Baljit Kaur , Hyderabad V. Dy. Commissioner of Income Tax , Circle-16(2), Hyderabad

ITA 231/Hyd/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2136 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2011-2012
• Appeal Filed On: 26-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Reopening of assessment; Unexplained cash credit; Search and seizure; Salary income; Question of law; Accommodation entries; Set aside
• Section: 143(1); 195; 13; 68; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT A NO. 231 /H/20 20 ASSESSMENT YEAR: 2 0 11 - 12 BALJIT KAUR, HYDERABAD. PAN A JXPK 8087H VS. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 16(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P. MURALI MOHAN RAO REVENUE BY: SHRI ROHIT MUJUMDAR DATE OF HEARING: 10 /0 6 /2021 DATE OF PRONOUNCEMENT: 28 /0 6 /2021 O R D E R PER L.P. SAHU, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST CIT(A) 4 , HYDERABADS ORDER DATED 2 4 / 0 1 /20 20 FOR AY 20 11 - 12 INVOLVING PROCEEDINGS U/S 1 4 3( 3 ) RWS 147 OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT ON THE FOLLOWING GROUNDS: 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE AY 2011 - 12 ON I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 2 - : 29/09/2011 ADMITTING INCOME OF RS. 85,42,110/ - , WHICH WAS PROCESSED U/S 143(1) OF THE ACT. 2.1 THE JURISDICTIONAL AO RECEIVED FROM DDIT (INV), UNIT - 3 (4), KOLKATA ON 25/04/2017 , WHICH IS AS UNDER: 2. AS PER THE INFORMATION, VARIOUS COMPANIES VIZ (I) SUBHDHAN PRATISTHAN PVT. LTD. (II) SUBHANKAR DEALCOM PVT. LTD, (III) RANPRIYA COMMODEAL PVT. LTD. AND (IV) SIDHIDATA DISTRIBUTOR PVT. LTD: (V) SADAKRITI DEALERS PVT. LTD. (VI) SOMANATH VINIMAY P VT. LTD. INDULGED IN MULTIPLE ACCOUNT TRANSFER OF LARGE AMOUNTS WITH NO RATIONALE, THE COMPANIES DOING BUSINESS IN THE SAME ADDRESS HAVING SAME LINE OF ACTIVITY COUPLED WITH SAME PERSONS AS COMMON DIRECTORS. DURING THE COURSE OF INVESTIGATION, BANK ACCOUNTS OF THE ABOVE MENTIONED COMPANIES WERE OBTAINED AND THE BANK STATEMENTS WERE PERUSED VIS - A - VIS T HE LTD PROFILE OF THE SAME AND IT WAS CONCLUDED THAT THE TOTAL BANK CREDIT AND TURNOVER OF THE SAID COMPANIES DOES NOT COMMENSURATE WITH THEIR. RETURNED INCOME. FURTHER, TRAIL OF FUND WAS PREPARED BY THE DD IT (INV), UNIT3(4), KOLKATA AND SMT. BALJIT KA11R RECEIVED RS.41,50,OOOJ - FROM MIS SUBHANKAR DEALCOM PVT. LTD. D UR ING THE FY 2010 - 11 RELEVANT TO THE AY 2011 - 12. SMT. BALJIT KAUR IS ASSESSED WITH THE UNDERSIGNED. 