TMI Blog2020 (11) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... of Pradeep Kumar Jindal, Shri Subodh Kumar Khandelwal, Ms. Seema Khandelwal Ms. Meera Mishra who have furnished the list of companies stated to be not doing any business but engaged in providing accommodation entries. Before issuing the notice, the AO has not examined the profile of the said companies to arrive at the logical conclusion so as to issue notice u/s 148 Neither any reason has been recorded which is sufficient to believe that income to the tune of ₹ 15,00,000/- received from M/s. Hajima Resorts Ltd. has escaped assessment nor any such notice has been given to the assessee. All these facts goes to prove that the AO has not applied his judicial mind before recording the reasons to believe that such and such income has escaped assessment rather proceeded to initiate the proceedings u/s 147/148 of the Act by blindly following the report of the Investigation Wing. Coordinate Bench of the Tribunal in case cited as ITO, Ward 17 (4), New Delhi vs. M/s. Virat Credit Holdings Pvt. Ltd. [ 2018 (2) TMI 871 - ITAT DELHI ] dealt with the identical issue arising out of the search and seizure operation conducted by the Investigation Wing on 18.11.2015 on Pradeep Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents 6. Because the action for addition u/s 68 amounting ₹ 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 ₹ 45,000/ - is being challenged on facts and law as no specific show cause notice issued by CIT(A) on assessee. 8. Because the action is being challenged on facts and law for making addition on account of commission paid amounting ₹ 45,000/ - at the rate of 1 % of ₹ 45,00,000/-. 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Initially return of income filed by the assessee for the Assessment Year 2010-11 declaring an income of ₹ 7,15,990/- was processed under section 143 (1) of the Income-tax Act, 1961 (for short the Act ). Subsequently, on receipt of information from the Investigation Wing for providing accommodation entries to different beneficiaries by the companies floated by Pradeep Kumar Jindal Group on the basis of search and seizure operation carried out on 18.11.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 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 corporate companies from whom ₹ 45,00,000/- claimed to have been made, admitted that these three companies were engaged in the business of providing accommodation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 ₹ 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 enquiries had revealed that Sh. Pradeep Kumar Jindal is managing and controlling a web front/nondescript c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dpur, 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 with Sh. Pradeep Kr. Jain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission paid in cash @ 2.5% by the beneficiary to Pradeep Jindal on account of accommodation entries has to be added income of the beneficiary assessee. S. no. Name address of the beneficiary Amount Date of entry Entry provided by 1. M/s. Eminent Computers Pvt. Ltd. 18,00,000 23.06.2009 M/s. Juneja Nagpal Construction Pvt. Ltd. 2. M/s. Eminent Computers Pvt. Ltd. 3,00,000 23.06.2009 M/s. Luster Finlease Investment Pvt. Ltd. 3. M/s. Eminent Computers Pvt. Ltd. 9,00,000 23.06.2009 M/s. Luster Finlease Investment Pvt. Ltd, These aforesaid transactions are found recorded at various documents seized from Pradeep 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 informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial mind which is not sustainable; that AO has not applied his independent judicial mind while recording reasons for reopening the assessment rather reasons are based upon alleged admission of Pradeep Kumar Jindal, Shri Subodh Kumar Khandelwal, Ms. Seema Khandelwal Ms. Meera Mishra. 13. However, on the other hand, ld. DR for the Revenue to repel the arguments addressed by the ld. AR for the assessee contended inter alia that only prima facie material is to be seen for the purpose of reopening; that sanction has been accorded by Principal CIT for reopening after perusing entire assessment record prepared by the AO as well as report of the Investigation Wing after duly applying his mind. Ld. DR for the Revenue further supported the order passed by Ld. CIT(A) by placing on record, Annexure A , which is summary of the case purportedly put up before Pr. CIT for according approval for initiating proceedings U/s 148 of the Act. We are of the considered view that neither from the approval dt. 29.03.2017 nor from Annexure A it is made out if Pr. CIT has applied his mind before writing in cl. 13 of the approval that, I am satisfied . Ld. DR has also filed written submissions to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore issuing the notice, the AO has not examined the profile of the said companies to arrive at the logical conclusion so as to issue notice u/s 148 of the Act. 19. Bare perusal of the reasons recorded further shows that the reopening has been made on the allegation that the accommodation entry to the tune of ₹ 30,00,000/- have been provided by M/s. Juneja Nagpal Construction Pvt. Ltd. and M/s. Lustre Finlease Investment Ltd., however after initiating the reassessment proceedings u/s 147/148 of the Act, AO roped in one M/s. Hajima Resorts Ltd. for providing accommodation entry to the tune of ₹ 15,00,000/- to the assessee and proceeded to make addition of ₹ 45,00,000/-. 20. Neither any reason has been recorded which is sufficient to believe that income to the tune of ₹ 15,00,000/- received from M/s. Hajima Resorts Ltd. has escaped assessment nor any such notice has been given to the assessee. All these facts goes to prove that the AO has not applied his judicial mind before recording the reasons to believe that such and such income has escaped assessment rather proceeded to initiate the proceedings u/s 147/148 of the Act by blindly following the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not applied his mind independently. When we peruse the reasons recorded, available at pages 31-32 of the paper book, the entire reasons have been based on the statement of one Shri P.K. Jindal, who has furnished the list of companies stated to be not doing any business activities but engaged in providing accommodation entries. Before issuing the notice AO appeared to have not examined the profile of the said companies to arrive at a logical conclusion so as to issue the notice u/s 148 of the CO No.57/Del/2012 Act. When this fact is examined in the light of the completed assessment of the assessee u/s 143 (3), all the documents concerning share application money, now available at pages 1 to 30 of the paper book, were supplied to the AO. This fact has not been taken into consideration by the AO before initiating the proceedings u/s 147/148 of the Act. However, since reopening of assessment in this case is otherwise not sustainable, we are not entering into any merits. 14. Hon'ble Supreme Court in case cited as CIT vs. S. Goyanka Lime Chemical Ltd. - (2015) 64 taxmann.com 313 (SC) examined the identical issue as to according the sanction for reopening the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that sum of ₹ 1 Crore was received towards share application amounts and a further sum of Thirty Five Lakhs was credited to it as an advance towards loan- Original assessment was completed u/s 143(3)-However, pursuant to reassessment notice, which was dropped due to technical reasons, and later notice was issued and assessments were taken up afresh-After considering submissions of assessee and documents produced in reassessment proceedings, AO added back a sum of ₹ 1,35,00,000-CIT(A) held against assessee on legality of reassessment notice but allowed assessee's appeal on merits holding that AO did not conduct appropriate enquiry to conclude that share inclusion and advances received were from bogus entities-Tribunal allowed assessee's appeal on merits-Revenue appealed against appellate order on merits-Assessee's cross appeal was on correctness of reopening of assessment- Tribunal upheld assessee's cross-objections and dismissed Revenue's appeal holding that there was no proper application of mind by concerned sanctioning authority u/s Section 151 as a pre- condition for issuing notice u/s 147/148-Held, Section 151 stipulates that CIT (A), who was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is to be avoided; (ii) the reasons to believe ought to spell out all the reasons and grounds available with the AO for re- opening the assessment - especially in those cases where the first proviso to Section 147 is attracted. The reasons to believe ought to also paraphrase any investigation report which may form the basis of the reasons and any enquiry conducted by the AO on the same and if so, the conclusions thereof; (iii) where the reasons make a reference to another document, whether as a letter or report, such document and/ or relevant portions of such report should be enclosed along with the reasons; (iv) the exercise of considering the Assessee's objections to the reopening of assessment is not a mechanical ritual. It is a quasijudicial function. The order disposing of the objections should deal with each objection and give proper reasons for the conclusion. No attempt should be made to add to the reasons for CO No.57/Del/2012 reopening of the assessment beyond what has already been disclosed. 24. Perusal of the written submissions filed by the ld. DR for the Revenue goes to prove that he has relied upon the order passed by the AO as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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