TMI Blog2016 (3) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... caped assessment and without forming a prima facie opinion, on the basis of such material that income has escaped assessment the AO can not assume valid jurisdiction to initiate proceedings and to issue notice u/s 147/148 of the Act. - Notice u/s 148 quashed - Decided in favour of assessee - ITA No. 4029/Del. 2015 - - - Dated:- 19-2-2016 - SRI G.D. AGARWAL, HON BLE VICE PRESIDENT SRI C.M.GARG, JUDICIAL MEMBER For The Assessee : Sh. V.K.Tulsiyan, C.A. For The Revenue : Sh. P.Dam Kanunjna, Sr. DR ORDER PER C.M.Garg, J.M. This appeal by the assessee has been filed against the order of the CIT(A)- 6 Delhi dated 27.03.2015 passed in appeal no. 239/2014-15 for AY 2004-05. 2. The ld. Assessee s Representative (AR) and the Ld. Departmental Representative (DR) agreed that the legal grounds no. 1 2 should be heard first which read as under :- 1. Whether the Ld. CIT(A) was justified by upholding order dt. 09.11.11 passed u/s 144 which is valid one on assumption of jurisdiction i.e. for recording of reasons, its approval as well as within the limitation. 2. Whether the Ld. CIT(A) was justified by upholding the assessment order served before dispose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is apparent that the AO proceeded to initiate and to issue notice u/s 147/148 of the Act solely on the basis of information received from the DIT (Investigation). In the first part of reasons recorded he mentions factual details in a tabular form then writes information so received has been gone through and he further jumped to a conclusion that said tabulated instrument are in the nature of accommodation entry and then he writes modus operandi for this transaction. In the last lines of para 3 on page 2 on the top the AO writes that he has reason to believe that an income has escaped assessment. This shows that the AO proceeded to take action u/s 147/148 of the Act solely by mentioning the details received from DIT(Inv.) and without any further verification, examination or any other exercise he proceeded to initiate re-assessment proceedings and notice u/s 147/148 of the Act. It is relevant to note that the AO has not mentioned nature of transaction which was effected for alleged accommodation entry and even without mentioning the date of recording of reasons. 6. At this juncture, we respectfully take cognizance of preposition laid down by Hon ble Jurisdictional High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve had only a vague felling that they may be ' bogus transactions'. It was further explained by the Supreme Court that: Before issuing a notice under S. 148, the ITO must have either reasons to believe that by reason of the omission or failure on the part of the assessee to make a return under S. 139 for any assessment year to the ITO or to disclose fully and truly all material 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 issue a notice under S. 148. The Supreme Court concluded that it was not satisfied that the ITO had any material before him which could satisfy the requirements under Section 147 and therefore could not have issued notice under Section 148. 10. In ACIT v. Dhariya Construction Co.(2010)328 ITR 515 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 context that this Court in M/s Haryana Acrylic Manufacturing Co. (P) Ltd. (supra) explained that the ratio of the decision in Phool Chand Bajrang Lal (supra) may not be entirely applicable since the same was in respect of Section 147(a) as it existed prior to the amendment. 12. In the present case, after setting out four entries, stated to have been received by the Assessee on a single date i.e. 10th February 2003, from four entities which were termed as accommodation entries, which information was 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 where the AO of the person searched had handed over the relevant information to the AO of the assessee. In this case, the assessment was reopened at the instance of the same AO who conducted search and on information received during the course of search of person other than the assessee, therefore, it was held that there was no question of any satisfaction having been recorded by the AO having jurisdiction of the case of person searched. 12. In the case of AGR Investment Ltd. (supra), the Hon ble Jurisdictional Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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. Even the nature of transactions is not given, much less to establish that the above transactions are in the nature of accommodation entries. It has been stated by the learned counsel at the time of hearing before us that the assessee has only sold the shares through M/s Aayushi Stock Brokers (P) Limited and the sale proceed has duly been considered while computing the income of the assessee for the assessment year under consideration. In view of the above, in our opinion, the ratio of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case specially reasons recorded then it is clear that the AO has merely proceeded to initiate proceeding u/s 147 of the Act and to issue notice us/ 148 of the Act only on the basis of information received from DIT ( Inv.) with verifying and examining the same, without application of mind and even without mentioning the date of recording of reasons for taking action against the assessee. The AO in the operative part of the reason recorded mentioned that : Information so received has been gone through. The above said instruments are in the nature of accommodation entry, which the assessee has taken after paying unaccounted cash to the accommodation entry giver, who is a known entry operator as per report of the Investigation Wing. In view of these facts, the alleged transaction is not bona fide one. Therefore, I have reason to believe that an income of ₹ 14,10,000/- has escaped assessment in the year 2004-05 due to failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment so far as this amount is concerned. 9. The above noted operative part is unhelpful in understanding as to whether the AO applied his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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