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TMI Blog2020 (2) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... it is a fit case for issue of notice under section 148 of the I.T. Act , similarly worded approval did not approve the same and held that In the present case, there has been no application of mind by Addl. CIT before granting approval. Therefore, we are of the view that reopening of the assessment is bad in Law and that sanction/approval granted by the Competent Authority is also invalid. Considering the totality of the facts and circumstances of the case, we are of the view that reopening of the assessment is illegal, bad in Law and void abinitio. - Decided in favour of assessee. - Shri Bhavnesh Saini, Judicial Member And Shri R.K. Panda, Accountant Member For the Assessee : Shri Rakesh Gupta, And Shri Somil Agarwal, Advocates. For the Revenue : Shri S.L. Anuragi, Sr. D.R. ORDER PER BHAVNESH SAINI, J.M. This appeal by Assessee has been directed against the Order of the Ld. CIT(A), Muzaffrnagar, Dated 16.01.2017, for the A.Y. 2005-2006, challenging the reopening of the assessment under section 147 of the I.T. Act, 1961, sanction granted under section 151 of the I.T. Act, 1961 and addition of ₹ 2,23,50,000/- on account of share application money under section 68 of the I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Circle-22, New Delhi, intimating that requisite information is not available in the Office at New Delhi. The A.O, therefore, requested to supply information regarding beneficiaries who have received accommodation entries from Shri S.K. Gupta along with copy of the statement of Shri S.K. Gupta at the earliest as it is a time barring matter. PB- 811 is letter Dated 13.02.2013 of DCIT, Central Circle-22, New Delhi to the A.O. intimating that statements of Shri S.K. Gupta Dated 26.12.2008 and 20.11.2007 are enclosed. But, no other information is available in his Circle. Further, he has advised that further inquiries can be made on the basis of the available information. Learned Counsel for the Assessee referred to PB-347 which is reasons recorded for reopening of the assessment which is a fax message copy received by the A.O. on 28.03.2012 at 3.30 P.M. on which the A.O. merely signed and did nothing in the matter. Thus, the A.O. acted in a mechanical manner without having any evidence, material or information in her possession with regard to accommodation entries received by assessee. PB- 346 is letter Dated 28.03.2012 of ACIT, Central Circle-22, New Delhi to CIT-1 etc., New Delhi in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d which are the reasons recorded for reopening of the assessment. The Ld. D.R. submitted that list of beneficiaries was supplied by ITO, Delhi and while framing the assessment under section 143(3) of the I.T. Act, the A.O. did not mention anything in the assessment order, therefore, there was failure on the part of the assessee to disclose truly and correctly all necessary material relevant to the assessment year under appeal. 5. We have considered the rival submissions and perused the material on record. It is well settled Law that validity of the re-assessment proceedings is to be determined with reference to the reasons recorded for reopening of the assessment. The copy of the reasons recorded under section 147/148 are filed at page-347 of the PB. The same is reads as under : Reasons for issuing notice u/s.148 of the Act in the case of M/s. Bull Riders Financial Services (P) Ltd., for the A.Y. 2005-06 reg. Information has been received from the Investigation Wing of the Income Tax Department that the above named assessee is a beneficiary of accommodation entries received from various concerns floated by Shri S.K.Gupta during the period relevant to A.Y. 2005-06. I have perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned authorities at New Delhi to provide list of beneficiaries and statement of Shri S.K.Gupta after signing the recorded reasons on 28.03.2012. These correspondence, thus, clearly support the fact that A.O. was not having any list of beneficiaries of accommodation entries and statement of Shri S.K. Gupta at the time of signing the recorded Fax message for reopening of the assessment on 28.03.2012. The A.O. ultimately on 27.03.2012 (PB-344) through letter Dated 27.03.2012 from ITO, Ward-3(1), New Delhi, came to know that assessee is beneficiary of accommodation entry provided by M/s. Vasudeva Champ Finvest, Shri Suresh Gupta, ₹ 10 lakhs and M/s. Vasudeva Farms ₹ 3,50,000/- on 18.03.2005. The A.O. however did not make any addition of ₹ 13,50,000/- from these parties in the re-assessment order. The party at Sl.No.4 M/s. Vasudeva Farms Pvt. Ltd., though is mentioned in re-assessment order, but, against it, an amount of ₹ 20 lakhs have been mentioned by the A.O. in the assessment order which fact is incorrect in the reasons recorded for reopening of the assessment. Thus, the assessee has not received any amount from M/s. Vasudeva Champ Finvest, Shri Suresh Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al mistake and that the latter figure would be treated as his income. If the correct income i.e. ₹ 69,71,191 was put before the Commissioner at the time of seeking his approval, he might have taken a different view. There was nothing on record to show that the clerical mistake of substituting ₹ 20,56,145 for ₹ 69,71,191 was ever brought to the notice of the Commissioner either before or after approval or sanction under section 151(1) of the Act. The initiation of the case for reopening of the assessment was erroneous and without application of mind especially since the Assessing Officer had not examined the return filed, which would have revealed that the assessee had filed regular returns, had sufficient opening balance in his account and the withdrawals therefrom substantiated the donation made. Therefore, the reopening of the assessment was unsustainable in law and the notice issued under section 147 of the Act was to be quashed. 5.5. The Hon ble Bombay High Court in the case of Siemens Information Systems Ltd., vs., ACIT Others [2007] 293 ITR 548 (Bom.) held as under : The petitioner had several EOU/STP units engaged in the business of export of software. In r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax vs., RMG Polyvinyl (I) Ltd., 396 ITR 5 (Del.), Pr. Commissioner of Income Tax vs., Meenakshi Overseas (P) Ltd., 395 ITR 677 (Del.) and Pr. CIT vs., G And G Pharma India Ltd., [2016] 384 ITR 147 (Del.) and Sarthak Securities Co. (P) Ltd., 329 ITR 110 (Del.). 5.7. The above discussion would make it clear that the A.O. herself has not recorded any reasons for reopening of the assessment. No details or evidence of receiving accommodation entries were available to the A.O. on the day of issue of notice under section 148 on 29.03.2012. The A.O. recorded wrong, incorrect and non-existing reasons and merely signed the fax message which was already recorded for reopening of the assessment. The A.O. did not apply her mind and the objections of the assessee have not been disposed of. Therefore, the reopening of the assessment is illegal, bad in law and void abinitio. 5.8. In the present case, the original assessment was completed under section 143(3) on 27.09.2007. The A.O. on the basis of the facts recorded by the assessee in the books of account came to know that assessee has received share application money/share premium of ₹ 2,23,50,000/-. This fact was already available to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21,550. Nothing further had been indicated apart from this fact which was there on record even in the original assessment. Therefore, the allegations of the Assessing Officer in the reasons that the assessee had failed to disclose full and true particulars of its income, was without any basis. Consequently, in view of the provisions of the first proviso to section 147, the Revenue could not be permitted to reopen the assessment as the necessary pre-condition for doing so in a case which was beyond four years from the end of the relevant assessment year had not been fulfilled. 5.9. The assessee filed copy of the sanction granted by Competent Authority to the reasons recorded for reopening of the assessment. Copy of the same is filed at page-349 of the PB in which Addl. Commissioner of Income Tax has mentioned Yes, I am satisfied . The Commissioner of Income Tax, Ghaziabad noted Yes I am satisfied. It is a fit case to issue notice under section 148. Such an approval is not valid in Law because it would show that approval have been granted without application of mind. The Hon ble Delhi High court in the case of United Electrical Co. Pvt. Ltd., vs. Commissioner of Income Tax 258 ITR 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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