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TMI Blog2017 (7) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(1) on 30.01.2004.' Information was received from the DIT (Investigation) that certain persons were indulged in providing accommodation entries/bogus share application money/bogus capital gains. In the course of enquiries before Investigation Wing these persons had provided the details of various persons to whom such accommodation/bogus entries were provided. Based on the enquiries made, the DIT has provided details of persons whom were beneficiary/entry operators of such accommodation/bogus entries in Delhi in the last 5-6 years. The Investigation Wing on the basis of enquiries conducted/information collected has sent the name and address of the bank accounts of the beneficiary and the value of entry taken from different persons giving the accommodation entry. The name of entry giver and bank accounts through which the entry was given has also been informed by the Investigation Wing. One such beneficiary is M/s Pragati Vanijaya Ltd. As per the report of Investigation Wing, M/s Pragati Vanijaya Ltd. has received accommodation entry amounting to Rs. 11,25,000/- in the FY 2002-03 relevant to Assessment Year 2003-04 under the garb of share application money/share capital Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO can call for any information from him directly. The AO observed that notice under section 131 of the Act was issued to director of M/s Tulip Engineering Private Limited which was sent to him as per address given by the assessee. But the notice could not be served through the Inspector for which the notice was served through affixture. However, none appeared on that date. This was again confronted to the assessee. However, the assessee expressed its inability and submitted that they have already given the address of the company and affidavit and confirmation of the director in support of their claim. The relevant information was also furnished. 2.3. However, the AO was not satisfied with the explanation given by the assessee in view of the non production of the director of the share applicant company and made addition of Rs. 11,25,000/- u/s 68 of the I.T. Act, 1961 as unexplained cash credit. 3. Before the Ld.CIT(A) apart from challenging the addition on merits the assessee also challenged the validity of the reopening of assessment proceedings. Based on various documents filed by the assessee the Ld.CIT(A) called for remand report from the AO. After confronting the same th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction and the subsequent order passed u/s 143(3) and 147 is also illegal, bad in law and without jurisdiction. 2. That the notice u/s 148 has been issued/signed without recording reasons as required under the law; hence the notice u/s 148 is illegal, bad in law and without jurisdiction. 3. That the CIT(A) has grossly erred In law and on facts in upholding the issuance of notice u/s 148; despite the fact that the AO mechanically and without application of mind incorporated the information received from investigation wing as reasons for issue of a notice u/s 148. Further, the reasons recorded are factually incorrect. vague and based on surmises and conjectures and guesswork. 4. That the CIT (A) failed to consider that the appellant was not confronted with and supplied the report in respect of affixture of notice u/s 131 of the Income Tax Act, 1961 and it is not a valid service. 5. That the CIT(A) has in view of the facts and circum lances of the case erred on facts and in law in upholding the impugned assessment u/s 143(3) /147 dated 23.12.2012 assessing the income at Rs. 41,24.190/-. 6. That the CITCA) has in view of the facts and circumstances of the case erred on facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as nothing but accommodation entry, but the assessee was beneficiary was not sufficient to reopen the assessment when the AO did not apply his own mind to the information received. 6.2. Referring to the decision of the Coordinate Bench of the Tribunal in the case of Sonia Chowdhry vs. ITO in ITA nos. 2036 and 2037/Del/10 order dt. 7th October, 2016 for the Assessment Year 2002-03 and 2003-04 he submitted that following the above two decisions the Tribunal has quashed the reassessment proceedings. He accordingly submitted that this being a covered matter in favour of the assessee by the decisions of Jurisdictional High Court as well as the decision of the Coordinate Bench of the Tribunal the re-opening proceedings should be declared as null and void. 6.3. So far as the merit of the case is concerned, he submitted that the assessee has filed full details to prove the identity, genuineness and credit worthiness of the payer. The assessee had given the address of the share applicant company. The AO could have independently summoned and recorded the statement of the Director of the share applicant company, which he failed to do. He accordingly submitted that the addition on merit also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccommodation entry and the assessee is a beneficiary. It is the submission of the Ld.DR that the material from the investigation wing constitutes material and reopening on the basis of such information from the investigation wing has to be constituted as valid information for reopening of assessment. 9.2. I find an identical issue had come up before the Hon'ble Delhi High Court in the case of Pr.CIT vs. G&G Pharma (supra) wherein the Hon'ble High Court had quashed the reassessment proceedings initiated on the basis of information obtained from the investigation wing on the ground that AO has not applied his mind to the material before him to prove that he had reasons to believe that income had escaped from assessment. The relevant observation from para 12 to 15 is as under. "12. In the present case, after setting out four entries, stated to have been received by the Assessee on a single date i.e. 10th February 2003, from four entities which were termed as accommodation entries, which information was given to him by the Directorate of Investigation, the AO stated: "I have also perused various materials and report from Investigation Wing and on that basis it is evident that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otels Ltd. (supra) has also taken similar view. The relevant observation of Hon'ble High Court from para 14 onwards read as under. "14. The first sentence of the reasons states that information had been received from Director of Income-Tax (Investigation) that the petitioner had introduced money amounting to Rs. 5 lacs during financial year 2002-03 as per the details given in W.P. (C) NO. 8067/2010 Page 12 Annexure. The said Annexure, reproduced above, relates to a cheque received by the petitioner on 9th October, 2002 from Swetu Stone PV from the bank and the account number mentioned therein. The last sentence records that as per the information, the amount received was nothing but an accommodation entry and the assessee was the beneficiary. 15. The aforesaid reasons do not satisfy the requirements of Section 147 of the Act. The reasons and the information referred to is extremely scanty and vague. There is no reference to any document or statement, except Annexure, which has been quoted above. Annexure cannot be regarded as a material or evidence that prima facie shows or establishes nexus or link which discloses escapement of income. Annexure is not a pointer and does not indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred. This is the only material relied upon by the Assessing Officer. The said Annexure has been quoted above. In this connection, we may notice that M/s Swetu Stone Pvt. Ltd. is an incorporated company and the petitioner has pleaded and stated that the said company has a paid-up capital of Rs. 90 lacs. The company was incorporated on 4th January, 1989 and was also allotted a permanent account number in September, 2001. To this extent, there is no dispute. In these circumstances, we feel the judgments of the Delhi High Court in Commissioner of Income W.P. (C) NO. 8067/2010 Page 15 Tax versus SFIL Stock Broking Limited, [2010] 325 ITR 285 (Delhi) and Sarthak Securities Company Private Limited versus Income Tax Officer, 2010 (329) ITR 110 (Delhi), in which CIT versus Lovely Exports (P) Limited, (2009) 216 CTR 195 (SC) has been applied and followed, are applicable. We may notice here that the respondent in their counter affidavit have stated that Swetu Stone Pvt. Ltd. is unidentifiable and, therefore, the aforesaid decisions should not be applied and the ratio of the decision dated 7th January, 2011 in Writ Petition (Civil) No. 7517/2010, AGR Investment Limited versus Additional Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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