TMI Blog2015 (11) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... rson to form a belief on the basis of material or evidence that the income chargeable to tax has escaped assessment and reason which have been recorded would not lead to a prudent person to form an opinion that the income has escaped assessment within the meaning of section 147 then the action of the Assessing Officer in reopening the assessment u/s 147/148 is contrary to the powers permitted under the said provisions of Act. In the case in hand, the reasons recorded by the Assessing Officer do not indicate even a remote nexus between the application money received by the assessee with the alleged accommodation entries provided by Shri Giriraj Vijayvargiya or the alleged beneficiary of the accommodation entries. Accordingly, in the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee for the impugned assessment year under section 147 of the Act by issuing a notice under section 148 of the Act on 30th March 2011. As per information available, it was noticed that Shri Giriraj Vijayvargia was providing accommodation entries in the form of gift, loans, share application money though he was not having any source. As stated by the Assessing Officer, Shri Giriraj Vijayvargia, in a statement recorded under section 132(4) of the Act, admitted that in all these transactions, the actual amounts were paid by recipients of these entries in cash on payment of certain commission. It was also found that the assessee company is a family concern of Shri Vikas Barlia and Shri Vikas Barlia has introduced unaccounted money in the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of identical reasons, held that the initiation of action under section 147 of the Act is invalid and, accordingly, quashed the assessment order. In this context, the learned Counsel for the assessee specifically invited our attention to Para-12 to 15 of the Tribunal's order dated 31st December 2014, passed in ITA no.1159, 1160 1161/Mum./2013. The learned Departmental Representative, after perusing the order of the co-ordinate bench, did not dispute the aforesaid contention of the learned Counsel for the assessee. 6. We have considered the submissions of the parties and perused the material available on record. On a perusal of the reasons recorded for re-opening of the assessment in the impugned assessment year as well as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd 2. Watson Software Ltd. 3. Upbeat Trading Pvt. Ltd 13. There is no allegation of the Assessing Officer that the share applicants of the assessee have any connection with Shri Giriraj Vijayvargiya or with Shri Vikas Berlia. Once these share applicant companies are unrelated/ independent parties and have no connection either with Shri Giriraj or with Shri Vikas Berlia then there was nothing came to the possession of the Assessing Officer to believe that the share application money received by the assessee is bogus transaction and consequently the income assessable to tax has escaped assessment. From the reasons recorded by the Assessing Officer, there is no indication about the relation between the share application money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer must notice that the assessee has understated his income or has claimed excessive loss, deduction, allowance or relief in the return. The taking of such notice must be consistent with the provisions of the applicable law. The act of taking notice cannot be at the arbitrary whim or caprice of the Assessing Officer and must be based on a reasonable foundation. The sufficiency of the evidence or material is not open to scrutiny by the Court but the existence of the belief is the sine qua nonfor a valid exercise of power. In the present case, having regard to the law laid down by the Supreme Court it was impossible for any prudent person to form a reasonable belief that the income had escaped assessment. The reasons which have been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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