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TMI Blog2016 (9) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer. Further, from the table of the accommodations entries, which the assessee is said to have received, reproduced in the assessment order, we find that there are five instances, where the entries have been repeated. Assessing Officer has not applied his independent mind while recording the reasons in this case and, therefore, proceedings under section 147 of the Act initiated by way of issue of notice under section 148 of the Act are quashed. - ITA No. 735/Del/2012, C.O. No. 110/Del/2012 - - - Dated:- 29-7-2016 - SH. I.C. SUDHIR, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Department : Smt. Anima Barnwal, Sr.DR For The Assessee : Sh. Ram Samujh, Adv. ORDER PER O.P. KANT, A.M.: This appeal by the Revenue and cross objections of the assessee are directed against order dated 19/08/2011 of learned Commissioner of Income-tax (Appeals)-XII, New Delhi for assessment year 2003-04. The grounds of appeal raised by the assessee in ITA No. 735/Del/2012 are as under: i. The learned Commissioner of Income Tax(Appeals) erred in law and on the facts and circumstances of the case in quashing the proceedings initiated u/s 147 of the I.T. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 144 of the Act on making addition of ₹ 95,65,510/- as unexplained cash credit. Aggrieved, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals), who after considering the objection of the assessee challenging the issue of notice under section 148 of the Act as well as the additions made in respect of unexplained credit, allowed the appeal of the assessee. Aggrieved with the impugned order, the Revenue is in appeal before us and the assessee has filed cross objections to it. 4. At the time of hearing, it was observed that there was delay in filing appeal by the Revenue, therefore, an application condonation of the delay has been filed by the Assessing Officer. It was submitted by the learned Sr. Departmental Representative that limitation for filing appeal in this case was expired on 18/11/2011, whereas the appeal has been filed on 13/02/2012. The Registry has also pointed out delay of 87 days in filing the appeal. The learned Sr. Departmental Representative further submitted that due to proceeding on leave by the dealing Inspector for his marriage, the relevant file could not be placed before the authorities on time and as soon a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenged quashing of proceedings initiated under section 147 of the Act 6.1 The learned Sr. Departmental Representative (DR) supporting the order of the Assessing Officer submitted that the reasons were recorded after receipt of information from the Investigation Wing that the assessee obtained accommodation entry of ₹ 95,65,510/- from different entry operators and the information was specific to the extent of name of bank and branch of bank, date on which entry taken amount of entry taken, instrument through which entry taken etc. and thus the information could not be treated as vague. She further submitted that the reliance on the judgment of the various High Court was placed by the learned Commissioner of Income-tax (Appeals) without examining the facts of the case of the assessee. The learned Sr. Departmental Representative, further relying on the judgment of the Apex Court in the case of Raymond Woollen Mills, reported in 236 ITR 34, submitted that at the stage of issuing notice under section 148 of the Act, sufficiency of reasons was not to be examined. She also relied on the judgment in the case of S. Narayan Appa, reported in 63 ITR 219. Further, relying on the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to form his reasons to believe that income chargeable to tax has escaped assessment. Such belief is to be formed by him on the basis of material available to him on that very date when he records his reasons to believe. Of course, forming of this reason to belief is prima facie in nature but even for arriving at this prima facie belief, he has to apply his mind to arrive at a satisfaction to that effect. Even in this decision of Hon'ble Delhi High Court in the case of CIT vs. India Terminal Connector System Ltd. (supra) relied upon by the learned Senior DR, the decision in the case of Rajat Exports Import India Pvt. Ltd. vs. ITO - W.P.(C) No. 8341/2011 dated 18.1.2012 has been referred wherein the contention of the assessee has not been disputed that the validity of the reopening of the assessment should be judged only with reference to the reasons recorded by the Assessing Officer under sec. 148(2) at the time of issue of notice of reopening and any other material sought to be relied upon later, with a view to strengthening or improving the reasons, cannot be looked into by the Court. Thus, in our view, facts of each case are required to be gone into to arrive at a conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) before the Hon'ble High Court of Delhi, the first sentence of the reasons stated that information had been received from Director of Income-tax (Inv.) that the petitioner had introduced money amounting to ₹ 5 lacs during the financial year 2002-03 as per the details given in annexures. The said annexures related to a cheque received by the petitioner from Swetu Stone P.V. from the bank and the account number mentioned therein. The last sentence recorded that the as per the information, the amount received was nothing but an accommodation entry and the assessee was the beneficiary. The Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. The Assessing Officer accepted the plea on the basis of vague information in a mechanical manner. The Hon ble Court held that the reasons recorded reflect that the Assessing Officer did not independently apply his mind to the information received from the Director of Income-tax (Inv.) and arrive at a belief whether or not any income had escaped assessment. The writ petition was accordingly allowed by the Hon'ble High Court and proceedings under sec. 148 of the Act wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has submitted that the Assessing Officer failed to provide the list of entry operators, copy of their statement and other evidences provided by the investigation wing of the department. It was contended further that the Assessing Officer failed to provide the opportunity to cross examine the entry operators and the share applicants. It was submitted that all the share applicants are in existence having PAN and they are assessed to income tax, they had also filed their confirmation with other supported evidences and all the share application money was received through banking channels and the shares were already allotted to them in lieu of said share application money. Considering these material aspects of the fact of the present case, we find that the Assessing Officer has not applied his mind and has recorded his satisfaction forming reasons to believe merely on the basis of information received from the investigation wing of the department and ignoring the objections raised by the assessee in this regard. The object of the legislator behind recording of reasons to belief that a chargeable income has escaped assessment is a precautionary measure that an assessee should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volving total amount of ₹ 95,65,510/- represent the assessee s own unaccounted money. In view of above, I have reason to believe that an income of ₹ 95,65,510/- has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. Since, as per the available records the assessment was not made in this case u/s 143(3) or 147 of the Act and period of 4 years has elapsed, proposal is hereby submitted alongwith the relevant assessment records to the Addl. Commissioner of Income Tax, Range-9, New Delhi for consideration and necessary approval in accordance with the provisions of section 151(2) of the IT Act, 1961 for issuance of notice u/s 148 of the I.T. Act. 6.6 We find from the above that the Assessing Officer has mentioned that the Directorate of Income Tax (Investigation), New Delhi, has carried out enquiries in respect of the persons/companies engaged in the business of providing accommodation entries to various companies and these persons used to issue cheques in lieu of cash received after deducting their commission and the cheques were generally issued as share application money/unsecured loan. This was a general description of the modus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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