DCIT, CC-15, New Delhi V. BDR Builders & Developers P. Ltd., New Delhi

ITA 1177/DEL/2021

AI Insights

The case involves the Income Tax Department's appeal against BDR Builders & Developers P. Ltd concerning the reopening of an assessment for the assessment year 2012-13. The reopening was based on allegations that several merged entities had received accommodation entries. The CIT(A) had quashed the reopening, leading to the Revenue's appeal to the Tribunal. The Tribunal examined the validity of the reopening under Section 148 of the Income Tax Act, focusing on whether the reasons for reopening constituted a 'change of opinion' or were based on 'suspicion' without new tangible material.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131708 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 21-09-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Reopening of assessment; Unexplained cash credit; Question of law; Tangible material; Difference of opinion; Accommodation entries; Competent authority; Assessment record; Capital receipt; Reason to believe; Change of opinion; Reassessment proceedings; Borrowed satisfaction; Set aside
• Section: 147; 68; 148; 132; 143(3); 142(1); 153A; 133(6); 195; 143(2)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘A’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar US, Judicial Member ITA No. 1177/Del/2021 Asstt. Year: 2012-13 DCIT, Central Circle-15, New Delhi Vs. BDR Builders & Developers P. Ltd,B- 393, Zakir Nagar SO, South East Delhi, New Delhi-1100025 (APPELLANT) (RESPONDENT) PAN No. Assessee by : Dr. Rakesh Gupta, Adv. Revenue by : Sh. Kanv Bali, Sr. DR Date of Hearing: 28.02.2023 Date of Pronouncement: 16.03.2023 ORDER Per Dr. B. R. R. Kumar, Accountant Member: This appeal has been filed by the Revenue against the order of the ld CIT(A)-26, New Delhi dated 23.02.2020 for AY 2012-13. 2. The revenue has raised the following grounds of appeal for AY 2012-13:- “1. On the facts and circumstances of the case the Ld. CIT(A) has erred in quashing the order by holding that the reason for reopening the case u/s 148 of the IT Act are either based on change of opinion or reason to suspect. 2. On facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting addition of Rs. 17,95,00,000/- made by AO on account of unexplained source of source of Share Capital and Share Premium u/s 68 of the Income Tax Act, 1961. 3. (a) The Ld. Commissioner of Income Tax (Appeals) is erroneous and not tenable in law and on facts. ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 2 (b) The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.” 3. The assessee furnished its original return of income u/s 139(1) of the Act declaring net taxable income of Rs.47,97,827 Thereafter an order u/s 153A read with section 143(3) of the Act was passed in this case on 30.12.2019 accepting the returned income of Rs.47,97,827/-. 4. Vide an order passed by Hon'ble Delhi High Court on 20.2.13 various companies including Gulab Buildtech Private Ltd., Verma Buildtech & Promoters Pvt. Ltd, Renu Builders & Promoters Pvt. Ltd and D&S Developers Pvt. Ltd. stood amalgamated in assessee company with effect from 14.2012. 5. The assessee company was issued a notice u/s 148 of the Act dated 31st March 2019 and in response to the assessee's request for providing reasons for reopening of the case, the copy of such reasons was provided to the assessee, according to which the allegation was that the erstwhile companies namely, Gulab Buildtech Pvt. Ltd., Verma Buildtech & Promoters Pvt. Ltd., Renu Builders & Promoters Pvt. Ltd, and D&S Developers Pvt. Ltd. had received accommodation entries during the instant year. The assessee filed objections against the reopening of the case and the same were disposed off by the Assessing Officer vide an order dated 15.10.2019 when the same were rejected. Against rejection of such objections the assessee preferred a Writ petition before the High Court of Delhi who vide their order dated 9.1.2020 has allowed the assessee "to avail of its statutory right of appeal in respect of the reassessment order ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 3 dated 27.12.19 before the CIT (Appeals)" and has further directed that "the CIT (A) shall pass an order dealing with all the submissions of the petitioner including in relation to the validity of the notice under section 148 of the Act". The Assessing Officer has passed an assessment order u/s 143(3) of the Act read with section 147 of the Act on 27.12.19 determining the taxable income of the assessee at Rs. 18,64,39,790/- making an addition of Rs.17.95 crores. 6. The appellant is aggrieved by the re- opening of its case under section 147 of the Act and is also aggrieved by the addition of Rs. 17.95 crores filed appeal before the ld CIT(A). The ld CIT(A) deleted the addition holding that the notice issued u/s 148 is void ab initio. 7. Facts relevant to the adjudication of the case are as under:- “ The appellant company had been amalgamated with other group companies including M/s D & S Developers Pvt. Ltd. (DSDPL), M/s Verma Buildtech & Promoters Pvt. Ltd.(VBPL), M/s Renu Builders & Promoters Pvt. Ltd.(RBPL), and M/s Gulab Buildtech Pvt. Ltd.(GBPL). 8. The AO received the information that: (i) M/s. GBPL has received entries of share capital of Rs. 7 crores from two companies of entry operator Sh. Himanshu Verma. (ii) M/s. GBPL has received entries of Rs. 5.655 crores from Mr. Roop Kishore Madan prop. Rhea Distribution Company who had huge cash & credit amounts appearing ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 4 in their bank accounts, which were immediately transferred out to various persons/entities. (iii) M/s. VBPL, M/s DSDPL & M/S RBPL have received entries of Rs. 5.30 crores from Mr. Manoj Sethi, who had huge cash & credit amounts appearing in his bank accounts, which were immediately transferred out to various persons/entities. 9. As the companies M/s. VBPL, M/s DSDPL, M/s RBPL & M/s. GBPL (referred as merged entities) stand amalgamated in the appellant company w.e.f.1.4.2012, accordingly, proceedings u/s 148 were initiated by the AO in the case of the appellant company. As per the assessment order, the appellant has asked for the reasons for reopening and filed objections to reopening with the AO on 23.09.2019, which were disposed of by the AO on 15.10.2019. Thereafter, the appellant had filed writ petition on 19.12.2019 before the Hon'ble Delhi High Court, however, in the interim order of the Court, the assessment proceedings were continued to go on and finally the AO passed assessment order on 27.12.2019. 10. For the sake of ready reference the entire order of the AO is reproduced below:- “Assessment in this case was completed u/s 143(3) vide order dated 26.03.2015 at income of Rs.4,56,640/-. Thereafter assessment was completed u/s 153A/143(3) of the Act vide order dated 30.03.2016 at total income of Rs.47,97,827/- in respect of M/s BDR Builders & Developers Pvt. Ltd. and Rs.21,41,0964/- in respect of M/s Renu Builders & Promoters totalling Rs.69,39,791/-. Subsequently, action u/s 132 of the Act was carried out by the department in Himanshu Verma Group of cases on 29.03.2012 and on verification documents found and seized it was found that they ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 5 were providing accommodation entries to the beneficiaries. The enquiries made further revealed that they had provided accommodation entries to M/s Gulab Buildtech Pvt. Ltd. merged with the assessee company M/s BDR Builders and Developersthrough their companies, M/s Soffpro Technologies Pvt. Rs.5,00,00,000/- and M/s Mithilanchal Investment Finance Pvt. Ltd. Rs.2,00,00,000/- totaling of Rs.7,00,00,000/- need be assessed in the hands of the assessee as undisclosed/unaccounted income during the year under consideration. Thereafter, information was again received from DIT(Inv.)-1, New Delhi in the case of M/s. Verma Buildtech & Promoters Pvt. Ltd. and it was found that bank account No. 910010032209647 was maintained with Axis Bank Lajpat Nagar where Sh. Manoj Sethi is authorized signatory. In this account huge cash deposits and withdrawals were made. Enquiries conducted by the Inv. Wing revealed that Mr.Manoj Sethi could not prove the source of the deposits in the said bank account nor could he explain the names of the parties from whom these deposits were received and also the parties to whom money was transferred from this account. As per enquiries made a sum of Rs.45,00,000/-, Rs.4,50,00,000/-, and Rs.35,00,000/- totaling Rs.5,30,00,000/- was transferred from this account to M/s. Verma Buildtech& Promoters Pvt. Ltd., M/s. Renu Builders & Promoters Pvt. Ltd. and M/s. D and S Developers Pvt. Ltd. respectively during the financial year 2011-12 relevant to assessment year 2012-13. All these three companies have already been merged with the assessee company M/S BDR Builders and Developers Pvt. Ltd. Since Shri Manoj Sethi could not explain the reasons for transferring these amounts to these merged companies it shows that these companies have taken accommodation entries by transferring their own funds in cash to the account of Sh. Sethi and then again getting the same amounts through the above bank account. Another information has been received from the Inv. Wing New Delhi that a sum of Rs.45,00,00,000/- was received in account No. 040001000011 with ICICI Bank Ltd. New Delhi Sunder Nagar branch owned by Sh. Roop Kishore Madan during the assessment year 2012-13 which was immediately transferred to various entities. In spite of providing proper opportunities, Sh. Madan could not explain the source of deposits in this account nor could he explain the purpose of transfer of the said amount to various entities. This amount was transferred to various entities including M/s. Gulab ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 6 Buildtech Pvt. Ltd. to whom a sum of Rs. 5,65,50,000/- was transferred on 03.02.2012. Since these companies have been merged with the assessee company M/s. BDR Builders and Developers Pvt. Ltd., the accommodation entries received by them amounting in all to Rs.17,95,50,000/- are to be assessed in its hands during the year under consideration as its unaccounted/undisclosed income under the provisions of Section 147 of the Act. Therefore, after recording reasons to believe that income to the tune of Rs. 17,95,50,000/- has escaped assessment and after obtaining sanction u/s151 from the competent authority, notice u/s 148 of the Act was issued to the assesse on 31.03.2019 requiring the assesse to file the return of its income within 30 days from the service of the said notice. In response to this notice the assesse filed a letter dated 15.04.2019 filed the copy of the return filed on 05.04.2019 declaring total income of Rs.47,97,830/-. Thereafter on the request of the assesse copy of the reasons for initiating proceedings u/s 147 of the Act was provided to the assesse on 26.08.2019. Vide letter dated 23.09.2019 the assesse filed objections to the reasons recorded for initiating reassessment proceedings u/s 147/148 of the Act which were disposed off vide this office letter F. No.ACIT/CC-25/2019- 20/148/Misc:/922 dated 15.10.2019. Thereafter, the assesse filed a Writ Petition before the High Court and the Hon'ble High Court of Delhi vide their order in W.P.(C)/2019 dated 19.12.2019 disposed off the writ petition as under: "Mr. Singh, learned senior advocate submits that the approval of the PCIT under section 151 of the Income Tax Act has not been provided to the petitioner despite it being claimed that the same is enclosed with the order disposing of the objections. He further submits that the objections preferred by the petition have not been dealt with adequately. Let the respondent produce the original record on the next date for perusal of the court including the approval obtained from the PCIT. Till the next date the assessment proceedings may go on and the reassessment order may also be passed but the same should not be given effect to." ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 7 As stated above, during under consideration the assessee company M/s BDR Builders and Developers Pvt. Ltd had taken accommodation entries to the tune of Rs. 7,00,00,000/- Rs. 4,50,00,000/-, Rs. 35,00,000/-, Rs. 5,65,50,000/- totalling in all to Rs. 17,95,00,00/-, Notice u/s 143(2) was issued on 30.10.2019. Notice u/s 142(1) along with questionnaire was issued on 22.11.2019 requiring the assessee to file the details as mentioned therein. In response to this notice the assesee vide its letter dated 20.12.2019 filed various details in respect of all these companies Including their balance sheets, computations of income, bank statements and enclosures to the balance sheets and copies of assessment orders the cases where assessments had already been completed but no documentary supportive evidence has been filed in respect of the creditworthiness of the parties from whom these accommodation entries were received not has the assessee-filed any evidence to prove the - genuineness of these transactions as per the provisions of Section 68 of the income tax Act, 1961. In view of these facts and the whole amount of Rs. 17,95,00,000/- received as accommodation entries is treated unexplained credits in the books of account of the assessee company and is being added to the income of the assessee as assessee's income from undisclosed sources u/s 68 of the Income Tax Act, 1961. 11. Aggrieved the assessee filed appeal before the ld CIT(A), who held that the initiations of proceedings u/s 147 of the Act are not valid in law. Hence, the revenue filed appeal before the Tribunal. 11A. Heard, the arguments of both the parties and perused the material available on record. We have perused the order of the ld CIT(A) in detail. For the sake of ready reference the said order adjudicating the issue is reproduced as under:- “6. Ground Nos. 1 to 5: I have considered the facts of the case and written submissions of the appellant. The various grounds taken by the appellant are adjudicated in subsequent para. 6.1 It is observed that four group companies viz M/s D & S Developers Pvt. Ltd. (DSDPL), M/s Verma Buildtech & Promoters Pvt. Ltd. (VBPL), M/s Renu Builders & Promoters Pvt. Ltd. (RBPL), and M/s Gulab Buildtech Pvt. Ltd.(GBPL) were amalgamated in the appellant company with the orders of Hon'ble Delhi High Court dated 20.2.2013 w.e.f 01.04.2012. These companies were existing ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 8 independently before 01.04.2012 and thereafter were part of the appellant company. The case of M/s GBPL for the year under consideration was in the jurisdiction of ITO Ward 10(4) Delhi and original assessment, u/s 143(3) for the year under consideration, was completed by the ITO Ward 10(4) Delhi on 26.03.2015. There was a search & seizure action on the appellant company as on 02.01.2014 and the jurisdiction of the appellant company was transferred to DCIT, CC-15 Delhi. The assessment order u/s 153A had been passed on 31.03.2016 considering the income of M/s BDR at Rs. 47,97,827/- and of M/s RBPL at Rs. 21,41,964/- totalling the taxable income at Rs. 69,39,791/-. In the year 2019, the information relating to M/s GBPL was received in the office of ITO Ward 10(4) Delhi, which was forwarded to DCCC-15 Delhi. The information in the case of M/s VBPL/RBPL/DSDPL was received by DCCC-15 Delhi directly from the Investigation wing Delhi. The reopening u/s 148, on account of the transactions relating to the merged entities, had been done in the name & PAN of the appellant, as merged entities no longer exist. 7. Ground No. 1, 2 & 3 relate to challenging the reopening u/s 148 of the IT Act. These can be summed up as under: (i) The reasons recorded and notice u/s 148 on consolidated basis in respect of more than one entity is bad-in-law. (ii) The appellant had disclosed fully and truly all material facts and the case of M/s GBPL was assessed u/s 143(3) in 2015. (iii) The AO had made enquiries with regard to share capital received in M/s GBPL during the assessment made u/s 143(3) in 2015. (iv) The transactions of Mr. Roop Kishore Madan prop. Rhea Distribution Company, have all been examined in the assessment u/s 143(3) of M/s GBPL in 2015. (v) There is change of opinion of the AO, which is not valid ground for reopening u/s 148. (vi) The fact that Sh. Manoj Sethi and Sh. Roop Kishore Madan had deposited cash in their bank accounts & there are many credit entries in these bank accounts, cannot automatically lead to inference that these entities are involved in transactions of accommodation entries. In the facts of the case, the "reasons to believe" are based on perverse inference and appellant cannot be held responsible for entries in the bank account of third party, unless there is specific finding in this regard. (vii) There is no valid basis to conclude that the income had escaped assessment. 7.1 The appellant had filed a writ petition before the Hon'ble High Court of Delhi on reopening of the case u/s 148 of the IT Act 1961. In the interim order dated 19.12.2019, the High Court had allowed to carry on the assessment proceedings but had put a restraint on the enforcement of assessment order. In the final order dated 09.01.2020, the Hon'ble High Court of Delhi had held as under: 1. "The petitioner has preferred the present writ petition to assail the notice issued under Section 148 of the Income Tax Act (hereinafter referred as the Act) dated 31.03.2019, relevant to the assessment year (AY) for 2012-13 and the order dated 15.10.2019 disposing of the objections preferred by the petitioner preferred to the said notice. ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 9 2. The petitioner also assails the re-assessment proceedings initiated by the aforesaid notice for the AY 2012-13. The writ petition was initially heard by this Court on 19.12.2019. The submission advanced on behalf of the petitioner on the said date was that the approval of the PCIT under Section 151 of the Income Tax Act had not been provided to the petitioner, despite being claimed by the respondents that it was enclosed with the order disposing of all the objections. It was also the grievance of the petitioner that the objections had not been dealt with adequately. Consequently, this Court had directed the respondents to produce the original records on the next date of hearing for perusal of this Court, including the approval obtained from the PCIT. We also permitted that the assessment proceedings may go on and the reassessment order may be passed, however, the same was not to be given effect. 3. The respondents have produced the original record which shows that the approval of the PCIT has indeed been obtained on 30.03.2019 prior to the issuance of the impugned notice dated 31.03.2019. The assessing Officer (AO) has now passed the re-assessment order. 4. We have heard learned counsels at some length. One of the submissions of Mr. Balbir Singh, learned senior counsel for the petitioner is that while passing the assessment order, the AO has not dealt with various submissions of the petitioner. There may be merit in this submission of the petitioner, however, we do not wish to examine the same any further at this stage, considering the fact that the petitioner has statutory right of the appeal to assail the re-assessment order before the CIT (A) and, if necessary even before the ITAT. Though, it is open to the petitioner to press this petition, to independently assail the notice under Section 148 of the Act irrespective of the fact that the assessment order has been passed, Mr. Balbir Singh, on instruction states that the appellant would be satisfied,if the appellant is permitted to raise all its pleas before the CIT (A), including in relation to the validity of the notice issued under Section 148 of the Act which may be decided on merits. He submits that in the meantime, the demand that may be raised by the petitioner in pursuance of the re-assessment order dated 27.12.2019, be not given effect to. 5. We are inclined to accept the submission of the Mr. Singh looking into the overall facts and circumstances of the case. We accordingly dispose of this petition with liberty to the petitioner to avail of its statutory right of appeal in respect of the re-assessment order dated 27.12.2019 before the CIT (A). Demand, if any, raised in consequence of the said re-assessment order shall however not be enforced till the decision of the appeal by the CIT (A). We make it clear that we have made no observations on the merits of the case one way or another and all pleas and defences of the petitioner as well as the revenue are preserved. The CIT (A) shall pass an order dealing with all the submissions of the petitioner including in relation of the validity of the notice under Section 148 of the Act. We however vacate the interim order passed by us on 19.12.2019. Consequently, the re-assessment order becomes effective from today." Thus there is a direction in the above order of Hon'ble High Court Delhi that CIT(A) shall pass an order dealing with all the submissions of the petitioner including in relation of the validity of the notice under Section 148 of the Act. ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 10 8. Let us first observe the facts of the case regarding the material information available for initiation of proceedings u/s 148 of the IT Act 1961. 8.1 It is observed from the assessment records that there was communication of the information relating to three transactions from the investigation wing to the AO. The information can be summed up as under: a) The information was received from the Investigation wing Delhi in the office of Range-10, Delhi (earlier jurisdiction) on 01.03.2019, which was forwarded to the DCIT central circle 15 (present jurisdiction) on 18.12.2019.It contained the fact that the appellant had received share capital entries of Rs 7 Cr in M/s GBPL (now merged with the appellant w.e.f.01.04.2012) from two companies [Rs 5 Cr from M/s Saffpro Technologies Pvt. Ltd (STPL)& Rs 2 Cr from M/s Mithilanchal Investment Finance Pvt. Ltd. (MIFTL)] operated & managed by the entry operator Mr Himanshu Verma. Sh Himanshu verma had admitted in his search on 29.03.2012 that he is an entry operator, providing entries on various accounts including share capital, through his various companies including the alleged companies. b) The another forwarding letter of Investigation wing in this regard dated 26.03.2019 was received in the office of ITO ward 10(4) on 28.03.2019, which had been further forwarded to the office of DCIT, CC-15 Delhi on 29.03.2019. As per this letter, the appellant had received the entries of Rs. 5.655 cr in M/s. GBPL from Mr. Roop Kishore Madan (RKM) prop. Rhea Distribution Company. The investigation wing had mentioned that in the open enquiries conducted in the case of RKM, on the basis of suspicious transactions in his case, the incomplete reply to queries was submitted by the AR of Mr. RKM. There were cash deposits and huge credit entries in his accounts and funds were immediately transferred after receipt of the same. On the basis of the fact of incomplete details furnished by Mr. Roop Kishore Madan (RKM) prop. Rhea Distribution Company w.r.t transactions in his bank accounts, The Investigation Wing had recommended as under: "12. From the above table it is clear that the majority of the funds were transferred to the companies wherein Mr. Roop Kishore Madan has direct interest. In the absence any reply from the subject these transactions remained unexplained and are suspicious. Further, one of the above mentioned companies have not filed their ITRS for the A.Y. 2012-13 and some are Zero turnover and Zero tax paid companies. 13. Further, there are cash deposits of Rs. 1.8585 crores & 1.661 crores in the Central Bank of India Account 3014813657 of Rhea Distribution Company & Mr. Roop Kishore Madan during the F.Y. 2011-12 & 2012-13 respectively. These funds are forwarded to M/s. Sanya Hospitality Pvt. Ltd, Roop Kishore Madan. 14. As the territorial jurisdiction over the case of the assessee lies with you, the information is being forwarded to you for considering the re- opening of case of M/s. Gulab Buildtech Pvt. Ltd having PAN:- AACCG2042H for the A. Y. 2012-13 u/s 147 of the IT Act, 1961." c) The forwarding letter of Investigation wing dated 15.03.2019 w.r.t another transactions had been received in the office of DCIT, CC-15 Delhi ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 11 on 20.03.2019. As per the contents of this letter, the investigation wing had mentioned that in the open enquiries conducted in the case of Sh.Manoj Sethi, on the basis of STR in his case, the incomplete reply to queries was submitted by him. There were cash deposits and huge debit/credit entries in his accounts and funds were immediately transferred after receipt of the same. The investigation wing observed from his bank account that "It is emphasised that the transactions discussed above are directly related to Sh. Manoj Sethi, Sh. Manoj Sethi either received the funds from the concerns and persons mentioned above or transferred the funds to them. Shri Manoj Sethi during the course of investigation proceedings could not explain the source of deposits, purpose of transfer of funds, nature of transactions and identity of the persons, genuineness of the transaction and credit worthiness of persons from whom funds received." On the basis of this observation, the recommendations of the Investigation Wing were as under: "From the fact and discussion made above, it is clear that Sh. Manoj Sethi has deposited Rs. 4,71,99,000/- and deposited Rs. 56,25,04,262/- to transfer entries from the different persons and entities but could not furnish any evidences in support of their identity, their credit worthiness and could not prove genuineness of transaction. He also could not furnish cashbook and other evidences in support of source of cash deposited made in his bank account. It is also pointed out that majority of the bank accounts maintained by him and business entities through which he is carrying out business activities and having substantial interest in these entities and made voluminous transferred of the funds between them. Therefore, following proposals are made:- You are advised to consider to invoke the provisions of section 147 r.w. Section 148 of IT Act, 1961 in the case of Sh. Manoj Sethi for F.Y. 2011- 12 relevant to A.Y. 2012-13 and reopen the case after recording reasons for reopening of the case. In view of above, you are advised to consider to invoke the provisions of Section 147 r.w. Section 148 of IT Act, 1961 in the case of Sh. Manoj Sethi for F.Y. 2011-12 relevant to A.Y. 2012-13 and reopen the case of M/s. Verma Buildtech & Promoters Pvt. Ltd. having PAN- AABCV9813C who has advanced/received the funds to/from Sh. Manoj Sethi [PAN- AAZPS6697N/AO, Circle-27(1), Delhi." There were similar information received in M/S RBPL & M/s DSDPL wherein, the total transactions of three merged group entities in the appellant including M/s VBPL were at Rs 5.30 cr. 8.2 Thereafter, the AO had issued notices dated 26.03.2019 & 29.03.2019 u/s 133(6) of the IT act 1961 to the appellant and the respective replies of the appellant on these notices, read as under: "(a)Notice u/s 133(6) on 26.3.2019:- "Please refer to the above mentioned subject. ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 12 In this regard, the information available with this office shows that M/s. Gulab Buildtech Pvt. Ltd., M/s Verma Buildtech & Promoters Pvt. Ltd., M/s. Renu Builders & Promoters Pvt. Ltd and M/s. D & S Developers Pvt. Ltd. Merged with the assessee company M/s. BDR Builders and Developers Pvt. Ltd had taken accommodation entries to the tune of Rs. 12,30,00,000/- for the A.Y. 2012-13. You are requested to verify the source of cash and other credit entries with documentary evidences. Please submit your explanation for the above asked details on or before 29.03.2019 positively. This information is being asked u/s 133(6) of the Act and failure to comply to this will attract action under the provisions of the IT Act, 1961." (b)Reply of the appellant dated 29.03.2019 on the notice u/s 133(6) dated 26.03.2019: "In reference to your letter F.NO. ACIT/CC-15/2018-19 Dt. 26.03.2019 it is respectfully submitted that no accommodation entries amounting to Rs. 12,30,00,000/- for the A.Y. 2012-13 had been taken by the companies viz M/s. Gulab Buildtech Pvt. Ltd., M/s Verma Buildtech & Promoters Pvt. Ltd., M/s. Renu Builders & Promoters Pvt. Ltd and M/s D & S Developers Pvt. Ltd merged with the assessee company M/s. BDR Builders and Developers Pvt. Ltd as mentioned in the said letter sent by your goodself. All the above said companies have been regularly filing their Income Tax Returns and have been duly assessed to income tax. Please take it on your records that all the future correspondence related to the assessee company through e-mail be sent on e-mail id [e-mail]." (c) Notice u/s 133(6) on 28.3.2019:- "Please refer to the above mentioned subject. In this regard, the information available with this office shows that M/s. Gulab Buildtech Pvt. Ltd., M/s Verma Buildtech & Promoters Pvt. Ltd., M/s. Renu Builders & Promoters Pvt. Ltd and M/s. D & S Developers Pvt. Ltd. Merged with the assessee company M/s. BDR Builders and Developers Pvt. Ltd had taken accommodation entries to the tune of Rs. 17,95,50,000/- for the A.Y. 2012-13. You are requested to verify the source of cash and other credit entries with documentary evidences. Please submit your explanation for the above asked details on or before 30.03.2019 positively. This information is being asked u/s 133(6) of the Act and failure to comply to this will attract action under the provisions of the IT Act, 1961." (d)Reply of the appellant dated 30.03.2019 on the notice u/s 133(6) dated 28.03.2019: "Inreference to your letter F.NO. ACIT/CC-15/2018-19/1952 Dt. 28.03.2019 it is respectfully submitted that no accommodation entries amounting to Rs. 17,95,50,000/- for the A.Y. 2012-13 had been taken by the companies viz M/s. Gulab Buildtech Pvt. Ltd., M/s Verma Buildtech & Promoters Pvt. Ltd., M/s. Renu Builders & Promoters Pvt. Ltd and M/s D & S Developers Pvt. Ltd merged with the assessee company M/s. BDR Builders and Developers Pvt. Ltd as mentioned in the said letter sent by your good self. The same facts have already been clarified to you in our earlier reply filed dated 29.03.2019 in response to your letter dated 26.03.2019 asking the similar information. All the above said companies have been regularly filing their income tax returns and have been duly ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 13 assessed to income tax. Please take it on your records that all the future correspondence related to the company through e-mail be sent on [e-mail]." 