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TMI Blog2017 (3) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... the final stage before the Assessing Officer. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1961 (hereinafter referred to as the Act) on the basis of information received from Investigation Wing. 4. The facts of the case in brief are that the assessee filed the original return of income on 31.10.2007 declaring an income of ₹ 11,20,430/- which was processed u/s 143(1) of the Act. Thereafter, the AO issued the notice u/s 148 of the Act after recording the reasons u/s 147 of the Act. The assessee in response to the said notice filed a letter dated 23.04.2013 enclosing the revised return for the assessment year under consideration. The assessee thereafter vide letter dated 14.05.2013 asked the copy of reason to belief for reopening the case. The AO in para 3.1 of the assessment order observed as under: "3.1 A detailed information regarding accommodation entries provided by Sh. Surendra Kumar Jain Group to various beneficiary companies was received from the office of the Director of Income Tax (Inv.)-II, New Delhi. Vide her letter F. No. DIT(Inv.)-II u/s 148/2012-13/269 dated 15.03.2013. As per the information a search & survey action was conducted by Unit-VI(2), New Delhi in the case of Shri Surendra Kumar Jain and Shri Virendra Jain on 14.09.2010. Various in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly shows that the appellant has taken accommodation entries from Sh. Surinder Kumar Jain Group of cases during the F.Y. 2007-08. The quantum of entries i.e. 20 Lacs has been specifically mentioned. In fact in the case of ITO vs Purshottam Dass Bangur (1997) 224 ITR 362 (SC) the Hon'ble Supreme Court has clearly held that letter from Deputy Director (Investigation) constitutes information and reasons to believe that income has escaped assessment. In fact herein the Hon'ble Supreme Court has also held that merely because the notice was sent on the next day of the receipt of the information from the DDIT(Inv.) does not mean the ITO has not applied his mind in this connection, Hon'ble Supreme Court in the case of RAYMOND WOLLEN MILLS LTD. Vs. ITO 236 ITR 34 (SC) and ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. 291 ITR 500 (SC) and CIT VS. India Terminal Connector System ltd, ITA 643/2011 Delhi HC that at the stage of initiation of Re - Asstt. Proceedings only primer -facie belief has to be formed for escaped income and not conclusively. Reliance is also placed on the Judgment of the Hon'ble Supreme Court in the case of PHOOL CHAND BAJRANG LAL AND ANOTHER VS. ITO & ANO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have no hesitation in holding that the AO has rightly reopened the assessment proceedings and the approval accorded by the Addl. Commissioner of Income Tax, Range-1, Faridabad has not been done in purely mechanical manner. 12. The next contention of the appellant has been that the reason recorded by the AO has not been supplied to him despite repeated requests. In this regard, the Director of the Company Sh. Harpinder Singh S/o Sh. Jarnail Singh has an affidavit which is reproduced below: "I Harpinder Singh S/o Sh. Jarnail Singh R/o H.No. 612, Sector-14, Faridabad do here by solemnly affirm that: 1) That I am a director in "M/s Speco Tech Roofing & Ceilings Systems Private Limited" having PAN No. AAJCS7152F, I am competent to make the statement on behalf of the company. 2) That we have filed Income tax Return as on 25/04/2013 for the assessment year 2007-2008 in response to your notice U/s 148 for our above mentioned company. 3) That the alleged Notice dated 25/07/2013 along with reasons to believe as alleged in para 2 of the assessment order was never received by the company." 13. To verify this contention of the appellant the assessment records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se facts and as per the provisions of Section 124 this ground of the appellant is also dismissed. 15. The next contention of the appellant has been that the reasons recorded are undated and thus could have been recorded later than the issue of notice u/s 148. Once again the same has been verified by me from the assessment record and it is seen that the Addl. Commissioner of Income Tax, Range- 1, Faridabad has accorded his approval to ACIT, Circle-1, Faridabad vide letter dated 22.03.2013, dispatch No. 1480 and the same has been received by ACIT, Circle-1, Faridabad on 25.03.2013 and is placed on the assessment folder. Thus from the above it is clear that the AO has recorded the reasons for reopening of the case and received the approval of Addl. Commissioner of Income Tax, Range-1/ Faridabad before the issue of notice u/s 148. Thus this ground of the appellant is also dismissed. Thus Ground Nos. 1 to 4 of the appellant are dismissed." 7. The ld. CIT(A) on merit also confirmed the addition made by the AO. 8. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and also furnished the factual aspects which ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was placed on the following case laws: * Signature Hotels (P.) Ltd. Vs ITO (2011) 338 ITR 51 (Del) * Jagdish Karnany Vs ITO 155 Taxman 35 (Del) * Mrs. Amina Rasool Vs ITO 161 TTJ 405 (Asr.) * Aksar Wire Products (P) Ltd. Vs ACIT in ITA No. 1167/Del/2015 order dated 11.12.2015 * Signature Hotels (P) Ltd. Vs ITO 338 ITR 51 (Del.) * CIT Vs Atul Jain 299 ITR 383 (Del.) * CIT Vs Insecticides (India) Ltd. 357 ITR 330 (Del.) * ITO Vs Lakhmani Mewal Das 103 ITR 437 (SC) * CIT Vs Orissa Corp. (P) Ltd. 159 ITR 78 (SC) * Kishinchand Chellaram Vs CIT 125 ITR 713 (SC) 10. In his rival submissions the ld. DR strongly supported the orders of the authorities below and further submitted that the assessee was given numerous opportunity to produce Principal Officer/ relevant person of the investor companies but the onus cast upon the assessee was not discharged. It was further submitted that the inquiries conducted by the Investigation Wing and also by the assessment wing established that the assessee was indulged in a notorious practice of receiving the accommodation entry in order to effect payment of legitimate tax. Therefore, the addition made by the AO and sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, which is the final stage before the Assessing Officer. It has further been held that: "the reassessment proceedings were initiated on the basis of information received from the Director of Income-tax (Investigation) that the petitioner had introduced money amounting to ₹ 5 lakhs during financial year 2002-03 as stated in the annexure. According to the information, the amount received from a company, S, was nothing but an accommodation entry and the assessee was the beneficiary. The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid-up capital of ₹ 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September, 2001. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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