Sh. Jawahar Lal Kesarwani, Noida V. DCIT, New Delhi

CO 115/DEL/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3960 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tangible material; Fair market value; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. G.D. AGRAWAL, PRESIDENT AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.6108/DEL/2014 (ASSESSMENT YEAR: 2006-07) DCIT CENTRAL CIRCLE-20 NEW DELHI VS. JAWAHAR LAL KESARWANI 809, VALENCIA TOWER, MAHAGUN MAPPLE APARTMENT, SECTOR-50 NOIDA PAN : AKEPK2123Q C.O. NO. 115/DEL/2017 (IN ITA NO. 6108/DEL/2014) (ASSESSMENT YEAR: 2006-07) JAWAHAR LAL KESARWANI 809, VALENCIA TOWER, MAHAGUN MAPPLE APARTMENT, SECTOR-50 NOIDA PAN : AKEPK2123Q VS. DCIT CENTRAL CIRCLE-20 NEW DELHI PAN : (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJIV SAXENA, MS. SUMONGLA SAXENA, SH. AJIT KUMAR JHA, ADV. REVENUE BY : SH. AMIT JAIN, SR. DR DATE OF HEARING : 25.04.2018 DATE OF PRONOUNCEMENT : 23.07.2018 2 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) O R D E R PER BENCH : THE APPEAL IS PREFERRED BY THE DEPARTMENT A GAINST ORDER DATED 29.08.2014 PASSED BY THE LD. CIT (APPEALS)-XXXI, NE W DELHI FOR ASSESSMENT YEAR 2006-07 WHEREIN VIDE THE IMPUGNED OR DER THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 1,18,80,000/ - MADE BY THE AO AS UN-ACCOUNTED INVESTMENT OF THE ASSESSEE. THE CROSS OBJECTION IS PREFERRED BY THE ASSESSEE AND IT CHALLENGES THE ACTION OF THE LD. CIT (A) IN UPHOLDING THE VALIDITY OF INITIATION OF RE-ASSESSMENT PROCEEDINGS IN THE ASSESSEES CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ORIG INAL RETURN OF INCOME WAS FILED DECLARING A GROSS TOTAL INCOME 3,82,100/-. THIS RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT). SUBSEQUENTLY, REASONS FO R RECORDED FOR RE- OPENING OF THE ASSESSMENT ON 28.03.2013 AND THE ASS ESSEE WAS CALLED UPON TO FILE A RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S 148. IN RESPONSE THE ASSESSEE SUBMITTED THAT THE OR IGINAL RETURN OF INCOME FILED U/S 139 OF THE ACT MAY BE TREATED AS T HE RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. 3 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) 2.1 THE REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT ARE AS UNDER:- REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASS ESSMENT IN THE CASE OFSH. JAWAHAR LAI KESARWANI SH. J. L KESARWANI IS A CLOSE RELATIVE OF SH. U. D. KESARWANI WHO IS THE OWNER AND MANAGING DIRECTOR OF THE FOLLO WING COMPANIES. (A) M/S MADHYAM CONSTRUCTION COMPANY PVT. LTD. (PAN NO . AADCM8688G) (B) M/S MADHYAM HOSING (P) LTD. (PAN NO. AADCM7666G) (C) M/S MADHYAM HOSING SOLUTIONS (P) LTD. (PAN NO. AADCM5942R) ALL OF THESE COMPANIES ARE HAVING THEIR REGISTERED OFFICE AT 201-202 PANKAJ HOUSE , POCKET -H LSC SARITA VIHAR , NEW DELHI . SH U.D KESARWANI HAS USED THESE COMPANI ES FOR CONVERTING ILL GOTTEN BLACK MONEY WORTH MORE THAN R S. 16 CRORES WITHOUT PAYING ANY INCOME TAX. DURING THE A.Y. 2005 -06 THE PAID UP CAPITAL OF THE COMPANY M/S MADHYAM CONSTRUC TION COMPANY PVT. LTD. HAS SUDDENLY INCREASED TO RS. 14 CRORES. THIS WAS DONE BY ISSUING RS. 14 CRORES WORTH OF SHA RES AT A PREMIUM OF RS. 12.6 CRORES. SIMILARLY THE PAID UP C APITAL OF THE COMPANY M/S MADHYAM HOUSING (P) LTD. HAS INCREASED IN THE SAME A.Y. TO RS. 2 CR. THIS WAS DONE BY ISSUING RS. 20 LACS WORTH OS SHARES AT A PREMIUM OF RS. 18 CR. THE TOTA L CAPITAL OF 4 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) THESE COMPANIES THUS ROSE TO RS. 16 CR. IN ONE YEAR . NOTABLY DURING THE A.Y. 2004-05 THE CAPITAL OF BOTH THESE C OMPANIES WAS RS. 1 LAC EACH ONLY SO AN INCREASE FROM RS. ONE LAC TO RS. 14 CR. AND FROM RS. 2 CR. THIS SUDDEN AND WHOPPING INCREASE IN PAID UP CAPITAL HAS HAPPENED IN THE FOLLOWING MA NNER & DESERVES YOUR IMMEDIATE ATTENTION. HE ALLOTTED THE SHARES AS PER DETAILS GIVEN BELOW. (A) SHARES WORTH RS. 80 LACS WERE ALLOTTED TO M/S NAM O RESORTS PVT. LTD. B-12B, GALI NO, SHAKARPUR , NEW DELHI -92 OF RS. 90/SHARE. IT MEANS RS. 8 CR. WERE INVESTED BY A COM PANY WHICH ITSELF IS NOT WORTH MORE THAN RS. 50 LACS. (B) SHARES WORTH RS.601 LACS WERE ALLOTTED TO M/S NAPST EL INDIA PVT. LTD. 311-D-5, AVADH COMPLEX , LAXMI NAGAR , NEW DEL HI -92 AT A PREMIUM OF RS. 90/- PER SHARE. IT MEANS RS. 6 CR. W ERE INVESTED BY A COMPANY ITSELF IS NOT WORTH MORE THAN RS. 50 LACS. (C) SIMILARLY SHARES WORTH RS. 20 LACS WERE ALLOTTED TO SOME COMPANY AGAIN AT A PREMIUM OF RS. 90/- PER SHARE . WE HAVE NOT COME TO KNOW THE NAME OF THE COMPANY BUT IT MEANS THAT A SM ALL TIME COMPANY INVESTED RS. 2 CR. WHICH ITSELF MAY NOT BE WORTH MORE THAN A FEW LACS OF RUPEES. FROM THE PERUSAL OF CONTENTS OF THE ALLEGATION , IT IS INFERRED THAT THE ALLEGATION ARE PRIMARILY RELATING TO THE ISSUES WHI CH PERTAINS TO THE F.Y.2004-05. NO ACTION CAN BE TAKEN FROM INCOME TAX POINT OF VIEW AS THE PROCEEDINGS ARE BARRED BY LIMITATION AND ANY ACTION , IF CONTEMPLATED UNDER THE IT ACT BE MERELYA FUTILE EXE RCISE AND LEGALLY IN FRUCTUOUS . 5 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) DURING A.Y. 2006-07 ALL THESE SHARES HAVE BEEN TRAN SFERRED TO SH. U.D. KESARWANI AND HIS CLOSE RELATIVES AT THROUGH A WAY PRICES OFRS. 1/- ONLY. IT MEANS, IN A NUTSHELL, THAT RS. 16 CR. OF BACK MONEY WAS CONVERTED AT A PRICE OF RS. 16 LACS ONLY. THIS HAS RESULTED IN A HUGE ;LOSS TO THE GOVERNMENT EXCHEQUER BY DELIBERATE EVA SION OF INCOME TAX. NAME OF FEW OF THE CLOSE AIDES RELATIVES OF SH . U.D. KESARWANI , WHO WERE INSTRUMENTAL IN THIS CONVERSION ARE AS FOL LOWS :- (1) SH. U.D.KESARWANI (2) SH. U.D.KESARWANI (HUF) (3) SH. J.L.KESARWANI (4) SH. J.L.KESARWANI. (HUF) (5) SH. SHYAM BABU (6) SMT. MADHURI DEVI (7) SMT. SAVITA KESARWANI IT HAS COME TO NOTICE THAT M/S NAMO RESORTS PVT. LT D WB - 12 GALI NO.I SHAKARPUR, NEW DELHI HAD PURCHASED SHARES FROM M/S MADHYAM CONSTRUCTION COMPANY PVT. LTD. WORTH OFRS. 80 LACS (8,00,000 SHARES) AT A PREMIUM OF RS. 90 PER SHARES FOR TOTAL CONSIDERATION OF RS. 8 CROCES DURING THE F.Y. 2004- 05. AFTER 31-03- 2005 IMMEDIATELY ON 30-04-2005 SH. JAWHARLAL KESARW ANI FATHER OF SH. U.D. KESARWANI BUY BACK 1,00,000/- SHARES FROM M/S NAMO RESORTS PVT. LTD. AT THE RATE OF RS. 1 PER SHARE, L ATER ON 31-08-2005 SH. JAWHARLAL KESARWANI BUY BACK 20,000 SHARES FROM M/S NAMO RESORTS PVT. LTD. AT THE RATE OF RS. 1 PER SHARE. W HEREAS M/S NAMO RESORTS PVT. LTD. PURCHASED THESE SHARES FROM THE C OMPANY M/S MADHYAM CONSTRUCTION COMPANY PVT. LTD. OF SH. U.D. KESARWANI 6 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) AND SH. JAWHARLAL KESARWANI AT THE RATE OFRS. 100/- PER SHARE DURING THE YEAR ENDING 31-03-2005 AT THE PREMIUM OF RS. 90 PER SHARE AND MAJOR PORTION OF SHARES PURCHASED BY SH. JWHARLAL KESARWANI ON 30-04-2005. THE BOOK VALUE FAIR MARKED VALUE OF THESE SHARES WAS RS. 100/- PER SHARE FOR M/S NAMO R ESORTS PVT. LTD. AS THE COMPANY HAD PURCHASED THESE SHARES FROM M/S MADHYAM CONSTRUCTION COMPANY PVT. LTD. DURING THE Y EAR ENDING 31-03-2005 RS. 100/- PER SHARE. THUS THE ASSESSEE S H. JAWHARLAL KESARWANI HAD PURCHASED THE SHARES FOR A CONSIDERAT ION LESS THAN FAIR MARKET VALUE BOOK VALUE BY SUPPRESSING THE BOO K VALUE OF THE SHARES BY AMOUNT RS. 99/-(BOOK VALUE RS. 100/- RS. 1 PURCHASED CONSIDERATION) PER SHARE AND SH. JAWHARLAL KESARWAN I HAD PURCHASED 1,20,000/- DURING THE F.Y. 2005- 06. BECA USE ON PERUSAL OF ASSESSMENT ORDER PASSED BY ITO WARD 13 (1) , NEW DELHI U/S 143(3) OF THE IT ACT FOR A.Y. 2006-07 OF M/S NAMO R ESORTS PVT. LTD. RECEIVED FROM ITO WARD 13(1) ON FAX. IT WAS FOUND T HAT M/S NAMO RESORTS PVT.LTD. COMPANY HAS BEEN ENGAGED IN THE BU SINESS OF PROVIDING OF ACCOMMODATION ENTRIES M/S NAMO RESORTS PVT. LTD. HAD PROVIDED ACCOMMODATION ENTRIES TO PACL OF RS. 57,36 ,200/- DURING THE F.Y. 2005-06 AND ITO WARDI3(I) .NEW DELHI, ASSE SSED THE INCOME RECEIVED FROM PROVIDING OF ACCOMMODATION ENTRIES AS THE COMMISSION INCOME @ 3% OF THE TOTAL AMOUNT OF ENTRIES PROVIDED I.E RS. 57,36,200/- DURING THE A.Y 2006-07 AND THUS COMPUTE D ADDITIONAL TAXABLE INCOME OF RS.1,72,086/- (3% OF RS. 57,36,20 0/) SIMILAR ACTIVITIES MAY BE DONE BY THE COMPANY M/S NAMO RESO RTS PVT. LTD. IN THE CASE OF M/S MADHYAM CONSTRUCTION COMPANY PVT . LTD. THUS 7 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) THE TOTAL CONSIDERATION WHICH THE LESS THAN BOOK VA LUE FAIR MARKET VALUE IS RS. I,I8,8O,OO(GGXI,20,OOO) IS THE INCOME CHARGEABLE TO INCOME TAX OF SH. JAWHARLAL KESARWANI (THE ASSESSEE ) FROM UNDISCLOSED SOURCES FOR THE F.Y. 2005-06 1 .S. A.Y. 2006-07 IN VIEW OF THE FACTS, I HAVE REASON TO BELIEVE THAT INCOME AMOUNTING TO RS. 1,18,80,000 HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSED AND TRULY ALL MATERIAL FACTS IN ITS RETURN FILED U/S 139 OF THE ACT. IN VIEW OF THE ABOVE FACTS, APPROVAL FOR INITIATING PROCEEDINGS U/S 147 OF THE I.T. ACT FOR THE A.Y. 2006-07 MAY BE ACC ORDED IN ACCORDANCE OF PROVISO OF SECTION 151 OF THE ACT. 2.2 THE ASSESSEE WAS REQUIRED TO FURNISH DETAILS AB OUT THE TRANSACTIONS AS MENTIONED IN THE REASONS RECORDED. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE AO WAS OF THE OPINION THAT THE INVESTOR OF THE ASSESSEE COMPANY WA S NOT A GENUINE INVESTOR BUT AN ENTRY OPERATOR. THE AO FURT HER HELD THAT THE ASSESSEE HAD ROUTED HIS UNACCOUNTED MONEY THROU GH THE ENTRY OPERATOR. THE AO PROCEEDED TO MAKE AN ADDITIO N OF RS. 1,18,80,000/- TO THE INCOME OF THE ASSESSEE. 2.3 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. CIT (A) AND CHALLENGED THE ACTION OF THE AO BY QUESTIONING THE VERY VALIDITY OF THE INITIATION OF RE-ASSESSMENT PROCEEDINGS. THE AS SESSEE ALSO 8 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) CHALLENGED THE ADDITION ON MERITS. THE LD. CIT (A) DID NOT ACCEPT THE ASSESSEES LEGAL CHALLENGE TO THE VALIDITY OF I NITIATION OF RE- ASSESSMENT PROCEEDINGS AND UPHELD THE SAME. THE LD. CIT (A), HOWEVER, DELETED THE ADDITION ON MERITS. 2.4 NOW, THE DEPARTMENT HAS APPROACHED THE ITAT AN D HAS CHALLENGED THE DELETION OF ADDITION BY THE LD. CIT (A) ON MERITS WHEREAS THE ASSESSEE HAS CHALLENGED THE UPHOLDING OF VALIDITY INITIATION OF THE RE-ASSESSMENT PROCEEDINGS. 3. AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEES C.O. CHALLENGING THE VALIDITY O F INITIATION OF RE- ASSESSMENT PROCEEDINGS SHOULD BE TAKEN UP FIRST BEC AUSE IF THE ASSESSEES C.O. IS ALLOWED AND THE RE-ASSESSMENT PR OCEEDINGS ARE HELD TO BE BAD IN LAW, THEN THE DEPARTMENTS APPEAL WILL NOT BE SURVIVE. 4. THE LD. SR. DEPARTMENTAL REPRESENTATIVE HAD NO O BJECTION TO THE ASSESSEES C.O. BEING HEARD FIRST. 