S.P. SINGLA CONSTRUCTION PRIVATE LIMITED,DELHI V. DEPUTY COMMISSIONER OF INCOME TAX, CHANDIGARH

ITA 514/CHANDI/2023

AI Insights

The case involves M/s S.P. Singla Construction Pvt. Ltd., which faced a reassessment notice under Section 148 of the Income Tax Act, 1961, following a search operation. The AO alleged that the company had booked bogus expenses through subcontractor firms to reduce taxable income. The Tribunal examined whether the reopening of the assessment was justified and whether the assessee had failed to disclose material facts in the original assessment. After reviewing the submissions and evidence, including the original assessment records and the statement of the company's former auditor, the Tribunal concluded that the assessee had not concealed any facts and that the reopening was based on a mere change of opinion by the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469857 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Other Referred Cases: CIT Vs Foramer France (2003) 264 ITR 566 (S.C.), Rajshree Realtors Pvt. Ltd. V UOI (2023) 457 ITR 354 (Bom)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Assessee Lawyers: ASHWANI KUMAR
• Keywords: Set aside; Business income; Difference of opinion; Change of opinion; Revised return; Business expenditure; Corroborative evidences; Depreciation; Reopening of assessment; TDS; Accommodation entries; Reason to believe; Tangible material; Bogus
• Section: 147; 148; 143(3); 142(1); 201; 153; 132; 153A; 22; 13; 139; 274; 2; 191; 264; 44BB; 20

Judgement Text

"आयकर अपील य अ धकरण,च\u0010डीगढ़ \u0014यायपीठ , च\u0010डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’ CHANDIGARH BEFORE: SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER, आयकर अपील सं./ ITA No. 514/CHD/2023 \u0001नधा\u0005रण वष\u0005 / Assessment Year : 2012-13 M/s S.P.Singla Construction Pvt.Ltd., Flat No. 1006-1007, 10th Floor, Pearls Best Height-1, Netaji Subhash Place, Pitampura, Delhi. Versus The DCIT, Central Circle-1, Chandigarh. थायी लेखा सं./PAN /TAN No: AACCS5773B अपीलाथ\u0017/Appellant \u0018\u0019यथ\u0017/Respondent \u0001नधा\u0005\u001aरती क ओर से/Assessee by : Shri Ashwani Kumar, CA Shri Aditya Kumar, CA Ms. Muskan Garg and Ms. Deepali Aggarwal, CA राज व क ओर से/ Revenue by : Smt. Kusum Bansal, CIT-DR सुनवाई क तार\"ख/Date of Hearing : 31.12.2024 उदघोषणा क तार\"ख/Date of Pronouncement : 02.01.2025 PHYSICAL HEARING आदेश/ORDER PER MAHAVIR SINGH, VP This appeal by assessee is arising out of the order of CIT(A)-3 Gurgaon in appeal No. 10314/2019-20 dated 26.07.2023. The assessment was framed by DCIT, Central Circle-I Chandigarh for the assessment year 2012-13 under ITA 514/CHD/2023 A.Y. 2012-13 2 Section 147 read with Section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide his order dated 17.12.2019. 3. At the outset, ld. Counsel for the assessee drew our attention to the first jurisdictional issue raised as regards to re-opening of assessment. The ld. Counsel for the assessee particularly drew our attention to ground No. 2 and 3 raised regarding this issue which read as under : “2. That the ld. CIT(A) further gravely erred in upholding the action of the Learned Assessing Officer in resorting to initiation of proceedings u/s 148. 3. That the Learned CIT(A) further gravely erred in upholding the action of the Learned Assessing Officer in proceeding with the re-assessment u/s 148 despite the fact that the entire reliance has been made by the Learned Assessing Officer on some alleged documents found during the course of search u/s 132 at the premises of the third party and it at all any action was warranted, Should have been by resort to Section 153-C.” 4. The brief facts are that a search & seizure operation was conducted on Bakshi Group of cases including the assessee on 10.12.2012 under Section 132 of the Act and consequent to the same, assessment under Section 153A r.w. section 143(3) of the Act was framed vide order dated 31.03.2015 originally. Subsequently, second search under Section 132 of the Act was conducted on the business and residential premises of the assessee on 09.08.2018. Post search proceedings, in consequent to second search, the AO noted that the assessee has created a web of sub-contractor ITA 514/CHD/2023 A.Y. 2012-13 3 firms having its registered offices either at the residence or office premises of its Chartered Accounts, one Shri Gurinder Kumar Garg, resident of House No.66 NAC, Shivalik Enclave, Mani Majra, Chandigarh or at the residential premises of assessee's Accountant Shri Manoj Kumar, resident of House No.202, GH-68, Sector 20, Panchkula. The AO further noted that the Sub Contractor firms have been used by assessee company to book bogus expenses to bring down its overall profit. The DDIT (Investigation) passed on the information to the AO of the assessee i.e. DCIT Circle-22 New Delhi and DCIT Circle 22 New Delhi after verifying the facts, issued notice under Section 148 of the Act dated 20.03.2019 after recording reasons in term of Section 148(2) of the Act. The AO issued notice under Section 148 of the Act after obtaining due approval from DCIT New Delhi on 20.03.2019. In response to notice under Section 148 of the Act, assessee filed its return of income declaring total income of Rs.32,82,24,450/- on 23.04.2019. The assessee subsequently vide letter dated 29.04.2019 requested for supply of reasons recorded under Section 148 of the Act. The assessee's case was centralized consequent to the order passed by PCIT-8 New Delhi under Section 127 of the Act ITA 514/CHD/2023 A.Y. 2012-13 4 and accordingly, assessment proceedings were completed under Section 147 read with Section 143(3) of the Act dated 17.12.2019. Thereby, the AO after verifying the details of bogus Sub Contractor Firms numbering in 39 disallowed the total expenses claimed by assessee on account of these bogus Sub Contractor firms at Rs.36,10,58,438/-. Accordingly, assessee's income was assessed. Aggrieved, assessee preferred appeal before CIT(A). 