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2015 (11) TMI 1800

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..... troduced 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 the Ld.Commissioner of Income Tax (Appeals)-XV dated 28.11.2013 perta .....

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..... ta 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 of the appraisal report. From the perusal of details/documents forwarded by the DCIT, Central Circle - 18, it has noticed that the assessee has received ₹ 5 Lacs from M/s Zenith Estate Limited on 07.08.2004. The assessee during the course of .....

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..... 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 entries. From the above referred survey action, following points conclusively pointed out that Shri S.K. Gupta is an established Entry Operator:- * Shri S.K. Gupta was controlling more that 35 companies from a small office premises without sufficient infrastructure or employees to carry out meaningful business activity in so .....

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..... t 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 Revenue could have uncovered but did not, then it is the duty of the assessee to bring it to the notice of the assessing authority. The assessee knows all the material and relevant facts the assessing authority might not. In respect of the failure to disclose, the omission to disclose may be deliberate or inadvertent. That subject to the other conditions, jurisdiction to reopen is attracted. It is thus clear that there are so .....

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..... 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 drawn on Kotak Mahindra Bank, New Delhi as advance against sale of property vide agreement on sale dt. 4.8.2004. This fact was recorded in the books of accounts of the assessee and the original return of income contained the audited accounts. This advance received was returned to M/s Zenith Estates Ltd. on 21.03.2009, consequent to cancellation of the agreement to sell. All these documents were with the Assessing Officer. In fact the assessee filed his objections also .....

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