TMI Blog2019 (2) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... rom para 5 of the aforesaid reasons recorded wherein the AO had clearly stated that the said information was in his possession and on that basis he had reasons to believe that the assessee had concealed the fact regarding the amount of ₹ 31,50,000/- received from M/s Nazar Impex Pvt. Ltd. However, the said amount was considered as genuine earlier when the assessment was framed by the AO u/s 153C of the Act. AO simply acted upon the information received from the Investigation Wing and did not apply his own mind. Therefore, the reopening u/s 147 by issuing the notice u/s 148 of the Act only on the basis of information received from the Investigation Wing was not valid. Accordingly, the reassessment framed by the AO is quashed. - Decided in favour of assessee. - ITA No.181/Asr./2017 - - - Dated:- 15-1-2019 - Sh. N. K. Saini, Hon ble Vice President And Sh. Ravish Sood, Judicial Member For the Assessee : Sh. Sudhir Sehgal, Adv. For the Revenue : Sh. Bhawani Shankar, DR ORDER PER N. K. SAINI, VICE PRESIDENT: This is an appeal by the assessee against the order dated 20.03.2017 of ld. CIT(A)-I, Jalandhar. 2. Following grounds have been raised in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 3. Vide ground nos. 1 to 3, the assessee challenged the jurisdiction of the AO in reopening the case u/s 148 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act). 4. Facts of the case in brief are that the assessee filed its original return of income on 30.09.2008 declaring an income of ₹ 4,63,33,441/-. Thereafter, a search u/s 132 of the Act was carried out on assesse s group on 22.01.2009. In response to the notice u/s 153C of the Act, the assessee filed its return of income declaring the same income of ₹ 4,63,33,441/- on 06.02.2010. The AO completed the assessment u/s 153C of the Act vide order dated 29.12.2010 at an income of ₹ 4,64,33,441/-. Subsequently, a search operation u/s 132 of the Act was carried out by Directorate of Income Tax(Investigation), Mumbai on 03.10.2013 at Rajendra Jain Group, Sanjay Choudhary Group and Dharmichand Jain Group of Mumbai. In view of certain evidences gathered during the search, the case of the assessee was reopened u/s 147/148 of the Act and a notice u/s 148 of the Act was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the then Ld. AO has applied his mind while framing his assessment order and the said figure of the unsecured loan was not left unnoticed by the then AO since it firstly appears in the Balance Sheet' under the head Sundries , and secondly there is a clear mention of the same in the Tax Audit Report of the assessee. Thus, the statement made by the Ld. AO that there is a failure on the part of the assessee to disclose fully and truly all the material facts necessary for completion of the assessment does not hold any basis. 1.5 Thus, it is clear that the Ld. AO has not actually applied his mind while issuing notice u/s 147 and the same is also evident from the reasons recorded by the Ld.AO, which are given in Point 2 of the re-assessment order. Herein the Ld. AO has merely discussed the search carried on the Sanjay Chaudhary Group and alleged that Sanjay Chaudhary himself has admitted that his concern NIPL is providing accommodation entries in the nature of bogus loans when neither there is any mention of NIPL giving the bogus unsecured loan entries nor there was any mention of the assessee availing bogus loan. Thus, the reasons to believe are only the misguided contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the Tax Audit Report. Thus, from the same it is clear that the Ld. AO have only relied on the information of the investigation wing and have neither looked into the facts and circumstances of the case or even on the documents filed in the reassessment proceedings. Thus, reopening without application of mind is invalid and wrong. Reliance in this regard is placed on the following judgments:- SHEO NATH SINGH vs. APPELLATE ASSISTANT COMMISSIONER OF INCOME TAX (SC) 82 ITR 0147-There also, the report submitted by the officer to the CIT and the latter's orders thereon were produced. In his report, the ITO referred to some communications received by him from the CIT, Bihar and Orissa, from which it appeared that certain creditors of the assessee were mere namelenders and the loan transactions were bogus and, therefore, proper investigation regarding the loans was necessary. It was observed that the ITO had not set out any reason for coming to the conclusion that it was a fit case for issuing a notice under s. 148 of the IT Act, 1961. CIT Vs SFIL Stock Broking Ltd. [2010] 325 ITR 285 (Delhi) Reassessment Reason to believe Reopening on directions of superio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessment. He further observed that the amount received from M/s Nazar Impex Pvt. Ltd. was not shown under unsecured loans in the balance sheet by the assessee but it was shown under the head sundries as a current liability, which clearly shows that it was not the intention of the assessee to fully and truly disclosed in its balance sheet, the so-called unsecured loans taken from M/s Nazar Impex Pvt. Ltd. He accordingly confirmed the addition made by the AO. 8. Now the assessee is in appeal. The ld. Counsel for the assessee submitted that earlier income of the assessee was assessed u/s 153C of the Act after a detailed scrutiny and an addition of ₹ 1,00,000/- was made which was reduced by the ld. CIT(A) to ₹ 30,000/- (a reference was made to page nos. 37 to 39 of the assessee s compilation). It was further submitted that the reopening was done beyond four years but there was no failure on the part of the assessee to disclose fully and truly all materials facts necessary for the assessment. It was contended that a loan of ₹ 31,50,000/- from M/s Nazar Impex Pvt. Ltd. was received through Sh. Ashok Kumar Malhotra, MD of the said company who had good rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. in the Tax Audit Report which is evident from page no. 18 of the assessee s paper book wherein the details of the loans or deposits received from various persons have been mentioned, so it cannot be said that the facts relating to the receipt of loan from M/s Nazar Impex Pvt. Ltd. was not available to the AO who made the assessment after making proper scrutiny. In the present case, the AO reopened the assessment by recording the following reasons: The assessee had filed its original return of income on 30.09.2008 at returned income of ₹ 4,63,33,441/-. A search u/s 132 of the Income Tax Act, 1961 was carried out on the assessee s group on 22.01.2009. In response to notice u/s 153C, the assessee filed its return of income declaring income of ₹ 4,63,33,441/- on 06.02.2010. Assessment was completed u/s 153C of the Income Tax Act, 1961 vide order dated 29.12.2010 at an assessed income of ₹ 4,64,33,441/-. - 2. A search operation u/s 132 of the Income Tax Act, 1961 was carried out by Directorate of Income Tax (Investigation), 3rd Floor, Scindia House Ballard Estate, Mumbai on 03.10.2013 at Rajendra Jain Group, Sanjay Choudhary Group and Dharmichand Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the assessment was framed by the AO u/s 153C of the Act. Now question arises as to whether, on the basis of information received from the Investigation Wing, the completed assessment can be reopened. 12. On a similar issue the Hon ble Delhi High Court in the case of Principal Commissioner of Income Tax-4 Vs G G Pharma Ltd. 384 ITR 147 (supra) held as under: The basic requirement of law for reopening an assessment is applicat ion of mind by the Assessing Off icer, to the materials produced prior to reopening the assessment, to conclude that he has reason to believe that income has escaped assessment. Unless that basic jurisdictional requirement is satisf ied a post mortem exercise of analysing materials produced subsequent to the reopening wi ll not make an inherently defect ive reassessment order valid. It has further been held as under: Without forming a prima facie opinion, on the basis of such material, it was not possible for him to have simply concluded that it was evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries. The basic jurisdict ional requirement was application of mind by the Ass ..... 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