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TMI Blog2014 (12) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case and in law the Ld. CIT (A) erred in not quashing the order passed by the Ld. A.O despite the fact that the Ld. AO issued notice u/s 148 seeking to reopen the assessment uls 147 on a non existent entity and consequent assessment order so passed in the name of non existent entity is illegal, bad in law or otherwise void for the want of jurisdiction. 3. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the AO's action of reopening the assessment which is illegal, bad in law or otherwise void for the want of jurisdiction. 4. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the A.O's action of reopening the assessment which is barred by limitation. 5. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the A.O's action of assessing the income of the appellant at Rs. 19,57,600/- in the assessment framed u/s 143(3) r.w.s. 147 as against returned income of Rs. 87602/- 6. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the A.O's action of making addition of Rs. 18,70,000/- on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has submitted that the assessment was reopened based on the statement of Shri Giriraj Vijayvargiya admitting giving accommodating entries in the form of gifts, loans and share application money. The Assessing Officer has reproduced the reasons recorded in the assessment order itself, wherein, the accommodating entries given by Shri Giriraj Vijayvargiya in the companies controlled by Shri Vikas Berlia was also mentioned. The Ld. Authorized Representative has pointed out that non of these companies which are mentioned by the Assessing Officer in the reasons recorded are the share holders of the assessee. He has further contended that even in the statement of Shri Giriraj Vijayvargiya, there is no allegation of any accommodating entries in the form of share application money to these three companies. Thus the Ld. Authorized Representative has submitted that the Assessing Officer has reopened the assessment on the basis of conjecture and surmises and only on assumptions without any tangible material or information that the assesses have received any application money from Shri Giriraj Vijayvargiya or from the Group companies of Shri Vikas Berlia. He has further submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the deep of merits of the issue but what is required is the reason to believe that the income assessable to tax has escaped assessment. He has relied upon the orders of authorities below. 11. We have considered the rival submissions and relevant material on record. The Assessing Officer has reopened the assessment in respect of these three cases on the reason that the share application received by the assessee is not a genuine transaction but is on account of accommodation entries received by paying the cash being unaccounted money of the assessee. The reasons recorded by the Assessing Officer as reproduced in the assessment order are as under:- "on the 8th of september 2010. The reasons as recorded and given to the assessee are as under:- Search action u/s 132 of the Act took place in the case of Shri GirirajVijayvargiya on 26.4.2007. Shri Giriraj Vijayvargiya is a member of Group called Ankur Group. During the course of search, it was found that Shri Giriraj Vijayvargiyahas give accommodation entries in the form of gifts, loans and share application money. In the sworn statement u/s 132(4), Shri Giriraj has admitted that he is not having any source of gifts, loans or shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial year of entries. 1. Shri Giriraj Vijayvargiya 2,00,00,000 2005-06 2. Jeth mal Vijayvargiya 5,00,000 2004-05 3. Santosh Vijayvargiya 5,00,000 2004-05 4. Giriraj HUF 5,00,000 2004-05 5. Rekha Vijayvargiya 5,00,000 2004-05 6. Surendra Vijayvargiya 5,00,000 2004-05 7. Premlata Vijayvargiya 5,00,000 2004-05 Total 2,30,00,000 M/s. Sweet Marketing (I) Pvt. Ltd. M/s. Berlin Securities Pvt. Ltd. Sr. No. Name of Person Total Amount of entries Given Financial of entries 1 Smt. Premlata Vijayvargiya Rs.2,20,000/- 2003-04 Total Rs.2,20,000/- Sr. No. Name of Person Total Amount of entries given Financial of entries 1 Smt. Premlata Vijayvargiya Rs.4,00,000/- 2001-02 Total Rs.4,00,000/- M/s. Beri Finvest Pvt. Ltd. Sr. No. Name of Person Total Amount of entries Given Financial of entries 1 Smt. Sonal Vijayvargiya Rs.2,20,000/- 2003-04 Total Rs.2,20,000/- During the course of assessment proceedings in the' case of Shri Giriraj, statement of Shri Vikas Berlia, Director of M/s Maj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia was expected to co-operate with the department and explain the queries raised. On the contrary, after appearing once, Mr Vikas Berlia chose not to comply with the summons. In his statement U/S 131 on oath, Mr Vikas Berlia stated that in connection with the introduction of the share capital, Mr. Giriraj was introduced to him by Mr J.P. Agarwal which was denied by Shri.Giriraj in his statement U/S 131. Also he stated that Mr. Giriraj was well known to his late father. This was again denied by Shri Giriraj in his statement u/s 1312. Also he stated that Mr. Giriraj was well known to his late father. This was again denied by Shri Giriraj. 6. M/s Major Metals Ltd is not a listed company and never declared any dividends. It was showing only nominal profit in its Profit and Loss account but they were introducing huge amounts as share application money which the claim to have received for issuing shares at a substantial premiums. The following chart shows year-wise capital, profit, amount introduced in the form of share application money/share premium, earning per share (EPS), and premium for shares allotted during the year. F.Y. Capital Profit Amount introduced as share applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this I have reason to believe that income of Rs. 18,70,000/- being increase in share capital and share premium during the year, has escaped assessment in the case of M/s Ginni Finvest Pvt. Ltd for A. Y. 2003-04 'as per the provisions of section 147 of the Act. On verification of records for A. Y. 2003- . 04.is seen that the case was not scrutinized u/s 143(3) in that year. Hence, notice u/ 148 is issueds after obtaining prior approval of the Addl CIT(A), Central Range 4, Mumbai" 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 the allegation of giving accommodation entries in the shape of share application money was made by Shri Giriraj in his statement . It is pertinent to note that these three concerns(assessee before us) are not part of the beneficiaries of the accommodation entries as per the allegation made in the statement of Shri Giriraj. Further even those four concerns who have allegedly received the accommo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 relief in the return." For the purpose of clause (b) to Explanation (2), the Assessing 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 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 petition s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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