8.2.1 The AO had recorded reasons for opening on 29.03.2019 and had obtained the approval of PCIT-2 Delhi on 30.03.2019. The notice u/s 148 was issued by the AO on 31.03.2019, which was e-mailed on the mail id [e-mail] of the appellant on 31.03.2019 at 5:11 pm. 8.3 The appellant had asked for the reasons recorded for reopening of its case u/s 148 of the IT act 1961, which were supplied by the AO vide letter dated 26.08.2019. The appellant had filed letter dated 23.9.2019 filing the objections to re-opening u/s 148.These objections have been disposed of by the AO vide letter dated 15.10.2019. The assessment order was passed on 27.12.2019 as reproduced in para 5.2 above. 8.4 The reasons forming the belief of the AO for reopening u/s 148 are as under: "1. Reasons for reopening of the assessment Assessment in this case was completed u/s 143(3) vide order dated 26.03.2015 at income of Rs. 4,56,640/-. Subsequently, action u/s 132 of the Act was carried out by the department in Himanshu Verma Group of cases on 29.03.2012 and on verification documents found and seized it was found that they were providing accommodation entries to the beneficiaries. The enquiries made further revealed that they had provided accommodation entries to M/s Gulab Buildtech Pvt. Ltd. merged with the assessee company M/s BDR Builders and Developers through their companies M/s Soffpro Technologies Pvt. Ltd. Rs. 5,00,00,000/- and M/s Mithilanchal Investment Finance Pvt. Ltd. Rs. 2,00,00,000/- totalling Rs. 7,00,00,000/- during the assessment year under consideration and therefore, these accommodation entries of Rs. 7,00,00,000/- need be assessed in the hands of the assessee as undisclosed/unaccounted income during the year under consideration. Thereafter, information was again received from DIT(Inv.)-1, New Delhi in the case of M/s Verma Buildtech & Promoters Pvt. Ltd. and it was found that bank account No. 910010032209647 was maintained with Axis Bank Lajpat Nagar where Shri Manoj Sethi is authorised signatory. In this account huge cash deposits and withdrawals were made. Enquiries conducted by the Inv. Wing revealed that Mr. Sethi could not prove the source of the deposits in the said bank account nor could he explain the names of the parties from these deposits were received and also the parties to whom money was transferred from this account. As per enquiries made a sum of Rs. 45,00,000/-, Rs. 4,50,00,000/- and Rs. 35,00,000/- totalling Rs. 5,30,00,000/- was transferred from this account to M/s Verma Buildtech & Promoters Pvt. Ltd., M/s Renu Builders & Promoters Pvt. Ltd. and M/s D and S Developers Pvt. Ltd. respectively during the financial year 2011-12 relevant to assessment year 2012-13. All these three companies have already been merged with the assessee company M/s BDR Builders and Developers Pvt. Ltd. Since Shri Manoj Sethi could not explain the reasons for transferring these amounts to these merged companies it shows that these companies have taken accommodation entries by transferring their own funds in cash to the bank account of Shri Sethi and then again getting the same amounts through the above bank account. ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 14 Another information has been received from the Inv. Wing New Delhi that a sum of Rs. 45,00,000/- was received in account No. 040001000011 with ICICI Bank Ltd., New Delhi Sunder Nagar branch owned by Shri Roop Kishore Madan during the assessment year 2012-13 which was immediately transferred to various entries. In spite of providing proper opportunities, Shri Madan could not explain the source of deposits in this account nor could he explain the purpose of transfer of the said amount to various entities. This amount was transferred to various entities including M/s Gulab Buildtech Pvt. Ltd. to whom a sum of Rs. 5,65,50,000/- was transferred on 03.02.2012. Since these companies have been merged with the assessee company M/s BDR Builders and Developers Pvt. Ltd., the accommodation entries received by them amounting in all to Rs. 17,95,50,000/- are to be assessed in its hands during the year under consideration as its unaccounted/undisclosed income under the provisions of Section 147 of the Act. 2. Brief details of information collected/received by the AO In this case enquiries were made by the Investigation Wing and it was found that during the year under consideration M/s Gulab Buildtech Pvt. Ltd. M/s Verma Buildtech & Promoters Pvt. Ltd., M/s Renu Builders & Promoters Pvt. Ltd. and D and S Developers Pvt. Ltd. merged with the assessee company BDR Builders and Developers Pvt. Ltd. had taken accommodation entries to the tune of Rs. 7,00,00,000/-, Rs. 45,00,000/-, Rs. 4,50,00,000/- and Rs. 35,00,000 and Rs. 5,65,50,000/- totalling in all to Rs. 17,95,00,000/- which need be assessed in the hands of the assessee company M/s BDR Builders and Developers Pvt. Itd. during the year under consideration. 3. Analysis of information collected/received On the basis of enquiries conducted, it stands established that the assessee company had taken accommodation entries which require to be considered for tax purposes. 4. Enquiries made by the AO as sequel to information collected or received. Enquiries has been made by issuing notice u/s 133(6) of the I.T. Act, 1961 after taking due approval from Pr. CIT(Central)-2, New Delhi on 28.03.2019 to the assessee and requested to file its explanation for the accommodation entries to the tune of Rs. 11,89,481/- and asked to verify the sources of cash and other credit entries with documentary evidences. The assessee has stated that it has not taken any accommodation entries. The reply of the assessee is not tenable as the assessee has not submitted any documentary evidence to substantiate its claim for the same. 5. Findings of the AO. In view of the information received from investigation wing and after examination of the seized documents and on the basis of other enquiries made u/s. 133(6) of the IT Act, 1961. It is found that income to the tune of Rs. 17,95,50,000/- has escaped assessment in this case and the same needs be assessed as income of the assessee during the ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 15 assessment year 2012-13 under the provisions of section 147 of IT Act, 1961. 6. Basis of forming reasons to believe and details of escapement of income. Since the enquiries made in this case reveal that the assessee company has taken accommodation entries to the tune of Rs. 17,95,50,000/-. I have reason to believe that income to the tune of Rs. 17,95,50,000/- has escaped assessment for the Assessment Year 2012-13 and case needs be re-assessed as per the provisions of section 147 of the Act. 7. Escapement of income chargeable to tax in relation to any assets (including financial interest in any entity) located outside India. NIL 8. Findings of AO on true and full disclosure of the material facts necessary for assessment under provio to section 147. The assessee had failed to disclose fully and truly all material facts which were necessary for correct assessment of its income. 9. Applicability of the provisions of section 147/151 to the facts of the case. Assessment in this case was completed u/s. 143(3) vide order dated 26.03.2015 at income of Rs. 4,56,640/-. Subsequently, action u/s. 132 of the Act was carried out by the department in Himanshu Verma Group of cases on 29.03.2012 and on verification documents found and seized it was found that they were providing accommodation entries to the beneficiaries. The enquiries made further revealed that they had provided accommodation entries to M/s. Gulab Builtech Pvt. Ltd. merged with the assessee company M/s. BDR Builders and Developers through their companies M/s. Soffpro Technologies Pvt. Rs. 5,00,00,000/- and M/s. Mithilanchal Investment Finance Pvt. Ltd. Rs. 2,00,00,000/-. Thereafter as per enquiries made by the Wing a sum of Rs. 45,00,000/-, Rs. 4,50,00,000/- and Rs. 35,00,000/- totalling Rs. 5,30,00,000/- was transferred from this account to M/s. Verma Builtech & Promoters Pvt. Ltd. M/s. Renu Builders & Promoters Pvt. Ltd. and M/s. D and S Developers Pvt. Ltd.,. respectively during the financial year 2011-12 relevant to assessment year 2012-13. In another case of Shri Roop Kishore Madan it was found that accommodation entries to the tune of Rs. 5,65,50,000/- were given by Shri Madan from his account No. 040001000011 maintained with ICICI Bank Ltd, Sunder Nagar Branch, New Delhi to M/s. Gulab Buildtech Pvt. Ltd. on 03.02.2012. All these three companies have also already been merged with the assessee company M/s. BDR Builders and Developers Pvt. Ltd. The total amount of accommodation entries comes to Rs. 17,95,50,000/-. The requirement to initiate proceeding u/s 147 of the Act are reasons to believe that income for the year under consideration has escaped reasons to believe that because of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded above. I have carefully perused the assessment records containing the submissions made by the assessee in response to various notice issued during the assessment /re-assessment proceedings and have ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 16 noted that the assessee had not fully and truly disclosed the material facts necessary for its assessment for the year under consideration. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for its assessment for the year under consideration thereby necessitating reopening of the case u/s 147 of the Act. In this case assessment was completed u/s 143(3) of the Act, and period for reopening of the case is beyond 4 years therefore, necessary sanction to issue notice u/s 148 has to be obtained from Commissioner of Income Tax as per the provisions of section 151 of the Act." 9. Regarding the reasons recorded by the AO for reopening of the case u/s 148, the appellant had raised the legal ground that assessment proceedings initiated and assessment orders passed on the basis of combined reasons recorded for the cases of more than one entity are bad in law and without jurisdiction. 9.1 The AO had mentioned in the reasons that "Assessment in this case was completed us 143(3) vide order dated 26.03.2015 at income of Rs. 4,56,640/-" In the assessment order it had again mentioned that "Assessment in this case was completed u/s 143(3) vide order dated 26.03.2015 at income of Rs. 4,56,640/- Thereafter assessment was completed w/s 153A/143(3) of the act vide order dated 30.3.2016 at total income of Rs 47,97,827/- in respect of M/s BDR Builders Pvt. Limited and Rs 21,41,964/- in respect of M/s Renu Builders & promoters totalling to Rs 69,39,791" The AO had started the assessed income with Total income already assessed us 153A/143(3) vide order dated 30.3.2016 Rs 69,39,791/-And made additions of Rs 17,95,00,000/- u/s 68 on account of alleged accommodation entries in the reasons recorded. 9.2 It is observed that the amalgamation of M/s Gulab Buildtech Pvt. Ltd. M/s Verma Buildtech & Promoters Pvt. Ltd., M/s Renu Builders & Promoters Pvt. Ltd. and D and S Developers Pvt. Ltd. was effective from 01.04.2012. Therefore, for the year under consideration AY 2012-13, these entities were independent existing entities. Their P & L account and balance sheet entries will get merged with M/s BDR w.e.f 01.04.2012 and before that period these entities have individual existence w.r.t to the transactions in their respective books of accounts. It is even evident from fact that the assessment u/s 143(3) of M/s GBPL for AY 2012-13 had been completed by the AO of M/s GBPL in March' 2015 (not the AO of M/s BDR), even after the amalgamation order of it with M/s BDR was passed by the Court in 2013. The abated assessment in M/s RBPL had been made u/s 153A on 31.03.2016 as independent entity determining the income at Rs. 21,41,964/-, however, this assessed income was added to the income of M/s BDR as merged entity. Although after amalgamation of these companies with M/s BDR, the responsibility of liabilities of the companies will be with M/s BDR and even the notice will be issued on the PAN of M/s BDR, the reopening of these entities for the period prior to 1.4.2012 had to be w.r.t their individual status of assessments in those years. It is possible that some entities may have been assessed u/s 143(3) and other entities u/s 143(1). Further one entity may have profit after addition (say assessed income Rs 1 Cr) &other entity may have loss after addition (say assessed loss Rs 1 Cr), their combined effect may be NIL on total income of M/s BDR, if assessed as part of. There will be tax liability in one case and no ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 17 liability in another case and in case the order is made considering it as part of M/s BDR for these years, it will lead to wrong results of assessed income and consequent demand of these entities when considered combined with M/s BDR in the years before 01.04.2012. Another issue arising would be that the additions made to the returned income of M/s BDR will not be legally correct for its determination of income in the years prior to 01.04.2012, as it does not include the returned or assessed income of these entities in its return of income. It is also not clear the income of Rs. 4,56,640/-(as in para 9.1)adopted by the AO in reasons of which company. Further any addition made u/s 68 in these entities considering them to be part of M/s BDR for the years prior to 01.04.2012 will be legally wrong, as the alleged transactions are not part of books of M/s BDR prior to 01.04.2012. Therefore, any addition u/s 68 in these entities had to in their individual cases prior to 01.04.2012 and not in the hands of pre-merged M/s BDR. Making such addition u/s 68 in the hands of M/s BDR will not be legally correct as, these transactions are not part of books of M/s BDR prior to 1.4.2012. In my opinion, the A.O. was required to record separate reasons, issue separate notice u/s 148 and to pass separate assessment orders relating to transactions of GBPL,VBPL and other amalgamated entities, however, the assessment proceedings will be in the name & PAN of M/s BDR. E.g. in respect of transactions of VBPL, the A.O. was required to record reasons, issue notice u/s 148 and pass assessment order in the name of "BDR in the matter of erstwhile VBPL". Similarly in respect of transactions of GBPL, the A.O. was required to record reason, issue notice u/s 148 and pass assessment order in the name of "BDR - in the matter of erstwhile GBPL". The combined recording of reasons and passing of common assessment order on M/s BRD is not as per law. 10. Regarding the reasons recorded by the AO for reopening of the case u/s 148, following observations are made on these three pieces of information. 10.1 The first issue is regarding the allegation that M/s. GBPL has received entries of share capital of Rs. 7 crores from two companies [Rs 5 Cr. from M/s Saffpro Technologies Pvt. Ltd (STPL)& Rs 2 Cr from M/s Mithilanchal Investment Finance Pvt. Ltd. (MIFTL)] controlled by the entry operator Himanshu Verma. 10.1.1 The AO while passing the assessment order on 27.12.2019 had commented that in subsequent search on Mr. Himanshu Verma in 2012, it is observed that the appellant company had received subsequently the entries. Same wording had been used in the "Reasons to believe" note reproduced above. However the search on Mr Himanshu Verma on 29.3.2012 was much earlier to the filing of return of income by the appellant for the year under consideration. 10.1.2 It is pertinent to mention over here that the facts of search on Mr Himanshu Verma in the year 2012 along with the relevant portion of his appraisal report were available with the erstwhile AO while making the original assessment u/s 143(3) in the case of M/s GBPL in year 2014-15. As per the assessment records, the letter No Jt. CIT Range- 10/Transfer/2014- 15/388 dated 13.2.2015 of joint CIT, Range-10, Delhi, to all AO's read as under: ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 18 "Sub:- Dissemination of database of beneficiaries provided by Sh. Himanshu Verma & its associates - reg. Please refer to letter F.No. CCIT- IV/2013-14/1046 dated 20.02.2014 of the office of the Chief Commissioner of Income Tax, Delhi-IV on the above noted subject which was circulated among all AOS of the erstwhile Range- 12, New Delhi. The data made available along with the above referred letter consisted of 16 accommodation entries given by Sh. Himanshu Verma Group of company in respect of F.Y. 2009-10, 28 entries for F.Y. 2010-11 and 56 entries in respect F.Y. 2011-12. The respective AOS of this Range are directed to submit the status report of the action taken by them in this regard by return of post. A copy of the above referred list of cases pertaining to this Range is again enclosed for ready reference." It is further observed that the last two entries in the annexure to this letter refer to amount of Rs 7 Cr from the two entities of Himanshu Verma referred above. 10.1.3 The assessment of M/s GBPL u/s 143(3) had been completed by the ITO ward 10(4), New Delhi on 26.03.2015. As per the copies of letters filed by the appellant w.r.t assessment completed on 26.03.2015, it is observed that: • The appellant had made submissions of details of this share capital along with relevant confirmation of account of these companies, bank statement, share certificates etc during the assessment proceedings u/s 143(3) in the year 2015. • There is letter in response to notice u/s 133(6) from M/s Saffpro Technologies Pvt. Ltd to the ITO Ward 10(4) dated 29.01.2015 received in the office of ITO on 02.02.2015 with following contents: "Sub: Information u/s 133(6) of the Income Tax Act, 1961 in the case of M/S Gulab Buildtech P Ltd. It is respectfully submitted that we are in receipt of your letter bearing no. F. No. ITO/Ward-10(4)/2014-15 dated 21.01.2015. We have to submit as under: 1. That the company has invested in the equity share capital of the company and has purchased 1,00,000 shares of Rs. 10/- each at a premium of Rs. 490/- each. 2. That the company has made payment to the company during the financial year 2011-12 for the purchase of above said equity shares of the company. The copy of the share application forms is enclosed. 3. That the copy of bank statement with Axis Bank, Ashok Vihar, New Delhi having A/c No. 910020038535624 & Indusind Bank, Ashok Vihar, New Delhi having A/c No. 0143-A00829-050 is enclosed, highlighting an investment of Rs. 5,00,00,000/- (Rs, five crores only) made in the company. 4. That the complete set of the Income Tax Return filed with the department for AY 2012-13 is enclosed along with the copy of the audited balance sheet, profit and loss account with enclosures and audit report. ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 19 5. The perusal of copy of account of the assessee company would clarify that the shares were allotted on 30.03.2012 by the company. The original share certificate was surrendered by us upon amalgamation of the company with M/s BDR Builders & Developers P Ltd. and consequent upon the amalgamation, a fresh share certificate bearing no. 195 was Issued by the amalgamated company on 28.03.2013. If any other information is needed, I am glad to furnish the same at the earliest." • There is letter in response to notice u/s 133(6) from M/s Mithilainchal Inv. & Finance Pvt. Ltd to the ITO Ward 10(4) dated 29.1.2015 received in the office of ITO on 02.02.3015 with similar details as reproduced above in the case of M/s Saffpro Technologiels Pvt. Ltd. 10.1.4 In view of the above facts & circumstances, it is observed that the information emanating from the search of Mr Himanshu verma was available with the AO, while making original assessment in the year 2015 of M/s GBPL u/s 143(3) for the year under consideration. The information was circulated to the AO's in Feb., 2014 by the office of CCIT and status on action taken was asked by the JCIT Range 10 from the AO's on 13.2.2015, whereas the assessment u/s 143(3) was completed on 26.3.2015. The findings of the search in the case of Sh Himanshu Verma were in the knowledge of the AO and even enquiries u/s 133(6) were conducted by the AO, as is evident from the detailed reply of these two alleged companies, who had subscribed to the share capital of M/s GDBL. In these facts & circumstances of the case, recording satisfaction of "reasons to belief" on the same set of information for reopening, which was available & had been examined in the earlier assessment completed u/s 143(3), will tantamount to "change of opinion" on the same set of facts of the case. The change of opinion cannot be a valid ground for reopening of assessment proceedings u/s 148 of the IT Act 1961. 10.2 The second ground taken by the AO for reopening was regarding the entries of Rs. 5.655 cr received in M/s. GBPL from Mr. Roop Kishore Madan prop. Rhea Distribution Company. 10.2.1 There is no material or statement referred by the investigation wing in the information forwarded on 26.3.2019 • Wherein it transpires, on the basis of material on record, that Sh. Roop Kishore madan is an entry operator or • There is no admission in any statement made by Sh. Roop Kishore Madan that he is an entry operator or he had given entries to the appellant against any receipt of cash. • There is no material on record that the appellant had made any unaccounted cash payments to Mr. Roop Kishore madan. • The appellant had never been called by the Investigation Wing to explain the transactions with Mr. Roop Kishore madan. 10.2.2 During the course of appellate proceedings, the appellant had submitted the copy of assessment order u/s 143(3) of Sh. Roop Kishore Madan for AY 2012- ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 20 13 completed on 27.3.2015 (as verified from the assessment records of Sh. Roop Kishore Madan) in which • His returned income for AY 2012-13 was at Rs 25,71,810/-. • On the basis of AIR/ITS information, the AO had made addition of Rs 9.73 Cr on account of cash deposits in his accounts and of Rs 24.51 cr on account of addition in his capital account. • There is no finding in this assessment order made u/s 143(3), considering all cash/credit entries in his bank account, that he is an entry operator. 10.2.3 Thus there was no material or statement of Mr. Roop Kishore Madan or the appellant, in this information forwarded by the investigation wing, to arrive at the conclusion by the AO, that Mr. Roop Kishore Madan is an entry operator, as alleged in notices u/s 133(6) issued by the AO prior to recording of reasons and in the "Reasons to Believe" for reopening of the assessment of the appellant on account of these alleged transactions. The AO should have looked into these facts before forming his "reasons to believe". This clearly indicates that the AO did not have even a single piece of evidence/material from where it is appearing that this person is an entry operator and had given accommodation entries to the appellant, at the time of forming "reasons to believe" for "escapement of income" against the appellant. 10.2.4 Further, it will be pertinent to mention over here that the assessment of Sh Roop Kishore Madan was also reopened u/s 148 in response to the information forwarded by the Investigation wing and the assessed income u/s 143(3) in the order dated 27.3.2015 had been accepted even in the reassessment made u/s 148 completed in December 2019. Further, the assessment order dated 27.3.2015 of Sh Roop Kishore Madan was appealed by him and part relief had been given by CIT(A) and full relief had been given by ITAT Delhi. Sh.Roop Kishore Madan had not been held to be entry operator either in the assessment dated 27.3.2015 u/s 143(3) or by CIT(A) while deciding this appeal or by ITAT while adjudicating the case, or even in the reassessment made u/s 147 r.w.s 143(3) in Dec., 2019 on the basis of transactions in his bank account, 10.2.5 It appears from the assessment order of Sh. Roop Kishore madan for AY 2012-13 that the information forwarded by the investigation wing had already been taken into consideration in his assessment u/s 143(3) completed on 27.3.2015. There is no finding in this assessment order that Sh. Roop Kishore madan is an entry operator and the beneficiary of its transactions should be brought to tax. There is neither any such finding in the assessment order completed on 27.3.2015 nor in the investigation report of the wing that Sh. Roop Kishore madan is an entry operator. From the copy of report of the investigation wing, it appears that there are even no inquiries made by the investigation wing with the appellant (even confirmed by the appellant) which can lead to the conclusion that the transactions of the appellant with Sh. Roop Kishore madan represent accommodation entries. It is further submitted that Sh. Roop Kishore madan is an existing assessee filing return of income in high income bracket. 10.2.6 Without prejudice to it, regarding these transactions, the appellant had submitted that M/s GBPL had continued transactions with Sh. Roop Kishore Madan Prop. M/s Rhea Distribution during the year under consideration and in the subsequent years. It is observed from the ledger account of M/s Rhea Distribution Company in the books of M/s GBPL that the appellant had received total amount of Rs. 8.685 cr. during the year from M/s Rhea Distribution Company, whereas, ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 21 the AO had made addition of only the amount of one entry of Rs. 5.655 cr. as suggested by the Investigation Wing. The appellant had claimed that these transactions were investigated during the original assessment u/s 143(3) of M/s GBPL completed on 26.3.2015 and had further submitted the following documents during assessment as well as appellate proceedings: • Confirmation of ledger account of M/s Rhea Distribution Prop Sh. Roop Kishore madan • Copy of ITR of Sh. Roop Kishore madan for AY 2011-12 & 2012-13 • Bank statement of Sh. Roop Kishore Madan highlighting the payments • bank statement of the appellant showing corresponding entries as per the ledger account. 10.2.6.1 Thus, it is observed that (i) The appellant had discharged the primary burden to prove identity, creditworthiness and genuineness of these transactions, by filing the copy of return acknowledgement/ confirmation/bank statement of M/s Rhea Distribution. The AO had not rebutted these primary evidences with any adverse material on record. (ii) Mr.Roop Kishor Madan is an existing assessee with high returned income, whose assessment for AY 2012-13 had been completed u/s 143(3) after taking into account all the bank transactions. The primary evidences submitted by the appellant regarding these loan transactions proving identity of creditor, genuineness of transaction and creditworthiness of the creditor had not been rebutted by the AO with any adverse evidence on record. In these facts & circumstances of the case, it is held that the amounts received by the merged entity M/s GBPL from Mr Roop Kishor madan prop. of M/s Rhea Distribution Company are not accommodation entries, but are the loan entries, which had been later returned by the appellant. Without prejudice to it, once an existing credible assessee had given confirmation of amounts paid by him to any entity, any action on account of allegation of any credits in his accounts should be taken in his case only and the same had been done in the assessment made u/s 143(3) of Mr Roop Kishor Madan in 2015. Once the unexplained amounts in the account of Mr Roop Kishor Madan had been assessed in his hands, the amounts transferred to various entities from these accounts are application of money and cannot be taxed again in normal circumstances. In view of the above factual position and discussion made above, the addition of Rs 5.655Cr. made by the AO on account of payments received from Mr. Roop Kishor madan prop. M/s Rhea Distribution Company is not sustainable even on merit. 10.3 The third issue raised by the AO is regarding the entries of Rs. 5.30 cr. received in M/s. VBPL and other merged entities from Mr Manoj Sethi. 10.3.1 There is no material or statement referred by the Investigation Wing in the information forwarded vide different letters: • Wherein it transpires, on the basis of material on record, that Mr Manoj Sethi is an entry operator or ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 22 • There is no admission in any statement made by Mr Manoj Sethi that he is an entry operator or he had given entries to the appellant against any receipt of cash. • There is no material on record that the appellant had made any unaccounted cash payments to Mr Manoj Sethi. • The appellant had never been called by the investigation to explain the transactions with Mr Manoj Sethi. 10.3.2 It is further observed that Mr Manoj Sethi is an existing assessee and had filed the returned income of AY 2012-13 at Rs 2,93,79,060/-. In his assessment for AY 2012-13 completed u/s 143(3) on 31.3.2015, the AO had made addition of Rs 20.86 Cr. (out of total unsecured loans of Rs 53.77 Cr shown by him) on 31.03.2015. Further addition of Rs 3.9 cr. had been made on account of cash deposits made by him in the bank accounts. The total income had been assessed at Rs. 35.97 Cr. There i is no finding in this assessment order made u/s 143(3), considering all cash/credit entries in his bank account, that he is an entry operator. 10.3.3 Thus there was no material or statement of Mr. Manoj Sethi or the appellant, in this information forwarded by the Investigation Wing, to arrive at the conclusion by the AO, that Mr Manoj Sethi is an entry operator, as alleged in the "Reasons to Believe" for reopening of the assessment of the appellant on account of these alleged transactions. 10.3.4 It will be pertinent to mention over here that the assessment of Mr Manoj Sethi was also reopened u/s 148 in response to the information forwarded by the Investigation Wing and in this reassessment, the assessed income u/s 143(3) in the order dated 27.3.2015 had been accepted without making any addition. Sh. Manoj Sethi had not been held to be entry operator either in the assessment dated 27.3.2015 u/s 143(3) or in the reassessment u/s 148 completed on 30.12.2019. 10.3.5 It appears from the assessment order of Mr Manoj Sethi for AY 2012-13 that the information forwarded by the investigation wing had already been taken into consideration in his assessment u/s 143(3) completed on 27.3.2015. There is no finding in this assessment order that Mr Manoj Sethi is an entry operator and the beneficiary of its transactions should be brought to tax. There is neither any such finding in the assessment order completed on 27.3.2015 nor in the investigation report of the wing that Mr Manoj Sethi is an entry operator. From the copy of report of the investigation wing, it appears that there are even no inquiries made by the investigation wing with the appellant (even confirmed by the appellant) which can lead to the conclusion that the transactions of the appellant with Mr Manoj Sethi represent accommodation entries. It is further submitted that Mr Manoj Sethi is an existing assessee filing return of income in high income bracket. 10.3.6 It is observed from the assessment records that the Investigation Wing had forwarded the information of various deposits in cash as well as in credit in the bank accounts of Sh. Manoj Sethi and the subsequent transfer of this money to various entities. As per the investigation wing, Mr Manoj Sethi could not explain the source of deposits, nature & purpose of all the transactions and identity/ genuineness/ creditworthiness of these transactions. It is further observed that ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 23 the AO had neither done any enquiry/investigation w.r.t. these entries received from Mr Manoj Sethi nor referred to any adverse statement of Mr Manoj Sethi against the appellant or his bank account transactions nor analysed & appreciated the documents submitted by the appellant during the assessment proceedings w.r.t these transactions. The AO had presumed these entries of Rs 5.3 cr received from Mr Manoj Sethi as accommodation entries just on the suspicion of investigation wing. The AO had neither brought any material on record to prove that Mr. Manoj Sethi is an entry operator nor that these are really accommodation entries received by M/s VBPL and other merged entities. 10.3.7 Without prejudice to it, the appellant had claimed that there were loans given to Mr Manoj Sethi from three group companies (now merged with the appellant) of the appellant, which had been received back in the year under consideration. It is observed from the detail submitted by the appellant that these amounts advanced by various group companies in FY 2010-11 to Mr. Manoj Sethi were mainly received back in the FY 2011-12 as per the following table: Name Date of receipt Particulars of cheque/RTG S Bank Amount(Rs) Date of repayment Particulars of cheque/RT GS Bank Amount(Rs) I.Vemia Buildtec h and Promote rs Pvt. Ltd 21.03.2011 HDFCH1108 0700094 HDF C Bank 1,00,00,000/ - 13.07.2011 UTIBH1119 4009022 HDFC Bank 45,00,000/- Total 1,00,00,000/ - 45,00,000/- 2, Renu Builders &Promo ters Pvt. Ltd 24.12.2010 Ch No. 234876 HDF C Bank 2,50,00,000/ - 09.07.2011 UTTBH1119 0068022 HDFC Bank 2,00,00,000/- 07.01.2011 Ch No. 234878 HDF C Bank 2,00,00,000/ - 09.07.2011 UTTBH1118 8040334 HDFC Bank 3,00,00,000/- 10.01.2011 HDSFCH110 10625736 HDF C Bank 2,80,00,000/ - 11.07.2011 Ch No. 578239 HDFC Bank 2,00,00,000/- 10.01.2011 HDSFCH110 10627343 HDF C Bank 1,20,00,000/ - 13.07.2011 UTIBH1119 4009087 HDFC Bank 1,50,00,000/- Total 8,50,00,000/ - 8,50,00,000/- 3.D&S Develope rs Pvt. Ltd 30.01.2010 HDFCH1003 0618294 HDF C Bank 50,00,000/- 26.05.2011 UTIBH1114 6075100 HDFC Bank 35,00,000/- 02.03.2010 HDFCH1006 1987657 HDF C Bank 1,80,00,000/ - 18.08.2011 Ch No. 578243 HDFC Bank 1,95,00,000/- Total 2,30,00,000/ - 2,30,00,000/- The outstanding loans receivable from Mr Manoj Sethi in these entities are available from the audited balance sheets of these three entities as on 31.3.2011. The amounts received by these entities in FY 2011-12 are verifiable from the bank statements of FY 2011-12. It is observed that the AO had added back the amount of Rs 5.30 cr received in M/s VBPL& other entities, whereas the total amount of transactions with these entities are at Rs. 11.25 Cr. The AO had not even bothered to look into the total amounts received in these merged entities in spite of information of ledger accounts of these entities submitted by the appellant and had mechanically added the amount of Rs 5.3 Cr as worked by the investigation wing. ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 24 10.3.8 Further the appellant had filed following documents during the assessment proceedings and the copy had been filed during appellate proceedings: • Copies of ledger accounts of these entities with Mr Manoj Sethi wherein the loans given to him in the preceding year had been shown as opening credit balances in these entities. • Copy of acknowledgement of ITR-4 filed by Mr Manoj Sethi showing gross total income at Rs 2,94,79,060/-. • Confirmation of Mr. Manoj Sethi of the accounts of these three entities in his books of accounts. • Copy of the bank statements of these entities reflecting the transactions with Mr Manoj Sethi. Copy of the bank statements of Mr Manoj Sethi reflecting the transactions with these entities. 10.3.9 From the above discussion, it is observed that (i) The AO had mechanically adopted the figures of transactions (for recording reasons as well as making addition in reassessment) of Mr Manoj Sethi at Rs 5.3 Cr with M/s VBPL& other entities, as suggested by the Investigation wing, whereas there are total receipts of Rs 11.25 Cr in the three entities as mentioned in above table (now merged with the appellant company) with Mr Manoj Sethi. (ii) The AO had not brought any adverse evidence/statement from where the conclusion, that the amounts received from Mr Manoj Sethi are accommodation entries, can be arrived at. (iii) The appellant had discharged the primary burden to prove identity, creditworthiness and genuineness of these transactions, by filing the copy of return acknowledgement/ confirmation/bank statement of Sh Manoj sethi. The AO had not rebutted these primary evidences with any adverse material on record. (iv) Mr. Manoj sethi had filed the return of income for AY 2012-13 at Rs2.94 Cr and his assessment had been made u/s 143(3) in 2015 after considering all his bank transactions. (v) The amounts received by these merged entities in the year under consideration are the receipts of the money advanced by them in past FY 2010-11 to My Manoj Sethi. There is nothing on record to prove that Mr Manoj Sethi is an entry operator. He is an existing assessee with high returned income, whose assessment for AY 2012-13 had been completed u/s 143(3) after taking into account all the bank transactions in March 2015. The primary evidences submitted by the appellant regarding these loan transactions proving identity of creditor, genuineness of transaction and creditworthiness of the creditor had not been rebutted by the AO with any adverse evidence on record in reassessment made in Dec., 2019. In these facts & circumstances of the case, it is held that the amounts received by the above three merged entities from Mr Manoj Sethi are not accommodation entries, but are the repayment of loan amounts by Mr. Manoj Sethi, which had been advanced by these entities in earlier year. Without ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 25 prejudice to it, once an existing credible assessee had given confirmation of amounts paid by him to any entity, any action on account allegation of any credits in his accounts should be taken in his case only and the same had been done in the assessment u/s 143(3) of Sh. Manoj sethi in March, 2015. Once the unexplained amounts in the account of Mr Manoj Sethi had been taxed in his hands, the amounts transferred to various entities from these accounts are application of money and cannot be taxed again in normal circumstances. In view of the above factual position and discussion made above, the addition of Rs 5.3 cr made by the AO on account of payments received from Mr Manoj sethi is not sustainable even on merit. 11. It is further observed that the AO had issued two notices u/s 133(6) on 26.03.2019 & 29.3.2019 at the fag end of the time barring date for reopening u/s 148, wherein he had pre-concluded that the appellant had taken accommodation entries to the tune of Rs. 12.34 Cr & Rs. 17.57 Cr (respective notices), however he had not mentioned the name of entry providers in any of these notices. Thus the appellant was not given the names of specific alleged entry providers and even the details of alleged entries to rebut the allegations of the AO & was given very little time to respond. The AO had not given proper opportunity to the appellant and was pre-decided in mind, without considering the reply of the appellant, on the basis of information received from the investigation wing. The AO had issued notices u/s 133(6) as a formality. Thus the conclusion of the AO to form "reasons to belief" is on the basis of the borrowed satisfaction and wrong inference of investigation report that the appellant had received accommodation entries. There is no independent finding of the AO to reach at the conclusion that the appellant had taken accommodation entries. 11.1 The appellant cannot be held responsible for incomplete submissions made by Sh. Roop Kishore madan and Sh Manoj Sethi (referred as entities) to the investigation wing w.r.t. his transactions unless there is nexus established between these entities & the appellant for introducing the unaccounted money of the appellant in the books of appellant through them. Further the doubted bank credit amounts of these entities have already been assessed in their hands in their respective assessments u/s 143(3) made in March, 2015. There are no new facts emerging from the report of investigation wing which indicate that these entities are providing accommodation entries and the appellant is the beneficiary of the such transactions with them. Even in the reassessment of these two entities made in December 2019, there is no addition except the addition made in their orders made u/s 143(3) in March, 2015. In these facts & circumstances of the case, it is held that there is no foundation on which the AO had interpreted these entities as "Entry Operators". The reopening cannot be done on the basis of "suspicion" but should be based on prima facie facts of belief based on tangible material for "escapement of income". The appellant had disclosed all these transactions in the audited accounts and these have even been assessed in the assessment made u/s 143(3) on 27.3.2015 in M/s GBPL. As per the assessment order, assessment u/s 153A had been completed in M/S BDR & M/s RBPL (as merged entity) on 30.3.2016. 12. Conclusion: On the basis of above discussion, following observations are made w.r.t reopening of assessment for the year under consideration u/s 148. 12.1 The first reason given for reopening u/s 148 was that M/s GBPL (now merged with appellant w.e.f.1.4.2012) had received entries of Rs. 7 crores from entry operator Mr. Himanshu Verma. ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 26 12.1.1 As discussed in the above para 10.1.2, this information was available with the AO of M/s GBPL much before passing the order u/s 143(3) on 26.03.2015. The AO had concluded the assessment u/s 143(3) after considering this information and making requisite enquiry on this issue. There are no new facts in the information received by the AO on 18.12.2019 from Inv. Wing on the basis of which reopening had been purposed by the AO after expiry of four year from the end of the relevant assessment year. It is a clear case of change of opinion on same set of facts of the case, which is not a valid ground for reopening u/s 148 as per various judicial pronouncement on this issue. 12.2 The second and third reason given for reopening u/s 148 were the transactions of the appellant with two parties viz., • Entries of Rs. 5.655 cr in M/s. GBPL from Mr. Roop Kishore Madan (RKM) prop. Rhea Distribution Company. The total transactions as worked by Investigation Wing, in the reasons recorded by the AO and added by the AO in reassessment proceedings were at Rs 5.655 cr. Whereas factually the total transactions as per books were at Rs. 8.685 cr. • Entries of Rs. 5.30 cr in M/s VBPL & other merged entities, from Sh. Manoj Sethi. The total transactions of three merged group entities in the appellant as worked by Investigation Wing and added by the AO were at Rs 5.30 cr., whereas factually the total transactions as per books w.r.t these three merged entities were at Rs. 11.25 cr. 12.3 As discussed in the above, the facts are summed as under: (i) There is nothing in the report of Investigation Wing forwarded, regarding transactions with both these entities (Mr Manoj Sethi & Mr roop Kishore Madan) with the merged entities of the appellant, which suggest that these entities are involved in providing accommodation entries in general and in particular to the merged entities of the appellant. (ii) It is observed that, the assessment u/s 143(3) had been completed in the case of these two entities in March 2015, wherein, the AIR transactions (considered STR by the Investigation wing) as reflected in their bank account had been examined and accordingly additions were made on this basis in these respective cases. In these assessments completed for these entities in 2015, there is no allegation in these assessment orders that these two entities are engaged in the business of providing accommodation entries in general and in particular to the merged entities of the appellant. It is pertinent to mention over here that even the assessment of M/s GBPL was also completed u/s 143(3) in march 2015 and transactions related to Sh. Roop Kishore Madan prop. M/s Rhea Distribution Company were also verified to be genuine. (iii) The Investigation Wing had suggested reopening in the case of both these entities on the basis of same information in STR which had already been considered in the AIR received by the AO's of both these entities. This ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 27 fact is even evident from the reassessment of these entities made in 2019, wherein, no further additions except the additions as made in the original order u/s 143(3) in March, 2015 were reiterated. Therefore, the information forwarded by the Investigation Wing with respect to these entities was same as considered in the assessment of these two entities made u/s 143(3) in March, 2015 itself. There is no allegation in the assessment made u/s 143(3) made in the March, 2015 or in the reassessment made in the Dec, 2019 in both these two entities that they are providing accommodation entries to anyone. (iv) The Investigation Wing had suggested reopening in the case of both these entities and advised the AO to consider reopening of the case of the appellant also as successor of merged group entities of the appellant. The reopening in the case of these two entities had been suggested by the Investigation Wing on the basis of the fact that these two entities have provided incomplete details of the transactions in their respective bank accounts. The suggestion of considering reopening in the case of appellant is not based on any material fact collected by the Investigation Wing from these entities or any statement of these entities or any enquiry of the appellant with regard to the transactions with these entities. Thus, there was no material referred in the report of the Investigation Wing to form any opinion of "Escapement of Income" in the hands of the appellant. Accordingly the prima facie belief of the AO on the basis of said report was not justified. The AO had simply relied on the report of the Investigation Wing in a mechanical manner, which clearly indicates it is a case of non application of mind and borrowed satisfaction. (v) The AO had issued notices u/s 133(6) to form "Reasons to believe" of "Escapement of Income" independently. However, it is observed from these 133(6) notices that the AO had already presumed these two entities as "entry operators" as it had mentioned in the notices u/s 133(6), without any valid basis. The AO had not mentioned, even the names of these entities and amount of transactions with individual entities, with whom the transactions of merged entities of appellant have been presumed to be "Accommodation Entries" and had given very little time to the appellant to respond to these notices. In the absence of the names of the alleged entities and alleged amounts of transactions with these individual entities, there was no occasion with the appellant to satisfy the AO about genuineness of these transactions. In such a situation, non submissions of details of these transactions, not confronted to the appellant in the notice u/s 133(6), cannot form the valid basis for reaching to the "reasons to believe" for "escapement of income" in the hands of the appellant. It appears that these incomplete notices were issued without application of mind in a mechanical manner to just do formality of paper work to show that the AO had applied his mind independently. Such action of the AO cannot be termed as independent application of mind by AO, on the information received from the Investigation wing. (vi) Without prejudice to it, even the AO had made the reassessment without considering the replies of the appellant. The ledger accounts of these parties show transactions of more amounts with these two entities than those worked by Investigation Wing &same worked amounts added by ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 28 the AO in the assessment order. It is very much evident that the AO had not applied his mind and based his every action merely on the report of the Investigation Wing. 12.4 The legal position on various relevant issues arising in the 148 proceedings is as under: (i) In the case of Pr. CIT v Meenakshi Overseas Pvt. Ltd. (2017) (5) TMI 1428, Delhi, reopening u/s 148 was made on the basis of information received form investigation wing. The Hon'ble High Court held that such reopening which was based merely on the information received from Investigation. Wing without independent application of mind by A.O. amounted to "borrowed satisfaction" and such reopening was liable to be quashed. The relevant portion of the judgment is reproduced as under:- "31. In Commissioner of Income Tax v. G&G Pharma (supra) there was a similar instance of reopening of assessment by the AO based on the Information received from the DIT (1). There again the details of the entry provided were set out in the 'reasons to belleve'. However, the Court found that the AO had not made any effort to discuss the material on the basis of which he formed prima facie view that income had escaped assessment. The Court held that the basic requirement of Section 147 of the Act that the AO should apply his mind in order to form reasons to believe that income had escaped assessment had not been fulfilled. Likewise in CIT-4 v. Independent Media P, Limited (supra) the Court in similar circumstances invalidated the initiation of the proceedings to reopen the assessment under Section 147 of the Act. 32. In Oriental Insurance Company Limited v. Commissioner of Income Tax 378 ITR 421 (Del) it was held that "therefore, even if it is assumed that, in fact, the Assessee's income has escaped assessment, the AO would have no jurisdiction to assess the same if his reasons to believe were not based on any cogent material. In absence of the jurisdictional pre-condition being met to reopen the assessment, the question of assessing or reassessing income under Section 147 of the Act would not arise." 33. In Rustagi Engineering Udyog (P) Limited (supra), it was held that "...the impugned notices must also be set aside as the AO had no reason to believe that the income of the Assessee for the relevant assessment years had escaped assessment. Concededly, the AO had no tangible material in regard to any of the transactions pertaining to the relevant assessment years. Although the AO may have entertained a suspicion that the Assessee's income has escaped assessment, such suspicion could not form the basis of initiating proceedings under Section 147 of the Act. A reason to believe not reason to suspect - is the precondition for exercise of jurisdiction under Section 147 of the Act." 34. Recently in Agya Ram v. CII (supra), it was emphasized that the reasons to believe "should have a link with an objective fact in the ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 29 form of information or materials on record..." It was further emphasized that "mere allegation in reasons cannot be treated equivalent to material in eyes of law. Mere receipt of information from any source would not by itself tantamount to reason to believe that income chargeable to tax has escaped assessments." 35. In the decision of this Court dated 16th March 2016 in W.P. (C) No. 9659 of 2015 (Rajiv Agarwal v. CIT) it was emphasized that "even in cases where the AO comes across certain unverified information, it is necessary for him to take further steps, make inquiries and garner further material and if such material indicates that income of an Assessee has escaped assessment, form a belief that income of the Assessee has escaped assessment." 36. In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the AO one after the other. There is no Independent application of mind by the AO to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The conclusions of the AO are at best a reproduction of the conclusion in the investigation report. Indeed it is a 'borrowed satisfaction'. The reasons fail to demonstrate the link between the tangible material and the formation of the reason to believe that income has escaped assessment. 37. For the aforementioned reasons, the Court is satisfied that in the facts and circumstances of the case, no error has been committed by the ITAT in the impugned order in concluding that the initiation of the proceedings under Section 147/148 of the Act to reopen the assessments for the AYS in question does not satisfy the requirement of law. 38. The question framed is answered in the negative, i.e., in favour of the Assessee and against the Revenue. The appeal is, accordingly, dismissed but with no orders as to costs." (ii) In the case of Pr. CIT v SNG Developers Ltd. (2018) 404 ITR 312 (Del) assessment was reopened u/s 147 of the Act. The A.O. recorded the reasons that as per information received from investigation wing, the assessee had taken accommodation entries to the tune of Rs. 95,65,510/-. The assessee filed the objections against the reopening. One of the objections was that figure of Rs. 95,65,510/- itself was wrong. The A.O. rejected the objections of the assessee and passed the assessment order making addition of Rs.95,65,510/-. On appeal, the CIT(A) quashed the reopening as the reasons were held to be recorded without application of mind. On appeal by revenue, the ITAT confirmed the order of CIT(A). On further appeal by ITAT, the Hon'ble High Court upheld the order of CIT(A) and ITAT quashing the reopening. The relevant portion of judgment is reproduced as under:- "22. As rightly pointed out by the ITAT, the 'reasons to believe' are not in fact reasons but only conclusions, one after the other. The expression 'accommodation entry is used to describe the information set out without explaining the basis for arriving at such a conclusion. The statement that the said entry was given to the Assessee on his paying "unaccounted cash" is another conclusion the basis for which is not disclosed. Who is the accommodation entry giver is not mentioned. How he can be said to be "a known entry operator" is even more mysterious. Clearly the source for all ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 30 these conclusions, one after the other, is the Investigation report of the DIT. Nothing from that report is set out to enable the reader to appreciate how the conclusions flow therefrom. 23. Thus, the crucial link between the information made available to the AO and the formation of belief is absent. The reasons must be self evident, they must speak for themselves. The tangible material which forms the basis for the belief that income has escaped assessment must be evident from a reading of the reasons. The entire material need not be set out. However, something therein which is critical to the formation of the belief must be referred to. Otherwise the link goes missing. 24. The reopening of assessment under Section 147 is a potent power not to be lightly exercised. It certainly cannot be invoked casually or mechanically. The heart of the provision is the formation of belief by the AO that income has escaped assessment. The reasons so recorded have to be based on some tangible material and that should be evident from reading the reasons. It cannot be supplied subsequently either during the proceedings when objections to the reopening are considered or even during the assessment proceedings that follow. This is the bare minimum mandatory requirement of the first part of Section 147 (1) of the Act." 13. In view of the said decision, the Court has no hesitation in concluding in the present case that the reasons recorded by the AO for reopening the assessment under Section 147 of the Act do not meet the requirement of the law. The ITAT was, therefore, perfectly justified in confirming the order of the CIT (A) and holding the reopening of the assessment to be bad in law. 14. The question framed is, accordingly, answered in the negative i.e. in favour of the Assessee and against the Revenue." (iii) In the case of Pr. CIT RMG Polyvinyl (I) Ltd (2017) 83 taxmann.com 348 (Del), the case was reopened u/s 147/148. The reasons recorded stated that as per the information received from Investigation Wing, the assessee had received accommodation entries of Rs. 1,56,00,000/-. The assessing officer made the addition of Rs. 1,56,00,000/-. The Hon'ble High Court upheld the quashing of reopening on the ground that the figures stated in the reasons was erroneous. The relevant portion of judgment is reproduced as under:- "9. However, in neither of the above cases are the facts similar to those in the present case. The two glaring errors in the reasons in the present case are, in fact, unusual. What the AO might have done if he was aware, even at the stage of consideration of reopening of the assessment that a return had in fact been filed by the Assessee and that the extent of the accommodation entries was to the tune of Rs.78 lakh and not Rs.1.56 crore would be a matter of pure speculation at this stage. He may or may not have come to the same conclusion. But that is not the point. The question is of application of mind by the AO to the material available with him before deciding to reopen the assessment under Section 147 of the Act.. 11. There can be no manner of doubt that in the instant there was a failure of application of mind by the AO to the facts. In fact he proceeded on two wrong premises one regarding alleged non-filing of the return and the other regarding the extent of the so-called accommodation entries. ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 31 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 formation 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 tangible 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 erroneous premise that Assessee had not filed a return when in fact it had. 14. To compound matters further the in the assessment order the AO has, instead of adding a sum of Rs.78 lakh, even going by the reasons for reopening of the assessment, added a sum of Rs.1.13 crore. On what basis such an addition was made has not been explained. 15. For the aforementioned reasons, the Court is satisfied that no error was committed by the ITAT in holding that reopening of the assessment under Section 147 of the Act was bad in law. 16. No substantial question of law arises from the impugned order of the ITAT." (iv) In the case of New Delhi Television Limited vs DCIT (2020) (4) TMI 133 Supreme Court, the Hon'ble apex court held as under: - "Question No.2 24. Coming to the second question as to whether there was failure on the part of the assessee to make a full and true disclosure of all the relevant facts. The case of the assessee is that it had disclosed all facts which were required to be disclosed 25. The revenue has placed reliance on certain complaints made by the minority shareholders and it is alleged that those complaints reveal that the assessee was indulging in round-tripping of its funds. According to the revenue the material disclosed in these complaints clearly shows that the assessee is guilty of creating a network of shell companies with a view to transfer its untaxed income in India to entities abroad and then bring it back to India thereby avoiding taxation. We make it clear that we are not going into this aspect of the matter because those complaints have not seen light of the day either before the High Court or this Court and, therefore, it would be unfair to the assessee if we rely upon such material which the assessee has not been confronted with. 26. Even before the assessment order was passed on 03.08.2012, the assessing officer was aware of the entities which had subscribed to the convertible bonds. This is apparent from the communication dated 08.04.2011. The case of the revenue is that the assessee did not disclose the amount subscribed by each of the entities and furthermore the management structure of these companies. We are not in agreement with this submission of the revenue. It is apparent from the records of the case that the revenue was aware of the entities which subscribed to the convertible bonds. It has been urged that these are bogus companies, but we are not concerned with that at this stage. The issue before us is whether the revenue can take the benefit of the extended period of limitation of 6 years for initiating proceedings under the first proviso Section 147 of the Act. This can only be done if the revenue can show that the assessee had failed to disclose fully and truly all material facts necessary for its assessment. The assessee, in our view had disclosed all the facts it was bound to disclose. If the revenue wanted to investigate the ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 32 matter further at that stage it could have easily directed the assessee to furnish more facts. 27. The High Court held that there was no "true and fair disclosure" in view of the law laid down by this Court in Phool Chand's case (supra), and the judgment of the Delhi High Court in Honda Siel Power Products Limited vs. Deputy Commissioner Income Tax and Another (2012) 340 ITR 53 (Delhi). We have already referred to the judgment in Phool Chand's case (supra), wherein it was held that where the transaction of a particular assessment year is found to be a bogus transaction, the disclosures made could not be said to be all "true" and "full". Relying upon the said judgment the High Court held that merely because the transaction of convertible bonds was disclosed at the time of original assessment does not mean that there is true and full disclosure of facts. 28. We are unable to agree with this reasoning given by the High Court. The assessee as mentioned above made a disclosure about having agreed to stand guarantee for the transaction by NNPLC and it had also disclosed the factum of the issuance of convertible bonds and their redemption. The income, if any, arose because of the redemption at a discounted price. This was an event which took place subsequent to the assessment year in question though it may be income for the assessment year. As we have observed above, all relevant facts were duly within the knowledge of the assessing officer. The assessing officer knew who were the entities who had subscribed to other convertible bonds and in other proceedings relating to the subsidiaries the same assessing officer had knowledge of addresses and the consideration paid by each of the bondholders as is apparent from assessment orders dated 03.08.2012 passed in the cases of M/s. NDTV Labs Ltd. and M/s. NDTV Lifestyle Ltd. Therefore, in our opinion there was full and true disclosure of all material facts necessary for its assessment by the assessee. 29. The fact that stepup coupon bonds for US$ 100 million were issued by NNPLC was disclosed; who were the entities which subscribed to the bonds was disclosed; and the fact that the bonds were discounted at a lower rate was also disclosed before the assessment was finalised. This transaction was accepted by the assessing officer and it was clearly held that the assessee was only liable to receive a guarantee fees on the same which was added to its income. Without saying anything further on merits of the transaction we are of the view that it cannot be said that the assessee had withheld any material information from the revenue. 30. According to the revenue the assessee to avoid detection of the actual source of funds of its subsidiaries did not disclose the details of the subsidiaries in its final accounts, balance sheets, and profit and loss account for the relevant period as was mandatory under the provisions of the Indian Companies Act, 1956. It is not disputed that the assessee had obtained an exemption from the competent authority under the Companies Act, 1956 from providing such details. in its final accounts, balance sheets, etc. As such it cannot be said that the assessee was bound to disclose this to the Assessing Officer. The Assessing Officer before finalising the assessment of 03.08.2012 had never asked the assessee to furnish the details. ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 33 31. The revenue now has come up with the plea that certain documents were not supplied but according to us all these documents cannot be said to be documents which the assessee was bound to disclose at the time of assessment. The main ground raised by the revenue is that the assessee did not disclose as to who had subscribed what amount and what was its relationship with the assessee. As far as the first part is concerned it does not appear to be correct. There is material on record to show that on 08.04.2011 NNPLC had sent a communication to the Deputy Director of Income Tax Investigation), wherein it had not only disclosed the names of all the bond holders but also their addresses; number of bonds along with the total consideration received. This chart forms part of the assessment orders dated 03.08.2012 in the case of M/s. NDTV Labs Ltd. and M/s. NDTV Lifestyle Ltd. The said two assessment orders were passed by the same officer who had passed the assessment order in the case of the assessee on the same date itself. Therefore, the entire material was available with the revenue 32. A number of decisions have been cited as to what is meant by true and full disclosure. It is not necessary to multiply decisions, as law in this regard has been succinctly laid down by a Constitution Bench of this Court in Calcutta Discount Co. Ltd. vs. Incometax Officer, Companies District 1, Calcutta and Another AIR 1961 SC 372, wherein it was held as follows: "(8)... The words used are "omission or failure to disclose fully and truly all material facts necessary for his assessment for that year". It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts. are material, and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise assessing authority has to draw inferences as regards certain -the other facts, and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable. Thus, when a question arises whether certain income received by an assessee is capital receipt, or revenue receipt, the assessing authority has to find out what primary facts have been proved, what other facts can be inferred from them, and taking all these together, to decide what the legal inference should be. (9)There can be no doubt that the duty of disclosing all the primary facts relevant to the decision of the question before the assessing authority lies on the assessee. To meet a possible contention that when some account books or other evidence has been produced, there is no duty on the assessee to disclose further facts, which on due diligence, the Income tax Officer might have discovered, the Legislature has put in the Explanation, which has been set out above. In view of the Explanation, it will not be open to the assessee to say, for example - "I have produced the account books and the documents: You, the assessing officer examine them, and ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 34 find out the facts necessary for your purpose: My duty is done with disclosing these account books and the documents. His omission to bring to the assessing authority's attention these particular items in the account books, or the particular portions of the documents, which are relevant, will amount to "omission to disclose fully and truly all material facts necessary for his assessment." Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quietus to all such contentions; and the position remains that so far as primary facts are concerned, it is the assessee's duty to disclose all of them including particular entries in account books, particular portions of documents and documents, and other evidence, which could have been discovered by the assessing authority, from the documents and other evidence disclosed. (10) Does the duty however extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else - far less the assessee- to tell the assessing authority what inferences - whether of facts or law should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences - whether of facts or law - he would draw from the primary facts. (11) If from primary facts more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority. How could an assessee be charged with failure to communicate an inference, which he might or might not have drawn?" A careful analysis of this judgment indicates that the Constitution Bench held that it is the duty of the assessee to disclose full and truly all material facts which it termed as primary facts. Nondisclosure of other facts which may be termed as secondary facts is not necessary. In light of the above law, we shall deal with the facts of the present case. 33. In our view the assessee disclosed all the primary facts necessary for assessment of its case to the assessing officer. What the revenue urges is that the assessee did not make a full and true disclosure of certain other facts. We are of the view that the assessee had disclosed all primary facts before the assessing officer and it was not required to give any further assistance to the assessing officer by disclosure of other facts. It was for the assessing officer at this stage to decide what inference should be drawn from the facts of the case. In the present case the assessing officer on the basis of the facts disclosed to him did not doubt the genuiness of the ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 35 transaction set up by the assessee. This the assessing officer could have done even at that stage on the basis of the facts which he already knew. The other facts relied upon by the revenue are the proceedings before the DRP and facts subsequent to the assessment order, and we have already dealt with the same while deciding Issue No.1. However, that cannot lead to the conclusion that there is nondisclosure of true and material facts by the assessee. 34. It is interesting to note that whereas before this Court the revenue is strenuously urging that the assessee is guilty of nondisclosure of material facts, before the High Court the case of the revenue was just opposite. We may quote a portion of the counter affidavit filed by the revenue in response to the writ petition filed by the assessee before the High Court which reads as follows: It is evident from these facts that second proviso to Section 147 is clearly attracted in this case and first proviso to Section 147 is not applicable to facts of this case, i.e. in this case, the only requirement to reopen assessment U/s 147 was that the AO has reason to believe that any income chargeable to tax has escaped assessment. The second condition that the income should have escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts necessary for making assessment is not relevant to decide issue before the Hon'ble Court" This submission has been repeated a number of times in the counter affidavit. Therefore, in our opinion the revenue cannot now turn around and urge that the assessee is guilty of nondisclosure of facts. We are also of the view that the revenue could not be permitted to blow hot and cold at the same time. 35. We are clearly of the view that the revenue in view of its counter affidavit before the High Court that it was not relying upon the nondisclosure of facts by the assessee could not have been permitted to orally urge the same. Even otherwise we find that the assessee had fully and truly disclosed all material facts necessary for its assessment and, therefore, the revenue cannot take benefit of the extended period of limitation of 6 years. We answer Question No.2 accordingly. (v) The head note of decision in the case of CIT vs Usha International Limited 2012(9) TMI 767- Delhi High Court is as under: - "Change of opinion - Whether assessment proceedings can be validly reopened under Section 147 of the Act, even within four year, if an assessee has furnished full and true particulars at the time of original assessment with reference to income alleged to have escaped assessment - Held that:- As decided in CIT Versus Kelvinator Of India Limited [2002 (4) TMI 37 DELHI HIGH COURT] an assessment order passed undersection 143(3) must be presumed to be one passed after full scrutiny and formation of opinion on the points raised in the return and in the course of the assessment proceedings. It has been observed that section114(e) of the Evidence Act comes into operation and it must be presumed that the AO had performed his duty in the manner expected of him, that is, after examining and forming an opinion on all aspects of the return, though he has not been articulate about it in the assessment order. It has also been ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 36 held that if such a presumption is not drawn, that would amount to putting a premium on a perfunctory discharge of duties by the assessing authority and permitting him to take advantage of his own wrong The first proviso to section 147 can be resorted to only if the assessee has not discharged the duty. Where the assessee has discharged his duty and the assessment completed under section 143 (3) is reopened with in the period of 4 years from the end of the assessment year, the assessing officer has to either show that the disclosure is not full and true or he has come into possession of some "tangible material", to borrow with respect the expression used by the Supreme Court in Kelvinator (supra), to come to the conclusion that there is escapement of income. The material must have a live link with the formation of the belief regarding escapement of income. When there is no failure on the part of the assessee to furnish full and true particulars and there is no tangible material on the basis of which the assessing officer can allege escapement of income, the only consequence would be that the assessing officer was exercising the power of review on the very same materials which he is presumed to have examined. This would amount to abuse of the power to re-assess and has to be checked When the assessing officer fails to examine a subject matter, entry, claim or deduction, he forms no opinion, notwithstanding that the assessee had made a full and true disclosure and notwithstanding that the assessment was completed under section 143 (3) and to further hold that it would be a case of "no opinion", would be to fly in the teeth of the two rulings. It is not even open to the revenue to urge such a proposition - Thus the assessment proceedings cannot be validly reopened under section 147 even within four years, if an assessee has furnished full and true particulars at the time of original assessment with reference to the income alleged to have escaped assessment, if the original assessment was made u/s 143(3), thus the issue is concluded by the judgment of the Full Bench of this court in Kelvinator (supra). So long as the assessee has furnished full and true particulars at the time of original assessment and so long as the assessment order is framed under section 143(3) it matters little that the assessing officer did not ask any question or query with respect to one entry or note but had raised queries and questions on other aspects. Again the answer to this question stands concluded by the judgment of the Full Bench of this court in Kelvinator (supra). It is that section 114(e) of the Evidence Act can be applied to an assessment order framed under section 143(3) provided that there has been a full and true disclosure of all material and primary facts at the time of original assessment. In such a case if the assessment is reopened in respect of a matter covered by the disclosure, it would amount to change of opinion." 12.5 In these facts & circumstances of the case and the legal position cited above, 12.5.1 It is held as under: (a) The AO should have recorded the reasons for reopening in each of merged entities wherein transactions were alleged to accommodation entries, issued different notices, prior to 01.04.2012. The AO should have made separate assessments in the name of M/s BDR, in each of these entities, starting from their last assessed income. The reopening in each ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 37 individual entity had to be separately recorded depending on the past assessment status of each entity for this assessment year. Each entity had to be separately assessed w.r.t its income and not w.r.t income of M/s BDR. The addition cannot be made to assessed income of M/s DBR u/s 68 w.r.t these entities, as the books of these entities are not part of M/s BDR for this year. The action of the AO on this account is not legally tenable and is without application of mind. (b) There are many other mistakes in the "reasons to believe" recorded by the AO (i) The status of assessment and returned income cited is that of M/s BDR and not of the individual entities wherein alleged accommodation entries have been received. (ii) The AO had mentioned at S.No. 9 that "Subsequently, action u/s 132 of the Act was carried out by the department in Himanshu Verma Group of cases on 29.03.2012" Whereas this had happened before the filing of return by all these alleged merged entities. (iii) The AO had mentioned at para 9 that "As per enquiries made a sum of Rs. 45,00,000/-, Rs. 4,50,00,000/- and Rs. 35,00,000/- totalling Rs. 5,30,00,000/- was transferred from this account to M/s Verma Buildtech & Promoters Pvt Ltd, M/s Remu Builders & Promoters Pvt. Ltd. and M/s D and S Developers Pvt. Ltd. respectively during the financial year 2011-12 relevant to assessment year 2012-13. All these three companies have already been merged with the assessee company M/s BDR Builders and Developers Pvt. Ltd. Since Shri Manoj Sethi could not explain the reasons for transferring these amounts to these merged companies it shows that these companies have taken accommodation entries by transferring their own funds in cash to the bank account of Shri Sethi and then again getting the same amounts through the above bank account. • The AO had made addition also of Rs 5.3 Cr, as per the information received from the Investigation Wing. In reality the total of these transactions during the year under consideration is at Rs 11.25 Cr as per the table in para 10.3.7 above. Thus amount of the individual amounts of transactions & total transactions in two entities are different in satisfaction (in addition as well) than as per the actual transaction amounts as provided by the appellant during assessment as well as appellate proceedings. • The finding of Investigation wing was that "Shri Manoj Sethi could not explain the reasons for transferring these amounts to these merged companies" and the conclusion drawn by the AO is it shows that these companies have taken accommodation entries by transferring their own funds in cash to the bank account of Shri Sethi and then again getting the same amounts through the above bank account. This conclusion is without any tangible material on record. (iii) The AO had mentioned in para 9 that ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 38 "In another case of Shri Roop Kishore Madan it was found that accommodation entries to the tune of Rs. 5,65,50,000/- were given by Shri Madan from his account No. 040001000011 maintained with ICICI Bank Ltd, Sunder Nagar Branch, New Delhi to M/s. Gulab Buildtech Pvt. Ltd on 03.02.2012" • Here also the conclusion drawn by the AO that Sh. Madan had provided accommodation entries is not based on any tangible material. • The amount of transactions mentioned in reasons (and added in the reassessment) is at Rs. 565.50 lakhs, whereas the amount of total transactions during the year with Mr Madan is at Rs 868.5 lakhs as per the actual transaction amounts as provided by the appellant during assessment as well as appellate proceedings. Thus the AO had formed his opinion, on presumption of these transactions as accommodation entries, on his own, without any tangible material on record and had recorded wrong figures of transactions in reasons as well as in the assessed income. These facts indicate that he had formed his opinion on the borrowed satisfaction, on suspicion and without application of mind. (c) The first point of reopening by the AO was regarding accommodation entries received by M/s GBPL on account of share capital from two companies. The information collected by the investigation wing in 2012, was available with the AO of M/s GBPL while making assessment u/s 143(3) on 27.3.2015. The information received by the present AO in 2019 is not a new information. As the AO in March, 2015 had passed assessment in M/s GBPL u/s 143(3) after considering & verifying this information, the reopening on this ground will tantamount to change of opinion, which cannot be held to be a valid ground for reopening u/s 148. (d) The loan transactions of the in M/s GBPL and M/s VBPL & other amalgamated entities amalgamated with the appellant company with two entities Sh. Roop Kishore Madan (prop. M/s Rhea Distribution Company) and Sh. Manoj Sethi) have been presumed by the AO to be accommodation entries only on suspicious. The report of investigation was based on incomplete submissions by these entities and appears to have been prepared even without referring to any basic documents like assessment records of these entities for this assessment year. The report of investigation had not brought any material or statement on record to prove that these entities are providing accommodation entries. Even no enquiries have been made with the appellant. Thus it was suspicion of the investigation wing regarding bank transactions of these two entities and consequently further stretched suspicion w.r.t transactions of the merged entities of the appellant, with these two entities. The AO, in the notice u/s 133(6), had presumed the transactions of the merged entities of the appellant with these two entities as "accommodation entries" on the basis of report of investigation wing, which is based on far fetched suspicion only. Even the two notices issued u/s 133(6) by the AO, at the fag end of time barring date, to form his independent opinion was merely a paper formality, as it did not mention the name of these alleged entities and nature of transactions of merged entities of the appellant, with these two entities, thus denying the appellant proper opportunity to respond. The merged entities of the appellant cannot be held responsible for incomplete submission of details by these two entities before investigation wing (which has ultimate powers to get the information), particularly when the assessment of these two entities had been ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 39 completed u/s 143(3) in the past (March 2015) considering their all bank transactions. Non submission of details cannot automatically lead to the conclusion that these entities are entry operators, particularly when these are filing high income returns and the investigation wing is the ultimate wing of department having all powers to get any information. The suspicion cannot be valid reason for reopening assessment u/s 148. There must be some prima-facie facts or information and tangible material in the case of the appellant (and not any other person) to arrive at "reasons to believe" for "escapement of income". In these facts & circumstances of the case, it is held that the "Reasons to Believe" recorded by the AO for escapement of income are based on suspicion rather than any valid material or information in the case of the appellant w.r.t. the transactions with these two entities. 12.5.2 Thus the reopening of proceedings u/s 148 made by the AO is on the basis of "Change of Opinion" in one transaction and "Suspicion" in other two transactions w.r.t different merged entities of the appellant. The reasons have been not been validly recorded in each merged entity individually as they existed as standalone entities during the year under consideration. The reasons are either based on "change of opinion" or "reason to suspect" without any tangible material on record. Even the figures of transactions mentioned in reasons are partly wrong. The addition had been made on account of these transactions u/s 68 to the returned income of M/s BDR, whereas these transactions are not part of books of M/s BDR in the year under consideration as the merger of these entities is w.e.f.1.4.2012. The reason recorded by the AO cannot be construed as "reason to believe". The reasons to believe for escapement of income recorded by the AO are based on borrowed satisfaction without any application of mind. The reliance is placed on judicial pronouncements cited above. In view of the factual and legal position as discussed above, the reopening proceedings u/s 147 of the Act cannot be held to be valid as per law. As the initiation of proceedings u/s 147 of the Act in case have been held to be not valid in law, the assessment order made by the AO is quashed being null and void ab-initio. 12. Having gone through the entire order in toto we find that the ld CIT(A) Shri K. J. Singh has duly examined the issue with regard to reopening of the case u/s 147 of the Act. Shri Roop Kishore Madan was not found to be entry operator from the sources of Shri R. K. Madan with regard to the amounts given to M/s. Gulab Buildtech on 03.02.2012 have been duly proved. The total amount given was Rs. 8.68 crore as against the amount alleged by the Revenue of Rs. 5.65 crores. The source of the entire amount have been duly examined by the ld CIT(A). Similarly, the loan transaction in M/s. G. B. P L. and BBPL with Sh. R. K. Madan which has been presumed to be an ITA Nos. 1177/Del/2021 BDR Builders & Developers P. Ltd 40 accommodation entry has been proved contra. Hence, the ld CIT(A) held that there was no reason to believe but it was only the suspicion which led to reopening of the case. We find no flaw in the order of the ld CIT(A), either on facts of the case or on judicial pronouncements applicable to the instant case in the background of the said facts. Hence, we decline to interfere with the well reasoned and logical order of the ld CIT(A). 13. In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 16/03/2023. Sd/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 16/03/2023 *Subodh Kumar/AK, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR