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TMI Blog2020 (12) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded' :- "2. Further information has been received from the Investigation Wing, Unit-2(1). New Delhi that a search & seizure operation was carried out on 18.11.2015 in the cases of Shri Pradeep Kumar Jindat Group of Companies and Shri Sajjan Kumar Jain Group of Companies who had taken accommodation entries in the form of bogus share premium besides other accommodation entries of Long Term Capital Gains and share forfeiture from front companies of Shri Pradeep Kumar Jindal, Subsequently, a Survey was carried out on 01,.02.2016 at 116, R.K.Complex, Mahendru Enclave, G.T.Karnal Road, Delhii which was found to be a secret office of Shri Pradeep Kumar Jindal, where record and data related to accommodation entries of various nature was found recorded in his iaptop and computers. / The documents/digital data impounded/seized during search and surveys and the submission of Shri Pradeep Kumar Jindal and dummy directors of his front companies has established beyond doubt that Shri Pradeep Kumar Jindal provides bogus entries to various business entities and individuals by accepting cash from them in lieu of such accommodation entries and thus abets tax evasion by way of channeling undisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Income Tax Act, 1961. 4. Thereafter, the assessee filed objections to proceedings u/s 147/148 vide letter dated 30.05.2016, wherein, the assessee submitted that the assessee did not receive any money from M/s Euphoria Capital Private Limited as alleged in the 'reasons recorded' for sums aggregating of Rs. 20 Lakhs. The assessee also produced its bank statement and books of accounts to show that there was no credit entry from M/s Euphoria Capital Private Limited and it did not enter any such transactions with the said company. Since, reopening u/s 147 was only on the basis of information received from Investigation Wing and there is no such entry in the bank account of the assessee, then such 'reasons recorded' itself cannot be basis of reopening of assessment. Thereafter, the assessee further vide reply dated 14.07.2016 reiterated that there is no such credit amount from the said company in the books of accounts of the assessee and the copy of bank account and books of accounts were duly filed. It was also pointed out that there was no fresh increase in the share capital during the year and there was no credit in the books of account. 5. The Ld. Assessing Officer after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of allotment of shares including the premium of Rs, 32,80,000/-. Since there was no transaction with M/s Euporia Capital Private Limited and/or no amount was received from the said party, the reason to reopen the case and the AO had no specific information on record, AO was convinced that no further investigation was required in the absence of the credit of Entries as reported by the Investigation wing. In view of the various court decisions. Prima Facie the case was wrongly re-opened u/s 147/148, as such the AO passed the order. If any addition is made on this account, it will be mainly due to change of opinion m the part of department." 7. However, the Pr. CIT has set-aside the order of the AO to pass a fresh assessment order after observing as under:- "The reply of the assessee has been gone through carefully. The assessee did not furnish in detail of a person from whom the share. The assessee received share premium nor furnished any explanation regarding the identity, the source of investment and creditworthiness of the subscribers. He also did not furnish any documents in support of the fair market value adopted by the company and received huge premium during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons were recorded only on the ground that the assessee company has taken accommodation entry of bogus share premium/application for sums segregating to Rs. 20 Lakhs received from M/s Euphoria Capital Private Limited for two amounts of Rs. 10 Lakhs each on 01.04.2008 and 10.06.2008. Once, it was proven on record before the AO that no such amount has been credited in the bank account of the assessee or in the books of account from the said company, then the entire foundation of the reopening fails. There is only one entry of Rs. 10 Lakhs which was from a different party. Therefore, the very basis on which the reasons were recorded based on such alleged information was found to be incorrect and therefore, the AO had rightly accepted the return of income of the assessee. He further drew our attention to the reply before the AO along with various documents filed in the course of assessment proceedings to show that, AO has duly examined this issue and accepted the assessee's contention. Once the very basis on which reasons were recorded were found to be factually incorrect, then the AO could not have travelled beyond the reasons to make any further addition for which no such mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is such amount credited in the bank account or books of account of the assessee from the said party. This fact was reiterated before the AO along with copy of bank statements and books of accounts. The Ld. AO on examination of the bank account and books of accounts has categorically noted that, firstly, only amount of Rs. 10 Lakhs was found credited in the bank account which was received from M/s Gannon Dunkerly and Company Ltd. on 24.01.2009; secondly, there is no such entry as mentioned in the Investigation report or information; and lastly, is no other entry of Rs. 10 Lakhs found. In view of the factual verification, the AO accepted the return income in order dated 29.09.2016 passed u/s 147/148 of the Act. Now, Ld. Pr. CIT in his revisionary jurisdiction u/s 263 of the Act based on same information which has been incorporated in reasons recorded has sought to draw adverse inference by observing that AO has not verified the share premium of Rs. 20 Lakhs from Euphoria Capital Private Limited and therefore, order of the AO is erroneous insofar as prejudicial in the interest of the Revenue. 11. Once, the very basis for reason to believe on the basis of which assessment was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 147/143(3). [Para 13] For exercise of power under section 263 it is mandatory that the order passed by the Assessing Officer should be erroneous and prejudicial to the interest of the revenue. In the instant case, the Assessing Officer did not make any addition for the reasons recorded at the time of issue of notice under section 148, This position is not disputed and disturbed by the Commissioner in his order under section 263. Sequitur is that the Assessing Officer could not have made an addition on account of share application money in the assessment proceedings under section 147/148. Accordingly, the assessment order is not erroneous. Thus, the Commissioner could not have exercised jurisdiction under section 263. [Para 14] The question of law is accordingly answered in affirmative against the revenue and in favour of the assessee. [Para 15]." 12. It is not a case here where the basis and material on which the 'reasons were recorded' has not been considered by the Assessing Officer. In fact, the assessment record clearly shows that the AO has duly called for all the information and has verified the same and has arrived at the conclusion. Without finding any e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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