TMI Blog2021 (8) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... by the first appellate authority. We find that in none of the decisions the issue was of multiplicity of the entries in the information received by the Assessing Officer which formed the basis for reopening the assessment. In all the decisions relied upon by the ld. DR, the issue was whether the information received amounts to tangible material evidence for reopening the assessment. Whereas the facts of the case in hand relates to the very information itself which contains 11 entries as mentioned elsewhere, where the total amount of escaped income is mentioned at ₹ 2.05 crores which is part of the reasons recorded for reopening the assessment. We are of the considered view that the assumption of jurisdiction by issue of notice u/s 148 of the Act is bad in law which makes the assessment order framed u/s 147 r.w.s 143(3) of the Act void ab initio. - Decided in favour of assessee. - ITA No. 8094/DEL/2019 - - - Dated:- 6-8-2021 - Shri N.K. Billaiya, Accountant Member, And Ms. Suchitra Kamble, Judicial Member For the Assessee : Shri Kapil Goel, Adv For the Revenue : Shri E.V. Bhaskar, Sr. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GS/Cheque was issued to the beneficiaries for purpose of providing accommodation entries. 3. Analysis of information collected/ received: On perusal of report, various findings of investigation wing and document attached with the letter as Annexure A- l. it is seen that the assessee, M/s Lakchmi Chand Tejoo Mai had been provided accommodation entries as follow: S.No Name Address of the beneficiary Amount (Rs.) Date of Entry Entry provided by 1. Lakchmi Chand Tejoo Mai 20,00,000 23.09.2010 -- Focus Industrial Resource Ltd. 2. Lakchmi Chand Tejoo Mal 20,00,000 14.09.2010 Focus Industrial Resource Ltd. 3. Lakhcmi Chand TejooMal ' 20.00.000 24.09.2010 Focus Industrial Resource Ltd. 4. Lakchmi Chand Tejoo ! Mai 20,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department in this case. 5. Findings of the AO: In view of the above discussion and analysis of the material and enquiries made by undersigned clearly shows that the assessee has been a beneficiary of the accommodation entries provided by Sh. Pradeep Kumar Jindal or his associated entities in different layers. 6. Basis of forming reason to believe and details of escapement of income: As per enquiries made by investigation wing of the department and the undersigned from the system and the material available in this case 1 have reasons for belief that income has escaped assessment which has been sufficiently demonstrated. Consequently. 1 have reasons to believe that the assessee has furnished inaccurate particulars of his income for A.Y. 2011-12 and income has escaped assessment due to failure on part of the assessee within the meaning of Sec. 147 ofl.T. Act, 1961. 7. Seventh paragraph will include escapement of income chargeable to tax in relation to any assets (including financial interest in any entity) located outside India: N.A. 8. Findings of the AO on true and full disclosure of the material facts necessary for assessment under proviso to section 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries where total unsecured loan amount comes to ₹ 75 lakhs and information is in respect of amount of ₹ 2.05 crores. 7. Strong reliance was placed on the decision of the Hon'ble Jurisdictional High Court in the case of RMG Poly Viynl India Ltd ITA No. 29/2017 CM No. 1009/2017 order dated 07.07.2017. 8. Further reliance was placed on the decision of the co-ordinate bench in ITA No. 4991/DEL/2014 and 4853/DEL/2014 and also on the decision of the Hon'ble High Court of Delhi in the case of Synfonia Trade Links Pvt Ltd in WT(C) 12544/2018 judgment pronounced on 26.03.2021. Referring to all these judgments, the ld. counsel for the assessee vehemently stated that in all these judgments, the issue was in relation to multiple entries in the information received from INV Wing where the additions were made by reopening assessment. 9. The ld. counsel for the assessee also argued that the Assessing Officer has not applied his mind before issuing notice u/s 148 of the Act as it can be seen from the reasons for reopening assessment and additions made in the assessment order dated 18.12.2018. 10. Strongly relying on the order of the ld. CIT(A), the ld. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding alleged non-filing of the return and the other regarding the extent of the so-called accommodation entries. 12. Recently, in its decision dated 26th May, 2017 in ITA No.692/2016 (Principal Commissioner of Income Tax-6 v. Meenakshi Overseas Pvt. Ltd.), this Court discussed the legal position regarding reopening of assessments where the return filed at the initial stage was processed under Section 143(1) of the Act and not under Section 143(3) of the Act. The reasons for the reopening of the assessment in that case were more or less similar to the reasons in the present case, viz., information was received from the Investigation Wing regarding accommodation entries 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the formation of belief that the taxable income of the assessee escaped assessment; the link being the reasons recorded, in that behalf, by the assessing officer. (iii) The AO is mandatorily obliged to record reasons before issuing notice to the assessee under Section 148(1) of the Act. This is evident from the bare perusal of sub-section (2) of Section 148 of the Act. (iv) No notice can be issued under Section 148 of the Act by the A.O. after the expiry of four years from the end of the relevant AY unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner arrives at a satisfaction based on the reasons recorded by the A.O. that it is a fit case for issuance of a notice under Section 148 of the Act. [See: Section151(1) of the Act]. (v) The limitation for issuance of notice under Section 148 as prescribed under Section 149 of the Act commences from the date of its issuance while the time limit for passing the order of assessment, reassessment, computation and re-computation as prescribed under Section 153 of the Act commences from the date of service [See: R.K. Upadhyay v. Shanab Bhai P. Patel, (1987) 3 SCC 96]. (vi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing assertion which is made in the order recording reasons: Thus, the assessee company has taken bogus share capital/share premium from the said entries providers amounting to ₹ 26,93,500/-. 9.3. Furthermore, respondent no.1 in no uncertain terms, has indicated in the order recording reasons that the information which triggered the initiation of proceedings qua the assessee under Section 147 of the Act was received upon a search being carried out at the residence of Mr. Pradeep Kumar Jindal. While a general statement had been made that Mr. Pradeep Kumar Jindal had provided accommodation entries in the form of share capital/share premium, loans and advances, in lieu of cash, qua a large number of beneficiaries through his front companies, insofar as the assessee was concerned, it was emphasized that the accommodation entry was reflected in its books in the form of bogus share capital and share premium . 9.4. Respondent no.1, in paragraph 4 of the order recording reasons, in no uncertain terms alludes to the fact that the information was received from the investigation wing. The emphasis was laid on the fact that the entry providers were three companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee also went on to state, in its objections, that the opening balance (as on 01.04.2010) and closing balance (as on 31.03.2011) of the share premium account (₹ 3,66,16,800/-) and the share capital account (₹ 24,15,200/-) remained unchanged. In other words, the emphasis was that there was no increase in the share capital or the share premium account, as alleged, or at all. In the order passed by the assessing officer dated 08.10.2018, whereby, the objections of the assessee were rejected; none of this has been dealt with. Therefore, in our view, while the assessing officer may suspect that the taxable income of the assessee escaped assessment, he could not have formed a belief qua the same based on the material which is, presently, on record. 9.7. Therefore, in our opinion, the formation of belief by respondent no.1 that income of the assessee chargeable to tax had escaped assessment, was unreasonable and irrational, as it could not be related to the underlining information; something which is discernible from a bare reading of the order recording reasons. 13. In light of the aforementioned decisions of the Hon'ble Jurisdictional High Court, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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