TMI Blog2019 (1) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... e explanation 2 is inserted which even otherwise makes the order passed without making enquiries or verification which should have been made by the Assessing Officer are deemed to be erroneous insofar as it is prejudicial to the interest of the revenue. The impugned order passed by the ld CIT u/s 263 of the Act on 17.03.2017 also gets a statutory support from the above amendment. No infirmity in the order of the ld Pr. CIT in passing order u/s 263 of the Act - decided against assessee - ITA No. 6905/Del/2017, ITA No. 2182/Del/2017, ITA No. 2544/Del/2017 And ITA No. 2841/Del/2017 - - - Dated:- 14-1-2019 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Shri S. Krishnan, CA For The Revenue : Shri S.S. Rana, CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. All these four appeals filed by the respective parties involve common issue of challenged to the order passed by the ld Commissioner of Income Tax u/s 263 of the Act. 2. The assessee i.e. Shri Sai City Promoters and Developers Pvt Ltd in ITA No. 6905/Del/2017 for the Assessment Year 2007-08 has raised the following grounds of appeal:- 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the directors or their relatives or the concerns in which directors are interested, it is found by the AO that there is nexus between the cash deposits and the cheque issued by the group companies of SK Jain or no valid explanation is given for the transfer of shares at lower price in the name of directors, relatives and the concerns in which assessee company is interested, then same may be considered as an accommodation entry and taxed accordingly as per the provisions of Income Tax Act under the circumstances that as per provision of section 263 only Id Commissioner has the powers to enquire on the issue for which provision of section 263 is invoked. 3 Without prejudice to ground of appeal no. 1 and 2, Id CIT is not justified in law and facts and circumstances of the case in holding the proceedings initiated under section 147 of the I.T. Act as valid. 4. The assessee i.e. M/s. SNB Enterprises Pvt. Ltd in ITA No. 2544/Del/2017 for the Assessment Year 2008-09 has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the CIT erred in initiating proceedings and framing an order u/s 263 without meeting either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for AY 2007-08. Assessee is a private limited company filed return of income declaring of ₹ 392390/- on 02.10.2007. Notice u/s 148 of the Act was issued on 10.02.2014 as information was received from Director of Income Tax (Investigation) New Delhi dated 12.03.2013 stating that information has been received regarding accommodation entries given by Shri Surender Kumar Jain and Shri Virendra Kumar Jain along with hundreds of bogus companies of the group and many other related entry providers. In that information the name of the assessee figured as a person who has allegedly taken accommodation entries from the various entities belonging to the group of Sri Surender Kumar Jain. Consequently, the ld Assessing Officer made certain enquiries and also issued the summons u/s 131 of the Act and in response to which they produced the documents and the ld AO held that as per the documentary evidences produced by the assessee and those companies along with personal disposition of the directors of these companies no adverse inference was drawn with respect to the share application money received from the above entities. Consequently, the ld AO passed an order u/s 143(3) read with section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest of revenue. consequently, order u/s 263 of the Act was passed on 17.03.2017 held that reassessment order passed by the ld AO on 19.03.2015 for the AY 2007-08 is erroneous and prejudicial to the interest of the revenue and it was set aside with a direction to the ld AO to examine the seized material and confront the same to the assessee. It was further directed that if after verification of the seized material it is found by the ld AO that there is a nexus between the cash deposit and cheque issued by the group companies of S,K. Jain, and then it may be considered as an accommodation entry and taxed accordingly. Against this order the assessee is aggrieved and has preferred this appeal. 8. The ld Authorised Representative submitted a paper book submitted that during the course of assessment proceedings the assessee submitted a reply dated 02.07.2014, wherein the ledger account, confirmation, income tax returns, bank statement and list of directors and application form of all the three share holders were submitted before the ld Assessing Officer. Further, on 133.09.2014 the copy of the bank statement and audit report was also submitted. Further, he also referred to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there is no infirmity in the order of the ld CIT in invoking the jurisdiction and passing order u/s 263 of the Act. the coordinate bench has held as under :- 6. We have heard the rival submissions, perused the relevant finding and observations appearing in the impugned order as well as the material referred to before us. We find that Ld. Pr. CIT in his revisionary jurisdiction under section 263 of the Act from the examination of records before him, noted that though the assessment was reopened under section 148 of the Act on the allegation of accommodation entry taken from S.K. Jain group of concerns who were subjected to search on 14/9/2010 by the Investigation Wing, however, the Assessing Officer had not examined the seized material in the form of cash book and books containing the details of cheques issued by such concerns seized from the premises of S.K. Jain during the course of search, which indicated accommodation entry pertaining to assessee also. We further find that an appraisal report along with scanned copy of seized material sent by the Investigation Wing to all the Assessing Officers through their respective CITs, have neither been looked upon by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of investigation and search seizure action in the case of S.K. Jain group which was seized during the course of search by the Investigation Wing on 14/9/2010. He further noted that these seized papers clearly reveal various accommodation entries provided by such companies to various beneficiaries. The appraisal report was forwarded by the Investigation Wing in the month of March, 2013 to the then CIT-III in hard copy and various other seized materials running into 1000 pages were scanned and soft copies of the relevant seized materials were sent to the Commissioners and then to the Assessing Officers. The relevant extract of certain seized documents has also been scanned by him including the one marked as Annexure A-13 (back page 38) pertaining to the accommodation entry relating to the assessee, which has been noted by him from the seized documents scanned at pages 7 8 of the impugned order. The relevant observation with regard to these seized material by the Pr. CIT, for the sake of ready reference, is reproduced hereunder:- It is important to note that the assessee is also shown as beneficiary as evident from the scanned copy of the seized material name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seized material. It was further noted that there is nothing on the record to show that the AO has ever confronted the assessee on such seized documents. Had the AO examined the seized material, there should have been some nothings either in the order sheet or in the questionnaire issued to the assessee by the AO or in the submission of the assessee before the AO. In this case, the seized material clearly indicate the cheques issued against the receipt of cash through some intermediaries and the details of cheque number, bank name, date, amount and the name of the issuing party clearly matches with the cheques credited in the bank account of the assessee. Keeping in views of the facts and circumstances, we are of the considered opinion that Assessing Officer did not examine the relevant seized material despite the fact that entries in the seized material showed that assessee was also one of the beneficiaries of the accommodation entries given by the concerns of S.K. Jain group. The Assessing Officer 22 was mainly trying to verify the existence of the parties, rather than to make enquiries regarding the genuineness of the transactions whether cheque was issued in lieu of cash or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llenged in the revisionary proceeding under section 263; and secondly, if any material has been found pertaining to the assessee in the case of person searched or covered u/s 153A of the Act, then only recourse was to initiate proceedings under section 153C of the Act and not under section 147 of the Act. At the outset, we do not find any quarrel to the proposition that the validity of assessment or reassessment cannot be challenged in the revisionary proceedings u/s 263, however, on the facts of the present case, the ratio laid down in such judgments would not be applicable at all, because here in this 24 case no document or material belonging to the assessee was found in the course of search proceedings in the case of S.K. Jain group, albeit assessee s name appears as one of the beneficiaries of accommodation entries in the books of account maintained by one of the concern of S.K. Jain group. The entries in the books of account of S.K. Jain group cannot be reckoned as any material or document belonging to the assessee so as to constitute document or asset seized or requisitioned in the case of person searched in terms of scope of section 153C of the Act. If certain documents or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion does constitute a tangible and relevant material sufficient enough to form reason to believe that income chargeable to tax has escaped assessment. Apart from that, it is seen from the records that the assessee had raised similar objections after the receipt of reasons recorded before the Assessing Officer during the course of re-assessment proceedings, which have been amply dealt with and discussed by the Assessing Officer inn detail vide his separate order, copy of which has been placed in the paper book. Against the said order, assessee has not sought for any remedy nor has it challenged this issue in appeal after the passing of the assessment order. In any case, we have already held Assessing Officer has rightly acquired jurisdiction under section 147 of the Act based on the information/material referred to in the reasons recorded . Accordingly, this contention raised by the ld. Counsel of the assessee is also rejected. 6.4 Lastly on merits, as discussed in the foregoing paragraphs, the Pr. CIT has amply demonstrated in his impugned order that this issue was neither enquired into nor was verified by the Assessing Officer once the information and the material in ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cases where AO did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, 28 after setting aside the order of the AO, simply directed the AO to carry thorough and detailed inquiry. 6.6 In the background of the aforesaid discussions and respectfully following the precedents, as aforesaid, we hold that the Ld. Pr. CIT has rightly exercised his jurisdiction under section 263 of the Act in setting aside the order of the Assessing Officer being erroneous in so far it is prejudicial to the interest of the Revenue. Accordingly, we confirm the order of the Ld. Pr. CIT and dismiss the grounds raised by the assessee before us. 7. In the result, appeal of the assessee is dismissed. 11. Further on the identical facts in case of the accommodation entries received from Mr. S K jain, the coordinate bench has upheld the revisionary proceedings u/s 263 of the act when in reopened proceedings ld AO failed to confront the seized material to the assessee and also failed to consider it . The Coordinate bench held as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 147, then he was required to carry out detailed enquiry and verification, not only on the information pertaining to assessee being one of the beneficiary of accommodation entry, but also should have enquired about the genuineness of the transaction as a whole. In the impugned assessment order u/s 143(3)/147, there is no whisper about any enquiry or verification done by the Assessing Officer in this regard. Though in his order disposing of the assessee s objection on validity of proceedings under section 147, it is seen that he has passed a very detailed order justifying the assumption of jurisdiction under section 147 precisely on this ground that assessee has received entries from many parties and information and document in the form of CD, appraisal report has been received wherein assessee has been found to be one of the beneficiaries. However such a finding remained confined to justify the reopening under section 147 and was not taken to logical conclusion by further probing into the matter. 18. Here in this case, one important aspect which needs to be kept in mind that the reopening has been done within four years from the end of the relevant assessment year, becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mained untaxed in the Assessment Year 2009-10. There is no rebuttal to such a finding recorded in the order or any material has been brought on record by the assessee before us that these observations and findings of the Pr. CIT are contrary to the facts. The observations and findings recorded by him ostensibly goes to show that the Assessing Officer has not made any proper or adequate enquiry on this issue, which at the outset renders the assessment order erroneous and prejudicial to the interest of the revenue. 19. Now coming to the one of the main contention raised by the ld. counsel of the assessee that the proceedings under section 147 was itself bad in law and therefore, proceedings u/s 263 could not have been invoked. The reasons given for this proposition is that, here in this case, material on the basis of which proceedings for reopening the assessment has been sought to be initiated u/s 147 has been found from the search conducted at the premises of third party and if material found from the premises of the searched person is being utilized, then in such a situation the law provides that proceedings should have been initiated under section 153C, which has not been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47. 20. As regards the contention that material or information found during the course of search in the case of S.K. Jain group cannot be held to be a tangible material pertaining to the assessee, we are unable to accept such a contention for the reason that, firstly, there was a categorical information and material coming on record post passing of the original assessment order under section 143(3) that assessee was one of the beneficiaries of accommodation entries provided by one of the group concern of S.K. Jain and not only that, a specific amount (of ₹ 1 Crore) has been mentioned which prima-facie pertained to the assessee. This definitely constitutes a tangible and definite material having live-link nexus with the income chargeable to tax escaping assessment. The judgments relied upon by the ld. CIT D.R. on this point, specifically the judgment of Hon'ble Delhi High Court in the case of PCIT Vs Paramount Communication (P.) Ltd. (supra) is squarely applicable, as in that case also the information regarding bogus purchase by the assessee was received vide DRI from CCE which was passed on to Revenue authorities and was held to be tangible material outside record t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Rules. There is no material fact on record to decide this issue as it has been raised at the last moment at the time of hearing. Accordingly, we are rejecting this plea of the ld. counsel at the threshold. 22. Lastly on merits, as discussed in the foregoing paragraphs, the Pr. CIT has amply demonstrated in his impugned order that this issue was neither enquired into nor was verified by the Assessing Officer once the information and the material in hard copy and in form of CD was made available to him. AO should have verified the genuineness of the transaction and also should have carried out adequate enquiry to come to a logical conclusion that either there is no accommodation entry and the contents found qua the assessee being one of the beneficiary of the accommodation entry in the books of account of the concerns of S.K. Jain group are false or bogus; or assessee had amply demonstrated and substantiated before the AO regarding the genuineness of the transaction of the accommodation entry. In absence of such a mandate which was cast upon the AO, we are of the opinion that the assessment order is not only erroneous but also prejudicial to the interest of revenue, as this m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment made to the provision of section 263 of the Act w.e.f. 01.06.2015 by the Finance Act 2015 wherein, the explanation 2 is inserted which even otherwise makes the order passed without making enquiries or verification which should have been made by the Assessing Officer are deemed to be erroneous insofar as it is prejudicial to the interest of the revenue. The impugned order passed by the ld CIT u/s 263 of the Act on 17.03.2017 also gets a statutory support from the above amendment. 13. In view of the above facts ground No. 1 and 2 of the appeal of the assessee are dismissed and we do not find any infirmity in the order of the ld Pr. CIT in passing order u/s 263 of the Act. Accordingly, appeal of the assessee is dismissed. 14. Hence ITA No ITA No. 2182/Del/2017 for AY 2010-11 15. Now we come to the appeal of the assessee i.e. Surya Irrigation Private Limited in ITA No. 2182/Del/2017 for the Assessment Year: 2010-11, wherein, the challenge has made to the order u/s 263 of the Act dated 17.03.2017 passed by the Pr. CIT-8, New Delhi holding that the order passed by the ld Assessing Officer ITO, Ward-24(4), New Delhi on 30.06.2014 /s 147 read with Section 143(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this appeal that the reopening has been made on the basis of borrowed satisfaction. 21. The ld AR relied upon the decision of the Hon'ble Delhi High Court in case of Meenakshi Oversees Ltd (supra). We have carefully considered the facts before us in the present appeal as well as the facts before the Hon'ble Delhi High Court. In the present case the Investigation Wing has found the documents along with the cash back where the assessee was found to be the beneficiary and the name of one intermediary was mentioned. Such facts were not before the Hon'ble Delhi High Court and in that case it was merely an intimation from the Investigation Wing. In the present case the seized material along with the information of the Investigation Wing clearly shows nexus of the accommodation entry and the relevant cashbook pages where the cash received was also shown from Mr. Satish Goel and Mr. Neeraj are specifically mentioned. In view of this we find no infirmity in the reopening of the assessment. In the result ground No. 1 to 3 of the appeal are dismissed. Accordingly, 2182/Del/2017 for the AY 2010-11 is dismissed. 22. Now we come to ITA No. 2544/Del/2017 which is against the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the order passed by the Pr. CIT-8, New Delhi u/s 263 of the Act on 20.03.2017 holding that order passed by the ld Assessing Officer u/s 147 read with section 143(3) of the Act dated 28.08.2014 is erroneous and prejudicial to the interest of revenue. 29. The facts shows that case of the assessee was reopened wherein it is found that assessee is the beneficiary of accommodation entry from the entities controlled by Shri S.K. Gupta amounting to ₹ 750000/- from M/s. Victory Software Pvt. Ltd in the form of share application money. The ld Assessing Officer passed an assessment order accepting the details furnished by the assessee, identity, creditworthiness, and genuineness of the transactions. The Pr. CIT passed an order u/s 263 of the Act holding that the order is erroneous and prejudicial to the interest of the revenue as it was passed without confronting the assessee with the seized material showing the nexus between cash paid and the amount of cheque received by the assessee. 30. The ld AR submitted that during the year assessee has submitted the confirmation, audited balance sheet, bank statement, assessment order, board resolution, and affidavit of the director o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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