DATED 05/08/2014 CARRIED OUT IN M/S. KUSHAL GROUP OF COMPANIES. WE THEREFORE PROPOSE TO DECIDE THE INSTANT BATCH VIDE COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. ASSESSMENT YEAR 2008-09 ; REVENUES APPEAL IN IT(SS)A NO. 159/KOL/2017 AND ASSESSEES C.O. NO. 16/KOL/2018. 4. THE REVENUE/APPELLANT CANVASSES THE FOLLOWING SUBSTANTIVE GROUND IN THE INSTANT APPEAL:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)-20 ERRED IN ALLOWING THE TECHNICAL GROUNDS OF APPEAL, GROUND NO. 1 AND 8 DISCUSSING WRONG FACTS AN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING THE TECHNICAL GROUNDS TAKEN BY THE ASSESSEE HOLDING THE REASONS RECORDED BY THE AO AS VOID AB INITIO AND IS LIABLE TO BE QUASHED AND HENCE, THE ASSESSMENT ORDER PASSED IS BAD IN LAW MAINLY DISCUSSING AND RELYING ON THOSE CASE LAWS IN WHICH IT WAS HELD THAT REOPENING OF ASSESSMENT WAS BAD IN LAW ON THE GROUND THAT REOPENING WAS DONE BEYOND THE FOUR YEARS AFTER PASSING OF ORDER U/S 143(3) AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT BUT THE LD. CIT(A) FAILED TO EXAMINE THE FACTS OF THIS CASE IN WHICH ORIGINAL ASSESSMENT WAS DONE U/S 143(1)(A) AND NOT U/S 143(3) AND HENCE FIRST PROVISO TO SECTION 147 DID NOT APPLY IN THE INSTANT CASE. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN NOT CONSIDERING THE FACTS OF THE CASE THAT ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(1)(A) AND HENCE, REQUIREMENT OF FIRST PROVISO TO SECTION 147 OF RECORDING OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, WAS NOT REQUIRED. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ONLY ON TECHNICAL GROUNDS WITHOUT EXAMINING THE CASE ON MERIT OF ADDITION, WITHOUT EXAMINING THE FACTS OF THE CASE AND WITHOUT APPLYING THE CORRECT LAW ON THE FACTS OF THE CASE AND HENCE ORDER OF CIT(A) DESERVES TO BE SET ASIDE. 5. LEARNED CIT D/R, REITERATES THE REVENUES ABOVE PLEADINGS SEEKING TO REVERSE THE CIT(A)S ORDER QUASHING THE IMPUGNED REOPENING. HE PLACES ON RECORD, THE ASSESSING OFFICERS ORDER DATED 22/12/2015 DEALING WITH THE ASSESSEES CROSS OBJECTIONS AGAINST REOPENING REASONS AS PER HONBLE APEX COURTS JUDGEMENT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS ITO REPORTED IN [2003] 259 ITR 19 (SC) . HE THEN REFERS TO OTHER 3 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD JUDICIAL PRECEDENTS (A) HOME FINDERS HOUSING LTD. VS. INCOME-TAX OFFICER, CORPORATE WARD 2(3) [2018] 94 TAXMANN.COM 84 (SC) & (B) PEASS INDUSTRIAL ENGINEERS (P) LTD. VS. DCIT, [2016] 73 TAXMANN.COM 185 (GUJARAT) , IN SUPPORT OF THE ASSESSING OFFICERS ACTION TAKING RECOURSE TO SECTION 148/147 PROCEEDINGS AGAINST THE TAXPAYER. 6. LEARNED SENIOR COUNSEL REPRESENTING THE ASSESSEE ON THE OTHER HAND HAS FILED A DETAILED PAPER BOOK COMPRISING OF SECTION 148 NOTICE DATED 26/3/2015, REOPENING REASONS DATED 09/07/2015, COMPUTATION OF INCOME IN THE IMPUGNED ASSESSMENT YEAR ALONG WITH INCOME TAX ACKNOWLEDGEMENT AND RETURNS, AUDITED ANNUAL ACCOUNTS, TAX AUDIT REPORT, OBJECTIONS TO VALIDITY OF REOPENING DATED 29/07/2015 AND ASSESSING OFFICERS ORDER THEREUPON DATED 22/12/2015 (SUPRA) AND MCAS DATABASE OF SHARE ALLOTTEES; RESPECTIVELY FOLLOWED BY A COMPILATION OF VARIOUS JUDICIAL PRECEDENTS TO BE DEALT IN SUCCEEDING PARAGRAPHS. 6.1. WE ARE NEXT TAKEN TO THE ASSESSING OFFICERS REOPENING REASONS DATED 26/03/2015 IN ISSUE AT PAGE 3 OF THE PAPER BOOK AS FOLLOWS:- THIS CASE BELONGS TO KUSHAL GROUP OF CASES WHERE SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 05.08.2014 AND SUBSEQUENT DATES. IN COURSE OF SEARCH AND FOLLOW-UP ENQUIRIES IT HAS BEEN SEEN THAT THIS GROUP INFLATES EXPENSES AND RESORTS TO OUT OF BOOK PURCHASE AND INCOME GENERATED IN THESE PROCESSES IS BROUGHT BACK IN THE BOOKS OF ACCOUNTS IN THE GUISE OF BOGUS SHARE CAPITAL/PREMIUM IN COURSE OF DISCRETE ENQUIRIES MADE BY INVESTIGATION WING IT WAS SEEN THAT THERE IS NO REAL EXISTENCE OF THE SHAREHOLDERS ON THE ADDRESSES SHOWN IN THE FORM OF ALLOTMENT FILED WITH REGISTRAR OF COMPANIES. ON PERUSAL OF INFORMATION RECEIVED FROM INVESTIGATION WING OF THE DEPARTMENT AND ON PERUSAL OF SEIZED BOOKS/DOCUMENTS IT IS SEEN THAT THE COMPANY HAS RESORTED TO RAISING SHARE CAPITAL IN THE MODE AS DESCRIBED ABOVE DURING THE FINANCIAL YEAR 2007-08. IN VIEW OF THE ABOVE I HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IN RESPECT OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. NOTICE U/S 148 ISSUED ON RECEIPT OF SANCTION FROM JOINT COMMISSIONER OF INCOME TAX (CENTRAL)-RANGE 1, KOLKATA. MR. AGARWALLA, STATES THAT THE ABOVE REOPENING REASONS MAKE IT CLEAR THAT THE ASSESSING OFFICER SET SECTION 148 PROCESS IN MOTION BASED ON THE INVESTIGATION WINGS INFORMATION WITHOUT APPLYING HIS MIND INDEPENDENTLY. HIS CASE IS THAT THE IMPUGNED 4 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD REASONS ARE BASED ON SECTION 132 (4) ACTION. HE QUOTES HONBLE BOMBAY HIGH COURTS DECISION IN THE CASE OF HINDUSTAN LEVER LTD. VS. R.B. WADKAR [2004] 268 ITR 332 (BOMBAY) THAT THE ASSESSING OFFICERS REOPENING REASONS HAVE TO BE READ AS IT IS. HE HAS TO DISCLOSE HIS MIND THROUGH REOPENING REASONS ONLY THAT THE ASSESSEES TAXABLE INCOME LIABLE TO BE ASSESSED HAS ESCAPED ASSESSMENT. 6.2. LEARNED SENIOR COUNSELS NEXT PLEA IS THAT THE ASSESSING OFFICER HAS NOWHERE TAKEN NOTE SECTION 132 (4) SEARCH STATEMENTS OR EVIDENCE FOUND THEREIN IN HIS ABOVE EXTRACTED REOPENING REASONS. HE CITES CASE LAW ASSAM CO. LTD. VS. UNION OF INDIA [2006] 150 TAXMAN 571 (GAU.) THAT THE ASSESSING OFFICERS REOPENING REASONS IN SUPPORT OF THE PROPOSED ACTION MUST NECESSARILY REVEAL ALL FACTS AND MATERIALS NOT DISCLOSED AT THE TAXPAYERS BEHEST SO AS TO ESTABLISH A LINK BETWEEN REASONS AND EVIDENCE. LEARNED SENIOR COUNSELS CONTENTION IS THAT THE ASSESSING OFFICERS NON RECORDING OF ALL THE SAID MATERIAL PINPOINTING ESCAPEMENT OF TAXABLE INCOME FROM BEING ASSESSED HAS DEFEATED THE ASSESSEES IS RIGHT TO FILE ITS COMPREHENSIVE OBJECTIONS IN VIOLATION OF HONBLE APEX COURTS DECISION IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. (SUPRA). MR. AGARWALLA CONTINUES HIS ARGUMENTS AGAINST VALIDITY OF THE IMPUGNED REOPENING. HE REFERS TO THE HONBLE JURISDICTIONAL HIGH COURTS DECISION IN EQUITABLE INVESTMENT CO. (P.) LTD. VS. INCOME-TAX OFFICER [1988] 174 ITR 714 (CAL.), THAT IT IS THE RECORDED REASONS ONLY THAT CAN BE TAKEN INTO CONSIDERATION WHILST ADJUDICATING VALIDITY OF THE REOPENING IN ISSUE. AND THAT THE ASSESSING OFFICERS ADDITIONAL AVERMENTS IN HIS SUPPORTING AFFIDAVIT DO NOT DESERVE TO BE ACCEPTED. HE LASTLY REFERS TO HONBLE DELHI HIGH COURTS DECISION IN THE CASE OF SABH INFRASTRUCTURE VS. ACIT [2017] 398 ITR 198 (DELHI), ISSUING THE FOLLOWING GUIDELINES TO THE DEPARTMENT FOR NECESSARY COMPLIANCE AS UNDER: 19. BEFORE PARTING WITH THE CASE, THE COURT WOULD LIKE TO OBSERVE THAT ON A ROUTINE BASIS, A LARGE NUMBER OF WRIT PETITIONS ARE FILED CHALLENGING THE REOPENING OF ASSESSMENTS BY THE REVENUE UNDER SECTIONS 147 AND 148 OF THE ACT AND DESPITE NUMEROUS JUDGMENTS ON THIS ISSUE, THE SAME ERRORS ARE REPEATED BY THE CONCERNED REVENUE AUTHORITIES. IN THIS BACKGROUND, THE COURT WOULD LIKE THE REVENUE TO ADHERE TO THE FOLLOWING GUIDELINES IN MATTERS OF REOPENING OF ASSESSMENTS: (I) WHILE COMMUNICATING THE REASONS FOR REOPENING THE ASSESSMENT, THE COPY OF THE STANDARD FORM USED BY THE AO FOR OBTAINING THE APPROVAL OF THE SUPERIOR OFFICER SHOULD ITSELF BE PROVIDED TO THE ASSESSEE. THIS WOULD CONTAIN THE COMMENT OR ENDORSEMENT OF THE SUPERIOR OFFICER WITH HIS 5 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD NAME, DESIGNATION AND DATE. IN OTHER WORDS, MERELY STATING THE REASONS IN A LETTER ADDRESSED BY THE AO TO THE ASSESSEE IS TO BE AVOIDED; (II) THE REASONS TO BELIEVE OUGHT TO SPELL OUT ALL THE REASONS AND GROUNDS AVAILABLE WITH THE AO FOR RE-OPENING THE ASSESSMENT - ESPECIALLY IN THOSE CASES WHERE THE FIRST PROVISO TO SECTION 147 IS ATTRACTED. THE REASONS TO BELIEVE OUGHT TO ALSO PARAPHRASE ANY INVESTIGATION REPORT WHICH MAY FORM THE BASIS OF THE REASONS AND ANY ENQUIRY CONDUCTED BY THE AO ON THE SAME AND IF SO, THE CONCLUSIONS THEREOF; (III) WHERE THE REASONS MAKE A REFERENCE TO ANOTHER DOCUMENT , WHETHER AS A LETTER OR REPORT, SUCH DOCUMENT AND/ OR RELEVANT PORTIONS OF SUCH REPORT SHOULD BE ENCLOSED ALONG WITH THE REASONS ; (IV) THE EXERCISE OF CONSIDERING THE ASSESSEE'S OBJECTIONS TO THE REOPENING OF ASSESSMENT IS NOT A MECHANICAL RITUAL. IT IS A QUASI- JUDICIAL FUNCTION. THE ORDER DISPOSING OF THE OBJECTIONS SHOULD DEAL WITH EACH OBJECTION AND GIVE PROPER REASONS FOR THE CONCLUSION. NO ATTEMPT SHOULD BE MADE TO ADD TO THE REASONS FOR REOPENING OF THE ASSESSMENT BEYOND WHAT HAS ALREADY BEEN DISCLOSED. 6.3. LEARNED SENIOR COUNSEL ACCORDINGLY CONTENDS THAT THE ASSESSING OFFICERS ACTION TAKING RECOURSE TO THE IMPUGNED REOPENING HAS BEEN RIGHTLY REVERSED IN THE LOWER APPELLATE PROCEEDINGS. 7. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE RIVAL PLEADINGS ON THE INSTANT LEGAL ISSUE OF THE VALIDITY OF THE IMPUGNED REOPENING. THERE IS HARDLY ANY DISPUTE BETWEEN THE PARTIES THAT THE ASSESSING OFFICERS ABOVE STATED REASONS CULMINATED IN HIS REASSESSMENT ADDING ASSESSEES SHARE APPLICATION/PREMIUM OF RS.6,92,00,000/- AS UNEXPLAINED CASH CREDITS. THE CIT(A) HAS QUASHED THE REOPENING IN ISSUE IN LIGHT OF VARIOUS JUDICIAL PRECEDENTS HOLDING THAT IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO QUOTE ASSESSEES FAILURE IN NOT DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS AS PER SECTION 147 FIRST PROVISO SINCE WE ARE DEALING WITH ASSESSMENT YEAR 2008 09 AND SECTION 148 NOTICE HAD BEEN ISSUED ON 26/03/2015 IS BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. HE QUOTES HONBLE HIGH COURTS JUDGMENTS (SUPRA) THAT THE ASSESSING OFFICERS FAILURE IN NOT RECORDING SUCH REASONS IS FATAL TO THE VALIDITY OF THE REOPENING IN ISSUE. THE REVENUES ARGUMENT IS THAT THE SAID STATUTORY PROVISION DOES NOT APPLY TO SECTION 143 (1) (A) BUT ONLY IN SECTION 143 (3) ASSESSMENT IS DEVOID OF MERIT AS HELD IN THIS TRIBUNALS COORDINATE BENCHS DECISION IN GREAT WALL MARKETING PVT. LTD. VS. DCIT IN ITA NO. 660/KOL/2011 ORDER DT. 03/02/2016. COUPLED WITH THIS, THE CIT D/R FAILS 6 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD TO DISPUTE THE FACT THAT THE ASSESSING OFFICER HAD ALSO NOT APPLIED HIS INDEPENDENT MIND ON THE INVESTIGATION WINGS INFORMATION SO AS TO FORM REASONS TO BELIEVE THAT THE ASSESSEES TAXABLE INCOME LIABLE TO BE ASSESSED HAS ESCAPED ASSESSMENT. LEARNED COORDINATE BENCH HAS ACCEPTED THE CONCERNED ASSESSEES LEGAL PLEA AGAINST A SIMILAR REOPENING AS FOLLOWS:- 8. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE BOTH ON THE VALIDITY OF INITIATION OF RE-ASSESSMENT PROCEEDINGS AS WELL AS THE MERITS OF THE APPEAL. NONE APPEARED ON BEHALF OF THE DEPARTMENT. 8.1.WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. AS FAR AS THE VALIDITY OF INITIATION OF RE-ASSESSMENT PROCEEDINGS ARE CONCERNED THE REASONS RECORDED BY THE AO FOR INITIATING PROCEEDINGS U/S 148 ARE AS FOLLOWS :- 'NO.DCIT/CIR-6/REASONS FOR REOPENING/09-10 DATED 22/04/2009 TO THE PRINCIPAL OFFICER GREATWALL MARKETING (P) LTD. C/O SRI. S.M. DAGA 11, CLIVE ROW, ROOM NO. 2 .Z-. FIR. KOLKATA- 700001. SIR. SUB: RECORDED REASONS FOR REOPENING IN THE CASE OF GREATWALL MARKETING (P) LTD. FOR ASST. YR. 02-03 REF: YOUR LETTER DATED 02/04/09 PLEASE REFER TO THE ABOVE. AS PER INFORMATION RECEIVED FROM INVESTIGATION WING NEW DELHI THE INTRODUCED SHARE CAPITAL DURING THE YEAR. HAD BEEN RECEIVED FROM CORPORATE BODIES WHICH ARE NON EXISTENT AND WHOSE CAPACITY TO INVEST ( CREDIT WORTHINESS ) COULD NOT BE ESTABLISHED . THEREFORE I HAVE REASONS TO BELIEVE THAT UNEXPLAINED CASH CREDIT HAD BEEN INTRODUCED IN YOUR BOOKS OF ACCOUNTS IN THE NAME OF INTRODUCTION OF SHARE CAPITAL AND RECEIPT OF SHARE APPLICATION MONEY. IN ABSENCE OF SATISFACTORY IDENTITY AND CREDIT WORTHINESS OF THE OTHER PARTIES. THE ENTIRE INTRODUCED CAPITAL AND SHARE APPLICATION MONEY WILL BE TREATED AS YOUR INCOME FOR THAT YEAR. I WILL THEREFORE CONTINUE THE PROCEEDINGS FOR REASSESSMENT OF YOUR RETURN U/S 147. STATUTORY NOTICES U/S 143(2) AND 142(1) ARE ENCLOSED HEREWITH. YOURS FAITHFULLY. SD/- ( SANJAY MUKHERJEE) DCIT /CIR-6/KOL ' 8.2. THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US WAS THAT THE REASONS RECORDED BY THE AO WERE MERE INFORMATION RECEIVED FROM D.I.T.(INVESTIGATION), NEW DELHI. THERE WAS NO INDEPENDENT APPLICATION OF MIND BY THE AO BASED ON WHICH IT CAN BE SAID THAT HE ARRIVED AT THE SATISFACTION THAT THE INCOME OF THE ASSESSEE IS CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT WAS SUBMITTED THAT INFORMATION RECEIVED BY THE AO WAS VAGUE AND UNCERTAIN AND CANNOT BE CONSTRUED TO BE SUFFICIENT AND RELEVANT MATERIAL ON THE BASIS OF WHICH REASONABLE PERSON CAN FORM BELIEF REGARDING ESCAPEMENT OF INCOME. RELIANCE WAS PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS INSCETICIDES (INDIA) LTD 357 ITR 330 AND CIT VS SFIL STOCK BROKING LTD . 325 ITR 285 (DELHI). IN BOTH THE AFORESAID DECISIONS THE REASONS RECORDED BY THE AO FOR INITIATING 7 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD PROCEEDINGS U/S 148 OF THE ACT THE HON'BLE DELHI HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL QUASHING THE PROCEEDINGS. RELIANCE WAS ALSO PLACED ON THE DECISION OF ITAT, KOLKATA 'C' BENCH IN THE CASE OF M/S. CONTROLLA ELECTROTECH (P)LTD VS DCIT IN ITA NOS.1443 & 1444/KOL/2014 WHEREIN ON IDENTICAL FACTS THE TRIBUNAL WAS PLEASED TO QUASH THE REASSESSMENT PROCEEDINGS. ON MERITS THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 9. WE HAVE GIVEN A CAREFUL CONSIDERATION OF THE SUBMISSIONS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE. IT IS CLEAR FROM THE REASONS RECORDED BY THE AO THAT THE AO ACTED ONLY ON THE BASIS OF A LETTER RECEIVED FROM INVESTIGATION WING , NEW DELHI. THE REASONS RECORDED DOES NOT GIVE AS TO WHO HAS GIVEN THE BOGUS ENTRIES TO THE ASSESSEE. THE REASONS RECORDED ALSO DOES NOT MENTION AS TO ON WHICH DATES AND THROUGH WHICH MODE THE BOGUS ENTRIES WERE MADE BY THE ASSESSEE. THE REASONS RECORDED WHICH ARE EXTRACTED IN THE EARLIER PART OF THE ORDER DOES NOT SHOW, WHAT WAS THE INFORMATION GIVEN BY DIT(INV.),NEW DELHI. THE DATE OF THE INFORMATION RECEIVED BY THE AO WERE NOT SPELT OUT IN THE REASONS RECORDED. THE INVOLVEMENT OF THE ASSESSEE IS ALSO NOT SPELT OUT, EXCEPT