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Berlia Plastochem Pvt Ltd (Now Known As GLB Finvest Pvt Ltd) Versus Dy. Commissioner of Income Tax

Reopening of assessment - receipt of accommodation entry - Held that:- n a perusal of the reasons recorded for re-opening of the assessment in the impugned assessment year as well as the reasons recorded for re-opening the assessment in assessee's own case in the assessment year 2003-04, which is extracted in entirety in the order of the co-ordinate bench under reference, the reasons are found to be identical.

No sufficiency of evidence or material for forming the belief is not open .....

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rs 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 and circumstances of the case, we hold that the reopening in these cases are not valid and consequently the same is quashed - Decided i .....

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issions on ground no.2, which relates to the legal issue of re-opening of assessment under section 147 of the Income Tax Act, 1961 (for short "the Act"). Considering such submissions of the assessee, we propose to dispose of this issue at the first instance. 3. Briefly the facts of this issue are, the assessee, which is now known as "GLB Finvest Pvt. Ltd. , is a company. For the assessment year under consideration, the assessee filed its return of income on 18th October 2004, decl .....

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n 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 .....

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fficer ultimately proceeded to complete assessment under section 143(3) r/w section 147 of the Act, vide order dated 30th December 2011, by adding an amount of ₹ 33,74,000. 4. Being aggrieved of such addition made in the assessment order, the assessee preferred appeal before the learned Commissioner (Appeals) challenging the assessment order both on the issue of re-opening of assessment as well as on merits of addition made. As it appears, since on the date of hearing before the learned Co .....

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3-04, wherein the Tribunal, while considering the validity of re-opening of assessment on the 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, afte .....

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e co-ordinate bench under reference, the reasons are found to be identical. The co-ordinate bench, after perusing the reasons recorded for re-opening the assessment, held as under:- "12. These reasons are nothing but the summary of statement of Shri Giriraj Vijayvargiya during the search as well as the assessment proceedings of Shri Giriraj. It is manifest from these reasons recorded by the Assessing Officer that four concerns are mentioned which are controlled by Shri Vikas Berlia in which .....

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#39;s before us. Therefore, as far as, share application money received by the assessee the same is neither came from Shri Giriraj or from any related party or person or even from the other group concern of Shri Vikas Berlia. The share application were received by the assessee from following concerns:- 1. M/s Shresth Leasing and Finance 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 con .....

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is no indication about the relation between the share application money and the bogus accommodation entries given by Shri Giriraj. Therefore, the assessments were reopened by the AO merely on the basis of assumptions without having any tangible material or information on the basis of which it could be believed that transaction of share application money was as bogus transaction. In the case of CIT Vs. Kelvinator of India Ltd. (supra), the Hon'ble Supreme Court while confirming the judgment .....

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ble to tax has escaped assessment within the meaning of the substantive provisions of section 147. Explanation (2) to section 147 creates a deeming fiction of cases where income chargeable to tax has escaped assessment. Clause (b) deals with a situation "where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relie .....

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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 recorded could never have led a prudent person to form an opinion that income had escaped assessment within the meaning of section 147. In these circumstances, the pet .....

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