Ratan Pal Kain, Ghaziabad V. ITO, Ward- 2(2), Ghaziabad

ITA 1273/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5098 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 22-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Reopening of assessment; Income from undisclosed sources; Search and seizure; Tangible material; Accommodation entries; Reason to believe; Borrowed satisfaction; Set aside
• Section: 143(3); 143(1); 147; 148; 132

Judgement Text

1 ITA NO. 1273/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: SMC, NEW DELHI) BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER ITA NO:-1273/DEL/2018 ( ASSESSMENT YEAR: 2009-10) RATAN PAL KE IN AKHILESH KUMAR, ADVOCATE, CHAMBER NO. 206-207, ANSAL SATYAM, RDC RAJ NAGAR, GHAZIABAD PAN NO. AKRPP4393G VS. INCOME TAX OFFICER WARD 2 (2) GHAZIABAD APPELLANT RESPONDENT ASSESSEE BY : SH. AKHILESH KUMAR, ADVOCATE SH. MOHIT AGGARWAL, CA REVENUE BY : SH. S. L. ANURAGI, SR. DR DATE OF HEARING : 20.05.2019 DATE OF PRONOUNCEMENT : 22 .05.2019 ORDER PER: N. K. BILLAIYA, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS] GHAZIABAD DATE D 03.11.2017 FOR ASSESSMENT YEAR 2009-10. 2. VIDE GROUND N0. 1 TO 3, THE ASSESSEE HAS CHALLEN GED THE REOPENING OF THE ASSESSMENT AND BY GROUND NO. 4, TH E ASSESSEE HAS 2 ITA NO.-1273/DEL/2018 CHALLENGED THE ADDITION OF RS.33,15,990/- MADE TO T HE RETURNED INCOME OF THE ASSESSEE. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT ON THE BASIS OF THE INFORMATION RECEIVED FROM DDIT INVESTIGATION, UNIT 5 (1), NEW DELHI. THE A.O CAME TO KNOW THAT THE ASSESSEE HAS PAID DON ATION OF RS.12 LCAS IN CASH, RS. 16.50 LACS THROUGH DEMAND DRAFT AND RS. 1.62 LACS IN CASH AGAINST REGULAR FEE FOR ADMISSION OF H IS DAUGHTER VAISHALI KEIN IN SANTOSH MEDICAL COLLEGE, GHAZIABA D. AS PER THE A.O, THE SAID INFORMATION WAS FOUND DURING THE SEAR CH AND SEIZURE OPERATION CARRIED OUT ON 27/06/2013 IN SANTOSH GROU P OF INSTITUTIONS AND DR. P. MAHALINGAM, GHAZIABAD. ON THE BASIS OF THIS INFORMATION, AND AFTER RECORDING REASONS AND O BTAINING PRIOR APPROVAL FROM THE PCIT, GHAZIABAD, NOTICE U/S 148 O F THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE ALONG WITH QUES TIONNAIRE. 4. THE ASSESSEE WAS CONFRONTED WITH THE INFORMATION AND WAS ASKED TO EXPLAIN THE SOURCES OF FUNDS FROM WHICH TH E ASSESSEE HAS MADE THE IMPUGNED PAYMENTS. IN ITS REPLY, THE ASSE SSEE STATED THAT HE HAS PAID RS. 1, 60,000/-, HIS DAUGHTER HAS PAID RS. 50,000/- 3 ITA NO.-1273/DEL/2018 AND HIS WIFE HAS CONTRIBUTED RS. 2 LACS AND THE TOT AL FEES PAID FOR THE YEAR WAS RS. 4.10 LACS. 5. NOT ACCEPTING THE SUBMISSIONS OF THE ASSESSEE, T HE A.O WAS OF THE FIRM BELIEF THAT THE INFORMATION RECEIVED FROM DDIT, INVESTIGATION SHOWS THAT THE ASSESSEE HAS PAID DONA TION OF RS. 12 LACS IN CASH 16.50 LACS THROUGH DD AND 1.62 LACS IN CASH. AND ACCORDINGLY TREATED THE AMOUNT OF RS.30.12 LACS AS UNEXPLAINED MADE OUT OF UNDISCLOSED SOURCES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 6. THE ASSESSEE STRONGLY AGITATED THE MATTER BEFORE THE CIT (A) BUT THE CIT(A) WAS CONVINCED WITH THE FINDINGS OF T HE A.O AND DISMISSED THE APPEAL. 7. BEFORE ME, THE COUNSEL FOR THE ASSESSEE VEHEMENT LY STATED THAT THE A.O WITHOUT MAKING ANY ENQUIRY/INVESTIGATI ON HAS SIMPLY BORROWED THE INFORMATION GIVEN BY THE INVESTIGATION WING WITHOUT APPLYING HIS OWN MIND BEFORE THE ISSUE OF NOTICE U/ S 148 OF THE ACT. IT IS THE SAY OF THE COUNSEL THAT THE TOTAL TUITION FEES FOR THE FIRST 4 ITA NO.-1273/DEL/2018 YEAR WAS ONLY RS. 4 LACS AND THE COMPLETE FEE OF FO UR AND HALF YEARS COURSE WAS RS. 18 LACS. THEREFORE, THE CLAIM OF TH E A.O THAT THE ASSESSEE HAS PAID RS. 30.12 LACS IS IN CORRECT AND, THEREFORE, NOT ONLY THE REOPENING SHOULD BE QUASHED BUT THE ADDITI ON MADE SHOULD ALSO BE DELETED. PER CONTRA, THE DR STRONGL Y SUPPORTED THE FINDINGS OF THE A.O AND READ THE OPERATIVE PART OF THE ORDER OF THE CIT(A). 8. I HAVE GIVEN A THOUGHTFUL CONSIDERATION OF THE O RDERS TO THE AUTHORITIES BELOW AND WITH THE ASSISTANCE OF THE LE ARNED COUNSEL. I HAVE CONSIDERED THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN THE LIGHT OF RU LE 18 (6) OF THE ITAT RULES. EXHIBIT 18 IS PART OF THE INFORMATION RECEIVED FROM THE OFFICE OF DDIT INVESTIGATION AND AT SERIAL NO. 33 T HE NAME OF THE STUDENT VAISHALI KEIN HAS BEEN MENTIONED. AND AS P ER THIS SCHEDULE THE ASSESSEE HAS PAID RULE 30.12 LACS WHIC H INCLUDES DONATION OF RS. 12 LACS, REGULAR FEE PAID THROUGH D EMAND DRAFT RS. 16.50 LACS, REGULAR FEE PAID IN CASH RS. 1.62 LACS. AT THE SAME TIME, I FIND A CERTIFICATE ISSUED BY THE OFFICE OF THE F INANCE & ACCOUNTS MAHARAJI EDUCATION TRUST SANTOSH GROUP OF INSTITUTI ONS, 5 ITA NO.-1273/DEL/2018 GHAZIABAD, WHICH IS EXHIBITED AT PAGE 27 OF THE PAP ER BOOK AND THE SAME READ AS UNDER:- OFFICE OF THE FINANCE & ACCOUNTS MAHARAJI EDUCATIONAL TRUST SANTOSH GROUP OF INSTITU TIONS NO: H-L SANTOSH NAGAR, PRATAP VIHAR, GHAZIABAD - 201 009 DATE: 06-09-2008 TO WHOM IT MAY CONCERN THIS IS TO CERTIFY THAT MR.VAISHALI KAIN D/O. SHRI.RATAN PAL KAIN HAS BEEN ADMITTED IN MBBS COURSE IN 2008-2009 BATCH IN OUR. SANTOSH MEDICAL COLLEGE RUN BY MAHARAJI EDUCATIONAL TRUST. COURSE IS RECOGNISED BY THE MEDICAL COUNCIL OF INDIA. THE DURATION OF THE COURSE IS FOUR AND HALF YEARS. FEE STRUCTUREC 1ST YEAR TUITION FEES TUITION FEES 4,00,000/- IIND YEAR TUITION FEES TUITION FEES 4,00,000/- ILLRD YEAR TUITION FEES TUITION FEES 4,00,000/- IVTH YEAR TUITION FEES TUITION FEES 4,00,000/- FINAL YEAR TUITION FEES TUITION FEES 2,00,000/- THE DEMAND DRAFT SHOULD BE DRAWN IN FAVOUR OF MAHARAJI EDUCATIONAL TRUST PAYABLE AT GHAZIABAD. THIS CERTIFICATE IS ISSUED EXCLUSIVELY TO ENABLE TH E STUDENT TO OBTAIN FINANCIAL ASSISTANCE FROM BANK/FINANCIAL INSTITUTION. THE FEE IS SUBJECT TO REVISION IN THE FORTHCOMING YEARS. SD/- FOR MAHARAJI EDUCATION T RUST ACCOUNTANT 6 ITA NO.-1273/DEL/2018 9. A PERUSAL OF THE AFOREMENTIONED CERTIFICATE SHOW S THAT THE TUITION FEES FOR THE FIRST YEAR IS RS. 4 LACS AND T HE TOTAL TUITION FEES FOR THE ENTIRE COURSE OF FOUR AND HALF YEARS IS 18 LACS. I FIND THAT NEITHER THE A.O NOR THE CIT(A) HAS MADE ANY ENQUIRY FROM THE INSTITUTION REGARDING THIS CERTIFICATE. 10. THERE IS NO DISPUTE THAT THE A.O HAS SIMPLY BOR ROWED THE INFORMATION RECEIVED FROM DDIT, INVESTIGATION. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT READ AS UNDER :- REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. AN INFORMATION HAS BEEN RECEIVED FROM DDI (1 .PV.) UNIT-5(1), NEW DELHI THAT SH. RATAN PAL KEIN, HAS PAID DONATION OF RS. 12,00,000/- IN CASH, RS. 16,50,000/- THROUGH DD AND RS. 1,62,00 0/- IN CASH AGAINST REGULAR FEE FOR THE ADMISSION IN MMBS COURS E OF HIS DAUGHTER MS. VAISHALI KEIN, DURING THE F.Y. 2008-09 RELEVANT TO A.Y. 20C9-10 IN SANTOSH MEDICAL COLLEGE, GHAZIABAD. THE ABOVE INFORMATION WAS FOUND DURING THE SEARCH AND SEIZURE OPERATION CARRIED OUT ON 27/06/2013 IN SANTOSH GROUP OF INSTI TUTION & P. MAHALINGAM, GHAZIABAD. I HAVE GONE THROUGH THE CONTENTS OF LETTER OF DDI ( INV.) NEW DELHI AND FOUND THAT THE SOURCES OF ABOVE DEPOSITS ARE NOT KNOWN AND IT IS ASSUMED THAT ABOVE DEPOSITS HAVE BEEN MAD E BY THE ASSESSES OUT OF UNDISCLOSED SOURCES WHICH WAS NOT O FFERED TO TAX FOR 7 ITA NO.-1273/DEL/2018 A.Y. 2009-10. THEREFORE, I HAVE REASONS TO BELIEVE THAT THE INCOME OF RS.30,12,000/- (RS. 12,00,000/- + RS. 16,50,000/- + RS. 1,62,000/-), HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTIO N 147 OF THE I.T. ACT, WHICH WAS CHARGEABLE TO TAX FOR A.Y. 2009-10. IF APPROVED, NOTICE U/S 148 OF THE I.T. ACT, 1961, MAY BE ISSUED. 11. ON IDENTICAL SET OF FACTS THE CO-ORDINATE BENCH IN ITA NO. 4035/DEL/2017 HAS DECIDED THE APPEAL IN FAVOUR OF T HE ASSESSEE AND AGAINST THE REVENUE. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER:- 6. ASSESSEE AGGRIEVED WITH THE ORDER HAS PREFERRED THE APPEAL BEFORE US. 7. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED :- (I) THAT THE REASONS RECORDED BY THE ASSESSING OFFI CER ARE BASED ON INFORMATION SUPPLIED BY THE INVESTIGATION WING; THE RE IS NO INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OF FICER. HE REFERRED TO THE REASON WHICH CLEARLY SHOWS, ACCORDING TO HIM , THAT THERE IS NO ENQUIRY MADE BY THE ASSESSING OFFICER. HE, THEREFOR E, SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN SIGNATURE HOTELS PVT. LTD. VS. ITO 338 ITR 51 (DEL.); (II) HE FURTHER STATED THAT SATISFACTION RECORDED B Y THE APPROVING AUTHORITY HAS MERELY MENTIONED 'YES'. HE SUBMITTED THAT SUCH SATISFACTION WITHOUT ANY REASONING IS INCORRECT. HE REFERRED TO THE 8 ITA NO.-1273/DEL/2018 DECISION OF THE HON'BLE M.P. HIGH COURT IN CIT VS. S. GOYANKA LIME AND CHEMICAL LTD. 56 TAXMAN.COM 390 (MP). HE FURTHE R STATED THAT HON'BLE SUPREME COURT HAS DISMISSED SLP AGAINST THE SAME; (III) HE FURTHER STATED THAT INFORMATION WAS RECEIV ED DURING THE COURSE OF SEARCH AND, THEREFORE, THE LEARNED ASSESSING OFF ICER SHOULD HAVE INVOKED THE PROVISIONS OF SECTION 153C OF THE ACT A ND NOT SECTION 148 OF THE ACT. FOR THIS HE RELIED UPON THE DECISION OF CO-ORDINATE BENCH IN RAJAT S. CHHATERJI VS. ACIT IN ITA. NO. 2430 (DEL) OF 2015 [ORDER DATED 20.05.2016]; (IV) ON THE MERITS OF THE CASE HE SUBMITTED THAT AS SESSEE HAS NOT PAID ANY MONEY OTHER THAN RS.15 LAKHS TO THE INSTITUTE A ND, THEREFORE, IN ABSENCE OF ANY EVIDENCE, ADDITION CANNOT BE MADE; (V) HE FURTHER SUBMITTED THAT NO CROSS EXAMINATION OF THE PERSON WHOSE STATEMENT WAS RECORDED WAS GIVEN TO THE ASSES SEE AND IN ABSENCE OF CROSS EXAMINATION WHEN ASSESSEE SPECIFIC ALLY DENIED SUCH PAYMENT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. 7.1 IN THE END, HE SUBMITTED THAT RE-OPENING IS INV ALID AND FURTHER THE ADDITION ON THE MERIT ALSO CANNOT BE SUSTAINED. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTESTE D THE ARGUMENTS OF THE LEARNED AUTHORIZED REPRESENTATIVE AND SUBMIT TED THAT THERE IS A DEFINITE INFORMATION RECEIVED BY THE ASSESSING OFFI CER IN THE LETTER THAT ASSESSEE HAS PAID RS.70 LAKHS FOR THE ADMISSION OF HIS SON. THE LEARNED ASSESSING OFFICER HAS REASON TO BELIEVE THA T INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. WITH RESPECT TO TH E MERITS HE SUBMITTED THAT COPY OF THE STATEMENT WAS GIVEN TO T HE ASSESSEE AND THERE IS NO REQUEST OF CROSS EXAMINATION. HE, THERE FORE, SUBMITTED THAT ASSESSEE DOES NOT HAVE ANY CASE ON THE MERITS. HE S UPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 9 ITA NO.-1273/DEL/2018 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND ALSO THE ORDERS OF THE LOWER AUTHORITIES. THE ASSESSEE IS AN INDIVIDUAL, WHO FILED HIS RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT AT RS.1,52,100/-. DURING THE COURSE OF SEARCH, UNDER S ECTION 132 OF THE ACT ON 27.06.2013 ON SANTOSH GROUP OF INSTITUTES AN D DR. P. MAHALINGAM, CERTAIN DOCUMENTS WERE SEIZED. THE DOCU MENTS REVEALED RECEIPT OF DONATION OVER AND ABOVE THE REGULAR COUR SE FEES. DR. P. MAHALINGAM, IN HIS STATEMENT UNDER SECTION 132(4) H AS ADMITTED THE RECEIPT OF UN-ACCOUNTED MONEY. FROM THOSE PAPERS IT WAS FOUND THAT ASSESSEE'S SON, DR. NEERAJ GOEL, WHO IS PURSUING MD COURSE IN THAT INSTITUTE ON 3.02.2010 HAS PAID RS.15 LAKHS AS REGU LAR FEES AND RS.55 LAKHS AS DONATION. THIS INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER VIDE LETTER DATED 11.03.2015. BASED ON THIS , THE LEARNED ASSESSING OFFICER RECORDED THE REASONS FOR RE-OPENI NG UNDER SECTION 147 OF THE ACT, WHICH ARE PLACED AT PAGE NO. 1 OF THE PAPER BOOK. THE SAME IS AS UNDER :- ANNEXURE A REASONS RECORDED FOR ISSUING NOTICE U/S 148 O F THE ACT. NAME OF THE ASSESSEE : SHRI SHIV CHA RAN GOEL ADDRESS : 1/7032, SHIVAJI PARK, SHAHDARA, DELHI - 110 032. PAN : NOT -AVAILABLE. ASSESSMENT YEAR : 2010-11 A LETTER DATED 05.03.2015 HAS BEEN RECEIVED FROM T HE DEPUTY DIRECTOR OF INCOME TAX (INV.), UNIT-5(1), NEW DELHI IN RESPE CT OF INFORMATION REGARDING FEE OF RS.70,00,000/- PAID IN CASH TO SAN TOSH MEDICAL COLLEGE, GHAZIABAD BY SHRI SHIV CHARAN GOEL F/O DR. NEERAJ KUMAR GOEL R/O 1/7032, SHIVAJI PARK, SHAHDARA, DELHI - 11 0 032. 10 ITA NO.-1273/DEL/2018 BASED ON THE ABOVE INFORMATION I AM SATISFIED THAT THE FEE PAID OF RS.70,00,000/- IN CASH IS ASSESSEE'S OWN UNEXPLAINE D INCOME FROM UNDISCLOSED SOURCES AND LIABLE TO BE ASSESSED IN TH E HANDS OF THE ASSESSEE. THEREFORE, I HAVE REASON TO BELIEVE THAT UNEXPLAINED CASH PAID TOWARDS FEE IS CHARGEABLE TO TAX AND THE SAME HAS ESCAPED ASSESSMENT FOR THE YEAR UNDER CONSIDERATION AND IS A FIT CASE FOR REOPENING U/S 148 OF I.T. ACT. THE PROPOSAL FOR OBTAINING KIND APPROVAL OF THE CO MPETENT AUTHORITY; TO INITIATE PROCEEDINGS U/S 147/148 IS HEREBY PUT U P FOR NECESSARY APPROVAL. SUBMITTED FOR FURTHER DIRECTIONS AND APPR OVAL PLEASE. SD/- (DEEPAK KUMAR ) INCOME TAX OFFICER WARD 56 (4), NEW DELHI. WHETHER THE ADDL. CIT, RANGE-56, N. DELHI SATISFIED ON THE REASONS RECORDED BY THE AO THAT IT IS FIT CASE FOR THE ISSU E OF NOTICE U/S. 148. YES SD/- 27/3/2015. ADDL. COMMISSIONER OF INCOME TAX, RANGE-56, NEW DELHI. ' 9.1 ON THE SAME DATE THE REASONS WERE APPROVED BY THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 56, NEW DELHI. WH ILE APPROVING HE HAS SIMPLY MENTIONED 'YES'. THEREFORE, NOW THE Q UESTION ARISES THAT WHETHER THE RE-OPENING HAS BEEN CORRECTLY INIT IATED BY THE LEARNED ASSESSING OFFICER OR HE HAS SIMPLY ACTED ON THE INF ORMATION RECEIVED FROM THE INVESTIGATION WING. ON PERUSAL OF THE REAS ONS RECORDED IT IS APPARENT THAT THE LEARNED ASSESSING OFFICER REFERRE D TO THE LETTER DATED 5.03.2015 RECEIVED FROM THE DY. DIRECTOR OF INCOME TAX, INVESTIGATION, AND BASED ON THAT INFORMATION HE STATED THAT HE IS SATISFIED THAT THE FEE PAID OF RS.70 LAKHS IN CASH IS ASSESSEE'S UNEXP LAINED INCOME FROM 11 ITA NO.-1273/DEL/2018 UNDISCLOSED SOURCES. ACCORDING TO THE PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED THE ASSESSMENT THEN ONLY HE CAN RE-OPEN THE ASSESSMENT. THE REASON HAS TO BE OF THE ASSESSEE AN D CANNOT BE BORROWED ONE. THE HON'BLE DELHI HIGH COURT IN PARA NO. 15 IN SIGNATURE HOTELS PVT. LTD. VS. ITO (SUPRA) HAS HELD THAT THERE IS NO REFERENCE TO THE DOCUMENT OR STATEMENT IN THIS CASE EXCEPT THE LETTER OF THE INVESTIGATION WING, WHICH HAS BEEN QUOTED IN TH E REASONS. THE ANNEXURE ALSO DOES NOT SHOW PRIMA FACIE OR ESTABLIS HES NEXUS FOR LINK WHICH DISCLOSES ESCAPEMENT OF INCOME. FURTHER THE A SSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND E XAMINED THE BASIS AND MATERIAL OR THE INFORMATION. THE ADDL. COMMISSI ONER ALSO GRANTED HIS APPROVAL MECHANICALLY. THE FACTS ARE SIMILAR TO THE FACTS BEFORE THE HON'BLE DELHI HIGH COURT. THE HON'BLE DELHI HIGH CO URT THEN HELD THAT THE REASONS DO NOT SATISFY THE REQUIREMENT OF SECTI ON 147 OF THE ACT. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE HON'BLE DELHI HIGH COURT, WE ALSO HOLD THAT RE-OPENING IN THIS CASE AL SO DOES NOT SATISFY PROVISIONS OF SECTION 147 OF THE ACT. IN VIEW OF TH IS THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER DOES NOT STAND THE TE ST OF THE RATIO PAGE | 9 I.T.A. NO. 4035 (DEL) OF 2017 - SHRI SHIV CHARA N GOEL, DELHI LAID DOWN BY THE HON'BLE DELHI HIGH COURT. THE LEARNED C IT (APPEALS) WHILE UPHOLDING THE ACTION UNDER SECTION 147 HAS HELD THA T ASSESSEE HAS NOT FILED ANY RETURN OF INCOME. HOWEVER, WHEN WE LOOK A T THE ASSESSMENT ORDER, THE ADDITION MADE BY THE LEARNED ASSESSING O FFICER IS TO THE ORIGINAL RETURNED INCOME OF RS.1,52,100/-. THEREFOR E, THIS FINDING OF THE LEARNED CIT (APPEALS) IS NOT IN CONFORMITY WITH THE RECORDS. WITH RESPECT TO THE FINDING OF THE LEARNED CIT (APPEALS) THAT ADDL. DIRECTOR WAS IN POSSESSION OF ADEQUATE INFORMATION SO MERELY WRITING 'YES' FULFILLS THE REQUIREMENT OF APPROVAL. WE NOTE THAT IT IS NOT THE ADDL. DIRECTOR, WHO HAS APPROVED THE RE-OPENING MECHANICA LLY. FURTHER SUCH APPROVAL IS ALSO NOT IN CONFORMITY WITH THE DECISIO N OF HON'BLE M.P. 12 ITA NO.-1273/DEL/2018 HIGH COURT. IN VIEW OF THE ABOVE FACTS, WE REVERSE THE FINDING OF THE LOWER AUTHORITIES AND SET ASIDE THE ASSESSMENT ORDE R PASSED BY THE LEARNED ASSESSING OFFICER HOLDING THAT RE-OPENING U NDER SECTION 147 IS NOT VALID. 12. THE CO-ORDINATE BENCH IN ANOTHER CASE IN ITA NO . 1106/DEL/2018 HAD THE OCCASION TO CONSIDER THE APPE AL AGAIN ON SIMILAR SET OF FACTS AND ONCE AGAIN DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER:- 6. I HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONS IDERED THE SAME. I NOTE THAT IN THIS CASE THE AO WHILE RECORDI NG THE REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT H AS RECORDED THE REASONS AS UNDER:- 'IN THIS CASE, AS PER RECORD THE ASSESSEE HAS NOT F ILED HER RETURN OF INCOME FOR AY 2007-08. FURTHER, AS PER INFORMATION RECEIVED. MS. MEGHA GUPTA, R/O 2-E, KAM LA NAGAR, DELHI PAN ALBPG3157A, DURING THE F.Y. 2006-0 7 RELEVANT AY 2007-08, HAS GIVEN DONATION IN CASH OF RS. 21,00,000/- FOR ADMISSION IN THE COURSE OF MBBS TO THE SANTOSH MEDICAL COLLEGE, GHAZIABAD. AS, THE ASSESSE E HAS NOT FILED HER RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR I.E. AY 2007-08. THEREFORE, ALL THE CASH TRANSACTION MADE TREATED AS HER INCOME FROM UNDISCL OSED SOURCES. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT ASSESSMENT MS. MEGHA GUPTA, PAN ALBPG3147A HAS ESCAPED HER INCOME OF RS. 21,00,000/-. THE INCOME O F RS. 21,0,000/- IS ESCAPED ASSESSMENT WITHIN THE 13 ITA NO.-1273/DEL/2018 MEANING OF SECTION 147(B) AND IS TO BE TAXED ACCORDINGLY.' 6.1 AFTER PERUSING THE AFORESAID REASONS RECORDED, I FIND THAT IT IS A CASE WHERE ACTION HAS BEEN TAKEN MECHANICALLY ON TH E BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING, AND, NOT ON AN INDEPENDENT APPLICATION OF MIND AND THEREFORE ON TH IS GROUND TOO, THE PROCEEDINGS ARE WITHOUT JURISDICTION. IT IS APP ARENT FROM THE FACT THAT ACCORDING TO THE AO, INVESTIGATION WING H AS INFORMED THAT ASSESSEE HAS PAID CASH OF RS. 21,00,000/- FOR ADMIS SION IN THE COURSE OF MBBS TO SANTOSH MEDICAL COLLEGE, GHAZIABA D. IT HAS BEEN FURTHER NOTED THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR I.E. ASSESSMENT YE AR 2007-08 AND, AO HAS INVOKED SECTION 148 OF THE ACT TO VERIF Y THE SOURCE OF CASH PAID OF RS. 21,00,000/-. THUS, THE AO HAS ACTE D MECHANICALLY AND WITHOUT ANY INDEPENDENT APPLICATION OF MIND. IT IS ALSO EVIDENT THAT WHILE ALLEGING CASH PAYMENT OF RS. 21 LACS IT IS NOT EVEN KNOWN OR STATED ON WHICH DATE AND ON WHAT BASIS SUC H SUMS WAS ALLEGEDLY PAID BY ASSESSEE; THE REASONS RECORDED AR E THEREFORE VAGUE, HIGHLY NON SPECIFIC AND REFLECT COMPLETE NON -APPLICATION OF MIND. THAT REASONS RECORDED ARE 'REASON TO SUSPECT' AND, IS A MERE ATTEMPT TO CARRY OUT FISHING AND ROVING EXPEDITION. IT IS ALSO NOTED THAT IN THE ABSENCE OF SPECIFIC AND INCRIMINATING M ATERIAL MUCH LESS TANGIBLE AND, RELEVANT MATERIAL TO FORM EVEN P RIME FACIE BELIEF THAT THERE WAS ALLEGED PAYMENT OF RS. 21,00,000/- I S ALSO APPARENT FROM THE FACT THAT THE ALLEGED DOCUMENT FOUND AND S EIZED DURING THE COURSE OF SEARCH/SURVEY ACTION U/S 132/133A OF THE ACT DOES NOT REFLECT ANY FIGURE OF RS. 21 LACS AND IN THE AB SENCE OF ANY INDEPENDENT ENQUIRY OR EXAMINATION OF FACTS ON RECO RD OR NOTICING THE CONTENT OF ALLEGED DOCUMENTS IN THE REASONS REC ORDED AND, REASONS BEING SILENT AS TO THE SPECIFIC FACTS, THE VAGUE ALLEGATION 14 ITA NO.-1273/DEL/2018 SHOWS THAT ACTION HAS BEEN TAKEN MECHANICALLY ON TH E BASIS OF ALLEGED REPORT OF INVESTIGATION WING, AND, NOT ON I NDEPENDENT APPLICATION OF MIND AND THEREFORE ON THIS GROUND TO O, THE PROCEEDINGS ARE WITHOUT JURISDICTION. IT IS ALSO NO TED THAT THERE IS NO LIVE LINK OR DIRECT NEXUS BETWEEN ALLEGED MATERI AL AND, INFERENCE. IT IS A CASE OF INVESTIGATION IN THE GAR B OF ACTION U/S 148 OF THE ACT ON THE BASIS THAT PROCEEDINGS HAVE BEEN INITIATED ON THE BASIS OF NO MATERIAL MUCH LESS ANY TANGIBLE AND, RE LEVANT MATERIAL AND AS SUCH REASONS RECORD DO NOT CONSTITUTE VALID REASON TO BELIEVE FOR INITIATING PROCEEDINGS U/S 147 OF THE A CT. IN THIS REGARD, I DRAW SUPPORT FROM THE DECISION OF THE HON'BLE SUP REME COURT 320 ITR 561 (SC) CIT VS KELVINATOR OF INDIA L TD. IT IS FURTHER NOTED THAT INITIATION OF PROCEEDINGS IS ALSO BASED ON NON APPLICATION OF MIND MUCH LESS INDEPENDENT APPLICATI ON OF MIND BUT IS A CASE OF BORROWED SATISFACTION. TO SUPPORT THIS VIEW, I DRAW SUPPORT FROM THE FOLLOWING DECISIONS:- I) 384 ITR 147 (DEL) PR. CIT V. G&G PHARMA INDIA LT D. (INTRODUCTION OF SHARE CAPITAL) 'TODAY WHEN THE CASE WAS CALLED OUT, MR. SAWHNEY PR ODUCED BEFORE THE COURT THE VERY SAME LETTER OF THE AO DAT ED 15TH SEPTEMBER 2010 WHICH HAS BEEN REPRODUCED IN ITS ENT IRELY IN THE IMPUGNED ORDER OF THE ITAT. HE SUBMITTED THAT THE A O WAS HIMSELF PRESENT IN THE COURT AND FURTHER EFFORTS WO ULD BE MADE TO LOCATE THE MATERIALS ON THE BASIS OF WHICH THE A O FORMED HIS OPINION REGARDING REOPENING OF THE ASSESSMENT. THE COURT WAS NOT PREPARED TO GRANT FURTHER TIME FOR THIS PURPOSE SINCE IT WAS NOT CLEAR THAT THE MATERIALS WERE, IN FACT, AVAILAB LE WITH THE DEPARTMENT. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENTRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A S INGLE DATE I.E. 10TH FEBRUARY 2003, FROM FOUR ENTITIES WHICH W ERE TERMED AS 15 ITA NO.-1273/DEL/2018 ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, THE AO STATED: I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGA TION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE C OMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK AC COUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES.' THE ABOVE CONC LUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE AO APPLIED H IS MIND TO THE MATERIALS THAT HE TALKS ABOUT PARTICULARLY SINC E HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE O N WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KN OWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOU NTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER 2004 AND WAS PROCE SSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: 'IT IS EVIDENT THAT TH E ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES'. IN THE CONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SUFFICIEN T CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCUSSED HEREINBEFO RE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE.' II) 395 ITR 677 (DEL) PR. CIT V. MEENAKSHI OVERSEAS (P) LTD. V. ITO '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 APPLICATIO N OF MIND BY THE AO TO THE TANGIBLE MATERIAL WHICH FORMS THE BASIS O F THE REASONS 16 ITA NO.-1273/DEL/2018 TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE CONCLUSIONS OF THE AO ARE AT BEST A REPRODUCTION OF THE CONCLUS ION IN THE INVESTIGATION REPORT. INDEED IT IS A 'BORROWED SATI SFACTION'. THE REASONS FAIL TO DEMONSTRATE THE LINK BETWEEN THE TA NGIBLE MATERIAL AND THE FORMATION OF THE REASON TO BELIEVE THAT INC OME HAS ESCAPED ASSESSMENT. 37. FOR THE AFOREMENTIONED REASONS, THE COURT IS SA TISFIED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, NO ERROR H AS BEEN COMMITTED BY THE ITAT IN THE IMPUGNED ORDER IN CONC LUDING THAT THE INITIATION OF THE PROCEEDINGS UNDER SECTION 147 /148 OF THE ACT TO REOPEN THE ASSESSMENTS FOR THE AYS IN QUESTION D OES 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 COS TS. III) 396 ITR 5 (DEL) PRO CIT V. RMG PLYVINYL (I) LT D. 11. THERE CAN BE NO MANNER OF DOUBT THAT IN THE INS TANT THERE WAS A FAILURE OF APPLICATION OF MIND BY THE AO TO THE F ACTS. IN FACT HE PROCEEDED ON TWO WRONG PREMISES - ONE REGARDING ALL EGED NON- FILING OF THE RETURN AND THE OTHER REGARDING THE EX TENT OF THE SO- CALLED ACCOMMODATION ENTRIES. 12. RECENTLY, IN ITS DECISION DATED 26TH MAY, 2017 IN ITA NO.692/20L6 (PRINCIPAL COMMISSIONER OF INCOME TAX-6 V. MEENAKSHI OVERSEAS PVT. LTD.), THIS COURT DISCUSSED THE LEGAL POSITION REGA RDING REOPENING OF ASSESSMENTS WHERE THE RETURN FILED AT THE INITIAL S TAGE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AWL NOT U NDER SECTION 17 ITA NO.-1273/DEL/2018 143(3) OF THE ACT. THE REASONS FOR THE REOPENING OF THE ASSESSMENT IN THAT CASE WERE MORE OR LESS SIMILAR TO THE REASO NS IN THE PRESENT CASE, VIZ., INFORMATION WAS RECEIVED FROM THE INVES TIGATION WING REGARDING ACCOMMODATION ENTRIES PROVIDED BY A 'KNOW N' ACCOMMODATION ENTRY PROVIDER. THERE, ON FACTS, THE COURT CAME TO THE CONCLUSION T HAT THE REASONS WERE, IN FACT, IN THE FORM OF CONCLUSIONS 'ONE AFTE R THE OTHER' AND THAT THE SATISFACTION ARRIVED AT BY THE AO WAS A 'B ORROWED SATISFACTION' AND AT BEST 'A REPRODUCTION OF THE CO NCLUSION IN THE INVESTIGATION REPORT.' 13. AS IN THE ABOVE CASE, EVEN IN THE PRESENT CASE, THE COURT IS UNABLE TO DISCERN THE LINK BETWEEN THE TANGIBLE MAT ERIAL AND THE FORMATION OF THE REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. IN THE PRESENT CASE TOO, THE INFORMATIO N RECEIVED FROM THE INVESTIGATION WING CANNOT BE SAID TO BE TANGIBL E MATERIAL PER SE WITHOUT A FURTHER INQUIRY BEING UNDERTAKEN BY THE A O. IN THE PRESENT CASE THE AO DEPRIVED HIMSELF OF THAT OPPORT UNITY BY PROCEEDING ON THE ERRONEOUS PREMISE THAT ASSESSEE H AD NOT FILED A RETURN WHEN IN FACT IT HAD. 14. TO COMPOUND MATTERS FURTHER THE IN THE ASSESSME NT ORDER THE AO HAS, INSTEAD OF ADDING A SUM OF 78 LAKH, EVEN GO ING BY THE REASONS FOR REOPENING OF THE ASSESSMENT, ADDED A SU M 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 SA TISFIED THAT NO ERROR WAS COMMITTED BY THE ITAT IN HOLDING THAT REO PENING OF THE ASSESSMENT UNDER SECTION 147 OF THE ACT WAS BAD IN LAW.' 18 ITA NO.-1273/DEL/2018 6.2 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS EXPLAINED ABOVE AND RESPECTFULLY FOLLOWING THE PREC EDENTS, AS AFORESAID, THE PROCEEDINGS INITIATED BY INVOKING TH E PROVISIONS OF SECTION 147 OF THE ACT BY THE AO AND UPHELD BY T HE LD. CIT(A) ARE NONEST IN LAW AND WITHOUT JURISDICTION, HENCE, THE ASSESSMENT IS QUASHED. SINCE I HAVE ALREADY QUASHED THE ASSESSMEN T, THE OTHER GROUNDS HAVE BECOME ACADEMIC AND ARE THEREFORE NOT ADJUDICATED AND ACCORDINGLY, THE ASSESSEE'S APPEAL IS ALLOWED. 13. THE FACTS OF THE CASE IN HAND ARE IDENTICAL TO THE FACTS CONSIDERED BY THE CO-ORDINATE BENCHES (SUPRA). THE REFORE, RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCHES, I AM OF THE CONSIDERED VIEW THAT THE PROCEEDINGS INITIAT ED BY INVOKING PROVISIONS OF SECTION 147 OF THE ACT ARE NON EAST O F LAW AND WITHOUT JURISDICTION. HENCE, THE ASSESSMENT IS QUASHED. S INCE, THE ASSESSMENT ORDER HAS BEEN QUASHED BY ME. I DO NO F IND IT NECESSARY TO WELL INTO MERITS OF THE CASE. APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 .05.201 9. SD/- (N.K.BILLAIYA) ACCOUNTANT MEMBER DATED: 22 .05.2019 19 ITA NO.-1273/DEL/2018 R.N COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 21 .05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21 .05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 2 2 .05.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 2 2 .05.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 2 .05.2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 20 ITA NO.-1273/DEL/2018