M/s. Rasalika Trading & Investment Co. (P) Ltd., New Delhi V. ITO, New Delhi

ITA 3103/DEL/2013

• Counselvise Citation: 310320114 RSA 2013
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 17-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 17-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Reopening of assessment; Income from undisclosed sources; Tangible material; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUD ICIAL MEMBER ITA NO: 3103/DEL/2013 AY : - 2004-05 RASALIKA TRADING & INVESTMENT CO. (P) LTD. VS. ITO 73, G.B. ROAD WARD-15 (4) NEW DELHI 110 006 NEW DELHI PAN AAACR0096C (APPELLANT) (RESPONDENT) APPELLANT BY : DR. RAKESH GUPTA & SHRI TARUN KUMAR, ADVOCATE RESPONDENT BY : MS. RAKHI VIMAL, SR.DR DATE OF HEARING : 17.11.2015 DATE OF PRONOUNCEMENT : 2 7 .11.2015 O R D E R PER SUDHANSHU SRIVASTAVA JUDICIAL MEMBER ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPUGNED ORDER DATED 25.3.2013 PASSED BY THE LD. CIT(A) XVIII, NEW DELHI FOR ASS ESSMENT YEAR 2004-05. 2. THE BRIEF FACTS OF THE CASE ARE THAT INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT THA T THE ASSESSEE HAD RECEIVED ENTRIES OF RS. 22 LACS FROM THREE DIFFERENT PARTIES . THE REASONS RECORDED FOR THE ISSUANCE OF NOTICE U/S 148 OF THE INCOME TAX ACT 19 61 ARE AS UNDER:- ITA NO. 3103/DEL/2013 RASALIKA TRADIN G & INVESTMENT CO. (P) LTD. VS ITO 2 RETURN OF INCOME DECLARING AN INCOME OF RS. 12,790 /- WAS ORIGINALLY FILED BY THE ASSESSEE FOR THE ABOVE ASSESSMENT YEAR ON 30.10 .2004 AND THE CASE WAS PROCESSED U/S 143(1). INFORMATION HAS BEEN RECEIVED FROM THE INVESTIGATIO N WING OF THE INCOME TAX DEPARTMENT THAT THE ABOVE NAMED ASSESSEE IS A BENEF ICIARY OF ACCOMMODATION ENTRIES RECEIVED FROM CERTAIN ESTABLI SHED ENTRY OPERATOR IDENTIFIED BY THE WING DURING THE PERIOD RELEVANT T O A.Y. 2004-05. A COMPREHENSIVE INVESTIGATION WAS CARRIED OUT BY THE INVESTIGATION WING FOR IDENTIFICATION OF ENTRY OPERATORS ENGAGED IN THE BU SINESS OF MONEY LAUNDERING FOR THE BENEFICIARIES AND ON THE BASIS OF INVESTIGA TION CARRIED OUT AND EVIDENCES COLLECTED, A REPORT HAS BEEN FORWARDED. I HAVE PERUSED THE INFORMATION CONTAINED IN THE REPORT AND THE EVIDENC ES GATHERED. THE REPORT PROVIDES DETAILS OF THE MODUS OPERANDI OF THE 'MONE Y LAUNDERING SCAM' AND EXPLAINS HOW THE UNACCOUNTED MONEY OF THE BENEFICIA RIES ARE PLOUGHED BACK IN ITS BOOKS OF ACCOUNT IN VARIOUS FORMS INCLUDING THE FORM OF BOGUS SHARE CAPITAL/ CAPITAL GAINS ETC AFTER ROUTING THE SAME T HROUGH THE BANK ACCOUNT (S) OF THE ENTRY OPERATORS. ENTRY OPERATORS WERE IDENTI FIED AFTER THOROUGH INVESTIGATION ON THE BASIS OF DEFINITE ANALYSIS OF THEIR IDENTITY, CREDITWORTHINESS AND THE SOURCE OF THE MONEY ULTIMA TELY RECEIVED BY BENEFICIARIES. THESE ENTRY OPERATORS ARE FOUND TO BE MOSTLY ABSCON DING/ NON- COMPLYING AFTER THE UNEARTHING OF THE 'MONEY LAUNDE RING SCAM' LEAVING THE SAID MONEY AT THE DISPOSAL OF THE BENEFICIARIES WIT HOUT ANY ASSOCIATED COST OR LIABILITY. IN THE INSTANT CASE, THE ASSESSEE IS FOU ND TO BE THE BENEFICIARY OF ACCOMMODATION ENTRY FROM SUCH ENTRY OPERATORS AS PE R THE FOLLOWING SPECIFIC DETAILS OF TRANSACTION:- ITA NO. 3103/DEL/2013 RASALIKA TRADIN G & INVESTMENT CO. (P) LTD. VS ITO 3 THE ASSESSEE HAS RECEIVED UNEXPLAINED SUMS FROM THE ENTRY OPERATORS AS PER THE ABOVE DETAILS AS PER INFORMATION AVAILABLE WITH THE UNDERSIGNED. AS EXPLAINED ABOVE, THE IDENTITY, CREDITWORTHINESS AND GENUINENE SS OF TRANSACTIONS WITH THE PERSONS FOUND TO BE ENTRY OPERATORS CANNOT BE ESTAB LISHED. I THEREFORE HAVE REASONS TO BELIEVE THAT THE INCOME CHARGEABLE TO TA X AMOUNTING TO RS. 22,00,000/-, WHICH IS THE ASSESSEE'S OWN INCOME, HAS ESCAPED ASS ESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. SINCE FOUR YEARS HAVE SINCE EXPIRED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, AND NO SCRUTINY ASSESSMENT WAS COMPLETED IN THE CAS E OF THE ASSESSEE FOR THE SAID ASSESSMENT YEAR, THE REASONS RECORDED ABOVE FOR THE PURPOSE OF REOPENING OF ASSESSMENT ARE PUT UP FOR KIND SATISFACTION OF ADDL . CIT, RANGE -15, NEW DELHI IN TERMS OF SECTION 151 OF THE ACT. BENEFI CIARY BANK NAME BENEFI CIARY BANK BRANCH VALUE OF ENTRY TAKEN INSTRU - MENT NO. BY WHICH ENTRY TAKEN DATE ON WHICH ENTRY TAKEN NAME OF ACCOUNT HOLDER OF ENTRY GIVING ACCOUNT BANK FROM WHICH ENTRY GIVEN BRANCH OF ENTRY GIVING BANK A/C NO. ENTRY GIVING ACCOUNT RATNAKAR KAROL BAGH M.V. MKTG P. LTD. 47 26 - AUG - 03 RASALIKA TRADING 54636 500,000 RASALIKA TRADING & INVESTMEN T CO PVT LTD RATNAKAR KAROL BAGH MESTRO MKTG & ADVT. P. LTD. 46 26 - AUG - 03 RASALIKA TRADING 56455 500,000 RASALIKA TRADING & INVESTMEN T CO PVT LTD CORPN BANK KAMLA NAGAR PARIVARTAN CAPITAL & FINANCIAL SERVICES PVT LTD 3317 02 - SEP - 03 RASALIKA TR. 270902 500,000 RASALIKA TRADING & INVESTMEN T CO'PVT LTD CORPN. BANK KAMLA NAGAR PARIVARTAN CAPITA! & FINANCIAL SERVICES PVT LTD 3317 11 - DEC - 03 R TRADING & INVESTMENT 338500 400,000 RASALIKA TRADING & INVESTMEN T CO PVT LTD CORPN. BANK KAMLA NAGAR PARIVARTAN CAPITAL & FINANCIAL SERVICES PVT LTD 3317 29 - NOV - 03 RASALIKA TRADING & INVESTMENTS 270911 300,000 RASALIKA TRADING & INVESTMEN TS CO PVT LTD ITA NO. 3103/DEL/2013 RASALIKA TRADIN G & INVESTMENT CO. (P) LTD. VS ITO 4 3. AS PER THE AO, THE REASONS AS REPRODUCED ABOVE WER E PROVIDED TO THE ASSESSEE ALONG WITH THE NOTICE U/S 148. HOWEVER, THE ASSESSE E MADE NO COMPLIANCE TO THE NOTICE. IT HOWEVER FURNISHED THE COPY OF ITR ACKNOW LEDGEMENT WHICH WAS TREATED AS RETURN FILED IN COMPLIANCE TO THE NOTICE U/S 148. A S PER THE AO, THE