TMI Blog2018 (10) TMI 1298X X X X Extracts X X X X X X X X Extracts X X X X ..... closed/produced by the assessee relating to share capital increased during the year under consideration. Therefore, in our considered opinion, the Assessing Officer was not justified to reopen the assessment only on the basis of information received from Investigation Wing, that too beyond period of limitation of four years. - Decided in favour of assessee. - ITA No. 637/Del/2018 - - - Dated:- 23-10-2018 - Shri Amit Shukla, Judicial Member And Shri L.P. Sahu, Accountant Member For The Appellant : Shri Sunil Jain, FCA For The Respondent : Sh. Kaushlendra Tiwari, Sr. DR ORDER Per L.P. Sahu, A.M.: This is an appeal filed by the assessee against the order of the ld. CIT(A)- VII, New Delhi dated 16.10.2017 for the assessment year 2009-10 on the following grounds : 1. On the facts and circumstances of the case and in law, the notice dated 21.03.216 issued by the learned Assessing Officer under section 148 of the Act is wrong and bad in law and the learned CIT(Appeals) has erred in upholding the validity of the notice. 2. On the facts and circumstances of the case and in law, the notice dated21.03.2016 issued by the learned assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heque/ PO number, the name of company engaged in providing accommodation entries, the mediator/ middle man, bank etc. noted from scrutiny of the seized documents have been tabulated and enclosed with the report. 4. In the appraisal report of Sh. Surendra Kumar Jain Group, has summarized evidences which had proved that Sh. Surendra Kumar Jain and his brother I3h. Virendra Jain were engaged in the business of providing accommodation entries. The modus operandi for providing accommodation entries in lieu of cash as adopted by the Jain Brothers have-been discussed below in brief: A. During the course of search proceedings in the Sh. S.K. Jain Group it was found that a number of companies were running from the residential as well as other premises related to Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain. However, all the books of accounts and other relevant papers of these companies were found at the residence of Sr. Surendra Kumar Jain and Sh. Virendra Kumar Jain itself and no documents was found at the other addresses which were mentioned in the statutory records of these companies. The above facts and result of post search enquiries have revealed Shri Surendra Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Virgin Capital Services P. Ltd. Total 50,00,000 7. I have carefully examined the report of investigation wing along with details of transaction as recorded in the seized documents which revealed following important facts: i. That passbooks and cheque books of approximately 200 persons/firms/companies engaged in the business of providing accommodation entries along with details of beneficiary companies/ entries were found and seized, from the residence of Sh. Surendra Kumar Jain and Sh. Virendra Kumar. . ii. Undated blank cheque and signed by entities engaged in providing accommodation entries were also seized from custody and control of Jain. iii. That computer hard discs seized from the residence of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain contained confidential details like user name, passwords and IDs of the various companies engaged in providing accommodation entries required for filing of e-returns of these companies, authority letter of these companies authorizing to represent these companies in various Govt. Department. These co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (14,Companies). iii. 209, Bhanot Plaza, 3, D.B. Gupta Road, Paharganj, New Delhi. (11 companies) 9. In order to verify the genuineness and the existence of these companies at the above mentioned addresses, a simultaneous survey action 133A of the I.T. Act, 1961 was carried out on 14.09.2010 on above referred to address by officers of Investigation Wing on the Department which resulted following facts: a. On the address, 106, Palco House; T-10, Main Patel Road, Patel Nagar, Delhi, the survey party found only one person named Sh. Mukesh Kumar S/o Sh. Satyender Kumar, R/o Village Gazera, Distt. Pauri Gadhwal in this premises. He deposed before the survey party that his employer and owner of that place is one Sh. Virendra Jain R/o somewhere in Rajender Nagar, Delhi and provided his telephone No. as 9891095232. It was already proved from the call records that this telephone number pertained to Sh. Virendra Jain. resident of 221/, New Rajinder Nagar; New Delhi. He also disclosed that Shri Virendra Jain used to visit the place once in a while. Sh. Mukesh Kumar also told that no books of account of companies registered on this address was available in the premises i.e. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belongs Axis Bank 22401020000 5906 Eagle Infratech Pvt. Ltd. 9891095232 Virendra Jain 22401020000 7160 Kailash Textiles 9891095232 Virendra Jain 22301020002 0846 Mani Mala Delhi Properties Pvt. Ltd. 9891095232 Virendra Jain 22401020000 5890 Singhal Securities Pvt. Ltd. 9310395234 Surendra Kumar Jain 224010200000 7016 Roshan Lal Lalit Kumar CO. 9310395234 Surendra Kumar Jain 22401020000 5845 Finage Leasing Finance Ltd. 9310395234 Surendra Kumar Jain 22301020001 2014 Mani Mala Delhi Properties Pvt. Ltd. 9310395234 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were increased sufficiently, accommodation entries through RTGS/Cheque/P.O. in the shape of the share capital, share premium, capital gains or loans as per the specific requirement of the recipient clients were provided to beneficiary in lieu of the cash received from them. In this way, the chain for providing an accommodation entry gets completed. d. The above findings corroborated with the seizure of documents by investigation wing evidencing the above mentioned process used by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain for providing accommodation entry. 12. As sequel to the information received from the Investigation Wing, copies ofavailable assessment orders CIT(A) orders of members of accommodation' entry group were obtained from assessment wing for examination. Reason for formation of belief: 13. I have carefully perused and considered the return of income of the assessee, information received from Investigation Wing, copies of incriminating documents seized from custody and control of Jain Brothers, copies of assessment order and appeal order as discussed along with evidences related to the assessee and have reached the-following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 50,00,000/- by assessee from S.K.Jain Group Companies were noted on the seized documents. 14. A careful scrutiny of information received from the investigation wing and subsequent analysis of report of investigation wing, copies of seized document and verification of assessment and appeal order in case of Jain Brothers lead to an irresistible conclusion that in business of providing accommodation entries in lieu of cash payment by beneficiary including assessee by charging commission, accordingly, an amount of ₹ 50,00,000/-. represents unexplained credit u/s 68 of the Act in books of A/c of the assessee. Income Chargeable to tax escaping assessment 15. Considering the above referred to credible information, incriminating seized document u/s 132 of the Act and enquiries and investigation subsequent to the information, I have reason to believe that an amount at least of ₹ 50,00,000/-has escaped assessment in case the of the assessee for the relevant year. 16. Prior to 1989 section 147 provided for two grounds to reopen concluded assessments: (i)On basis of information received by the Assessing Officer assessment could be reopened. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly was received as follows : Name of Entry Operators Comments Ad Fin Capital Services P. Ltd. No reply received Shalini Holdings Ltd. Notice returned back Mani Mala Delhi Pro. P. Ltd. No reply received VIP Leasing Finances P. Ltd. No reply received Virgin Capital Services P. Ltd. Notice returned back Various opportunities were given to the assessee and notices u/s. 131 were also issued to produce the directors, but neither they attended on the appointed date nor any reply received from the assessee. On 25.11.2016, Shri Sunil Jain attended and he asked to confront the relevant documents, which were seized on the search of S.K. Jain Group, which was already confronted earlier by the Assessing Officer. The onus for producing the directors as per summons issued was not discharged by the assessee. The last opportunity was also granted on 28.11.2016. But the assessee did not produce the directors. The Assessing Officer observed that the controller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings. Therefore, it is a complete change of opinion. Therefore, the reopening is unjustified. The assessee also filed a paper book containing 161 pages and copies of submissions made before the Assessing Officer also. 6. On the other hand, the ld. DR relied on the order of the lower authorities and submitted that the assessee has not disclosed fully and truly all material facts during the course of assessment proceedings. Therefore, on the basis of information received from the investigation wing, the reopening is justified beyond four years. As per reasons recorded, S.K. Jain group had accepted clearly that they were engaged in providing accommodation entries and the assessee is one of the beneficiaries. The amounts accepted before the investigation wing, are reflected in the books of the assessee. The Assessing Officer at the time of original assessment proceedings did not make any enquiry regarding the share application money received by the assessee. During the course of re-assessment proceedings, the assessee was asked to produce the directors of the share applicant companies, but in spite of number of opportunities provided, he did not comply with it. The case laws c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and Findings 10. The law on this subject is well settled. As held in Kelvinator (supra), the powers under Section 147of the Act have to be exercised after a period of four years only if there is a failure to disclose fully and truly all material facts and information, by the Assessee. This legal position has been reiterated recently by this Court in Oracle India Pvt. Ltd. v. ACIT 2017 SCC OnLine Del 9360, Unitech Limited v. DCIT 2017 SCC OnLine Del 9408, BDR Builders and Developers Pvt. Ltd. v. ACIT 2017 SCC OnLine Del 9425 and in judgment dated 30th August, 2017 in W.P.(C) 5807/2014 (Swarovski India Pvt. Ltd. v. Deputy Commissioner of Income Tax). 11. Thus, it is also now well settled that the reasons to believe have to be self explanatory. The reasons cannot be thereafter supported by any extraneous material. The order disposing of the objections cannot act as a substitute for the reasons to believe and neither can any counter affidavit filed before this court in writ proceedings. 12. In the present case, the reasons to believe contained the names of the very same five companies which were initially disclosed by the Petitioner during the assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation, if these companies were in fact 'paper companies'. No effort has been made to establish the connection between the statement of Mr. Navneet Kumar Singhania and the five companies. 16. Mr. Chaudhary's submission that this Court cannot dictate the manner and content of what is to be written in the reasons to believe is correct as a legal proposition. However, the Court has to examine the reasons to believe to see if it satisfies the rigour of the provisions. The observations of this court in Multiplex (supra) are relevant in this respect and are set out below: 24. In our view, the question whether the Assessee could have been stated to disclosed fully and truly all material facts have to be examined in the light of facts of each case and also the reasons that led the AO to believe that income of an Assessee has escaped assessment. In a case where the primary facts have been truly disclosed and the issue is only with respect to the inference drawn, the AO would not have the jurisdiction to reopen assessment. But in cases where the primary facts as asserted by the Assessee for framing of assessment are subsequently discovered as false, the reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO for re-opening the assessment - especially in those cases where the first proviso to Section 147 is attracted. The reasons to believe ought to also paraphrase any investigation report which may form the basis of the reasons and any enquiry conducted by the AO on the same and if so, the conclusions thereof; (iii) where the reasons make a reference to another document, whether as a letter or report, such document and/ or relevant portions of such report should be enclosed along with the reasons; (iv) the exercise of considering the Assessee's objections to the reopening of assessment is not a mechanical ritual. It is a quasi- judicial function. The order disposing of the objections should deal with each objection and give proper reasons for the conclusion. No attempt should be made to add to the reasons for reopening of the assessment beyond what has already been disclosed. There are several other decisions of Hon ble Jurisdictional High Court on this issue. Therefore, respectfully following the decision of Hon ble Jurisdictional High Court, as reproduced above, we are of the considered opinion that the ld. Authorities below fell in error in justifying the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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