TMI Blog2017 (1) TMI 1517X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment completed without making any addition on account of accommodation entry taken and the Ld. Pr. CIT s order u/s. 263 of the Act on account of the fact that the AO had not taken into consideration the material seized during search in the case of Sh. SK Jain. We further find that the present is also covered by the decision of the Hon ble Supreme Court of India in the case of Deniel Merchants Pvt. Ltd. vs. ITO (2017 (12) TMI 476 - SUPREME COURT) wherein the Hon ble Supreme Court of India has dismissed the SLPs in cases where AO did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting aside the order of the AO, simply directed the AO to carry thorough and detailed inquiry. - Decided against assessee. - I.T.A. No. 2915/DEL/2017 - - - Dated:- 8-1-2018 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Assessee : Sh. Kapil Goel, Adv. For The Department : Sh. S.S. Rana, CIT(DR) ORDER PER H.S. SIDHU : JM This appeal has been filed by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng part of Show Cause notice dated 13.01.2017, which is clearly proscribed and prohibited (refer paragraph 7.2, 8, 9, 11, 14;, 14.1, 15 of the impugned order, which are outside the purview of show cause notice dated 13.01.2017). 4.1. That on the facts and in the circumstances of the case and in law, Ld. CfT erred in passing impugned order u/s 263 without considering asseessee's reply dated 24.01.2017 and 02.02.2017, thus rendering the entire exercise a nullity. 5. That on the facts and in the circumstances of the case and in law, Ld. CIT erred in passing revision order u/s. 263 by simply setting aside the matter without himself making the due enquiries, which vitiates the entire exercise, as present case at best can be a case of inadequate enquiry but definitely not a case of no enquiry. 6. That on the facts and in the circumstances of the case and in law, Ld. CIT erred in passing revision order u/s. 263, subsequent to reopening proceedings U/S 148, on basis of seized material of SK. Jain Group, without confronting the assessee with the statement of SK. Jain, much less cross examination of SK. Jain, on the purported seized material which is sufficient to knock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the Assessing Officer had not examined the seized material in the form of cash book and books containing the details of cheques issued by such concerns seized from the premises of S.K. Jain during the course of search, which indicated accommodation entry pertaining to assessee also. He further observed that an appraisal report along with scanned copy of seized material sent by the Investigation Wing to all the Assessing Officers through their respective CITs, have neither been looked upon by the Assessing Officer nor has been examined by him during the course of reassessment proceedings. Accordingly, he issued a show cause notice under section 263, the contents of which have been incorporated by him at pages 2 and 3 of the impugned order, wherein he has specifically brought out that the Assessing Officer has failed to consider the relevant seized material pertaining to the assessee-company, which was evident from Annexure A-13 back page 38 of the seized material, wherein there is a categorical mention of an amount of ₹ 25 lacs was taken by the through cheque No.369817 dt. 18.3.2010 of ₹ 5 lacs; cheque no. 378628 dated 18.3.2010 of ₹ 10 lacs and cheque no. 02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scanned by him including the one marked as Annexure A-13 (back page 38) pertaining to the accommodation entry relating to the assessee, which has been noted by him from the seized documents scanned at pages 7 8 of the impugned order. The relevant observation with regard to these seized material by the Pr. CIT, for the sake of ready reference, is reproduced hereunder:- It is important to note that the assessee is also shown as beneficiary as evident from the scanned copy of the seized material namely Annexure number A-13 backpage-38 showing that 03 cheque number 369817 dated 18.3.2010 for ₹ 5 Lakhs were issued by Zenith from Axis Bank in favour of Surya Financial Services Ltd, cheque no. 378628 dated 18.3.2010 for ₹ 10 lacs was issued by Shalini Holding From Axis Bank and cheque no. 029630 dated 18.3.2010 for ₹ 10 lacs by Apoorva from Axis Bank in favour of the assessee company. In other words, on 18.3.2010 total cheques of ₹ 25 lacs were issued by three companies as mentioned above in favour of the assessee company. All the three cheques have been credited in the account of the assessee, therefore, authenticity of the seized pages cannot be doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. 3.4 On the aforesaid reasons and background, the Ld. Pr. CIT held that the Assessing Officer did not examine the relevant seized material despite the fact that entries in the seized material showed that assessee was also one of the beneficiaries of the accommodation entries given by the concerns of S.K. Jain group. The Assessing Officer was mainly trying to verify the existence of the parties, rather than to make enquiries regarding the genuineness of the transactions whether cheque was issued in lieu of cash or not as was appearing in the seized material. Lastly, he held that from the perusal of the case records of the assessee for the relevant assessment year, there is nothing on record to show that the Assessing Officer has ever confronted the assessee on such seized documents and had the Assessing Officer examined the seized material, he should have made some noting either in the order sheet or in the questionnaire issued to the assessee or any kind of reference would have been made in the submissions made by the assessee before the Assessing Officer. Therefore, the decisions and the case laws relied upon by the assessee would not be applicable that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, once reasons recorded are invalid, consequential all proceedings, including order passed u/s. 147 of the Act under the revision become nullity rendering revision proceedings and revision order u/s. 263 of the Act invalid and unsustainable in law. He further stated that the impugned order u/s 263 of the Act on basis of reasons and grounds which are not forming part of Show Cause notice dated 13.01.2017, which is clearly proscribed and prohibited (refer paragraph 7.2, 8, 9, 11, 14;, 14.1, 15 of the impugned order, which are outside the purview of show cause notice dated 13.01.2017. He further stated that impugned order u/s 263 of the Act was passed without considering asseessee's reply dated 24.01.2017 and 02.02.2017, thus rendering the entire exercise a nullity. He further stated that Ld. CIT erred in passing revision order u/s. 263 of the Act by simply setting aside the matter without himself making the due enquiries, which vitiates the entire exercise, as present case at best can be a case of inadequate enquiry but definitely not a case of no enquiry. It was the further contention that revision order u/s. 263 of the Act is subsequent to reopening proceedings u/s. 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G Bench, passed in ITA No. 2158/Del/2017 (AY 2009-10) in the case of Surya Jyoti Software Pvt. Ltd. vd. Pr. CIT, because in both these cases the order u/s. 263 of the Act has been passed by the Ld. Pr. CIT-8, New Delhi; information was received from Investigation Wing that the assessee has received accommodation entries from Sh. SK Jain; assessments were reopened u/s. 147 of the Income Tax Act, 1961 on the basis of above information and assessment completed without making any addition on account of accommodation entry taken and the Ld. Pr. CIT s order u/s. 263 of the Act on account of the fact that the AO had not taken into consideration the material seized during search in the case of Sh. SK Jain. He further stated that the present case is also covered by the decision of the Hon ble Supreme Court of India in the case of Deniel Merchants Pvt. Ltd. vs. ITO (Appeal No. 2396/2017) dated 29.11.2017, wherein the Hon ble Supreme Court of India has dismissed the SLPs in cases where AO did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officers through their respective CITs, have neither been looked upon by the Assessing Officer nor has been examined by him during the course of reassessment proceedings. Accordingly, Ld. Pr. CIT issued a show cause notice under section 263 of the Act, the contents of which have been incorporated by him at pages 2 and 3 of the impugned order, wherein he has specifically brought out that the Assessing Officer has failed to consider the relevant seized material pertaining to the assessee-company, which was evident from Annexure A-13 back page 38 of the seized material, wherein there is a categorical mention of an amount of ₹ 25 lacs was taken by the through cheque No.369817 dt. 18.3.2010 of ₹ 5 lacs; cheque no. 378628 dated 18.3.2010 of ₹ 10 lacs and cheque no. 029630 dated 18.3.2010 of ₹ 10 lacs 244595, dated 29/1/2009; and there was also a corresponding entry in the cash book on 18/3/2010 seized as per Annexure A-13/Page- 15 shows that cash of ₹ 25 lacs was given by the same Goyal Sahab to SK Jain Group. We note that the relevant copies of the seized material relating to the assessee, were not only given to the assessee along with the show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hown as beneficiary as evident from the scanned copy of the seized material namely Annexure number A-13 backpage-38 showing that 03 cheque number 369817 dated 18.3.2010 for ₹ 5 Lakhs were issued by Zenith from Axis Bank in favour of Surya Financial Services Ltd, cheque no. 378628 dated 18.3.2010 for ₹ 10 lacs was issued by Shalini Holding From Axis Bank and cheque no. 029630 dated 18.3.2010 for ₹ 10 lacs by Apoorva from Axis Bank in favour of the assessee company. In other words, on 18.3.2010 total cheques of ₹ 25 lacs were issued by three companies as mentioned above in favour of the assessee company. All the three cheques have been credited in the account of the assessee, therefore, authenticity of the seized pages cannot be doubted. On perusal of the cash book as on 18.3.2010 which has been scanned as page no. 15 of Annexure A-13 and reproduced as above, it was seen that cash of ₹ 25 lacs has been received from same Goyal Sahab on 18.3.2010 itself. This prima facie shows that the entry of ₹ 25 lacs was received against the payment of cash of ₹ 25 lakhs. 6.1 We further note that similarly, in the Appraisal Report the year wise detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eness of the transactions whether cheque was issued in lieu of cash or not as was appearing in the seized material. From the perusal of the case records of the assessee for the relevant assessment year, there is nothing on record to show that the Assessing Officer has ever confronted the assessee on such seized documents and had the Assessing Officer examined the seized material, he should have made some noting either in the order sheet or in the questionnaire issued to the assessee or any kind of reference would have been made in the submissions made by the assessee before the Assessing Officer. Therefore, the decisions and the case laws relied upon by the assessee s counsel would not be applicable that the Assessing Officer had formed an opinion on the relevant seized material. Accordingly, Ld. Pr. CIT has rightly set aside the re-assessment order on the ground that the Assessing Officer has not made any proper verification/enquiries and, therefore, the said assessment order is deemed to be erroneous and insofar as prejudicial to the interest of the Revenue in terms of amended provisions inserted in section 263 of the Act by way of Explanation 2. Thus, the order of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of scope of section 153C of the Act. If certain documents or asset or books of account belonging to the assessee would have been found during the course of search proceedings of S.K. Jain and his group concerns, then perhaps it would have been held that the provisions of section 153C of the Act would have been invoked. But here in this case what has been found, is the regular entries in the books of account of the concerns of S.K. Jain group, in which name of the assessee is appearing. Such entries in the cash books depicting the details of cheques issued in favour of the assessee as well as cash deposit through intermediates on various dates cannot be reckoned as document or books of account of the assessee. This fact has been noted by the Pr. CIT in the impugned order, wherein the entries pertains to the assessee for a sum of ₹ 25 lacs. Thus, the contention raised by the ld. counsel on this point is out rightly rejected that the proceedings under section 153C of the Act should have been initiated instead of under section147 of the Act. 6.3 As regards the contention that material or information found during the course of search in the case of S.K. Jain group cannot be h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer once the information and the material in hard copy and in form of CD was made available to him. AO should have verified the genuineness of the transaction and also should have carried out adequate enquiry to come to a logical conclusion that either there is no accommodation entry and the contents found qua the assessee being one of the beneficiary of the accommodation entry in the books of account of the concerns of S.K. Jain group are false or bogus; or assessee had amply demonstrated and substantiated before the AO regarding the genuineness of the transaction of the accommodation entry. In absence of such a mandate which was cast upon the AO, we are of the opinion that the assessment order is not only erroneous but also prejudicial to the interest of revenue, as this matter definitely requires proper enquiry and verification by the AO. 6.5 In view of above, there is absolutely no dispute that the AO has not made any enquiry regarding the accommodation entry pertaining to the assessee specifically which was found during the course of search and investigation in SK Jain Group as highlighted by the Pr. CIT. Once adequate or proper enquiry has not been done, then in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X
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