PLB Infrastructure Pvt. Ltd., New Delhi V. ACIT, Central Circle- 25, New Delhi

ITA 1390/DEL/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5790 (ITAT-DELHI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Unexplained cash credit; Bogus Share capital; Income from undisclosed sources; Tangible material; Accommodation entries; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 133(6); 147; 131; 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.1390/DEL/2018 ASSESSMENT YEAR : 2009-10 PLB INFRASTRUCTURE PVT. LTD., 249-250, BANK STREET, KAROL BAGH, NEW DELHI. VS. ACIT, CENTRAL CIRCLE- 25, NEW DELHI. PAN : AAECP8129L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HIREN MEHTA SHRI SANJEEV KWATRA, CA DEPARTMENT BY : SHRI ATIQ AHMAD, SR.DR DATE OF HEARING : 13-06-2018 DATE OF PRONOUNCEMENT : 27-06-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 25.01.2018 OF THE CIT(A)- 29, NEW DELHI RELATING TO ASSESSMENT YEAR 2009-10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF INVESTMENT AND S ALE OF PROPERTY. IT FILED ITS RETURN OF INCOME ON 26.09.2009 DECLARING NIL INCOME , WHICH WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 ON 02.11.2010. SUBSEQ UENTLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY RECORDING THE FO LLOWING REASONS AND AFTER 2 ITA NO.1390/DEL/2018 OBTAINING THE SANCTION U/S 151(1) OF THE PR.CIT, (C ENTRAL)-III, NEW DELHI DATED 26.08.2015 :- RECORDING REASONS FOR INITIATING PROCEEDINGS U/S 148 R.W.S. 1 47 OF THE I. T. ACT, 1961. A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT ON 15.1 0.2013 SRM GROUP OF COMPANIES ON THE BASIS OF INFORMATION THAT THAT THE SRM GROUP HAS INTRODUCED ITS OWN UNACCOUNTED INCOME IN THE BOOKS OF ITS COMPANIES IN THE GUISE OF SHARE CAPITAL AND SHARE PREMIUM SHOWN TO HAVE BEEN RECEIVED FROM VARI OUS ENTRY PROVIDING NON- DESCRIPT COMPANIES MAINLY BASED IN KOLKATA AND DELH I. 2. ACCORDINGLY, INFORMATION WAS RECEIVED FROM THE I NVESTIGATION WING OF INCOME TAX DEPARTMENT, NEW DELHI THAT M/S PLB INFRASTRUCTU RE PVT. LTD HAS RECEIVED SHARE APPLICATION MONEY/SHARE PREMIUM AMOUNTING TO RS. 2, 65,00,000/- FROM DIFFERENT ENTRY PROVIDING COMPANIES IN F.Y. 2008-09 RELEVANT TO AY 2009-10. 3. THE PROMOTERS OF SRM GROUP OF COMPANIES, NAMELY SH. ASHOK GOEL, SH. PRADEEP GOEL AND SH. PRAVEEN GUPTA FAILED TO PROVE GENUINENESS OF THE ABOVE INVESTMENT. FURTHER, THE INVESTIGATION WING KOLKATA HAS ALSO RECORDED STATEMENT SHRI RAJESH KUMAR AGGARWAL WHO HAS SPECIFICALLY ADMITTED THAT 22 COMPANIES OUT OF 40 SUCH COMPANIES CONTROLLED AND MANAGED BY HIM HAVE M ADE INVESTMENTS IN THE FORM OF SHARE CAPITAL & SHARE PREMIUM IN GROUP COMPANIES OF SRM AND THESE ARE MERE PAPER COMPANIES WHICH HAVE BEEN FORMED AND SUBSEQUENTLY U SED TO PROVIDE ACCOMMODATION ENTRIES TO VARIOUS CLIENTS. HE STATED THAT HE PROVI DED ACCOMMODATION ENTRIES TO VARIOUS COMPANIES LIKE GINNI GOLD LTD, GOEL EXIM IN DIA PVT. LTD, PLB INFRASTUCTRE PVT. LTD, SRM DIAMONDS PVT. LTD, GOEL IMPEX PVT. LT D, SRM SECURITIES PVT. LTD AND BHAVYA GOLD PVT. LTD OF SRM GROUP THROUGH ENTRIES O F BOGUS SHARE CAPITAL AND PREMIUM THROUGH COMPANIES CONTROLLED BY HIM. HE FUR THER STATED THAT THESE SHARE CAPITAL AND PREMIUM ARE JUST AN ACCOMMODATION ENTRY PROVIDED TO SRM GROUP OF DELHI TO ROUTE INTO THE BUSINESS THEIR UNACCOUNTED MONEY. SOME OF OTHER ENTRY OPERATORS ALSO ADMITTED TO HAVE PROVIDED ENTRIES TO SRM GROUP OF COMPANIES. 4. FROM THE VERY PERUSAL OF THE FINANCIALS OF THE S HARE APPLICANT COMPANIES, IT IS ALSO EVIDENT THAT THE GROSS RECEIPT/ TURNOVER OF TH ESE COMPANIES ARE EXTREMELY LOW & PROFIT BEFORE TAX IS EITHER NEGATIVE IN MOST OF THE CASES OR AT A LOWER SIDE WHICH PROVES THAT THESE COMPANIES ARE ONLY CONDUIT COMPAN IES CREATED FOR THE SOLE PURPOSE OF TRANSFERRING MONEY TO THE BENEFICIARY COMPANY WI THOUT PAYING ANY SUBSTANTIAL AMOUNT OF TAXES AND IS ALSO BENEFITTING THE BENEFIC IARY COMPANY BY PROVIDING ACCOMMODATION ENTRY THEREBY SAVING THE BENEFICIARY COMPANY FROM PAYING OF SUBSTANTIAL AMOUNT OF TAXES. THE ANALYSIS OF THE BA NK STATEMENTS OF INVESTING COMPANIES ALSO DEPICTS THE PECULIAR CHARACTERISTICS OF THE ENTRY OPERATING COMPANIES I.E. MONEY BEING CREDITED IN THE BANK ACCOUNTS FROM OTHER ACCOUNTS AND THE SAME BEING TRANSFERRED TO THE BENEFICIARY BANK ACCOUNT O N THE SAME OR NEXT DAY, LEAVING NOMINAL BALANCE IN THE ACCOUNT. 