TMI Blog2015 (11) TMI 1800X X X X Extracts X X X X X X X X Extracts X X X X ..... is introduced by the company. The amount received as advance was returned. The assessee in his letter dt. 7.12.2011 has specifically asked for the statements of Mr.D.N.Taneja and Shri SK Gupta and ledger account of Sh.G.Taneja and copy of appraisal report in the case of TDS proof. It was specifically stated that Shri DN Taneja was never associated with the assessee company. It is also specifically submitted that Mr.SK Gupta has not mentioned that he received ₹ 5 lakhs in cash in lieu of the cheque issued by Zenith Estates Ltd to the assessee. AO has not independently apply his mind to come to a conclusion that income chargeable to tax has escaped assessment. Thus, the reasons recorded and consequent reopening of the assessment, in my view are bad in law. Hence uphold the statements of the assessee and quash the reopening of the assessment as bad in law. - Decided in favour of assessee. - ITA No. 622/Del/2014 - - - Dated:- 30-11-2015 - SHRI J. SUDHAKAR REDDY, J. Appellant by : Shri Salil Aggarwal, Adv. Respondent by : Sh. T.Vasanthan, Sr.D.R. ORDER This is an appeal filed by the Assessee directed against the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. The following documents are enclosed herewith in this regard. 1. Copy of statement of Shri DN Taneja recorded on 7.1.2009. 2. Copy of statement of Shri SK Gupta recorded on 5.1.2009 during the course of survey u/s 133A of the I.T.Act, 1961 in the case of M/s Omni Farms Pvt.Ltd. in which he has admitted regarding providing of accommodation entries to various group, including Taneja Group. 3. Copy of ledger account which includes accommodation entries of ₹ 5 lacs (duly highlighted) provided by the companies of Shri SK Gupta to your assessee. This ledger account was extracted by the investigation wing from the back up files of one of the laptops impounded during the course of survey in the case of Shri SK Gupta on 20.11.2007. 4. Extracts of following pages of appraisal report in TDI group explaining the modus operandi in respect of providing of accommodation entries by Shi SK Gupta through various companies of his group. a. Pages 3, 4 and 5 of letter dt. 24.7.2009 of ADIT(Inv.Unit VI, Delhi) (Copy of letter was enclosed in the Appraisal Report). b. Pages 20, 21, 24 to 32, 38 to 42, 47 to 49 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the fact that Taneja Group of Companies are such beneficiaries. While answering to Q. No. 17 Shri S.K. Gupta has admitted that he is controlling M/s Zenith Estates Ltd. and the same is running from the premises controlled by Shri S.K. Gupta. The part of the appraised report was also perused. The appraised report discussed in details the modus operandi of the entry given by Shri SK Gupta and taken by Taneja Group through Shri AS Aneja : A survey action u/s 133A of the I.T. Act, 1961 was conducted by Unit-VI of Investigation Wing (Income Tax), Delhi on 20.11.2007, at the business premises of Shri Suresh Kumar Gupta (C.A.). In the Survey it was noticed that Shri S.K. Gupta, a Chartered Accountant by profession was controlling various companies from a small office (308, Arunachal Building, 19, Barakhamba Road) without having sufficient infrastructure/man power for running the business affairs of such companies. Further, during the course of survey dated 20.11.2007, in his statement recorded on oath, Shri S.K. Gupta accepted that the various companies controlled by him do not have any actual business activities and are used only to issue accommodation entri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and which does not stand the contours of the law defined by various courts in respect of section 68 of the Act. It is clear that assessee has earned an income of ₹ 5,00,000/- and has not reflected it in its books of account. The statements of Shri S.K, Gupta and Shri D.N. Taneja clubbed with the evidences collected during the course of survey/search operation has provided the sufficient reasons to believe that income of ₹ 5,00,000/- has escaped assessment in the case of M/s Hiteshi Estates Ltd. for A.Y. 2005-06 and thus there is clear cut case of reopening the assessment u/s 1₹ 48 of the Act. At this outset it is relevant to point out the fact that the assessee is duty bound to disclose fully and truly all material facts necessary for assessment and the same has not been done by the assessee. The assessee was aware that he has taken the accommodation entry and the same fact has been accepted by the assessee. It has been judiciously established that mere production of evidence before the IYO was not enough, that there may be omission or failure to make a true and full disclosure, if some material for the assessment lay embedded in the evidence which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity . 4.2. In the case on hand, the assessee has submitted that it received ₹ 5 lakhs from M/s Zenith Estates Ltd. on 7.8.2004 vide cheque no. 000006 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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