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TMI Blog2016 (6) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... y him from the Directorate of Income Tax (Investigation), New Delhi. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, we are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed - Decided in favour of assessee. - ITA No. 278/Del/2010, Cross Objection No. 64/Del/2010 - - - Dated:- 10-5-2016 - Shri H. S. Sidhu, Judicial Member And Shri J. S. Reddy, Accountant Member For the Department : Sh. P. Damkanunjna, Sr. DR For the Respondent : Dr. Rakesh Gupta, Adv. Sh. Somil Agarwal, Adv ORDER Per H. S. Sidhu, J. M. The Department has filed the Appeal and Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f hearing. 3. The brief facts of the case are that the return of income declaring a NIL income was filed on 20.12.2003. The case of the assessee was selected for scrutiny u/s. 148. Notice under section 148 of the Income Tax Act, 1961 dated 25.1.2007 was served on the assessee i.e. within the statutory time period prescribed. The case was reopened because of the information received from the Investigation Wing of Delhi that the assessee is indulging in receiving the accommodation entries from the entry operators after paying its unaccounted cash. The notice u/s. 142(1) was served fixing the case for 12.3.2007. None attended. Another notice u/s. 142(1) fixing the case for 24.9.2007 alongwith questionnaire was sent to the assessee. Then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel of the assessee has only argued the legal ground challenging the validity of reopening u/s. 147 of the I.T. Act by stating that action of the Assessing Officer is illegal, because no proper reasons were recorded; no nexus between the materials relied upon and the belief formed for escapement of income; no application of mind; no proper satisfaction was recorded before issue of notice u/s. 148 and no independent conclusion that there was escapement of income and no proper satisfaction. He further draw our attention towards the notice u/s. 148 and objections filed by the Assessee on which the Ld. CIT(A) has not commented upon. Lastly, he submitted that the present case is squarely covered by the Hon ble Jurisdictional High Court Decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2007 u/s. 148 for reopening of assessment which reads as under:- REASONS RECORDED IN WRITING FOR REOPENING THE CASE U/S. 149 M/S JAMES CAPITAL FINANCE PRIVATE LIMITED (AY 2003- 04) Information has been received from the Investigation Wing of Income Tax Department, New Delhi regarding beneficiaries and operators of accommodation entries in Delhi. In the said information, it has been inter alia reported as under:- Entries are broadly taken for two purposes. 1. To plough back unaccounted black money for the purpose of business or for personal needs such as purchase of assets etc., in the form of gifts, share application money, loans etc. 2. To inflate expenses in the trading and profit and loss account so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x (Investigation), New Delhi. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, we are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. Our view is supported by the following judgment/decision:- Pr. CIT vs. G G Pharma India Ltd. in ITA No. 545/2015 dated 8.10.2015 of the Delhi High Court wherein the Hon ble Court has adjudicated the issue as under:- 12. In the present case, after setting out four entries, stated to have been received by the Assessee on a single date i.e. 10th February 2003, from four entities which were termed as accommodation entries, which inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case. 13. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT (A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing mater ..... X X X X Extracts X X X X X X X X Extracts X X X X
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