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TMI Blog2018 (12) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... the creditors, their creditworthiness and genuineness of the transaction. The A.O. also made direct enquiry by issuing summons under section 133(6) of the I.T. Act to the Investors who have also replied directly to the A.O. Therefore, A.O. rightly accepted the credits as genuine. In view of the above finding, there is no need to give a finding in detail on merits. In view of the above, we allow the appeal of assessee. Reopening of assessment - non independent application of mind - Held that:- A.O. on the basis of the information and material received from Investigation Wing has recorded reasons for reopening of the assessment which was ultimately found to be incorrect and non-existent. It is well settled law that when no new material other than examined by the A.O originally found on record for the purpose of initiating the re-assessment proceedings, the proceedings under section 148 would be invalid and bad in law. We rely upon decision of Delhi High Court in the case of Atul Kumar Swamy [2014 (3) TMI 759 - DELHI HIGH COURT]. The Hon’ble Delhi High Court in the case of SNG Developers Ltd.[2017 (7) TMI 575 - DELHI HIGH COURT] held that when A.O. initiated the re-assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, accepted the returned income and completed the re-assessment order under section 147/143(3) of the I.T. Act, 1961, on Dated 30.06.2014. 3.1. The Ld. Pr. CIT on examining the assessment record noticed that though the assessment was reopened under section 148 of the I.T. Act on the allegation of accommodation entry taken from Shri S.K. Jain group of concerns who were searched on 14.09.2010 by the Investigation Wing of the Income Tax Department, some of the A.O s did not examine the seized material in the form of cash book and books containing the details of cheques issued by such concerns seized from the premises of Shri S.K. Jain during the course of search. The Investigation Wing, Delhi, forwarded the hard copy of appraisal report to the then Commissioner, Delhi-III, which was received by him on 15.03.2013, the relevant seized material (containing many thousands of pages) was scanned and sent to the Commissioner of Income Tax in soft copy. However, while completing the assessment under section 147 r.w.s. 143 of the I.T. Act, though the A.O. referred the appraisal report but did not look into the relevant seized material in soft copy. This was one of the case where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined based on information provided by the assessee-company. The proceedings under section 263 would amount to the consideration of material which has already been considered by the A.O. during the assessment proceedings under section 147 read with section 143 of the I.T. Act, and if in case the documents are not available in the files of A.O, then, there is also no scope of revision under section 263 of the I.T. Act. The A.O. has not issued notice under section 143(2) of the I.T. Act during the re-assessment proceedings. The assessee relied upon several decisions in support of the contention that revision proceedings under section 263 may be dropped. 3.3. The Ld. Pr. CIT considering the submissions of the assessee and material on record noted in his findings that the seized papers contains various accommodation entries were provided by such companies to various beneficiaries. The appraisal report was forwarded by the Investigation Wing in the month of March, 2013 to then CIT-III, Delhi in hard copy. The seized material contained many thousand pages. The seized material contained consolidated day-to-day cash transactions of all such shell companies wherein the opening and clos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notices are nothing but notice under section 143(2). of the I.T. Act. It is also noted by the Ld. Pr. CIT that even though no formal notice under section 143(2) was issued by the A.O, in the letters dated 11.06.2014 and 19.06.2014 it was specifically mentioned that in the absence of the requisite details the assessment would be completed under section 144 of the I.T. Act. The A.O. has not examined this issue in the light of seized material. Therefore, re-assessment order was found to be erroneous in so far as prejudicial to the interests of the Revenue because A.O. failed to look into the seized material. The Order was set aside and restored to the file of A.O. with a direction to examine the seized material and confront the same to the assessee and pass the order in accordance with law. 4. Learned Counsel for the Assessee reiterated the submissions made before the authorities below. Learned Counsel for the Assessee submitted that in this case the value of the share was ₹ 10/- with premium of ₹ 50/- per share. No business was there in this year. However, assessee proved the identity of the Investors, their creditworthiness and genuineness of the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 148 by the A.O. PB-37 to 139 are replies with documents filed by Investor Companies directly to the A.O. under section 133(6) of the I.T. Act. If the CD is not considered by the A.O. at the time of re-assessment order as per notice under section 263 of the I.T. Act, the re-assessment order is bad in law. Learned Counsel for the Assessee relied upon the Order of ITAT, Delhi Bench in the case of M/s. NKG Infrastructure Ltd., New Delhi vs. Pr. CIT, Circle-3, New Delhi in ITA.No.3825 to 3827/Del./2018, Dated 05.09.2018, in which the issue was validity of proceedings under section 147/148 of the I.T. Act. The assessee submitted before the Tribunal that assessment order in this case is barred by limitation is non-est in the eye of Law. Therefore, the Pr. CIT cannot assume jurisdiction under section 263 of the I.T. Act to revise such assessment order which is non-est in the eye of Law and being barred by limitation. The Tribunal held that the Order which is barred by limitation cannot be revised under section 263 of the I.T. Act by the Pr. CIT. The appraisal report was based on CD and if same is not considered by the A.O, it is non-application of mind by the A.O. to init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the Judgment of Hon ble Delhi High Court in the case of Globus Infocom Ltd., vs. CIT-IV, Delhi (2014) 369 ITR 14 (Del.). Learned Counsel for the Assessee has also relied upon the Judgment of Hon ble Delhi High Court in the case of Pr. CIT-8 vs. Shri Jai Shiv Shankar Traders Pvt. Ltd., 2015-(10)-TMI-1765-Delhi-High Court in which it was held that no notice under section 143(2) of the I.T. Act was issued to the assessee after 16.12.2010, the date on which the assessee informed the A.O. that the return originally filed should be treated as return filed pursuant to the notice under section 148 of the I.T. Act. Therefore, the same is fatal to the Order of reassessment. He has submitted that assessee produced sufficient evidences before A.O. to prove identity of the Investors, their creditworthiness and genuineness of the transaction in the matter. Therefore, A.O. in the re-assessment order correctly accepted the explanation of assessee. In support of the said contention, the Learned Counsel for the Assessee relied upon decisions of Hon ble Delhi High Court in the case of Pr. CIT vs. Softline Creations P. Ltd., (2016) 387 ITR 636 (Del.) and CIT vs. Fair Finvest Ltd., (20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench in the case of Shankar Tradex Pvt. Ltd., Delhi vs. Pr. CIT-8, New Delhi, vide ITA.No.2999/Del.2017 Dated 16.04.2018 in which similar issue was decided against the assessee. The Ld. D.R. submitted that A.O. has not taken into consideration the material seized during search in the case of Shri S.K. Jain. Therefore, Explanation-2 to Section 263 of the I.T. Act is applicable in this case. The Ld. D.R. relied upon decision of Hon ble Supreme Court in the case of Deniel Merchants P. Ltd., vs. ITO Another in SLP (C) No.23976/2017 Dated 29.11.2017 in which SLP have been dismissed where A.O. did not make any proper enquiry while making the assessment and accepting the explanation of assessee in so far as receipt of share application money is concerned. The Ld. D.R. also relied upon decision of Hon ble Supreme Court in the case of Rajmandir Estates (P.) Ltd., vs. PCIT (2017) 245 Taxman 127 (SC) and other decisions also on the same proposition that if A.O. did not make any enquiry on the issue, the proceedings under section 263 could be initiated. The Ld. D.R. submitted that no objection was raised before A.O. regarding the issues raised in the present appeal. The Ld. D.R. relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, 1961 was prepared and served upon the assessee. On appeal: Held, dismissing the appeal, that mere noting in the order sheet would not suffice and the copy of the notice issued under section 143(2) of the Act was not available on record. Since the Department had failed to produce the copy the notice under section 143(2) of the Act there was no option but to agree with the findings of the Tribunal that no such notice was prepared and served upon the assessee. In the absence of this mandatory requirement of issuing statutory notice under section 143(2) of the Act, the Tribunal had rightly quashed the assessment as null and void. 6.1. The Hon ble Delhi High Court in the case of Pr. CIT vs. Silverline (2016) 383 ITR 455 (Del.) held that Order of reassessment cannot be passed without notice under section 143(2) of the I.T. Act. The jurisdictional error cannot be cured by Section 292BB of the I.T. Act . It is, well settled Law that before passing the re-assessment order, A.O. shall have to prepare and serve notice upon assessee under section 143(2) of the I.T. Act. The Ld. Pr. CIT, however, observed that no formal notice under section 143(2) have been issued to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Ld. Pr. CIT-8, New Delhi, Dated 22.03.2017, for the A.Y. 2007-2008 under section 263 of the I.T. Act, 1961. 9. Briefly the facts of the case are that in this case similar information about entry operators and their beneficiaries of Delhi was received from the O/o. DIT, (Inv.)-II, Delhi, along with detailed report giving working of entry operators with a list of beneficiaries. After making inquiries, the Addl. DIT, Unit-VI of Investigation in his report has established large amount of tax evasion in the transactions between entry operators and the beneficiaries. It was revealed from the list that the assessee-company viz., M/s. SPJ Hotels Private Limited during the previous year relevant to the assessment year under appeal had taken accommodation entries from M/s. Hillridge Investments Ltd., and M/s. Vogue Leasing Finance Private Limited in a sum of ₹ 5 lakhs each on 28.03.2017. The A.O. reopened the assessment under section 148 of the I.T. Act. Notice under section 148 was issued on 25.03.2014 after recording the reasons and taking prior approval of the Competent Authority. In response thereto, assessee submitted a letter stating therein that it was incorpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication of mind by the A.O. The assessee requested for crossexamination to the statement of Shri S.K. Jain. The Pr. CIT noted that correct amount of accommodation entries from both these companies are ₹ 50 lakhs each instead of ₹ 5 lakhs. The Ld. Pr. CIT also noted that A.O. failed to consider the seized material found during the course of search in the case of Shri S.K. Jain, therefore, A.O. passed the re32 assessment order without proper verification and enquiries. Therefore, re-assessment order was set aside and A.O. was directed to pass the order afresh as per law. 11. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and referred to PB-1 which is reasons recorded for reopening of the assessment in which A.O. found that income of ₹ 10 lakhs has escaped assessment. However, the Ld. Pr. CIT noted that amount is ₹ 50 lakhs each in both the cases, therefore, escapement of income is of ₹ 1 crore. He has, therefore, submitted that reasons recorded for reopening of the assessment are invalid, incorrect and non-existing. Therefore, re-assessment order is invalid and bad in law. He has submitted that A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iciaries. It is revealed from the list that the assessee company M/s. SPJ Hotels (P) Limited (termed as beneficiary) during the previous year 2006-2007 relevant to Assessment. Year 2007-2008 had taken accommodation entries totaling Rs.l0,00,000/- from the persons/parties (termed as entry operators). These entries have been investigated by the Investigation Wing and found to be given as accommodation entries from entities operated and controlled by Surender Kumar Jain. The details of which are mentioned below : Beneficiary s Name Amount (Rs.) Entry Provider Cheque/P.O.No. Dated M/s. SPJ Hotels (P) Limited 5,00,000/- M/s. Hillridge Investments Limited. 011048 28.03.2007 M/s. SPJ Hotels (P) Limited 5,00,000/- M/s. Vogue Leasing Finance (P) Limited 011047 28.03.2007 I have very carefully considered the aforesaid piece of information and the modus operandi of the entry operator Surender Kumar Jain and its controlled entitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the basis of the same material, the Pr. CIT initiated the proceedings under section 263 of the I.T. Act on the reasons that amount in question is not ₹ 10 lakhs received from these two companies, but, it is ₹ 50 lakhs each i.e., ₹ 1 crore. Thus, the facts mentioned in the reasons for reopening of the assessment are incorrect and non-existent. The Hon ble Punjab Haryana High Court in the case of CIT vs. Atlas Cycle Industries (1989) 180 ITR 319 (P H) held as under : Held (i) that the Tribunal was right in cancelling the reassessment as both the grounds on which the reassessment notice was issued were not found to exist, and, therefore, the Income-tax Officer did not get jurisdiction to make a reassessment. 13.2. Since the facts are totally different as A.O. had reason to believe that ₹ 10 lakhs has escaped assessment on account of ₹ 5 lakhs received from two companies referred to above, which was ultimately found to be incorrect and nonexistent, therefore, there may not be any application of mind on the part of the A.O. to proceed to initiate the re-assessment proceedings. There is no other material available on record except the inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.10.2007. It was further stated that income of ₹ 33,79,596/- as declared in the return of income under section 139 has been accepted and assessed to tax under section 143(3) vide Order dated 27.11.2009. The A.O. after considering the material on record and summons issued under section 131(1) of the I.T. Act and notice under section 133(6) and other material on record, accepted the return of income and passed the re-assessment order under section 143(3) r.w.s. 147 of the I.T. Act, Dated 30.03.2015. 17. The Ld. Pr. CIT found the said re-assessment order to be erroneous in so far as it is prejudicial to the interests of the Revenue. It is noted that assessment was reopened under section 148 on the allegation of accommodation entries taken from Shri S.K. Jain group of concerns who were searched on 14.09.2010 by the Investigation Wing of the Income Tax Department. Some of the Assessing Officers did not examine the seized material in the form of cash book and the books containing the details of cheques issued by such concerns seized from the premises of Shri S.K. Jain. Notice under section 263 of the I.T. Act was issued to the assessee which is reproduced in the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 18.1. The Learned Counsel for the Assessee submitted that additional ground is legal in nature and no fresh facts are to be investigated. The additional ground goes to the root of the matter and therefore, prayed that the same may be admitted for disposal of the appeal. Learned Counsel for the Assessee relied upon the decision of Hon ble Supreme Court in the case of NTPC Limited vs. CIT (1998) 229 ITR 383 (SC) and CIT vs. Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) and decision of Hon ble Punjab Haryana High Court in the case of VMT Spinning Co. Ltd., vs. CIT, Ludhiana and another (2016) 389 ITR 326 (P H). 19. On the other hand, Learned D.R. objected to the admission of additional ground of appeal. 20. Considering the facts of the case, we are of the view that additional ground is legal in nature and goes to the root of the matter. Therefore the same shall have to be admitted for the purpose of disposal of the appeal. We, accordingly, admit the additional ground of appeal. Learned Counsel for the Assessee contended that re-assessment order in this case under section 143(3)/147 is invalid and bad in law and as such, the same could not be revised u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrongly mentioned in the reasons. In the books of account of assessee, assessee has shown to have received share application money from two Investors in a sum of ₹ 2.20 crores and not ₹ 2.90 crores. Learned Counsel for the Assessee referred to various replies filed before A.O. at original assessment stage as well as in the reassessment proceedings in which it was clearly highlighted that there is application of mind from the side of the A.O. to frame the re-assessment order. PB-300 and 301 is report of the Inspector to show that notice under section 133(6) have been served upon M/s. Vogue Leasing Finance Pvt. Ltd. PB- 319 is the report of the Investigation Wing which clarifies that summons under section 131 and notice under section 133(6) have been issued on the Directors of the assessee-company which have been complied with. Necessary enquiry have been conducted by the Inspector of the Office who has submitted his report without pointing-out any specific discrepancy. PB50 310-317 is order sheet. Learned Counsel for the Assessee relied upon decision of Hon ble Delhi High Court in the case of Haryana Acrylic Manufacturing Company vs. CIT (2009) 308 ITR 38 (Del.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. CIT correctly invoked jurisdiction under section 263 of the I.T. Act. Assessee cannot challenge validity of re-assessment proceedings under section 263 of the I.T. Act. 22. We have considered the rival submissions and perused the material available on record. It is well settled that the Ld. Pr. CIT while exercising power under section 263 of the I.T. Act could not revise the assessment order which was illegal, bad in law and non-est in the eye of Law. The assessee can challenge the validity of the re-assessment order referred to under section 263 of the I.T. Act being non-est and illegal. The case Laws relied upon by the Learned Counsel for the Assessee are squarely applicable to the facts and circumstances of the case. In the present case, A.O. passed the original assessment order under section 143(3) of the I.T. Act, Dated 27.11.2009. The A.O. has mentioned in the assessment order that details have been filed by assessee and after discussion of the case return of income have been accepted. The assessee in this case received share application money/premium from two parties and filed several documents on record to prove genuine credit in the matter which is accepted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter, there is no need to decide the issue on merit. However, we may note briefly that documentary evidences were filed before A.O. at original assessment stage as well as at the stage of re-assessment to prove genuine credit in the matter which have accepted by the A.O. after considering and examining the material on record and calling explanation from the Investors under section 133(6) of the I.T. Act. In this view of the matter, we allow the appeal of assessee. 24. In the result, ITA.No.2527/Del./2017 of the Assessee is allowed. ITA.No.3301/Del./2017 M/s. Superior Buildwell Pvt. Ltd., Delhi. 25. This appeal by Assessee has been directed against the Order of the Ld. Pr. CIT-8, New Delhi, Dated 17.03.2017, for the A.Y. 2009-2010 under section 263 of the I.T. Act, 1961. 26. Briefly the facts of the case are that original return of income was filed on 18.09.2009 declaring NIL income. On the basis of information received from Directorate of Investigation Wing of Income Tax Department, it was noticed that during the course of search in the premises of Shri Surendra Kumar Jain group of cases, it was found that assessee has obtained an entry of ₹ 2 crores by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. It would show that A.O. did not verify and examine the seized material relating to assessee and accepted the explanation of assessee without examining the seized paper. The Ld. Pr. CIT, therefore, found that the seized documents have not been examined and verified by the A.O. Therefore, re-assessment order was set aside and matter was restored to the A.O. for passing the Order afresh as per provisions of Law. 27. The assessee in the present appeal challenged the Order under section 263 of the I.T. Act as well as filed an application for admission of additional grounds which reads as under : 7.(a) On the facts and circumstances of the case, the learned Pr. CIT has erred, both on facts and in law, in holding that the legality of original assessment proceedings could not be challenged in the 263 proceedings, disregarding the various judicial pronouncements cited by the assessee in this regard. 7.(b) On the facts and circumstances of the case, the learned Pr. CIT has erred both on facts and in law in ignoring the fact that the order of the AO reopening the assessment under Section 147 of the Act, without complying with the statutory conditions and the procedure presc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for a lesser amount of ₹ 1 crore. If reasons were incorrect for reopening of the assessment, then, re-assessment proceedings would be invalid and non-est, therefore, Ld. Pr. CIT has no power to review the same under section 263 of the I.T. Act. Learned Counsel for the Assessee referred to several replies filed before A.O. to show all documentary evidences were examined by the A.O. at re-assessment proceedings. There is no co-relation of the seized documents with the assessee. Since the A.O. recorded incorrect reasons for reopening of the assessment and that no notice under section 143(3) have been issued, therefore, re-assessment order is invalid and as such, same cannot be revised under section 263 of the I.T. Act. A.O. made enquiry of all the documents but Ld. Pr. CIT did not make any enquiry on the documentary evidences on record. Learned Counsel for the Assessee submitted that the issue is same as have been considered and decided in the cases of M/s. Supersonic Technologies Pvt. Ltd., M/s. SPJ Hotels Private Limited and M/s. Shiv Sai Infrastructure (P( Ltd., New Delhi (supra). 31. On the other hand, Learned D.R. reiterated the submissions already made in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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