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TMI Blog2019 (3) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... the return and second regarding the extent of accommodation entries - The court was unable to discern the link between the tangible material and the formation of the reasons to believe that income had escaped assessment. The information received from the Investigation Wing cannot be said to be tangible material per se without a further inquiry being undertaken by the Assessing Officer and in the present case, the AO had deprived himself of that opportunity by proceeding on the erroneous premise that the assessee had not filed the return when in fact it had. we uphold the findings of the Ld. CIT (A) in holding that the initiation of reassessment proceedings in the instant case was bad in law and not sustainable - Decided in favour of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee approached the learned First Appellate Authority and challenged the initiation of reassessment proceedings as well as challenged the addition on merits. The Ld. Commissioner of Income Tax (Appeals) noted in the appellate order that from the perusal of reasons recorded by the Assessing Officer, it was apparent that the entire basis for reopening of the case was based on the premise that the assessee company had not filed the return of income for the year under consideration but the fact of the matter was that the assessee had filed the return of income on 22.02.2007 vide acknowledgement no. 1111. The Ld. Commissioner of Income Tax (Appeals) held that the very basis for issuance of notice u/s 148 did not exist. Ld. Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s wrong. The fact is that the assessee had filed return with wrong assessing officer which is a non-est return. 3. The Ld. CIT(A) erred in holding that the only reason for reopening being a finding of investigation wing of Department that the assessee had received accommodation entries from the entities indentified as entry operators, is not sufficient material for reopening the assessment. 4. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 3.0 The Ld. Sr. DR submitted that the Ld. Commissioner of Income Tax (Appeals) had erred in observing that the return was available with the A.O. and hence the main gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced reliance on the findings of the Ld. Commissioner of Income Tax (Appeals) and submitted that in the present case, the reasons recorded for initiating the proceedings u/s 147 of the Act could not be recorded as reason to believe as required under the mandate of the section because the reasons recorded were totally vague and the Assessing Officer had failed to apply his mind on the information said to have been received from the Investigation Wing. He also drew our attention to the reasons recorded in this case and submitted that it was the apparent from the reasons that the Assessing Officer had not carried out any independent inquiry apart from relying on the information received from the Investigation Wing while recording his satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed must, therefore, show application of mind by the assessing officer. If the reasons recorded are vague or ambiguous, the proceedings initiated under section 147 of the Act are liable to be held as invalid and bad in law. 5.1 A perusal of the reasons shows that the Assessing Officer has clearly borrowed the information received from the Investigation Wing but he has not carried out any verification to test the veracity of the information which has been passed by the Investigation Wing. Thus, he has proceeded to form an opinion on the basis of borrowed reasons and there is no independent application of mind. It is also seen in the assessment order that the Assessing Officer had duly noted that the original return of income was filed on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening u/s 148 was bad in law. The revenue, thereafter, approached the Hon ble Delhi High Court and the Hon ble High Court held that there was a failure of application of mind by the Assessing Officer as it had proceeded on two wrong premises, one regarding non-filing of the return and second regarding the extent of accommodation entries. The Hon ble Delhi High Court held that the court was unable to discern the link between the tangible material and the formation of the reasons to believe that income had escaped assessment. The Court further held that the information received from the Investigation Wing cannot be said to be tangible material per se without a further inquiry being undertaken by the Assessing Officer and in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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