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TMI Blog2016 (7) TMI 1450X X X X Extracts X X X X X X X X Extracts X X X X ..... is is an appeal by the assessee against the order dated 27.11.2015 of ld. CIT(A)-V, Delhi. 3. Following grounds have been raised in this appeal: 1. That the learned Commissioner of Income Tax (Appeals) 5, New Delhi has grossly erred both in law and on facts in upholding the initiation of proceedings under section 147 of the Act and, completion of assessment under section 147/143(3) of the Act without appreciating that, statutory pre-conditions for neither the initiation of proceedings and, nor the completion of assessment under the Act had been fulfilled and, therefore, the same were without jurisdiction and hence deserve to be quashed as such. 1.1. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, there was no material on record on the basis of which, it could be held that, there was any reason to believe with the learned Income Tax Officer that, income of the appellant company had escaped assessment and, in view thereof, the proceedings initiated were illegal, untenable and therefore, unsustainable. 2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining an aggregate addition made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial placed on record and, are otherwise unsustainable in law and therefore, addition so sustained is absolutely unwarranted. 3. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts is not admitting the additional evidence filed by the appellant company in the shape of audited balance sheet and profit and loss account of Singhal Securities Pvt. Ltd., the certificate of incorporation and PAN the matter date details from MCA website and an affidavit of the director of M/s Singhal Securities Pvt. Ltd., namely Sh. Anil Kumar Bansal and therefore the order so made and addition sustained of disregarding the crucial evidence is a vitiated order and not in accordance with law. 4. That both the authorities below have framed the impugned order without granting sufficient proper opportunity to the appellant company and therefore the same are contrary to principle of natural justice and hence vitiated. 5. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding an addition of ₹ 28,000/- on account of alleged commission paid to the entry provider in cash for obtaining accommodation entry and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, which were disposed off by the AO and he asked the assessee to file original confirmation and produce the directors of the company M/s Singhal Securities (P) Ltd. for personal deposition. The AO observed that the assessee failed to produce the director of the said company and even there was no compliance of notices u/s 133(6) of the Act issued on 09.01.2014 and summon u/s 131 of the Act issued on 24.01.2014 to the party M/s Singhal Securities Pvt. Ltd. Therefore, the identity and creditworthiness of the said party were unverifiable. The AO accordingly made the addition of ₹ 14,00,000/- which was the share capital subscribed by M/s Singhal Securities Pvt. Ltd. He also made the addition of ₹ 28,000/- considering the same as a commission @ 2% of the amount of entry i.e. ₹ 14,00,000/-. Accordingly, assessment was framed at an income of ₹ 14,16,152/-. 7. Being aggrieved the assessee carried the matter to the ld. CIT(A) and challenged the reopening u/s 147 r.w.s. 148 of the Act by stating that there was no material on record with the AO to believe that the income had escaped assessment. It was also stated that the mandatory conditions of Sections 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eelkanth Finbuild Ltd. in ITA No.2821/Del/2009 order dated 01.04.2015 8. It was further submitted that Sh. Surender Kumar Jain in whose case search took place was neither Director nor share subscriber in the alleged dummy company namely M/s Singhal Securities Pvt. Ltd. Therefore, those entities could not be termed as group entities of Sh. Surender Kumar Jain and that in the assessment proceeding u/s 153C of the Act in the case of M/s Singhal Securities Pvt. Ltd. for the assessment year 2008-09, assessment order dated 28.03.2013 was passed subsequent to the issuance of notice u/s 148 of the Act to the assessee and those companies were not held as in the business of providing accommodation entries but dealing in shares and securities. Therefore, the reasons as recorded by the AO were against the material on record. The reliance was placed on the following case laws: Ranbaxy Laboratories Ltd. Vs CIT 336 ITR 136 (Del) CIT Vs Jet Airways India Ltd. 331 ITR 236J (Bom) CIT Vs Software Consultants 341 ITR 240J (Del) 9. The ld. CIT(A) after considering the submissions of the assessee observed that the AO was required to record his reasons in writing u/s 148 of the Act b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the assessee for the year under consideration. Accordingly, the ld. CIT(A) opined that there was no infirmity or illegality in the reassessment proceedings u/s 147 of the Act. 11. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the AO simply acted on the advice of the Investigation Wing and did not apply his own mind. Therefore, reopening was not valid. It was further submitted that the AO on the basis of this information of Investigation Wing that M/s Singhal Securities Pvt. Ltd. was an entry operator and provided the accommodation entry to the assessee, reopened the assessment. However, in the assessment of the said company, the AO never said the same thing rather the assessment was framed u/s 143(3) of the Act vide order dated 28.03.2013 at the disclosed loss. A reference was made to page nos. 25 26 of the assessee s paper book. The reliance was placed on the following decision of the ITAT Delhi: Unique Metal Industries Vs ITO in ITA No. 1372/Del/2015, order dated 28.10.2015 Punjab Metal Store Vs ITO in ITA No. 1512/Del/2015, order dated 02.12.2015 G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of M/s Singhal Securities Pvt. Ltd. and was also not connected with the assessee. In the present case, when the assessment of M/s Singhal Securities Pvt. Ltd. from whom the assessee received share application money was assessed at the same figure of the loss which was declared by the said assessee, on the same date when the AO recorded the reasons that the income of the assessee escaped assessment for a sum of ₹ 14,00,000/- i.e. the amount received as share application money from M/s Singhal Securities Pvt. Ltd. In the present case, it cannot be said that the AO was having any material in his possession except the information received from the Investigation Wing. Therefore, the reopening was done by the AO only on the basis of the information received from Investigation Wing. 15. An identical issue was a subject matter of the assessee s appeal in the case of M/s Dhanuka Agritech Ltd. Vs ACIT in ITA No. 1003/Del/2014 for the assessment year 2003-04 wherein vide order dated 11.05.2016 this bench of the Tribunal has held as under: 9. On a similar issue, their lordships of the Hon ble Jurisdictional High Court in the case of Principal Commissioner of Income-tax vs. G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 10. 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 describe how and what manner it came to his knowledge that the assessee receive the accommodation entries. We, therefore, by keeping in view the ratio laid down by the Hon ble Jurisdictional High Court in the aforesaid referred to case of Principal Commissioner of Income-tax vs. G G Pharma India Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X
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