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TMI Blog2023 (11) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... O has not examined this vital aspect while forming belief that there was escapement of income, which also goes to show that there was complete non-application of mind on the part of the assessing officer. It also shows that the assessing officer has failed to demonstrate link between the material and formation of reasons to believe that income has escaped assessment. We hold that the re-opening of assessment is bad in law. Decided in favour of assessee. - Shri B.R. Baskaran (AM) Shri Pavan Kumar Gadale (JM) For the Assessee : Shri Neelkanth Khandelwal Shri Aakash Kumar For the Department : Ms. N.V. Nadkarni Shri Ujjawal Kumar Chavan ORDER Per B.R.Baskaran (AM) :- The assessee has filed this appeal challenging the order dated 8.3.2019 passed by the learned CIT(A)-24, Mumbai and it relates to A.Y. 2011-12. The assessee is aggrieved by the decision of the learned CIT(A) in confirming the validity of reopening of the assessment and also in confirming the assessment of Rs. 66.25 crores being share capital including share premium received by the assessee, as unexplained income under section 68 of the I.T. Act. 2. The facts relating to the case are stated in brief. The assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. The Learned AR invited our attention to the reasons recorded by the Assessing Officer, which reads as under :- The above mentioned assessee has filed the return of income for A.Y. 2011-12 23.01.2012 declaring loss at Rs. 39,901/-. The return was processed u/s 143(1) on 13.02.2012. In this case, an information has been received from DDIT(Inv.)-II, Jodhpur, Rajasthan that a search Seizure Action u/s. 132 of the LT. Act, 1961 was carried out in the case of M/s. Varash Infra Group of Jodhpur on 21.01.2015. The main allegation against the company was that, it has rotated its unaccounted money in the form of Share Premium to various paper companies based at Kolkata, Mumbai, Indore Jodhpur. Main Bogus Entry Provider in this case was Jagdish Prasad Purohit and its associates namely Eknath Mandavkar, Raj Kumar Kanodia, and family members Sushil Kumar Purohit, Anil Kumar Purohit and Kailash Prasad Purohit based at Kolkata and Mumbai. Its associates were working as dummy directors managed by Jagdish Prasad Purohit. Mr. Jagdish Prasad Purohit accepted that he was a entry provider engaged in providing accommodation entries to willing companies in the form of share capital, share premium, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action reached by the Assessing Officer is borrowed satisfaction and not its own satisfaction. Further, there was no proper and independent application of mind by the Assessing Officer on this escapement and hence the reopening of assessment is bad in law. 7. The Learned AR also invited our attention to the copy of the approval given by JCIT-15, Mumbai dated 21.3.2016, which is placed at page No. 507 of the paper book filed by the assessee. He invited our attention to the same, more particularly the point No. 7 of the Approval Form, which reads as under:- whether assessment is proposed to be made for the first time. If the reply is in the affirmative, please state the reasons. The answer field is yes . He submitted that this is not the case of first assessment, but it was a case of reassessment as noticed earlier, i.e., regular assessment had been completed earlier by the Assessing Officer under section 143(3) of the Act prior to reopening of the assessment. Accordingly, he submitted that the answer given to Point No.7 mentioned above is also wrong, which also confirms non-application of mind by the AO. He submitted that the Ld JCIT has also not verified this fact and accordingly c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons recorded. (b) In the application submitted to JCIT for seeking his approval also, the AO states that the proposed assessment is first assessment. (c) The AO is referring to Share premium amount only in the reasons for reopening of assessment, i.e., he did not mention about share capital amount. (d) The allegation of DDIT is that the assessee is one of the beneficiaries of accommodation entries provided by Shri Jagdish Prasad Purohit through his group companies numbering 246. The list of 246 companies is given along with the statement taken from him. It is peculiar that the assessee s name finds place at serial no.16 as one of the companies controlled by Shri Jagdish Prasad Purohit. (e) It is the contention of Ld A.R that the assessee has not received share capital/share premium from any of the 246 companies. All the above said defects, in our view, are major defects and they support the case of the assessee that there was no application of mind by the AO on the information supplied by the DDIT. 12. Under section 147 of the Act, it is mandatory that the assessing officer should have reason to believe that any income chargeable to tax has escaped assessment. In the instant case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income. There is no independent application of mind by the AO. Various defects in the reasons recorded by the AO, which were pointed out by Ld A.R, also go to suggest that there was no independent application of mine by the AO. Further, the AO has not shown as to how the share capital/premium would constitute income that has escaped assessment. Further, the assessee herein is mentioned as a company controlled by Shri Jagdish Prasad Purohit in the list attached with the sworn statement taken from the above said person, while the allegation of the DDIT is that the assessee herein is one of the beneficiaries of Shri Jagdish Prasad Purohit. Admittedly, both these information contradicts with each other. We notice that the AO has not examined this vital aspect while forming belief that there was escapement of income, which also goes to show that there was complete non-application of mind on the part of the assessing officer. It also shows that the assessing officer has failed to demonstrate link between the material and formation of reasons to believe that income has escaped assessment. 16. In view of the foregoing discussions, we hold that the re-opening of assessment is bad in law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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