M/s. Zeco Aircon Ltd., New Delhi V. DCIT, New Delhi

CO 128/DEL/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3955 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2005-2006
• Appeal Filed On: 08-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Deemed to accrue or arise in india; Tangible material; Accommodation entries; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 133A; 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.5231/DEL/2014 ASSESSMENT YEAR : 2005-06 DCIT, CIRCLE- 18(1), NEW DELHI. VS. ZECO AIRCON LTD., 2 ND FLOOR, DDA, SHOPPING COMPLEX, NEAR SINDHI SCHOOL, NEW RAJENDER NAGAR, NEW DELHI. PAN : AAACZ0195N (APPELLANT) (RESPONDENT) C.O. NO.128/DEL/2015 (IN ITA NO.5231/DEL/2014) ASSESSMENT YEAR : 2005-06 ZECO AIRCON LTD., 2 ND FLOOR, DDA, SHOPPING COMPLEX, NEAR SINDHI SCHOOL, NEW RAJENDER NAGAR, NEW DELHI. VS. DCIT, CIRCLE- 18(1), NEW DELHI. PAN : AAACZ0195N (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI ARUN KUMAR YADAV, SR.DR ASSESSEE BY : SHRI SATISH AGGARWAL, CA DATE OF HEARING : 18-07-2018 DATE OF PRONOUNCEMENT : 31-07-2018 2 ITA NO.5231/DEL/2014 C.O. NO.128/DEL/2015 O R D E R PER R. K. PANDA, AM : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 15.07.2014 OF THE CIT(A)- XXI, NEW DELHI RELATING T O ASSESSMENT YEAR 2005-06. THE ASSESSEE HAS FILED THE CROSS OBJECTIO N AGAINST THE APPEAL FILED BY THE REVENUE. FOR THE SAKE OF CONVENIENCE, THE APPE AL AS WELL AS THE CROSS OBJECTION WERE HEARD TOGETHER AND ARE BEING DISPOSE D OF BY THIS COMMON ORDER. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF PARTS FOR AIR-COND ITIONING MACHINES, ERECTION & ASSEMBLING AIR-CONDITION SYSTEM AND SOME TRADING OF SOME SUCH PARTS. IT FILED ITS RETURN OF INCOME ON 31.10.2005 DECLARING TOTAL INCOME OF RS.1,08,56,711/-. THE ASSESSMENT U/S 143(3) WAS CO MPLETED VIDE ORDER DATED 20.12.2007 ON A TOTAL INCOME OF RS.1,08,86,710/- BY ADDING AN ESTIMATED DISALLOWANCE OF RS.30,000/- OUT OF VEHICLE RUNNING EXPENSES ON ACCOUNT OF NON- MAINTENANCE OF LOGBOOK. SUBSEQUENTLY, THE ASSESSIN G OFFICER REOPENED THE ASSESSMENT U/S 148 BY RECORDING THE FOLLOWING REASO NS :- REASONS RECORDED FOR RE-OPENING THE CASE OF 147/14 8 OF INCOME TAX ACT. IN THIS CASE ASSESSEE HAS FURNISHED INCOME TAX RETU RN DECLARING INCOME OF RS.1,08,56,711/- AND ASSESSMENT WAS COMPLETED U/S 1 43(3) AT RS.1,08,86,711/-. THE ASSESSEE COMPANY HAD RECEIVED ACCOMMODATION ENTRIES AMOUNTING TO RS.2 CRORES AS UNDER DURING THE F.Y. 2004-05. S.NO. NAME OF THE PARTY AMOUNT DATE OF RECEIPT 1. SINO CREDIT 10,00,000 22-02-2005 2. CHAMP FINVEST 10,00,000 22-02-2005 3. SINO CREDIT 10,00,000 23-02-2005 3 ITA NO.5231/DEL/2014 C.O. NO.128/DEL/2015 4. SINO CREDIT 10,00,000 23-02-2005 5. VISHRUT MARKETING 15,00,000 25-02-2005 6. VISHRUT MARKETING 15,00,000 25-02-2005 7. VISHRUT MARKETING 10,00,000 28-02-2005 8. CHAMP FINVEST 10,00,000 28-02-2005 9. CHAMP FINVEST 10,00,000 28-02-2005 10. SINO CREDIT 10,00,000 03-03-2005 11. SINO CREDIT 15,00,000 03-03-2005 12. CHAMP FINVEST 10,00,000 05-03-2005 13. SINO CREDIT 15,00,000 07-03-2005 14. SINO CREDIT 25,00,000 19-03-2005 15. SINO CREDIT 25,00,000 23-03-2005 TOTAL 2,00,00,000 THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME TO THE EXTENT OF RS.2,00,00,000/- HAS ESCAPED ASSESSMENT ON ACCOUNT OF NOT DISCLOSING TRU E AND CORRECT FACTS BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. 3. ACCORDINGLY, NOTICE U/S 148 WAS ISSUED TO THE AS SESSEE. THE ASSESSEE FILED OBJECTION AGAINST SUCH REOPENING WHICH WAS DI SPOSED OF BY THE ASSESSING OFFICER BY PASSING A SPEAKING ORDER. THEREAFTER, I N RESPONSE TO NOTICE U/S 143(3) & 142(1), THE ASSESSEE FILED REQUISITE DETAILS. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT INFORMATION HAS BEEN RECEIVED FROM TH E INVESTIGATION WING OF THE DEPARTMENT THAT ASSESSEE, DURING THE FINANCIAL YEAR 2004-05, HAS RECEIVED ACCOMMODATION ENTRIES OF RS.2 CRORES FROM THREE DIF FERENT ENTITIES ON 9 DIFFERENT DATES. THE THREE DIFFERENT ENTITIES ARE SINO CREDI T & LEASING LTD., CHAMP FINVEST PVT. LTD. AND VISHRUT MARKETING PVT. LTD. W HICH WERE CONTROLLED AND OPERATED BY SHRI S.K. GUPTA. HE OBSERVED THAT DURI NG THE COURSE OF SURVEY U/S 133A ON 20.11.2007, SHRI S.K. GUPTA, THE CONTROLLER OF ABOVE SAID THREE 4 ITA NO.5231/DEL/2014 C.O. NO.128/DEL/2015 COMPANIES HAD ADMITTED IN THE STATEMENT RECORDED ON OATH TO HAVE GIVEN ONLY ACCOMMODATION ENTRIES. THEREAFTER, ON 26.12.2008 I N ASSESSMENT PROCEEDINGS, SHRI S.K. GUPTA UNDER ANOTHER STATEMENT ON OATH HAS STATED THAT HE IS CONTROLLING 30 COMPANIES AND EXCEPT FOR SOME SHARE BROKERAGE OT HER TRANSACTIONS OF THESE CONCERNS/ENTITIES ARE NOT GENUINE. HE FURTHER NOTE D THAT SHRI S.K. GUPTA IN HIS PETITION FILED BEFORE THE INCOME TAX SETTLEMENT COM MISSION FOR ASSESSMENT YEAR 2008-09 HAD ADMITTED AN ADDITIONAL INCOME OF RS.68, 76,755/- AS COMMISSION/PREMIUM FOR PROVIDING ACCOMMODATION ENTR IES THROUGH 32 COMPANIES TO VARIOUS BENEFICIARIES. HE, THEREFORE, ASKED THE ASSESSEE TO ESTABLISH THE IDENTITY, GENUINENESS AND CREDITWORTH INESS OF THE LOAN OF RS.2 CRORES RECEIVED BY THEM DURING THE YEAR. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND RELYING ON VARIOUS DECISI ONS, THE ASSESSING OFFICER MADE ADDITION OF RS.2 CRORES BY INVOKING THE PROVIS IONS OF SECTION 68 OF THE I.T. ACT. 5. BEFORE THE LD. CIT(A), THE ASSESSEE APART FROM C HALLENGING THE ADDITION ON MERIT CHALLENGED THE VALIDITY OF THE REOPENING OF T HE ASSESSMENT. HOWEVER, THE LD. CIT(A) WAS NOT SATISFIED WITH THE ARGUMENTS ADV ANCED BY THE ASSESSEE ON ACCOUNT OF REOPENING OF THE ASSESSMENT AND HE UPHEL D THE REOPENING BY OBSERVING AS UNDER :- 3.3 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE A SSESSEE. THE AO HAD RECEIVED THE INFORMATION ABOUT THE ACCOMMODATION ENTRY AND ACCOR DINGLY HAD RECORDED THE 5 ITA NO.5231/DEL/2014 C.O. NO.128/DEL/2015 REASONS, SUPPLIED THE REASONS TO THE ASSESSEE AND H AS ALSO PASSED THE ORDER U/S 147 REGARDING THE OBJECTION OF THE ASSESSEE AND AS SUCH THE AO HAS FULFILLED ALL THE CONDITION AND HAS FOLLOWED THE PROPER PROCEDURE U/S 147 AND HAS REDRESSED THE GRIEVANCE OF THE ASSESSEE REGARDING THE REOPENING O F THE ASSESSMENT. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THE AO HAS FOLLOWED THE PROPER LAW AND PROCEDURE FOR REOPE NING THE ASSESSMENT AND ACCORDINGLY THE ACTION OF THE AO IS CONFIRMED. 6. HE, HOWEVER, DELETED THE ADDITION OF RS.2 CRORES MADE BY THE ASSESSING OFFICER U/S 68 BY OBSERVING AS UNDER :- 4.3 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSIONS OF THE ASSESSEE. IT IS APPARENT FROM THE ABOVE THAT THE ASSESSEE HAD RECEIVED THE REGULAR LO ANS FROM THREE PARTIES AND THE CONFIRMATIONS FOR THE SAME WERE FILED BEFORE THE AO DURING THE COURSE OF ORIGINAL ASSESSMENT. THE ASSESSEE HAD RECEIVED THE REGULAR LOANS, HAD PAID THE INTEREST AFTER TDS AND THE LOANS WERE SUBSEQUENTLY REPAID AND ALL THE TRANSACTIONS ARE THROUGH ACCOUNT PAYEE CHEQUES AND ALL THE DETAILS WERE SUBM ITTED BEFORE THE AO VIDE ANNEXURE-A. IT IS ALSO APPARENT THAT THE NAME OF T HE ASSESSEE DOES NOT APPEAR IN THE STATEMENT OF THE THIRD PARTY I.E. SHRI S.K. GUPTA V IDE A STATEMENT DATED 20/11/2007 IN QUESTION NO.8 VIDE PB-1 PAGE-67 TO 75 AS DISCUSSED ABOVE. EVEN OTHERWISE AS PER THE GENERAL PRINCIPLE OF LAW THE AO IS ENTITLED TO ASSESS ANY INCOME WHICH IS RECEIVED BY THE ASSESSEE OR HAS ACCRUED TO THE ASSESSEE BUT IN THE PRESENT CASE NO SUCH INCOME HAS BEEN RECEIVED BY THE ASSESSEE OR HAS ACCRUED TO THE ASSESSEE AS THE NORMAL BUSINESS LOANS RECEIVED BY THE ASSESSEE HAS BEEN RE PAID WITH INTEREST AFTER TDS AS DISCUSSED ABOVE. AFTER CONSIDERING ALL THE FACTS A ND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THE AO HAS NOT MADE OUT ANY PROPER CASE OF ESCAPEMENT OF INCOME OR CONCEALMENT OF INCOME OR EVEN DEEMED INCOME AND AS SUCH IT IS DIFFICULT TO SUSTAIN SUCH ADDITIONS ON NOTIONAL BASIS WHICH HAS NO LEGAL FOOTING AND ACCORDINGLY THE ADDITION MADE BY THE AO IS DELETED. 7. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) THE REVENUE HAS FILED THE APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2,00,00,000/- MADE BY THE AO U/S. 68 R.W.S 69A OF I.T. ACT, 1961 BEING ACCOMMODATION ENTRIES RECEIVED FROM SINO CREDIT & LEASING LTD., CHAMP FINVEST (P) LTD. AND VISHRUT MARKETING P. LTD ., SHOWN AS LOANS RECEIVED WITHOUT APPRECIATING THE FACT THAT THE GIVER OF LOA N HAVE ADMITTED ON OATH BEFORE 3 DIFFERENT AUTHORITIES I.E. INVESTIGATION WING, ASSE SSING OFFICER OF THOSE 3 COMPANIES AND SETTLEMENT COMMISSION, THAT IT HAS ONLY GIVEN A CCOMMODATION ENTRIES. 6 ITA NO.5231/DEL/2014 C.O. NO.128/DEL/2015 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. CIT(A) ERRED IN WHILE DIRECTING TO DELETE THE SAID ADDITION OF R S. 2 CRORES THE LD. CIT(A) ERRED IN NOT FOLLOWING THE RATIO-DECIDED IN THE JUDGMENTS OF HON'BLE SUPREME COURT AND HIGH COURT INCLUDING THE JURISDICTIONAL ONE IN THE FOLLO WING CASES, (I) SUMATI DAYAL VS. CIT [80 TAXMAN 89 (SC)], (II) T.P.ABDULLA VS. ACIT [207 TAXMANN 24 (KERALA)], (III) NOVA PROMOTERS & FINLEASE P. LTD. [342 ITR 169 (DEL HI)] AND (IV) CIT VS. N.R. PORTFOLIO LTD. [29 TAXMANN.COM 291 (DELHI)]. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFOR E OR DURING THE HEARING OF THIS APPEAL. 8. THE ASSESSEE IN HIS CROSS OBJECTION HAS RAISED T HE FOLLOWING GROUNDS :- 1. THAT THE LEARNED CIT (APPEALS) XXI HAS GROSSLY ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE IN NOT QUASHING THE ASSES SMENT ORDER PASSED PURSUANT TO ILLEGAL ASSUMPTION OF JURISDICTION UNDER SECTION 14 7/148 OF THE ACT. 2. THAT THE LEARNED CIT (APPEALS) XXI HAS GROSSLY E RRED IN NOT HOLDING THAT THE ISSUE OF NOTICE BY THE ASSESSING OFFICER UNDER SECT ION 148 OF THE ACT, WAS ILLEGAL AND BAD IN LAW. 9. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET R EFERRED TO PAGE 4 OF THE PAPER BOOK AND DREW THE ATTENTION OF THE BENCH TO R EASONS RECORDED FOR REOPENING OF THE CASE U/S 147/148 FOR ASSESSMENT YE AR 2005-06 WHICH HAS BEEN SUPPORTED TO THE CASE OF THE ASSESSEE AND WHICH REA DS AS UNDER :- OFFICE OF THE ASSTT. COMMISSIONER OF INCOME TAX, CI RCLE-18(1) ROOM NO.211A, CENTRAL REVENUE BUILDING. I.P. ESTATE , NEW DELHI-110002 F.NO.-ACIT/CIRCLE 18(1)/ND/2012-13 DATE :18-10-2 012 M/S. ZECO AIRCON LTD., 2 ND FLOOR, DDA SHOPPING COMPLEX, NEW RAJINDER NAGAR, NEW DELHI- 110001. SIR, SUB- REASONS RECORDED FOR RE-OPENING THE CASE U/S 147/148 OF IT ACT. ASSESSMENT YEAR 2005-06-REG. REFER TO ABOVE MENTIONED SUBJECT. 7 ITA NO.5231/DEL/2014 C.O. NO.128/DEL/2015 REASONS RECORDED FOR RE-OPENING U/S 147/148 OF THE IT ACT, 1961 IN THE CASE OF M/S. ZECO AIRCON LTD. FOR THE ASSESSMENT YEAR 2005- 06 IS AS UNDER :- INTIMATION HAS BEEN RECEIVED FROM THE INVESTIGATION WING, DELHI THAT ASSESSEE COMPANY HAS TAKEN ACCOMMODATION ENTRIES AMOUNTING T O RS.2 CRORES FROM FOLLOWING PARTIES. S.NO. NAME OF THE PARTY AMOUNT DATE OF RECEIPT 1. SINO CREDIT 10,00,000 22-02-2005 2. CHAMP FINVEST 10,00,000 22-02-2005 3. SINO CREDIT 10,00,000 23-02-2005 4. SINO CREDIT 10,00,000 23-02-2005 5. VISHRUT MARKETING 15,00,000 25-02-2005 6. VISHRUT MARKETING 15,00,000 25-02-2005 7. VISHRUT MARKETING 10,00,000 28-02-2005 8. CHAMP FINVEST 10,00,000 28-02-2005 9. CHAMP FINVEST 10,00,000 28-02-2005 10. SINO CREDIT 10,00,000 03-03-2005 11. SINO CREDIT 15,00,000 03-03-2005 12. CHAMP FINVEST 10,00,000 05-03-2005 13. SINO CREDIT 15,00,000 07-03-2005 14. SINO CREDIT 25,00,000 19-03-2005 15. SINO CREDIT 25,00,000 23-03-2005 TOTAL 2,00,00,000 THEREFORE, AN AMOUNT OF RS.2 CRORES SHOULD HAVE BEE N TREATED AS INCOME OF THE ASSESSEE. YOUR SUBMISSION ON THE ABOVE REASONS FOR REOPENING SHALL REACH THIS OFFICE WITHIN 7 DAYS OF RECEIPT OF THIS LETTER. YOURS FAITHFULLY, SD/- (A.N.V. IYER) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 18(1), NEW DELHI. 10. REFERRING TO THE REASONS RECORDED IN THE ASSESS MENT ORDER AND REASONS SUPPLIED TO THE ASSESSEE, HE SUBMITTED THAT THERE I S VARIANCE IN THE LANGUAGE USED. HE SUBMITTED THAT THE ASSESSING OFFICER HAS INITIATED THE REASSESSMENT PROCEEDINGS MAINLY ON THE BASIS OF INFORMATION RECE IVED FROM THE INVESTIGATION WING, DELHI. HOWEVER, HE HAS NOT APPLIED HIS MIND INDEPENDENTLY BEFORE RECORDING HIS SATISFACTION FOR REOPENING OF THE ASS ESSMENT. HE SUBMITTED THAT SUCH REOPENING OF THE ASSESSMENT AT BEST CAN BE CAL LED AS REOPENING ON 8 ITA NO.5231/DEL/2014 C.O. NO.128/DEL/2015 BORROWED SATISFACTION AND THERE IS ABSENCE OF LIVE LINK BETWEEN THE REOPENING OF THE ASSESSMENT AND MATERIAL ON RECORD. REFERRING T O VARIOUS DECISIONS INCLUDING THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN TH E CASE OF PR.CIT VS. MEENAKSHI OVERSEAS (P) LTD. REPORTED IN 395 ITR 677 , PR.CIT VS. G&G PHARMA REPORTED IN 384 ITR 147, PR.CIT VS. SABH INFRASTRUC TURE REPORTED IN 398 ITR 19 AND PR.CIT VS. RMG POLYVINYL (I) LTD. REPORTED IN 3 96 ITR 5, HE SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE ABOVE DECISIONS HAS CATEGORICALLY HELD THAT REOPENING OF THE ASSESSMENT ON THE BASIS OF REPORT OF THE INVESTIGATION WING WITHOUT INDEPENDENT APPLICATION OF MIND BY THE ASSE SSING OFFICER IS INVALID. HE ACCORDINGLY SUBMITTED THAT SINCE THE ASSESSMENT IN THE INSTANT CASE HAS BEEN REOPENED ON THE BASIS OF REPORT OF THE INVESTIGATIO N WING AND THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OF FICER, THEREFORE, THE REOPENING OF THE ASSESSMENT U/S 147 IS VOID AB-INITIO . 11. SO FAR AS MERIT OF THE CASE IS CONCERNED, HE RE LIED ON THE ORDER OF THE LD. CIT(A). 12. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT THE ASSESSING OFFICER IN THE INSTANT CASE AFTER RECORDING THE REASONS AND AFTER FULFILLING ALL THE CONDITIONS AS LAID DOWN FOR REOPENING OF THE ASSESSMENT HAS ISSUED NOTICE U/S 1 48. THEREFORE, THE SAME 9 ITA NO.5231/DEL/2014 C.O. NO.128/DEL/2015 BEING IN ORDER SHOULD BE UPHELD. SO FAR AS MERIT O F THE CASE IS CONCERNED, HE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND THE ASSESSING OFFICER REOPENED THE ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING THAT THE ASSESSEE HAS TAKEN ACCO MMODATION ENTRIES OF RS.2 CRORES FROM 3 CONCERNS AND, THEREFORE, HE HAS REASO N TO BELIEVE THAT INCOME TO THE EXTENT OF RS.2 CRORES HAS ESCAPED ASSESSMENT ON ACCOUNT OF NON-DISCLOSURE OF TRUE AND CORRECT FACTS BY THE ASSESSEE DURING TH E ASSESSMENT PROCEEDINGS. AT THE OUTSET, WE FIND THE REASONS RECORDED FOR REOPEN ING OF THE ASSESSMENT IN THE BODY OF THE ASSESSMENT ORDER AND THE REASONS THAT H AS BEEN SUPPLIED TO THE ASSESSEE ARE DIFFERENT. WHILE IN THE REASONS RECOR DED IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MENTIONED AFTER THE TABLE THAT HE HAS REASON TO BELIEVE THAT INCOME TO THE EXTENT OF RS.2 CRORES HAS ESCAPE D ASSESSMENT ON ACCOUNT OF NON-DISCLOSURE OF TRUE AND CORRECT FACTS BY THE ASS ESSEE DURING THE ASSESSMENT PROCEEDINGS, HOWEVER, IN THE REASONS SUPPLIED TO TH E ASSESSEE, THE ASSESSING OFFICER MENTIONS THAT INFORMATION HAS BEEN RECEIVED FROM THE INVESTIGATION WING, DELHI THAT THE ASSESSEE COMPANY HAS TAKEN ACC OMMODATION ENTRIES AMOUNTING TO RS.2 CRORES FROM DIFFERENT PARTIES AND , THEREFORE, THE AMOUNT OF RS.2 CRORES SHOULD HAVE BEEN TREATED AS INCOME OF T HE ASSESSEE. A PERUSAL OF THE 10 ITA NO.5231/DEL/2014 C.O. NO.128/DEL/2015 REASONS RECORDED IN THE ASSESSMENT ORDER AS WELL AS THE REASONS SUPPLIED TO THE ASSESSEE SHOW THAT THERE IS NO INDEPENDENT APPLICAT ION OF MIND BY THE ASSESSING OFFICER BEFORE RECORDING THE REASONS AND THE SAME W AS BASED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. THE HONBLE DELHI HIGH COURT IN THE CASE OF MEENAKSHI O VERSEAS (P) LTD. (SUPRA), FOLLOWING THE DECISION IN THE CASE OF SIGNATURE HOT ELS PVT. LTD. VS. ITO REPORTED IN 338 ITR 51 HAS HELD THAT IN ABSENCE OF INDEPENDE NT APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE TANGIBLE MATERIAL WHIC H FORMS THE BASIS OF THE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT, SUCH REOPENING DOES NOT SATISFY THE REQUIREMENT OF LAW. IT HAS BEEN HELD I N THE SAID DECISION THAT THE CONCLUSION OF THE ASSESSING OFFICER IS AT BEST A RE PRODUCTION OF THE CONCLUSION IN THE INVESTIGATION REPORT. INDEED IT IS BORROWED SA TISFACTION. THE REASONS FAILED TO DEMONSTRATE THE LIVE LINK BETWEEN THE TANGIBLE M ATERIAL AND FORMATION OF THE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT. 14. WE FIND, FOLLOWING THE ABOVE DECISIONS THE HON BLE DELHI HIGH COURT IN THE CASE OF RMG POLYVINYL (I) LTD. (SUPRA) HAS QUAS HED THE REASSESSMENT PROCEEDINGS ON THE BASIS OF REPORT OF THE INVESTIGA TION WING BY OBSERVING AS UNDER :- 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 SECT ION 143(1)OF THE ACT AND NOT 11 ITA NO.5231/DEL/2014 C.O. NO.128/DEL/2015 UNDER SECTION 143(3) OF THE ACT. THE REASONS FOR TH E 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 WIN G REGARDING ACCOMMODATION ENTRIES PROVIDED BY A 'KNOWN' ACCOMMODATION ENTRY P ROVIDER. 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 ARR IVED AT BY THE AO WAS A 'BORROWED SATISFACTION' AND AT BEST 'A REPRODUCTION OF THE CO NCLUSION 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 FORM ATION OF THE REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. IN THE PRESENT CASE TOO, THE INFORMATION RECEIVED FROM THE INVESTIGATION WING CANNOT BE SAID TO BE TA NGIBLE MATERIAL PER SE WITHOUT A FURTHER INQUIRY BEING UNDERTAKEN BY THE AO. IN THE PRESENT CASE THE AO DEPRIVED HIMSELF OF THAT OPPORTUNITY BY PROCEEDING ON THE ER RONEOUS PREMISE THAT ASSESSEE HAD NOT FILED A RETURN WHEN IN FACT IT HAD. 14. TO COMPOUND MATTERS FURTHER IN THE ASSESSMENT O RDER THE ASSESSING OFFICER HAS, INSTEAD OF ADDING A SUM OF RS.78 LAKHS, EVEN G OING BY THE REASONS FOR REOPENING OF THE ASSESSMENT, ADDED A SUM OF RS.1.13 CRORES. ON WHAT BASIS SUCH AN ADDITION WAS MADE HAS NOT BEEN EXPLAINED. 15. FOR THE AFOREMENTIONED REASONS, THE COURT IS SA TISFIED THAT NO ERROR WAS COMMITTED BY THE INCOME-TAX APPELLATE TRIBUNAL IN H OLDING THAT REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF THE ACT WAS BAD IN LAW. 15. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE HIGH COURT IN VARIOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSE SSEE. SINCE THE ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING AND THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OFFICER BEFORE SUCH REOPENING, THEREFORE, FOLLOWING THE DECISIONS OF THE JURISDICTIONAL HIGH COURT CITED (SUPRA), WE HOLD THAT SUCH REOPENING OF THE ASSESSMENT IS NOT IN ACCORDANCE WITH LAW. WE, THEREFORE, QUASH THE REOP ENING OF THE ASSESSMENT 12 ITA NO.5231/DEL/2014 C.O. NO.128/DEL/2015 MADE BY THE ASSESSING OFFICER AND UPHELD BY THE LD. CIT(A). THE GROUND RAISED BY THE ASSESSEE IN THE CROSS OBJECTION IS ACCORDING LY ALLOWED. 16. SINCE WE ARE QUASHING THE REASSESSMENT PROCEEDI NGS, THE GROUND RAISED BY THE REVENUE CHALLENGING THE ORDER OF THE LD. CIT (A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 BECOME ACADEMI C IN NATURE AND, THEREFORE, THE SAME IS NOT BEING ADJUDICATED. 17. IN THE RESULT, THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST JULY, 2018. SD/- SD/- (SUCHITRA KAMBLE) (R. K. P ANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31-07-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI