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TMI Blog2016 (6) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... fact the aforesaid conclusion of the A.O. is unhelpful in understanding as to whether the AO applied his mind to the material, particularly when he did not describe how and what manner it came to his knowledge that the assessee receive the accommodation entries. We, therefore, by keeping in view the ratio laid down in Principal Commissioner of Income-tax vs. G & G Pharma India Ltd.[2015 (10) TMI 754 - DELHI HIGH COURT ], are of the view that the reopening done by the AO u/s 147 of the Act was not valid and accordingly the subsequent assessment framed by the AO was void-ab-initio and therefore the same is quashed. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... ring or earlier." 2. Ground nos. 1 and 5 are general in nature and ground no. 2 was not pressed so these grounds do not require any adjudication on our part. Ground no. 3 is legal ground which is related to the validity of the reassessment proceedings u/s 147 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'). 3. Facts of the case in brief are that the assessee filed its return of income after setting off the brought forward losses of ₹ 80,29,450/- against the gross total income, on 27.11.2014. However, the tax was paid on the Book Profit u/s 115JB of the Act at ₹ 8,136/-. The return of income was processed u/s 143(1) of the Act at the same figure. Later on, the case was selected for scrutiny and the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within his competence while invoking the powers contained in section 147 of the Act. He also observed that there was no provision in section 148 of the Act that reasons for re-opening should also be given within the limitation period. Now the assessee is in appeal. 5. The ld. Counsel for the assessee submitted that the earlier assessment was framed u/s 143(3) of the Act by the AO who made the inquiries relating to the loans raised and framed the assessment after applying his mind. He also drew our attention towards page no. 8 of the assessee's paper book which is the copy of the reasons recorded and submitted that the AO alleged in the reasons recorded that the persons from whom the amount was received were entry operator who provided th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t u/s 147 of the Act. In the present case, the AO recorded the reasons on 30.3.2010 copy of which is placed at page no. 8 of the assessee's paper book and read as under : "30.03.2010- In this case it was gathered that the Assessee during the year under consideration has received following amount from various persons as per detail below on various dates in various forms. It has come to the knowledge of undersigned that the persons from whom the amount was received are entry operator and have provided the entries to the assessee after receiving the amount in cash from the Assessee. The Assessee is a type of beneficiary and has introduced the unaccounted money in the books of accounts by way of obtaining the entry from the entry operator are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the assessee placed at page no. 75 of the assessee's paper book wherein it has been clarified that short term inter-corporate loans outstanding as on 31.3.2003 were at ₹ 2,04,04,010/- whereas at the end of immediately preceding years, those were at ₹ 7,02,89,764/-. As such there was a reduction in the loans. The contention of the ld. Counsel for the assessee that the loans were repaid in the same year was also not rebutted. 9. On a similar issue, their lordships of the Hon'ble Jurisdictional High Court in the case of Principal Commissioner of Income-tax vs. G. & G. Pharma India Ltd. (supra) observed in para 12 & 13 of the order dated 8th October, 2015 as under : "12. In the present case, after setting off four entrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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