M/s Waryam Steel Castings Pvt. Ltd., Ludhiana V. DCIT, Ludhiana

ITA 23/CHANDI/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5110 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 08-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 14-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Reopening of assessment; Difference of opinion; Accommodation entries; Capital receipt; Reason to believe; Change of opinion; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 147; 68; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.23/CHD/2016 (ASSESSMENT YEAR : 2005-06) M/S WARYAM STEEL CASTINGS PVT.LTD. VS. THE D.C.I.T., KANGANWAL ROAD, JUGIANA, CIRCLE-V, LUDHIANA. LUDHIANA. PAN: AAACW1494P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 14.03.2017 DATE OF PRONOUNCEMENT : 12.06.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER PASSED BY THE CIT(APPEALS)-2, LUDHIANA DA TED 17.11.2015 PERTAINING TO ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE RAISED THE FOLLOWING GROUND OF APPEAL: 1. THAT ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-II LUDHIANA U/S 250(6) OF THE INCOME TAX ACT 1961 IS BAD IN LAW IN AS MUCH AS THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN INITIATING THE PROCEEDINGS U/S 147. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER GRAVELY ERRED IN UPHOLDING THE ADDITION OF RS. 55.00 LACS RECEIVED BY THE APPELLANT COMPANY BY WAY OF SHARE CAPITAL FROM THE FOLLOWING COMPANIES BY RESORT TO PROVISIONS OF SEC. 68:- SR NO. NAME OF THE PARTY AMOUNT RECEIVED AS SHARE CAPITA (IN RUPEES) 1. KRISHNA INDS. LTD. 10,00,000 2 2. LEHRA INVESTMENT LTD. 10,00,000 3. STALLER INVESTMENT LTD. 10,00,000 4. VPC CAPITAL FINANCIAL SERVICES PVT. LTD. 10,00,000 5. WORLD LINK TELECOM LTD. 10,00,000 TOTAL 55,00,000 3. BRIEF FACTS RELEVANT TO THE CASE ARE THAT THE ASSESSMENT IN THE PRESENT CASE WAS COMPLETED U/S 14 3(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON 28 .10.2005. THEREAFTER NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 29.3.2012 FOR REOPENING OF ASSESSMENT F OR THE IMPUGNED YEAR ON THE BASIS OF REASONS RECORDED WHIC H STATED THAT IT HAD BEEN FOUND THAT ACCOMMODATION EN TRIES WERE PROVIDED TO THE ASSESSEE AMOUNTING TO RS.55 LA CS FROM S.K. JAIN GROUP OF CASES. THE BASIS OF THE INFORMA TION, AS RECORDED IN THE REASONS, WAS THE INFORMATION RECEIV ED FROM DIT(INV.)-II, NEW DELHI. SUBSEQUENTLY PROCEEDINGS U/S 147 OF THE ACT WERE INITIATED. COPY OF REASONS RECORDE D WERE PROVIDED TO THE ASSESSEE. THE ASSESSEE RAISED OBJE CTIONS TO THE REASONS RECORDED WHICH WERE DISPOSED OFF BY THE ASSESSING OFFICER AND THEREAFTER, AFTER DISCUSSING THE CASE ON MERITS, THE ASSESSING OFFICER HELD THAT THE AMOU NT OF RS.55 LACS RECEIVED BY THE ASSESSEE BY WAY OF SHARE APPLICATION MONEY DURING THE IMPUGNED YEAR HAD BEEN ESTABLISHED BEYOND DOUBT TO BE MERE ACCOMMODATION E NTRY. HE, THEREFORE, TREATED THE SAID RECEIPTS AS UNEXPLA INED CASH CREDITS AND BROUGHT THE SAME TO TAX U/S 68 OF THE A CT. 4. AGGRIEVED BY THE SAME, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(APPEALS) CHALLENGING THE V ALIDITY OF 3 INITIATION OF RE-ASSESSMENT PROCEEDINGS AS ALSO THE MERITS OF THE ADDITION MADE IN THE PRESENT CASE. DETAILED SUBMISSIONS WERE FILED BEFORE THE LD.CIT(APPEALS) REPRODUCED AT PARA 4.4 OF THE ORDER WHEREIN THE ASS ESSEE, ON THE VALIDITY OF INITIATION OF RE-ASSESSMENT PROC EEDINGS, SUBMITTED THAT THE REASONS RECORDED WERE VAGUE, THE RE- OPENING HAD BEEN DONE BEYOND FOUR YEARS AND THERE W AS NO ALLEGATION THAT THE ASSESSEE HAD FAILED TO TRULY DI SCLOSE ANY MATERIAL FACTS AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND THAT THE ENTIRE ISSUE RELATING TO S HARE CAPITAL RECEIPTS VIS--VIS THE SPECIFIC COMPANIES H AD BEEN DULY AND THOROUGHLY EXAMINED DURING ASSESSMENT PROCEEDINGS AND REOPENING IN THE PRESENT CASE ON TH E SAME ISSUE MERELY AMOUNTED TO CHANGE OF OPINION. ON THE MERITS OF THE CASE, THE ASSESSEE SUBMITTED THAT IT HAD DUL Y DISCHARGED ITS ONUS OF PROVING THE GENUINENESS OF T HE SHARE APPLICATION MONEY RECEIVED FROM THE PARTIES CONCERN ED BY DULY PROVING THEIR IDENTITY, CREDITWORTHINESS AND A LSO GENUINENESS OF THE TRANSACTIONS. THE LD.CIT(APPEAL S) AFTER CONSIDERING THE ASSESSEES SUBMISSIONS HELD THAT TH ERE WAS NO MERIT IN THE LEGAL CONTENTIONS AS WELL CONTENTIO NS RAISED ON THE MERITS OF THE ISSUE. ON THE LEGAL CONTENTIO NS RAISED BY THE ASSESSEE, THE LD.CIT(APPEALS) HELD THAT THE INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM THE DIT (INV.)-II, NEW DELHI WAS SPECIFIC INFORMATION AND T HE INFORMATION REFERRED TO ALL FACTS RELATING TO THE ACCOMMODATION ENTRIES RECEIVED BY THE ASSESSEE. HE , THEREFORE, HELD THAT THE INFORMATION WAS NOT AMBIGU OUS OR 4 GENERAL. THE LD.CIT(APPEALS) HELD THAT THE INFORMAT ION RECEIVED BY THE ASSESSING OFFICER COULD MAKE HIM PR IMA- FACIE HAVE REASON TO BELIEVE THAT THE INCOME HAD ES CAPED ASSESSMENT. HE, THEREFORE, HELD THAT IT IS EVIDENT FROM THE REASON RECORDED THAT THE ASSESSING OFFICER HAD APPL IED HIS MIND TO IT. THE CONTENTION OF THE ASSESSEE CHALLE NGING THE VALIDITY OF THE RE-OPENING U/S 147 OF THE ACT, WAS THUS DISMISSED BY THE LD.CIT(APPEALS). ON THE MERITS OF THE CASE, THE LD.CIT(APPEALS) HELD THAT ASSESSEE HAD FA ILED BADLY TO PROVE ALL THE THREE LIMBS OF SECTION 68 OF THE ACT, I.E THE IDENTITY, GENUINENESS AND CREDITWORTHINESS . THE LD.CIT(APPEALS) HELD THAT THE ASSESSING OFFICER HAD SUCCESSFULLY BROUGHT OUT THE FACTS THAT THE ASSESSE E HAD BROUGHT HIS OWN MONEY AFTER ROUTING THROUGH SHARE APPLICATION FROM DUMMY CONCERNS, WHICH THE ASSESSEE HAD NOT CONTROVERTED IN ANY MANNER BY PRODUCING CONCERN ED DIRECTORS OF THESE CONCERNS EITHER AT THE TIME OF A PPELLATE PROCEEDINGS OR AT THE TIME OF ASSESSMENT PROCEEDING S. SHE, THEREFORE, HELD THAT THE ASSESSEE HAD FAILED COMPLE TELY TO PROVE THE CREDITWORTHINESS OF THESE SHARE APPLICANT S AND THUS UPHELD THE ADDITION MADE BY THE ASSESSING OFFI CER. 5. AGGRIEVED BY THE SAME, THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US. 6. GROUND NO.1 RAISED BY THE ASSESSEE CHALLENGES THE VALIDITY OF THE REOPENING OF ASSESSMENT U/S 14 7 OF THE ACT. THE LD. COUNSEL FOR ASSESSEE REITERATED THE CONTENTIONS MADE BEFORE THE LD.CIT(APPEALS). PRIMA RILY, THE 5 LD. COUNSEL FOR ASSESSEE CHALLENGED THE VALIDITY OF THE RE- ASSESSMENT PROCEEDINGS INITIATED ON THREE GROUNDS; I) NON APPLICATION OF MIND AND BORROWED SATISFACTION B Y THE ASSESSING OFFICER WHILE RECORDING REASONS; II) CHANGE OF OPINION ON THE SAME SET OF FACTS; III) NO ALLEGATION BY THE AO OF THE ASSESSEE HAVING FA ILED TO DISCLOSE ANY MATERIAL FACTS AT THE TIME OF ORIGI NAL ASSESSMENT PROCEEDINGS, WHICH IS A PRE-REQUISITE FO R REOPENING OF ASSESSMENTS EARLIER FRAMED U/S 143(3) OF THE ACT AND WHICH ARE REOPENED BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR TO WHICH THEY RELATE. 7. TAKING UP THE FIRST ARGUMENT RAISED BY THE LD. COUNSEL FOR ASSESSEE, IT WAS CONTENDED THAT A BARE PERUSAL OF THE REASONS RECORDED BY THE ASSESSING OFFICER WO ULD REVEAL THAT THE SATISFACTION RECORDED THEREIN BY TH E ASSESSING OFFICER FOR REOPENING OF ASSESSMENT WAS N OT HIS OWN BUT WAS BORROWED SATISFACTION. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT EVEN OTHERWISE THE REASONS RECORDED WERE VAGUE AND GENERAL AND IT DOES NOT COM E OUT CLEARLY FROM THE REASONS RECORDED AS TO HOW INCOME HAS ESCAPED ASSESSMENT. THE LD. COUNSEL FOR ASSESSEE D REW OUR ATTENTION TO THE COPY OF REASONS RECORDED, PLACED A T PAPER BOOK PAGE NO.68 IN THIS REGARD. LD COUNSEL CONTENDE D THAT SUCH REASONS COULD NOT FORM THE BASIS FOR REOPENING AN 6 ASSESSMENT AND RELIED UPON THE FOLLOWING CASE LAWS IN SUPPORT: 1. CIT VS SMT.PARAMJEET KAUR (2009) 311 ITR 38(P&H) 2. M/S A.P.REFINERY PVT.LTD. VS ACIT IN ITA NO.572/CHD/2015 DT .05-11-15. 6. THE LD. DR, ON THE OTHER HAND, CONTENDED THAT THE REASONS SPECIFICALLY REFERRED TO THE REPORT OF THE DIT(INV.) WHICH CONSTITUTES MATERIAL FOR REOPENING AND THE REASONS RECORDED THEREIN COULD NOT BE SAID TO BE VA GUE. THE LD. DR RELIED UPON FOLLOWING CASE LAWS IN SUPPO RT OF HIS CONTENTION: 1) ITO VS GURINDER KAUR UTAT. DELL 102 ITD 189 2) STERLITE INDUSTRIES (INDIA) LTD. VS ACIT (MAD) 302 IT R 275 3) AGR INVESTIGATION LTD. VS ADDL.CIT & ANR (DEL) 333 ITR 146 SHALIMAR BUILDCON (PI LTD. VS ITO TITAT. JAIPUR) 136 TTJ 701 4) RAJAT EXPORT IMPORT INDIA PVT. LIMITED VS ITO 34 1 ITR 135 (DEL) HIGH COURT DATED 18/01/2012 7. WE HAVE HEARD BOTH THE PARTIES. THE FIRST CONTENTION OF THE LD. COUNSEL FOR ASSESSEE IS VIS A VIS THE RELEVANCE OF THE REASONS RECORDED IN THE PRESENT CA SE, TO SHOW THE BELIEF OF THE AO THAT INCOME HAD ESCAPED ASSESSMENT FOR THE PURPOSE OF REOPENING THE CASE. 8. THE IMPORTANCE OF THE REASONS RECORDED FOR ASSUMING JURISDICTION U/S 147 OF THE ACT AND THE REQUIREMENTS TO BE FULFILLED BY THE SAID REASONS FO R VALIDLY REOPENING A CASE ON THE BASIS OF REASONS RECORDED, HAS BEEN DEALT WITH BY VARIOUS COURTS. THE POSITION WHICH E MERGES IS 7 THAT FORMATION OF BELIEF BY THE AO OF ESCAPEMENT O F INCOME IS CENTRAL TO THE INITIATION OF REASSESSMENT SINCE THE FIRST PART OF SECTION 147(1) OF THE ACT REQUIRES THE ASSE SSING OFFICER TO HAVE REASONS TO BELIEVE THAT ANY INCOM E CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. THE STAT UTE REQUIRES RECORDING OF THE REASONS FORMING THE BELIE F, U/S 148(2), THE PURPOSE BEING TO ACT AS A CHECK AGAINST ARBITRARY EXERCISE OF POWER BY AOS IN REOPENING CO MPLETED ASSESSMENTS, SINCE THE POWER OF REASSESSMENT GIVEN TO AOS IS A POTENT POWER. ALSO THE VALIDITY OF THE REOPEN ING CAN BE DECIDED ON THE BASIS OF THE REASONS RECORDED. THE REASONS SO RECORDED ARE THE ONLY REASONS WHICH CAN BE CONSI DERED WHEN THE FORMATION OF BELIEF IS IMPUGNED. THIS PROP OSITION WAS LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN T HE CASE OF PRASHANT S JOSHI VS ITO & ANR (2010) 230 CT R 232 AS UNDER: 9 .SEC. 147 PROVIDES THAT IF THE AO HAS REASON TO BELIE VE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY SUBJECT TO THE PROVISION S OF SS. 148 TO 163, ASSESS OR REASSESS SUCH INCOME AND ALSO A NY OTHER INCOME CHARGEABLE TO TAX, WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. THE FIRST PROVISO TO S. 147 HAS NO APPLICATION IN THE FACTS OF THIS CASE. THE BASIC POSTULATE WHICH UNDERLINES S. 147 IS THE F ORMATION OF THE BELIEF BY THE AO THAT ANY INCOME CHARGEABLE T O TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. THE AO M UST HAVE REASON TO BELIEVE THAT SUCH IS THE CASE BEFORE HE PROCEEDS TO ISSUE A NOTICE UNDER S. 147. THE REASONS WHICH ARE RECORDED BY THE AO FOR REOPENING AN ASSESSMENT ARE THE ONLY REASONS WHICH CAN BE CONSIDERED WHEN THE FORMAT ION OF 8 THE BELIEF IS IMPUGNED. THE RECORDING OF REASONS DIST INGUISHES AN OBJECTIVE FROM A SUBJECTIVE EXERCISE OF POWER. TH E REQUIREMENT OF RECORDING REASONS IS A CHECK AGAINST ARBITRARY EXERCISE OF POWER. FOR IT IS ON THE BASIS OF THE REA SONS RECORDED AND ON THOSE REASONS ALONE THAT THE VALIDITY OF THE ORDER REOPENING THE ASSESSMENT IS TO BE DECIDED. THE REASONS RECORDED WHILE REOPENING THE ASSESSMENT CANNOT BE ALLO WED TO GROW WITH AGE AND INGENUITY, BY DEVISING NEW GROUNDS IN REPLIES AND AFFIDAVITS NOT ENVISAGED WHEN THE REASON S FOR REOPENING AN ASSESSMENT WERE RECORDED. THE PRINCIPLE OF LAW, THEREFORE, IS WELL SETTLED THAT THE QUESTION AS TO WHET HER THERE WAS REASON TO BELIEVE, WITHIN THE MEANING OF S. 147 THA T INCOME HAS ESCAPED ASSESSMENT, MUST BE DETERMINED WIT H REFERENCE TO THE REASONS RECORDED BY THE AO. THE REA SONS WHICH ARE RECORDED CANNOT BE SUPPLEMENTED BY AFFIDAV ITS. THE IMPOSITION OF THAT REQUIREMENT ENSURES AGAINST AN ARB ITRARY EXERCISE OF POWERS UNDER S. 148. 9. FURTHER THE REASONS SO RECORDED MUST BRING OUT THE MATERIAL ON THE BASIS OF WHICH THE BELIEF OF ES CAPEMENT OF INCOME WAS FORMED, ALONGWITH THE BELIEF. THE HO NBLE SUPREME COURT IN THE CASE OF ITO & OTHER VS MADNANI ENGG. WORKS LTD. REPORTED IN 12 CTR (SC) 144 HELD AS UNDE R: 5. WE MAY ALSO POINT OUT THAT THOUGH IT WAS CONTENDED IN THE WRIT PETITION THAT THE ITO COULD HAVE NO REASON TO BEL IEVE THAT ANY PART OF THE INCOME OF THE RESPONDENT HAD ESCAPE D ASSESSMENT BY REASON OF ITS FAILURE TO MAKE A FULL AND TRUE DISCLOSURE OF MATERIAL FACTS, THE ITO DID NOT DISCLOSE I N HIS AFFIDAVIT ANY MATERIAL ON THE BASIS OF WHICH IT COULD BE SAID THAT HE HAD COME TO THE REQUISITE BELIEF. ALL THAT THE ITO STATED IN HIS AFFIDAVIT WAS THAT HE DISCOVERED THAT THE TRA NSACTIONS OF LOAN AGAINST SECURITY OF HUNDIS WERE NOT GENUINE AND THAT THE CREDITS AGAINST THE NAMES OF CERTAIN PERSONS WHO WERE ALLEGED TO HAVE ADVANCED LOANS WERE BOGUS. THE ITO MERELY STA TED HIS BELIEF BUT DID NOT SET OUT ANY MATERIAL ON THE B ASIS OF 9 WHICH HE HAD ARRIVED AT SUCH BELIEF SO THAT THE COU RT COULD DECIDE FOR ITSELF WHETHER THERE WAS ANY MATERIAL ON T HE BASIS OF WHICH THE ITO COULD REASONABLY ENTERTAIN SUCH BEL IEF. WE ARE, THEREFORE, NOT AT ALL SATISFIED ON THE AFFIDAVIT TH AT THE ITO HAD REASON TO BELIEVE THAT A PART OF THE INCOME OF T HE RESPONDENT HAD ESCAPED ASSESSMENT BY REASON OF ITS FAILURE TO MAKE A TRUE AND FULL DISCLOSURE OF THE MATERIAL FACT S. THE NOTICE UNDER S. 147(A) OF THE IT ACT FOR REOPENING T HE ASSESSMENT MUST IN THE CIRCUMSTANCES BE HELD TO BE VOID. 10. ALSO THERE SHOULD BE DIRECT NEXUS BETWEEN THE PRIMARY FACTS AND THE CONCLUSION OF ESCAPEMENT OF I NCOME ARRIVED BY THE ASSESSING OFFICER. MOREOVER IT HAS ALSO BEEN HELD THAT THE REASONS CANNOT BE VAGUE AND GENERAL A ND THE SATISFACTION OF ESCAPEMENT OF INCOME HAS TO BE OF T HE AO AND NOT BORROWED. THE HONBLE DELHI HIGH COURT HAS HELD SO IN THE FOLLOWING DECISIONS: I) CIT VS SFIL STOCK BROKING (2010) 325 ITR 285 II) SARTHAK SECURITIES CO. PVT. LTD. VS ITO (2010) 329 ITR 110 (DELHI) III) SIGNATURE HOTELS (P) LTD. VS ITO & ANR. (2011) 338 ITR 51 (DEL) 11. HAVING SAID SO IT IS IMPERATIVE TO REPRODUCE T HE REASONS RECORDED IN THE PRESENT CASE AND SEE WHETHE R THEY SATISFY THE REQUIREMENTS OF LAW.THE REASONS RECORDE D IN THE PRESENT CASE ARE AS UNDER: 1. IN THIS CASE RETURN INCOME WAS FILED ON 28.10.2 005 BY DECLARING INCOME OF NIL. 2. THE RETURN WAS PROCESSED U/S 143(1). SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS FRAMED U/S 143(3) ON 10 28.12.2007. 3. ON THE BASIS OF SEARCH IN THE CASE OF SH.SUNNDER KUMAR JAIN GROUP OF CASES (ENTRY OPERATOR) BY ADIT (INV.)UNIT-VI(2)NEW DELHI & FURTHER ENQUIRIES, IT WAS FOUND THAT THE ACCOMMODATION ENTRIES HAVE BEEN OBTAINED BY THIS ASSESSEE M/S WARYAM STEEL CASTING P. LTD., FROM SHRI SURINDER KUMAR JAIN GROU P AMOUNTING TO RS.55,00,000/-. ON THE BASIS OF THE INFORMATION RECEIVED FROM DIT(LNV.)-LL, NEW DELHI, 1 HAVE REASONS TO 1 BELIEVE THAT INCOME OF RS.55,00,000.'- IN THE SHAPE OF ACCOMMODA TION ENTRIES RECEIVED BY THE ASSESSEE HAS ESCAPED ASSESSMENT IN HIS HANDS. 1 THEREFORE PROPOSE TO REASSESS INCOME OF RS.55,00.,000/- AND ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO MY NOTICE SUBSEQUENTLY DURING REASSESSMENT PROCEEDING U/S 147. 12. ON GOING THROUGH THE SAME, WE FIND THAT IT DOE S NOT CONTAIN ANY DETAIL OF THE FACTS BEFORE THE AO W HICH LEAD TO THE FORMATION OF HIS BELIEF OF ESCAPEMENT OF INC OME. THE SAID REASONS ONLY MENTION THAT ACCOMMODATION ENTRIE S HAVE BEEN RECEIVED BY THE ASSESSEE AMOUNTING TO RS.55 LA CS. IN WHAT FORM THE SAID ENTRIES WERE RECEIVED, FROM WHOM THEY WERE RECEIVED, AND OTHER DETAILS WITH THE AO WHICH LEAD TO THE CONCLUSION THAT THEY WERE ACCOMMODATION ENTRIES , IS NOT MENTIONED. THEREAFTER WE FIND THAT THE REASONS REF ER TO SOME INFORMATION RECEIVED FROM DIT(INV)-II, NEW DEL HI WHICH LEADS HIM TO BELIEVE THAT THE IMPUGNED INCOME OF RS .55 LACS HAD ESCAPED ASSESSMENTS IN THE HANDS OF THE ASSESSE E. THERE IS NO MENTION OR SPECIFICATION OR DETAIL OF T HE INFORMATION RECEIVED FROM THE DIT(INV)-II, NEW DELH I. CLEARLY, THE REASONS DO NOT BRING OUT OR SPELL OUT WHAT INFORMATION WAS IN THE POSSESSION OF THE ASSESSING OFFICER AND HOW IT LED HIM TO BELIEVE THAT THE INCOME HAD 11 ESCAPED ASSESSMENT. WHAT IS MENTIONED IN THE REASO NS IS ONLY A CONCLUSION WHICH THE ASSESSING OFFICER ARRIV ED, ON THE BASIS OF INFORMATION RECEIVED BY HIM. AT PARA 3 OF THE REASONS, THE ASSESSING OFFICER MENTIONS THAT ON THE BASIS OF SEARCH CONDUCTED IN THE CASE OF ONE SHRI S.K. JAIN GROUP OF CASES, IT WAS FOUND THAT THE ACCOMMODATION ENTRIES HAVE BEEN OBTAINED BY THE ASSESSEE AMOUNTING TO RS.55 LA CS AND, THEREFORE, ON THE BASIS OF THIS INFORMATION HE HAS REASON TO BELIEVE THAT THE SAID INCOME IN THE SHAPE OF ACCOMM ODATION ENTRIES HAD ESCAPED ASSESSMENT. THE ASSESSING OFFI CER CLEARLY HAS ONLY BROUGHT OUT HIS CONCLUSION OF THE SAID ENTRIES BEING ACCOMMODATION ENTRIES IN THE REASONS RECORDED. 13. MOREOVER EVEN IF THE REPORT OF THE INVESTIGATI ON WING CAN BE SAID TO CONSTITUTE MATERIAL FOR FORMING REASONS TO BELIEVE ESCAPEMENT OF INCOME, THE SATISFACTION O F ESCAPEMENT HAS TO BE OF THE ASSESSING OFFICER ONLY WHICH IN THE PRESENT CASE WE FIND IS ABSENT AND IS ACTUALLY BORROWED SATISFACTION. AS IS EVIDENT FROM THE REASONS RECORD ED, IT IS ON THE BASIS OF INFORMATION RECEIVED FROM THE DIT(I NV) THAT THE AO FORMED THE BELIEF OF ESCAPEMENT OF INCOME. THERE APPEARS TO BE NO INDEPENDENT APPLICATION OF MIND BY THE AO ON THE INFORMATION RECEIVED FROM THE DIT(INV),TO AR RIVE AT HIS INDEPENDENT SATISFACTION. 14. THE REASONS RECORDED THUS DO NOT FULFILL THE PARAMETERS LAID DOWN BY LAW, BEING VAGUE AND GENERA L, NOT BRINGING OUT NEXUS BETWEEN THE INFORMATION AND FORM ATION 12 OF BELIEF OF ESCAPEMENT OF INCOME AND EXHIBITING TO TAL ABSENCE OF APPLICATION OF MIND BY THE AO ON THE INF ORMATION RECEIVED TO ARRIVE AT HIS INDEPENDENT SATISFACTION OF ESCAPEMENT OF INCOME. 15. THE HONBLE DELHI HIGH COURT IN THE CASE OF SIGNATURE HOTELS (SUPRA) ,ON IDENTICAL FINDINGS OF FACTS QUASHED THE REASSESSMENT PROCEEDINGS HOLDING AS UND ER: 14. THE FIRST SENTENCE OF THE REASONS STATES THAT INFOR MATION HAD BEEN RECEIVED FROM DIRECTOR OF IT (INV.) THAT T HE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS. 5 LACS DURING FINANCIAL YEAR 2002-03 AS PER THE DETAILS GIVEN IN AN NEXURE. THE SAID ANNEXURE, REPRODUCED ABOVE, RELATES TO A C HEQUE RECEIVED BY THE PETITIONER ON 9TH OCT., 2002 FROM SWETU STONE PV FROM THE BANK AND THE ACCOUNT NUMBER MENTIONED T HEREIN. THE LAST SENTENCE RECORDS THAT AS PER THE INFORMATIO N, THE AMOUNT RECEIVED WAS NOTHING BUT AN ACCOMMODATION EN TRY AND THE ASSESSEE WAS THE BENEFICIARY. 15. THE AFORESAID REASONS DO NOT SATISFY THE REQUIREMEN TS OF S. 147 OF THE ACT. THE REASONS AND THE INFORMATION RE FERRED TO IS EXTREMELY SCANTY AND VAGUE. THERE IS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT ANNEXURE, WHICH HAS BEE N QUOTED ABOVE. ANNEXURE CANNOT BE REGARDED AS A MATER IAL OR EVIDENCE THAT PRIMA FACIE SHOWS OR ESTABLISHES NEXUS OR LINK WHICH DISCLOSES ESCAPEMENT OF INCOME. ANNEXURE IS NO T A POINTER AND DOES NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, IT IS APPARENT THAT THE AO DID NOT APPLY HIS OWN MIN D TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF TH E INFORMATION. THE AO ACCEPTED THE PLEA ON THE BASIS OF VAGUE INFORMATION IN A MECHANICAL MANNER. THE CIT ALSO ACTED ON THE SAME BASIS BY MECHANICALLY GIVING HIS APPROVAL. TH E REASONS RECORDED REFLECT THAT THE AO DID NOT INDEPEN DENTLY APPLY HIS MIND TO THE INFORMATION RECEIVED FROM THE DIRECTOR OF IT (INV.) AND ARRIVE AT A BELIEF WHETHER OR NOT ANY INCOME HAD ESCAPED ASSESSMENT . 16. THE RELIANCE PLACED BY THE LD. DR ON THE DECIS ION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF AGR INVESTMENT LTD. VS. ADDL.CIT & ANOTHER, 333 ITR 146 IS DISTINGUISHABLE. A PERUSAL OF THE ORDER OF THE HON 'BLE DELHI HIGH COURT REVEALS THAT IN THAT CASE THE REASONS WE RE 13 DETAILED SPECIFICALLY MENTIONING THAT CERTAIN INVES TIGATIONS WERE CARRIED OUT BY THE DIT (INV.)-II, NEW DELHI IN RESPECT OF BOGUS ENTRIES PROVIDED BY CERTAIN INDIVIDUALS AND I N WHICH THE NAME OF THE ASSESSEE ALSO FIGURED AS ONE OF THE BENEFICIARIES. THE REASONS REFLECTED APPLICATION OF MIND BY THE ASSESSING OFFICER ON THE SAID INFORMATION BY ST ATING THAT IT SHOWED THAT ENTRIES WERE TAKEN TO PLOUGH B ACK UNACCOUNTED BLACK MONEY FOR THE PURPOSE OF BUSINESS OR FOR PERSONAL NEEDS OR THE BOGUS ENTRIES WERE TAKEN INTO TO INFLATE EXPENSES IN THE TRADING AND PROFIT & LOSS A CCOUNT SO AS TO REDUCE THE REAL PROFITS. THE REASONS GAVE D ETAILS OF THE SPECIFIC ENTRIES RECEIVED BY THE ASSESSEE INCLU DING THE NAMES OF BENEFICIARIES, THE BENEFICIARIES BANK, VAL UE OF ENTRY TAKEN, INSTRUMENT NUMBER, DATE, NAME OF ACCOU NT IN WHICH THE ENTRY WAS TAKEN AND ALSO THE ACCOUNT FROM WHERE THE ENTRY WAS GIVEN. THE REASONS THEREAFTER RECORD ED THAT THE TRANSACTIONS INVOLVING RS.27 LACS AS MENTIONED IN THE DETAILS CONSTITUTED FRESH INFORMATION IN RESPECT OF THE ASSESSEE AND REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE. THE HON'BLE COURT DID NOT INTERFERE IN TH E CIRCUMSTANCES IN EXERCISE OF ITS WRIT JURISDICTION BUT QUASHED THE PROCEEDINGS. IT IS EVIDENT FROM THE AB OVE REASONS THAT THE ASSESSING OFFICER DID NOT MERELY R EPRODUCE THE INFORMATION WHICH HE RECEIVED BUT ACKNOWLEDGED THE ASSESSEES SPECIFIC INFORMATION IN THE REASONS. AL L SPECIFIC INFORMATION RELATING TO THE BOGUS ENTRIES WAS MENTI ONED IN THE REASONS AND ALSO THE REASONS STATED WHY SAID EN TRIES WERE TREATED AS BOGUS. THE INFORMATION IN THE SAID CASE 14 WAS SPECIFIC, THE ASSESSING OFFICER HAD DULY APPLIE D HIS MIND TO THE INFORMATION RECEIVED AND THERE WAS LIVE LINK BETWEEN THE INFORMATION RECEIVED AND FORMATION OF B ELIEF THAT THE INCOME HAD ESCAPED ASSESSMENT. THE SAID D ECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF AGR INVESTMENT LTD. (SUPRA) IS, THEREFORE, DISTINGUISHA BLE ON FACTS AND CAN BE OF NO ASSISTANCE TO THE REVENUE. THE DECISIONS OF HON'BLE DELHI HIGH COURT IN THE CASE O F RAJAT EXPORT IMPORT INDIA PVT. LTD. VS. ITO (SUPRA) AND O F THE HON'BLE MADRAS HIGH COURT IN THE CASE OF STERLITE I NDUSTRIES (INDIA) LTD. (SUPRA) FOR THE SAME REASONS ARE DISTINGUISHABLE, AND THUS NOT APPLICABLE TO THE FAC TS OF THE PRESENT CASE. 17. IN VIEW OF THE ABOVE ,WE HOLD , THAT IN THE PR ESENT CASE THERE WAS NO VALID ASSUMPTION OF JURISDICTION BY THE AO TO REOPEN THE ASSESSMENT U/S 147 OF THE ACT AND THE REOPENING IS THEREFORE DIRECTED TO BE QUASHED. THE ORDER OF THE LD.CIT(A) IS THUS SET ASIDE . FURTHER SINCE WE HAVE QUASHED THE RE-ASSESSMENT PROCEEDINGS FOR THE AFORE SAID REASON , WE ARE NOT DEALING WITH OTHER ARGUMENTS RA ISED BY THE LD. COUNSEL FOR ASSESSEE VIS--VIS CHANGE OF OP INION AND ABSENCE OF CHARGE OF NON-DISCLOSURE OF MATERIAL FAC T BY THE ASSESSEE SINCE THE SAME WOULD BE MERELY ACADEMIC IN NATURE. GROUND NO.1 RAISED BY THE ASSESSEE IS, THEREFORE, ALLOWED. 15 18. FURTHER SINCE WE HAVE QUASHED RE-OPENING OF ASSESSMENT IN THE PRESENT CASE, WE ARE NOT DEALING WITH THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE ON M ERITS. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE, THEREFORE, STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : JUNE, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH