M/s Suraj Pulses Processors Pvt.Ltd., Delhi V. Pr. CIT-8, New Delhi

ITA 3012/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9512 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Gift; Rectification of order; Search and seizure; Opportunity of being heard; Reasonable cause; Tangible material; Validity of assessment; Accommodation entries; Reason to believe; Documents seized; Reassessment proceedings; Set aside
• Section: 143(3); 153A; 133(6); 143(2); 64; 43; 48; 13; 22; 153C; 147; 148; 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.3009 & 3010/DEL/2017 ASSESSMENT YEAR: 2007-08 & 2008-09 SURAJ PULSES PVT. LTD., 4062-630, NAYA BAZAR, DELHI. VS. PR.CIT-8, NEW DELHI. TAN/PAN: AAKCS4913P (APPELLANT) (RESPONDENT) I.T.A. NO.3011/DEL/2017 ASSESSMENT YEAR: 2007-08 SURAJ BUILDMART INDIA PVT. LTD., 4062-630, NAYA BAZAR, DELHI. VS. PR.CIT-8, NEW DELHI. TAN/PAN: AAKCS3598L (APPELLANT) (RESPONDENT) I.T.A. NO.3012/DEL/2017 ASSESSMENT YEAR: 2009-10 SURAJ PULSES PROCESSORS PVT. LTD., 4062-630, NAYA BAZAR, DELHI. VS. PR.CIT-8, NEW DELHI. TAN/PAN: AAKCS3598L (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI SHANTANU JAIN, ADV. RESPONDENT BY: SHRI H.K. CHOUDHARY, CIT-D.R. DATE OF HEARING: 08 04 2021 DATE OF PRONOUNCEMENT: 06 07 2021 ITA. NO.3009 TO 3012/DEL/2017 2 O R D E R PER AMIT SHUKLA, JM :- THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSE SSEE AGAINST IMPUGNED ORDER DATED 14.03.2017 AND 17.03.2 017, PASSED BY LD. PCIT-VIII, NEW DELHI U/S 263 OF THE I NCOME TAX ACT, FOR THE ASSESSMENT YEAR 2007-08, 2008-09 AND 2 009-10, RESPECTIVELY. SINCE THE ISSUES INVOLVED IN ALL THE APPEALS ARE COMMON ARISING OUT OF ALMOST IDENTICAL SET OF FACTS , THEREFORE, SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. 2. WE WILL FIRST TAKE UP THE APPEAL IN THE CASE OF SURYA PULSES PVT. LTD. FOR THE ASSESSMENT YEAR 2007-08 IN ITA NO.3009/DEL/2017. 3. THE FACTS OF THE CASE ARE THAT ORIGINAL RETURN OF I NCOME FOR THIS YEAR WAS FILED ON 25.10.2007 AT NIL INCOME. TH E NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT WAS ISSUED ON 25.03.2014 AFTER RECORDING THE REASONS AND TAKING PRIOR APPROVAL FROM THE COMPETENT AUTHORITIES. THE CASE W AS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE OFFICE OF CIT, NEW DELHI VIDE LETTER DATED 28.03.2013 WHER EIN IT WAS STATED THAT DURING THE COURSE OF SEARCH CONDUCTED I N THE PREMISES OF SHRI SURINDER KUMAR JAIN IT WAS FOUND T HAT ASSESSEE HAS OBTAINED AN ENTRY OF RS.25 LAC DURING THE RELEVANT YEAR. THE ASSESSEE IN RESPONSE TO THE STAT UTORY NOTICE VIDE LETTER DATED 01.04.2014 SUBMITTED THAT THE ORI GINAL ITA. NO.3009 TO 3012/DEL/2017 3 RETURN FILED MAY BE TREATED AS A RETURN FILED IN RE SPONSE TO THE NOTICE UNDER SECTION 148 OF THE I.T. ACT; AND ALSO VIDE LETTER DATED 15.04.2014 REQUESTED TO PROVIDE REASONS RECOR DED, WHICH WERE DULY PROVIDED. THE ASSESSEE FILLED ITS O BJECTIONS WHICH WERE DISPOSED OFF. THE A.O. THE ISSUED NOTICE S TO PROVE THE SOURCE OF CREDITS WHICH WERE DULY COMPLIED BY T HE ASSESSEE AND FILED ALL THE EVIDENCES AND DETAILS AS CALLED FOR ASSESSING OFFICER. THE ASSESSEE HAD FURNISHED THE D ETAILS OF THE PARTIES FROM WHOM ASSESSEE RECEIVED SHARE CAPIT AL/SHARE APPLICATION MONEY AND FURNISHED INCOME TAX RETURN, CONFIRMATION, FINANCIAL STATEMENTS, AUDITED ACCOUNT S, BANK STATEMENTS AND OTHER RELATED MATERIALS. ASSESSING O FFICER THEN CONDUCTED INDEPENDENT INQUIRY AND ISSUED NOTIC ES U/S 133(6) TO THE COMPANIES WHO HAVE INVESTED AND IN RE SPONSE ALL THESE PARTIES DULY REPLIED AND SENT TO THE ASSE SSING OFFICER. AFTER THE INQUIRY THE ASSESSING OFFICER AND AFTER DISCUSSING THE CASE WITH THE ASSESSEE, HE ACCEPTED THE RETURNED INCOME AND PASSED THE RE-ASSESSMENT ORDER UNDER SECTION 147/143(3) OF THE I.T. ACT, 1961, ON DATED 27.01.2015. 4. THE LD. PR. CIT ON EXAMINING THE ASSESSMENT RECO RD NOTICED THAT THOUGH THE ASSESSMENT WAS REOPENED UND ER SECTION 148 OF THE I.T. ACT ON THE ALLEGATION OF AC COMMODATION ENTRY AMOUNTING RS. 25,00,000/- TAKEN FROM SHRI S.K . JAIN GROUP OF CONCERNS WHO WERE SEARCHED ON 14.09.2010 B Y THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT, SO ME OF THE A.OS DID NOT EXAMINE THE SEIZED MATERIAL IN THE FO RM OF CASH ITA. NO.3009 TO 3012/DEL/2017 4 BOOK AND BOOKS CONTAINING THE DETAILS OF CHEQUES IS SUED BY SUCH CONCERNS SEIZED FROM THE PREMISES OF SHRI S.K. JAIN DURING THE COURSE OF SEARCH. THE INVESTIGATION WING , DELHI, FORWARDED THE HARD COPY OF APPRAISAL REPORT TO THE THEN COMMISSIONER, DELHI-III, WHICH WAS RECEIVED BY HIM ON 15.03.2013, THE RELEVANT SEIZED MATERIAL (CONTAININ G MANY THOUSANDS OF PAGES) WAS SCANNED AND SENT TO THE COMMISSIONER OF INCOME TAX IN SOFT COPY. HOWEVER, W HILE COMPLETING THE ASSESSMENT UNDER SECTION 147 R.W.S. 143 OF THE I.T. ACT, THOUGH THE A.O. REFERRED THE APPRAISA L REPORT BUT DID NOT LOOK INTO THE RELEVANT SEIZED MATERIAL IN S OFT COPY. ACCORDINGLY, A SHOW CAUSE NOTICE UNDER SECTION 263 OF THE I.T. ACT WAS ISSUED TO THE ASSESSEE ON 13.01.2017 WHICH IS REPRODUCED IN THE IMPUGNED ORDER. IN THE SHOW CAUSE NOTICE IT IS STATED THAT THE CASE WAS REOPENED ON THE ALLE GATION OF ACCOMMODATION ENTRY OF RS.25 LAKHS ON ACCOUNT OF SH ARE APPLICATION/CAPITAL RECEIVED FROM M/S. EURO ASIA VE NTURE CAPITAL (INDIA) LTD. A CONCERN OF S.K. JAIN GROUP O F CASES. SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 14. 09.2010 AT THE PREMISES OF SHRI SURENDER JAIN AND SHRI VIRE NDER JAIN. DURING THE COURSE OF SEARCH, CASH BOOK AND BANK BOO KS OF THE CONCERNS MANAGED BY SHRI S.K. JAIN GROUP WHEREIN DE TAILED OF DAY-TO-DAY RECEIPTS IN CASH AND CHEQUE FROM/TO D IFFERENT PERSONS/FIRMS/COMPANIES HAVE BEEN RECORDED WERE SEI ZED. ON PERUSAL OF THE RE-ASSESSMENT ORDER, IT IS NOTICE D THAT WHILE PASSING THE SAID ORDER, THE A.O. HAS FAILED TO CONS IDER THE RELEVANT SEIZED MATERIAL PERTAINING TO THE ASSESSEE -COMPANY ITA. NO.3009 TO 3012/DEL/2017 5 WHICH IS MENTIONED IN THE ORDER. IT IS NOTED IN THE NOTICE UNDER SECTION 263 THAT THE AMOUNTS RECEIVED BY ASSE SSEE- COMPANY WERE ACCOMMODATION ENTRY IN LIEU OF CASH GI VEN BY THE ASSESSEE-COMPANY THROUGH SHRI SATISH GOEL. THE RELEVANT COPIES OF THE SEIZED MATERIAL RELATING TO THE ASSES SEE-COMPANY WERE GIVEN ALONG WITH SHOW CAUSE NOTICE OR DURING T HE PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT. REPL Y OF THE ASSESSEE WAS CALLED FOR IN WHICH THE ASSESSEE EXPLA INED THAT THE A.O. AFTER EXAMINING THE ENTIRE DETAILS AND DOC UMENTARY EVIDENCES ON RECORD AND MAKING DIRECT/INDEPENDENT E NQUIRY FROM BOTH THE INVESTORS UNDER SECTIONS 133(6) OF TH E I.T. ACT, COMPLETED THE ASSESSMENT PROCEEDINGS. THE ASSESSEE FILED ALL THE DOCUMENTARY EVIDENCES BEFORE A.O. I.E., CONFIRM ATION LETTER FROM INVESTORS, COPY OF THEIR BANK ACCOUNTS, COPY OF ITR, COPY OF PAN, COPY OF AUDITED BALANCE SHEET, CO PY OF MASTER DATA TAKEN FROM OFFICIAL WEBSITE OF MCA. IT WAS ALSO STATED THAT THE SEIZED PAPERS ARE ONLY ROUGH PAPERS AND NO DETAILS ARE MENTIONED THEREIN. AS SUCH, THE RE-ASSE SSMENT ORDER WAS SET ASIDE BY THE LD. PR. CIT AND RESTORED TO THE LD. AO FOR PASSING THE ORDER AFRESH AS PER LAW. 5. ASSESSEE BESIDES TAKING VARIOUS GROUNDS CHALLENG ING THE VALIDITY OF THE ACTION TAKEN BY THE LD. PCIT U/S.26 3 AND ON MERITS, THE ASSESSEE HAS ALSO MOVED AN APPLICATION FOR ADMISSION OF FOLLOWING ADDITIONAL GROUNDS:- I) BECAUSE THE ACTION FOR INITIATION, CONTINUATION AND CONCLUSION OF REASSESSMENT PROCEEDINGS IS BEING CHA LLENGED ON FACTS AND LAW. ITA. NO.3009 TO 3012/DEL/2017 6 II) BECAUSE THE CONTINUATION AND CONCLUSION OF REASSESS MENT PROCEEDINGS IS BEING CHALLENGED ON FACTS AND LAW WH ILE THERE BEING ERRONEOUS DISPOSAL OF PRELIMINARY OBJEC TION RAISED PURSUANT TO JUDGMENT OF GKN DRIVESHAFTS 259 ITR 19 SC III) BECAUSE THE ACTION FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS IS UNREASONABLE SINCE WHILE RECORDING R EASONS, THERE IS NON APPLICATION OF MIND MUCH LESS INDEPEND ENT APPLICATION OF MIND AND MERELY RELYING UPON INVESTI GATION REPORT BY AO, FURTHER REASONS RECORDED ARE VAGUE, L ACKING TANGIBLE MATERIAL/REASONABLE CAUSE AND JUSTIFICATIO N IV) BECAUSE THE ACTION IS BEING CHALLENGED ON FACTS & LAW FOR CHALLENGING THAT THE REASSESSMENT ORDER PA SSED U/S 147/143(3) WAS ILLEGAL OR NULLITY IN THE EYES O F LAW, THEN, WHETHER THE CIT HAD A VALID JURISDICTION TO P ASS THE IMPUGNED ORDER U/S 263 TO REVISE THE NON EST REASSE SSMENT ORDER. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ADDITIONAL GROUNDS ARE LEGAL IN NATURE AND NO FRESH FACTS ARE TO BE INVESTIGATED. HE ALSO SUBMITTED THAT THE ADDI TIONAL GROUND GOES TO THE ROOT OF THE MATTER AND THEREFORE , PRAYED THAT THE SAME MAY BE ADMITTED FOR DISPOSAL OF THE A PPEAL. HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF NTPC LIMITED VS. CIT REPORTED IN 229 ITR 38 3 (SC) AND HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. SPLS SIDDHARTHA LTD. REPORTED IN 345 ITR 223 (DELHI). 7. ON THE OTHER HAND, LEARNED DR OBJECTED TO THE ADMISSION OF ADDITIONAL GROUNDS OF APPEAL STATING T HAT SUCH GROUNDS WERE NOT RAISED BEFORE THE LOWER AUTHORITIE S AND AS SUCH THE SAME COULD NOT BE RAISED AT THIS STAGE. ITA. NO.3009 TO 3012/DEL/2017 7 8. IN REBUTTAL, THE LD. COUNSEL FOR THE ASSESSEE HA S SUBMITTED THAT THE SAID GROUNDS CHALLENGING THE REO PENING U/S 148 OF THE ACT WERE RAISED BEFORE THE LD. PR. C IT AS EVIDENT FROM THE IMPUGNED ORDER BUT ON ACCOUNT OF A BUNDANT CAUTION, THE SAME WERE RAISED AGAIN. 9. CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT ADDITIONAL GROUNDS RAISED ARE PURELY LEGAL IN NATUR E AND GOES TO THE ROOT OF THE MATTER, WHICH DOES NOT REQUIRE A NY INVESTIGATION FACTS AND IS BORNE OUT FROM THE ORDER S AND MATERIAL ON RECORD. THEREFORE, THE SAME ARE ADMITTE D FOR THE PURPOSE OF DISPOSAL OF THE APPEAL. WE, ACCORDINGLY, ADMIT THE ADDITIONAL GROUNDS OF APPEAL. 10. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THA T THE REOPENING OF ASSESSMENT IS ITSELF INVALID; AS SUCH THE LD. PR. CIT DOES NOT HAVE ANY JURISDICTION TO UPSET THE RE- ASSESSMENT ORDER, IN PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT. HE SUBMITTED THAT IT IS WELL SETTLED PRINCIPLE OF LAW THAT VALIDITY OF THE ORIGINAL ASSESSMENT ORDER CAN BE CHALLENGED IN THE COLLATERAL PROCEEDINGS. THUS, IN VIEW OF THE SAME, APPELLANT AGITATES THE VERY VALIDITY OF THE REASSESSMENT ORDE R U/S 147 OF THE ACT, WHICH WAS SOUGHT TO BE REVISED BY THE IMPU GNED ORDER U/S 263 OF THE ACT. HE PLACED RELIANCE UPON T HE FOLLOWING JUDICIAL DECISIONS: - SUPERSONIC TECHNOLOGIES (P) LTD. VS. PCIT IN ITA NO . 2269/D/2017 DATED 10.12.2018 (ITAT, DELHI BENCH) ITA. NO.3009 TO 3012/DEL/2017 8 6.1. IT IS WELL SETTLED LAW THAT ASSESSEE CAN CHALLENGE THE VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS IN THE COLLATERAL PROCEEDINGS (RELATING TO EXAMINATION OF VALIDITY OF ORDER PASSED) UNDER SECT ION 263 OF THE I.T. ACT. WE RELY UPON THE ORDER OF ITAT, MUMBAI BENCH IN THE CASE OF WESTLIFE DEVELOPMENT LT D., VS. PCIT 49 ITR (TRIBU.) 406 IN WHICH IT WAS HELD ALLO WING THE APPEAL (I) THAT JURISDICTION ASPECT OF THE ORDER PA SSED IN THE PRIMARY PROCEEDINGS CAN BE EXAMINED IN COLLATERAL PROCEEDINGS ALSO. THUS, THE ASSESSEE COULD BE PERMI TTED TO CHALLENGE THE VALIDITY OF THE ORDER PASSED UNDER SE CTION 263 ON THE GROUND THAT THE ASSESSMENT ORDER WAS NON-EST . SINCE THE REASSESSMENT ORDER ITSELF IS BAD IN LAW, THEREFORE, LEARNED COUNSEL FOR THE ASSESSEE, RIGHTL Y CONTENDED THAT THE SAME CANNOT BE REVISED UNDER SECTION 263 OF THE I.T. ACT.ONLY VALID RE-ASSESSMEN T ORDER CAN BE REVISED UNDER SECTION 263 OF THE I.T. ACT. ON THIS GROUND ITSELF THE PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT ARE BAD IN LAW AND LIABLE TO BE QUASHED. WE, ACCORDINGLY, SET ASIDE THE ORDER OF LD. PR. CIT PASSED UNDER SECTION 263 OF THE I.T. ACT AND QU ASH THE SAME. - M/S CHARBHUJAMARMO (INDIA) (P) LTD. VS. PCIT IN ITA NO. 4749/D/2019 DATED 31.12.2019 (ITAT, DELHI) 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS . IT IS WELL SETTLED LAW THAT SINCE RE-ASSESSMENT PROCEEDINGS AR E INVALID AND BAD IN LAW, THEREFORE, SUCH PROCEEDINGS COULD NOT BE REVISED UNDER SECTION 263 OF THE I.T. ACT. IT IS ALSO WELL SETTLED LAW THAT VALIDITY OF THE RE -ASSESSMENT PROCEEDINGS ARE TO BE JUDGED ON THE BASIS OF THE RE ASONS RECORDED FOR REOPENING OF THE ASSESSMENT. ITA. NO.3009 TO 3012/DEL/2017 9 10.1 HE FURTHER PLACED RELIANCE UPON THE FOLLOWIN G JUDGMENTS: - M/S WESTLIFE DEVELOPMENT LTD. VS. PCIT IN ITA NO. 688/MUM/2016 DATED24.06.2016 (ITAT, MUMBAI) - KRISHNA KUMAR SARAF VS. CIT IN ITA NO. 4562/DEL/2011 DATED 24.09.2015 (ITAT, DELHI) - M/S CLASSIC FLOUR & FOOD PROCESSING (P) LTD. VS. C IT IN ITA NO. 764 TO 766/KOL/2014 DATED 05.04.2017 (ITAT, KOLKATA) 11. IN THIS CASE, THE A.O. WHILE REOPENING THE ASS ESSMENT HAS RECORDED THE FOLLOWING REASONS FOR RE-ASSESSMEN T UNDER SECTION 147/148 OF THE I.T. ACT, COPY OF WHICH IS P LACED AT PG. 18 OF THE PAPER BOOK: INFORMATION/ DOCUMENTS IN THE FORM OF CD, APPRAISA L REPORT ALONGWITH RELEVANT DETAILS HAS BEEN RECEIVED FROM THE OFFICE OF THE CIT-III, NEW DELHI VIDE LETTER F. NO. CIT- III/CONFIDENTIAL/2012-13 DATED 28.03.2013 THAT THE ABOVE ASSESSEE, M/S SURAJ PULSES PRIVATE LIMITED HAS RECEIVED AND IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVI DED BY THE GROUP OF SHRI SURENDRA KUMAR JAIN, SH. RAKESH G UPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN &VAIBHAV J AIN AND HUNDREDS OF BOGUS COMPANIES OF HIS GROUP AND MA NY OTHER RELATED ENTRY PROVIDERS. THESE SEARCH AND SEI ZURE OPERATIONS UNEARTHED THE MODUS OPERANDI OF THESE EN TRY OPERATORS. THE VARIOUS COMPANIES WHICH DO NOT HAVE ANY BUSINESS WERE BEING USED FOR PROVIDING ACCOMMODATIO N ENTRIES TO VARIOUS ASSESSEES WHO WERE REROUTING THE IR UNACCOUNTED CASH THROUGH THESE ACCOMMODATION ENTRIE S. THE ASSESSEES WOULD PAY CASH TO THE ENTRY PROVIDERS . THIS CASH WOULD THEN BE DEPOSITED IN THE ACCOUNTS OF VAR IOUS ITA. NO.3009 TO 3012/DEL/2017 10 BOGUS COMPANIES AND THE TRANSACTIONS WOULD BE ROUTE D THROUGH MANY BANK ACCOUNTS TO COVER THE TRAIL. THEN THE ASSESSEE WOULD BE GIVEN CHEQUE FROM ONE OF THE MANY ACCOUNT WHICH WOULD BE GIVEN THE COLOUR OF SHARE APPLICATION MONEY OR SHARE CAPITAL OR SHARE PREMIUM OR LOANS OR ADVANCE ETC. IN THE PROCESS, THE ENTRY OPE RATOR WOULD EARN CERTAIN COMMISSION. THE SEARCHES BY THE INVESTIGATION WING AGAINST THE ENTRY OPERATORS RESU LTED IN UNEARTHING OF LARGE NUMBER OF PASS BOOKS, CHEQUE BO OKS, COMPUTER HARD DISKS, SIGNED BLANK CHEQUES, SHARE TR ANSFER CERTIFICATES AND MANY OTHER BLANK SIGNED DOCUMENTS. THIS INFORMATION HAS BEEN PROVIDED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT TO THE ASSESSING OFFICER. 12. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTEN TION TOWARDS THE WRITTEN SUBMISSIONS ALONG WITH DOCUMENT ARY EVIDENCES (PLACED IN PAPER BOOK) FILED BY THE ASSES SEE BEFORE THE AUTHORITIES BELOW AND ALSO THE WRITTEN SYNOPSIS FILED BEFORE US. HE SUBMITTED THAT THERE IS NON-APPLICATI ON OF MIND BY THE LEARNED ASSESSING OFFICER IN RECORDING REASO NS FOR REOPENING OF THE ASSESSMENT AND HE MERELY RELIED UP ON THE INFORMATION OF THE INVESTIGATION WING. HE FURTHER S UBMITTED THAT THE REASONS RECORDED ARE VAGUE, DEVOID OF TANG IBLE MATERIAL, REASONABLE CAUSE AND JUSTIFICATION. IT WA S SUBMITTED THAT THERE IS NO LIVE NEXUS BETWEEN THE MATERIAL AN D FORMATION OF BELIEF. HE STATED THAT THE TOTAL AMOUN T OF ENTRIES TAKEN BY THE ASSESSEE HAS NOT BEEN MENTIONED, THE N ATURE OF TRANSACTION WHETHER THE SAME IS SHARE CAPITAL, SHAR E PREMIUM, LOAN, ADVANCES ETC. HAS NOT BEEN MENTIONED , THE NAMES OF THE PARTIES FROM WHOM SUCH ENTRIES ARE TAK EN HAS ITA. NO.3009 TO 3012/DEL/2017 11 NOT BEEN MENTIONED, DATE AND MODE OF TRANSACTION WH ETHER THROUGH BANK OR CASH ETC. HAS NOT BEEN MENTIONED, R EASONS ARE GENERAL IN NATURE, THERE IS NO REASONS TO BELIE F FORMED BY THE LD. AO THAT THERE IS AN INCOME WHICH HAS ESCAPE D ASSESSMENT, NOTHING IS MENTIONED WHETHER THERE IS 1 43(1) OR 143(3) ORDER BEFORE IN THE CASE OF ASSESSEE. 13. HE PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS, AMONG OTHER JUDGMENTS: - CIT VS INSECTICIDES (INDIA) LTD. REPORTED IN 357 IT R 330 (HIGH COURT OF DELHI) 8.THE AO HAS FURTHER STATED THAT THE ASSESSEE COMPANY HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND SOURCE OF THESE FUNDS ROUTED THROUGH BANK ACCOUNT OF THE ASSESSEE COMPANY. IN THE REASONS REC ORDED, IT IS NOWHERE MENTIONED AS TO WHO HAD GIVEN BOGUS ENTRIES/TRANSACTIONS TO THE ASSESSEE OR TO WHOM THE ASSESSEE HAD GIVEN BOGUS ENTRIES OR TRANSACTIONS. I T IS ALSO NOWHERE MENTIONED AS TO ON WHICH DATES AND THROUGH WHICH MODE THE BOGUS ENTRIES AND TRANSACTIONS WERE MADE BY THE ASSESSEE. WHAT WAS THE INFORMATION GIVEN BY THE DIRECTOR OF INCOME-TAX (INV.), NEW DELHI, VIDE LETT ER DATED 16.06.2006 HAS ALSO NOT BEEN MENTIONED. IN OTHER WO RDS, THE CONTENTS OF THE LETTER DATED 16.06.2006 OF THE DIRECTOR OF INCOME-TAX (INV.), NEW DELHI HAVE NOT BEEN GIVEN . THE AO HAS VAGUELY REFERRED TO CERTAIN COMMUNICATIONS T HAT HE HAD RECEIVED FROM THE DIT (INV.), NEW DELHI; THE AO DID NOT MENTION THE FACTS MENTIONED IN THE SAID COMMUNICATI ON EXCEPT THAT FROM THE INFORMATION GATHERED BY THE DI T (INV.), NEW DELHI THAT THE ASSESSEE WAS INVOLVED IN GIVING AND TAKING ACCOMMODATION ENTRIES ONLY AND REPRESENTED UNSECURED MONEY OF THE ASSESSEE COMPANY IS ACTUALLY UNEXPLAINED INCOME OF THE ASSESSEE COMPANY OR THAT IT HAS ITA. NO.3009 TO 3012/DEL/2017 12 BEEN INFORMED BY THE DIRECTOR OF INCOME-TAX (INV.), NEW DELHI VIDE LETTER DATED 16.06.2006 THAT THE ASSESSE E COMPANY WAS INVOLVED IN GIVING AND TAKING BOGUS ENTRIES/TRANSACTIONS DURING THE RELEVANT FINANCIAL YEAR. THE AO DID NOT MENTION THE DETAILS OF TRANSACTIONS THAT REPRESENTED UNEXPLAINED INCOME OF THE ASSESSEE COMP ANY. THE INFORMATION ON THE BASIS OF WHICH THE AO HAS IN ITIATED PROCEEDINGS U/S 147 OF THE ACT ARE UNDOUBTEDLY VAGU E AND UNCERTAIN AND CANNOT BE CONSTRUED TO BE SUFFICIENT AND RELEVANT MATERIAL ON THE BASIS OF WHICH A REASONABL E PERSON COULD HAVE FORMED A BELIEF THAT INCOME HAD E SCAPED ASSESSMENT. IN OTHER WORDS, THE REASONS RECORDED BY THE AO ARE TOTALLY VAGUE, SCANTY AND AMBIGUOUS. THEY AR E NOT CLEAR AND UNAMBIGUOUS BUT SUFFER FROM VAGUENESS. TH E REASONS RECORDED BY THE AO DO NOT DISCLOSE THE AO'S MIND AS TO WHAT WAS THE NATURE AND AMOUNT OF TRANSACTION OR ENTRIES, WHICH HAD BEEN GIVEN OR TAKEN BY THE ASSES SEE IN THE RELEVANT YEAR. THE REASONS RECORDED BY THE AO A LSO DO NOT DISCLOSE HIS MIND AS TO WHEN AND IN WHAT MODE O R WAY THE BOGUS ENTRIES OR TRANSACTIONS WERE GIVEN OR TAK EN BY THE ASSESSEE. FROM THE REASONS RECORDED, NOBODY CAN KNOW WHAT WAS THE AMOUNT AND NATURE OF BOGUS ENTRIE S OR TRANSACTIONS GIVEN AND TAKEN BY THE ASSESSEE IN THE RELEVANT YEAR AND WITH WHOM THE TRANSACTION HAD TAK EN PLACE. AS ALREADY NOTED ABOVE, IT IS WELL SETTLED T HAT ONLY THE REASONS RECORDED BY THE AO FOR INITIATING PROCE EDINGS U/S 147 OF THE ACT ARE TO BE LOOKED AT OR EXAMINED FOR SUSTAINING OR SETTING ASIDE A NOTICE ISSUED U/S 148 OF THE ACT. THE REASONS ARE REQUIRED TO BE READ AS THEY WE RE RECORDED BY THE AO. NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITION CAN BE MADE TO THOSE REASO NS. THEREFORE, THE DETAILS OF ENTRIES OR AMOUNT MENTION ED IN THE ASSESSMENT ORDER AND IN RESPECT OF WHICH ULTIMATE A DDITION HAS BEEN MADE BY THE AO, CANNOT BE MADE A BASIS TO SAY THAT THE REASONS RECORDED BY THE AO WERE WITH REFER ENCE TO THOSE AMOUNTS MENTIONED IN THE ASSESSMENT ORDER. TH E ITA. NO.3009 TO 3012/DEL/2017 13 REASONS RECORDED BY THE AO ARE TOTALLY SILENT WITH REGARD TO THE AMOUNT AND NATURE OF BOGUS ENTRIES AND TRANSACT IONS AND THE PERSONS WITH WHOM THE TRANSACTIONS HAD TAKE N PLACE. IN THIS RESPECT, WE MAY RELY UPON THE DECISI ON OF HON'BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT V. ATUL JAIN [2000] 299 ITR 383, IN WHICH CA SE THE INFORMATION RELIED UPON BY THE AO FOR INITIATING PR OCEEDINGS U/S 147 OF THE ACT DID INDICATE THE SOURCE OF THE C APITAL GAIN AND NOBODY KNEW WHICH SHARES WERE TRANSACTED A ND WITH WHOM THE TRANSACTION HAS TAKEN PLACE AND IN TH AT CASE THERE WERE ABSOLUTELY NO DETAILS AVAILABLE AND THE INFORMATION SUPPLIED WAS EXTREMELY SCANTY AND VAGUE AND IN THAT LIGHT OF THOSE FACTS, THE HON'BLE JURISDICT IONAL DELHI HIGH COURT HELD THAT INITIATION OF PROCEEDINGS U/S 147 OF THE ACT BY THE AO WAS NOT VALID AND JUSTIFIED IN TH E EYES OF LAW. THE RECENT DECISION OF HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF SIGNATURE HOTELS (P.) LTD. (SUPRA) ALSO SUPPORTS THE VIEW WE HAVE TAKEN A BOVE.' - SHANKERTRADEX (P) LTD. VS. ITO IN ITA NO. 2200/D/2019 DATED 10.11.2020 (ITAT, DELHI) 11 ON PERUSAL OF THE REASON IT IS APPARENT THAT IN THE FIRST PARAGRAPH THE LEARNED ASSESSING OFFICER H AS MENTIONED THAT DETAILS ABOUT THE ENTRY OPERATORS. I N THE SECOND PARAGRAPH THE LEARNED ASSESSING OFFICER HAS NOTED THAT FROM THE VERIFICATION OF THE DOCUMENTS SEIZED IT IS CLEARLY APPEARS TO HIM THAT ACCOMMODATION ENTRIES F ROM VARIOUS PAPER COMPANIES WERE OBTAINED BY THE ASSESS EE. HOWEVER IN THE TABLE REPRODUCED IN PARAGRAPH NUMBER TWO THERE IS NO REFERENCE TO THE NATURE OF THE ACCOMMOD ATION ENTRY, THE PARTIES FROM WHOM ACCOMMODATION ENTRIES HAVE BEEN PROVIDED/OBTAINED BY THE ASSESSEE, THE VARIOUS DATES OF THE ACCOMMODATION ENTRIES, THE AMOUNT INVOLVED W ITH RESPECT TO EACH OF THE PARTIES FROM WHOM ACCOMMODAT ION ENTRIES HAVE BEEN OBTAINED. INSTEAD OF THAT THE LEA RNED ITA. NO.3009 TO 3012/DEL/2017 14 ASSESSING OFFICER IN PARAGRAPH NUMBER [2] HAS MENTI ONED NAME OF THE ASSESSEE ITSELF AND AGAINST THE NAME OF THE ASSESSEE MENTIONED SUM OF 20 LAKHS. IN PARAGRAPH NUMBER [3] OF THE REASONS IT WAS FURTHER STATED BY HIM THAT HE HAS REASON TO BELIEVE THAT ASSESSEE HAS CONCEALE D ITS PARTICULARS OF INCOME WILLFULLY AND KNOWINGLY AND T HEREFORE THE SUM OF 20 LAKHS CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 2008 09. HOWEVER WH EN WE PERUSED ASSESSMENT ORDER OF THE LD AO, IT HAS CO MPLETE DETAILS AND THAT IS THE REASON THAT THE LD AR HAS N OT PRESSED THE GROUNDS ON THE MERITS F THE ADDITION. H OWEVER IT IS ALSO A TRITE LAW THAT REOPENING OF ASSESSMENT WHEN QUESTION, SHOULD SAIL THROUGH BASED ONLY ON THE REA SONS RECORDED BY THE LD AO. THE ORDER MAY BE EXHAUSTIVE COVERING SEVERAL POINTS, BUT THE REASON RECORDED BY THE LD AO, WHICH GIVES HIM JURISDICTION TO REASSESS THE AS SESSEE ON HIS REASON TO BELIEVE. IN THE PRESENT CASE THE LD AO REFERRED TO SIX YEARS OF RECORDS OF THE ENTRY OPERA TOR BUT DOES NOT MENTION HOW HE PROPOSES TO REOPEN THE IMPU GNED ASSESSMENT FOR AY 2008-09. THERE IS NO REFERENCE TH AT HOW THE REPORT OF INVESTIGATION WING AS WELL HIS OWN ASSESSMENT GIVES HIM BELIEF THAT, AY 2008- 09 IS RE QUIRED TO BE REASSESSED. FURTHER THERE IS NO REFERENCE AS WHAT NATURE OF ACCOMMODATION ENTRIES HAS BEEN OBTAINED B Y THE ASSESSEE, THROUGH WHICH COMPANIES AND ON WHICH DATE S, THOUGH WHICH MEDIUM. MAY BE IN ASSESSMENT ORDER COMPLETE DETAILS ARE MENTIONED, AND THEY ARE IN FAC T EXHAUSTIVELY MENTIONED, HOWEVER THE REASONS RECORDE D ARE DEVOID OF THE SAME. THEREFORE WE DO NOT HAVE ANY HESITATION IN QUASHING REOPENING OF ASSESSMENT .IN THE RESULT GROUND NO [2] & [3] OF THE APPEAL ARE ALLOWE D. - SUPERSONIC TECHNOLOGIES (P) LTD. VS. PCIT IN ITA NO . 2269/D/2017 DATED 10.12.2018 (ITAT, DELHI BENCH `G) ITA. NO.3009 TO 3012/DEL/2017 15 ..FURTHER A.O. RECORDED INCORRECT FACTS IN THE REASONS FOR REOPENING OF THE ASSESSMENT BECAUSE THE AMOUNT IN QUESTION IS RS.2.20 CRORES BUT A.O. HAS MENTIONED IN THE REASONS THE AMOUNT OF RS.2.90 CROR ES WHICH ESCAPED ASSESSMENT. FURTHER, NO NAMES OF THE PARTIES HAVE BEEN MENTIONED IN REASONS UNDER SECTIO N 147 FROM WHOM THE AMOUNT IN QUESTION HAVE BEEN RECEIVED BY THE ASSESSEE AS ACCOMMODATION ENTRY. ALL THE FACTS BROUGHT TO THE NOTICE OF THE A.O. BY THE INVESTIGATION WING HAVE BEEN CONSIDERED BY THE A.O. WHILE FRAMING THE RE- ASSESSMENT AND ACCEPTED THE RETURN OF INCOME. THERE FORE, THERE WAS NO NEW MATERIAL AVAILABLE ON RECORD TO JU STIFY REOPENING OF THE ASSESSMENT OR TO INVOKE JURISDICTI ON UNDER SECTION 263 OF THE I.T. ACT, WHICH WOULD ALSO SHOW THAT THERE IS TOTALLY NON-APPLICATION OF MIND ON THE PAR T OF THE A.O. TO REOPEN THE ASSESSMENT IN THE MATTER. THESE FACTS ARE SUFFICIENT TO HOLD THAT REOPENING OF THE ASSESS MENT WAS BAD IN LAW, ILLEGAL AND NON-EST, THEREFORE, SUCH OR DER COULD NOT BE REVISED IN THE PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT. WE, ACCORDINGLY SET ASIDE THE ORDER OF TH E LD. PR. CIT PASSED UNDER SECTION 263 OF THE I.T. ACT AND QU ASH THE SAME. IN THIS VIEW OF THE MATTER, THERE IS NO NEED TO DECIDE THE ISSUE ON MERIT. HOWEVER, WE MAY NOTE BRIEFLY TH AT DOCUMENTARY EVIDENCES WERE FILED BEFORE A.O. AT ORI GINAL ASSESSMENT STAGE AS WELL AS AT THE STAGE OF RE-ASSE SSMENT TO PROVE GENUINE CREDIT IN THE MATTER WHICH HAVE AC CEPTED BY THE A.O. AFTER CONSIDERING AND EXAMINING THE MAT ERIAL ON RECORD AND CALLING EXPLANATION FROM THE INVESTOR S UNDER SECTION 133(6) OF THE I.T. ACT. IN THIS VIEW OF THE MATTER, WE ALLOW THE APPEAL OF ASSESSEE. 13.1 FURTHER RELIANCE WAS PLACED UPON THE FOLLOWING JUDGMENTS: - G & G PHARMA 384 ITR 0147 (HIGH COURT OF DELHI) ITA. NO.3009 TO 3012/DEL/2017 16 - MEENAKSHI OVERSEAS 395 ITR 677 (HIGH COURT OF DELHI) - SABH INFRASTRUCTURE REPORTED IN 398 ITR 198 (HIGH COURT OF DELHI) - DCIT VS KLA FOODS (INDIA) LTD. IN ITA NO. 2846/D/2015 DATED 08.04.2019 (ITAT, DELHI) - ITO VS SMT. AARTI KHATTAR IN ITA NO. 2395/D/2012 DATED 22.08.2014 (ITAT, DELHI) - CIT VS. SHREE RAJASTHAN SYNTEX LTD REPORTED IN 313 ITR 231 (HIGH COURT OF RAJASTHAN) 14. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS EVEN VIDE ITS LETTER DATED 23.06.2014 (PLACED AT PAPER BOOK PG. 19 POINT 4) TO THE LD. AO SPECIFICAL LY MENTIONING THAT THE NAME OF PERSONS FROM WHOM THE C REDIT ENTRY OF RS. 25,00,000/- IS RECEIVED, HAS NOT BEEN GIVEN. ALSO, ASSESSEE VIDE ITS LETTER DATED 15.12.2014 (PLACED A T PAPER BOOK PG. 23-26) ALSO RAISED THE OBJECTIONS BEFORE L D. AO WHICH WERE DISPOSED OFF BY LD. AO VIDE ORDER DATED 18.12.2014 (PLACED AT PAPER BOOK PG. 27) BUT THE SA ME HAS NOT BEEN DISPOSED OFF BY A SPEAKING ORDER. 15. ON THE OTHER HAND, THE LD. CIT DR RELIED UPON ORDER OF THE LD. PR. CIT. HE SUBMITTED THAT APPRAISAL REPORT WAS SENT TO THE LD. AO AND THE REASONS RECORDED UNDER SECTIO N 148 OF ARE PRIMA FACIE CORRECT BASED ON CONCRETE MATERIAL AND INFORMATION. ASSESSING OFFICER HAS RECORDED THE REA SONS AFTER GOING THROUGH THE APPRAISAL REPORT AND THE DOCUMENT S, ITA. NO.3009 TO 3012/DEL/2017 17 THEREFORE, REOPENING OF THE ASSESSMENT IS JUSTIFIED . HE FURTHER SUBMITTED THAT ONCE HE HAS PERUSED THE APPRAISAL RE PORT AND THE INFORMATION THAT HE HAS BEFORE HIM THEN IT IS N OT NECESSARY TO WRITE EACH AND EVERY DETAIL IN HIS REA SONS TO BELIEVE. HE HAS TO JUST FORM A PRIMA FACIE BELIEF T HAT THERE IS AN INCOME WHICH HAS ESCAPED ASSESSMENT, WHICH HE HA S DULY FORMED IN THE INSTANT CASE. THE LD. D.R. ALSO SUBMI TTED THAT THE LD. PR. CIT ON GOING THROUGH THE RECORD, CORREC TLY FOUND IT TO BE AN ASSESSMENT ERRONEOUS AS WELL AS PREJUDICIA L TO THE INTERESTS OF THE REVENUE BECAUSE LD. AO HAS NOT EXA MINED THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEAR CH. THE LD. DR HAS RELIED UPON BELOW MENTIONED DECISIONS PLACED IN HIS PAPER BOOK: - SURYA JYOTI SOFTWARE P. LTD. VS PCIT IN ITA NO. 2158/DEL/2017 DATED 25.10.2017 (ITAT, DELHI) 19. NOW COMING TO THE ONE OF THE MAIN CONTENTION RA ISED BY THE LD. COUNSEL OF THE ASSESSEE THAT THE PROCEEDING S UNDER SECTION 147 WAS ITSELF BAD IN LAW AND THEREFORE, PROCEEDING S U/S 263 COULD NOT HAVE BEEN INVOKED. THE REASONS GIVEN FOR THIS PROPOSITION IS THAT, HERE IN THIS CASE, MATERIAL ON THE BASIS OF WHICH PROCEEDINGS FOR REOPENING THE ASSESSMENT HAS BEEN SOUGHT TO BE INITIATED U/S 147 HAS BEEN FOUND FROM THE SEARCH CONDUCTED AT THE PREMISES OF THIRD PARTY AND IF MATERIAL FOUND FROM THE PREMISES OF THE SEARCHED PE RSON IS BEING UTILIZED, THEN IN SUCH A SITUATION THE LAW PR OVIDES THAT PROCEEDINGS SHOULD HAVE BEEN INITIATED UNDER SECTIO N 153C, WHICH HAS NOT BEEN DONE AND, THEREFORE, THE ENTIRE PROCEEDINGS UNDER SECTION 147 GETS VITIATED AND IS BAD IN LAW. IN SUPPORT OF THIS PROPOSITION LD. COUNSEL, HA S RELIED ITA. NO.3009 TO 3012/DEL/2017 18 UPON CERTAIN DECISIONS, FIRSTLY ON THE POINT THAT V ALIDITY OF REASSESSMENT OR ASSESSMENT ORDER CAN BE CHALLENGED IN THE REVISIONARY PROCEEDING UNDER SECTION 263; AND SECON DLY, IF ANY MATERIAL HAS BEEN FOUND PERTAINING TO THE ASSES SEE IN THE CASE OF PERSON SEARCHED OR COVERED U/S 153A, TH EN ONLY RECOURSE WAS TO INITIATE PROCEEDINGS UNDER SECTION 153C AND NOT UNDER SECTION 147. AT THE OUTSET, WE DO NOT FIND ANY QUARREL TO THE PROPOSITION THAT THE VALIDITY OF ASS ESSMENT OR REASSESSMENT CANNOT BE CHALLENGED IN THE REVISIONAR Y PROCEEDINGS U/S 263, HOWEVER, ON THE FACTS OF THE P RESENT CASE, THE RATIO LAID DOWN IN SUCH JUDGMENTS WOULD N OT BE APPLICABLE AT ALL, BECAUSE HERE IN THIS CASE NO DOC UMENT OR MATERIAL BELONGING TO THE ASSESSEE WAS FOUND IN THE COURSE OF SEARCH PROCEEDINGS IN THE CASE OF S.K. JAIN GROU P, ALBEIT ASSESSEES NAME APPEARS AS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES IN THE BOOKS OF ACCOUNT MAINT AINED BY ONE OF THE CONCERN OF S.K. JAIN GROUP. THE ENTRI ES IN THE BOOKS OF ACCOUNT OF S.K. JAIN GROUP CANNOT BE RECKO NED AS ANY MATERIAL OR DOCUMENT BELONGING TO THE ASSESSEE SO AS TO CONSTITUTE DOCUMENT OR ASSET SEIZED OR REQUISITIONE D IN THE CASE OF PERSON SEARCHED IN TERMS OF SCOPE OF SECTIO N 153C. IF CERTAIN DOCUMENTS OR ASSET OR BOOKS OF ACCOUNT BELO NGING TO THE ASSESSEE WOULD HAVE BEEN FOUND DURING THE COURS E OF SEARCH PROCEEDINGS OF S.K. JAIN AND HIS GROUP CONCE RNS, THEN PERHAPS IT WOULD HAVE BEEN HELD THAT THE PROVI SIONS OF SECTION 153C WOULD HAVE BEEN INVOKED. BUT HERE IN T HIS CASE WHAT HAS BEEN FOUND, IS THE REGULAR ENTRIES IN THE BOOKS OF ACCOUNT OF THE CONCERNS OF S.K. JAIN GROUP , IN WHICH NAME OF THE ASSESSEE IS APPEARING. SUCH ENTRI ES IN THE CASH BOOKS DEPICTING THE DETAILS OF CHEQUES ISS UED IN FAVOUR OF THE ASSESSEE AS WELL AS CASH DEPOSIT THRO UGH INTERMEDIATES ON VARIOUS DATES CANNOT BE RECKONED A S DOCUMENT OR BOOKS OF ACCOUNT OF THE ASSESSEE. THIS FACT HAS BEEN NOTED BY THE PR. CIT IN THE IMPUGNED ORDER RIG HT FROM PAGES 7 TO 15, WHEREIN ONE OF THE ENTRIES PERTAINS TO THE ASSESSEE FOR A SUM OF RS.1 CRORE. THUS, THE CONTENT ION ITA. NO.3009 TO 3012/DEL/2017 19 RAISED BY THE LD. COUNSEL ON THIS POINT IS OUT RIGH TLY REJECTED THAT THE PROCEEDINGS UNDER SECTION 153C SHOULD HAVE BEEN INITIATED INSTEAD OF UNDER SECTION147. 20. AS REGARDS THE CONTENTION THAT MATERIAL OR INFO RMATION FOUND DURING THE COURSE OF SEARCH IN THE CASE OF S. K. JAIN GROUP CANNOT BE HELD TO BE A TANGIBLE MATERIAL PERT AINING TO THE ASSESSEE, WE ARE UNABLE TO ACCEPT SUCH A CONTEN TION FOR THE REASON THAT, FIRSTLY, THERE WAS A CATEGORICAL I NFORMATION AND MATERIAL COMING ON RECORD POST PASSING OF THE O RIGINAL ASSESSMENT ORDER UNDER SECTION 143(3) THAT ASSESSEE WAS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES P ROVIDED BY ONE OF THE GROUP CONCERN OF S.K. JAIN AND NOT ON LY THAT, A SPECIFIC AMOUNT (OF RS. 1 CRORE) HAS BEEN MENTIONED WHICH PRIMA-FACIE PERTAINED TO THE ASSESSEE. THIS DEFINIT ELY CONSTITUTES A TANGIBLE AND DEFINITE MATERIAL HAVING LIVE-LINK NEXUS WITH THE INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT. THE JUDGMENTS RELIED UPON BY THE LD. CI T D.R. ON THIS POINT, SPECIFICALLY THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT VS PARAMOUNT COMMUNICATIO N (P.) LTD. (SUPRA) IS SQUARELY APPLICABLE, AS IN THAT CAS E ALSO THE INFORMATION REGARDING BOGUS PURCHASE BY THE ASSESSE E WAS RECEIVED VIDE DRI FROM CCE WHICH WAS PASSED ON TO REVENUE AUTHORITIES AND WAS HELD TO BE TANGIBLE MAT ERIAL OUTSIDE RECORD TO INITIATE VALID RE-ASSESSMENT PROC EEDINGS. HERE IN THIS CASE, AS REITERATED SEVERAL TIMES THER E WAS A DEFINITE INFORMATION AND MATERIAL FOUND QUA THE ASS ESSEE WHICH AT LEAST NEEDED VERIFICATION AND EXAMINATION AND HENCE, IN OUR OPINION SUCH A MATERIAL AND INFORMATI ON DOES CONSTITUTE A TANGIBLE AND RELEVANT MATERIAL SUFFICI ENT ENOUGH TO FORM REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. APART FROM THAT, IT IS SEEN FRO M THE RECORDS THAT THE ASSESSEE HAD RAISED SIMILAR OBJECT IONS AFTER THE RECEIPT OF REASONS RECORDED BEFORE THE ASSESS ING OFFICER DURING THE COURSE OF RE- ASSESSMENT PROCEED INGS, WHICH HAVE BEEN AMPLY DEALT WITH AND DISCUSSED BY T HE ITA. NO.3009 TO 3012/DEL/2017 20 ASSESSING OFFICER INN DETAIL VIDE HIS SEPARATE ORDE R, COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK. AGAINST TH E SAID ORDER, ASSESSEE HAS NOT SOUGHT FOR ANY REMEDY NOR H AS IT CHALLENGED THIS ISSUE IN APPEAL AFTER THE PASSING O F THE ASSESSMENT ORDER. IN ANY CASE, WE HAVE ALREADY HELD ASSESSING OFFICER HAS RIGHTLY ACQUIRED JURISDICTION UNDER SECTION 147 BASED ON THE INFORMATION/MATERIAL REFER RED TO IN THE REASONS RECORDED. ACCORDINGLY, THIS CONTENTIO N RAISED BY THE LD. COUNSEL IS ALSO REJECTED. - SURYA FINANCIAL SERVICES LTD VS PCIT IN ITA NO. 2915/DEL/2017 DATED 08.01.2018 (ITAT, DELHI) 6.2 NOW COMING TO THE ONE OF THE MAIN CONTENTION R AISED BY THE LD. COUNSEL OF THE ASSESSEE THAT THE PROCEEDING S UNDER SECTION 147 OF THE ACT WAS ITSELF BAD IN LAW AND TH EREFORE, PROCEEDINGS U/S 263 OF THE ACT COULD NOT HAVE BEEN INVOKED. THE REASONS GIVEN FOR THIS PROPOSITION IS THAT, HERE IN THIS CASE, MATERIAL ON THE BASIS OF WHICH PROCEE DINGS FOR REOPENING THE ASSESSMENT HAS BEEN SOUGHT TO BE INIT IATED U/S 147 OF THE ACT HAS BEEN FOUND FROM THE SEARCH CONDUCTED AT THE PREMISES OF THIRD PARTY AND IF MAT ERIAL FOUND FROM THE PREMISES OF THE SEARCHED PERSON IS B EING UTILIZED, THEN IN SUCH A SITUATION THE LAW PROVIDES THAT PROCEEDINGS SHOULD HAVE BEEN INITIATED UNDER SECTIO N 153C OF THE ACT, WHICH HAS NOT BEEN DONE AND, THEREFORE, THE ENTIRE PROCEEDINGS UNDER SECTION 147 OF THE ACT GET S VITIATED AND IS BAD IN LAW. IN SUPPORT OF THIS PROPOSITION L D. COUNSEL, HAS RELIED UPON CERTAIN DECISIONS, FIRSTLY ON THE POINT THAT VALIDITY OF REASSESSMENT OR ASSESSMENT O RDER CAN BE CHALLENGED IN THE REVISIONARY PROCEEDING UNDER S ECTION 263; AND SECONDLY, IF ANY MATERIAL HAS BEEN FOUND PERTAINING TO THE ASSESSEE IN THE CASE OF PERSON SE ARCHED OR COVERED U/S 153A OF THE ACT, THEN ONLY RECOURSE WAS TO INITIATE PROCEEDINGS UNDER SECTION 153C OF THE ACT AND NOT UNDER SECTION 147 OF THE ACT. AT THE OUTSET, WE DO NOT FIND ITA. NO.3009 TO 3012/DEL/2017 21 ANY QUARREL TO THE PROPOSITION THAT THE VALIDITY OF ASSESSMENT OR REASSESSMENT CANNOT BE CHALLENGED IN THE REVISIONARY PROCEEDINGS U/S 263, HOWEVER, ON THE FA CTS OF THE PRESENT CASE, THE RATIO LAID DOWN IN SUCH JUDGM ENTS WOULD NOT BE APPLICABLE AT ALL, BECAUSE HERE IN THI S CASE NO DOCUMENT OR MATERIAL BELONGING TO THE ASSESSEE WAS FOUND IN THE COURSE OF SEARCH PROCEEDINGS IN THE CASE OF S.K. JAIN GROUP, ALBEIT ASSESSEES NAME APPEARS AS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES IN THE BOOKS OF ACCOUNT MAINTAINED BY ONE OF THE CONCERN OF S.K. JA IN GROUP. THE ENTRIES IN THE BOOKS OF ACCOUNT OF S.K. JAIN GROUP CANNOT BE RECKONED AS ANY MATERIAL OR DOCUMENT BELO NGING TO THE ASSESSEE SO AS TO CONSTITUTE DOCUMENT OR ASS ET SEIZED OR REQUISITIONED IN THE CASE OF PERSON SEARCHED IN TERMS OF SCOPE OF SECTION 153C OF THE ACT. IF CERTAIN DOCUME NTS OR ASSET OR BOOKS OF ACCOUNT BELONGING TO THE ASSESSEE WOULD HAVE BEEN FOUND DURING THE COURSE OF SEARCH PROCEED INGS OF S.K. JAIN AND HIS GROUP CONCERNS, THEN PERHAPS IT W OULD HAVE BEEN HELD THAT THE PROVISIONS OF SECTION 153C OF THE ACT WOULD HAVE BEEN INVOKED. BUT HERE IN THIS CASE WHAT HAS BEEN FOUND, IS THE REGULAR ENTRIES IN THE BOOKS OF ACCOUNT OF THE CONCERNS OF S.K. JAIN GROUP, IN WHIC H NAME OF THE ASSESSEE IS APPEARING. SUCH ENTRIES IN THE CASH BOOKS DEPICTING THE DETAILS OF CHEQUES ISSUED IN FAVOUR O F THE ASSESSEE AS WELL AS CASH DEPOSIT THROUGH INTERMEDIA TES ON VARIOUS DATES CANNOT BE RECKONED AS DOCUMENT OR BOO KS OF ACCOUNT OF THE ASSESSEE. THIS FACT HAS BEEN NOTED B Y THE PR. CIT IN THE IMPUGNED ORDER, WHEREIN THE ENTRIES PERT AINS TO THE ASSESSEE FOR A SUM OF RS.25 LACS. THUS, THE CON TENTION RAISED BY THE LD. COUNSEL ON THIS POINT IS OUT RIGH TLY REJECTED THAT THE PROCEEDINGS UNDER SECTION 153C OF THE ACT SHOULD HAVE BEEN INITIATED INSTEAD OF UNDER SECTION147 OF THE ACT. 6.3 AS REGARDS THE CONTENTION THAT MATERIAL OR INFO RMATION FOUND DURING THE COURSE OF SEARCH IN THE CASE OF S. K. JAIN GROUP CANNOT BE HELD TO BE A TANGIBLE MATERIAL PERT AINING TO ITA. NO.3009 TO 3012/DEL/2017 22 THE ASSESSEE, WE ARE UNABLE TO ACCEPT SUCH A CONTEN TION FOR THE REASON THAT, FIRSTLY, THERE WAS A CATEGORICAL I NFORMATION AND MATERIAL COMING ON RECORD, THAT ASSESSEE WAS ON E OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES PROVIDED BY ONE OF THE GROUP CONCERN OF S.K. JAIN AND NOT ONLY THAT , A SPECIFIC AMOUNT (OF RS. 25 LACS ) HAS BEEN MENTIONE D WHICH PRIMA-FACIE PERTAINED TO THE ASSESSEE. THIS DEFINIT ELY CONSTITUTES A TANGIBLE AND DEFINITE MATERIAL HAVING LIVE-LINK NEXUS WITH THE INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT. THE JUDGMENTS RELIED UPON BY THE LD. CI T D.R. ON THIS POINT, SPECIFICALLY THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT VS PARAMOUNT COMMUNICATIO N (P.) LTD. (SUPRA) IS SQUARELY APPLICABLE, AS IN THAT CAS E ALSO THE INFORMATION REGARDING BOGUS PURCHASE BY THE ASSESSE E WAS RECEIVED VIDE DRI FROM CCE WHICH WAS PASSED ON TO REVENUE AUTHORITIES AND WAS HELD TO BE TANGIBLE MAT ERIAL OUTSIDE RECORD TO INITIATE VALID RE-ASSESSMENT PROC EEDINGS. HERE IN THIS CASE, AS REITERATED SEVERAL TIMES THER E WAS A DEFINITE INFORMATION AND MATERIAL FOUND QUA THE ASS ESSEE WHICH AT LEAST NEEDED VERIFICATION AND EXAMINATION AND HENCE, IN OUR OPINION SUCH A MATERIAL AND INFORMATI ON DOES CONSTITUTE A TANGIBLE AND RELEVANT MATERIAL SUFFICI ENT ENOUGH TO FORM REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. APART FROM THAT, IT IS SEEN FRO M THE RECORDS THAT THE ASSESSEE HAD RAISED SIMILAR OBJECT IONS AFTER THE RECEIPT OF REASONS RECORDED BEFORE THE ASSESS ING OFFICER DURING THE COURSE OF RE-ASSESSMENT PROCEEDI NGS, WHICH HAVE BEEN AMPLY DEALT WITH AND DISCUSSED BY T HE ASSESSING OFFICER INN DETAIL VIDE HIS SEPARATE ORDE R, COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK. AGAINST TH E SAID ORDER, ASSESSEE HAS NOT SOUGHT FOR ANY REMEDY NOR H AS IT CHALLENGED THIS ISSUE IN APPEAL AFTER THE PASSING O F THE ASSESSMENT ORDER. IN ANY CASE, WE HAVE ALREADY HELD ASSESSING OFFICER HAS RIGHTLY ACQUIRED JURISDICTION UNDER SECTION 147 OF THE ACT BASED ON THE INFORMATION/MAT ERIAL REFERRED TO IN THE REASONS RECORDED. ACCORDINGLY, THIS ITA. NO.3009 TO 3012/DEL/2017 23 CONTENTION RAISED BY THE LD. COUNSEL OF THE ASSESSE E IS ALSO REJECTED. - SHANKERTRADEXPVT LTD. VS PCIT IN ITA NO. 2999/DEL/2017 DATED 16.04.2018 (ITAT, DELHI) 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RECORDS. WE HAVE TAKEN CONGNIZANCE OF ALL THE CONTE NTIONS OF THE LD. AR. WHEN WE ASKED THE SPECIFIC QUERY ABOUT WHETHER THE PRESENT DIRECTORS OF THOSE COMPANIES WE RE CALLED FOR AND GIVEN A STATEMENT, THE LD. AR SUBMIT TED THAT MOST OF THE COMPANIES WHOM SHARES HAVE BEEN GIVEN T HE CURRENT DIRECTORS WERE NOT GIVEN STATEMENTS BUT THE PAST DIRECTORS HAVE GIVEN STATEMENTS. THE CASE LAWS CITE D BY THE LD. AR WILL NOT BE APPLICABLE IN THE PRESENT CASE A S THE FACTS IN THE PRESENT CASE ARE DIFFERENT. IN FACT THE DECI SION OF THE HONBLE SUPREME COURT IN MALABAR INDUSTRIAL COMPANY LTD. VS. CIT (243 ITR 83)(SC) WHEREIN IT IS HELD THAT TH E COMMISSIONER HAS TO SATISFY HIMSELF OF BOTH THE CON DITIONS, ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF REVENUE. BOTH THESE TEST HAVE BEEN SEEN BY THE PRIN CIPAL COMMISSIONER OF INCOME TAX IN THE PRESENT CASE AND APTLY APPLIES IN THE PRESENT CASE. IT IS ALSO HELD BY THE HONBLE APEX COURT THAT THE PROVISIONS CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED B Y THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRO NEOUS THAT THE SECTION WILL BE ATTRACTED. THUS, THE PRI. CIT H AS LOOKED INTO THE ASPECT OF THE ASSESSMENT ORDER IN THE PRES ENT CASE TO THE EXTENT OF ERRONEOUS AND THUS, SECTION 263 OF THE ACT IS ATTRACTED IN THE PRESENT CASE. SECTION 263 OF THE A CT IS NOT INVOKED SIMPLY FOR CORRECTING MISTAKE OR ERROR COMM ITTED BY THE ASSESSING OFFICER IN THE PRESENT CASE. IT CAN B E OBSERVED THAT THE PR. CIT HAS CONSIDERED ALL THE CONTENTIONS OF THE ASSESSEE AND THEREAFTER RIGHTLY COME TO THE CONCLUS ION THAT THE ASSESSING OFFICER FAILED TO CONSIDER THE SEIZED MATERIAL. ITA. NO.3009 TO 3012/DEL/2017 24 THE PR. CIT HELD AS UNDER VIDE ORDER DATED 23.03.20 17 PASSED UNDER SECTION 263 OF THE ACT: 11. THERE IS ANOTHER POINT OF NOT MAKING PROPER EN QUIRY IN THIS CASE. SUBSEQUENT TO ISSUE OF SHARES TO THE CON CERNS OF SK JAIN GROUP, MOST OF THE BENEFICIARY COMPANIES GO T THE SHARES TRANSFERRED AT A NOMINAL RATE IN THE NAME OF THEIR DIRECTORS OR THEIR RELATIVES ORIGINALLY ISSUED TO S UCH SHELL COMPANIES. EVEN THOUGH, THE SHARES WERE ISSUED AT A PREMIUM, IN MOST OF THE CASES SUCH SHARES WERE TRAN SFERRED WITHIN ONE OR TWO YEARS IN THE NAME OF DIRECTORS OF THE BENEFICIARY COMPANY OR TO THE CONCERNS IN WHICH SUC H DIRECTORS WERE INTERESTED, AT VERY NOMINAL PRICE. T HE AO DID NOT MAKE ANY ENQUIRY WHATSOEVER ON THIS ASPECT. HE OUGHT TO HAVE ASKED THE BENEFICIARY COMPANY AS TO WHY THE SHARES ISSUED AT PREMIUM WERE TRANSFERRED BY THE IN VESTOR COMPANIES (SHELL COMPANIES) TO THE DIRECTORS OR THE IR RELATIVES OR CONCERNS OF THE BENEFICIARY COMPANY AT A VERY DISCOUNTED PRICE. WHAT WAS THE FACE VALUE OF THE SH ARES AT THE TIME OF THE ALLOTMENT AND TRANSFER. WHAT HAPPEN ED SUDDENLY THAT THE VALUE OF SUCH SHARES WENT DOWN RA NGING FROM 50% TO 90%. THIS UNUSUAL EVEN HAD TAKEN PLACE IN MOST OF THE CASES BEFORE THE AOS COMPLETED THE ASSE SSMENT PROCEEDINGS DURING FINANCIAL YEAR 2014-15 BUT THE A O DID NOT MAKE ANY ENQUIRY WHATSOEVER ON THIS ASPECT. IN THIS CASE, THE ASSESSEE DID NOT FURNISH THE DETAILS OF S HARES TRANSFERRED FROM THE ABOVE MENTIONED COMPANIES OF S K JAIN GROUP TO OTHER PERSONS DESPITE MY SPECIFIC QUERY IN THE SHOW CAUSE NOTICE. ..... 16. IN VIEW OF THE ABOVE DISCUSSION, I AM SATISFIE D THAT THE REASSESSMENT ORDER PASSED BY THE AO ON 31/3/2015 FO R ASSESSMENT YEAR 2007-08, IS NOT ONLY PREJUDICIAL TO THE INTEREST OF THE REVENUE BUT IS ALSO ERRONEOUS IN SO FAR AS THE ITA. NO.3009 TO 3012/DEL/2017 25 AO HAS FAILED TO LOOK INTO THE SEIZED MATERIAL. THE REFORE, THE SAID ORDER IS SET ASIDE WITH A DIRECTION TO THE AO TO EXAMINE THE SEIZED MATERIAL AND CONFRONT THE SAME TO THE AS SESSEE. THE AO WOULD ALSO EXAMINE THE REASON FOR TRANSFERRI NG SUCH SHARES, IF ANY, AT A NOMINAL RATE TO THE DIRECTORS OR THEIR RELATIVES OR THE CONCERNS IN WHICH THE ASSESSEE COM PANY IS INTERESTED AND PASS A SPEAKING ORDER AFTER AFFORDIN G ON OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IF AFTE R VERIFICATION OF THE SEIZED MARTIAL AN THE EXPLANATI ON REGARDING T HE TRANSFER OF SHARES IN THE NAME OF TH E DIRECTORS OR THEIR RELATIVES OR THE CONCERNS IN WHICH THE DIR ECTORS ARE INTERESTED, IT IS FOUND BY THE AO THAT THERE IS NEX US BETWEEN THE CASH DEPOSITS AND THE CHEQUES ISSUED BY THE GRO UP COMPANIES OF SK JAIN OR NO VALID EXPLANATION IS GIV EN FOR THE TRANSFER OF SHARES AT LOWER PRICE IN THE NAME OF DI RECTORS, RELATIVES AND THE CONCERNS IN WHICH THE ASSESSEE CO MPANY IS INTERESTED, THEN THE SAME MAY BE CONSIDERED AS A N ACCOMMODATION ENTRY AND TAXED ACCORDINGLY AS PER TH E PROVISIONS OF THE INCOME TAX ACT. THUS, IT CAN BE SEEN THAT THE PR. CIT HAS PROPERLY INVOKED THE PROVISIONS OF SECTION 263 AND THERE IS NO PROCE DURAL LAPSE ON THE PART OF THE PR. CIT. IN FACT, THE ASSE SSING OFFICER THOUGH REOPENED THE ASSESSMENT PROCEEDINGS DID NOT MADE ANY INQUIRY AND THERE IS NO MENTION OF THE SAME IN THE ASSESSMENT ORDER ITSELF WHICH PROVES THAT THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHI CH SHOULD HAVE BEEN MADE BY THE ASSESSING OFFICER. THU S, IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THER E IS LOSS OF REVENUE. THE PR. CIT AFTER ISSUING THE SHOW CAUSE N OTICE U/S 263 OF THE ACT GIVEN AMPLE OPPORTUNITY TO THE A SSESSEE FOR EXPLANATION AND DEALT WITH THE REPLY/DETAILS FI LED BY THE ASSESSEE IN PROPER MANNER. THUS, PROPER OPPORTUNITY WAS GIVEN BY THE PR. CIT TO THE ASSESSEE DURING THE PRO CEEDINGS U/S 263 OF THE ACT. THE PRESENT CASE IS COVERED BY THE DECISION OF THE HONBLE APEX COURT IN CASE OF DENIE L ITA. NO.3009 TO 3012/DEL/2017 26 MERCHANTS PRIVATE LIMITED &ANR. VS. INCOME TAX OFFI CER (APPEAL NO. 2396/2017 ORDER DATED 29.11.2017). THE HONBLE SUPREME COURT HELD AS UNDER: IN ALL THESE CASES, WE FIND THAT THE COMMISSIONER OF INCOME TAX HAD PASSED AN ORDER UNDER SECTION 263 OF THE IN COME TAX ACT, 1961 WITH THE OBSERVATIONS THAT THE ASSESS ING OFFICER DID NOT MAKE ANY PROPER INQUIRY WHILE MAKIN G THE ASSESSMENT AND ACCEPTING THE EXPLANATION OF THE ASSESSEE(S) INSOFAR AS RECEIPT OF SHARE APPLICATION MONEY IS CONCERNED. ON THAT BASIS THE COMMISSIONER OF INCOME TAX HAD, AFTER SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER, SIMPLY DIRECTED THE ASSESSING OFFICER TO CARRY THOR OUGH AND DETAILED INQUIRY. IT IS THIS ORDER WHICH IS UPHELD BY THE HIGH COURT. WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE HIGH COURT. THE SPECIAL LEAVE PETITIONS ARE DISMISSED. THUS, IN THE PRESENT CASE THE ASSESSING OFFICER HAS THOUGH RIGHTLY RE-OPENED THE ASSESSMENT PROCEEDINGS HAS NO T PROPERLY ADJUDICATED THE ISSUE FOR RE- OPENING THER EFORE, THE PR. CIT HAS RIGHTLY INVOKED SECTION 263 OF THE ACT AND PASSED THE ORDER. THEREFORE, THE ORDER UNDER SECTIO N 263 OF THE INCOME TAX ACT, 1961 PASSED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX IS JUST AND PROPER. THER E IS NO NEED TO INTERFERE WITH THE SAME. THE APPEAL OF THE ASSESSEE IS DISMISSED. HE HAS RELIED UPON OTHER JUDGMENTS AS UNDER: - ACIT VS RAJESH JHAVERI STOCK BROKING REPORTED IN 291 ITR 500 (SC) - RAYMOND WOLLEN MILLS LTD. VS ITO REPORTED IN 236 ITR 34 (SC) ITA. NO.3009 TO 3012/DEL/2017 27 - PARAMOUNT COMMUNICATIONS LTD. VS PCIT REPORTED IN 84 TAXMANN.COM 300 (SC) - RAJMANDIR ESTATE P LTD VS PCIT REPORTED IN 70 TAXMANN.COM 124 (CALCUTTA) - RAJMANDIR ESTATE P LTD VS PCIT REPORTED IN 77 TAXMANN.COM 285 (SC) - DENIEL MERCHANT (P) LTD. VS ITO IN SLP (C) NO. 23976/2017 DATED 29.11.2017 (SC) - MALABAR INDUSTRIAL CO. LTD. VS CIT REPORTED IN 109 TAXMAN 66 (SC) 16. IN REBUTTAL, THE LD. COUNSEL FOR THE ASSESSEE H AS FILED ANOTHER WRITTEN SYNOPSIS IN REBUTTAL TO THE CASE LA WS FILED BY THE LD. DR AND SUBMITTED THAT THE CASE LAWS RELIED UPON BY THE LD. DR ARE ON DIFFERENT FACTS AND ISSUES. HE FU RTHER SUBMITTED THAT SUCH CASE LAWS RELATES TO THE ISSUE WHETHER THE LD. PR. CIT HAS RIGHTLY INITIATED THE PROCEEDIN GS UNDER SECTION 263 OF THE ACT ON ACCOUNT OF NO INQUIRY BY THE LD. AO, BUT THE ISSUES RAISED BY THE ASSESSEE VIDE ADDITION AL GROUNDS OF APPEAL ARE THAT WHETHER THE REOPENING U/S 147 OF THE ACT IS VALID IN THE EYES OF LAW AND IF THE SAME ARE INVALI D THEN WHETHER THE LD. PR. CIT HAS A RIGHT TO UPSET SUCH I NVALID ASSESSMENT ORDER. FURTHER, HE ALSO SUBMITTED THAT T HE CASE OF SURYA JYOTI SOFTWARE (P) LTD. AND SURYA FINANCIAL S ERVICES (SUPRA) DOES NOT DEAL WITH THE ISSUE WHETHER THE LD . AO HAS INDEPENDENTLY APPLIED HIS MIND OR NOT IN THE REASON S RECORDED TO THE INFORMATION RECEIVED. HE SUBMITTED THAT THE ITA. NO.3009 TO 3012/DEL/2017 28 ISSUES DEALT WITH IN THESE CASES RELATES TO WHETHER THE PROCEEDINGS SHOULD HAVE BEEN INITIATED U/S 153C OF THE ACT INSTEAD OF 147 OF THE ACT, WHETHER THE MATERIAL OR INFORMATION FOUND DURING THE COURSE OF SEARCH CAN BE HELD TO BE A TANGIBLE MATERIAL PERTAINING TO THE ASSESSEE, WHETHER A NOTI CE WAS ISSUED OR SERVED U/S 143(2) OF THE ACT UPON THE ASS ESSEE DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS. HE ALSO SUBMITTED THAT IN THE CASE OF SHANKER TRADEX (P) LT D. (SUPRA), NO ISSUE QUA RE-OPENING U/S 147 OF THE ACT WAS RAIS ED BY THE ASSESSEE AND FURTHER ALSO THIS DECISION AGAIN CAME BEFORE THIS TRIBUNAL AGAINST AN ORDER PASSED U/S 147/ 263/ 144 OF THE ACT, WHEREIN THE REOPENING U/S 147 WAS CHALLENGED B Y THE ASSESSEE AND THIS TRIBUNAL WAS PLEASED TO ALLOW THE APPEAL OF THE ASSESSEE VIDE SHANKER TRADEX (P) LTD. VS. ITO I N 7583/D/2019 DATED 10.11.2020 AY 2007-08 (ITAT, DELH I) (COPY PLACED ON RECORD), AS SUCH THE LD. DR CANNOT PLACE ANY RELIANCE UPON SUCH CASE LAW. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL REFERRED TO BEFORE US AT THE TIME OF HEARI NG AND THE WRITTEN SYNOPSIS FILED BY BOTH THE PARTIES. ONE OF THE MAIN CONTENTIONS RAISED BY THE LD. CIT-DR WAS THAT ONCE THE ASSESSEE HAS ACCEPTED THE RE-ASSESSMENT ORDER AND H AS NOT CHALLENGED THE VALIDITY OF REOPENING U/S.147, THEN ASSESSEE IS PRECLUDED FROM AGITATING THIS ISSUE ESPECIALLY IN T HE PROCEEDINGS U/S.263 ON THE GROUND THAT ASSESSMENT O RDER ITSELF IS BAD IN LAW. THE VALIDITY OF RE-ASSESSMENT PROCEEDINGS ITA. NO.3009 TO 3012/DEL/2017 29 CANNOT BE JUDGED OR CHALLENGED IN REVISIONARY PROCE EDINGS. THUS, THE MAIN ISSUE BEFORE IS, FIRSTLY , WHETHER THE ASSESSEE CAN CHALLENGE THE VALIDITY OF ASSESSMENT ORDER DURI NG THE REVISIONARY PROCEEDINGS AND ALSO THE VALIDITY OF RE OPENING U/S.147 WHEN IT WAS NOT CHALLENGED BY THE ASSESSEE; AND SECONDLY , WHETHER THE REOPENING BASED ON THE REASONS RECORDED BY THE ASSESSING OFFICER ITSELF WAS BAD IN LAW OR NOT. 18. THIS PRECISE ISSUE HAS BEEN DEALT IN DETAIL BY THE CO- ORDINATE BENCH OF ITAT MUMBAI BENCH IN THE CASE OF M/S. WESTLIFE DEVELOPMENT LTD. V. PR. CIT AS REPORTED IN 49 ITR (T) 406 WHEREIN THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: 8. CHALLENGING THE JURISDICTIONAL DEFECTS OF ASSES SMENT ORDER FOR ASSAILING THE JURISDICTIONAL VALIDITY OF THE REVISI ON ORDER PASSED U/S 263: THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION I S - WHETHER THE ASSESSEE CAN CHALLENGE THE JURISDICTIONAL VALIDITY OF ORDER PASSED U/S 143(3) IN THE APPELLATE PROCEEDINGS TAKE N UP FOR CHALLENGING THE ORDER PASSED U/S 263? IF WE ANALYSE THE NATURE OF BOTH OF THESE PROCEEDINGS, WHICH ARE UNDER CONSI DERATION BEFORE US, WE FIND THAT THE ORIGINAL ASSESSMENT PRO CEEDINGS CAN BE CLASSIFIED IN A WAY AS PRIMARY PROCEEDINGS. TH ESE ARE, IN EFFECT, BASIC/FOUNDATIONAL PROCEEDINGS AND AKIN TO A PLATFORM UPON WHICH ANY SUBSEQUENT PROCEEDINGS CONNECTED THE REWITH CAN REST UPON. THE PROCEEDINGS INITIATED U/S 263 SE EKING TO REVISE THE ORIGINAL ASSESSMENT ORDER IS OFF SHOOT O F THE PRIMARY PROCEEDINGS AND THEREFORE, THESE MAY BE TERMED AS COLLATERAL ITA. NO.3009 TO 3012/DEL/2017 30 PROCEEDINGS' IN THE LEGAL FRAMEWORK. THE ISSUE THAT ARISES HERE IS WHETHER ANY ILLEGALITY/INVALIDITY IN THE ORDER PASS ED IN THE 'PRIMARY PROCEEDINGS' CAN BE SET UP IN THE 'COLLATE RAL PROCEEDINGS' AND IF YES, THEN OF WHAT NATURE? 8.1. WE HAVE ANALYSED THIS ISSUE CAREFULLY. THERE I S NO DOUBT THAT AFTER PASSING OF THE ORIGINAL ASSESSMENT ORDER , THE PRIMARY (I.E. ORIGINAL PROCEEDINGS) HAD COME TO AN END AND ATTAINED FINALITY AND, THEREFORE, OUTCOME OF THE SAME CANNOT BE DISTURBED, AND THEREFORE, THE ORIGINAL ASSESSMENT ORDER FRAMED TO CONCLUDE THE PRIMARY PROCEEDINGS HAD ALSO ATTAINED FINALITY AND IT ALSO CANNOT BE DISTURBED AT THE INSTANCE OF THE ASSESSEE , EXCEPT AS PERMITTED UNDER THE LAW AND BY FOLLOWING THE DUE PR OCESS OF LAW. UNDER THESE CIRCUMSTANCES, IT CAN BE SAID THAT EFFECT OF THE ORIGINAL ASSESSMENT ORDER CANNOT BE ERASED OR MODIF IED SUBSEQUENTLY. IN OTHER WORDS, WHATEVER TAX LIABILIT Y HAD BEEN DETERMINED IN THE ORIGINAL ASSESSMENT ORDER THAT HA D ALREADY BECOME FINAL AND THAT CANNOT BE SOUGHT TO BE DISTUR BED BY THE ASSESSEE. BUT, THE ISSUE THAT ARISES HERE IS THAT I F THE ORIGINAL ASSESSMENT ORDER IS ILLEGAL IN TERMS OF ITS JURISDI CTION OR IF THE SAME IS NULL & VOID IN THE EYES OF LAW ON ANY JURIS DICTIONAL GROUNDS, THEN, WHETHER IT CAN GIVE RISE TO INITIATI ON OF FURTHER PROCEEDINGS AND WHETHER SUCH SUBSEQUENT PROCEEDINGS WOULD BE VALID UNDER THE LAW AS CONTAINED IN INCOME TAX A CT? IT HAS BEEN VEHEMENTLY ARGUED BEFORE US THAT THE SUBSEQUEN T PROCEEDINGS (I.E. COLLATERAL PROCEEDINGS) DERIVE ST RENGTH ONLY FROM THE ORDER PASSED IN THE ORIGINAL PROCEEDINGS (I.E. PRIMARY PROCEEDINGS). THUS, IF ORDER PASSED IN THE ORIGINAL PROCEEDINGS IS ITSELF ILLEGAL, THEN THAT CANNOT GIVE RISE TO VALID REVISION PROCEEDINGS. THEREFORE, AS PER LAW, THE VALIDITY OF THE ORDER PASSED IN THE PRIMARY (ORIGINAL) PROCEEDINGS SHOULD BE ALLOWED ITA. NO.3009 TO 3012/DEL/2017 31 TO BE EXAMINED EVEN AT THE SUBSEQUENT STAGES, ONLY FOR THE LIMITED PURPOSE OF EXAMINING WHETHER THE COLLATERAL (SUBSEQUENT) PROCEEDINGS HAVE BEEN INITIATED ON A VALID LEGAL PL ATFORM OR NOT AND FOR EXAMINING THE VALIDITY OF ASSUMPTION OF JUR ISDICTION TO INITIATE THE COLLATERAL PROCEEDINGS. IF IT IS NOT S O ALLOWED, THEN, IT MAY SO HAPPEN THAT THOUGH ORDER PASSED IN THE ORIGI NAL PROCEEDINGS WAS ILLEGAL AND THUS ORDER PASSED IN TH E SUBSEQUENT PROCEEDINGS IN TURN WOULD ALSO BE ILLEGA L, BUT IN ABSENCE OF A REMEDY TO CONTEST THE SAME, IT MAY GIV E RISE TO AN 'ENFORCEABLE' TAX LIABILITY WITHOUT AUTHORITY OF LA W. THEREFORE, THE COURTS HAVE TAKEN THIS VIEW THAT JURISDICTIONAL ASP ECTS OF THE ORDER PASSED IN THE PRIMARY PROCEEDINGS CAN BE EXAM INED IN THE COLLATERAL PROCEEDINGS ALSO. THIS ISSUE IS NOT RES INTEGRA. THIS ISSUE HAS BEEN DECIDED IN MANY JUDGMENTS BY VARIOUS COURTS, AND SOME OF THEM HAVE BEEN DISCUSSED BY US IN FOLLO WINGS PARAGRAPHS. 8.10 THUS, ON THE BASIS OF AFORESAID DISCUSSION WE CAN SAFELY HOLD THAT AS PER LAW, THE ASSESSEE SHOULD BE PERMIT TED TO CHALLENGE THE VALIDITY OF ORDER PASSED U/S.263 ON T HE GROUND THAT THE IMPUGNED ASSESSMENT ORDER WAS NON EST AND WE HOLD ACCORDINGLY. [EMPHASIS SUPPLIED]. 19. OTHERWISE ALSO, IT IS A WELL ESTABLISHED JURISP RUDENCE LAID DOWN BY THE VARIOUS COURTS, INCLUDING HONBLE APEX COURT, REITERATING THE FUNDAMENTAL PRINCIPLE THAT THE DECR EE OR ORDER PASSED BY A COURT WITHOUT JURISDICTION IS A NULLITY AND ITS VALIDITY COULD BE CHALLENGED WHENEVER IT IS SOUGHT TO BE ENFORCED OR RELIED UPON, EVEN AT THE STAGE OF EXECU TION AND IN ITA. NO.3009 TO 3012/DEL/2017 32 COLLATERAL PROCEEDINGS. THIS PRINCIPLE HAS BEEN LAI D DOWN BY THE HONBLE APEX COURT IN THE FOLLOWING JUDGMENTS:- I) AIR 1954 SC 340 KIRAN SINGH AND OTHERS V. CHAMAN PAWAN AND OTHERS . THE FACTS WERE THAT THE APPELLANT IN THAT CASE HAD UNDERVALUED THE SUIT AT RS.2,950 AND LAID IT IN THE COURT OF THE SUBORDINATE JUDGE, MONGHYR FOR RECOVERY OF POSS ESSION OF THE SUIT LANDS AND MESNE PROFITS. THE SUIT WAS D ISMISSED AND ON APPEAL IT WAS CONFIRMED. IN THE SECOND APPEA L IN THE HIGH COURT THE REGISTRY RAISED THE OBJECTION AS TO VALUATION UNDER SECTION 11. THE VALUE OF THE APPEAL WAS FIXED AT RS.9,980. A CONTENTION THEN WAS RAISED BY THE PLAIN TIFF IN THE HIGH COURT THAT ON ACCOUNT OF THE VALUATION FIXED B Y THE HIGH COURT THE APPEAL AGAINST THE DECREE OF THE COURT OF THE SUBORDINATE JUDGE DID NOT LIE TO THE DISTRICT COURT , BUT TO THE HIGH COURT AND ON THAT ACCOUNT THE DECREE OF THE DI STRICT COURT WAS A NULLITY. ALTERNATIVELY, IT WAS CONTENDE D THAT IT CAUSED PREJUDICE TO THE APPELLANT. IN CONSIDERING T HAT CONTENTION AT PAGE 121, A FOUR JUDGE BENCH OF HON'B LE SUPREME COURT SPEAKING THROUGH VANKATARAMA AYYAR, J . HELD THAT: 'IT IS A FUNDAMENTAL PRINCIPLE WELL-ESTABLISHED THA T A DECREE PASSED BY A COURT WITHOUT JURISDICTION IS A NULLITY, AND THAT ITS INVALIDITY COULD BE SET UP WHENEVER AN D WHEREVER IT IS SOUGHT TO BE ENFORCED OR RELIED UPON , EVEN AT THE STAGE OF EXECUTION AND EVEN IN COLLATERAL PROCE EDINGS. A DEFECT OF JURISDICTION, WHETHER IT IS PECUNIARY OR TERRITORIAL, ITA. NO.3009 TO 3012/DEL/2017 33 OR WHETHER IT IS IN RESPECT OF THE SUBJECT-MATTER O F THE ACTION, STRIKES AT THE VERY AUTHORITY OF THE COURT TO PASS ANY DECREE AND SUCH A DEFECT CANNOT BE CURED EVEN B Y CONSENT OF PARTIES.' II) BALWANT N. VISWAMITRA AND OTHERS V. YADAV SADASHIV MUL (DEAD) THROUGH IRS AND OTHERS REPORTED IN (2004) 8 SCC 706 HAS HELD AS UNDER: 9 THE MAIN QUESTION WHICH ARISES FOR OUR CONSIDERA TION IS WHETHER THE DECREE PASSED BY THE TRIAL COURT CAN BE SAID TO BE 'NULL AND 'VOID'. IN OUR OPINION, THE LAW ON THE POINT IS WELL SETTLED. THE DISTINCTION BETWEEN A DECREE WHICH IS VOID AND A DECREE WHICH IS WRONG, INCORRECT, AND IRREGULAR OR NOT IN ACCORDANCE WITH LAW CANNOT BE OVERLOOKED OR IGNORED . WHERE A COURT LACKS INHERENT JURISDICTION IN PASSING A DE CREE OR MAKING AN ORDER, A DECREE OR ORDER PASSED BY SUCH C OURT WOULD BE WITHOUT JURISDICTION NON EST AND VOID AB I NITIO. A DEFECT OF JURISDICTION OF THE COURT GOES TO THE ROO T OF THE MATTER AND STRIKES AT THE VERY AUTHORITY OF THE COURT TO P ASS A DECREE OR MAKE AN ORDER. SUCH DEFECT HAS ALWAYS BEEN TREAT ED AS BASIC AND FUNDAMENTAL AND A DECREE OR ORDER PASSED BY A COURT OR AN AUTHORITY HAVING NO JURISDICTION IS NUL LITY. VALIDITY OF SUCH DECREE OR ORDER CAN BE CHALLENGED AT ANY ST AGE, EVEN IN EXECUTION OR COLLATERAL PROCEEDINGS. 10 FIVE DECADES, IN KIRAN SINGH & ORS. V. CHAMAN PASWAN & ORS., [SCR P. 121) THIS COURT DECLARED; 'IT IS A FUNDAMENTAL PRINCIPLE WELL ESTABLISHED THA T A DECREE PASSED BY A COURT WITHOUT JURISDICTION IS A NULLITY ITA. NO.3009 TO 3012/DEL/2017 34 AND THAT ITS INVALIDITY COULD BE SET UP WHENEVER AN D WHEREVER IT IS SOUGHT TO BE ENFORCED OR RELIED UPON , EVEN AT THE STAGE OF EXECUTION AND EVEN IN COLLATERAL PROCE EDINGS. A DEFECT OF JURISDICTION STRIKES AT THE VERY AUTHORIT Y OF THE COURT TO PASS ANY DECREE AND SUCH A DEFECT CANNOT B E CURED EVEN BY CONSENT OF PARTIES. 11 THE SAID PRINCIPLE WAS REITERATED BY THIS COURT IN SETH HIRALAL PATNI V. SRI KALI NATH. THE COURT SAID : (SCR PP. 751-52) 'COMPETENCE OF A COURT TO TRY A CASE GOES TO THE VE RY ROOT OF THE JURISDICTION, AND WHERE IT IS LACKING, IT IS CA SE OF INHERENT LACK OF JURISDICTION.' 12 IN VASUDEV DHANJIBHAI MODI V. RAJABHAI ABDUL REHMAN & ORS., [1871] 1 SCR 66, A DECREE FOR POSSES SION WAS PASSED BY THE COURT OF SMALL CAUSES WHICH WAS CONFIRMED IN APPEAL AS WELL AS IN REVISION. IN EXEC UTION PROCEEDINGS, IT WAS CONTENTED THAT THE SMALL CAUSES COURT HAD NO JURISDICTION TO PASS THE DECREE AND, HENCE, IT WAS A NULLITY. 13 REJECTING THE CONTENTION, THIS COURT STATED: (SC C P. 672, PARA 6) 'A COURT EXECUTING A DECREE CANNOT GO BEHIND THE DE CREE : BETWEEN THE PARTIES OR THEIR REPRESENTATIVES IT MUS T TAKE THE DECREE ACCORDING TO ITS TENOR, AND CANNOT ENTER TAIN ANY OBJECTION THAT THE DECREE WAS INCORRECT IN LAW OR O N FACTS. UNTIL IT IS SET ASIDE BY AN APPROPRIATE PROCEEDING IN APPEAL ITA. NO.3009 TO 3012/DEL/2017 35 OR REVISION, A DECREE EVEN IF IT BE ERRONEOUS IS ST ILL BINDING BETWEEN THE PARTIES. 14 SUFFICE IT TO SAY THAT RECENTLY A BENCH OF TWO- JUDGES OF THIS COURT HAS CONSIDERED THE DISTINCTION BETWEE N NULL AND VOID DECREE AND ILLEGAL DECREE IN RAFIQUE BIBI V. SAYED WALIUDDIN,. ONE OF US (R.C. LAHOTI, J. AS HIS LORDS HIP THEN WAS), QUOTING WITH APPROVAL THE LAW LAID DOWN IN VA SUDEV DHANJIBHAI MODI, STATED: (SCC PP. 291-92, PARAS 6-8 ) '6 WHAT IS 'VOID' HAS TO BE CLEARLY UNDERSTOOD. A D ECREE CAN BE SAID TO BE WITHOUT JURISDICTION, AND HENCE A NUL LITY, IF THE COURT PASSING THE DECREE HAS USURPED A JURISDIC TION WHICH IT DID NOT HAVE; A MERE WRONG EXERCISE OF JUR ISDICTION DOES NOT RESULT IN A NULLITY. THE LACK OF JURISDICT ION IN THE COURT PASSING THE DECREE MUST BE PATENT ON ITS FACE IN ORDER TO ENABLE THE EXECUTING COURT TO TAKE COGNIZANCE OF SUCH A NULLITY BASED ON WANT OF JURISDICTION, ELSE THE NOR MAL RULE THAT AN EXECUTING COURT CANNOT GO BEHIND THE DECREE MUST PREVAIL. 7 TWO THINGS MUST BE CLEARLY BORNE IN MIND. FIRSTLY , 'THE COURT WILL INVALIDATE AN ORDER ONLY IF THE RIGHT RE MEDY IS SOUGHT BY THE RIGHT PERSON IN THE RIGHT PROCEEDINGS AND CIRCUMSTANCES. THE ORDER MAY BE A 'A NULLITY' AND ' VOID' BUT THESE TERMS HAVE NOT ABSOLUTE SENSE: THEIR MEANING IS RELATIVE, DEPENDING UPON THE COURT'S WILLINGNESS TO GRANT RELIEF IN ANY PARTICULAR SITUATION. IF THIS PRINCIP LE OF ILLEGAL RELATIVITY IS BORNE IN MIND, THE LAW CAN BE MADE TO OPERATE JUSTLY AND REASONABLY IN CASES WHERE THE DOCTRINE O F ULTRA ITA. NO.3009 TO 3012/DEL/2017 36 VIRES, RIGIDLY APPLIED, WOULD PRODUCE UNACCEPTABLE RESULTS.' (ADMINISTRATIVE LAW, WADE AND FORSYTH, 8TH EDN., 20 00, P. 308). SECONDLY, THERE IS A DISTINCTION BETWEEN MERE ADMINISTRATIVE ORDERS AND THE DECREES OF COURTS, ES PECIALLY A SUPERIOR COURT. 'THE ORDER OF A SUPERIOR COURT SU CH AS THE HIGH COURT MUST ALWAYS BE OBEYED NO MATTER WHAT FLA WS IT MAY BE THOUGHT TO CONTAIN. THUS, A PARTY WHO DISOBE YS A HIGH COURT INJUNCTION IN PUNISHABLE FOR CONTEMPT OF COURT EVEN THOUGH IT WAS GRANTED IN PROCEEDINGS DEEMED TO HAVE BEEN IRREVOCABLY ABANDONED OWING TO THE EXPIRY OF A TIME- LIMIT.' (IBID., P. 312) 8 A DISTINCTION EXISTS BETWEEN A DECREE PASSED BY A COURT HAVING NO JURISDICTION AND CONSEQUENTLY BEING A NUL LITY AND NOT EXECUTABLE AND A DECREE OF THE COURT WHICH IS M ERELY ILLEGAL OR NOT PASSED IN ACCORDANCE WITH THE PROCED URE LAID DOWN BY LAW. A DECREE SUFFERING FROM ILLEGALITY OR IRREGULARITY OF PROCEDURE, CANNOT BE TERMED INEXECU TABLE BY THE EXECUTING COURT; THE REMEDY OF A PERSON AGGRIEV ED BY SUCH A DECREE IS TO HAVE IT SET ASIDE IN A DULY CON STITUTED LEGAL PROCEEDINGS OR BY A SUPERIOR COURT FAILING WH ICH HE MUST OBEY THE COMMON OF THE DECREE. A DECREE PASSED BY A COURT OF COMPETENT JURISDICTION CANNOT BE DENUDED O F ITS EFFICACY BY ANY COLLATERAL ATTACK OR IN INCIDENTAL PROCEEDINGS.' FROM THE ABOVE DECISIONS, IT IS AMPLY CLEAR THAT AL L IRREGULAR OR WRONG DECREES OR ORDERS ARE NOT NECESSARILY NULL AND ITA. NO.3009 TO 3012/DEL/2017 37 VOID. AN ERRONEOUS OR ILLEGAL DECISION, WHICH IS NO T VOID, CANNOT BE OBJECTED IN EXECUTION OR COLLATERAL PROCE EDINGS. 15 FROM THE ABOVE DECISIONS, IT IS AMPLY CLEAR THAT ALL IRREGULAR OR WRONG DECREES OR ORDERS ARE NOT NECESS ARILY NULL AND VOID. AN ERRONEOUS OR ILLEGAL DECISION, WH ICH IS NOT VOID, CANNOT BE OBJECTED IN EXECUTION OR COLLATERAL PROCEEDINGS. .. 20 IN OUR CONSIDERED OPINION, SUCH A DECREE, BY NO STRETCH OF IMAGINATION, CAN BE DESCRIBED NULLITY. I F THE DECREE IS NOT NULL AND VOID, AS PER SETTLED LAW, AP PROPRIATE PROCEEDINGS WILL HAVE TO BE TAKEN BY THE PERSONS AG GRIEVED BY SUCH DECREE. 20. SIMILAR VIEW HAS BEEN EXPRESSED BY THE JUDGME NTS OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT V. KALYAN SOLVENT EXTRACTION LTD. REPORTED IN 276 ITR 154 AND CALCUTTA HIGH COURT IN THE CASE OF KESHAV NARAYAN BANERJEE V. CIT REPORTED IN 238 ITR 694. HONBLE CALCUTTA HIGH COURT IN THE CASE OF KESHAV NARAYAN BANERJEE ( SUPRA) HAS HELD AS UNDER: WE HAVE, THEREFORE, NO HESITATION IN HOLDING THAT THE SERVICE BY REGISTERED POST OF THE NOTICES ALLEGEDLY SENT TO THE APPELLANT WRIT APPLICANT, RESULTING IN THE PASSING OF THE ORDER UNDER SECTION 147 OF THE ACT WAS NOT PROPERLY EFFECTED OR ACCOMPLISHED. SINCE, ADMITTEDLY, THE SERVICE OF SUCH NOTICES WAS A NECESSARY PRE-REQUISITE, A CONDITION PRECEDENT FOR PASSING OF THE ORDERS UNDER SECTION 147 OF THE ACT, WE ITA. NO.3009 TO 3012/DEL/2017 38 ALSO HAVE NO HESITATION IN HOLDING THAT SUCH ORDERS WERE BAD IN LAW, AND, THEREFORE, THE PROCEEDINGS UNDER S ECTION 263 OF THE ACT, ADMITTEDLY, ORIGINATING FROM SUCH O RDERS COULD NOT BE INITIATED AGAINST THE APPELLANTS. ALSO, HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT V. KALYAN SOLVENT EXTRACTION LTD. (SUPRA) HAS H ELD AS UNDER: ONCE THE ORIGINAL ORDER STANDS RECTIFIED THEN IT L OSES ITS IDENTITY AT LEAST TO THE EXTENT IT STOOD RECTIFIED. IN SUCH CIRCUMSTANCES, THE COMMISSIONER SHOULD HAVE INVOKED HIS SUO MOTU POWERS UNDER SECTION 263 OF THE ACT AGAINS T THE SUBSEQUENT RECTIFIED ORDER DATED MARCH 14, 1989, IF HE WAS OF THE VIEW THAT THE SAME IS ERRONEOUS AND PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. WE ARE, THEREFORE, OF THE VIEW THAT THE TRIBUNAL MA DE NO MISTAKE IN COMING TO THE CONCLUSION THAT THE ORDER OF THE COMMISSIONER PASSED UNDER SECTION 263 OF THE ACT WH ICH HAD THE EFFECT OF SETTING ASIDE THE ASSESSMENT ORDE R DATED MARCH 13, 1987, IS WITHOUT JURISDICTION. ACCORDINGLY, AND IN VIEW OF THE AFORESAID DISCUSSIO N, WE ANSWER THE R EFERENCE AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 21. FURTHER, HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. SOFTWARE CONSULTANTS REPORTED IN 341 ITR 240 HAS HELD AS UNDER: ITA. NO.3009 TO 3012/DEL/2017 39 14. FOR EXERCISE OF POWER UNDER SECTION 263 OF THE ACT, IT IS MANDATORY THAT THE ORDER PASSED BY THE ASSESSING OFFICER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE, THE ASSESSING OFFICER DID NOT MAKE AN Y ADDITION FOR THE REASONS RECORDED AT THE TIME OF IS SUE OF NOTICE UNDER SECTION 148 OF THE ACT. THIS POSITI ON IS NOT DISPUTED AND DISTURBED BY THE COMMISSIONER O F INCOME TAX IN HIS ORDER UNDER SECTION 263 OF THE ACT. SEQUITUR IS THAT THE ASSESSING OFFICER COULD N OT HAVE MADE AN ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY IN THE ASSESSMENT PROCEEDINGS UNDER SECTION 147/148. ACCORDINGLY, THE ASSESSMENT ORDER IS NOT ERRONEOUS. THUS, THE COMMISSIONER OF INCOME TAX COULD NOT HAVE EXERCISED JURISDICTION UNDER SECTION 263 OF THE ACT. 22. ERGO, IT IS INCONTROVERTIBLE THAT PROCEEDINGS U/S. 263 ARE COLLATERAL PROCEEDINGS OF THE ASSESSMENT, BECAUSE L D. CIT/PCIT EXERCISE REVISIONARY JURISDICTION U/S.263 S EEKING TO REVISE THE ASSESSMENT ORDER ON THE GROUND THAT IT I S ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE. THE EDIFICE OF THE PROCEEDINGS U/S 263 IS THE ASSESSMENT ORDER WHICH IS THE ORIGINAL PROCEEDINGS WHICH HAS COME TO AN END. HOWEVER, IF THE ORIGINAL ASSESSMENT ORDER ITSELF WAS INVALID OR ILLEGAL IN TERMS OF JURISDICTI ON OR WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE STATUTE OR WAS BARRED ITA. NO.3009 TO 3012/DEL/2017 40 BY LIMITATION, THEN SUCH AN INVALID ORDER CANNOT BE SUBJECT MATTER OF FURTHER PROCEEDINGS SO AS TO VALIDATE THE SAID ASSESSMENT ORDER IN COLLATERAL PROCEEDINGS LIKE U/S 263. THIS PRECISE PRINCIPLE HAS BEEN REITERATED BY THE HONBL E APEX COURT IN SEVERAL CASES WHICH IS EVIDENT FROM THE JUD GMENT OF KIRAN SINGH AND OTHERS VS. CHAMAN PAWAN AND OTHERS (SUPRA) AND BALWANT N. VISWAMITRA AND OTHERS VS. YADAV SADA SHIV MUL (SUPRA) WHICH WE HAVE QUOTED EXTENSO IN THE FOR GOING PARAGRAPHS. IN VIEW OF THE BINDING JUDICIAL PRECEDEN TS AND THE PRINCIPLE AND RATIO LAID DOWN BY THE HONBLE APEX C OURT AS WELL AS BY THE HONBLE JURISDICTIONAL HIGH COURT, W E HOLD THAT THE PRESENT PROCEEDINGS BEING COLLATERAL PROCEEDING S AND IF THE ASSESSMENT ORDER IS INHERENTLY INVALID OR BAD I N LAW, THEN VALIDITY OF SUCH AN ORDER CAN BE CHALLENGED AT ANY STAGE IN THE COLLATERAL PROCEEDINGS INCLUDING THE PROCEEDINGS U/ S.263, BECAUSE INVALID ORDER CANNOT BE SET ASIDE OR CAN BE REVISED TO MAKE IT VALID. THOUGH ASSESSMENT ORDER MAY BE SAID TO BE ERRONEOUS BUT CERTAINLY IT CANNOT BE HELD PREJUDICI AL TO THE INTEREST OF THE REVENUE IN SUCH CIRCUMSTANCES WHEN ASSESSMENT ORDER ITSELF IS UNSUSTAINABLE, IN VIEW O F THE PROVISIONS OF LAW AS REITERATED BY THE HONBLE JURI SDICTIONAL HIGH COURT AS DISCUSSED HEREIN ABOVE. 23. NOW COMING TO ISSUE WHETHER THE ASSESSMENT ORDER ITSELF WAS VALID OR NOT. THE REASONS RECORDED BY TH E ASSESSING OFFICER FOR REOPENING THE ASSESSMENT U/S.147 HAVE A LREADY BEEN INCORPORATED IN THE FOREGOING PARAGRAPH. FROM A BARE ITA. NO.3009 TO 3012/DEL/2017 41 PERUSAL OF THE SAME, IT IS SEEN THAT ASSESSEES CAS E HAS BEEN REOPENED ON THE BASIS OF INFORMATION OF CIT-III, NE W DELHI VIDE LETTER F.NO. CIT-III/CONFIDENTIAL/2012-13 DATED 28. 03.2013 THAT THE ABOVE ASSESSEE, M/S SURAJ PULSES PRIVATE LI MITED HAS RECEIVED AND IS A BENEFICIARY OF ACCOMMODATION ENTR IES PROVIDED BY THE GROUP OF SHRI SURENDRA KUMAR JAIN, SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JA IN & VAIBHAV JAIN AND HUNDREDS OF BOGUS COMPANIES OF HIS GROUP AND MANY OTHER RELATED ENTRY PROVIDERS. ON PERUSAL OF THE REASON IT IS APPARENT THAT, FIRSTLY, THE LEARNED AS SESSING OFFICER HAS NO WHERE MENTIONED THE DETAILS ABOUT THE ENTRY OPERATORS. SECONDLY, THE LEARNED ASSESSING OFFICER HAS NOTED THAT FROM THE VERIFICATION OF THE DOCUMENTS SEIZED IT APPEARS TO HIM THAT ACCOMMODATION ENTRIES HAS BEEN TAKEN FR OM VARIOUS PAPER COMPANIES WHICH WERE OBTAINED BY THE ASSESSEE. HOWEVER IN THE REASONS RECORDED THERE IS NO REFERENCE TO WHICH ARE THE PAPER COMPANIES AND WHAT IS THE NATURE OF THE ACCOMMODATION ENTRY, AND THE PARTIES FROM WHOM ACCOMMODATION ENTRIES HAVE BEEN PROVIDED/OBTAI NED BY THE ASSESSEE. NO VARIOUS DATES HAVE BEEN MENTION ED OF THE ACCOMMODATION ENTRIES AND THE AMOUNT INVOLVED FROM WHOM ACCOMMODATION ENTRIES HAVE BEEN OBTAINED. IN FACT T HERE IS NO WHISPER ABOUT HOW MUCH CREDIT OR ENTRY HAS BEEN REC EIVED AND WHAT IS THE INCOME WHICH ESCAPED ASSESSMENT. NO REASONS TO BELIEVE HAS BEEN FORMED BY THE LD. AO TH AT THERE IS AN INCOME WHICH HAS ESCAPED ASSESSMENT. ASSESSEE EV EN VIDE ITS LETTER DATED 23.06.2014 TO THE LD. AO SPECIFICA LLY ITA. NO.3009 TO 3012/DEL/2017 42 MENTIONED THAT THE NAME OF PERSONS FROM WHOM THE CR EDIT ENTRY OF RS. 25,00,000/-, HAS BEEN RECEIVED HAS NOT BEEN GIVEN TO THE ASSESSEE. ASSESSING OFFICER HAS JUST V AGUELY REFERRED TO INFORMATION/DOCUMENTS THAT HE HAD RECEI VED FROM THE CIT-III, NEW DELHI. BUT WHAT IS THE INFORMATION AND WHAT IS THE MATERIAL HAS NOT BEEN MENTIONED AT ALL. THE INFORMATION WHICH HAS BEEN MENTIONED IN THE REASONS ON THE BASI S OF WHICH THE AO HAS INITIATED PROCEEDINGS U/S 147 OF T HE ACT ARE UNDOUBTEDLY VAGUE AND UNCERTAIN AND CANNOT BE CONST RUED TO BE SUFFICIENT AND RELEVANT MATERIAL ON THE BASIS OF WHICH A REASONABLE PERSON COULD HAVE FORMED A BELIEF THAT I NCOME HAD ESCAPED ASSESSMENT. IN OTHER WORDS, THE REASONS REC ORDED BY THE AO ARE TOTALLY VAGUE, SCANTY AND AMBIGUOUS. THE REASONS RECORDED BY THE AO DO NOT DISCLOSE THE AO'S MIND AS TO WHAT WAS THE NATURE AND AMOUNT OF TRANSACTION OR ENTRIES , WHICH HAD BEEN GIVEN OR TAKEN BY THE ASSESSEE IN THE RELE VANT YEAR. THE REASONS RECORDED BY THE AO ALSO DO NOT DISCLOSE HIS MIND AS TO WHEN AND IN WHAT MODE OR WAY THE BOGUS ENTRIE S OR TRANSACTIONS WERE GIVEN OR TAKEN BY THE ASSESSEE. F ROM THE REASONS RECORDED, NOBODY CAN KNOW WHAT WAS THE AMOU NT AND NATURE OF BOGUS ENTRIES OR TRANSACTIONS GIVEN A ND TAKEN BY THE ASSESSEE IN THE RELEVANT YEAR AND WITH WHOM THE TRANSACTION HAD TAKEN PLACE. THERE IS NO LIVE NEXUS WITH THE INFORMATION RECEIVED AND THE FORMATION OF BELIEF BY THE LD. AO. AT LEAST THE REASON WHICH IS THE FOUNDATION AND EDI FICE FOR ACQUIRING JURISDICTION TO REOPEN THE ASSESSMENT, AT LEAST SHOULD PRIMA FACIE INDICATE THAT THERE IS LIVE LINK NEXUS WITH ITA. NO.3009 TO 3012/DEL/2017 43 THE MATERIAL COMING ON RECORD WITH THE INCOME ESCAP ING ASSESSMENT. THE MATERIAL SHOULD NOT BE SPECIFIC BUT ALSO SHOULD INDICATE WHAT IS THE AMOUNT WHICH IS ESCAPIN G ASSESSMENT. AS HELD ABOVE, NOWHERE THE REASONS REFE R WHAT WAS THE NATURE OF ACCOMMODATION ENTRY, THE QUANTUM OF THE AMOUNT OF ENTRY WHICH HAS ESCAPED ASSESSMENT. IN FA CT THE REASON IS PURELY BASED ON GENERAL OBSERVATION AND T HE MODUS OPERANDI WITHOUT ANY LIVE LINK NEXUS WITH THE ASSES SEE. 24. AS ALREADY NOTED ABOVE IN VARIOUS JUDGEMENTS CITED ABOVE, IT IS WELL SETTLED THAT ONLY THE REASONS REC ORDED BY THE AO FOR INITIATING PROCEEDINGS U/S 147 OF THE ACT AR E TO BE LOOKED AT OR EXAMINED FOR SUSTAINING OR SETTING ASI DE A NOTICE ISSUED U/S 148 OF THE ACT. THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE AO. NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITION CAN BE MADE TO THOSE RE ASONS. THEREFORE, THE DETAILS OF ENTRIES OR AMOUNT MENTION ED IN THE ASSESSMENT ORDER AND IN RESPECT OF WHICH ULTIMATE A DDITION HAS BEEN MADE BY THE AO, CANNOT BE MADE A BASIS TO SAY THAT THE REASONS RECORDED BY THE AO WERE WITH REFERENCE TO THOSE AMOUNTS MENTIONED IN THE ASSESSMENT ORDER. THE PRIN CIPLES LAID DOWN IS COVERED BY THE JUDGMENT PASSED BY HON BLE HIGH COURT OF DELHI IN THE CASE OF INSECTICIDES (INDIA) LTD. REPORTED IN 357 ITR 330 AND THIS TRIBUNAL IN THE CASE OF SHA NKER TRADEX (P) LTD. IN ITA NO. 2200/D/2019 DATED 10.11. 2020. 24.1 IN VIEW OF THESE FACTS AND CIRCUMSTANCES, SIN CE THE REASSESSMENT ORDER ITSELF IS BAD IN LAW, THEREFORE, THE SAME ITA. NO.3009 TO 3012/DEL/2017 44 CANNOT BE REVISED UNDER SECTION 263 OF THE I.T. ACT . ONLY VALID RE-ASSESSMENT ORDER CAN BE REVISED UNDER SECTION 26 3 OF THE I.T. ACT. WE, ACCORDINGLY, SET ASIDE THE ORDER OF L D. PR. CIT PASSED UNDER SECTION 263 OF THE I.T. ACT AND QUASH THE SAME. IN VIEW OF THE ABOVE, THE REMAINING PLEAS OF THE AS SESSEE ARE NOT REQUIRED TO BE ADJUDICATED. ACCORDINGLY, APPEAL OF THE ASSESSEE IS ALLOWED. ASSESSMENT YEAR 2008-09 IN ITA NO.3010/DEL/2017 25. HERE IN THIS CASE ALSO EXACTLY SIMILAR FACTS AN D CIRCUMSTANCES ARE INVOLVED. FOR THIS YEAR, ORIGINAL RETURN OF INCOME IN THIS CASE WAS FILED ON 25.10.2007 DECLARI NG INCOME OF RS. 3,55,310/-. THE NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, WAS ISSUED ON 25.03.2014 AFTER RECORDING T HE REASONS AND TAKING PRIOR APPROVAL FROM THE COMPETEN T AUTHORITIES WHICH WASS BY AND LARGE ON THE SAME GRO UNDS AS WAS TAKEN IN ASSESSMENT YEAR 2007-08. THE ASSESSEE IN RESPONSE TO THE STATUTORY NOTICE VIDE LETTER DATED 01.04.2014 SUBMITTING THEREIN THAT THE ORIGINAL RETURN FILED B E TREATED AS RETURN FILED IN RESPONSE TO THE NOTICE UNDER SECTIO N 148 OF THE I.T. ACT AND VIDE LETTER DATED 15.04.2014 REQUESTED TO PROVIDE REASONS RECORDED, WHICH WERE DULY PROVIDED TO IT. T HE ASSESSEE ALSO FILLED ITS OBJECTIONS WHICH WERE DISP OSED OFF. THE A.O. ISSUED STATUTORY NOTICES WHICH WERE COMPLIED B Y THE ASSESSEE AND FILED DETAILS AS CALLED FOR. LD. AO IS SUED INDEPENDENT NOTICES U/S 133(6) OF THE I.T. ACT, 196 1 TO THE COMPANIES WHO HAS INVESTED AND DUE REPLY HAS BEEN R ECEIVED. ITA. NO.3009 TO 3012/DEL/2017 45 THE A.O. AFTER DISCUSSING THE CASE WITH THE ASSESSE E, ACCEPTED THE RETURNED INCOME AND PASSED THE RE-ASSESSMENT OR DER UNDER SECTION 147/143(3) OF THE I.T. ACT, 1961, ON DATED 27.01.2015. 26. THE LD. PR. CIT ON EXAMINING THE ASSESSMENT REC ORD NOTICED THAT THOUGH THE ASSESSMENT WAS REOPENED UND ER SECTION 148 OF THE I.T. ACT ON THE ALLEGATION OF AC COMMODATION ENTRY TAKEN FROM SHRI S.K. JAIN GROUP OF CONCERNS W HO WERE SEARCHED ON 14.09.2010 BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT, SOME OF THE A.OS DID NOT EX AMINE THE SEIZED MATERIAL IN THE FORM OF CASH BOOK AND BO OKS CONTAINING THE DETAILS OF CHEQUES ISSUED BY SUCH CO NCERNS SEIZED FROM THE PREMISES OF SHRI S.K. JAIN DURING T HE COURSE OF SEARCH. THE INVESTIGATION WING, DELHI, FORWARDED THE HARD COPY OF APPRAISAL REPORT TO THE THEN COMMISSIONER, DELHI-III, WHICH WAS RECEIVED BY HIM ON 15.03.2013, THE RELEVA NT SEIZED MATERIAL (CONTAINING MANY THOUSANDS OF PAGES) WAS S CANNED AND SENT TO THE COMMISSIONER OF INCOME TAX IN SOFT COPY. HOWEVER, WHILE COMPLETING THE ASSESSMENT UNDER SECT ION 147 R.W.S. 143 OF THE I.T. ACT, THOUGH THE A.O. REFERRE D THE APPRAISAL REPORT BUT DID NOT LOOK INTO THE RELEVANT SEIZED MATERIAL IN SOFT COPY. THIS WAS ONE OF THE CASE WHE RE THE A.O. DID NOT EXAMINE THE SEIZED MATERIAL. ACCORDINGLY, A SHOW CAUSE NOTICE UNDER SECTION 263 OF THE I.T. ACT WAS ISSUED TO THE ASSESSEE ON 13.01.2017 WHICH IS REPRODUCED IN T HE IMPUGNED ORDER. IN THE SHOW CAUSE NOTICE IT IS STAT ED THAT THE CASE WAS REOPENED ON THE ALLEGATION OF ACCOMMODATIO N ENTRY ITA. NO.3009 TO 3012/DEL/2017 46 OF RS.70 LAKHS ON ACCOUNT OF SHARE APPLICATION/CAPI TAL RECEIVED FROM M/S HUM TUM MARKETING PVT LTD, M/S VI RGIN CAPITAL SERVICES PVT LTD, M/S EAGLE INFRATECH PVT L TD, M/S VICTORY SOFTWARE PVT LTD, M/S MEGA TOP PROMOTERS PV T LTD, M/S FINANCE LEASING & FINANCE INDIA LTD, M/S BRITE INDUSTRIAL RESOURCES LTD, M/S SUNNY CAST & FORGE LT D AND M/S SINGHAL SECURITIES PVT LTD, CONCERNS OF S.K. JA IN GROUP OF CASES. HOWEVER, ON PERUSAL OF RECORDS AND ANNEXURES OF CASH BOOK AND CHEQUE BOOK SEIZED IN THE CASE OF SK JAIN GROUP, IT HAS BEEN OBSERVED THAT THE TOTAL ACCOMMODATION ENTR Y OF RS. 90 LAKHS HAS BEEN TAKEN BY YOUR COMPANY FROM THE AB OVE MENTIONED CONCERNS INSTEAD OF RS. 70 LAKHS AS PER R EASONS RECORDED FOR REOPENING OF ASSESSMENT. SEARCH AND SE IZURE OPERATION WAS CARRIED OUT ON 14.09.2010 AT THE PREM ISES OF SHRI SURENDER JAIN AND SHRI VIRENDER JAIN. DURING T HE COURSE OF SEARCH, CASH BOOK AND BANK BOOKS OF THE CONCERNS MANAGED BY SHRI S.K. JAIN GROUP WHEREIN DETAILED OF DAY-TO- DAY RECEIPTS IN CASH AND CHEQUE FROM/TO DIFFERENT PERSONS/FIRMS/COMPANIES HAVE BEEN RECORDED, WERE SE IZED. ON PERUSAL OF THE RE-ASSESSMENT ORDER, IT IS NOTICE D THAT WHILE PASSING THE SAID ORDER, THE LD. AO HAS FAILED TO CO NSIDER THE RELEVANT SEIZED MATERIAL PERTAINING TO THE ASSESSEE -COMPANY WHICH IS MENTIONED IN THE ORDER. IT IS NOTED IN THE NOTICE UNDER SECTION 263 THAT THE AMOUNTS RECEIVED BY ASSE SSEE- COMPANY WERE ACCOMMODATION ENTRY IN LIEU OF CASH GI VEN BY THE ASSESSEE-COMPANY THROUGH SHRI SATISH GOEL. THE RELEVANT COPIES OF THE SEIZED MATERIAL RELATING TO THE ASSES SEE-COMPANY ITA. NO.3009 TO 3012/DEL/2017 47 WERE GIVEN ALONG WITH SHOW CAUSE NOTICE OR DURING T HE PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT. REPL Y OF THE ASSESSEE WAS CALLED FOR IN WHICH THE ASSESSEE EXPLA INED THAT THE A.O. AFTER EXAMINING THE ENTIRE DETAILS AND DOC UMENTARY EVIDENCES ON RECORD AND MAKING DIRECT/INDEPENDENT E NQUIRY FROM BOTH THE INVESTORS UNDER SECTIONS 133(6) OF TH E I.T. ACT, COMPLETED THE ASSESSMENT PROCEEDINGS. THE ASSESSEE FILED ALL THE DOCUMENTARY EVIDENCES BEFORE A.O. I.E., CONFIRM ATION LETTER FROM INVESTORS, COPY OF THEIR BANK ACCOUNTS, COPY OF ITR, COPY OF PAN, COPY OF AUDITED BALANCE SHEET, CO PY OF MASTER DATA TAKEN FROM OFFICIAL WEBSITE OF MCA. IT WAS ALSO STATED THAT THE SEIZED PAPERS ARE ONLY ROUGH PAPERS AND NO DETAILS HAVE BEEN MENTIONED THEREIN REJECTED. AS SU CH, THE RE- ASSESSMENT ORDER WAS SET ASIDE AND RESTORED TO THE A.O. FOR PASSING THE ORDER AFRESH AS PER LAW. 27. THE ASSESSEE IN THE PRESENT APPEAL HAS CHALLEN GED THE ORDER UNDER SECTION 263 OF THE IT. ACT. THE ASSESSE E ALSO MOVED AN APPLICATION FOR ADMISSION OF THE FOLLOWING ADDITIONAL GROUNDS: I) BECAUSE THE ACTION FOR INITIATION, CONTINUATION AND CONCLUSION OF REASSESSMENT PROCEEDINGS IS BEING CHALLENGED ON FACTS AND LAW. II) BECAUSE THE CONTINUATION AND CONCLUSION OF REASSESSMENT PROCEEDINGS IS BEING CHALLENGED ON FAC TS AND LAW WHILE THERE BEING ERRONEOUS DISPOSAL OF PRELIMI NARY OBJECTION RAISED PURSUANT TO JUDGMENT OF GKN DRIVES HAFTS 259 ITR 19 SC III) BECAUSE THE ACTION FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS IS UNREASONABLE SINCE WHILE RECORDING ITA. NO.3009 TO 3012/DEL/2017 48 REASONS, THERE IS NON APPLICATION OF MIND MUCH LESS INDEPENDENT APPLICATION OF MIND AND MERELY RELYING UPON INVESTIGATION REPORT BY AO, FURTHER REASONS RECORDE D ARE VAGUE, LACKING TANGIBLE MATERIAL/REASONABLE CAUSE A ND JUSTIFICATION IV) BECAUSE THE ACTION IS BEING CHALLENGED ON FACTS & LAW FOR CHALLENGING THAT THE REASSESSMENT ORDER PA SSED U/S 147/143(3) WAS ILLEGAL OR NULLITY IN THE EYES O F LAW, THEN, WHETHER THE CIT HAD A VALID JURISDICTION TO P ASS THE IMPUGNED ORDER U/S 263 TO REVISE THE NON-EST REASSESSMENT ORDER. 28. CONSIDERING THE FACTS OF THE CASE, WE ARE OF TH E VIEW THAT ADDITIONAL GROUNDS ARE LEGAL IN NATURE AND GOES TO THE ROOT OF THE MATTER. THEREFORE THE SAME ARE ADMITTED FOR THE PURPOSE OF DISPOSAL OF THE APPEAL. WE, ACCORDINGLY, ADMIT T HE ADDITIONAL GROUNDS OF APPEAL. 29. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE SUBMISSIONS WITH RESPECT TO THE PRESENT CASE IS SAM E AS IN THE CASE OF SURAJ PULSES PVT. LTD. IN ITA NO.3009/D EL/2017 (SUPRA), AS THE REASONS RECORDED ARE IDENTICAL. THE REASONS RECORDED WHICH ARE PLACED AT PG. 3 OF THE PAPER BOO K READS AS UNDER: INFORMATION/ DOCUMENTS IN THE FORM OF CD, APPRAISA L REPORT ALONGWITH RELEVANT DETAILS HAS BEEN RECEIVED FROM THE OFFICE OF THE CIT-III, NEW DELHI VIDE LETTER F. NO. CIT- III/CONFIDENTIAL/2012-13 DATED 28.03.2013 THAT THE ABOVE ASSESSEE, M/S SURAJ PULSES PRIVATE LIMITED HAS RECEIVED AND IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVI DED BY THE GROUP OF SHRI SURENDRA KUMAR JAIN, SH. RAKESH G UPTA ITA. NO.3009 TO 3012/DEL/2017 49 & SH. VISHESH GUPTA AND SH. NAVNEET JAIN &VAIBHAV J AIN AND HUNDREDS OF BOGUS COMPANIES OF HIS GROUP AND MA NY OTHER RELATED ENTRY PROVIDERS. THESE SEARCH AND SEI ZURE OPERATIONS UNEARTHED THE MODUS OPERANDI OF THESE EN TRY OPERATORS. THE VARIOUS COMPANIES WHICH DO NOT HAVE ANY BUSINESS WERE BEING USED FOR PROVIDING ACCOMMODATIO N ENTRIES TO VARIOUS ASSESSEES WHO WERE REROUTING THE IR UNACCOUNTED CASH THROUGH THESE ACCOMMODATION ENTRIE S. THE ASSESSEES WOULD PAY CASH TO THE ENTRY PROVIDERS . THIS CASH WOULD THEN BE DEPOSITED IN THE ACCOUNTS OF VAR IOUS BOGUS COMPANIES AND THE TRANSACTIONS WOULD BE ROUTE D THROUGH MANY BANK ACCOUNTS TO COVER THE TRAIL. THEN THE ASSESSEE WOULD BE GIVEN CHEQUE FROM ONE OF THE MANY ACCOUNT WHICH WOULD BE GIVEN THE COLOUR OF SHARE APPLICATION MONEY OR SHARE CAPITAL OR SHARE PREMIUM OR LOANS OR ADVANCE ETC. IN THE PROCESS, THE ENTRY OPE RATOR WOULD EARN CERTAIN COMMISSION. THE SEARCHES BY THE INVESTIGATION WING AGAINST THE ENTRY OPERATORS RESU LTED IN UNEARTHING OF LARGE NUMBER OF PASS BOOKS, CHEQUE BO OKS, COMPUTER HARD DISKS, SIGNED BLANK CHEQUES, SHARE TR ANSFER CERTIFICATES AND MANY OTHER BLANK SIGNED DOCUMENTS. THIS INFORMATION HAS BEEN PROVIDED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT TO THE ASSESSING OFFICER. 30. LEARNED COUNSEL FOR THE ASSESSEE DRAW OUR AT TENTION TOWARDS THE WRITTEN SUBMISSIONS ALONGWITH DOCUMENTA RY EVIDENCES FILED BY THE ASSESSEE BEFORE THE AUTHORIT IES BELOW AND ALSO WRITTEN SYNOPSIS. HE SUBMITTED THAT THE IS SUE IN THE SAID APPEAL IS IDENTICAL AS THE AFORESAID APPEAL IN THE CASE OF SURAJ PULSES (P) LTD. FOR AY 2007-08 IN ITA NO. 3009 /D/2017. THEREFORE, RELIANCE IS PLACED UPON SUBMISSIONS MADE THEREIN. FURTHER, HE SUBMITTED THAT LD. AO HAS MENTIONED AMO UNT OF RS. 70,00,000/- WHICH IS ESCAPED ASSESSMENT IN THE PROFORMA ITA. NO.3009 TO 3012/DEL/2017 50 OF APPROVAL U/S 151 OF THE ACT, WHICH IS PLACED PAP ER BOOK PG. NO. 2, WHILE PR. CIT HAS MENTIONED IN HIS ORDER AT PG. 2THAT THE AMOUNT RECEIVED IS RS. 90,00,000/- BY ASS ESSEE INSTEAD OF RS.70,00,000/- AS PER REASONS RECORDED F OR REOPENING OF ASSESSMENT. THEREFORE, HE SUBMITTED TH AT THE REOPENING IS MADE ON WRONG SETS OF FACTS. HE ALSO P LACED ON RECORD THE ORDER DATED 06.12.2017 PASSED BY LD. AO U/S 263/147/143(3) OF THE ACT WHEREIN THE ADDITION IS A LSO MADE OF RS.90,00,000/-. 31. ON THE OTHER HAND, LD. D.R. RELIED UPON THE OR DER OF THE LD. PR. CIT. HE HAS RELIED UPON SAME SUBMISSION AND JUDGMENTS AS RELIED IN THE CASE OF SURAJ PULSES (P) LTD. FOR AY 2007-08 IN ITA NO. 3009/D/2017. THEREFORE, HE SUBM ITTED THAT THE LD. PR. CIT RIGHTLY CONSIDERED RE-ASSESSME NT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF TH E REVENUE. 32. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE PERUSED T HAT THE IDENTICAL GROUNDS HAS BEEN DEALT WITH BY US IN APPE AL IN THE CASE OF SURAJ PULSES (P) LTD. FOR AY 2007-08 IN ITA NO. 3009/D/2017 (SUPRA). THE ABOVE FINDING GIVEN THEREIN WILL APPLY MUTATIS MUTANDIS FOR THIS YEAR ALSO. 33. FURTHER, IN THE FROM THE PERUSAL OF THE REASONS RECORDED FOR INITIATING PROCEEDINGS U/S 148 AND OBTAINING TH E APPROVAL OF THE ADDL. COMMISSIONER OF INCOME TAX , RANGE-9, NEW ITA. NO.3009 TO 3012/DEL/2017 51 DELHI, IT IS MENTIONED THAT ASSESSEE COMPANY RECEIV ED SHARE CAPITAL ON ACCOUNT OF ACCOMMODATION ENTRIES OF RS. 70 LAKHS. HOWEVER, LD. PR. CIT IN ORDER U/S 263 HAS ADMITTED THAT THE TOTAL ACCOMMODATION ENTRY OF RS. 90 LAKHS HAS BEEN TAKEN BY THE ASSESSEE COMPANY FROM THE VARIOUS CONCERNS INST EAD OF RS. 70 LAKHS AS PER REASONS RECORDED FOR REOPENING OF ASSESSMENT. THE SAME IS ALSO CLARIFIED FROM THE ORD ER DATED 06.12.2017 PASSED BY LD. AO U/S 263/147/143(3) OF T HE ACT WHEREIN THE ADDITION IS ALSO MADE OF RS.90,00,000/- . THUS, THE FACTS MENTIONED IN THE PROFORMA FOR REASONS FOR REOPENING OF THE ASSESSMENT ARE INCORRECT AND NON-EXISTENT. T HE HONBLE HIGH COURT OF DELHI IN THE CASE OF PCIT VS. RMG POLYVINYL REPORTED IN 396 ITR 5 (DELHI) HAS HELD AS UNDER : 9. HOWEVER, IN NEITHER OF THE ABOVE CASES ARE THE FACTS SIMILAR TO THOSE IN THE PRESENT CASE. THE TWO GLARI NG ERRORS IN THE REASONS IN THE PRESENT CASE ARE, IN FACT, UN USUAL. WHAT THE AO MIGHT HAVE DONE IF HE WAS AWARE, EVEN A T THE STAGE OF CONSIDERATION OF REOPENING OF THE ASSESSME NT THAT A RETURN HAD IN FACT BEEN FILED BY THE ASSESSEE AND THAT THE EXTENT OF THE ACCOMMODATION ENTRIES WAS TO THE TUNE OF RS. 78 LAKH AND NOT RS. 1.56 CRORE WOULD BE A MATTE R OF PURE SPECULATION AT THIS STAGE. HE MAY OR MAY NOT H AVE COME TO THE SAME CONCLUSION. BUT THAT IS NOT THE PO INT. THE QUESTION IS OF APPLICATION OF MIND BY THE AO TO THE MATERIAL AVAILABLE WITH HIM BEFORE DECIDING TO REOPEN THE ASSESSMENT UNDER SECTION 147 OF THE ACT. ITA. NO.3009 TO 3012/DEL/2017 52 11. THERE CAN BE NO MANNER OF DOUBT THAT IN THE INS TANT THERE WAS A FAILURE OF APPLICATION OF MIND BY THE A O TO THE FACTS. IN FACT HE PROCEEDED ON TWO WRONG PREMISES - ONE REGARDING ALLEGED NON-FILING OF THE RETURN AND THE OTHER REGARDING THE EXTENT OF THE SO-CALLED ACCOMMODATION ENTRIES. 13. AS IN THE ABOVE CASE, EVEN IN THE PRESENT CASE, THE COURT IS UNABLE TO DISCERN THE LINK BETWEEN THE TAN GIBLE MATERIAL AND THE FORMATION OF THE REASONS TO BELIEV E THAT INCOME HAD ESCAPED ASSESSMENT. IN THE PRESENT CASE TOO, THE INFORMATION RECEIVED FROM THE INVESTIGATION WIN G CANNOT BE SAID TO BE TANGIBLE MATERIAL PER SE WITHOUT A FU RTHER INQUIRY BEING UNDERTAKEN BY THE AO. IN THE PRESENT CASE THE AO DEPRIVED HIMSELF OF THAT OPPORTUNITY BY PROC EEDING ON THE ERRONEOUS PREMISE THAT ASSESSEE HAD NOT FILE D A RETURN WHEN IN FACT IT HAD. 14. TO COMPOUND MATTERS FURTHER THE IN THE ASSESSME NT ORDER THE AO HAS, INSTEAD OF ADDING A SUM OF RS. 78 LAKH, EVEN GOING BY THE REASONS FOR REOPENING OF THE ASSE SSMENT, ADDED A SUM OF RS. 1.13 CRORE. ON WHAT BASIS SUCH A N ADDITION WAS MADE HAS NOT BEEN EXPLAINED. 34. HERE ALSO AO HAD REASON TO BELIEVE THAT RS.70 L AKHS HAS ESCAPED ASSESSMENT, WHICH WAS ULTIMATELY WAS FOUND TO BE INCORRECT AND NON-EXISTENT, THEREFORE, THERE WAS CO MPLETE FAILURE OF ANY APPLICATION OF MIND ON THE PART OF T HE LD. AO TO PROCEED TO INITIATE THE RE-ASSESSMENT PROCEEDINGS. THERE IS NO ITA. NO.3009 TO 3012/DEL/2017 53 OTHER MATERIAL AVAILABLE ON RECORD EXCEPT THE INFOR MATION RECEIVED FROM THE INVESTIGATION WING. THE LD. AO ON THE BASIS OF THE INFORMATION AND MATERIAL RECEIVED FROM INVES TIGATION WING HAS RECORDED REASONS FOR REOPENING OF THE ASSE SSMENT WHICH ARE ULTIMATELY FOUND TO BE INCORRECT AND NON- EXISTENT. FURTHER ALSO, FOLLOWING THE REASONS FOR DECISION IN THE CASE OF SURAJ PULSES (P) LTD. FOR AY 2007-08 IN ITA NO. 3009 /D/2017 (SUPRA), WE SET ASIDE THE ORDER PASSED BY THE LD. P R. CIT UNDER SECTION 263 OF THE I.T. ACT AND QUASH THE SAM E. ACCORDINGLY, APPEAL OF THE ASSESSEE IS ALLOWED. 35. IN THE RESULT, ITA. NO. 3010/DEL./2017 OF THE ASSESSEE IS ALLOWED. SURAJ BUILDMART INDIA PVT LTD. APPEAL NO. 3011/D/2 017 AY 2007-08 36. HERE AGAIN FACTS ARE EXACTLY SAME. IN THIS YE AR ALSO THE ORIGINAL RETURN OF INCOME WAS FILED ON 25.10.2007 D ECLARING INCOME OF RS. 2,05,085. THE NOTICE UNDER SECTION 14 8 OF THE INCOME TAX ACT, WAS ISSUED ON 25.03.2014 AFTER RECO RDING THE REASONS AND TAKING PRIOR APPROVAL FROM THE COMPETEN T AUTHORITIES ON BY AND LARGE SAME REASONS AND INFORM ATION AS DEALT IN THE EARLIER PART OF THE ORDER. THE ASSESSE E IN RESPONSE TO THE STATUTORY NOTICE VIDE LETTER DATED 01.04.201 4 SUBMITTING THEREIN THAT THE ORIGINAL RETURN FILED M AY PLEASE BE TREATED AS RETURN FILED IN RESPONSE TO THE NOTICE U NDER SECTION 148 OF THE I.T. ACT AND VIDE LETTER DATED 15.04.201 4 REQUESTED ITA. NO.3009 TO 3012/DEL/2017 54 TO PROVIDE REASONS RECORDED, WHICH WERE DULY PROVID ED TO IT. THE ASSESSEE ALSO FILLED ITS OBJECTIONS WHICH WERE DISPOSED OFF. THE A.O. ISSUED VARIOUS NOTICE WHICH WERE COMPLIED BY THE ASSESSEE AND FILED DETAILS AS CALLED FOR. LD. AO IS SUED INDEPENDENT NOTICES U/S 133(6) OF THE I.T. ACT, 196 1 TO THE COMPANIES WHO HAS INVESTED AND DUE REPLY HAS BEEN R ECEIVED. THE LD. AO AFTER DISCUSSING THE CASE WITH THE ASSES SEE, ACCEPTED THE RETURNED INCOME AND PASSED THE RE-ASSE SSMENT ORDER UNDER SECTION 147/143(3) OF THE I.T. ACT, 196 1, ON DATED 27.01.2015. 37. THE LD. PR. CIT ON EXAMINING THE ASSESSMENT REC ORD NOTICED THAT THOUGH THE ASSESSMENT WAS REOPENED UND ER SECTION 148 OF THE I.T. ACT ON THE ALLEGATION OF AC COMMODATION ENTRY TAKEN FROM SHRI S.K. JAIN GROUP OF CONCERNS W HO WERE SEARCHED ON 14.09.2010 BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT, SOME OF THE A.OS DID NOT EX AMINE THE SEIZED MATERIAL IN THE FORM OF CASH BOOK AND BO OKS CONTAINING THE DETAILS OF CHEQUES ISSUED BY SUCH CO NCERNS SEIZED FROM THE PREMISES OF SHRI S.K. JAIN DURING T HE COURSE OF SEARCH. THE INVESTIGATION WING, DELHI, FORWARDED THE HARD COPY OF APPRAISAL REPORT TO THE THEN COMMISSIONER, DELHI-III, WHICH WAS RECEIVED BY HIM ON 15.03.2013, THE RELEVA NT SEIZED MATERIAL (CONTAINING MANY THOUSANDS OF PAGES) WAS S CANNED AND SENT TO THE COMMISSIONER OF INCOME TAX IN SOFT COPY. HOWEVER, WHILE COMPLETING THE ASSESSMENT UNDER SECT ION 147 R.W.S. 143 OF THE I.T. ACT, THOUGH THE LD. AO REFER RED THE ITA. NO.3009 TO 3012/DEL/2017 55 APPRAISAL REPORT BUT DID NOT LOOK INTO THE RELEVANT SEIZED MATERIAL IN SOFT COPY. THIS WAS ONE OF THE CASE WHE RE THE LD. AO DID NOT EXAMINE THE SEIZED MATERIAL. ACCORDINGLY , A SHOW CAUSE NOTICE UNDER SECTION 263 OF THE I.T. ACT WAS ISSUED TO THE ASSESSEE ON 13.01.2017 WHICH IS REPRODUCED IN T HE IMPUGNED ORDER. IN THE SHOW CAUSE NOTICE IT IS STAT ED THAT THE CASE WAS REOPENED ON THE ALLEGATION OF ACCOMMODATIO N ENTRY OF RS. 2.60 CRORES ON ACCOUNT OF SHARE APPLICATION/ CAPITAL RECEIVED FROM M/S SHALINI HOLDING LTD., M/S NISHA H OLDING LTD., M/S S.R. CABLE PVT LTD., M/S FINGE LEASING & FINANCE LTD. M/S VOGUE LEASING & FINANCE PVT LTD., M/S PELI CON FINANCE & LEASING LTD., M/S SUNNY CAST & FORGE LTD, M/S PITAMBRA SECURITIES PVT LTD. M/S PARISUDH FINANCE C O. PVT LTD., M/S HILLRIDGE INVESTMENT LTD. , M/S SINGHAL S ECURITIES PVT LTD, M/S KDG PROPER & CONSTRUCTION PVT LTD. AND M/S BRITE INDU. RESOURCES LTD, VARIOUS CONCERNS OF S.K. JAIN GROUP OF CASES. HOWEVER, ON PERUSAL OF RECORDS AND ANNEXURES OF CASH BOOK AND CHEQUE BOOK SEIZED IN THE CASE OF SK JAIN GROUP, IT HAS BEEN OBSERVED THAT THE TOTAL ACCOMMOD ATION ENTRY OF RS. 2.15 CRORE (AS AGAINST RS. 2.60 AS PER REASONS RECORDED FOR REOPENING OF ASSESSMENT) HAS BEEN TAK EN BY YOUR COMPANY FROM THE ABOVE MENTIONED CONCERNS. SEA RCH AND SEIZURE OPERATION WAS CARRIED OUT ON 14.09.2010 AT THE PREMISES OF SHRI SURENDER JAIN AND SHRI VIRENDER JA IN. DURING THE COURSE OF SEARCH, CASH BOOK AND BANK BOO KS OF THE CONCERNS MANAGED BY SHRI S.K. JAIN GROUP WHEREIN DE TAILED OF DAY-TO-DAY RECEIPTS IN CASH AND CHEQUE FROM/TO D IFFERENT ITA. NO.3009 TO 3012/DEL/2017 56 PERSONS/FIRMS/COMPANIES HAVE BEEN RECORDED, WERE SE IZED. ON PERUSAL OF THE RE-ASSESSMENT ORDER, IT IS NOTICE D THAT WHILE PASSING THE SAID ORDER, THE LD. AO HAS FAILED TO CO NSIDER THE RELEVANT SEIZED MATERIAL PERTAINING TO THE ASSESSEE -COMPANY WHICH IS MENTIONED IN THE ORDER. IT IS NOTED IN THE NOTICE UNDER SECTION 263 THAT THE AMOUNTS RECEIVED BY ASSE SSEE- COMPANY WERE ACCOMMODATION ENTRY IN LIEU OF CASH GI VEN BY THE ASSESSEE-COMPANY THROUGH SHRI SATISH GOEL. THE RELEVANT COPIES OF THE SEIZED MATERIAL RELATING TO THE ASSES SEE-COMPANY WERE GIVEN ALONG WITH SHOW CAUSE NOTICE OR DURING T HE PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT. REPL Y OF THE ASSESSEE WAS CALLED FOR IN WHICH THE ASSESSEE EXPLA INED THAT THE LD. AO AFTER EXAMINING THE ENTIRE DETAILS AND DOCUMENTARY EVIDENCES ON RECORD AND MAKING DIRECT/INDEPENDENT ENQUIRY FROM BOTH THE INVESTORS UNDER SECTIONS 133(6) OF THE I.T. ACT, COMPLETED THE ASSE SSMENT PROCEEDINGS. THE ASSESSEE FILED ALL THE DOCUMENTARY EVIDENCES BEFORE LD. AO I.E., CONFIRMATION LETTER FROM INVEST ORS, COPY OF THEIR BANK ACCOUNTS, COPY OF ITR, COPY OF PAN, COPY OF AUDITED BALANCE SHEET, COPY OF MASTER DATA TAKEN FROM OFFIC IAL WEBSITE OF MCA. IT WAS SUBMITTED THAT THE SEIZED PAPERS ARE ONLY ROUGH PAPERS AND NO DETAILS HAVE BEEN MENTIONED THE REIN. REJECTED. AS SUCH, THE RE-ASSESSMENT ORDER WAS SET ASIDE AND RESTORED TO THE LD. AO FOR PASSING THE ORDER AFRESH AS PER LAW. 38. THE ASSESSEE IN THE PRESENT APPEAL HAS CHALLENG ED THE ORDER UNDER SECTION 263 OF THE IT. ACT. THE ASSESSE E ALSO ITA. NO.3009 TO 3012/DEL/2017 57 MOVED AN APPLICATION FOR ADMISSION OF THE FOLLOWING ADDITIONAL GROUNDS: I) BECAUSE THE ACTION FOR INITIATION, CONTINUATION AND CONCLUSION OF REASSESSMENT PROCEEDINGS IS BEING CHALLENGED ON FACTS AND LAW. II) BECAUSE THE CONTINUATION AND CONCLUSION OF REASSESSMENT PROCEEDINGS IS BEING CHALLENGED ON FAC TS AND LAW WHILE THERE BEING ERRONEOUS DISPOSAL OF PRELIMI NARY OBJECTION RAISED PURSUANT TO JUDGMENT OF GKN DRIVES HAFTS 259 ITR 19 SC III) BECAUSE THE ACTION FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS IS UNREASONABLE SINCE WHILE RECORDING REASONS, THERE IS NON APPLICATION OF MIND MUCH LESS INDEPENDENT APPLICATION OF MIND AND MERELY RELYING UPON INVESTIGATION REPORT BY AO, FURTHER REASONS RECORDE D ARE VAGUE, LACKING TANGIBLE MATERIAL/REASONABLE CAUSE A ND JUSTIFICATION IV) BECAUSE THE ACTION IS BEING CHALLENGED ON FACTS & LAW FOR CHALLENGING THAT THE REASSESSMENT ORDER PA SSED U/S 147/143(3) WAS ILLEGAL OR NULLITY IN THE EYES O F LAW, THEN, WHETHER THE CIT HAD A VALID JURISDICTION TO P ASS THE IMPUGNED ORDER U/S 263 TO REVISE THE NON-EST REASSESSMENT ORDER. 39. CONSIDERING THE FACTS OF THE CASE, WE ARE OF TH E VIEW THAT ADDITIONAL GROUNDS ARE LEGAL IN NATURE AND GOES TO THE ROOT OF THE MATTER. THEREFORE THE SAME ARE ADMITTED FOR THE PURPOSE OF DISPOSAL OF THE APPEAL AS DONE IN THE OTHER TWO APPEALS. WE, ACCORDINGLY, ADMIT THE ADDITIONAL GROUNDS OF AP PEAL. 40. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE SUBMISSIONS WITH RESPECT TO THE PRESENT CASE IS SAM E AS IN ITA. NO.3009 TO 3012/DEL/2017 58 THE CASE OF SURAJ PULSES PVT. LTD. IN ITA NO.3009/D EL/2017 (SUPRA) AND SURAJ PULSES PVT LTD. IN ITA NO. 3010/D/ 2017 (SUPRA), AS THE REASONS RECORDED ARE IDENTICAL. THE REASONS RECORDED WHICH ARE PLACED AT PG. 6 OF THE PAPER BOO K READS AS UNDER: INFORMATION/ DOCUMENTS IN THE FORM OF CD, APPRAISA L REPORT ALONGWITH RELEVANT DETAILS HAS BEEN RECEIVED FROM T HE OFFICE OF THE CIT-III, NEW DELHI VIDE LETTER F.NO. CIT- III/CONFIDENTIAL/2012-13 DATED 28.03.2013 THAT THE ABOVE ASSESSEE, M/S SURAJBUILDMART PVT. LTD. HAS RECEIVED AND IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVI DED BY THE GROUP OF SHRI SURENDRA KUMAR JAIN, SH. RAKESH G UPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN &VAIBHAV J AIN AND HUNDREDS OF BOGUS COMPANIES OF HIS GROUP AND MA NY OTHER RELATED ENTRY PROVIDERS. THESE SEARCH AND SEI ZURE OPERATIONS UNEARTHED THE MODUS OPERANDI OF THESE EN TRY OPERATORS. THE VARIOUS COMPANIES WHICH DO NOT HAVE ANY BUSINESS WERE BEING USED FOR PROVIDING ACCOMMODATIO N ENTRIES TO VARIOUS ASSESSEES WHO WERE REROUTING THE IR UNACCOUNTED CASH THROUGH THESE ACCOMMODATION ENTRIE S. THE ASSESSEES WOULD PAY CASH TO THE ENTRY PROVIDERS . THIS CASH WOULD THEN BE DEPOSITED IN THE ACCOUNTS OF VAR IOUS BOGUS COMPANIES AND THE TRANSACTIONS WOULD BE ROUTE D THROUGH MANY BANK ACCOUNTS TO COVER THE TRAIL. THEN THE ASSESSEE WOULD BE GIVEN CHEQUE FROM ONE OF THE MANY ACCOUNT WHICH WOULD BE GIVEN THE COLOUR OF SHARE APPLICATION MONEY OR SHARE CAPITAL OR SHARE PREMIUM OR LOANS OR ADVANCE ETC. IN THE PROCESS, THE ENTRY OPE RATOR WOULD EARN CERTAIN COMMISSION. THE SEARCHES BY THE INVESTIGATION WING AGAINST THE ENTRY OPERATORS RESU LTED IN UNEARTHING OF LARGE NUMBER OF PASS BOOKS, CHEQUE BO OKS, COMPUTER HARD DISKS, SIGNED BLANK CHEQUES, SHARE TR ANSFER CERTIFICATES AND MANY OTHER BLANK SIGNED DOCUMENTS. THIS ITA. NO.3009 TO 3012/DEL/2017 59 INFORMATION HAS BEEN PROVIDED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT TO THE ASSESSING OFFICER. 41. LEARNED COUNSEL FOR THE ASSESSEE DRAW OUR ATT ENTION TOWARDS THE WRITTEN SUBMISSIONS ALONGWITH DOCUMENTA RY EVIDENCES FILED BY THE ASSESSEE BEFORE THE AUTHORIT IES BELOW AND THE WRITTEN SYNOPSIS. HE SUBMITTED THAT THE ISS UE IN THE SAID APPEAL IS IDENTICAL AS THE AFORESAID APPEAL IN THE CASE OF SURAJ PULSES (P) LTD. FOR AY 2007-08 IN ITA NO. 3009 /D/2017 AND SURAJ PULSES PVT LTD. IN ITA NO. 3010/D/2017. TH EREFORE, RELIANCE IS PLACED UPON THE SAME. FURTHER, LD. AO H AS MENTIONED AMOUNT OF RS. 2,60,00,000/- WHICH IS ESCA PED ASSESSMENT IN PROFORMA FOR REASONS RECORDED WHICH I S PLACED AT PAGE NO. 5 OF THE PAPER BOOK, WHILE LD. PR. CIT HAS MENTIONED IN HIS ORDER AT PG. 27THAT THE AMOUNT REC EIVED IS RS. 2,15,00,000/- BY ASSESSEE AS AGAINST RS. 2,60, 00,000/- AS PER PROFORMA OF REASONS RECORDED FOR REOPENING O F ASSESSMENT. THEREFORE, HE SUBMITTED THAT THE REOPEN ING IS MADE ON WRONG SETS OF FACTS. HE ALSO PLACED ON RECO RD THE ORDER DATED 08.12.2017 PASSED BY LD. AO U/S 263/147/143(3) OF THE ACT WHEREIN THE ADDITION IS A LSO MADE OF RS. 2,15,00,000/-. 42. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE LD. PR. CIT. HE HAS RELIED UPON SAME SUBMISSION AND JUDGMENTS AS RELIED IN THE CASE OF SURAJ PULSES (P) LTD. FOR AY 2007-08 IN ITA NO. 3009/D/2017 &SURAJ PULSES (P) LT D. FOR AY 2008-09 IN ITA NO. 3010/D/2017. THEREFORE, HE ITA. NO.3009 TO 3012/DEL/2017 60 SUBMITTED THAT THE LD. PR. CIT HAS RIGHTLY CONSIDER ED RE- ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 43. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. HERE IN THIS CASE ALSO SIMILAR FACTS AND ISSUES ARE PERMEATING AND THE IDENTICAL G ROUNDS HAVE BEEN DEALT WITH BY US IN APPEAL IN THE CASES O F SURAJ PULSES (P) LTD. FOR AY 2007-08 IN ITA NO. 3009/D/20 17 &SURAJ PULSES (P) LTD. FOR AY 2008-09 IN ITA NO. 3010/D/2017. FURTHER, ON PERUSAL OF THE FORM FOR RE CORDING THE REASONS FOR INITIATING PROCEEDINGS U/S 148 AND OBTAINING THE APPROVAL OF THE ADDL. COMMISSIONER OF INCOME TA X, RANGE-9, NEW DELHI, IT IS MENTIONED THAT ASSESSEE C OMPANY RECEIVED SHARE CAPITAL ON ACCOUNT OF ACCOMMODATION ENTRIES OF RS. 2,60,00,0000. HOWEVER, LD. PR. CIT IN ORDER U/S 263 HAS OBSERVED THAT THE TOTAL ACCOMMODATION ENTRY OF WHIL E PR. CIT HAS MENTIONED IN HIS ORDER AT PG. 27 THAT THE AMOUN T RECEIVED IS RS. 2,15,00,000/- BY ASSESSEE AS AGAINST RS. 2,60,00,000/-. FURTHER, THE LD. AO IN THE ASSESSMEN T ORDER U/S 263/147/143(3) DATED 08.12.2017 HAS CONFIRMED T HE SAME BY MAKING AN ADDITION OF RS. 2,15,00,000/-. TH US, FOLLOWING THE REASONS FOR DECISION IN THE CASE OF S URAJ PULSES (P) LTD. FOR AY 2007-08 IN ITA NO. 3009/D/2017 (SUP RA) AND SURAJ PULSES (P) LTD. FOR AY 2008-09 IN ITA NO. 3010 /D/2017, WE SET ASIDE THE ORDER PASSED BY THE LD. PR. CIT UN DER SECTION ITA. NO.3009 TO 3012/DEL/2017 61 263 OF THE I.T. ACT AND QUASH THE SAME. ACCORDINGLY , THE APPEAL OF THE ASSESSEE IS ALLOWED. 44. IN THE RESULT, ITA. NO. 3011/DEL/2017 OF THE AS SESSEE IS ALLOWED. SURAJ PULSES PROCESSORS PVT LTD. APPEAL NO. 3012/D /2017 AY 2009-10 45. THE FACTS OF THE CASE ARE THAT ORIGINAL RETURN OF INCOME IN THIS CASE WAS FILED ON 22.08.2009 DECLARING INCOME OF RS.5,967/-. THE NOTICE UNDER SECTION 148 OF THE INC OME TAX ACT, WAS ISSUED ON 18.10.2013 AFTER RECORDING THE R EASONS AND TAKING PRIOR APPROVAL FROM THE COMPETENT AUTHOR ITIES. THE ASSESSEE IN RESPONSE TO THE STATUTORY NOTICE VIDE L ETTER DATED 18.11.2013 SUBMITTED THAT THE ORIGINAL RETURN FILED MAY PLEASE BE TREATED AS RETURN FILED IN RESPONSE TO TH E NOTICE UNDER SECTION 148 OF THE I.T. ACT AND VIDE LETTER D ATED 18.11.2013 REQUESTED TO PROVIDE REASONS RECORDED, W HICH WERE DULY PROVIDED TO IT. THE ASSESSEE ALSO FILLED ITS OBJECTIONS WHICH WERE DISPOSED OFF. THE LD. AO ISSUED STATUTOR Y NOTICE WHICH WERE COMPLIED BY THE ASSESSEE AND FILED ALL T HE NECESSARY DETAILS AS CALLED FOR. AO CONDUCTED INDEP ENDENT INQUIRIES AND SENT NOTICES U/S 133(6) OF THE I.T. A CT, 1961 TO THE COMPANIES WHO HAS INVESTED AND DUE REPLY HAS BE EN RECEIVED. THE LD. AO AFTER DISCUSSING THE CASE WITH THE ASSESSEE, ACCEPTED THE RETURNED INCOME AND PASSED T HE RE- ITA. NO.3009 TO 3012/DEL/2017 62 ASSESSMENT ORDER UNDER SECTION 147/143(3) OF THE I. T. ACT, 1961, ON DATED 27.01.2015. 46. THE LD. PR. CIT ON EXAMINING THE ASSESSMENT REC ORD NOTICED THAT THOUGH THE ASSESSMENT WAS REOPENED UND ER SECTION 148 OF THE I.T. ACT ON THE ALLEGATION OF AC COMMODATION ENTRY TAKEN FROM SHRI S.K. JAIN GROUP OF CONCERNS W HO WERE SEARCHED ON 14.09.2010 BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT, SOME OF THE A.OS DID NOT EX AMINE THE SEIZED MATERIAL IN THE FORM OF CASH BOOK AND BO OKS CONTAINING THE DETAILS OF CHEQUES ISSUED BY SUCH CO NCERNS SEIZED FROM THE PREMISES OF SHRI S.K. JAIN DURING T HE COURSE OF SEARCH. THE INVESTIGATION WING, DELHI, FORWARDED THE HARD COPY OF APPRAISAL REPORT TO THE THEN COMMISSIONER, DELHI-III, WHICH WAS RECEIVED BY HIM ON 15.03.2013, THE RELEVA NT SEIZED MATERIAL (CONTAINING MANY THOUSANDS OF PAGES) WAS S CANNED AND SENT TO THE COMMISSIONER OF INCOME TAX IN SOFT COPY. HOWEVER, WHILE COMPLETING THE ASSESSMENT UNDER SECT ION 147 R.W.S. 143 OF THE I.T. ACT, THOUGH THE A.O. REFERRE D THE APPRAISAL REPORT BUT DID NOT LOOK INTO THE RELEVANT SEIZED MATERIAL IN SOFT COPY. THIS WAS ONE OF THE CASE WHE RE THE LD. AO DID NOT EXAMINE THE SEIZED MATERIAL. ACCORDINGLY , A SHOW CAUSE NOTICE UNDER SECTION 263 OF THE I.T. ACT WAS ISSUED TO THE ASSESSEE ON 13.01.2017 WHICH IS REPRODUCED IN T HE IMPUGNED ORDER. IN THE SHOW CAUSE NOTICE IT IS STAT ED THAT THE CASE WAS REOPENED ON THE ALLEGATION OF ACCOMMODATIO N ENTRY OF RS.20.50 LAKHS ON ACCOUNT OF SHARE APPLICATION/C APITAL ITA. NO.3009 TO 3012/DEL/2017 63 RECEIVED FROM M/S SHALINI HOLDINGS LTD, CONCERN OF S.K. JAIN GROUP OF CASES. FURTHER, ON PERUSAL OF RECORDS AND ANNEXURES OF CASH BOOK AND CHEQUE BOOK SEIZED IN THE CASE OF SK JAIN GROUP, IT HAS BEEN OBSERVED THAT THE TOTAL ACCOMMOD ATION ENTRY OF RS. 20.50 LAKHS HAS BEEN TAKEN BY YOUR COM PANY FROM THE ABOVE MENTIONED CONCERNS. SEARCH AND SEIZU RE OPERATION WAS CARRIED OUT ON 14.09.2010 AT THE PREM ISES OF SHRI SURENDER JAIN AND SHRI VIRENDER JAIN. DURING T HE COURSE OF SEARCH, CASH BOOK AND BANK BOOKS OF THE CONCERNS MANAGED BY SHRI S.K. JAIN GROUP WHEREIN DETAILED OF DAY-TO- DAY RECEIPTS IN CASH AND CHEQUE FROM/TO DIFFERENT PERSONS/FIRMS/COMPANIES HAVE BEEN RECORDED, WERE SE IZED. ON PERUSAL OF THE RE-ASSESSMENT ORDER, IT IS NOTICE D THAT WHILE PASSING THE SAID ORDER, THE LD. AO HAS FAILED TO CO NSIDER THE RELEVANT SEIZED MATERIAL PERTAINING TO THE ASSESSEE -COMPANY WHICH IS MENTIONED IN THE ORDER. IT IS NOTED IN THE NOTICE UNDER SECTION 263 THAT THE AMOUNTS RECEIVED BY ASSE SSEE- COMPANY WERE ACCOMMODATION ENTRY IN LIEU OF CASH GI VEN BY THE ASSESSEE-COMPANY THROUGH SHRI SATISH GOEL. THE RELEVANT COPIES OF THE SEIZED MATERIAL RELATING TO THE ASSES SEE-COMPANY WERE GIVEN ALONG WITH SHOW CAUSE NOTICE OR DURING T HE PROCEEDINGS UNDER SECTION 263 OF THE I.T. ACT. REPL Y OF THE ASSESSEE WAS CALLED FOR IN WHICH THE ASSESSEE EXPLA INED THAT THE LD. AO AFTER EXAMINING THE ENTIRE DETAILS AND DOCUMENTARY EVIDENCES ON RECORD AND MAKING DIRECT/INDEPENDENT ENQUIRY FROM BOTH THE INVESTORS UNDER SECTIONS 133(6) OF THE I.T. ACT, COMPLETED THE ASSE SSMENT ITA. NO.3009 TO 3012/DEL/2017 64 PROCEEDINGS. THE ASSESSEE FILED ALL THE DOCUMENTARY EVIDENCES BEFORE A.O. I.E., CONFIRMATION LETTER FROM INVESTOR S, COPY OF THEIR BANK ACCOUNTS, COPY OF ITR, COPY OF PAN, COPY OF AUDITED BALANCE SHEET, COPY OF MASTER DATA TAKEN FROM OFFIC IAL WEBSITE OF MCA. IT WAS SUBMITTED THAT THE SEIZED PAPERS ARE ONLY ROUGH PAPERS AND NO DETAILS HAVE BEEN MENTIONED THE REIN. REJECTED. AS SUCH, THE RE-ASSESSMENT ORDER WAS SET ASIDE AND RESTORED TO THE LD. AO FOR PASSING THE ORDER AFRESH AS PER LAW. 47. THE ASSESSEE IN THE PRESENT APPEAL ALSO HAS CHA LLENGED THE ORDER UNDER SECTION 263 OF THE I.T. ACT. THE AS SESSEE ALSO MOVED AN APPLICATION FOR ADMISSION OF THE FOLLOWING ADDITIONAL GROUNDS WHICH ARE AS UNDER: I) BECAUSE THE ACTION FOR INITIATION, CONTINUATION AND CONCLUSION OF REASSESSMENT PROCEEDINGS IS BEING CHALLENGED ON FACTS AND LAW. II) BECAUSE THE CONTINUATION AND CONCLUSION OF REASSESSMENT PROCEEDINGS IS BEING CHALLENGED ON FAC TS AND LAW WHILE THERE BEING ERRONEOUS DISPOSAL OF PRELIMI NARY OBJECTION RAISED PURSUANT TO JUDGMENT OF GKN DRIVES HAFTS 259 ITR 19 SC III) BECAUSE THE ACTION FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS IS UNREASONABLE SINCE WHILE RECORDING REASONS, THERE IS NON APPLICATION OF MIND MUCH LESS INDEPENDENT APPLICATION OF MIND AND MERELY RELYING UPON INVESTIGATION REPORT BY AO, FURTHER REASONS RECORDE D ARE VAGUE, LACKING TANGIBLE MATERIAL/REASONABLE CAUSE A ND JUSTIFICATION IV) BECAUSE THE ACTION IS BEING CHALLENGED ON FACTS & LAW FOR CHALLENGING THAT THE REASSESSMENT ORDER PA SSED U/S 147/143(3) WAS ILLEGAL OR NULLITY IN THE EYES O F LAW, THEN, WHETHER THE CIT HAD A VALID JURISDICTION TO P ASS THE ITA. NO.3009 TO 3012/DEL/2017 65 IMPUGNED ORDER U/S 263 TO REVISE THE NON-EST REASSESSMENT ORDER. 48. FOR THE SAME REASONS AS GIVEN ABOVE WE ARE ADMI TTING THE ADDITIONAL GROUNDS. 49. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE SUBMISSIONS WITH RESPECT TO THE PRESENT CASE ARE SA ME AS IN THE AFOREMENTIONED THREE CASES, AS THE REASONS RECO RDED ARE SIMILAR. THE REASONS RECORDED WHICH ARE PLACED AT P G. 1-2 OF THE PAPER BOOK (TRUE TYPED COPY FILED SEPARATELY) R EADS AS UNDER : INFORMATION HAS BEEN RECEIVED FROM THE DIRECTORATE OF INVESTIGATION WING OF THE INCOME TAX DEPARTMENT THA T THE ABOVE NAMED ASSESSEE IS A BENEFICIARY OF ACCOMMODATION EN TRIES RECEIVED FROM AN ESTABLISHED ENTRY OPERATOR IDENTIF IED BY THE WING DURING THE PERIOD RELEVANT TO AY 2009-10. ON T HE BASIS OF SEARCH CONDUCTED IN THE PREMISES OF SHRI SURENDRA K UMAR JAIN GROUP, FURTHER INQUIRIES MADE, THE INVESTIGATION CA RRIED OUT AND EVIDENCES COLLECTED, A REPORT HAS BEEN FORWARDED IN WHICH THE ASSESSEE COMPANY IS FOUND TO BE THE BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY THE GROUP OF COMP ANIES RUN BY SHRI SURENDRA KUMAR JAIN GROUP AS PER THE FOLLOW ING SPECIFIC DETAILS OF TRANSACTION:- NAME OF THE BENEFICIARY A.Y. AMOUNT M/S SURAJ PULSES PROCESSORS PRIVATE LIMITED 2009-10 RS. 20,50.000/- THE INVESTIGATION WING ON THE BASIS OF ENQUIRIES CONDUCTED/INFORMATION COLLECTED HAS SENT THE NAME O F THE BENEFICIARIES AND THE VALUE OF ENTRIES TAKEN BY THE M. FROM THE REPORT OF THE INVESTIGATION WING IT IS GATHERED THA T M/S SURAJ ITA. NO.3009 TO 3012/DEL/2017 66 PULSES PROCESSORS PRIVATE LIMITED HAS RECEIVED ENTRIES TO THE TUNE OF RS. 20,50,000/- THROUGH THE ABOVE ES TABLISHED ENTRY OPERATORS DURING THE PERIOD UNDER CONSIDERATI ON. I AM SATISFIED THAT THE ASSESSEE COMPANY HAD RECEIV ED BOGUS ACCOMMODATION ENTRIES TO THE TUNE OF RS. 20,50,000/ - RELEVANT TO A.Y. 2009-10. THEREFORE, THE ASSESSEE HAS DELIBERAT ELY FURNISHED WRONG FACTS AT THE TIME OF FILING OF RETURN, THE DE TAILS OF WHICH ARE MENTIONED ABOVE. IN VIEW OF ABOVE, I HAVE REASONS TO BELIEVE THAT AN AMOUNT OF RS. 20,50,000/- HAS ESCAPED FROM THE ASSESSMENT FOR THE A.Y. 2009- 10 WHICH WAS CHARGEABLE TO TAX. I AM ALSO SATISFIED THAT ON ACCOUNT OF FAILURE ON THE PART OF ASSESSEE TO DISCL OSE TRULY AND FULLY ALL THE MATERIAL FACTS NECESSARY FOR ASSESSME NT FOR THE ABOVE ASSESSMENT YEAR, THE INCOME CHARGEABLE TO TAX TO THE TUNE OF RS. 20,50,000/- HAS ESCAPED ASSESSMENT WITH THE MEANING OF SECTION 147OF THE I.T. ACT, 1961. 50. HE DREW OUR ATTENTION TOWARDS THE WRITTEN SUBMI SSIONS ALONGWITH DOCUMENTARY EVIDENCES FILED BY THE ASSESS EE BEFORE THE AUTHORITIES BELOW AND ALSO THE WRITTEN SYNOPSIS . HE SUBMITTED THAT THE ISSUE IN THE SAID APPEAL IS IDEN TICAL AS THE AFORESAID APPEAL IN THE CASE OF SURAJ PULSES (P) LTD . FOR AY 2007-08 IN ITA NO. 3009/D/2017. THEREFORE, RELIANCE WAS PLACED UPON THE SAME. 51. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORD ER OF THE LD. PR. CIT. HE HAS RELIED UPON SAME SUBMISSION AND JUDGMENTS AS RELIED IN THE CASE OF SURAJ PULSES (P) LTD. FOR AY 2007-08 IN ITA NO. 3009/D/2017. THEREFORE, HE SUBM ITTED THAT THE LD. PR. CIT HAS RIGHTLY CONSIDERED RE-ASSE SSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERE STS OF THE REVENUE. ITA. NO.3009 TO 3012/DEL/2017 67 52. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE MATERIAL PLACED ON RECORD, WE FIND THAT AS FAR AS T HE REASONS RECORDED, THOUGH THERE IS A SPECIFIC MENTION ABOUT AMOUNT OF RS.20,50,000/- RECEIVED BY WAY OF ACCOMMODATION ENT RY, HOWEVER NEITHER THERE IS ANY MENTION FROM WHOM THE ASSESSEE HAD RECEIVED THE AMOUNT NOR WHAT IS THE NATURE OF T HE ENTRY NOR WHETHER IT IS IN CASH OR CHEQUE. IN FACT, IT IS NOT DISCERNIBLE AS TO WHAT IS THE NATURE OF TRANSACTION . WHAT IS MENTIONED IS THAT ASSESSEE WAS FOUND TO BE BENEFICI ARY OF AMOUNT OF RS.20,50,000/- WHICH IS IN THE NATURE OF BOGUS ACCOMMODATION ENTRY. THE LD. DR HAS SUBMITTED THAT THE VERY FACT THAT ASSESSEE WAS BENEFICIARY OF ACCOMMODATION ENTRY OF A PARTICULAR AMOUNT THAT IS SUFFICIENT ENOUGH TO EN TERTAIN REASON TO BELIEVE. HOWEVER, THE REASONS RECORDED AT LEAST MENTION WHAT IS THE NATURE OF ACCOMMODATION ENTRY A ND WHICH IS THE ENTITY FROM WHICH ASSESSEE HAS RECEIVE D THE AMOUNT. WHETHER THE ENTRY HAS BEEN RECEIVED TOWARDS SHARE APPLICATION MONEY OR LOAN OR GIFT, ETC. THESE REASO NS ARE PURELY VAGUE AND SHOW THERE IS A NON APPLICATION OF MIND ON THE INFORMATION WHICH WAS RECEIVED AND THE REASON R ECORDED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT EVEN MENTIONED AS TO WHAT WAS THE NATURE OF ENTRY AS GIV EN IN THE REPORT AND SIMPLY SAYING THAT ASSESSEE RECEIVED ENT RY TO THE TUNE OF RS.20,50,000/- FROM ENTRY OPERATORS DURING THE PERIOD IS NOT SUFFICIENT. SUCH A VAGUE REASONS CANNOT JUSTI FY THE REOPENING AND AS OBSERVED ABOVE, THE ASSESSING OFFI CER CAN VALIDLY ACQUIRE JURISDICTION ONLY WHEN THE REASONS RECORDED ITA. NO.3009 TO 3012/DEL/2017 68 ITSELF POINTS OUT OR SPEAKS OF LIVE LINK NEXUS WITH THE MATERIAL AVAILABLE ON RECORD AND INCOME ESCAPING ASSESSMENT AND IT SHOULD NOT BE VAGUE OR MERE PRETENCE. THE ASSESSING OFFICER SHOULD HAVE AT LEAST PERUSED THE REPORT AND EXAMINE WHAT IS THE MATERIAL PERTAINING TO ASSESSEE AND WHAT IS THE NATURE OF ENTRY AND WHETHER IT IS MATCHING WITH RECORDS OF TH E ASSESSEE. HE SHOULD HAVE PRIMA FACIE SEEN WHAT IS THE NATURE OF BOGUS ENTRY AND FROM WHICH ENTITY ASSESSEE HAS RECEIVED. SUCH VAGUE AND GENERAL OBSERVATION MADE BY THE ASSESSING OFFICER IN THE REASONS RECORDED DOES NOT CONFER ANY JURISDIC TION TO HIM REOPEN THE CASE. AS POINTED OUT BY THE LD. COUN SEL, THESE REASONS ARE SIMILAR OR IDENTICAL IN THE CASE OF SHA NKER TRADEX (P) LTD. VS. ITO IN ITA NO. 2200/D/2019 DATED 10.11 .2020 AY 2008-09 (ITAT, DELHI) (SUPRA) WHEREIN THIS TRIBUNAL HAS HELD THAT SUCH REASONS RECORDED SHOWS COMPLETE NON-APPLI CATION OF MIND BY THE LD. AO AND AS SUCH THE REOPENING IS INVALID UNDER THE LAW. WE THUS SET ASIDE THE ORDER PASSED B Y THE LD. PR. CIT UNDER SECTION 263 OF THE I.T. ACT AND QUASH THE SAME AS THE ASSESSMENT ORDER ITSELF WAS VOID-AB-INITIO. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 53. IN THE RESULT, THE APPEALS OF THE ASSESSEES A RE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JULY, 2021. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 6 TH JULY, 2021 PKK