$ 3 * IN HIGH COURT OF DELHI AT NEW DELHI % DECIDED ON: 09.02.21015 + ITA 58/2015 TULIP ENGINEERING PVT. LTD. ..... Appellant Through: Mr. Om Prakash Pahuja with Ms. Indu Pahuja, Advocates. versus INCOME TAX OFFICER ..... Respondent Through: Ms. Suruchi Aggarwal, Sr. Standing Counsel with Mr. Amir Aziz, Advocate. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K. GAUBA S.RAVINDRA BHAT, J. (OPEN COURT) 1. assessee is in appeal before us and challenges order of Income Tax Appellate Tribunal (hereafter referred to as ITAT ) dated 30.06.2014 in ITA 410/Del/2013. 2. assessee was subjected to re-assessment proceedings; initiation of which has been challenged under Section 147. second ground urged is with respect to absence of notice under Section 143 (2) and third is with respect to merits of addition of Rs.4,84,000/-. 3. Briefly, facts are that for AY 2008-09, assessee had reported income of Rs.444/-. This was processed under Section 143 (1). Upon enquiry and investigation report, AO issued notice under Section 148, doubting transaction based upon transfer of shares and purchase by two subsequent transferees i.e. Raghubir Singh and Simranjeet Kaur. ITA 58/2015 Page 1 assessment was completed with addition of that amount to assessee s final income. matter was carried in appeal unsuccessfully to CIT (A), and later, to ITAT as well. assessee was unable to persuade both authorities to accept its submissions that reassessment proceedings were without jurisdiction. On merits as well, ITAT confirmed view of Assessing Officer and CIT (A) that amount had to be added to assessee s income and brought to tax. 4. Learned counsel urges that re-assessment proceedings were unjustified and emphasized that approval, in circumstances of case, was accorded mechanically. He highlighted that reasons to believe , forming basis for reopening of assessment, did not disclose any particulars as to how information triggering notice was received and who furnished that information. It was next urged that AO did not even issue notice under Section 143 (2), but rather completed assessment. Highlighting that absence of notice vitiates entire proceedings, learned counsel states that both CIT (A) and ITAT erred in not returning findings on this aspect. Arguing on merits, learned counsel submitted that additions under Section 68 were unwarranted because identity of purchasers of shares had been established. In fact, AO had noted that both purchasers had filed returns and assessee deposited amounts received in bank. Learned counsel complained that if findings of ITAT are not reversed, all assessees in like circumstances would be placed under unbearable burden of proving not only genuineness of transaction, but also genuineness of transaction which preceded one in question. 5. This Court has considered submissions. So far as first issue ITA 58/2015 Page 2 urged, i.e., legality of notice goes, reasons to believe recorded by AO and duly communicated to assessee had noted that its name figures as one of beneficiaries of alleged bogus transactions, which had cropped up during investigation carried out by Directorate of Investigation, Jhandewalan. entries relating to transactions and sums of money were also included in tabular statement as part of note. CIT v. M/s Kelvinator of India Ltd, (2010) 320 ITR 561 (SC) states that reassessment can be resorted to if there is tangible material justifying such move. receipt of investigation report in opinion of Court, undoubtedly constituted such tangible material outside record, which were received by AO after assessment was processed under Section 143 (1). In circumstances, first ground urged is insubstantial and, therefore, rejected. 6. As to second ground, Court holds that assessee is precluded from arguing on validity or nullity of order, in view of bar enacted under Section 292 (BB) which reads as under: - Notice deemed to be valid in certain circumstances. 292BB. Where assessee has appeared in any proceeding or co-operated in any inquiry relating to assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that notice was - (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in improper manner: Provided that nothing contained in this section shall apply where assessee has raised such objection before completion of such assessment or reassessment.] ITA 58/2015 Page 3 7. assessee sought to urge that above provision is inapplicable in circumstances of case because notice in present case was not issued at all under Section 143 (2). Court rejects this contention in view of express terms of Section 292BB, which overrides all arguments, so long as assessee appears in any proceedings or cooperated in any enquiry related to assessment or reassessment. In present case, there is no doubt at all that assessee cooperated and appeared both in assessment as well as reassessment proceedings. Therefore, it had deemed notice of re-assessment proceedings. Its contentions were taken into account. In such circumstances, issuance of notice is mere empty formality. Thus, non-issuance of notice, in opinion of Court, shall not vitiate assessment proceedings after due service of notice under Section 147. This argument was not urged in first instance at all either before AO or before CIT (A). 8. So far as last ground, i.e., merits as to addition of Rs.4,84,000/- goes, basis for introducing Section 68 is understood in CIT v. Lovely Exports, 216 CTR 195 to say that assessee not only has to establish identity of share applicant or investor, as case may be, but also of third party. It has to be prima facie established that such third party was credit worthy and transaction was genuine. Whilst acquisition of shares of Galaxy Commercial was not doubted by AO, what ultimately fell for his consideration was sale consideration. AO s discussion in paragraph 3 of his order is significant in this regard; both purchasers did not respond to notices issued by income tax authorities. Furthermore, AO s enquiry reveal that these purchasers had insubstantial means and could not reasonably be said to possess means to make investments that they did, in purchasing assessee s shares for amounts reported by it. Besides, as to whether ITA 58/2015 Page 4 transaction was genuine or not is pure finding of fact which has concurrently been rendered against assessee. 9. For above reasons, this Court finds no ground for interference and holds that there is no substantial question of law. 10. appeal is accordingly dismissed. S. RAVINDRA BHAT (JUDGE) R.K. GAUBA (JUDGE) FEBRUARY 09, 2015 /vikas/ ITA 58/2015 Page 5 Tulip Engineering Pvt. Ltd. v. Income-tax Officer