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TMI Blog2017 (3) TMI 1706X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 was received from the office of the Chief Commissioner of Income Tax, Delhi-I, New Delhi therein forwarding letter dated 19.3.2013 received from the Commissioner of Income Tax, Central II, New Delhi alongwith CD containing the details of the accommodation entries provided by Sh. Rakesh Gupta, Sh. Vishesh Gupta, Sh. Navneet Jain and Sh. Vaibhav Jain was appearing. After going through the complete list and indentifying the parties, after recording the reasons, the AO has made an addition of Rs. 8,57,330/- on account of bogus purchase and completed the assessment at an income of Rs. 8,57,330/- u/s. 143(3)/147 of the I.T. Act, 1961 vide his order dated 07.3.2014. 3. Aggrieved by the order of the AO, the assessee came in appeal before the learned CIT(A), who vide impugned order dated 18.3.2016 has dismissed the appeal of the assessee and accordingly enhanced the addition from Rs. 8,57,331/- to Rs. 10,33,083/-. 4. Against the order of the Ld. CIT(A), assessee is in appeal before the Tribunal. 5. At the time of hearing, Ld. Counsel has stated that exactly similar reasons recorded by the AO has been struck down by the various orders of the ITAT, Delhi Benches. Ld. Counsel of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi along with a CD containing the details of accommodation entries provide by Shri Rakesh Gupta & Sh. Vishesh Gupta and Sh. Navneet Jain & Sh. Vaibhav Jain and directing this office to take necessary action as per section 148 in respect entries pertaining to A.Y. 2006-07, which in time barring on 31/03/2013. The information provided by the GIT, Gentral-11, New-Delhi vide his letter dated 19/03/2013 reads as under:- "Kindly find enclosed herewith letter dated 13/03/2013 of ACIT, Central Circle-10 duly forwarded by the Addl. C1T, Central Range- IV, alongwith its enclosures on the subjection mentioned above. 2. The assessment of search and seizure cases of Sh. Rakesh Gupta, Sh. Sh. Vishvesh Gupta, Sh. Navneet Jain & Sh.Vaibhav Jain are under process with ACIT, Central Circle 10, During the assessment proeeding uls 153A in the aforesaid cases, details regarding accommodation entries given by the above entry. 3. The list of accommodation a entry recipients has been obtained from Sh. Rakesh Gupta and Sh. Vishesh Gupta. The list gives the name of the firm which has provided the accommodation entry along with the name: and address of the recipients of accommodation entry. 4. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, notice u/s. 148 of the Act may be issued. SD/- (Veena Rastogi) ITO, Ward 39(2), New Delhi 8. After perusing the aforesaid reasons, I find that the facts and circumstances of the present case are similar to that case of Unique Metal Industries (supra) and Signatures Hotel, the legal issue of reopening in the Assessee's Appeal is squarely covered by the Order dated 28.10.2015 of this Bench passed in the case of Unique Metal Industries vs. ITO in ITA No. 1372/Del/2015 dated 28.10.2015 and decision of the Hon'ble High Court in the case of Signatures Hotel. The Tribunal in the case of Unique Metal has adjudicated the legal issue at page no. 9 to 23 vide para no. 7 to 13 as under:- "7. I have perused the assessment order, order passed by the learned CIT(A) as well as the paper book. It will be relevant to refer to the reasons recorded by the Assessing Officer and the approval of the Joint Commissioner of Income Tax which reads as under:- "Reasons for the belief that the income has escaped assessment in the case of M/s Unique Metal Ind for the assessment year 2006-07 A letter bearing F.No. Addl. CIT/(Hq)/(Coord.)/Accommodation entry/2012-13/15016 dated 26.03.2013 was receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accommodation entries provided by Sh. Rakesh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain pertaining to A.Y. 2006-07, it is noted that the following accommodation entries have been taken by the assessee namely M/s Unique Metal Industries:- Sl. No. Accommodation entry provided by Name of party to whom accommodation entry is provided Amount of Accommodation entry 1 Shree Shyam Trading Co. M/s Unique Metal Industries Rs.2,44,399/- 2 Vishnu Trading Co. M/s Unique Metal Industries Rs.8,12,542/- 3 Shree BankeyBihari M/s Unique Metal Industries Rs.3,28,368/- Total amount of entries= Rs.13,85,309/- Since Sh. Rakeh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain during the course of assessment proceedings u/s 153A of I. Tax Act have admitted that they have given accommodation entries to the parties whose lists have been provided by them to the ACIT, Central Circle-10, New Delhi, therefore, it is fair to conclude that M/s Unique Metal Industries whose name is appearing in the said list, has taken accommodation entries from Sh. Rakeh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der:- "Here it is pertinent to mention that in the intervening period, this office had conversations with the ACIT, Central Circle-10, New Delhi from whom vide this office's letter dated 23.07.2013, 02.09.2013, 14.10.2013, 06.11.2013, 22.11.2013, 09.12.2013 & 24.12.2013 and vide Joint CIT, Range-39, New Delhi's letter dated 16.12.2013, the following details/documents were sought:- i) Copies of the statements recorded of Sh. Rakeh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain in search/post search/assessment proceedings. ii) Soft copies of the tatements recorded of Sh. Rakeh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain in search/post search/assessment proceedings.\ iii) Hard copy of assessment orders passed in these cases for A.Y. 2006-7 iv) Soft copy of assessment orders passed in these cases for A.Y. 2006-07 v) Any other detail/document you may deem fit that need to be confronted with the parties whose cases have been reopened u/s 148 of I. Tax Act. 4. In response to these letters, the ACIT, Central Circle-10, New Delhi vide his letter dated 20.12.2013, received by this office on 27.12.2013, forwarded his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet appended to the reasons and quoted on page 4 of the assessment order whereby against Item no. 7, whether the assessment is proposed to be made for the first time, the Assessing Officer has stated 'Yes', and in Column no. 7(a), whether any voluntary return had already been filed and in Column no. 8 (b), date of filing the said return 'NA' has been stated. Thus this is a clear case of non-application of mind by the Assessing Officer. It may also be relevant that on page 2 of the assessment order, the Assessing Officer himself has stated that in this case the return of income for the year under consideration was filed with this ward on 27.09.2006. These facts clearly demonstrate that the return was with the same ward and at the time of recording of the reasons for reopening the assessment, the Assessing Officer has not looked at the return and in a mechanical way, on receipt of the letter from the CIT, Central-2, New Delhi the assessment has been reopened. It is a settled position of law that there must be material for formation of a belief that income has escaped assessment. Further reasons referred to must disclose process of reasoning by which the Assessing Officer holds reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the names of the companies were available with the authority. Their existence is not disputed. What is mentioned is that these companies were used as conduits. The same has not been referred to while passing the order of rejection. The assessee in his objections had clearly stated that the companies had bank accounts and payments were made to the assessee company through banking channel. The identity of the companies was not disputed. Under these circumstances, it would not be appropriate to require the assessee to go through the entire gamut of proceedings. It is totally unwarranted. Resultantly, the initiation of proceedings under s. 147 and issuance of notice under s. 148 are hereby quashed." 11. Similarly in Signature Hotels (P) Ltd. vs. ITO (2011) 338 ITR 51 (Del) the Hon'ble Court has also quashed the reopening of the assessment on the ground that the AO did not independently apply his mind to the information received from the Director of Income Tax (Inv.). The relevant observation of the Court reads as under:- "The first sentence of the reasons states that information had been received from Director of IT (Inv.) that the petitioner had introduced money amounting to Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the very same Dy. Director to issue a notice under s. 148 and the third sentence again comprises of a direction given by the Addl. CIT to initiate proceedings under s. 148 in respect of cases pertaining to the relevant ward. These three sentence are followed by the following sentence, which is the concluding portion of the so-called reasons : "Thus, I have sufficient information in my possession to issue notice under s. 148 in the case of M/s SFIL Stock Broking Ltd. on the basis of reasons recorded as above." From the above, it is clear that the AO referred to the information and the two directions as 'reasons' on the basis of which he was proceeding to issue notice under s. 148. These cannot be the reasons for proceeding under s. 147/148. The first part is only an information and the second and the third parts of the beginning para of the so-called reasons are mere directions. From the so-called reasons, it is not at all discernible as to whether the AO had applied his mind to the information and independently arrived at a belief that, on the basis of the material which he had before him, income had escaped assessment. Consequently, the Tribunal has arrived at the corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. (iv) Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid up capital of Rs. 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." 9. In view of above, I am of the considered view that the aforesaid issue in dispute is exactly the similar and identical to the issue involved in the present appeal and is squarely covered by the aforesaid decisions of the Hon'ble High Court of Delhi Signatures Hotels (P) Ltd. (Supra) and ITAT, Delhi decision in Unique Metal Industries vs. ITO. Hence, respectfully following the above precedents in the case of Signature Hotels (P) Ltd. vs. ITO and Unique Metal Industries vs. ITO, I decide the legal issue in dispute in favor of the Assessee and against the Revenue and accordingly quash the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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