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TMI Blog2019 (12) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... an Goel was recorded on oath. The Investigation report, statement and other details were perused, examined and placed on record. As per statement of Shri Kishori Sharan Goel recorded under section 131(1A) of I.T Act, 1961, he is in business of providing bogus billing/accommodation entries of sales/ purchases to various parties/and the modus operandi was receiving cheque from beneficial concern [that bogus sales] and returning the amount through the bank accounts of the concern operated by Shri Kishori Sharan Goel and returning the same in case after withdrawn from the Bank Account on the same day or very next day to the beneficial entity after deducting commission. Also receiving cash from beneficial concerns who took bogus sales and returning the amount through bank accounts of the concern operated by Shri Kishori Sharan Goel and his Associates. In his statement, Shri Kishori Sharan Goel has admitted that certain concerns were controlled by him through the proprietors that are merely signing authorities and were used for providing bogus bills/accommodation entries of sales/ purchases to various parties. In his statement, he has specifically admitted in his reply to question No.17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed the assessment order under section 144/147 of the Income Tax Act, 1961, Dated 26th December 2017. 4. The assessee challenged the reopening of the assessment as well as both the additions before the Ld. CIT(A). The detailed written submissions of the assessee is reproduced in the appellate order. The assessee in the same has submitted that notice issued under section 148 is barred by time and that notice issued under section 148 have returned to the A.O. and have not been served upon the assessee. It was also submitted that the reasons to believe recorded are not reasons but conclusion of the A.O. only by reproducing report of the Investigation Wing. It was a borrowed satisfaction only. It was submitted that no notice have been served upon the assessee on last known address. It was submitted that all the additions are based on incorrect facts. The A.O. in the rejoinder reiterated the facts stated in the assessment order. Copy of the speed post record is reproduced in the appellate order, in which, at Sl. No.9 name of the assessee have been mentioned with the following details - "Devki Nandan Bindal, Proprietor, M/s. Yogesh Trading Company, Katra, Delhi-110006". The Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Del.) on the proposition that "for second addition which is not mentioned in the reasons, if no fresh notice have been issued under section 148, reopening would be bad in Law." He has relied upon Order of ITAT, Mumbai G-Bench in the case of Juliet Industries Limited, Mumbai vs., ITO 6(3)(3), Mumbai in ITA.No.5452 & 5975/Mum/2016 Dated 4th April, 2018, in which the Tribunal "following the Judgment of the Hon'ble Bombay High Court in the case of Ranbaxy Laboratories Limited (supra) in similar circumstances quashed the reopening of assessment". He has also relied upon the Order of ITAT, Kolkata B-Bench in the case of M/s. Arati Engineering & Construction Co., Hooghly vs., ITO, Ward-1(2), Hooghly in ITA.No.2152/Kol./2014, Dated 22.11.2019 in which the appeal of assessee has been allowed by holding that "we note that if the recorded reasons shout contradiction and inconsistency, it means necessary satisfaction in terms of statutory provision has not been recorded at all." Learned Counsel for the Assessee, therefore, submitted that reopening of the assessment is bad in Law, illegal and is liable to be quashed. 6. On the other hand, Ld. D.R. relied upon the orders of the authorities bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving cheque from beneficiary concern (that booked bogus purchase) in the bank accounts of his concerns and returning the same in case after withdrawing from the bank account on the same day or the very next day to the beneficiary entity after deducting commission. Also, receiving cash from beneficiary concerns (that booked bogus sales) and returning the amount trough the bank accounts of the concerns operated by Mr. Kishori Sharan Goel and his associates. In his statement Sh. Kishori Sharan Goel has admitted that certain concerns were controlled by him through the proprietors that are merely signing authorities and were used for providing bogus billing/accommodation entry of sales/purchase to various parties. In his statement he has specifically admitted in his reply to question no.17 that the firm M/s JMD International whose proprietor is Sh. Anand Singh has been used for providing bogus accommodation entries. I have examined the statement of the Bank Accounts No.910020000560939 of M/s. JMD International maintained with Axis Bank, and found that M/s Yogesh Trading Co., 6244-C, Kucha Shiv Mandir, Katra Baryan, Fatehpuri, Delhi-110006 has entered into a transaction as below : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing but an accommodation entry taken by the assessee. Again he has held in the assessment order that assessee has taken accommodation entry of Rs. 15 lacs from M/s. JMD International which has to be added in his hand. However, while concluding the issue, he has made addition of Rs. 15 lacs on account of unexplained expenditure. All these facts clearly show that A.O. has not applied his mind to the information received from Investigation Wing. It is only a borrowed satisfaction. The A.O. without any justification has recorded in the reasons that assessee has taken accommodation entry from M/s. JMD International. Further it is not a denying fact that assessee has made payment to M/s. JMD International. Therefore, it can never be unexplained expenditure of the assessee. The A.O, therefore, recorded in correct and wrong facts in the reasons for reopening of assessment as well as in the assessment order. In the case of DCIT, Rohtak Circle, Rohtak vs., M/s. KLA Foods (India) Ltd., New Delhi in ITA.No.2846/Del./ 2015 & C.O.No.333/Del./2015 in ITA.No.2846/Del./2015, for the A.Y. 2007-2008, the ITAT, Delhi D-Bench, Delhi, while deciding the issue of reopening of the assessment under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th March, 2013 that the assessee has taken accommodation entries amounting to Rs. 1.50 crore in the shape of share capital from various companies, in order to verify the genuineness of the said investors, notice under section 148 was issued on 28th March, 2013. The Assessing Officer asked the assessee to explain the share capital received from 07 Investors. The Assessing Officer after considering the material on record, in the light of report of Investigation Wing, made the addition of Rs. 1.50 crores on account of unexplained credit. 3.1. The assessee challenged the addition before the the Ld. CIT(A). Ld. CIT(A) noted that all the investor companies are assessed to tax under section 153C/153A of the Income Tax Act, 1961 and nothing adverse was found against the assessee during the course of assessment. Therefore, addition was deleted. 3.2. The Revenue is in appeal challenging the deletion of addition of Rs. 1.50 crores and assessee in the crossobjection challenged initiation of re-assessment proceedings under section 147/148 of the Income Tax Act, 1961. 3.3. Before considering the issue on merit, we proceed to decide the legal issue i.e., reopening of assessment in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hotels (P) Ltd., 338 ITR 51 (Del.) He has submitted that reassessment is initiated on mere suspicion only. He has referred to page-1 of the paper book filed by the Departmental Representative in which the ACIT of the Investigation Wing has directed to issue notice under section 147/148 of the Income Tax Act, 1961 after recording reasons. He has submitted that all the Investors are assessed to tax and no material found during the course of search have been supplied to the assessee. He has submitted that proceedings are initiated on mere suspicion which is not reason to believe and based on no tangible material. He has submitted that reopening of assessment may be quashed. 4. On the other hand, Learned Departmental Representative relied upon order of the Assessing Officer and referred to information received from Investigation Wing, copy of which, is filed at Page-1 of the paper book of the Department, which is supported by letter of the DIT (Inv.)-II, Wing, New Delhi, Dated 15th March, 2013, which is referred to in the reasons for reopening of the assessment. The Learned Departmental Representative referred to the report of the Investigation Wing in detail and submitted that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Issue Notice under section 148 of the Income-tax Act, 1961 for the assessment year 2007-2008. Dated : 25th March, 2013 Sd/- S. Dayal Assistant Commissioner of Income-tax, Rohtak Circle, Rohtak". 5.1. The relevant provision of Section 147 of the Income Tax Act provides as under : "147. If the [Assessing] Officer [has reason to believe] that any income chargeable to tax has escaped assessment for any assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): "Provided that where an assessment under subsection (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Act. The Investigation Wing has required the Assessing Officer to reopen the assessment. It, therefore, appears that reassessment proceedings are initiated on mere suspicion and that reason to suspect is not the same thing as "reason to believe". The A.O. recorded vague reasons based on no evidence at the dictate of Investigation Wing only. Thus, there is totally non- application of mind on the part of the Assessing Officer to record reasons for reopening of the assessment. The Assessing Officer did not mention any material facts in the reasons, therefore, reopening of assessment is clearly illegal and bad in law. In the case of Signature Hotels P. Ltd., vs., Income Tax Officer And Another (2011) 338 ITR 51 (Del.) the Hon'ble Delhi High Court held as under : "Held allowing the petition, that the reassessment proceedings were initiated on the basis of information received from the Director of Income- tax (Investigation) that the petitioner had introduced money amounting to Rs. 5 lakhs during financial year 2002-03 as stated in the annexure. According to the information, the amount received from a company, S, was nothing but an accommodation entry and the assessee was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclose fully and truly all material facts necessary for assessment under section 147 of the Income Tax Act, 1961. 5.7. In view of the above, it is clear that in the instant case the Assessing Officer reopened the assessment after 04 years from the end of the assessment year and Assessing Officer has failed to specify if there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment under section 147 of the Income Tax Act, therefore, conditions of Section 147 of the Income Tax Act are not satisfied in this case. Further, the reasons are vague and do not disclose any incriminating material against the assessee. The decisions relied upon by Learned Counsel for the Assessee squarely apply to facts of case. Therefore, reopening of the assessment is wholly unjustified in the matter. We are, therefore, of the view that assumption of jurisdiction under section 147/148 of the Income Tax Act is clearly illegal and bad in Law. We, accordingly, set aside the orders of the authorities below and quash the reopening of the assessment under section 147/148 of the Income Tax Act, 1961. Resultantly, all additions stand deleted. The cros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 2. After going through entries it is revealed that M/s. Param Exim Ltd., who is assessed with this Circle, has availed the following accommodation book entries :- Sr.No. Name of the Company PAN F.Y. 2007-08 Amount (Rs.) 1. M/s. Param Exim Ltd., AACCP9669B 3,20,00,000/- Therefore, I have reason to believe that income to the tune of Rs. 3,20,00,000/- has escaped assessment. Issue Notice under section 148 of the Income-tax Act, 1961 for the assessment year 2007-2008. Dated : 25th March, 2013 Sd/- S. Dayal Asst. Commissioner of Income-tax, Rohtak Circle, Rohtak". 9.1. Learned Counsel for the Assessee submitted that apart from the fact that the issue is same as have been considered in other case, but, in the present case the amount in question as mentioned in the reasons at Rs. 3.20 crores have been wrongly mentioned because the amount in question is Rs. 2.20 crores [PB-10]. He has also submitted that the Assessing Officer in the reasons has mentioned that income escaped for assessment for F.Y. 2007-2008 instead of F.Y. 2006-2007. He has, therefore, submitted that since wrong facts have been mentioned in the reasons for reopening of assessment, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no application of mind on the part of the Assessing Officer while recording reasons for reopening of the assessment. We, therefore, considering the above discussion and following the reasons for decision in the case of M/s. KLF Food (India) Ltd., (supra), hold that assumption of jurisdiction by the Assessing Officer for reopening of the assessment is illegal and bad in Law. We, accordingly, set aside the orders of the authorities below and quash the reopening of assessment in the matter. Resultantly, all additions stand deleted. In view of the above, there is no need to decide the Departmental Appeal on merit in which Ld. CIT(A) has already deleted the addition. 12. In the result Appeal of the Department is dismissed and the cross-objection of the Assessee is allowed. 13. To sum-up, both Cross-Objections of different Assessees are allowed and both Departmental Appeals are dismissed." 7.2. According to Section 148(1), before making reassessment under section 147 of the Income Tax Act, 1961, A.O. shall have to serve the notice under section 148 upon the assessee requiring him to furnish the return as specified in the notice. However, in the present case it is an admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (I) Limited [2011] 331 ITR 236 (Bom.). We may also note that the heading of section 147 is "income escaping assessment" and that of section 148 "issue of notice where income escaped assessment". Sections 148 is supplementary and complimentary to section 147. Sub-section (2) of section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or re-compute the escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Explanation 3 if during the course of these proceedings the Assessing Officer comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the Legislature could not be presumed to have intended to give blanket powers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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