TMI Blog2019 (12) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment stage, A.O. made further addition of ₹ 52.91 crores on account of deposits in the bank account of the assessee. No reasons have been mentioned as to why such addition have been made and what was the purpose in making the addition. The entire deposit in the Bank account of the assessee could never be unexplained. Even the Investigating Agency have not made any allegation against the assessee if that amount was an accommodation entry taken by the assessee ? D.R. admitted that no notice have been issued by the A.O. while proposing to make this addition of ₹ 52.91 crores. We are of the view that A.O. has recorded non-existing, incorrect and wrong facts in the reasons recorded for reopening of the assessment. A.O. did not applied his mind to the report of Investigation Wing. A.O. merely believed report of Investigation Wing without making further scrutiny at the assessment. The A.O. merely reproduced report of Investigation Wing without making further scrutiny of the same. The A.O. merely reproduced report of Investigation Wing and crux of statement of Shri Kishori Sharan Goel for reopening of the assessment in the matter. It was merely a borrowed satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties and were used for providing bogus bills/accommodation entries of sales/ purchases to various parties. In his statement, he has specifically admitted in his reply to question No.17 that the Firm M/s. JMD International whose operator is Shri Anand Singh has been used for providing accommodation entries. Further, on examination of statement of Bank A/c. No. XXXX560939 of M/s. JMD International maintained with Axis Bank, it was found that M/s. Yogesh Trading Co., 6244-C, Kucha Shiv Mandir, Katra Baryan, Fetehpur, Delhi has entered into a transaction on 4th March, 2010 of ₹ 15 lacs. The A.O, therefore, noted that there is escapement of income and recorded reasons for reopening of assessment. Notice under section 148 was issued to the assessee, but, same was not complied with. The show cause notice Dated 11th December, 2017 was also served through affixture on 11th December, 2017. Since no compliance was made, A.O. proceeded under section 144 of the Income Tax Act, 1961. The A.O. noted that there are deposits in Bank from M/s. JMD International a sum of ₹ 53,06,51,396/-. From the perusal of the Investigation report and statement of Shri Kishori Sharan Goel, it is evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced in the appellate order, in which, at Sl. No.9 name of the assessee have been mentioned with the following details Devki Nandan Bindal, Proprietor, M/s. Yogesh Trading Company, Katra, Delhi-110006 . The Ld. CIT(A), therefore, found that notice have been issued to the assessee at the correct address and no change of address have been intimated to the Department. The Ld. CIT(A), therefore, confirmed the reopening of the assessment because it is based on information received from Investigation Wing, the additions on merit are also confirmed. The Ld. CIT(A) also noted that assessee has received accommodation entry of ₹ 15 lacs. The additions on merit were also confirmed and appeal of assessee has been dismissed. 5. Learned Counsel for the Assessee reiterated the submissions made before the authorities below. He has referred to Page 3 of the paper book, which are reasons recorded for reopening of the assessment, in which A.O. has mentioned that assessee has taken accommodation entry of ₹ 15 lacs, but, A.O. made addition on account of unexplained expenditure incurred by the assessee by making payment to M/s.JMD International. Therefore, wrong and incorrect rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been recorded at all. Learned Counsel for the Assessee, therefore, submitted that reopening of the assessment is bad in Law, illegal and is liable to be quashed. 6. On the other hand, Ld. D.R. relied upon the orders of the authorities below and submitted that at the stage of initiation of reopening of the assessment, A.O. need not to see entire transaction in detail. The A.O. has gone through the Investigation report and based on the Investigation report, correctly recorded reasons for reopening of the assessment. The assessee has not intimated about change of address to the Department. The assessee did not co-operate with the A.O. Therefore, matter requires reconsideration at the level of the A.O. The Ld. D.R. also produced assessment record and after going through the same submitted that no second notice under section 148 have been issued for making addition of second item of ₹ 52.91 crores. The Ld. D.R. stated that notice issued under section 148 within the period of limitation has returned back to the A.O. 7. We have considered the rival submissions and perused the material available on record. It is well settled Law that validity of reassessment proceedings a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries. I have examined the statement of the Bank Accounts No.910020000560939 of M/s. JMD International maintained with Axis Bank, and found that M/s Yogesh Trading Co., 6244-C, Kucha Shiv Mandir, Katra Baryan, Fatehpuri, Delhi-110006 has entered into a transaction as below : Date of Transaction Amount Name of concern/firm used for providing accommodation entries A/c No. Bank of the concern/firm used for providing accommodation entries 04.03.2010 15,00,000 M/s. JMD International 910020000560939 In view of the above facts and after perusing the details I am satisfied that this is a accommodation entry which M/s Yogesh Trading Co. has taken through M/s JMD International and therefore, amount of ₹ 15,00,000/- has escaped assessment. In view of the above, Explanation 2(b) to section 147 of the I. T. Act is applicable in the case which lays down as : Explanation 2. For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational. Therefore, it can never be unexplained expenditure of the assessee. The A.O, therefore, recorded in correct and wrong facts in the reasons for reopening of assessment as well as in the assessment order. In the case of DCIT, Rohtak Circle, Rohtak vs., M/s. KLA Foods (India) Ltd., New Delhi in ITA.No.2846/Del./ 2015 C.O.No.333/Del./2015 in ITA.No.2846/Del./2015, for the A.Y. 2007-2008, the ITAT, Delhi D-Bench, Delhi, while deciding the issue of reopening of the assessment under section 148 of the Income Tax Act, 1961 vide Order Dated 8th April, 2019 considered the issue in detail by following several decisions of different High Courts and came to the finding that if the A.O. has recorded non- existing reasons and incorrect facts, then reopening of the assessment would not be valid. The Order is reproduced as under : IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES D : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA.No.2846/Del./2015 Assessment Year 2007-2008 The DCIT, Rohtak Circle, Rohtak. vs., M/s. KLA Foods (India) Ltd., 21/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .)-II, New Delhi, Dated 15th March, 2013 that the assessee has taken accommodation entries amounting to ₹ 1.50 crore in the shape of share capital from various companies, in order to verify the genuineness of the said investors, notice under section 148 was issued on 28th March, 2013. The Assessing Officer asked the assessee to explain the share capital received from 07 Investors. The Assessing Officer after considering the material on record, in the light of report of Investigation Wing, made the addition of ₹ 1.50 crores on account of unexplained credit. 3.1. The assessee challenged the addition before the the Ld. CIT(A). Ld. CIT(A) noted that all the investor companies are assessed to tax under section 153C/153A of the Income Tax Act, 1961 and nothing adverse was found against the assessee during the course of assessment. Therefore, addition was deleted. 3.2. The Revenue is in appeal challenging the deletion of addition of ₹ 1.50 crores and assessee in the crossobjection challenged initiation of re-assessment proceedings under section 147/148 of the Income Tax Act, 1961. 3.3. Before considering the issue on merit, we proceed to decide the lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Delhi High Court in the case of Signature Hotels (P) Ltd., 338 ITR 51 (Del.) He has submitted that reassessment is initiated on mere suspicion only. He has referred to page-1 of the paper book filed by the Departmental Representative in which the ACIT of the Investigation Wing has directed to issue notice under section 147/148 of the Income Tax Act, 1961 after recording reasons. He has submitted that all the Investors are assessed to tax and no material found during the course of search have been supplied to the assessee. He has submitted that proceedings are initiated on mere suspicion which is not reason to believe and based on no tangible material. He has submitted that reopening of assessment may be quashed. 4. On the other hand, Learned Departmental Representative relied upon order of the Assessing Officer and referred to information received from Investigation Wing, copy of which, is filed at Page-1 of the paper book of the Department, which is supported by letter of the DIT (Inv.)-II, Wing, New Delhi, Dated 15th March, 2013, which is referred to in the reasons for reopening of the assessment. The Learned Departmental Representative referred to the report of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntries :- Sr.No. Name of the Company PAN F.Y. 2006-07 Amount (Rs.) 1. M/s. KLA Foods (India) Ltd., AACCK8299G 1,50,00,000/- Therefore, I have reason to believe that income to the tune of ₹ 1,50,00,000/- has escaped assessment. Issue Notice under section 148 of the Income-tax Act, 1961 for the assessment year 2007-2008. Dated : 25th March, 2013 Sd/- S. Dayal Assistant Commissioner of Income-tax, Rohtak Circle, Rohtak . 5.1. The relevant provision of Section 147 of the Income Tax Act provides as under : 147. If the [Assessing] Officer [has reason to believe] that any income chargeable to tax has escaped assessment for any assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re-compute the loss or the depreciation allowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee filed original return of income on 8th November, 2007. The Assessing Officer examined the issue of share capital and charging of share premium and ultimately assessed the income at NET LOSS, without making any addition on account of share capital/share premium. The Assessing Officer did not mention in the reasons if assessee filed original return of income and whether assessee has been assessed under section 143(3) of the Income Tax Act. The Investigation Wing has required the Assessing Officer to reopen the assessment. It, therefore, appears that reassessment proceedings are initiated on mere suspicion and that reason to suspect is not the same thing as reason to believe . The A.O. recorded vague reasons based on no evidence at the dictate of Investigation Wing only. Thus, there is totally non- application of mind on the part of the Assessing Officer to record reasons for reopening of the assessment. The Assessing Officer did not mention any material facts in the reasons, therefore, reopening of assessment is clearly illegal and bad in law. In the case of Signature Hotels P. Ltd., vs., Income Tax Officer And Another (2011) 338 ITR 51 (Del.) the Hon ble Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the reasons. The Assessing Officer did not mention that assessee was already assessed under section 143(3) in the original assessment, in which, Assessing Officer has already examined the issue of share capital/premium and what was the material produced before him regarding accommodation entry. The Assessing Officer did not record as to who has provided accommodation entry to assessee in the reasons. Thus, there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment under section 147 of the Income Tax Act, 1961. 5.7. In view of the above, it is clear that in the instant case the Assessing Officer reopened the assessment after 04 years from the end of the assessment year and Assessing Officer has failed to specify if there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment under section 147 of the Income Tax Act, therefore, conditions of Section 147 of the Income Tax Act are not satisfied in this case. Further, the reasons are vague and do not disclose any incriminating material against the assessee. The decisions relied upon by Learned Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Assessment Year 2007-2008. Reasons in brief for reopening the case under section 147 of the Income-tax Act, 1961 : In this case, information was received from DIT (Inv.)-II, New Delhi, vide letter F.No.DIT (Inv.)-II under section 148/2012-13 dated 15.03.2013. On the basis of search in the cases of Shri Surendra Kumar Jain group of cases (entry operator) and further enquiries the DDIT (Inv.) has suggested the notice under section 148 in following cases for the A.Y. 2007-08 is required to be issued to bring to tax the undisclosed income regarding the accommodation entries obtained by the companies. 2. After going through entries it is revealed that M/s. Param Exim Ltd., who is assessed with this Circle, has availed the following accommodation book entries :- Sr.No. Name of the Company PAN F.Y. 2007-08 Amount (Rs.) 1. M/s. Param Exim Ltd., AACCP9669B 3,20,00,000/- Therefore, I have reason to believe that income to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Condition precedent for issue of notice for reassessment is that the reason to believe that income has escaped assessment must be based on correct facts. Notice based on wrong facts is without jurisdiction and is to be quashed. 11.2. In the instant case, the Assessing Officer has recorded vague reasons based on wrong facts. The escapement of income based on accommodation entry as informed by Investigation Wing have been mentioned at ₹ 3.20 crores which in fact was ₹ 2.20 crores. Such fact is mentioned in the balance sheet of the assessee, copy of which is, filed at Page-10 of the paper book, which is also supported by the list of Investors filed at Page-21 of the paper book. The Assessing Officer in the reasons for reopening has also mentioned incorrect F.Y. 2007-2008 instead of F.Y. 2006-2007. Therefore, the reasons are based on wrong facts, which clearly show that there was no application of mind on the part of the Assessing Officer while recording reasons for reopening of the assessment. We, therefore, considering the above discussion and following the reasons for decision in the case of M/s. KLF Food (India) Ltd., (supra), hold that assumption of jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 52.91 crores on account of deposits in the bank account of the assessee. No reasons have been mentioned as to why such addition have been made and what was the purpose in making the addition. The entire deposit in the Bank account of the assessee could never be unexplained. Even the Investigating Agency have not made any allegation against the assessee if that amount was an accommodation entry taken by the assessee ? The Ld. D.R. admitted that no notice have been issued by the A.O. while proposing to make this addition of ₹ 52.91 crores. The issue is, therefore, covered in favour of the assessee against the Department by Judgment of Hon ble Delhi High Court in the case of Ranbaxy Laboratories Limited vs., CIT [2011] 336 ITR 136 (Del.) in which in para 18 it was held as under : We are in complete agreement with the reasoning of the Division Bench of the Bombay High Court in the case of CIT vs., Jet Airways (I) Limited [2011] 331 ITR 236 (Bom.). We may also note that the heading of section 147 is income escaping assessment and that of section 148 issue of notice where income escaped assessment . Sections 148 is supplementary and complimentary to section 147. Sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
