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TMI Blog2014 (12) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 28-11-2014 - Shri G. D. Agrawal And Shri Chandramohan Garg,JJ. For the Appellant : Shri Kapil Goel, Adv. For the Respondent : Shri J.P. Chandraker, Sr.DR ORDER Per Chandramohan Garg, J. M. These appeals have been preferred by the assessee against the separate orders of the CIT(A)-IX, New Delhi both dated 14.9.2012 in Appeal No.116/08-09 and 112/07-08 for AY 2001-02 and 2002-03 respectively. ITA No. 6153/Del/2012 2. The assessee has raised legal contentions regarding validity of reopening u/s 147 and 148 of the Income Tax Act, 1961 which read as under:- Validity of Reopening u/s 148 That on the facts and in the circumstances of the case and in law, learned CIT-A erred in upholding the reopening action of Ld AO which stands vitiated inter alia for following reasons: a. Notice u/s 148 is vague and do not meet testimony of law; b. Border line reasons are recorded belatedly on basis of stale information and consequential notice u/s 148 could have been issued in March 2007, instead waiting for last date thereby making assessee's task difficult u/s 68; c. Total lack of tangible material/reasonable cause and justification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faction without application of mind as the reasons recorded are based on vague and sketchy information and reflect total non-application of mind on the part of reason recording authority i.e. the assessing officer. Ld. Counsel further contended that there is no minimal discussion in the reasons as to how the AO has independently believed that the amount is income escaping assessment in the hands of assessee company for the period under consideration. 6. Ld. Counsel has also placed his reliance on various decisions of Hon ble Jurisdictional High Court including decision of Hon ble Jurisdictional High Court of Delhi in the case of Signatures Hotels Pvt. Ltd. vs ITO and Another (2011) 338 ITR 51 (Delhi) , CIT vs Insecticides (India) Ltd. (2013) 357 ITR 330 and decision of ITAT E Bench dated 27.08.2013 in the case of ITO vs On Exim Pvt. Ltd. in ITA No. 1116/Del/2011 for AY 2001-02. 7. Replying to the above, ld. DR supported the action of the authorities below and submitted that the AO has reason to believe that the assessee has received two amounts of ₹ 2,50,000/- each from alleged accommodation entry providers and, therefore, there was escapement of assessment by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S, was nothing but an accommodation entry and the assessee was the beneficiary. The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escarpment of income. The annexure was not a pointer and did not indicate escapement of income. Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid-up capital of ₹ 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September, 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to be quashed. 11. Similar view is taken in the case of Sarthak Securities Co.P. Ltd. (supra), wherein their Lordships held as under:- allowing the petition, that the formation of belief was a condition precedent as regards the escapement of the tax pertaining to the assessment year by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/- 3 24/03/01 694235/562 10,00,000/- 4 28/03/01 694238/605 450000/- 13. However, the detail given is only with regard to name of the bank, ledger account number and amount. Even the nature of transactions is not given, much less to establish that the above transactions are in the nature of accommodation entries. It has been stated by the learned counsel at the time of hearing before us that the assessee has only sold the shares through M/s Aayushi Stock Brokers (P) Limited and the sale proceed has duly been considered while computing the income of the assessee for the assessment year under consideration. In view of the above, in our opinion, the ratio of the above decisions of Hon'ble Jurisdictional High Court would be squarely applicable and, respectfully following the same, we hold that the reasons did not satisfy the requirement of Section 147. 14. In view of the totality of above factual as well as legal position, we hold that the notice issued under Section 148 was not valid. The same is quashed. Once the notice issued under Section 148 is quashed, the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 for AY 2002-03 13. In the beginning, both the parties agreed that the ground of the assessee regarding validity of reopening of assessment u/s 147/148 of the Act may be considered first. The legal ground raised by the assessee in this regard reads as under:- Validity of Reopening u/s 148 That on the facts and in the circumstances of the case and in law, learned CIT-A erred in upholding the reopening action of Ld AO which stands vitiated for following reasons: a. Total lack of tangible material/reasonable cause and justification b. Absence of nexus (much less live nexus) between alleged information (unknown whether exists on file or not) and tentative inference drawn; c. Non Application of mind much less independent application of mind as apparent from fact that 3 different figures are mentioned for income escapement in reasons recorded. d. Total lack of clarity on nature of transaction in reasons recorded . 14. Ld. Counsel of the assessee referring to the reasons recorded by the AO pointed out that in the reasons recorded, the AO simply reproduced certain details received from the Investigation Wing without any application of mind and issued notice u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suing notice u/s 148 of the Act read as under:- (i) Certain investigations were carried out by the directorate of Investigation, Unit, V. Jhandewalan, New Delhi in respect of the bogus/accommodation entries provided by the certain individuals / companies. The name of the appellant figures as one of the beneficiaries of these alleged bogus transactions given by the Directorate after making the necessary enquiries. It has been revealed that the following entries have been received by the appellant:- (ii) The transactions involving ₹ 9,50,000/- mentioned in the manner above, constitutes fresh information in respect of the appellant as a beneficiary of bogus accommodation entries provided to it. (iii) On the basis of this new information, I have reason to believe that the income of ₹ 10,00,000/- has escaped assessment as defined by sec. 147 of the Income Tax Act in the AY 2002-03. Therefore, this is a fit case for the issuance to the notice u/s 148. 17. From careful reading of above reasons recorded by the AO, we find that in the first table, the amount of four entries of ₹ 1,50,000 each has been shown which comes to a total of ₹ 6 lakh. In pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept preparing the table of alleged accommodation entries from the details claimed to have been received from the Investigation Wing, has not at all applied his mind. From a bare perusal of the table of the alleged accommodation entries, it is evident that the same entries have been repeated five times. This is the clear indication of nonapplication of mind by the Assessing Officer. Therefore, the above decision of Hon ble Jurisdictional High Court would be squarely applicable to the facts of the assessee s case. 18. In the appeal before us, the contention of the assessee is that the AO issued a notice u/s 148 of the Act mechanically without application of mind and without forming a prima facie belief that the income has escaped assessment, simply on the basis of information alleged to have been received from the Investigation Wing. On the above facts of this case, we find this contention of the ld. Counsel of the assessee to be correct and, moreover, on identical facts, Hon ble Jurisdictional High Court of Delhi in the case of Suren International Pvt. Ltd. (supra) held that the reasons recorded without any application of mind cannot be said to be a proper belief with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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