TMI Blog2015 (11) TMI 1535X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee - ITA No 3103/Del/2013 - - - Dated:- 27-11-2015 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For the Appellant: Dr. Rakesh Gupta Shri Tarun Kumar, Advocate For the Respondent: Ms. Rakhi Vimal, Sr.DR O R D E R PER SUDHANSHU SRIVASTAVA JUDICIAL MEMBER Assessee has filed this appeal against the impugned order dated 25.3.2013 passed by the Ld. CIT(A) XVIII, New Delhi for assessment year 2004-05. 2. The brief facts of the case are that information was received from the investigation wing of the Income Tax Department that the assessee had received entries of ₹ 22 lacs from three different parties. The reasons recorded for the issuance of notice u/s 148 of the Income Tax Act 1961 are as under:- Return of income declaring an income of ₹ 12,790/- was originally filed by the assessee for the above assessment year on 30.10.2004 and the case was processed u/s 143(1). Information has been received from the Investigation Wing of the Income Tax Department that the above named assessee is a beneficiary of accommodation entries received from certain established entry operator identified by the Wing dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en Date on which entry taken Name of account holder of entry giving account Bank from which entry given Branch of entry giving bank A/c no. Entry giving account Ratnakar Karol Bagh M.V. Mktg P. Ltd. 47 26-Aug-03 Rasalika Trading 54636 500,000 Rasalika Trading Investment Co Pvt Ltd Ratnakar Karol Bagh Mestro Mktg advt. P. Ltd. 46 26-Aug-03 Rasalika Trading 56455 500,000 Rasalika Trading Investment Co Pvt Ltd Corpn Bank Kamla nagar Parivartan Capital Financial Services Pvt Ltd 3317 02-Sep-03 Rasalika Tr. 270902 500,000 Rasalika Trading Investment Co'Pvt Ltd Corpn. Bank Kamla nagar Parivartan Capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee 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 these entries were bogus and it was assessee s own income from undisclosed sources and an addition of ₹ 22 lacs was made. 4. The appeal before the Ld. CIT (A) was also dismissed on the ground that the assessee had been unable to explain the creditworthiness of the companies which had allegedly made the investments. As per the Ld. CIT (A), the appellant had failed to discharge its onus to produce legally acceptable evidence of creditworthiness of the companies and accordingly the addition made by the AO was confirmed. 5. In the present appeal before us the main ground of appeal is as under:- i) that having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned reassessment order u/s 147/143(3) and that too without complying with other mandatory conditions as envisaged u/s 147 to 151 of Income Tax Act, 1961. 6. Ld. Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. 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 reason to believe that income had escaped assessment during the year under consideration. We draw our support from the judgment of the Hon ble High Court of Delhi in ITA No. 545/2015 dated 8.10.2015 in the case of Pr. Commissioner of Income Tax -4 vs. G G Pharma India Ltd. in which the Hon ble Jurisdictional High Court has recapitulated the jurisdictional requirement for reopening of the assessment u/s 147/148 of the Act as under:- 9. The Court at the outset proposes to recapitulate the jurisdictional requirement for reopening of the assessment under Section 147/148 of the Act by referring to two decisions of the Supreme Court. In Chhugamal Rajpal v. SP Chaliha (1971) 79 ITR 603, the Supreme Court was dealing with a case where the AO had received certain communications from the Commissioner of Income Tax showing that the alleged creditors of the Assessee were namelende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 brought about to Section 147 of the Act with effect from 1st April 1989 and observed: 29. It is at once seen that the Amendment in Section 147 of the Act brought about a material change in law w.e.f. 1st April, 1989. Section 147(a) as it stood prior to 1st April 1989 required the AO to have a reason to believe that (a) the income of the Assessee has escaped assessment and (b) that such escapement is by reason of omission or failure on the part of the Assessee to file a return or to disclose fully and truly all material facts necessary for his assessment for that year. After the Amendment, only one singular requirement is to be fulfilled under Section 147(a) and that is, that the AO has reason to believe that income of an Assessee has escaped assessment. However, the proviso to Section 147 of the Act provides a complete bar for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. Swhney took the Court through the order of the CIT (A) to show how the CIT (A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a postmortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied, a post mortem exercise of analysing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity. 9. In the present case also it is seen that the AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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