TMI Blog2021 (1) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of the assessee has been reopened, meaning thereby the AO has not applied his mind and only issued notice u/s. 148 of the Act. Thus, the AO has acted mechanically and without any independent application of mind. It is further noted that initiation of proceedings is 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 application of mind by him. Even otherwise, we find that Ld. Joint CIT, Range-24, New Delhi has granted the approval in a mechanical manner by mentioning only Yes, I am satisfied that this is a fit case for issue of notice u/s. 148 of the I.T. Act. which is not valid for initiating the reassessment proceedings. Thereafter, the AO has mechanically issued notice u/s. 148 - Even otherwise, we find that Ld. Joint CIT, Range-24, New Delhi has granted the approval in a mechanical manner by mentioning only Yes, I am satisfied that this is a fit case for issue of notice u/s. 148 of the I.T. Act. which is not valid for initiating the reassessment proceedings. Thereafter, the AO has mechanically issued notice u/s. 148 - Decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dation entries amounting to ₹ 1,30,00,000/- from Sh. SK Jain Group, details of which the AO has reproduced in para no. 4 at page 2 3 of the assessment order and after considering the reply and other documentary evidences filed by the assessee, the AO finally was of the view that the companies used by the Jain Brothers received cash from the beneficiaries or different persons/firms/companies for the purpose of providing accommodation entries in lieu of cash received from the recipient clients and charging the commission for providing accommodation entries by issuing the cheques in lieu of cash. After examining the documentary evidences filed by the assessee and disposing of the objections of the assessee, the AO was of the view that assessee has taken accommodation entries amounting to ₹ 1.30 crores which was credited in the books of accounts of the assessee and the assessee failed to pass the test of genuineness within the meaning of section 68 of the Act and held that to be the income of the assessee u/s. 68 of the Act and added the same to the income of the assessee and ₹ 2,34,000/- representing commission paid @ 1.8% at ₹ 1.30 crores was treated as unex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnature Hotels (P) Ltd. vs. ITO (2010) 338 ITR 51 (Delhi) - PCIT vs. G G Pharma India Ltd. (2016) 384 ITR 147 (Delhi). - PCIT vs. RMG Polyvinyl (I) Ltd. (2017) 396 ITR 5 (Delhi). - PCIT vs. Meenakshi Overseas Pvt. Ltd. (2017) 395 ITR 677 and; - Multiplex Trading and Industrial Co. Ltd. 378 ITR 351. 3.1. Ld. Counsel for the assessee secondly argued that Ld. CIT(A) has also failed to appreciate that the approval granted u/s. 151 of the I.T. Act for issuance of notice u/s. 148 of the Act by the JCIT, Range-24, New Delhi was a mechanical approval, hence, initiation of proceedings u/s. 147 of the Act on this ground is also invalid and to support this contention, he relied upon the decision of the Hon'ble Supreme Court of India in the case of CIT vs. S. Goyanka Lime Chemical Ltd. reported in (2015) 64 taxmann.com 313 (SC). He further argued that the revenue authorities has failed to appreciate that the non-disposal of the objection filed by the assessee against the initiation of the proceedings u/s. 147 of the Act objectively and judiciously is also illegal against the law and facts on the file and relied upon the decision of the Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that AO should first apply his mind on the material/statement(s) etc. supplied by the Investigation Wing, which has not been done in this case. The reasons are based on conclusions of the Investigation Wing, not that of AO. However, the reasons recorded merely on the basis of some letter of Investigation Wing issued in the year 2013, and there was no material etc. in the possession of the Assessing Officer which he examined independently at the time of recording reasons on 25.2.2015. We observe that application of mind can be seen from the reasons recorded only and no reference can be made to any other material even if that material is available on assessment records. We further find that the reasons to believe recorded by the AO are mechanically based on borrowed satisfaction of Investigation Wing even does not disclose the nature of alleged accommodation entries whether loan, share application, share capital etc. amounting to ₹ 1.30 crores is written without giving the specific details of the said amount i.e. bank, cheque no, and date etc. The entire reasons to believe recorded by the AO is reproduction of conclusions drawn by the Investigation Wing. It is settled law that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by a 'known' accommodation entry provider. There, on facts, the Court came to the conclusion that the reasons were, in fact, in the form of conclusions one after the other and that the satisfaction arrived at by the AO was a borrowed satisfaction and at best a reproduction of the conclusion in the investigation report. 13. As in the above case, even in the present case, the Court is unable to discern the link between the tangible material and the formation of the reasons to believe that income had escaped assessment. In the present case too, the information received from the Investigation Wing cannot be said to be tangible material per se without a further inquiry being undertaken by the AO. In the present case the AO deprived himself of that opportunity by proceeding on the erroneous premise that Assessee had not filed a return when in fact it had. 14. To compound matters further the in the assessment order the 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 reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
