TMI Blog2020 (12) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... ot sustainable in law in absence of the Assessing Officer's having made his independent enquiry or due application of mind. The same stands quashed therefore. - Decided in favour of assessee. - ITA Nos. 795 and 796 /Chd/2017 - - - Dated:- 11-11-2020 - N. K. Saini, Vice President And Satbeer Singh Godara, Member (J) For the Appellant : Tej Mohan Singh, Adv. For the Respondents : Meenakshi Vohra, Addl. CIT ORDER Satbeer Singh Godara, Member (J) These two assessees' appeals for A.Y. 2010-11 arise against the CIT(A)-2, Chandigarh separate orders; dated 01/03/2017 and 07/03/2017 passed in appeal No. 193/2/15-16 192/2/15-16 respectively inter alia upholding the Assessing Officer's action initiating reopening proceedings culminating in identical long term capital gain addition(s) of ₹ 81,53,086/- each involving proceedings U/s. 143(3) r.w.s. 147 of the Act. Heard both the parties. Case file records perused. 2. Both the learned representatives are ad idem at the outset that these two assessees' appeals raised identical substantive grounds on law as well as on facts. With this, we take ITA 795/Chd/2017 as the lead case. This lead appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representatives next invited our attention to the CIT(A)'s detailed discussion upholding the Assessing Officer's action on the above stated twin issues as under: 5. Grounds of appeal No. 1 2 are against re-opening of assessment by issue of notice u/s. 148 as there has been no escapement of income and reopening on the basis of borrowed information and without being a reason to believe. 5.1 Brief facts on the issue are that assessing officer received information from Central Circle, Meerut that as a result of search u/s. 132 of the Act at the business premises of M/s. Godwin Group of Companies on 09.09.2010, certain documents were seized which show that the appellant alongwith five other co-owners have received an amount of ₹ 7,74,00,000/- from the representative of the purchaser i.e. M/s. Great Value Infra Promoters Pvt. Ltd, as advance payment on account of sale of residential house No. 11, Plot No. 83, Sector-9A, Chandigarh. However, the sellers alongwith the assessee has shown the sale consideration for the said property at ₹ 5,50,00,000/- in the registered sale deed dated 05.06.2009. Assessing Officer after making independent enquiries recorded re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er company i.e. M/s. Great Value Infra Promoters Pvt. Ltd, and therefore, it cannot be said that the source of information, which led to reason to believe for escapement of income by the assessing officer is third party. The information that the assessee alongwith other co-owners had sold the impugned property for a higher sale consideration than what is shown in the registered sale deed came from the relevant source. After independently verifying information, assessing officer recorded his reason to believe that income on account of capital gains has escaped assessment and issued notice u/s. 148 of the Act. The reliance placed by the appellant in the case of M/s. JMD Astrological consultancy decided by Hon'ble ITAT, Chandigarh Bench is not relevant to the issue as in this case assessing officer noted that assessee has not filed his return of income and that was one of the reasons for resorting to issue of notice u/s. 148 which was found not correct. Also in his statement Sh. Tarun Goyal, never mentioned that the assessee company in that case is one of the beneficiaries of the accommodation entries. In the instant case specific and relevant documents pertaining to the said prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the form of minutes of the meeting of Board of Directors of the purchaser company were seized which authorized Mr. Pankaj Garg, Chief Executive of the company to entered into agreement to sell. Copies of 35 demand drafts of ₹ 9,00,000/- each were also seized during the search which proves that these demand drafts pertains to the said transaction and were credited into the bank account of the sellers. Smt. Amandeep Randhawa, wife of the assessee made general power of attorney in the name of Sh. Vijay Sahu to carry out the deal with regard to this property and the affidavit of Sh. Vijay Sahu confirming general power of attorney was also seized. Sh. Vijay Sahu admitted during assessment proceeding that the documents seized from the premises of M/s. Godwin Group relating to him are true copies. Therefore on the basis of these documents assessing officer held that the impugned property was sold for ₹ 11,25,00,000/- as against ₹ 5,50,00,000/- as claimed by the assessee in his return of income for calculating long term capital gains. Assessing officer computed long term capital gains of the share of the assessee on the sale consideration on ₹ 11,25,00,000/- and mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of meeting of the Boards of Directors of the purchaser company mentioning the said immovable property and authorizing Sh. Pankaj Garg, Chief Executive and Legal Officer in the company to enter into sale agreement for this property. Copies of demand drafts each of ₹ 9,00,000/- and one draft of ₹ 8,00,000/- issued by Allahabad Bank Meerut were also seized and these demand drafts were credited into the loan account of the assessee. One of the sellers Smt. Amandeep Randhawa, wife of the assessee was away abroad and therefore she gave General Power of Attorney to Sh. Vijay Sahu of Chandigarh for earring out this deal. The documents seized showing the details of payment relating to the sale of this property exactly matches with the amount paid through demand draft. Another important fact in this case is that during assessment proceedings, assessing officer summoned Sh. Vijay Sahu, General power attorney holder of assessee's wife Smt. Amandeep Randhawa and his presence was recorded in the order sheet by the AO on 21.10.2015 wherein he has categorically agreed that the documents related to general power of attorney are true copies and he was involved in getting clearance a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 148 proceedings on the basis of borrowed information only without there being any reason to believe based on tangible material that the tax payer's income liable to be assessed had escaped assessment. We proceed in this factual backdrop and find that the Assessing Officer's reopening reasons recorded in the lead case read as under: Information has been received in the case of the assessee i.e. Sh. Amarjit Singh Randhawa, PAN-APPR6056G, from the O/o ACIT, Central Circle, Meerut vide letter no. F. NO. ACIT/CC/MRT/2012-13/08 dated 31.03.2013 received in this office on 25.04.2013 for further necessary action. As per information during search seizure u/s. 132 in the case of M/S. Godwin group certain documents relating to Sh. Amarjit Singh Randhawa have been found. As per the information and documents received by this office following facts have come to light:- i) The assessee Sh. Amarjit Singh Randhawa alongwith other five other co-owners had sold property i.e. Residential House No. 11, Built on Plot No. 83, Sec-9A, Chandigarh measuring 1800 Sq. Yards to M/s. Great Value Infrapromotors Pvt. Ltd. Meerut (U.P.) through Registered Sale Deed dated 5.6.2009. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the contents of the Receipts whereby the assessee has admitted to have received a Cash amount ₹ 7,74,00,000/- (Rupees Seven Crore Seventy Lacs only;. Further as already mentioned above the 35 demand drafts which consist of the receipts of ₹ 7,74,00,000 are mentioned in the registered sale deed. In view of the above, it is amply clear that the hand written paper pertains to the deal/transaction of Sale of property (i.e. Free-hold Residential House No. 11, Built on Plot No. 83, Sec-9A, Chandigarh measuring 1800 Sq. Yards). Thus, after independent verification of the information/documents, I have reasons to believe that the sale consideration received by the assessee alongwith other co-owners of the said property i.e. House No. 11, Built on Plot No, 83, Sec-9A, Chandigarh is actually ₹ 11,25,00,000/- (Rupees Eleven Crore Twenty Five Lacs only) as against ₹ 5,50,00,000/- (Rupees Five Crore Fifty Lacs only) mentioned in the Registered Sale Deed. Accordingly, it is crystal clear that an element/component of unaccounted Receipts was involved in this transaction. It is also clear that the assessee i.e. Sh. Amarjit Singh Randhawa has recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter giving our thoughtful consideration to rival pleadings against and in support of the reopening, we find no merit in the Revenue's stand that the Assessing Officer had rightly set section 148/148 machinery in motion against this tax payer. We afforded ample opportunities to the departmental representative to place on record all necessary details indicating the assessee's Assessing Officer to have independently verified all the documents coming from Merrut. No such records forms part of the case file to this effect. We notice in this factual backdrop that the impugned reopening is not based on any independent application of mind at the assessee's Assessing Officer's end. This tribunal's coordinate bench's decision in M/s. J.M.D. Astrological Consultancy Services Pvt. Ltd. vs. CIT ITA No No. 849/Chd/2011 dated 05/01/2017 holds that such a reopening not based on any tangible material having direct nexus between the material forming basis thereon vis a vis the addition made; is not sustainable as follows: 10. We have considered the rival submissions. It is well settled law that validity of re-assessment proceedings to be determined with reference to rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tarun Goyal were recorded. These include Sh. Pramod Kunar, his peon; Sh. Harpreet Singh, Accountant. In their statements they stated that they were mere employees of Sh. Tarun Goyal and they were signing various documents related to many companies at his behest, as and when asked by Sh. Tarwi Goyal. e. Later, more employees were traced namely, Ms. Usha and Ms. Ritu Saxena, former receptionists. In their statements recorded on oath, they have started that various bank accounts were opened in their names by Sh, Tarun Goyal, who himself operated these accounts and deposited cash in them. As such, they could not refuse the same as they were mere employees. All the passbooks, cheque-books, various important documents were in his total control. f. The statements of the auditors of various companies of Sh. Tarun Goyal were recorded on oath after summons were issued to them. The auditors of various companies run by Sh. Tarun Goyal have confirmed that they had no knowledge about the directors of the companies and all the audits were done at the instructions of Sh. Tarun Goyal. One of the auditors has stated that proper records for transactions and contracts of shares, held as inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment years since the date of incorporation. Therefore, it is evident that the assessee is non-filer and as such the income has escaped assessment within the meaning of explanation (ii) (a) of section 147 of the Income tax Act. Moreover, in the light of above mentioned facts, it is clear that the assessee has taken accommodation entries of ₹ 21.00 lacs in the assessment year 2008-09. In the light of the above recorded reasons. I have reason to believe that income of more than ₹ 21.00 lacs has escaped assessment for the A.Y. 2008-09 in the case of the assessee. 11. The Ld. DR relied upon copy of the letter of the Addl. DIT (Inv.) New Delhi dated 6/8 April, 2009 addressed to CIT-I Panchkula Haryana intimating that search u/s. 132 was conducted in the case of Shri Tarun Goel, Chartered Accountant on 15.9.2008. He was examined by the Investigation party on the same day and his statement was recorded, copy of which is also placed on record by the Ld. DR in which he has accepted that he has provided accommodation entries to various companies by creating number of private limited companies and firms. All his employees were involved in the same to provide bogu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef that income chargeable to tax had escaped assessment because assessee did not file return of income. It is, therefore, apparent that fact of non-filling of return of income for assessment year under appeal had prompted the Assessing officer for arriving at the conclusion about escapement of income. However, the material on record showed that the assessee filed original return of income for assessment year under appeal in October 2008, copy of acknowledgement is filed at page 1 of the paper book and is also not disputed by the Ld. DR. The Assessing officer, therefore, recorded incorrect, irrelevant and non-existing reasons u/s. 148 of the I.T. Act. The reasons, therefore, are vitiated and liable to be quashed as would not showed even prima facie case that the Assessing officer has any reason to believe that income escaped assessment. It is not discernible as to whether Assessing officer has applied his mind to the report of the DIT (Inv.) New Delhi which is sole basis of recording of reasons for reopening of the assessment and independently arrived at a belief that income has escaped assessment, therefore, Assessing officer did not get jurisdiction to make re-assessment. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10] 325 ITR 285 (Delhi) held as under:- Held, dismissing the appeal, that the first sentence of the reasons recorded by the Assessing Officer was mere information received from the Deputy Director of Income-tax (Investigation). The second sentence was a direction given by the same Deputy Director of Income-tax (Investigation) to issue a notice under section 148 and the third pertaining to the relevant ward. The Assessing Officer referred to the information and the two directions as reasons on the basis of which he was proceeding to issue notice under section 148. These could not be the reasons for proceeding under section 147/148 of the Act. As the first part was only an information and the second and the third parts of the reasons were mere directions, it was not at all discernible as to whether the Assessing Officer had applied his mind to the information and independently arrived at a belief that, on the basis of the material which he had before him, income had escaped assessment. There was no substantial question of law for consideration. 13.4 The Hon'ble Delhi High Court in the case of Sarthak Securities Co. P. Ltd. [2010] 329 ITR 110 (Delhi) held as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. 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 ₹ 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 be quashed. 13.6 The Hon'ble Gujarat High Court in the case of Sagar Enterprises v. Assistant Commissioner in [2002] 257 ITR 335 (Gujarat) held as under:- Held, that it was apparent that the fact of non filing of the return for the assessment year 1991-92 had weighed with the respondent for arriving at the satisfaction about the failure on the part of the assessee and escapement of assessment of income. However, the material on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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