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TMI Blog2016 (3) TMI 1417X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 82,14,000/- made u/s. 68 of the Income Tax Act, 1961 especially when the identity and credit worthiness of the subscribers to the share application money and genuineness of transaction, were not established satisfactorily. 2. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 2,05,350/- made on account of commission paid for obtaining accommodation entries in guise of share application money." 2. The grounds raised by the Assessee in the Cross Objection reads as under:- "1. That having regard to the facts and circumstances of the case Ld. CIT(A) has erred in law and on facts in confirming the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y received on account of share application is treated as undisclosed income amounting to Rs. 82,14,000/- and also added the commission paid to the entry operators amounting to Rs. 2,05,350/- to the income of the assessee by completing the assessment at Rs. 84,19,350/- u/s. 143(3)/147 of the Act vide order dated 18.12.2007. 4. Against the Order of the Ld. AO, assessee appealed before the Ld. CIT(A), challenging the validity of reassessment as well as the additions in dispute who vide impugned order dated 12.11.2009 has partly allowed the appeal of the Assessee and deleted the addition in dispute. 5. Aggrieved with the aforesaid order of the Ld. CIT(A), Revenue is in Appeal before the Tribunal against the deletion of additions and Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and stated that Ld. CIT(A) has rightly upheld the action of the AO of reopening. 9. We have heard both the parties and perused the relevant records available with us, especially the orders of the revenue authorities and the case law cited by the assessee's counsel on the issue in dispute. In our view, it is very much necessary to reproduce the reasons recorded by the AO before issue of notice u/s. 148 and the approval of the Ld. Addl. CIT, Range-17, New Delhi for reopening of assessment which reads as under:- "REASONS An information has been received vide exhaustive report of the Investigation Wing dated 2.3.2006, that the assessee company has received accommodation entry of Rs. 2,55,000/- dated 24.6.1999, through Federal Bank, Karol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. Our view is supported by the following judgment/decision:- Pr. CIT vs. G&G Pharma India Ltd. in ITA No. 545/2015 dated 8.10.2015 of the Delhi High Court wherein the Hon'ble Court has adjudicated the issue as under:- "12. In the present case, after setting out four entries, stated to have been received by the Assessee on a single date i.e. 10th February 2003, from four entities which were termed as accommodation entries, which information was given to him by the Directorate of Investigation, the AO stated: "I have also perused various materials and report from Investigation Wing and on that basis it is evident that the assessee company has i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity . 14. In the circumstances, the conclusion reached by the ITAT cannot be said to be erroneous. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner had introduced money amounting to Rs. 5 lakhs during F.Y. 2002-03 as stated in the annexure. According to the information, the amount received from a company, S, was nothing but an accommodation entry and the assessee was the beneficiary. The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. (iv) Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the infor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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