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2015 (11) TMI 1802

..... ing is bad in law as in this case the A.O. has not independently applied his mind to the information received so as to form an opinion that income chargeable to tax has escaped assessment in the case of the assessee. He has not stated as to how the material gathered by the Investigation Wing has nexus with the assessee. The report and the finding of the Investigations Wing have to be relied upon by the A.O. without any independent verification. Merely discussing the modus operandi will not lead the A.O. to form a reasonable belief that income chargeable to tax of the assessee has escaped assessment. Hence in my view the reopening of the assessment is bad in law. - Decided in favour of assessee. - ITA No. 2408/Del/2014 - 30-11-2015 - SHRI J. .....

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..... hauhan had admitted to have taken cheques under the garb of gifts after giving cash to the entry operator. Probe was initiated into accounts which were used to provide these entries. These investigations revealing of many more bank accounts which were being used by the entry operators for the purpose of giving accommodation entries. 2. Extensive enquiries were made into numerous such bank accounts, the account holders, the persons operating these accounts and the persons for whom such account holders s were working. These enquiries revealed inter alia the following. 2.1. Entries were being broadly taken for two purposes: a. To plough back unaccounted black money for the purpose of business or for personal needs such as purchase of assets et .....

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..... count holders were masons, plumbers, electricians, peons, drivers etc, whose earnings are not sufficient for a living. They earned normally ₹ 3 to 5 thousand per month in their normal work and by working for the entry operators earned extra income of ₹ 2 to 4 thousand per month. Their signatures were taken on blank gif: deeds, cheque books, share application money etc. In fact these persons signed all types of papers they were asked to sign. They were made directors of companies, partners of firms and proprietor of different concerns solely for operation of these accounts. Actually, many of them were not even aware of the tax implications etc. Their only concern was with the few thousand rupees given to them by the entry operato .....

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..... f providing accommodation entries through his companies as well as his associates. He is just providing accommodation entries to various other beneficiaries by using various concerns. 4.2 In view of the findings of the investigation report, the entities from where assessee has received funds had been proved to be men/parties of no creditworthiness. On the basis of the statements recorded on oath and the letters of admission clearly show that these transaction do not appears to be genuine. Therefore, it appears that the aforesaid credit entries are covered under the provisions of section 68 of the I. T. Act. I therefore have reasons to believe that this amount of ₹ 7,00,000/- represents income of the assessee chargeable to tax which ha .....

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..... vident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries . In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT (A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has t .....

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