M/s. K.K. Arora & Sons (HUF), New Delhi V. ACIT, New Delhi

ITA 2960/DEL/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7107 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 10-11-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL KR JAIN
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard; Principle of natural justice; Question of law; Tangible material; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 143(3); 133A; 153A; 147; 68; 148; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 2960/DEL/2015 A.Y. : 2005-06 M/S K.K. ARORA & SONS (HUF) C/O ANIL JAIN D.D. & CO., CHARTERED ACCOUNTANTS, 611, SURYA KIRAN BUILDING, 19, KG MARG, NEW DELHI 110001 (PAN: AANHK9309K) VS. ACIT, CIRCLE 41(1), CIVIC CENTRE, NEW DELHI (APPELLANT) (RESPONDENT) AND I.T.A. NO. 2958/DEL/2015 A.Y. : 2005-06 M/S R.K. ARORA & SONS (HUF) C/O ANIL JAIN D.D. & CO., CHARTERED ACCOUNTANTS, 611, SURYA KIRAN BUILDING, 19, KG MARG, NEW DELHI 110001 (PAN: AABHR8360R) VS. ACIT, CIRCLE-41(1), CIVIC CENTRE, NEW DELHI (APPELLANT) (RESPONDENT) AND I.T.A. NO. 2959/DEL/2015 A.Y. : 2005-06 MR. KAMAL KRISHAN ARORA, C/O ANIL JAIN D.D. & CO., CHARTERED ACCOUNTANTS, 611, SURYA KIRAN BUILDING, 19, KG MARG, NEW DELHI1 (PAN: AAIPA0350P) VS. ACIT, CIRCLE-41(1), CIVIC CENTRE, NEW DELHI (APPELLANT) (RESPONDENT) AND I.T.A. NO. 2961/DEL/2015 A.Y. : 2005-06 SMT. RENU ARORA C/O ANIL JAIN D.D. & CO., CHARTERED ACCOUNTANTS, 611, SURYA KIRAN BUILDING, 19, KG MARG, NEW DELHI1 PAN: AABHR8360R) VS. ITO, WARD 72(3) CIVIC CENTRE, NEW DELHI (APPELLANT) (RESPONDENT) 2 AND I.T.A. NO. 2962/DEL/2015 A.Y. : 2005-06 SMT. KIRAN ARORA, C/O ANIL JAIN D.D. & CO., CHARTERED ACCOUNTANTS, 611, SURYA KIRAN BUILDING, 19, KG MARG, NEW DELHI 110001 (PAN: AABHR8360R) VS. ITO, WARD 72(3) CIVIC CENTRE, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL KR. JAIN, CA DEPARTMENT BY : SH. ANIL KUMAR SHARMA, SR. DR ORDER THESE ARE 05 APPEALS ARE FILED BY DIFFERENT ASSES SES WHICH IS AGAINST THE SEPARATE ORDERS OF THE LD. CIT(A) FOR THE SAME ASSTT. YEAR I.E. 2006-06. SINCE THE ISSUES INVOLVED IN ALL THE 05 APPEALS ARE IDENTICAL AND COMMON, HENCE, THESE APPEALS ARE BEING CONSOL IDATED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE, BY DEAL ING WITH ITA NO. 2960/DEL/2015 (AY 2005-06). 2. SINCE THE GROUNDS IN ALL THE 05 APPEALS ARE EXA CTLY SIMILAR, EXCEPT THE FIGURE, THEREFORE, FOR THE SAKE OF BREVITY, I A M ONLY REPRODUCING THE GROUNDS RAISED IN THE ASSESSEES APPEAL NO. 2960/ DEL/2015 (AY 2005- 06) AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT(APPEAL) HAS FAI LED TO APPRECIATE THAT THE NOTICE U/S 148 IS ILLEGAL, BAD IN LAW, TIME BARRED AND WITHOUT JURISDICTION AND AS SUCH TH E 3 ASSESSMENT ORDER PASSED U/S 148 IS ILLEGAL AND BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT(APPEAL) HAS FAI LED TO APPRECIATE THAT THE INITIATION OF REASSESSMENT PROCEEDING U/S 147 IS ILLEGAL AND BAD IN LAW. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW LD CIT APPEAL HAS FILED TO APPRECIATE THAT NO VALID NOTICE U/S 143(2) HAS BEEN ISSUED, CONSEQUENTLY ASSESSMENT FRAMED BECOMES ILLEGAL. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT(APPEAL) HAS FAILED TO APPRECIATE THAT THE IMPUGNED ASSESSMENT ORDER PASSE D BY THE LD. AO IS BAD IN LAW, ILLEGAL AND WRONG ON F ACTS. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT(APPEAL) HAS FAI LED TO APPRECIATE THAT THE IMPUGNED ASSESSMENT ORDER PASSE D BY THE LD. AO IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND HAS BEEN PASSED WITHOUT AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD. 6. THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF TH E CASE AND THE PROVISION OF LAW THE LD CIT APPEAL HAS ERRED IN SUSTAINING AN ADDITION OF RS. 15,05,250/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX AC T, 1961. 7. THAT THE APPELLANT CRAVES THE RIGHT TO AMEND, APPEND, DELETE ANY OR ALL GROUNDS OF APPEAL. 4 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH A ND SEIZURE ACTION U/S. 132 OF THE I.T. ACT, 1961 WAS CARRIED OUT IN WINGS PHARMACEUTICALS GROUP OF CASES ON 14.2.2008 AND THE ASSESSEE WAS ALSO COV ERED UNDER SEARCH. PROCEEDINGS U/S. 153A OF THE I.T. ACT, 1961 HAD BEE N INITIATED. IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S. 1 53A, THE ASSESSEE HAD DECLARED INCOME OF RS. 4,61,863/-. THE ASSESSMENT U/S. 143(3)/153A OF THE I.T. ACT, 1961 WAS COMPLETED ON 24.12.2009 AND ASSESSED AT RETURNED INCOME OF RS. 4,61,863/-. SUBSEQUENTLY, A LETTER WAS RECEIVED FROM THE CIT (CENTRAL)-III, NEW DELHI FORWARDING TH EREIN INFORMATION THAT, A SURVEY U/S. 133A WAS CONDUCTED ON 20.11.2007 IN T HE CASE OF SH. SK GUPTA AND THE COMPANIES OPERATED BY HIM AT 308, ARU NACHAL BUILDING, 19, BARAKHAMBA ROAD, NEW DELHI 110001. SH. SK GUPT A IS BASICALLY A CHARTERED ACCOUNTANT BUT HE IS FOUND TO HAVE BEEN I NDULGED IN PROVIDING ACCOMMODATION ENTRIES TO THE DIFFERENT COMPANIES, I NDIVIDUAL AND OTHERS, REPORTED TO BE MORE THAN 30 IN NUMBER. A LIST OF B ENEFICIARIES OF ACCOMMODATION ENTRIES PROVIDED BY SURESH KUMAR GUPT A FOR A.Y. 2005- 06 WAS ALSO ENCLOSED WITH THE AFORESAID LETTER AND ON PERUSAL OF THE SAME, AO REVEALED THAT M/S RK ARORA & SONS (HUF), WHO IS ASSESSED TO TAX IS ONE OF THE BENEFICIARIES AND HAS RECEIVED ACCOMMODA TION ENTRIES FROM SURESH KUMAR GUPTA HUSBAND OF ANJALI GUPTA. IN V IEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CASE OF THE ASSESSEE WAS REOPENED U/S. 147 OF THE I.T. ACT, 1961 AND ACCORDINGLY, NOTICE U/S. 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 29.3.2012 AND IN RESPONSE THERETO ASSESSEE HAS SUBMITTED ITS REPLY. THEREAFTER, AFTER CONSIDE RING THE REPLY OF THE 5 ASSESSEE THE AO ASSESSED THE INCOME OF THE ASSESSE E AT RS. 19,67,010/- U/S. 143(3)/148 OF THE I.T. ACT, 1961 ON 28.3.2013. 4. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER D ATED 28.3.2008, ASSESSEE WAS IN APPEAL BEFORE THE LD. CIT(A), W HO VIDE IMPUGNED ORDER DATED 30.3.2015 HAS DISMISSED THE APPEAL OF T HE ASSESSEE. 5. AGAINST THE AFORESAID ORDER OF THE LD. CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD. COUNSEL OF THE ASSESSEE REITERATED THE CONT ENTION RAISED IN THE GROUNDS OF APPEAL. HE FURTHER SUBMITTED THAT THE A O HAS MECHANICALLY ISSUED THE NOTICE ON THE BASIS OF LETTER RECEIVED F ROM THE OFFICE OF THE CIT CENTRAL-3. THERE IS NO LIVE LINK IN THE REASONS RE CORDED BETWEEN THE INFORMATION OBTAINED AND THE BELIEF FORMED BY THE AO. ONLY THE VALUE OF ENTRY TAKEN IS MENTIONED BUT THE NATURE OF ENTRY WH ETHER IT IS, BOGUS GIFT, LOAN OR SHARE CAPITAL MONEY IS NOT MENTIONED. MORE OVER, ON WHAT BASIS THE ABOVE PRESUMPTION IS DRAWN THAT THE ASSESSSEE H AS TAKEN ANY ACCOMMODATION ENTRY IS ALSO NOT MENTIONED. NO REFER ENCE IS MADE TO ANY TANGIBLE MATERIAL STATEMENT OR ANNEXURE IN SUPPORT OF THE INFORMATION RECEIVE ON THE BASIS OF WHICH REASONS HAVE BEEN REC ORDED. FROM THE REASONS IT IS ALSO NOT CLEAR WHETHER ANY STATEMENT OF SMT. ANJALI GUPTA/ SH. SURESH KUMAR GUPTA HAS BEEN RECORDED OR NOT. EV EN IN THE REASONS RECORDED, PAY ORDER NO. MENTIONED IS WRONG MEANING THEREBY THAT THE AO HAS NOT BOTHERED TO EVEN VERIFY THE INFORMATION RECEIVED WITH THE ASSESSMENT FOLDER WHEREIN THE CONFIRMATION/COPY OF PAY ORDER HAS ALREADY 6 BEEN FILED AT THE TIME OF ORIGINAL ASSESSMENT U/S 1 53A. IT INDICATES THAT THE AO HAS MECHANICALLY RECORDED THE REASONS AND IS SUED THE NOTICE WITHOUT APPLYING HIS OWN MIND. THEREFORE, ON THESE FACTS, THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE SIGNA TURE HOTELS PVT. LTD. (SUPRA), 338 ITR 51, INSECTICI (INDIA) LTD. (SUPRA) , 357 ITR 330 WOULD BE SQUARELY APPLICABLE BECAUSE THE INFORMATION ON THE BASIS OF WHICH THE AO HAD INITIATED PROCEEDINGS UNDER SECTION 147 WAS VAGUE AND UNCERTAIN AS MAY BE EVIDENCED FROM THE RELEVANT PARA OF THESE JUDGMENTS. HE FURTHER STATED THAT THE ISSUE IN DISPUTE IS ALSO SQ UARELY COVERED BY THE ITAT, DELHI DECISION 24.9.2015 IN ASSESSEES OWN C ASE FOR THE ASSESSMENT YEAR 2004-05 PASSED IN ITA NOS. 444/DEL/ 2014 (AY 2004-05) AND ITA NO. 4445/DEL/2014 (AY 2004-05). HE FURTHE R STATED THAT THAT THE ISSUE IN DISPUTE IS ALSO SQUARELY COVERED IN FA VOUR OF THE ASSESSEE BY THE ITAT DECISION DATED 09.1.2015 IN THE CASE OF G& G PHARMA INDIA LIMITED VS. ITO PASSED IN ITA NO. 3149/DEL/2013 (AY 2003-04) IN WHICH THE JUDICIAL MEMBER IS THE AUTHOR. HE FURTHER STA TED THAT THE ABOVE DECISION OF THE ITAT DATED 9.1.2015 HAS BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN ITS DECISION DATED 08. 10.2015 IN ITA NO. 545/2015 IN THE CASE OF PR. CIT-4 VS. G&G PHARMA IN DIA LTD. IN THIS REGARD, HE FILED THE COPIES OF THE AFORESAID DECISI ONS BEFORE THE TRIBUNAL. HENCE, HE REQUESTED THAT RESPECTFULLY FO LLOWING THE ABOVE PRECEDENTS, THE REASSESSMENT PROCEEDINGS MAY BE QUA SHED. 7. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS PASSED BY THE LOWER AUTHORITIES ON THE ISSUE IN DISPUTE. 7 8. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. I FIND THAT THE AO HAS RECORDED THE REASONS FOR BELIEF TH AT INCOME HAS ESCAPED ASSESSMENT AS UNDER. THE SAME IS REPRODUCED IN THE IMPUGNED ORDER WHICH READ AS UNDER:- REASONS. TO BELIEVE FOR REOPENING U/S 147 MIS K.K. ARORA & SONS HUF, B-4/48, PASCHIM VLHAR, N EW DEIHL. (A.Y.2005-06) A SEARCH & SEIZURE ACTION U/S 132 WAS CARRIED OUT I N WINGS GROUP OF CASES ON 14.02.2008. THE .CASE WAS CENTRALIZED WITH CENTRAL CIRCLE- 2 VIDE ORDER ULS 127 BY CIT-IX, NEW DELHI ON 24.10. 2008. 2. THE ASSESSMENT IN THE CASE OF MIS K.K. ARORA & SONS HUF WAS COMPLETED VIDE ORDER U/S 143(3)/153A OF THE ACT, 19 61 DATED 24.12.2009 AT THE RETURNED INCOME OF RS.4,61 ,863/- . 3. A LETTER HAS BEEN RECEIVED FROM THE CIT(CENTRAL) -III, NEW DELHI FORWARDING THEREWITH COPY OF LETTER OF THE ACIT, CE NTRAL CIRCLE-22, NEW DELHI. AS PER INFORMATION VIDE THIS LETTER (SUP RA), A SURVEY U/S 133'A WAS CONDUCTED ON 20.11.2007 IN THE CASE OF SH . S.K. GUPTA AND THE COMPANIES OPERATED BY HIM AT 308, ARUNANCHA L BUILDING, 19, BARASHAMBA READ, NEW DELHI- 110001. S.K. GUPTA IS BASICALLY A CHARTED ACCOUNTANT BUT HE IS FOUND TO HAVE BEEN INDULGED PROVIDING ACCOMMODATION ENTRIES TO THE DIFFERENT PA RTIES THROUGH THE BANK ACCOUNTS OPERATED BY HIM IN THE NAME OF DI FFERENT COMPANIES, INDIVIDUAL AND OTHERS, REPORTED TO BE MO RE THAN 30 IN NUMBER. AS PER THE PRINT OUT TAKEN FROM ANNEXURE A- 14 (LAPTOP) IMPOUNDED DURING THE COURSE OF SURVEY, THERE WERE H UGE CASH FOUND TO HAVE BEEN DEPOSITED IN VARIOUS LEDGER ACCOUNTS. SH. S.K. GUPTA IS THE MAIN PERSON CONTROLLING THE CONCERN OF THIS GROUP. 8 4. THIS FACT WAS CONFRONTED TO SH. S.K. GUPTA WHO, VIDE HIS STATEMENT ON 26.12.2008, HAS ADMITTED AS UNDER:- 'Q2 INVESTIGATION WING OF THE INCOME TAX DEPARTMENT HAS REPORTED THAT TRANSACTION UNDERTAKEN THROUGH THES E COMPANIES WERE NOT GENUINE .. THEY WERE MERE ENTRIE S GIVEN FOR EQUIVALENT CASH AND YOU CHARGED CERTAIN COMMI SSION FOR THOSE TRANSACTIONS. ANS. YES, I AGREE WITH ABOVE STATEMENT EXCEPT OR SO ME GENUINE WORK OF SHARE BROKERAGE, OTHER TRANSACTION DONE ARE NOT GENUINE. CASH WAS TAKEN AND CHEQUES WERE ISSUED FROM DIFFERENT COMPANIES. THE EXACT DETAILS OF EACH PART Y ARE RECORDED IN THE COMPUTER SEIZED BY THE DEPARTMENT I N THE SURVEY OPERATIONS ON 20.11.2007 AT MY PREMISES. DE TAILS OF PREMIUM EARNED BY ME ARE ALSO RECORDED THERE. THE COMMISSION INCOME EARNED BELONGS TO ME AND SHOULD B E TAXED IN MY HANDS. DETAILS OF THE ENTRIES GIVEN OVE R IN DIFFERENT YEARS LIKE ADDRESSES OF BENEFICIARIES AND NATURE OF TRANSACTION WILL BE SUPPLIED FROM TO TIME.' 5. A LIST OF BENEFICIARIES OF ACCOMMODATION ENTRIE S PROVIDED BY SH. SURESH KUMAR GUPTA FOR AY 2005-06 IS ALSO ENCLOSED WITH THE LETTER (SUPRA). A PERUSAL OF THE LIST ENCLOSED WITH THE LE TTER OF THE ACIT, CC-22, NEW DELHI REVEALS THAT MIS K.K. ARORA & SONS HUF, WHO IS ASSESSED TO TAX WITH THIS CIRCLE, IS ONE OF THE BEN EFICIARIES AND HAS RECEIVED ACCOMMODATION ENTRIES FROM ANJALI GUPTA, A S PER DETAILS GIVEN BELOW: MEDIATORY ACTUAL BENEFICIARY DATE CH. NO. PO NO. AMOUNT DEEPAK JAIN KK ARORA & SONS HUF 17.6.2004 320390 RS. 5,00,625 9 6. IN VIEW OF THIS, I AM SATISFIED THAT THE INCOME TO THE TUNE OF RS.5,OO,625/- HAS ESCAPED ASSESSMENT BY REASON OF T HE FAILURE ON THE PART OF THE ASSESSEE AND TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSM ENT YEAR. 7. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE O F MORE THAN RS.1.0 LAC HAS ESCAPED FROM ASSESSMENT. SD/- (JANARDAN DAS) ACIT, CENTRAL CIRCLE-2, NEW DELHI 9. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS, I AM OF THE CONSIDERED VIEW THAT ONLY LEGAL GROUND INVOLVED IN THIS APPEAL IS WHETHER THE REASSESSMENT PROCEEDINGS U/S. 148 OF THE I.T. ACT ARE ILLEGAL AND WITHOUT JURISDICTION IN THE ABSENCE OF ANY TANGIBL E EVIDENCE OR MATERIAL IN RESPECT OF ANY UNDISCLOSED INCOME AND RECORDING OF REQUISITE SATISFACTION IN RESPECT OF ANY SUCH UNDISCLOSED INCOME OR NOT. I AM OF THE VIEW THAT AO HAS NOT APPLIED HIS MIND SO AS TO COME TO AN IND EPENDENT CONCLUSION THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAP ED DURING THE YEAR. IN MY VIEW THE REASONS ARE VAGUE AND ARE NOT BASED ON ANY TANGIBLE MATERIAL AS WELL AS ARE NOT ACCEPTABLE IN THE EYES OF LAW. THE AO HAS MECHANICALLY ISSUED NOTICE U/S. 148 OF THE ACT, ON THE BASIS OF INFORMATION ALLEGEDLY RECEIVED BY HIM FROM THE INCOME TAX DEPAR TMENT. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRES ENT CASE AND THE CASE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, I AM OF THE CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF THE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BAD IN LAW AND DESERVES TO BE QUASHED. I FIND THAT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SIGNATURE HOTELS P. LTD. VS. INCOME TAX OFFICER [2011] 338 ITR 0051 HAS HELD A S UNDER:- 10 HELD, ALLOWING THE PETITION, THAT THE REASSESSMENT PROCEEDING WERE INITIATED ON THE BASIS OF INFORMATI ON RECEIVED FROM THE DIRECTOR OF INCOME TAX (INVESTIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS. 5 LACS DURING THE FINANCIAL YEAR 2002-03 AS STATED IN THE ANNEXURE. ACCORDING TO THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY , S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIREMENTS OF SECTION 147 OF THE ACT. THERE WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT , EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DISCLOSE D ESCAPEMENT OF INCOME. THE ANNEXURE WAS NOT A POINTER AND DID NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS OW N MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THERE WAS NO DISPUTE THAT THE COMPANY, S, HAD A PAID-UP CAPITAL OF RS. 90 LAK HS AND WAS INCORPORATED ON JANUARY 4, 1989, AND WAS AL SO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER, 2001. THUS, IT COULD NOT BE HELD TO BE A FICTITIOU S PERSON. THE REASSESSMENT PROCEEDINGS WERE NOT VALI D AND WERE LIABLE TO BE QUASHED. 10. I ALSO FIND THAT THE LEGAL ISSUE IS ALSO COVERE D BY THE HONBLE HIGH COURT OF DELHI IN THE CASE OF PR. CIT VS. G&G PHARM A INDIA LTD. IN ITA NO. 545/2015 DATED 8.10.2015 WHEREIN, HONBLE DELHI HIG H COURT HAS ADJUDICATED THE ISSUE AS UNDER:- 11 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. 10TH FEBRUARY 2003, FROM FOUR ENTI TIES 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 INVESTIGATION WIN G AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES.' THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE AO APPLIED HIS MIND TO TH E MATERIALS THAT HE TALKS ABOUT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DA TE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESS EE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN , WHICH WAS FILED ON 14TH 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 SI MPLY CONCLUDED: 'IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES'. IN THE CONSIDERED VI EW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SU FFICIENT CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCU SSED HEREINBEFORE, THE BASIC REQUIREMENT THAT THE AO MUS T APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE RE ASONS 12 TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. 13. MR. SAWHNEY TOOK THE COURT THROUGH THE ORDER OF THE CIT(A) TO SHOW HOW THE CIT (A) DISCUSSED THE MATERIALS PRODUCED DURING THE HEARING OF THE APPEAL . THE COURT WOULD LIKE TO OBSERVE THAT THIS IS IN THE NATURE OF A POST MORTEM EXERCISE AFTER THE EVENT OF REOPEN ING OF THE ASSESSMENT HAS TAKEN PLACE. WHILE THE CIT MA Y HAVE PROCEEDED ON THE BASIS THAT THE REOPENING OF T HE ASSESSMENT WAS VALID, THIS DOES NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO THE REOPENING OF T HE ASSESSMENT, THE AO HAS TO, APPLYING HIS MIND TO THE MATERIALS, CONCLUDE THAT HE HAS REASON TO BELIEVE T HAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. UNLE SS THAT BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED A POST MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT RESCUE AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALIDIT Y . 14. IN THE CIRCUMSTANCES, THE CONCLUSION REACHED BY THE ITAT CANNOT BE SAID TO BE ERRONEOUS. NO SUBSTANTIAL QUESTION OF LAW ARISES. 15. THE APPEAL IS DISMISSED. 11. IN VIEW OF ABOVE, I AM OF THE CONSIDERED VIEW THAT THE AFORESAID ISSUE IN DISPUTE IS EXACTLY THE SIMILAR AND IDENTIC AL TO THE ISSUE INVOLVED IN THE PRESENT APPEAL AND IS SQUARELY COVERED BY THE A FORESAID DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF SIGN ATURES HOTELS (P) LTD. VS. ITO (SUPRA) AND CIT VS. G&G PHARMA INDIA LTD. ( SUPRA) AND ITAT, DELHI DECISION DATED 24.9.2015 IN ASSESSEES OWN C ASE FOR THE ASSESSMENT YEAR 2004-05 PASSED IN ITA NOS. 444/DEL/ 2014 (AY 2004-05) 13 AND ITA NO. 4445/DEL/2014 (AY 2004-05) WHEREIN, ON SIMILAR AND IDENTICAL FACTS AND CIRCUMSTANCES, THE APPEAL OF TH E ASSESSEE WAS ALLOWED ON LEGAL GROUND. HENCE, RESPECTFULLY FOLLOWING THE ABOVE PRECEDENTS, I DECIDE THE LEGAL ISSUE IN DISPUTE IN FAVOR OF THE A SSESSEE AND AGAINST THE REVENUE AND ACCORDINGLY QUASH THE REASSESSMENT PROC EEDINGS AND ALLOW THE LEGAL ISSUE. SINCE I HAVE ALREADY QUASHED THE REASSESSMENT PROCEEDINGS, AS AFORESAID, THE OTHER ISSUES ARE NOT BEING DEALT WITH BEING ACADEMIC IN NATURE. 12. IN THE RESULT, ALL THE 05 APPEALS OF THE ASSES SES STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/01/2017. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 03/1/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 14