Bhageria Finance & Investment pvt Ltd, New Delhi V. ITO WARD - 4(4), New Delhi

ITA 1801/DEL/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0486 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 02-11-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained expenditure; Search and seizure; Document seized; Principle of natural justice; Source of fund; Question of law; Accommodation entries; Competent authority; Assessment record; Tax effect; Onus to prove; Documents seized; Reassessment proceedings; Set aside
• Section: 143(3); 133(6); 139(1); 13; 153C; 147; 69; 148; 68

Judgement Text

ITA NO. 1801/DEL/2020 AY 2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCE) ITA NO. 1801/DEL/2020 A.Y. : 2010-11 M/S BHAGERIA FINANCE & INVESTMENT PVT. LTD., B-1/14, RANA PRATAP BAGH, UPPER GROUND FLOOR, DELHI 110 007 (PAN: AAACB4130E) VS. INCOME TAX OFFICER, WARD 4(4), NEW DELHI (APPELLANT) (RESPONDENT) ORDER PER H.S. SIDHU, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 09.09.2020 PASSED BY THE LD. CIT(A)-2, NEW DELHI IN RELATION TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- ASSESSEE BY SH. SURESH KR. GUPTA, CA DEPARTMENT BY SH. PRAKASH DUBEY, SR. DR. ITA NO. 1801/DEL/2020 AY 2010-11 2 1. THE IMPUGNED ASSESSMENT IS INVALID AND WITHOUT JURISDICTION AS THE SAID ASSESSMENT IS COMPLETED WITHOUT COMPLYING WITH LEGAL REQUIREMENTS OF THE PROVISIONS OF SECTION 147/148 OF THE INCOME TAX ACT THEREFORE SUCH ASSESSMENT IS VOID AB INITIO AND LIABLE TO BE QUASHED. 2. THE LD AO ERRED BOTH ON FACTS AND IN LAW IN REOPENING THE CASE BASED ON THE SAME SET OF REASONS AND THE VERY SAME MATERIAL WHICH WAS CONSIDERED FOR PASSING THE ORIGINAL REASSESSMENT ORDER U/S 147/143(3) OF THE ACT. 2.1 THE LD. CIT(A) HAS ERRED BOTH IN LAW AND CIRCUMSTANCES OF THE CASE IN UPHOLDING THE REASSESSMENT PROCEEDINGS U/S 147 OF THE IT ACT WHICH IS NOT PROPERLY INITIATED AND THEREFORE NEED BE QUASHED AS THE APPELLANTS CASE IS COVERED BY PROVISO TO SECTION 147 OF THE IT ACT AND THAT BEING THE CASE THE AO HAS FAILED TO GIVE A FINDING AS WHICH MATERIAL FACTS THE APPELLANT FAILED TO DISCLOSE FULLY AND TRULY DURING ORIGINAL PROCEEDINGS AND IN THE ABSENCE OF ANY SUCH FINDING, THE INITIATION OF REASSESSMENT PROCEEDINGS AND THE IMPUGNED ASSESSMENT ORDER BOTH ARE BAD IN LAW BECAUSE SUCH PROCEEDINGS ARE AS A RESULT OF CHANGE OF MIND BY THE SUCCESSOR INCUMBENT ON THE SAME SET OF FACTS. 3. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND CIRCUMSTANCES OF THE CASE IN UPHOLDING THE REASSESSMENT PROCEEDINGS INITIATED U/S 147 OF THE IT ACT IGNORING THE CONTENTION OF APPELLANT THAT THE PROCEEDINGS HAVE BEEN INITIATED BY THE AO WITHOUT APPLICATION OF ITA NO. 1801/DEL/2020 AY 2010-11 3 INDEPENDENT MIND ON THE MATERIAL, IF ANY, PROVIDED BY THE INV. WING OF THE DEPARTMENT. IN VIEW OF THE ABOVE DEFICIENCIES THE RESULTANT REASSESSMENT PROCEEDINGS ARE REQUIRED TO BE SET ASIDE. 4. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND IN FACTS OF THE CASE IN UPHOLDING THE IMPUGNED REASSESSMENT PROCEEDINGS IGNORING THE FACT THAT THE SANCTION U/S 151 OF IT ACT AS PROVIDED WITH THE COPY OF THE REASON RECORDED SHOWS MECHANICAL SATISFACTION BY THE PR CIT, DELHI-2, NEW DELHI. 5. THE LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE HAS ERRED IN UPHOLDING THE VALIDITY OF IMPUGNED ASSESSMENT ORDER PASSED U/S 143(3)/147 OF THE ACT ON THE GROUND THAT THE ASSESSING OFFICER WAS NOT ENTITLED TO TAKE COGNIZANCE OF THE MATERIAL SEIZED FROM THE THIRD PARTY BY INVOKING PROVISIONS OF SEC 147/148 OF THE ACT IGNORING THE SPECIFIC PROVISION U/S 153C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DEALING WITH SUCH MATERIAL. 6. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND CIRCUMSTANCES OF THE CASES IN UPHOLDING THE ADDITION OF RS.2,60,00,000/- U/S 68 OF THE IT ACT HOLDING THE SHARE CAPITAL AS UNEXPLAINED CASH CREDIT IGNORING THE FACT THAT THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS U/S 68 OF THE IT ACT EXPLAINING NATURE AND SOURCE OF THE CREDITS BY FILING REQUISITE DOCUMENTS PROVING IDENTITY AND CREDITWORTHINESS OF THE LENDERS AND ALSO TO ESTABLISH GENUINENESS OF THE TRANSACTION DURING ASSESSMENT PROCEEDINGS. ITA NO. 1801/DEL/2020 AY 2010-11 4 7. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND CIRCUMSTANCES OF THE CASES IN UPHOLDING ACTION OF THE AO, IN MAKING ADDITION U/S 68 OF THE IT ACT OF RS.2,60,00,000/- IS ERRONEOUS AS THE EVIDENCES FILED BY THE APPELLANT IN SUPPORT OF CASH CREDIT OF RS.2,60,00,000/- HAVE BEEN REJECTED BY THE AO WITHOUT CONDUCTING ANY ENQUIRY THEREON IN DISCHARGE OF ONUS SHIFTING ON THE REVENUE AFTER THE INITIAL ONUS DISCHARGED BY THE APPELLANT. 8. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND CIRCUMSTANCES OF THE CASES IN RELIANCE ON THE MATERIAL TO TAKE VIEW ADVERSE TO THE APPELLANT WITHOUT CONFRONTING THE SAME AND THEREFORE ACTION OF THE AO IS IN CONTRAVENTION OF THE PRINCIPALS OF NATURAL JUSTICE. 9. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND CIRCUMSTANCES OF THE CASES IN UPHOLDING ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS.5,20,000/- BEING 2% OF THE ALLEGED ACCOMMODATION ENTRIES OF RS.2,60,00,000/- IS ARBITRARY AND WITHOUT BASIS AND THEREFORE NEED BE QUASHED. 10. THE APPELLANT CRAVES LEAVE TO ADD, DELETE, MODIFY / AMEND THE ABOVE GROUNDS OF APPEAL WITH THE PERMISSION OF THE HONBLE APPELLATE AUTHORITY. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED ITS RETURN OF INCOME DIGITALLY ON 10.9.2010 DECLARING TOTAL INCOME OF RS. 4,460/-. SUBSEQUENTLY, ON THE INFORMATION FROM THE OFFICE OF SFIO IN THE CASE OF MONEY LAUNDERING OPERATION CONDUCTED BY JAIN BROTHERS THROUGH PROPER CHANNEL AND ALSO A REPORT OF DDIT (INV.) UNIT- ITA NO. 1801/DEL/2020 AY 2010-11 5 VI(2), NEW DELHI. THE MONEY LAUNDERING OPERATION WAS CONDUCTED BY JAIN BROTHERS WITH THE HELP OF 56 PROFESSIONALS WHO WORKED AS MEDIATORS TO BRING THE POTENTIAL BENEFICIARIES TO JAIN BROTHERS FOR LAUNDERING THEIR UNACCOUNTED CASH. THE REPORT HAS IDENTIFIED 559 BENEFICIARIES DURING THE FINANCIAL YEAR 2009-10 AND THE TOTAL QUANTUM HAS BEEN ESTIMATED AT A MINIMUM OF RS. 11,970 CRORES. THE MODUS OPERANDI FOR LAUNDERING MONEY DURING PRE AND POST SEARCH PERIOD HAS BEEN CLEARLY BROUGHT OUT IN THE REPORT. INVESTIGATION NEEDS TO BE EXPANDED TO COVER ALL THE BENEFICIARIES AND THE PROFESSIONAL MEDIATORS AND THE NAME OF COMPANY ENGAGED IN PROVIDING ACCOMMODATION ENTRIES, THE MEDIATOR / MIDDLE MAN, BANK ETC. NOTED FROM SCRUTINY OF THE SEIZED DOCUMENTS, WHICH THE ASSESSING OFFICER HAS REPRODUCED AT PAGE NO. 2 OF THE ASSESSMENT ORDER. ON THE BASIS OF THIS INFORMATION THE APPROVAL OBTAINED FROM THE PR. COMMISSIONER OF INCOME TAX-02, NEW DELHI WHICH WAS DULY SERVED UPON THE ASSESSEE. A COPY OF THE REASONS RECORDED FOR REOPENING THE CASE U/S. 148 OF THE I.T. INCOME TAX ACT, 1961 WAS OBTAINED BY THE ASSESSEE COMPANY WAS ALSO GIVEN TO THE ASSESSEE COMPANY AS REQUESTED. ON 18.9.2017, THE ASSESSEE FILED THE OBJECTION TO THE NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961 AND REASONS RECORDED WHICH WAS DISPOSED OFF VIDE ORDER DATED 06.11.2017. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER, THE ASSESSEE FILED ALL DOCUMENTARY EVIDENCES FOR SUBSTANTIATING THE CLAIM OF ASSESSEE ALONGWITH THE SHARE APPLICATION ITA NO. 1801/DEL/2020 AY 2010-11 6 CONFIRMATION DOCUMENTS I.E. SHARE APPLICATION FORM, BOARD RESOLUTION, CONFIRMATION OF THE SHARE APPLICANT AND BANK STATEMENT I.E. SOURCE OF FUND IN RESPECT OF 05 COMPANIES. ASSESSING OFFICER PERUSED THE DETAILS FILED BY THE ASSESSEE AND IS OF THE VIEW THAT ASSESSEE COMPANY HAS RECEIVED SHARE CAPITAL AND PREMIUM FROM VARIOUS COMPANIES CONTROLLED AND MANAGED BY SH. SURENDER KUMAR JAIN AND SH. VIRENDER KUMAR JAIN WHO ARE ESTABLISHED ENTRY OPERATORS. ON 28.11.2017 THE AR OF THE ASSESSEE COMPANY WAS ASKED TO PRODUCE THE DIRECTORS OF THE COMPANIES FROM WHOM SHARE CAPITAL HAS BEEN RECEIVED BY THE ASSESSEE COMPANY AND THE CASE WAS FIXED FOR HEARING ON 4.12.2017 AND NO ONE ATTENDED THE PROCEEDINGS NOR ANY SUBMISSION MADE NOR ANY LETTER FOR ADJOURNMENT WAS FILED. THE ASSESSING OFFICER CALLED THE REPLY FROM THE ASSESSEE FOR THE IDENTITY, CREDITWORTHINESS OF THE TRANSACTION FIXING THE CASE FOR 11.12.2017. IN RESPONSE TO THE SAME M/S APPORVA LEASING AND INVESTMENT CO. LTD. HAS SUBMITTED ITS REPLY AND FILED DOCUMENTS SUCH AS COPY OF ACCOUNTS OF THE ASSESSEE; COPY OF BANK STATEMENT FOR THE DATES 16.3.2010 TO 23.3.2010 ONLY AND COMPUTATION OF TOTAL INCOME, COPY BALANCE SHEET ALOGNWITH AUDIT REPORT. ON PERUSAL OF DETAILS FILED, THE ASSESSING OFFICER FOUND THAT INVESTEE COMPANY HAS NOT SUBMITTED THE FULL ITR BUT ONLY THE ACKNOWLEDGEMENT AND INCOMPLETE BANK STATEMENT WHICH OF NO RESULTING TO ANALYSE THE TRANSACTION OF THE INVESTEE COMPANY. FURTHER THE BALANCE SHEET SHOWS MERE PROFIT OF RS. 82,225/- AND HAS NO CREDIT WORTHINESS. ITA NO. 1801/DEL/2020 AY 2010-11 7 2.1 AS REGARDS THE CASE OF M/S SHALINI HOLDING LTD., NOTICE U/S. 133(6) OF THE INCOME TAX ACT, 1961 DATED 4.12.2017 WAS RETURNED BACK AS UNSERVED WITH THE REMARKS LEFT AND IN THE CASE OF ATTRACTIVE FINLEASE PVT. LTD. AND M/S AASHEESH CAPITAL SERVICES PVT. LTD. NO REPLY HAS BEEN RECEIVED FROM THE PARTIES. THEREFORE, THE THREE CRITERIA U/S. 68 HAVE NOT BEEN FULFILLED. REPLY TO THE NOTICE U/S. 133(6) OF THE INCOME TAX ACT, 1961 OF M/S SUNNY CAST AND FORGE LTD. WAS RECEIVED IN THE OFFICE OF ASSESSING OFFICER ON 21.12.2017. AR OF THE ASSESSEE WAS ASKED VIDE OFFICE NOTING DATED 28.11.2017; 3.12.2017 & 19.12.2017 TO PRODUCE THE DIRECTORS. HOWEVER, THE AR OF THE ASSESSEE HAS EXPRESSED HIS INABILITY TO PRODUCE THE SAID DIRECTORS FOR CONFIRMATION OF THE ALLEGED INVESTMENTS MADE WITH THE ASSESSEE COMPANY. AFTER EXAMINING THE AFORESAID DOCUMENTARY EVIDENCES AND REPLY FILED BY THE ASSESSEE AND THE OTHER COMPANIES, THE ASSESSING OFFICER IS OF THE VIEW THAT ASSESSEE HAS NOT DISCHARGED ITS PRIMARY ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE CAPITAL SUBSCRIPTION AND ON THE BASIS OF VARIOUS JUDGEMENTS MENTIONED IN THE ASSESSMENT ORDER, HE HAS HELD THAT THE CREDITS OF RS. 2,60,00,000/- ARE DIRECTLY HIT BY SECTION 68 OF THE INCOME TAX ACT, 1961 AND ONUS IS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE PERSON WHO HAS GIVEN CREDIT TO THE ASSESSEE. THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS AND FINALLY AN AMOUNT OF RS. 2,60,00,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CREDIT U/S. 68 OF ITA NO. 1801/DEL/2020 AY 2010-11 8 THE INCOME TAX ACT, 1961 AND RS. 5,20,000/- ON ACCOUNT OF COMMISSION PAID BY THE ASSESSEE FOR ABOVE TRANSACTION U/S. 69 OF THE I.T. INCOME TAX ACT, 1961 BY HOLDING THAT ITS ASSESSEE UNACCOUNTED MONEY WHICH HAVE NOT BEEN ROUTED THROUGH THE BANK ACCOUNTS EXISTING IN THE NAMES OF THE ABOVE PERSONS BY PAYING A COMMISSION TO THE ENTRY OPERATORS, GENERALLY VARIES FROM 2 TO 4 PERCENT, CONSIDERING THE COST BENEFIT ANALYSIS OF THE TRANSACTIONS, A SUM OF RS. 5,20,000/- BEING 2% OF RS. 2,60,00,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE AS COMMISSION PAID TO THE ENTRY OPERATORS OUT OF UNDISCLOSED SOURCE AND HE COMPLETED THE ASSESSMENT U/S. 147/143(3) OF THE INCOME TAX ACT, 1961 VIDE ORDER DATED 30.12.2017. AGGRIEVED WITH THE SAME, ASSESSEE FILED THE APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) WHO VIDE IMPUGNED ORDER DATED 09.9.2020 CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGAINST THE IMPUGNED ORDER DATED 9.9.2020, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TOWARDS THE WRITTEN SUBMISSIONS FILED BY HIM CONTAINING PAGES 1-66 IN WHICH HE HAS SUBSTANTIATED THE CLAIM OF THE ASSESSEE WITH THE SUPPORT OF DOCUMENTARY EVIDENCES. HE HAS ALSO DRAW OUR ATTENTION TOWARDS THE RELEVANT PARAGRAPHS OF THE ASSESSING OFFICER AS WELL AS LD. COMMISSIONER OF INCOME TAX(A) ORDERS WHICH HE HAS MENTIONED IN THE WRITTEN SUBMISSION. HE HAS ALSO DRAWN OUR ATTENTION TOWARDS 09 CREDITORS AMOUNTING TO ITA NO. 1801/DEL/2020 AY 2010-11 9 RS. 2,60,00,000/-. NO DOUBT THAT THE LD. COUNSEL FOR THE ASSESSEE HAS WRITTEN HIS WRITTEN SUBMISSIONS ON ALL THE ISSUES I.E. OF CHALLENGING THE ASSESSMENT ORDER ON LEGAL AS WELL AS ON MERITS ALSO. HE SUBMITTED THAT REOPENING IN THE CASE OF THE ASSESSEE U/S. 147 / 148 OF THE INCOME TAX ACT, 1961 IS VOID AB INITIO AND IS LIABLE TO BE QUASHED BECAUSE THE REOPENING OF THE ASSESSMENT ON THE SET OF REASONS AND VERY SAME MATERIAL WHICH WAS CONSIDERED FOR PASSING THE ORIGINAL ASSESSMENT ORDER U/S. 147/143(3) OF THE I.T. INCOME TAX ACT, 1961 AND FURTHER UPHOLDING THE SAME BY LD. COMMISSIONER OF INCOME TAX(A) WHICH WAS NOT PROPERLY INITIATED AND THEREFORE NEED TO BE QUASHED AS THE APPELLANTS CASE IS COVERED BY THE PROVISO TO SECTION 147 OF THE I.T. INCOME TAX ACT, 1961 AND THAT BEING THE CASE THE ASSESSING OFFICER HAS FAILED TO GIVE A FINDING AS WHICH MATERIAL FACTS, THE APPELLANT FAILED TO DISCLOSE FULLY AND TRULY DURING ORIGINAL PROCEEDINGS AND IN THE ABSENCE OF ANY SUCH FINDING, THE INITIATION OF REASSESSMENT PROCEEDINGS AND THE IMPUGNED ASSESSMENT ORDER BOTH ARE BAD IN LAW BECAUSE SUCH PROCEEDINGS ARE AS A RESULT OF CHANGE OF MIND BY THE SUCCESSOR INCUMBENT ON THE SAME SET OF FACTS AND WITHOUT APPLICATION OF INDEPENDENT MIND AND THE SAME DESERVE TO BE CANCELLED. LD. COUNSEL FOR THE ASSESSEE FURTHER CHALLENGED THE IMPUGNED ORDER BY STATING THAT SANCTION U/S. 151 OF THE INCOME TAX ACT, 1961 AS PROVIDED WITH THE COPY OF THE REASONS RECORDED SHOWS MECHANICAL SATISFACTION BY THE PR. COMMISSIONER OF INCOME TAX, DELHI-2, NEW DELHI. HE FURTHER STATED THAT THE ITA NO. 1801/DEL/2020 AY 2010-11 10 ASSESSING OFFICER IS NOT ENTITLED TO TAKE COGNIZANCE OF THE MATERIAL SEIZED FROM THE THIRD PARTY BY INVOKING PROVISIONS OF SECTION 147/148 OF THE INCOME TAX ACT, 1961 IGNORING THE SPECIFIC PROVISION U/S. 153C OF THE INCOME TAX ACT, 1961 DEALING WITH SUCH MATERIAL. 3.1 AS REGARDS TO THE MERITS OF THE CASE THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ADDITION IN DISPUTE U/S. 68 OF THE INCOME TAX ACT, 1961 HOLDING THAT THE ASSESSEE SHARE CAPITAL AS UNEXPLAINED CASH CREDIT IGNORING THE FACT THAT ASSESSEE HAS DISCHARGED ITS INITIAL ONUS U/S. 68 OF THE INCOME TAX ACT, 1961 BY EXPLAINING ITS NATURE BY FILING REQUISITE DOCUMENTS PROVING THE IDENTITY AND CREDITWORTHINESS OF THE LENDERS AND ALSO TO ESTABLISH THE GENUINENESS OF TRANSACTIONS DURING THE ASSESSMENT PROCEEDINGS. ASSESSING OFFICER HAS MADE THE ADDITION IN DISPUTE WITHOUT CONDUCTING ANY ENQUIRY THEREON IN DISCHARGE OF ONUS SHIFTING ON THE REVENUE AFTER THE INITIAL ONUS DISCHARGED BY THE ASSESSEE. SIMILARLY, THE LD. COMMISSIONER OF INCOME TAX(A) HAS WRONGLY UPHELD THE ASSESSMENT WHICH DESERVE TO BE CANCELLED. 3.2 AS REGARDS THE ADDITION ON ACCOUNT OF COMMISSION I.E. ALSO CONNECTED TO THE MAIN ADDITION OF RS. 2.60 CRORES WHEN THE MAIN ADDITION IS BASELESS THE CONSEQUENT ADDITION IS AUTOMATICALLY BASELESS. IN SUPPORT OF HIS CONTENTION, HE ALSO CITED VARIOUS JUDGEMENTS OF THE HONBLE SUPREME COURT OF INDIA; HONBLE HIGH COURTS AND THE ITAT BENCHES, WHICH HE HAS MENTIONED IN THE ITA NO. 1801/DEL/2020 AY 2010-11 11 WRITTEN SUBMISSIONS CONTAINING PAGES 1-66 AND LASTLY HE REQUESTED THAT THE APPEAL FILED BY THE ASSESSEE MAY BE ALLOWED BY CANCELLING THE IMPUGNED ORDER. 3. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(A) AND STATED THAT CASE OF THE ASSESSEE WAS REOPENED ON THE BASIS OF SPECIFIC INFORMATION BY RECORDING THE VALID REASONS AND GETTING THE VALID APPROVAL FROM THE COMPETENT AUTHORITY. LD. DR FURTHER STATED THAT ALL THE DOCUMENTARY EVIDENCES REQUESTED BY THE ASSESSEE HAS BEEN SUPPLIED AND ASSESSEE WAS GIVEN FULL OPPORTUNITY FOR SUBSTANTIATING ITS CLAIM BEFORE THE ASSESSING OFFICER AS WELL AS LD. COMMISSIONER OF INCOME TAX(A) FOR WHICH ASSESSEE HAS FAILED TO ESTABLISH ITS CLAIM BEFORE THE AUTHORITIES BELOW. THEREFORE, THE LD. COMMISSIONER OF INCOME TAX(A) HAS PASSED A WELL REASONED ORDER WHICH NEEDS TO BE UPHELD BY DISMISSING THE APPEAL OF THE ASSESSEE. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES ALONGWITH WRITTEN SUBMISSIONS FILED BY THE LD. COUNSEL FOR THE ASSESSEE AND THE DOCUMENTARY EVIDENCES IN THE SHAPE OF PAPER BOOK. AS PER RECORD THE ASSESEE FILED ITS ORIGINAL E-RETURN OF INCOME U/S. 139(1) OF THE I.T. ACT, 1961 ON 10.9.2010 DECLARING INCOME OF RS. 4,460/- WHICH WAS NOT SELECTED FOR REGULAR SCRUTINY U/S. 143(3) OF THE ACT. ASSESSEE HAS ATTACHED THE RETURN ALONGWITH COMPUTATION OF INCOME IN THE PAPER BOOK PAGE 1&2. ITA NO. 1801/DEL/2020 AY 2010-11 12 LATER ON, THE AO ISSUED NOTICE U/S. 148 OF THE ACT ON 08.12.2014 WHICH THE ASSESSEE HAS PLACED AT PAGE NO. 49. THE ITO, WARD 4(4), NEW DELHI HAS ISSUED THIS NOTICE ON THE BASIS OF INFORMATION PROVIDED BY THE DIRECTOR OF INCOME TAX (INVESTIGATION), UNIT VI(2), NEW DELHI THAT POST SEARCH INVESTIGATION CARRIED OUT ON IN THE CASE OF SH. SK JAIN GROUP THAT THE SAID GROUP WAS INVOLVED IN CARRYING OUT THE ACTIVITIES OF ACCOMMODATION ENTRIES AND AS PER THE ABOVE INFORMATION THE ASSESSEE HAS ACCEPTED ACCOMMODATION ENTRIES OF RS. 2,60,00,000/- FROM 5 ENTITIES. COPY OF THE REASONS RECORDED DATED 24.11.2014, THE ASSESSEE HAS PLACED IN THE PAPER BOOK AT PAGE NO. 50-52. AFTER COMPLETING THE NECESSARY FORMALITIES, THE ITO, WAR 4(4), NEW DELHI COMPLETED THE REASSESSMENT U/S. 148/143(3) OF THE ACT VIDE ORDER DATED 11.3.2015 ACCEPTING THE ABOVE CASH CREDIT OF RS. 2,60,00,000/- IN THE FORM OF SHARE CAPITAL FROM THE 5 ENTITIES NAMED IN THE REASONS RECORDED. ASSESSEE HAS ATTACHED THIS ASSESSMENT ORDER AT PAGE NO. 57-58 OF PAPER BOOK. THEREAFTER THE AO HAS AGAIN FOR THE SECOND TIME REOPENED THE ASSESSMENT OF THE ASSESSEE FOR THE ASSESSMENT YEAR IN DISPUTE ON THE INFORMATION RECEIVED FROM THE OFFICE OF THE CIT-2, NEW DELHI DATED 05.01.2017 WHICH HAS BEEN FORWARDED BY SERIOUS FRAUD INVESTIGATION OFFICE (IN SHORT SFIO), NEW DELHI AND ALSO REPORT OF DDIT (INV.) THAT FROM THE POST SEARCH AND SEIZURE OPERATION CARRIED OUT ON THE PREMISES OF SH. SK JAIN IT WAS NOTICED THAT THE SAID PERSONS ENGAGED IN PROVIDING THE ACCOMMODATION ENTRIES AND FROM THE DOCUMENT ITA NO. 1801/DEL/2020 AY 2010-11 13 COLLECTED FROM THE SAID 5 COMPANIES WHICH WERE ALSO NAMED IN THE REASONS RECORDED AT THE TIME OF INITIATION OF FIRST REASSESSMENT PROCEEDINGS ON 8.12.2014. AFTER RECORDING THE SATISFACTION ON 27.3.2017, THE AO ISSUED NOTICE U/S. 148 OF THE ACT ON 30.3.2017 AFTER OBTAINING THE APPROVAL OF THE PR. CIT, DELHI-2, NEW DELHI. ASSESSEE HAS ATTACHED THE NOTICE U/S. 148 OF THE ACT AT PAGE NO. 76 OF THE PAPER BOOK. IN COMPLIANCE OF THE NOTICE U/S. 148 OF THE ACT, ASSESSEE FILED LETTER DATED 11.5.2017 STATING THAT THE ORIGINAL RETURN OF INCOME FILED U/S. 139(1) OF THE ACT ON 10.9.2010 BE TREATED AS RETURN FILED IN RESPONSE TO ABOVE NOTICE U/S. 148 OF THE ACT AND HAS ALSO REQUESTED THE AO TO PROVIDE THE COPY OF REASONS RECORDED FOR REOPENING THE PRESENT CASE WHICH WAS PROVIDED BY THE AO TO THE ASSESSEE AND THE ASSESSEE HAS FILED OBJECTIONS TO THE ASSUMPTION OF JURISDICTION BY THE AO U/S. 147 OF THE ACT VIDE LETTER DATED 10.9.2017. COPY OF THE REASONS ALONGWITH THE OBJECTIONS ASSESSEE HAS ATTACHED IN THE SHAPE OF PAPER BOOK PAGES 77-81 AND 95-98 RESPECTIVELY. THE AO DISPOSED OFF THE OBJECTION OF THE ASSESSEE VIDE ORDER DATED 6.11.2017 WHICH THE ASSESSEE HAS PLACED AT PAGE NO. 83-89 AND COMPLETED THE ASSESSMENT U/S. 147/143(3) OF THE ACT BY MAKING THE ADDITION OF RS. 2.60 CRORES U/S. 68 OF THE ACT AS UNEXPLAINED EXPENDITURE FOR RAISING THE ABOVE ACCOMMODATION ENTRIES. ASSESSEE AGGRIEVED BY THE AFORESAID ASSESSMENT ORDER, FILED THE APPEAL BEFORE THE LD. CIT(A) WHO VIDE ITS ORDER DATED 09.9.2020 REJECTED THE CLAIM OF THE ASSESSEE. NOW THE ASSESSEE HAS ITA NO. 1801/DEL/2020 AY 2010-11 14 FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 9.9.2020 PASSED BY THE LD. CIT(A) BEFORE THE TRIBUNAL. AS STATED IN THE EARLIER PARAGRAPHS THE ASSSESSEE HAS CHALLENGED THE IMPUGNED ORDER ON VARIOUS GROUNDS ON LEGAL AS WELL AS ON MERITS. AFTER HEARING BOTH THE PARTIES, LD. COUNSEL FOR THE ASSESSEE HAS MAINLY ARGUED THAT ASSESSEE FILED ITS E-RETURN U/S. 139(1) OF THE ACT ON 10.9.2010 DECLARING INCOME OF RS. 4,460/- WHICH WAS LATER REOPENED BY THE ITO, WARD 4(4), NEW DELHI BY ISSUING NOTICE U/S. 148 OF THE ACT ON THE BASIS OF THE SAME INFORMATION ABOUT THE SAME ACCOMMODATION ENTRIES AND ON THE SAME AMOUNT OF RS. 2.60 CRORES WHICH THE ASSESSEE HAS RECEIVED FROM THE 5 ENTITIES. BUT IN SECOND TIME ALSO THE SAME AO HAS ALSO ISSUED NOTICE U/S. 148 OF THE ACT FOR THE SAME ACCOMMODATION ENTRIES AND FOR THE SAME AMOUNT OF RS. 2.60 CRORES FROM THE SAME 5 ENTITIES, WHICH IS NOT PERMISSIBLE IN VIEW OF THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT PASSED IN ITA NO. 54/2017 IN THE CASE OF PR. CIT, CENTRAL (1), NEW DELHI VS. ADITYA KHANNA. HE HAS ALSO FILED THE COPY OF THE SAME DECISION AND REQUESTED THAT THE AO HAS NO JURISDICTION TO REOPEN THE CASE OF THE ASSESSEE ON THE SAME MATERIAL. SECOND TIME, AO HAS NOT APPLIED HIS MIND AS WELL AS BY OBTAINING THE APPROVAL FROM THE COMPETENT AUTHORITY, WHO HAS ALSO NOT APPLIED HIS MIND BEFORE GIVING APPROVAL FOR ISSUE OF NOTICE U/S. 148 OF THE ACT. AO HAS ALSO NOT NOTICED THESE FACTS POINTED OUT BY THE ASSESSEE IN ITS OBJECTION RAISED IN RESPONSE TO THE NOTICE U/S. 148 OF THE ACT AND COMPLETED THE ITA NO. 1801/DEL/2020 AY 2010-11 15 ASSESSMENT BY MAKING THE ADDITION IN DISPUTE WHICH HAS ALREADY BEEN EXAMINED, ENQUIRED AND APPRECIATED BY THE AO IN THE REASSESSMENT ORDER DATED 11.3.2015 PASSED U/S. 148/143(3) OF THE ACT AND SECOND TIME ALSO THE AO REOPENED THE ASSESSMENT IN DISPUTE ON THE SAME INFORMATION AND COMPLETED THE ASSESSMENT IN DISPUTE BY MAKING THE SAME ADDITION ON THE BASIS OF SAME DOCUMENTARY EVIDENCES WHICH HAVE ALREADY BEEN CONSIDERED AND ACCEPTED BY THE AO. LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSMENT ORDER IS WITHOUT JURISDICTION AND REQUESTED TO CANCEL THE SAME ALONGWITH THE IMPUGNED ORDER WHICH HAS ALSO BEEN PASSED BY THE LD. CIT(A) WITHOUT GOING THROUGH THE ORIGINAL FACTS OF THE CASE. WE HAVE ALSO GONE THROUGH THE JUDGMENT PASSED BY THE HONBLE DELHI HIGH COURT DATED 21.11.2017 PASSED IN ITA 54/2017 IN THE CASE OF PR. CIT, CENTRAL (I) VS. ADITYA KHANNA. FOR THE SAKE OF CONVENIENCE, THE AFORESAID JUDGEMENT IS REPRODUCED AS UNDER:- 1. THE REVENUES GRIEVANCE IN THIS CASE IS THAT ITS APPEAL IS REJECTED BY THE INCOME TAX APPELLATE TRIBUNAL (ITAT) ON THE GROUND THAT THE TAX EFFECT IS LOWER THAN THE STIPULATED AMOUNT IN TERMS OF THE PREVAILING CIRCULAR. THE ASSESSMENTS INVOLVING SIMILAR QUESTIONS WERE REMITTED FOR FRESH CONSIDERATION TO THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE CASE OF OTHER PARTIES, I.E. MR ARVIND KHANNA AND MR NAVIN KHANNA. 2. THE REVENUE URGES THAT THE SUM OF RS.33,51,269/-, IN THE FACTS AND CIRCUMSTANCES OF THIS CASE, HAS TO BE ADDED UNDER ITA NO. 1801/DEL/2020 AY 2010-11 16 SECTION 68 OF THE INCOME TAX ACT (HEREAFTER REFERRED TO AS THE ACT). 3. LEARNED COUNSEL RELIES UPON THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT CONTENDING THAT THE REVENUE HAD RECEIVED INFORMATION FROM THE ENFORCEMENT DIRECTORATE WITH RESPECT TO THE POSSIBLE DISALLOWANCE UNDER SECTION 68. 4. THE ASSESSEE, WHO IS REPRESENTED BY THE COUNSEL, URGES THAT THE RESPONDENT IS A NON-RESIDENT AND THE AMOUNTS WERE REMITTED BY ONE M/S. NEWHEAVEN NOMINEES LIMITED. 5. IT IS CONTENDED THAT THE ORIGINAL ASSESSMENT WAS COMPLETED AFTER FILING OF RETURN, WHEN THE NET INCOME WAS DECLARED AS RS.98,850/-. SOON THEREAFTER, PROCEEDINGS UNDER SECTION 148 WERE INITIATED CULMINATING BY SUBSTANTIAL ACCEPTANCE OF THE ASSESSEES ARGUMENTS AND NOT RESULTING IN ANY NOTICEABLE ADDITION BY AN ORDER DATED 31.12.2007. THE ASSESSEE HAS PRODUCED THE COPY OF THAT ASSESSMENT ORDER. IT REFERS TO A LETTER OF THE DIRECTORATE OF ENFORCEMENT DATED 28.03.2006, MENTIONING ABOUT SOME TRANSACTIONS BY THE ASSESSEE. THE REVENUE APPEARS TO HAVE ISSUED A FRESH NOTICE UNDER SECTION 148 ON 23.02.2012 AND RECOUNTED VIRTUALLY THE SAME FACTS. 6. IN THIS CASE, THE ASSESSING OFFICER (A.O.) APPEARS TO HAVE COMPLETELY IGNORED THE EARLIER RE-ASSESSMENT ORDER FRAMED UNDER SECTION 148/143(3) ON 31.12.2007. THE FIRST RE- ASSESSMENT ORDER NOTICED ALL THE RELEVANT FACTS AND ACCEPTED THE NET INCOME AT RS.1,03,890/- . THE ASSESSMENT MADE IN THE ITA NO. 1801/DEL/2020 AY 2010-11 17 COURSE OF ASSESSMENT PROCEEDING, IN THE PRESENT CASE, DOES NOT REFER TO ANY SUBSEQUENT MATERIAL OTHER THAN THE DIRECTORATE OF ENFORCEMENTS LETTER OF 28.03.2006; INSTEAD THE A.O. APPEARS TO HAVE JUST MADE A CHART AS THE BASIS EVEN WHILE ACKNOWLEDGING THAT THE EARLIER RE-ASSESSMENT PROCEEDINGS WERE CONCLUDED ON 31.12.2007, CLEARLY STATED THAT PERUSAL IN ASSESSMENT RECORDS REVEALS THAT THE REMITTANCES RECEIVED ARE NOT CONSIDERED IN THE RETURN OF INCOME FILED BY THE ASSESSEE AND IN THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEARS 2003-2004 & 2006-2007. THAT CLEARLY SHOWS THAT THE A.O. IGNORED THAT THE MATERIAL, WHICH LED THE REVENUE TO RE-OPEN THE ASSESSMENT, IN THE FIRST INSTANCE, WAS THE SAME THAT HE SOUGHT TO RESUSCITATE IN ORDER TO MAKE SUBSTANTIAL ADDITIONS. 7. HAVING REGARD TO THESE FACTS, THE COURT IS OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES. 8. THE APPEAL IS, THEREFORE, DISMISSED. 4.1 AFTER GOING THROUGH THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT, WE ARE OF THE VIEW AO HAS COMPLETELY IGNORED THE REASSESSMENT ORDER DATED 11.3.2015 PASSED U/S. 148/143(3) OF THE ACT IN WHICH HE HAS ACCEPTED THE CASH CREDIT IN DISPUTE IN THE FORM OF SHARE CAPITAL FROM THESE 5 ENTITIES AND AGAIN REOPENED THE CASE OF THE ASSESSEE FOR THE SAME ASSESSMENT YEAR ON THE SAME GROUND BY RECORDING THE ALMOST SAME REASONS AND MADE THE SAME ITA NO. 1801/DEL/2020 AY 2010-11 18 ADDITION WHICH IS IN DISPUTE WHILE COMPLETING THE ASSESSMENT IN DISPUTE U/S. 147/143(3) OF THE ACT VIDE ORDER DATED 30.12.2017, WHICH IS NOT PERMISSIBLE AS PER LAW AS WELL AS IN VIEW OF THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT. 4.2 KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE IN THE SHAPE OF PAPER BOOK AND THE WRITTEN SUBMISSIONS ALONGWITH VARIOUS CASE LAWS ESPECIALLY THE HONBLE DELHI HIGH COURT JUDGMENT DATED 21.11.2017 PASSED IN ITA 54/2017 IN THE CASE OF PR. CIT, CENTRAL (I) VS. ADITYA KHANNA, AS REPRODUCED ABOVE, THE ADDITION IN DISPUTE IS DELETED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. THE DECISION IS PRONOUNCED ON 23.12.2020. SD/- SD/- (ANIL CHATURVEDI) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI