M/s. Creative Infotech (P) Ltd, New Delhi V. ITO, New Delhi

CO 153/DEL/2009

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5711 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-10-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 22-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Unexplained cash credit; Gift; Audit objection; Accommodation entries; Bogus loan
• Section: 147; 148; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 2503(DEL)/2008 ASSESSMENT YEAR: 2000-01 INCOME-TAX OFFICER, M/S CREATIVE INFOTECH (P) LTD., WARD 3(4), NEW DELHI. VS. 37/3, EA ST PATEL NAGAR, NEW DELHI. C.O. NO. 153(DEL)/2009 (ARISING OUT OF ITA NO. 2503(DEL)/2008) ASSESSMENT YEAR: 2000-01 M/S CREATIVE INFOTECH (P) LTD., INCOME-TA X OFFICER, 37/3, EAST PATEL NAGAR, VS. WARD 3(4), NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) DEPARTMENT BY : MS. MONA MOHANTY, SR. DR ASSESSEE BY : SHRI ASHWANI TANEJA & SHRI TARUN KUMAR, ADVOCATES ORDER PER K.G. BANSAL ; AM THE ASSESSEE FILED ITS RETURN ON 29.11.2000 DE CLARING TOTAL INCOME OF RS. 9,170/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961, ON 20.03.2001. SUBSEQUENTLY, INFORM ATION WAS RECEIVED FROM THE DIRECTORATE OF INCOME-TAX (INVESTIGATION) TH AT SOME PERSONS HAVE BEEN LAUNDERING THEIR UNACCOUNTED MONEY THROUGH ACCOMMODATION ENTRIES AS SHARE APPLICATION MONEY, GIFT, S ALE PROCEEDS OF NON-EXISTENT ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 2 GOODS ETC. IN THIS CONNECTION, IT WAS INFORME D THAT THE ASSESSEE RECEIVED ENTRIES OF RS. 7,00,200/- FROM M/S AGGA RWAL & COMPANY IN FINANCIAL YEAR 1999-00. ACTING ON THIS INFORMA TION, REASONS WERE RECORDED, APPROVAL OBTAINED FROM THE COMMISSIONE R OF INCOME-TAX AND NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE-CO MPANY ON 23.3.2007. THE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN MAY BE TAKEN AS RETURN U/S 148. THEREAFTER, ASSESSMENT PROCEEDINGS WERE I NITIATED BY ISSUING STATUTORY NOTICE U/S 143(2). THE ASSESSMENT WAS COMPLETED ON 28.12.2007, DETERMINING THE TOTAL INCOME AT RS. 17,65,996/- AND THE AMOUNT PAYABLE BY THE ASSESSEE AT RS. 13,98,415/ -. IN THIS ASSESSMENT, ADDITION OF RS. 14,00,214/- WAS MADE U/S 68 OF T HE ACT IN RESPECT OF UNEXPLAINED CREDITS IN THE BANK ACCOUNT. 1.1 AGGRIEVED BY THIS ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS)-XVI, NEW DELHI, WHO DISPOSED OFF T HE APPEAL ON 23.4.2008 IN APPEAL NO. 177/07-08, IN WHICH THE APPEAL WAS TREATED AS PARTLY ALLOWED. 2. THE REVENUE FILED APPEAL AGAINST THIS ORDER, IN WHICH TWO SUBSTANTIVE GROUNDS HAVE BEEN TAKEN UP TO THE EFFECT THAT ON THE FACTS ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 3 AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) ERRED IN (I) NULLIFYING THE PROCEEDINGS U/S 14 8 BY HOLDING THAT MANDATORY CONDITION PRESCRIBED U/S 151(2) HAS NOT BEEN COMPLIED WITH; AND (II) DELETING THE ADDITION OF RS. 14,00,214 /- MADE BY THE AO IN RESPECT OF DEPOSITS MADE IN THE BANK ACCOUNT. TH E ASSESSEE FILED CROSS OBJECTION, IN WHICH TWO SUBSTANTIVE GROUNDS HAVE BEEN TAKEN TO THE EFFECT THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) ERRED IN NOT QUASHING THE ORDER O N THE GROUND THAT THE REASONS RECORDED BY THE AO FOR INITIATING ASS ESSMENT U/S 147 ARE INVALID AND, THEREFORE, THE ASSESSMENT ORDER IS NOT SUS TAINABLE. AS THE APPEAL AND THE CROSS OBJECTION INVOLVE PRELIMINARY GROUN DS REGARDING VALIDITY OF THE ASSESSMENT, WE PROCEED TO DECIDE THE SAM E AT THE OUTSET. 3. BEFORE US, THE LD. COUNSEL REFERRED TO THE REAS ONS RECORDED BY THE AO ON 15.03.2007 FOR REOPENING THE ASSESSMEN T, WHICH READ AS UNDER:- A REPORT ON ENQUIRIES MADE BY THE DIRECTORATE OF INCOME-TAX (INVESTIGATION), NEW DELHI INTO ACCOMMODATION ENT RIES GIVEN BY ENTRY OPERATORS HAS BEEN RECEIVED. THIS REPORT WAS RECEIVED IN THE OFFICE OF COMMISSIONER OF INCOME-TAX, DELHI-I, NEW DELHI AND WAS SUBSEQUENTLY FORWARDED. THESE ENQUIRIES WERE INITIATED TO PROBE INTO SOME BANK ACCOUNTS WHICH WERE USED TO ISSU E CHEQUES TO ENTRY SEEKERS OR BENEFICIARIES AGAINST CASH PAID BY THEM TO THE ENTRY OPERATORS. SUCH A CAMOUFLAGED TRANSACTION CA ME TO LIGHT DURING ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 4 THE COURSE OF SURVEY. PROBE WAS INITIATED INTO THE ACCOUNTS WHICH WERE USED TO PROVIDE THESE ENTRIES. THESE INV ESTIGATIONS LED TO REVEALING OF MANY MORE BANK ACCOUNTS WHICH WERE BEING USED BY THE ENTRY OPERATORS FOR THE PURPOSE OF GIVING AC COMMODATION ENTRIES. 2. EXTENSIVE ENQUIRIES WERE MADE INTO NUMERO US SUCH BANK ACCOUNTS, THE ACCOUNT HOLDERS, THE PERSONS OPERATING THESE ACCOUNTS AND THE PERSONS FOR WHOM SUCH ACCOUNT HOLDERS WERE WORKING. THESE ENQUIRIES REVEALED INTER ALIA T HE FOLLOWING: 2.1 ENTRIES WERE BEING BROADLY TAKEN FOR TWO PU RPOSES: 3. TO PLOUGH BACK UNACCOUNTED BLACK MONEY FOR TH E PURPOSE OF BUSINESS OR FOR PERSONAL NEEDS SUCH AS PURCHASE OF ASSETS ETC. IN THE FORM OF GIFTS, SHARE APP LICATION MONEY, LOANS ETC. 4. TOP INFLATE EXPENSES IN THE TRADING AND PR OFIT AND LOSS ACCOUNT SO AS TO REDUCE THE REAL PROFITS A ND THEREBY PAY LESS TAXES. 2.2 THE ASSESSEES WHO HAD UNACCOUNTED MONEY (CAL LED AS ENTRY TAKERS OR BENEFICIARIES) AND WANTED TO INTRODUCE THE SAME IN THE BOOKS OF ACCOUNTS WITHOUT PAYING TAX, APPROACHE D ANOTHER PERSON (CALLED AS ENTRY OPERATOR) AND HANDED OVER TH E CASH (PLUS COMMISSION) AND HAD TAKEN CHEQUES/DDS/POS. THE CASH WAS BEING DEPOSITED BY THE ENTRY OPERATOR IN A BANK ACC OUNT EITHER IN HIS OWN NAME OR IN THE NAME OF RELATIVE/FRIENDS OR OTHER PERSON HIRED BY HIM FOR THE PURPOSE OF OPENING BANK ACCOUN T. IN MOST OF THESE BANK ACCOUNTS THE INTRODUCER WAS THE MAIN EN TRY OPERATOR AND THE CASH DEPOSIT SLIPS AND OTHER INSTRUMENTS WERE FILLED BY HIM. THE OTHER PERSONS (IN WHOSE NAME THE ACCOUNT IS OPE NED) ONLY USED TO SIGN THE BLANK CHEQUE BOOK AND HAND OVER THE SAM E TO THE MAIN ENTRY OPERATOR. THE ENTRY OPERATOR THEN USED TO I SSUE CHEQUES/DDS/POS IN THE NAME OF THE BENEFICIARY FRO M THE SAME ACCOUNT (IN WHICH THE CASH IS DEPOSITED) OR ANO THER ACCOUNT IN WHICH FUNDS WERE TRANSFERRED THROUGH CLEARING IN TWO OR MORE STAGES. THE BENEFICIARY IN TURN DEPOSITED THESE INSTRUMENTS IN HIS BANK ACCOUNTS AND THE MONEY CAME TO HIS REGULAR B OOKS OF ACCOUNT ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 5 IN THE FORM OF GIFT, SHARE APPLICATION MONEY, L OAN ETC. THROUGH BANKING CHANNELS. 2.3 THE OPERATORS GAVE THE ACCOUNT HOLDER AMOUNT S RANGING FROM RS. 1000/- TO RS. 2000/- PER MONTH. THESE ACCOUN T HOLDERS WERE MASONS, PLUMBERS, ELECTRICIANS, PEONS, DRIVERS E TC. WHOSE EARNINGS ARE NOT SUFFICIENT FOR A LIVING. THEY EARNED NORMALLY RS. 3 TO 5 THOUSAND PER MONTH IN THEIR NORMAL WORK AND BY WO RKING FOR THE ENTRY OPERATORS EARNED EXTRA INCOME OF RS. 2 TO 4 THOUSAND PER MONTH. THEIR SIGNATURES WERE TAKEN ON BLANK GI FT DEEDS, CHEQUE BOOKS, SHARE APPLICATION MONEY ETC. IN FACT THESE PERSONS SIGNED ALL TYPES OF PAPERS THEY WERE ASKED TO SIGN. T HEY WERE MADE DIRECTORS OF COMPANIES, PARTNERS OF FIRMS AND P ROPRIETOR OF DIFFERENT CONCERNS SOLELY FOR OPERATION OF THESE ACCOUNTS. ACTUALLY, MANY OF THEM WERE NOT EVEN AWARE OF THE TAX IMPLICATIO NS ETC. THEIR ONLY CONCERN WAS WITH THE FEW THOUSAND RUPEES GIVEN TO THEM BY THE ENTRY OPERATORS. 3. SUMMING UP THE REPORT AS A RESULT OF THESE E XTENSIVE ENQUIRIES CARRIED OUT BY THE DIT (INV.), NEW DEL HI HAS ASSAILED GENUINENESS OF TRANSACTIONS, WHETHER SHOWN BY B ENEFICIARIES AS INFLOW OF SHARE CAPITAL OR RECEIPT OF GIFTS OR C ONSIDERATION FOR SALE- PURCHASE. IT HAS ALSO DEALT A BODY BLOW TO T HE CREDITWORTHINESS OF THE PERSONS CONTROLLING THE CONCERNS WHO HAVE GI VEN THESE CREDIT ENTRIES, SHARE CAPITAL, GIFTS, SALE CONSIDERATIO N AS THEY HAVE BEEN SEEN TO BE MEN OF NO MEANS. 4. IN THE INSTANT CASE OF THE ASSESSEE, M/S CRE ATIVE INFOTECH P. LTD., THE FOLLOWING CREDITS HAVE BEEN SHOWN IN THE BANK ACCOUNT:- BANK OF THE ASSESSEE DFT ISSUE BRANCH OF THE BANK NEW DELHI INSTRUMENT NO. 655231 AMOUNT 400200 DATE 4.08.1999 CREDIT ENTRY COMING FROM THE ACCOUNT OF AGGARWAL & CO. INDIAN OVERSEAS BANK PREET VIHAR, NEW DELHI 657630 300000 18.11.1999 AGGARWAL & CO. ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 6 4.2 IN VIEW OF THE FINDINGS OF THE INVESTIGATION R EPORT, THE LENDERS IN THESE CASES HAVE BEEN PROVED TO BE MEN/PARTIES OF NO CREDITWORTHINESS. THE STATEMENTS ON OATH AND THE LETTERS OF ADMISSION CLEARLY SHOW THAT THE TRANSACTION TO T HE TUNE OF RS. 7,00,200/- INVOLVING RECEIPT OF THE SAID AMOU NT DURING THE YEAR UNDER CONSIDERATION DOES NOT APPEAR TO BE GENUINE AND IS AN ACCOMMODATION ENTRY. THEREFORE, THE AFORESAID CRE DIT ENTRIES ARE SQUARELY HIT BY SECTION 68 OF THE I.T.ACT. I HAVE REASONS TO BELIEVE THAT THE AMOUNT OF RS. 7,00,200/- REPRESENTS INCOME OF THE ASSESSEE CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT FOR A.Y. 2000-01. 3.1 IT IS SUBMITTED THAT PARAGRAPH 1 REFERS TO THE REPORT RECEIVED BY THE AO FROM THE INVESTIGATION WING THROUGH THE COMMIS SIONER. THIS REPORT HAS NOT BEEN SHOWN TO THE ASSESSEE. COMING TO P ARAGRAPH NO. 4 OF THE REASONS, IT IS SUBMITTED THAT THE NAME OF THE AS SESSEE HAS NOT BEEN MENTIONED, AND COMING TO PARAGRAPH NO. 4.2, IT IS SUBMITTED THAT NO NAME HAS BEEN MENTIONED WHOSE CREDITWORTHINESS ETC. H AS BEEN QUESTIONED. FURTHER, IT IS SUBMITTED THAT THE COMMISSIONER OF INCOME-TAX GRANTED APPROVAL IN A MECHANICAL WAY AND WITHOUT APP LICATION OF MIND. THEREFORE, IT IS ARGUED THAT THE REASONS DO NOT CONFORM TO STATUTORY PROVISIONS CONTAINED IN SECTION 147. 3.2 IT IS FURTHER SUBMITTED THAT THE MONIES WERE RECEIVED AS SALE PROCEEDS OF THE SHARES AND THE TRANSACTIONS OF P URCHASE AND SALE WERE ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 7 ENTERED IN PROFIT AND LOSS ACCOUNT. THE AO DID NOT MAKE ANY VERIFICATION ABOUT THE TRANSACTIONS AND SUMMARILY CAME TO THE CONCLUSION THAT THE DEPOSITS REPRESENTED UNEXPLAINED INCOME OF THE A SSESSEE. 3.3 IN REPLY, THE LD. DR SUBMITTED THAT THE DET AILS OF TRANSACTIONS UNDER QUESTION HAVE BEEN MENTIONED IN PARAGRAPH NO. 4 OF THE REASONS RECORDED BY THE AO. THE INFORMATION WAS RECEIVE D FROM THE INVESTIGATION WING AND, THEREFORE, IT WAS BELIEVA BLE IN THE SENSE THAT IT HAD BEEN RECEIVED FROM AUTHORITIES WHO ARE E NGAGED IN CARRYING OUT INVESTIGATIONS. THE APPROVAL WAS GRANTED BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX ON 16.3.2007 WHO RECORDED THAT I HAVE PERUSED THE REASONS RECORDED BY THE AO AND THE SUPPORTING RECORD. I AM SATISFIED THAT IT IS A FIT CASE FOR REOPENING ASSESSMENT U/S 147 OF THE INCOME-TAX ACT (UNQUOTE). IN VIEW OF THE ABOVE FACTS, IT IS ARGUED THAT THE REASONS HAVE BEEN PROPERLY RECORDED AND APPROVAL HAS ALS O BEEN RECEIVED FROM THE APPROPRIATE STATUTORY AUTHORITY BEFORE ISSU ING NOTICE U/S 148. ACCORDINGLY, IT IS ARGUED THAT THE LD. COMMISSION ER OF INCOME-TAX (APPEALS) ERRED IN RECORDING A FINDING THAT THE MANDATORY CONDITION PRESCRIBED U/S 151(2) HAS NOT BEEN COMPLIED WI TH. ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 8 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US IN THIS BEHALF. THE REASONS HAVE BE EN RECORDED BY THE AO TO THE EFFECT THAT THE ASSESSEE HAS USED THE SE RVICES OF ACCOMMODATION ENTRY PROVIDERS TO LAUNDER ITS UNACCOUNTED MON EY AS SHARE CAPITAL, GIFT OR SALE-PURCHASE CONSIDERATION. HE HAS LISTED TWO CHEQUES RECEIVED BY THE ASSESSEE FROM AGGARWAL & COMPANY ON 4.8.1999 AND 18.11.1999, AGGREGATING TO RS. 7,00,200/-. IT IS FURTHER RECORDED THAT THE SUBMISSIONS FURNISHED BEFORE THE INVESTIGATION WING SHOW THAT THESE PARTIES ARE NOT CREDITWORTHY. FINALLY, IT HAS BEEN RECORDED THAT INCOME OF RS. 7,00,200/- HAS ESCAPED ASSESSMENT, WHICH IS CHARGEABLE TO T AX IN ASSESSMENT YEAR 2000-01. IT HAS ALREADY BEEN MENTIONED THAT THE REASONS RECORDED BY THE AO WERE APPROVED BY THE ADDITIONAL COMMISSIONER . WE FIND THAT THE APPROVAL HAS BEEN FURTHER GRANTED BY THE COMMISSION ER OF INCOME-TAX TO ISSUE NOTICE U/S 148 ON 20.3.2007, WHICH IS UNN ECESSARY AND INCONSEQUENTIAL IN VIEW OF THE STATUTORY PROVISI ON THAT THE NOTICE HAS TO BE ISSUED AFTER OBTAINING APPROVAL OF THE ADDITION AL COMMISSIONER. WE ALSO FIND THAT THE ADDITIONAL COMMISSIONER OF INCOME-T AX HAS PERUSED THE RECORD AND THE REASONS RECORDED BY THE AO BEFORE ACCORDING HIS APPROVAL. IN THE LIGHT OF THESE FACTS, ONE THING IS CL EAR THAT THE LD. CIT(APPEALS) ERRED WHEN ON THE BASIS OF FACTS OF THIS CASE, HE RECORDED ON PAGE NO. 11 ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 9 OF HIS ORDER THAT THE APPROVAL HAS TO BE RECEIVED F ROM THE JOINT COMMISSIONER AND THE SANCTION FROM THE COMMISSION ER WILL NOT BE VALID AS PER LAW. THE FACT OF THE MATTER IS THAT THE APPROVAL HAS BEEN RECEIVED FROM ADDITIONAL COMMISSIONER. SECTION 2(28C) OF THE ACT DEFINES JOINT COMMISSIONER TO MEAN A PERSON APPOINTED TO BE A JOINT COMMISSIONER OF INCOME-TAX OR AN ADDITIONAL COMMISSIONER OF INCOME-TAX UNDER SUB- SECTION (1) OF SECTION 117. THEREFORE, FOR T HE PURPOSE OF SECTION 151(2), ADDITIONAL COMMISSIONER WILL HAVE TO BE TAKEN AS JOINT COMMISSIONER. ACCORDINGLY, IT IS HELD THAT THE AO HAD OBTAINED APPROVAL FROM THE JOINT COMMISSIONER BEFORE ISSUING NOTICE U/S 148. THE NATURAL COROLLARY IS THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED WHEN HE HELD THAT MANDATORY CONDITION PRESCRIBED U/S 151(2) H AS NOT BEEN SATISFIED. ACCORDINGLY, GROUND NO. 1 OF THE APPEAL OF THE RE VENUE IS ALLOWED. 5. WE NOW PROCEED TO DECIDE THE GROUND OF THE ASSESSEE AS TO WHETHER THE REASONS RECORDED BY THE AO ARE V ALID OR NOT IN THE EYES OF LAW. IN THIS CONNECTION, RELIANCE HAS BEEN PLAC ED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF LAKSHYA EXIM (P) LTD. VS . ITO, (2010) 131 TTJ 621. THE AO HAD RECEIVED INTIMATION FROM THE ASSESSING OFFICER OF SHRI P.K. RUIA THAT DURING SEARCH AND INVESTIGATION IN HIS GROUP COMPANIES, IT ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 10 WAS GATHERED THAT A LARGE NUMBER OF COMPANIES WERE FLOATED AND BOGUS ENTRIES WERE GIVEN TO A NUMBER OF BENEFICIARIES BY CHARGING COMMISSION AND IN TURN BENEFICIARIES PAID CASH TO OBTAIN TH E BOGUS ENTRIES OF LOANS. ONE SUCH BENEFICIARY IS LAKSHYA EXIM (P) LTD. , WHO UNDERTOOK TRANSACTIONS WITH VIVEK LEAFIN PVT. LTD. IN WHIC H THE ASSESSEE HAS SHOWN BOGUS LOAN/SHARE CAPITAL. IN VIEW OF THE INFORMA TION, THE AO RECORDED THE REASONS THAT INCOME HAS ESCAPED ASSESSMENT. TH E TRIBUNAL MENTIONED THAT THE AO DID NOT LOOK INTO AND VERIFY THE I NFORMATION RECEIVED BY HIM AS IT WAS FOUND TO BE NON-EXISTENT. THE ASSESSEE HAD SOLD FABRICS TO VIVEK LEAFIN PVT. LTD. AND SALE PROCEEDS WER E RECEIVED. THUS, IT WAS HELD THAT THE BELIEF OF THE ASSESSING OFFICER THAT THE ASSESSEE RECEIVED ACCOMMODATION ENTRIES OF LOAN/SHARE CAPITAL WAS NOT BASED ON ANY RELEVANT MATERIAL ON RECORD. HIS REASONS ARE BASED ON U NFOUNDED AND NON-EXISTENT INFORMATION SUPPLIED BY THE AO OF SHRI P.K. RUI A. THEREFORE, IT WAS HELD THAT THE INITIATION OF PROCEEDINGS WAS BAD IN LAW. PARAGRAPH NO. 29 OF THE ORDER READS AS UNDER:- 29. IT IS, THUS, CLEAR THAT THE ASSESSING OFFIC ER HAS INITIATED PROCEEDINGS UNDER SECTION 147 OF THE ACT, AFTER ENTERTAINING A BELIEF THAT INCOME OF THE ASSESSEE, WHICH HAS B EEN SHOWN AS BOGUS LOANS/SHARE CAPITAL, HAS ESCAPED ASSESS MENT TO THE EXTENT OF AMOUNT OF LOANS/SHARE CAPITAL MENTIONED I N THE REASONS RECORDED. IN OTHER WORDS, THE ASSESSI NG OFFICER HAS INITIATED THE PROCEEDINGS UNDER SECTION 147 OF THE ACT ON ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 11 ASSUMPTIONS THAT THE ASSESSEE HAD RAISED BOGU S LOANS/SHARE CAPITAL RESULTING INTO ESCAPEMENT OF ASSESSEE S INCOME. HOWEVER, ON PERUSAL OF THE ASSESSMENT ORDER AND T HE BASIS ON WHICH THE ADDITION OF RS. 10,52,62,889/- AND RS. 10,52,629/- HAS BEEN MADE, IT IS SEEN THAT THE ADDITION H AS BEEN MADE ON ACCOUNT OF RECEIPTS OF SALE OF FABRICS SOLD BY THE ASSESSEE TO M/S VIVEK LEAFIN PVT. LTD. FROM THE DETAILS OF THE TRANSACTIONS BETWEEN M/S VIVEK LEAFIN PVT. LTD. AND THE ASSESSEE, IT IS CLEAR THAT THE ASSESSEE COMPANY HAD NEITHER RAISED ANY LOANS NOR ANY SHARE CAPITAL, AND NO ADDITION ON ACCOUNT OF ANY BOGUS LOANS/SHARE CAPITAL ALLEGED LY RAISED BY THE ASSESSEE FROM M/S VIVEK LEAFIN PVT. LTD., H AS BEEN EVEN MADE IN THE ASSESSMENT ORDER. IT IS, THUS, BEYOND ANY DOUBT THAT THE NATURE OF THE TRANSACTION REFERRED TO I N THE INFORMATION SUPPLIED BY DCIT, CC-VI, KOLKATA TO DCIT,. CIRCLE 4(1), NEW DELHI AND REFERRED TO IN THE REASONS RE CORDED BY THE ASSESSING OFFICER IN ENTERTAINING A BELIEF REQU IRED UNDER SECTION 147 OF THE ACT HAS NOT BEEN ACTUALLY LOO KED INTO AND VERIFIED BUT IT IS FOUND TO BE NON-EXISTENT. THE INFORMATION SUPPLIED BY DCIT, CC-VI, KOLKATA, THAT ASSESSEE COMPANY HAS OBTAINED BOGUS/SHARE CAPITAL FROM M/S VIVEK LEAFIN PVT. LTD., A DUMMY COMPANY OF SHRI P.K. RUIA, IS NOT B ASED ON FACTS FOUND DURING THE SEARCH. THUS, THE ASSESSI NG OFFICERS BELIEF THAT THE INCOME OF THE ASSESSEE COMPANY, IN THE NATURE OF BOGUS LOANS/SHARE CAPITAL, HAS ESCAPED ASS ESSMENT TO THAT EXTENT IS NOT BASED ON ANY RELEVANT MATERIAL FO UND DURING THE COURSE OF THE SEARCH CONDUCTED AGAINST SHRI P .K. RUIA AND HIS GROUP COMPANIES. THIS, THUS, MAKES IT CLE AR THAT THE PROCEEDINGS UNDER SECTION 147 HAS BEEN INITIATE D BY THE ASSESSING OFFICER ON NON-EXISTENT GROUND OR FACT I NASMUCH AS THERE IS NO MATERIAL ON RECORD TO ENTERTAIN A BELIEF THAT THE ASSESSEE HAD BOGUS LOANS/SHARE CAPITAL FROM COM PANIES CONTROLLED BY SHRI P.K. RUIA, AND THUS, THERE EXIS T NO DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL FOUND D URING THE COURSE OF THE SEARCH RELATING TO THE PRESENT ASS ESSEE AND THE BELIEF ENTERTAINED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD RAISED BOGUS AND CREDITS DURING THE YEAR U NDER CONSIDERATION, WHICH RESULTED INTO ESCAPEMENT O F INCOME. WE FIND THAT THE ASSESSING OFFICER HAS ENTERTAINE D A BELIEF MERELY ON THE BASIS OF UNFOUNDED AND NON-EXISTE NT ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 12 INFORMATION SUPPLIED BY DCIT, CC-6, KOLKATA, THA T THE ASSESSEE HAD RAISED BOGUS LOANS/SHARE CAPITAL FROM GROUP OF COMPANIES CONTROLLED BY SHRI RUIA WITHOUT MAKING ANY EFFORT TO SATISFY HIMSELF AS TO WHETHER THE INFORMATI ON RECEIVED FROM THE OFFICE OF THE DCIT, CC-6, KOLKATA THAT T HE ASSESSEE HAD RAISED LOANS/SHARE CAPITAL IS BASED ON SOME R ELEVANT MATERIAL OR NOT. WE FIND THAT THE PROCEEDINGS UND ER SECTION 147 OF THE ACT HAVE BEEN INITIATED BY THE ASSES SING OFFICER IN A MECHANICAL MANNER AND ON VAGUE GROUNDS AND W ITHOUT APPLICATION OF MIND. WE, THEREFORE, HOLD THAT THE INITIATION OF PROCEEDINGS MADE BY THE ASSESSING OFFICER UNDER S ECTION 147OF THE ACT ARE PURELY BASED ON MERE SUSPICION AND NON- EXISTENT GROUND OR FACT, HAVING NO NEXUS OR LIV E LINK BETWEEN THE NATURE OF THE TRANSACTION BETWEEN THE ASSESSEE AND M/S VIVEK LEAFIN PVT. LTD. AND THE FORMATION OF BELIEF BY THE ASSESSING OFFICER. 5.1 FURTHER, RELIANCE HAS BEEN PLACED ON THE DEC ISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. INDIAN SUGAR & GENERAL INDUSTRY EXPORT IMPORT CORPORATION LTD., (2008) 205 TAXATION 42. IN THIS CASE, THE AO RECORDED REASONS TO THE EFFECT THAT THE ASSESSM ENT WAS COMPLETED ON 5.12.1997 ALLOWING DEDUCTION OF RS. 10,49,417/- IN RESPECT OF PRIOR PERIOD EXPENSES. UNDER THE ACT, BUSINESS PROFI TS ARE COMPUTED IN ACCORDANCE WITH METHOD OF ACCOUNTING REGULARLY EM PLOYED BY THE ASSESSEE. THE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOU NTING IN WHICH PROFITS ARE WORKED OUT ON DUE BASIS. THE OMISSION TO DO SO HAS RESULTED IN EXCESS ALLOWANCE OF THE AFORESAID AMOUNT, BEING 1/5 TH OF REPAIR EXPENSES. THEREFORE, INCOME HAS ESCAPED ASSESSMENT. A NO TE WAS APPENDED TO THE ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 13 REASONS THAT THE NOTICE HAS BEEN ISSUED KEEPING I N VIEW THE OBJECTION RAISED BY REVENUE AUDIT PARTY. THE HONBLE COUR T MENTIONED THAT THERE IS NOTHING TO SUGGEST IN THE REASONS OR NOTE THAT THE AO MADE AN INDEPENDENT EXAMINATION OF THE MATERIAL COLLECTED BY THE AUDIT PARTY. THERE IS ALSO NO INDEPENDENT CONCLUSION ARRIVED AT BY THE AO. THERE IS NOTHING TO SUGGEST FROM THE LANGUAGE OF THE NOT E THAT THE AO HAD APPLIED HIS MIND TO THE CONTENTS OF AUDIT OBJE CTION BEFORE ISSUING NOTICE U/S 148. ON THE CONTRARY, THE NOTE SUGGESTS THA T THE NOTICE WAS ISSUED MECHANICALLY AS A RESULT OF AUDIT OBJECTION. IN THESE CIRCUMSTANCES, THE APPEAL FILED BY THE REVENUE WAS DISMISSED. 5.2 RELIANCE HAS ALSO BEEN PLACED ON THE DECISIO N OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. PARAMJ IT KAUR (2007) 311 ITR 38. THE HONBLE COURT MENTIONED THAT IT IS UN DISPUTED THAT THE ASSESSING OFFICER INITIATED RE-ASSESSMENT PROCEEDI NGS ON THE BASIS OF INFORMATION RECEIVED FROM THE SURVEY CIRCLE TH AT THE ASSESSEE HAD GOT PREPARED A DEMAND DRAFT OF RS. 80,040/-, WHIC H WAS NOT ACCOUNTED FOR IN THE BOOKS. THE AO DID NOT EXAMINE OR CORROB ORATE THE INFORMATION BEFORE RECORDING HIS SATISFACTION ABOUT ESCAPEM ENT OF INCOME. THUS, THE AO ACTED ONLY ON THE BASIS OF SUSPICION AND IT CANNOT BE SAID THAT THE ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 14 SAME WAS BASED ON BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. 5.3 RELIANCE HAS ALSO BEEN PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ATUL JAIN & VINI TA JAIN, (2007) 299 ITR 383. IN PARAGRAPH 10, IT IS MENTIONED THAT IN THE CASE OF CHHUGAMAL RAJPAL VS. S.P. CHALIHA & OTHERS, (1971) 79 IT R 603, RE-ASSESSMENT PROCEEDINGS WERE STRUCK DOWN BY THE SUPREME CO URT ON THE GROUND THAT THE REASONS RECORDED BY THE ASSESSING OFFICER VAGU ELY REFERRED TO CERTAIN COMMUNICATIONS THAT HE HAD RECEIVED; HE DID NOT M ENTION THE FACTS CONTAINED IN THE COMMUNICATION EXCEPT THAT FROM THOSE COMMUNICATIONS IT APPEARS THAT THESE PERSONS WERE NAME LEN DERS AND THE TRANSACTIONS WERE BOGUS. HE DID NOT COME TO ANY PRIMA FACI E CONCLUSION THAT THE REFERRED TRANSACTIONS ARE NOT GENUINE. HE APPE ARED TO HAVE A VAGUE FEELING THAT THE REFERRED TRANSACTIONS MAY BE BOGUS TRANSACTIONS. FINALLY, HIS CONCLUSION WAS THAT A PROPER INVESTIGATION REGARDING THE LOAN IS NECESSARY. THE COMMISSIONER WHILE GRANTING APPR OVAL HAD MERELY SAID YES. THE HONBLE COURT FURTHER MENTIONED THAT T HE DECISION OF THE SUPREME COURT IS CLEAR THAT A MERE STATEMENT OF FACTS IN THE FORM OF REPORT IS NOT SUBSTITUTE FOR REASONS THAT ARE REQUIR ED TO BE RECORDED BEFORE ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 15 ISSUING NOTICE U/S 148. THEREFORE, MERELY SA YING YES DID NOT FULFILL THE DUTY CAST ON THE COMMISSIONER. 5.4 THE LD. COUNSEL ALSO RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SARTHAK SECURITIES CO. (P) LT D. VS. ITO IN WP(C) NO. 6087/2010 DATED 18.10.2010, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK. IT IS INTER-ALIA MENTIONED THAT THE ASSESSING OFFICER IS REQUIRED TO FORM AN OPINION BEFORE HE PROCEEDS TO ISSUE THE NOTICE. THE VALIDITY OF REASONS, WHICH ARE SUPPOSED TO SUSTA IN THE FORMATION OF AN OPINION, IS CHALLANGEABLE. THE FACTS OF THE C ASE ARE THAT THE AO WAS AWARE OF EXISTENCE OF FOUR COMPANIES WITH WHOM THE ASSESSEE HAD ENTERED INTO TRANSACTIONS. THE REASONS IN THE INITIAL NOTICE OR THE COMMUNICATION PROVIDING THE REASONS TO THE ASSESSEE DO NOT EV EN REMOTELY INDICATE THAT HE APPLIED HIS MIND INDEPENDENTLY. IT IS TRUE THAT AT THIS STAGE IT IS NOT NECESSARY TO ESTABLISH THE ESCAPEMENT OF INCOME. HOWEVER, WHAT IS NECESSARY IS THAT THERE IS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQUISITE BELIEF. IN VI EW OF THE PRINCIPLES LAID DOWN IN THE CASE OF LOVELY EXPORTS (P) LTD., THE REASONS COULD NOT BE SUSTAINED AS THE ASSESSEE HAD IN THE OBJECTIONS CLEARLY STATED THAT THE ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 16 COMPANIES HAD BANK ACCOUNTS AND PAYMENTS WERE MADE THROUGH BANKING CHANNELS. THE IDENTITY OF THE COMPANIES WAS NOT IN DISPUTE. 5.5 IN REPLY, THE LD. DR SUBMITTED THAT THE C ASES RELIED UPON BY THE LD. COUNSEL DEAL WITH THE ISSUE OF BOGUS SHAR E CAPITAL, WHERE THE ASSESSEE IS REQUIRED TO ESTABLISH ONLY THE IDE NTITY OF THE SUBSCRIBER. SHE REFERRED TO THE REASONS RECORDED BY THE AO WHIC H FURNISH THE NAME OF THE PAYER ALONG WITH THE AMOUNT, CHEQUE NUMBER AND TH E BANK OF THE ASSESSEE. ALL THIS COULD NOT BE MERELY FIGMENT OF IMAGINATI ON. THEREFORE, IT IS CLEAR THAT INFORMATION, WHICH WAS GATHERED BY INVESTI GATION WING IN THE COURSE OF SURVEY, WAS AVAILABLE WITH THE ASSESSEE ALO NG WITH THE STATEMENTS OF THE PAYER. 5.6 IN THE REJOINDER, IT IS SUBMITTED THAT IT HA S TO BE ADMITTED THAT SOME MATERIAL WAS FORWARDED BY THE INVESTIGATION WI NG TO THE AO THROUGH THE COMMISSIONER. HOWEVER, THE STATEMENT AND OTHER DETAILS ALLEGEDLY GATHERED BY THE INVESTIGATION WING ARE NOT ON RECORD. 6. WE HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BEFORE US. THE AO HAS RECORDED HIS REASONS I N A NOTE WHICH RUNS INTO ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 17 THREE PAGES. PARAGRAPH 1 MENTIONS THAT A REP ORT HAS BEEN RECEIVED FROM THE INVESTIGATION WING THROUGH THE COMMISSI ONER, WHICH SHOWS THAT ENQUIRIES WERE MADE INTO SOME BANK ACCOUNTS. T HESE ACCOUNTS WERE USED TO ISSUE CHEQUES TO THE BENEFICIARIES AGAIN ST PAYMENT OF CASH BY THE ACCOMMODATION ENTRY OPERATORS. THIS PARAGRAPH CONTA INS GENERAL CONCLUSIONS ABOUT THE ENQUIRY AND FINDINGS OF T HE INVESTIGATION WING. PARAGRAPH 2 FURNISHES THE MODES OPERANDI OF OBTAINI NG BOGUS ACCOMMODATION ENTRIES BY PAYING CASH AND RECEIVIN G CHEQUES. IT ALSO MENTIONS ABOUT THE COMMISSION PAID TO THE BOGUS ACCOMMODATION ENTRY OPERATORS. THIS IS ALSO GENERAL IN NATURE. PAR AGRAPH 3 MENTIONS THAT THE REPORT ASSAILS THE GENUINENESS OF THE TRANSACTI ONS IN CASE OF BENEFICIARIES SHOWING RECEIPT OF SHARE CAPITAL, GIFT OR SALE CO NSIDERATION. IT ALSO GIVES A BODY BLOW TO THE CREDITWORTHINESS OF ACCOMMODATI ON ENTRY OPERATORS. TO OUR MIND, THIS PORTION IS THE OPINION FORMED BY THE AO ON GOING THROUGH THE REPORT. PARAGRAPH 4 CONTAINS SPECIFIC INFORMATION ABOUT TWO CHEQUES RECEIVED BY THE ASSESSEE FROM M/S AGGA RWAL & COMPANY AGGREGATING TO RS. 7,00,200/-. IT IS CORRECT IN SO FAR AS ITS CONTENTS GO. IN PARAGRAPH 4.2, IT IS MENTIONED THAT IN VIEW OF THE FINDINGS OF INVESTIGATION WING, THE LENDERS HAVE BEEN FOUN D TO BE MEN OF NO CREDITWORTHINESS. THE STATEMENT ON OATH AND LETTERS OF ADMISSION SHOW ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 18 THAT RECEIPT OF RS. 7,00,200/- IS NOT GENUINE AN D IT IS AN ACCOMMODATION ENTRY. TO OUR MIND, TWO THINGS EMERGE FROM THI S PARAGRAPH- (I) THE AO HAS NOT VERIFIED THE INFORMATION WITH THE RETURN OF INCOME ON RECORD, AND (II) HE IS UNDER SUSPICION THAT THE ENTRIES A RE NOT GENUINE BECAUSE HE HAS USED THE WORDS DOES NOT APPEAR TO BE GENUIN E. THE DETAILED NOTE, TO OUR MIND, GOES TO SHOW CLEARLY THAT THE INF ORMATION WAS RECEIVED, AND LETTERS OF ADMISSION HAD BEEN PERUSED B Y THE AO. THE QUESTION IS WHETHER THE CONTENTS OF PARAGRAPH 4.2 MEET THE REQUIREMENTS OF SECTION 147 AS INTERPRETED JUDICIALLY. 6.1 THE FACTS OF THE CASE OF SARTHAK SECURITIES CO. (P) LTD. (SUPRA) ARE DISTINGUISHABLE AS THIS CASE DEALS WITH GENUI NENESS OF MONEY RECEIVED AS SUBSCRIPTION TOWARDS SHARE CAPITAL. THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (P) LTD. IS APPLICABLE TO THE EFFECT THAT ONCE IDENTITY IS ESTABLISHED, NO FURTHER ACTION CAN BE TAKEN IN THE HANDS OF RECIPIENT. SINCE THE SUBSCRIBERS WERE CO MPANIES AND TRANSACTIONS HAD TAKEN PLACE THROUGH BANKING CHANNELS, THERE WAS NO DISPUTE REGARDING THE IDENTITY OF THE SUBSCRIBER. HOW EVER, SUCH ARE NOT THE FACTS IN THE CASE AT HAND AND EVEN THE DECISIO N IN THE CASE OF LOVELY EXPORTS (P) LTD. IS NOT APPLICABLE. ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 19 6.2 THE FACTS OF THE CASE OF LAKSHYA EXIM PVT. LTD.(SUPRA) ARE SIMILAR TO THE FACTS OF THIS CASE. IN THIS CASE, THE IN FORMATION WAS RECEIVED FROM THE ASSESSING OFFICER OF P.K. RUIA AND HIS GROUP O F COMPANIES REGARDING ACCOMMODATION ENTRIES RECEIVED BY THE ASSESSE E FROM VIVEK LEAFIN (P) LTD. THE INFORMATION WAS FOUND TO BE WRONG AN D THE AMOUNT WAS RECEIVED AS SALE CONSIDERATION OF FABRICS. IN TH E RECORDED REASONS IN THIS CASE, THE AO SPEAKS IN GENERAL TERMS ABOUT REC EIPT OF SHARE CAPITAL, GIFTS OR SALE CONSIDERATION. HE HAS NOT IDENTIFIED W ITH REFERENCE TO THE RETURN ON RECORD WHETHER THE CHEQUES RECEIVED WERE SUBSCRIPTIONS FOR SHARE CAPITAL, GIFTS OR SALE CONSIDERATION. WITHOUT AS CERTAINING THE CORRECT FACT, IT COULD NOT BE SAID WHETHER INCOME HAS ESCAPED ASSESSMENT OR NOT. IN CASE OF SALE, THERE COULD BE PROFIT OR THERE CO ULD BE LOSS. FURTHER, IT WAS NOT ASCERTAINED WHETHER THE RECEIPTS FORM PART OF PROFIT AND LOSS ACCOUNT OR ONLY THE BALANCE SHEET. THEREFORE, A DECISION REGARDING ESCAPEMENT OF INCOME COULD NOT HAVE BEEN ARRIV ED AT BEFORE EXAMINING THE NATURE OF RECEIPTS. IN THESE CIRCUMSTANCES , IT CAN BE SAID THAT THERE WAS NO APPLICATION OF MIND BY THE AO AND HE ME RELY PROCEEDED ON THE BASIS OF INFORMATION FURNISHED BY THE INVESTIGATION WING WITHOUT ASCERTAINING THE FACTS OF HIS CASE. THE CASE O F INDIAN SUGAR & GENERAL ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 20 INDUSTRY EXPORT IMPORT CORPORATION LTD. (SUPRA) DE ALT WITH PRIOR PERIOD EXPENSES. THE NOTICE FOR RE-ASSESSMENT WAS ISS UED ON THE BASIS OF AUDIT OBJECTION. THE HONBLE COURT MENTIONED THAT TH ERE IS NOTHING TO SUGGEST FROM THE LANGUAGE OF THE NOTE THAT THE AO APPL IED HIS MIND TO THE CONTENTS OF AUDIT OBJECTION. THIS CASE INVOLVED A POINT OF LAW WHETHER A PART OF PRIOR PERIOD EXPENSES COULD BE ALLOWED. HOWEVER, THE INFORMATION IN THE CASE BEFORE US IS OF FACT THAT M/S AGGA RWAL & COMPANY HAD BEEN ISSUING ACCOMMODATION ENTRIES OF CAPITAL, GIFT O R SALE CONSIDERATION. THEREFORE, THE FACTS ARE DISTINGUISHABLE. IN THE CASE OF PARAMJIT KAUR (SUPRA), INFORMATION WAS RECEIVED FROM SURV EY CIRCLE REGARDING NON- ACCOUNTING OF DEMAND DRAFT OF RS. 80,040/-. THIS INFORMATION WAS NOT EXAMINED OR CORROBORATED BY THE AO. IT WAS HELD THAT HE PROCEEDED MERELY ON SUSPICION. WE ARE OF THE VIEW THAT THE FACTS OF THIS CASE ARE ALSO DISTINGUISHABLE. THE REASON IS THAT THE A O DID NOT RECORD HIS OWN SATISFACTION AFTER EXAMINING OR CORROBORATING THE INFORMATION. WHEN WE LOOK AT THE REASONS RECORDED BY THE AO IN THIS CASE, IT IS CLEAR THAT HE EXAMINED THE INFORMATION AND DREW HIS OWN CONCL USIONS ABOUT THE INFORMATION IN PARAGRAPH NO. 3. HE ALSO ASCERTAI NED THE ENTRIES OBTAINED FROM M/S AGGARWAL &COMPANY. TO THIS EXTENT THE FACTS ARE DISTINGUISHABLE. HOWEVER, IT IS CLEAR THAT HE DID NOT CORROBORATE THE ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 21 INFORMATION EITHER BY EXAMINING THE RETURN OF INCOME OF THE ASSESSEE OR MAKING INDEPENDENT ENQUIRIES FROM THE ASSESSEE O R M/S AGARWAL & CO. IN THESE CIRCUMSTANCES, WE MAY NOT RELY ON THE DECISION IN THIS CASE AS FACTS ARE PARTLY DISTINGUISHABLE. THE DECISIO N IN THE CASE OF ATUL JAIN AND VINITA JAIN (SUPRA) WAS FOLLOWED IN THE CASE OF LAKSHYA EXIM PVT. LTD. HOWEVER, THE ISSUE HERE WAS REGARDING THE APPROVAL GRANTED BY THE COMMISSIONER, WHO MERELY STATED YES AND APPEND ED HIS SIGNATURE. THE FACTS OF THIS CASE ARE ALSO DISTINGUISHABL E. WE HAVE ALREADY SEEN THAT THE ADDITIONAL COMMISSIONER NOT ONLY PERUSED THE REASONS RECORDED BY THE AO BUT ALSO THE SUPPORTING RECORD AN D CLEARLY MENTIONED THAT HE WAS SATISFIED THAT IT WAS A FIT CASE FOR REOPE NING ASSESSMENT U/S 147. THEREFORE, ON THESE FACTS, THE DECISION IS NOT APPLICABLE. 6.3 THE RESULT OF THE DISCUSSION IS THAT THE REOP ENING OF ASSESSMENT WAS BAD IN LAW AS THE AO DID NOT MAKE ANY ENQUIRY T O ASCERTAIN THE NATURE OF THE TRANSACTION SO AS TO COME TO A CONCLUSION THAT ANY INCOME ESCAPED ASSESSMENT. IT IS HELD ACCORDINGLY. ITA NO. 2503(DEL)/2008 & C.O. NO. 153(DEL)/2009 22 7. IN VIEW OF THE AFORESAID DISCUSSION, IT IS NOT NECESSARY FOR US TO EXAMINE THE MERITS OF THE ADDITION MADE BY THE AO , WHICH HAS BEEN DELETED BY THE LD. CIT(APPEALS). 8. IN RESULT, THE APPEAL OF THE REVENUE IS PARTL Y ALLOWED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11 FEBRUARY, 2011. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 11 TH FEBRUARY, 2011. SP SATIA COPY OF THE ORDER FORWARDED TO: M/S CREATIVE INFOTECH (P) LTD., NEW DELHI. ITO, WARD 3(4), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.