M/s Holy Faith International Pvt. Ltd, Jalandhar V. The Dy Commissioner of Income Tax, Jalandhar

ITA 181/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7061 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-01-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Keywords: Bogus purchase; Principle of natural justice; Opportunity of cross examination; Question of law; Accommodation entries; Bogus loan; Reason to believe; Reassessment proceedings
• Section: 147; 131; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CAMP BENCH AT JALANDHAR BEFORE SH. N. K. SAINI, HONBLE VICE PRESIDENT AND SH. RAVISH SOOD, JUDICIAL MEMBER ITA NO.181/ASR./2017 : ASSTT. YEAR : 2008-09 M/S HOLY FAITH INTERNATIONAL PVT. LTD., MBD HOUSE, RAILWAY ROAD, JALANDHAR VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, JALANDHAR (APPELLANT) (RESPONDENT) PAN NO. AAACH6111J ASSESSEE BY : SH. SUDHIR SEHGAL, ADV. REVENUE BY : SH. BHAWAN I SHANKAR, DR DATE OF HEARING : 07.01.2019 DATE OF PRONOUNCEMENT : 15.01.2019 ORDER PER N. K. SAINI, VICE PRESIDENT: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 20.03.2017 OF LD. CIT(A)-I, JALANDHAR. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (A)- 1, JALANDHAR HAS ERRED IN DISMISSING THE APPEAL FILED BY THE ASSESSEE. 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE CONTENTION OF THE ASSESSING OFFICER IN REOPENING TH E CASE U/S 148 OF THE INCOME TAX ACT AND, THUS, FRAMING OF ASSESSMENT U/S 147 R.W.S.143(3)/153C AT AN INCOME O F RS. 4,95,13,441/- AGAINST THE RETURNED INCOME OF RS. 4,63,33,441/-. 3. THAT THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THAT THERE WAS NO REASON TO BELIEVE THAT THE INCOME OF T HE ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 2 ASSESSEE HAS ESCAPED AND THERE WAS FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR THE ASSESSMENT AND OUR OBJECTIONS AS FILED BEFORE THE ASSESSING OFFICER HAVE NOT BEEN CONSIDER ED PROPERLY. 4. NOTWITHSTANDING THE ABOVE SAID FACTS, IT IS SUBM ITTED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADD ITION AS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SO C ALLED BOGUS UNSECURED LOAN IN THE NAME OF M/S NAZAR IMPEX PVT. LTD., SPECIALLY, WHEN THE CONFIRMATION FROM TH E SAID PARTY HAD BEEN FURNISHED. 5. THAT THE LD. CIT (A) HAS ERRED IN NOT CONSIDERIN G THAT THE RELIANCE BY THE ASSESSING OFFICER ON THE STATEM ENT OF SH. SANJAY CHAUDHARY AT THE BACK OF ASSESSEE WAS NO T PROPER WITHOUT GIVING ANY OPPORTUNITY FOR CROSS EXAMINATION AND WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 6. THAT THE LD.CIT(A) HAS ERRED IN NOT CONSIDERING AND CONFIRMING THE CONTENTION OF THE ASSESSING OFFICER IN NOT ACCEDING THE ASSESSEES REQUEST TO SUMMON SH. SANJA Y CHAUDHARY U/S 131 AND, AS SUCH, NO ADDITION COULD B E MADE WITHOUT ACCEDING TO THE REQUEST OF THE ASSESSE E. 7. THAT THE WORTHY CIT (A) IN PARA 16 HAVING AGREED THAT THE ASSESSING OFFICER DID NOT PROVIDE ANY OPPORTUNI TY TO THE ASSESSEE TO CROSS-EXAMINE SH. SANJAY CHAUDHARY AND STILL CONFIRMED THE ADDITION, WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AS HELD IN THE CASE O F M/S ANDEMAN TIMBER INDUSTRIES AS REPORTED 127 DTR 141 I N THE CASE OF KISHINCHAND CHELLARAM AS REPORTED IN 12 5 ITR 713. 8. THAT THE ADDITION AS MADE BY THE ASSESSING OFFIC ER HAS BEEN WITHHELD/CONFIRMED BY THE LD. CIT(A) AGAINST T HE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSION FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 3 ASSESSING OFFICER AND DURING THE COURSE OF APPELLAT E PROCEEDINGS HAVE NOT BEEN CONSIDERED PROPERLY. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEAR D OR DISPOSED OFF. 3. VIDE GROUND NOS. 1 TO 3, THE ASSESSEE CHALLENGED THE JURISDICTION OF THE AO IN REOPENING THE CASE U/S 14 8 R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT). 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME ON 30.09.2008 DECLARING A N INCOME OF RS.4,63,33,441/-. THEREAFTER, A SEARCH U/S 132 OF T HE ACT WAS CARRIED OUT ON ASSESSES GROUP ON 22.01.2009. IN RE SPONSE TO THE NOTICE U/S 153C OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING THE SAME INCOME OF RS.4,63,33,441/- ON 06 .02.2010. THE AO COMPLETED THE ASSESSMENT U/S 153C OF THE ACT VID E ORDER DATED 29.12.2010 AT AN INCOME OF RS.4,64,33,441/-. SUBSEQ UENTLY, A SEARCH OPERATION U/S 132 OF THE ACT WAS CARRIED OUT BY DIRECTORATE OF INCOME TAX(INVESTIGATION), MUMBAI ON 03.10.2013 AT RAJENDRA JAIN GROUP, SANJAY CHOUDHARY GROUP AND DHARMICHAND JAIN GROUP OF MUMBAI. IN VIEW OF CERTAIN EVIDENCES GATHERED DU RING THE SEARCH, THE CASE OF THE ASSESSEE WAS REOPENED U/S 1 47/148 OF THE ACT AND A NOTICE U/S 148 OF THE ACT WAS ISSUED TO T HE ASSESSEE. IN RESPONSE TO WHICH, THE ASSESSEE FILED THE RETURN OF INCOME ON 24.04.2015 DECLARING AN INCOME OF RS.4,63,33,441/-. THE AO, HOWEVER, COMPLETED THE ASSESSMENT AT AN INCOME OF RS.4,95,13,441/- BY MAKING THE ADDITION OF RS.31,50 ,000/- ON ACCOUNT OF LOAN RECEIVED FROM M/S NAZAR IMPEX PVT. LTD. AND ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 4 RS.30,000/- ON ACCOUNT OF DISALLOWANCE WHICH WAS EA RLIER MADE U/S 153C OF THE ACT AT RS.1,00,000/- BUT WAS RESTRICTED BY THE LD. CIT(A) TO RS.30,000/-. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND CHALLENGED THE JURISDICTION OF THE AO IN REOPENING THE ASSESSMENT BY STATING THAT THERE WAS NO REASON TO B ELIEVE THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT AND T HAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. IT WAS ALSO STATED THAT THE OBJECTIONS WERE FILED BEFORE THE AO WHICH HAD N OT BEEN CONSIDERED PROPERLY AND THAT THE ADDITION MADE BY T HE AO ON ACCOUNT OF LOAN IN THE NAME OF M/S NAZAR IMPEX PVT. LTD. WAS NOT CALLED FOR ESPECIALLY WHEN THE CONFIRMATION FROM TH E SAID PARTY HAD BEEN FURNISHED AND THAT THE STATEMENT OF SH. SANJAY CHOUDHARY WAS RECORDED AT THE BACK OF ASSESSEE BY THE AO WITHOUT GIVING ANY OPPORTUNITY OF CROSS EXAMINATION. THEREFORE, THE AD DITION MADE WAS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. IT WAS F URTHER SUBMITTED AS UNDER: (I) THE LD. AO HAS APPLIED HIS MIND WHILE FRAMING THE ORIGINAL ASSESSMENT ORDER U/S 153C AND NO DISCREPAN CY WITH REGARD TO THE UNSECURED LOAN WAS NOTICED. (II) REASONS RECORDED BY THE LD. AO IS MERELY BASED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WIN G OF THE DEPARTMENT WITHOUT ANY INDEPENDENT APPLICATION OF MIND. (III) IN THE STATEMENT OF SANJAY CHAUDHARY, HE HAS ONLY DISCUSSED THE BOGUS ENTRIES GIVEN BY M/S VARDHMAN ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 5 JEWELS, M/S GANESH OIAM AND TIMIL ENTERPRISES AND N OT NAZAR IMPEX PVT. LTD. (IV) SANJAY CHAUDHARY HAS ALSO NEVER SPECIFICALLY POINTED OUT THE NAME OF THE ASSESSEE WITH REGARD TO THE BOGUS ENTRIES. (V) THE CONDITIONS LAID DOWN IN FIRST PROVISO TO SE CTION 147 IS NOT SATISFIED WITH REGARD TO REOPENING THE C ASE BEYOND 4 YEARS. NOW, THE POINT WISE EXPLANATION OF THE ABOVE POINTS ARE PROVIDED AS UNDER: 1.4 IT IS SUBMITTED THAT THE CASE OF THE ASSESSEE H AS ALREADY BEEN ASSESSED U/S 153C/143(3) OF THE ACT AN D THE THEN LD. AO HAS APPLIED HIS MIND WHILE FRAMING HIS ASSESSMENT ORDER AND THE SAID FIGURE OF THE UNSECUR ED LOAN WAS NOT LEFT UNNOTICED BY THE THEN AO SINCE IT FIRSTLY APPEARS IN THE BALANCE SHEET' UNDER THE HEA D SUNDRIES, AND SECONDLY THERE IS A CLEAR MENTION O F THE SAME IN THE TAX AUDIT REPORT OF THE ASSESSEE. THUS, THE STATEMENT MADE BY THE LD. AO THAT THERE IS A FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL THE MATERIAL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT DOES NOT HOLD ANY BASIS. 1.5 THUS, IT IS CLEAR THAT THE LD. AO HAS NOT ACTUA LLY APPLIED HIS MIND WHILE ISSUING NOTICE U/S 147 AND T HE SAME IS ALSO EVIDENT FROM THE REASONS RECORDED BY T HE LD.AO, WHICH ARE GIVEN IN POINT 2 OF THE RE-ASSESSM ENT ORDER. HEREIN THE LD. AO HAS MERELY DISCUSSED THE SEARCH CARRIED ON THE SANJAY CHAUDHARY GROUP AND ALLEGED THAT SANJAY CHAUDHARY HIMSELF HAS ADMITTED THAT HIS CONCERN NIPL IS PROVIDING ACCOMMODATION ENTRIES IN THE NATURE OF BOGUS LOANS WHEN NEITHER THERE IS ANY MENTION OF NIPL GIVING THE BOGUS UNSECURED LOAN ENT RIES NOR THERE WAS ANY MENTION OF THE ASSESSEE AVAILING BOGUS LOAN. THUS, THE REASONS TO BELIEVE ARE ONLY THE MISGUIDED CONTENTION OF THE LD.AO WHICH WERE ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 6 CONCLUDED WITHOUT APPLYING ANY MIND AND HASTILY SERVING OF THE NOTICE NEAR THE TIME BARRED DATES. I T MAY BE MENTIONED HERE THAT THE AO HAS ISSUED THE NOTICE U/S 148 ON 23.03.2015 AND THE SAID ACTION WOULD HAVE BE EN TIME BARRED BY 31.03.2015. 1.6 MOREOVER , SANJAY CHAUDHARY GROUP HAD MANY CONCERNS UNDER IT AND IT IS NOT NECESSARY THAT EVER Y ENTRY PROVIDED BY EVERY CONCERN UNDER IT IS BOGUS A S NO INVESTIGATION WITH RESPECT TO THE SAME HAS EVER BEE N CARRIED OUT EITHER BY THE INVESTIGATION WING OR THE INCOME TAX DEPARTMENT ITSELF. MOREOVER, THE CONCERN ED PERSON HAS NEVER POINTED OUT THE NAME OF THE ASSESS EE WHILE BEING INVESTIGATED BY THE DEPARTMENT, THUS, I T IS MERELY A ROUGH ASSUMPTION TO STATE THAT IF THE NAME OF THE ASSESSEE IS APPEARING IN THE BOOKS OF NIPL THEN , THE ENTRY PROVIDED BY THE NIPL IS BOGUS WHEN NO CLAIM H AS BEEN MADE BY THE CONCERNED PERSON IN HIS STATEMENT. IT IS ALSO SUBMITTED THAT IN THE COURSE OF THE RE-ASSE SSMENT PROCEEDINGS THE ASSESSEE HAS EVEN REQUESTED THE COP Y OF THE STATEMENT OF SANJAY CHAUDHARY RECORDED BY THE INVESTIGATION WING VIDE LETTER DATED 05.05.2015 WHI CH IS RECEIVED BY THE ASSESSEE AND THE COPY OF THE SAME I S ENCLOSED IN THE PAPER BOOK. HOWEVER, IT IS TO BE NO TED HERE THAT THE SAID COPY IS INCOMPLETE AND INCOHEREN T AS IT LACKS SOME OF THE IMPORTANT PAGES OF THE STATEME NT, THUS, FROM THE SAME IT IS VERY MUCH CLEAR THAT THE LD. AO HIMSELF NEVER HAD THE FULL STATEMENT IN HIS POSSESS ION WHICH AGAIN GOES ON TO PROVE THAT IT WAS IMPOSSIBLE FOR THE LD, AO TO PROCESS THE RELEVANT DATA AS THE DATA AVAILABLE WITH HIMSELF IS MISPLACED. 1.7 THE IMPETUOUS NATURE OF SERVICE OF NOTICE U/S 1 48 AND ORDER U/S 147 IS ALSO CLEAR FROM THE FACT THAT THE ASSESSEE WAS NEVER ALLOWED TO CROSS EXAMINE SANJAY CHAUDHARY EVEN WHEN THE ASSESSEE HAD ASKED THE LD. AO DURING THE REASSESSMENT PROCEEDINGS TO DO THE SAME. THUS, THE CASE OF THE ASSESSEE HAS BEEN REOPENED ME RELY ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AND NO INDEPENDENT APPLICATION O F ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 7 MIND HAS BEEN MADE BY THE LD. AO BECAUSE THE LD. AO ON ONE HAND IS ALLEGING THAT THE INFORMATION WERE CONCEALED BY THE ASSESSEE AT THE TIME OF THE ORIGIN AL ASSESSMENT PROCEEDINGS AND ON THE OTHER HAND HE IS ADMITTING THAT THE INFORMATION WAS PRIMA FACIE PUT UNDER THE HEAD 'SUNDRIES IN THE CURRENT LIABILITIE S AND THE SAME HAD A CLEAR MENTION IN THE TAX AUDIT REPOR T. THUS, FROM THE SAME IT IS CLEAR THAT THE LD. AO HAV E ONLY RELIED ON THE INFORMATION OF THE INVESTIGATION WING AND HAVE NEITHER LOOKED INTO THE FACTS AND CIRCUMSTANCE S OF THE CASE OR EVEN ON THE DOCUMENTS FILED IN THE REASSESSMENT PROCEEDINGS. THUS, REOPENING WITHOUT APPLICATION OF MIND IS INVALID AND WRONG. RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING JUDGMENTS:- SHEO NATH SINGH VS. APPELLATE ASSISTANT COMMISSIONER OF INCOME TAX (SC) 82 ITR 0147-THERE ALSO, THE REPORT SUBMITTED BY THE OFFICER TO THE CIT AND THE LATTER'S ORDERS THEREON WERE PRODUCED. IN HIS REPORT, THE ITO REFERRED TO SOME COMMUNICATIONS RECEIVED BY HIM FROM THE CIT, BIHAR AND ORISSA, FROM WHICH IT APPEARED THAT CERTAIN CREDITORS OF THE ASSESSEE WERE MERE NAME- LENDERS AND THE LOAN TRANSACTIONS WERE BOGUS AND, THEREFORE, PROPER INVESTIGATION REGARDING THE LOANS WAS NECESSARY. IT WAS OBSERVED THAT THE ITO HAD NOT SET OUT ANY REASON FOR COMING TO THE CONCLUSION THAT IT WAS A FIT CASE FOR ISSUING A NOTICE UNDER S . 148 OF THE IT ACT, 1961. CIT VS SFIL STOCK BROKING LTD. [2010] 325 ITR 285 (DELHI) REASSESSMENT REASON TO BELIEVE REOPENING ON DIRECTIONS OF SUPERIOR OFFICERS SO CALLED REASONS RECORDED BY THE AO FOR REOPENING ASSESSEES ASSESSMENT COMPRISES MERE INFORMATION RECEIVED FROM DY. DIRECTOR OF IT(INV.) FOLLOWED BY DIRECTIONS OF THE VERY SAME OFFICER AND THE ADDL. CIT TO INITIATE PROCEEDINGS UNDER S. 147 THESE CANNOT BE THE REASONS FOR PROCEEDING UNDER S. 147/148 FROM THE SO-CALLED REASONS IT IS NOT AT ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 8 ALL DISCERNIBLE AS TO WHETHER THE AO HAS APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF ON THE BASIS OF THE MATERIAL BEFORE HIM THAT INCOME HAD ESCAPED ASSESSMENT PROCEEDINGS UNDER S. 147/148 RIGHTLY QUASHED BY TRIBUNAL NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION. ITO VS NARNAUDIA FINANCIAL SERVICES PVT. LTD. IN ITA NO. 4094/DEL/2009, ITAT DELHI- THE REOPENING WAS DONE MERELY ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING. AS PER RATIO EMANATING FROM ABOVE SAID JURISDICTIONAL HIGH COURT DECISION, ON THE FACTS AND CIRCUMSTANCES O THE CASE REOPENING IS NOT VALID. HENCE WE HOLD THAT THE REOPENING WAS NOT VALID. SHRI CHUNNILAL PRAJAPATI VS INCOME-TAX OFFICER-II, ITA NOS. 290 TO 293/LUC/2010, ITAT LUCKNOW. 6. IT WAS ALSO STATED THAT THE ASSESSMENT FRAMED BE YOND FOUR YEARS WAS BARRED BY LIMITATION. ON MERIT, IT WAS ST ATED THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S PROVED THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR ALONG WITH GENUINENESS OF THE TRANSACTION. THEREFORE, THE ADDITION MADE WA S NOT JUSTIFIED. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS PRECISION FINANCE PVT. LTD. (1994) 208 ITR 4 65 (CAL.) ITO VS SURESH KALMADI (1988) 32 TTJ (PUNE) TM 300 PAUL MATHEWS AND SONS VS CIT 263 ITR 101 (KER.) CIT VS KHADER KHAN SON 300 ITR 157 (MADRAS) KISHINCHAND CHELLARAM VS CIT 125 ITR 0713 (SC) ANDAMAN TIMBER INDUSTRIES VS COMMISSIONER OF CENTRA L EXCISE 127 DTR 241 SH. ASHOK KUMAR BHAILAL VS ITO IN ITA NOS. 562 & 591/AHD.2015 ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 9 7. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE AO NOTED DURING THE COUR SE OF SEARCH ON SH. SANJAY CHAUDHARY GROUP THAT THE SAID GROUP WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES TO DIFFERENT ASSESS EES FOR BOGUS UNSECURED LOANS AND BOGUS PURCHASES. SUCH AN ENTRY WAS ALSO PROVIDED TO THE ASSESSEE BY M/S NAZAR IMPEX PVT. LT D., ONE OF ITS GROUP COMPANIES OF RS.31,50,000/-. ON THAT BASIS, T HE AO REOPENED THE ASSESSMENT. HE FURTHER OBSERVED THAT THE AMOUNT RECEIVED FROM M/S NAZAR IMPEX PVT. LTD. WAS NOT SHOWN UNDER UNSE CURED LOANS IN THE BALANCE SHEET BY THE ASSESSEE BUT IT WAS SHO WN UNDER THE HEAD SUNDRIES AS A CURRENT LIABILITY, WHICH CLEAR LY SHOWS THAT IT WAS NOT THE INTENTION OF THE ASSESSEE TO FULLY AND TRULY DISCLOSED IN ITS BALANCE SHEET, THE SO-CALLED UNSECURED LOANS TA KEN FROM M/S NAZAR IMPEX PVT. LTD. HE ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE AO. 8. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT EARLIER INCOME OF THE ASSES SEE WAS ASSESSED U/S 153C OF THE ACT AFTER A DETAILED SCRUTINY AND A N ADDITION OF RS.1,00,000/- WAS MADE WHICH WAS REDUCED BY THE LD. CIT(A) TO RS.30,000/- (A REFERENCE WAS MADE TO PAGE NOS. 37 T O 39 OF THE ASSESSEES COMPILATION). IT WAS FURTHER SUBMITTED T HAT THE REOPENING WAS DONE BEYOND FOUR YEARS BUT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI ALS FACTS NECESSARY FOR THE ASSESSMENT. IT WAS CONTENDED THAT A LOAN OF RS.31,50,000/- FROM M/S NAZAR IMPEX PVT. LTD. WAS RECEIVED THROUGH SH. ASHOK KUMAR MALHOTRA, MD OF THE SAID COMPANY WHO HAD GOOD RELATION ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 10 WITH THE ASSESSEE, THROUGH BANKING CHANNELS AND IT WAS REPAID BACK IN THE NEXT YEAR THROUGH NORMAL BANKING CHANNELS. T HIS FACT WAS DISCLOSED IN THE TAX AUDIT REPOT FURNISHED ALONGWIT H THE ORIGINAL RETURN OF INCOME (A REFERENCE WAS MADE TO PAGE NO. 18 OF THE ASSESSEES COMPILATION). IT WAS FURTHER SUBMITTED T HAT THE AO MADE THE SCRUTINY DURING THE COURSE OF ORIGINAL ASSESSME NT PROCEEDINGS U/S 153C OF THE ACT AND THE SAID AMOUNT WAS REFLECT ED IN THE BALANCE SHEET UNDER THE HEAD SUNDRIES ALONGWITH O THER FIGURES WHICH CLEARLY PROVED THAT IT WAS PART AND PARTIAL O F THE RECORD OF THE DEPARTMENT. IT WAS FURTHER SUBMITTED THAT THERE WAS NO SEARCH IN THE CASE OF THE ASSESSEE RATHER THERE WAS A SURVEY OPER ATION AND THE STATEMENT OF SH. SANJAY CHAUDHARY RECORDED AT THE B ACK OF THE ASSESSEE WAS NEVER CONFRONTED TO THE ASSESSEE. THER EFORE, THE REOPENING DONE BY THE AO ONLY ON THE BASIS OF INFOR MATION RECEIVED FROM THE DIRECTORATE OF INCOME TAX WITHOUT MAKING A N INQUIRY WAS NOT JUSTIFIED. THE RELIANCE WAS PLACED ON THE FOLLO WING CASE LAWS: SHEO NATH SINGH VS ACIT 82 ITR 0147 (SC) CIT VS SFIL STOCK BROKING LTD. (2010) 325 ITR 285 (DEL.) PR. CIT VS G. G. PHARMA INDIA LTD. 384 ITR 147 (DEL .) SIGNATURE HOTELS PVT. LTD. VS ITO 338 ITR 51 (DEL.) ITO VS NARNAUDIA FINANCIAL SERVICES PVT. LTD. IN IT A NO. 4094/DEL/2009 SH. CHUNNILAL PRAJAPATI VS ITO-II IN ITA NOS.290 TO 295/LUC/2010 G. N. SHAW (WINE) (P) LTD. VS ITO 260 ITR 513 (CAL. ) SUN PHARMACEUTICAL INDUSTRIES LTD. VS DCIT 381 ITR 387 (DEL.) SHAF BROADCAST PVT. LTD. VS ACIT IN ITA NO. 1819/MUM/2012 ASHOK KUMAR VS ACIT IN ITA NO. 825/CHD./2007 ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 11 ALFA RADIOLOGICAL CENTRE P. LTD. VS ITO 44 ITR 184 (CHD. TRIB.) 9. IN HIS RIVAL SUBMISSIONS, THE LD. CIT DR STRONGL Y SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND FUR THER SUBMITTED THAT M/S NAZAR IMPEX PVT. LTD. WAS AN ENTRY PROVIDE R, THEREFORE, THE ENTRY TAKEN BY THE ASSESSEE WAS A BOGUS ENTRY AND T HE ASSESSMENT WAS RIGHTLY REOPENED BY THE AO. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN TH E PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ORIGINAL ASSESSMENT OF THE ASSESSEE WAS FRAMED U/S 153C OF THE ACT AFTER MAKING THE DEEP SC RUTINY. IN THE ORIGINAL RETURN, THE ASSESSEE FURNISHED THE PARTICU LARS OF THE LOAN RECEIVED FROM M/S NAZAR IMPEX PVT. LTD. IN THE TAX AUDIT REPORT WHICH IS EVIDENT FROM PAGE NO. 18 OF THE ASSESSEES PAPER BOOK WHEREIN THE DETAILS OF THE LOANS OR DEPOSITS RECEIV ED FROM VARIOUS PERSONS HAVE BEEN MENTIONED, SO IT CANNOT BE SAID T HAT THE FACTS RELATING TO THE RECEIPT OF LOAN FROM M/S NAZAR IMPE X PVT. LTD. WAS NOT AVAILABLE TO THE AO WHO MADE THE ASSESSMENT AFT ER MAKING PROPER SCRUTINY. IN THE PRESENT CASE, THE AO REOPEN ED THE ASSESSMENT BY RECORDING THE FOLLOWING REASONS: THE ASSESSEE HAD FILED ITS ORIGINAL RETURN OF INCO ME ON 30.09.2008 AT RETURNED INCOME OF RS. 4,63,33,441/-. A SEARCH U/S 132 OF THE INCOME TAX ACT, 1961 WAS CARR IED OUT ON THE ASSESSEES GROUP ON 22.01.2009. IN RESPO NSE TO NOTICE U/S 153C, THE ASSESSEE FILED ITS RETURN OF I NCOME DECLARING INCOME OF RS. 4,63,33,441/- ON 06.02.2010 . ASSESSMENT WAS COMPLETED U/S 153C OF THE INCOME TAX ACT, 1961 VIDE ORDER DATED 29.12.2010 AT AN ASSESSE D INCOME OF RS. 4,64,33,441/-. - ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 12 2. A SEARCH OPERATION U/S 132 OF THE INCOME TAX ACT , 1961 WAS CARRIED OUT BY DIRECTORATE OF INCOME TAX (INVESTIGATION), 3RD FLOOR, SCINDIA HOUSE BALLARD E STATE, MUMBAI ON 03.10.2013 AT RAJENDRA JAIN GROUP, SANJAY CHOUDHARY GROUP AND DHARMICHAND JAIN GROUP OF MUMBAI. 3. DURING THE COURSE OF SEARCH OPERATION, ON THE SA NJAY CHOUDHARY GROUP, IT EMERGED THAT THE GROUP IS ENGAG ED IN PROVIDING ACCOMMODATION ENTRIES TO DIFFERENT ASS ESSEES IN THE NATURE OF BOGUS UNSECURED LOANS AND BOGUS PURCHASES. IN HIS STATEMENT RECORDED ON OATH, SH. S ANJAY CHOUDHARY HAS ADMITTED THAT HIS CONCERN M/S NAZAR IMPEX PVT. LTD., BEARING PAN AACCN3603R IS PROVIDIN G ACCOMMODATION ENTRIES IN THE NATURE OF BOGUS LOANS. 4. M/S. NAZAR IMPEX PVT. LTD., BEARING PAN AACCN3603R HAS PROVIDED ACCOMMODATION ENTRY TO M/S. HOLY FAITH INTERNATIONAL PVT. LTD. (THE ASSESSEE) B EARING PAN AAACH6111J OF RS. 31,50,000/- UNDER THE NATURE OF LOAN DURING THE FINANCIAL YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR 2008-09. THIS HAS BEEN ESTABLISHED IN THE COURSE OF THE POST SEARCH INVESTIGATION OF THE SEIZED BOOKS OF ACCOUNTS OF THE SANJAY CHOUDHARY GROUP, IN WHICH M/S NAZAR IMPEX PVT. LTD. IS ONE OF THE CONCE RN. 5. IN VIEW OF THIS INFORMATION IN MY POSSESSION, I HAVE REASONS TO BELIEVE THAT THE ASSESSEE M/S HOLY FAITH INTERNATIONAL PVT. LTD. HAS CONCEALED THE FACT REGA RDING THE AMOUNT OF RS. 31,50,000/- RECEIVED FROM M/S NAZ AR IRNPEX PVT. LTD. AND HAS THEREBY NOT DISCLOSED FULL Y AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSME NT OF THE RELEVANT ASSESSMENT YEAR. THE ASSESSMENT FOLDER HAS BEEN EXAMINED AND THIS ENTRY HAS NOT BEEN REFLECTED . IN VIEW OF THE DISCUSSION ABOVE, I HAVE REASONS TO BELIEVE THAT INCOME OF RS.31,50,000/- HAS ESCAPED ASSESSMEN T WITH THE MEANING OF SECTION 147 OF THE INCOME TAX A CT 1961 FOR THE FINANCIAL YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR 2008-09. ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 13 11. FROM THE ABOVE REASONS RECORDED, IT IS CLEAR TH AT THE REOPENING WAS DONE ON THIS BASIS THAT A SEARCH OPERATION U/S 132 OF THE ACT WAS CARRIED OUT BY THE DIRECTORATE OF INCOME TAX(IN VESTIGATION), MUMBAI ON 03.10.2013 AT RAJENDRA JAIN GROUP, SANJAY CHOUDHARY GROUP AND DHARMICHAND JAIN GROUP OF MUMBAI, ONLY ON THE BASIS OF THE ABOVE INFORMATION, THIS CASE WAS REOPENED WH ICH IS EVIDENT FROM PARA 5 OF THE AFORESAID REASONS RECORDED WHERE IN THE AO HAD CLEARLY STATED THAT THE SAID INFORMATION WAS IN HIS POSSESSION AND ON THAT BASIS HE HAD REASONS TO BELIEVE THAT THE ASSES SEE HAD CONCEALED THE FACT REGARDING THE AMOUNT OF RS.31,50,000/- REC EIVED FROM M/S NAZAR IMPEX PVT. LTD. HOWEVER, THE SAID AMOUNT WAS CONSIDERED AS GENUINE EARLIER WHEN THE ASSESSMENT WAS FRAMED BY T HE AO U/S 153C OF THE ACT. NOW QUESTION ARISES AS TO WHETHER, ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING, T HE COMPLETED ASSESSMENT CAN BE REOPENED. 12. ON A SIMILAR ISSUE THE HONBLE DELHI HIGH COUR T IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX-4 VS G & G PHARMA LTD. 384 ITR 147 (SUPRA) HELD AS UNDER: THE BASIC REQUIREMENT OF LAW FOR REOPENING AN ASSE SSMENT IS APPLICATION OF MIND BY THE ASSESSING OFFICER, TO THE MATERIALS PRODUCED PRIOR TO REOPENING THE ASSESSMEN T, TO CONCLUDE THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. UNLESS THAT BASIC JURISDICTIONA L REQUIREMENT IS SATISFIED A POST MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOP ENING WILL NOT MAKE AN INHERENTLY DEFECTIVE REASSESSMENT ORDER VALID. IT HAS FURTHER BEEN HELD AS UNDER: WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASI S OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR HIM TO HAVE SIMPLY ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 14 CONCLUDED THAT IT WAS EVIDENT THAT THE ASSESSEE COM PANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BAN K BY WAY OF ACCOMMODATION ENTRIES. THE BASIC JURISDICTIO NAL REQUIREMENT WAS APPLICATION OF MIND BY THE ASSESSIN G OFFICER TO THE MATERIAL PRODUCED BEFORE ISSUING THE NOTICE FOR REASSESSMENT. WITHOUT ANALYSING AND FORMING A P RIMA FACIE OPINION ON THE BASIS OF MATERIAL PRODUCED, IT WAS NOT POSSIBLE FOR THE ASSESSING OFFICER TO CONCLUDE THAT HE HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMEN T. 13. SIMILARLY, THE HONBLE DELHI HIGH COURT IN THE CASE OF SIGNATURE HOTELS PVT. LTD. VS ITO AND ANR. (2011) 338 ITR 51 (SUPRA) HELD AS UNDER: SECTION 147 OF THE INCOME-TAX ACT, 1961, IS WIDE B UT NOT PLENARY. THE ASSESSING OFFICER MUST HAVE 'REASON TO BELIEVE' THA T AN INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THIS IS MANDATORY AND THE 'REASONS TO BELIEVE' ARE REQUIRED TO BE RECORDED IN WRITING BY THE ASSESSING OFFICER. SUFFICIENCY OF REASONS IS NOT A MATTER, WHICH IS TO BE DECIDED BY THE WRIT COURT, BUT EXISTENCE ON BELIEF IS THE SUBJECT-MATTER OF THE SCRUTINY. A NOTICE UNDER SECTION 148 CAN BE QUASHED IF THE 'BELIEF' IS NOT BONAFIDE, OR ONE BASED ON VAGUE, IR RELEVANT AND NON- SPECIFIC INFORMATION. THE BASIS OF THE BELIEF SHOUL D BE DISCERNIBLE FROM THE MATERIAL ON RECORD, WHICH WAS AVAILABLE WITH THE AS SESSING OFFICER, WHEN HE RECORDED THE REASON. THERE SHOULD BE A LINK BETWEEN THE REASONS AND THE EVIDENCE /MATERIAL AVAILABLE WITH THE ASSESSING OFFICER. THE 'REASONS TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION OF THE ASSESSING OFFICER TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT AND NOT THAT THE ASSESSING OFFICER SHOU LD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR REACHED A CONCLUSION, AS IS DETERMINED AND DECIDED IN THE ASSESSMENT ORDER, WHI CH IS THE FINAL STAGE BEFORE THE ASSESSING OFFICER. IT HAS FURTHER BEEN HELD THAT: THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME-TA X (INVESTIGATION ) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS. 5 LAKHS DURING FINANCIAL YEAR 2002-03 AS STATED IN THE ANNEXURE. A CCORDING TO THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY , S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIREMENTS OF SECTION 147 OF THE ACT. THERE WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT , EXCEPT THE ITA NO. 181/ASR./2017 HOLY FAITH INTERNATIONAL PVT. LTD. 15 ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A M ATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEX US OR LINK WHICH DISCLOSED ESCAPEMENT OF INCOME. THE ANNEXURE WAS NO T A POINTER AND DID NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND E XAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THERE WAS NO DISPU TE THAT THE COMPANY, S, HAD A PAID-UP CAPITAL OF RS. 90 LAKHS A ND WAS INCORPORATED ON JANUARY 4, 1989, AND WAS ALSO ALLOT TED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER, 2001. THUS, IT COULD N OT BE HELD TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDINGS WER E NOT VALID AND WERE LIABLE TO BE QUASHED. 14. IN THE PRESENT CASE ALSO, THE AO SIMPLY ACTED U PON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AN D DID NOT APPLY HIS OWN MIND. THEREFORE, THE REOPENING U/S 147 BY I SSUING THE NOTICE U/S 148 OF THE ACT ONLY ON THE BASIS OF INFO RMATION RECEIVED FROM THE INVESTIGATION WING WAS NOT VALID. ACCORDIN GLY, THE REASSESSMENT FRAMED BY THE AO IS QUASHED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. (ORDER PRONOUNCED IN THE COURT ON 15/01/2019) SD/- SD/- (RAVISH SOOD) (N. K. SAINI) JUDICIAL MEMBER V ICE PRESIDENT DATED: 15/01/2019 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR