M/s Roopali Marketing Ltd., New Delhi V. ITO, New Delhi

CO 142/DEL/2013

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1421 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 18-11-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 03-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R SANTHAN AM; DEEPAK OSWAL
• Keywords: Gift; Tangible material; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDI CIAL MEMBER ITA NO: 2813/DEL/2011 AY: - 2003-04 ITO VS. M/S. ROOPALI MARKETING LTD. WARD-15(4), ROOM NO. 223 H.NO . 608/8, C.R. BUILDING KRISHNA STREET NO. 9, MANJ PUR NEW DELHI 110 002. NEW DELHI- 110 053 (PAN A ABCR8276P) (APPELLANT) (RESPONDENT) CO. NO . 142/DEL/2013 AY: - 2003-04 ROOPALI MARKETING LTD. VS. ITO C/O D, OSTWAL & ASSOCIATES, 303, WARD- 15(4), ROOM NO. 223, DAKHA CHAMBERS, 2068/38, C.R. BUILDING, NAIWALA, NEW DELHI - 11002 NEW DELHI- 110 005 (PAN AABCR8276P) APPELLANT BY : MS. RAKHI VIMAL, SR. DR RESPONDENT BY : SHRI R. SANTHANAM, ADVOCATE & SHRI DEEPAK OSWAL, FCA DATE OF HEARING : 18.11.2015 DATE OF PRONOUNCEMENT : 27 .11.2015 O R D E R PER BENCH REVENUE HAS FILED THIS APPEAL AGAINST THE IMPUGNED ORDER DATED 28.2.2011 PASSED BY THE LD. CIT(A) XVIII, NEW DELHI FOR ASS ESSMENT YEAR 2003-04. THE FOUR GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT RELATE TO THE DELETION OF ADDITION OF ITA NO. 2813/DEL/2013 & CO NO. 142/DEL/2013 2 RUPEES THIRTY SIX LACS BY THE LD. CIT (A) WHEREAS I N THE CO, THE ASSESSEE HAS CHALLENGED THE ASSUMPTION OF JURISDICTION U/S 147 O F THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). BOTH THE PARTIES AGRE ED THAT THE ISSUE REGARDING THE ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT HAS T O BE ADJUDICATED PRIOR TO THE ADJUDICATION ON THE MERITS OF THE CASE. WE, THEREFO RE, PROCEED TO DISPOSE THE CO OF THE ASSESSEE FIRST. CO 142/DEL/2013 2. THE BRIEF FACTS OF THE CASE ARE THAT INFORMATIO N WAS RECEIVED FROM THE DIRECTOR OF INCOME TAX, (INV.), NEW DELHI THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRIES AMOUNTING TO RS.92,00,000/- F ROM VARIOUS PARTIES. THE REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT ARE AS UNDER: 'DIT (LNV) DURING THE COURSE OF INVESTIGATION IN TH E CASE OF MUKESH GUPTA GROUP ALONG WITH ITS CLOSE CONFIDANTS SHRI RAJAN JA SSAI AND SHRI SURINDER PAL SINGH FOUND THAT THE GROUP HAVE OPERATED MULTIPLE ACCOUNT S IN VARIOUS BRANCHES TO PLOUGH BACK UNACCOUNTED BLACK MONEY FOR THE PURPOSE OF BUS INESS OR FOR PERSONAL NEEDS SUCH AS PURCHASE OF ASSETS ETC. IN THE FORM OF GIFT S, SHARE APPLICATION MONEY LOANS ETC. DURING THE COURSE OF INVESTIGATIONS BY THE DIT (LNV) IT WAS DISCOVERED THAT THE ASSESSES WHO HAVE UNACCOUNTED MONEY (HEREINAFTER CA LLED AS ENTRY TAKERS OR BENEFICIARIES) AND WANT TO INTRODUCE THE SAME IN TH E BOOKS OF ACCOUNTS WITHOUT PAYING TAX APPROACH ANOTHER PERSON (ENTRY OPERATOR) AND HAND OVER CASH (PLUS COMMISSION) AND TAKE CHEQUES/DDS/POS. THE CASH IS D EPOSITED BY THE ENTRY OPERATOR IN A BANK ACCOUNT EITHER IN HIS OWN NAME O R IN THE NAME OF RELATIVE/FRIENDS OR OTHER PERSON HIRED BY HIM, FOR THE PURPOSE OF OP ENING BANK ACCOUNT. THE ENTRY OPERATOR THEREAFTER ISSUES CHEQUE/DD/PO IN THE NAME OF BENEFICIARY FROM THE SAME ACCOUNT (IN WHICH THE CASH IS DEPOSITED) OR ANOTHER ACCOUNT IN WHICH FUNDS ARE TRANSFERRED THROUGH CLEARING IN TWO OR MORE STAGES. THE BENEFICIARY IN TURN DEPOSITS ITA NO. 2813/DEL/2013 & CO NO. 142/DEL/2013 3 THESE INSTRUMENTS IN HIS BANK ACCOUNTS AND THE MONE Y COMES TO HIS REGULAR BOOKS OF ACCOUNT IN THE FORM OF GIFT, SHARE APPLICATION MONE Y, LOAN ETC. THROUGH BANKING CHANNELS AND THE TRANSACTION LOOKS GENUINE. IT IS NOTICED FROM THE LIST OF ENTRIES THAT THE ASS ESSEE M/S ROOPALI MARKETING LTD. HAS TAKEN THE FOLLOWING ACCOMMODATIO N ENTRIES FROM THE FOLLOWING PERSON(S) AS PER DETAILS HEREUNDER:- 11 1 500000 7 976 21 . 0 9 . 2002 SH Y AM F A BR IC S R ATNAK A R K AR O L B A G H 25 9 500000 797 6 21 . 0 9 . 2 002 S H Y AM F ABR ICS RATN A K A R K AR O L B AG H 259 12 13 750000 68 4 9 23 . 09 . 2 0 02 S H Y A M FABRI C S RA T N A K AR K AR O L B AGH 259 14 750000 6 849 2 3 . 0 9 . 2002 SH Y A M F A BRI CS RATN AK AR K A R O LB AGH 259 15 750000 685 0 2 3 . 0 9 . 2002 S H Y AM F A BRI CS RATN A K AR KAR OL B AGH 259 I1 16 750000 6 850 23 . 09 . 2002 S H Y A M F A BRI CS R AT N A KA R K AR O L B AG H 2 59 17 100000 5 4 63 5 1 9 . 02 . 2002 MV . MK T G P . L TD RA T N AK AR KA R OL B A GH 4 7 18 100000 5 4 63 5 1 9 . 02 . 200 2 M .V. M K T G P . L TD RA T N A KA R K A R O L B AG H 4 7 IN VIEW OF THE REPORT RECEIVED FROM THE DIT (LNV.) NEW DELHI, AND IN VIEW OF THE FACTS NARRATED ABOVE IT IS CLEAR THAT THE AS SESSEE HAS NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSME NT FOR THAT ASSESSMENT YEAR. I HAVE THEREFORE, REASON TO BELIEVE THAT THE SUM OF R S.92,00,000/- CHARGEABLE TO SNO . AMOUNT INSTRUMENT DATE NAME OF ENTRY PROVIDE R NAME OF BANK NAME OF A L E NO . NO . BRANCH 1 50000 0 7 9 23 03 . 1 0 . 2002 J A G AT E N TR I PRI S E S RATN AKA R KA R OL BA GH 235 2 5000 0 0 79 2 3 03 . 1 0 . 2002 JAGA T E NTRI P R IS E S RAT NAKA R K AR O LB AG H 235 3 50 0 000 698 4 0 1 . 08 . 2 0 02 W E B N E T SYS T E M P L TO R A T NAKA R KA R O L B AGH 1 16 4 5 0 00 0 0 69 84 0 1 . 08 . 2002 W E B N E T SYS T E M P L TO R A T NAKA R KA R OL B AG H 116 5 5 0000 0 698 4 0 1 . 08 . 2002 W E B N E T SYS T E M P . L T O R A T NAKA R KA R O LBA GH 1 1 6 6 5 0 0 00 0 698 4 0 1 . 08 . 2002 W EB N ET S Y ST E M P L TO R A T NAKAR KA R OL BAGH 116 7 5 00000 90 7 3 0 108 . 2002 S H A T IA R CHI F IN . & R ATNAKAR KA R O L BAGH 71 L E AS I NG 8 5000 0 0 90 7 3 0108 . 2002 S H A TI A R C HI F I N . & R ATNAKA R KA R O L B AG H 7 1 LE AS I NG 9 5000 00 7976 2109 . 2002 S H YAM F ABR I CS R A T N A KA R KARO L B AG H 259 259 10 5 00000 7976 2 1 . 09 . 2002 SH Y AM F A BR ICS R ATNAKA R KAR O L B AG H ITA NO. 2813/DEL/2013 & CO NO. 142/DEL/2013 4 TAX HAS ESCAPED ASSESSMENT. THUS, THE SAME IS TO BE BROUGHT TO TAX UNDER SECTION 147/148 OF THE I.T. ACT 1961. 3. AS PER THE AO, THE REASONS AS REPRODUCED A BOVE WERE PROVIDED TO THE ASSESSEE. IN RESPONSE TO VARIOUS NOTICES, THE ASSES SEE FILED COPIES OF CONFIRMATORY LETTERS, ITR AND BALANCE SHEETS OF THE VARIOUS PART IES. HOWEVER, SINCE THE ASSESSEE DID NOT PRODUCE THESE PARTIES FOR CROSS EXAMINATION AND IN LIGHT OF THE FINDINGS OF THE DIT (INV), THE CONTENTION OF THE ASSESSEE WAS NOT A CCEPTED AND RS. 36,00,000/- WERE ADDED TO THE INCOME OF THE ASSESEE AS BEING AC COMMODATION ENTRIES . 4. THE APPEAL BEFORE THE LD. CIT (A) W AS DECIDED IN FAVOUR OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD PROVIDED PROOF OF IDENTITY AND PROOF OF CREDIT WORTHINESS OF THE PARTIES AND THEREFORE THE ADDITIO N MADE WAS LEGALLY UNSUSTAINABLE. 5. IN THE PRESENT CO BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE DREW OUR ATTENTION TOWARDS REASONS RECORDED (REPRODUCED HERE IN ABOVE) AND SUBMITTED THAT THE AO HAS MECHANICALLY PROCEEDED TO ASSUME JURISDI CTION U/S 147 OF THE ACT AND HAS ACCORDINGLY ISSUED NOTICE U/S 148 OF THE ACT. L D. AR CONTENDED THAT THE AO SIMPLY PROCEEDED ON THE INFORMATION OF THE INVESTIG ATION WING WITHOUT ANALYSING AND APPLYING HIS MIND TOWARDS THE NATURE OF TRANSACTION S. HE SUBMITTED THAT THE SO CALLED INFORMATION SAID TO BE RECEIVED FROM THE INV ESTIGATION WING HAD NOT BEEN DULY PROCESSED BY THE AO AND THAT THERE WAS NO MATERIAL ON RECORD TO SHOW THAT THE AO HAD APPLIED HIS MIND IN FORMING A BELIEF WHICH WOUL D RESULT IN THE REASON TO BELIEVE AS REQUIRED TO PROCEED U/S 147 AND 148 OF THE INCOM E TAX ACT, 1961. LD. COUNSEL VEHEMENTLY CONTENDED THAT THE COPY OF THE REASONS R ECORDED GIVEN TO THE ASSESSEE CLEARLY SHOWS THAT THE AO SIMPLY PROCEEDED IN A MEC HANICAL MANNER AND THAT THERE ITA NO. 2813/DEL/2013 & CO NO. 142/DEL/2013 5 WAS A CLEAR LACK OF APPLICATION OF INDEPENDENT MIND BY THE AO PRIOR TO THE ISSUANCE OF NOTICE U/S 148 OF THE ACT, 1961. 6. LD. DR ON THE OTHER HAND STATED THAT THE A O HAD REOPENED THE CASE ON THE BASIS OF VARIOUS DOCUMENTARY EVIDENCES RELATING TO THE ASSESSEE AND SUBMITTED THAT THE AO HAS RIGHTLY REOPENED AFTER DUE APPLICAT ION OF MIND. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED T HE RECORDS AVAILABLE WITH US AND AFTER PERUSING THE REASONS RECORDS WE FIND T HAT THE REOPENING IS BASED ENTIRELY BY MAKING A REFERENCE TO THE INFORMATION R ECEIVED FROM THE INVESTIGATION WING. THE REASONS ARE AT BEST VAGUE AND THE SATISFA CTION OF THE AO IS NOT BASED ON ANY TANGIBLE MATERIAL. THE AO HAS MECHANICALLY ISSU ED NOTICES U/S 148 OF THE INCOME TAX ACT, 1961 ON THE BASIS OF INFORMATION RE CEIVED BY HIM FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. TH EREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS NOT APPLIED HIS MIN D SO AS TO GIVE AN INDEPENDENT CONCLUSION THAT HE HAD REASON TO BELIEVE THAT INCOM E HAD ESCAPED ASSESSMENT DURING THE YEAR UNDER CONSIDERATION. WE DRAW OUR SU PPORT FROM THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN ITA NO. 545/2015 DAT ED 8.10.2015 IN THE CASE OF PR. COMMISSIONER OF INCOME TAX -4 VS. G&G PHARMA INDIA LTD. IN WHICH THE HONBLE JURISDICTIONAL HIGH COURT HAS RECAPITULATED THE JUR ISDICTIONAL REQUIREMENT FOR REOPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT AS UNDER:- 9. THE COURT AT THE OUTSET PROPOSES TO RECAPITU LATE THE JURISDICTIONAL REQUIREMENT FOR REOPENING OF THE ASSESSMENT UNDER S ECTION 147/148 OF THE ACT BY REFERRING TO TWO DECISIONS OF THE SUPREME CO URT. IN CHHUGAMAL RAJPAL V. SP CHALIHA (1971) 79 ITR 603, THE SUPREME COURT WAS DEALING WITH A CASE WHERE THE AO HAD RECEIVED CERTAIN COMMUNICATIONS FR OM THE COMMISSIONER OF ITA NO. 2813/DEL/2013 & CO NO. 142/DEL/2013 6 INCOME TAX SHOWING THAT THE ALLEGED CREDITORS OF TH E ASSESSEE WERE NAME- LENDERS AND THE TRANSACTIONS ARE BOGUS. THE AO CAM E TO THE CONCLUSION THAT THERE WERE REASONS TO BELIEVE THAT INCOME OF THE AS SESSEE HAD ESCAPED ASSESSMENT. THE SUPREME COURT DISAGREED AND OBSERVE D THAT THE AO HAD NOT EVEN COME TO A PRIMA FACIE CONCLUSION THAT THE TRAN SACTIONS TO WHICH HE REFERRED WERE NOT GENUINE TRANSACTIONS. HE APPEARED TO HAVE HAD ONLY A VAGUE FELLING THAT THEY MAY BE 'BOGUS TRANSACTIONS '.' IT WAS FURTHER EXPLAINED BY THE SUPREME COURT THAT: BEFORE ISSUING A NOTICE UNDER S. 148, THE ITO MUST HAVE EITHER REASONS TO BELIEVE THAT BY REASON OF THE OMISSION O R FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER S. 139 FOR A NY ASSESSMENT YEAR TO THE ITO OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT YEAR OR ALTERNATIVE LY NOTWITHSTANDING THAT THERE HAS BEEN NO OMISSION OR FAILURE AS MENTI ONED ABOVE ON THE PART OF THE ASSESSEE, THE ITO HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. UNLESS THE REQUIREMENTS OF CL. (A) OR CL. (B) OF S. 147 ARE SATISFIED, THE ITO HAS NO JURISDICTION TO ISSUE A NOTICE UNDER S. 148. THE SUPREME COURT CONCLUDED THAT IT WAS NOT SATISFI ED THAT THE ITO HAD ANY MATERIAL BEFORE HIM WHICH COULD SATISFY THE REQUIRE MENTS UNDER SECTION 147 AND THEREFORE COULD NOT HAVE ISSUED NOTICE UNDER SE CTION 148. 10. IN ACIT V. DHARIYA CONSTRUCTION CO.(2010)328 ITR 515 THE SUPREME COURT IN A SHORT ORDER HELD AS UNDER: HAVING EXAMINED THE RECORD, WE FIND THAT IN THIS C ASE, THE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPINION GIVEN BY THE DVO. OPINION OF THE DVO PER SE IS NOT AN INFORMATION FOR THE PURPOSES OF REOPENING ASSESSMEN T UNDER S. ITA NO. 2813/DEL/2013 & CO NO. 142/DEL/2013 7 147 OF THE IT ACT, 1961. THE AO HAS TO APPLY HIS MI ND TO THE INFORMATION, IF ANY, COLLECTED AND MUST FORM A BELI EF THEREON. IN THE CIRCUMSTANCES, THERE IS NO MERIT IN THE CIVI L APPEAL. THE DEPARTMENT WAS NOT ENTITLED TO REOPEN THE ASSESSMEN T. 11. THE ABOVE BASIC REQUIREMENT OF SECTIONS 147/14 8 HAS BEEN REITERATED IN NUMEROUS DECISIONS OF THE SUPREME COURT AND THIS CO URT. RECENTLY, THIS COURT RENDERED A DECISION