TMI Blog2018 (11) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is not to be seen at the stage of the reopening of the assessment. In our opinion, the reassessment proceeding is a kind of enquiry, where the assessee is granted opportunity to explain his stand on the correctness of reasons to believe escapement of income. Further, the Assessing Officer is not empowered in law to carry out any enquiry, if no assessment proceeding are pending. The reassessment proceedings thus, empower the Assessing Officer to verify correctness of the information. In the case of Ankit Financial Services Ltd.[2017 (1) TMI 1041 - GUJARAT HIGH COURT] material indicating that assessee has received bogus share application through accommodation entry is one of the beneficiary, was recovered in the search of another person. In such circumstances, the initiation of reopening was justified. CIT(A) is not justified in holding that reassessment proceeding are invalid. Accordingly, we set-aside the order of the Ld. CIT(A) to the extent of holding the proceedings under section 147 of the Act is invalid. - Decided in favour of revenue - ITA No.5570/Del/2011 - - - Dated:- 24-10-2018 - Shri Amit Shukla, Judicial Member And Shri O.P. Kant, Accountant Member Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, it was mentioned that certain investigations were carried out by the Investigation Wing of the Department, wherein it was found that amount of ₹ 91,51,200/- entered in the books of the accounts of the assessee by way of share application money received from following parties, was actually in the nature of accommodation entries taken from entry operators: a. Aggregate Finance and Investment P. Ltd. Rs.50,00,000/- b. Garner Finance and Securities P. Ltd. Rs.26,25,000/- c. Viniyas Finance and Investment P. Ltd. Rs.15,00,000/- Total Rs.91,25,000/- 3.1 During assessment proceedings, in support of genuineness of the share application money, the assessee filed confirmation letters, bank statement, copy of the Income Tax Return, copy of certificate of incorporation alongwith Memorandum of Articles etc. The Assessing Officer issued summon under section 131 of the Act to the above 3 parties at their addresses as disclosed by the assessee, however, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on received was illegal. But according to him, the Hon ble Supreme Court in the case of Raymond Woollen Mills Ltd versus ITO and Others has held that at the stage of initiation of reassessment proceeding, the sufficiency or correctness of the material is not to be seen. He relied on the decision of the Hon ble Delhi High Court in the case of PCIT Vs Paramount Communication Private Limited (2017) 392 ITR 444 (Delhi) wherein the information received from the DRI regarding bogus purchases was held to be a tangible material outside the record to initiate valid reassessment proceedings. He submitted that the SLP filed by the assessee against the above decision was also dismissed by the Hon ble Supreme Court as reported in Paramount Communication Private Limited Vs PCIT 2017-TIOL-253-SC-IT. The Ld. Sr. DR also relied on the decision of the Hon ble Gujarat High Court in the case of Ankit Financial Services Ltd. versus DCIT (2017) 78 taxmann.com 58 (Gujarat). In view of the above arguments, the Ld. Sr. DR submitted that the reassessment proceeding have been validly initiated by the Assessing Officer. 6. We have heard the submission of the Ld. DR and perused the order of the lower a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EN NAME OF ACCOUNT HOLDER OF ENTRY GIVING ACCOUNT BANK FROM WHICH ENTRY GIVEN BRANCH OF ENTRY GIVING BANK A/C N( ENTRY GIVIN ACCOL ERAWAT INFOTLCH PVT LTD 1001000 7-Dec-01 AGCRF.GATF. FINANCE INVLS RATNAKAR KAROL BAG II 52 ERAWAT INFOTLCH PVT LTD 1001000 2851 8-Dec-01 AGGREGATE FINANCE INVLS RATNAKAR KAROL BAGH 52 ERAWAT INFOTLCH PVT LTD 1001000 2852 10-Dec-01 AGGREGATE FINANCE INVLS RATNAKAR KAROL BAGH 52 ERAWAT INFOTLCH PVT l.TD 1001000 2853 11-Dec-01 AGGREGATE FINANCE INVES RAI'NAKAR KAROL BAGH 52 LERAWAT INFOTLCH PVT LTD 1001000 2855 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LTD 500500 1207 29-Nov-0l VINIYAS FINANCE INVI S EMI NE RATNAKAR KAROL BAGH 30 ERAWAT INFOTLCH-PVT LTD 500500 1207 29-Nov-01 VINIYAS FINANCE: INVESTMENT RATNAKAR KAROL BAGH 30 ERAWAT INFOTLCH PVT I II) 1001000 1211 29-Nov-OI VINIYAS FINANCE: INVESTMENT RATNAKAR KAROI BAGII 30 ERAWAT INFOTLCH PVT LTD 1001000 1211 29-Nov-OI VINIYAS FINANCE INVESTMENT RATNAKAR KAROL BAGII 30 8. We find that in the instant case, the return of income filed by the assessee in the regular course was only processed under section 143 (1) of the Act, wherein prima-facie arithmetical error in computation of income are only checked. No detailed scrutiny of the return of income filed was carried out prio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the direction of the Additional Commissioner of Income-tax. In the present case before us, there is no such allegation and hence ratio of the said decision cannot be applied over the instant case. 12. In the case of CIT Vs Atul Jain Vinita Jain (supra) relied upon by the Ld. CIT(A), the reopening was held illegal on the ground that case was reopened without verifying the correctness of the information received but merely accepted the truth of vague information in the mechanical manner. In this regard, the Ld. DR has relied on the decision of the Hon ble Supreme Court in the case of Raymond Woollen Mills Ltd (supra), wherein the Hon ble Supreme Court has held that sufficiency or correctness of the material is not a thing to be considered at the stage of reopening of the assessment. Thus, in view of the decision of the Hon ble Supreme Court in the case of Raymond Woollen Mills Limited (supra), the ratio of the decision in the case of Atul Jain Vinita Jain (supra) cannot be applied over the facts of the instant case. 13. In the case of Sarthak Security Co. P. Ltd (supra) relied upon by the Ld. CIT(A), a reopening was held illegal as there was no new information before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, no. 2 to 4 raised by appellant are treated as allowed and it is held that proceedings u/s 148 have been invalidly initiated by the Assessing Officer. 16. In the case of Signature Hotels Private Limited (supra) the Hon ble High Court observed that the information on the basis of which the assessment was reopened, was scanty and vague and there was no reference of any document or statement. The Assessing Officer accepted the plea on the basis of the vague information in mechanical manner. Thus, it was held that apparently the Assessing Officer did not apply his own mind to the information and examined the basis and material of the information. 17. However, we note that in the instant case, the information is specific having detail of value of the amount of accommodation entry taken, the instrument and date through which entry was taken, name and account number of the entry provider were available before the Assessing Officer and thus we cannot hold the information was vague. Further, the Hon ble Delhi High Court in the case of PCIT Vs Paramount Communication Private Limited (supra), after considering various decisions held that the information received from Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt were to dictate the manner and contents of what is to be written, the statutory conditions would be added as it were. In this context, it needs to be emphasized that the court would interpret the statute as they stand in their own terms, but at the same time being conscious of the rights of the citizens. So viewed, Kelvinator (supra) strikes just balance. To add further conditions to the nature of discussion/reasons that the officer authorising the notice would have to discuss in the note or decision would be beyond the purview of the Courts and would not be justified. For the above reasons, this Court is of the opinion that the impugned order - and the consequential order of 05.01.17 cannot be sustained. They are accordingly set aside. The question of law urged by the Revenue is answered in its favour. The parties are directed to be present before the ITAT on 06.03.2017. The ITAT shall proceed to hear the Revenue s appeals on its merits and render decision in accordance with law. All rights and contentions of the parties with respect to the merits are reserved. 18. In the instant case before us, the information has been received from the Director of Income Tax (Investig ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
