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TMI Blog2023 (8) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts. (b) The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal." 3. The assessee furnished its original return of income u/s 139(1) of the Act declaring net taxable income of Rs. 47,97,827 Thereafter an order u/s 153A read with section 143(3) of the Act was passed in this case on 30.12.2019 accepting the returned income of Rs. 47,97,827/-. 4. Vide an order passed by Hon'ble Delhi High Court on 20.2.13 various companies including Gulab Buildtech Private Ltd., Verma Buildtech & Promoters Pvt. Ltd, Renu Builders & Promoters Pvt. Ltd and D&S Developers Pvt. Ltd. Stood amalgamated in assessee company with effect from 14.2012. 5. The assessee company was issued a notice u/s 148 of the Act dated 31st March 2019 and in response to the assessee's request for providing reasons for reopening of the case, the copy of such reasons was provided to the assessee, according to which the allegation was that the erstwhile companies namely, Gulab Buildtech Pvt. Ltd., Verma Buildtech & Promoters Pvt. Ltd., Renu Builders & Promoters Pvt. Ltd, and D&S Developers Pvt. Ltd. had received accommodation entries during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant company. As per the assessment order, the appellant has asked for the reasons for reopening and filed objections to reopening with the AO on 23.09.2019, which were disposed of by the AO on 15.10.2019. Thereafter, the appellant had filed writ petition on 19.12.2019 before the Hon'ble Delhi High Court, however, in the interim order of the Court, the assessment proceedings were continued to go on and finally the AO passed assessment order on 27.12.2019. 10. For the sake of ready reference the entire order of the AO is reproduced below:- "Assessment in this case was completed u/s 143(3) vide order dated 26.03.2015 at income of Rs. 4,56,640/-. Thereafter assessment was completed u/s 153A/143(3) of the Act vide order dated 30.03.2016 at total income of Rs. 47,97,827/- in respect of M/s BDR Builders & Developers Pvt. Ltd. and Rs. 21,41,0964/- in respect of M/s Renu Builders & Promoters totalling Rs. 69,39,791/-. Subsequently, action u/s 132 of the Act was carried out by the department in Himanshu Verma Group of cases on 29.03.2012 and on verification documents found and seized it was found that they were providing accommodation entries to the beneficiaries. The en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount was transferred to various entities including M/s. Gulab Buildtech Pvt. Ltd. to whom a sum of Rs. 5,65,50,000/- was transferred on 03.02.2012. Since these companies have been merged with the assessee company M/s. BDR Builders and Developers Pvt. Ltd., the accommodation entries received by them amounting in all to Rs. 17,95,50,000/- are to be assessed in its hands during the year under consideration as its unaccounted/undisclosed income under the provisions of Section 147 of the Act. Therefore, after recording reasons to believe that income to the tune of Rs. 17,95,50,000/- has escaped assessment and after obtaining sanction u/s 151 from the competent authority, notice u/s 148 of the Act was issued to the assessee on 31.03.2019 requiring the assessee to file the return of its income within 30 days from the service of the said notice. In response to this notice the assessee filed a letter dated 15.04.2019 filed the copy of the return filed on 05.04.2019 declaring total income of Rs. 47,97,830/-. Thereafter on the request of the assessee copy of the reasons for initiating proceedings u/s 147 of the Act was provided to the assessee on 26.08.2019. Vide letter dated 23.09.2019 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed sources u/s 68 of the Income Tax Act, 1961. 11. Aggrieved the assessee filed appeal before the ld CIT(A), who held that the initiations of proceedings u/s 147 of the Act are not valid in law. Hence, the revenue filed appeal before the Tribunal. 11A. Heard, the arguments of both the parties and perused the material available on record. We have perused the order of the ld CIT(A) in detail. For the sake of ready reference the said order adjudicating the issue is reproduced as under:- "6. Ground Nos. 1 to 5: I have considered the facts of the case and written submissions of the appellant. The various grounds taken by the appellant are adjudicated in subsequent para. 6.1 It is observed that four group companies viz M/s D & S Developers Pvt. Ltd. (DSDPL), M/s Verma Buildtech & Promoters Pvt. Ltd. (VBPL), M/s Renu Builders & Promoters Pvt. Ltd. (RBPL), and M/s Gulab Buildtech Pvt. Ltd.(GBPL) were amalgamated in the appellant company with the orders of Hon'ble Delhi High Court dated 20.2.2013 w.e.f 01.04.2012. These companies were existing independently before 01.04.2012 and thereafter were part of the appellant company. The case of M/s GBPL for the year under conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening of the case u/s 148 of the IT Act 1961. In the interim order dated 19.12.2019, the High Court had allowed to carry on the assessment proceedings but had put a restraint on the enforcement of assessment order. In the final order dated 09.01.2020, the Hon'ble High Court of Delhi had held as under: 1. "The petitioner has preferred the present writ petition to assail the notice issued under Section 148 of the Income Tax Act (hereinafter referred as the Act) dated 31.03.2019, relevant to the assessment year (AY) for 2012-13 and the order dated 15.10.2019 disposing of the objections preferred by the petitioner preferred to the said notice. 2. The petitioner also assails the re-assessment proceedings initiated by the aforesaid notice for the AY 2012-13. The writ petition was initially heard by this Court on 19.12.2019. The submission advanced on behalf of the petitioner on the said date was that the approval of the PCIT under Section 151 of the Income Tax Act had not been provided to the petitioner, despite being claimed by the respondents that it was enclosed with the order disposing of all the objections. It was also the grievance of the petitioner that the objections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner as well as the revenue are preserved. The CIT (A) shall pass an order dealing with all the submissions of the petitioner including in relation of the validity of the notice under Section 148 of the Act. We however vacate the interim order passed by us on 19.12.2019. Consequently, the re-assessment order becomes effective from today." Thus there is a direction in the above order of Hon'ble High Court Delhi that CIT(A) shall pass an order dealing with all the submissions of the petitioner including in relation of the validity of the notice under Section 148 of the Act. 8. Let us first observe the facts of the case regarding the material information available for initiation of proceedings u/s 148 of the IT Act 1961. 8.1 It is observed from the assessment records that there was communication of the information relating to three transactions from the investigation wing to the AO. The information can be summed up as under: a) The information was received from the Investigation wing Delhi in the office of Range-10, Delhi (earlier jurisdiction) on 01.03.2019, which was forwarded to the DCIT central circle 15 (present jurisdiction) on 18.12.2019.It contained the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd having PAN:- AACCG2042H for the A. Y. 2012-13 u/s 147 of the IT Act, 1961." c) The forwarding letter of Investigation wing dated 15.03.2019 w.r.t another transactions had been received in the office of DCIT, CC-15 Delhi on 20.03.2019. As per the contents of this letter, the investigation wing had mentioned that in the open enquiries conducted in the case of Sh.Manoj Sethi, on the basis of STR in his case, the incomplete reply to queries was submitted by him. There were cash deposits and huge debit/credit entries in his accounts and funds were immediately transferred after receipt of the same. The investigation wing observed from his bank account that "It is emphasised that the transactions discussed above are directly related to Sh. Manoj Sethi, Sh. Manoj Sethi either received the funds from the concerns and persons mentioned above or transferred the funds to them. Shri Manoj Sethi during the course of investigation proceedings could not explain the source of deposits, purpose of transfer of funds, nature of transactions and identity of the persons, genuineness of the transaction and credit worthiness of persons from whom funds received." On the basis of this observa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocumentary evidences. Please submit your explanation for the above asked details on or before 29.03.2019 positively. This information is being asked u/s 133(6) of the Act and failure to comply to this will attract action under the provisions of the IT Act, 1961." (b) Reply of the appellant dated 29.03.2019 on the notice u/s 133(6) dated 26.03.2019: "In reference to your letter F.NO. ACIT/CC-15/2018-19 Dt. 26.03.2019 it is respectfully submitted that no accommodation entries amounting to Rs. 12,30,00,000/- for the A.Y. 2012-13 had been taken by the companies viz M/s. Gulab Buildtech Pvt. Ltd., M/s Verma Buildtech & Promoters Pvt. Ltd., M/s. Renu Builders & Promoters Pvt. Ltd and M/s D & S Developers Pvt. Ltd merged with the assessee company M/s. BDR Builders and Developers Pvt. Ltd as mentioned in the said letter sent by your good self. All the above said companies have been regularly filing their Income Tax Returns and have been duly assessed to income tax. Please take it on your records that all the future correspondence related to the assessee company through e-mail be sent on e-mail id [email protected]." (c) Notice u/s 133(6) on 28.3.2019:- "Please refer to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessment order was passed on 27.12.2019 as reproduced in para 5.2 above. 8.4 The reasons forming the belief of the AO for reopening u/s 148 are as under: "1. Reasons for reopening of the assessment Assessment in this case was completed u/s 143(3) vide order dated 26.03.2015 at income of Rs. 4,56,640/-. Subsequently, action u/s 132 of the Act was carried out by the department in Himanshu Verma Group of cases on 29.03.2012 and on verification documents found and seized it was found that they were providing accommodation entries to the beneficiaries. The enquiries made further revealed that they had provided accommodation entries to M/s Gulab Buildtech Pvt. Ltd. merged with the assessee company M/s BDR Builders and Developers through their companies M/s Soffpro Technologies Pvt. Ltd. Rs. 5,00,00,000/- and M/s Mithilanchal Investment Finance Pvt. Ltd. Rs. 2,00,00,000/- totalling Rs. 7,00,00,000/- during the assessment year under consideration and therefore, these accommodation entries of Rs. 7,00,00,000/- need be assessed in the hands of the assessee as undisclosed/unaccounted income during the year under consideration. Thereafter, information was again received from DI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion collected/received by the AO In this case enquiries were made by the Investigation Wing and it was found that during the year under consideration M/s Gulab Buildtech Pvt. Ltd. M/s Verma Buildtech & Promoters Pvt. Ltd., M/s Renu Builders & Promoters Pvt. Ltd. and D and S Developers Pvt. Ltd. merged with the assessee company BDR Builders and Developers Pvt. Ltd. had taken accommodation entries to the tune of Rs. 7,00,00,000/-, Rs. 45,00,000/-, Rs. 4,50,00,000/- and Rs. 35,00,000 and Rs. 5,65,50,000/- totalling in all to Rs. 17,95,00,000/- which need be assessed in the hands of the assessee company M/s BDR Builders and Developers Pvt. Itd. during the year under consideration. 3. Analysis of information collected/received On the basis of enquiries conducted, it stands established that the assessee company had taken accommodation entries which require to be considered for tax purposes. 4. Enquiries made by the AO as sequel to information collected or received. Enquiries has been made by issuing notice u/s 133(6) of the I.T. Act, 1961 after taking due approval from Pr. CIT(Central)-2, New Delhi on 28.03.2019 to the assessee and requested to file its explanation for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter as per enquiries made by the Wing a sum of Rs. 45,00,000/-, Rs. 4,50,00,000/- and Rs. 35,00,000/- totalling Rs. 5,30,00,000/- was transferred from this account to M/s. Verma Builtech & Promoters Pvt. Ltd. M/s. Renu Builders & Promoters Pvt. Ltd. and M/s. D and S Developers Pvt. Ltd.. respectively during the financial year 2011-12 relevant to assessment year 2012-13. In another case of Shri Roop Kishore Madan it was found that accommodation entries to the tune of Rs. 5,65,50,000/- were given by Shri Madan from his account No. 040001000011 maintained with ICICI Bank Ltd, Sunder Nagar Branch, New Delhi to M/s. Gulab Buildtech Pvt. Ltd. on 03.02.2012. All these three companies have also already been merged with the assessee company M/s. BDR Builders and Developers Pvt. Ltd. The total amount of accommodation entries comes to Rs. 17,95,50,000/-. The requirement to initiate proceeding u/s 147 of the Act are reasons to believe that income for the year under consideration has escaped reasons to believe that because of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. It is pertinent to mention here that reasons to believe th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt and balance sheet entries will get merged with M/s BDR w.e.f 01.04.2012 and before that period these entities have individual existence w.r.t to the transactions in their respective books of accounts. It is even evident from fact that the assessment u/s 143(3) of M/s GBPL for AY 2012-13 had been completed by the AO of M/s GBPL in March' 2015 (not the AO of M/s BDR), even after the amalgamation order of it with M/s BDR was passed by the Court in 2013. The abated assessment in M/s RBPL had been made u/s 153A on 31.03.2016 as independent entity determining the income at Rs. 21,41,964/-, however, this assessed income was added to the income of M/s BDR as merged entity. Although after amalgamation of these companies with M/s BDR, the responsibility of liabilities of the companies will be with M/s BDR and even the notice will be issued on the PAN of M/s BDR, the reopening of these entities for the period prior to 1.4.2012 had to be w.r.t their individual status of assessments in those years. It is possible that some entities may have been assessed u/s 143(3) and other entities u/s 143(1). Further one entity may have profit after addition (say assessed income Rs 1 Cr) &other entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 crores from two companies [Rs 5 Cr. from M/s Saffpro Technologies Pvt. Ltd (STPL)& Rs 2 Cr from M/s Mithilanchal Investment Finance Pvt. Ltd. (MIFTL)] controlled by the entry operator Himanshu Verma. 10.1.1 The AO while passing the assessment order on 27.12.2019 had commented that in subsequent search on Mr. Himanshu Verma in 2012, it is observed that the appellant company had received subsequently the entries. Same wording had been used in the "Reasons to believe" note reproduced above. However the search on Mr Himanshu Verma on 29.3.2012 was much earlier to the filing of return of income by the appellant for the year under consideration. 10.1.2 It is pertinent to mention over here that the facts of search on Mr Himanshu Verma in the year 2012 along with the relevant portion of his appraisal report were available with the erstwhile AO while making the original assessment u/s 143(3) in the case of M/s GBPL in year 2014-15. As per the assessment records, the letter No Jt. CIT Range-10/Transfer/2014- 15/388 dated 13.2.2015 of joint CIT, Range-10, Delhi, to all AO's read as under: "Sub:- Dissemination of database of beneficiaries provided by Sh. Himanshu Verma & its asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment of Rs. 5,00,00,000/- (Rs, five crores only) made in the company. 4. That the complete set of the Income Tax Return filed with the department for AY 2012-13 is enclosed along with the copy of the audited balance sheet, profit and loss account with enclosures and audit report. 5. The perusal of copy of account of the assessee company would clarify that the shares were allotted on 30.03.2012 by the company. The original share certificate was surrendered by us upon amalgamation of the company with M/s BDR Builders & Developers P Ltd. and consequent upon the amalgamation, a fresh share certificate bearing no. 195 was Issued by the amalgamated company on 28.03.2013. If any other information is needed, I am glad to furnish the same at the earliest." * There is letter in response to notice u/s 133(6) from M/s Mithilainchal Inv. & Finance Pvt. Ltd to the ITO Ward 10(4) dated 29.1.2015 received in the office of ITO on 02.02.3015 with similar details as reproduced above in the case of M/s Saffpro Technologiels Pvt. Ltd. 10.1.4 In view of the above facts & circumstances, it is observed that the information emanating from the search of Mr Himanshu verma was available wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no finding in this assessment order made u/s 143(3), considering all cash/credit entries in his bank account, that he is an entry operator. 10.2.3 Thus there was no material or statement of Mr. Roop Kishore Madan or the appellant, in this information forwarded by the investigation wing, to arrive at the conclusion by the AO, that Mr. Roop Kishore Madan is an entry operator, as alleged in notices u/s 133(6) issued by the AO prior to recording of reasons and in the "Reasons to Believe" for reopening of the assessment of the appellant on account of these alleged transactions. The AO should have looked into these facts before forming his "reasons to believe". This clearly indicates that the AO did not have even a single piece of evidence/material from where it is appearing that this person is an entry operator and had given accommodation entries to the appellant, at the time of forming "reasons to believe" for "escapement of income" against the appellant. 10.2.4 Further, it will be pertinent to mention over here that the assessment of Sh Roop Kishore Madan was also reopened u/s 148 in response to the information forwarded by the Investigation wing and the assessed income u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents during assessment as well as appellate proceedings: * Confirmation of ledger account of M/s Rhea Distribution Prop Sh. Roop Kishore madan * Copy of ITR of Sh. Roop Kishore madan for AY 2011-12 & 2012-13 * Bank statement of Sh. Roop Kishore Madan highlighting the payments * bank statement of the appellant showing corresponding entries as per the ledger account. 10.2.6.1 Thus, it is observed that (i) The appellant had discharged the primary burden to prove identity, creditworthiness and genuineness of these transactions, by filing the copy of return acknowledgement/ confirmation/bank statement of M/s Rhea Distribution. The AO had not rebutted these primary evidences with any adverse material on record. (ii) Mr.Roop Kishor Madan is an existing assessee with high returned income, whose assessment for AY 2012-13 had been completed u/s 143(3) after taking into account all the bank transactions. The primary evidences submitted by the appellant regarding these loan transactions proving identity of creditor, genuineness of transaction and creditworthiness of the creditor had not been rebutted by the AO with any adverse evidence on record. In these facts & circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntries in his bank account, that he is an entry operator. 10.3.3 Thus there was no material or statement of Mr. Manoj Sethi or the appellant, in this information forwarded by the Investigation Wing, to arrive at the conclusion by the AO, that Mr Manoj Sethi is an entry operator, as alleged in the "Reasons to Believe" for reopening of the assessment of the appellant on account of these alleged transactions. 10.3.4 It will be pertinent to mention over here that the assessment of Mr Manoj Sethi was also reopened u/s 148 in response to the information forwarded by the Investigation Wing and in this reassessment, the assessed income u/s 143(3) in the order dated 27.3.2015 had been accepted without making any addition. Sh. Manoj Sethi had not been held to be entry operator either in the assessment dated 27.3.2015 u/s 143(3) or in the reassessment u/s 148 completed on 30.12.2019. 10.3.5 It appears from the assessment order of Mr Manoj Sethi for AY 2012-13 that the information forwarded by the investigation wing had already been taken into consideration in his assessment u/s 143(3) completed on 27.3.2015. There is no finding in this assessment order that Mr Manoj Sethi is an entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cheque/RTGS Bank Amount(Rs) I. Vemia Buildtech and Promoters Pvt. Ltd 21.03.2011 HDFCH1108 0700094 HDFC Bank 1,00,00,000/- 13.07.2011 UTIBH1119 4009022 HDFC Bank 45,00,000/- Total 1,00,00,000/- 45,00,000/- 2, Renu Builders & Promoters Pvt. Ltd 24.12.2010 Ch No. 234876 HDFC Bank 2,50,00,000/- 09.07.2011 UTTBH1119 0068022 HDFC Bank 2,00,00,000/- 07.01.2011 Ch No. 234878 HDFC Bank 2,00,00,000/- 09.07.2011 UTTBH1118 8040334 HDFC Bank 3,00,00,000/- 10.01.2011 HDSFCH110 10625736 HDFC Bank 2,80,00,000/- 11.07.2011 Ch No. 578239 HDFC Bank 2,00,00,000/- 10.01.2011 HDSFCH110 10627343 HDFC Bank 1,20,00,000/- 13.07.2011 UTIBH1119 4009087 HDFC Bank 1,50,00,000/- Total 8,50,00,000/- 8,50,00,000/- 3. D&S Developers Pvt. Ltd 30.01.2010 HDFCH1003 0618294 HDFC Bank 50,00,000/- 26.05.2011 UTIBH1114 6075100 HDFC Bank 35,00,000/- 02.03.2010 HDFCH1006 1987657 HDFC Bank 1,80,00,000/- 18.08.2011 Ch No. 578243 HDFC Bank 1,95,00,000/- Total 2,30,00,000/- 2,30,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record. (iv) Mr. Manoj sethi had filed the return of income for AY 2012-13 at Rs2.94 Cr and his assessment had been made u/s 143(3) in 2015 after considering all his bank transactions. (v) The amounts received by these merged entities in the year under consideration are the receipts of the money advanced by them in past FY 2010-11 to My Manoj Sethi. There is nothing on record to prove that Mr Manoj Sethi is an entry operator. He is an existing assessee with high returned income, whose assessment for AY 2012-13 had been completed u/s 143(3) after taking into account all the bank transactions in March 2015. The primary evidences submitted by the appellant regarding these loan transactions proving identity of creditor, genuineness of transaction and creditworthiness of the creditor had not been rebutted by the AO with any adverse evidence on record in reassessment made in Dec., 2019. In these facts & circumstances of the case, it is held that the amounts received by the above three merged entities from Mr Manoj Sethi are not accommodation entries, but are the repayment of loan amounts by Mr. Manoj Sethi, which had been advanced by these entities in earlier year. Without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in March, 2015. There are no new facts emerging from the report of investigation wing which indicate that these entities are providing accommodation entries and the appellant is the beneficiary of the such transactions with them. Even in the reassessment of these two entities made in December 2019, there is no addition except the addition made in their orders made u/s 143(3) in March, 2015. In these facts & circumstances of the case, it is held that there is no foundation on which the AO had interpreted these entities as "Entry Operators". The reopening cannot be done on the basis of "suspicion" but should be based on prima facie facts of belief based on tangible material for "escapement of income". The appellant had disclosed all these transactions in the audited accounts and these have even been assessed in the assessment made u/s 143(3) on 27.3.2015 in M/s GBPL. As per the assessment order, assessment u/s 153A had been completed in M/S BDR & M/s RBPL (as merged entity) on 30.3.2016. 12. Conclusion: On the basis of above discussion, following observations are made w.r.t reopening of assessment for the year under consideration u/s 148. 12.1 The first reason given for reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments completed for these entities in 2015, there is no allegation in these assessment orders that these two entities are engaged in the business of providing accommodation entries in general and in particular to the merged entities of the appellant. It is pertinent to mention over here that even the assessment of M/s GBPL was also completed u/s 143(3) in march 2015 and transactions related to Sh. Roop Kishore Madan prop. M/s Rhea Distribution Company were also verified to be genuine. (iii) The Investigation Wing had suggested reopening in the case of both these entities on the basis of same information in STR which had already been considered in the AIR received by the AO's of both these entities. This fact is even evident from the reassessment of these entities made in 2019, wherein, no further additions except the additions as made in the original order u/s 143(3) in March, 2015 were reiterated. Therefore, the information forwarded by the Investigation Wing with respect to these entities was same as considered in the assessment of these two entities made u/s 143(3) in March, 2015 itself. There is no allegation in the assessment made u/s 143(3) made in the March, 2015 or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere issued without application of mind in a mechanical manner to just do formality of paper work to show that the AO had applied his mind independently. Such action of the AO cannot be termed as independent application of mind by AO, on the information received from the Investigation wing. (vi) Without prejudice to it, even the AO had made the reassessment without considering the replies of the appellant. The ledger accounts of these parties show transactions of more amounts with these two entities than those worked by Investigation Wing &same worked amounts added by the AO in the assessment order. It is very much evident that the AO had not applied his mind and based his every action merely on the report of the Investigation Wing. 12.4 The legal position on various relevant issues arising in the 148 proceedings is as under: (i) In the case of Pr. CIT v Meenakshi Overseas Pvt. Ltd. (2017) (5) TMI 1428, Delhi, reopening u/s 148 was made on the basis of information received form investigation wing. The Hon'ble High Court held that such reopening which was based merely on the information received from Investigation. Wing without independent application of mind by A.O. amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegation in reasons cannot be treated equivalent to material in eyes of law. Mere receipt of information from any source would not by itself tantamount to reason to believe that income chargeable to tax has escaped assessments." 35. In the decision of this Court dated 16th March 2016 in W.P. (C) No. 9659 of 2015 (Rajiv Agarwal v. CIT) it was emphasized that "even in cases where the AO comes across certain unverified information, it is necessary for him to take further steps, make inquiries and garner further material and if such material indicates that income of an Assessee has escaped assessment, form a belief that income of the Assessee has escaped assessment." 36. In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the AO one after the other. There is no Independent application of mind by the AO to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The conclusions of the AO are at best a reproduction of the conclusion in the investigation report. Indeed it is a 'borrowed satisfaction'. The reasons fail to demonstrate the link between the tangible mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is absent. The reasons must be self evident, they must speak for themselves. The tangible material which forms the basis for the belief that income has escaped assessment must be evident from a reading of the reasons. The entire material need not be set out. However, something therein which is critical to the formation of the belief must be referred to. Otherwise the link goes missing. 24. The reopening of assessment under Section 147 is a potent power not to be lightly exercised. It certainly cannot be invoked casually or mechanically. The heart of the provision is the formation of belief by the AO that income has escaped assessment. The reasons so recorded have to be based on some tangible material and that should be evident from reading the reasons. It cannot be supplied subsequently either during the proceedings when objections to the reopening are considered or even during the assessment proceedings that follow. This is the bare minimum mandatory requirement of the first part of Section 147 (1) of the Act." 13. In view of the said decision, the Court has no hesitation in concluding in the present case that the reasons recorded by the AO for reopening the assessment unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 78 lakh, even going by the reasons for reopening of the assessment, added a sum of Rs. 1.13 crore. On what basis such an addition was made has not been explained. 15. For the aforementioned reasons, the Court is satisfied that no error was committed by the ITAT in holding that reopening of the assessment under Section 147 of the Act was bad in law. 16. No substantial question of law arises from the impugned order of the ITAT." (iv) In the case of New Delhi Television Limited vs DCIT (2020) (4) TMI 133 Supreme Court, the Hon'ble apex court held as under: - "Question No.2 24. Coming to the second question as to whether there was failure on the part of the assessee to make a full and true disclosure of all the relevant facts. The case of the assessee is that it had disclosed all facts which were required to be disclosed 25. The revenue has placed reliance on certain complaints made by the minority shareholders and it is alleged that those complaints reveal that the assessee was indulging in round-tripping of its funds. According to the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that merely because the transaction of convertible bonds was disclosed at the time of original assessment does not mean that there is true and full disclosure of facts. 28. We are unable to agree with this reasoning given by the High Court. The assessee as mentioned above made a disclosure about having agreed to stand guarantee for the transaction by NNPLC and it had also disclosed the factum of the issuance of convertible bonds and their redemption. The income, if any, arose because of the redemption at a discounted price. This was an event which took place subsequent to the assessment year in question though it may be income for the assessment year. As we have observed above, all relevant facts were duly within the knowledge of the assessing officer. The assessing officer knew who were the entities who had subscribed to other convertible bonds and in other proceedings relating to the subsidiaries the same assessing officer had knowledge of addresses and the consideration paid by each of the bondholders as is apparent from assessment orders dated 03.08.2012 passed in the cases of M/s. NDTV Labs Ltd. and M/s. NDTV Lifestyle Ltd. Therefore, in our opinion there was full and tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame officer who had passed the assessment order in the case of the assessee on the same date itself. Therefore, the entire material was available with the revenue 32. A number of decisions have been cited as to what is meant by true and full disclosure. It is not necessary to multiply decisions, as law in this regard has been succinctly laid down by a Constitution Bench of this Court in Calcutta Discount Co. Ltd. vs. Incometax Officer, Companies District 1, Calcutta and Another AIR 1961 SC 372, wherein it was held as follows: " (8)... The words used are "omission or failure to disclose fully and truly all material facts necessary for his assessment for that year". It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts. are material, and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence disclosed. (10) Does the duty however extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else - far less the assessee- to tell the assessing authority what inferences - whether of facts or law should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences - whether of facts or law - he would draw from the primary facts. (11) If from primary facts more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority. How could an assessee be charged with failure to communicate an inference, which he might or might not have drawn?" A careful analysis of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant to decide issue before the Hon'ble Court" This submission has been repeated a number of times in the counter affidavit. Therefore, in our opinion the revenue cannot now turn around and urge that the assessee is guilty of nondisclosure of facts. We are also of the view that the revenue could not be permitted to blow hot and cold at the same time. 35. We are clearly of the view that the revenue in view of its counter affidavit before the High Court that it was not relying upon the nondisclosure of facts by the assessee could not have been permitted to orally urge the same. Even otherwise we find that the assessee had fully and truly disclosed all material facts necessary for its assessment and, therefore, the revenue cannot take benefit of the extended period of limitation of 6 years. We answer Question No.2 accordingly. (v) The head note of decision in the case of CIT vs Usha International Limited 2012(9) TMI 767- Delhi High Court is as under: - "Change of opinion - Whether assessment proceedings can be validly reopened under Section 147 of the Act, even within four year, if an assessee has furnished full and true particulars at the time of original assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue to urge such a proposition - Thus the assessment proceedings cannot be validly reopened under section 147 even within four years, if an assessee has furnished full and true particulars at the time of original assessment with reference to the income alleged to have escaped assessment, if the original assessment was made u/s 143(3), thus the issue is concluded by the judgment of the Full Bench of this court in Kelvinator (supra). So long as the assessee has furnished full and true particulars at the time of original assessment and so long as the assessment order is framed under section 143(3) it matters little that the assessing officer did not ask any question or query with respect to one entry or note but had raised queries and questions on other aspects. Again the answer to this question stands concluded by the judgment of the Full Bench of this court in Kelvinator (supra). It is that section 114(e) of the Evidence Act can be applied to an assessment order framed under section 143(3) provided that there has been a full and true disclosure of all material and primary facts at the time of original assessment. In such a case if the assessment is reopened in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion also of Rs 5.3 Cr, as per the information received from the Investigation Wing. In reality the total of these transactions during the year under consideration is at Rs 11.25 Cr as per the table in para 10.3.7 above. Thus amount of the individual amounts of transactions & total transactions in two entities are different in satisfaction (in addition as well) than as per the actual transaction amounts as provided by the appellant during assessment as well as appellate proceedings. * The finding of Investigation wing was that "Shri Manoj Sethi could not explain the reasons for transferring these amounts to these merged companies" and the conclusion drawn by the AO is it shows that these companies have taken accommodation entries by transferring their own funds in cash to the bank account of Shri Sethi and then again getting the same amounts through the above bank account. This conclusion is without any tangible material on record. (iii) The AO had mentioned in para 9 that "In another case of Shri Roop Kishore Madan it was found that accommodation entries to the tune of Rs. 5,65,50,000/- were given by Shri Madan from his account No. 040001000011 maintained with ICICI Bank Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suspicion w.r.t transactions of the merged entities of the appellant, with these two entities. The AO, in the notice u/s 133(6), had presumed the transactions of the merged entities of the appellant with these two entities as "accommodation entries" on the basis of report of investigation wing, which is based on far fetched suspicion only. Even the two notices issued u/s 133(6) by the AO, at the fag end of time barring date, to form his independent opinion was merely a paper formality, as it did not mention the name of these alleged entities and nature of transactions of merged entities of the appellant, with these two entities, thus denying the appellant proper opportunity to respond. The merged entities of the appellant cannot be held responsible for incomplete submission of details by these two entities before investigation wing (which has ultimate powers to get the information), particularly when the assessment of these two entities had been completed u/s 143(3) in the past (March 2015) considering their all bank transactions. Non submission of details cannot automatically lead to the conclusion that these entities are entry operators, particularly when these are filing high in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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