TMI Blog2012 (7) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... d as a material or evidence that prima facie shows or establishes nexus or link which discloses escapement of income. Annexure is not a pointer and does not indicate escapement of income - need not go into the merits of the addition made by the AO as the CIT (A) had deleted the addition on merits and the Tribunal has simply remitted the case back to the AO - in favour of assessee. - ITA No.4777 & 4778/D/2011 - - - Dated:- 29-6-2012 - SHRI J.S. REDDY, AND SHRI CHANDRA MOHAN GARG, JJ. Appellant by : Shri T.R. Talwar Respondent by : Shri Sat Pal Singh, Sr. DR O R D E R PER CHANDRA MOHAN GARG, J.M. These appeals have been preferred by the assessee against the order dated 16.8.2011 of the CIT(A)-XV, New Delhi by which he confirmed the assessment order dated 29.11.2010 pertaining to A.Y. 2001-02 and 2002-03. 2. These appeals have been filed on the grounds which read as under:- On the facts and circumstances of the case, the learned CIT(A) has erred:- 1. in confirming the order of the AO by not following the decision of the Apex Court in the case of Lovely Exports Pvt. Ltd. and of jurisdictional High Court in the case of Value Capital Exports Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irming the order of the AO who had denied the identity, creditworthiness and genuineness of the transaction of the two share applicants ignoring their registration as companies under the Companies Act, their PAN, the fact of their filing of Income Tax Return/assessment, their bank accounts from which the account payee cheques/drafts were issued, their share applications, their confirmations of the transactions. 4. in confirming the order of the AO who had not provided the statement of the concerned persons specifically implicating the appellant as alleged beneficiary of the said bogus/accommodation entries though asked for. 5. in confirming the order of the AO who had not provided an opportunity to the appellant, as requested by to, to cross examine those persons who have specifically implicated the appellant as the alleged beneficiary of the said bogus/accommodation entries. 6. in treating the amount of Rs.44,46,000/- received through payee s accounts cheques/drafts for allotment of shares as unexplained credits under the provisions of section 68 of the IT Act on mere conjectures, suspicion and surmises. 7. in treating the amount of Rs.44,46,000/- as unexplained credits un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the genuineness of the transactions and made additions to the income of the assessee u/s 68 of the Act. The assessee again invoked the ld. CIT(A) who upheld the findings of the Assessing Officer by the impugned orders and empty handed assessee is before this Tribunal with the present appeals. 6. The assessee s representative (for short the AR) submitted the copy of the judgement of Hon ble Jurisdictional High Court of Delhi in assessee s ITA No. 1228/2010, ITA No.1229/2010 and ITA No.1230/2010 with eight other appeals titled as CIT-II vs Kamdhenu Steels and Alloys Ltd. dated 23.12.2011. The relevant paras to the present case are being respectfully reproduced as under:- 65. It is clear from the above that the AO acted mechanically on the information supplied by the Directorate of Income Tax(Investigation) without applying his own mind. He did not even care to see the apparent mistake in the particulars where three entries were repeated twice each. Almost on identical facts, a Division Bench of this Court set aside such a notice under Section 147/148 of the Act in the case Sarthak Securities Co. P. Ltd. Vs. ITO (Delhi), 329 ITR 110. After taking note of various judgments delinea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussion in this behalf needs to be noted: 9. In the present case, we find that the first sentence of the socalled reasons recorded by the Assessing Officer is mere information received from the Deputy Director of Income Tax (Investigation). The second sentence is a direction given by the very same Deputy Director of Income Tax (Investigation) to issue a notice under Section 148 and the third sentence again comprises of a direction given by the Additional Commissioner of Income Tax to initiate proceedings under Section 148 in respect of cases pertaining to the relevant ward. These three sentence are followed by the following sentence, which is the concluding portion of the so-called reasons:- Thus, I have sufficient information in my possession to issue notice u/s 148 in the case of M/s SFIL Stock Broking Ltd. on the basis of reasons recorded as above. 10. From the above, it is clear that the Assessing Officer referred to the information and the two directions as reasons on the basis of which he was proceeding to issue notice under Section 148. We are afraid that these cannot be the reasons for proceeding under Section 147/148 of the said Act. The first part is only an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except Annexure, which has been quoted above. Annexure cannot be regarded as a material or evidence that prima facie shows or establishes nexus or link which discloses escapement of income. Annexure is not a pointer and does not indicate escapement of income. Further, it is apparent that the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. The Assessing Officer accepted the plea on the basis of vague information in a mechanical manner. The Commissioner also acted on the same basis by mechanically giving his approval. The reasons recorded reflect that the Assessing Officer did not independently apply his mind to the information received from the Director of Income-Tax (Investigation) and arrive at a belief whether or not any income had escaped assessment. 16. It may be noted here that a company by the name of Swetu Stone Pvt. Ltd. had applied for and was allotted shares in the petitioner company on payment by cheque of Rs.5 lacs. As noticed above, in the Annexure the name of the company/account holder is mentioned as Swetu Stone PV. The same is also mentioned in the undated reasons mentioned above. 17. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the ratio of the decision dated 7th January, 2011 in Writ Petition (Civil) No. 7517/2010, AGR Investment Limited versus Additional Commissioner of Income Tax and Another should be applied. In the said decision, decisions in the case of Sarthak Securities Company Private Limited (supra) and SFIL Stock Broking Limited (supra) was distinguished by giving the following reasons: 22. .In SFIL Stock Broking Ltd. (supra), the bench has interfered as it was not discernible whether the assessing officer had applied his mind to the information and independently arrived at a belief on the basis of material which he had before him that the income had escaped assessment. In our considered opinion, the decision rendered therein is not applicable to the factual matrix in the case at hand. In the case of Sarthak Securities Co. Pvt. Ltd. (supra), the Division Bench had noted that certain companies were used as conduits but the Assessee had, at the stage of original assessment, furnished the names of the companies with which it had entered into transaction and the assessing officer was made aware of the situation and further the reason recorded does not indicate application of mind. That a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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