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TMI Blog2020 (11) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Investigation Wing, which has otherwise been based upon the statements of Pradeep Kumar Jindal, Shri Subodh Kumar Khandelwal, Ms. Seema Khandelwal Ms. Meera Mishra who have furnished the list of companies stated to be not doing any business but engaged in providing accommodation entries. Before issuing the notice, the AO has not examined the profile of the said companies to arrive at the logical conclusion so as to issue notice u/s 148 Neither any reason has been recorded which is sufficient to believe that income to the tune of ₹ 15,00,000/- received from M/s. Hajima Resorts Ltd. has escaped assessment nor any such notice has been given to the assessee. All these facts goes to prove that the AO has not applied his judicial mind before recording the reasons to believe that such and such income has escaped assessment rather proceeded to initiate the proceedings u/s 147/148 of the Act by blindly following the report of the Investigation Wing. Coordinate Bench of the Tribunal in case cited as ITO, Ward 17 (4), New Delhi vs. M/s. Virat Credit Holdings Pvt. Ltd. [ 2018 (2) TMI 871 - ITAT DELHI ] dealt with the identical issue arising out of the search and seizure operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng ₹ 45,00,000/- is being challenged on facts and law while all parameters for the provision of law required by assessee fulfilled as revealed in findings from acquiescence by silence. 7. Because the action for enhancement of addition on account of commission ₹ 45,000/ - is being challenged on facts and law as no specific show cause notice issued by CIT(A) on assessee. 8. Because the action is being challenged on facts and law for making addition on account of commission paid amounting ₹ 45,000/ - at the rate of 1 % of ₹ 45,00,000/-. 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Initially return of income filed by the assessee for the Assessment Year 2010-11 declaring an income of ₹ 7,15,990/- was processed under section 143 (1) of the Income-tax Act, 1961 (for short the Act ). Subsequently, on receipt of information from the Investigation Wing for providing accommodation entries to different beneficiaries by the companies floated by Pradeep Kumar Jindal Group on the basis of search and seizure operation carried out on 18.11.2015 and from the documents impounded/seized from the submissions of Pradeep Kumar Jind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, AO proceeded to conclude that identity, creditworthiness and genuineness of the transactions of aforesaid three companies were not established and from the statements of Shri Subodh Kumar Khandelwal, Ms. Seema Khandelwal, Ms. Meera Mishra, Shri Laxman Singh, Shri Satya and Shri Pradeep Kumar Jindal related to aforesaid three corporate companies from whom ₹ 45,00,000/- claimed to have been made, admitted that these three companies were engaged in the business of providing accommodation entries in the form of share capital and share premium etc. and thereby made addition of ₹ 45,00,000/- and consequently, framed the assessment at ₹ 52,15,990/- u/s 143(3)/147 of the Act. 6. Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has not only confirmed the addition but also enhanced the same to the extent of ₹ 45,000/- i.e. @ 1% on account of commission for obtaining accommodation entries to the taxable income of the assessee. Feeling aggrieved by the order passed by the ld. CIT (A), the assessee has come up before the Tribunal by way of filing the present appeal. 7. We have heard the ld. Authorized Representatives of the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , simultaneously, search and seizure action was carried out on Faridabad based Sh. Sajan Kumar Jain group who had taken accommodation entries of more than 100 crores in the form of bogus share premium, exempt LTCG and advance against property etc. majority from front and non-descript companies of Sh. Pradeep Kumar Jindal. Pre-search enquiries had revealed that Sh. Pradeep Kumar Jindal is managing and controlling a web front/nondescript companies through dummy directors and has provided accommodation entries of share capital and premium and unsecured loans to a large number of beneficiaries. The front companies of Sh. Pradeep Kumar Jindal have no creditworthiness to invest such huge amounts in share capital/premium or to issue loans and advances. The enquiries had revealed that the investing companies were shell companies. The so called directors of the shell companies had been evading income tax summons/letters issued to them from time to time. The bank statements of various front companies of Sh. Pradeep Kumar Jindal was provided by Vaish Co-operative Bank Ltd., Nai Sarak, Delhi U/s 131 (1A) of the Income tax act 1961 analysis of the bank statement revealed that huge cash is being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain/loss advance against property, unsecured loans, transfer of company, bogus sale-purchase etc. The name of individuals of Sh. Pradeep Kumar Jindal group whose bank accounts have been used by him for purpose of providing accommodation entries are :- S. No. Name of the individual Address of the individual Relation with Sh. Pradeep Kr. Jain 1. Pradeep Kumar Jindal H-1/1A, Model Town, Delhi Self 2. Mamta Jindal H-1/1A, Model Town, Delhi Wife and Dummy Director 3. Archit Jindal H-1/1A, Model Town, Delhi Dummy Director and Cash Handler 4. Meera Mishra K-31/6, Model Town-III, Delhi Dummy Director 5. Renu Jindal 4/429, Kacheri Ghat, Agra Sister-in-law and Dummy Director 6. Ajay Kumar Jindal 4/429, Kacheri Ghat, Agra Brother and Dummy Director 7. Subodh Kumar Khandewal 88, Baldev Park, Parwana Road, Delhi Dummy Director 8. Uttam Kumar Shrivastava 88, Baldev Park, Parwana Road, Delhi Dummy Director and Cash Handler 9. Laxman Singh Satyapal Gali No.10, Block A, Baba Colony, Burari, Delhi Dummy Director and Cash Handler During the course of post-search investigation it has been found that the assessee was using accommodation entries in the form of share premium/share application money/unsec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dersigned. As explained above, the identity, creditworthiness and genuineness of transactions with these persons/subscribers as accommodation was found to be dubious. The transaction amount of ₹ 30,00,000/- received as discussed above leads to a credible question on the genuineness of share capital/ share application money received etc., during the year within the meaning of section 68 of the Income Tax Act, 1961, on the basis of facts discussed above relating to the so called subscribers. It is evident from the perusal of the return that assessee has not disclosed its income to the tune of ₹ 30,00,000/-. Keeping in view the above facts, I have reason to believe that on account of failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment for above assessment year 2010-11, the income chargeable to tax to the extent of above mentioned accommodation entry amounting to ₹ 30,00,000/- as mentioned above has escaped assessment within the meaning of section 147/148 of the Act. Moreover, as the case pertains to a period beyond four years from the end of relevant assessment years, for issuing the notice u/s 148, necessary ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that reasons for the belief that income has escaped assessment . In response to the said question as contained in Column No.11, it is mentioned by the AO that as per Annexure A . But no such Annexure A has been brought on record before the Bench for perusal. In these circumstances, it is difficult to make out as to what were the reasons for belief that income has escaped assessment with the AO on the basis of which Principal CIT has accorded sanction by merely writing I am satisfied. 17. Apparently, from the approval recorded and words used that Yes. I am satisfied. , it is proved on record that the sanction is accorded in mechanical manner and Pr.CIT has not applied independent mind while according sanction as there is not an iota of material on record as to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment u/ss 147/148 of the Act. 18. Even the AO has not applied his judicial mind independently while recording the reasons for initiating proceedings u/s 147/148 of the Act. Bare perusal of the reasons recorded shows that the entire emphasis is placed on the report of the Investigation Wing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . First of all, ld. AR for the assessee company drew our attention towards sanction accorded by the Addl.CIT for reopening of the assessment obtained by moving an application under Right to Information Act, 2005, available on file as Annexure 'A'. Perusal of the sanction accorded by Addl. CIT in the prescribed proforma shows that there is a question no.13 viz : 13. Whether the Addl. CIT is satisfied on the reasons recorded under section 147 that it is a fit case for issue of notice under section 148 of the IT Act. 11. In response to aforesaid question no.13 in the prescribed proforma, Addl. CIT has written Yes. I am satisfied. No doubt, columns of reasons recorded was there and it is also mentioned in column no.12 that reasons for belief that income has escaped assessment are as per annexure enclosed but such annexure has not been produced before the Bench for perusal. 12. Apparently, from the approval recorded and words used that Yes. I am satisfied. , it has proved on record that the sanction is merely mechanical and Addl.CIT has not applied independent mind while according sanction as there is not an iota of material on record as to what documents he had perused and what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee objected to same before AO, that was rejected and assessment was completed u/ss. 143(3) and CO No.57/Del/2012 147-CIT(A) found that reason recorded by Joint Commissioner of Income Tax, for according sanction, was merely recording 'I am Satisfied'-Action for sanction was alleged to be without application of mind and to be done in mechanical manner-Held, while according sanction, Joint Commissioner, Income Tax only recorded Yes, I am satisfied -Mechanical way of recording satisfaction by Joint Commissioner, that accorded sanction for issuing notice u/s. 147, was clearly unsustainable-On such consideration, both Appellate authorities interfered into matter- No error was committed warranting reconsideration-As far as explanation to S. 151, brought into force by Finance Act, 2008 was concerned, same only pertained to issuance of notice and not with regard to manner of recording satisfaction-Amended provision did not help Revenue-No question of law involved in matter, that warranted reconsideration-Revenue's Appeals dismissed. 15. The Hon'ble Delhi High Court has also decided this legal issue in case cited as Pr. CIT vs. N.C. Cables Ltd. in ITA 335/2015 order dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustainable standard operating procedure containing self-speaking reasons for according sanction while discharging such quasi-judicial function. 23. Hon'ble High Court of Delhi in case cited as SABH Infrastructure Ltd. vs. ACIT in WP (C) 1357/2016 order dated 25.09.2017 has issued guidelines to the Revenue authorities while CO No.57/Del/2012 deciding the issue of reopening u/s 147/148 of the Act. Operative part of which is reproduced as under:- 19. Before parting with the case, the Court would like to observe that on a routine basis, a large number of writ petitions are filed challenging the reopening of assessments by the Revenue under Sections 147 and 148 of the Act and despite numerous judgments on this issue, the same errors are repeated by the concerned Revenue authorities. In this background, the Court would like the Revenue to adhere to the following guidelines in matters of reopening of assessments: (i) while communicating the reasons for reopening the assessment, the copy of the standard form used by the AO for obtaining the approval of the Superior Officer should itself be provided to the Assessee. This would contain the comment or endorsement of the Superior Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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