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TMI Blog2018 (7) TMI 1617X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, we quash the reassessment proceedings. - decided in favour of assessee - ITA No.252/Del/2012 And ITA No.1002/Del/2012 - - - Dated:- 23-7-2018 - SH. G.D. AGRAWAL, PRESIDENT AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Assessee : Sh. R.S.Singhvi, Sh. Satyajeet Goel, CA For The Revenue : Sh. Amit Jain, Sr. DR ORDER PER BENCH: ITA no. 252/Del/2012 is the department s appeal filed against order dated 23.11.2011 passed by the Ld. CIT (Appeals) VII, New Delhi for assessment year 2003-04 wherein the Ld. CIT (A) has deleted an addition of ₹ 1,62,80,585/- made by the Assessing Officer u/s 68 of the Income Tax Act, 1961 (herein after referred to as the Act ). ITA No. 1002/Del/2012 is the assessee s appeal for the same year and challenges the action of the Ld. CIT (A) in holding that the re-assessment proceedings initiated for the year u/s 147/148 of the Act were valid. 2. The brief facts of the case are that the original assessment in the case of the assessee for assessment year 2003-04 was completed u/s 143(3) of the Act vide order dated 29.03.2006 at a total loss of ₹ 1,29,550/-as against the declared returned loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was not able to explain the nature and source of cash deposits aggregating to the above amount in its bank account. 3. The CIT(A) erred in not appreciating the fact that the assessee did not disclose its bank account maintained with State Bank of Patiala in its balance sheet and had not disclosed the same even during the course of assessment proceedings. 4. The CIT (A) without any cogent reason deleted the addition on account of the above and instead held that the assessee held that the assessee had commission/brokerage of 7.5% of the total cash deposit appearing in it undisclosed bank statement. ITA 1002/Del/2012 (Assessee s Appeal): l(i). That on the facts and circumstances of the case, the CIT(A) was not justified in confirming the action u/s. 147 even though the Assessing Officer has no jurisdiction in accordance with relevant provisions. (ii) That the finding and observation of the Assessing Officer that the proviso to sec. 147 is not applicable is without appreciation of facts as there is no omission or failure on the part of the assessee in disclosing relevant particulars of income supported by audited accounts and as such action of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and further that the AO had failed to specify in the reasons recorded as to what material facts were not declared by the assessee which led to income escaping assessment. The Ld. Authorised Representative emphasized that the reasons were recorded without application of mind and without bringing on record or examining any adverse material. It was submitted that information received from the investigation wing was simply relied upon and completed assessment of the assessee was re-opened which was illegal and not tenable in law. The Ld. Authorised Representative also submitted that the case of the assessee was reopened after four years from the end of the relevant assessment year and, therefore, it was incumbent on the part of the AO to demonstrate that any income chargeable to tax had escaped assessment by reason of failure on part of the assessee. It was submitted that during the course of original assessment proceedings, which culminated in the assessment order being passed u/s 143(3) of the Act, the AO had examined the books of accounts of the assessee along with supporting vouchers. The Ld. Authorised Representative also submitted that the impugned bank account of State Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share application money, loans etc. 2. To inflate expenses in the trading and profit and loss account so as to reduce the real profits and thereby pay less taxes. The specific information provided by the Investigation Wing of Income-tax Department, New Delhi is enclosed as per Annexure. In view of the specific information received as above from Investigation Wing of Income-Tax Department, New Delhi, I have sufficient reason to believe that the assessee Company M/s. JRD Stock Brokers Pvt. Ltd. has indulged in The activity of accommodation entries and the total amount of transaction by the assessee company amounting to Rs . 82,90,360/- which is bogus and represents the undisclosed income/income from other sources of the assessee company, which has not been offered to tax by the assessee in the return filed. Accordingly, I have reason to believe that on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Therefore, the income of ₹ 82,90,360/- chargeable to tax has escaped assessment for the assessment year 2003-04. 7.1 Along with the reasons there is also one Annexure running in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year or alternatively notwithstanding that there has been no omission or failure as mentioned above on the part of the assessee, the ITO has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. Unless the requirements of cl. (a) or cl. (b) of S. 147 are satisfied, the ITO has no jurisdiction to issue a notice under S. 148. The Supreme Court concluded that it was not satisfied that the ITO had any material before him which could satisfy the requirements under Section 147 and therefore could not have issued notice under Section 148. 10. In ACIT v. Dhariya Construction Co.(2010)328 ITR 515 the Supreme Court in a short order held as under: Having examined the record, we find that in this case, the Department sought reopening of the assessment based on the opinion given by the DVO. Opinion of the DVO per se is not an information for the purposes of reopening assessment under s. 147 of the IT Act, 1961. The AO has to apply his mind to the inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in M/s Haryana Acrylic Manufacturing Co. (P) Ltd. (supra) explained that the ratio of the decision in Phool Chand Bajrang Lai (supra) may not be entirely applicable since the same was in respect of Section 147(a) as it existed prior to the amendment. 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 assessee company has introduced its own unaccounted money it 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 en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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