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TMI Blog2016 (9) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) and upheld the deletion of the addition. In fact, they substantially relied upon and quoted the decision of its coordinate bench in the case of MAF Academy P. Ltd., a decision which has been overturned by the Delhi High Court vide its judgment in C.I.T vs. MAF Academy P. Ltd [ (2014) 206 DLT 277). In the impugned order it is accepted that the assessee was unable to produce directors and principal officers of the six shareholder companies and also the fact that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer has observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions. 21. In view of the aforesaid discussion, we feel that the matter requires an order of remit to the tribunal for fresh adjudication keeping in view the aforesaid case law. The question of law is, therefore, answered in favour of the Revenue and against the respondent-assessee, but with an order of remit to the tribunal to decide the whole issue afresh. One of the reasons, why we have remitted the matter is that the cross objections of the respondent-assessee questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the matter action of Ld. CTT (A) in not quashing the assessment order is bad in law and against the facts and circumstances of the case. 3. That the cross objector craves the leave to add, amend, modify, delete any of the ground(s) of cross objection before or at the time of hearing." 5. Briefly stated the facts of this case are : assessee company filed return of income declaring loss of Rs. 1,58,035/- on 20.10.2002 which was processed under section 143 (1) of the Income-tax Act, 1961 (for short 'the Act'). Subsequently, it was noticed by the revenue authorities that during the year under assessment, the assessee received accommodation entry under the garb of share application money/share capital/share premium from the following entry operators :- Beneficiary Beneficiary Value of Entry taken Instrument No. by which Entry taken Date on which entry taken Name of a/c Account Holder of Entry of giving A/c Bank from which entry given Branch of entry giving bank A/c No. of entry giving account HDFC Bank Rajender Nagar Mkt., ND 70000 972521 07.3.02 Sekhawati Finance P. Ltd. SBP Daryaganj 50111 HDFC OLD Rajender Nagar, ND 1000000 13.3.02 D.K. Ispat & Tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with cross objection. 9. Now, the revenue as well as assessee are again before the Tribunal by way of filing appeal as well as cross objection in the second round of litigation. 10. Undisputedly, it is settled principle of law that the AO is required to reach at an independent conclusion by applying his own mind that he has reason to believe that the income of the assessee has escaped assessment to assume the jurisdiction for reopening of the assessment u/s 147 / 148 of the Act. 11. Now before proceeding further, we would like to peruse the reasons rendered by the AO for reopening of the assessment u/s 147 of the Act which are reproduced for ready reference 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 identified by the Wing during the period relevant to A.Y. 2002-03. A comprehensive investigation was carried out by the Investigation wing for identification of entry operators engaged in the business of money laundering for the beneficiaries and on the basis of investigation carried out and evidences coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nagar 1000000 18- Mar-02 Chintpuri Credits SBP DG 50058 The assessee has received unexplained sums from the entry operators as per the above details as per information available with the undersigned. As explained above, the identity, creditworthiness and genuineness of transactions with the persons found to be entry operators cannot be established. The Assessing Officer therefore have reasons to believe that on account of failure on the part of the assessee or disclose truly and fully all material facts necessary for assessment for above assessment year, the income chargeable to tax to extent of accommodation entry mentioned above, has escaped assessment within the meaning of Section 147 of the Act." 12. In the backdrop of the aforesaid facts and circumstances of the case, the sole question arises for determination in this case is :- "as to whether AO is empowered to initiate the proceedings u/s 147/148 of the Act merely on the basis of report received from the Investigation Wing that the assessee has been provided with accommodation entry to the tune of Rs. 54,00,000/- by the entry operators, without applying his mind?" 13. Identical issue has come up before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed various materials and report from Investigation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money in its bank account by way of above accommodation entries." The above conclusion is unhelpful in understanding whether the AO applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the AO, if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: "it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries". In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the revenue that such and such company has provided an accommodation entries to the assessee to the tune of Rs. 54,00,000/- does not amount to the satisfaction of the AO in any manner whatsoever to reopen the case u/s 147 of the Act; (vi) that when the AO has sufficient material to conduct the independent investigation to assume the jurisdiction u/s 147/148 of the Act, which he has not used for the reasons best known to him rather proceeded on the basis of report of Investigation Wing without applying his mind, which is not permissible under law; (vii) that in view of the law laid down by the Hon'ble Supreme Court and Hon'ble jurisdictional High Court in the judgment cited as Chhugamal Rajpal vs. S.P. Chaliha and G & G Pharma India Ltd.(supra) respectively when the initiation of proceedings u/s 147 of the Act in this case is itself bad in law, consequent assessment framed u/s 143(3)/147 of the Act is also not sustainable, hence hereby quashed. 18. In view of what has been discussed above, since the reopening of the proceedings u/s 147 of the Act and consequent assessment framed u/s 143 (3) / 147 have held to be not sustainable in the eyes of law for want of jurisdictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X
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