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TMI Blog2024 (10) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... n which statement of Sri Sharma is recorded is not known to Assessing Officer and also whether it relates to the assessment year in question is also not known. Further, the date of statement of Sri Sharma is neither mentioned in the recorded reasons nor in the show cause notice nor in the Assessment Order. The Counter Affidavit is also silent, hence, on its basis no reasonable belief could be formed that the said statement relates to the assessment year in question in which the income has escaped the assessment. In the absence of date of statement, it is far- fetched to assume that it relates to the assessment year in question as held in ITO Vs. Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] It further transpires from records that the proceedings in the instant case is initiated for verifications and roving enquiry which is clearly impermissible under section 147/148 as held by this Court in the case of PCIT Vs. Maheswari Devi [ 2022 (11) TMI 1117 - JHARKHAND HIGH COURT] - It is also not clear whether the statement of Sri Ajay Kumar Sharma is recorded U/s 132(4) or Section 133A, inasmuch as, a statement recorded U/s 133A has no evidentiary value. Decided in favour of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the prayers for quashing the order disposing objection dated 16.03.2022 and also the penalty order dated 28.09.2022 passed by respondent nos. 3 and 4 under section 271 (1)(c) of the Income Tax Act and also for quashing notice of demand dated 28.09.2022 issued by respondent nos. 3/4 under section 156 of the Income Tax Act. 3. Learned counsel for the petitioner as well as learned counsel for the Respondents have relied upon their respective arguments advanced in the similar matter of the same Assessee i.e., W.P.(T) No.1850 of 2022. As a matter of fact, the issue involved in this case is entirely same and similar, barring few facts and the assessment year and the matter was also heard together but for brevity, separate order is being passed in this case. 4. This Court in the matter of W.P.(T) No.1850 of 2022 has decided the issue. The relevant part of the same is quoted herein below:- 8. Having heard the arguments advanced by respective parties and having perused the documents brought on record and the statements averments made in the respective Counter Affidavits and materials available on record, at the outset it is clarified that the formation of reasonable belief that the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of CIT Vs. S.Khader Khan Son reported in (2015) 14 SCC 491. It is also apparent from record that the recorded reason is silent whether the purported bogus financial transactions represents receipt or payment or investment or share capital or unsecured loan or purchase or sale, hence, no reasonable belief of escapement of assessment of income could have been formed on the basis of such vague material. Further more, the recorded reason is also silent under which provision of the Act the additions are sought to be made i.e. whether Section 68, Section 69A, Section 69B, Section 69C or any other provisions of the Act. It is not the case of the Revenue that the Petitioner has paid any cash to the so-called accommodation entry provider to obtain the accommodation entry to plough back own funds, hence, there is no ground/material to form reasonable belief of any accommodation entry. (Refer PCIT Vs. Meenakshi Overseas P. Ltd. reported in [2017] 395 ITR 677 (Del). 11. In the case of ITO Vs. Lakhmani Mewal Das reported in [1976] 103 ITR 437 (SC), while dealing with an almost similar situation, it is held by the Hon ble Supreme Court that Mohan Singh Kanayalal against whose name there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o believe escapement of income. Accordingly, the appeal filed by the revenue was dismissed. After considering the submissions made on either side and carefully perusing the materials placed before us, we find that the entire matter is factual and the reopening itself was made on wrong presumption of facts. 12. The law is now no more res integra that the recorded reasons for reopening assessment cannot be supplemented as held by this Court in the case of Naveen Kumar Jaiswal Vs. Income Tax Department in W.P.(T) No.675 of 2022 (Ranchi) reported in 2022 SCC Online Jhar 189 (Para 11) followed by another judgment of this Court in the PCIT Vs. Maheswari Devi reported in 2022-VIL-254-Jhar-DT and in the case of Sabh Infrastructure Ltd. Vs. ACIT reported in (2017) 398 ITR 198 (Del.). 13. In the case at hand; the relevant portions of the recorded reasons reads as follows- 2. The reason for reopening of the assessee is as follows- Information has been received in Insight module that during the course of action in the case of Shri Ajay Kuamr Sharma, PAN:CIBPS1382J, it was gathered that shri Sharma is used to provide accommodation entry through his bank accounts to certain beneficiaries This wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recipient of any accommodation entry/bogus financial transaction. The recorded reasons and findings in the impugned Order are also silent about the provisions under which addition are sought to be made as the assessing officer himself is not sure whether financial transactions sought to be added are debit entries or credit entries in the books of the Petitioner. In the case of Lakhmani Mewal Das (supra) it is held by the Hon ble Apex Court that the reasons for formation of belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the income tax officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts ..At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far-fetched, which would warrant the formation of the belief relating to the escapement of the income of the assessee from the assessment The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try provider. Hence, it cannot be presumed to be an accommodation entry. There is no material that the Petitioner has paid cash to the accommodation entry provider to obtain the accommodation entry to tax the same in his hands. The expression accommodation entry and bogus financial transactions used in the recorded reasons are not reasons but conclusions. The expression accommodation entry and bogus financial transaction in the recorded reasons are not reason for formation of reasonable belief but are conclusions. In the case of PCIT Vs. Meenakshi Overseas P. Ltd. reported in [2017] 395 ITR 677 (Del.) under Para 22, the Delhi High Court held that As rightly pointed out by the Income Tax Tribunal, the reason to believe are not in fact reasons but conclusions, one after the other. The expression accommodation entry is used to describe the information set out without explaining the basis for arriving at such a conclusion. The statement that the said entry was given to the assessee on his paying unaccounted cash is another conclusion the basis of which is not disclosed. Who is the accommodation entry giver is not mentioned. How can he be said to be a known entry operator is even more m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus without authority of law. In the case of Dhakeswari Cotton Mills Ltd. Vs. CIT reported in AIR 1955 SC 65, a five-Judge Constitution Bench of the Hon ble Supreme Court has held as under: 8. As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income-tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law, but there the agreement ends; because it is equally clear in making the assessment under sub-section (3) of Section 23 of the Act, the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must he something more than bare suspicion to support the assessment under Section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the SC 70 Lahore High Court in the case of AIR 1944 Lah 353 (2) (FB) (A). (emphasis added) In the impugned Order the assessing authority has simply made additions in the returned income without stating whether it is a case of cash credit, unexplained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocence. In the entire course of the proceeding, at no stage the Petitioner is made aware of the provisions of law which have been contravened and/or under which the additions are sought to be made which is in gross violation of the principles of natural justice and the procedure adopted by the Department is not fair or proper. In the case of New Delhi Television Ltd. Vs. DCIT reported in [2020] 424 ITR 607 (SC), it is held by the Hon ble Apex Court that the Assessee must be put to notice of all the provisions on which the Department relies. 19. In view of the aforesaid discussions and several judicial pronouncements in the facts and circumstances of this case we are having no hesitation in holding that in the instant case the belief formed by the Assessing Officer suffers from lack of bona fides, is vague, far-fetched, irrelevant, based on conjecture and surmises and also arbitrary and irrational. Further, since the very initiation of the proceedings is bad in law and attracts jurisdictional issue which goes to the root of the case; thus we are having no hesitation in holding that the writ is maintainable and the judgments cited by the Revenue has no application in the facts and ci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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