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TMI Blog2016 (9) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... es to amend modify, alter, add or forego any ground of appeal at any time before or during the hearing of this appeal. 2. The cross objections raised by the assessee in C.O No. 110/Del/2012 are as under: i. That on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in law and on facts by holding that once the second notice dated 31.03.2010 was issued under section 148, the first notice dated 19.03.2010 issued under sec. 148 has become redundant. The finding of the learned Commissioner of Income Tax (Appeal) is contrary to the judicial pronouncements in the case of Indian Tube Co. Ltd. Vs. Income Tax Officer (2005) 272 ITR 439 (Cal.), Sukhlal Ice & Cold Storage Co. Vs. Income Tax Officer (1993) 199 ITR 129 (All.) and Ashok Kumar Dixit Vs. Income Tax Officer (1992) 198 ITR 669 (All.) ii. That on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) erred in law and on facts by not giving any finding on the case laws cited on page 2 of the written submission dated 27.05.2011 on the subject relevant to two notices issued simultaneously under sec. 148. iii. That the appellant craves leave to add, amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard the rival arguments on the issue of the condonation of the delay. We find that the delay was due to reasonable cause and bonafide mistake and the appeal has been filed as soon as the mistake has been detected. In view of the facts and in the interest of justice, we condone the delay in filing the appeal and admit the same. 5. First, we take up the cross objection raised by the assessee challenging the omission by learned Commissioner of Income-tax (Appeals) in not deciding the issue of two notices issued simultaneously under section 148 of the Act . 5.1 At the outset of hearing, the learned Authorized Representative referring to page 19 of the first paper book of the assessee submitted that the first notice under section 148 of the Act in the case of the assessee was issued on 19th of March, 2010 and even during the pendency of proceedings under section 147 of the Act vide notice dated 19/03/2010, the AO issued another notice, dated 31/03/2010, which was served on the assessee on 02/04/2010. The learned Authorized Representative accordingly submitted that proceeding of Sec. 148 of the Act through notice dated 31/03/2010 were not validly initiated and deserves to be quashed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation received from the Investigation Wing are from reliable source. In view of the above, she submitted that the order of the learned Commissioner of Income-tax (Appeals) was a non-speaking order and, therefore, finding of the learned Commissioner of Income-tax (Appeals) on the issue need to be reversed. 6.2 The learned Authorized Representative (AR) of the assessee on the contrary, relying on the finding of the learned Commissioner of Income-tax (Appeals) submitted that the Assessing Officer has merely referred to the information received from the Investigation Wing and recorded reasons without applying his mind. The learned Authorized Representative submitted that there was repetition of entries in the reasons recorded by the AO, which shows that, he did not take due care in recording reasons. The learned Authorized Representative relied on the decision of the Tribunal in the case of G.N. International Private Limited Vs. ACIT in ITA No. 6323/Del/2012, which has considered judgment of the jurisdictional High Court including the judgment in the case of Signature Hotels Private Limited Vs. ITO, Writ Petition(Civil) No. 8067/2010, order dated 21/07/2011. 6.3 We have heard the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no mention that the company who had invested shares in petitioner company were fictitious. What were mentioned was that these companies were used as conduits. Assessee in his objection had clearly stated that the company had bank accounts and payments were made to the assessee company through banking channel. Identity of companies was not disputed. The Hon'ble Delhi High Court held that it would not be appropriate to require the assessee to go through the entire gamut of reassessment proceedings. Neither the reasons in the initial notice nor the communication providing reasons remotely indicated independent application of mind by the Assessing Officer. Notice issued under sec. 148 was accordingly quashed. In the case of CIT vs. India Terminal Connector System Ltd. (supra) relied upon by the learned Senior DR, the decision in the case of Sarthak Security Co. Pvt. Ltd. (supra) has been distinguished on the facts of these two cases before the Hon'ble High Court. In that case, the Hon'ble High Court has observed that at that stage, it is not necessary to have the established fact of escapement of income but what is necessary is that there is relevant material on which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the reasons for initiating reassessment proceedings are recorded. The Hon'ble High Court has shown its unableness to countenance that any belief based on such statement can ever be arrived at. The Hon'ble High Court has been pleased to hold that the reasons have been recorded without any application of mind and thus no belief that income had escaped assessment can be stated to have been formed based on such reasons as recorded. 11. When we examine the facts of the present case to find out as to whether the Assessing Officer while recording his satisfaction to initiate reopening proceedings had applied his independent mind to form his reasons to believe that income chargeable to tax has escaped assessment, we find that the reasons to believe are based on the information received from the Investigation Wing of the Department that name of the assessee figure as one of the beneficiaries of theses alleged bogus transactions given by the Directorate after making the necessary inquiries. It has been noted in the reasons that the report of the Directorate of Investigation reveals that there has been a systematic plan by unscrupulous persons/entities in which the cash is giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding reasons remotely indicate independent application of mind by the Assessing Officer, hence, notice under sec. 148 of the Act is quashed. In consequence, the assessment made in pursuance to the said invalid notice is also held void and is quashed as such. The objections raised in the cross objection preferred by the assessee are accordingly allowed. 6.4 The Tribunal has observed the fact of repetition of entries and held that it indicated of the callous manner in which the reasons for initiating proceedings were recorded. The Tribunal has already summarized the findings in the case of various High Court judgments including judgments in the case of Signature Hotels Private Limited (supra). 6.5 When we examine the facts in the present case, it is relevant to refer the pages 36 to 37 of the assessee's paper book containing the reasons recorded by the Assessing Officer for reopening of the assessment, which are reproduced as under: "Return of income in this case was filed on 25/11/2003 declaring total income of Rs. 76,340/- which was processed vide order u/s 143(1) dated 16/02/2004. The Directorate of Income Tax (lnv.), New Delhi has carried out a detailed enquiry about the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity to cross-examine the entry operators was provided by the Assessing Officer. Further, from the table of the accommodations entries, which the assessee is said to have received, reproduced in the assessment order, we find that there are five instances, where the entries have been repeated. We find that, the Tribunal in the case of GN International Private Limited (supra) also observed similar facts of receiving information from the Directorate of Investigation and the repetition of entries and held that the Assessing Officer did not apply independent mind while recording the reasons, hence the proceeding under section 148 of the Act, are quashed. Further, the cases relied upon by the learned Sr. Departmental Representative are on the issue of sufficiency of reasons for reopening of the assessment and not on the issue of application of mind by the Assessing Officer. Thus, respectfully following the decision of the Tribunal in the case of G.N. International Private Limited (supra) and judgment of the Hon'ble High Court in the case of Signature Hotels Private Limited (supra), we hold that the Assessing Officer has not applied his independent mind while recording the reasons in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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