Rhino Footware Pvt Ltd, New Delhi V. ITO Ward 2(3), New Delhi

ITA 2009/DEL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4915 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 07-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Reopening of assessment; Tangible material; Accommodation entries; Borrowed satisfaction
• Section: 143(3); 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA NO. 6677/DEL/2018 ASSESSMENT YEAR: 2011-12 LUXE TRADING AND HOLDING (INDIA) PVT. LTD., C/O SH. KAPIL GOEL, ADV. F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: AAACL1949E) VS. ITO, WARD 15(4), NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 1268/DEL/2019 ASSESSMENT YEAR: 2009-10 INSTYLE INFRASTRUCTURE P. LTD., C/O SH. KAPIL GOEL, ADV. F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: AABCI6893B) VS. ITO, WARD 12(3), NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 2009/DEL/2019 ASSESSMENT YEAR: 2010-11 RHINO FOOTWARE PVT. LTD., C/O SH. KAPIL GOEL, ADV. F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: AADCR3542E) VS. ITO WARD 2(3), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY SH. KAPIL GOEL, ADVOCATE DEPARTMENT BY SH. S.L. ANURAGI, SR. DR. 2 ORDER THESE 03 APPEALS HAVE BEEN FILED BY THE SEPARATE AS SESSEES AGAINST THE RESPECTIVE ORDERS PASSED BY THE DIFFERENT LD. C IT(A)S PERTAINING TO RESPECTIVE ASSESSMENT YEARS. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE NOT REPEATED HERE FOR THE SAKE OF CONVENIENCE. 3. THESE ARE 03 APPEALS FILED BY THE DIFFERENT ASSE SSES BY RAISING VARIOUS GROUNDS OF APPEAL IN EACH APPEAL CHALLENGIN G ADDITION IN DISPUTE ON MERIT AS WELL AS ON LEGAL. HOWEVER, LD. COUNSEL FOR THE ASSESSEE ONLY ARGUED THE LEGAL GROUND NO. 1 TO 1.1 IN ITA NO. 667 7/DEL/2018 (AY 2011- 12) WHICH IS COMMON IN ALL THE AFORESAID 03 APPEALS OF DIFFERENT ASSESSES. HE DRAW MY ATTENTION TOWARDS THE LEGAL GROUNDS RAIS ED BY THE ASSESSEE IN ALL THE APPEALS I.E. GROUND NO. 1 WHICH ARE IDENTIC AL IN ALL THE 03 APPEALS. FOR THE SAKE OF CONVENIENCE, THE LEGAL GROUND RAIS ED BY THE ASSESSEE IN ITA NO. 6677/DEL/2018 (AY 2011-12) IS REPRODUCED AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN SUSTAININ G THE ORDER PASSED BY THE AO U/S. 147/143(3) WITHOUT APPRECIATING THAT ASSUMPTION OF JURISDICTION U/S. 148 BY AO WAS IN VIOLATION OF MANDATORY JURISDICTIONAL CONDITIONS STIPULATED UNDER THE ACT; 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN SUSTAININ G THE ORDER PASSED BY THE AO U/S. 147/143(3) WITHOUT APPRECIATING THAT RUBBER STAMP REASONS IN PRESENT CASE ARE BASED ON BORROWED SATISFACTION AND ARE WITHOUT INDEPENDENT APPLICATION OF MIND. 3.1. LD. COUNSEL FOR THE ASSESSEE STATED THAT AO HA S COMPLETED THE ASSESSMENT IN DISPUTE U/S. 147/143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) WITHOUT APPRECIATING THE FACTS AND CI RCUMSTANCES OF THE CASE AND WRONGLY ASSUMED THE JURISDICTION U/S. 148 OF TH E I.T. ACT, 1961, WHICH IS IN VIOLATION OF MANDATORY JURISDICTIONAL CONDITI ONS AS STIPULATED UNDER THE ACT. HE FURTHER STATED THAT LD. FIRST APPELLAT E AUTHORITY HAS WRONGLY UPHELD THE ORDER OF THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE 3 WITHOUT PASSING ANY REASONABLE AND ELABORATE FINDIN G AND WITHOUT PROPERLY ADJUDICATING THE LEGAL GROUND, AS PER THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE, WHICH IS AGAINST THE LAW AND FACTS ON THE FILE. LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT THE AO HAS COMPLET ED THE ASSESSMENT AND LD. CIT(A) HAS WRONGLY UPHELD THE ORDER OF THE LD. CIT(A) WITHOUT APPRECIATING THAT THE REASONS IN THIS CASE ARE BASE D ON BORROWED SATISFACTION AND WITHOUT INDEPENDENT APPLICATION O F MIND. LASTLY, HE SUBMITTED THAT EXACTLY SIMILAR ISSUE HAS ALREADY BE EN ADJUDICATED AND DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT, DELH I G BENCH, NEW DELHI IN THE CASE OF M/S SBS REALTORS (P) LTD. VS. ITO DE CIDED IN ITA NO. 7791/DEL/2018 (AY 2009-10) VIDE ORDER DATED 01.04 .2019. HE HAS ALSO FILED THE COPY OF THE AFORESAID ORDER IN THE SHAPE OF PAPER BOOK AND ESPECIALLY DRAW MY ATTENTION TOWARDS THE PAGE NO. 1 00-112. HE REQUESTED THAT IN THIS CASE THE BENCH HAS ELABORATE LY DISCUSSED THE VARIOUS CASE LAWS RENDERED BY THE JURISDICTIONAL HI GH COURT AND QUASHED THE ASSESSMENT ON THE LEGAL SIMILAR ISSUE. HE FUR THER REQUESTED THAT IN VIEW OF THE ORDER DATED 01.04.2019 PASSED IN THE CA SE OF M/S SBS REALTORS (P) LTD. VS. ITO (SUPRA) THE LEGAL GROUND INVOLVED IN THIS APPEAL MAY BE DECIDED IN FAVOUR OF THE ASSESSEE AND NOTICE U/S. 148 OF THE ACT MAY BE QUASHED AND ACCORDINGLY ASSESSMENT IN PURSUA NCE OF THE NOTICE MAY ALSO BE QUASHED BY ACCEPTING THE APPEAL OF THE ASSESSEE. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS O F THE AUTHORITIES BELOW. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS, ESPECIALLY THE ORDERS OF REVENUE AUTHORITIES AS WELL AS THE PA PER BOOK FILED BY THE LD. COUNSEL FOR THE ASSESSEE IN WHICH THE ASSESSEE HAS FILED THE COPIES OF THE VARIOUS DECISIONS RENDERED BY THE HONBLE JURISDIC TIONAL HIGH COURT AS WELL AS TRIBUNAL. SINCE SIMILAR LEGAL ISSUE HAS BEE N RAISED IN ALL THE APPEALS, HENCE, THE APPEALS WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE, BY DEALIN G WITH ITA NO. 6677/DEL/2018 (AY 2011-12), THE RESULT THEREOF WILL APPLY MUTATIS MUTANDIS TO OTHER APPEALS I.E. ITA NO. 1268 & 2009 /DEL/2019. 4 5.1 THE REASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 148 READ AS UNDER IN ITA NO. 6677/DEL/2018 (AY 2011-12):- 5 6 5.2 FROM A PERUSAL OF THE REASONS, IT IS SEEN THA T THE NOTICE U/S. 148 OF THE ACT HAS BEEN ISSUED MECHANICALLY WITHOUT APPLIC ATION OF MIND AND THE SATISFACTION BY THE ASSESSING OFFICER IS ONLY THE BORROWED SATISFACTION OF THE INVESTIGATION WING. THE ASSESSING OFFICER, WIT HOUT APPLYING HIS MIND, HAS SIMPLY ON THE BASIS OF INFORMATION OF THE INVES TIGATION WING JUMPED TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOM E. FROM THE PERUSAL OF THE AFORESAID REASONS, I DO NOT FIND ANY APPLICA TION OF MIND BY THE AO FOR REACHING TO THE CONCLUSION THAT THERE WAS ESCAP EMENT OF INCOME EXCEPT THE INFORMATION FROM THE INVESTIGATION WING. THEREFORE, I FIND CONSIDERABLE COGENCY IN THE CONTENTION OF THE LD. C OUNSEL FOR THE ASSESSEE THAT AO HAS COMPLETED THE ASSESSMENT IN DISPUTE U/ S. 147/143(3) OF THE ACT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCE S OF THE CASE AND WRONGLY ASSUMED THE JURISDICTION U/S. 148 OF THE AC T, 1961, WHICH IS IN VIOLATION OF MANDATORY JURISDICTIONAL CONDITIONS AS STIPULATED UNDER THE 7 ACT. HE FURTHER STATED THAT LD. FIRST APPELLATE AU THORITY HAS WRONGLY UPHELD THE ORDER OF THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE WITHOUT PASSING ANY REASONABLE AND ELABORATE FINDI NG AS WELL AS LEGAL WITHOUT PROPERLY ADJUDICATING THE LEGAL GROUND A S PER THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE, WHICH IS AGAINST THE LAW AND FACTS ON THE FILE. LD. COUNSEL FOR THE ASSESSEE FURTHER STAT ED THAT THE AO HAS COMPLETED THE ASSESSMENT AND LD. CIT(A) HAS WRONGLY UPHELD THE ORDER OF THE LD. CIT(A) WITHOUT APPRECIATING THAT THE REA SONS IN THIS CASE ARE BASED ON BORROWED SATISFACTION AND WITHOUT INDEPEN DENT APPLICATION OF MIND. LASTLY, HE SUBMITTED THAT EXACTLY SIMILAR IS SUE HAS ALREADY BEEN ADJUDICATED AND DECIDED IN FAVOUR OF THE ASSESSEE B Y THE ITAT, DELHI G BENCH, NEW DELHI IN THE CASE OF M/S SBS REALTORS (P ) LTD. VS. ITO DECIDED IN ITA NO. 7791/DEL/2018 (AY 2009-10) VIDE ORDER DATED 01.04.2019. HE HAS ALSO FILED THE COPY OF THIS ORDER IN THE SHA PE OF PAPER BOOK AND ESPECIALLY DRAW MY ATTENTION TOWARDS THE PAGE NO. 1 00-112. HE REQUESTED THAT IN THIS CASE THE BENCH HAS ELABORATE LY DISCUSSED THE VARIOUS CASE LAWS RENDERED BY THE JURISDICTIONAL HI GH COURT AND DECLARED THE INVALID ASSESSMENT. HE FURTHER REQUESTED THAT IN VIEW OF THE ORDER DATED 01.04.2019 PASSED IN THE CASE OF M/S SBS REAL TORS (P) LTD. VS. ITO (SUPRA) THE LEGAL GROUND INVOLVED IN THIS APPEAL MA Y BE DECIDED IN FAVOUR OF THE ASSESSEE AND NOTICE U/S. 148 OF THE ACT MAY BE QUASHED AND ACCORDINGLY ASSESSMENT IN PURSUANCE OF THE NOTICE M AY ALSO BE QUASHED BY ACCEPTING THE APPEAL OF THE ASSESSEE. FOR THE S AKE OF CONVENIENCE, I AM REPRODUCING THE FINDINGS OF THE TRIBUNAL IN THE CASE OF M/S SBS REALTORS (P) LTD. VS. ITO (SUPRA) AS UNDER, IN WHI CH VARIOUS CASE LAWS OF THE HONBLE COURTS HAVE BEEN DISCUSSED ELABORATELY :- 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF B OTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE RE ASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 148 READ AS UNDER :- NAME OF THE ASSESSEE : M/S SBS REALTORS P.LTD. A.Y . 2009-10 PAN : AALCS5106R 8 ASSESSMENT YEAR : 2009-10 REASONS FOR ISSUE OF NOTICE U/S 148 OF THE INCOME T AX ACT, 1961 THE RETURN OF INCOME FOR THE A.Y. 2009-10 HAS BEEN FILED BY THE ASSESSEE COMPANY ON 20.09.2009 DECLARING NIL TO TAL INCOME. THE SAME WAS PROCESSED U/S 143(1) ON 17.01.2011. N O ASSESSMENT U/S 143(3) FOR THE A.Y. 2009-10 HAS BEEN MADE IN TH IS CASE. IN THIS CASE INFORMATION HAS BEEN SHARED BY DIT(INVESTIGATION)-II (LETTER FLAGGED AS ANNEXURE A ) ON THE BASIS OF SEARCH IN THE CASE OF SH. SURENDRA KR. JAIN GROUP O F CASES (ENTRY OPERATOR) NEW DELHI THAT DURING THE FINANCIAL YEAR 2008-09 THE AFOREMENTIONED ASSESSEES HAS INTRODUCED ITS OWN MON EY BY WAY OF TAKING BOGUS ACCOMMODATION ENTRIES PROVIDED BY SH. S.K. JAIN GROUP OF CASES (ENTRY OPERATOR) THE DETAILS OF ACCO MMODATION ENTRY AMOUNT RECEIVED AS BENEFICIARY IS GIVEN AS UNDER AS PROVIDED BY INVESTIGATION WING : S.NO. BENEFICIARIES NAME OF ENTRY PROVIDER AMOUNT TOTAL AMOUNT 1 M/S SBS REALTORS P.LTD. S.K. JAIN GROUP 235,00,000/- 235,00,000/- IN THE LIGHT OF INFORMATION PROVIDED BY THE INVESTI GATION WING, IT IS NECESSARY TO EXAMINE AND VERIFY THE GENUINENESS, ID ENTIFICATION AND CREDITWORTHINESS OF THE AFORESAID TRANSACTION. I HAVE PERUSED DETAILS OF THE CHEQUES/PO RECEIVED BY THE ABOVE COMPANY, THE AMOUNT, THE ISSUING COMPANY, THE RECIPIENT COMPANY, MIDDLEMEN BANK ETC. AS TABULATED BELOW: S. NO . FROM COMPANY NAME TO COMPANY NAME NAME OF THE ISSUING BANK CHQ./RTGS/ PO CH./DATE AMOUNT NAME OF THE MIDDLE MEN 1 AD FIN CAPITAL SERVICES P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.023905 17.04.2008 1,000,000/ - RAJESH AGGARWAL 2 SHAKINI HOLDING LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.025624 10.06.2008 3,000,000/ - RAJESH AGGARWAL 3 MANI MALA DELHI PRO PVT.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.025623 10.06.2008 2,500,0 00/- RAJESH AGGARWAL 4 EURO ASIA MERCANTILE PVT.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.025622 10.06.2008 2,500,000/- RAJESH AGGARWAL 5 VIRGIN CAPITAL SERVICES P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.025711 13.06.2008 1,000,000/ - RAJESH AGGARWAL 9 6 VICTORY SOFTWARE P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.026398 09.07.2008 2,500,000/ - RAJESH AGGARWAL 7 HUMTUM MARKETING P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.026397 09.07.2008 2,000,000/ - RAJESH AGGARWAL 8 EAGLE INFATECH SBS REALTORS PVT.LTD. AXIS P.O. NO.027056 02.08.2008 1,500,000/ - RAJESH AGGARWAL 9 VICTORY SOFTWARE P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.027055 02.08.2008 1,000,000/ - RAJESH AGGARWAL 10 LOTUS REALCOM P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.027123 04.08.2008 2,500,000/ - RAJESH AGGARWAL 11 . ZENITH AUTOMOTIVE P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.027201 18.03.2009 2,000,000/ - RAJESH AGGARWAL 12 MEGA TOP PROMOTERS P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.027200 18.03.2009 2,500,000/ - RAJESH AGGARWAL I HAVE REASON TO BELIEF THAT THE INCOME PERTAINING TO THE ASSTT. YEAR 2009-10 HAS ESCAPED ASSESSMENT TO THE EXTENT OF RS. 23500000/- UPON RECEIPT OF THE ABOVE INFORMATION, I HAVE COMPA RED THE FIGURES IN THE BALANCE SHEETS FILED BY THE ASSESSEE VIDE E- RETURN FOR AYS 2008-09 & 2009-10. IT IS FOUND THAT IN AY 2009-10 ISSUED SUBSCRIBED AND PAID UP SHARE CAPITAL HAS INCREASED BY RS.23,50,000/- AND SECURITIES PREMIUM HAS INCREASED BY RS.2,11,50,000/- I.E., BOTH TOTALLING TO RS.235,00 ,000/-. THE SAME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT FOR THE AY 2009-10. IN ORDER TO VERIFY THE GENUINENESS, IDENTIFICATION AND CREDITWORTHINESS OF THE AFORESAI D TRANSACTION THE CASE NEEDS TO BE REOPENED U/S 147 OF THE I.T. ACT 1 961. SINCE MORE THAN FOUR YEAR HAVE BEEN ELAPSED FROM TH E END OF THE RELEVANT A.Y. I.E. 2009-10, NECESSARY STATUTORY APP ROVAL U/S 151(2) OF THE I.T. ACT MAY KINDLY BE ACCORD TO ISSUE NOTIC E U/S 148 FOR THE A.Y. 2009-10 FOR THE PURPOSE OF REOPENING OF THE CA SE U/S 147 OF THE I.T. ACT, 1961. SD/- (R.O. BHUTIA) INCOME TAX OFFICER WARD-22(4), NEW DELHI 6. FROM A PERUSAL OF THE ABOVE REASONS, IT IS SEEN THAT THE INVESTIGATION WING HAS SUPPLIED CERTAIN INFORMATION TO THE ASSESSING OFFICER WITH REGARD TO RECEIPT OF CHEQUES BY THE AS SESSEE FROM VARIOUS COMPANIES WHO ARE CONSIDERED TO BE S.K. JAI N GROUP COMPANIES BY THE INVESTIGATION WING. AS PER THE IN VESTIGATION 10 WING, THE ABOVE CHEQUES PAID BY S.K. JAIN GROUP COM PANIES WERE ACCOMMODATION ENTRIES TO M/S SBS REALTORS PVT.LTD. I.E., THE ASSESSEE. HOWEVER, WHAT IS THE MATERIAL FOUND DURI NG THE COURSE OF SEARCH OF S.K. JAIN GROUP CASES WHICH HAD LED TO FO RM THE BELIEF THAT ALL THOSE COMPANIES ARE PROVIDING ACCOMMODATION ENT RIES IS NOT MENTIONED IN THE REASONS RECORDED. IT IS ALSO NOT MENTIONED WHETHER ANY OF THE DIRECTORS OF THE ABOVE COMPANIES HAVE PROVIDED ACCOMMODATION ENTRIES TO M/S SBS REALTORS PVT.LTD. IT IS ALSO NOT MENTIONED WHETHER ANY DOCUMENT WAS FOUND WHICH LED TO THE BELIEF OF GIVING OF ACCOMMODATION ENTRIES BY THOSE TWELVE COMPANIES TO THE ASSESSEE. ON RECEIPT OF ABOVE INFORMATION, THE ASSESSING OFFICER COMPARED THE FIGURES IN THE BALANCE SHEET OF THE AS SESSEE FILED FOR ASSESSMENT YEAR 2009-10 AND HE FOUND THAT THE SHARE CAPITAL HAS INCREASED BY `2,35,00,000/-. AFTER RECORDING THE A BOVE FACTUAL FINDING, THE ASSESSING OFFICER HAS CONCLUDED THE S AME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THE AY 2009-10. IN ORDER TO VERIFY THE GENUINENESS, ID ENTIFICATION AND CREDITWORTHINESS OF THE AFORESAID TRANSACTION THE C ASE NEEDS TO BE REOPENED U/S 147 OF THE I.T. ACT 1961. THE CONCLU SION OF THE ASSESSING OFFICER AT THE END OF THE REASONS RECORDE D AS NOTED ABOVE IS CONTRADICTORY. IN THE FIRST TWO LINES, THE ASSE SSING OFFICER HAS RECORDED THE FINDING THAT THE SUM OF `2,35,00,000/- HAS ESCAPED ASSESSMENT BUT IN THE LAST TWO LINES, HE HAS RECORD ED THAT THE CASE IS BEING REOPENED TO VERIFY THE GENUINENESS, IDENTI FICATION AND CREDITWORTHINESS OF THE AFORESAID TRANSACTIONS. IF THE CASE IS BEING REOPENED FOR THE PURPOSE OF VERIFICATION OF THE GEN UINENESS, HOW CAN THERE BY SATISFACTION OF ESCAPEMENT OF INCOME. ANY SATISFACTION WITH REGARD TO ESCAPEMENT OF INCOME OR OTHERWISE CAN BE RECORDED ONLY AFTER THE VERIFICATION OF GENUINENESS, IDENTIFICATI ON AND CREDITWORTHINESS OF THE TRANSACTION AND NOT EARLIER . THUS, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER HAS REOPENED THE CASE UNDER 11 SECTION 147 FOR THE PURPOSE OF VERIFICATION OF GENU INENESS, IDENTIFICATION AND CREDITWORTHINESS OF THE TRANSACT IONS MENTIONED IN THE INFORMATION SUPPLIED BY THE DIT (INVESTIGATION) AND THIS IS WHAT THE ASSESSING OFFICER HAS CONCLUDED AT THE END OF T HE REASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 148. NO W, THE QUESTION REMAINS WHETHER AN ASSESSMENT CAN BE REOPENED UNDER SECTION 147 FOR THE PURPOSE OF VERIFICATION OF GENUINENESS, IDE NTIFICATION AND CREDITWORTHINESS OF ANY TRANSACTION. IN OUR OPINIO N, THE REPLY IS CLEARLY NO. THERE IS SECTION 143(2) OF THE INCOME- TAX ACT UNDER WHICH THE ASSESSING OFFICER CAN ISSUE NOTICE FOR TH E PURPOSE OF VERIFICATION. THE SAID SECTION READS AS UNDER :- 143(2). WHERE A RETURN HAS BEEN FURNISHED UNDER SECTION 139, OR IN RESPONSE TO A NOTICE UNDER SUB-S ECTION (1) OF SECTION 142, THE ASSESSING OFFICER OR THE PRESCRIBED INCOME-TAX AUTHORITY, AS THE CASE MAY BE , IF, CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER-PAID THE T AX IN ANY MANNER, SHALL SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM, ON A DATE TO BE SPECIFIED THEREIN, E ITHER TO ATTEND THE OFFICE OF THE ASSESSING OFFICER OR TO PR ODUCE, OR CAUSE TO BE PRODUCED BEFORE THE ASSESSING OFFICE R ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN: PROVIDED THAT NO NOTICE UNDER THIS SUB-SECTION SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONT HS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RET URN IS FURNISHED. 7. THUS, IF THE ASSESSING OFFICER CONSIDERED IT NEC ESSARY TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE IN COME, HE CAN ISSUE THE NOTICE UNDER SECTION 143(2). HOWEVER, PR OVISO TO ABOVE SECTION PROVIDES THE TIME LIMIT WITHIN WHICH SUCH N OTICE CAN BE ISSUED. ONCE THAT TIME LIMIT IS EXPIRED, IN OUR OP INION, THE ASSESSING OFFICER CANNOT INVOKE SECTION 148 JUST FOR THE PURP OSE OF VERIFICATION. THEREFORE, IN OUR OPINION, IN THE CA SE UNDER 12 CONSIDERATION, THE REOPENING OF ASSESSMENT FOR THE PURPOSE OF VERIFICATION OF GENUINENESS, IDENTIFICATION AND CRE DITWORTHINESS OF THE TRANSACTION IS NOT PERMISSIBLE UNDER LAW AND IS LIA BLE TO BE QUASHED. 8. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO ME NTIONED THAT THE NOTICE HAS BEEN ISSUED MECHANICALLY WITHOUT APP LICATION OF MIND AND THE SATISFACTION BY THE ASSESSING OFFICER IS ON LY THE BORROWED SATISFACTION OF THE INVESTIGATION WING. THE ASSESS ING OFFICER, WITHOUT APPLYING HIS MIND, HAS SIMPLY ON THE BASIS OF INFORMATION OF THE INVESTIGATION WING JUMPED TO THE CONCLUSION THA T THERE IS ESCAPEMENT OF INCOME. FROM A PERUSAL OF THE AFORES AID REASONS, WE DO NOT FIND ANY APPLICATION OF MIND BY THE ASSESSIN G OFFICER FOR REACHING TO THE CONCLUSION THAT THERE WAS ESCAPEMEN T OF INCOME EXCEPT THE INFORMATION FROM THE INVESTIGATION WING. AFTER GETTING THE INFORMATION FROM THE INVESTIGATION WING, THE AS SESSING OFFICER COMPARED THE FIGURES IN THE BALANCE SHEET AND HAS F OUND THAT THE ASSESSEE HAS ISSUED SHARE CAPITAL OF `2,35,00,000/- . THE ISSUE OF SHARE CAPITAL BY ITSELF IS NOT SUFFICIENT TO REACH TO THE CONCLUSION OF ESCAPEMENT OF INCOME. THE INVESTIGATION WING HAS A LLEGED THAT 12 COMPANIES WHO HAVE GIVEN CHEQUES TO THE ASSESSEE CO MPANY WERE ACCOMMODATION ENTRIES. HOWEVER, THE BASIS OF SUCH ALLEGATION IS NOT MENTIONED IN THE REASONS RECORDED. WHETHER SUCH CO NCLUSION IS REACHED BY THE INVESTIGATION WING ON THE BASIS OF S TATEMENT OF DIRECTOR OF ANY COMPANY OR ON THE BASIS OF SOME MAT ERIAL SEIZED DURING THE COURSE OF SEARCH OF THOSE COMPANIES, IS NOT MENTIONED IN THE REASONS RECORDED. WHETHER THERE WAS ANY MATERI AL WITH THE ASSESSING OFFICER WHILE ISSUING NOTICE UNDER SECTIO N 148 IS NOT CLEAR. THEREFORE, FROM THE REASONS RECORDED, WE DO NOT FIN D ANY BASIS FOR REACHING TO THE CONCLUSION THAT THERE WAS ESCAPEMEN T OF INCOME BY THE ASSESSING OFFICER. LEARNED DR HAS RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PC IT VS. PARAMOUNT COMMUNICATION PVT.LTD. [2017] 392 ITR 444 (DELHI) , WHEREIN ON THE BASIS OF REPORT OF THE INVESTIGATION WING, HON' BLE JURISDICTIONAL 13 HIGH COURT HAS UPHELD THE ISSUE OF NOTICE UNDER SEC TION 148. THEIR LORDSHIPS HELD AS UNDER :- HELD, THAT HAVING REGARD TO THE CONTENTS OF THE NO TICE ISSUED UNDER SECTION 148 OF THE INCOME-TAX ACT, 196 1, THE FINDINGS OF THE APPELLATE TRIBUNAL WERE NOT SUSTAINABLE. IT CONSTITUTED REFERENCE TO TANGIBLE MATERIAL OUTSIDE THE RECORD WHICH WAS INFORMATION BASED UP ON THE INVESTIGATION OF THE COMMISSIONER OF CENTRAL EX CISE. TO HAVE REQUIRED THE REVENUE TO DISCLOSE FURTHER DE TAILS REGARDING THE NATURE OF DOCUMENTS OR OF CONTENTS THEREOF WOULD BE REWRITING THE CONDITIONS IN SECTIO N 147 WHICH MERELY AUTHORISED THE ISSUANCE OF NOTICE TO REOPEN WITH CONDITIONS. FOR THE ASSESSMENT YEARS 2 004- 05 AND 2005-06, THE NOTES DISCLOSED THE SOURCE OF INFORMATION, THE DIRECTORATE OF REVENUE INTELLIGENC E, WHICH HAD SENT INFORMATION BASED UPON THE COMMISSIONER OF CENTRAL EXCISES INVESTIGATIONS. T O ADD FURTHER CONDITIONS TO BE NATURE OF DISCUSSIONS OR R EASONS THAT THE OFFICER AUTHORIZING THE NOTICE WOULD HAVE TO DISCUSS IN THE NOTE OR DECISION WAS BEYOND THE PURV IEW OF THE COURTS AND WAS NOT JUSTIFIED. THE ORDERS OF THE APPELLATE TRIBUNAL COULD NOT BE SUSTAINED. THE APP ELLATE TRIBUNAL WAS DIRECTED TO HEAR THE DEPARTMENTS APPE ALS ON THEIR MERITS. 9. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSES SEE HAS RELIED UPON THE CATENA OF JUDGMENT BEFORE AND AFTER THE DA TE OF ABOVE JUDGMENT OF HON'BLE DELHI HIGH COURT WHEREIN THE NO TICE UNDER SECTION 148 SIMPLY ON THE BASIS OF REPORT OF THE IN VESTIGATION WING HAS BEEN QUASHED. THE SAME IS AS UNDER:- (I) SARTHAK SECURITIES CO.P.LTD. VS. ITO [2010] 3 29 ITR 110 (DELHI). (II) SIGNATURE HOTELS P.LTD. VS. ITO [2011] 338 I TR 51 (DELHI). (III) PCIT VS. G AND G PHARMA INDIA LTD. [2016] 3 84 ITR 147 (DELHI). (IV) PCIT VS. RMG POLYVINYL (I) LTD. [2017] 396 I TR 5 (DELHI). (V) PCIT VS. MEENAKSHI OVERSEAS PVT.LTD. [2017] 3 95 ITR 677 (DELHI). 14 10. LEARNED DR HAS ALSO RELIED UPON FEW DECISIONS O F HONBLE GUJARAT HIGH COURT. HOWEVER, WHEN THERE ARE LARGE NUMBER OF DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT, THE SAME WOULD BE BINDING ON US. THEREFORE, WE CONSIDER ALL THE DECI SIONS OF HON'BLE JURISDICTIONAL HIGH COURT RELIED UPON BY EITHER SID E. 11. WE FIND THAT THE EARLIER DECISIONS OF HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE OF SARTHAK SECURITIES CO.P.LTD. ( SUPRA), SIGNATURE HOTELS P.LTD. (SUPRA) AND G AND G PHARMA INDIA LTD. (SUPRA) WERE NOT BROUGHT TO THE KNOWLEDGE OF THEIR LORDSHIPS WHI LE DECIDING THE CASE OF PARAMOUNT COMMUNICATION (P) LTD. (SUPRA). WE FIND THAT THE DECISION IN THE CASE OF RMG POLYVINYL (I) LTD. (SUPRA) AND MEENAKSHI OVERSEAS PVT.LTD. (SUPRA) ARE SUBSEQUENT TO THE DECISION OF PARAMOUNT COMMUNICATION (P) LTD. (SUPRA). HOWEV ER, IT SEEMS THAT NEITHER IN THE CASE OF MEENAKSHI OVERSEAS PVT. LTD. (SUPRA) NOR IN THE CASE OF RMG POLYVINYL (I) LTD. (SUPRA), THE DECISION OF PARAMOUNT COMMUNICATION (P) LTD. (SUPRA) WAS BROUGH T TO THE KNOWLEDGE OF THEIR LORDSHIPS. THUS, THERE ARE TWO VIEWS BY THE HON'BLE JURISDICTIONAL HIGH COURT. WHILE IN THE CA SE OF PARAMOUNT COMMUNICATION (P) LTD. (SUPRA), THE ISSUE OF NOTICE ON THE BASIS OF INFORMATION FROM INTELLIGENCE WING OF THE INCOME TA X DEPARTMENT HAS BEEN UPHELD, IN THE CASE OF SARTHAK SECURITIES CO.P.LTD. (SUPRA), SIGNATURE HOTELS P.LTD. (SUPRA), G AND G PHARMA IND IA LTD. (SUPRA), RMG POLYVINYL (I) LTD. (SUPRA) AND MEENAKSHI OVERSE AS PVT.LTD. (SUPRA), THE NOTICE ISSUED ON THE BASIS OF DIT(INVE STIGATION) HAS BEEN QUASHED. IT IS A SETTLED LAW THAT WHEN THERE ARE TWO VIEWS, THE VIEW IN FAVOUR OF THE ASSESSEE IS TO BE FOLLOWE D AND MOREOVER, THERE ARE AT LEAST TWO DECISIONS SUBSEQUENT TO THE DECISION OF PARAMOUNT COMMUNICATION (P) LTD. (SUPRA), WHEREIN T HEIR LORDSHIPS HAVE QUASHED THE NOTICE ISSUED UNDER SECTION 148 ON THE BASIS OF INFORMATION FROM THE INVESTIGATION WING. THE FACTS IN THE CASE OF THE ASSESSEE ARE ALMOST IDENTICAL TO THE FACTS IN T HE CASE OF RMG POLYVINYL (I) LTD. (SUPRA) AND MEENAKSHI OVERSEAS P VT.LTD. (SUPRA). 15 THEREFORE, THEY WOULD BE SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. CONSEQUENTLY, WE HOLD THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT TO BE INVALID FOR TWO REASONS :- (I) THE NOTICE IS ISSUED FOR THE PURPOSE OF VERIFIC ATION OF GENUINENESS, IDENTIFICATION AND CREDITWORTHINESS OF THE TRANSACTION, WHICH IS NOT PERMISSIBLE; (II) THE ASSESSING OFFICER HAS RECORDED HIS SATISFA CTION ON THE BASIS OF MERE REPORT FROM THE INVESTIGATION WING. THERE IS NO CRUCIAL LINK BETWEEN THE INFORMATION MADE AVAILABLE TO THE ASSES SING OFFICER AND THE FORMATION OF BELIEF OF ESCAPEMENT OF INCOME. T HERE IS NO BASIS FOR COMING TO THE CONCLUSION THAT THE ASSESSEE RECE IVED ACCOMMODATION ENTRIES. THE INVESTIGATION WING ALLE GED THAT THE COMPANIES WHICH ISSUED CHEQUES TO THE ASSESSEE COMP ANY ARE COMPANIES OF SHRI S.K. JAIN GROUP AND THEY ARE ENTR Y PROVIDERS. HOWEVER, THE BASIS FOR SUCH CONCLUSION IS MISSING. THERE IS NO MENTION THAT ANY DOCUMENT WAS SEIZED FROM SHRI S.K. JAIN GROUP OR ANY DIRECTOR OF THE 12 COMPANIES WHICH HAVE GIVEN C HEQUES TO THE ASSESSEE HAS GIVEN THE STATEMENT THAT THEY HAVE PRO VIDED ACCOMMODATION ENTRIES TO THE ASSESSEE. THE ASSESSI NG OFFICER HAS SIMPLY REOPENED THE CASE ON THE BASIS OF INFORMATIO N PROVIDED BY THE INVESTIGATION WING WITHOUT ANY INDEPENDENT APPL ICATION OF MIND. THERE IS NO TANGIBLE MATERIAL WHICH FORMED THE BASI S FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. 12. WHILE TAKING THE ABOVE VIEW, WE DERIVE SUPPORT FROM THE LATEST DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF RMG POLYVINYL (I) LTD. (SUPRA) AND MEENAKSHI OVERSEAS P VT.LTD. (SUPRA). IN VIEW OF THE ABOVE, WE QUASH THE NOTICE ISSUED UN DER SECTION 148 OF THE ACT AND CONSEQUENTLY, THE ASSESSMENT COMPLET ED IN PURSUANCE THERETO. ACCORDINGLY, GROUND NOS.1, 1.1 AND 1.2 OF THE ASSESSEES APPEAL ARE ALLOWED. 13. SINCE THE NOTICE ISSUED U/S 148 IS QUASHED, THE ASSESSMENT ORDER PASSED IN PURSUANCE TO SUCH NOTICE IS ALSO QU ASHED. ONCE THE 16 ASSESSMENT ORDER ITSELF HAS BEEN QUASHED, THE OTHER GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL DO NOT REQUIRE ANY AD JUDICATION ON MERITS. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 5.3 RESPECTFULLY FOLLOWING THE AFORESAID PRECEDENTS , I QUASH THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT AND CONSEQUENT LY, THE ASSESSMENT COMPLETED IN PURSUANCE THERETO. ACCORDINGLY, THE L EGAL GROUND NO. 1 TO 1.1. OF THE ASSESSEE ARE ALLOWED. 5.4 SINCE THE NOTICE ISSUED U/S. 148 OF THE ACT IS QUASHED, THE ASSESSMENT ORDER PASSED IN PURSUANCE TO SUCH NOTICE IS ALSO QUASHED. ONCE THE ASSESSMENT ORDER ITSELF HAS BEEN QUASHED, THE OTHER GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL DO NOT REQUIRE ANY ADJUDICATION ON MERITS. 6. IN THE RESULT, ALL THE 03 THE APPEALS FILED BY T HE DIFFERENT ASSESSEES ARE ALLOWED. THE DECISION IS PRONOUNCED ON 14/08/2019. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 14/08/2019 SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI