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TMI Blog2016 (7) TMI 1621X X X X Extracts X X X X X X X X Extracts X X X X ..... n S.K. Gupta Group cases on 20.11.2007 and the coordinate Bench came to the conclusion that the AO has not applied his mind on the information received form ACIT as required u/s 147 of the Act and as such, assessment framed u/s 147 read with section 143(3) is not sustainable - Decided in favour of assessee. - ITA No.2912/Del./2013 - - - Dated:- 14-7-2016 - SHRI N.K. SAINI, ACCOUNTANT MEMBER And SHRI KULDIP SINGH, JUDICIAL MEMBER For the Appellant : Shri Deepak Ostwal, CA and Shri Rishabh Ostwal, Advocate For the Respondent : Shri Shravan Gotru, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, M/s. Lavitra Technologies Pvt. Ltd. (hereinafter referred to as the assessee ), by filing the present appeal sought to set aside the impugned order dated 14.03.2013 passed by the Commissioner of Income-tax (Appeals)-XVIII, New Delhi qua the assessment year 2004-05 on the grounds inter alia that :- 1. On the facts and in the circumstances of the case, the CIT (A)-XVIII, New Delhi has erred both on facts and in law, in upholding the illegal order passed by the Respondent without jurisdiction, violative of natural justice, without application of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder in terms of law therefore impugned order passed ought to have been set aside by Ld. CIT (A) and failure to do so have vitiated the impugned order. 8. Ld. CIT (A) erred in making the illegal additions of ₹ 30,00,000/- in place of deleting the additions of ₹ 22,00,000/- made by Respondent without any basis and legs u/s. 68 by treating the sale proceed of stock/shares as unexplained income ignoring the records and documents already filed before the ITO which were properly verified and accepted by him. Hence the order may be vacated and demand may be deleted. 9. The authorities below have erred in not following the binding decisions of Courts and Tribunals relied upon by the appellant for the fact that nothing was added out of reasons recorded and impugned orders cannot, therefore, be sustained both on facts and in law. 10. Ld. CIT (A) has also erred in upholding the illegal additions and disallowances and consequent demands of Income Tax, Interest and penalties illegally raised by the Respondent and hence the impugned order sustaining the additions and demand would require be setting aside and quashing to that extent. 11. The appellant craves leave to rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the parties with whom the assessee had transactions operate through paper companies and have no real identity. So, the amount of ₹ 22,00,000/- received by the assessee from the entry operators is treated as assessee s income from undisclosed sources and consequently, AO made an addition of ₹ 22,00,000/- to the total income of the assessee. 4. Assessee carried the matter before the ld. CIT (A) who has dismissed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 6. Undisputedly, the AO received information from the Investigation Wing, New Delhi that the assessee had received bogus accommodation entries to the following effect :- i. M/s. RSG Marketing P. Ltd. ₹ 10,00,000 ii. M/s. Maple Sales Pvt.Ltd. ₹ 5,00,000 iii. M/s. Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Now, the sole question arises for determination in this case is:- as to whether the AO can initiate proceedings u/s 147/148 of the Act on the basis of certain communication received from his superior revenue authorities, namely, Addl. Director of Income-tax (Inv.), Unit-1, New Delhi showing that the assessee has been provided with accommodation entry to the tune of ₹ 75,00,000/- (actual amount if ₹ 22,00,000/-), a shell company/concern floated by Deepak Gupta?. 11. Identical issue has come up before the Hon ble Supreme Court in judgment cited as Chhugamal Rajpal vs. S.P. Chaliha (1971) 79 ITR 603, wherein it is held as under :- The Supreme Court was dealing with a case where the AO had received certain communications from the Commissioner of Income Tax showing that the alleged creditors of the Assessee were name-lenders and the transactions are bogus. The AO came to the conclusion that there were reasons to believe that income of the Assessee had escaped assessment. The Supreme Court disagreed and observed that the AO had not even come to a prima facie conclusion that the transactions to which he referred were not genuine transactions. He appeared to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries . In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. 13. Furthermore, similar issue has cropped up before the ITAT, Delhi Bench H in M/s. USG Buildwell Pvt. Ltd. (supra), wherein addition of ₹ 20,00,000/- was made by the AO on the basis of similar intimation sent by ACIT, Central Circle 19, New Delhi on the basis of survey operation conducted in S.K. Gupta Group cases on 20.11.2007 and the coordinate Bench came to the conclusion that the AO has not applied his mind on the informa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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