DATED 22ND SEPTEMBER 2015 IN IT A NO. 356 OF 2013 (COMMISSIONER OF INCOME TAX I I V. MULTIPLEX TRADING AND INDUSTRIAL CO. LTD.) WHERE THE ASSESSMENT WAS SOUGHT TO BE REOPENED BEYO ND THE PERIOD OF FOUR YEARS. THIS COURT CONSIDERED THE DECISION OF THE SU PREME COURT IN PHOOL CHAND BAJRANG LAL V. INCOME-TAX OFFICER ( S U P R A ) AS WELL AS THE DECISION OF THIS COURT IN M/S HARYANA ACRYLIC MANUFACTURING CO. (P) LTD. V. CIT 308 ITR 38 (DEL). THE COURT NOTED THAT A MATERIAL CHANGE HAD B EEN BROUGHT ABOUT TO SECTION 147 OF THE ACT WITH EFFECT FROM 1ST APRIL 1 989 AND OBSERVED: 29. IT IS AT ONCE SEEN THAT THE AMENDMENT IN SECTI ON 147 OF THE ACT BROUGHT ABOUT A MATERIAL CHANGE IN LAW W.E.F. 1ST A PRIL, 1989. SECTION 147(A) AS IT STOOD PRIOR TO 1ST APRIL 1989 REQUIRED THE AO TO HAVE A REASON TO BELIEVE THAT (A) THE INCOME OF THE ASSESS EE HAS ESCAPED ASSESSMENT AND (B) THAT SUCH ESCAPEMENT IS BY REASO N OF OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO FILE A RETUR N OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT FOR THAT YEAR. AFTER THE AMENDMENT, ONLY ONE SINGULAR REQUIREMENT IS TO BE FULFILLED UNDER SECTION 147(A) AND THAT IS, THAT THE AO HAS R EASON TO BELIEVE THAT INCOME OF AN ASSESSEE HAS ESCAPED ASSESSMENT. HOWEVER, THE PROVISO TO SECTION 147 OF THE ACT PROVIDES A COMPLE TE BAR FOR REOPENING AN ASSESSMENT, WHICH HAS BEEN MADE UNDER SECTION 143(3) OF THE ACT, AFTER THE EXPIRY OF FOUR YEARS. HOWEVER , THIS PROSCRIPTION IS NOT APPLICABLE WHERE THE INCOME OF AN ASSESSEE HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIA L FACTS NECESSARY FOR HIS ASSESSMENT. THUS, IN ORDER TO REOPEN AN ASSESSMENT WHICH IS BEYOND ITA NO. 2813/DEL/2013 & CO NO. 142/DEL/2013 8 THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, THE CONDITION THAT THERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL MATERIAL FACTS MUST BE CONCLUDED WITH CERTAIN LEVEL OF CERTAINTY. IT IS IN THE AFORESAID CONTEXT THAT THIS COURT IN M/S HARYANA ACRYLIC MANUFACTURING CO. (P) LTD. (SUP RA) EXPLAINED THAT THE RATIO OF THE DECISION IN PHOOL CHAND BAJRANG LA I (SUPRA) MAY NOT BE ENTIRELY APPLICABLE SINCE THE SAME WAS IN RESPEC T OF SECTION 147(A) AS IT EXISTED PRIOR TO THE AMENDMENT. 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR E NTRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10 TH FEBRUARY 2003, FROM FOUR ENTITIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES , WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, T HE AO STATED : I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGA TION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS I NTRODUCED ITS OWN UNACCOUNTED MONEY IT ITS BANK ACCOUNT BY WAY OF ABO VE ACCOMMODATION ENTRIES. THE ABOVE CONCLUSION IS UNHELPFUL IN UNDE RSTANDING WHETHER THE AO APPLIED HIS MIND TO THE MATERIALS THAT HE TALKS ABO UT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DA TE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WO ULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TEND ERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14 TH NOVEMBER, 2004 AND WAS PROCESSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES. IN THE CONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SU FFICIENT CLARITY BY SUPREME COURT IN THE DECISIONS DISCUSSED HEREINBEFORE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT ITA NO. 2813/DEL/2013 & CO NO. 142/DEL/2013 9 CASE. 13. MR. SAWHNEY TOOK THE COURT THROUGH THE ORDER OF THE CIT (A) TO SHOW HOW THE CIT (A) DISCUSSED THE MATERIALS PRODUCED DU RING THE HEARING OF THE APPEAL. THE COURT WOULD LIKE TO OBSERVE THAT THIS I S IN THE NATURE OF A POST MORTEM EXERCISE AFTER THE EVENT OF REOPENING OF THE ASSESSMENT HAS TAKEN PLACE. WHILE THE CIT MAY HAVE PROCEEDED ON THE BASI S THAT THE REOPENING OF THE ASSESSMENT WAS VALID, THIS DOES NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO THE REOPENING OF THE ASSESSMENT, THE AO HA S TO, APPLYING HIS MIND TO THE MATERIALS, CONCLUDE THAT HE HAS REASON TO BELIE VE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. UNLESS THAT BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED, A POST MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT RESCU E AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALIDITY. 8. IN THE PRESENT CASE ALSO IT IS SEEN THAT THE AO HAS MERELY RELIED ON THE REPORT OF THE INVESTIGATION WING BUT IT IS APPARENT THAT H E HAS NOT APPLIED HIS MIND TO THE MATERIALS WHICH WERE BEFORE HIM. IN OUR VIEW, WITHO UT FORMING A PRIMA FACIE OPINION ON THE BASIS OF ONLY THE REPORT OF THE INVESTIGATIO N WING OF THE INCOME TAX DEPARTMENT, IT WAS NOT LEGAL FOR THE AO TO HAVE SIM PLY CONCLUDED THAT HE HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT. UNLESS THE BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED, A POST MOR TEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT RESCU E AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALIDITY. IN THE CIRCUMSTAN CES AND RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF PR. COMMISSIONER OF ITA NO. 2813/DEL/2013 & CO NO. 142/DEL/2013 10 INCOME TAX-4 VS. G&G PHARMA INDIA LTD. (SUPRA) WE H OLD THAT THE REOPENING OF THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR IS BAD IN LAW AND WE ACCORDINGLY QUASH THE REASSESSMENT PROCEEDINGS. 9. IN THE RESULT THE CO FILED BY THE ASSESSEE IS ALLOWED. ITA 2813/DEL/2011 10. IN VIEW OF OUR FINDINGS IN THE CO FILED BY THE ASSESSEE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 11. IN THE FINAL RESULT THE CO OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2015. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER DATED: THE 27. 11. 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR ITA NO. 2813/DEL/2013 & CO NO. 142/DEL/2013 11 SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 21.11.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 24.11. 2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER