M/S. STATUS VYAPAAR PVT. LTD.,LUCKNOW V. INCOME TAX OFFICER- 6(2), LUCKNOW

CO 2/LKW/2021

AI Insights

The case involves M/s. Status Vyapaar Pvt. Ltd, the appellant, contesting an assessment order from the Income Tax Officer-6(2), Lucknow, for the assessment year 2012-13. The primary contention was regarding the addition of Rs. 6,34,00,000 to the assessee's income, which was claimed to be based on conjecture and without substantial material. The assessee argued that the reassessment was initiated without proper jurisdiction and was based on incorrect and unsubstantiated reasons. However, the assessee later opted for the Direct Tax Vivad se Vishwas Scheme, leading to the withdrawal of the objection.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472050 (ITAT-LUCKNOW)
• Appeal Type: Cross Objection
• Pronouncement Date: 01-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANU CHAURASIA
• Assessee Lawyers: MAHENDRA KUMAR
• Keywords: Set aside; Difference of opinion; Change of opinion; Reassessment proceedings; Accommodation entries; Reason to believe; Tangible material
• Section: 147; 148; 143(2); 250

Judgement Text

"0IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “A”, LUCKNOW BEFORE SHRI KUL BHARAT, VICE PRESIDENT AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER CO. No.02/LKW/2021 (Arising out of ITA. No.403/LKW/2020 (Assessment Year: 2012-13) M/s. Status Vyapaar Pvt. Ltd 24, Eldico Greens, Gomti Nagar, Lucknow-246010. v. Income Tax Officer-6(2) Lucknow-226010. PAN:AAMCS1343P (Appellant) (Respondent) Appellant by: Shri Mahendra Kumar, C.A. Respondent by: Shri Manu Chaurasia, CIT(DR) Date of hearing: 01 01 2025 Date of pronouncement: 01 01 2025 O R D E R PER KUL BHARAT, VICE PRESIDENT.: The Cross Objection (CO) filed by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)-2, Lucknow dated 24.09.2020 pertaining to the assessment year 2012-13. The assessee has raised the following cross objection: - “1. [BECAUSE, on the facts and in the circumstances of the case, the Ld. Assessing Officer has manifestly erred in law and on facts in determining the Total Income of the assessee at Rs. 6,34,42,150/- The addition of Rs. 6,34,00,000/- is wholly illegal and bad in law and as the same is made on NO material and purely on conjecture and surmise. The Ld. CIT(A) has correctly concluded that there is no justification in the additions sustained by the AO. 2. BECAUSE, on the facts and in the circumstances of the case, the impugned assessment proceedings are without jurisdiction and bad in law, as the statement of reasons recorded for reopening assessment do not lead to the formation of belief that income chargeable to tax of the assessee has escaped assessment and hence the initiation of proceedings under Section 147 is without jurisdiction. The Assessing Officer while re- opening the case of the assessee for the instant assessment year in the CO. No.02/LKW/2021 Page 2 of 5 statement of reasons recorded treated the assessee as a beneficiary of the various transaction appearing in bank account whereas in the order of assessment there is a diametrically opposite and contradictory observation that assessee was shell company. “From the perusal of materials on records as well as details/documents filed by assessee, it is apparent that assessee company was not doing any business during the relevant Financial Year. It was a shell company created for the purpose of rotating funds/providing accommodation entries to the beneficiaries companies,” 3. BECAUSE, the impugned reassessment proceedings are without jurisdiction and bad in law, since notice U/s 148 of the Act has been issued on the sole reason, being a report of the investigation wing and without any independent application of mind by the Assessing Officer; further wrong reasons have been recorded in as much as there is no receipt of Rs. 1,05,00,000/- received by the assessee from Shivbhumi Tradelink Pvt. Ltd. It is settled that re-assessment proceeding cannot be taken out on the basis of factually incorrect reasons and the reasons once recorded cannot be substituted or modified. 4. BECAUSE, on the facts and in the circumstances of the case, the impugned assessment proceedings are without jurisdiction and bad in law, as the statement of reasons recorded for reopening assessment, which has been initiated beyond a period of four years from the end of the relevant assessment year do not demonstrate or establish that the fundamental requirement stipulated under the first proviso to Section 147 of the Income Tax Act, stands satisfied. Hence the impugned order deserves to be set aside and quashed. 5. BECAUSE, it is further settled that if an assessee has disclosed basic and all the true facts; at a later point in time, notice u/s 148 of the Act cannot be issued merely because there is another inference possible from the same documents and facts available before the Assessing Officer, as the same shall constitute “change of opinion”. There must be some new material coming to the possession of Revenue for initiating action under Section 147 r/w 148 of the Act. In the instant case, such imperative requirement is lacking, rendering the impugned order to be set-aside and quashed. 6. BECAUSE, it is settled that one needs to give a schematic interpretation to the words “reason to believe\" failing which, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments, which cannot be per se reason to re-open. It is further submitted that the Assessing Officer has power to re-open an assessment, provided there is \"fresh tangible material” to conclude that there is escapement of income from assessment. The “reason to believe” must have a live link with the formation of the belief. In the instant case, such imperative requirement is lacking, rendering the impugned order to be set-aside and quashed. 7. BECAUSE, on the facts and in the circumstances of the case, the impugned proceedings are bad in law, as the same have been initiated without observing the procedure established under law. Further the sanction obtained under Section 151 of the Act is not in accordance with law. In the instant case, such imperative requirement is lacking, rendering the impugned order to be set-aside and quashed. 8. BECAUSE, on the facts and in the circumstances of the case, the assessment impugned proceedings are bad in law, as the same have been initiated without observing the procedure established under law. The CO. No.02/LKW/2021 Page 3 of 5 requirements under Section 149 of the Act have not been observed rendering the impugned order to be set-aside and quashed. 9. BECAUSE, the impugned assessment proceedings are further bad in law and liable to be quashed as the Order of Assessment is barred by limitation. 10. BECAUSE, the impugned assessment proceedings are further bad in law and liable to be quashed as the jurisdictional Notice under Section 143(2) of the Act, has not been issued by the jurisdictional Assessing Officer, rendering the Order of Assessment bad in law. 11. BECAUSE, on the facts and in the circumstances of the case, the addition of Rs. 6,34,00,000/- made to the returned income filed by the assessee is unsustainable in law as the same has been sustained purely on the basis of incomplete information, un concluded investigation and on conjecture and surmises. The Ld. Assessing Officer, while disbelieving the share capital raised by assessee has not bothered to satisfy himself about the finality of assessment proceedings in the case of the investor companies. There is no mention in the entire body of impugned assessment order as to what was the ultimate fate of assessment and other adjudications made by other agencies in the case of investor companies. 12. BECAUSE, on the facts and in the circumstances of the case, the addition of Rs. 6,34,00,000/- is unsustainable in law as the same had been made on the basis of material which has been gathered behind the back of the assessee and is also not confronted to the assessee. The addition made to the returned income has its foundation on un-confronted material which is impermissible in law and hence the addition made on such basis is liable to be deleted. 13. BECAUSE, on the facts and in the circumstances of the case, the addition of Rs. 6,34,00,000/- is unsustainable in law as the same had been made on the basis of material which has been gathered behind the back of the assessee and is not confronted to the assessee and without affording an opportunity to cross examine the relevant person and hence the addition made on such basis is liable to be deleted. 14. BECAUSE, on the facts and in the circumstances of the case, the addition of Rs. 6,34,00,000/- is unsustainable in law as the Assessing Officer has erroneously placed reliance upon certain statements made by third persons and which do not name the assessee anywhere or in any manner are inculpatory in nature and hence placing reliance on such statements is wholly impermissible in law hence the addition made on the basis of such statement which have no evidentiary value is liable to be ignored and addition cannot be sustained on the basis of such material. 15. BECAUSE, on the facts and in the circumstances of the case, the addition of Rs. 6,34,00,000/- is unsustainable in law as the Assessing Officer has erroneously placed reliance on entries appearing in the books of account of a third person which have admittedly been recorded by such third person without confirmation or acknowledgement from the assessee. It is settled position of law that no addition can be made by solely placing reliance on entries contained in the Books of Account of third person and hence the addition made on the basis of such entry which have no evidentiary value is liable to be ignored and addition cannot be sustained on the basis of such material. CO. No.02/LKW/2021 Page 4 of 5 16. Because, the Ld. Assessing Officer has erred in law and on facts in making addition of Rs. 6,34,00,000/- by refusing to acknowledge and apply legal evidence, admissible under law, which has been adduced by the assessee in support of its claim having issued shares and such evidence has not been disproved at any stage of the proceedings. Hence, the addition made ignoring evidence is liable to be deleted with consequential relief to the assessee. 17. BECAUSE, on the facts and in the circumstances of the case, the Ld. CIT(A) has properly appreciated the facts and circumstances of the case and is wholly justified in passing the impugned order by further directing the assessing officer to cause a verification or other investigation in the cases of other entity. 18. BECAUSE, wholly without prejudice to the aforementioned grounds of appeal the determination of 1% as the commission earn by the assessee is on the higher site and the income is liable to be determined at a rate not higher than 0.5% of the gross receipts. 19.The humble assessee, craves for leave to add/amend any other ground with the prior permission of your honours.” 2. At the outset, the Ld. Authorized Representative for assessee stating that the assessee had opted for settling the dispute arising in cross objection under the Direct Tax Vivad se Vishwas Scheme, 2024 (“DTVSVS” for short) for A.Y. 2012-13 by filing declarations and the Ld. PCIT-1, Lucknow (Designated Authority) accepting assessee declarations has issued certificate in Form no. 2 on 20.12.2024. (A copy of Form 1 & 2 are enclosed herewith). In this regard, the relevant contents of the letter dated 21.12.2024 is reproduced as under: - “1. That appellant has filed the Appeal for AY 2012-13 on 06.04.2021 vide ITA. No.CO2/LKW/2021 against the order u/s 250 of the Income Tax Act, 1961 vide DIN No. ITBA/NFAC/S/250/2023-24/1060187127(1) on 29/01/2024, which is pending for adjudication. 2. That appellant has filed Application in Form No. 1 under DTVSV 2024 vide 757145610171224 Ack. Dt. 17.12.2024, in response to which PCIT-1, Lucknow (Designated Authority) has issued Form No. 2 on 20.12.2024. (Copy of Form-1 & 2 are enclosed herewith). 3. Therefore in present facts & circumstances of the case and as per the provision of Scheme appellant wishes to withdraw the above said pending appeal.” 3. The Learned Departmental Representative has no objection for withdrawal of the cross objection. CO. No.02/LKW/2021 Page 5 of 5 4. In view of the facts discussed above, we permit the assessee to withdraw this cross objection. Accordingly, the cross objection is dismissed as withdrawn. 5. In the result, the cross objection of the assessee is dismissed as withdrawn. Order pronounced in the open Court on 01/01/2025. Sd/- Sd/- [ANADEE NATH MISSHRA] [KUL BHARAT] ACCOUNTANT MEMBER VICE PRESIDENT DATED: 01/01/2025 Vijay Pal Singh, (Sr. PS) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard file By order //True Copy// Assistant Registrar "