TMI Blog2020 (1) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... n entry of ₹ 38 laks. There is no mention of any application of mind or any independent inquiry or any link between any tangible material and formation of reasons to believe that income chargeable to tax has escaped assessment. AO was not having even the material before him, at the time of initiation of proceedings, on the basis of which the Investigation Wing sent his report. AO assumed and worked only on the satisfaction of only Investigation Wing. It is also noted that even the copies of statements recorded by the Investigation Wing in the case of Tarn Goyal on the basis of which impugned proceedings have been initiated were not available with the AO as admitted by the AO himself in his letter dated 10.12.2015 AO has not even specified as to what is the amount of alleged income escaping assessment, which shows that AO has merely recorded certain unsubstantiated allegations on the basis of some information received, which is against the principle laid down in the case of CIT vs SFIL Stock Broking Ltd [ 2010 (4) TMI 102 - DELHI HIGH COURT] wherein held that mere information received from DDIT(Inv) cannot constitute valid reasons for initiating reassessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or framing the assessment. 4. That under the facts and circumstances and in the absence of any material whatsoever on records, the AO committed grave error of law and facts in imaging 2% as commission element on alleged accommodation entry of ₹ 38 lacs, consequently he erred in making an addition of ₹ 76,000/- u/s. 68. 2. The facts in brief are that assessee filed its return of income on 2.11.2008 declaring income of ₹ 2,98,810/-. Later on, Information was received from the Directorate of Income Tax (Inv.) to the effect that during the FY 2007-08 the assessee company M/s Goel Wax Pvt. Ltd. had taken accommodation entries for a sum of ₹ 38,00,000/- from the companies controlled by Sh. Tarun Goyal as under: S.No. Party Name Amount (Rs.) 1. Countrywide Credit and Securities P. Ltd. 18,00,000/- 2. Taurus Iron Steel Co. P. Ltd. 20,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and served upon the assessee on 6.1.2016. In response to the same, the AR of the assessee attended the proceedings from time to time and furnished copy of Annual Report of the above mentioned two companies, from whom the assessee had taken share capital for a sum of ₹ 38 lacs. Assessee also filed the reply dated 22.2.2016 stating therein that assessee company had issued 19000 equity shares of face value of ₹ 100 each of premium of ₹ 100/-. After considering the reply of the assessee, a show cause notice letter dated 11.3.2016 was issued, but no reply was received and proceedings were closed on 18.3.2016. As the assessee company has failed to fully reply to the questionnaire / note sheet entry requirements, hence, AO passed the reassessment order dated 18.3.2016 u/s. 147/144 of the Act after adding ₹ 38,00,000/- on account of accommodation entry and ₹ 76,000/- on account of commission thereon and completed the assessment at ₹ 41,74,810/-. 3. Aggrieved with the aforesaid assessment order dated 18.3.2016, assessee appealed before the Ld. CIT(A) who vide his impugned order dated 1.12.2017 has affirmed the action of the AO. Against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in YI would be a reason to initiate reassessment proceedings. ii) Relying on PCIT vs. Meenakshi Overseas Pvt. Ltd. ITA No. 651/Del/2016 dated 11.1.2016 (Hon ble Delhi High Court) approval u/s. 151 upheld. 2. Raymond Woollen Mills Ltd. v. ITO And Others [236 ITR 341 (Copy Enclosed) where Hon ble Supreme Court held that in determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. 2.1 Yuvraj v. Union of India Bombay High Court [20091 315 ITR 84 (Bombay)/[2009] 225 CTR 283 (Bombay) Points not decided while passing assessment order under section 143(3) not a case of change of opinion. Assessment reopened validly. 3. Devi Electronics Pvt Ltd Vs ITO Bombay High Court 2017-TIQL-92-HC-MUM- IT The likelihood of a different view when materials exist of forming a reasonable belief of escaped income, will not debar the AO from exercising his jurisdiction to assess the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share application money from several entities which were only engaged in business of providing bogus accommodation entries to beneficiary concerns, reassessment on basis of said information was justified. 11. Rakesh Gupta Vs CIT P H High Court f20181 93 taxmann.com 271 (Punjab Haryana) Where Assessing Officer received information from Principle Director of Income Tax (Investigation) that assessee had received bogus loss from his broker by client code modification, reassessment on basis of said information was justified. 12. Home Finders Housing Ltd. Vs. ITO (2018) 94 taxmann.com 84 (SC). SLP dismissed against High Court s order that non-compliance of direction of Supreme Court in GKN Driveshafts (India) Ltd. Vs. ITO (2002) 125 Taxman 963 that on receipt of objection given by assessee to notice under section 148, Assessing Officer is bound to dispose objections by passing a speaking order, would not make reassessment order void ab initio. 13. Baldevbahi Bhikhabhai Patel vs. DCIT (Gujarat High Court) (2018) 94 Taxmann.co, 428(Gujarat) Where revenue produced bunch of documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t available with the AO as admitted by the AO himself in his letter dated 10.12.2015 placed at page no. 7-8 of the Paper Book. The AO has not even specified as to what is the amount of alleged income escaping assessment, which shows that AO has merely recorded certain unsubstantiated allegations on the basis of some information received, which is against the principle laid down by the Hon ble Delhi High Court in the case of CIT vs SFIL Stock Broking Ltd. (2010) 325 ITR 285 (Del), wherein it was observed that reassessment proceedings were initiated on the basis of information received from investigation wing regarding alleged accommodation entries and it has been held by jurisdictional Delhi High Court that mere information received from DDIT(Inv) cannot constitute valid reasons for initiating reassessment proceedings in the absence of anything to show that A.O. had independently applied his mind to arrive at a belief that the income had escaped assessment. Thus, the AO has acted mechanically and without any independent application of mind. The reasons recorded are therefore vague, highly non specific and reflect complete non-application of mind. It is also noted that there is no li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO was a borrowed satisfaction and at best a reproduction of the conclusion in the investigation report. 13. As in the above case, even in the present case, the Court is unable to discern the link between the tangible material and the formation of the reasons to believe that income had escaped assessment. In the present case too, the information received from the Investigation Wing cannot be said to be tangible material per se without a further inquiry being undertaken by the AO. In the present case the AO deprived himself of that opportunity by proceeding on the erroneous premise that Assessee had not filed a return when in fact it had. 14. To compound matters further the in the assessment order the AO has, instead of adding a sum of 78 lakh, even going by the reasons for reopening of the assessment, added a sum of ₹ 1.13 crore. On what basis such an addition was made has not been explained. 15. For the aforementioned reasons, the Court is satisfied that no error was committed by the ITAT in holding that reopening of the assessment under Section 147 of the Act was bad in law. iii) 395 ITR 677 (Del) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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