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TMI Blog2020 (1) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... rus Iron & Steel Co. P. Ltd. 20,00,000/- Total 38,00,000/- 3.1 That without prejudice, in the absence of providing the adverse material for rebuttal as well as in the absence of providing for cross - examining the persons whose statements have been taken on the back of the assessee which have been adversely used, no adverse view of such material and statements etc. can be taken and all such material needs to be ignored for taking a view for 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 Rs. 38 lacs, consequently he erred in making an addition of Rs. 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 Rs. 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 Rs. 38,00,000/- from the companies controlled by Sh. Tarun Goyal as under: S.No. Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 16.12.2015 and thereafter notice u/s. 143(2) of the Act was issued 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 Rs. 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 Rs. 100 each of premium of Rs. 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 Rs. 38,00,000/- on account of accommodation entry and Rs. 76,000/- on account of commission thereon and completed the assessment at Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 assessee on reopening notice.. 4. Acorus Unitech Wireless (P.) Ltd. Vs ACIT Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to suggest that entire proposal of reopening of assessment alongwith reasons recorded by the Assessing Officer for same were placed before Additional Commissioner who, upon perusal of same, recorded his satisfaction that it was a fit case for issuance of notice for reopening assessment, reassessment notice issued against assessee was justified." 6. I have heard both the parties and ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 live link or direct nexus between alleged material and, inference. 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. Nothing is independently examined or considered by the AO which can demonstrate application of mind by him. There is nothing to show that the cash is paid from coffers of the assessee. Reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Rs. 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) Pr. CIT v. Meenakshi Overseas (P) Ltd. "36. In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the AO one after the other. There is no independent application of mind by the AO to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The conclusions of the AO are at best a reproduction of the conclusion in the investigation report. Indeed it is a 'borrowed satisfaction'. The reasons fail to demonstrate the link between the tangible material and the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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