TMI Blog2015 (11) TMI 1525X X X X Extracts X X X X X X X X Extracts X X X X ..... /2011 - - - Dated:- 27-11-2015 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For the Appellant : Ms. Rakhi Vimal, Sr. DR For the Respondent : Shri P.C. Yadav, Advocate O R D E R PER SUDHANSHU SRIVASTAVA JUDICIAL MEMBER Department has filed this appeal against the impugned order dated 14.02.2011 passed by the Ld. CIT(A) XVIII, New Delhi for assessment year 2003- 04. 2. The facts of the case are that the assessee company had filed its Return of Income for the year under consideration for ₹ 65,518/- which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called the Act). Thereafter, based on a report of DIT (Investigation), reassessment proceedings were initiated and the reassessment was completed at ₹ 16,00,000/-. . 3. Before proceeding with the on the merits of the appeal, it will be worthwhile to reproduce the reasons recorded for the issuance of notice u/s 148 off the Act. The reasons recorded for the issuance of notice u/s 148 of the Income Tax Act 1961 are as under:- DIT (lnv) during the course of investigation in the case of Mukesh Gupta group along with its dose confidan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of ₹ 8,00,000/- chargeable to tax has escaped assessment. Thus, the same is to be brought to tax under section 147/148 of the I.T. Act 1961 . 4. As per the AO, the assessee furnished copies of share application forms, certified copies of confirmations containing details of amounts invested, copies of PAN card, copies of bank accounts of the parties, copies of ITRs etc. in support of its claim of receipt of shares application money from the parties. The AO observed that a perusal of the bank statements of the parties from whom the assessee had received funds revealed that these entries were cleared after deposit of equivalent amount in cash or transfer just prior to the clearance of the cheques issued to the assessee company. Accordingly, it was the AO s opinion that the assessee had failed to prove the credit worthiness of the parties and as such these entries were bogus and it was assessee s own income from undisclosed sources and an addition of ₹ 16 lacs was made. 5. The appeal before the Ld. CIT (A) was decided in favour of the assessee on the ground that the assessee had provided proof of identity and proof of credit worthiness of the parties and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax-4 vs. G G Pharma India Ltd. of the Hon ble Delhi High Court which has affirmed the judgment of the ITAT Delhi C Bench in ITA No. 3149/2013 8. Ld. DR on the other hand stated that the AO had reopened the case on the basis of various documentary evidences relating to the assessee and submitted that the AO has rightly reopened the case of the assessee on the basis of such documentary evidences. Ld. DR also submitted that the decisions relied on by the Ld. AR are on a completely different set of facts and as such were not applicable to the appeal before us. 9. We have heard both the parties and perused the records available with us and we note that after perusing the reasons records we find that the mere reference is made to the information received from the investigation wing and the reasons are vague and are not based on tangible material. The AO has mechanically issued notices u/s 148 of the Income Tax Act 1961 on the basis of information received by him from the investigation wing of the Income Tax Department. Therefore, we are of the considered view that the AO has not applied his mind so as to give an independent conclusion that he had reasons to believe that income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme 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 I I v. Multiplex Trading and Industrial Co. Ltd.) where the assessment was sought to be reopened beyond the period of four years. This Court considered the decision of the Supreme Court in Phool Chand Bajrang Lal v. Income-tax Officer ( s u p r a ) as well as the decision of this Court in M/s Haryana Acrylic Manufacturing Co. (P) Ltd. v. CIT 308 ITR 38 (Del). The Court noted that a material change had been bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the assessee escaped assessment is missing in the present case. 13. Mr. Sawhney took the Court through the order of the CIT (A) to show ..... X X X X Extracts X X X X X X X X Extracts X X X X
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