TMI Blog2017 (2) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... e : Sh. Salil Agarwal, Adv. and Sh. Shailesh Gupta, Adv. For The Revenue : Sh. Anil Kumar Sharma, Sr. DR ORDER PER H.S. SIDHU, JM The Assessee has filed the Appeal against the Order dated 18.2.2013 of the Ld. CIT(A)-XIII, New Delhi pertaining to assessment year 2005-06 and raised the following grounds:- 1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in sustaining an assessment under section 143(3)/147 of the Act at an income of ₹ 14, 44, 800/- as against returned loss of 55, 200/-. 2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining the initiation of proceedings under section 147 of the Act and, further completion of assessment under section 143(3)/147 of the Act without satisfying the statutory pre-conditions for initiation of the proceedings and, completion of assessment under the Act. 3 That the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts in sustaining the initiation of proceedings u/s 147 of the Act on the basis of information received from OIT (investigation) mechanically and without indepen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein he specifically surrendered ₹ 15,00, 000/- on behalf of appellant company, ignoring and overlooking the basic fact that Sh. D.N. Taneja was never a director in the appellant company and nor he had any shareholding in the appellant company, and thus, the surrender made by him on behalf of appellant company cannot be relied upon, as he is not aware of the facts of the appellant company. 7. That the learned Commissioner of Income Tax (Appeals) has further relied on a general statement of Sh. S.K.Gupta dated 05.01.2009, wherein no . where he mentioned that he has given accommodation entries to appellant company and no where he had mentioned that he has received cash in lieu of cheques issued by M/s Passion Chits Company Pvt. Ltd. to appellant company. His statement is general in nature and cannot be relied upon and addition made on his statement is totally based on irrelevant considerations, conjectures and surmises and as such is liable to be deleted as such. 8. That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in making additions in the hands of assessee company, without giving any fair and proper opportunity of being heard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above decision of the ITAT dated 09.01.2015 has been upheld by the Hon ble Jurisdictional High Court in its Decision dated 08.10.2015 in ITA No. 545/2015 in the case of Pr. CIT-4 vs. G G Pharma India Ltd. In this regard, he filed the copies of the aforesaid decisions before the Tribunal. In view of the above, he requested that by following the aforesaid precedents the reassessment proceedings of the AO may be quashed by accepting the Appeal filed by the Assessee. 6. On the contrary, Ld. DR relied upon the order passed by the authorities below and stated that the AO has properly recorded the reasons for reopening by due application of mind, hence, the appeal of the Assessee may be dismissed. 7. We have heard both the parties and perused the relevant records available with us, especially the orders of the revenue authorities and the case law cited by the assessee s counsel on the issue in dispute. We are of the view, it is very much necessary to reproduce the reasons recorded by the AO before issue of Notice to the Assessee u/s. 148 of the I.T. Act, 1961 which is reproduced hereunder:- Information has been received from the Deputy Commissioner of Income tax (Central Circl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of entries and are sufficient reasons to make belief of the undersigned that the income to at least the above amount of ₹ 15,00,000/- has escaped assessment for A. Y. 2005-06. In view of the totality of facts and circumstances brought out by the specific information provided by DIT (Inv.), New Delhi, and also further supported by the circumstantial evidence that the entry operator is a professional name lender, I have reasons to believe that the assessee company has accepted accommodation entries which are of 'more than ₹ 1 Lakh so as to-evade income tax on its real income for the concerned assessment years, which have escaped assessment within the meaning of section 147 of the Act. The assessee has filed its return for A. Y. 2005-06 vide acknowledgement no. 582 on 21.11.2005 at a loss of ₹ 55,200/- and as per the records available the case has not been assessed u/s. 143(3) of the Act. In such eventuality approval vide provisions of section 149(1)(b) read with section 151(2) of the IT Act, 1961 is sought to issue notice U/S 148 of the Income Tax Act 1961 for the A. Y. 2005-06. 8. After going through the reasons recorded by the AO, as af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered 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 assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity . 14. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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