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TMI Blog2019 (5) TMI 1795X X X X Extracts X X X X X X X X Extracts X X X X ..... ot of the reassessment order framed pursuant to reopening itself. 3. The brief facts of the case necessary for adjudication of the legal issue are that the assessee had filed the original return of income on 03.07.2009 for AY 2009-10. Since the time period expired for issuance of notice u/s. 143(2) of the Act, therefore originally, no scrutiny assessment was framed. Therefore, the return of income filed by assessee stood accepted by the Department. Thereafter, the AO on 30.03.2016 issued notice u/s. 148 of the Act for reopening the assessment, and the reassessment order was passed on 28.12.2016. Since the legal challenge is in respect of the very action of the AO to invoke the jurisdiction to reopen the assessment, as stated above, we would like to first dispose of the said legal ground. 4. The Ld. AR assailed the decision of the AO to reopen the assessment based on letter from the ADIT (Inv.), Thane. According to Ld. Counsel, the AO without application of mind has proceeded to reopen the assessment only on the basis of a investigation report given by the ADIT (Inv.), Thane in respect of accommodation entries given in the form of share capital by companies floated by Shri Vikas J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o) PCIT Vs. Meenakshi Overseas Ltd. 395 ITR 677(Del.) p) DCIT Vs. Greal Wall Marketing Pvt. Ltd. ITA No.660/Kol/2011 q) Shri Raj Kumar Goel Vs. ITO ITA No.1028/Kol/2017 r) Classic Flour & Food Processing Pvt. Ltd. Vs. CIT ITA Nos. 764 to 766/Kol/2014 s) PCIT Vs. Shodiman Investments (P) Ltd. (2018) 93 taxmann.com 153 (Bom) t) KSS Petron Pvt. Ltd. Vs. ACIT ITA No. 224/Mum/2014 u) PCIT Vs. Tupperware India Pvt. Ltd. (2016) 236 Taxman 494 v) DCIT Vs. National Bank for Agriculture and Rural Development ITA No.4964/Mum/2014 w) CIT Vs. Insecticides (India) Ltd. (2013) 357 ITR 330 (Del.) x) Hon'ble Calcutta High Court in the case of Pr. CIT Vs. G4G Pharma India Ltd. in ITA 545/2015 vide order dated 08.10.2015 6. The Ld. AR drew our attention to the decision of the Hon'ble High Court of Delhi in ACIT Vs. Meenakshi Overseas (P) Ltd. (2017) 82 taxmann.com 300 (Del) wherein it has been held as under: "22. As rightly pointed out by the ITAT, the 'reasons to believe' are not in fact reasons but only conclusions, one after the other. The expression 'accommodation entry' is used to describe the information set out without explaining the basis for arriving at s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity is expected to arrive at a subjective satisfaction independently on an objective criteria. While the report of the Investigation Wing might constitute the material on the basis of which he forms the reasons to believe the process of arriving at such satisfaction cannot be a mere repetition of the report of investigation. The recording of reasons to believe and not reasons to suspect is the pre- condition to the assumption of jurisdiction under Section 147 of the Act. The reasons to believe must demonstrate link between the tangible material and the formation of the belief or the reason to believe that income has escaped assessment. 27. Each case obviously turns on its own facts and no two cases are identical. However, there have been a large number of cases explaining the legal requirement that requires to be satisfied by the AO for a valid assumption of jurisdiction under Section 147 of the Act to reopen a past assessment. 28.1 In Signature Hotels Pvt. Ltd. v. Income Tax Officer (supra), the reasons for reopening as recorded by the AO in a proforma and placed before the CIT for approval read thus: "11. Reasons for the belief that income has escaped assessment.- Informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uashed the proceedings under Section 148 of the Act. The facts in the present case are more or less similar. The present case is therefore covered against the Revenue by the aforementioned decision. 29.1 The above decision can be contrasted with the decision in AGR Investment v. Additional Commissioner of Income Tax (supra), where the 'reasons to believe' read as under: "Certain investigations were carried out by the Directorate of Investigation, Jhandewalan, New Delhi in respect of the bogus/accommodation entries provided by certain individuals/companies. The name of the assessee figures as one of the beneficiaries of these alleged bogus transactions given by the Directorate after making the necessary enquiries. In the said information, it has been inter-alia reported as under: "Entries are broadly taken for two purposes: 1. To plough back unaccounted black money for the purpose of business or for personal needs such as purchase of assets etc., in the form of gifts, share application money, loans etc. 2. To inflate expense in the trading and profit and loss account so as to reduce the real profits and thereby pay less taxes. It has been revealed that the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on conducted at his office premises by the Investigation Wing. The particulars of some of the transaction of this nature are as under: Date Particulars of cheque Debit Amt. Credit Amt 18.11.96 305002 5,00,000 Through the Bank Account No. CA 4266 of M/s. Mehram Exports Pvt. Ltd. in the PNB, New Rohtak Road, New Delhi. Note: It is noted that there might be more such entries apart from the above. The return of income for the assessment year 1997-98 was filed by the Assessee on 4th March 1998 which was accepted under Section 143 (1) at the declared income of Rs. 4,200. In view of these facts, I have reason to believe that the amount of such transactions particularly that of Rs. 5,00,000 (as mentioned above) has escaped the assessment within the meaning of the proviso to Section 147 and clause (b) to the Explanation 2 of this section. Submitted to the Additional CIT, Range -12, New Delhi for approval to issue notice under Section 148 for the assessment year 1997-98, if approved." 30.2 The AO was not merely reproducing the information received from the investigation but took the effort of referring to the deposition made during the survey by the Chartered A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. A reason to believe - not reason to suspect - is the precondition for exercise of jurisdiction underSection 147 of the Act. " 34. Recently in Agya Ram v. CIT (supra), it was emphasized that the reasons to believe "should have a link with an objective fact in the form of information or materials on record..." It was further emphasized that "mere allegation in reasons cannot be treated equivalent to material in eyes of law. Mere receipt of information from any source would not by itself tantamount to reason to believe that income chargeable to tax has escaped assessments." 35. In the decision of this Court dated 16th March 2016 in W.P. (C) No. 9659 of 2015 (Rajiv Agarwal v. CIT) it was emphasized that "even in cases where the AO comes across certain unverified information, it is necessary for him to take further steps, make inquiries and garner further material and if such material indicates that income of an Assessee has escaped assessment, form a belief that income of the Assessee has escaped assessment." 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 indepe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm a belief that income has escaped assessment. The Hon'ble Delhi High Court has also come to the conclusion that the reasons recorded did not disclose the AO's mind regarding escapement of income. The Hon'ble Delhi High Court ultimately held that initiation of proceedings u/s 148 of the Act was not valid and justified in the eyes of law. The facts and circumstances in the present case are identical to the case decided by the Hon'ble Delhi High Court. Following the said decision we hold that initiation of reassessment proceedings is not valid. On this ground, the assessment is liable to be annulled." 8. The Hon'ble Bombay High Court in Pr.CIT Vs. Shodiman Investments (P) Ltd. (2018) 93 taxmann.com 153 (Bom) it has been held as under: "9. We find that at the time of re-opening of the Assessment, the Assessing Officer did not provide the reasons recorded in support of the re-opening notice in its entirety, to the Respondent-Assessee. This was contrary to and in defiance of the decision of the Apex Court in GKN Driveshafts v. ITO [2002] 125 Taxman 963/ [2003]259 ITR 19. The entire objects of reasons for re- opening notice as recorded being made available to an Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices." . Therefore, the sentence being relied upon was made in the context of the change in law that under the amended provision 'reason to believe' that in case of escaped assessment, is sufficient to re-open the assessment. This unlike the earlier provision of Section 147(a) of the Act which required two conditions i.e. failure to disclose fully and truly all facts necessary for assessment and reason to believe that income has escaped assessment Thus, the observations being relied upon must be read in the context in which it rendered. On so reading the submission, will not survive. 11. Further, a reading of the entire decision, it is clear that the reasonable belief on the basis of tangible material could be, prima facie, formed to conclude that income chargeable to tax has escaped assessment. Mr. Mohanty, learned counsel is ignoring the fact that 6the words 'whatever reasons' is qualified by the words 'having reasons to believe that income has escaped assessment'. The words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the formation of belief i.e. there must be a live link between material coming the notice of the Assessing Officer and the formation of belief regarding escapement of income. If the aforesaid requirement are not met, the Assessee is entitled to challenge the very act of re-opening of Assessment and assuming jurisdiction on the part of the Assessing Officer. 13. In this case, the reasons as made available to the Respondent- Assessee as produced before the Tribunal merely indicates information received from the DIT (Investigation) about a particular entity, entering into suspicious transactions. However, that material is not further linked by any reason to come to the conclusion that the Respondent-Assessee has indulged in any activity which could give rise to reason to believe on the part of the Assessing Officer that income chargeable to tax has escaped Assessment. It is for this reason that the recorded reasons even does- not indicate the amount which according to the Assessing Officer, has escaped Assessment. This is an evidence of a fishing enquiry and not a reasonable belief that income chargeable to tax has escaped assessment. 14. Further, the reasons clearly shows that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is open to an assessee in an appeal against the order u/.s 263 of the Act which seeks to revise an order passed u/s 147 of the Act, to challenge the validity of the order passed u/s.147 of the Act as well as initiation of proceedings u/.s 147 of the Act. In this regard the Ld. Counsel for the assessee placed before us two decisions one rendered by Lucknow Bench of ITAT in the case of Inder Kumar Bachani (HUF) vs ITO 99 ITD 621 (Luck) and ITAT Mumbai 'G' Bench in the case of M/s. Westlife Development Ltd. Vs Principal C.I.T. in ITA NO.688/Mum/2016. In both the decisions a view has been taken by the Tribunal that when an Assessment order passed u/s 147 of the Act was illegal the CIT cannot invoke the jurisdiction u/s 263 of the Act against such void or non-est order. In the second decision cited the Hon'ble Mumbai bench of the Tribunal has specifically framed the following questions :- " 1.Whether the assessee can challenge the validity of an assessment order during the appellate proceedings pertaining to examination of validity of order passed u/s 263? 2. Whether the impugned assessment order passed u/s 143(3) dated 24-10-2013 was valid in the eyes of law or a nullity a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. There is no quarrel with the proposition advanced by Id. DR that the proceedings u/s 263 are for the benefit of revenue and not for assessee. 18. However, u/s 263 the Id. Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance to the notice U/S 143(2), which was beyond time, therefore, the assessment order passed in pursuance to the barred notice had no legs to stand as the same was non est in the eyes of law. All proceedings subsequent to the said notice are of no consequence. Further, the decision of Hon'ble Madras High Court in the case of CIT Vs. Gitsons Engineering Co. 370 ITR 87 (Mad) clearly holds that the objection in relation to non service of notice could be raised for the first time before the Tribunal as the same was legal, which went to the root of the matter. 19. While exercising powers u/s 263 Id. Commissioner cannot revise an assessment order which is non est in the eye of law because it would prejudice the right of assessee which has accrued in favour of assessee on account of its income being determined. If Id. Commissioner revises such an assessment order, then it would imply extending/ granting fres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant assessment years has escaped assessment. In this regard the reasons recorded by the AO for initiating proceedings u/.s 147 of the Act for A.Y.2007-08 and 2008-09 has already been set out by an order in the earlier part of this order. The gist of the reasons recorded by the AO is that the assessee had made investments of about Rs. 4 crore in construction of hotel/resort at Mandarmoni, Purba Midnapore. It is the further allegation in the reasons recorded that to a notice u/s 133(6) of the Act, the Assessee had in reply admitted investment of only Rs. 3.38 crores in construction of hotel and that source of funds for such construction was out of share capital and secured loan. It is also not disputed that the value of investments as stated by the assessee in its reply to the notice u/s 133(6) of the Act, was duly shown as the investment in construction of hotel with the balance sheet of the assessee. The AO has however inferred that there is a difference in the value of investment in construction of hotel as shown in the books of account and as per the information in possession of the AO which is a sum of Rs. 4 crores. Another reason given by the AO is that the difference in the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO have to be tested on the basis of specific wordings of the reasons so recorded. No external material can be shown to justify the conclusion arrived at in the reasons recorded unless these materials are specifically referred to or incorporated in the reasons recorded. In the reasons recorded the AO has not disclosed the basis of this conclusion that the assessee made an investment of Rs. 4 crores in the construction of a hotel at Mandarmoni. We find that in this regard that Hon'ble Bombay High Court in the case of Hindustan Lever Ltd., Vs. R.B.Wadkar (2004) 268 ITR 0332 the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the AO to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the AO to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the AO to form his opinion. It is for him to pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t'. As held by the Coordinate Bench of this Tribunal in the case of Deputy Director of inc me Tax (International Taxation )-21, Mumbai -vs.- Societe International De Telecommunication ( supra) cited by the Id. counsel for the assessee, unless the reasons to believe about the escapement of income exist, no recourse can be taken to the provisions of section 147. It was held that where an Assessing Officer ventures to initiate reassessment proceedings with an object of finding some material about the escapement of income, such reassessment cannot legally stand and the law doe s not permit the Assessing Officer to conduct inquiries after the initiation of reassessment ITA No. 671 / KOL/2015 Assessment year: 2008 - 2009 proceedings, to find if there is an escapement of income. It was held that the scope of section 147 cannot encompass such an action under which certain examination is to be conducted for forming a reason to believe as to the escapement of income. If the facts of the present case including especially the reasons recorded by the Assessing Officer for reopening the assessment a reconsidered in the light of the decision of the Coordinate Bench of this Tribunal in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been informed by the Director of Income-tax (Inv.), New Delhi, vide letter dated 16.06.2006 that the above named company was involved in giving and taking bogus entries/transactions during the relevant year, which is actually unexplained income of the assessee company. The AO has further stated that the assessee company has failed to disclose fully and truly all material facts and source of these funds routed through bank account of the assessee company. In the reasons recorded, it is nowhere mentioned as to who had given bogus entries/transactions to the assessee or to whom the assessee had given bogus entries or transactions. It is also nowhere mentioned as to on which dates and through which mode the bogus entries and transactions were made by the assessee. What was the information given by the Director of Income-tax (Inv.), New Delhi, vide letter dated 16.06.2006 has also not been mentioned. In other words, the contents of the letter dated 16.06.2006 of the Director of Income-tax (Inv.), New Delhi have not been given. The AO has vaguely referred to certain communications that he had received from the DIT(Inv.), New Delhi; the AO did not mention the facts mentioned in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries and transactions and the persons with whom the transactions had taken place. In this respect, we may rely upon the decision of Hon'ble jurisdictional Delhi High Court in the case of CIT v. Atul Jain [2000] 299 ITR 383, in which case the information relied upon by the AO for initiating proceedings u/s 147 of the Act did indicate the source of the capital gain and nobody knew which shares were transacted and with whom the transaction has taken place and in that case there were absolutely no details available and the information supplied was extremely scanty and vague and in that light of those facts, the Hon'ble Jurisdictional Delhi High Court held that initiation of proceedings u/s 147 of the Act by the AO was not valid and justified in the eyes of law. The recent decision of Hon'ble jurisdictional High Court of Delhi in the case of Signature Hotels (P.) Ltd. (supra) also supports the view we have taken above." 9. We do not see any reason to differ with the view expressed by the Tribunal. No substantial question of law arises for our consideration. The appeals are dismissed. There shall be no order as to costs. 11. The Hon'ble Calcutta High Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loating paper companies and bringing in funds from Kolkata Companies and thereafter systematically laundering the unaccounted money of persons like assessee. According to the Ld. DR, when the AO was in receipt of the information from the ADIT, Thane, he noted that the assessee had obtained accommodation entry in the form of share capital from the companies named in the report which was nothing but the infusion of the unaccounted money of the assessee. So, when he understood that assessee had indulged in obtaining accommodation entry from paper companies floated by Shri Vikas Jain who had admitted also in sec. 131 statement these facts, the AO believed that there was escapement of income. Therefore, he rightly reopened the assessment that too which was not originally done under scrutiny. Therefore, according to the Ld. DR, we should not interfere in the impugned order of the Ld. CIT(A) and also relied upon the following decisions : 13. PCIT vs. NRA Iron & Steel (P.) Ltd. [103 taxmann.com 48 (SC)] Issue of Cash credit (Share application money) was raised as to whether assessee is under a legal obligation to prove receipt of share capital/premium to satisfaction of Assessing Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had raised a false claim for exemption of capital gain, initiated reassessment proceedings. Question was, whether since there was no scrutiny assessment, Assessing officer had no occasion to form any opinion on any of issue arising out of return filed by assessee - Held, yes. Another issue was whether, therefore, concept of change of opinion would have no application and, as a consequence, validity of impugned reassessment proceedings was to be upheld - Held, yes. 15. In the case of Anip Rastogi vs. ITO, in ITA No. 3809/Del/2018 dt.8.1.2019 TS-5007- ITAT-2019 (Delhi)-O) Hon'ble ITAT, Delhi has upheld addition u/s 68 on account of credits arising on sale of penny stock on the ground that assessee had generated bogus entries of Long term capital gains on sale of penny stocks (copy of order attached). 16. M/s. Pankaj Agarwal & Sons (HUF); I.T.A.No.1413/CHNY/2018 dt.6.12.201 8 (and others). In this case AO treated sale and purchase of shares as sham transaction denying the claim u/s.10(38) and treating the same u/s. 68. Findings of the SEBI were corroborated by the Investigation wing of the department viz. equity shares with no credibility were purchased. Trading participants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even net worth was not known to the assessee, without expert advice was beyond the business logics and was valid reason to make addition for undisclosed income. When assessee fails to prove through evidences that purchase and sale transactions of shares are genuine, claim of exempted LTCG can be disallowed and addition for undisclosed income can be made. When facts indicates that whole process of trading in shares is depicted just to avoid tax liability, the addition for undisclosed income should be upheld. 21. Smt. M. K. Rajeshwari Vs ITO ITAT Bangalore 2018 [2018] 99 taxmann.com 339 (Bangalore - Trib.) Where assessee claimed exemption under section 10(38) in respect of capital gain arising from sale of shares, in view of fact that financial worth of said company was meagre and, moreover, there was abnormal rise in price of shares, it could be concluded that assessee introduced her own unaccounted money in garb of long term capital gain and, thus, claim raised by her was to be rejected. 22. Sanjay Bimalchand Jain L/J Shantidevi Bimalchand Jain Vs PCIT Bombay High Court (Nagpur Bench) 2017 ITA No. 18/20l7L: The assessee had purchased shares of two penny stocks of Kolkata bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umes jurisdiction to re-open it is necessary that the conditions laid down in the said section 147 has to be satisfied viz., AO should record "reason to believe" that the income chargeable to tax for that assessment year has escaped assessment. If this condition is not satisfied at the first place, then it cannot be said the AO has validly assumed jurisdiction u/s. 147 of the Act. Therefore, the question for consideration is whether on the basis of the reasons recorded by the AO, he could have validly reopened the assessment. For that it has to be seen as to whether the AO on the basis of whatever material before him, [which he had indicated in his "reasons recorded"] had reasons warrant holding a belief that income chargeable to tax has escaped assessment. It is important to remember that the reasons recorded by AO to reopen has to be evaluated on a stand-alone basis and no addition/extrapolation can be made or assumed, while adjudicating the legal issue of AO's usurpation of jurisdiction u/s. 147 of the Act. Moreover, the Parliament has given power to AO to reopen the assessment, if the condition precedent as discussed above are satisfied, and not otherwise. It should be kept in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return of income of an assessee is processed u/s. 143(1) and intimation he receives thereafter from the Department, he cannot be kept in a disadvantageous position vis-à-vis a case wherein the return of income of an assessee has been picked up for scrutiny u/s. 143(3) of the Act. In any case, for reopening the assessment by the AO the condition precedent of reason to believe escapement of income is sine qua non in both the cases wherein assessment is done under 143(1) or 143(3) of the Act. Thus, it must be kept in mind that reasons to believe postulates foundation based on information and belief based on reason. Even if there is foundation based on information there must be some reason warrant holding the belief that income chargeable to tax has escaped assessment. It has to be kept in mind that the Hon'ble Supreme Court in Ganga Saran & Sons P. Ltd. Vs. ITO (1981) 130 ITR 1 (SC) held that the expression "reason to believe" occurring in sec. 147 "is stronger" than the expression "if satisfied" and such requirement has to be met by the AO in the reasons recorded before usurping the jurisdiction u/s. 147 of the Act. It must be kept in mind that information adverse against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those who make them.......". "Ministers and the Departments had several time fallen foul of the same rule, no doubt equally to their surprise.......". The Hon'ble Supreme Court thereafter in para 14 in that case held "the present was thus a clear case of exercise of power on the basis of external dictation. That the dictation came on the prayer of DSP will not make any difference to the principle. The DSP did not exercise the jurisdiction vested in him by the statute and did not grant approval to the recording of information under TADA in exercise of his discretion. And thereafter the Hon'ble Supreme Court was pleased to hold that since the DSP did not exercise his discretion independently but referred the matter to the Additional Secretary, Home Department requesting permission to invoke the provisions of TADA was held to be an exercise of power on the basis of external dictation and the registration of case under TADA was held to be vitiated and was, therefore, quashed 29. From the aforesaid understanding of law governing the issue at hand, we have to examine the reasons recorded by AO for successfully assume jurisdiction to re-open u/s 147 of the Act, which is already set out a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fusion of funds through share capital is just a façade to regularize unaccounted money. Then the AO concludes that the assessee has taken accommodation entries from companies operated by Shri Vikas Jain to the tune of Rs. 1.22 cr. And then the AO again concludes that "but total share application money received by the assessee during the AY 2009-10 is Rs. 11,50,00,000/-". Therefore, he has reasons to believe that income of Rs. 11,50,00,000/- or more has escaped assessment. Accordingly, he has issued notice u/s. 148 of the Act. 30. An analysis of the reasons recorded by the AO to believe escapement of income, we note that he received an information from ADIT (Inv.), Thane that the investigation carried out revealed that one Shri Vikas Jain alongwith his family members and trusted employees have floated 23 companies for the purpose of funding his three companies namely, M/s. Gandhar Gautam Fabtex Ltd., M/s. Sagartex Creation Ltd. & M/s. Sahani Infra Development Pvt. Ltd. As per Shri Viash Jain (u/s. 131 of the /Act) since funds were not available from Banks, he floated the 23 companies and infused funds of Rs. 14.50 cr. from Kolkata based companies for backward integration. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... believe that income of Rs. 11,50,00,000/- or more has escaped assessment. This final conclusion of Rs. 11.50 cr. escaping assessment and Rs. 1.22 cr. discussed till the final conclusion above goes on to show that AO influenced by the information given by ADIT (Inv.) Thane by mere suspicion, in order to undertake a roving enquiry, without application of mind has finally jumped to the conclusion of Rs. 11.50 cr. escaping income, without making any preliminary enquiry at all. Thus, from a reading of the reasons recorded by AO to justify re-opening of assessment, clearly show that the AO has taken note of the information from the ADIT(Inv.) and taken the contents of the information given by ADIT (inv) as gospel of truth against the assessee [without any verification or enquiry] to form a conclusion about escapement of income without independent application of mind by himself is nothing but an action taken by AO based on the strength of borrowed belief of ADIT (inv) and not that of AO, which vitiates the very assumption of jurisdiction by AO to re-open the assessment, which finding of us will be clear when we analyze the reasons recorded in detail infra. 31. From the aforesaid reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e an independent decision whether to re-open the assessment or not. And at the cost of repetition we say that the AO should not act on dictate of any other authority like in this case from ADIT (Inv.) because then it would be borrowed satisfaction of the jurisdictional fact & law which is not permitted by law and consequently vitiate the assumption of jurisdiction by AO to reopen u/s. 147 of the Act. In this case, as discussed above, we note that the AO after referring to the investigation report concludes that the information given by the ADIT (Inv.) proves that companies created by Shri Vikas Jain are for providing accommodation entries. Thereafter, the AO says that he has reason to believe escapement of income of Rs. 11.50 cr, though AO admits that assessee has received only Rs. 1.22 cr. from companies run by Shri Vikas Jain. So it is clear from the aforesaid averments that AO based on ADIT Investigation's Report has taken a view that share capital of Rs. 11.50 cr. have escaped assessment, and not as per his independent view after a preliminary enquiry. Because the AO himself records in the reasons to re-open that "as mentioned by ADIT (Inv.), Thane investigation proved that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion given by the ADIT(Inv.). The reasons recorded by AO does not stand the test as laid by plethora of judicial precedence as discussed above which is sine qua non to assume jurisdiction u/s 147 of the Act, therefore, in the light of the aforesaid facts and circumstances of the case as discussed, we find that the reasons recorded by the AO to justify reopening the assessment u/s. 147 fails and, therefore, the very assumption of jurisdiction to reassess the assessee falls. Since the AO failed to validly assume jurisdiction u/s. 147 of the Act, the assumption of jurisdiction by him to re-open the assessment itself is qorum non judice and, therefore, all subsequent action is null in the eyes of law and therefore, we quash the reopening and consequent reassessment order framed by him. 32. Further, while challenging the legality of assumption of jurisdiction by the AO for reopening the assessment u/s. 147 of the Act, the assessee has also challenged the legality/validity of the approval granted by the Ld, Commissioner by only writing 'I am satisfied', which according to the Ld. AR, does not satisfy the requirement of law as laid in plethora of decisions, and, therefore, the approval o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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