TMI Blog2014 (11) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... come has escaped assessment. In the main part of reason to believe, there is no mentioning of nature of transaction to establish and fortify the fact that the transactions were in the nature of accommodation entries - there is no mentioning of date and it can safely be presumed that the AO had not examined the assessment record of the assessee which was processed u/s 143(1)(a) of the Act on 15.3.2005 for forming a belief that the income of the assessee had escaped assessment - CIT(A) rightly was of the view that there was no material on record to show that the AO had applied her independent mind in forming a belief which may result in the required reason to believe as per provisions of section 147 and 148 of the Act - the CIT(A) was right in following the ratio of the decision CIT vs Sun Engineering Works Pvt. Ltd. [1992 (9) TMI 1 - SUPREME Court] - the CIT(A) was justified and reasonable in quashing the notice u/s 148 of the Act and entire reassessment proceedings – Decided against revenue. - I.T.A. No. 2068/Del/2010 - - - Dated:- 31-10-2014 - Shri G. D. Agrawal And Shri Chandra Mohan Garg,JJ. For the Appellant : Smt. Parwinder Kaur, Sr. DR For the Respondent : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was right on facts and in law in quashing the assessment and not adjudicated upon the merits of the additions ? 7. That the appellant craves for the permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal. 3. Briefly stated, the facts giving rise to this appeal are that the assessee is deriving income from the business of Trading of Iron Steel and manufacturing of crane parts under the name and style of proprietary concern, M/s Dinesh Steels. The assessee furnished his return of income on 30.10.2004 declaring a loss of ₹ 3,06,245/- which was duly processed u/s 143(1)(a) as such on 15.03.2005. Later on, on account of information received from Additional Commissioner of Income Tax, Range-II, Faridabad that the assessee was beneficiary of obtaining accommodation entries to the tune of ₹ 4.51 lakhs, the proceedings u/s 147 were initiated by recording the reasons u/s 148(2) to tax the said escaped income of ₹ 4,51,000/-. After considering and analysing the submissions of the assessee regarding compliance to the show cause notices, the AO completed the reassessment proceedings u/s 143(3) r/w section 147 of the Act t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to reassess the income of the assessee accordingly. Ld. DR placed his reliance on the following decisions to support the case of the revenue:- i) Decision of Hon ble Supreme Court in the case of ACIT vs Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 291 ITR 500 ii) Decision of Hon ble Supreme Court in the case of Raymond Woollen Mills Ltd. Vs ITO (1999) 236 ITR 34(SC) iii) Decision of Hon ble Jurisdictional High Court in the case of AGIR Investment Ltd. Vs ACIT (2011) 333 ITR 146 (Delhi) iv) Decision of ITAT Delhi Bench in the case of Ambika Steels Ltd. Vs DCIT (2008) 305 ITR (AT) 49 (Del) 8. Replying to the above, ld. Counsel of the assessee has drawn our attention towards reasons recorded available on page no. 17 and 18 of the Paper Book and submitted that the AO mechanically proceeded to assume jurisdiction u/s 147 of the Act and to issue notice u/s 148 of the Act. Ld. Counsel pointed out that there is no mentioning of the date on which the AO recorded reasons for issuance of notice u/s 148 of the Act and the AO simply proceeded on information of the Investigation Wing without analysing and applying his mind towards the nature of transaction to establish that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instant case, the action of the AO in making the total addition of ₹ 1,01,86,341/- to the returned loss is not in conformity with the correct adherence to the provisions of section 147 to 151 of the Income Tax Act, 1961. As sufficiently brought out by the Ld. AR above, and as the AO's order abundantly manifests, the AO has merely proceeded on the basis of information contained in a CD alleging the receipt of amount of ₹ 4,51,000/- as an accommodation entry. The so-called information has not been duly processed by the AO and there is no material on record to show that the AO had applied her independent mined in forming a belief which may result in the reasons to believe as envisaged in the proceedings u/s 147/148 of the Income Tax Act, 1961. The law on this point is very much clear, as has been established by the Ld. AR in the various judgments relied upon by him. The AO's disposal of the various judgments relied upon by the Ld. AR during the assessment proceedings is wholly hollow and fallacious and hence untenable. Even so the amount of ₹ 4,51,000/-, as per the AO's own acknowledgement in para 3, had been substantiated by various documentary evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant was not provided any opportunity and thus the reassessment also suffers severely from the violation of natural justice and hence further vitiates the reassessment. In all, the whole assessment is completely high-handed and legally infirm and hence being invalid, deserves to be annulled. 10. From bare reading of the copy of the reasons recorded by the AO for issuance of notice u/s 148 of the Act available on page no. 17 and 18, we observe that there is no mention of date therein. However, the details given are only with regard to name of the bank and its branch, address of the beneficiary, instrument no., date of transaction and amount is mentioned therein but in the operative part of the reasons recorded, there is no mention of the nature of transaction, much less to establish that the impugned transactions were in the nature of accommodation entries in the garb of gift. 11. At this juncture, we find it appropriate to consider the ratio of the decisions relied by both the parties in the case of Ambika Steels Ltd. (supra), the information was received by the AO directly from the Investigation Wing of the department which had conducted the search. It was not the case whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d proceedings u/s 147 of the Act was vague and uncertain and should not be construed to be sufficient and relevant material on the basis of which reasonable belief could be formed that income had escaped assessment, then notice of reassessment u/s 148 of the Act was not valid and was liable to be quashed. In this case, their lordships have also considered the decision of Hon ble High Court of Delhi in the case of Signature Hotel (P) Ltd. (supra) wherein it was held that where the reasons did not satisfy the requirement of section 147 of the Act, then the reassessment proceedings cannot be held as valid and the same is liable to be quashed. 17. In the case of CIT vs. SFIL Stock Broking Ltd. (supra), speaking for the Jurisdictional High Court of Delhi, their lordships held that where the AO has not applied his mind to information to independently arrive at a belief that income had escaped assessment, then quashing of reassessment and entire proceedings thereunder is justified. 18. In the case of ITO vs On Exim (P) Ltd. (supra), ITAT Delhi E Bench, it was held as under:- 13. However, the detail given is only with regard to name of the bank, ledger account number and amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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