TMI Blog2018 (12) TMI 1451X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 26-9-2018 - Shri N. K. Saini, Accountant Member And Ms Suchitra Kamble, Judicial Member For the Appellant : Sh. Kapil Goel, Adv For the Respondent : Sh. Surender Pal, Sr. DR ORDER PER BENCH These appeals are filed by various assessees against the orders dated 15/12/2017 passed by CIT (A)-12, New Delhi for various Assessment Years. 2. The grounds of appeal are as under:- ITA No. 2719/Del/2018(A.Y 2007-08) 1. That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in accordance with law and accordingly all the subsequent actions founded on such reasons namely notice issued u/s 148 , the order passed by Ld AO and Id. ClT-A are void ab initio and deserves to be quashed; 1.1 That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in accordance with law in as much as hypothesis stated in reasons ....PAN of M/s Jyoti Engineering Works is not available on AST... vitiates the reasons completely as firstly there cannot be PAN of proprietary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere no back material is adequately and lawfully confronted to assessee in due regard of principle of natural justice. ITA No. 2720/Del/2018 (A.Y 2009-10) 1. That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in accordance with law and accordingly all the subsequent actions founded on such reasons namely notice issued u/s 148 , the order passed by Ld AO and Id. ClT-A are void ab initio and deserves to be quashed; 1.1 That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in accordance with law in as much as hypothesis stated in reasons ....PAN of M/s Jvoti Engineering Works is not available on AST... vitiates the reasons completely as firstly there cannot be PAN of proprietary concern who is not an assessee under the Act and secondly, proprietor of said concern (assessee) not only had PAN but was also filing return in regular course as admitted in assessment order, which has been completely aborted in reasons recorded; 1.2. That on facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly all the subsequent actions founded on such reasons namely notice issued u/s 148 , the order passed by Ld AO and Id. ClT-A are void ab initio and deserves to be quashed; 1.1 That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in accordance with law in as much as hypothesis stated in reasons ....PAN of M/s Jvoti Engineering Works is not available on AST... vitiates the reasons completely as firstly there cannot be PAN of proprietary concern who is not an assessee under the Act and secondly, proprietor of said concern (assessee) not only had PAN but was also filing return in regular course as admitted in assessment order, which has been completely aborted in reasons recorded; 1.2. That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in accordance with law as in reasons recorded there is no independent application of mind and same is based on mere borrowed satisfaction only; 1.3. That on facts and circumstances of the case and in law, the reasons recorded u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with law in as much as hypothesis stated in reasons ....PAN of M/s Jvoti Engineering Works is not available on AST... vitiates the reasons completely as firstly there cannot be PAN of proprietary concern who is not an assessee under the Act and secondly, proprietor of said concern (assessee) not only had PAN but was also filing return in regular course as admitted in assessment order, which has been completely aborted in reasons recorded; 1.2. That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in accordance with law as in reasons recorded there is no independent application of mind and same is based on mere borrowed satisfaction only; 1.3. That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in accordance with law as basis of reasons recorded has been completely dropped and changed in final assessment order; 1.4. That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular course as admitted in assessment order, which has been completely aborted in reasons recorded; 1.2. That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in accordance with law as in reasons recorded there is no independent application of mind and same is based on mere borrowed satisfaction only; 1.3. That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in accordance with law as basis of reasons recorded has been completely dropped and changed in final assessment order; 1.4. That on facts and circumstances of the case and in law, the reasons recorded u/s 148 to assume jurisdiction u/s 148 of the Act are not validly recorded in accordance with law in as much as no back incriminating material like investigation wing report, statement recorded (if any) as available , etc has been confronted to assessee thus making the reopening as nullity; 2. That on facts and circumstances of the case and in law, Id CIT-A erred in confirming the arbitrary addition of ₹ 919,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Vishesh Gupta were indulged in providing accommodation entries. During the course of assessment proceedings u/s 153A statements were recorded by the ACIT, Central Circle-10, New Delhi, wherein both Shri Rakesh Gupta and Vishesh Gupta categorically admitted that they were issuing bogus purchase bills/accommodation entries bills to the interested parties; cheques were received from them; cash was returned to them after the cheques were cleared; the cash was received from the firms from whom purchase were shown and the cash was paid after deducting their commission. In this case, information was received from Asstt. Commissioner of Income Tax, Central Circle-10, New Delhi that during the assessment proceedings of Shri Rakesh Gupta, Shri Vishesh Gupta, Shri Navneet Jain and Shri Vaibhav Jain u/s 153A details regarding accommodation entries given by the above entry providers during the financial year 2006-07 relevant to assessment year 2007-08 was obtained. As per the details provided by the above mentioned assessees, the name of M/s Jyoti Engineering Works was appearing in the list of entries recipients who received accommodation entries. As per details made available by the ACIT M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce advocate of the assessee vide his letter dated 01.05.2014 submitted that return filed by it vide Acknowledgement dated 27.10.2007 declaring a net taxable income of ₹ 52,420/- may treated as return filed in response to notice u/s 148. Accordingly, notice dated 18.09.2014 u/s 143(2) was issued and duly served upon the assessee. In response to notices issued u/s 143(2) 142(1), Advocate and authorized representatives of the assessee attended the assessment proceedings and filed details which were placed on record by the Assessing Officer. The Assessing Officer determined the total income of ₹ 9,67,980/- as against the returned income of ₹ 52,420/-. 5. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 6. The Ld. AR submitted that the Tribunal in case of Rajendra Prasad vs. ITO being ITA No. 7060/DEL/2017 for A.Y. 2007-08 order dated 07.09.2018 held that reopening of the assessment is without any application of mind and examination of the facts in respect of identical reasons incorporated in the said case which are contested in the present appeal as well. The Ld. AR submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Addl. CIT, Central Range-IV, along with its enclosures on the subject mentioned above. 2. The assessment of search cases of Sh. Rakesh Gupta, Sh. Vishesh Gupta, Sh. Navneet Jain Sh. Vaibhav Jain are under process with the ACIT, Central Circie-10. During the assessment proceedings u/s 153A in the aforesaid cases, details regarding accommodation entries given by the above entry providers has been obtained by the A.O. 3. The list of accommodation entry recipients has been obtained from Sh. Rakesh Gupta and Sh. Vishesh Gupta. Hard copy of the list is enclosed as Annexure A, duly signed by 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. Sh. Navneet Jain Sh. Vaibhav Jain has provided accommodation entry through thirty- seven paper entities. The list of the firms giving accommodation entry is enclosed as annexure- B. The list of accommodation entry recipients, has been obtained from Sh. Naveneet Jain Sh. Vaibhav Jain. It does not give year wise bifurcation. Hard copy of the list is enclosed as annexure-C, duly signed by Sh. Vaibhav Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including A.Y.2007-08, therefore, this office is of The firm view that these cases also need to be reopened u/s 147 of I.Tax Act. Accordingly, on examining the list of accommodation entries provided by Sh. Rakesh Gupta Sh. Vishesh Gupta and Sh. Navneet Jain Sh. Vaibhav Jain pertaining to A.Y. 2007- OS, it is noticed that the following accommodation entries have been taken by the assessee namely M/s Friya Enterprises in A.Y. 2007-08 and whose territorial jurisdiction lies with this Ward SI. No. Accommodation entry provided by Name of party to whom Accommodation entry is provided Amount of Accommodation entry 1. Shree Bankey Bihari Trading M/s Priya Enterprises ₹ 3,69,408/- 2. OM Agencies M/s Priya ₹ 7,24,172/- Total amount of ₹ 10,93,580/- Also the details of Income tax Return filed by M/s Priya Enterprises for A.Y. 2007-08 and proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing, that notice u/s 148 vis a vis reasons are devoid of any application of mind. 8. From the reasons, it can be safely concluded that the Assessing Officer proceeded to make opinion on the basis of borrowed reasons and there is no independent application of mind and in such circumstances and facts of the case, reopening of the assessment u/s 147 of the Act is bad in law and is accordingly directed to be quashed. 9. Our view is fortified by the decision in the case of G G Pharma India Ltd 545/DEL/2015 wherein reliance was placed on 384 ITR 147 and the same read as under: In the present case, after setting out four entries, stated to have been received by the Assessee on a single date i.e. 10th February 2003, from four entities which were termed as accommodation entries, which information was given to him by the Directorate of Investigation, the AO stated: I have also perused various materials and report from Investigation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money in its bank account by way of above accommodation entries. The above conclusion is unhelpful in understanding whether the AO applied his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the base or foundation or platform of prudence which a reasonable person is required to apply. As is manifest from the perusal of the supply of reasons and the order of rejection of objections, 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. In that view of the matter, the principle laid down in Lovely Exports (P) Ltd. (supra) gets squarely attracted. 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 Section 147 and issuance of notice under Section 148 of the Act are hereby quashed. 12 In the case of Signature Hotels P Ltd Vs. ITO 338 ITR 51, it has been held as under: The first sentence of the reasons states that information had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omprises of a direction given by the Additional Commissioner of Income Tax to initiate proceedings under Section 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 u/s 148 in the case of M/s SFIL Stock Broking Ltd. on the basis of reasons recorded as above. 10. From the above, it is clear that the Assessing Officer referred to the information and the two directions as reasons‟ on the basis of which he was proceeding to issue notice under Section 148. We are afraid that these cannot be the reasons for proceeding under Section 147/148 of the said Act. The first part is only an information and the second and the third parts of the beginning paragraph of the so-called reasons are mere directions. From the so-called reasons, it is not at all discernible as to whether the Assessing Officer 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, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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