Savita Holdings Pvt. Ltd., Delhi V. ITO, Ward- 22(4), New Delhi

ITA 1389/DEL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9556 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 19-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Keywords: Unexplained cash credit; Loose papers; Accommodation entries; Reason to believe; Documents seized; Reassessment proceedings; Set aside
• Section: 143(3); 143(1); 69A; 139(1); 64; 13; 147; 148; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES G : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI B.R.R KUMAR, ACCOUNTANT MEMBER ITA.NO.1389/DEL./2019 ASSESSMENT YEAR 2010-2011 M/S SAVITA HOLDINGS PVT. LTD. B-1/14, RANA PRATAP BAGH, DELHI. PAN NO. AABCS3394P [ VS. ITO WARD 22(4) NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI SURESH KUMAR GUPTA, C.A. FOR REVENUE : SHRI PRAKASH DUBEY, SR. D.R. DATE OF HEARING : 10.03.2021 DATE OF PRONOUNCEMENT : 19.03.2021 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-31, NEW DELHI DATED 25.09 .2018 FOR AY 2010-11, CHALLENGING THE INITIATION OF THE REASSESSMENT PROCEEDINGS U/S 147 OF THE I.T. ACT AN D ADDITIONS OF RS. 2,15,84,086/- U/S 68 OF THE ACT HO LDING THE SHARE APPLICATION MONEY OF RS. 50 LAKHS AND UNSECUR ED 2 ITA.NO.1389/DEL./2019 LOANS OF RS. 1,65,84,086/- AS UNEXPLAINED CASH CRED IT U/S 69A OF THE ACT AND ADDITION OF RS. 90,000/- ON ACCO UNT OF COMMISSION PAID TO THE BROKERS. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL ON RECORD. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE IS A COMPANY WHICH WAS INCORPORATED ON 22.01.1996 UNDER THE COMPANIES ACT HAVING ITS TWO DIRECTORS NAMELY SHRI VIMAL BHAGERIA AND AARTI SUREKA. THE ASSESSEE COMPANY FI LED ITS RETURN OF INCOME ON 15.10.2010 FOR ASSESSMENT YEAR UNDER APPEAL DECLARING INCOME AT RS. 62,360/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 17.02.2012. THE AO RECEIVED INFORMATION FROM DIT(INV.) DATED 12.03.201 3 MENTIONING THEREIN THAT A SEARCH OPERATION WAS CARR IED OUT IN THE CASE OF SHRI S.K. JAIN GROUP OF CASES, WHERE IN AFTER INTENSIVE AND EXTENSIVE ENQUIRY AND EXAMINATION OF THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH, IT HA S BEEN NOTICED THAT THE SAID GROUP IS INVOLVED IN PROVIDIN G ACCOMMODATION ENTRIES AND THE NAME OF THE ASSESSEE COMPANY ALSO FIGURES IN THE LIST AS ONE OF THE BENE FICIARIES OF 3 ITA.NO.1389/DEL./2019 THE ACCOMMODATION ENTRIES. THE AO RECORDED REASONS FOR REOPENING OF THE ASSESSMENT AND ISSUE A NOTICE U/S 148 OF THE ACT. THE ASSESSEE IN RESPONSE TO THE SAME SUBM ITTED BEFORE AO THAT RETURN OF INCOME FILED ORIGINALLY MA Y BE TREATED AS RETURN HAVING BEEN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THE AO NOTED THAT THE RETURN OF IN COME FILED BY THE ASSESSEE SHOWS THAT ASSESSEE HAS RECEIVED SH ARE CAPITAL OF RS. 50 LAKHS AND UNSECURED LOANS OF RS. 2,10,84,386/- IN ASSESSMENT YEAR UNDER APPEAL. THE AO REFERRED TO ANNEXURE B IN THE ASSESSMENT ORDER WHIC H WAS RECOVERED FROM JAIN BROTHERS TO SHOW THAT ON 04.05. 2009 ASSESSEE COMPANY HAS RECEIVED SHARE CAPITAL OF RS. 25 LAKHS EACH FROM TWO COMPANIES NAMELY EURO ASIA MERCANTILE PVT. LTD. AND AD FIN CAPITAL SERVICES P. LTD. THROUGH AC COUNT PAYEE CHEQUES. THE AO NOTED THAT ON THE BASIS OF T HE SEIZED DOCUMENT IT WAS NOTICED THAT JAIN BROTHERS H AVE RECEIVED RS. 50 LAKHS IN CASH FROM INTERMEDIARY SH. VIMAL BHAGERIA FOR GETTING THE SAID ENTRY. THE AO ALSO R EFERRED TO ANNEXURE D WHICH WAS ALSO FOUND FROM JAIN BROTHERS WHICH IS EXTRACT FROM CASH BOOK FORMING PART OF SEIZED MA TERIAL TO 4 ITA.NO.1389/DEL./2019 SHOW THAT CASH RECEIPT BY THE ACCOMMODATION INTERME DIARY (SH. VIMAL BHAGERIA) OF RS. 50 LAKHS FROM 01.05.200 9 TO 30.05.2009. THE AO REFERRED TO MODUS OPERANDI OF JAIN BROTHERS TO PROVIDE ACCOMMODATION ENTRY IN THE ASSE SSMENT ORDER AND REFERRED TO ORDER OF THE LD. CIT(A) IN TH EIR CASE THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPL AIN THE ABOVE SHARE CAPITAL MONEY RECEIVED. 3.1 THE ASSESSEE FILED A REPLY BEFORE AO WHICH IS REPRODUCED IN THE ASSESSMENT ORDER IN WHICH ASSESSE E HAS BRIEFLY EXPLAINED THAT IT HAS NOT PAID ANY CASH TO ANY SUCH PERSON. THE ASSESSEE SUBMITTED COPY OF THE ITR, COMPUTATION, BANK STATEMENTS, MASTER DATA FROM ROC, BOARD RESOLUTION AND BALANCE SHEET OF THE ABOVE MEN TIONED INVESTORS TO SHOW THAT ASSESSEE HAS RECEIVED GENUIN E SHARE CAPITAL MONEY FROM THESE TWO COMPANIES. THE EVIDEN CES FILED BY THE ASSESSEE HAVE NOT BEEN CONTROVERTED. THE AO, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSES SEE AND MADE ADDITION OF RS. 50 LAKHS ON ACCOUNT OF UNEXPLA INED SHARE CAPITAL RECEIVED FROM THE ABOVE TWO COMPANIES . THE AO ALSO NOTED THAT IN ASSESSMENT YEAR UNDER APPEAL 5 ITA.NO.1389/DEL./2019 ASSESSEE HAS ALSO RECEIVED OTHER CREDITS ON ACCOUNT OF UNSECURED LOANS OF RS. 2.10 CRORES THE ASSESSEE CO MPANY IN SUPPORT OF THE SAME FILED THEIR CONFIRMATION, IT R, BANK STATEMENTS. THE AO, HOWEVER, NOTED THAT ASSESSEE H AS RECEIVED LOAN OF RS. 1,65,84,086/- FROM THREE COMPA NIES NAMELY M/S TRANSNATIONAL GROWTH FUND LTD., M/S SOLO MON HOLDINGS P. LTD. AND M/S RKG FINVEST LTD. WHICH ARE THE COMPANIES CONTROLLED BY JAIN BROTHERS. THE AO, THE REFORE, TREATED THE SUM OF RS. 1,65,84,086/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND MADE THE ADDITION ACCO RDINGLY. THE AO ALSO MADE ADDITION OF RS. 90,000/- ON ACCOUN T OF COMMISSION PAID FOR PROCURING THE ACCOMMODATION ENT RIES. 4. THE ASSESSEE CHALLENGED THE REOPENING OF THE ASSESSMENT AS WELL AS ABOVE ADDITIONS BEFORE LD. CI T(A). DETAILED SUBMISSION OF THE ASSESSEE IS REPRODUCED I N THE APPELLATE ORDER, HOWEVER, LD. CIT(A) DISMISS THE AP PEAL OF THE ASSESSEE. 5. LD. COUNSEL FOR ASSESSEE REFERRED TO PB 34 WHICH IS COPY OF THE REASONS RECORDED FOR INITIATION OF THE REASSESSMENT PROCEEDINGS. THE SAME READS AS UNDER: 6 ITA.NO.1389/DEL./2019 NAME OF THE ASSESSEE: M/S SAVITA HOLDINGS P. LTD. AY 2010- 11 PAN: AABCS3394P ASSESSMENT YEAR: 2010-11 REASONS FOR ISSUE OF NOTICE U/S 148 OF THE INCOME T AX ACT, 1961 THE RETURN OF INCOME FOR THE AY 2009-10 HAS BEEN FILED BY THE ASSESSEE COMPANY ON 15.10.2010 DECLARING TOTAL INCOME AMOUNTING TO RS. 62,360/-. THE SAME WAS PROCESSED U/S 143(1) ON 03.11.2010. NO ASSESSMENT U/S 143(3) FOR THE AY 2010-11 HAS BEEN MADE IN THIS CASE. IN THIS CASE INFORMATION HAS BEEN SHARED BY DIT (INVESTIGATION)-II (LETTER FLAGGED AS ANNEXURE A) O N THE BASIS OF SEARCH IN THE CASE OF SH. SURENDRA KR. JAIN GROUP O F CASES (ENTRY OPERATOR) NEW DELHI THAT DURING THE FY 2009-10. IT IS INFORMED THAT THE AFOREMENTIONED ASSESSEE HAS INTRODUCED ITS OWN MONEY BY WAY OF TAKING BOGUS ACCOMMODATION ENTRIES PROVID ED BY SH. S.K. JAIN GROUP OF CASES (ENTRY OPERATOR) THE DETAI LS OF ACCOMMODATION ENTRY AMOUNT RECEIVED AS BENEFICIARY IS GIVEN AS UNDER AS PROVIDED BY INVESTIGATION WING: S.NO. BENEFICIARIES NAME OF THE ENTRY PROVIDER AMOUNT TOTAL AMOUNT 1. M/S SAVITA HOLDING P. LTD. SH. SURENDRA KUMAR JAIN GROUP 50,00,000/- 50,00,000/- I HAVE PERUSED THE BALANCE SHEET OF THE ASSESSEE FOR THE YEAR ENDING 31.03.2010 AND 31.03.2009 IT IS REVEALE D THEREIN THAT ISSUED SUBSCRIBED AND PAID UP CAPITAL HAS INCR EASED BY RS. 50 LACS. IN THIS REGARD I HAVE ALSO TALLIED THE ABOVE WITH INFORMATION DETAILS OF THE CHEQUES/PO RECEIVED BY THE ABOVE COM PANY, THE AMOUNT THE ISSUING COMPANY, THE RECEIPT COMPANY, MI DDLEMAN BANK ETC. AS TABULATED/REPRODUCED BELOW WHICH ARE F OUND TOTALLY WITH FRESH SHARE CAPITAL RECEIVED AS DETAILED BELOW TO. 7 ITA.NO.1389/DEL./2019 S.N O. FROM COMPANY NAME TO COMPANY NAME NAME OF THE ISSUING BANK CHQ./RT GS/PO CH./DATE AMOUNT NAME OF THE MIDDLEMEN 1. EURO ASIA MERCANTILE P. LTD. SAVITA HOLDING P. LTD. AXIS CH. NO. 192357 04.05.09 2500000/- VIMAL BHAGERIA 2. AD FIN CAPITAL SERVICES P. LTD. SAVITA HOLDING P. LTD. AXIS CH. NO. 0125 04.05.09 2500000/- VIMAL BHAGERIA THEN AGAIN IT IS SEEN THAT THE TWO COMPANIES FROM W HOM THE AMOUNT WERE RECEIVED ARE LISTED AS PAPER COMPANIES CONTROLLED BY SH. S.K. JAIN GROUP. THUS, IN VIEW OF ABOVE, I HAVE REASON TO BELIEVE TH AT THE INCOME PERTAINING TO THE AY 2010-11 HAS ESCAPED ASSESSMENT TO THE EXTENT OF RS. 50,00,000/-. THE ESCAPEMENT OF INCOM E HAS BEEN CLEARLY ON ACCOUNT OF FAILURE ON THE PART OF THE AS SESSEE TO TRULY AND FULLY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE ASSESSMENT IS PROPOSED TO BE MADE FOR THE TIME AND CASE HAS NOT BEEN COMPLETED U/S 143(3) EARLIER. THUS, IT IS A FIT CASE FOR INITIATION OF PROCEEDING U/S 147 OF THE INCOME TAX ACT. 6. LD. COUNSEL FOR ASSESSEE SUBMITTED THAT THE CONCLUSION OF THE AO IS THE CONCLUSION DRAWN BY THE INVESTIGATION WING. BUT THE AO IN ABSENCE OF ANY APPLICATION OF MIND TO THE RELEVANT INFORMATION WAS IN NO POSITION TO REACH A BELIEF HIMSELF THAT THE INCOME HAS ESCAPED ASSESSMENT, INDEPENDENT OF THE CONCLUSION O F INVESTIGATION WING. THE AO DOES NOT DISCUSS HOW TH E PRIMA FACIE BELIEF OF ACCOMMODATION ENTRY IS REACHED WHEN NO EVIDENCE/MATERIAL REGARDING THE PAYMENT OF CASH IN LIEU OF 8 ITA.NO.1389/DEL./2019 CHEQUES TO THE SEARCH GROUP IS DISCUSSED. THE ROLE OF MIDDLEMAN IS NOT DISCUSSED AND NOR IS THERE ANY IND ICATION THAT HE WAS EXAMINED BY THE INVESTIGATION WING OR T HE AO. THE CONCLUSION OF THE AO IS NOT SUPPORTED BY ANY EV IDENCE OR MATERIAL ON RECORD. THE REASONS RECORDED DO NOT REFER EVIDENCE OR ANY CONFESSIONAL STATEMENT OF ANY ENTRY PROVIDER, CASH PAYMENT BY ASSESSEE/PAYMENT OF COMMISSION ETC. NON DISCLOSURE OF SPECIFIC MATERIA L IN THE PROCESS OF FORMATION OF PRIMA FACIE BELIEF SHOWS THAT EITHER THE MATERIAL REFERRED IN THE INFORMATION OF INVESTI GATION WING WAS NOT AVAILABLE TO THE AO OR IF IT WAS THERE , THE SAME HAVE NOT BEEN CONSIDERED BY THE AO. HE HAS RELIED UPON JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. MEENAKSHI OVERSEAS PVT. LTD. 395 ITR 677 (DEL.) , WHEREIN IT WAS HELD THAT REPRODUCTION OF INFORMATI ON WITHOUT SHOWING HOW THE MATERIAL REFERRED THEREIN D OES NOT SHOW APPLICATION OF MIND BY THE AO IN ABSENCE OF AN Y SPECIFIC DISCUSSION ON THE MATERIAL ON THE BASIS OF WHICH INDEPENDENT PRIMA FACIE BELIEF IS REACHED THAT INCOME HAS ESCAPED ASSESSMENT. LD. COUNSEL FOR THE ASSESSEE IN 9 ITA.NO.1389/DEL./2019 SUPPORT OF THE PROPOSITION OF LAW REGARDING NON-APP LICATION OF THE MIND BY THE AO ON THE REASONS RECORDED RELIE D UPON THE JUDGMENT OF DELHI HIGH COURT IN THE CASES OF M/ S RMG POLYVINYL (I) LTD. (2017) 396 ITR 5 (DEL.), M/S G & G PHARMA INDIA LTD., 384 ITR 147 (DEL.), M/S SIGNATURE HOTEL S P. LTD., 338 ITR 0051 (DEL.) AND M/S SFIL STOCK BROKING LTD. , 325 ITR 285. 6.1 LD. COUNSEL FOR ASSESSEE SUBMITTED THAT IT IS S ETTLED POSITION OF LAW THAT THE REASONS FOR REOPENING OF T HE ASSESSMENT MUST BE COMPLETE AND A SELF EXPLANATORY DEMONSTRATION THE APPLICATION OF MIND BY THE AO OF THE RELEVANT MATERIAL IN HIS POSSESSION. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE JUDGMENT OF DELH I HIGH COURT IN THE CASE OF SABH INFRASTRUCTURE VS. ACIT 3 98 ITR 198 (DEL.). LACK OF INDEPENDENT APPLICATION OF MIN D AT THE STAGE OF RECORDING REASONS IS ALSO EVIDENCE FROM TH E FACT THAT AO HIMSELF HAS TRIED DURING REASSESSMENT PROCEEDING S TO SUPPORT THE CONCLUSION OF ACCOMMODATION ENTRIES BY RELYING UPON VARIOUS ADDITIONAL SEIZED MATERIAL IN THE SHOW -CAUSE NOTICE. THE ADDITIONAL MATERIALS ARE HANDWRITTEN C ASH BOOK, 10 ITA.NO.1389/DEL./2019 WHERE CASH TRANSACTIONS ARE RECORDED BUT THE SAME A RE NOT FOUND RECORDED IN THE REGULAR BOOKS OF THE ACCOUNT OF THE SEARCHED PERSONS. THERE WAS NO SUPPORTING MATERIAL TO ANY OF THE SEIZED PAPER. THE AO IN ORDER TO IMPROVE TH E REASONS RELIED UPON ADDITIONAL MATERIALS LATER ON WHICH ARE NOT PART OF THE REASONS RECORDED. HE HAS SUBMITTED THAT IF THE REOPENING IS BASED ON SOME INFORMATION OR MATERIAL, SAME SHOULD HAVE THE REFERENCE IN THE REASONS RECORDED W HICH WILL HAVE TO BE THE BASIS FOR REOPENING OF THE ASSE SSMENT. HE HAS RELIED UPON THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF SABHARWAL PROPERTIES INDUSTRIES PVT. LTD., 382 ITR 547, ETC. LD. COUNSEL FOR ASSESSEE FURTHER SUBMITT ED THAT NON-APPLICATION OF THE MIND BY THE AO CAN ALSO BE F OUND FROM THE FACT THAT IN PARA 20 AT PAGE 51 OF THE SHO W-CAUSE NOTICE THE AO ALLEGED THAT THE AMOUNT OF RS. 50 LAK HS WAS RECEIVED BY S.K. JAIN GROUP FROM THE MIDDLEMAN SHRI VIMAL BHAGERIA IN LIEU OF CHEQUES OF RS. 50 LAKHS ACCEPTE