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2016 (12) TMI 58 - ITAT DELHI

2016 (12) TMI 58 - ITAT DELHI - TMI - Validity of reopening of assessment - Held that:- Assessing Officer has not applied his mind while recording the reasons to believe that the income escaped the assessment and he has acted only in a mechanical manner. Thus, the reassessment proceedings completed under Section 147 r.w.s. 143 of the Act in the present case in question are thus, held as void-ab-initio. - Decided in favour of assessee. - ITA No. 3098/Del/2015 - Dated:- 4-10-2016 - SH. H.S. SIDHU, .....

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in law, the addition of ₹ 15lacs was not permissible in the assessment made u/s 147/143(3) of the Act as the income declared and assessed on 24.12.2007 u/s 143(3) at ₹ 2,30,413/- ought to have been accepted. 3. That without prejudice, the order passed by the Assessing Officer, and confirmed by CIT(A), is bad on facts and in law in as much as it suffers from the vice of violation of the principles of natural justice and denial of opportunity of being heard, rendering the assessment v .....

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61 dated 24.12.2007 was completed at an income of ₹ 2,30,413/-. Subsequently, the information was received from the ACIT, Central Circle -22, New Delhi, that the assessee has received accommodation entries of ₹ 15,00,000/- from the Global Trust Bank account of M/s Namrata Marketing Pvt. Ltd., which is floated / controlled by Sh. SK Gupta, during the FY 2004-05 relevant to assessment year 2005-06. Therefore, to reassess the inome which had escaped assessment within the meaning of sect .....

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ices u/s. 143(2) of the Act dated 19.9.2012 was issued for 10.10.2012. Before the Assessing Officer, the assessee had raised objection against the validity of initiation of reopening proceeding but could not succeed. It raised this issue again before the learned Commissioner of Income Tax (Appeals) but the learned Commissioner of Income Tax (Appeals) has also decided the issue against the assessee, hence, the present appeal before the ITAT. 3. At the outset of hearing, learned Authorized Represe .....

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sent appeal, learned Authorized Representative submitted that in the case of other concerns of the assessee company also, identical reasons were recorded for reopening of the assessment but the Tribunal in those cases held the initiation of proceedings under Section 147 of the Act as invalid. The learned Authorized Representative given a list of such cases, wherein the initiation of proceedings under Section 147 was held invalid, as under: i. M/s Remarkable Estates Pvt. Ltd. vs. ACIT, ITA No. 45 .....

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invalid due to non-application of mind by the Assessing Officer. 6. On the other hand, learned Sr. Departmental Representative relied on the order of the lower authorities, however, could not controvert that the reasons recorded in the instant case are identical to the reasons recorded in the cases before the Tribunal (supra) relied upon by the learned Authorized Representative. 7. I have heard the rival submissions and perused the material on record, including the orders of the Tribunal cited b .....

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ssment on the basis of information received by it, the Assessing Officer has not applied her mind. The reasons recorded in the present case by the Assessing Officer for the purpose are being reproduced hereunder: 2. As per the information received from the ACIT, Central Circle- 19, New Delhi, a survey operation was conducted in the S.K. Gupta group of cases on 20.11.2007, Arunachal Building, 19-Barakhamba Road, New Delhi-1100 01 and 1007-1008, Arunachal Building, 19- Barakhamba Road, New Delhi-1 .....

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fferent branches, in the names of these shell companies/concerns. After receiving cash from the beneficiaries, Sh. S.K. Gupta used to deposit the same in the bank account of one of the these shell companies/concerns. Then he used to route the entries through two to four accounts of these shell companies/concerns before ultimately transferring same to the bank accounts of tire beneficiaries to give the color of genuineness to these transactions. 3. Further, as per the information received from th .....

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ee to disclose fully and truly all material facts necessary for its assessment within the meaning of section 147 of the Income-tax Act, 1961. 5. Issue notice u/s. 148 of the Income-tax Act, 1961. 8. The Tribunal in para 8 of the order held that the Assessing Officer has not applied his own mind while recording the reasons. The relevant para of the order of the Tribunal is as under: 8. The very perusal of the reasons, it is apparent that these were based on the information received from ACIT, Cen .....

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decisions of the Hon'ble High Court, it has been observed by the Hon'ble High Court that such type of conclusion is unhelpful in understanding whether the Assessing Officer had applied his mind to the materials that he talks about particularly since he did not describe what those material were. Hon'ble High Court has observed further that once the date on which the so-called accommodation entries were provided is known, it would not have been difficult for the Assessing Officer, if h .....

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mind to the material in order to form reasons to believe that the income of the assessee has escaped assessment. Such basic requirement while recording the reasons for initiation of proceedings under sec. 147 of the Act is missing in the present case before us. As it is evident in the reasons recorded, reproduced hereinabove, the Assessing Officer has simply recorded the information received from her colleague and without making any exercise of her mind on those information to form her own reaso .....

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f the provisions of the law laid down under sec. 147 of the Act, hence, the initiation of the proceedings was not valid and nor the assessment made in furtherance to the said initiation of the proceedings. The assessment framed under sec. 147 read with 143(3) of the Act in the present case in question is thus held as void-ab-initio. The ground Nos. 1 and 2 are accordingly allowed. 9. When I advert to the facts of the present case, I find that the copy of the reasons recorded has been reproduced .....

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ngs several ledger accounts maintained in Tally for the F.Y. 2004-05, besides various other documents/accounts were found. Further, during the course of survey & assessment proceedings. Sh. S.K. Gupta admitted that he had been providing accommodation entries to various persons/beneficiaries through a large no. of shell companies/concerns floated by & effectively controlled by him. He operated a number of accounts in the same bank/branch or in different branches, in the names of these she .....

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