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TMI Blog2021 (5) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri S.K. Jain group of cases in which the assessee has also found to have received accommodation entry from M/s Nisha Holding Limited Rs. 9 lakhs, M/s Brite Indu Resources Ltd. Rs. 9 lakhs and M/s Finage Leasing & Finance India Ltd. Rs. 7 lakhs, totaling to Rs. 25 lakhs. The AO initiated the reassessment proceedings and after considering the explanation of the assessee made addition of Rs. 25 lakhs u/s 68 of the Act and further made addition of Rs. 45,000/- on account of unexplained investment. The Ld. CIT(A) dismissed the appeal of assessee. 4. Ld. Counsel for assessee referred to copy of the reasons recorded for reopening of the assessment which is filed at page 1 & 2 of the Paper Book and reads as under: Annexure - "A" Reasons for the belief that income has escaped assessment in the case of M/s Neel Builders Pvt. Ltd. AY 2008-09 (PAN AABCN9572C) A search and seizure action u/s 132/133A of the Income Tax Act, 1961 was conducted at the residential and business premises of Shri Surender Kumar Jain group of cases (Entry operator). During the course of post search investigation and preparation of appraisal report it has been evidently established that Shri Surender Kumar Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase return of income was filed on 08/07/2008 declaring income of Rs. 5,340/-. Further, it is noticed that the assessee company M/s Neel Builders Pvt. Ltd. has received accommodation entries to the tune of Rs. 25,00,000/- during the FY 2007-08 relevant to AY 2008-09 from the entry operators as mention in the chart above. After perusal and careful consideration about the information provided by the Investigation Wing of the department, I have reason to believe that Income of the assessee company to the extent of Rs. 25,00,000/- has escaped assessment for the AY 2008-09, therefore, proceedings u/s 147 i.e. clause (b) of explanation 2 of provisions of section 147 of the IT Act, 1961 is proposed to be initiated for the AY 2008-09. As per the record, no scrutiny u/s 143(3) has been done in the case for AY 2008-09. Kind approval for issuing notice u/s 147 of the I.T. Act, 1961 is solicited." Sd/- (Virendra Singh) Income-tax Officer Ward 18(1), New Delhi. 5. He has submitted that the same AO Sh. Virender Singh, ITO, Ward-18(1), New Delhi recorded the similar reasons for reopening of the assessment in the case of M/s Neelkanth Plywood Pvt. Ltd. for same AY 2008-09 in respect of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Ltd. asking for documents regarding its transaction with the assessee. It was replied by the said company that it has given an amount of Rs. 5,50,000/- through cheque No. 000111 dated 24.12.2007 drawn on Kotak Mahindra Bank. The Assessing Officer asked the assessee to produce the Director of above said company. He also asked the assessee to substantiate the identity and creditworthiness of the Investor Company and genuineness of the transaction. However, the assessee failed to produce the director of the investor company. Rejecting the various explanation given by the assessee and relying on various decisions the Assessing Officer made addition of Rs. 5,50,000/- to the total income of the assessee u/s. 68 of the IT Act. On the ground that the assessee could not substantiate the ingredients of the said section. 3. Before CIT(A) the assessee apart from challenging the addition on merit challenged the validity of reassessment proceedings. However, the Ld. CIT(A) was not satisfied with the arguments advanced by the assessee and upheld the validity of reassessment proceedings and also sustained the addition made by the Assessing Officer u/s. 68 of the IT Act. 4. Aggrieved with su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT of Hon'ble Delhi High Court 2. Meenakshi Overseas Vs. PCIT ITA No.692/2016 3. Signature Hotels (P) ltd. Vs. ITO of Hon'ble Delhi High Court reported in 338 ITR 51 4. CIT Vs. Insecticides India Ltd. of Hon'ble Delhi High Court reported in 357 ITR 330 5. CIT Vs. G&G Pharma India Ltd. of Hon'ble Delhi High Court ITA No. 545/2015 6. So far as the merit of the case is concerned he submitted that to prove the identity and credit worthiness of the investor company and genuineness of the transaction the assessee company had filed the copy of confirmation, copy of share application form, bank statements, balancesheet, income tax return, auditor report, board resolutions, directors report and return of allotment of shares before the Assessing Officer. Further the company M/s. Finage Lease & Finance P. Ltd is having net worth of Rs. 14.57 crores. He submitted that the investor company has complied with the notice issued u/s. 133 (6) by the Assessing Officer. 7. So far as the production of the director is concerned he submitted that assessee had requested the Assessing Officer to call them by issuing notice u/s. 131 which was not done by the Assessing Officer. He submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered the rival arguments made by both the sides, perused the orders of the authorities below and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. A perusal of the reasons for reopening of the case for the impugned assessment year, copy of which is placed at paper book page No. 20-21 shows that the reopening was made on the basis of the report of the investigation wing and there is no independent application of mind by the Assessing Officer for such reopening. The Hon'ble Delhi High Court in a number of cases has held that the reopening on the basis of report of investigation wing without independent application of mind by the Assessing Officer is not valid. Accordingly the reassessment proceedings which were based on the report of the investigation wing and without independent application of mind by the Assessing Officer have been held to be illegal. Since the Assessing Officer in the instant case has reopened the assessment on the basis of report of the investigation wing and there appears to be no independent application of mind by the Assessing officer for reopening of the case, therefore, the reassessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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