TMI Blog2017 (4) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... dv. For The Revenue : Sh. F.R. Meena, Sr. DR ORDER PER H.S. SIDHU, JM The Assessee has filed the Appeal against the Order dated 03.12.2013 of the Ld. CIT(A)-XVII, New Delhi pertaining to assessment year 2005-06 on the following grounds:- 1. That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of ₹ 20,00,000/- representing the share capital by invoking the provisions of Section 68. 2. That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of ₹ 50,000/- being a hypothetical figure (Commission) @4% of the share capital. 3. That the Ld. CIT(A) has erred in law and on facts in sustaining the addition despite no proper opportunity of being heard was provided by the AO. 4. That the impugned appellate order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence. 5. That the appellant craves leave to add/ alter any / all grounds of appeal before or at the time of hearing of the appeal. 2. Assessee has also filed an Application for admission of additional grounds of Appeal vide its Application in which the assessee has stated that in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attended the proceedings from time to time and filed the information as called for. Thereafter, AO added ₹ 20,50,000/- to the income of the assessee u/s 68 of the Income Tax Act, 1961 and completed the assessment at ₹ 42,65,830/- u/s. 143(3)/147 of the Act vide his order dated 15.2.2013. 7. Against the Order of the AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 03.12.2013 has dismissed the appeal of the Assessee. 8. Aggrieved with the aforesaid order of the Ld. CIT(A), Assessee is in Appeal before the Tribunal for challenging the legal issue raised vide additional as well as the addition in dispute, as aforesaid. 9. At the time of hearing, Ld. Counsel of the assessee has only argued the legal ground that notice u/s. 148 issued in this case is contrary to the provisions of section 147 by stating that action of the Assessing Officer is illegal. He further stated that assessment could not have been re-opened u/s. 147/148 as reasons have been recorded by AO only on borrowed satisfaction. He further stated that there are no material on record to establish any satisfaction on the part of the AO that any income belonging to the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the above named assessee is a beneficiary of accommodation entries received during the period F. Y.2004-05 relevant to A. Y. 2005-06 taken from established entry-operators identified by the Investigation Wing on the basis of Search/Survey conducted by it on in the case of Sh. Tarun Goyal c.A. and Group. A comprehensive investigation was carried out by the Investigation Wing in this regard and on the basis of investigation carried out and evidences collected, examination made, a report has been forwarded which shows that the above named Sh. Tarun C.A. and Group has floated a number of concern/Pvt. Ltd. companies for providing accommodation entries to various desirous persons. These concerns/companies were found to be only paper entities providing accommodation entries and not doing any other real business. Sh. Tarun Goyal C.A. and Group have been doing the business of providing accommodation entries through these concerns by giving cheques/PO/DD in lieu of cash with/without the help of some agents/mediators. They have also being charging certain commission for providing these entries which usually varied from 1.5% to 3.5%. A perusal/ examination of report/ related docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upported by the following judgments/decisions:- (A) The Tribunal in its decision dated 9.1.2015 passed in ITA No. 3149/Del/2013 (AY 2003-04) in the case of G G Pharma India Limited vs. ITO, has held under:- 8. We have perused the aforesaid reasons recorded by the AO for reopening the assessment in dispute and we are of the considered view that the 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. A mere reference is made to certain information received from the Investigation Wing which was supplied to the assessee vide AO s letter dated 15.9.2010. In our view the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO had mechanically issued notices u/s. 148 of the Act, on the basis of information allegedly received by him from the Directorate of Investigation, Jhandewalan, New Delhi. Keeping in view of the facts and circumstances of the present case and the law applicable in the case of the assessee, we are of the considered view that the reopening in the case of the assessee for the asstt. year in dispute is bad in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 the quashed. (ii). In the case of CIT vs. Atul Jain reported in 299 ITR 383 it has been held as under:- Held, dismissing the appeals, that the only information was that the assessee had taken a bogus entry of capital gains by paying cash along with some premium for taking a cheque for that amount. The information did not indicate the source of the capital gains which in this case were shares. There was no information which shares had been transferred and with whom the transaction had taken place. The AO did not verify the correctness of information received by him but merely accepted the truth of the vague information in a mechanical manner. The AO had not even recorded his satisfaction about the correctness or otherwise of the information for issuing a notice u/s 148. What had been recorded by the AO as his reasons to believe was nothing more than a report given by him to the Commissioner. The submission of the report was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arity 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 the circumstances, the conclusion reached by the ITAT cannot be said to be er ..... X X X X Extracts X X X X X X X X Extracts X X X X
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