TMI Blog2018 (3) TMI 1767X X X X Extracts X X X X X X X X Extracts X X X X ..... s a mere attempt to carry out fishing and roving expedition. In the absence of specific and incriminating material much less tangible and, relevant material to form even prime facie belief that there was alleged payment of ₹ 21,00,000/- is also apparent from the fact that the alleged document found and seized during the course of search/survey action u/s 132/133A of the Act does not reflect any figure of ₹ 21 lacs and in the absence of any independent enquiry or examination of facts on record or noticing the content of alleged documents in the reasons recorded and, reasons being silent as to the specific facts, the vague allegation shows that action has been taken mechanically on the basis of alleged report of investigation wing, and, not on independent application of mind and therefore on this ground too, the proceedings are without jurisdiction. There is no live link or direct nexus between alleged material and, inference. It is a case of investigation in the garb of action u/s 148 of the Act on the basis that proceedings have been initiated on the basis of no material much less any tangible and, relevant material and as such reasons record do not constitute valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax (Appeals) has further erred both in law and on facts in upholding an addition of ₹ 21,00,000/- representing the alleged donation paid by the father of appellant for admission in the course of MBBS to Santosh Group of Institution. 2.1 That while sustaining the learned Commissioner of Income Tax (Appeals) has failed to appreciate that addition had been made on arbitrary assumptions and, presumptions and overlooking the evidence and explanation tendered by the appellant. 2.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that impugned addition has been made without providing any cross examination to the appellant and therefore third party evidence and statement could not be a ground to make an addition in the hands of the appellant. 2.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that assessee was minor at the time of payment of fees as she became major on 14.12.2006, and therefore there could be no basis to even assume that assessee has incurred any expenditure much less unexplained expenditure in the instant year. 3. That the learned Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. Act. Show cause notice was issued on 18.02.2015 fixing the case for 25.02.2015. Written reply dated 25.02.2015 was filed by the A.R., of the assessee which are placed on record. Further, all the objections raised by the assessee meet out vide letter dated 20.02.2015. In this facts leading to the initiation or proceedings u/s 148 are that a search seizure action u/s 132 of the I.T. Act, 1961, was carried out on 27.06.013 in Santosh Group of Institutions Dr. P. Mahalingam. The Group comprises of the following institutions:- 1. Santosh Hospital (P) Ltd. 2. Maharaji Education Trust and 3. Santosh Trust. The above said trusts/institutions, engaged in running of the educational activities in health-care, are predominantly and principally indulged in extracting substantial amount of fees in the form of donations/capitation fees from the parents of the students for allowing admission to the various medical, dental, paramedical para-dental courses conducted by such trusts/ institutions. The statements were recorded u/s 132(4) during the search and seizure action of Dr. P. Mahalignam, founder chairman of group, Shri S. Chakravarthi, General M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower authorities wrongly made/upheld the addition of ₹ 21,00,000/- representing the alleged donation paid by the father of assessee for admission in the course of MBBS to Santosh Group of Institution and also failed to appreciate that addition had been made on arbitrary assumptions and, presumptions and overlooking the evidence and explanation tendered by the assessee. It was further submitted that the addition has been made without providing any cross examination to the assessee and therefore third party evidence and statement could not be a ground to make an addition in the hands of the assessee. It was further submitted that the lower authorities also ignored the fact that assessee was minor at the time of payment of fees as she became major on 14.12.2006, and therefore there could be no basis to even assume that assessee has incurred any expenditure much less unexplained expenditure in the instant year. It was further stated that levy of interest of ₹ 5,35,745/- under section 234A of the Act and of ₹ 6,34,957/- u/s. 234B of the Act which are not leviable on the facts and circumstances of the case of the assessee. On the issue of initiation of proceedings u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance amount of ₹ 21 lacs was paid in cash, hence, it was requested that the orders of the authorities below may be upheld on the legal issue as well as on the merits of the case. 6. I have heard both the parties and carefully considered the same. I note that in this case the AO while recording the reasons for the belief that income has escaped assessment has recorded the reasons as under:- In this case, as per record the assessee has not filed her return of income for AY 2007-08. Further, as per information received. Ms. Megha Gupta, r/o 2-E, Kamla Nagar, Delhi PAN ALBPG3157A, during the F.Y. 2006-07 relevant AY 2007-08, has given donation in cash of ₹ 21,00,000/- for admission in the course of MBBS to the Santosh Medical College, Ghaziabad. As, the assessee has not filed her return of income for the relevant assessment year i.e. AY 2007-08. Therefore, all the cash transaction made treated as her income from undisclosed sources. In view of the above, I have reason to believe that assessment Ms. Megha Gupta, PAN ALBPG3147A has escaped her income of ₹ 21,00,000/-. The income of ₹ 21,0,000/- is escaped assessment within the mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s any tangible and, relevant material and as such reasons record do not constitute valid reason to believe for initiating proceedings uls 147 of the Act. In this regard, I draw support from the decision of the Hon ble Supreme Court 320 ITR 561 (SC) CIT vs Kelvinator of India Ltd. It is further noted that initiation of proceedings is also based on non application of mind much less independent application of mind but is a case of borrowed satisfaction. To support this view, I draw support from the following decisions:- i) 384 ITR 147 (Del) Pr. CIT v. G G Pharma India Ltd. (introduction of share capital) Today when the case was called out, Mr. Sawhney produced before the Court the very same letter of the AO dated 15th September 2010 which has been reproduced in its entirely in the impugned order of the ITAT. He submitted that the AO was himself present in the Court and further efforts would be made to locate the materials on the basis of which the AO formed his opinion regarding reopening of the assessment. The Court was not prepared to grant further time for this purpose since it was not clear that the materials were, in fact, available with the Department. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. 37. For the aforementioned reasons, the Court is satisfied that in the facts and circumstances of the case, no error has been committed by the ITAT in the impugned order in concluding that the initiation of the proceedings under Section 147/148 of the Act to reopen the assessments for the AYs in question does not satisfy the requirement of law. 38. The question framed is answered in the negative, i.e., in favour of the Assessee and against the Revenue. The appeal is, accordingly, dismissed but with no orders as to costs. iii) 396 ITR 5 (Del) Pro CIT v. RMG Plyvinyl (I) Ltd. 11. There can be no manner of doubt that in the instant there was a failure of application of mind by the AO to the facts. In fact he proceeded on two wrong premises - one regarding alleged non-filing of the return and the other regarding the extent of the so-called accommodation entries. 12. Recently, in its decision dated 26th May, 2017 in ITA NO.692/20l6 (Principal Commissioner of Income Tax-6 v. Meenakshi Overseas Pvt. Ltd.), this Court discussed the legal position regarding reopening of assessments where the return filed at the initial stage was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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