M/s ON Exim Pvt. Ltd., New Delhi V. ITO, New Delhi

CO 112/DEL/2011

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8919 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-08-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 15-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: RAVI GUPTA
• Keywords: Reopening of assessment; Bogus Share capital; Period of limitation; Accommodation entries; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.1116/DEL/2011 1116/DEL/2011 1116/DEL/2011 1116/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2001 2001 2001 2001- -- -02 0202 02 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -13(4), 13(4), 13(4), 13(4), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S O M/S O M/S O M/S ON EXIM PVT.LTD., N EXIM PVT.LTD., N EXIM PVT.LTD., N EXIM PVT.LTD., 7 77 7- -- -MATHURA ROAD, JANGPURA, MATHURA ROAD, JANGPURA, MATHURA ROAD, JANGPURA, MATHURA ROAD, JANGPURA, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : PAN : PAN : PAN : AAACO1504E. AAACO1504E. AAACO1504E. AAACO1504E. (APPELLANT) (RESPONDENT) CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION NO. NO. NO. NO.112/DEL/2011 112/DEL/2011 112/DEL/2011 112/DEL/2011 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2001 2001 2001 2001- -- -02 0202 02 M/S ON EXIM PVT.LTD., M/S ON EXIM PVT.LTD., M/S ON EXIM PVT.LTD., M/S ON EXIM PVT.LTD., C/O SHRI RAVI GUPTA, C/O SHRI RAVI GUPTA, C/O SHRI RAVI GUPTA, C/O SHRI RAVI GUPTA, ADVOCATE, ADVOCATE, ADVOCATE, ADVOCATE, D DD D- -- -10, KAILASH COLONY, 10, KAILASH COLONY, 10, KAILASH COLONY, 10, KAILASH COLONY, NEW NEW NEW NEW DELHI DELHI DELHI DELHI 110 048. 110 048. 110 048. 110 048. PAN : AAACO1504E. PAN : AAACO1504E. PAN : AAACO1504E. PAN : AAACO1504E. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -13(4), 13(4), 13(4), 13(4), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SAMEER SHARMA, SR.DR. ASSESSEE BY : SHRI RAVI GUPTA, ADVOCATE. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF LEARNED CIT(A)-XVIII, NEW DELHI DATED 23 RD NOVEMBER, 2010 FOR THE AY 2001-02. THE ASSESSEE HAS ALSO FILED THE CROSS-OBJECTION. 2. IN THE CROSS-OBJECTION, THE ASSESSEE HAS RAISED THE ISSUE AGAINST THE VALIDITY OF REOPENING OF ASSESSMENT UNDER SECTION 1 48 READ WITH SECTION 149 OF THE INCOME-TAX ACT, 1961. THEREFORE , IT WAS REQUESTED BY THE ASSESSEES COUNSEL THAT SINCE THE ISSUE RAISED IN THE CROSS- ITA-1116/D/2011 & C.O.112/D/2011 2 OBJECTION GOES TO THE ROOT OF THE MATTER, IT SHOULD B E ADJUDICATED FIRST. THE LEARNED DR HAS NO OBJECTION. THEREFORE, WE PRO CEED TO HEAR THE CROSS-OBJECTION. 3. THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED AT LENGTH CHALLENGING THE VALIDITY OF THE NOTICE ISSUED UNDER S ECTION 148. THE SAME CAN BE SUMMARIZED IN THREE BASIC ISSUES:- (I) THE NOTICE ISSUED IS BARRED BY LIMITATION BECAUSE THE ASSESSMENT YEAR INVOLVED IS 2001-02 AND THE NOTICE UNDER SECTION 148 IS HANDED OVER TO THE POSTAL AUTHORITIES O N 1 ST APRIL, 2008. THUS, IT IS AFTER MORE THAN SIX YEARS FRO M THE END OF THE RELEVANT ASSESSMENT YEAR. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE DECISION OF HON'BLE G UJARAT HIGH COURT IN THE CASE OF KANUBHAI M.PATEL (HUF) VS. HIREN BHATT OR HIS SUCCESSORS TO OFFICE AND OTHERS [2011] 334 ITR 25 (GUJ). (II) THE NOTICE IS ISSUED AT THE WRONG ADDRESS. THAT THE ADDRESS OF THE ASSESSEE IS M/S ON EXIM PVT.LTD., 7, MATHU RA ROAD, JANGPURA, NEW DELHI. THE SAME ADDRESS IS GIVEN I N THE ASSESSMENT ORDER AND IN THE APPEAL FILED BY THE DEPARTMENT BEFORE THE ITAT. HOWEVER, NOTICE UNDER SECTION 148 HAS BEEN ISSUED AT THE ADDRESS M/S ON EXIM PVT.LTD., 550, KUCHA PATI RAM, BAZAR SITA RAM, DELH I. THE SAID NOTICE WAS NEVER RECEIVED BY THE ASSESSEE. (III) THE REASONS GIVEN FOR REOPENING OF ASSESSMENT ARE VAGUE AND DO NOT INDICATE ANY APPLICATION OF MIND BY THE ASSESSING OFFICER. HE ISSUED THE NOTICE SIMPLY ON THE BASI S OF CERTAIN INFORMATION RECEIVED FROM THE INVESTIGATI ON WING, AGRA. THAT IN THE REASONS RECORDED, IT IS ALLEG ED THAT ONE PARTY, VIZ., M/S AAYUSHI STOCK BROKERS (P) LIMIT ED IS ITA-1116/D/2011 & C.O.112/D/2011 3 PROVIDING BOGUS ACCOMMODATION ENTRIES OF BOGUS SHARE TRANSACTIONS, BOGUS SHARE CAPITAL ETC. BUT, IT IS NOT SPECIFIED WHAT WAS THE EXACT TRANSACTION BETWEEN THE ASSESSEE AND M/S AAYUSHI STOCK BROKERS (P) LIMITED. IN TH E REASONS RECORDED, ONLY THE NAME OF THE BANK, LEDGER ACCOUNT NUMBER AND THE AMOUNT IS GIVEN. THEREFORE, THIS ONLY INDICATES SOME TRANSACTIONS BETWEEN THE ASSESSEE AND M/S AAYUSHI STOCK BROKERS (P) LIMITED BUT, THE SAM E IS NOT SUFFICIENT TO FORM THE BELIEF OF ESCAPEMENT OF IN COME. HE CLARIFIED THAT THE ASSESSEE HAS ONLY SOLD THE SHARES THROUGH M/S AAYUSHI STOCK BROKERS (P) LIMITED AND THE SALE PROCEED HAS ALREADY BEEN CONSIDERED WHILE COMPUTING T HE INCOME OF THE ASSESSEE FOR AY 2001-02. HE, THEREFORE, STATED THAT THE NOTICE ISSUED UNDER SECTION 148 IS LIAB LE TO BE QUASHED. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS:- (A) SIGNATURE HOTELS P.LTD. VS. ITO AND ANOTHER [2011] 338 ITR 51 (DELHI). (B) CIT VS. SFIL STOCK BROKING LTD. [2010] 325 ITR 285 (DELHI). (C) SARTHAK SECURITIES CO.P.LTD. VS. ITO [2010] 329 ITR 110 (DELHI). 4. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF LEARNED CIT(A) AND STATED THAT IN THIS CASE, NOTICE UNDER SECT ION 148 WAS DULY SIGNED ON 31 ST MARCH, 2008 AND GIVEN FOR DISPATCH. THAT IN THE GOVERNMENT, THERE IS A PROCEDURE FOR DISPATCH OF ANY NOTICE ETC. IT GOES TO THE DISPATCH SECTION AND THEN ONLY TO THE POSTA L AUTHORITIES. THAT MERELY BECAUSE THE ENVELOPE WAS ACTUALLY POSTED ON 1 ST APRIL, 2008, IT CANNOT BE SAID THAT THE NOTICE WAS NOT ISSUED ON 31 ST MARCH, 2008. IN FACT, THE NOTICE WAS PUT IN THE PROCESS OF SE RVICE ON 31 ST ITA-1116/D/2011 & C.O.112/D/2011 4 MARCH, 2008 ITSELF. WITH REGARD TO ADDRESS IN THE NOT ICE, HE STATED THAT THE ASSESSING OFFICER ISSUED THE NOTICE AT THE ADDRESS GIVE N BY THE INVESTIGATION WING WHICH WAS THE CORRECT ADDRESS OF THE ASSESSEE. HE FURTHER STATED THAT EVEN THE NOTICE OF HEARING ISSUED AT THE ABOVE ADDRESS WAS DULY RESPONDED BY THE ASSESSEE BECAUSE THE ASSESSEE APPEARED ON THE DATE OF HEARING. THEREFORE, THE NO TICE WAS ISSUED AT THE CORRECT ADDRESS. WITH REGARD TO REASONS RECORDED, IT IS STATED BY THE LEARNED DR THAT DEFINITE INFORMATION WAS RECEIVE D FROM THE INVESTIGATION WING OF THE INCOME-TAX DEPARTMENT THAT THE ASSESSEE WAS THE BENEFICIARY OF THE ACCOMMODATION ENTRIES PROV IDED BY M/S AAYUSHI STOCK BROKERS (P) LIMITED. THAT THE INVESTIG ATION WING OF THE IT DEPARTMENT HAS NO ANIMOSITY WITH THE ASSESSEE SO AS TO SE ND ANY INCORRECT INFORMATION. THE ASSESSING OFFICER FORMED TH E OPINION OF ESCAPEMENT OF INCOME ON THE BASIS OF THE INFORMATION FROM THE INVESTIGATION WING OF THE IT DEPARTMENT WHO ARE RESPO NSIBLE OFFICERS. THEREFORE, THE ASSESSING OFFICER HAD SUFFICIENT MATERIA L TO FORM THE OPINION OF ESCAPEMENT OF INCOME. HE, THEREFORE, SUBM ITTED THAT THE ORDER OF LEARNED CIT(A) ON THIS POINT SHOULD BE SUSTAIN ED AND THE CROSS- OBJECTION OF THE ASSESSEE BE DISMISSED. 5. IN THE REJOINDER, IT IS STATED BY THE LEARNED COUN SEL THAT NEITHER THE NOTICE UNDER SECTION 148 NOR THE NOTICE OF HEAR ING ISSUED TO THE ASSESSEE COMPANY WAS SERVED UPON THE ASSESSEE. THE ASSESSEE APPEARED ON ONE DATE OF HEARING BEFORE THE ASSESSING OF FICER BECAUSE APART FROM ISSUING NOTICE TO THE COMPANY, THE ASSESSING O FFICER HAD ISSUED NOTICE TO THE DIRECTOR AT THE RESIDENTIAL ADDRE SS WHICH WAS SERVED UPON DIRECTOR. HE, THEREFORE, SUBMITTED THAT THE NOTICE UNDER SECTION 148 WAS ISSUED AT THE WRONG ADDRESS. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE UNDISP UTED FACTS ARE ITA-1116/D/2011 & C.O.112/D/2011 5 THAT THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2001-02 A ND SIX YEARS FROM THE RELEVANT ASSESSMENT YEAR ENDED ON 31 ST MARCH, 2008. THE REASONS RECORDED AS WELL AS NOTICE UNDER SECTION 148 WE RE SIGNED ON 31 ST MARCH, 2008 BUT THE SAME WERE HANDED OVER TO THE PO STAL AUTHORITIES ON 1 ST APRIL, 2008. THE NOTICE WAS ISSUED AT THE FOLLOWING ADDRESS:- M/S ON EXIM (P) LTD., 550, KUCHA PATI RAM BAZAR SITA RAM, DELHI. 7. THE ADDRESS GIVEN IN THE ORIGINAL ASSESSMENT ORDER WAS AS UNDER:- U-112, LGF, VIDHATA HOUSE, VIKAS MARG, SHAKARPUR, DELHI. IN THE ASSESSMENT ORDER PASSED IN PURSUANCE TO NOTICE UNDE R SECTION 147, ADDRESS IS AS UNDER:- M/S ON EXIM PVT.LTD., 7, MATHURA ROAD, JUNG PURA, NEW DELHI. 8. EVEN IN THE APPEAL MEMO IN THE APPEAL FILED BY T HE REVENUE BEFORE THE ITAT, THE ADDRESS OF RESPONDENT IS THE SAME A S GIVEN IN THE ASSESSMENT ORDER PASSED UNDER SECTION 147. IT IS ADMITTED BY THE REVENUE ITSELF THAT THE NOTICE UNDER SECTION 148 IS I SSUED AT THE ADDRESS GIVEN IN THE COMMUNICATION FROM THE INVESTIGAT ION WING. THAT THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF KANUBH AI M.PATEL (HUF) VS. HIREN BHATT OR HIS SUCCESSORS TO OFFICE AND OTHERS (S UPRA) AT PAGE 32 OF 334 ITR HELD AS UNDER:- ITA-1116/D/2011 & C.O.112/D/2011 6 THUS, THE EXPRESSION TO ISSUE IN THE CONTEXT OF ISSUANC E OF NOTICES, WRITS AND PROCESS, HAS BEEN ATTRIBUTED THE MEANING, TO SEND OUT; TO PLACE IN THE HANDS OF THE PR OPER OFFICER FOR SERVICE. THE EXPRESSION SHALL BE ISSUED AS USED IN SECTION 149 WOULD THEREFORE HAVE TO BE READ I N THE AFORESAID CONTEXT. IN THE PRESENT CASE, THE IMPUGNED NOTICES HAVE BEEN SIGNED ON MARCH 31, 2010, WHEREAS TH E SAME WERE SENT TO THE SPEED POST CENTRE FOR BOOKING ONL Y ON APRIL 7, 2010. CONSIDERING THE DEFINITION OF THE WORD ISSUE, IT IS APPARENT THAT MERELY SIGNING THE NOTICES ON MARCH 31, 2010, CANNOT BE EQUATED WITH ISSUANCE OF NO TICE AS CONTEMPLATED UNDER SECTION 149 OF THE ACT. THE DA TE OF ISSUE WOULD BE THE DATE ON WHICH THE SAME WERE HANDED OVER FOR SERVICE TO THE PROPER OFFICER, WHICH IN THE FACTS OF THE PRESENT CASE WOULD BE THE DATE ON WHICH THE SAID NOTICES WERE ACTUALLY HANDED OVER TO THE POST OFFICE FOR THE PURPOSE OF BOOKING FOR THE PURPOSE OF EFFECTING SERVIC E ON THE PETITIONERS. TILL THE POINT OF TIME THE ENVELOPES ARE PROPERLY STAMPED WITH ADEQUATE VALUE OF POSTAL STAMPS, IT CANNOT BE STATED THAT THE PROCESS OF ISSUE IS COMPLETE. IN THE FACTS OF THE PRESENT CASE, THE IMPUGNED NOTICES HAV ING BEEN SENT FOR BOOKING TO THE SPEED POST CENTRE ONLY ON APRIL 7, 2010, THE DATE OF ISSUE OF THE SAID NOTICES W OULD BE APRIL 7, 2010 AND NOT MARCH 31, 2010, AS CONTENDED O N BEHALF OF THE REVENUE. IN THE CIRCUMSTANCES, THE IMPUGNED NOTICES UNDER SECTION 148 IN RELATION TO THE ASSESSMENT YEAR 2003-04, HAVING BEEN ISSUED ON APRIL 7, 2010 WHICH IS CLEARLY BEYOND THE PERIOD OF SIX YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR, ARE CLEARLY BA RRED BY LIMITATION AND AS SUCH, CANNOT BE SUSTAINED. (EMPHASIS BY UNDERLINING SUPPLIED BY US) 9. FROM THE ABOVE, IT IS EVIDENT THAT HON'BLE GUJARA T HIGH COURT HAS EXAMINED THE EXPRESSION TO ISSUE IN THE CONTEXT OF SE CTION 149 AND HAVE COME TO THE CONCLUSION THAT THE DATE OF ISSUE WOU LD BE THE DATE ON WHICH THE SAME WERE HANDED OVER FOR SERVICE TO THE PROPER OFFICER WHICH, IN THE FACTS OF THE PRESENT CASE, WERE POSTAL AU THORITIES. ADMITTEDLY, IN THE CASE OF THE ASSESSEE ALSO, THE NOTICE WAS HANDED OVER TO THE POSTAL AUTHORITIES ON 1 ST APRIL, 2008 WHICH WAS BEYOND THE ITA-1116/D/2011 & C.O.112/D/2011 7 PERIOD OF LIMITATION OF SIX YEARS PROVIDED IN SECTION 149. MOREOVER, THE NOTICE WAS NOT CORRECTLY ADDRESSED. THE NOTICE HAS TO BE SENT AT THE ADDRESS OF THE ASSESSEE GIVEN IN ITS RECORD WITH THE INCO ME-TAX DEPARTMENT AND NOT WITH SOME OTHER ADDRESS WHICH MIGHT HAVE BEEN GIVEN BY THE INVESTIGATION WING. THE NOTICE WAS ISSUED IN MARCH, 2008 AND THE ASSESSMENT WAS COMPLETED IN DECEMBER, 2008 AND, IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HIMSELF HAS GIVEN A D IFFERENT ADDRESS THAN WHAT WAS GIVEN IN THE NOTICE UNDER SECTIO N 148. THEREFORE, WE HAVE NO HESITATION TO HOLD THAT THE NO TICE WAS ISSUED AT THE INCORRECT ADDRESS AND THE SAME CANNOT BE SAID TO BE VALID ISSUE OF NOTICE IF THE SAME IS WRONGLY ADDRESSED. 10. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO RELIED UPON THE VARIOUS DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT IN SUPPORT OF HIS CONTENTION THAT THE NOTICE HAS BEEN ISSUED ON THE BASIS OF VAGUE INFORMATION ALLEGED TO HAVE BEEN RECEIVED FROM THE INVESTIGATION WING. WE FIND THAT HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF SIGNATURE HOTELS P.LTD. (SUPRA) HELD AS UNDER:- ALLOWING THE PETITION, THAT THE REASSESSMENT PROCEEDIN GS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED F ROM THE DIRECTOR OF INCOME-TAX (INVESTIGATION) THAT THE PETI TIONER HAD INTRODUCED MONEY AMOUNTING TO RS.5 LAKHS DURING FINANCIAL YEAR 2002-03 AS STATED IN THE ANNEXURE. ACCORDING TO THE INFORMATION, THE AMOUNT RECEIVED F ROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY A ND THE ASSESSEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIREMENTS OF SECTION 147 OF THE ACT. TH ERE WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED A S A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DISCLOSED ESCARPMENT OF INCOME. THE ANNEXURE WAS NOT A POINTER AND DID NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATIO N AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. T HERE ITA-1116/D/2011 & C.O.112/D/2011 8 WAS NO DISPUTE THAT THE COMPANY, S, HAD A PAID-UP CA PITAL OF RS.90 LAKHS AND WAS INCORPORATED ON JANUARY 4, 1989 , AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER, 2001. THUS, IT COULD NOT BE HELD TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LIABLE TO BE QUASHED. 11. SIMILAR VIEW IS TAKEN IN THE CASE OF SARTHAK SECU RITIES CO.P.LTD. (SUPRA), WHEREIN THEIR LORDSHIPS HELD AS UNDER:- ALLOWING THE PETITION, THAT THE FORMATION OF BELIE F WAS A CONDITION PRECEDENT AS REGARDS THE ESCAPEMENT OF THE T AX PERTAINING TO THE ASSESSMENT YEAR BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS REQUIRED TO FORM AN OPINION BEFORE HE PROCEEDED TO ISSUE A NOTICE. THE VALIDITY OF REASONS, WHICH WERE SUPPOSED TO SUSTAIN THE FORMATION OF AN OPINION, WAS CHALLENGEABLE. THE REASONS TO BELIEV E WERE REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER. ONCE THE INGREDIENTS OF SECTION 147 WERE FULFILLED, T HE ASSESSING OFFICER WAS COMPETENT IN LAW TO INITIATE THE PROCEEDINGS UNDER SECTION 147. THE ASSESSING OFFICER WAS AWARE OF THE EXISTENCE OF THE FOUR COMPANIES WITH WHO M THE ASSESSEE HAD ENTERED INTO TRANSACTION. BOTH THE ORD ERS SHOWED THAT THE ASSESSING OFFICER WAS MADE AWARE OF THE SITUATION BY THE INVESTIGATION WING AND THERE WAS NO MENTION THAT THESE COMPANIES WERE FICTITIOUS COMPANIES. NEITHER THE REASONS IN THE INITIAL NOTICE NOR THE COMMUNICATION PROVIDING REASONS REMOTELY INDICATED INDEPENDENT APPLICATION OF MIND. THOUGH CONCLUSIVE PROOF WAS NOT GERMANE AT THIS STAGE THE FORMATION OF BELIEF MUST BE ON THE BASE OR FOUNDATION OR PLATFORM OF PRUDENCE WHICH A REASONABLE PERSON WAS REQUIRED TO APPLY. FROM THE PERUSAL OF THE REASONS RECORDED AND THE ORDER OF REJECTION OF OBJECTIONS, THE NAMES OF THE COMPANIES WE RE AVAILABLE WITH THE AUTHORITY AND THEIR EXISTENCE WAS NOT DISPUTED. THE ASSESSEE IN ITS OBJECTIONS HAD STATED THAT THE COMPANIES HAD BANK ACCOUNTS AND PAYMENTS WERE MADE TO THE ASSESSEE THROUGH BANKING CHANNEL. THE IDENTITY OF THE COMPANIES WAS NOT DISPUTED. UNDER T HESE CIRCUMSTANCES, THE INITIATION OF PROCEEDINGS UNDER SEC TION 147 AND ISSUANCE OF NOTICE UNDER SECTION 148 OF THE AC T WERE TO BE QUASHED. ITA-1116/D/2011 & C.O.112/D/2011 9 12. WHEN WE EXAMINE THE REASONS RECORDED IN THE LIGH T OF ABOVE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT, WE ARE OF THE OPINION THAT THE RATIO OF THE ABOVE DECISIONS WOULD OPERATE I N FAVOUR OF THE ASSESSEE BECAUSE IN THE APPEAL BEFORE US ALSO, THE ONLY IN FORMATION RECEIVED BY THE ASSESSING OFFICER WAS THAT M/S AAYUSHI STO CK BROKERS (P) LIMITED IS FOUND TO BE PROVIDING ACCOMMODATION E NTRIES IN THE FORM OF BOGUS SHARE TRANSACTIONS, BOGUS SHARE CAPITAL ETC. TH EN, THERE IS A MENTION THAT THE ASSESSEE HAS RECEIVED BOGUS ACCOMMODATI ON ENTRIES FROM SUCH PARTY, DETAIL OF WHICH IS AS UNDER:- S.NO. DATE NAME & NATURE OF A/C LEDGER NO. AMT. 1 13/03/01 FEDERAL BANK -/502 500000/- 2 21/03/01 694205/550 10,00,000/- 3 24/03/01 694235/562 10,00,000/- 4 28/03/01 694238/605 450000/- 13. HOWEVER, THE DETAIL GIVEN IS ONLY WITH REGARD TO NAME OF THE BANK, LEDGER ACCOUNT NUMBER AND AMOUNT. EVEN THE N ATURE OF TRANSACTIONS IS NOT GIVEN, MUCH LESS TO ESTABLISH THAT THE ABOVE TRANSACTIONS ARE IN THE NATURE OF ACCOMMODATION ENTRI ES. IT HAS BEEN STATED BY THE LEARNED COUNSEL AT THE TIME OF HEARING BEFORE US THAT THE ASSESSEE HAS ONLY SOLD THE SHARES THROUGH M/S AAYUSHI STOCK BROKERS (P) LIMITED AND THE SALE PROCEED HAS DULY BEEN CONSIDE RED WHILE COMPUTING THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEA R UNDER CONSIDERATION. IN VIEW OF THE ABOVE, IN OUR OPINION , THE RATIO OF THE ABOVE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT W OULD BE SQUARELY APPLICABLE AND, RESPECTFULLY FOLLOWING THE SAME, WE H OLD THAT THE REASONS DID NOT SATISFY THE REQUIREMENT OF SECTION 147. 14. IN VIEW OF THE TOTALITY OF ABOVE FACTUAL AS WELL AS LEGAL POSITION, WE HOLD THAT THE NOTICE ISSUED UNDER SECTION 148 WAS N OT VALID. THE ITA-1116/D/2011 & C.O.112/D/2011 10 SAME IS QUASHED. ONCE THE NOTICE ISSUED UNDER SECTION 148 IS QUASHED, THE ASSESSMENT ORDER PASSED IN PURSUANCE THERETO IS ALSO QUASHED. 15. SINCE WE HAVE ALREADY QUASHED THE ASSESSMENT ORDER, THE APPEAL OF THE REVENUE DOES NOT SURVIVE FOR ADJUDICATI ON ON MERITS. THE SAME IS DEEMED TO BE DISMISSED. 16. IN THE RESULT, THE CROSS-OBJECTION OF THE ASSESSEE IS A LLOWED AND THE APPEAL OF THE REVENUE IS DEEMED TO BE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2013. SD/- SD/- ( (( (CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 27.08.2013 VK. COPY FORWARDED TO: - 1. REVENUE : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -13(4), NEW DELHI. 13(4), NEW DELHI. 13(4), NEW DELHI. 13(4), NEW DELHI. 2. ASSESSEE : M/S ON EXIM PVT.LTD., M/S ON EXIM PVT.LTD., M/S ON EXIM PVT.LTD., M/S ON EXIM PVT.LTD., C/O SHRI RAVI GUPTA, ADVOCATE, C/O SHRI RAVI GUPTA, ADVOCATE, C/O SHRI RAVI GUPTA, ADVOCATE, C/O SHRI RAVI GUPTA, ADVOCATE, D DD D- -- -10, KAILASH COLONY, NEW DELHI 10, KAILASH COLONY, NEW DELHI 10, KAILASH COLONY, NEW DELHI 10, KAILASH COLONY, NEW DELHI 110 048. 110 048. 110 048. 110 048. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR