TMI Blog2021 (6) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... e legal requirement to reopen i.e. reason to believe escapement of income has not been satisfied. Since the requirement of law prescribed u/s 147 of the Act has not been met in the reasons recorded in the case of assessee, the AO did not have jurisdiction to reopen the assessment and therefore the very action of issuing notice u/s 148 is bad in law and consequently all action taken by the AO is null in the eyes of law and therefore quashed. Appeal of the assessee is allowed. - I.T.A. No. 2142/Kol/2019 - - - Dated:- 18-6-2021 - Shri A. T. Varkey, JM For the Appellant : Shri K. M. Roy, A.R For the Respondent : Shri Jayanta Khanra, JCIT, Sr. DR ORDER This is an appeal preferred by the assessee against the order of Ld. CIT(A)-11, Kolkata dated 26.07.2019 for Assessment year 2013-14. 2. At the outset, the Ld. A.R of the assessee Shri K. M. Roy assailed the jurisdiction of the AO to reopen the assessment u/s 147 of the Income Tax Act, 1961 ( hereinafter referred to as the Act) without satisfying the condition precedent i.e. reason to believe, escapement of income , in the reasons recorded by him before re-opening the assessment of AY 2013-14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he link between the alleged tangible material and formation of the reason to believe that income has escaped assessment. So, he submitted that the very basis/foundation which enables an officer to assume jurisdiction u/s 147 is absent; so according to him, the AO has no jurisdiction to reopen the assessment. Further according to Ld. A.R. from a perusal of assessment order it can be seen that the AO has added a sum of ₹ 9,73,583/-. However, on a perusal of the reasonsrecorded for re-opening assessment, AO has alleged that a sum of ₹ 5,55,624/- has escaped assessment. So according to Ld. A.R, the apparent discrepancy in the two figures which forms the bedrock to re-open the assessment shows the whimsical/lackadaisical attitude adopted by AO and therefore for non-application of mind, the reasons- recorded for re-opening assessment itself is bad in law. And therefore the action of AO to re-open the assessment was without jurisdiction, so consequent framing of assessment order is null in the eyes of law needs to be quashed. 8. Per contra, the Ld. D.R Shri Jayanta Khanra opposing the arguments of the Ld. AR submitted that the assessee has not challenged the legal validit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 130 ITR 1 (SC) held that the expression reason to believe as occurring in section 147 of the Act is stronger then the expression is satisfied which is the requirement of law for the AO to reopen the assessment. Keeping the aforesaid legal principles in mind let me have a look at the reason recorded by the AO to reopen the assessment which is reproduced as under: In the instant case, there is information on record from investigation regarding suspicious transactions of Long Term Capital Gain in shares amounting to ₹ 10,67,310/- by the assessee Shri Jai Prakash Gupta on different dates during the financial year 2012-13 ranging in a sham script namely Essar India. The Director of Income Tax (Investigation) in his communication had reported that the assessee had made bogus transactions with Essar India and had shown bogus long term capital gains by way of accommodation entry and subsequently claimed it as exempt income u/s 10(38) of the Act. Since the transactions carried out by the assessee is a bogus one, the amount of income that has escaped assessment in the instant case is ₹ 5,55,624/- and in view of the above, I have substantial reasons to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely on the following case laws: i) Decision of Hon ble Delhi High Court in the case of Pr. CIT vs. Meenakshi Overseas Pvt. Ltd. 395 ITR 677. ii) Decision of Hon ble Delhi High Court in the case of Pr. CIT vs. G G Pharma India Ltd. 387 ITR 147. iii) Decision of Hon ble Delhi High Court in the case of Pr. CIT vs. RMG Polyvinyl (I) Ltd. 396 ITR 5 iv) Decision of Hon ble Delhi High Court in the case of Sab Infrastructure Ltd. vs. ACIT 2017-(9)-TMI-1589. ITA No. 366/Del/2016 M/s Key Components (P) Ltd., Delhi. v) Decision of Hon ble Delhi High Court in the case of CIT vs. Atul Jain 299 ITR 383. vi) Decision of Hon ble Delhi High Court in the case of Shiv Sai Infrastructure Pvt. Ltd. vs. DCIT 2018-(8)-TMI-205. vii) Order of ITAT, Delhi Bench in the case of M/s MRY Auto Components Ltd. vs. ITO, in ITA No. 2418/Del/2014, dated 15.09.2017. 11. As well as the decision of the Delhi Tribunal in the case of M/s Key Components P Ltd. vs. ITO, New Delhi in ITA No. 366/Del/2016 dated 12.02.2019 wherein it was held as follows: 30.1. In Commissioner of Income Tax, New Delhi v. High gain Finvest (P) Limited (2007) 164 Taxman 142 (Del) it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the information received from the DIT (I). There again the details of the entry provided were set out in the 'reasons to believe'. However, the Court found that the AO had not made any effort to discuss the material on the basis of which he formed prima facie view that income had escaped assessment. The Court held that the basic requirement of Section 147 of the Act that the AO should apply his mind in order to form reasons to believe that income had escaped assessment had not been fulfilled. Likewise in CIT-4 v. Independent Media P. Limited (supra) the Court in similar circumstances invalidated the initiation of the proceedings to reopen the assessment under Section 147 of the Act. 32. In Oriental Insurance Company Limited v. Commissioner of Income Tax 378 ITR 421 (Del) it was held that therefore, even if it is assumed that, in fact, the Assessee s income has escaped assessment, the AO would have no jurisdiction to assess the same if his reasons to believe were not based on any cogent material. In absence of the jurisdictional pre-condition being met to reopen the assessment, the question of assessing or reassessing income under Section 147 of the Act would not arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding that the initiation of the proceedings under Section 147/148 of the Act to reopen the assessments for the AYs in question does not satisfy the requirement of law. 38. The question framed is answered in the negative, i.e., in favour of the Assessee and against the Revenue. The appeal is, accordingly, dismissed but with no orders as to costs . 5.1. In this case, the reasons for reopening are also reproduced in the judgment of the Hon ble Delhi High Court in which similarly information has been received from Director of Income Tax (Investigation), New Delhi that assessee has received amount of ₹ 5 lakhs. The A.O. on going through the information found that it is an accommodation entry and reopened the assessment. In the instant case under appeal, the A.O. has reproduced the precise information he has received from Investigation Wing of the Revenue and reproduced the same in the reasons recorded under section 148 of the I.T. Act. This information shows that assessee has received the amount of credit through banking channels by mentioning names of the parties and cheque nos. with amount. This information by itself cannot be said to be tangible material. The A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the order of ITAT, Delhi G Bench in the case of Mrs. Sonia Choudhary vs. ITO (supra), in which on identical facts the reopening of the assessment have been quashed. 5.4. In view of the above, reopening of assessment in the facts and circumstances of the case are not justified and have to be quashed. 6. Considering the facts and circumstances of the case, in the light of above discussion and decision of the Hon ble Delhi High Court in the case of Meenakshi Overseas Pvt. Ltd., (supra), we set aside the orders of the authorities below and quash the reopening of the assessment under section 147/148 of the I.T. Act. Resultantly, the entire additions of ₹ 27,54,000 are deleted. Since the reopening of the assessment is quashed, therefore, there is no need to decide the addition on merit. 7. In the result, appeal of the assessee is allowed. 12. Relying on the aforesaid decision of Hon ble Courts it is clear that in the instant case the AO has simply reproduced the information from DIT(Inv) that since the assessee has transacted in this financial year in the scrip of M/s Essar India, the LTCG claim is bogus; and the AO while recording the reason concluded th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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