TMI Blog2018 (8) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.07.2014 of the CIT(A)- XXI, New Delhi relating to assessment year 2005-06. The assessee has filed the Cross Objection against the appeal filed by the Revenue. For the sake of convenience, the appeal as well as the Cross Objection were heard together and are being disposed of by this common order. 2. Facts of the case, in brief, are that the assessee is a company engaged in the business of manufacturing of parts for Air-conditioning machines, erection assembling Air-condition system and some trading of some such parts. It filed its return of income on 31.10.2005 declaring total income of ₹ 1,08,56,711/-. The assessment u/s 143(3) was completed vide order dated 20.12.2007 on a total income of ₹ 1,08,86,710/- by adding an estimated disallowance of ₹ 30,000/- out of vehicle running expenses on account of nonmaintenance of logbook. Subsequently, the Assessing Officer reopened the assessment u/s 148 by recording the following reasons :- Reasons recorded for re-opening the case of 147/148 of Income Tax Act . In this case assessee has furnished Income Tax Return declaring income of ₹ 1,08,56,711/- and assessment was completed u/s 143(3) at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 148 was issued to the assessee. The assessee filed objection against such reopening which was disposed of by the Assessing Officer by passing a speaking order. Thereafter, in response to notice u/s 143(3) 142(1), the assessee filed requisite details. 4. During the course of assessment proceedings, the Assessing Officer observed that information has been received from the Investigation Wing of the Department that assessee, during the financial year 2004-05, has received accommodation entries of ₹ 2 crores from three different entities on 9 different dates. The three different entities are Sino Credit Leasing Ltd., Champ Finvest Pvt. Ltd. and Vishrut Marketing Pvt. Ltd. which were controlled and operated by Shri S.K. Gupta. He observed that during the course of survey u/s 133A on 20.11.2007, Shri S.K. Gupta, the controller of above said three companies had admitted in the statement recorded on oath to have given only accommodation entries. Thereafter, on 26.12.2008 in assessment proceedings, Shri S.K. Gupta under another statement on oath has stated that he is controlling 30 companies and except for some share brokerage other transactions of these concerns/entities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough account payee cheques and all the details were submitted before the AO vide Annexure-A. It is also apparent that the name of the assessee does not appear in the statement of the third party i.e. Shri S.K. Gupta vide a statement dated 20/11/2007 in question No.8 vide PB-1 Page-67 to 75 as discussed above. Even otherwise as per the general principle of law the AO is entitled to assess any income which is received by the assessee or has accrued to the assessee but in the present case no such income has been received by the assessee or has accrued to the assessee as the normal business loans received by the assessee has been repaid with interest after TDS as discussed above. After considering all the facts and circumstances of the case, I am of the view that the AO has not made out any proper case of escapement of income or concealment of income or even deemed income and as such it is difficult to sustain such additions on notional basis which has no legal footing and accordingly the addition made by the AO is deleted. 7. Aggrieved with such order of the ld. CIT(A) the Revenue has filed the appeal before the Tribunal by raising the following grounds :- 1. On the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Sir, Sub- Reasons recorded for re-opening the case u/s 147/148 of IT Act. Assessment Year 2005-06-reg. Refer to above mentioned subject. Reasons recorded for re-opening u/s 147/148 of the IT Act, 1961 in the case of M/s. Zeco Aircon Ltd. for the assessment year 2005-06 is as under :- Intimation has been received from the Investigation Wing, Delhi that assessee company has taken accommodation entries amounting to ₹ 2 crores from following parties. S. No. Name of the party Amount Date of receipt 1. Sino Credit 10,00,000 22-02-2005 2. Champ Finvest 10,00,000 22-02-2005 3. Sino Credit 10,00,000 23-02-2005 4. Sino Credit 10,00,000 23-02-2005 5. Vishrut Marketing 15,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in the case of Pr.CIT vs. Meenakshi Overseas (P) Ltd. reported in 395 ITR 677, Pr.CIT vs. G G Pharma reported in 384 ITR 147, Pr.CIT vs. Sabh Infrastructure reported in 398 ITR 19 and Pr.CIT vs. RMG Polyvinyl (I) Ltd. reported in 396 ITR 5, he submitted that the Hon ble Delhi High Court in the above decisions has categorically held that reopening of the assessment on the basis of report of the Investigation Wing without independent application of mind by the Assessing Officer is invalid. He accordingly submitted that since the assessment in the instant case has been reopened on the basis of report of the Investigation Wing and there is no independent application of mind by the Assessing Officer, therefore, the reopening of the assessment u/s 147 is void ab-initio . 11. So far as merit of the case is concerned, he relied on the order of the ld. CIT(A). 12. The ld. DR on the other hand heavily relied on the order of the ld. CIT(A). He submitted that the Assessing Officer in the instant case after recording the reasons and after fulfilling all the conditions as laid down for reopening of the assessment has issued notice u/s 148. Therefore, the same being in order shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. Indeed it is borrowed satisfaction. The reasons failed to demonstrate the live link between the tangible material and formation of the reasons to believe that income has escaped assessment. 14. We find, following the above decisions the Hon ble Delhi High Court in the case of RMG Polyvinyl (I) Ltd. (supra) has quashed the reassessment proceedings on the basis of report of the Investigation Wing by observing as under :- 12. Recently, in its decision dated 26th May, 2017 in ITA No.692/2016 (Principal Commissioner of Income Tax-6 v. Meenakshi Overseas Pvt. Ltd.), this Court discussed the legal position regarding reopening of assessments where the return filed at the initial stage was processed under Section 143(1)of the Act and not under Section 143(3) of the Act. The reasons for the reopening of the assessment in that case were more or less similar to the reasons in the present case, viz., information was received from the Investigation Wing regarding accommodation entries provided by a 'known' accommodation entry provider. There, on facts, the Court came to the conclusion that the reasons were, in fact, in the form of conclusions one after the other and that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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