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2017 (1) TMI 1374 - ITAT DELHI

2017 (1) TMI 1374 - ITAT DELHI - TMI - Validity of reopening of assessment - whether the reassessment proceedings u/s. 148 are illegal and without jurisdiction in the absence of any tangible evidence or material in respect of any undisclosed income and recording of requisite satisfaction in respect of any such undisclosed income or not? - Held that:- AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. In my .....

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A. No. 2959/DEL/2015, I.T.A. No. 2961/DEL/2015, I.T.A. No. 2962/DEL/2015 - Dated:- 3-1-2017 - SHRI H.S. SIDHU, JUDICIAL MEMBER For Assessee : Shri Anil Kr. Jain, CA For The Department : S h . Anil Kumar Sharma, Sr. DR ORDER These are 05 Appeals are filed by different assesses which is against the separate orders of the Ld. CIT(A) for the same asstt. year i.e. 2006-06. Since the issues involved in all the 05 appeals are identical and common, hence, these appeals are being consolidated by this com .....

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nd without jurisdiction and as such the assessment order passed u/s 148 is illegal and bad in law. 2. That on the facts and circumstances of the case and the provision of law the Ld CIT(Appeal) has failed to appreciate that the initiation of reassessment proceeding u/s 147 is illegal and bad in law. 3. That on the facts and circumstances of the case and the provision of law Ld CIT Appeal has filed to appreciate that no valid notice u/s 143(2) has been issued, consequently assessment framed becom .....

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opportunity of being heard. 6. That on the facts and on the circumstances of the case and the provision of law the Ld CIT Appeal has erred in sustaining an addition of ₹ 15,05,250/- as unexplained cash credit u/s 68 of the Income Tax Act, 1961. 7. That the Appellant craves the right to amend, append, delete any or all grounds of appeal. 3. The brief facts of the case are that a search and seizure action u/s. 132 of the I.T. Act, 1961 was carried out in Wings Pharmaceuticals group of cases .....

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y u/s. 133A was conducted on 20.11.2007 in the case of Sh. SK Gupta and the companies operated by him at 308, Arunachal Building, 19, Barakhamba Road, New Delhi - 110001. Sh. SK Gupta is basically a Chartered Accountant but he is found to have been indulged in providing accommodation entries to the different companies, individual and others, reported to be more than 30 in number. A list of beneficiaries of accommodation entries provided by Suresh Kumar Gupta for A.Y. 2005- 06 was also enclosed w .....

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y. Thereafter, after considering the reply of the assessee the AO assessed the income of the assessee at ₹ 19,67,010/- u/s. 143(3)/148 of the I.T. Act, 1961 on 28.3.2013. 4. Aggrieved with the aforesaid assessment order dated 28.3.2008, Assessee was in appeal before the Ld. CIT(A), who vide impugned order dated 30.3.2015 has dismissed the appeal of the assessee. 5. Against the aforesaid order of the Ld. CIT(A), Assessee is in appeal before the Tribunal. 6. Ld. Counsel of the assessee reite .....

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hat the assesssee has taken any accommodation entry is also not mentioned. No reference is made to any tangible material statement or annexure in support of the information receive on the basis of which reasons have been recorded. From the reasons it is also not clear whether any statement of Smt. Anjali Gupta/ Sh. Suresh Kumar Gupta has been recorded or not. Even in the reasons recorded, Pay Order no. mentioned is wrong meaning thereby that the AO has not bothered to even verify the information .....

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n on the basis of which the AO had initiated proceedings under section 147 was vague and uncertain as may be evidenced from the relevant para of these judgments. He further stated that the issue in dispute is also squarely covered by the ITAT, Delhi decision 24.9.2015 in assessee s own case for the assessment year 2004-05 passed in ITA Nos. 444/Del/2014 (AY 2004-05) and ITA No. 4445/Del/2014 (AY 2004-05). He further stated that that the issue in dispute is also squarely covered in favour of the .....

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nal. Hence, he requested that respectfully following the above precedents, the reassessment proceedings may be quashed. 7. On the other hand, Ld. DR relied upon the orders passed by the lower authorities on the issue in dispute. 8. I have heard both the parties and perused the records. I find that the AO has recorded the reasons for belief that income has escaped assessment as under. The same is reproduced in the impugned order which read as under:- REASONS. TO BELIEVE FOR REOPENING U/S 147 MIs .....

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Central)-III, New Delhi forwarding therewith copy of letter of the ACIT, Central Circle-22, New Delhi. As per information vide this letter (supra), a Survey u/s 133'A was conducted on 20.11.2007 in the case of Sh. S.K. Gupta and the companies operated by him at 308, Arunanchal Building, 19, Barashamba Read, New Delhi- 110001. S.K. Gupta is basically a charted accountant but he is found to have been indulged providing accommodation entries to the different parties through the bank accounts op .....

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Income Tax Department has reported that transaction undertaken through these companies were not genuine .. They were mere entries given for equivalent cash and you charged certain commission for those transactions. Ans. Yes, I agree with above statement except or some genuine work of share brokerage, other transaction done are not genuine. Cash was taken and cheques were Issued from different companies. The exact details of each party are recorded in the computer seized by the Department in the .....

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osed with the letter of the ACIT, CC-22, New Delhi reveals that MIs K.K. Arora & Sons HUF, who is assessed to tax with this Circle, is one of the beneficiaries and has received accommodation entries from Anjali Gupta, as per details given below: Mediatory Actual Beneficiary Date Ch. No. PO No. Amount Deepak Jain KK Arora & Sons HUF 17.6.2004 320390 ₹ 5,00,625 6. In view of this, I am satisfied that the income to the tune of ₹ 5,OO,625/- has escaped assessment by reason of the .....

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ether the reassessment proceedings u/s. 148 of the I.T. Act are illegal and without jurisdiction in the absence of any tangible evidence or material in respect of any undisclosed income and recording of requisite satisfaction in respect of any such undisclosed income or not. I am of the view that AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. In my view the reasons are vague and are not based on any ta .....

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le Jurisdictional High Court in the case of Signature Hotels P. Ltd. vs. Income Tax Officer [2011] 338 ITR 0051 has held as under:- Held, allowing the petition, that the reassessment proceeding were initiated on the basis of information received from the Director of Income Tax (Investigation) that the petitioner had introduced money amounting to ₹ 5 lacs during the financial year 2002-03 as stated in the Annexure. According to the information, the amount received from a company, S, was not .....

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o the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid-up capital of ₹ 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September, 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to be quashed. 10. I also find that the legal issue is also covered by the Hon ble High Court of Delhi in the case of P .....

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vestigation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money in its bank account by way of above accommodation entries." The above conclusion is unhelpful in understanding whether the AO applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the AO, if he .....

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ey 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 ma .....

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