TMI Blog2020 (2) TMI 1267X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 non-application of mind by him. There is nothing to show that the cash is paid from coffers of the assessee. Reasons do not indicate as to who AO reached to the conclusion that the assessee received accommodation entry and escaped assessment. Proceedings initiated by invoking the provisions of section 147 of the Act by the AO and upheld by the Ld. CIT(A) are nonest in law and without jurisdiction, hence, the assessment is quashed and ground no. 1 is allowed. - ITA No. 6396/Del/2017 - - - Dated:- 16-1-2020 - Shri H.S. Sidhu, Judicial Member For the Assessee : Sh. R.C. Rai, CA Ms. Kamal Sharma, CA For the Department : Sh. Manoj Kumar Chopra, Sr. DR. ORDER This appeal filed by the assessee is directed against the order passed by the Ld. CIT(A)-28, New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 147/143(3) of the Act after making the addition of ₹ 10 lacs on account of unexplained cash credit u/s. 68 and ₹ 20,000/- on account of unexplained expenditure (commission payment in cash) and assessed the income of the assesse at ₹ 10,27,700/- against the income of ₹ 7,670/- disclosed by the assessee in its return of income vide order dated 23.3.2016 passed u/s. 143(3)/147 of the Act. Against the assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 30.8.2017 has dismissed the appeal of the assessee. Aggrieved with the impugned order dated 30.8.2017 assesee is in appeal before the Tribunal. 3. During the hearing, ld. Counsel of the assessee has only argued legal ground no. 1 and stated the reassessment as made is without jurisdiction, without compliance with mandatory provisions of section 147/148 of the Act and as such the same deserves to be quashed. He further stated that the reasons recorded for the reassessment are at pager book page nos.19-21 and the reasons are bald and do not contain even the prima facie view or reason to believe of the AO that income has escaped assessment to tax within the meaning of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmann.com 150 (Delhi). i) Where Congress Party gave loan to AJL and assigned said loan to non-profit YI which subsequently issued shares to assesses at a price less than FMV, non-disclosure by assesses of allotment of shares in YI would be 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m several entities which were only engaged in business of providing bogus accommodation entries to beneficiary concerns, reassessment on basis of said information was justified. 11. Rakesh Gupta Vs CIT P H High Court f20181 93 taxmann.com 271 (Punjab Haryana) Where 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 O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 non-application of mind by him. There is nothing to show that the cash is paid from coffers of the assessee. Reasons do no indicate as to who AO reached to the conclusion that the assessee received accommodation entry and escaped assessment. To support my aforesaid view, I draw support from the following decisions:- i)ACIT vs. Dhariya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO has, instead of adding a sum of 78 lakh, even going by the reasons for reopening of the assessment, added a sum of ₹ 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 formation of the reason to believe that income has escaped assessment. 37. For the aforementioned reasons, the Court is satisfied that in the facts and circumstances of the case, no error has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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