D BY THE ASSESSEE COMPANY AS ACCOMMODATION ENTRY. THE ALLEG ATION WAS FOUND SUPPORTED BY ANNEXURE D (PB 69-70). ON ANNEXURE D (PB 70) IS THE CASH BOOK MARKED A-23 AND THE 11 ITA.NO.1389/DEL./2019 PERUSAL OF THIS REVEALS THAT CONTRARY TO WHAT THE A O STATED, THERE IS A PAYMENT OF RS. 50 LAKHS SHOWN TO HAVE BE EN MADE AS PER THE SAME DOCUMENT BY S.K. JAIN GROUP TO SH. VIMAL BHAGERIA DURING THE PERIOD 01.05.2009 TO 30.05.2009. THEREFORE, THE GROUND TAKEN BY THE AO IN THE REASONS THAT CASH IS PAID BY MIDDLEMAN OF ASSESSEE TO SH. S.K. JAIN IS NOT SUPPORTED BY THE SEIZED MATERIAL. THE AO RECORDED INCORRECT FACTS IN THE REASONS FOR GIVING CASH TO S.K. JAIN GROUP OF CASES FOR TAKING ACCOMMODATION E NTRY. HE HAS SUBMITTED THAT EVEN THE NAME OF MIDDLEMAN IS INCORRECTLY RECORDED BECAUSE SH. VIMAL BHAGERIA IS ONE OF THE DIRECTOR OF THE ASSESSEE COMPANY. LD. COUNSEL FOR ASSESSEE, THEREFORE, SUBMITTED THAT SINCE INCORRECT AND WRONG FACTS ARE RECORDED IN THE REOPENING OF THE ASSESSMENT, THEREFORE, IT IS INVALID AND BAD IN LAW . IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE J UDGMENT OF DELHI HIGH COURT IN THE CASE OF M/S SNG DEVELOPE RS LTD., 404 ITR 312 (DEL.) IN WHICH DEPARTMENTAL SLP HAS BE EN DISMISSED BY THE SUPREME COURT VIDE ORDER DATED 09.02.2018. HE HAS ALSO RELIED UPON THE JUDGMENT O F DELHI 12 ITA.NO.1389/DEL./2019 HIGH COURT IN THE CASE OF SHAMSHAD KHAN 395 ITR 265 (DEL.), JUDGMENT OF (P&H) IN THE CASE OF ATLAS CYCL E INDUSTRIES 180 ITR 319 AND JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF SIEMENS INFORMATION SYSTEM LTD . 293 ITR 548. NONE OF THE ANNEXURE REFERRED BY THE AO I N THE ASSESSMENT ORDER HAVE ANY REFERENCE IN THE REASONS FOR REOPENING OF THE ASSESSMENT. THE AO IN THE SHOW-CA USE NOTICE DATED 23.02.2016 (PB 55) HAS STATED THAT AS PER ANNEXURE A SEIZED FROM S.K. JAIN GROUP SHOWS THAT N AME OF THE ASSESSEE APPEARS ON THIS DOCUMENT HAVING TAKEN ACCOMMODATION ENTRY AMOUNTING TO RS. 17.05 CRORES F ROM SEARCHED GROUP. IF SUCH AMOUNT IS CORRECT, THERE W ERE NO REASONS FOR THE AO TO MENTION ONLY RS. 50 LAKHS IN THE REASONS. THUS, THE AO DID NOT APPLY HIS INDEPENDEN T MIND TO THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WHICH HAS RESULTED INTO THAT SANCTION U/S 151 IS AL SO INVALID. THE AO DID NOT TAKE ANY ACTION ON THE INF ORMATION RECEIVED FROM INVESTIGATION WING FOR ABOUT 2 YEARS AND DID NOT VERIFY THE SAME AND JUST REPEATED THE SAME FOR THE PURPOSE OF REOPENING OF THE ASSESSMENT. HE HAS REL IED UPON 13 ITA.NO.1389/DEL./2019 THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CAS E OF SHRI RAJIV AGARWAL VS. ACIT 395 ITR 255 IN WHICH IT WAS HELD THAT EVEN IN CASES, WHERE THE AO COMES ACROSS CERT AIN UNVERIFIED INFORMATION, IT IS NECESSARY FOR HIM TO TAKE FURTHER STEPS, MAKE INQUIRIES AND GARNER FURTHER MA TERIAL AND, IF SUCH MATERIAL INDICATES THAT INCOME OF AN A SSESSEE HAS ESCAPED ASSESSMENT, FORM A BELIEF THAT INCOME O F THE ASSESSEE HAS ESCAPED ASSESSMENT. THERE IS NON-APPL ICATION OF MIND BY THE AO COULD NOT BE SAID TO HAVE REASON TO BELIEVE AS TO JUSTIFY REOPENING OF THE ASSESSMENT. THE AO COULD HAVE MADE ENQUIRIES PRIOR TO RECORDING THE RE ASONS BY UNDERTAKING ENQUIRIES U/S 131/133(6)/142 OF THE ACT . BUT THE AO MERELY ACTED ON WRONG AND INCORRECT INFORMAT ION. LD. COUNSEL FOR ASSESSEE, THEREFORE, SUBMITTED THAT REOPENING OF THE ASSESSMENT IS INVALID AND BAD IN L AW. HE HAS FURTHER SUBMITTED THAT THE AO RELIED UPON MATER IAL COLLECTED DURING THE COURSE OF SEARCH IN THE CASE O F S.K. JAIN GROUP AND INVESTIGATION WING HAVE RECORDED STATEMEN T OF SOME PERSONS IN THEIR SEARCH BY CONFRONTING THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. 14 ITA.NO.1389/DEL./2019 THE AO, HOWEVER, DID NOT PROVIDE COPIES OF SUCH MAT ERIAL FOR CONFRONTATION OF THE ASSESSEE AND NO RIGHT OF CROSS - EXAMINATION HAVE BEEN PROVIDED TO THE ASSESSEE, THE REFORE, SUCH MATERIAL COLLECTED AT THE BACK OF THE ASSESSEE CANNOT BE USED IN EVIDENCE AGAINST THE ASSESSEE. IN SUPPO RT OF HIS CONTENTION, HE HAS RELIED UPON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES 281 CTR 241 AND KISHINCHAND CHELLARAM 125 ITR 713 (SC). LD . COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT REOPENING OF THE ASSESSMENT IS BAD IN LAW AND IS LI ABLE TO BE QUASHED. 7. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SUFFICIENC Y OF THE REASONS ARE NOT TO BE LOOKED INTO AT THE STAGE OF R EOPENING OF THE ASSESSMENT. THE AO RECORDED REASONS FOR REOPEN ING OF THE ASSESSMENT BASED ON INFORMATION RECEIVED FROM INVESTIGATION WING AND HAS APPLIED HIS MIND TO SUCH INFORMATION. THEREFORE, REOPENING OF THE ASSESSMEN T IS JUSTIFIED. 15 ITA.NO.1389/DEL./2019 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION. IT IS WELL SETTLED LAW THAT VALIDITY OF THE REASSESSMENT PROCE EDINGS IS TO BE DETERMINED WITH REFERENCE TO THE REASONS RECO RDED FOR REOPENING OF THE ASSESSMENT. THE COPY OF THE REASO NS RECORDED FOR REOPENING OF THE ASSESSMENT IS REPRODU CED ABOVE. IT IS ADMITTED FACT THAT ASSESSEE FILED ORI GINAL RETURN OF INCOME WHICH WAS PROCESSED U/S 143(1). THE AO L ATER ON RECEIVED INFORMATION FROM INVESTIGATION WING THAT S EARCH WAS CARRIED OUT IN THE CASE OF S.K. JAIN GROUP OF C ASES, WHEREIN AFTER DETAILED ENQUIRY AND EXAMINATION OF D OCUMENT SEIZED DURING THE COURSE OF SEARCH, IT WAS FOUND TH AT THE SAID PERSONS HAVE GIVEN ACCOMMODATION ENTRIES TO TH E ASSESSEE AS PER THE LIST IN WHICH ASSESSEE IS SHOWN AS ONE OF THE BENEFICIARIES. THE AO REFERRED TO ANNEXURE B A ND D AND OTHER MATERIAL IN THE ASSESSMENT ORDER FOR JUSTIFYI NG REOPENING OF THE ASSESSMENT IN THE MATTER. THE AO AS PER SEIZED MATERIAL NOTED THAT ASSESSEE HAS RECEIVED ACCOMMODATION ENTRY OF RS. 50 LAKHS FROM TWO PARTIE S IN WHICH INTERMEDIARY WAS SH. VIMAL BHAGERIA. THE AO RECORDED INCORRECT FACT THAT SH. VIMAL BHAGERIA WAS 16 ITA.NO.1389/DEL./2019 INTERMEDIARY BECAUSE AT THE FIRST PAGE OF THE ASSES SMENT ORDER AO HAS MENTIONED THAT SH. VIMAL BHAGERIA IS O NE OF THE DIRECTOR OF THE ASSESSEE COMPANY. THE AO ALSO ON THE BASIS OF THE SEIZED DOCUMENT FOUND THAT JAIN BROTHE RS HAD RECEIVED RS. 50 LAKHS IN CASH FROM SH. VIMAL BHAGER IA AND REFERRED TO ANNEXURE D IN THE REASSESSMENT ORDER, C OPY OF WHICH IS ALSO FILED AT PAGE 69 AND 70 OF THE PAPER BOOK. ANNEXURE D WOULD REVEAL THAT CASH IS RECEIVED BY TH E ACCOMMODATION INTERMEDIARY (SH. VIMAL BHAGERIA). P B 70 IS ALSO ANNEXURE D PAGE 1 ACCORDING TO WHICH RS. 50 LAKHS SHOWN TO HAVE BEEN MADE BY S.K. JAIN GROUP TO SH. V IMAL BHAGERIA DURING PERIOD FROM 01.05.2009 TO 30.05.200 9. SO THE GROUND TAKEN BY THE AO THAT ASSESSEE HAS PAID C ASH IN LIEU OF CHEQUE OF RS. 50 LAKHS ACCEPTED FROM SH. S. K. JAIN HAS NOT BEEN SUPPORTED BY ANY MATERIAL. RATHER A C ONTRARY FACT HAS BEEN RECORDED IN THE SEIZED ANNEXURE D (PB 69-70) THAT S.K. JAIN GROUP HAS PAID CASH TO SH. VIMAL BHA GERIA. PB 59 TO 64 IS ANNEXURE A, PB 65 TO 66 IS ANNEXURE B AND PB 67 TO 68 IS ANNEXURE C AND PB 69 TO 70 IS ANNEXU RE D WHICH ACCORDING TO AO WOULD SUPPORT THE ALLEGATION OF 17 ITA.NO.1389/DEL./2019 ACCOMMODATION ENTRY OF RS. 50 LAKHS RECEIVED BY ASS ESSEE FROM THE COMPANIES CONTROLLED BY SH. S.K. JAIN GROU P. HOWEVER, THESE ENTRIES FOUND DURING THE COURSE OF S EARCH IN THE CASE OF S.K. JAIN ARE NOT FOR ANY HELP TO THE A O OR THE REVENUE DEPARTMENT TO FORM A BELIEF OF ESCAPEMENT O F INCOME. THESE ANNEXURE WILL SHOW THAT AO WAS NOT C ORRECT TO FORM HIS BELIEF ON SUCH ANNEXURE WHICH ARE TOTAL LY DUMB DOCUMENTS AND DO NOT PROVIDE ANYTHING OF PROVIDING ACCOMMODATION ENTRIES. ANNEXURE A IS LIST OF THE C OMPANIES AND THERE IS NO SUPPORTING MATERIAL TO THE SAME OR IT IS CONTROLLED BY SOMEBODY ELSE. ANNEXURE B IS AGAIN D ETAILS OF CHEQUE ISSUED BY VARIOUS COMPANIES ON 01.05.2009 TO 11.05.2019 WHICH IS A ROUTINE LIST AND NOTHING MORE . IT WOULD ALSO NOT INDICATE THAT CHEQUES HAVE BEEN ISSU ED IN LIEU OF THE CASH. ANNEXURE C IS AGAIN DETAILS OF T RANSACTION IN THE MONTH OF MARCH 2010 AND DECEMBER 2009. THES E DETAILS DO NOT PERTAIN TO THE PERIOD OF THE MONTH O F MAY, 2009. IT DOES NOT PROVIDE OF ANY DETAILS FOR ACCOM MODATION ENTRIES. ANNEXURE D IS DIFFERENTLY AS MENTIONED AB OVE IN WHICH IT IS MENTIONED THAT CASH PAYMENT OF RS. 50 L AKHS IS 18 ITA.NO.1389/DEL./2019 PAID TO MIDDLEMAN AND NOT THAT MIDDLEMAN HAS PAID A NY CASH PAYMENT TO S.K. JAIN GROUP OF CASES. THE AO SUBSEQUENTLY IN THE SHOW-CAUSE NOTICE DATED 23.02.2 016 HAS MENTIONED THAT ASSESSEE HAS RECEIVED ACCOMMODAT ION ENTRIES OF RS. 17.05 CRORES FROM THE SEARCHED GROUP WHICH FACT IS ALSO INCORRECT. SHRI VIMAL BHAGERIA IS NOT THE MIDDLEMAN AS MENTIONED IN THE REASONS. HE IS ONE O F THE DIRECTOR OF THE ASSESSEE COMPANY. THE AO IN THE ASSESSMENT ORDER HAS SPECIFICALLY MENTIONED THAT TH E RETURN OF INCOME FILED ORIGINALLY U/S 139(1) SHOWS ASSESSE E HAS RECEIVED SHARE CAPITAL OF RS. 50 LAKHS AND UNSECURE D LOANS OF RS. 2.10 CRORES IN ASSESSMENT YEAR UNDER APPEAL. THUS, THERE WAS NO REASON FOR THE AO TO MENTION IN THE RE ASONS RECORDED FOR REOPENING OF THE ASSESSMENT THAT THERE IS AN ESCAPEMENT OF INCOME ON ACCOUNT OF FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERI AL FACTS NECESSARY FOR ASSESSMENT. THE ABOVE FACTS ON RECOR D CLEARLY SHOW THAT DURING THE COURSE OF SEARCH NO SPECIFIC M ATERIAL OR EVIDENCE WAS FOUND AGAINST THE ASSESSEE FOR RECE IVING ANY ACCOMMODATION ENTRY FROM S.K. JAIN GROUP OF CASES. THE 19 ITA.NO.1389/DEL./2019 AO DID NOT REFER TO ANY MATERIAL FOUND DURING THE C OURSE OF SEARCH AGAINST THE ASSESSEE IN THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT. THE AO BELIEVED THE INFORMATION RECEIVED FROM INVESTIGATION WING THAT A SSESSEE HAS RECEIVED ACCOMMODATION ENTRY BUT ALL THE ANNEXU RE SEIZED DURING THE COURSE OF SEARCH FROM S.K. JAIN G ROUP OF CASES AS DISCUSSED ABOVE DID NOT IMPLICATE THE ASSE SSEE OF RECEIVING ANY ACCOMMODATION ENTRY. NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AS TO HOW SH. S.K. JAIN GROUP WAS CONTROLLING THE INVESTOR COMPANIES OR THE COMPA NIES PROVIDED LOAN TO THE ASSESSEE. SUCH FACT IS ALSO N OT CORROBORATED BY ANY EVIDENCE OR MATERIAL, IF FOUND DURING THE COURSE OF SEARCH. THUS, THE AO RECORDED INCORR ECT AND WRONG FACTS IN THE REASONS RECORDED FOR REOPENING O F THE ASSESSMENT. THE AO INDEPENDENTLY DID NOT APPLY HIS MIND TO THE INFORMATION RECEIVED FROM INVESTIGATION WING AND MERELY BELIEVED THE SAME TO BE CORRECT FOR THE PURP OSE OF REOPENING OF THE ASSESSMENT DESPITE NO SPECIFIC MAT ERIAL WAS FOUND DURING THE COURSE OF SEARCH AGAINST THE A SSESSEE COMPANY. WHATEVER MATERIAL WAS RECOVERED DURING TH E 20 ITA.NO.1389/DEL./2019 COURSE OF SEARCH OR ANY STATEMENT RECORDED DURING S EARCH IN THE CASE OF S.K. JAIN GROUP OF CASES, SUCH MATERIAL WAS NEVER SUPPLIED TO ASSESSEE OR CONFRONTED OR GIVEN A NY RIGHT OF CROSS EXAMINATION TO THE ASSESSEE. THEREFORE, S UCH MATERIAL CANNOT BE USED AGAINST THE ASSESSEE. CONS IDERING THE ABOVE DISCUSSION, IT IS CLEAR THAT AO HAS MENTI ONED WRONG AND INCORRECT FACTS IN THE REASONS RECORDED F OR REOPENING OF THE ASSESSMENT AND DID NOT APPLY HIS M IND TO THE INFORMATION RECEIVED FROM INVESTIGATION WING. THUS, THE REOPENING OF THE ASSESSMENT IS INVALID AND BAD IN L AW AND IS LIABLE TO BE QUASHED. THE DECISIONS RELIED UPON BY LD. COUNSEL FOR ASSESSEE SUPPORT OUR FINDINGS. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDERS OF THE AUTHORIT IES BELOW AND QUASH THE REOPENING OF THE ASSESSMENT. RESULTA NTLY ALL ADDITIONS STAND DELETED. 9. THE LD. REPRESENTATIVES OF BOTH THE PARTIES HAVE ALSO ARGUED ON MERITS IN WHICH LD. COUNSEL FOR ASSESSEE ARGUED THAT WHATEVER DOCUMENTARY EVIDENCE WAS FILED ON REC ORD FOR THE PURPOSE OF EXPLAINING THE SHARE APPLICATION MON EY AND LOANS, NO INVESTIGATION HAS BEEN MADE BY THE AO. T HUS, IN 21 ITA.NO.1389/DEL./2019 PRINCIPLE ADDITION IS OTHERWISE WHOLLY UNJUSTIFIED. SINCE, WE HAVE QUASHED THE REOPENING OF THE ASSESSMENT, THERE FORE, THE ISSUE OF MERIT IS LEFT WITH ACADEMIC DISCUSSION ONLY AND, AS SUCH, WE DO NOT PROPOSE TO DECIDE THE SAME AT TH E STAGE. 10. IN VIEW OF THE ABOVE, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/03/2021 SD/- SD/- (B.R.R. KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 19 TH MARCH, 2021 *KAVITA ARORA COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT C BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.