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TMI Blog2023 (12) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order did not deal with the query raised with regard to the accommodation entry and the material furnished, in our opinion, is misconceived, as the aspect concerning accommodation entries was the focus of the assessment order, which is evident upon perusal of the said assessment order itself. AO adverts to the notices issued to the petitioner, to which we had made a reference above, and the material (i.e., two sheets of paper) which were alluded to the accommodation entry received by the petitioner. It is well-established that an AO need not write a detailed order, as long as the assessment record is indicative of the fact that a query was raised and it was answered; if such an exercise has been undertaken, it would not be open to the AO to reopen the same, unless fresh material comes to light which was not available when the matter was examined in the first instance. Thus principle that once a query is raised and answered, the AO would have formed an opinion, notwithstanding the fact that no reasons are recorded in the assessment order. In such circumstances, the reassessment proceedings, if initiated, would be construed as being invalid in law. This principle is fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led its objections dated 26.11.2013, which was received by the respondent/revenue on 13.12.2013. 4.6. Curiously, the AO did not dispose of the objections, and instead, via communication dated 17.12.2013, informed the petitioner that they would be considered at a later date, albeit before reassessment proceedings are completed. 4.7. The AO, thus, instead of disposing of the objections, issued a notice under Section 143(2) of the Act to the petitioner, along with the aforementioned letter. 4.8. This was followed by a notice dated 15.01.2014. This notice was issued under Section 142(1) of the Act. 4.9. Given the fact that the AO had not disposed of the objections, the petitioner filed a letter dated 29.01.2014. 5. Once again, the AO via communication dated 11.02.2014 indicated to the petitioner that the objections would be disposed of before the completion of reassessment proceedings. As was the position earlier, the AO instead enclosed with the said communication a notice under Section 142(1) of the Act. 5.1. The AO continued with this approach and thus issued notices under Section 142(1) of the Act to the petitioner on 24.02.2014 and 08.09.2014. 5.2. The record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 147 of the Act. 6. Significantly, the said assessment order adverts to the notices issued with regard to the enquiry made concerning the accommodation entry, and the two (2) sheets of paper recovered during the search and seizure action which were furnished to the petitioner. 6.1. The respondent/revenue thereafter appears to have passed an order dated 22.11.2016 under Section 127 of the Act. Via this order, the jurisdiction concerning the petitioner was transferred from DCIT Circle-1, Moradabad to ACIT Central Circle-30, New Delhi. 6.2. The attempt was to consolidate the petitioner s case with those concerning a group known as the Kuber Group of Companies. 6.3. The record shows that on 30.03.2018, the respondent/revenue triggered a fresh reassessment proceedings against the petitioner. Consequently, a notice of even date i.e., 30.03.2018 was issued to the petitioner under Section 148 of the Act [hereafter referred to as 2018 notice ]. The trigger for issuance of the 2018 notice apparently was also the purported availment of the accommodation entry received from Mr S.K. Jain. 7. Given this position, the petitioner, this time around as well, filed its objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Priti Mercantile Company Ltd., has received an accommodation entry from Transnational Growth Fund Ltd., of Rs. 50,00,000/- during financial year 2010-11. The said entry has been shown in various paper seized during search and seizure action conducted on the S.K. Jain Group of Delhi. The observation of Ld. DDIT(Inv.), New Delhi are as follows, Company had obtained accommodation entry from various paper companies of S.K. Jain Group in lieu of cash during F.Y. 2010-ll amounting of Rs. 50,00,000/-. These bogus share capital/Premium/loan has clearly escaped taxation . After going through the above said report, I have come to the conclusion that the assessee has intentionally entered into this sham transaction in order to bring its undisclosed income of this F.Y.(2010-ll) of his business in the shape of share capital/premium/loan from the limited company namely Transactional Growth Fund Ltd. Thus, the assessee has not shown correct status of its income for the F.Y. 2010-11. I, therefore, have reason to believe that income of Rs. 50,00,000/- chargeable to tax has escaped assessment Notice u/s 148 of the I.T. Act 1961 is hereby issued to the assessee company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bank accounts of these concerns to various beneficiary parties (apparently in lieu of the cash) that had been regularly received by them over a period of time and regularly entered in the cash books maintained by them in their own hand writing. It is also pertinent to mention that Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain, along with Ms. Priti Jain, Wife of Sh. Surendra Kumar Jain, were directors in few of these companies presently or they were directors in few of these companies at one point of time in the past. Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain have used these companies to undertake various financial transactions to further their activities of providing accommodation entries to various beneficiaries. It is apparently from seized record that Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain had used a large no. of entities for the purpose of accommodation entries. All these entities represent a common 'Hotch Pot' used for the purpose of generation accommodation entries and their financial transaction individually do not reflect the correct business affairs hence, taxable income. As per the list attached with the information, M/s P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e source of the accommodation entry and the amount was also similar, both when the assessment order dated 30.03.2015 was passed and when the 2018 notice was issued. Therefore, according to us, it is a clear case of change of opinion. 14. Mr Maratha s submission that the assessment order dated 30.03.2015 did not deal with the query raised with regard to the accommodation entry and the material furnished, in our opinion, is misconceived, as the aspect concerning accommodation entries was the focus of the assessment order, which is evident upon perusal of the said assessment order itself. For the sake of convenience, the relevant part of the assessment order is extracted hereafter: The assessee had filed the original income tax return on 30.11.2011 in the status of company on dated 30.09.2011 declaring the total income of Rs. 1,52,47,940.00. The return was processed u/s 143(1). The notice U/s 148 of the Income Tax Act was issued dated 17.09.2013. The assessee had filed the letter in response to notice U/S 148 to treat the return filed on 30.09.2013 as filed in response to notice U/s 148 of the Income Tax Act on dated 09.10.2013. The assessee has also requested in this letter f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses will be hit by principle of ―change of opinion. (3) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons. [Emphasis is ours] 18. The observations made in paragraph 13(3) clearly establish the principle that once a query is raised and answered, the AO would have formed an opinion, notwithstanding the fact that no reasons are recorded in the assessment order. In such circumstances, the reassessment proceedings, if initiated, would be construed as being invalid in law. This principle is founded on the rationale that the assessee has no control over the manner in which the AO chooses to frame the assessment order. One needs to reme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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