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ITO, Ward 17 (4) , New Delhi Versus M/s. Virat Credit & Holdings Pvt. Ltd. And Vice-Versa

2018 (2) TMI 871 - ITAT DELHI

Reopening of the assessment - non application of mind BY CIT-A - No proper sanction - Held that:- Perusal of the noting sheet dated 09.03.2010 to 30.12.2010 made available to the Bench for perusal shows that only AO has recorded that Addl.CIT has considered the reasons recorded before according the sanction, however even no prima facie material is there, if Addl.CIT has applied his mind by considering the reasons recorded before according the sanction. We are of the considered view that the AO w .....

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charging quasijudicial function. - Reassessment opened by the AO in this case is not sustainable in the eyes of law, hence hereby quashed. - Decided in favour of assessee - ITA No.89/Del./2012, CO No.57/Del/2012 - Dated:- 9-2-2018 - SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER For The ASSESSEE : Shri Ashwani Taneja, Advocate Shri Shantanu Jain, Advocate For The REVENUE : Shri Vijay Verma, CIT DR Shri Amit Jain, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : .....

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e facts and circumstances of the case and in law the learned CIT (A) as erred in deleting the addition of ₹ 1,04,50,0001- made u/s 68 of the Income Tax Act, 1961 treating the credit in the books of the assessee as unexplained shown as receipt of share application money. 2. On the facts and circumstances of the case and in law the learned CIT (A) has erred in appreciating that the assessee company had not discharged its onus of proving the creditability of the applicants from whom the money .....

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hat :- 1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in quashing the impugned assessment order passed by Ld. AO without complying with the mandatory requirements of section 147 to 151 of the Income tax Act, 1961 and without recording valid approval as per law and passing the impugned order that too without independent application of mind. 2. That in any case and in any view of the matter action of Ld. CIT (A) in not quashing the assessment order is bad in .....

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ompleted the assessment u/s 143 (3) and thereby made an addition of ₹ 1,04,50,000/- on account of obtaining accommodation entries under the garb of share application money from different persons as unexplained cash credit u/s 68 of the Act and made further addition of ₹ 1,04,500/- as unexplained expenditure u/s 69C of the Act. 5. Assessee carried the matter by way of filing appeal before the ld. CIT (A) who has deleted the addition of ₹ 1,04,50,000/- and ₹ 1,04,500/- by p .....

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elied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 7. Undisputedly, the assessment of the assessee for AY 2005- 06 was framed u/s 143 (3) vide order dated 04.12.2007. It is also not in dispute that ld. CIT (A) has given a relief to the assessee company on merits without deciding the legal issue of reopening. The AO on receipt of information from Addl.CIT, Range-1, New Delhi reopened the assessment by issuing a notice dated 25.03 .....

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143(3) of the IT Act vide order dated 4/12/2007 at returned income of ₹ 31490/-. Later on information received from office of the Addl CIT Range-1 New Delhi that during the assessment proceedings of M/s Aanchal Net Technologies Pvt Ltd, the ITO Ward 1 (1), New Delhi, came across the 7 cases of following companies, which were involved in providing bogus entries: i) M.s Anchal Net Technologies Pvt Ltd ii) M/s Anchal Buildcon Pvt Ltd iii) M/s Anchal Contractors Pvt Ltd iv) M/s Anchal Township .....

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companies. In some of the companies he himself was the Director. In other companies there were dummy Directors and Sh Jindal was actually controlling the affairs of those companies. Sh PK Jindal furnished a list of companies, which were not doing any real business activities but were engaged in providing accommodation entries. Sh Jindal also furnished a list of beneficiaries, who got the accommodation entries in form of share application money after making cash payment to the companies (or thei .....

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n entries Amount of share application money received through accommodation entry (Rs) 1. Instant Traveling and Tours Pvt. Ltd. 9 lac 2. Luster Finlease Investment Pvt. Ltd. 5 lac 3. Junnon Capital services Pvt. Ltd. 10 lac 4. Aanchal Buildcon Pvt. Ltd. 27.50 lac 5. Juneja Nagpal Construction Pvt. Ltd. 8 lac 6. Prasandi Leasing & Finance Pvt. Ltd. 5 lac 7. Dume Footwear Pvt. Ltd. 25lac 8. Akik Education Centre Pvt. Ltd. 5 Lac 9. Gaurav Holding Pvt. Ltd. 10 lac Total 104.50 lac It may be menti .....

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reasons to believe that assessee income amounting to ₹ 104.50 Lac chargeable to tax has escaped assessment for the assessment year 2005-06. Submitted to the Addl Commissioner Range-17 for her perusal and sanction under section 151 for issue of notice under section 148 of the IT Act. 8. The ld. AR for the assessee challenging the reopening contended that Addl.CIT has accorded sanction without applying judicial mind which is not sustainable; that AO has not applied his independent judicial .....

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for the assessee company contended that only prima facie material is to be seen for the purpose of reopening; that sanction has been accorded by Addl. CIT for reopening after duly applying his mind. 10. First of all, ld. AR for the assessee company drew our attention towards sanction accorded by the Addl.CIT for reopening of the assessment obtained by moving an application under Right to Information Act, 2005, available on file as Annexure A . Perusal of the sanction accorded by Addl. CIT in the .....

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ure enclosed but such annexure has not been produced before the Bench for perusal. 12. Apparently, from the approval recorded and words used that Yes. I am satisfied. , it has proved on record that the sanction is merely mechanical and Addl.CIT has not applied independent mind while according sanction as there is not an iota of material on record as to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment u/ .....

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file of the said companies to arrive at a logical conclusion so as to issue the notice u/s 148 of the Act. When this fact is examined in the light of the completed assessment of the assessee u/s 143 (3), all the documents concerning share application money, now available at pages 1 to 30 of the paper book, were supplied to the AO. This fact has not been taken into consideration by the AO before initiating the proceedings u/s 147/148 of the Act. However, since reopening of assessment in this case .....

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961 - Income escaping assessment - Sanction for issue of notice (Recording of satisfaction) - High Court by impugned order held that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under. section 148, reopening of assessment was invalid - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [In favour of assessee] Search and Seizure-Procedure for black Assessment- Sear .....

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atisfied'-Action for sanction was alleged to be without application of mind and to be done in mechanical manner-Held, while according sanction, Joint Commissioner, Income Tax only recorded "Yes, I am satisfied"-Mechanical way of recording satisfaction by Joint Commissioner, that accorded sanction for issuing notice u/s. 147, was clearly unsustainable-On such• consideration, both Appellate authorities interfered into matter- No error was committed warranting reconsideration-As .....

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findings :- Reassessment-Issuance of Notice-Sanction for issue of Notice-Assessee had in its return for A Y 2001-02 claimed that sum of ₹ 1 Crore was received towards share application amounts and a further sum of Thirty Five Lakhs was credited to it as an advance towards loan-Original assessment was completed u/s 143(3)-However, pursuant to reassessment notice, which was dropped due to technical reasons, and later notice was issued and assessments were taken up afresh-After considering su .....

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ess of reopening of assessment- Tribunal upheld assessee's cross-objections and dismissed Revenue's appeal holding that there was no proper application of mind by concerned sanctioning authority u/s Section 151 as a precondition for issuing notice u/s 147/148-Held, Section 151 stipulates that CIT (A), who was competent authority to authorize reassessment notice, had to apply his mind and form opinion- Mere appending of expression 'approved' says nothing-It was not as if CIT (A) h .....

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t only AO has recorded that Addl.CIT has considered the reasons recorded before according the sanction, however even no prima facie material is there, if Addl.CIT has applied his mind by considering the reasons recorded before according the sanction. We are of the considered view that the AO who has recorded the reasons cannot enter into the mind of the sanctioning authority (Addl.CIT) discharging the quasi-judicial function for according valid sanction for reopening the assessment. 17. Moreover .....

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while deciding the issue of reopening u/s 147/148 of the Act. Operative part of which is reproduced as under:- 19. Before parting with the case, the Court would like to observe that on a routine basis, a large number of writ petitions are filed challenging the reopening of assessments by the Revenue under Sections 147 and 148 of the Act and despite numerous judgments on this issue, the same errors are repeated by the concerned Revenue authorities. In this background, the Court would like the Rev .....

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