5. Before CIT(A), assessee raised the issue of re-opening vide Ground No. 2 and 3 as under : “2. That the assessment order dated 17.12.2019 passed u/s 147 r.w.s. 143(3) of the Act by the learned AO is non-est and bad in law in as much as the proceedings have not been conducted in the manner prescribed by the department instructions from time to time which are mandatory for compliance by the learned AO since the impugned order has not been uploaded on the e-filing portal of the appellant company but has been served on it through courier. 3. That the very initiation of proceedings under Section 148 of the Act is bad in law. 6. The CIT(A) considered this issue of re-opening and finally upheld the action of the AO in re-opening assessment by observing in para 8.14 and 8.15 as under : 8.14 The argument of Ld. AR that assessment in this case should have been framed, if at all, u/s 153A of the Act by invoking 4th provisio as the income escaping assessment was more than 50 lacs; therefore proceedings u/s 147 of the Act were bad in law, void ab initio has been examined. In order to decide this ground of appeal it is relevant to refer to 4th proviso to section 153A of the Act which is reproduced as under:- ITA 514/CHD/2023 A.Y. 2012-13 5 Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the assessing officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years. (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. From the perusal of the above, it is evident that in order to issue notice for assessment/ re assessment for relevant assessment years (an assessment year preceding the assessment year relevant to previous year in which search is conducted which falls beyond six assessment year but not later than 10 assessment year), the AO on the basis of books of account, other documents or evidence has to satisfy himself/ herself that income more than Rs.50 lacs has escaped assessment which is represented in the form of assets. Further explanation-2 to section 153A provides that the asset shall include immovable property being land or building or both, shares and securities, loans and advances and deposits in the bank accounts. From the facts of the case, it is observed that the AO has recorded her satisfaction that income of Rs. 36,10,58,438/- has escaped assessment on account of bogus expenses claimed in the names of fictitious sub contractors for the assessment year under consideration. Such assessment year 2012-13 falls beyond six assessment years (AY 2013-14 to AY 2018-19 preceding to the assessment year in which search was conducted on 09.08.2018). However such income of Rs. 36,10,58,438/- escaping assessment is not represented in the form of any asset (as defined in Explanation-2 to section 153A). Therefore it is found that facts of the present case are not covered by the 4th provisio read with Explantion-2 to section 153A of the Act. Therefore on facts no action was required to be taken under the provisions of section 153A of the Act in this case. The AO was justified in initiating proceedings u/s 147/148 of the Act in accordance with the provisions of the Act. Accordingly no merit is found in such ground of appeal taken by the appellant. The same is hereby dismissed. 8.15 Thus from the above facts and discussion it is found that the AO has formed reason to believe for escapement of income with application of mind, based upon tangible material and in accordance with the provisions of the Act. Accordingly no merit is found in such grounds of appeal no 3 and 4 taken by the appellant and the same are hereby dismissed. ITA 514/CHD/2023 A.Y. 2012-13 6 7. We have heard the rival contentions and gone through the facts and circumstances of the case. We have perused the case records including the assessment order and the order of CIT(A). We have also perused the case laws, Paper Books filed by assessee consisting of pages 1-629 and second Paper Book consisting of pages 630-1776. 8. Before us, ld. Counsel for the assessee drew our attention to notice issued under Section 148 of the Act dated 20.03.2019 which is enclosed with assessee's Paper Book page No.131. He also drew our attention to the reasons recorded which are enclosed at assessee's Paper Book pages 133 to 138. The relevant reasons recorded were referred by ld. counsel and the same are being reproduced as under: Reasons recorded for initiating proceedings ids 148 of the I.T. Act, 1961, Reasons recorded in the case of Ms. S P Singla Constructions Pvt. Ltd. A.Y 2012-13 in respect of initiation of re-assessment proceedings u/s 147/148 of the Income- tax Act, 1961 1. The Return of income for A.Y. 2012-13 was originally e-filed vide acknowledgement no. 507755821300912 by the assessee company on 30.09.2012 declaring total income of Rs,32,82,24,450/. Later the revised return was e-filed by the assessee company vide acknowledgement No. 180747961070514 declaring the same income as in original return i.e. Rs. 32,82,24,450/- The assessment proceedings u/s 153A/143(3) was completed on 31.03.2015 by the DCIT, Central Circle- 26, New Delhi by determining income of Rs. 32,82,24,450/- 2. Vide letter dated 07.01.2019, the Deputy Commissioner of Income Tax(Inv) -2, Chandigarh has informed that a search was conducted on SP Singla Group on 09.08.2018. Post search proceedings in the said case revealed that SP Singla Constructions Pvt. Ltd. has created a ITA 514/CHD/2023 A.Y. 2012-13 7 web of sub-contractor firms having its registered address either at the residential/office premise of the then chartered accountant of the company Sh. Gurinder Kumar Garg, House No. 66, NAC, Shiwalik Enclave, Manimajra, Chandigarh or at the residential address of the company's main accountant Sh. Manoj Kumar, 202, GH 68, Sector 20, Panchkula. The alleged sub-contractors firms have been used by the assessee company to book bogus expenses to bring down its overall profits. The relevant portions of the information are reproduced as under: \" 4. During the course of search, Sh. Gurinder Kumar Garg was confronted with a sheet containing list of sub-contractors which was seized at his residence while recording his statement on oath under section 132(4) of the Act, 1961 dated 09.08.2018. In response, he stated that the said list contains the names of firms were controlled by Sh. Sat Paul Singla, Managing Director of SP Singla Constructions Pvt. Ltd. Since Sh. Gurinder Kumar Garg was the auditor of SP Singla Group he was directed by Sh. Sat Paul Singla to file Income Tax Returns for these firms by declaring a profit of 8% on the total receipts of each of the said sub-contractors. He further stated that no books of accounts were maintained for these sub-contractor firms. When Sh. Gurinder Kumar Garg was asked to give details of the partners of these sub-contracting firms, he stated that the partner of the firm were either the employees of SP Singla Constructions Pvt. Ltd or the relatives of Sh. Sat Paul Singla. He further stated that these sub-constructor firms have never performed any construction related activity and that the expenses booked on these accounts were claimed as business expenses in the books of SP Singla Constructions Pvt. Ltd. and SPS Structures Ltd. 5……….. 6. During the post search enquiries, the ITD data of these firms were obtained and analysed. On such analysis it was observed that the registered addresses of these firms are either the residential or office address of Sh. Gurinder Kumar Garg or the residential address of Sh. Manoj Kumar, Accountant of SP Singla Constructions Pvt. Ltd.………….. 7. On further analysis of the Income Tax returns it was observed that the said sub-contractor firms have filed their returns by declaring extremely low profits who do not commensurate with the scale of turnover and general prevailing net profit rates of sub-contractors. Further it was also noticed that the last year of filing of returns of the above stated firms is assessment year 2012-13 corresponding to financial year 2011-12 which matches with the year up to which Sh. Gurinder Kumar Garg was involved in the auditing of Sat Paul Singla group. This corroborates the statement of Sh. Gurinder Kumar Garg that he had filed the returns of the above stated bogus firms as the said firms become non-operative on the same year in which he left SP Singla Constructions Pvt. Ltd. as auditor. 8…………….. ITA 514/CHD/2023 A.Y. 2012-13 8 9…………… 10………….. 11 . In order to further reaffirm the genuineness of the said firms, summons were issued on 05.10.2018 to partners of these firms seeking personal deposition and also asking to furnish the copy of agreement signed between their sub-contractor firms with SP Singla Constructions Pvt. Ltd and SPS Structures Ltd. They were also asked to furnish the copy of audited balance sheet, P & L Account and also the copies of original bills raised against sub-contract work done for SP Singla Constructions Pvt. Ltd & SPS Structures Ltd. However, none of the parties attended the proceedings nor filed any reply in this regard. 12. In view of all the above it is clear that the said firms are bogus sub- contractors parties which are not involved in any actual activity and that they are merely established to book bogus expenses for SP Singla Constructions Pvt. Ltd. and SPS Structures Ltd so as to bring down their tax liability. Accordingly, copy of accounts of these firms in the books of SP Singla Constructions Pvt. Ltd. was retrieved from the tally data. On analysis of the same it was observed that the bogus sub-contractor expenses were last book in FY 2011-12, that is the last year of association of the assessee group with Sh. Gurinder Kumar Garg, CA. The details of bogus expenses booked by SP Singla Constructions Pvt. Ltd. in financial year 2011-12 on the pretext of sub —contractor expenses paid to the bogus sub-contractor firms as under: Sr. No Name of the Firm PAN Amount in Rs. 1 A.G. Highways AAMFA7228C 5,94,34,770 2 Alankar Construction AALFA5858P 23,76,033 3 Ambey Engineers & Contractors AALFA6162G 22,84,130 4 Amar Construction & Engineers AALFA5859N 48,02,187 5 Bridge Construction AAGFB9157P 42,69,484 6 Chenab Construction AAEFC6518M 53,38,599 7 Continental Construction AAEFC6570F 37,27,490 8 Continental Conrete Piles AAFFC0609Q 1,14,17,563 9 Deepak construction AAFFD3140B 2,91,63,157 10 Malwa Construction & Engineer AAMFM0282A 70,57,336 11 National Engineer & Contractor AAFFN8932K 1,78,26,814 12 Om Construction & Engineer AABFO2739D 40,46,479 13 Pragati Infrastructure AAMFP0684P 1,23,35,507 ITA 514/CHD/2023 A.Y. 2012-13 9 14 Prem Infrastructure & Developers AAIFP8447M 23,49,739 15 Sabhya Construction ABVFS1189A 1,34,82,267 16 Shiv Sakti Construction ABCFS4259A 27,47,393 17 Shivalaya Construction ABVFS1790F 1,30,40,920 18 Shivalik Engineers & Contractors ABCFS4475N 28,10,920 1 9 Sabhavana Infrastructure ABVFS1190H 1,10,96,388 20 Surya Construction Eng. & Contractor ABCFS4474P 3,06,63,625 21 Swastik Construction ABFFS5101G 4,99,85,804 22 Unique Construction AABFU7844B 23,78,145 23 Jai Durga Engineering and Construction AAFFJ0221R 30,75,446 24 SS Construction Engineering ABCFS4260N 25,88,301 25 Hind Construction Engineers Contractors AADFH9919A 42,00,000 26 India Engineers and Contractors AABF1869E 53,08,069 27 Balaji Engineers and Contractors AAIFB1217A 38,17,244 28 Sunshine Construction ABCFS4473L 39,34,091 29 Anand Engineers and Contractors AANFA8994L 36,67,059 30 Rk Construction and Engineers AAIFR2538Q 39,50,000 31 Bharat Construction AAFGB9151M 42,21,036 32 Adarsh Construction and Engineers AANFA8995M 39,35,164 33 Tirupati Engineers and Contractors AAEFT9240M 34,40,288 34 Ganga Constructions AAGFG1512M 41,19,600 35 Maaa Bhagwati enterprises AAMFM0246L 58,20,821 36 Omkar Engineers and Contractors AABFD6378E 42,83,134 37 Gupta Constructions and Engineers AAGFG1480L 40,00,000 38 Himland Construction and Engineers AAEFH6688K 40,45,000 39 Himalayan Construction and Engineers AADFH9910K 40,18,435 TOTAL 36,10,58,438 ITA 514/CHD/2023 A.Y. 2012-13 10 15. Taking into consideration all the above facts an opportunity was given to SP Singla Constructions Pvt. Ltd. and SPS Structures Ltd. vide this office letter No. 838 dated 16.11.2018 to show cause as to why the above-mentioned sub- contractors expenses booked by the assessee companies should not be treated as bogus. However, the assessee company failed to submit any explanation in this regard. 16. After taking all the above information into consideration, it is clear that the assessee has no valid explanation to offer with regard to the bogus sub- contractor expenses booked by them. Therefore, the bogus sub-contractor expenses booked by SP Singla Constructions Pvt. Ltd to the tune of Rs. 36,10,58,438/- during financial year 2011-12 may be disallowed as per the provisions of the Income Tax Act, 1961.” Analysis of information by the AO: 3. Vide letter dated 01.03.2019 and email ID at [e-mail] [e-mail], assessee Company was requested to provide following information to this office on or before 06.03.2019: I. Please furnish copies of nil, audit financial statements with all annexures for FY 2011-12. II. Please furnish the nature of transaction with the said entities during the FY 2011- 12. III. Please furnish certified copy of ledger account of each entities during the FY 2011-12. IV. Please furnish statement of all bank accounts maintained by you during the FY 2011-12. 4. The assessee company neither filed any submission nor attend the office of the undersigned to present its stand on the issue. As the assessee co did not file relevant documents as discussed above, it seems that the assessee company booked bogus expenses to minimise its taxable income through non-genuine/paper entity that does not have any business set up. What a reasonable person can infer from the above is that as the transactions were sham, the assessee company opted not to comply the letter of this office. 5. M/s SP Singla Constructions Pvt. Ltd. has e-filed its original return of income for A.Y. 2012-13 vide acknowledgement no. 507755821300912 on 30.09.2012 declaring total income of Rs.32,82,24,450/-. Later the revised return was e-filed by the assessee company vide acknowledgement No, 180747961070514 declaring the same income as in original return i.e. Rs. 32,82,24,450/- The assessment proceedings u/s 153A/143(3) was completed on 31.03 2015 by the DCIT, Central Circle- 26, New Delhi by determining income of Rs. 32,82,24,450/-. On perusal of P & L Account of the assessee for AY 2012-13 filed in e-filed return. Assessee has debited following expenses: ITA 514/CHD/2023 A.Y. 2012-13 11 Sl.No. Head of Expense Amount (In Crore) 1 Purchases Rs. 265.04 2 Freight Rs. 4.76 3 Duties Rs. 4.48 4 Consumption of stores and spare parts Rs. 10.29 5 Other Expenses Rs. 174.23 On analysis of report of. the investigation wing and the return of income, it is clear that bogus expense of Rs. 36,10,58,438/- has been booked by the assessee company during the year under consideration. 6. Considering the above referred credible information, have reason to believe that an amount of atleast Rs. 36,10,58,438/- has escaped assessment in case of M/s SP Singla Constructions Pvt. Ltd., PAN: AAGCS5773B for A.Y. 2012-13 within the meaning of Section147/148 of the Income Tax Act, 1961. The case is covered by clause (c) of Explanation 2 to Section 147.Therefore, it is a fit case for the issuance of notice u/s 148 of the I T Act, 1961to re-assesss such income in the course of proceedings u/s 147 of the Income Act, 1961. 7. This escapement of income of atleast Rs. 36,10,58,438/- by way of bogus expenses during the F.Y. 2011-12 relevant to A.Y. 2012-13 has been clearly due to failure of the assessee company to disclose truly & fully these material facts regarding obtaining accommodation entries as source of them remained unverified/unexplained in course of assessment proceedings and are unexplained on the basis of return of income also. 8 In this case a return of income was filed for the year under consideration and regular assessment u/s 153A/143(3) was made on 31.03.2015. Since, 4 years from the end of the relevant year has lapsed in this case, the only requirement to initiate proceeding u/s 147 is reason to believe which has been recorded above. 9. It is pertinent to mention here that in this case an assessment was made as stipulated u/s 2(40) of the Act. However, as discussed in reason to believe in this case: • Income chargeable to tax has been under assessed by an amount of atleast Rs.36,10,58,438/- In view of the above facts, the provisions of clause (c) of explanation 2 to section 147are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. ITA 514/CHD/2023 A.Y. 2012-13 12 In this case, more than four year has lapsed from the end of the assessment year under consideration. Hence necessary sanction to issue the notice u/s 148 is being obtained separately from the Pr. Commissioner of Income tax-8, New Delhi as per the provisions of the section 151(2) of the Income Tax Act, 1961.” 9. In view of the above reasons, ld. Counsel for the assessee stated that the only charge of the AO in the reasons recorded is that the assessee has used various sub contractor firms to book bogus expenses to bring down its overall profits and according to the reasons, this was affirmed by Chartered Accountant Shri Gurinder Kumar Garg. The AO in the reasons recorded has reproduced same information but nowhere it is mentioned that the independent information or any incriminating material was found during the course of search conducted on assessee on 09.08.2012. It is only the statement of Shri Gurinder Kumar Garg, Chartered Accountant who was auditor of the S.P. Singla Group of Cases and that all these alleged bogus firms were at the address of the Chartered Accountant Shri Gurinder Kumar Garg or at the address of Accountant Shri Manoj Kumar. The ld. counsel contended that the AO while recording reasons presumed that the sub contractor expenses booked by assessee are bogus and in the reasons he narrated 39 parties who are sub contractors of the ITA 514/CHD/2023 A.Y. 2012-13 13 assessee to whom the assessee has paid a sum of Rs.36,10,58,438/- as Sub Contractor Charges. The ld. counsel pointed out to relevant para 6, 7, 8 & 9 of the reasons recorded and stated that for reaching a conclusion that these are bogus expenses being sub contractor expenses for the reason that during original assessment proceedings, these expenses remain unverified/unexplained. The ld. counsel argued that in the very reasons, the AO has admitted that these sub contract expenses are part of the case records i.e. part of financials of the assessee. He stated that the entire financials were declared by assessee in the original return of income and entire reasons recorded on the basis of either the statement of the Chartered Accountant Shri Gurinder Kumar Garg or the financials of the assessee filed alongwith the return of income for assessment year 2012-13 filed on 30.09.2012. The ld. counsel explained that all information relating to these sub contract expenses were enquired into by the AO during the course of original assessment proceedings and all details were filed by assessee. The ld. Counsel for the assessee took us through various notices issued by AO during original assessment proceedings and particularly drew our attention to page 1631 ITA 514/CHD/2023 A.Y. 2012-13 14 of assessee's Paper Book wherein notice issued by DCIT during original assessment proceedings vide F.No:DCIT/CC- 2/AAGCS/2014-15/647 dated 11.11.2014 and relevant question raised by AO reads as under : “Please furnish the year wise details of all major expenses alongwith bills and vouchers and supporting evidences. Please also file details of any such expenses which covered within the provisions of TDS and the amount of TDS deducted and credited to the Central Govt. account.” 9.1 The ld. Counsel for the assessee explained that further the AO while completing assessment under Section 153A read with Section 143(3) of the Act, originally, vide questionnaire dated 18.02.2015 vide No. DCIT/CC-26/2014- 15/1391 dated 18.02.2015 wherein questions particularly about sub contracts were raised and the relevant reads as under : In continuation of this office questionnaire dated 13.02.2015 you are also requested to furnish the details of expenses claimed by you (above Rs.2 Crores) under head “sub contracts” during the period between F.Ys 2006-07 to 2012-13 in the following format : Name and address of the party PAN Total amount paid (month wise) Mode of payment (including A/c number to which payment has been made) Nature of work done Name of project, type of work done etc. Copy of agreement entered Details of TDS deducted This should be treated as a notice under Section 142(1) and compliance should be made by 02.2015 at 11.30 AM.” ITA 514/CHD/2023 A.Y. 2012-13 15 9.2 He further explained that the entire details of sub contracts alongwith deduction of TDS and proof of depositing the same was enclosed at assessee's Paper Book pages 1638- 1776. The ld. Counsel for the assessee stated that there are so many sub contractors and as per the alleged documents found from the premises of the Chartered Accountant Shri Gurinder Kumar Garg, the total parties are more than 150 which include the alleged parties noted by AO in reasons recorded in No.39. In view of the above, ld. Counsel for the assessee demonstrated before us that the assessee has filed complete details before AO during original assessment proceedings on being enquired into the sub contractors and AO, originally, completed assessment without making any addition on this account after due verification. The ld. Counsel for the assessee stated that the assessment was completed by the AO originally under Section 153A read with Section 143(3) for the relevant assessment year 2012-13 vide order dated 31.03.2015. Further, admittedly the four years have elapsed from the relevant assessment year till the issuance of notice under Section 148 of the Act. Hence, ld. counsel stated that the assessee's case is fully covered by ITA 514/CHD/2023 A.Y. 2012-13 16 the proviso to Section 147 of the Act. Further, ld. counsel stated that in the reasons recorded, there is no iota of evidence that there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for this assessment year. The ld. counsel stated that this issue is covered by various decisions of Hon'ble Supreme Court including CIT Vs Foramer France (2003) 264 ITR 566 (S.C.). Further, ld. Counsel for the assessee also relied upon decision of Hon'ble Bombay High Court in the case of Rajshree Realtors Pvt. Ltd. V UOI (2023) 457 ITR 354 (Bom). 10. On the other hand, the ld. CIT DR argued that the assessee has tried to argue that it had discharged the onus by filing confirmations or the copy of account of these parties but actually this has not been examined by the AO while completing original assessment and merely filing of these documents will not help the assessee in discharging its onus. The assessee stated that the statement of Shri Gurinder Kumar Garg, Chartered Accountant of the assessee group company is itself an incriminating material which is sufficient for re-opening of assessment. The ld. CIT DR argued that the ld. CIT(A) while adjudicating the issue of re- ITA 514/CHD/2023 A.Y. 2012-13 17 opening has given a categorical finding that the AO has recorded his satisfaction that income has escaped income on account of claim of bogus sub contract expenses and the name of these sub contractors are fictitious. 10.1 The ld. CIT DR also pointed out that in view of the reasons recorded, the income has escaped in term of clause (c) of Explanation-2 to Section 147 of the Act and this provision is applicable to the facts of this case and the assessment year under consideration and there is deemed escapement of income in view of this provision. The assessee agreed that four years have elapsed from the ending of the relevant assessment year but for this, the only requirement is to record reasons under Section 147 of the Act. On query from the Bench that how the revenue will come out of the proviso to Section 147 of the Act, she could not controvert the same but she argued that the re-opening is as per law and just to assess the deemed escapement of income in term of clause (c) of Explanation-2 to Section 147 of the Act. 11. In reply, ld. Counsel for the assessee stated that the assessee's case itself defeats its purpose for the reason that in para 7 and 8, the AO while recording reasons has clearly admitted that the assessee's case falls under the proviso but ITA 514/CHD/2023 A.Y. 2012-13 18 subsequently in para 9, they invoked clause (c) of Explanation-2 to Section 147 of the Act as deemed escapement of income which is not the case of the assessee. He argued that assessee's case is fully covered by the proviso to Section 147 of the Act, which has been interpreted by Hon'ble Supreme Court in the case of Foramer France (supra) and various case laws of Hon'ble Bombay High Court and Delhi High Court including Rajshree Realtors Pvt. Ltd. (cited supra). 12. After considering both the sides and going through the facts of the case and going through the reasons and the information submitted by assessee before AO originally during assessment proceedings, we noted that the assessee has filed complete details in respect to these 39 parties i.e. sub contractors on behalf of whom the assessee has claimed sub contract expenses amounting to Rs.36,10,58,438/-. The assessee has replied these details and also filed the details of all work done by these sub contracts during original assessment proceedings vide questionnaire dated 11.11.2014, particularly Question No.10. The details filed by the assessee before us now in Paper Book at pages 1638 to 1776 clearly show that these details were made available ITA 514/CHD/2023 A.Y. 2012-13 19 to the AO during original assessment proceedings and the details include these 39 parties on behalf of the assessee who has carried out the sub contract work. Accordingly, the assessee has made sub contract payment to these 39 parties and genuineness was explained during original assessment proceedings. The original assessment was completed under Section 143(3) read with Section 153A of the Act dated 31.03.2015, which was carried out in consequent to search conducted under Section 132 of the Act on the assessee group of cases i.e. first search. The only basis made by AO treating the same as incriminating material i.e. the statement of Shri Gurinder Kumar Garg, Chartered Accountant, we noted that the statement of Shri Gurinder Kumar Garg, nowhere admits that these parties are bogus, only he stated that all parties are registered at his address or at the address of one Shri Manoj Kumar, Accountant of the assessee firm. During original assessment proceedings, all these materials were produced by assessee and even the same is part of assessee's financials filed alongwith the return of income and part of audited accounts which were never doubted by AO during original assessment proceedings. Simpliciter one list found from Shri Gurinder ITA 514/CHD/2023 A.Y. 2012-13 20 Kumar Garg wherein around 150 parties of sub contractors including these 39 parties who has carried out sub contract work of the assessee and received payment but this paper does not indicate anything that these are bogus contract parties. 13. Apart from the above, we noted from the very reasons recorded by AO, admittedly original assessment was completed under Section 143(3) read with 153 of the Act in consequent to search conducted under Section 132 of the Act and relevant assessment year is 2012-13 and further the re- opening notice is dated 20.03.2019, which is beyond four years. The only saving grace will remain for Department that if the Department proves that there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year. But from the very reasons we came to conclusion that not only the Revenue fails to prove failure on the part of the assessee but they invoked the deeming provisions i.e the provisions of clause (c) of Explanation-2 to Section 147 of the Act. In our view, w.e.f. 01.04.1989, the entire position of Section 147 changed and this has been explained by Hon'ble Supreme Court in the case of Foramer France (supra) ITA 514/CHD/2023 A.Y. 2012-13 21 wherein Hon'ble Supreme Court has affirmed the decision of Hon'ble Allahabad High Court in the case of Foramer Vs CIT (2001) 247 ITR 436 (All), wherein Hon'ble Allahabad High Court has considered this issue as under : “14. It may be mentioned that a new Section substituted Section 147 of the Income- tax Act by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989. The relevant part of the new Section 147 is as follows : \"147. If the Assessing Officer, has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this Section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under Sub-section (3) of Section 143 or this Section has been made for the relevant assessment year, no action shall be taken under this Section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under Sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year.\" 15. This new Section has made a radical departure from the original Section 147 inasmuch as clauses (a) and (b) of the original Section 147 have been deleted and a new proviso added to Section 147. 16. In Rakesh Aggarwal v. Asst. CIT (1997] 142 CTR (Del) 272 : (1997) 225 ITR 496 (Del), the Delhi High Court held that in view of the proviso to Section 147 notice for reassessment under Section 147/148 should only be issued in accordance with the new Section 147, and where the original assessment had been made under Section 143(3) then in view of the proviso to Section 147, the notice under section 148 would be illegal if issued more than four years after the end of the relevant assessment year. The same view was taken by the Gujarat High Court in Shree Tharad Jain Yuvak Mandal v. ITO (2000) 162 CTR (Guj) 462 : (2000) 242 ITR 612 (Guj). 17. In our opinion, we have to see the law prevailing on the date of issue of the notice under Section 148, i.e., November 20, 1998. Admittedly, by that date, the new Section 147 has come into force and, hence, in our opinion, it is the new Section ITA 514/CHD/2023 A.Y. 2012-13 22 147 which will apply to the facts of the present case. In the present case, there was admittedly no failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for the assessment. Hence, the proviso to the new Section 147 squarely applies, and the impugned notices were barred by limitation mentioned in the proviso. 18. Learned departmental counsel relied on Section 153(3)(ii) of the Income-tax Act and submitted that there was no bar of limitation in view of the said provision. We do not agree. Section 153 relates to passing of an order of assessment and it does not relate to issuing of notice under Section 147/ 148. Moreover, this is not a case where reassessment is sought to be made in consequence of or to give effect to any finding or direction contained in the order of the Tribunal in Boudier Christian's case. As already stated above, Boudier Christian's case related to the employees of the company, whereas the impugned notice has been issued to the company. Hence, it cannot be said that the proposed reassessment in consequence of the impugned notice would be in consequence of or to give effect to any findings of the Tribunal in Boudier Christian's case. 19. A direction or finding as contemplated by Section 153(3)(ii) must be a finding necessary for the disposal of a particular case, that is to say, in respect of the particular assessee and in relevance to a particular assessment year. To be a necessary finding it must be directly involved in the disposal of the case. To be a direction as contemplated by Section 153(3)(ii) it must be an express direction necessary for the disposal of the case before the authority or court vide Rajinder Nath v. CIT [1979] 12 CTR (SC) 201 : (1979) 120 ITR 14 (SC); Gupta Traders v. CIT [1982] 28 CTR (All) 270 : (1982) 135 ITR 504 (All); CIT v. Tarajan Tea Co. (P.) Ltd. [1999] 152 CTR (SC) 1 : (1999) 236 ITR 477 (SC) and CIT v. Goel Bros. [1982] 28 CTR (All) 274 : (1982) 135 ITR 511 (All), etc. The case of an expatriate employee was to be decided on the basis of the provisions of article XIV of the treaty, whereas corporate income was to be decided on the basis of either article III or article XVI of the treaty or Section 44BB of the Act. Hence, the observations of the Tribunal in Boudier Christian's case was not a direction necessary for the disposal of the appeal relating to the petitioner. The exigibility of income of the petitioner from manning and management contracts was never an issue directly or indirectly involved in the case of Boudier Christian. 20. Moreover, the Tribunal in the appeal relating to the assessment of the petitioner's own case, vide Deputy CIT v. ONGC [1999] 70 ITD 468 (Delhi) has considered the decision of the Tribunal in Boudier Christian's case. It is settled law that an appeal is a continuation of the original proceedings and hence when the Tribunal in the appeal relating to the petitioner has considered the decision of the Tribunal in Boudier Christian's case, the impugned notice under Section 147/148 would obviously be on the basis of a mere change of opinion by the income- tax authorities, which would not be valid as held by the Supreme Court in Indian and Eastern News- paper Society v. CIT [1979] 12 CTR (SC) 190 : (1979)119 ITR 996 ; Gemini Leather Stores v. ITO [1975] CTR (SC) 127 : (1975) 100 ITR 1 (SC) and Jindal Photo Films Ltd. v. Deputy CIT [1998] 154 CTR (Del) 355 : (1998) 234 ITR 170 (Delhi), etc. ITA 514/CHD/2023 A.Y. 2012-13 23 21. In the decision of the Tribunal in the assessee's own case, Deputy CIT v. ONGC [1999] 70 ITD 468 (Delhi) it has been held that the income from the contract between the parties was business income and not fee for technical services. 22. Although we are of the opinion that the law existing on the date of the impugned notice under Section 147/148 has to be seen, yet even in the alternative even if we assume that the law prior to the insertion of the new Section 147 will apply even then it will make no difference since even under the original Section 147 notice for reassessment could not be given on the mere change of opinion as held in numerous cases of the Supreme Court, some of which have been mentioned above. Since the Tribunal in the appeal relating to the assessee-company had considered the Tribunal's earlier decision in Boudier Christian's case, it will obviously amount to mere change of opinion, and hence the notice under Section 147/148 would be illegal. 23. As regards alternative remedy, we are of the opinion since the notice under Section 148 is without jurisdiction the petitioner should not be relegated to his alternative remedy vide Calcutta Discount Co. Ltd. v. ITO (1961) 41 ITR 191 (SC); Smt. Jamila Ansari v. Income-tax Department [1997] 137 CTR (All) 587 : (1997) 225 ITR 490 (All); Govind Chhapabhai Patel v. Deputy CIT (1999) 156 CTR (Guj) 353 : [1999] 240 ITR 628 (Guj) and Jindal Photo Films Ltd. v. Deputy CIT (supra) and other decisions.” 14. Similarly, Hon'ble Bombay High Court in the case of Rajshree Realtors Pvt. Ltd. (supra) has considered this issue and noted that the reasons in support of the notice issued under Section 148 of the Act does not contain even an allegation about the assessee's failure to disclose fully and truly all material facts necessary for his assessment for the relevant assessment year. Hon'ble High Court has categorically held for assuming crucial jurisdiction under the provisions of Section 147 of the Act, there are parameters prescribed in the proviso to Section 147 i.e. assessee's failure to disclose fully and truly all material facts necessary ITA 514/CHD/2023 A.Y. 2012-13 24 for its assessment was not fulfilled and once it is fulfilled, the notice under Section 148 has to be annulled. Hon'ble Bombay High Court finally considering the facts of that case held as under : “17. In the circumstances, the issue regarding subscription of shares by SHPL and SCPL in petitioner has been thoroughly examined by the AO, who also in fact, did not accept petitioner's explanation and added the amount of Rs. 3,00,00,000/- to petitioner's income. That addition was deleted by CIT(A) and the order of CIT(A) has been upheld by ITAT. All these only goes to prove that there was no failure on the part of petitioner to truly and fully disclose material facts. As section 147 of the Act is very clear that no action shall be taken under the said Section after the expiry of 4 years from the end of the relevant assessment years unless any income chargeable to tax has escaped assessment by reason of the failure on the part of assessee to disclose fully and truly all material facts. First of all, it is not spelt out in the reasons to believe as to what was the material fact which was not truly and fully disclosed. Further, having considered the submissions of petitioner during the course of original assessment proceedings and the findings of CIT(A) as well as ITAT, we are also satisfied that there was no failure on the part of petitioner to disclose fully and truly any material fact. Even assuming, respondents' case is petitioner should have disclosed that these were bogus or accommodation entries, still there is nothing on record to indicate that petitioner was aware that these were bogus shares capital/premium from bogus paper companies, viz., SHPL and SCPL and were accommodation entries. 18. In the circumstances, we hereby quash and set aside the notice dated 19th March 2019 issued under section 148 of the Act. Consequently, the order on objection dated 14th August 2019 as well as the assessment order dated 7th September 2021 also are quashed and set aside.” 15. In terms of the above, we hold that the notice issued by the AO under Section 148 of the Act dated 20.03.2019 is bad in law and hence quashed. Consequential assessment is also quashed. ITA 514/CHD/2023 A.Y. 2012-13 25 16. As regards to the issues on merits and other issues on jurisdiction, we refrain ourselves from adjudicating the same for the reason that evidently jurisdictional issue is decided against Revenue and in favour of assessee. 17. In the result, the appeal is allowed. Order pronounced on 02.01.2025. Sd/- Sd/- ( KRINWANT SAHAY) ( MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” आदेश क\u0002 \u0003ितिलिप अ ेिषत/ Copy of the order forwarded to : 1. अपीलाथ\u000f/ The Appellant 2. \u0003\u0010यथ\u000f/ The Respondent 3. आयकर आयु\u0014/ CIT 4. िवभागीय \u0003ितिनिध, आयकर अपीलीय आिधकरण, च\u0018डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "