TMI Blog2016 (5) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... I HIGH COURT] hold that the initiation of re-opening proceedings in the present case by the Assessing Officer was not valid and the assessment made in furtherance to such initiation is also held void ab initio. - Decided in favour of assessee - ITA No. 3623/Del/2014 - - - Dated:- 22-4-2016 - Shri I. C. Sudhir And Shri O. P. Kant For the Petitioner : Shri Gautam Jain, FCA For the Respondent : Ms. Anima Barnwal, Sr. DR ORDER Per I. C. Sudhir: Judicial Member The assessee has questioned first appellate order on several grounds. Out of these grounds in ground No.2, the assessee has questioned validity of initiation of reopening of proceedings under sec. 147/148 of the Income-tax Act, 1961. In ground Nos. 3 to 7, the validity of sustaining of addition of ₹ 6,50,000 under sec. 68 of the Act on account of accommodation entry has been questioned. In ground No.1, the assessee has questioned non-service of notices issued by the first appellate authority resulting into prevention of the assessee from representing its case before the Learned CIT(Appeals). 2. During the course of hearing, the Learned AR preferred to argue the issue raised in ground No.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son that he had also perused various material and report received from Investigation Wing from which it is evident that assessee company had introduced its own unaccounted money in its bank by way of accommodation entry. He, thereafter, noted that he has reasoned to believe that the income amounting to ₹ 13 lacs has escaped assessment. He submitted that during the year the assessee had received share application money of ₹ 13,49,000 through account payee cheques. The assessee had allotted shares to the share applicants. Out of the said share application money, the Assessing Officer has made addition of ₹ 6,50,000 received from Polo Leasing Finance Pvt. Ltd. (Rs.2,50,000), Fair N Square Exports Pvt. Ltd. (Rs.2,00,000) and Tashi Contractors Pvt. Ltd. (Rs.2,00,000). These amounts were paid through account payee cheques and sufficient evidences in the form of confirmation of accounts from all the entities who had applied for allotment of equity shares of the assessee company, certificate of incorporation, proof of filing of income-tax return of those entities, form No. 2 for share allotment, board resolutions etc. were filed. In the reasons recorded, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be questioned before the Court of Law and in this regard she placed reliance on the decision of Hon'ble Supreme Court in the case of Raymond Woolen Mills 236 ITR 34 (SC). The Learned Senior DR submitted further that in the present case, there was no assessment under sec. 143(3) of the Act before issuance of notice under sec. 148 of the Act. The same entry operator was there in the case of CIT vs. Nova Promoters 342 ITR 169 (Del.). The Learned CIT(Appeals) was thus justified in rejecting the ground regarding validity of notice issued under sec. 148 of the Act raised before him. 4. Having gone through the above cited decisions especially the recent decision of Hon'ble jurisdictional High Court of Delhi in the case of Principal CIT vs. G G Pharma India Ltd. (supra), for acquiring jurisdiction under sec. 147 of the Act, the Assessing Officer is required to form a prima facie opinion on the basis of material available before it. In other words, application of mind by the Assessing Officer for forming reason to believe that there is escapement of assessment of taxable income is a pre-condition for acquisition of jurisdiction under sec. 147 of the Act. The Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Supreme Court in a short order held as under: Having examined the record, we find that in this case, the Department sought reopening of the assessment based on the opinion given by the DVO. Opinion of 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 decision dated 22nd September 2015 in ITA No. 356 of 2013 (Commissioner of Income Tax II v. Multiplex Trading and Industrial Co. Ltd.) where the assessment was sought to be reopened beyond the period of four years. This Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 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 Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries . In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Construction Pvt. Ltd. (A/c. No. 2837 with Vijaya Bank, Ramnagar) 429990 Rs.2,00,000 30-03-2001 Tashi Construction Pvt. Ltd. (A/c. No. 2837 with Vijaya Bank, Ramnagar) 429990 Rs.2,00,000 30-03-2001 Fair N Square Exports Pvt. Ltd. (A/c. No. CA2814 with Karur Vaishya Bank, Karol Bagh) 168941 Rs.2,00,000 30-03-2001 Fair N Square Exports Pvt. Ltd. (A/c. No. CA2814 with Karur Vaishya Bank, Karol Bagh) 168941 The said amount has been credited in to assessee s bank account maintained with Dena Bank, South Exn. On investigation made by the investigating wing it has been found that assessee is a beneficiary of taking the aforesaid accommodation entries. I have also perused various material report received from Investigation Wing and ont hat basis, it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entry, therefore, I have reason to believe that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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