TMI Blog2021 (3) TMI 728X X X X Extracts X X X X X X X X Extracts X X X X ..... formation from DIT (Investigation) that assessee had received accommodation entry but there was no independent application of mind by Assessing Officer to tangible material and reasons failed to demonstrate link between tangible material and formation of reason to believe that income had escaped assessment, reassessment was not justified. Addl. CIT who has given approval for such reopening has simply mentioned that yes, I am satisfied that this is a fit case for issue notice of u/s 148 of I.T. Act . A perusal of the approval given by the Addl. CIT shows that he has not applied his mind properly and has in a mechanical manner given his approval - Reassessment proceedings initiated by the AO are not as per law and has to be quashed. Reassessment proceedings initiated by the AO by recording wrong and incorrect facts and the approval given by the Addl. CIT in a mechanical manner without application of mind makes the entire reassessment proceedings a nullity - Decided in favour of assessee. - ITA No. 1791/Del/2019 - - - Dated:- 18-3-2021 - SHRI R.K. PANDA, ACCOUNTANT MEMBER Assessee by : Shri Akhilesh Kumar, Advocate Shri Pushkar Pandey, Advocate Department by : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently the assessee requested for supply of the reasons which were provided to the assessee on 23rd March, 2016. The assessee challenged the proceedings initiated u/s 147 of the Act on the ground that the assessee has not received any such share capital from the companies name in the reasons so recorded and provided to it. It was accordingly, argued that the reasons are non-existent and the notice is against law and, therefore, the said notice should be vacated. It was further requested that if any other information is available on record other than what has been provided should also be provided to the assessee so that the assessee can reply to the same. The assessee requested that since the notice issued u/s 148 of the Act was issued on the basis of certain non-existent reason and there was even no reason to believe nor there was any satisfaction before issuance of the notice, therefore, the said notice issued u/s 148 should be vacated. 6. However, the AO was not satisfied with the objections raised by the assessee and dismissed the same on the ground that the company has taken share capital from the following three companies : 1. M/s. Lotus Real Con (P) Ltd. 2. M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year, the AO issued notice u/s 148 after statutory approvals. The appellant raised objections to notice u/s 148, which were duly replied by AO vide order sheet dt. 28.03.2016. Right to cross examine a statement which is only secondary evidence does not invariably lead to breech of principle of natural justice. Reliance is placed on the decision of GTC Industries Ltd. vs ACIT 65 ITD 380. If appellant is aware of the facts being used against it there is no need for giving opportunities to cross examine. Moreover, if AO received information from Investigation Wing for issue of notice u/s 147, AO is to discharge his official duty by taking action u/s 147. Reliance is placed in this regard on the decision of Hon'ble Apex Court in cases of ITO vs Purshottam Das Banur Anr. (SC) 224 ITR 362 and ITO vs Selected Dalurband Coal Co. (P) Ltd. (SC) 217 ITR 597. 5.2.1 According to the appellant, while recording reasons, AO has mentioned the name of different companies than the actual company from who appellant has taken the share application money. This fact was appropriately dealt in by AO as according to the AO appellant has accepted share capital from three companies na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement etc. with opportunity to cross despite specific request. 6. Because, without prejudice to above and in alternative on merits, Id. CIT (A) erred in dismissing the appeal without considering the material/submissions on record and without appreciating that neither AO has rejected any evidence nor discharged onus lay upon him to reject transactions. Therefore, it is prayed that notice/order under question may kindly be quashed, however only as an alternative it is prayed that addition may be quashed. 12. Ld. Counsel for the assessee referring to the reasons recorded by the AO submitted that such reason so recorded was based on non existent/incorrect reasons. He submitted that although the reasons recorded alleged that assessee has received share capital/share application money of ₹ 30 lacs from M/s. Hillridge Investment Ltd. and M/s. World Link Telecom Ltd. however, the fact remains that no such share capital has been received by the assessee from the above two companies. Relying on the following decisions, the Ld. Counsel for the assessee submitted that when the notice u/s 148 is based on non existent/incorrect reasons, the same is invalid and the addition base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal :- A) M/S. PT ENGINEERS P. LTD 86 87/2015 B) ACIT V. M/S ASIS PLYWOOD PVT. LTD. (ITA NO. 2144/D/15)(28/01/2019) C) PR. CIT V. MEENAKSHI OVERSEAS [2017] 82 TAXMANN.COM 300(DELHI) D) PR. CIT V G G PHARMA LTD. 2016-384 ITR 147 (DEL.) E) ANDAMAN TIMBERS INDUSTRIES V. CCE[2015] 62 TAXMANN.COM 3(SC) 15. Referring to the following decisions, the Ld. Counsel for the assessee submitted that the addition made by the AO without any material against the assessee and without any enquiry etc. is invalid :- A) PCIT V. Best Infrastructure (India) (P.) Ltd. *[2017] 84 Taxmann.com 287 (Delhi) B) CIT v. Gangeshwari Metals P. Ltd. [2014] 361 ITR 10 (DEL.) 16. Ld. Counsel for the assessee further submitted that the notice u/s 143(2) was issued to the assessee on the very same day on which the assessee replied to the AO that the return already filed may be treated as return filed in response to the notice u/s 148 of the I.T. Act. He submitted that the assessee filed this letter on 14th March, 2016 and the AO also issued and served the notice u/s 143(2) on 14th March, 2016 i.e on the very same day when the return was filed. 17. Referring to the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopers Private Limited The assessee company is taking this plea only on technical ground to save itself from paying Income Tax, Interest, Penalty may be prosecution and used dishonest means. The basic issues on the Facts are as under:- 1. The assessee company is not refuting the fact that the names of 2 companies and 3 companies as mentioned above were not in the list of companies by whom the Bogus Entries were given by way of giving Cheques and receiving Cash (in lieu of same against commission) from Group of Surender Jain and Virender Jain, Entry Operators (who have accepted in their statement while in search proceedings on them, to whom they have given Bogus Entries in any form). 2. The AO in his Asstt. Order has already mentioned and corrected that typographical mistake which occurred while Recording the Reasons (see Para-4 page-5 of Asstt. Order), as the fact still remains that the Entries of 3 companies amounting to ₹ 30 lakhs was given to assessee Company and whether it was by 2 companies wrongly mentioned or by 3 companies as corrected by A.O., does not matter. The real issue remains that the amount of ₹ 30 Lakhs was brought into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otices u/s 147 is basically to inform under Principle of Natural Justice, so that to inform assessee that there are grounds of escapement of Income and honest Tax Payer is not subjected to Scrutiny. But technical issue of any minor typographical mistake in Recording Reasons be not the ground for scrapping the valid assessment made of the Income of the assessee by the A.O. after following all valid procedures of assessment. Further, the Directorate of Income Tax, Investigation-II, New Delhi is the another wing of the Income Tax Department and they follow the Income Tax procedures / Rules and do their action as per the Income Tax Act and work as the arm of the Assessment Unit by way of supplementing the A.O. in proper Assessment of the Income of the assessees as per the provisions under different sections of the Income Tax Act. (Sanjiv Mahajan) Addl. CIT VU-1(3), New Delhi (Departmental Representative) 20. I have considered the rival arguments made by both the sides, perused the orders of the AO and Ld. CIT(A) and the paper book filed on behalf of the assesee.I have also considered the various decisions cited before me. I find the AO in the instant case reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposition that the reassessment proceedings initiated on wrong and incorrect facts make the reopening null and void also supports his case. I, therefore, hold that the notice issued by the AO u/s 148 of the I.T. Act by recording wrong and incorrect reasons for reopening of the case makes the reopening null and void. 24. Even otherwise also I find that the Addl. CIT who has given approval for such reopening has simply mentioned that yes, I am satisfied that this is a fit case for issue notice of u/s 148 of I.T. Act . A perusal of the approval given by the Addl. CIT shows that he has not applied his mind properly and has in a mechanical manner given his approval. I find the Hon ble Delhi High Court in the case of N.C. Cables Ltd. (supra) has held as under :- Reassessment-Issuance of Notice-Sanction for issue of Notice- Assessee had in its return for A Y 2001-02 claimed 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 notic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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