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TMI Blog2016 (6) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... O in making an aggregate addition of Rs. 7,50,000/- on account of share capital received from Sh. Vivek Aggarwal and M/s Globe Tech Solutions (P) Ltd. by treating it as unexplained cash credit u/s 68 of Income Tax Act, 1961. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 15,000/- (2% of Rs. 7,50,000/-) on account of alleged commission paid. 4. That in any case and in any view of the matter, impugned addition and impugned assessment order are bad in law, illegal, unjustified, barred by limitation, contrary to facts & law and based upon recording of incorrect facts and finding, without giving adequate opportunity of hearing, in violation of principles of natural justice and the same are not sustainable on various legal and factual grounds. 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in charging interest 234B, 234C and 234D of the Income Tax Act, 1961. 6. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to AY 2003-04. Further, sufficiency of reasons for forming the belief is not a requirement. Hon'ble Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers P. Ltd. reported in 291 ITR 500 has held when the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, the law does not require that Assessing Officer should have finally ascertained the fact of legal evidence or conclusion. The material required for conclusively proving the escapement of income is not concerned at the stage of reopening. Hon'ble Delhi High Court in the case of A.G. Holdings (P) Ltd. vs. ITO in W.P. (C) 8031/2011 and in the case of CIT vs. Nova Promoters & Finlease (P) Ltd (2012) 18 Taxmann.com 217 (Delhi) has held that at the time of issuing the notice to reopen the assessment, the Assessing Officer is only expected to form a prima facie or tentative belief that income chargeable to tax had escaped assessment. Whether the addition has to be made or not is a matter to be decided on merits in the course of the reassessment proceeding. The information received from the investigation wing was specific. The information was sufficient for making a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/Del/2014 order dated 11.05.2016 Vasundra Promoters Pvt. Ltd. Vs ACIT, CC-23, ITA No. 4014/Del/2014 order dated 28.04.2016 7. In his rival submissions the ld. DR strongly supported the orders of the authorities below and further submitted that the AO received the specific information from the Investigation Wing, on the basis of which the assessment was reopened, therefore, the ld. CIT(A) rightly upheld the action of the AO for reopening the assessment u/s 147 of the Act. 8. We have considered the submissions of both the parties and carefully gone through the material available on the record. To resolve the present controversy, it is relevant to consider and discuss the reasons recorded by the AO for reopening the assessment u/s 147 of the Act. The AO vide letter dated 02.07.2010 (copy of which is placed at page nos. 12 & 13 of the assessee's paper book) communicated to the assessee that the reasons recorded for issuing notice u/s 148 of the Act were as under: "Information has been received from the Investigation Wing of the Income Tax Department that the above named assessee is a beneficiary of accommodation entries received from certain established entry operators identif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year, the income chargeable to tax to the extent of accommodation entry mentioned above, has escaped assessment within the meaning of Section 147 of the Act. Since four years has since expired from the end of the relevant years, and no scrutiny assessment was completed in the case of the assessee for the said assessment year, the reasons recorded above for the purpose of reopening of assessment is put up for kind satisfaction of Addl. CIT, Range-13, New Delhi in terms of the provision to Section 151 of the Act. In view of the above, the Assessing Officer has the reasons to believe, that income of the assessee has escaped assessment during the year under consideration within the meaning of Section 147 of the Act and notice was issued after taking approval from the Addl. CIT, Range-13, New Delhi." 9. From the above reasons recorded and as communicated to the assessee by the AO, it is crystal clear that the AO reopened the assessment on the basis of information of other persons because he himself admitted that it came to his knowledge that the persons from whom the amount was received were entry operator and have provided entries to the assessee, after receiving amount in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 analyzing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity." 11. In the present case also the AO in the reasons recorded mentioned that it had come to his knowledge that the persons from whom amount was received were entry operator and provided the entries to the assessee after receiving the amount in cash, however, nothing was brought on record that how and in what manner the persons from whom the assessee received the loans were entry operator and that as to how the cash was paid by the assessee. In 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 descr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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