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TMI Blog2021 (3) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... he information stated that Shri Aseem Kumar Gupta, C.A. had provided accommodation entries to several beneficiaries after taking unaccounted cash from the beneficiaries which was routed through different entities by layering of accounts. All these entities were controlled by Shri Aseem Kumar Gupta who has stated on oath during search proceedings as well as during assessment proceedings that cash and other unexplained deposits in the bank accounts controlled by him belong to the beneficiaries and should be taxed in their hands. In his statement on oath he has specifically provided the names of such entities used to provide accommodation entries and as per information assessee-company has received the following amounts. Accommodation entry received (Rs.) Mode Date Bank Entry providing entity. 20,00,000 RTGS 04/08/2009 Corp. Bank, CP Moderate Credit Corp Ltd. 30,00,000 RTGS 08/08/2009 Corp. Bank, CP Moderate Credit Corp Ltd. 30,00,000 RTGS 10/08/2009 Corp. Bank, CP Moderate Credit Corp Ltd. 15,00,000 RTGS 10/08/2009 Jammu & Kashmir Bank Ltd., Moderate Credit Corp Ltd. 3.1. The A.O. after going through the ITR of the assessee found that share capital and share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om his earlier statement recorded during the course of search in his case and explained that his statement has been recorded under due influence and coercion. He has, therefore, withdrawn from his statement with regard to entries provided to the third parties routed through the bank accounts of third parties. Learned Counsel for the Assessee submitted that the A.O. received the information from CIT, Central-2, Delhi on 15.03.2012, but, the A.O. recorded the reasons for reopening of assessment only on 17.03.2017 i.e., after considerable period of 05 years. In the meantime, even before recording the reasons for reopening of the assessment and information provided by the CIT, Central-2, Delhi, Shri Aseem Kumar Gupta has retracted from his statement vide his letter Dated 25.12.2011, therefore, the statement referred to by the A.O. of Shri Aseem Kumar Gupta in the reasons recorded for reopening of assessment is irrelevant and cannot be considered as having any evidentiary value against the assessee so as to initiate the reassessment proceedings against the assessee. He has referred to PB-32 which is letter filed by the assessee before A.O. in respect of notice under section 148 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 CCH 18 [Del.] [HC]. The Learned Counsel for the Assessee, therefore, submitted that there is a total non-application of mind by the A.O. while recording the reasons for reopening of assessment and there is also non-application of mind on the part of the Pr. CIT while granting approval to the reasons recorded. He has submitted that there is no reference to the retraction statement of Shri Aseem Kumar Gupta in the impugned order. It would also show that there is a total nonapplication of mind on the part of the A.O. and non-consideration of the relevant material at the time of forming the belief that income chargeable to tax has escape assessment. Learned Counsel for the Assessee on merits also submitted that Investor company is NBFC and assessee produced all documentary evidences before A.O. which have not been doubted by the A.O. The A.O. did not summon the Director of the Investor company, therefore, no fault could be found with the assessee and as such no addition could be made even on merits against the assessee. 5. On the other hand, the Ld. D.R. relied upon the Orders of the authorities below and submitted that even if A.O. recorded reasons on 17.03.2017 for initiation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings) that cash & other unexplained deposits in the bank accounts controlled by him belong to beneficiaries and should be taxed in their Hands. In his statement on oath he has specifically provided the names of such entities used to provide accommodation entries. As per the information the assessee company received the following amounts : Accommodation entry received (Rs.) Mode Date Bank Entry providing entity. 2000000 RTGS 04/08/2009 Corp. Bank, CP Moderate Credit Corp Ltd. 3000000 RTGS 08/08/2009 Corp. Bank, CP Moderate Credit Corp Ltd. 5000000 3. After going through the ITR of the assessee it is seen that it has received Share Capital & Premium of Rs. 95 lakhs during the year. This amount is more than the amount reported by Sh Aseem Gupta and therefore this amount includes unaccounted cash of the assessee of Rs. 50 lakhs routed through M/s Moderate Credit Corp Ltd (an entity controlled by Shri Aseem Gupta). 