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TMI Blog2014 (12) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the reopening in these cases are not valid and consequently the same is quashed. - Decided in favour of assessee. - ITA NO.1159, 1160 & 1161/Mum/2013 - - - Dated:- 17-12-2014 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER For the Petitioner : Shri Hari S. Raheja For the Respondent : Shri. R. N. D souza ORDER Per Vijay Pal Rao, JM These three appeals by the assessee are directed against three separate orders of CIT(A) in the case of three assessee s who were subsequently amalgamated to one namely GLB Finvest Ltd. for A.Y. 2003-04. The facts and issues involved in all these appeals of the amalgamated assesses are identical, therefore, for the sake of convenience, these three appeals were heard together and are being disposed off by this single composite order. Identical grounds have been raised in all the appeals, therefore we reproduce the grounds in the appeal in ITA no. 1160/Mum/2013 are as under:- 1. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in passing the ex-parte order without providing reasonable opportunity of being heard. 2. On the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act took place in the case of Shri Giriraj Vijayvargiya on 26.04.2007, who is a member of group called Ankur Group. During the course of search, it was found that Shri Giriraj Vijayvargiya has given accommodating entries in the form of gifts, loans and share application money. In the assessment proceedings, of Shri Giriraj Vijayvargiya, it was found that he had given accommodating entries to 45 persons. It was also seen that various concerns controlled by Shri Vikas Berlia have introduced unaccounted money in the form of shares allocated to Shri Giriraj Vijayvargiya and his family members. Accordingly, the Assessing Officer has formed the belief that the premium received by these companies which are the group concern of Shri Vikas Berlia are involved in introducing unaccounted money in the form of bogus capital share and consequently, the income assessable to tax has escaped assessment. The re-assessments were completed in all the three cases, wherein, the additions on account of share premium and share application money was made u/s 68 of the Income Tax Act. 7. The assessee challenged the action of Assessing Officer before CIT(A) but could not succeed. 8. Before us, the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 561). He has also relied upon the following decisions: (i) Prashant S. Joshi Vs. ITO 324 ITR 154 (Bom) (ii) ITO Vs. Lakhani Mewal Das 103 ITR 437 (SC) (iii) Hindustan Dorr Oliver Ltd. Vs. DCIT 305 ITR 282 (Bom) (iv) Sarthak Securities Co. P. Ltd. Vs. ITO 329 ITR 110. 9 The above judgments were also relied upon by the assessee before CIT(A). 10. On the other hand, the Ld. DR has submitted that there was a new information came to the possession of the Assessing Officer regarding the introduction of fresh capital through the mode of bogus share allotment as a result of search action u/s 132 in the case of Shri Giriraj Vijayvargiya. In his statement Shri Giriraj Vijayvargiya has admitted that he was giving accommodating entries including share application to the group concerns controlled by Shri Vikas Berlia. These three companies are also Group companies of controlled by Shri Vikas Berilia, therefore, the Assessing Officer was having the reason to believe that the share application received by these companies are sham transactions through accommodation entries received from Shri Giriraj Vijayvargiya. He has further contended that at the stage of reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons who appeared in response to the summons have agreed that these gifts/loan entries are bogus. In view of the same, 20' assessees who have received entries for ₹ 1.06 crores in 47 entries have paid additional taxes/revised returns for A. Y. 's 2002-03 to 2005-06. 2.2. Two assessee's who are companies have paid additional taxes disclosing an amount of ₹ 59 Lakhs which they introduced as bogus share application money in the name of Shri. Giriraj and his family members. 3. Berlia Plastochem Pvt. Ltd is a family concern of Shri Vikas Berlia who is the main person of the group. The directors of assessee company for the year under consideration is Smt. Pooja Berlia and Smt. Varsha Berlia, Smt. Pooja Barlia is the sister of Shri Vikas Barlia and Smt. Varsa Barlia wife of Shri Vikas Berlia. The main company of the group is M/s Major Metals Ltd. It is seen that various concerns controlled by Shri Vikas Berlia have introduced unaccounted money in the form of shares allotted to Shri. Giriraj and his family members. Details of accommodation entry given by Shri. Giriraj and his family members in the form of share capital to the concerns controlled by Shri. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the course of assessment proceedings in the' case of Shri Giriraj, statement of Shri Vikas Berlia, Director of M/s Major Metals Ltd was recorded u/s 131 of the Act. This statement was confronted to Shri Giriraj. Shri Giriraj in his statement u/s . 131 has reiterated that the above transaction of introduction of share capital by M/s Major Metals Ltd was not genuine and it was only cheque issued by him/his family members (on his behalf) in lieu of cash and commission of 2-3.5%. The statements of above family members of Shri Giriraj were also recorded u/s 131 and they have stated Giriraj Vijayavargia has used their bank accounts for giving entries. They have also stated that they have signed the share application forms and other papers/documents to them by Shri Giriraj without going through the same in view of their relationship with and good faith and trust on Shri. Giriraj. During the course of assessment proceedings in the case of Shri Giriraj, statement of Shri Vikas Berlia was recorded u/s 131 and detailed questions were asked regarding introduction of share capital by M/s Major Metals Ltd as it is the main concern of the group. Fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm of share application money/share premium, earning per share (EPS), and premium for shares allotted during the year. F.Y. Capital Profit Amount introduced as share application money/premium EPS (Earning per Share) Premium per share 2002-03 88,58,500 6,06,438 1,91,84,500 0.68 490 2003-04 90,96,500 16,74,566 6,62,000 1.84 490 2004-05 99,56,500 13,78,653, 4,91,40,000 1.38 990 2005-06 99,56,500 25,12,765 2,44,00,000 2.52 990 2006-07 S 1,09,78,50 0 1,16,47,700 10,11,78,000 10.60 990 shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at year. Hence, notice u/ 148 is issueds after obtaining prior approval of the Addl CIT(A), Central Range 4, Mumbai 12. These reasons are nothing but the summary of statement of Shri Giriraj Vijayvargiya during the search as well as the assessment proceedings of Shri Giriraj. It is manifest from these reasons recorded by the Assessing Officer that four concerns are mentioned which are controlled by Shri Vikas Berlia in which the allegation of giving accommodation entries in the shape of share application money was made by Shri Giriraj in his statement . It is pertinent to note that these three concerns(assessee before us) are not part of the beneficiaries of the accommodation entries as per the allegation made in the statement of Shri Giriraj. Further even those four concerns who have allegedly received the accommodation entries in the form of share application money are not the share applicants of these assessee s before us. Therefore, as far as, share application money received by the assessee the same is neither came from Shri Giriraj or from any related party or person or even from the other group concern of Shri Vikas Berlia. The share application were received by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed excessive loss, deduction, allowance or relief in the return. The taking of such notice must be consistent with the provisions of the applicable law. The act of taking notice cannot be at the arbitrary whim or caprice of the Assessing Officer and must be based on a reasonable foundation. The sufficiency of the evidence or material is not open to scrutiny by the Court but the existence of the belief is the sine qua nonfor a valid exercise of power. In the present case, having regard to the law laid down by the Supreme Court it was impossible for any prudent person to form a reasonable belief that the income had escaped assessment. The reasons which have been recorded could never have led a prudent person to form an opinion that income had escaped assessment within the meaning of section 147. In these circumstances, the petition shall have to be allowed by setting aside the notice under section 148. 14. Thus it is clear that though the sufficiency of evidence or material for forming the belief is not open to scrutiny but the existence of belief is must for a valid exercise of power. If it is impossible for any prudent person to form a belief on the basis of material or evi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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