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TMI Blog2016 (2) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... T vs. G G Pharma [ 2015 (10) TMI 754 - DELHI HIGH COURT] we are inclined to hold that the AO issued notice u/s 148 of Act on the wrong and invalid assumption of Jurisdictional and all subsequent proceedings is pursuance thereto can t be held as sustainable and valid hence, the same deserve to be quashed and we quash the same. It is ordered accordingly. Accordingly, legal ground no. 1 2 of the assessee are allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... (4), NEW DELHI" 6. From the reasons recorded it is apparent that the AO proceeded to initiate proceedings and to issue notice u/s 147/148 of the act on the basis of AIR information and without verifying the same from the relevant assessment record of the assessee wherein the assessee filed copies of the letters submitted to the DCIT, Banglore on 8.10.2007 in reply to notice u/s 142(1) of the Income Tax Act, 1961(for short the Act) dated 15.9.2007 wherein the assessee informed that the payments are made out of his current account in the name of Mohan Brothers which is debiter to his personal A/c in the firm M/s. Mohan Brothers. The Ld. AR has not disputed that copies of these notices and reply of the assessee to DCIT Banglore was placed on record during original assessment proceedings. 7. In the light of above noted facts it is amply clear that the AO proceeded to take action and to issue notice u/s 148 of the Act without application of mind in a mechanical manner which is not a valid assumption of jurisdiction to issue notice u/s 148 of the Act. AT this point, we respectfully take note of the dicta laid down by Hon'ble High Court of Delhi in the case of CIT vs. G& G Pharma (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;"bogus transactions'." It was further explained by the Supreme Court that: "Before issuing a notice under S. 148, the ITO must have either reasons to believe that by reason of the omission or failure on the part of the assessee to make a return under S. 139 for any assessment year to the ITO or to disclose fully 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: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of four years from the end of the relevant assessment year, the condition that there has been a failure on the part of the Assessee to truly and fully disclose all material facts must be concluded with certain level of certainty. It is in the aforesaid context that this Court in M/s Haryana Acrylic Manufacturing Co. (P) Ltd. (supra) explained that the ratio of the decision in Phool Chand Bajrang Lal (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 in 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an "assessment" then it can never be subjected to section 147 proceedings, for, that section covers only an "assessment" and we wonder if the revenue would be prepared to concede that position. It is nobody's case that an "intimation" cannot be subjected to section 147 proceedings; all that is contended by the assessee, and quite rightly, is that if the revenue wants to invoke section 147 it should play by the rules of that section and cannot bog down. In other words, the expression "reason to believe" cannot have two different standards or sets of meaning, one applicable where the assessment was earlier made under section 143(3) and another applicable where an intimation was earlier issued under section 143(3) and another applicable where an intimation was earlier issued under section 143(1). It follows that it is open to the assessee to contend that notwithstanding that the argument of "change of opinion" is not available to him, it would still be open to him to contest the reopening on the ground that there was either no reason to believe or that the alleged reason to believe is not relevant for the formation of the belief that income chargeable to tax has escaped assessment. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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