5. IN VIEW OF THE ABOVE DISCUSSIONS, IT CAN BE CONC LUDED THAT THESE INVESTING COMPANIES ARE MERE PAPER/SHELL COMPANIES WHO HAVE N O BUSINESS ACTIVITIES AND ARE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES TO DIFFE RENT COMPANIES INCLUDING THE ASSESSEE COMPANY AND ACCORDINGLY, AN AMOUNT OF RS.2 ,65,00,000/- RECEIVED UNDER THE 3 ITA NO.1390/DEL/2018 HEAD SHARE APPLICATION/SHARE PREMIUM IS NOT GENUINE AND HENCE, LIABLE TO BE ADDED U/S 68 OF THE IT ACT, 1961 IN AY 2009-10. 6. IN VIEW OF THE ABOVE, AS INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT BY WAY OF FAILURE TO DISCLOSE ALL THE MATERIAL FACTS T RULY AND FULLY, I HAVE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. DATE : 26.08.2015 SD/- (GAUTAM DEB) DCIT, CENTRAL CIRCLE- 25, NEW DELHI 3. IN RESPONSE TO THE NOTICE U/S 148 ON 28.08.2015, THE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN FILED U/S 139(1) MAY BE TR EATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE I.T. ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ISSUED NOTICE U/S 133(6) TO THE FOLLOWING 12 COMPAN IES CALLING FOR INFORMATION ABOUT SHARES PURCHASED AT HUGE PREMIUM AS SHOWN AGA INST EACH OF THEM :- S.NO. NAME OF INDIV./COMP. (SH./SMT./M/S) SHARE CAP ITAL AND PREMIUM 1 VIRGIN CAPITAL SERVICES PVT. LTD. 2000000 2 VIP LEASING & FINANCE PVT. LTD. 2000000 3 VEMURI FINVEST PVT. LTD. 2500000 4 ULTIMATE IT SOLUTIONS PVT. LTD. 2000000 5 PITAMBER INFRASTRUCTURE PVT. LTD. 1000000 6 BHOLA MOTOR FINANCE PVT. LTD. 2500000 7 ADVENT TRADING PVT. LTD. 2000000 8 TOOR FINANCE COMPANY LIMITED 2500000 9 P L FINLEASE PVT. LTD. 2500000 10 NIPUN TRADEX PVT. LTD. 15000000 11 MANI MALA DELHI PROPERTIES PVT. LTD. 2500000 12 AD-FIN CAPITAL SERVICES INDIA PVT. LTD. 2500000 TOTAL 24500000/- 4 ITA NO.1390/DEL/2018 5. HE NOTED THAT THE NOTICE WAS SERVED ONLY ON 5 CO MPANIES AS PER SL.NO.8 TO 12 ABOVE. HOWEVER, THERE WAS NO REPLY RECEIVED FROM THE ABOVE COMPANIES. HE NOTED THAT THE NOTICES ISSUED UPON THE REMAINING 7 COMPANIES AT THE PROVIDED ADDRESS WERE RETURNED UNSERVED BY THE POSTAL DEPART MENT WITH THE REMARKS NO SUCH FIRM OR LEFT. HE, THEREFORE, ASKED THE ASS ESSEE TO EXPLAIN AS TO WHY THE SHARE CAPITAL AND SHARE PREMIUM RECEIVED TO THE TUN E OF RS.2,45,00,000/- BE NOT TREATED AS UNEXPLAINED CASH CREDIT WITHIN THE MEANI NG OF SECTION 68 OF THE I.T. ACT. 5.1 THE ASSESSEE, IN RESPONSE TO THE SAME, SUBMITTE D THAT THE ASSESSEE COMPANY NAMELY M/S PLB INFRASTRUCTURE PVT. LTD. BEL ONGS TO SHREE RAJ MAHAL JEWELLERS GROUP (SRM GROUP). THE ASSESSEE HAS FILE D AN APPLICATION DATED 11.07.2016 BEFORE THE INCOME TAX SETTLEMENT COMMISS ION (ITSC) WHICH HAS BEEN DULY ADMITTED U/S 245D(2) OF THE I.T. ACT. IN THE STATEMENT OF FACTS (SOF) ATTACHED TO ITSC IT HAS BEEN CLEARLY STATED THAT ST OCK FOUND SHORT AT THE TIME OF SEARCH IN VARIOUS GROUP ENTITIES WAS UTILIZED FOR M AKING SALES OUTSIDE BOOKS OF ACCOUNTS AND THE CASH SO GENERATED WAS UTILIZED FOR MAKING INVESTMENT IN PROPERTIES AND INTRODUCING THE MONEY IN THE BOOKS O F THE GROUP CONCERNS THROUGH SHARE CAPITAL. THE AMOUNT OF RS.2,65,00,00 0/- ALLEGEDLY RECEIVED AS SHARE CAPITAL BY THE ASSESSEE COMPANY IS ALSO PART OF THE SAME PROCEDURE AS EXPLAINED ABOVE. IT WAS POINTED OUT THAT THE UTILI ZATION OF CASH IS MENTIONED IN 5 ITA NO.1390/DEL/2018 DETAILS IN ANNEXURE-F FORMING PART OF THE SETTLEMEN T APPLICATION. ALTHOUGH, THE ASSESSEE COMPANY IS NOT AN APPLICANT BEFORE ITSC, H OWEVER, BEING A GROUP CONCERN CASH UTILIZED FOR INTRODUCTION OF SHARE CAP ITAL IS DULY STATED IN ANNEXURE-F (UTILIZATION CHART) AT SL. NO.9. MOREOV ER, AN AMOUNT OF RS.9.94 LAKHS IS SEPARATELY STATED ON ACCOUNT OF CAPITAL EN TRY EXPENSES. IT WAS ACCORDINGLY SUBMITTED THAT NO SEPARATE ADDITION IS WARRANTED ON ACCOUNT OF ALLEGED UNEXPLAINED SHARE CAPITAL SINCE THE AMOUNT OF RS.2,65,00,000/- HAS ALREADY BEEN INCLUDED IN THE SETTLEMENT APPLICATION OF THE SRM GROUP COMPANIES. 5.2 HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIE D WITH THE EXPLANATION GIVEN BY THE ASSESSEE. ACCORDING TO HIM, THE SOF S UBMITTED BY THE ASSESSEE BEFORE ITSC SHOWS THAT THE TOTAL UTILIZATION OF CAS H GENERATED OUTSIDE BOOKS OF ACCOUNTS AS PER ANNEXURE- F IS RS.1,18,65,70,487/- AS AGAINST TOTAL ADDITIONAL INCOME OF RS.8,60,87,803/- OFFERED BY THE ENTIRE GR OUP IN THE SETTLEMENT APPLICATION. REJECTING THE EXPLANATION GIVEN BY TH E ASSESSEE, THE ASSESSING OFFICER MADE ADDITION OF RS.2,65,00,000/- U/S 68 OF THE I.T. ACT. 6. BEFORE THE LD. CIT(A), THE ASSESSEE APART FROM C HALLENGING THE QUANTUM ADDITION ALSO CHALLENGED THE VALIDITY OF REOPENING OF THE CASE U/S 147 OF THE I.T. ACT. HOWEVER, LD. CIT(A) WAS NOT SATISFIED WITH TH E EXPLANATION GIVEN BY THE ASSESSEE AND DISMISSED THE APPEAL ON BOTH THE ISSUE S. SO FAR AS VALIDITY OF RE- 6 ITA NO.1390/DEL/2018 ASSESSMENT PROCEEDINGS IS CONCERNED, HE DECIDED THE ISSUE AGAINST THE ASSESSEE BY OBSERVING AS UNDER :- 5.2 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, SUBMISSION OF THE APPELLANT AS WELL AS THE CASE LAWS RELIED UPON AND PERUSED THE ASSESSMENT ORDER. FROM THE PERUSAL OF THE DETAILS/DOCUMENT FILED BY T HE APPELLANT, IT IS CLEAR THAT THE SHARE APPLICANTS WERE NOT HAVING ANY BUSINESS ACTIV ITY. THEY WERE HAVING MEAGER INCOME FROM WHICH IT IS CLEAR THAT THOSE WERE PAPER /SHELL COMPANIES ENGAGED IN GIVING ACCOMMODATION ENTRIES TO THE BENEFICIARIES I N THE GARB OF SHARE CAPITAL/PREMIUM. RELIANCE IS PLACED ON THE FOLLOWIN G JUDGEMENTS:- (I) HON'BLE SUPREME COURT IN THE CASE OF RAYMOND WOOLEN MILLS LTD. VS. ITO & OTHERS HAS HELD:- 'IN DETERMINING WHETHER COMMENCEMENT OF REASSESSMEN T PROCEEDINGS WAS VALID IT HAS ONLY TO BE SEEN WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS N OT A THING TO BE CONSIDERED AT THIS STAGE. (II) HON'BLE SUPREME COURT IN THE CASE OF YOGENDR KUMAR GUPTA VS. ITO HAS HELD:- 'WHETHER SUBSEQUENT TO COMPLETION OF ORIGINAL ASSES SMENT, AO, ON BASIS OF SEARCH CARRIED OUT IN CASE OF ANOTHER PERS ON, CAME TO KNOW THAT LOAN TRANSACTION OF ASSESSEE WITH A FINANCE CO MPANY WERE BOGUS AS SAID COMPANY WAS ENGAGED IN PROVIDING ACCOMMODAT ION ENTRIES, IT BEING A FRESH INFORMATION, HE WAS JUSTIFIED IN INIT IATING REASSESSMENT PROCEEDING IN CASE OF ASSESSEE' (III) HON'BLE DELHI HIGH COURT IN THE CASE OF ACORUS UNIT ECH WIRELESS P. LID. VS. ACIT HAS HELD:- IN TERMS OF SECTION 148, LAW ONLY REQUIRES THAT IN FORMATION OR MATERIAL ON WHICH AO RECORD HIS OR HER SATISFACTION HAS TO BE COMMUNICATED TO ASSESSEE, WITHOUT MANDATING DISCLOS URE OF ANY SPECIFIC DOCUMENT. (IV) HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT V S. PARAMOUNT COMMUNICATION P. LTD. HAS HELD : 'INFORMATION REGARDING BOGUS PURCHASE BY ASSESSEE R ECEIVED BY DRI FROM CCE WHICH WAS PASSED ON TO REVENUE AUTHORITIES WAS TANGIBLE MATERIAL OUTSIDE RECORD TO INITIATE VALID REASSESSM ENT PROCEEDINGS. (IV) HON'BLE SUPREME COURT IN THE CASE OF PARAMOUNT COMM UNICATION P. LTD. VS. PCIT HAS HELD:- ' .... SLP OF ASSESSEE DISMISSED. INFORMATION REGAR DING BOGUS PURCHASE BY ASSESSEE RECEIVED BY DRI FROM CCE WHICH WAS PASS ED ONTO REVENUE AUTHORITIES WAS TANGIBLE MATERIAL OUTSIDE RECORD TO INITIATE VALID REASSESSMENT PROCEEDINGS.' (V) HON'BLE GUJARAT HIGH COURT IN THE CASE OF ANKIT FIN ANCIAL SERVICES LTD. VS. DCIT HAS HELD :- 7 ITA NO.1390/DEL/2018 '.......... WHERE MATERIAL RECOVERED IN SEARCH OF A NOTHER PERSON INDICATED THAT ASSESSEE HAD RECEIVED BOGUS SHARE AP PLICATIONS THROUGH ACCOMMODATION ENTRIES, SINCE ASSESSEE WAS BENEFICIA RY, INITIATION OF REOPENING WAS JUSTIFIED.' (VI) HON'BLE GUJARAT HIGH COURT IN THE CASE OF AASPAS MU LTIMEDIA LTD. VS. DCIT HAS HELD:- ' ..... WHERE REASSESSMENT WAS MADE ON BASIS OF INF ORMATION RECEIVED FROM PR. DIT (INVESTIGATION) THAT ASSESSEE WAS BENE FICIARY OF ACCOMMODATION ENTRIES BY WAY OF SHARE APPLICATION P ROVIDED BY THIRD PARTY, SAME WAS JUSTIFIED.' 5.3 IN VIEW OF ABOVE DISCUSSION AND THE CASE LAWS, I FIND THAT THERE WAS NO INFIRMITY IN THE AO'S ORDER. THE APPELLANT WAS ASKE D TO PROVE THE GENUINENESS OF THE SHARE APPLICANT/SHARE APPLICATION MONEY BY FILING T HE RELEVANT DOCUMENTS/DETAILS BUT THEY FAILED TO DO SO. THEREFORE, THE CASE WAS NOT R EOPENED IN MECHANICAL MANNER BUT THE SAME WAS REOPENED AFTER PROPER APPLICATION OF M IND. SO FAR AS THE OTHER CASE LAWS RELIED UPON BY THE APPELLANT ARE CONCERNED NEITHER THE PRESENT CASE WAS REOPENED BASED ON MERE INFORMATION RECEIVED FROM THE INVESTI GATION WING, NOR THE REASONS RECORDED WERE VAGUE. BEFORE REOPENING THE CASE PRO PER EXERCISE WAS CARRIED OUT BY THE AO TO INVESTIGATE THE MATTER AND WHEN HE SATISF IED HIMSELF ON PROPER APPLICATION OF HIS MIND TO THE MATERIAL THEN ONLY HE CONCLUDED THAT HE HAD REASON TO BELIEVE THAT THE INCOME OF THE APPELLANT HAS ESCAPED ASSESSMENT. IN VIEW OF THE ABOVE DISCUSSION, THE GROUND RAISED BY THE APPELLANT ARE DISMISSED. 7. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUND S :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY CIT (A)-29, NEW DELHI (HEREINAFTER REFERRED TO A S CIT (A)), IS BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF AO IN INITIATI NG REASSESSMENT PROCEEDINGS WHICH ARE INVALID AND ILLEGAL BEING VOID-AB-INITIO AS THE AO HAS NOT APPLIED HIS MIND AND NOT CAME TO AN INDEPENDENT CONCLUSION THAT HE HAS R EASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT WHICH WAS A JURISDICTIONAL REQUIREMENT FOR REOPENING OF THE ASSESSMENT U/S 147/148 OF THE I.T. ACT. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF AO IN INITIATI NG REASSESSMENT PROCEEDINGS WHICH ARE INVALID AND ILLEGAL BEING VOID-AB-INITIO AS THE RE WAS NO MENTION ABOUT EXISTENCE OF ANY TANGIBLE MATERIAL IN THE REASONS TO BELIEVE FOR MED BY THE A.O. HENCE THE REASSESSMENT PROCEEDINGS WERE NOT VALIDLY INITIATED . 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF AO IN MAKING A N ADDITION OF RS. 2,65,00,000/- BY TREATING THE SHARE CAPITAL AND SHARE PREMIUM RECEIV ED DURING THE ASSESSMENT YEAR UNDER CONSIDERATION AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT. 8 ITA NO.1390/DEL/2018 5. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE NOTICE U/S 148 OF THE IT IS INVALID AS THE ALLEGED SATISFACTION RECOR DED BY THE AO IS THE BORROWED SATISFACTION AND REPRODUCTION OF CONCLUSION DRAWN I N THE INVESTIGATION REPORT AND NOT ON THE BASIS OF FURTHER ENQUIRY BY THE AO FOR THE F ORMATION OF THE REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT IN THE APPELLANT CASE. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUGNED ADDITION MADE BY CIT(A) IS NOT SUSTAINABLE AS PROPE R AND REASONABLE OPPORTUNITY WAS NOT PROVED TO THE ASSESSEE DURING THE COURSE OF ASS ESSMENT PROCEEDINGS. 7. THAT THE APPELLANT CRAVES LEAVED TO ADD, ALTER, MODIFY ANY OF THE GROUNDS AT THE TIME OF HEARING OR BEFORE THE HEARING. 8. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN RAISED BY THE ASSESSEE, HOWEVER, LD. COUNSEL FOR THE ASSESSEE CONFINED HIS ARGUMENT ONLY TO GROUND NO.2, 3 AND 5 IN WHICH THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REASSESSMENT PROCEEDINGS. REFERRING TO THE REASONS RECORDED BY THE ASSESSING OFFICER, COPY OF WHICH IS PLACED AT PAGE 1 AND 2 OF THE PAPER BOO K, HE SUBMITTED THAT THERE IS ABSOLUTELY NON-APPLICATION OF MIND BY THE ASSESSING OFFICER AND HE DID NOT COME TO AN INDEPENDENT CONCLUSION THAT HE HAD REASO NS TO BELIEVE THE ESCAPEMENT OF INCOME. HE SUBMITTED THAT IN THE REA SONS RECORDED THERE IS NO MENTION ABOUT EXISTENCE OF ANY TANGIBLE MATERIAL. THE SATISFACTION RECORDED BY THE ASSESSING OFFICER IS BORROWED SATISFACTION ENTI RELY BASED UPON THE ALLEGED MATERIAL/ INFORMATION RECEIVED FROM THE INVESTIGATI ON WING AND THE REASONS ARE IN-FACT CONCLUSIONS. REFERRING TO THE REASONS, HE SUBMITTED THAT THE SEARCH ACTION WAS CARRIED OUT ON 15.10.2013 ON SRM GROUP O F COMPANIES ON THE ALLEGATION THAT SHARE CAPITAL HAS BEEN RECEIVED FRO M VARIOUS ENTRY PROVIDING COMPANIES IN KOLKATA AND DELHI. ON THE BASIS OF TH E SAME, THE ASSESSING 9 ITA NO.1390/DEL/2018 OFFICER HAS DRAWN A CONCLUSION THAT INVESTING COMPA NIES ARE MERE SHELL COMPANIES AND, THEREFORE, THE AMOUNT OF RS.2.65 CRO RES RECEIVED UNDER THE HEAD SHARE APPLICATION IS NOT GENUINE. HE SUBMITTED THA T THE ASSESSING OFFICER HAS REFERRED TO THE STATEMENT OF SHRI RAJESH KUMAR AGGA RWAL RECORDED BY THE INVESTIGATION WING, KOLKATA WHERE IT HAS BEEN ADMIT TED BY HIM THAT 22 OUT OF 40 COMPANIES CONTROLLED AND MANAGED BY HIM HAVE MADE I NVESTMENTS IN SHARE CAPITAL IN GROUP COMPANIES OF SRM. HE HAD STATED T HAT HE PROVIDED ENTRIES TO VARIOUS COMPANIES LIKE GINNI GOLD, GOEL EXIM INDIA PVT. LTD., PLB INFRASTRUCTURE PVT. LTD., SRM DIAMOND PVT. LTD., GO EL IMPEX PVT. LTD., SRM SECURITIES PVT. LTD. AND BHAVYA GOLD PVT. LTD.. FU RTHER, ACCORDING TO THE ASSESSING OFFICER, THE FINANCIALS OF SHARE APPLICAN T COMPANIES ARE VERY WEAK AND TURNOVER OF THESE COMPANIES ARE EXTREMELY LOW A ND PROFIT IS EITHER NEGATIVE OR AT THE LOWER SIDE WHICH PROVE THAT THESE COMPANI ES ARE ONLY CONDUIT COMPANIES. 9. REFERRING TO THE STATEMENT OF SHRI RAJESH KUMAR AGGARWAL RECORDED U/S 131 OF THE I.T. ACT BY THE DDIT (INVESTIGATION) ON 22.01.2014, HE DREW THE ATTENTION OF THE BENCH TO THE QUESTION NO.9 WHEREIN SHRI RAJESH KUMAR AGGARWAL HAS GIVEN THE LIST OF THE 22 COMPANIES WHI CH ARE CONTROLLED BY HIM. REFERRING TO THE SAME, HE SUBMITTED THAT THE ASSESS EE HAS NOT RECEIVED ANY SHARE APPLICATION MONEY FROM ANY OF THE 22 COMPANIES CONT ROLLED BY SHRI RAJESH 10 ITA NO.1390/DEL/2018 KUMAR AGGARWAL. THEREFORE, THE REASONS RECORDED BY THE ASSESSING OFFICER ARE VERY VAGUE, SCANTY, SKETCHY AND, THEREFORE, THE RE- ASSESSMENT PROCEEDINGS SHOULD BE QUASHED. HE SUBMITTED THAT THE FOLLOWING INFORMATION WHICH IS ESSENTIAL FOR FORMATION OF BELIEF IS COMPLETELY MIS SING IN THE REASONS :- (A) NAMES OF THE INVESTING COMPANIES, (B) AMOUNT INVESTED BY EACH COMPANY, (C) ACCOMMODATION ENTRY PROVIDERS BANK DETAILS, (D) ALLEGED INSTRUMENT NUMBER, DATE, AMOUNT BY WHIC H ACCOMMODATION ENTRY WAS RECEIVED, (E) NAME OF THE BANK AND BRANCH AND ACCOUNT NUMBER FROM WHICH THE ALLEGED ENTRY ORIGINATED. 10. IN ABSENCE OF THE ABOVE, THE REASONS BEING NOT SPECIFIC BUT VAGUE AND GENERAL AND WOULD NOT LEAD TO ARRIVING AT A SATISFA CTION REGARDING ESCAPEMENT OF INCOME. 11. HE SUBMITTED THAT THERE IS A COMPLETE NON-APPLI CATION OF MIND AND INDEPENDENT ENQUIRY BY THE ASSESSING OFFICER. HE H AS MERELY REPRODUCED THE OBSERVATION OF THE INVESTIGATION WING REGARDING ALL EGED WEAK FINANCIALS OF THE INVESTING COMPANIES AND THE PECULIAR CHARACTERISTIC S OF THE BANK ACCOUNT OF ENTRY PROVIDER COMPANIES. HE SUBMITTED THAT AFTER THE INFORMATION RECEIVED FROM INVESTIGATION WING, THE ASSESSING OFFICER HAS STRAIGHTWAY DERIVED CONCLUSION REGARDING THE ESCAPEMENT OF INCOME. THE RE IS NO LIVE LINK BETWEEN THE FORMATION OF THE ASSESSING OFFICERS BELIEF AND TANGIBLE MATERIAL. 11 ITA NO.1390/DEL/2018 12. REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR.CIT VS. MEENAKSHI OVERSEAS (P) LTD. REPORTED IN 82 TAXMANN.COM 300, HE SUBMITTED THAT THE HON'BLE HIGH COURT IN THE SAID D ECISION HAS HELD THAT WHERE RE-ASSESSMENT WAS RESORTED TO ON BASIS OF INFORMATI ON FROM DIT (INVESTIGATION) THAT ASSESSEE HAD RECEIVED ACCOMMODATION ENTRY AND THERE WAS NO INDEPENDENT APPLICATION OF MIND BY ASSESSING OFFICER TO TANGIBL E MATERIAL AND REASONS FAILED TO DEMONSTRATE LINK BETWEEN TANGIBLE MATERIAL AND F ORMATION OF REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, RE-ASSE SSMENT WAS NOT JUSTIFIED. 13. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PR.CIT VS. RMG POLYVINYL (I) LTD. REPORTED IN 396 I TR 5, HE SUBMITTED THAT THE HON'BLE HIGH COURT IN THE SAID DECISION HAS HELD TH AT WHERE INFORMATION WAS RECEIVED FROM INVESTIGATION WING THAT ASSESSEE WAS BENEFICIARY OF ACCOMMODATION ENTRIES BUT NO FURTHER ENQUIRY WAS UN DERTAKEN BY ASSESSING OFFICER, SAID INFORMATION COULD NOT BE SAID TO BE T ANGIBLE MATERIAL PER SE AND, THUS, RE-ASSESSMENT ON SAID BASIS WAS NOT JUSTIFIED . 14. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SABH INFRASTRUCTURE LTD. VS. ACIT VIDE W.P.(C) 1357/2016 ORDER DATED 25.09.2017, HE SUBMITTED THAT THE HON'BLE HIGH COURT IN THE SAI D DECISION HAS HELD THAT THERE HAS TO BE REASONS TO BELIEVE AND NOT MERELY REASONS TO SUSPECT THAT INCOME HAS ESCAPED ASSESSMENT. 12 ITA NO.1390/DEL/2018 15. RELYING ON VARIOUS OTHER DECISIONS, HE SUBMITTE D THAT THE RE-ASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER AND UPHELD BY THE LD. CIT(A) BEING VOID AB-INITIO HAS TO BE QUASHED. 16. LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT LD. CIT(A) AFTER CAREFULLY GOING THROUGH THE REASONS RECORDED BY THE ASSESSING OFFICER HAD UPHELD SUCH RE-ASSESSM ENT PROCEEDINGS. HE SUBMITTED THAT IT IS VERY CLEAR FROM THE DETAILS/DO CUMENTS FILED BY THE ASSESSEE THAT THE SHARE APPLICANTS WERE NOT HAVING BUSINESS ACTIVITIES AND WERE HAVING MEAGER INCOME WHICH CLEARLY PROVES THAT THOSE PAPER /SHELL COMPANIES WERE ENGAGED IN GIVING ACCOMMODATION ENTRIES. SINCE THE CASE WAS NOT REOPENED IN A MECHANICAL MANNER BUT WAS REOPENED AFTER PROPER APP LICATION OF MIND, THEREFORE, THE VARIOUS DECISIONS RELIED ON BY THE L D. COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE AND ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HE ALSO RELIED ON THE DECISIONS WHICH WERE RELIED ON BY THE LD. CIT(A) WHILE DECIDING THE ISSUE. 17. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER ON THE BASIS OF INFORMAT ION RECEIVED FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT, NE W DELHI THAT M/S PLB 13 ITA NO.1390/DEL/2018 INFRASTRUCTURE PVT. LTD. HAS RECEIVED SHARE APPLICA TION MONEY/SHARE PREMIUM AMOUNTING TO RS.2,65,00,000/- FROM DIFFERENT ENTRY PROVIDING COMPANIES IN FINANCIAL YEAR 2008-09 HAD REOPENED THE ASSESSMENT BY ISSUE OF NOTICE U/S 148 OF THE I.T. ACT, THE REASONS FOR WHICH ARE ALREADY REPRODUCED IN THE PRECEDING PARAGRAPH. WE FIND THE LD. CIT(A) UPHELD THE ACTIO N OF THE ASSESSING OFFICER IN REOPENING OF THE ASSESSMENT, THE REASONS OF WHICH A RE ALSO REPRODUCED IN THE PRECEDING PARAGRAPH. IT IS THE SUBMISSION OF THE L D. COUNSEL FOR THE ASSESSEE THAT THE ASSUMPTION OF JURISDICTION BY THE ASSESSING OFF ICER U/S 147 OF THE I.T. ACT IS VOID AB-INITIO SINCE THERE IS (A) NON-APPLICATION O F MIND BY THE ASSESSING OFFICER IN RECORDING REASONS, (B) LACK OF TANGIBLE MATERIAL AND NON-EXISTENCE OF LIVE LINK BETWEEN FORMATION OF BELIEF BY THE ASSESS ING OFFICER AND THE TANGIBLE MATERIAL (C) THE SATISFACTION RECORDED BY THE ASSES SING OFFICER IS BORROWED SATISFACTION ENTIRELY BASED UPON THE ALLEGED MATERI AL/ INFORMATION RECEIVED FROM THE INVESTIGATION WING AND THE REASONS ARE IN-FACT CONCLUSIONS. 18. WE FIND MERIT IN THE ABOVE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. WE FIND FROM THE STATEMENT OF SHRI RAJESH KUMAR AGG ARWAL RECORDED BY THE DDIT (INVESTIGATION) U/S 131 OF THE I.T. ACT ON 22. 01.2014 WHEREIN SHRI RAJESH KUMAR AGGARWAL IN REPLY TO QUESTION NO.9 HAD GIVEN THE LIST OF 22 COMPANIES WHICH ARE CONTROLLED BY HIM. THE RELEVANT QUESTION AND ANSWER READS AS UNDER :- 14 ITA NO.1390/DEL/2018 Q.9 PLEASE STATE THE NAMES OF THE COMPANIES/PROPRI ETORSHIP CONCERNS MANAGED/CONTROLLED BY YOU AND ALSO STATE WHO ARE TH E DIRECTORS IN THESE COMPANIES/PROPRIETORSHIP CONCERNS? ANS. AS FAR AS MY MEMORY GOES, AS PER THE LIST PROV IDED BY YOU RELATED TO SRM GROUP OF CASES OF DELHI AROUND 22 (APPROXIMATELY) S HELL/PAPER COMPANIES ARE BEING CONTROLLED BY ME. THE BOOKS OF ACCOUNTS OF THOSE C OMPANIES ARE MAINTAINED IN THE COMPUTERS IN MY OFFICE. THE DIRECTORS OF THOSE COM PANIES ARE AS UNDER :- SL.NO. NAME OF THE COMPANY DIRECTORS 1. FESTINO AGRO PVT. LTD. PALAT MANDAL AJAY SHARMA 2. IMMORTAL VINIMAY PVT. LTD. MRITNUNJAY PAL SAHEB GHOSAL 3. ACTIVE SUPPLIERS PVT. LTD. MRITNUNJAY PAL SAHEB GHOSAL 4. KUSHAL INFOTECH PVT. LTD. PALAT MANDAL SAHEB GHO SHAL 5. MAHADHAN VYAPAR PVT. LTD. SAHEB GHOSH AJAY SHARM A 6. GAJANAND AGROTECH LTD. PALAT MANDAL SAHEB GHOSHA L 7. TITANIC CHEMICAL PVT. LTD. PALAT MANDAL SAHEB GH OSHAL 8. PARIJAT COMMODEAL PVT. LTD. MRITUYANJAY PAL SAHE B GHOSHAL 9. GOODFAITH PHARMACEUTICAL PVT. LTD. MRITUYANJAY PAL SAHEB GHOSAL 10. MAYUR VANIJYA PVT. LTD. MRITYUNJAY PAL SAHEB GH OSAL 11. MONALISA COMMERCIAL PVT. LTD. SAHEB GHOSHAL AJA Y SHARMA 12. NAVREKHA COMMOTRADE PVT. LTD. SAHEB GHOSHAL AJA Y SHARMA 13. OCTAL COMMODITIES PVT. LTD. PALAT MANDAL SAHEB GHOSHAL 14. MUKUL MILLS PVT. LTD. MRITYUNJAY PAL SAHEB GHOS HAL 15. GAJESHWAR SALES PVT. LTD. PALAT MANDAL AJAY SHA RMA 16. EXOTICA COMMODITY PVT. LTD. MRITYUNJAY PAL SAHE B GHOSHAL 17. BHAVTARANI SALES PVT. LTD. SAHEB GHOSHAL AJAY S HARMA 18. EVERSITE COMMODITY PVT. LTD. SAHEB GHOSHAL AJAY SHARMA 19. FASTINO AGENCIES PVT. LTD. PALAT MANDAL SAHEB G HOSHAL 20. MALAVIKA MERCHANTS PVT. LTD. PALAT MANDAL SAHEB GHOSHAL 21. TRIMLINE VYAPAR PVT. LTD. MRITYUNJAY PAL AJAY S HARMA 22. DHANSRI MERCHAANT PVT. LTD. PALAT MANDAL MRITYU NJAY PAL SIR, APART FROM THE ABOVE COMPANIES I AM CONTROLLIN G AND MANAGING A FEW MORE COMPANIES. HERE I WOULD LIKE TO MENTIONED THAT THE ABOVE DIRECTORS IN ALL OF THESE COMPANIES ARE DUMMY DIRECTORS WHO ARE MOSTLY MY EMP LOYEES WHO LEND THEIR NAMES FOR DIRECTORSHIP IN LIEU OF SOME COMPENSATIONS. THE ABOVE COMPANIES ALSO DO NOT HAVE ANY BUSINESS A CTIVITY AT ALL AND ARE CREATED BY MY ONLY FOR THE SOLE PURPOSE OF PROVIDING ACCOMMODA TION ENTRIES. 19. FROM THE ABOVE, IT IS SEEN THAT NONE OF THE 22 COMPANIES CONTROLLED BY HIM FIGURE OUT IN THE LIST OF COMPANIES FROM WHOM T HE ASSESSEE RECEIVED SHARE 15 ITA NO.1390/DEL/2018 CAPITAL/SHARE APPLICATION MONEY. FROM THE ABOVE, I T IS EVIDENT THAT THE RE- ASSESSMENT IS BASED UPON INFORMATION RECEIVED FROM INVESTIGATION WING OF THE INCOME TAX DEPARTMENT TO THE EFFECT THAT THE ASSESS EE HAS RECEIVED AN AMOUNT OF RS.2,65,00,000/- IN THE FORM OF SHARE CAPITAL/SH ARE PREMIUM FROM VARIOUS PAPER/SHELL COMPANIES. HOWEVER, THERE WAS NO INDEP ENDENT APPLICATION OF MIND BY THE ASSESSING OFFICER TO ANY TANGIBLE MATERIAL A ND THE REASONS FAILED TO DEMONSTRATE ANY LIVE LINK BETWEEN THE TANGIBLE MATE RIAL AND FORMATION OF REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT. 20. THE HONBLE DELHI HIGH COURT IN THE CASE OF MEE NAKSHI OVERSEAS (P.) LTD. (SUPRA) HAS HELD THAT WHERE REASSESSMENT WAS R ESORTED TO ON THE BASIS OF INFORMATION FROM DIT (INVESTIGATION) THAT ASSESSEE HAD RECEIVED ACCOMMODATION ENTRY BUT THERE WAS NO INDEPENDENT AP PLICATION OF MIND BY ASSESSING OFFICER TO TANGIBLE MATERIAL AND REASONS FAILED TO DEMONSTRATE LINK BETWEEN TANGIBLE MATERIAL AND FORMATION OF REASON T O BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, REASSESSMENT WAS NOT JUSTIFIED. THE RELEVANT OBSERVATION OF THE HON'BLE HIGH COURT READS AS UNDER :- 19. A PERUSAL OF THE REASONS AS RECORDED BY THE AO REVEALS THAT THERE ARE THREE PARTS TO IT. IN THE FIRST PART, THE AO HAS REPRODUCED THE PRECISE INFORMATION HE HAS RECEIVED FROM THE INVESTIGATION WING OF THE REVENUE. THIS IN FORMATION IS IN THE FORM OF DETAILS OF THE AMOUNT OF CREDIT RECEIVED, THE PAYER, THE PA YEE, THEIR RESPECTIVE BANKS, AND THE CHEQUE NUMBER. THIS INFORMATION BY ITSELF CANNOT BE SAID TO BE TANGIBLE MATERIAL. 20. COMING TO THE SECOND PART, THIS TELLS US WHAT T HE AO DID WITH THE INFORMATION SO RECEIVED. HE SAYS: 'THE INFORMATION SO RECEIVED HAS BEEN GONE THROUGH.' ONE WOULD 16 ITA NO.1390/DEL/2018 HAVE EXPECTED HIM TO POINT OUT WHAT HE FOUND WHEN H E WENT THROUGH THE INFORMATION. IN OTHER WORDS, WHAT IN SUCH INFORMATION LED HIM TO FORM THE BELIEF THAT INCOME ESCAPED ASSESSMENT. BUT THIS IS ABSENT. HE STRAIGHT AWAY RECORDS THE CONCLUSION THAT 'THE ABOVESAID INSTRUMENTS ARE IN THE NATURE OF ACC OMMODATION ENTRY WHICH THE ASSESSEE HAD TAKEN AFTER PAYING UNACCOUNTED CASH TO THE ACCOMMODATION ENTRY GIVEN (SIC GIVER)'. THE AO ADDS THAT THE SAID ACCOM MODATION WAS 'A KNOWN ENTRY OPERATOR' THE SOURCE BEING 'THE REPORT OF THE INVES TIGATION WING'. 