M/s Lavitra Technologies Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 2912/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6926 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 12-07-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 10-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Principle of natural justice; Accommodation entries; Reason to believe
• Section: 143(3); 133(6); 147; 68; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2912/DEL./2013 (ASSESSMENT YEAR : 2004-05) M/S. LAVITRA TECHNOLOGIES PVT. LTD., VS. ITO, WARD 15 (4), (AMALGAMATED COMPANY FOR NEW DELHI. M/S. ROOPALI MARKETING PVT. LTD. (AMALGAMATING COMPANY), 62, G 11, SECTOR 15, ROHINI, NEW DELHI 110 085. (PAN : AACCL0164F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEEPAK OSTWAL, CA AND SHRI RISHABH OSTWAL, ADVOCATE REVENUE BY : SHRI SHRAVAN GOTRU, SENIOR DR DATE OF HEARING : 12.07.2016 DATE OF ORDER : 14.07.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. LAVITRA TECHNOLOGIES PVT. LTD. (HE REINAFTER REFERRED TO AS THE ASSESSEE), BY FILING THE PRESE NT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 14.03.2013 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-XVIII, NEW DEL HI QUA THE ASSESSMENT YEAR 2004-05 ON THE GROUNDS INTER ALIA T HAT :- ITA NO.2912/DEL./2013 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT (A)-XVIII, NEW DELHI HAS ERRED BOTH ON FACT S AND IN LAW, IN UPHOLDING THE ILLEGAL ORDER PASSED B Y THE RESPONDENT WITHOUT JURISDICTION, VIOLATIVE OF NATUR AL JUSTICE, WITHOUT APPLICATION OF FAIR AND , OBJECTIV E MIND TO FACTS OF THE CASE AND THE LAW APPLICABLE AND WITHOU T GUIDED BY THE BINDING DECISIONS OF THE COURTS AND TRIBUNALS AND HENCE LIABLE TO BE SET ASIDE AND QUAS HED AND DECLARED NON-EST IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT (A)-XVIII, NEW DELHI HAS ERRED BOTH ON FACT S AND N LAW, IN UPHOLDING THE ILLEGAL ACTION OF RE- ASSESSMENT AND ASSUMPTION OF JURISDICTION ILLEGALLY BY THE RESPONDENT THAT TOO WITHOUT ISSUE/ SERVED NOTICE U/ S 148 AND THE ENTIRE PROCEEDINGS OF REASSESSMENT IS VOID AB INITIO, ILLEG.AL AND UNAUTHORIZED BY LAW. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT (A)-XVIII, NEW DELHI HAS ERRED BOTH ON FACT S AND IN !AW, IN UPHOLDING ASSUMPTION OF JURISDICTION IN SPITE OF THE FACT THAT THE CASE IS OF AFTER FOUR YE AR AND THE AO NOT RECORDED ANY SATISFACTION THAT THERE WAS ESCAPEMENT OF ANY INCOME BY REASON OF FAILURE ON TH E PART OF THE ASSESSEE THAT TOO WITHOUT ISSUE/ SERVED NOTICE U/S 148 IS VOID-AB-INITIO, ILLEGAL AND UNAUTHORISED BY LOW. 4. THE RESPONDENT HAS ERRED IN LAW AS THE STATUTORY REQUIREMENT OF SECTION 147 TO 153 OF THE INCOME TAX ACT AND THE IMPUGNED ORDER OUGHT TO HAVE BEEN SET ASIDE BY THE CIT(A) AND FAILURE TO DO SO HAS VITIATED THE IM PUGNED ORDER. 5. THE ORDER OF RE-ASSESSMENT HAVING BEEN PASSED IN VIOLATION OF NATURAL JUSTICE AND HASTILY BY OBTAINI NG BEHIND THE BACK OF THE APPELLANT ON THE BASIS OF SO ME ALLEGED STATEMENTS/INFORMATION NONE OF WHICH HAD BE EN MADE AVAILABLE TO THE APPELLANT NOR ANY OPPORTUNITY PROVIDED TO REBUT THE SAME AND WITHOUT PROVIDING OPPORTUNITY OF CROSS-EXAMINATION OF DIFFERENT PERSO NS SPECIFICALLY ASKED BY THE APPELLANT AND THERE WAS N OT EVEN A SHOW CAUSE NOTICE SPECIFICALLY PROPOSING TO MAKE THE ADDITIONS NOR ANY EFFECTIVE OPPORTUNITY OF PERS ONAL ITA NO.2912/DEL./2013 3 HEARING WAS GIVING HENCE, THE IMPUGNED ORDER OUGHT TO HAVE BEEN SET ASIDE BY THE CIT (A) AND FAILURE TO D O SO HAVE VITIATED THE IMPUGNED ORDER. 6. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE RESPONDENT HAS NOT DISCHARGED ITS O NUS OF PROOF IN ANY MANNER AND HAS CHOSEN TO MAKE ILLEGAL ADDITION PERVERSELY AND ALL THE ADDITIONS THEREFORE OUGHT TO BE SET ASIDE BY LD. CIT(A) AND FAILURE TO DO SO HAS VITIATED THE IMPUGNED ORDER. 7. THE RESPONDENT HAS NOT REPLIED TO THE OBJECTION SPECIFICALLY RAISED BY THE ASSESSEE DURING THE COUR SE OF PROCEEDING BY PASSING THE SPEAKING ORDER IN TERMS O F LAW THEREFORE IMPUGNED ORDER PASSED OUGHT TO HAVE BEEN SET ASIDE BY LD. CIT (A) AND FAILURE TO DO SO HAVE VITI ATED THE IMPUGNED ORDER. 8. LD. CIT (A) ERRED IN MAKING THE ILLEGAL ADDITION S OF RS.30,00,000/- IN PLACE OF DELETING THE ADDITION S OF RS.22,00,000/- MADE BY RESPONDENT WITHOUT ANY BASIS AND LEGS U/S. 68 BY TREATING THE SALE PROCEED OF STOCK/SHARES AS UNEXPLAINED INCOME IGNORING THE REC ORDS AND DOCUMENTS ALREADY FILED BEFORE THE ITO WHICH WE RE PROPERLY VERIFIED AND ACCEPTED BY HIM. HENCE THE OR DER MAY BE VACATED AND DEMAND MAY BE DELETED. 9. THE AUTHORITIES BELOW HAVE ERRED IN NOT FOLLOWIN G THE BINDING DECISIONS OF COURTS AND TRIBUNALS RELIE D UPON BY THE APPELLANT FOR THE FACT THAT NOTHING WAS ADDE D OUT OF REASONS RECORDED AND IMPUGNED ORDERS CANNOT, THEREF ORE, BE SUSTAINED BOTH ON FACTS AND IN LAW. 10. LD. CIT (A) HAS ALSO ERRED IN UPHOLDING THE IL LEGAL ADDITIONS AND DISALLOWANCES AND CONSEQUENT DEMANDS OF INCOME TAX, INTEREST AND PENALTIES ILLEGALLY RAISED BY THE RESPONDENT AND HENCE THE IMPUGNED ORDER SUSTAINING THE ADDITIONS AND DEMAND WOULD REQUIRE BE SETTING ASIDE AND QUASHING TO THAT EXTENT. 11. THE APPELLANT CRAVES LEAVE TO RAISE FURTHER/ADDITIONAL GROUNDS AND DOCUMENTS AND FILE P APER ITA NO.2912/DEL./2013 4 BOOK BEFORE THE HEARING OF THE APPEAL AND PRAYS FOR THE APPEAL TO BE ALLOWED AFTER HEARING BOTH SIDE. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE : ASSE SSEE FILED RETURN DECLARING INCOME OF RS.12,790/- ON 30.10.2004, PROC ESSED UNDER SECTION 143 (1) OF THE INCOME-TAX ACT, 1961 (FOR SH ORT THE ACT) ON 04.01.2005. HOWEVER, ON RECEIVING INFORMATION FROM THE INVESTIGATION WING, NEW DELHI THAT ASSESSEE IS ONE OF THE BENEFICIARIES OF THE BOGUS ACCOMMODATION ENTRIES AM OUNTING TO RS.75,00,000/-, PROCEEDINGS U/S 147/148 OF THE ACT WERE INITIATED. 3. IN RESPONSE TO THE NOTICE ISSUED U/S 148 OF THE ACT, ASSESSEE HAS NEITHER FIELD ANY RETURN OF INCOME NOR OPTED TO TREAT HIS RETURN FILED U/S 139(1) AS REPLY TO THE NOTICE. AO IN THE REASONS RECORDED STATED THAT THERE WAS SOME CLERICAL MISTAKE AS CERT AIN SINGLE TRANSACTIONS WERE APPEARING IN MULTIPLE RESULTING I N WORKING OF THE ESCAPED INCOME TO THE EXTENT OF RS.75,00,000/- WHI CH STANDS CORRECTED FOR THE PURPOSE OF COMPLETION OF THE PROC EEDINGS. STATEMENT OF ONE SHRI DEEPAK GUPTA, ENTRY OPERATOR FROM WHOM THE ASSESSEE HAS RECEIVED BOGUS ACCOMMODATION ENTRI ES, WAS RECORDED BY ADDL. DIRECTOR OF INCOME TAX (INVESTIGA TION), UNIT-I, NEW DELHI. ASSESSEE FILED COPY OF ITR, PAN, BALANC E SHEET AND CONFIRMATION BUT FAILED TO FURNISH ANY BANK STATEME NT BUT THE SAME WAS CALLED U/S 133(6) OF THE ACT. AO FROM THE BANK STATEMENT ITA NO.2912/DEL./2013 5 NOTICED THAT THERE ARE CREDIT ENTRIES OF APPROXIMAT ELY EQUIVALENT AMOUNT IN CASH OR TRANSFERRED PRIOR TO CLEARANCE OF CHEQUES ISSUED TO THE ASSESSEE COMPANY AND IN NONE OF THE ACCOUNTS , THERE WAS SUFFICIENT BALANCE ON ANY DAY BUT THE CHEQUES HAVE BEEN HONOURED BY WAY OF CASH DEPOSIT OR TRANSFER ENTRY. THERE WE RE REGULAR CASH DEPOSITS OR TRANSFER ENTRIES OF EQUIVALENT AMOUNT B EFORE THE CLEARANCE OF CHEQUES ISSUED BY THEM WHICH IS NOT PO SSIBLE IN A NATURAL COURSE OF BUSINESS TO HAVE DEBIT OR CREDIT TRANSACTIONS IN LAKHS OF RUPEES ON DAILY BASIS. THESE TRANSACTIONS ARE CARRIED OUT BY THE ENTRY OPERATOR ONLY. THE ONUS LIES ON THE D IRECTOR OF THE PRIVATE LIMITED COMPANIES FROM WHERE FUNDS WERE ARR ANGED TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINES S OF THE FUNDS OF SUCH PROVIDER U/S 68 OF THE ACT. ASSESSEE HAS F AILED TO PRODUCE SUCH PERSONS FOR CROSS-EXAMINATION NOR FURNISHED AN Y DOCUMENT. IT IS ESTABLISHED BY INVESTIGATION WING THAT THE PARTI ES WITH WHOM THE ASSESSEE HAD TRANSACTIONS OPERATE THROUGH PAPER COM PANIES AND HAVE NO REAL IDENTITY. SO, THE AMOUNT OF RS.22,00, 000/- RECEIVED BY THE ASSESSEE FROM THE ENTRY OPERATORS IS TREATED AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES AND CONSEQUENTLY, A O MADE AN ADDITION OF RS.22,00,000/- TO THE TOTAL INCOME OF T HE ASSESSEE. ITA NO.2912/DEL./2013 6 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) WHO HAS DISMISSED THE APPEAL. FEELING AGGRIEVED, THE ASSES SEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT AP PEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, THE AO RECEIVED INFORMATION FROM THE INVESTIGATION WING, NEW DELHI THAT THE ASSESSEE HAD RECEIVED BOGUS ACCOMMODATION ENTRIES TO THE FOLLOWING EFFECT :- I. M/S. RSG MARKETING P. LTD. RS.10,00,000 II. M/S. MAPLE SALES PVT.LTD. RS. 5,00,000 III. M/S. MILANSAAR IMPEX & TRADERS PVT. LTD. RS. 5,00,000 IV. M/S. ACOOT INDIA P.LTD. RS. 5,00,000 7. LD. AR FOR THE ASSESSEE CONTENDED THAT THE AO WI THOUT APPLYING HIS MIND AND WITHOUT BEING SATISFIED HIMSE LF AS REQUIRED U/S 147 OF THE ACT PROCEEDED TO REOPEN THE PROCEEDI NGS WHICH ARE BAD IN LAW AND RELIED UPON THE DECISION RENDERED BY HONBLE JURISDICTIONAL HIGH COURT IN PR. COMMISSIONER OF IN COME TAX- 4 VS. G & G PHARMA LIMITED IN ITA 545/2015 ORDER DA TED 08.10.2015 AND ITAT, DELHI BENCH H, NEW DELHI IN CASE OF USG BUILDWELL PVT. LTD. VS. ACIT, CENTRAL CIRCLE 23 , NEW ITA NO.2912/DEL./2013 7 DELHI ORDER DATED 15.02.2016 AND ORDER PASSED IN ASSESSEES OWN CASE CITED AS ITO VS. M/S. ROOPALI MARKETING LTD. BY ITAT, DELHI BENCH F, NEW DELHI IN ITA NO.2813/DEL/2011 VIDE ORDER DATED 27.11.2015 . HOWEVER, ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RELIED UPON THE ORDER PASSED BY THE AO AS WELL AS THE LD. CIT (A). 8. UNDISPUTEDLY, IT IS SETTLED PRINCIPLE OF LAW THA T THE AO IS REQUIRED TO REACH AT AN INDEPENDENT CONCLUSION BY A PPLYING HIS OWN MIND THAT HE HAS REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT TO ASSUME THE JURISDICTION F OR REOPENING OF THE ASSESSMENT U/S 147 / 148 OF THE ACT. 9. PERUSAL OF THE ASSESSMENT ORDER AS WELL AS IMPUG NED ORDER PASSED BY THE LD. CIT (A) APPARENTLY GO TO PROVE TH AT DETAILED REASONS ALLEGED TO HAVE BEEN RECORDED BY THE AO SO AS TO REACH AT AN INDEPENDENT CONCLUSION BY APPLYING HIS MIND THAT HE HAS REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCA PED ASSESSMENT TO ASSUME JURISDICTION FOR REOPENING HAVE NOT SEEN THE LIGHT OF THE DAY. HOWEVER, FROM THE ASSESSMENT ORDER AS WELL AS IMPUGNED ORDER PASSED BY THE LD. CIT (A), IT IS GATHERED THA T THE AO BY MERELY ACTING UPON AN INFORMATION RECEIVED FROM THE INVESTIGATION WING, NEW DELHI RECORDED THE REASONS FOR REOPENING THAT, THE ASSESSEE IS AMONGST THE BENEFICIARIES OF BOGUS ACCO MMODATION ITA NO.2912/DEL./2013 8 ENTRIES TOTALING TO RS.75,00,000/-. THIS FACT FURTHER GOT STRENGTHENED FROM PARA 3.2 OF THE ASSESSMENT ORDER WHEREIN THE AO HAS MERELY REPRODUCED THE STATEMENTS OF THE ENTRY O PERATORS RECORDED BY ADDL. DIRECTOR OF INCOME-TAX (INV.), UN IT-1, NEW DELHI AND AS SUCH, HE HAD NO OCCASION TO APPLY HIS INDEPENDENT MIND TO ASSUME THE JURISDICTION FOR REOPENING OF AS SESSMENT U/S 147/148 OF THE ACT. 10. NOW, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS:- AS TO WHETHER THE AO CAN INITIATE PROCEEDINGS U/S 147/148 OF THE ACT ON THE BASIS OF CERTAIN COMMUNICATION RECEIVED FROM HIS SUPERIOR REVENUE AUTHORITIES, NAMELY, ADDL. DIRECTOR OF INCOME-TAX (INV.), UNIT-1, NEW DELHI SHOWING THAT THE ASSESSEE HAS BEEN PROVIDED WITH ACCOMMODATION ENTRY TO THE TUNE OF RS.75,00,000/- (ACTUAL AMOUNT IF RS.22,00,000/-) , A SHELL COMPANY/CONCERN FLOATED BY DEEPAK GUPTA? . 11. IDENTICAL ISSUE HAS COME UP BEFORE THE HONBLE SUPREME COURT IN JUDGMENT CITED AS CHHUGAMAL RAJPAL VS. S.P. CHALIHA (1971) 79 ITR 603, WHEREIN IT IS HELD AS UNDER :- THE SUPREME COURT WAS DEALING WITH A CASE WHERE TH E AO HAD RECEIVED CERTAIN COMMUNICATIONS FROM THE COMMISSION ER OF INCOME TAX SHOWING THAT THE ALLEGED CREDITORS OF TH E ASSESSEE WERE NAME-LENDERS AND THE TRANSACTIONS ARE BOGUS. THE AO CAME TO THE CONCLUSION THAT THERE WERE REASONS TO BELIEV E THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THE SUPREME CO URT DISAGREED AND OBSERVED THAT THE AO HAD NOT EVEN CO ME TO A PRIMA FACIE CONCLUSION THAT THE TRANSACTIONS TO WHICH HE REFERRED WERE NOT GENUINE TRANSACTIONS. HE APPEARED TO HAVE HAD ONLY A VAGUE FELLING ITA NO.2912/DEL./2013 9 THAT THEY MAY BE BOGUS TRANSACTIONS. IT WAS FURT HER EXPLAINED BY THE SUPREME COURT THAT : BEFORE ISSUING A NOTICE UNDER S. 148, THE ITO MUST HAVE EITHER REASONS TO BELIEVE THAT BY REASON OF THE OMI SSION OR FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETUR N UNDER S. 139 FOR ANY ASSESSMENT YEAR TO THE ITO OR TO DISCLO SE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT FOR THAT YEAR, INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT FOR THAT YEAR OR ALTERNATIVELY NOTWITHSTANDING THAT THERE HAS BEEN NO OMISSION OR FAILURE AS MENTIONED ABOVE ON T HE PART OF THE ASSESSEE, THE ITO HAS IN CONSEQUENCE OF INFO RMATION IN HIS POSSESSION REASON TO BELIEVE THAT INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YE AR. UNLESS THE REQUIREMENTS OF CL. (A) OR CL. (B) OF S. 147 ARE SATISFIED, THE ITO HAS NO JURISDICTION TO ISSUE A N OTICE UNDER S. 148. THE SUPREME COURT CONCLUDED THAT IT WAS NOT SATISFI ED THAT THE ITO HAD ANY MATERIAL BEFORE HIM WHICH COULD SATISFY THE REQUIREMENTS UNDER SECTION 147 AND THEREFORE COULD NOT HAVE ISSU ED NOTICE UNDER SECTION 148. 12. IDENTICAL ISSUE HAS ALSO COME UP BEFORE HONBLE JURISDICTIONAL HIGH COURT IN JUDGMENT CITED AS G & G PHARMA INDIA LTD. (SUPRA) WHEREIN HONBLE HIGH COURT, BY FOLLOWING T HE JUDGMENT DELIVERED BY HONBLE SUPREME COURT, ENTITL ED CHHUGAMAL RAJPAL VS. S.P. CHALIHA (SUPRA) HELD AS UNDER :- 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR EN TRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10 TH FEBRUARY 2003, FROM FOUR ENTITIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, THE AO STATED: I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVE STIGATION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSES SEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BAN K ACCOUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES. THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER TH E AO APPLIED HIS MIND TO THE MATERIALS THAT HE TALKS ABO UT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE M ATERIALS WERE. ONCE THE DATE ON WHICH THE SO CALLED ACCOMMOD ATION ENTRIES WERE PROVIDED IS KNOWN, IT WOULD NOT HAVE B EEN ITA NO.2912/DEL./2013 10 DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VE RY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHIC H MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14 TH NOVEMBER 2004 AND WAS PROCESSED UNDER SECTION 143( 3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BAN K BY WAY OF ACCOMMODATION ENTRIES. IN THE CONSIDERED VIEW O F THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SUFFICIEN T CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCUSSED HEREIN BEFORE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MI ND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. 13. FURTHERMORE, SIMILAR ISSUE HAS CROPPED UP BEFOR E THE ITAT, DELHI BENCH H IN M/S. USG BUILDWELL PVT. LTD. (SUPRA), WHEREIN ADDITION OF RS.20,00,000/- WAS MADE BY THE AO ON THE BASIS OF SIMILAR INTIMATION SENT BY ACIT, CENTRAL C IRCLE 19, NEW DELHI ON THE BASIS OF SURVEY OPERATION CONDUCTED IN S.K. GUPTA GROUP CASES ON 20.11.2007 AND THE COORDINATE BENCH CAME TO THE CONCLUSION THAT THE AO HAS NOT APPLIED HIS MIND ON THE INFORMATION RECEIVED FORM ACIT AS REQUIRED U/S 147 OF THE ACT A ND AS SUCH, ASSESSMENT FRAMED U/S 147 READ WITH SECTION 143(3) IS NOT SUSTAINABLE. 14. NOW, ADVERTING TO THE CASE AT HAND, WE ARE OF T HE CONSIDERED VIEW INTER ALIA THAT : (I) AO HAS MERELY ACTED IN MECHANICAL MANNER ON RECEIPT OF INFORMATION FROM ADDL. DIRECTOR OF INCOME-TAX ITA NO.2912/DEL./2013 11 (INV.), UNIT-1, NEW DELHI THAT HE HAS REASON TO BEL IEVE THAT INCOME OF RS.22,00,000/- HAS ESCAPED ASSESSMEN T FOR THE YEAR 2004-05 DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT; (II) FORMING AN OPINION MERELY ON THE BASIS OF INFORMATI ON SUPPLIED TO THE AO BY ADDL. DIRECTOR OF INCOME-TAX (INV.), UNIT-1, NEW DELHI THAT DEEPAK GUPTA HAS PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE TO T HE TUNE OF RS.22,00,000/- DOES NOT AMOUNT TO SATISFACT ION OF THE AO TO REOPEN THE CASE U/S 147 OF THE ACT; (III) BEFORE INITIATING THE PROCEEDINGS U/S 147/148, THE AO HAS NOT PREFERRED TO EXAMINE DEEPAK GUPTA EVEN ON WHOSE ALLEGED STATEMENT, ADDL. DIRECTOR INCOME-TAX (INV.) SENT INTIMATION RATHER TAKEN HIS STATEMENT A S GOSPEL TRUTH. (IV) AO HAS CANDIDLY INCORPORATED IN ASSESSMENT ORDER THAT, IT IS ESTABLISHED BY INVESTIGATION WING THAT THE PARTIES WITH WHOM THE ASSESSEE HAD TRANSACTIONS OPERATE THROUGH PAPER COMPANIES AND HAVE NO REAL IDENTITY. AND THIS FACT GOES TO PROVE THAT HE HAS NOT ITA NO.2912/DEL./2013 12 PREFERRED TO INVESTIGATE THE MATTER HIMSELF TO REOP EN THE CASE. (V) IN VIEW OF THE LAW LAID DOWN BY THE HONBLE SUPREME COURT AND HONBLE JURISDICTIONAL HIGH COURT IN THE JUDGMENT CITED AS CHHUGAMAL RAJPAL VS. S.P. CHALIHA AND G & G PHARMA INDIA LTD.(SUPRA) RESPECTIVELY, TH E INITIATION OF PROCEEDINGS U/S 147 OF THE ACT IS ITS ELF BAD IN LAW AND CONSEQUENT ASSESSMENT FRAMED U/S 143(3)/147 OF THE ACT IS NOT SUSTAINABLE, HENCE HER EBY QUASHED. 15. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, SINCE THE VERY INITIATION OF THE PROCEEDINGS U/S 147 OF THE ACT FO R REOPENING AND CONSEQUENT ASSESSMENT FRAMED U/S 143(3)/ 147 HAVE H ELD TO BE NOT SUSTAINABLE IN THE EYES OF LAW, REMAINING GROUNDS R AISED BY THE ASSESSEE CHALLENGING THE ADDITION OF RS.22,00,000/- MADE BY THE AO AND CONFIRMED BY THE LD. CIT (A) U/S 68 OF THE A CT HAVE BECOME INFRUCTUOUS. RESULTANTLY, PRESENT APPEAL FI LED BY THE ASSESSEE IS HEREBY ALLOWED AND REASSESSMENT ORDER S TANDS QUASHED. ORDER PRONOUNCED IN OPEN COURT ON THIS 14 TH DAY OF JULY, 2016. SD/- SD/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE DAY OF JULY, 2016/TS ITA NO.2912/DEL./2013 13 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.