2.2 ACCORDINGLY, THE AO REOPENED THE CASE AFTER OBTAINING PRIOR APPROVAL OF THE PR. CIT 4 , HYDERABAD ISSUED NOTICE U/S 148 OF THE ACT TO THE ASSESSEE ON 14/03/2018, IN RESPONSE TO WHICH, THE ASSESSEE SUBMITTED A LETTER DATED 23/01/2018 STATING THAT THE RETURN FILED ON 29/09/2011 MAY BE TREATED AS COMPLIANCE IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. FURTHER, THE AO ISSUED STATUTORY NOTICES TO THE ASSESSEE, BUT, HE DID NOT APPEAR IN THE ASSESSMENT I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 3 - : PROCEEDINGS. ACCORDINGLY, THE AO COMPLETED THE ASSESSMENT U/S 144 OF THE ACT BY OBSERVING AS UNDER: 5.1 THE INFORMATION RECEIVED FROM DDIT(INV), UNIT - 3(4), KOLKATA REGARDING THE RECEIPT OF CASH AMOUNTING TO RS. 41,50,000/ - BY THE ASSESSEE FROM MIS SUBHANKAR DEALCOM PVT. LTD. DURING THE FINANCIAL YEAR RELE VANT TO THE AY 2011 - 12 WAS ANALYZED VIS - A - VIS THE RETURNS O INCOME FILED BY THE ASSESSEE, AS P ER THE RETURNS OF INCOME FILED BY THE ASSESSEE. 'DURING THE FY 2010 - 11 RELEVANT TO THE AY 2011~12, THE ASSESSEE ADMITTED INCOME FROM SALARY AMOU1TTING TO RS, 79,25,400/ - F ROM M / S PCB RETAIL LIMITED, PCR AGENCIES PVT. LTD., PCR TELECOM (INDIA) PVT. LTD., M/ S PCB LIFESTYLE PVT. LTD. AND PCH DISTRIBUTORS PVT. LTD. AND OTHER INCOME O F RS. 7,16,710/ - . 5.2 FROM THE ABOVE, IT CAN BE SEEN THAT OTHER THAN INCOME: FROM SALARY RECEIVED FRONT PCB GROUP OF COMPANIES AND INTEREST INCOME RECEIVED FROM ANDHRA BANK, THE A SSESSEE DID NOT DISCLOSE ANY OTHE R I NCOME. IN ORDER TO SUBSTAL1TIAT ABOUT THE SOURCES OF THE CASH CREDITS, THE ASSESSEE WAS GIVEN AMPLE OPPORTUNITIES . HOWEVER. THE ASSESSEE DID NOT RESPOND TO THE OPPORTUNITIES GIVE N TO HER. 5.3 HENCE, IN THE ABSENCE OF ANY SUBSTANTIATION BY THE ASSESSEE DESPITE: GIVING SEVERAL OPPORTUNITIES OF BEING HEARD AND FOR FAILING TO COMPLY TO THE NOTICES ISSUED, THE AMOUNT OF RS. 41,50, 000/ - RECEIVED BY THE ASSESSEE FROM MIS 5UBHANKAR DEALCOM PVT. LTD . IS TREATED A S UNEXPLAINED CASH CREDIT UL S 68.OF THE ACT AND ADDED TO THE RETURNED INCOME. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) AFTER I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 4 - : CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DISMISSED T HE APPEAL OF THE ASSESSEE. 4. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE AO BEFORE REOPENING THE CASE HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 147/148 AND THE PRECEDEN CE IN THIS REGARD. HE SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN REOPENING THE CASE BEYOND THE FOUR YEARS AND HE HAS REOPENED THE CASE ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING WITHOUT APPLYING HIS MIND. FURTHER, HE SUBMITTED THAT T HE ASSESSEE IS A REGISTERED COMPANY AND FILING RETURNS OF INCOME REGULARLY AND THE AMOUNT HAS BEEN RECEIVED THROUGH BANKING CHANNELS, THEREFORE, THERE IS NO VIOLATION OF PROVISIONS OF SECTION 68 OF THE ACT AS ALLEGED BY THE AO IN THIS REGARD. 6. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD AS WELL AS GONE THROUGH THE ORDERS OF REVENUE AUTHORITIES AND THE GROUNDS TAKEN BY THE ASSESSEE, WE OBSERVE THAT THE ASSESSEE HAS TAKEN A LEGAL GROUND IN GROUND NO. 4 THAT THE ASSESSEES CASE HAS BEEN REOPENED ON I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 5 - : THE BASIS OF INFORMATION RECEIVED FROM THIRD PARTY. THE CRUX OF THE ISSUE TO BE DECIDED IS WHETHER THE REOPENING OF ASSESSMENT BY THE AO IS IN ACCORDANCE WITH LAW OR NOT. AS PER THE ASSESSMENT ORDER, IT IS CLEAR THAT THE ASSESSEES CASE IS REOPENED ON THE BASIS OF THE INFORMATION RECEIVED FROM THE DIRECTOR OF INVESTIGATION AND WITHOUT APPLYING HIS MIND, THE AO HAS REOPENED THE CASE OF THE ASSESSEE. SIMILAR ISS UE HAS BEEN DECIDED BY HONBLE COURTS IN THE FOLLOWING CASES: 1. CIT V, KAMDHENU STEEL & ALLOYS LTD. (2012) 248 CTR 33 (DELHI)(HIGH COURT). 2. CIT V, MULTIPLEX TRADING & INDUSTRIAL CO LTD (2015) 128 DTR 217 (DELHI)(HC). 3. PR. CIT V G. PHARMA INDIA LTD.[2017] 384 ITR 147 (DELHI) (HC). 4. CIT VS INSECTICIDES (INDIA) LTD. (2013) 357 ITR 300 (DEI.)(HC) 5. CIT VS. MEENAKSHI OVERSEA'S PVT LTD (2017) 395 ITR 677(DEL) (HC) 6. CIT VS. FAIR INVEST LTD. (2013) 357 ITR 146 (DEI.)(HC) 7. SARTHAK SECURITIES CO. (P.) LTD. VS. ITO (2010) 329 ITR 110. 7.1 IN THE CASE OF CIT V, KAMDHENU STEEL & ALLOYS LTD. (20 12) 248 CTR 33 (DELHI)(HIGH COURT), THE HONBLE DELHI HIGH COURT HELD AS UNDER: I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 6 - : 17. EVEN IN THE INSTANT CASE, IT IS PROJECTED BY THE REVENUE THAT THE DIRECTORATE OF INCOME TAX (INVESTIGATION) HAD PURPORTEDLY FOUND SUCH A RACKET OF FLOATING BOGUS COMP ANIES WITH SOLE PURPOSE OF LANDING ENTRIES. BUT, IT IS UNFORTUNATE THAT ALL THIS EXERCISE IS GOING IN VAIN AS FEW MORE STEPS WHICH SHOULD HAVE BEEN TAKEN BY THE REVENUE IN ORDER TO FIND OUT CAUSAL CONNECTION BETWEEN THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THE APPLICANT BANKS AND THE ASSESSEE WERE NOT TAKEN. IT IS NECESSARY TO LINK THE ASSESSEE WITH THE SOURCE WHEN THAT LINK IS MISSING, IT IS DIFFICULT TO FASTEN THE ASSESSEE WITH SUCH A LIABILITY. 41. IT IS UNDER THESE CIRCUMSTANCES, THESE APPEALS ARE FILED FOR THESE ASSESSMENT YEARS. WE SHALL FIRST TAKE UP THE FACTS REGARDING VALIDITY OF NOTICE UNDER SECTION 148 OF THE ACT. LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT THIS NOTICE WAS ADMITTEDLY ISSUED BEYOND FOUR YEARS FROM THE DATE OF ASSESSMENT ORDER AND THERE WAS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE HAD NOT DISCLOSED ALL MATERIAL PARTICULARS OR HAD SUPPRESSED ANY INFORMATION. HE POINTED OUT THAT IN THE 'REASONS TO BELIEF' FURNISHED BY THE AO, THE AO HAD MERELY REFERRED TO CERTAIN INVESTIGATION CARRIED OUT BY THE DIRECTORATE OF INCOME TAX (INVESTIGATION) IN RESPECT OF BOGUS/ACCOMMODATION ENTRIES PROVIDED BY CERTAIN INDIVIDUALS/COMPANIES. THE AO, ACCORDING TO HIM, THE READING OF THESE REASONS CLE ARLY INDICATED THAT THE AO HAD NOT APPLIED HIS OWN MIND TO THE ISSUE OR CARRIED OUT ANY INCUMBENT VERIFICATION BEFORE ISSUING THE NOTICE. 42. WE FIND THIS CONTENTION OF T HE ASSESSEE TO BE CORRECT. IN PARA 2, THE AO HAS REPRODUCED THE PARTICULARS OF ALLEGEDLY BOGUS TRANSACTIONS AS 'GIVEN BY THE DIRECTORATE OF INCOME TAX (INVESTIGATION) AFTER MAKING THE NECESSARY INQUIRIES'. THE AO DID NOT EVEN CARE TO SEE THOSE PARTICULARS, WHICH ARE REPETITIVE IN NATURE AS IS CLEAR FROM THE FOLLOWING: NAME OF THE ASSESSEE/BENEFICIARIES NAME OF THE BANK BENEFICIARIES NAME OF THE OPERATOR INSTRUMENT NO. OPERATOR'S A/C NO. AND BANK DATE ON WHICH ENTRY TAKEN AMOUNT (IN RS.) M/S INFOMEDIARY INDIAN BANK M/S. SUMA 311108 2919, CORPN. 23 - 10,46,568/ - I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 7 - : INDIA PVT. LTD. FINANCE INVESTMENT LTD. BANK, KAROL BAGH, NEW DELHI MAR - 01 - DO - - DO - - DO - 311108 - DO - 16 - FEB - 01 10,46,568/ - - DO - - DO - - DO - 302578 - DO - 16 - FEB - 01 3,80,760/ - - DO - - DO - - DO - 302578 - DO - 16 - FEB - 01 3,80,760/ - - DO - - DO - - DO - 302581 - DO - 16 - FEB - 01 5,61,120/ - - DO - - DO - - DO - 302581 - DO - 16 - FEB - 01 5,61,120/ - - DO - - DO - M/S ANKUR MARKETING 450592 CA/11011938 BANK OF PUNJAB, CANNAUGHT PLACE, NEW DELHI 27 - MAR - 01 9,50,000/ - 43. FURTHERMORE, AFTER EXTRACTING THE AFORESAID PARTICULARS, THE AO RECORDED FOLLOWING REASONS: '3. IN VIEW OF THE ABOVE INFORMATION, IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES. THEREFORE, I HAVE REASONS TO BELIEVE THAT THE INCOME AMOUNTING TO RS. 43,65,776/ - HAS ESCAPE D ASSESSMENT, WHICH IS REQUIRED TO BE ASSESSED TO TAX UNDER THE PROVISION OF SECTION 147 OF THE I.T. ACT, 1961.' 44. IT IS CLEAR FROM THE ABOVE THAT THE AO ACTED MECHANICALLY ON THE INFORMATION SUPPLIED BY THE DIRECTORATE OF INCOME TAX (INVESTIGATION) WITH OUT APPLYING HIS OWN MIND. HE DID NOT EVEN CARE TO SEE THE APPARENT MISTAKE IN THE PARTICULARS WHERE THREE ENTRIES WERE REPEATED TWICE EACH. ALMOST ON IDENTICAL FACTS, A DIVISION BENCH OF THIS COURT SET ASIDE SUCH A NOTICE UNDER SECTION 147/148 OF THE ACT IN THE CASE SARTHAK SECURITIES CO. (P.) LTD. V. ITO [2010] 329 ITR 110 / 195 TAXMAN 262 ( DELHI ). AFTER TAKING NOTE OF VARIOUS JUDGMENTS DELINEATING THE SCOPE OF SECTION 148 OF THE ACT AS WELL AS LAW REG ARDING UNDISCLOSED INCOME UNDER SECTION 68 OF THE ACT, THE COURT HELD THAT: I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 8 - : 'THE OBTAINING FACTUAL MATRIX HAS TO BE TESTED ON THE ANVIL OF THE AFORESAID PRONOUNCEMENT OF LAW. IN THE CASE AT HAND, AS IS EVINCIBLE, THE ASSESSING OFFICER WAS AWARE OF THE EXIS TENCE OF FOUR COMPANIES WITH WHOM THE ASSESSEE HAD ENTERED INTO TRANSACTION. BOTH THE ORDERS CLEARLY EXPOSIT THAT THE ASSESSING OFFICER WAS MADE AWARE OF THE SITUATION BY THE INVESTIGATION WING AND THERE IS NO MENTION THAT THESE COMPANIES ARE FICTITIOUS CO MPANIES. NEITHER THE REASONS IN THE INITIAL NOTICE NOR THE COMMUNICATION PROVIDING REASONS REMOTELY INDICATE INDEPENDENT APPLICATION OF MIND. TRUE IT IS, AT THAT STAGE, IT IS NOT NECESSARY TO HAVE THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME BUT WHAT IS NE CESSARY IS THAT THERE IS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQUISITE BELIEF. TO ELABORATE, THE CONCLUSIVE PROOF IS NOT GERMANE AT THIS STAGE BUT THE FORMATION OF BELIEF MUST BE ON THE BASE OR FOUNDATION OR PLATFORM OF PRU DENCE WHICH A REASONABLE PERSON IS REQUIRED TO APPLY. AS IS MANIFEST FROM THE PERUSAL OF THE SUPPLY OF REASONS AND THE ORDER OF REJECTION OF OBJECTIONS, THE NAMES OF THE COMPANIES WERE AVAILABLE WITH THE AUTHORITY. THEIR EXISTENCE IS NOT DISPUTED. WHAT IS MENTIONED IS THAT THESE COMPANIES WERE USED AS CONDUITS. IN THAT VIEW OF THE MATTER, THE PRINCIPLE LAID DOWN IN LOVELY EXPORTS (P) LTD. (SUPRA) GETS SQUARELY ATTRACTED. THE SAME HAS NOT BEEN REFERRED TO WHILE PASSING THE ORDER OF REJECTION. THE ASSESSEE IN HIS OBJECTIONS HAD CLEARLY STATED THAT THE COMPANIES HAD BANK ACCOUNTS AND PAYMENTS WERE MADE TO THE ASSESSEE COMPANY THROUGH BANKING CHANNEL. THE IDENTITY OF THE COMPANIES WAS NOT DISPUTED. UNDER THESE CIRCUMSTANCES, IT WOULD NOT BE APPROPRIATE TO REQUIR E THE ASSESSEE TO GO THROUGH THE ENTIRE GAMUT OF PROCEEDINGS. IT IS TOTALLY UNWARRANTED.' 45. SIMILAR VIEW IS TAKEN BY ANOTHER DIVISION BENCH OF THIS COURT IN CIT V. SFIL STOCK BROKING LTD. [2010] 325 ITR 285 . IN THAT CASE ALSO, THE AO HAD RECORDED THE REASONS TO BELIEVE IN SIMILAR MANNER, VIZ., MORE INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) AND THE COURT TOOK THE VIEW THAT THESE WERE NO REASONS WITHIN THE MEANING I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 9 - : OF SECTION 148 OF THE ACT. FOLLOWING DISCUSSION IN THIS BEHALF NEEDS TO BE NOTED: '9. IN THE PRESENT CASE, WE FIND THAT THE FIRST SENTENCE OF THE SO - CALLED REASONS RECORDED BY THE ASSESSING OFFICER IS MERE INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION). THE SECOND SENTENCE IS A DIRECTION GIVEN BY THE VERY SAME DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) TO ISSUE A NOTICE UNDER SECTION 148 AND THE THIRD SENTENCE AGAIN COMPRISES OF A DIRECTION GIVEN BY THE ADDITIONAL COMMISSIONER OF INCOME TAX TO INITIATE PROCEEDINGS UNDER SECTION 148 IN RESPECT OF CASES PERTAINING TO THE RELEV ANT WARD. THESE THREE SENTENCE ARE FOLLOWED BY THE FOLLOWING SENTENCE, WHICH IS THE CONCLUDING PORTION OF THE SO - CALLED REASONS: - 'THUS, I HAVE SUFFICIENT INFORMATION IN MY POSSESSION TO ISSUE NOTICE U/S 148 IN THE CASE OF M/S SFIL STOCK BROKING LTD. ON TH E BASIS OF REASONS RECORDED AS ABOVE.' 10. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER REFERRED TO THE INFORMATION AND THE TWO DIRECTIONS AS 'REASONS' ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE UNDER SECTION 148. WE ARE AFRAID THAT THESE CANNOT BE THE REASONS FOR PROCEEDING UNDER SECTION 147/148 OF THE SAID ACT. THE FIRST PART IS ONLY AN INFORMATION AND THE SECOND AND THE THIRD PARTS OF THE BEGINNING PARAGRAPH OF THE SO - CALLED REASONS ARE MERE DIRECTIONS. FROM THE SO - CALLED REASONS, IT IS NOT AT ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF THAT, ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPED ASSESSMENT. CONSEQUENTLY, WE FIND THAT THE TRIBUNAL HAS ARRIVED AT THE CORRECT CONCLUSION ON FACTS. THE LAW IS WELL SETTLED. THERE IS NO SUBSTANTIAL QUESTION OF LAW WHICH ARISES FOR OUR CONSIDERATION. THE APPEAL IS DISMISSED.' 47. THERE IS ANOTHER RECENT JUDGMENT DATED 21.7.2011 OF THIS CO URT IN SIGNATURE HOTELS (P) LTD. V. ITO [W.P.(C) NO. 8067 OF 2010 ON DATED 21 - 7 - 2011]. THAT WAS ALSO A CASE WHERE THE NOTICE WAS ISSUED ON THE BASIS OF INFORMATION RECEIVED FROM DIRECTORATE, INCOME TAX (INVESTIGATION). THE COURT FIRST SET OUT I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 10 - : THE APPROACH THAT IS TO BE ADOPTED IN SUCH CASES, BY MENTIONING AS UNDER IN PARA 12: '12. IN THESE CIRCUMSTANCES, WE ARE EXAMINING THE REASONS GIVEN BY THE ASSESSING OFFICER IN THE PROFORMA SEEKING PERMISSION/APPROVAL OF THE COMMISSIONER AND WHETHER THE SAME SATISFY TH E PRE - CONDITIONS MENTIONED IN SECTION 147 OF THE ACT.' 48. ON EXAMINATION, THE COURT SET ASIDE THE NOTICE UNDER SECTION 148 OF THE ACT AND IN THE PROCESS, DISCUSSION THEREIN IS AS UNDER: '14. THE FIRST SENTENCE OF THE REASONS STATES THAT INFORMATION HAD BE EN RECEIVED FROM DIRECTOR OF INCOME - TAX (INVESTIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS. 5 LACS DURING FINANCIAL YEAR 2002 - 03 AS PER THE DETAILS GIVEN IN ANNEXURE. THE SAID ANNEXURE, REPRODUCED ABOVE, RELATES TO A CHEQUE RECEIVED B Y THE PETITIONER ON 9TH OCTOBER, 2002 FROM SWETU STONE PV FROM THE BANK AND THE ACCOUNT NUMBER MENTIONED THEREIN. THE LAST SENTENCE RECORDS THAT AS PER THE INFORMATION, THE AMOUNT RECEIVED WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BEN EFICIARY. 15. THE AFORESAID REASONS DO NOT SATISFY THE REQUIREMENTS OF SECTION 147 OF THE ACT. THE REASONS AND THE INFORMATION REFERRED TO IS EXTREMELY SCANTY AND VAGUE. THERE IS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT ANNEXURE, WHICH HAS BEEN QU OTED ABOVE. ANNEXURE CANNOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWS OR ESTABLISHES NEXUS OR LINK WHICH DISCLOSES ESCAPEMENT OF INCOME. ANNEXURE IS NOT A POINTER AND DOES NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, IT IS APPARENT THAT T HE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THE ASSESSING OFFICER ACCEPTED THE PLEA ON THE BASIS OF VAGUE INFORMATION IN A MECHANICAL MANNER. THE COMMISSIONER ALSO ACTED ON THE S AME BASIS BY MECHANICALLY GIVING HIS APPROVAL. THE REASONS RECORDED REFLECT THAT THE ASSESSING OFFICER DID NOT INDEPENDENTLY APPLY HIS MIND TO THE INFORMATION RECEIVED FROM THE I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 11 - : DIRECTOR OF INCOME - TAX (INVESTIGATION) AND ARRIVE AT A BELIEF WHETHER OR NOT AN Y INCOME HAD ESCAPED ASSESSMENT. 16. IT MAY BE NOTED HERE THAT A COMPANY BY THE NAME OF SWETU STONE PVT. LTD. HAD APPLIED FOR AND WAS ALLOTTED SHARES IN THE PETITIONER COMPANY ON PAYMENT BY CHEQUE OF RS. 5 LACS. AS NOTICED ABOVE, IN THE ANNEXURE THE NAME O F THE COMPANY/ACCOUNT HOLDER IS MENTIONED AS SWETU STONE PV. THE SAME IS ALSO MENTIONED IN THE UNDATED REASONS MENTIONED ABOVE. 17. IN THE COUNTER AFFIDAVIT IT IS STATED THAT M/S SWETU STONE PVT. LTD. HAD APPLIED FOR ALLOTMENT OF SHARES WORTH RS. 5 LACS AN D THE SAME WERE ALLOTTED BY THE PETITIONER. IT IS FURTHER STATED THAT STATEMENTS OF MAHESH GARG AND SHUBHASH GUPTA WERE RECORDED BY THE DIRECTOR OF INCOME - TAX (INVESTIGATION) AND ON THE BASIS OF THE STATEMENTS THEY HAVE COME TO THE CONCLUSION THAT THE SAID PERSONS WERE ENTRY OPERATORS. COPY OF THE STATEMENTS OF MAHESH GARG AND SHUBHASH GUPTA HAVE NOT BEEN PLACED ON RECORD BY THE RESPONDENT. THE PETITIONER, HAS, HOWEVER, ENCLOSED COPY OF STATEMENTS OF MAHESH GARG AND SHUBHASH GUPTA RECORDED ON DIFFERENT DATE S. THE SAID PERSONS HAVE NOT SPECIFICALLY NAMED THE PETITIONER THOUGH OTHER PARTIES HAVE BEEN NAMED AND DETAILS HAVE BEEN GIVEN AND IT IS STATED THAT THEY WERE PROVIDED ACCOMMODATION ENTRIES. HOWEVER, IT IS STATED THAT THE ENTRIES WERE MADE BY GIVING CHEQU E/DD/PO AFTER RECEIVING CASH AND SOMETIMES EXPENSES ENTRIES WERE PROVIDED. THE REASONS RECORDED BY THE ASSESSING OFFICER DO NOT MAKE REFERENCE TO ANY STATEMENT OF MAHESH GARG OR SHUBHASH GUPTA. THIS MAY NOT ALSO BE NECESSARY, IF THE STATEMENTS WERE ON RECO RD AND IT IS CLAIMED AND PRIMA FACIE ESTABLISHED THAT THEY WERE EXAMINED BY THE ASSESSING OFFICER BEFORE OR AT THE TIME OF RECORDING REASONS. ON THE OTHER HAND, IN THE PRESENT CASE, INFORMATION AS ENCLOSED AS ANNEXURE, HAS BEEN REFERRED. THIS IS THE ONLY M ATERIAL RELIED UPON BY THE ASSESSING OFFICER. THE SAID ANNEXURE HAS BEEN QUOTED ABOVE. IN THIS CONNECTION, WE MAY NOTICE THAT M/S SWETU STONE PVT. LTD. IS AN INCORPORATED COMPANY AND THE PETITIONER HAS PLEADED AND STATED THAT THE SAID COMPANY HAS A PAID - UP CAPITAL OF RS. 90 LACS. THE COMPANY WAS INCORPORATED ON 4TH JANUARY, 1989 AND WAS ALSO I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 12 - : ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER, 2001. TO THIS EXTENT, THERE IS NO DISPUTE. IN THESE CIRCUMSTANCES, WE FEEL THE JUDGMENTS OF THE DELHI HIGH COURT IN CO MMISSIONER OF INCOME TAX V. SFIL STOCK BROKING LIMITED, [2010] 325 ITR 285 ( DELHI ) AND SARTHAK SECURITIES COMPANY PRIVATE LIMITED V. INCOME TAX OFFICER, 2010 (329) ITR 110 ( DELHI ), IN WHICH CIT V. LOVELY EXPORTS (P) LIMITED, (2009) 216 CTR 195 (SC) HAS BEEN APPLIED AND FOLLOWED, ARE APPLICABLE. WE MAY NOTICE HERE THAT THE RESPONDENT IN THEIR COUNTER AFFIDAVIT HAVE STATED THAT SWETU STONE PVT. LTD. IS UNIDENTIFIABLE AND, THEREFORE, THE AFORESAID DECISIONS SHOULD NOT BE APPLIED AND THE RATIO OF THE DECISION DATED 7TH JANUARY, 2011 IN WRIT PETITION (CIVIL) NO. 7517/2010, AGR INVESTMENT LIMITED V. ADDITIONAL COMMISSIONER OF INCOME TAX AND ANOTHER SHOULD BE APPLIED. IN THE SAID DECISION, DECISIONS IN THE CASE OF SARTHAK SECU RITIES COMPANY PRIVATE LIMITED (SUPRA) AND SFIL STOCK BROKING LIMITED (SUPRA) WAS DISTINGUISHED BY GIVING THE FOLLOWING REASONS: '22. .IN SFIL STOCK BROKING LTD. (SUPRA), THE BENCH HAS INTERFERED AS IT WAS NOT DISCERNIBLE WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF ON THE BASIS OF MATERIAL WHICH HE HAD BEFORE HIM THAT THE INCOME HAD ESCAPED ASSESSMENT. IN OUR CONSIDERED OPINION, THE DECISION RENDERED THEREIN IS NOT APPLICABLE TO THE FACTUAL MATRIX IN THE CASE AT HAND. IN THE CASE OF SARTHAK SECURITIES CO. PVT. LTD. (SUPRA), THE DIVISION BENCH HAD NOTED THAT CERTAIN COMPANIES WERE USED AS CONDUITS BUT TH E ASSESSEE HAD, AT THE STAGE OF ORIGINAL ASSESSMENT, FURNISHED THE NAMES OF THE COMPANIES WITH WHICH IT HAD ENTERED INTO TRANSACTION AND THE ASSESSING OFFICER WAS MADE AWARE OF THE SITUATION AND FURTHER THE REASON RECORDED DOES NOT INDICATE APPLICATION OF MIND. THAT APART, THE EXISTENCE OF THE COMPANIES WAS NOT DISPUTED AND THE COMPANIES HAD BANK ACCOUNTS AND PAYMENTS WERE MADE TO THE ASSESSEE COMPANY THROUGH THE BANKING CHANNEL. REGARD BEING HAD TO THE AFORESAID FACT SITUATION, THIS COURT HAD INTERFERED. T HUS, THE SAID DECISION IS ALSO DISTINGUISHABLE ON THE FACTUAL SCORE.' I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 13 - : 18. THE FACTS INDICATED ABOVE DO NOT SHOW THAT M/S SWETU STONE PVT. LTD. IS A NON - EXISTING AND A FICTITIOUS ENTITY/PERSON. DECISION IN AGR INVESTMENT LIMITED (SUPRA), THEREFORE, DOES NOT HELP THE CASE OF THE RESPONDENT. 19. FOR THE REASONS STATED ABOVE, THE PRESENT WRIT PETITION IS ALLOWED AND WRIT OF CERTIORARI IS ISSUED QUASHING THE PROCEEDINGS UNDER SECTION 148 OF THE ACT. IN THE FACTS OF THE CASE, THERE WILL BE NO ORDER AS TO COSTS.' 7.2 THE LEGAL ISSUES RAISED BY THE ASSESSEE ARE SQUARELY COVERED BY THE ABOVE JUDGMENT. THEREFORE, R ESPECTFULLY FOLLOWING THE ABOVE JUDGMENT, WE SET ASIDE THE ORDER OF CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE ON THE LEGAL GROUNDS. ACCORDINGLY, THE GROU NDS RAISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28 TH JUNE , 2021 . SD/ - SD/ - ( S.S. GODARA ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 28 TH JUNE , 20 2 1 . K V I TA NO. 231 /HYD /20 20 BALJIT KAUR, HYD. : - 14 - : C OPY TO : 1 SMT. BALJIT KAUR, C/O P. MURALI & CO., CAS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82 2 DC IT , CIRCLE 16(2), HYDERABAD. 3 C I T(A) 4 , HYDERABAD. 4 PR. CIT - 4, HYDERABAD 5 ITAT, DR, HYDERABAD. 6 GUARD FILE.