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TMI Blog2021 (2) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... the credit of Rs. 1.37 crores. As per the report, transaction was found to be without any economic rationale and it is suspected that money laundering activities were being carried-out. The assessee has not filed return of income for the A.Y. 2010-2011. The A.O. has recorded reasons for reopening of the assessment, copy of which is filed at pages 1 to 4 of the PB and after taking administrative approval Dated 31.03.2017, issued notice under section 148 of the I.T. Act, 1961 on Dated 31.03.2017 which was served upon the assessee, however, no return has been filed in response to the notice under section 148 of the I.T. Act. During the assessment proceedings summons under section 131 of the I.T. Act, 1961 was issued for personal deposition of the assessee. The assessee appeared before the A.O. and statement of Shri Bishan Sharup Gupta [Assessee] Proprietor of M/s. Yogesh Trading Co. was recorded in which he has explained that he has maintained two bank accounts i.e., Ramgarhia Cooperative Bank, Paharganj, Delhi bearing Account No.xxxxx2211 and Oriental Bank of Commerce, Chandni Chowk bearing Account No.xxxxx1421. The assessee stated that he is working as Commission Agent and Broker a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o amount of Rs. 1.37 crores alleged to have been escaped assessment belonging to the assessee. The A.O, therefore, recorded wrong, incorrect and non-existing reasons in the reasons for reopening of the assessment. Thus, the reopening of the assessment have been done without application of mind and liable to be quashed. Same view have been taken by ITAT, Delhi E-Bench, Delhi in the case of Shri Natarajan Monie, Gurgaon vs., ITO, Ward-2(5), Gurgaon in ITA.No.1817/Del./2017 vide Order Dated 07.12.2020 after following several decisions of different High Courts and quashed the reopening of the assessment in the matter. The issue is, therefore, covered by the aforesaid Order of the Tribunal. The same is reproduced as under : "IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES "E" : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA.No.1817/Del./2017 Assessment Year 2011-2012 Shri Natrajan Monie, S-19/001, The Close South, Nirwana Country, Sector-50, Gurgaon. PAN AAFPN2890N vs. The Income Tax Officer, Ward - 2 (5), Gurgaon. (Appellant) (Respondent) For Assessee : Shri Kapil Goel, Advocate For Revenue : M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposits as discussed in para 3.4 Rs. 59,50,000/- 5. Income from unexplained cash credits as discussed in para 3.5(i). Rs. 9,85,000/- 6. Income from profit on redemption of MF/FD as discussed in para 3.5(ii) Rs. 1,32,174/- TOTAL Rs. 84,37,210/- 3.1. The assessee challenged the reopening of the assessment as well as additions on merit before the Ld. CIT(A). However, the appeal of assessee has been partly allowed. 4. Learned Counsel for the Assessee referred to the reasons recorded for reopening of the assessment which have been provided to the assessee under RTI Act, copy of which is placed on record. He has submitted that A.O. in the reasons mentioned that assessee has made investment of Rs. 2 lakhs for purchase of mutual fund and transaction of commodities exchange contract of Rs. 10 lakhs in assessment year under appeal. He has submitted that A.O. has recorded wrong, incorrect and non-existing reasons and did not apply his mind to the material on record before recording reasons for reopening of the assessment. He has submitted that assessee did not make any fresh investment during subject period in mutual fund and even the A.O. did not make any addition on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -12. The income chargeable to tax amounting to Rs. 1200000/- which is chargeable to tax has escaped assessment and any other income found during the course of assessment proceedings which is chargeable to tax has escaped assessment. I have reasons to believe that the above said income/transaction of Rs. 1200000/- and any other income found during the course of assessment proceedings which is chargeable to tax has escaped assessment which needs examination in the light of the information in my possession. Notice under section 148 of the Income Tax Act, 1961 is being issued. Sd/- Shamsher Singh Income Tax Officer Ward 2(5), Gurgaon." 6.1. In view of the above reasons, the A.O. has mentioned that he has information received through NMS that assessee has made investment of Rs. 2 lakhs for purchase of mutual funds and transaction of commodity exchange contract of Rs. 10 lakhs in assessment year under appeal and thus, there is an escapement of income of Rs. 12 lakhs. The A.O. also noted in the reason that this information needs examination. However, no material is produced before us if the A.O. made any investigation on the information supplied to him through NMS if there is any e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timately found incorrect by the A.O. himself and he has made part addition as against the income mentioned in the show cause notice. These facts clearly show that A.O. did not apply his mind to the information received through NMS and also recorded wrong, incorrect and non-existing facts in the reasons recorded for reopening of the assessment. Learned Counsel for the Assessee has also referred to page-14 which is supplied to the assessee under RTI which according to assessee was asked under the RTI Act. The first page of the RTI reply PB-10 shows that assessee has asked for the copy of the reasons for reopening of the assessment as well as details which are basis of reopening of the case under section 148 of the I.T. Act, 1961. Page-14 is the material supplied by the A.O. which is the information summary in which information is supplied to assessee through CIB Code that there is a deposit in cash aggregating to Rs. 2 lakhs or more with the Banking company, contract of Rs. 10 lakhs or more in commodities exchange ,Rs. 2 lakhs or more paid for purchase of units of Mutual Fund. Rule 114E of the I.T. Rules provides the statement of financial transactions required to be furnished unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reopening the assessment under section 147, issuing a notice under section 148 did not meet the statutory conditions. As already held by the Appellate Tribunal, there was a repetition of at least five accommodation entries and the total amount constituting the so-called accommodation entries would therefore, not work out to Rs. 95,65,510. It was unacceptable that the Assessing Officer persisted with his "belief" that the amount had escaped assessment not only at the stage of rejecting the assessee's objections but also in the reassessment proceedings, where he proceeded to add the entire amount to the income of the assessee. Therefore there was non-application of mind on the part of the Assessing Officer. The Appellate Tribunal was justified in confirming the order of the Commissioner (Appeals) and holding that the reopening of the assessment was bad in law." 6.4. The Hon'ble Delhi High Court in the case of Shamshad Khan vs., ACIT [2017] 395 ITR 265 (Del.) in which it was held as under : "Held, allowing the petition, that the form for recording the reasons for initiating the proceedings under section 148 of the Act for obtaining approval of the Commissioner itself proceeded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the petition, (i) that it would be clear from the reasons given that the authority proceeded on the presumption that the law applicable was the law after the amendment and not the law in respect of which the petitioner had filed the return for the year 1999-2000. This by itself clearly demonstrated that there was total non-application of mind on the part of the authority and consequently, the notice based on that reason would amount to non-application of mind. (ii) That the income derived by the assessee from an industrial undertaking to which section 10A applies could not be included in the total income of the assessee. Therefore, the petitioner was right in filing the return by excluding the income in terms of section 10A." 6.6. In the case of Pr. CIT vs., RMG Polyvinyl (I) Ltd., 396 ITR 5 (Del.) the Hon'ble Delhi High Court held as under: "In the present case too, the information received from the Inv. Wing cannot be said to be tangible material per se without a further enquiry being undertaken by the learned assessing officer" 6.7. In the case of Pr. CIT vs., Meenakshi Overseas (P) Ltd., 395 ITR 677 (Del.), the Hon'ble Delhi High Court held as under : "Reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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