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TMI Blog2018 (11) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... ollen Mills Ltd.[1997 (12) TMI 12 - SUPREME COURT] the sufficiency or correctness of the information is not to be seen at the stage of the reopening of the assessment. In our opinion, the reassessment proceeding is a kind of enquiry, where the assessee is granted opportunity to explain his stand on the correctness of reasons to believe escapement of income. Further, the Assessing Officer is not empowered in law to carry out any enquiry, if no assessment proceeding are pending. The reassessment proceedings thus, empower the Assessing Officer to verify correctness of the information. In the case of Ankit Financial Services Ltd.[2017 (1) TMI 1041 - GUJARAT HIGH COURT] material indicating that assessee has received bogus share application through accommodation entry is one of the beneficiary, was recovered in the search of another person. In such circumstances, the initiation of reopening was justified. CIT(A) is not justified in holding that reassessment proceeding are invalid. Accordingly, we set-aside the order of the Ld. CIT(A) to the extent of holding the proceedings under section 147 of the Act is invalid. - Decided in favour of revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... t was mentioned that certain investigations were carried out by the Investigation Wing of the Department, wherein it was found that amount of ₹ 91,51,200/- entered in the books of the accounts of the assessee by way of share application money received from following parties, was actually in the nature of accommodation entries taken from entry operators: a. Aggregate Finance and Investment P. Ltd. Rs.50,00,000/- b. Garner Finance and Securities P. Ltd. Rs.26,25,000/- c. Viniyas Finance and Investment P. Ltd. Rs.15,00,000/- Total Rs.91,25,000/- 3.1 During assessment proceedings, in support of genuineness of the share application money, the assessee filed confirmation letters, bank statement, copy of the Income Tax Return, copy of certificate of incorporation alongwith Memorandum of Articles etc. The Assessing Officer issued summon under section 131 of the Act to the above 3 parties at their addresses as disclosed by the assessee, however, the notice were received back with the remark that 'the concerned do not exist at the given address'. The fact of return of summon issued under section 131 of the Act was brought to the knowledge of the assessee and the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial is not to be seen. He relied on the decision of the Hon'ble Delhi High Court in the case of PCIT Vs Paramount Communication Private Limited (2017) 392 ITR 444 (Delhi) wherein the information received from the DRI regarding bogus purchases was held to be a tangible material outside the record to initiate valid reassessment proceedings. He submitted that the SLP filed by the assessee against the above decision was also dismissed by the Hon'ble Supreme Court as reported in Paramount Communication Private Limited Vs PCIT 2017-TIOL-253-SC-IT. The Ld. Sr. DR also relied on the decision of the Hon'ble Gujarat High Court in the case of Ankit Financial Services Ltd. versus DCIT (2017) 78 taxmann.com 58 (Gujarat). In view of the above arguments, the Ld. Sr. DR submitted that the reassessment proceeding have been validly initiated by the Assessing Officer. 6. We have heard the submission of the Ld. DR and perused the order of the lower authorities. In the instant case, the reasons recorded for the belief that income had escaped assessment are available on page 5 of the paper book of the assessee, which are reproduced as under: "Certain investigations were carried out by the Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BAGH 52 ERAWAT INFOTLCH PVT LTD 1001000 2852 10-Dec-01 AGGREGATE FINANCE & INVLS RATNAKAR KAROL BAGH 52 ERAWAT INFOTLCH PVT l.TD 1001000 2853 11-Dec-01 AGGREGATE FINANCE & INVES RAI'NAKAR KAROL BAGH 52 LERAWAT INFOTLCH PVT LTD 1001000 2855 12-Dec-01 AGGREGATE FINANCE & INVES RATNAKAR KAROL BAGH 52 ERAWAT INFOTECH PVT LTD 1001000 502873 29-Oct-01 DINANATH LAHURIWAl.A OBC MIN TO ROAD 19 ERAWAT INFOTECH PVT LTD 1001000 502873 29-Oct-O1 DINANATH LAHURIWAl.A one MINTO ROAD 19 ERAWAT INFOTLCH PVT LTD 500500 3002 14-Dec-01 GARNER FINANCE & SECURITE RAI'NAKAR KAROL BAGH 65 ERAW A 1 INFOTLCH PVT LTD 500500 3002 I4-Dec-01 GARNER FINANCE & SECIJRITL RATNAKAR KAROL BAGH 65 ERAWAT INFOTLCH PVT LTD 125125 3003 15-Dcc-OI GARNER FINANCE & SECURITE RATNAKAR KAROL BAGH 65 ERAWAT INFOTLCH PVT LTD 125125 3003 15-Dec-01 GARNER FINANCE & SECURITE RATNAKAR KAROL BAGH 65 ERAWAT INFOTLCH PVT LTD 500500 3010 19-Dec-01 GARNER FINANCE: & SECURITE RATNAKAR KAROL BAGH 65 ERAWAT INFOTLCH PVT LTD 500500 3010 19-Dec-0I GARNER FINANCE & SECURITE RATNAKAR KAROL BAGH 65 ERAWAT INFOTLCH PVT LTD 1501500 3012 7-Jan-02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative of the assessee as under: "9.3 With regard to the claim of AO having borrowed the satisfaction of the Investigation Wing and not having conducted any independent enquiries to arrive at own satisfaction for valid initiation of proceedings u/s 147, it is held that the case of the appellant is squarely covered by the decisions of the Hon'ble Jurisdictional High Court in the case of M/s. Commissioner of Income V/s SFIL Stock Broking Ltd., 325 ITR 285 (Delhi), CIT Vs. Atul Jain and Vinita Jain, 299 ITR 383 (Delhi) & Sarthak Securities Co. P. Ltd. V/s Income Tax Officer, 329 ITR 110 (Delhi) the gist of which have been provided in paras 5.6, 5.7 & 5.8 (supra)." 11. In the case of CIT Vs SFIL Stock Broking Ltd(supra) relied upon by the Ld. CIT(A), the reassessment was held invalid due to non-application of mind by the Assessing Officer as the assessment was reopened on the direction of the Additional Commissioner of Income-tax. In the present case before us, there is no such allegation and hence ratio of the said decision cannot be applied over the instant case. 12. In the case of CIT Vs Atul Jain & Vinita Jain (supra) relied upon by the Ld. CIT(A), the reopening was held illeg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntaining particulars of the accommodation entry providers as well as accommodation entry amount received by the appellant. However no independent inquiries have been conducted by the jrmation received so as to independently arrive at his own belief regarding escapement of income. The action u/s 148 was initiated mechanically. In such circumstances as held by the jurisdictional High Court in several cases including Commissioner of Income v/s SFIL Stock Broking Ltd. 325 ITR 285 (Delhi), CIT V/s Atul Jain and Vinita Jain, 299 HR 383 (Delhi) & Sarthak Securities Co. Pvt. Ltd. V/s Income Tax Officer 329 ITR 110(Delhi) and recent case of M/s Signature Hotels Ltd. the proceedings u/s 148 are held to be invalid for want of jurisdiction as the preconditions for the initiation of the said proceedings as stipulated as section 147 of the Act are not satisfied. Accordingly, no. 2 to 4 raised by appellant are treated as allowed and it is held that proceedings u/s 148 have been invalidly initiated by the Assessing Officer." 16. In the case of Signature Hotels Private Limited (supra) the Hon'ble High Court observed that the information on the basis of which the assessment was reopened, was scanty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, i.e. information based upon the investigation of the Commissioner of Central Excise with respect to the purchases made by the assesses. However, as far as the second issue is concerned, the Court is of the opinion that even the rectified order does not address the issues squarely. Thus, arguendo such arguments could be validly raised. At the same time, the court notices that for both AYs 2004-05 and 2005-06, the note discloses the source of the information, i.e. DRI Local Unit at Jaipur, sending information based upon the Commissioner of Central Excise's investigations. To require the Revenue to disclose further details regarding the nature of documents or contents thereof would be virtually rewriting the conditions in section 147. After all, Section 147 merely authorises the issuance of notice to reopen with conditions. If the Court were to dictate the manner and contents of what is to be written, the statutory conditions would be added as it were. In this context, it needs to be emphasized that the court would interpret the statute as they stand in their own terms, but at the same time being conscious of the rights of the citizens. So viewed, Kelvinator (supra) strikes just b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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