9911796707
TMI Blog2019 (5) TMI 1597X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation was found during the search and seizure operation carried out on 27/06/2013 in Santosh Group of Institutions and Dr. P. Mahalingam, Ghaziabad. On the basis of this information, and after recording reasons and obtaining prior approval from the PCIT, Ghaziabad, notice u/s 148 of the Act was issued and served upon the assessee along with questionnaire. 4. The assessee was confronted with the information and was asked to explain the sources of funds from which the assessee has made the impugned payments. In its reply, the assessee stated that he has paid Rs. 1, 60,000/-, his daughter has paid Rs. 50,000/- and his wife has contributed Rs. 2 lacs and the total fees paid for the year was Rs. 4.10 lacs. 5. Not accepting the submissions of the assessee, the A.O was of the firm belief that the information received from DDIT, Investigation shows that the assessee has paid donation of Rs. 12 lacs in cash 16.50 lacs through DD and 1.62 lacs in cash. And accordingly treated the amount of Rs. 30.12 lacs as unexplained made out of undisclosed sources and added the same to the income of the assessee. 6. The assessee strongly agitated the matter before the CIT (A) but the CIT(A) was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uition Fees 2,00,000/- The Demand Draft should be drawn in favour of "Maharaji Educational Trust" payable at Ghaziabad. This certificate is issued exclusively to enable the student to obtain financial assistance from Bank/Financial Institution. The fee is subject to revision in the forthcoming years. Sd/- For Maharaji Education Trust Accountant 9. A perusal of the aforementioned certificate shows that the tuition fees for the first year is Rs. 4 lacs and the total tuition fees for the entire course of four and half years is 18 lacs. I find that neither the A.O nor the CIT(A) has made any enquiry from the Institution regarding this certificate. 10. There is no dispute that the A.O has simply borrowed the information received from DDIT, Investigation. The reasons recorded for reopening the assessment read as under:- "Reasons for the belief that income has escaped assessment. An information has been received from DDI (1.pv.) Unit-5(1), New Delhi that Sh. Ratan Pal Kein, has paid donation of Rs. 12,00,000/- in cash, Rs. 16,50,000/- through DD and Rs. 1,62,000/- in cash against regular fee for the admission in MMBS course of his daughter Ms. Vaishali Kein, during the F.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 20.05.2016]; (iv) On the merits of the case he submitted that assessee has not paid any money other than Rs. 15 lakhs to the institute and, therefore, in absence of any evidence, addition cannot be made; (v) He further submitted that no cross examination of the person whose statement was recorded was given to the assessee and in absence of cross examination when assessee specifically denied such payment no addition can be made in the hands of the assessee. 7.1 In the end, he submitted that re-opening is invalid and further the addition on the merit also cannot be sustained. 8. The learned Departmental Representative contested the arguments of the learned authorized representative and submitted that there is a definite information received by the Assessing Officer in the letter that assessee has paid Rs. 70 lakhs for the admission of his son. The learned Assessing Officer has reason to believe that income of the assessee has escaped assessment. With respect to the merits he submitted that copy of the statement was given to the assessee and there is no request of cross examination. He, therefore, submitted that assessee does not have any case on the merits. He supported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons recorded by the AO that it is fit case for the issue of notice u/s. 148. Yes Sd/- 27/3/2015. Addl. Commissioner of Income Tax, Range-56, New Delhi. " 9.1 On the same date the reasons were approved by the Addl. Commissioner of Income Tax, Range 56, New Delhi. While approving he has simply mentioned "Yes". Therefore, now the question arises that whether the re-opening has been correctly initiated by the learned Assessing Officer or he has simply acted on the information received from the Investigation Wing. On perusal of the reasons recorded it is apparent that the learned Assessing Officer referred to the letter dated 5.03.2015 received from the Dy. Director of Income Tax, Investigation, and based on that information he stated that he is satisfied that the fee paid of Rs. 70 lakhs in cash is assessee's unexplained income from undisclosed sources. According to the provisions of section 147 of the Income Tax Act if the Assessing Officer has reason to believe that income has escaped the assessment then only he can re-open the assessment. The reason has to be of the assessee and cannot be borrowed one. The Hon'ble Delhi High Court in para No. 15 in Signature Hote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 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 Rs. 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 Rs. 21,00,000/-. The income of Rs. 21,0,000/- is escaped assessment within the meaning of section 147(b) and is to be taxed accordingly." 6.1 After perusing the aforesaid reasons recorded, I find that it is a case where action has been taken mechanically on the basis of information received from investigation wing, and, not on an independent application of mind and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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 repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirement 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 nonfiling of the return and the other regarding the extent of the socalled 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 processed under Section 143(1) of the Act awl not under Section 143(3) of the Act. The reasons for the reopening of the assessment in that case were more or less similar to the reasons in the present case, viz., information was received from the Investigation Wing regarding accommodation entries provided by a 'known' accommodation entry provider. There, on facts, the Court c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
