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TMI Blog2019 (11) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... king channel. The amount of cash paid tallied with the printout from Annexure A-27 seized from Corporate Office at Bakshi House, Nehru Place, New Delhi. It was further noticed that the cash received was coded as incentive to sale. Apart from this Annexure A-32, file DP correction sheet was also seized. 2.1. The assessee was found one of the investors in booking of FF-117, Ground Floor Commercial, Indirapuram Habitat Centre Project, Ghaziabad Project of AEZ Group. As per information received, assessee had made a total payment of Rs. 1,20,50,000/- for booking/purchase of this property. The cash payment as recorded in the seized record amounted to Rs. 88,50,000/- and payment through banking channel amounted to Rs. 32 lakhs. On perusal of the documents, it was crystal clear that the assessee had made cash payment amounting to Rs. 88,50,000/- apart from payment of Rs. 32 lakhs through banking channel. During the assessment proceeding, assessee regarding payment made by her to M/s AEZ Grop in connection with booking/purchase of property, the assessee has only admitted of having paid Rs. 32 lakhs out of her saving bank account maintained with Canara Bank in two installments of (i) Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13 under appeal. Regarding cash payment, out of Rs. 88,50,000/-, an amount of Rs. 67,21,980/- was already covered for the assessment proceedings for the A.Y. 2007-08 for which the assessee is in appeal before ITAT, New Delhi. The A.O, therefore, noted that since, as per reasons recorded for A.Y. 2007-08 and A.Y. 2012-13 (under appeal), the description of property appears to be same, therefore, the difference amount being Rs. 21,28,020/- (i.e., Rs. 88,50,000/- - Rs. 67,21,980/-) has, escaped for assessment and this amount is covered for assessment year under appeal i.e., 2012-2013. The A.O. accordingly made addition of Rs. 21,28,020/- under section 69A of the I.T. Act, 1961. 3. The assessee challenged the addition as well as reopening of the assessment before the Ld. CIT(A). The written submissions of the assessee are reproduced in the appellate order. The Ld. CIT(A), however, dismissed both the grounds. 4. I have heard the Learned Representative of both the parties and perused the material available on record. It is well settled Law that validity of the re-assessment proceedings shall have to be determined with reference to the reasons recorded for reopening of the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from undisclosed sources which is to be added to the income of the assessee. Hence, the case also need be opened for the assessment year 2012-13. 5. In view of the facts and circumstances, I have reason to believe that income to the extent of Rs. 88,50,000/- paid by Ms. Taruna Verma in cash for booking/purchase of property with AEZ Group in the FY 2011-12 is chargeable to tax for the assessment year 2012-13 and has escaped assessment." 4.1. Since in this case similar reasons were also recorded for A.Y. 2007-2008 and the matter was pending before the Tribunal, Learned Counsel for the Assessee filed copy of the same reasons for reopening of the assessment for A.Y. 2007-2008 at page-7 of the paper which which reads as under : "Ms. Taruna Verma - PAN AKFPV1950P - Assessment Year 2007-08. Information has been received front ADIT, (Investigation), Unit - III (3), New Delhi that a search & seizure operation was conducted on 17/08/2011 on AEZ Group (Part of Aerens Group). On the basis of material seized/impounded during the course of search/survey operation and post survey conducted on seven investors groups ; comprising of 23 investors to verify payment of such unaccounted money on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id in cash. It was stated in the reason that the assessee has accepted it during the course of post search enquiries conducted by the Investigation Wing. The reasons also stated that AO had issued a query letter on 05.02.2013, which was replied by the assessee on 27.02.2013, wherein the assessee has accepted investment of Rs. 11.37 lacs only. Therefore, the ld AO had reason to believe that sum of Rs. 67,21,980/- is paid by the assessee in cash. 9. In response to above reasons assessee submitted that it has paid on 21.04.2006 Rs. 11,37,000/- vide cheque No.874025 of Canara Bank and Rs. 20.63 lakhs on 21.06.2011, therefore, assessee has paid a sum of Rs. 32 lakhs by cheque. Therefore, the reason recorded by the Assessing Officer of payment Rs. 11.37 lacs by cheque is incorrect. Furthermore, the assessee was never examined during the post search enquiries and hence, it is an incorrect statement. The Assessing Officer has given the statement of two different persons vide letter dated 18.02.2014 but nowhere the statement of the assessee was given. Apparently, assessee was not examined. The Revenue also could not produce any such communication which are also referred to in letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopen the assessment." 