5. THE LD. AUTHORISED REPRESENTATIVE DREW OUR ATTENT ION TO THE COPY OF REASONS RECORDED AS AVAILABLE IN THE PAPER BOOK AND SUBMITTED THAT IT WOULD BE SEEN FROM THE REASONS REC ORDED THAT THERE WAS NO TANGIBLE MATERIAL IN POSSESSION OF THE AO FOR 9 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) FORMATION OF REASON TO BELIEVE THAT THE INCOME OF A SSESSEE HAD ESCAPED ASSESSMENT. THE LD. AUTHORISED REPRESENTATI VE SUBMITTED THAT IN THE REASONS TO BELIEVE IT HAS BEE N ALLEGED THAT A RELATIVE OF THE ASSESSEE SRI U.D.KESARWANI HAD USED THE COMPANY FOR CONVERTING HIS ILL-GOTTEN MONEY. IT WAS SUBMITTE D THAT THERE IS NO ALLEGATION BY THE AO THAT THE ASSESSEE HAS ANY U NACCOUNTED INCOME. IT WAS SUBMITTED THAT FROM THE REASONS RECOR DED IT WOULD BE SEEN THAT SRI U.D. KESARWANI IS THE OWNER AND MANA GING DIRECTOR OF M/S. MADHYAM CONSTRUCTION COMPANY PVT. LTD. AND DURING THE ASSESSMENT YEAR 2004-05, SHARES OF THIS COMPANY WERE ALLOTTED TO TWO COMPANIES VIZ. M/S. NAMO RESORTS PVT . LTD. AND M/S. NAPSTEL INDIA PVT. LTD. @ RS. 100/- PER SHARE (HAVING FACE VALUE OF RS. 10/- AND PREMIUM OF RS. 90/- PER SHARE ). THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT IN THE REASONS RECORDED IT HAS BEEN FURTHER STATED THAT IN THE ASS ESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAD PURCHASED 1,20 ,000 SHARES OF M/S. MADHYAM CONSTRUCTION CO. PVT. LTD. FROM M/S . NAMO RESORT PVT. LTD. AT THE RATE OF RE. 1/- PER SHARE A ND THAT THE PRICE PAID BY THE ASSESSEE WAS LESS THAN THE PRICE AT WHICH M/S. NAMO RESORTS PVT. LTD. HAS PURCHASED THE SHARES OF M/S. MADHYAM 10 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) CONSTRUCTION COMPANY PVT. LTD. AND, THUS, THE ASSES SEE HAD ROUTED ITS UNACCOUNTED MONEY THROUGH AN ENTRY OPERA TOR AND THE DIFFERENTIAL AMOUNT OF RS. 99 PER SHARE WAS THE UNA CCOUNTED INVESTMENT OF THE ASSESSEE WHICH WAS ROUTED THROUGH T HE ENTRY OPERATOR M/S. NAMO RESORTS PVT. LTD. THE LD. AUTHOR ISED REPRESENTATIVE FURTHER SUBMITTED THAT IN THE INSTAN T CASE, SHARE CAPITAL MONEY WAS RECEIVED BY M/S. MADHYAM CONSTRUCT ION COMPANY PVT. LTD., AND, THEREFORE, THE RECEIPT OF C APITAL HAD TO BE EXAMINED IN THE CASE OF THE AFORESAID COMPANY AND N OT IN THE CASE OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT THE EXPLANATION OF THE ASSESSEE FOR BUYING THE SHARES AT A LESSER PRIC E HAD BEEN DULY SUBMITTED BEFORE THE AO BUT THE SUBMISSIONS OF THE ASSESSEE WERE BRUSHED ASIDE WITHOUT BRINGING ANY COGENT REASON. I T WAS ALSO SUBMITTED THAT THE ASSUMPTION OF THE AO IS SOLELY B ASED ON ADMISSION OF ONE SRI MANOJ JAIN, DIRECTOR OF M/S. N AMO RESORT PVT. LTD BUT, THE ASSESSEE WAS NOT PROVIDED THE OPPO RTUNITY TO CROSS EXAMINE SRI MANOJ JAIN BEFORE RELYING ON THE SAID STATEMENT. 5.1 THE LD. AUTHORISED REPRESENTATIVE FURTHER SU BMITTED THAT IN THE INSTANT CASE THERE WAS NO VALID MATERIAL AND THE ASSUMPTIONS 11 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) MADE BY THE AO WERE BASED ON MERE SUSPICION AND THE SAME COULD NOT BE THE FOUNDATION FOR PROCEEDINGS U/S 147 OF THE ACT. THE LD. AUTHORISED REPRESENTATIVE PLACED RELIANCE O N A NUMBER OF JUDICIAL PRECEDENTS TO SUPPORT HIS CONTENTION THAT THE REOPENING IN ASSESSEES CASE WAS NOT VALID. THE LD. AUTHORISED REPRESENTATIVE ALSO SUBMITTED THAT THE DELHI BENCH OF THE ITAT IN RELATED CASE OF SAVITA KESARWANI, ON IDENTICAL RECOR DING OF REASONS FOR RE-OPENING, HAD QUASHED THE RE-ASSESSMENT PROCE EDINGS VIDE CO NO. 244/DEL/2016 IN ITA NO. 6107/DEL/2014 FOR AS SESSMENT YEAR 2006-07. THE LD. AUTHORISED REPRESENTATIVE SUB MITTED THAT THE REASSESSMENT PROCEEDINGS DESERVED TO BE QUASHED . 6. IN RESPONSE TO THE C.O., THE LD. SR. DEPARTMENTA L REPRESENTATIVE PLACED RELIANCE ON THE CONCURRENT FI NDINGS OF THE AO AS WELL AS THE LD. CIT (A) AND SUBMITTED THAT TH E RE- ASSESSMENT PROCEEDINGS HAD BEEN VALIDLY INITIATED. THE LD. SR. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED THAT THE AO HAD TAKEN A CORRECT RECOURSE BY REOPENING THE ASSESSMEN T IN THE ASSESSEES CASE AS IT HAD COME TO THE NOTICE OF AO THAT THE PAID CAPITAL OF M/S. MADHYAM CONSTRUCTION COMPANY PVT. L TD., HAD SUDDENLY INCREASED TO RS. 14 CRORES AFTER ISSUING S HARES AT A 12 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) PREMIUM OF RS. 12.6 CRORES AND FURTHER THE ASSESSEE IS THE FATHER OF SRI U.D. KESARWANI WHO WAS THE MANAGING DIRECTOR OF MADHYAM CONSTRUCTION COMPANY PVT. LTD. IT WAS FURTHE R SUBMITTED THAT THE ASSESSEES NAME ALSO FIGURED IN PURCHASE OF SHARES FROM M/S. NAMO RESORTS PVT. LTD. AT A PRICE WHICH WAS MUCH LOWER THAN ITS FACE VALUE. THE LD. SR. DEPARTM ENTAL REPRESENTATIVE, PLACING RELIANCE ON THE OBSERVATION S OF THE LD. CIT (A) WHILE DISMISSING THE ASSESSEES CHALLENGE TO THE INITIATION OF RE- ASSESSMENT PROCEEDINGS, SUBMITTED THAT THE C.O. OF THE ASSESSEE DESERVED TO BE DISMISSED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL ON RECORD AS WELL AS THE REASONS RECOR DED FOR RE- OPENING OF THE ASSESSMENT. WE FIND THAT IN AN IDENT ICAL ISSUE IN A RELATED CASE OF THE ASSESSEE GROUP, THE ITAT DELHI BENCH HAS ALREADY QUASHED THE RE-ASSESSMENT PROCEEDINGS ON AN IDENTICAL SET OF REASONS RECORDED. IN THE CASE OF DCIT VS. SM T. SAVITA KESARWANI (ITA NO. 6107/DEL/2014 VIDE ORDER DATED 25 .07.2016), THE ITAT DELHI BENCH, WHILE QUASHING THE RE-ASSESSME NT PROCEEDINGS, HELD AS UNDER: 13 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) 5. IT IS SETTLED LAW IN VIEW OF THE DECISIONS OF THE H ONBLE SUPREME COURT IN THE CASE OF GANGA SARAN & SONS PVT . LTD. US. ITO 130 ITR 1; S.V. NARAYANAPPA VS. CIT 63 ITR 219; AND SHEONATH SINGH VS. ACIT 82 ITR 147 (SC) THAT THE BE LIEF ENTERTAINED BY THE AO MUST BE ARBITRARY OR IRRATION AL. IT MUST BE REASONABLE. IT MUST BE BASED ON THE REASONS WHICH A RE RELEVANT AND MATERIAL. NO DOUBT THE COURT CANNOT INVESTIGATE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH WEIGHE D WITH THE AO IN COMING TO THE BELIEF BUT THE COURT CAN CERTAI NLY EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERT AIN THE BELIEF BEFORE HE CAN ISSUE NOTICE U/S. 147 OF THE I.T. ACT . THE BELIEF MUST BE HELD IN GOOD FAITH. IT MAY NOT BE MERELY A PRETENCE AS HAS HAPPENED IN THIS CASE. EXTRANEOUS AND IRRELEVAN T MATERIAL CANNOT BE THE BASIS FOR REASON TO BELIEVE. THERE MU ST BE DIRECT NEXUS TO THE CONCLUSION OF THE FACT ARRIVED BY THE AO AND THE PRIMARY FACTS UPON WHICH THE CONCLUSION IS BASED. M ERELY THE AGREED CONSIDERATION, IN THE OPINION OF THE AO, IS LESS, CANNOT BE THE BASIS UNTIL AND UNLESS THERE IS MATERIAL THA T THE ACTUAL CONSIDERATION IS MORE OR THE CONSIDERATION AGREED I S LESS THAN THE CONSIDERATION A HAS TO BE TAKEN IN ACCORDANCE W ITH LAW. IN VIEW OF THIS FACT I AM OF THE VIEW THAT REASONS REC ORDED U/S. 147 DOES NOT FULFILL THE INGREDIENTS OF SECTION 147 AND CONSEQUENTLY THE ASSESSMENT FRAMED U/S 143(3)/ 147 IS VOID AB INITIO AND LIABLE TO BE QUASHED. I, ACCORDINGLY QUASH THE 14 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) REASSESSMENT. THIS DISPOSES OFF THE CROSS OBJECTION FILED BY THE ASSESSEE. 7.1 ACCORDINGLY TAKING INTO CONSIDERATION THE FACT THAT A CO- ORDINATE BENCH OF THIS TRIBUNAL HAS QUASHED THE RE- ASSESSMENT PROCEEDINGS IN CASE OF SMT. SAVITA KESARWANI ON SIMI LAR SET OF REASONS RECORDED AND WHO IS ALSO RELATED PARTY, WE QU ASH THE RE- ASSESSMENT PROCEEDINGS AND ALLOW THE C.O. OF THE ASS ESSEE. 8. IN VIEW OF OUR QUASHING THE RE-ASSESSMENT PROCEED INGS, THE APPEAL OF THE DEPARTMENT ON MERITS BECOMES ACADEMIC IN NATURE AND THE SAME IS DISMISSED AS HAVING BECOME IN FRUCTUOUS. 9. IN THE RESULT THE C.O. OF THE ASSESSEE STANDS ALLOWED WHEREAS THE APPEAL OF THE DEPARTMENT STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JULY, 2018). SD/- SD/- (G.D.AGARWAL) (SUDHANSHU SRIVASTAVA ) PRESIDENT JUDICIAL MEMBER DATE: 23.07.2018 BINITA COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 15 ITA NO.6108/DEL/14, C.O. 115.D.17 (JAWAHAR LAL KESARWANI) 5) THE DR, I.T.A.T., NEW DELHI; TRUE COPY BY ORDER ITAT, NEW DELHI