21. THE THIRD AND LAST PART CONTAINS THE CONCLUSION DRAWN BY THE AO THAT IN VIEW OF THESE FACTS, 'THE ALLEGED TRANSACTION IS NOT THE BO NAFIDE ONE. THEREFORE, I HAVE REASON TO BE BELIEVE THAT AN INCOME OF RS. 5,00,000 HAS ES CAPED ASSESSMENT IN THE AY 2004- 05 DUE TO THE FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT... ' 22. AS RIGHTLY POINTED OUT BY THE ITAT, THE 'REASON S TO BELIEVE' ARE NOT IN FACT REASONS BUT ONLY CONCLUSIONS, ONE AFTER THE OTHER. THE EXPR ESSION 'ACCOMMODATION ENTRY' IS USED TO DESCRIBE THE INFORMATION SET OUT WITHOUT EX PLAINING THE BASIS FOR ARRIVING AT SUCH A CONCLUSION. THE STATEMENT THAT THE SAID ENTR Y 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 MENTION ED. HOW HE CAN BE SAID TO BE 'A KNOWN ENTRY OPERATOR' IS EVEN MORE MYSTERIOUS. CLEA RLY THE SOURCE FOR ALL THESE CONCLUSIONS, ONE AFTER THE OTHER, IS THE INVESTIGAT ION REPORT OF THE DIT. NOTHING FROM THAT REPORT IS SET OUT TO ENABLE THE READER TO APPR ECIATE 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 B ASIS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT MUST BE EVIDENT FROM A READING O F THE REASONS. THE ENTIRE MATERIAL NEED NOT BE SET OUT. HOWEVER, SOMETHING TH EREIN WHICH IS CRITICAL TO THE FORMATION OF THE BELIEF MUST BE REFERRED TO. OTHERW ISE THE LINK GOES MISSING. 24. THE REOPENING OF ASSESSMENT UNDER SECTION 147 I S 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 TA NGIBLE MATERIAL AND THAT SHOULD BE EVIDENT FROM READING THE REASONS. IT CANNOT BE S UPPLIED SUBSEQUENTLY EITHER DURING THE PROCEEDINGS WHEN OBJECTIONS TO THE REOPENING AR E CONSIDERED OR EVEN DURING THE ASSESSMENT PROCEEDINGS THAT FOLLOW. THIS IS THE BAR E MINIMUM MANDATORY REQUIREMENT OF THE FIRST PART OF SECTION 147 (1) OF THE ACT. XXXXX 36. IN THE PRESENT CASE, AS ALREADY NOTICED, THE RE ASONS 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 MATER IAL WHICH FORMS THE BASIS OF THE 17 ITA NO.1390/DEL/2018 REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT. THE CONCLUSIONS OF THE AO ARE AT BEST A REPRODUCTION OF THE CONCLUSION IN THE INV ESTIGATION REPORT. INDEED IT IS A 'BORROWED SATISFACTION'. THE REASONS FAIL TO DEMONS TRATE 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 SA TISFIED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, NO ERROR HAS BEEN COMMIT TED BY THE ITAT IN THE IMPUGNED ORDER IN CONCLUDING THAT THE INITIATION OF THE PROC EEDINGS UNDER SECTION 147/148 OF THE ACT TO REOPEN THE ASSESSMENTS FOR THE AYS IN QUESTI ON DOES NOT SATISFY THE REQUIREMENT OF LAW. 21. THE HONBLE DELHI HIGH COURT IN THE CASE OF RMG POLYVINYL (I) LTD. (SUPRA) FOLLOWING THE ABOVE DECISION HAS HELD THAT WHERE INFORMATION WAS RECEIVED FROM INVESTIGATION WING THAT ASSESSEE WAS BENEFICIARY OF ACCOMMODATION ENTRIES BUT NO FURTHER ENQUIRY WAS UN DERTAKEN BY THE ASSESSING OFFICER, SAID INFORMATION COULD NOT BE SAID TO BE T ANGIBLE MATERIAL PER SE AND, THUS, REASSESSMENT ON SAID BASIS WAS NOT JUSTIFIED. 22. SINCE IN THE INSTANT CASE NONE OF THE COMPANIES FROM WHOM THE ASSESSEE COMPANY HAS RECEIVED SHARE CAPITAL/SHARE PREMIUM AR E MENTIONED IN THE STATEMENT OF SHRI RAJESH KUMAR AGGARWAL, THEREFORE, IT IS A CLEAR CASE OF NO INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OF FICER TO THE TANGIBLE MATERIAL AND THE REASONS FAILED TO DEMONSTRATE LIVE LINK BETWEEN TANGIBLE MATERIAL AND FORMATION OF REASONS TO BELIEVE THAT I NCOME HAS ESCAPED ASSESSMENT. THE SATISFACTION RECORDED BY THE ASSES SING OFFICER IS AT BEST A REPRODUCTION OF THE CONCLUSION OF THE INVESTIGATION WING REPORT AND IS A 18 ITA NO.1390/DEL/2018 BORROWED SATISFACTION. SINCE THE REASONS DO NOT DE MONSTRATE THE LIVE LINK BETWEEN THE TANGIBLE MATERIAL AND FORMATION OF REAS ONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, THEREFORE, WE HOLD THAT THE INITIATION OF RE-ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER MERELY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING AND WITHOUT AN Y INDEPENDENT APPLICATION OF MIND IS VOID AB-INITIO. WE, THEREFORE, SET-ASID E THE ORDER OF THE LD. CIT(A) AND THE GROUNDS CHALLENGING THE VALIDITY OF THE RE- ASSESSMENT PROCEEDINGS ARE ALLOWED. SINCE THE ASSESSEE SUCCEEDS ON THE LEGAL GROUND, THE OTHER GROUNDS ARE NOT BEING ADJUDICATED BEING ACADEMIC IN NATURE. 23. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH JUNE, 2018. SD/- SD/- (SUCHITRA KAMBLE) (R. K. P ANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27-06-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI