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TMI Blog2022 (10) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessment orders and other details or document which would have enabled the Assessing Officer to apply his mind and form a belief that income has escaped assessment. In fact this information was not with the Assessing Officer till fag end of the reassessment proceedings, a fact admitted by the Assessing Officer himself in the assessment order. In the case of Sarthak Securities Pvt. Ltd. [ 2010 (10) TMI 92 - DELHI HIGH COURT] the Hon ble jurisdictional High Court has held that under the circumstances narrated hereinabove the reopening cannot be said to be a valid reopening. Thus reopening of the assessment is without application of mind and examination of the facts and accordingly the reopening is held to be invalid and accordingly the same is quashed - Decided in favour of assessee. - ITA No. 639/DEL/2017 - - - Dated:- 17-10-2022 - Shri N.K. Billaiya, Accountant Member For the Assessee : Shri Rohit Jain, Adv, Shri Deepesh Jain, Adv For the Department : Shri Om Prakash, Sr. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER :- This appeal by the assessee is preferred against the order of the ld. CIT(A) -20, New Delhi dated 09.12.2016 pertaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions relied upon duly considered. 8. I find that in the first round of litigation, this Tribunal had remanded the matter back to the file of the ld. CIT(A) with a direction to decide the issue on merits. Thereafter, this Tribunal, vide order dated 24.05.2019, recalled its earlier order dated 17.07.2017 holding that the issue shall be decided on merits by this Tribunal. 9. Reasons for reopening the assessment have been extracted by the Assessing Officer in the assessment order itself and for the sake of convenience the same is also extracted hereunder: Subsequently a letter bearing F. No. Add!. CIT(HQ.)/(Coord.) /Accommodation entry/2012- 13/15016 dated 26.03.2012 was received from the office of the Chief Commissioner of I. Tax, Delhi-1, New Delhi therein forwarding letter bearing F. No. CIT(C)- ll/2012-13/3898 dated 19.03.2013 received from the Commission of Income Tax, Central-ll, New Delhi along with a CD containing the details of accommodation entries provided by Sh. Rakesh Gupta Sh. Vishesh Gupta and Sh. Navneet Jain 8t Sh. Vaibhav jain and directing This office to take necessary action as per section 148 in respect of entries pertaining to A. Y. 2007-08, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- 3. Vishu Trading Co M/s Raj Metal Company Rs. 4,40,043/- Total Rs. 21,00,498/- Since Sh. Rakesh Gupta Vishesh Gupta and Sh. Navneet Jain Sh. Vaibhav Jain during the course of assessment proceedings u/s 153A of I.Tax Act have admitted that they have given accommodation entries to the parties whose lists have been provided by them to the ACIT, Central Circle-10, New Delhi, therefore, it is fair to conclude that Naveen Jain Metal Udyog, whose name is appearing in the said list, has taken accommodation entries from Sh. Rakesh Gupta SVishesh Gupta and Sh. Navneet Jain Sh. Vaibhav Jain pertaining to A. Y. 2007 08. In view of the above, the case for the above mentioned assessee for the A.Y. 2007-08 was reopened u/s 148 of the Income Tax Act after obtaining necessary approval from the JCIT, Range-39, and New Delhi and after framing the reasons for reopening the case. Accordingly notice u/s 148, dated 14.03.2014 was issued and served on the assessee. 10. A bare perusal of the aforementioned reasons clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve reasons it is evident that this assessment has been reopened on the basis of the letter received from Ld. CIT, Central 2, New Delhi with the direction to take necessary action as per section 148 of the Act. As per this, accommodation entries were obtained by various persons from Sh. Rakesh Gupta and Sh. Vishesh Gupta as well as Sh. Navneet Jain and Sh. Vaibhav Jain. Copy of this list was forwarded in a CD to the Assessing Officer. Thus this list contained the name of the assessee. The Assessing Officer reopened the assessment on the basis of this information. The basis given by the Assessing Officer in the reasons is that these persons have admitted that they have given accommodation entries to the parties whose lists have been provided by them. From the above facts it is apparent that the Assessing Officer at that point of time when he recorded the reasons was not having the copy of the statement or any other material in which these people have alleged to have provided accommodation entries to the assessee. This position gets also corroborated from the facts stated by the Assessing Officer himself in the reassessment order in para 3 page 5 which read as under: - Here it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no mention about the nature of the transactions. As per provision of section 147 an assessment can be reopened if the Assessing Officer has reasons to believe that any income chargeable to tax has escaped assessment. The reasons to believe has to be that of the Assessing Officer and further there have to be application of mind by the Assessing Officer though the reasons to believe does not mean that the Assessing Officer should have finally ascertained the fact that income has escaped assessment but at the same time, it also means that the Assessing Officer is required to examine the facts on the basis of the information and satisfy himself that the taxable income has escaped assessment. In the present case on going through the reasons it is quite evident that the Assessing Officer was also not aware of the nature of the accommodation entries. In the reasons recorded he has simply mentioned the name of the party and the amount and nowhere has stated the nature of such entry. This also shows that the Assessing Officer has made no effort to look into the return of the assessee which was available with him. This fact gets further supported from the sheet appended to the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2009) 329 ITR 110 the Hon ble jurisdictional High Court has held that under the circumstances narrated hereinabove the reopening cannot be said to be a valid reopening. The Hon ble Court has held as under In the case at hand, as is evincible, the AO was aware of the existence of four companies with whom the assessee had entered into transaction. Both the orders clearly exposit that the AO was made aware of the situation by the Investigation Wing and there is no mention that these companies are fictitious companies. Neither the reasons in the initial notice nor the communication providing reasons remotely indicate independent application of mind. True it is, at that stage, it is not necessary to have the established fact of escapement of income but what is necessary is that there is relevant material on which a reasonable person could have formed the requisite belief. To 'Waborate, the conclusive proof is not germane at this stage but the formation of belief must be on the base or foundation or platform of prudence which a reasonable person is required to apply. As is manifest from the perusal of the supply of reasons and the order of rejection of objections, the names of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Director of IT (Inv.) and arrive at a belief whether or not any income had escaped assessment. Company SS Ltd. had applied for and was allotted shares in the petitioner company on payment by cheque of Rs. 5 lacs. SS Ltd. is an incorporated company and the petitioner has pleaded and stated that the said company has a paid-up capital of Rs. 90 lacs. The company was incorporated on 4th Jan., 1989 and was also allotted PAN in September, 2001. The facts indicated above do not show that SS Ltd. is a non-existing and a fictitious entity/person. For the reasons stated above, writ of certiorari is issued quashing the proceedings under s. 148 12. In the case of CIT vs. SFIL Stockbroking Co. (2010) 325 ITR 285 (Del) also the Hon ble High Court has quashed the reopening proceedings on the ground that from the reasons it is not discernible as to whether the Assessing Officer has applied his mind to the information and independently arrived at a belief that income has escaped assessment. The Hon ble Court has held as under:- The first sentence of the so-called reasons recorded by the AO is mere information received from the Dy. Director of IT (Inv.). The second sentence is a direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 2006-07 A letter bearing F.No. AddI.CIT/(Hq)/(Coord.)/ Accommodation entry/2012- 13/15016 dated 26-03-2013 was received from the Office of the Chief Commissioner of I. Tax, Delhi-I, New Delhi therein forwarding letter bearing F. No. CIT(C)-1I/2012- 13/3898 dated 19.03.2013 received from the Commissioner of I. Tax, Central-II, New Delhi along with a CD containing the details of accommodation entries provided by Sh. Rakesh Gupta Sh. Vishesh Gupta and Sh. Navneet Jain Vaibhav Jain and directing this office to take necessary action as per section 148 in respect of entries pertaining to A.Y. 2006- 07, which is time barring on 31.03.2013. The information provided by the CIT, Central-II, New Delhi vide his letter dated 19.03.2013 reads as under :- Kindly find enclosed herewith letter dated 13.03.2013 of ACIT, Central Circle-10 duly forwarded by the Addl. CIT, Central Range-IV, along with its enclosures on the subject mentioned above. 2. The assessment of search cases of Sh. Rakesh gupta, Sh. Vishesh Gupta, Sh. Navneet Jain Sh. Vaibhav Jain are under process with the ACIT, Central Circle-10. During the assessment proceedings u/s 153A in the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommodation entries to the parties whose lists have been provided by them to the ACIT, Central Circle-10, New Delhi, therefore, it is fair to conclude that M/s Radhay Shyam Co., whose name is appearing in the said list, has taken accommodation entries from Sh. Rakesh Gupta Sh. Vishesh Gupta and Sh. Navneet Jain Sh. Vaibhav Jain pertaining to AY. 2006-07. In view of the above, I have reasons to believe that income chargeable to tax of M/s Radhay Shyam Co. amounting to Rs. 4,73,855/- for the F.Y. 2005-06 relevant to AY. 2006-07 has escaped assessment and it is a fit case for initiation of proceedings u/s 147 of the Act. Proposal in the prescribed form for the AY. 2006-07 (F. Y. 2005- 06) is submitted herewith for kind consideration and necessary approval u/s 151(2) of the I. Tax Act, 1961 as the same is getting barred by limitation on 31/3/2013. If approved, notice u/s 148 of the act may be issued. Sd/- 28.3.20 (Pawan Kumar Vashist) Income Tax Officer Ward-39(3),New Delhi. 6. Since in the case of Unique Metal Industries (supra), similar reasons were recorded, as have been recorded in the case of the assessee and the party from which the assessee made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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