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TMI Blog2016 (10) TMI 1279X X X X Extracts X X X X X X X X Extracts X X X X ..... s settled law that the action of reopening has to be judged only on the basis of the reasons recorded and no extraneous material can be supplemented to see the validity of the reopening. AO has to apply his mind to the material to conclude that he has reason to believe that income of the assessee escaped assessment and unless the basic jurisdictional requirement is not satisfied, a post-mortem exercise of analysing material produced subsequent to the reopening will not rescue an inherently defective reopening orders from invalidity. - Decided in favour of assessee. - ITA Nos. 78 & 2823/Del/2010 - - - Dated:- 19-10-2016 - SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For the Appellant : Sh. Tarun Kumar, Advocate For the Respondent : None ORDER PER O.P. KANT, A.M.: These two appeals of the assessee are directed against two separate orders dated 31/10/2009 and 26/03/2010 passed by the learned Commissioner of Income-tax (Appeals)-XVII, New Delhi, for assessment years 1999-2000 and 2001-02 respectively. The grounds raised in both the appeals are identical except the change of amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect facts and finding and without giving any opportunity of cross examination of the persons on whose statement impugned addition has been made. vii. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 3. In the appeal, the assessee filed application on 02/03/2014 under Rule 11 of the ITAT Rules, 1963 for filing additional ground in view of the judgment of the Hon ble Supreme Court in the case of National Thermal Power Corporation reported in 229 ITR 383(SC) as follows: That the mandatory notice u/s 148 was not served upon the assessee company much less in according to law and therefore learned Assessing Officer did not presume jurisdiction to frame the impugned assessment order and thereafter the impugned assessment is bad in law. 4. The application for admission of additional ground of the assessee was allowed by the Tribunal which is recorded in the order sheet entry dated 21/07/2015. ITA No. 78/Del/2010 for AY:1999-00 5. At the time of hearing, before us, non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re paid monthly remuneration. The Assessing Officer further observed that Sh. Sharique Kamal and Sh. Vinesh Kumar, both the Directors of the assessee company, in their statement dated 13/05/2005, admitted of working under the direction of Sh. Govind Ram and signed the Bank cheques and documents of various concerns including the assessee company. The Assessing Officer collected copy of bank statements of the assessee company from the banks and asked the assessee to provide narration of each debit and credit entry of the bank statement. The assessee provided the detail of share application money of ₹ 2,80,000/-received during the year from eight persons, having details as under: Sl. No. Name of the Party Amount 1. Sh. Brij Murari Pandey ₹ 16,000/- 2. Sh. Davender Sabat ₹ 18,000/- 3. Sh. Jagjit Malik ₹ 70,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals), however, rejected the legal grounds of the assessee and upheld the reassessment proceedings with following observations: 3.1. I have considered the facts of the case, order of the AO and submissions made by the Id. AR appearing on behalf of the appellant. The notice u/s 148 was issued in the present case on 30.03.2006. As per the provisions of Section 149 of the Income Tax Act, the notice u/s 148 can be issued within a period of four / six years from the end of the relevant Assessment Year. In the present case, notice was issued within a period of six years from the end of the relevant Assessment Year. Hence, it is seen that the notice was issued, well within the time and the same was not barred by limitation. 3.2 Regarding, the reason to believe, it is seen that in this case the reasons to believe was formed by the Assessing Officer on the specific information received from the Investigation Wing of the Department. The said information was not general or vague, as alleged by the appellant, but was basis of specific information, pertaining to the transactions made by the appellant. In the said information date of the cheque, amount of cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02) 125 Taxman 963 (SC) for supplying of the reasons recorded and disposing off of the objections raised by the appellant. 3.5. In the case of Highgain Finvest Pvt. Ltd. 304 ITR 325 (Del), Jurisdictional High Court of Delhi'xlpheidthe reopening of the assessment when specific information is available with the assessing officer. The fact of this case is also similar to the facts of the above case of Jurisdictional High Court. In view of the above, it is clear that the proceedings u/s 147 of the IT Act have been validly initiated in the case of the appellant. The facts of the case laws relied upon by the appellant are different with that of the appellant s case, therefore, the findings of those judgements are not applicable in the case of appellant. Therefore, ground nos.1, 2, 3 7 are rejected. 8. Before us, the learned Authorized Representative of the assessee argued in support of ground No. 1 that the Assessing Officer has not applied mind while recording reasons for reopening, which is evident from the copy of reasons recorded available at page 39 of the assessee s paper book. The learned Authorized Representative submitted that in the reasons re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries . In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. 13. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT (A) discussed the materials produced during the hearing of the appeal. The Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of income escaped and thus he has not even mentioned amount of income escaped , which is evident from the sentence in the reasons recorded that escaped income on account of accommodation entry was likely to exceed ₹ 1 lakh (v) the Assessing Officer has not even mentioned the nature of income escaped i.e loans or share application money or share capital etc. 12. In view of above, it is manifested that the Assessing Officer has not applied his mind to the information and he has recorded the reasons in a mechanical manner, which are vague and non-specific. It is settled law that the action of reopening has to be judged only on the basis of the reasons recorded and no extraneous material can be supplemented to see the validity of the reopening. Though the learned Commissioner of Income Tax, subsequently brought on record all the details leading to reopening of the assessment, however, but as held by the Hon ble Jurisdictional High Court in above decision that production of materials before the learned Commissioner of Income-tax (Appeals) during hearing was in the nature of a post-mortem exercise and taken place after the event of reopening th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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