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TMI Blog2020 (11) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... asons, there is non-application of mind much less independent application of mind and merely relying upon investigation report by AO, further reasons recorded are vague, lacking tangible material/ reasonable cause and justification. 4. Because the action is being challenged since the addition of Rs. 45,00,000/ - has been made without having provided the cross examination of the person on whose statement or information the proceedings under section 147 were initiated which is in violation of the settled principle of law. 5. Because the action is being challenged since the addition of Rs. 45,00,000/ - has been made without making proper investigation from the other party whereby assessee has discharged the onus by providing relevant documents 6. Because the action for addition u/s 68 amounting Rs. 45,00,000/- is being challenged on facts and law while all parameters for the provision of law required by assessee fulfilled as revealed in findings from acquiescence by silence. 7. Because the action for enhancement of addition on account of commission Rs. 45,000/ - is being challenged on facts and law as no specific show cause notice issued by CIT(A) on assessee. 8. Because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. M/s. Eminent Computers Pvt. Ltd. Rs. 3,00,000 23.06.2009 4. M/s. Lustre Finlease & Investment Pvt. Ltd. M/s. Eminent Computers Pvt. Ltd. Rs. 9,00,000 25.06.2009 Rs. 45,00,000 5. AO, after examining the report of Investigation Wing recorded "reasons to believe" that income has escaped assessment and after getting prior approval of the competent authority, initiated proceedings u/s 147 of the Act by issuing notice u/s 148 of the Act and in response thereto, assessee opted to treat his return of income filed on 24.09.2010 for AY 2010-11 as reply to the notice u/s 148 of the Act. After completing procedural formalities by providing "reasons recorded" and issuance of notice u/s 143(2) & 142(1), information was called from aforesaid three companies. After considering the contentions raised by the assessee, AO proceeded to conclude that identity, creditworthiness and genuineness of the transactions of aforesaid three companies were not established and from the statements of Shri Subodh Kumar Khandelwal, Ms. Seema Khandelwal, Ms. Meera Mishra, Shri Laxman Singh, Shri Satya and Shri Pradeep Kumar Jindal related to aforesaid three cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the assessment by issuing notice dated 29.03.2017 u/s 148 of the Act by recording following reasons :- "Recording of reasons for reopening the case of M/s. Eminent Companies Pvt. Ltd. For the A.Y. 2010-11 - PAN : AAACE2256K In this case return of income has been filed by the assessee on 24.09.2010 at a return income of Rs. 7,15,990/-. Now it is found that the ADIT (Inv.)-Unit 2 (1), New Delhi vide his letter F.No.ADIT (Inv.)/Unit 2(1)/PKJ/2016- 17/155 dated 21.03.2017 has informed that a search and seizure action was carried out on 18.11.2015 on entry provider Sh. Pradeep Kumar Jindal, resident of H-1/1A, Model Town New Delhi who was involved in providing various types of accommodation entries in lieu of cash to a large number of beneficiaries through front/non-descript companies managed and controlled by him with the help of dummy directors, simultaneously, search and seizure action was carried out on Faridabad based Sh. Sajan Kumar Jain group who had taken accommodation entries of more than 100 crores in the form of bogus share premium, exempt LTCG and advance against property etc. majority from front and non-descript companies of Sh. Pradeep Kumar Jindal. Pre-search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Sh. Pradeep Kumar Jindal at 514, Usha Kiran Building Complex, Azadpur Commercial Complex, Azadpur, Delhi, large number of physical documents and soft data majority tally data of the front companies of Sh. Pradeep Kumar Jindal was found and impound during the survey operation on 25.05.2016. The documents/digital data seized impounded during search/survey action and the admission of Sh. Pradeep Kumar Jindal, dummy directors of his front companies & beneficiaries has established beyond doubt that Sh. Pradeep Kumar Jindal provides bogus entries to various business entities and individual by accepting cash from them. The detailed analysis of digital data and annexures seized/impounded revealed that Sh. Pradeep Kumar Jindal has provided accommodation entries of shares Capital/Premium, Share forfeiture, Exempt long term capital gain/loss, short term capital gain/loss advance against property, unsecured loans, transfer of company, bogus sale-purchase etc. The name of individuals of Sh. Pradeep Kumar Jindal group whose bank accounts have been used by him for purpose of providing accommodation entries are :- S. No. Name of the individual Address of the individual Relation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Jindal Group of Companies, a copy of which was supplied along with the report as scanned documents in the CD. I have carefully examined the above referred information as received along with the return of the assessee for A.Y. 2010-11. The return of income filed by the assessee has also been analyzed with reference to the information received from the Investigation Wing and keeping in view the factual position found by the Investigation Wing on the basis of documents seized in the search operation and post search inquiries, as discussed above. Considering all these material in totality there is enough material on record to have a reason to believe that share application money/Share premium consideration are merely and accommodation entries for which the assessee company has paid cash from its coffer and commission thereon. The assessee has received unexplained sums as accommodation entries through Pradeep Kumar Jindal as per the above details as per information available with the undersigned. As explained above, the identity, creditworthiness and genuineness of transactions with these persons/subscribers as accommodation was found to be dubious. The transaction amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s applied his mind before writing in cl. 13 of the approval that, "I am satisfied". Ld. DR has also filed written submissions to support his arguments which are made part of the record. 14. First of all, ld. AR for the assessee drew our attention towards the sanction accorded by the ld. Principal CIT for reopening the assessment which is available at pages 14 & 15 of the paper book. On perusal of the sanction accorded by the ld. Principal CIT in the prescribed proforma goes to show that there is a question no.13 viz.: "Whether the Pr. Commissioner of Income Tax is satisfied on the reasons recorded by the A.O. that it is a fit case for issue of notice u/s 148 of the I.T. Act, 1961." 15. In response to the aforesaid question no.13 in the prescribed proforma for according sanction, ld. Principal CIT has written "Yes, I am satisfied." 16. No doubt, column of "reasons recorded" are there in the prescribed proforma shown as Annexure A, available at page 14 of the paper book, and it is mentioned in Column No.11 that "reasons for the belief that income has escaped assessment". In response to the said question as contained in Column No.11, it is mentioned by the AO that "as per Annexur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r proceeded to initiate the proceedings u/s 147/148 of the Act by blindly following the report of the Investigation Wing. Before according approval, ld. Principal CIT has also not examined all these facts rather accorded the approval in a mechanical manner. 21. Coordinate Bench of the Tribunal in case cited as ITO, Ward 17 (4), New Delhi vs. M/s. Virat Credit & Holdings Pvt. Ltd. in ITA No.89/Del/2012 & M/s. Virat Credit & Holdings Pvt. Ltd. vs. ITO, Ward 17 (4), New Delhi in CO No.57/Del/2012 order dated 09.02.2018 dealt with the identical issue arising out of the search and seizure operation conducted by the Investigation Wing on 18.11.2015 on Pradeep Kumar Jindal Group of companies who were allegedly engaged into providing accommodation entries, quashed the reassessment on the ground that AO has not applied his judicial mind independently and that ld. Principal CIT has accorded mechanical approval by merely writing words that "Yes, I am satisfied." without applying his judicial mind by returning following findings :- "10. First of all, ld. AR for the assessee company drew our attention towards sanction accorded by the Addl.CIT for reopening of the assessment obtained by movin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to according the sanction for reopening the assessment u/s 148 of the Act by merely recording "Yes. I am satisfied." And held that reopening on the basis of mechanical sanction is invalid by returning following findings :- " Section 151, read with section 148 of the Income-tax Act, 1961 - Income escaping assessment - Sanction for issue of notice (Recording of satisfaction) - High Court by impugned order held that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under. section 148, reopening of assessment was invalid - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [In favour of assessee] Search and Seizure-Procedure for black Assessment- Search was conducted at residential and business premises of Assessee and notice for block assessment u/s. 158-BC was issued- For block period, returns were filed that were processed u/s. 143 (1)- However, notice u/s. 148 was issued by AO, on basis of certain reasons recorded-Assessee objected to same before AO, that was rejected and assessment was completed u/ss. 143(3) and CO No.57/Del/2012 147-CIT(A) found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that CIT (A), who was competent authority to authorize reassessment notice, had to apply his mind and form opinion- Mere appending of expression 'approved' says nothing-It was not as if CIT (A) had to record elaborate reasons for agreeing with noting put up-At same time, satisfaction had to be recorded of CO No.57/Del/2012 given case which could be reflected in briefest possible manner- In present case, exercise appears to have been ritualistic and formal rather than meaningful, which was rationale for safeguard of approval by higher ranking officer- Revenue's appeal dismissed." 22. In view of what has been discussed above, we are of the considered view that according sanction is not a supervisory role rather it is a quasi-judicial function to be performed by the Principal CIT/CIT, as the case may be, as required u/s 151 of the Act. We fail to understand that when the Revenue Department is manned by highly qualified officers having experience of at least 20 years till reaching in the rank of Principal CIT, they are required to evolve legally sustainable "standard operating procedure" containing "self-speaking reasons" for according sanction while discharging such quas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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