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TMI Blog2020 (6) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... he re-opening of the assessment. This fact is clear from the facts and figures given in the reasons recorded are wrong. Such non-application of mind to the information received by the AO prior to recording of reasons for re-opening of assessment makes the reopening bad in law. Re-opening of assessment based on wrong facts and figures is bad in law. The re-opening is also bad in law as it proves non-application of mind by the AO. Addition of the sale proceeds u/s 68 - Assessee has disclosed the sale of shares in its books of account. Once the sale is declared as income by the assessee, the question of treating the same amount as a cash credit u/s 68 of the Act results in double addition. Moreover, the gross receipt cannot be brought to tax, specifically when the assessee had acquired the shares to an allotment as evidenced by the letter of allotment payment details etc. Thus, the addition is also bad on merits. - Decided in favour of assessee. - I.T.A. No. 2614/Kol/2019 - - - Dated:- 29-5-2020 - Shri J. Sudhakar Reddy, Accountant Member For the Assessee : Sh. Sunil Surana, AR For the Revenue : Sh. Jayanta Khanra, JCIT, Sr. DR ORDER PER J. SUDHAKAR RE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession, prior to forming of a belief that income subject to tax has escaped assessment. (d) A copy of approval from the competent authority permitting re-opening of assessment was not provided to the assessee despite specific request and hence the assessment was invalid. (e) The reason for re-opening was that an amount of ₹12 lakhs was received by the assessee was income which escaped assessment and as no addition whatsoever was made of this amount in the final assessment order passed u/s 143(3) r.w.s. 147 of the Act, no other addition can be made. (f) In reply to the objections made by the assessee for the re-opening, the AO stated that, the assessee has raised Securities Premium Account ₹38,00,000/- during the previous year which is not offered to taxation. This is factually wrong and shows non-application of mind by the AO. 6. In his reply, the AO states that re-opening is not possible without approval from the Pr. CIT/CIT but does not specify as to who has given the approval and hence, the reopening is bad in law. 7. In his reply, the AO admits that the re-assessment was on the basis of the report of the Investigation Wing. The information given by the Investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011-12 on 22.09.2011 declaring a total income of ₹ 39,020/- as business income. The assessee has not assessed on regular assessment. Information has been received from the ADIT (Inv.), Unit-2(l), Kolkata vide letter bearing no. ADIT(Inv.)/Kol/Unit.2(1)/Joydeb Sarkar/2017-18/8530 dated 09.03.2018 regarding credible sources that large value cash were deposited into the bank accounts No. 063205500113 of Gupta trading co. account No. 063205500114 of Adarsh Marketing and account No. 134805500060 of Noresh Kr. Parekh respectively were followed by immediate transfer to the bank account of Hindusthan Hardwere (accounts No. 62760525894) and Kazi Nachher Enterprises (A/c No 627605500226). Prima facie, it appears that funds are rotated through above bank accounts for the purpose of accommodation entry. Accordingly a Cash Trail tracing several beneficiaries has been prepared. On perusal the Cash Trail and placed on the records wherein it has been found that alleged funds were deposited in cash into subject bank account, and after layering through 2-3 inermediates bank accounts, the same funds were transferred to the bank accounts of beneficiaries. Cash Trail tracing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on such incorrect facts or such wrong figures cannot be sustained. 14. The re-opening in this case is beyond a period of 4 years from the end of the assessment year. The AO states that approval for re-opening of assessment was obtained from the Pr. CIT, Kol-5. The original return file was processed u/s 143(1) of the Act. Approval in such cases is to be obtained from ACIT or JCIT u/s 151 of the Act and not from the Pr. CIT. In any event no proof of approval from any authority is produced before me. 15. There is non-application of mind by the AO to the information received, prior the re-opening of the assessment. This fact is clear from the facts and figures given in the reasons recorded are wrong. Such non-application of mind to the information received by the AO prior to recording of reasons for re-opening of assessment makes the reopening bad in law. 16. This Bench of the Tribunal in the case of M/s. Cygnus Investments Finance Pvt. Ltd. Vs. ACIT, Kolkata in ITA No. 117/Kol/2018 for AY 2008-09 order dated 18.05.2018 from para 7 onwards held as follows: 7. Further a perusal of the reasons recorded shows non-application of mind by the Assessing Officer. Directions hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uely referred to certain communications that he had received from the DIT(Inv.), New Delhi; the AO did not mention the facts mentioned in the said communication except that from the informations gathered by the DIT (Inv.), New Delhi that the assessee was involved in giving and taking accommodation entries only and represented unsecured money of the assessee company is actually unexplained income of the assessee company or that it has been informed by the Director of Income-tax (Inv.), New Delhi vide letter dated 16.06.2006 that the assessee company was involved in giving and taking bogus entries/transactions during the relevant financial year. The AO did not mention the details of transactions that represented unexplained income of the assessee company. The information on the basis of which the AO has initiated proceedings u/s 147 of the Act are undoubtedly vague and uncertain and cannot be construed to be sufficient and relevant material on the basis of which a reasonable person could have formed a belief that income had escaped assessment. In other words, the reasons recorded by the AO are totally vague, scanty and ambiguous. They are not clear and unambiguous but suffer from vag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w arises for our consideration. The appeals are dismissed. There shall be no order as to costs. 7.2. The Jurisdictional High Court in the case of Principal CIT vs G G Pharma India Ltd. in ITA 545/2015 vide order dt. 08.10.2015 at paras 12 and 13 was held as follows: 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 Feb. 2003, from four entries which were received by the assessee on a single date i.e. 10th Feb. 2003, from four entries which were termed as accommodation entries, which information was given to him by the Director Investigation, the A.O. 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 A.O. applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons. There should be a link between the reasons and the evidence material available with the Assessing Officer. (iii) 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 ₹ 5 lakhs during F.Y.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 beneficiary. The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. (iv) Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, bad a paid up capital of ₹ 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t simply dispute the fact that the assessee did file the return. Importantly, even the second factual assertion of the Assessing Officer in the reasons recorded is totally incorrect. He has referred to said sum of ₹ 1,18,95,000/as a sale price of the property. The assessee had produced before the Assessing Officer, the sale deed in which, the sale consideration disclosed was ₹ 50 lakhs. 12. The Assessing Officer may be correct in pointing out that when the sale consideration as per the sale deed is ₹ 50 lakhs but the registering authority has valued the property on the date of sale at ₹ 1,18,95,000/for stamp duty calculation, section 50C of the Act would apply, of course, subject to the riders contained therein. However, this is not the cited reason for reopening the assessment. The reasons cited are that the assessee filed no return and that 1/3rd share of the assessee from the actual sale consideration of ₹ 1,18,95,000/therefore, was not brought to tax. These reasons are interconnected and interwoven. In fact, even if these reasons are seen as separate and severable grounds, both being factually incorrect, Revenue simply cannot hope to salvage t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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