MENTIONING THE CORPORATE BODIES WHO HAD SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE WERE NON-EXISTENT AND NOT CREDITWORTHY. ON IDENTICAL FACTS THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS INSECTICIDES (INDIA) LTD (SUPRA) HAS TAKEN A VIEW THAT THE REASONS RECORDED WERE VAGUE AND UNCERTAIN AND CANNOT BE CONSTRUED AS SATISFACTION ON THE BASIS OF THE RELEVANT MATERIAL ON THE BASIS OF WHICH A REASONABLE PERSON CAN FORM A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THE HON'BLE DELHI HIGH COURT HAS ALSO COME TO THE CONCLUSION THAT THE REASONS RECORDED DID NOT DISCLOSE THE AO'S MIND REGARDING ESCAPEMENT OF INCOME. THE HON'BLE DELHI HIGH COURT ULTIMATELY HELD THAT INITIATION OF PROCEEDINGS U/S 148 OF THE ACT WAS NOT VALID AND JUSTIFIED IN THE EYES OF LAW. THE FACTS AND CIRCUMSTANCES IN THE PRESENT CASE ARE IDENTICAL TO THE CASE DECIDED BY THE HON'BLE DELHI HIGH COURT. FOLLOWING THE SAID DECISION WE HOLD THAT INITIATION OF RE-ASSESSMENT PROCEEDINGS IS NOT VALID. ON THIS GROUND, THE ASSESSMENT IS LIABLE TO BE ANNULLED. 8. WE WISH TO RE-EMPHASISE HERE THAT THE ASSESSING OFFICERS REOPENING REASONS ARE NOT DIFFERENT IN THE INSTANT CASE AS WELL AS HE HAS SIMPLY PROCEEDED TO SET SECTION 148 AND 147 MACHINERY IN MOTION WITHOUT EVEN APPLYING HIS MIND TO THE ALLEGED INVESTIGATION WINGS REPORT. HONBLE DELHI HIGH COURTS DECISION (SUPRA) MAKES IT CLEAR THAT THE ASSESSING OFFICER IS SUPPOSED TO PARAPHRASE SUCH INVESTIGATION REPORT FORMING BASIS OF THE REOPENING REASONS ALONG WITH NECESSARY ENQUIRY. AND ALSO THAT ANY DOCUMENTARY EVIDENCE REFERRED IN THE REASONS MUST ALSO BE ENCLOSED WITH THE REASONS TO THE ASSESSEE. THE ASSESSING OFFICER HAS ADMITTEDLY NOT COMPLIED WITH ALL THOSE LEGAL REQUIREMENTS. WE THEREFORE REJECT THE REVENUES ARGUMENTS SEEKING TO REVIVE THE IMPUGNED REOPENING ON THE FORMER LEGAL ISSUE. WE FURTHER MAKE IT CLEAR THAT THE ASSESSING OFFICERS ABOVE NON-COMPLIANCE TO LEGAL REQUIREMENTS DEPRIVED THE ASSESSEE OF ITS VALUABLE RIGHT TO FILE OBJECTIONS CHALLENGING VALIDITY OF HIS REOPENING REASONS AS PER HONBLE APEX COURTS DECISION IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. (SUPRA). MR. NAYAKS RELIANCE ON HONBLE APEX COURTS DECISION HEREINABOVE IN HIS ARGUMENTS AND THE ASSESSING OFFICERS ORDER DATED 22/12/2015 DISPOSING OF THE TAXPAYERS OBJECTIONS ARE NOT LIABLE TO BE ACCEPTED GOING BY THE PRECEDING JUDICIAL PRECEDENTS THAT AN ASSESSEE 8 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD MUST BE SUPPLIED REOPENING REASONS SO THAT IT CAN PREFER OBJECTIONS AT THE THRESHOLD. WE THEREFORE FIND NO REASON TO INTERFERE WITH THE CIT(A)S ORDER IN QUASHING THE IMPUGNED REOPENING. THE REVENUES LAST SUBSTANTIVE GROUND THAT THE CIT(A) HAS NOT ADVERTED TO THE MERITS OF THE ISSUE ALSO DOES NOT CARRY ANY SUBSTANCE SINCE THE REOPENING ITSELF ITS STANDS QUASHED. THE REVENUE FAILS IN ITS FORMER APPEAL I.T.