4. Since Shri Aseem Gupta was involved in providing accommodation entries and in his statement on oath he has admitted using Moderate Credit Corp Ltd to route accommodation entries, therefore t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received Rs. 95 lacs from the Investor company in assessment year under appeal which is also found mentioned in the ITR filed by the assessee prior to recording of the reasons. The A.O, therefore, recorded incorrect and wrong facts in the reasons recorded for reopening of the assessment as regards the amount escaped assessment. The assessee has disclosed all the primary facts in the return of income that it has received Rs. 95 lacs in assessment year under appeal as share capital money from the Investor company Moderate Credit Corp. Ltd. No tangible material is also referred in the reasons as to how the A.O. came to know that assessee has received accommodation entry of Rs. 50 lacs only. No tangible material is also referred to as to how Shri Aseem Kumar Gupta has controlled the Investor company Moderate Credit Corp. Ltd. The A.O. also wrongly recorded income chargeable to tax in a sum of Rs. 50 lacs has escaped assessment, despite A.O. has contradictorily mentioned in the reasons that assessee has received Rs. 95 lacs from the Investor company and ultimately in the reassessment order A.O. made addition of Rs. 95 lacs. Since the assessee has disclosed Rs. 95 lacs as share capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retracted from his statement recorded on oath. Therefore, on the day of initiation of reassessment proceedings by recording reasons on 17.03.2017 the A.O. was not having any such statement of Shri Aseem Kumar Gupta available with him so as to believe that he controlled various companies to provide accommodation entries to the assessee and others. Thus, there is no tangible material available with the A.O. on the date of recording of the reasons for reopening of the assessment and whatever reasons were recorded are found to be wrong, incorrect and non-existing. Thus, there is a total non-application of mind on the part of the A.O. while recording the reasons for reopening of the assessment. It may also be noted here that assessee since beginning have been explaining that Investor is a NBFC Company and registered with Reserve Bank of India. Therefore, there is no question of it being controlled by any accommodation provider like Shri Aseem Kumar Gupta for which also no evidence has been brought on record while recording the reasons for reopening of the assessment. 6.2. The ITAT, Delhi C-Bench, Delhi in the case of Shri Karan Khurana, Delhi vs., ITO, Ward-48(2), New Delhi in ITA.No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Ld. Counsel for assessee submitted that it is, therefore, clear that reopening is based on incorrect facts. It is well settled law that if wrong facts and wrong reasons are recorded for reopening of the assessment, such assessment is bad in law. In support of his contention he has relied upon order of the ITAT Delhi Bench in the case of M/s Ganesh Ganga Investments P. Ltd. Vs. ITO in ITA No. 1579/Del/2019 dated 07.11.2019 only in paras 8.5 to 9 are reproduced as under : "8.5. The statement of Shri Himanshu Verma is also filed on record which did not find mention if M/s. Shubh Propbuild Pvt. Ltd., as mentioned in the reasons belong to Shri Himanshu Verma. There is no investor exist in the name of M/s. Management Services Pvt. Ltd., and no addition in respect of the same company have been made by the A.O. The A.O, therefore, recorded incorrect facts in the reasons for reopening of the assessment. Thus the same cannot be approved under the Law. It is well settled Law if wrong facts and wrong reasons are recorded for reopening of the assessment, reopening of the assessment would be invalid and bad in Law. We rely upon Judgment of Hon'ble Punjab & Haryana High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to demonstrate the link between the alleged tangible material and the formation of reasons to believe that income chargeable to tax has escaped assessment. The decisions relied upon by the Learned Counsel for the Assessee in the cases of Pr. Commissioner of Income Tax vs., RMG Polyvinyl (I) Ltd., 396 ITR 5 (Del.), Pr. Commissioner of Income Tax vs., Meenakshi Overseas (P) Ltd., 395 ITR 677 (Del.), Pr. Commissioner of Income Tax vs., G and G Pharma India Ltd., 384 ITR 147 (Del.) and Sarthak Securities Co. (P) Ltd., 329 ITR 110 (Del.), clearly apply to the facts and circumstances of the case. Learned Counsel for the Assessee also relied upon Order of ITAT, Delhi Bench in the case of Pioneer Town Planners Pvt. Ltd., (supra) in which on identical facts reopening of the assessment have been quashed. The Ld. D.R. relied upon certain decisions in support of the contention that reopening of the assessment is justified, but, the same are distinguishable on facts of the present case. Considering the facts and circumstances of the case in the light of above discussion and decisions referred to in the Order, we are of the view that reopening of the assessment is bad in law and that sanctio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, therefore, assumption of jurisdiction under section 147/148 of the I.T. Act, 1961, is bad and illegal. The AO was not justified in assuming jurisdiction under section 147/148 of the I.T. Act, 1961. We, therefore, hold that reopening of the assessment in the matter is bad in law and illegal, as such, same cannot be sustained in law. We, accordingly, set aside the orders of the authorities below and quash the reopening of the assessment. Resultantly, all additions stand deleted." 14.1 Ld. Counsel for assessee in support of the above contention also relied upon following decisions: 1. Shamshad Khan vs. ACIT 395 ITR 265 (Del.) 2. Pr. CIT vs. M/s SNG Developers Ltd. 404 ITR 312 (Del.). 3. CIT vs. Atlas Cycle Industries 180 ITR 319(P&H) 4. Siemens Information System Ltd. vs. ACIT 293 ITR 548 (Bom.). 15. On the other hand, Ld. DR relied upon the orders of the authorities below and submitted that since the assessee did not disclose bank account so AO applied his mind to the information received from Investigation Wing. Exact amount cannot be determined at the time of initiation of reassessment proceedings. Prima facie opinion to be formed at the stage of initiation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case by stating that his income was mentioned as Rs. 20,56,145 instead of Rs. 69,71,191, this was summarily rejected stating that it was a clerical mistake and that the latter figure would be treated as his income. If the correct income i.e. Rs. 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 Rs. 20,56,145 for Rs. 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." 19. Hon'ble Bombay High Court in the case of Siemens Information Systems Ltd. Vs. ACIT & Others [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 147/148 read with section 143(3) of the Act. The AO also incorrectly recorded that sanction for reopening of assessment is required under proviso to section 151(1) of the Act despite such proviso does not exist in the statute as it was amended in 2015. The AO, therefore, recorded wrong, incorrect and non-existing reasons for reopening of the assessment. It makes clear that there is a total nonapplication of mind on the part of the AO while recording the reasons for reopening of the assessment. The AO has recorded incorrect amount which escaped assessment. The reasons failed to demonstrate the live link between the alleged tangible material and the formation of belief that income chargeable to tax has escaped assessment. The decisions relied upon Ld. Counsel for assessee in the cases of Pr. CIT Vs. Meenakshi Overseas (P) Ltd. 395 ITR 677 (Del.), Pr. CIT Vs. RMG Polyvinyl (I) Ltd., 396 ITR 5 (Del.), Pr. CIT vs. G&G Pharma India Ltd. [2016] 384 ITR 147 (Del.) and Signature Hotels P. Ltd. Vs. ITO (supra) squarely apply to the facts and circumstances of the case. Considering the facts and circumstances of the case, in the light of the above discussion, and decisions referred to in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded has mentioned that assessee has received an amount of Rs. 50 lacs only in 02 transactions from the Investor Company. The Pr. CIT merely approved the reasons without saying anything. The Hon'ble Delhi High Court in the case of Pr. CIT vs., N.C. Cables Ltd., (supra) held in Para-11 as under : "11. Section 151 of the Act clearly stipulates that the CIT (A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression 'approved' says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed." 6.5. The Hon'ble Madhya Pradesh High Court in the case of CIT vs., S. Goyanka Lime & Chemicals Ltd., [2015] 231 Taxman 73 [MP] [HC] held that "mecha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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