9911796707
TMI Blog2016 (1) TMI 1442X X X X Extracts X X X X X X X X Extracts X X X X ..... s erred in law and on facts in confirming the action of Ld. AO in making aggregate addition of Rs. 9,36,328/- (as per details given in the assessment order) on 'account of alleged unexplained entries in bank account and that too by recording incorrect facts and findings and without considering the submissions/evidences of the assessee. 3. That in any case and in any view of the matter, impugned addition and impugned assessment order are bad in law, illegal, unjustified, barred by limitation, contrary to facts & law and based upon recording of incorrect facts and finding, without giving adequate opportunity of hearing, in violation of principles of natural justice and the same deserves to be quashed. 4. That the appellant craves to leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 3. The grounds raised in the Revenue's Appeal No. 2999/Del/2013 read as under:- "The CIT(A) has erred in deleting the addition of Rs. 10,00,000/- made by AO u/s. 68 of the I.T. Act, 1961 on account of accommodation entries without appreciating the inquiries conducted by the Investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/-, also required the assessee to explain all the other credit entries in the bank accounts and simultaneously also asked the assessee to explain why all the credit entries appearing in his bank account be not added in his returned income u/s 68 as income from undisclosed sources for the assessment year under consideration. 4.3 In response, the AR of the assessee has filed the reply vide letter dated 14.11.2011. After considering the reply of the AR, the AO observed that as per the information of the DIT(Inv.) since Sh. Satish Kumar Sharma was involved in giving bogus accommodation entries, the receipts of Rs. 10,00,000/- from him cannot be held to be reliable and genuine. He, accordingly, added the amount of credit entries aggregating to Rs. 10,00,000/- to the income of the assessee u/s. 68 of the Income Tax Act, 1961. 5. Against the Order of the Ld. AO, assessee appealed before the Ld. CIT(A), challenging the validity of reassessment as well as the addition of Rs. 10,00,000/-. Ld. CIT(A) who vide impugned order dated 27.2.2013 has partly allowed the appeal of the assesseee thereby deleting the addition in dispute and rejected the ground of challenging the validity of reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we would like to discuss the reasons for initiation of proceedings u/s. 147 and for obtaining the approval of the Addl. CIT/CIT as under:- "The Directorate of Income Tax (Investigation), New Delhi has carried out investigation in the cases of certain group of persons who were engaged in providing accommodation entries. These enquiries were initiated to probe into some bank accounts which were used by these persons to issue cheques to entry seekers or beneficiaries against cash paid by them to the entry providers. Such a camouflaged transaction came to light during the course of survey in the case of M/s Gurcharan Jewellers whose proprietor Sh. Ashok Kumar Chaudhary had admitted to have taken cheques under the garb of gifts after giving cash to the entry operator. Probe was initiated into the accounts which were used to provide these accommodation entries. These investigations led to revealing of many more bank accounts which were being used by the entry operators for the purpose of giving bogus accommodation entries. Extensive enquiries were-made in a number of such bank accounts, the account holders, the persons operating these accounts and the persons for whom such acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transactions, whether shown by beneficiaries as inflow of share capital / loan or receipt of gifts or consideration for sale purchase. It has also dealt a body blow to the creditworthiness of the persons controlling the concerns who have given these credit entries/ share capital / gifts / sale consideration as they have been found to be men of no means. In the instant case of the assessee, the following credits have been shown in the bank account. Bank of the assessee Branch of the Bank Amount Instrument No. Date Credit entry coming from the account of Bank a/c of entry provider BOR New Rohtak Road 25,00,000 5.8.2003 Satish Kumar Sharma 15447, SBBJ, NRR BOR New Rohtak Road 25,00,000 5.8.2003 Satish Kumar Sharma 15447, SBBJ, NRR BOR New Rohtak Road 25,00,000 5.8.2003 Satish Kumar Sharma 15447, SBBJ, NRR BOR New Rohtak Road 25,00,000 5.8.2003 Satish Kumar Sharma 15447, SBBJ, NRR In view of the report received from the DIT(Inv.), New Delhi and in view of the facts narrated above it is clear that the assessee has not disclosed fully and truly all material facts necessary for its assessment for that asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: "it is evident 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. 13. 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not indicate escapement of income. (iv) Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid up capital of Rs. 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to the quashed." 10. In view of above, we are of the considered view that the aforesaid issue in dispute is exactly the similar and identical to the issue involved in the present appeal and is squarely covered by the aforesaid decisions of the Hon'ble High Court of Delhi in the case of G&G Pharma (supra) & Signatures Hotels (P) Ltd. (Supra). However, we note that the case laws as referred by the Ld. DR are distinguishable to the facts of the present Appeal. Hence, respectfully following the above precedents in the case of Pr. CIT-4 vs. G&G Pharma India Ltd. (Supra) and Signature Hotels (P) Ltd. vs. ITO, we decide the legal issue in dispute in favor of the Assessee and against the Revenue and accordingly qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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