11. The above basic requirement of sections 147/148 has been reiterated in numerous decisions of the Supreme Court and this court. Recently, this court rendered a decision dated September 22, 2015 in I. T. A. No. 356 of 2013 (CIT v. Multiplex Trading and Industrial Co. Ltd. [2015] 378 ITR 351 (Delhi)) where the assessment was sought to be reopened beyond the period of four years. This court considered the decision of the Supreme Page No : 0152 Court in Phool Chand Bajrang Lal v. ITO (supra) as well as the decision of this court in Haryana Acrylic Manufacturing Co. (P.) Ltd. v. CIT [2009] 308 ITR 38 (Delhi) The court noted that a material change had been brought about to section 147 of the Act with effect from April 1, 1989 and observed (page 368 of 378 ITR) : "It is at once seen that the amendment in section 147 of the Act brought about a material change in law with effect from April 1, 1989. Section 147(a) as it stood prior to April 1, 1989, required the Assess ing Officer to have a reason to believe that (a) the income of the assessee has escaped assessment and (b) that such escapement is by reason of omission or failure on the part of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 November 14, 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 Assessing Officer 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 Assessing Officer 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 Commissioner of Income-tax (Appeals) to show how the Commissioner of Income-tax (Appeals) discussed the materials produced during the hearing of the appeal. The court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above said five assessment years. In so far as the appeals filed against the order of assessment before the Commissioner (Appeals), we direct the appellate authority to dispose of the same, expeditiously." 13. In the present case the assessee has filed the return of income on 18/04/2013 in response to the notice under section 148 of the income tax act dated 22/03/2013. On the date of filing of the return of income, the assessee requested for the reasons recorded. However, the correct reasons recorded were provided to the assessee only on 20/03/2014 i.e. Just before 10 days of the completion of the assessment. The Hon'ble Supreme Court has provided guidelines that reasons must be provided within reasonable time. We are of the opinion that Ld. assessing officer has not provided the reasons to the assessee within reasonable time but only at the fag end of the 18 | P a g e Tarun Verma Vs. ITO, ITA No. 2833/Del/2016 (Assessment Year: 2007-08) assessment proceedings. Furthermore, the Hon'ble Supreme Court has further guided that only after disposing of the objections of the assessee with respect to the reopening of the assessment, the assessing officer shall proceed for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to believe for impugned assessment year also shows several contradictory facts/inconsistencies which are as under : (i) In para-2, it is mentioned that Rs. 32 lakhs was paid by cheque on 01.04.2011. Whereas in the next para-3 it is mentioned that Rs. 32 lakhs was paid in two installments of Rs. 11,37,000/- on 21.04.2006 and Rs. 20,63,000/- on 21.06.2011. (ii) In para-4 of the reason, A.O. stated that case for A.Y. 2007-2008 have been reopened under section 148 after recording reasons and income was assessed at Rs. 68,30,980/-. However, in the very next line, it is stated that Rs. 88,50,000/- was paid in cash on 01.04.2011. If A.O. had believed that total cash portion of Rs. 88,50,000/- was paid in F.Y. 2011-2012, then, why A.O. allowed cash investment in A.Y. 2007-2008. 5.2. The aforesaid facts clearly establish reason to believe are incorrect, inconsistent, contradictory and vague which shows non-application of mind by the A.O. while recording reasons. Reopening of the assessment is, therefore, bad in law. 5.3. Considering the totality of the facts and circumstances of the case and comparing the reasons for reopening of the assessment for A.Y. 2007-2008 and 2012- 2013 (u ..... 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