(SS). A. NO. 159/KOL/2017 THEREFORE. 10. THE ASSESSEE DOES NOT PRESS FOR THE ITS CROSS-OBJECTIONS DEALING WITH THE MERITS OF THE CASE IN VIEW OF OUR FINDINGS ON THE FIRST AND FOREMOST LEGAL ISSUE IN REVENUES APPEAL. WE THEREFORE DECLINE THIS FIRST CROSS-OBJECTION IN C.O. NO. 16/KOL/2018, AS RENDERED INFRUCTUOUS. 11. ASSESSMENT YEAR 2009-10 ; REVENUES APPEAL IN IT(SS)A NO. 160/KOL/2017 AND ASSESSEES C.O. NO. 17/KOL/2018. 12. IT TRANSPIRES DURING THE COURSE OF HEARING THAT THE CIT(A) HAS QUASHED SECTION 153C ASSESSMENT/PROCEEDINGS IN THE INSTANT CASE ON THE GROUND THAT THERE WAS NO INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH. THIS DETAILED DISCUSSION TO THIS EFFECT READS AS UNDER:- 9 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD 10 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD 11 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD 12 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD 13 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD 14 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD 15 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD 16 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD 17 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD 13. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE REVENUES PLEADINGS/ARGUMENTS THAT THE CIT(A) HAS ERRED IN LAW AND IN FACTS IN QUASHING THE IMPUGNED ASSESSMENT FOR WANT OF ANY INCRIMINATING EVIDENCE FOUND OR SEIZED DURING THE COURSE OF ASSESSMENT. IT HAS COME ON RECORD THAT THE CIT(A) HAS TAKEN NOTE OF ALL THE JUDICIAL PRECEDENT INCLUDING HONBLE JURISDICTIONAL HIGH COURTS DECISION TO THIS EFFECT (SUPRA) WHILST HOLDING THE IMPUGNED ASSESSMENTS AS NOT SUSTAINABLE IN THE EYES OF LAW. WE THEREFORE SEE NO MERIT IN THE REVENUES INSTANT GRIEVANCE IN ABSENCE OF ANY INCRIMINATING EVIDENCE FOUND/SEIZED DURING SEARCH. REVENUES MAIN APPEAL I.T.(SS)A. NO. 160/KOL/2018 FAILS THEREFORE. 14. THE ASSESSEES LATTER CROSS-OBJECTION ON MERITS C.O. NO. 17/KOL/2018 IS RENDERED INFRUCTUOUS IN VIEW OF OUR FINDINGS AGAINST THE REVENUE ON THE PRECEDING LEGAL ISSUE. 15. THESE TWO REVENUES APPEALS ARE DISMISSED AND ASSESSEES CROSS-OBJECTIONS ARE DISMISSED AS RENDERED INFRUCTUOUS. ORDERED ACCORDINGLY. KOLKATA, THE 17 TH DAY OF MAY, 2019. SD/- SD/- [A.L. SAINI] [S.S. GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 17.05.2019 {SC SPS} 18 I.T.(SS).A NO. 159/KOL/2017 ASSESSMENT YEAR: 2008-09 I.T.(SS).A NO. 160/KOL/2017 ASSESSMENT YEAR: 2009-10 C.O. NO. 16/KOL/2018 ASSESSMENT YEAR: 2008-09 C.O. NO. 17/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. SAMARTH FABLON PVT. LTD COPY OF THE ORDER FORWARDED TO: 1. M/S. SAMARTH FABLON PVT. LTD 16, GANESH CHANDRA AVENUE KOLKATA 700 013 2. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(4), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES