9911796707
TMI Blog2012 (7) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... e which had been routed through the share applicants, as directed by the ITAT. 3. in confirming 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.75,20,276/- (and not Rs.60,89,500/29,38,448) received through payee's accounts cheques/drafts for allotment of shares as unexplained credits under the provisions of section 68 of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uspicion and surmises." As the main controversies in both appeals are related to the same issues, for the sake of proper adjudication and convenience, we are deciding both the appeals by this common order. 3. Brief facts of the case are that the assessee filed returns showing loss of Rs.4,44,629 in AY 2001-02 and loss of Rs.2,01,333 in AY 2002-03 and the same were processed and finalized at the loss as returned by the assessee. The Directorate of Income Tax (Inv.), New Delhi, informed the AO that the assessee was provided accommodation entries by M/s Suma Finance & Investment Ltd. and M/s Ankur Marketing Ltd. On the basis of above information, the AO re-opened the assessment proceedings u/s 147 of the Act and issued a notice u/s 148 of the Act to the assessee and after due hearing of the cases, the AO assessed the income of assessee in the AY 2001-02 at Rs.70,49,448 and in the AY 2002-03 at Rs.42,55,782 by adding amounts of Rs.75,20,276 and Rs.44,46,000 pertaining to said accommodation entries u/s 68 of the Act through assessments orders dated 31.3.2001 and 31.3.2002. 4. The assessee preferred appeals before the CIT(A) and he decided the issue in favour of the assessee re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law. In the case at hand, as is evincible, the assessing officer was aware of the existence of four companies with whom the assessee had entered into transaction. Both the orders clearly exposit that the assessing officer 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 elaborate, 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 the companies were available with the authority. Their existence is not disputed. What is mentioned is that these companies were used as conduits. In that view of the matter, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the information and independently arrived at a belief that, on the basis of the material which he had before him, income had escaped assessment. Consequently, we find that the Tribunal has arrived at the correct conclusion on facts. The law is well settled. There is no substantial question of law which arises for our consideration. The appeal is dismissed." 67. In view of that, we need not go into the merits of the addition made by the AO. As pointed out above, the CIT (A) had deleted the addition on merits and the Tribunal has simply remitted the case back to the AO. 68. There is another recent judgment dated 21.7.2011 of this Court in Signature Hotels (P) Ltd. Vs. Income Tax Officer- Ward 8(4) & Anr. [W.P.(C)No.8067/2010]. That was also a case where the notice was issued on the basis of information received from Directorate, Income Tax (Investigation). The Court first set out the approach that is to be adopted in such cases, by mentioning as under in para 12: "12. In these circumstances, we are examining the reasons given by the Assessing Officer in the proforma seeking permission/approval of the Commissioner and whether the same satisfy the pre-conditions mentioned in Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded by the Director of Income-Tax (Investigation) and on the basis of the statements they have come to the conclusion that the said persons were entry operators. Copy of the statements of Mahesh Garg and Shubhash Gupta have not been placed on record by the respondent. The petitioner, has, however, enclosed copy of statements of Mahesh Garg and Shubhash Gupta recorded on different dates. The said persons have not specifically named the petitioner though other parties have been named and details have been given and it is stated that they were provided accommodation entries. However, it is stated that the entries were made by giving cheque/DD/PO after receiving cash and sometimes expenses entries were provided. The reasons recorded by the Assessing Officer do not make reference to any statement of Mahesh Garg or Shubhash Gupta. This may not also be necessary, if the statements were on record and it is claimed and prima facie established that they were examined by the Assessing Officer before or at the time of recording reasons. On the other hand, in the present case, information as enclosed as Annexure, has been referred. This is the only material relied upon by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fered. Thus, the said decision is also distinguishable on the factual score." 18. The facts indicated above do not show that M/s Swetu Stone Pvt. Ltd. is a non-existing and a fictitious entity/person. Decision in AGR Investment Limited (supra), therefore, does not help the case of the respondent. 19. For the reasons stated above, the present writ petition is allowed and writ of certiorari is issued quashing the proceedings under Section 148 of the Act. In the facts of the case, there will be no order as to costs." 70. In respect of Assessment year 2002-03 also additions were made under Section 68 read with Section 69C of the Act after reopening assessment under Section 147/148of the Act. For the aforesaid reasons, even notice for this year also stands quashed. The question No.(1) is accordingly answered in favour of the assessee and for this reason, we are not going into the second question". 7. The ratio of above judgment is that the Hon'ble High Court quashed the initiation of proceedings u/s 147 and 148 of the Act. Accordingly, all proceedings subsequent to this initiation of reopening of assessment u/s 147 of the Act and notice u/s 148 of the Act to the assessee have become ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
