TMI Blog2010 (2) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Apex court decision in the case of Kapurchand Shrimal Vs. CIT, [ 1981 (8) TMI 2 - SUPREME COURT] , it was held that the appellate authority has jurisdiction as well as the duty to correct the errors in the proceedings under appeal. Hon ble Apex Court has further held that in the case of Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] and in the case of Sumati Dayal [ 1995 (3) TMI 3 - SUPREME COURT] has observed that the authorities should not put on blinkers, but should look at the surrounding circumstances also. Therefore, In our opinion, this matter needs to be remitted to the files of the AO to enable him to examine the matter afresh. Accordingly, the matter is remitted to the files of the AO. Revenue appeal is allowed for statistical purposes. Reopening of assessment - reason to believe - HELD THAT:- The return was processed u/s 143(1). Hon ble Apex court in the case of Rajesh Jhaveri [ 2007 (5) TMI 197 - SUPREME COURT] has held that intimation u/s143(1)(a) cannot be treated to be an order of reassessment. Therefore, there is no question of forming of opinion in such a case. Section 147 of the IT Act mandates that AO has reason to believe that any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odation entries. The deposits in the bank account are by way of clearing entries, which are immediately transferred out. The balance in the accounts is very low on any day. All the transactions are intra-day transactions which reflect that the account is just being used to route such money. The money does not stay in the accounts, so as to suggest that it had been received as and investment. So it is clear that these companies had no actual business and had been used to give accommodation entries. 3.1 AO asked the assessee to produce the Directors of these companies, but nobody attended. However the asessee has filed the affidavits from the Directors of the above companies. The assessee also submitted that in the letter that the law have vested very wide power to AO under section 131 of the IT Act, 1961 to call the witnesses to confirm the transactions same please be used at the cost of the assessee . AO observed that since the claim of the assessee that share application money was obtained, therefore, it is the duty of the assessee company to satisfy the AO, that condition laid down under section 68 of the Act are fulfilled. As assessee company failed to discharge its onus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares of ₹ 10/- each. We find that in this case the assessee has submitted that the four companies had applied for 4000/- equity shares of ₹ 10/- each at a premium of ₹ 90/-. In this regard, the assessee has only submitted affidavit from the Directors of the company. The AO request is that the Directors be present was not fulfilled. Though the assessee had submitted before the AO that necessary summons under section 131 may be issued. The AO has not done so and concluded that assessee had failed to discharge the onus. Upon assessee s appeal ld. CIT(A) noted that it is not disputed by the AO that an amount was received from companies which are registered under the Companies Act with (ROC) and the identity is established. In this regard, we fail to understand how the CIT(A) has inferred this from the assessment order. AO has very clearly mentioned that assessee has failed to establish the identity of these persons. It is not the case that the ROC registration certificate for these companies; their PAN details or their income tax returns or their balance sheet showing the investment, were submitted before the AO or CIT(A). Under such circumstances, there was no basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, therefore, liable to be quashed. In this regard the assessee s submission are as under:- That there was no reason to believe that petitioner s income has escaped assessment which is must for assuming lawful jurisdiction u/s 147 and such absence of reason to believe is evident from the plain reading of the reason recorded which does not contain event his basic jurisdictional element. That the reopening can be done on the basis of reason to believe that income has escaped assessment and recording of reason before the issue of notice u/s 148 is must as per provision of Sec. 148 which in this case has not been recorded and thus basic jurisdictional fact is missing in this case thus vitiating the issue of valid notice u/s 148. All that has been recorded in the garb of the purported reason is the proposal to the Additional CIT in terms of Sec. 151 which is different from the reason recorded as per the decision of Hon ble Delhi High Court in the case of Vinita Jain 212 CTR 45. Reopening is barred because the assessing officer had no himself formed any belief as to the escapement of income but he had merely acted upon the direction of the Investigation Wing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Investigation Wing, relying on the judgement of the Hon ble Apex Court in the case of ITO vs. Purshottamdas Bangur 224 ITR 362, he was of the opinion that issue had rightly been reopened. 8.3 We have carefully considered the submissions. We find that in this case the return was processed under section 143(1). Hon ble Apex court in the case of Rajesh Jhaveri cited above has held that intimation under section 143(1)(a) cannot be treated to be an order of reassessment. It was held that there is no question of forming of opinion in such a case and therefore, no question of change of opinion can be raised in this regard. 8.4 Section 147 of the IT Act mandates that AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may assess or reassess of such income. Now in this case AO has information from the Investigation Wing of the Department that assessee has taken accommodation entries to the tune of ₹ 16 lacs (Rs. 4 lacs each) and these amounts were found credited in the companies accounts maintained with the SBI, Hyderabad, Karol Bagh, New Delhi during the period relating to 2003-04. 8.5 In the above background, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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