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TMI Blog2021 (8) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... in the original return of income. As carefully gone through the decisions relied upon by the first appellate authority. We find that in none of the decisions the issue was of multiplicity of the entries in the information received by the Assessing Officer which formed the basis for reopening the assessment. In all the decisions relied upon by the ld. DR, the issue was whether the information received amounts to tangible material evidence for reopening the assessment. Whereas the facts of the case in hand relates to the very information itself which contains 11 entries as mentioned elsewhere, where the total amount of escaped income is mentioned at 2.05 crores which is part of the reasons recorded for reopening the assessment. We are of the considered view that the assumption of jurisdiction by issue of notice u/s 148 of the Act is bad in law which makes the assessment order framed u/s 147 r.w.s 143(3) of the Act void ab initio. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... eneficiaries for purpose of providing accommodation entries. 3. Analysis of information collected/ received: On perusal of report, various findings of investigation wing and document attached with the letter as Annexure A- l. it is seen that the assessee, M/s Lakchmi Chand Tejoo Mai had been provided accommodation entries as follow: S.No Name & Address of the beneficiary Amount (Rs.) Date of Entry Entry provided by 1. Lakchmi Chand Tejoo Mai 20,00,000 23.09.2010 -- Focus Industrial Resource Ltd. 2. Lakchmi Chand Tejoo Mal 20,00,000 14.09.2010 Focus Industrial Resource Ltd. 3. Lakhcmi Chand TejooMal ' 20.00.000 24.09.2010 Focus Industrial Resource Ltd. 4. Lakchmi Chand Tejoo ! Mai 20,00,000 16.09.2010 PawanSut Holdings Ltd. 5. Lakchmi Chand Tejoo Mal 15,00,000 25.09.2010 PawanSut Holdings Ltd. 6. Lakchmi Chand Tejoo Mal 20,00,000 16.09,2010 Focus Industrial Resource Ltd. 7; Lakchmi Chand Tejoo 20,00,000 25.09.2010 Focus Industrial j Resource Ltd. 8. Lakchmi Chand Tejoo Mal 20.00.000 18.09.2010. PawanSut Holdings Ltd. - 9. Lakchmi Chand Tejoo : Mal 15,00,000 08.10.2010 -- PawanSut Holdin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available and the information received in this case shows that the assessee has availed the undue benefits from the accommodation entries. Benefits from these transactions had not been shown in the original return by the assessee. Neither was this income added during the assessment made in this case for A.Y. 2011-12 as the assessee had not disclosed this income neither in his 1TR nor during the assessment proceedings. The material facts are clear and sound in this case. 9. Applicability of the provisions of section 147/ 151 to the facts of the case: In this case return of income was filed for the year under consideration and regular assessment u/s 143(3) was made on 13.03.2014. Since, 4 years from the end of the relevant assessment year has expired in this case, the requirements to initiate proceedings u/s 147 of the Act: are reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year under consideration. It is pertinent to mention here that reasons to believe that income has escaped assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss and when the Assessing Officer found that there were several entries of the same amount, he restricted the addition to actual transaction which shows that the Assessing Officer has applied his mind. The ld. DR relied upon the very same decisions which have been relied upon by the first appellate authority in his appellate order. 11. We have given thoughtful consideration to the orders of the authorities below. The Hon'ble High Court of Delhi was seized with a similar situation in the case of RMG Poly Vynl India Ltd [supra]. The relevant part of the judgment reads as under: "9. However, in neither of the above cases are the facts similar to those in the present case. The two glaring errors in the reasons in the present case are, in fact, unusual. What the AO might have done if he was aware, even at the stage of consideration of reopening of the assessment that a return had in fact been filed by the Assessee and that the extent of the accommodation entries was to the tune of ₹ 78 lakh and not ₹ 1.56 crore would be a matter of pure speculation at this stage. He may or may not have come to the same conclusion. But that is not the point. The question is of applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case too, the information received from the Investigation Wing cannot be said to be tangible material per se without a further inquiry being undertaken by the AO. In the present case the AO deprived himself of that opportunity by proceeding on the erroneous premise that Assessee had not filed a return when in fact it had. 14. To compound matters further the in the assessment order the AO has, instead of adding a sum of ₹ 78 lakh, even going by the reasons for reopening of the assessment, added a sum of ₹ 1.13 crore. On what basis such an addition was made has not been explained. 15. For the aforementioned reasons, the Court is satisfied that no error was committed by the ITAT in holding that reopening of the assessment under Section 147 of the Act was bad in law." 12. The Hon'ble High Court of Delhi, again, in the case of Synfonia Trade Links [supra] considered similar issue and the relevant extract of the judgment read as under: "9. We have heard the learned counsel for the parties and perused the record. Before we proceed further, it would be helpful if we were to set forth certain well-established principles enunciated by the courts over the years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d occur, which can be corrected by a writ court, if reasons to believe are based on grounds that are either arbitrary and/or irrational. (See: Sheo Nath Singh v. Appellate ACIT, Calcutta (1972) 3 SCC 234]. 9.1. Thus, if one were to apply the aforestated principles, it would be clear as daylight that the order recording reasons discloses complete non-application of mind. The reason we say so is discernible from the following: 9.2. Respondent no.1 in paragraphs 2 and 3 of the order recording reasons has unequivocally stated that under the heading "Details of information received regarding escapement of income and analysis" that material impounded during the search conducted at the premises of Mr. Pradeep Kumar Jindal had, inter alia, revealed that he had made investments in the form of share capital, share premium, loans and advance in lieu of cash via front/non-listed companies controlled by dummy directors to the tune of nearly ₹ 100 crores which included the assessee. It is in this context that in the order recording reasons, the following table is set out: S.No. Beneficiaries Name of Entry Provider Date Amount (Rs.) I. Synfonia Pharmaceuticals Name changed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital, issued and subscribed paid-up share capital, share premium and even as regards the year in which the assessee had been incorporated. The facts and figures have already been recorded in paragraphs 2 to 2.9 above. Therefore, the correlation between the underlying material and the information which was available in the balance sheet of the assessee was clearly not made. 9.5. Mr. Singh, in a desperate attempt to salvage the situation, drew our attention to the unsecured loans shown in the income tax returns of the assessee for AYs 2010-2011 and 2011-2012 amounting to ₹ 38,071/- and ₹ 25,57,206/- respectively. Apart from anything else, simple math would show that the cumulative total of these figures is ₹ 25,95,277/- and not ₹ 26,93,500/- which, according to respondent no. 1, is the unexplained credit in the books of accounts of the assessee and, hence, required to be added under Section 68 of the Act. Therefore, for Mr. Singh to say that these are inadvertent errors and hence should be ignored, in our opinion, is an argument that is completely misconceived. As indicated above, if the information received (from the investigation wing) was that the accom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income clearly showed unsecured loans in liability side and therefore, it cannot be said that the assessee has not disclosed true and material facts in the original return of income. 16. We have carefully gone through the decisions relied upon by the first appellate authority. We find that in none of the decisions the issue was of multiplicity of the entries in the information received by the Assessing Officer which formed the basis for reopening the assessment. In all the decisions relied upon by the ld. DR, the issue was whether the information received amounts to tangible material evidence for reopening the assessment. Whereas the facts of the case in hand relates to the very information itself which contains 11 entries as mentioned elsewhere, where the total amount of escaped income is mentioned at ₹ 2.05 crores which is part of the reasons recorded for reopening the assessment. 17. Considering the totality of the facts in light of the decisions of the Hon'ble Jurisdictional High Court discussed elsewhere, we are of the considered view that the assumption of jurisdiction by issue of notice u/s 148 of the Act is bad in law which makes the assessment order d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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