TMI Blog2016 (12) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd. [2015 (10) TMI 754 - DELHI HIGH COURT] - Decided in favour of assessee - ITA No. 1633/Del./2013 - - - Dated:- 13-12-2016 - Shri I. C. Sudhir, Judicial Member And Shri L. P. Sahu, Accountant Member Appellant by : Sh. V.P. Gupta, Advocate Respondent by : Sh. Rajesh Kumar, Sr. DR ORDER Per L. P. Sahu, Accountant Member: This is an appeal by the assessee against the order of ld. CIT(A)-IX, New Delhi dated 28.01.2013 for the assessment year 2004-05 on the following grounds : 1. That on facts and in law, the Ld. CIT(A)failed to appreciate that reopening of assessment u/s 147 is not legally valid and therefore the Order of Assessment is not sustainable under law. 2. That on facts and in law, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n - (1999) 237 ITR 570 (SC) relied upon by the appellant. 5 That on facts and in law, the Ld.CIT(A) erred in upholding the addition made by the AO without fully appreciating the facts and contention of the appellant and therefore the Order of the Ld.CIT(A) is bad in law. 2. The brief facts of the case are that the assessee filed its return of income for the year under consideration on 31.10.2004 declaring negative income of (-) ₹ 49,331/-. The same was processed u/s 143(1) of the Act. Subsequently, the case was reopened u/s 147 of the Act. Statutory notice u/s 143(2) was issued and duly served upon the assessee. The assessment was completed u/s 143(3)/147 vide order dated 21.9.2011 by the AO at an income of ₹ 19,90,67 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stal authorities returned these letters with the remarks such as no such firm at the given address or left from the given address or insufficient address. The AO, therefore, observed that the assessee failed to prove the ingredients of section 68 of the Act, i.e., identity and creditworthiness of the creditors and genuineness of the transactions. The AO also observed that during the year under consideration, the assessee company has not declared any receipts in its profit and loss account as there was no business. Only expenses relating to the bank charges, audit fees and preliminary maintenance expenses were claimed. He accordingly, made addition of ₹ 20 lacs as unexplained cash credits u/s. 68 and of ₹ 40000/- u/s. 69C as comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investigation wing and the AO has not applied his mind to any independent material in his possession before forming the belief of escapement of income and that the money credited was from the coffers of the assessee. It was submitted that complete evidences in regard to share capital received and for existence of companies were submitted before the authorities below. It was submitted that no addition could be made u/s. 68 simply because company had not commenced the business. No material which led the AO to form a belief of escapement was confronted to the assessee before initiating the proceedings u/s. 147 of the Act. Reliance is placed on plenty of decisions as under : (i). Sheo Nath Singh v. AAC 82 ITR 147 (SC) (ii). Sarth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terference. 6. We have considered the rival submissions and have perused the entire material available on record. A perusal of the reasons recorded shows that the very foundation of AO s belief is the information received from Investigation wing of the department. The AO has not applied his mind to any tangible material in his possession before issuing notice u/s. 148, in absence of which the reopening of assessment cannot be accepted in the eyes of law, as laid down by Hon ble Jurisdictional High Court as well as Tribunal in plenty of cases. Therefore, forming of belief of escapement and consequently reopening of assessment on the basis of mere information received by AO from Investigation wing is not tenable. We are fortified for this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 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 post mortem exercise after the event of reopening of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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