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2015 (10) TMI 754 - DELHI HIGH COURT

2015 (10) TMI 754 - DELHI HIGH COURT - [2016] 384 ITR 147 - Validity of reopening of assessment - receipt of accommodation entry - whether the ITAT was correct in holding that the Assessing Officer (“AO”) has not applied his mind and not come to an independent conclusion that he has reason to believe that the income of the Assessee has escaped assessment? - Held that:- In the present case, after setting out four entries, stated to have been received by the Assessee on a single date i.e. 10th Feb .....

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he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the AO, if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Ac .....

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the ITAT cannot be said to be erroneous - Decided against revenue. - I.T.A. No. 545 of 2015 - Dated:- 8-10-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Mr. Kamal Sawhney, Senior Standing counsel with Mr. Raghvendra Singh, Junior Standing counsel For the Respondent : Mr. Kapil Goel, Advocate ORDER 1. This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 ( Act ) is directed against the order dated 9th January 2015 passed by the Income Tax Appellate Tribunal ( .....

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November 2004 at ₹ 1,190/- which was processed under Section 143(3) of the Act on 1st March 2004. Thereafter, on the basis of information received from the Directorate of Investigation, the AO issued notice under Section 148 of the Act to the Assessee on 19th March 2010 i.e., more than six years after the assessment. The AO made various additions and completed the assessment at ₹ 55,50,1801. The Appeal of the Assessee was dismissed by the Commissioner of Income Tax (Appeals) [CIT (A) .....

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independent conclusion that he has reason to believe that the income has escaped assessment during the AY in question. 5. When this appeal was first listed on 7th August 2015, the Court enquired from Mr. Kamal Sawhney, learned Senior Standing counsel for the Revenue, whether he could produce the materials on the basis of which the assessment was reopened. He sought and was granted three weeks time for this purpose. The matter was next listed on 10th September 2015 when on account of the fact th .....

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nt in the Court and further efforts would be made to locate the materials on the basis of which the AO formed his opinion regarding reopening of the assessment. The Court was not prepared to grant further time for this purpose since it was not clear that the materials were, in fact, available with the Department. 7. Mr. Sawhney, has placed extensive reliance on the decision dated 21st March 2012 passed by this Court in ITA No. 643 of 2011 (CIT v. India Terminal Connector System Ltd.) where, acco .....

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try provider, the date on which the entry was taken, the cheque details as well as the amount credited to the account of the Assessee. He accordingly submitted that this by itself constituted sufficient material for the AO to form an opinion that the assessee company has introduced his own unaccounted money in its bank account by way of accommodation entries . 8. Mr. Kapil Goel, learned counsel for the Assessee, placed reliance on other decisions of this Court including CIT v. Pradeep Kumar Gupt .....

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the Supreme Court. In Chhugamal Rajpal v. SP Chaliha (1971) 79 ITR 603, the Supreme Court was dealing with a case where the AO had received certain communications from the Commissioner of Income Tax showing that the alleged creditors of the Assessee were name-lenders and the transactions are bogus. The AO came to the conclusion that there were reasons to believe that income of the Assessee had escaped assessment. The Supreme Court disagreed and observed that the AO had not even come to a prima .....

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al facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year or alternatively notwithstanding that there has been no omission or failure as mentioned above on the part of the assessee, the ITO has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. Unless the requirements of cl. (a) or cl. (b) of S. 147 are satisfied, the ITO has no jurisdiction to iss .....

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the DVO per se is not an information for the purposes of reopening assessment under s. 147 of the IT Act, 1961. The AO has to apply his mind to the information, if any, collected and must form a belief thereon. In the circumstances, there is no merit in the civil appeal. The Department was not entitled to reopen the assessment. 11. The above basic requirement of Sections 147/148 has been reiterated in numerous decisions of the Supreme Court and this Court. Recently, this Court rendered a decisio .....

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ection 147 of the Act with effect from 1st April 1989 and observed: 29. It is at once seen that the Amendment in Section 147 of the Act brought about a material change in law w.e.f. 1st April, 1989. Section 147(a) as it stood prior to 1st April 1989 required the AO to have a reason to believe that (a) the income of the Assessee has escaped assessment and (b) that such escapement is by reason of omission or failure on the part of the Assessee to file a return or to disclose fully and truly all ma .....

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ssessee has escaped assessment on account of failure on the part of the Assessee to make a return or to disclose fully and truly all material facts necessary for his assessment. Thus, in order to reopen an assessment which is beyond the period of four years from the end of the relevant assessment year, the condition that there has been a failure on the part of the Assessee to truly and fully disclose all material facts must be concluded with certain level of certainty. It is in the aforesaid con .....

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given to him by the Directorate of Investigation, the AO stated: I have also perused various materials and report from Investigation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money in its bank account by way of above accommodation entries. The above conclusion is unhelpful in understanding whether the AO applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on .....

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