ASSESSEE HAD ALSO FURNISHED COPIES OF SHARE APPLICATION FORMS, C ERTIFIED COPIES OF CONFIRMATIONS CONTAINING DETAILS OF AMOUNTS INVESTED, COPIES OF P AN CARD ETC. IN SUPPORT OF ITS CLAIM OF RECEIPT OF SHARES APPLICATION MONEY FROM T HE THREE PARTIES. HOWEVER, SINCE THE ASSESSEE HAD NOT FURNISHED COPIES OF THE BANK A CCOUNT OF THESE PARTIES, IT WAS THE AOS VIEW THAT THEIR CREDITWORTHINESS COULD NOT BE PROVED. THE AO ALSO GAVE A FINDING THAT THESE COMPANIES WERE DORMANT AS THEY H AD NOT FILED THE PRESCRIBED RETURNS WITH THE REGISTRAR OF COMPANIES FOR THE LAS T SEVERAL YEARS. THE AO ALSO OBSERVED THAT A PERUSAL OF THE BANK STATEMENTS OF T HE PARTIES FROM WHOM THE ASSESSEE HAD RECEIVED FUNDS REVEALED THAT THESE ENT RIES WERE CLEARED AFTER DEPOSIT OF EQUIVALENT AMOUNT IN CASH OR TRANSFER JUST PRIOR TO THE CLEARANCE OF THE CHEQUES ISSUED TO THE ASSESSEE COMPANY. ACCORDINGLY, IT WAS THE AOS OPINION THAT THESE ENTRIES WERE BOGUS AND IT WAS ASSESSEES OWN INCOME FROM UNDISCLOSED SOURCES AND AN ADDITION OF RS. 22 LACS WAS MADE. 4. THE APPEAL BEFORE THE LD. CIT (A) WAS ALSO DIS MISSED ON THE GROUND THAT THE ASSESSEE HAD BEEN UNABLE TO EXPLAIN THE CREDITWORTH INESS OF THE COMPANIES WHICH HAD ALLEGEDLY MADE THE INVESTMENTS. AS PER THE LD. CIT (A), THE APPELLANT HAD FAILED TO DISCHARGE ITS ONUS TO PRODUCE LEGALLY ACCEPTABLE EVIDENCE OF CREDITWORTHINESS OF THE COMPANIES AND ACCORDINGLY THE ADDITION MADE BY THE AO WAS CONFIRMED. ITA NO. 3103/DEL/2013 RASALIKA TRADIN G & INVESTMENT CO. (P) LTD. VS ITO 5 5. IN THE PRESENT APPEAL BEFORE US THE MAIN GR OUND OF APPEAL IS AS UNDER:- I) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN FRAMING THE IMPUGNED REASSESSMENT ORDER U/S 147/ 143(3) AND THAT TOO WITHOUT COMPLYING WITH OTHER MANDATORY CONDITIO NS AS ENVISAGED U/S 147 TO 151 OF INCOME TAX ACT, 1961. 6. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTI ON TOWARDS REASONS RECORDED (REPRODUCED HEREIN ABOVE) AVAILABLE ON PAGES 21 TO 23 OF THE PAPER BOOK AND SUBMITTED THAT THE AO HAS MECHANICALLY PROCEEDED TO ASSUME JURISDICTION U/S 147 OF THE ACT AND HAS ACCORDINGLY ISSUED NOTICE U/S 148 O F THE ACT. LD. AR CONTENDED THAT THE AO SIMPLY PROCEEDED ON THE INFORMATION OF THE I NVESTIGATION WING WITHOUT ANALYSING AND APPLYING HIS MIND TOWARDS THE NATURE OF TRANSACTIONS. HE SUBMITTED THAT THE SO CALLED INFORMATION SAID TO BE RECEIVED FROM THE INVESTIGATION WING HAD NOT BEEN DULY PROCESSED BY THE AO AND THAT THERE WA S NO MATERIAL ON RECORD TO SHOW THAT THE AO HAD APPLIED HIS MIND IN FORMING A BELIEF WHICH WOULD RESULT IN THE REASON TO BELIEVE AS REQUIRED TO PROCEED U/S 147 AND 148 OF THE INCOME TAX ACT, 1961. LD. COUNSEL VEHEMENTLY CONTENDED THAT THE COP Y OF THE REASONS RECORDED GIVEN TO THE ASSESSEE CLEARLY SHOWS THAT THE AO SIM PLY PROCEEDED IN A MECHANICAL MANNER AND THAT THERE WAS A CLEAR LACK OF APPLICATI ON OF INDEPENDENT MIND BY THE AO PRIOR TO THE ISSUANCE OF NOTICE U/S 148 OF THE A CT, 1961. LD. COUNSEL FOR THE ASSESSEE HAS PLACED HIS RELIANCE ON THE FOLLOWING D ECISIONS:- 1. ACIT, FARIDABAD VS. SHRI DEVESH KUMAR IN ITA NO. 2 068/DEL/2010 OF THE ITAT DELHI BENCH B. 2. G&G PHARMA INDIA LIMITED VS. ITO, WARD 12(1), NEW D ELHI IN ITA NO. 3149/DEL/2013 OF ITAT DELHI BENCH C. ITA NO. 3103/DEL/2013 RASALIKA TRADIN G & INVESTMENT CO. (P) LTD. VS ITO 6 3. ITA NO. 545/2015 IN THE CASE OF PR. COMMISSIONER OF INCOME TAX-4 VS. G&G PHARMA INDIA LTD. OF THE HONBLE DELHI HIGH COURT W HICH HAS AFFIRMED THE JUDGMENT OF THE ITAT DELHI C BENCH IN ITA NO. 314 9/DEL/2013. 7. LD. DR ON THE OTHER HAND SUPPORTED THE ORD ER OF THE LD. CIT(A) AND STATED THAT THE AO HAD REOPENED THE CASE ON THE BASIS OF V ARIOUS DOCUMENTARY EVIDENCES RELATING TO THE ASSESSEE AND SUBMITTED THAT THE AO HAS RIGHTLY REOPENED THE CASE OF THE ASSESSEE ON THE BASIS OF SUCH DOCUMENTARY EVIDE NCES. LD. DR ALSO SUBMITTED THAT THE DECISIONS RELIED ON BY THE LD. AR ARE ON A COMPLETELY DIFFERENT SET OF FACTS AND AS SUCH WERE NOT APPLICABLE TO THE APPEAL BEFOR E US. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E RECORDS AVAILABLE WITH US AND AFTER PERUSING THE REASONS RECORDED WE FIND THA T THE REOPENING IS BASED ENTIRELY BY MAKING A REFERENCE TO THE INFORMATION RECEIVED F ROM THE INVESTIGATION WING. THE REASONS ARE AT BEST VAGUE AND THE SATISFACTION OF T HE AO IS NOT BASED ON ANY TANGIBLE MATERIAL. THE AO HAS MECHANICALLY ISSUED N OTICES U/S 148 OF THE INCOME TAX ACT, 1961 ON THE BASIS OF INFORMATION RECEIVED BY HIM FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. THEREFORE, WE AR E OF THE CONSIDERED VIEW THAT THE AO HAS NOT APPLIED HIS MIND SO AS TO GIVE AN IN DEPENDENT CONCLUSION THAT HE HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMEN T DURING THE YEAR UNDER CONSIDERATION. WE DRAW OUR SUPPORT FROM THE JUDGMEN T OF THE HONBLE HIGH COURT OF DELHI IN ITA NO. 545/2015 DATED 8.10.2015 IN THE CA SE OF PR. COMMISSIONER OF INCOME TAX -4 VS. G&G PHARMA INDIA LTD. IN WHICH TH E HONBLE JURISDICTIONAL HIGH COURT HAS RECAPITULATED THE JURISDICTIONAL REQUIREM ENT FOR REOPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT AS UNDER:- ITA NO. 3103/DEL/2013 RASALIKA TRADIN G & INVESTMENT CO. (P) LTD. VS ITO 7 9. THE COURT AT THE OUTSET PROPOSES TO RECAPITU LATE THE JURISDICTIONAL REQUIREMENT FOR REOPENING OF THE ASSESSMENT UNDER S ECTION 147/148 OF THE ACT BY REFERRING TO TWO DECISIONS OF THE SUPREME CO URT. IN CHHUGAMAL RAJPAL V. SP CHALIHA (1971) 79 ITR 603, THE SUPREME COURT WAS DEALING WITH A CASE WHERE THE AO HAD RECEIVED CERTAIN COMMUNICATIONS FR OM THE COMMISSIONER OF INCOME TAX SHOWING THAT THE ALLEGED CREDITORS OF TH E ASSESSEE WERE NAME- LENDERS AND THE TRANSACTIONS ARE BOGUS. THE AO CAM E TO THE CONCLUSION THAT THERE WERE REASONS TO BELIEVE THAT INCOME OF THE AS SESSEE HAD ESCAPED ASSESSMENT. THE SUPREME COURT DISAGREED AND OBSERVE D THAT THE AO HAD NOT EVEN COME TO A PRIMA FACIE CONCLUSION THAT THE TRAN SACTIONS TO WHICH HE REFERRED WERE NOT GENUINE TRANSACTIONS. HE APPEARED TO HAVE HAD ONLY A VAGUE FELLING THAT THEY MAY BE 'BOGUS TRANSACTIONS '.' IT WAS FURTHER EXPLAINED BY THE SUPREME COURT THAT: BEFORE ISSUING A NOTICE UNDER S. 148, THE ITO MUST HAVE EITHER REASONS TO BELIEVE THAT BY REASON OF THE OMISSION O R FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER S. 139 FOR A NY ASSESSMENT YEAR TO THE ITO OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT YEAR OR ALTERNATIVE LY NOTWITHSTANDING THAT THERE HAS BEEN NO OMISSION OR FAILURE AS MENTI ONED ABOVE ON THE PART OF THE ASSESSEE, THE ITO HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. UNLESS THE REQUIREMENTS OF CL. (A) OR CL. (B) OF S. 147 ARE SATISFIED, THE ITO HAS NO JURISDICTION TO ISSUE A NOTICE UNDER S. 148. THE SUPREME COURT CONCLUDED THAT IT WAS NOT SATISFI ED THAT THE ITO HAD ANY MATERIAL BEFORE HIM WHICH COULD SATISFY THE REQUIRE MENTS UNDER SECTION 147 AND THEREFORE COULD NOT HAVE ISSUED NOTICE UNDER SE CTION 148. ITA NO. 3103/DEL/2013 RASALIKA TRADIN G & INVESTMENT CO. (P) LTD. VS ITO 8 10. IN ACIT V. DHARIYA CONSTRUCTION CO.(2010)328 ITR 515 THE SUPREME COURT IN A SHORT ORDER HELD AS UNDER: HAVING EXAMINED THE RECORD, WE FIND THAT IN THIS C ASE, THE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPINION GIVEN BY THE DVO. OPINION OF THE DVO PER SE IS NOT AN INFORMATION FOR THE PURPOSES OF REOPENING ASSESSMEN T UNDER S. 147 OF THE IT ACT, 1961. THE AO HAS TO APPLY HIS MI ND TO THE INFORMATION, IF ANY, COLLECTED AND MUST FORM A BELI EF THEREON. IN THE CIRCUMSTANCES, THERE IS NO MERIT IN THE CIVI L APPEAL. THE DEPARTMENT WAS NOT ENTITLED TO REOPEN THE ASSESSMEN T. 11. THE ABOVE BASIC REQUIREMENT OF SECTIONS 147/14 8 HAS BEEN REITERATED IN NUMEROUS DECISIONS OF THE SUPREME COURT AND THIS CO URT. RECENTLY, THIS COURT RENDERED A DECISION DATED 22ND SEPTEMBER 2015 IN IT A NO. 356 OF 2013 (COMMISSIONER OF INCOME TAX I I V. MULTIPLEX TRADING AND INDUSTRIAL CO. LTD.) WHERE THE ASSESSMENT WAS SOUGHT TO BE REOPENED BEYO ND THE PERIOD OF FOUR YEARS. THIS COURT CONSIDERED THE DECISION OF THE SU PREME COURT IN PHOOL CHAND BAJRANG LAL V. INCOME-TAX OFFICER ( S U P R A ) AS WELL AS THE DECISION OF THIS COURT IN M/S HARYANA ACRYLIC MANUFACTURING CO. (P) LTD. V. CIT 308 ITR 38 (DEL). THE COURT NOTED THAT A MATERIAL CHANGE HAD B EEN BROUGHT ABOUT TO SECTION 147 OF THE ACT WITH EFFECT FROM 1ST APRIL 1 989 AND OBSERVED: 29. IT IS AT ONCE SEEN THAT THE AMENDMENT IN SECTI ON 147 OF THE ACT BROUGHT ABOUT A MATERIAL CHANGE IN LAW W.E.F. 1ST A PRIL, 1989. SECTION 147(A) AS IT STOOD PRIOR TO 1ST APRIL 1989 REQUIRED THE AO TO HAVE A REASON TO BELIEVE THAT (A) THE INCOME OF THE ASSESS EE HAS ESCAPED ASSESSMENT AND (B) THAT SUCH ESCAPEMENT IS BY REASO N OF OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO FILE A RETUR N OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT FOR THAT YEAR. AFTER THE AMENDMENT, ONLY ONE SINGULAR REQUIREMENT IS TO BE FULFILLED UNDER SECTION 147(A) AND THAT IS, THAT THE AO HAS R EASON TO BELIEVE THAT INCOME OF AN ASSESSEE HAS ESCAPED ASSESSMENT. HOWEVER, THE ITA NO. 3103/DEL/2013 RASALIKA TRADIN G & INVESTMENT CO. (P) LTD. VS ITO 9 PROVISO TO SECTION 147 OF THE ACT PROVIDES A COMPLE TE BAR FOR REOPENING AN ASSESSMENT, WHICH HAS BEEN MADE UNDER SECTION 143(3) OF THE ACT, AFTER THE EXPIRY OF FOUR YEARS. HOWEVER , THIS PROSCRIPTION IS NOT APPLICABLE WHERE THE INCOME OF AN ASSESSEE HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIA L FACTS NECESSARY FOR HIS ASSESSMENT. THUS, IN ORDER TO REOPEN AN ASSESSMENT WHICH IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, THE CONDITION THAT THERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL MATERIAL FACTS MUST BE CONCLUDED WITH CERTAIN LEVEL OF CERTAINTY. IT IS IN THE AFORESAID CONTEXT THAT THIS COURT IN M/S HARYANA ACRYLIC MANUFACTURING CO. (P) LTD. (SUP RA) EXPLAINED THAT THE RATIO OF THE DECISION IN PHOOL CHAND BAJRANG LA I (SUPRA) MAY NOT BE ENTIRELY APPLICABLE SINCE THE SAME WAS IN RESPEC T OF SECTION 147(A) AS IT EXISTED PRIOR TO THE AMENDMENT. 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENT RIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10 TH FEBRUARY 2003, FROM FOUR ENTITIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES , WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, T HE AO STATED : I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGA TION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS I NTRODUCED ITS OWN UNACCOUNTED MONEY IT ITS BANK ACCOUNT BY WAY OF ABO VE ACCOMMODATION ENTRIES. THE ABOVE CONCLUSION IS UNHELPFUL IN UNDE RSTANDING WHETHER THE AO APPLIED HIS MIND TO THE MATERIALS THAT HE TALKS ABO UT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DA TE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WO ULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TEND ERED ALONG WITH THE RETURN, WHICH WAS FILED ON14 TH NOVEMBER, 2004 AND WAS PROCESSED UNDER ITA NO. 3103/DEL/2013 RASALIKA TRADIN G & INVESTMENT CO. (P) LTD. VS ITO 10 SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMO DATION ENTRIES. IN THE CONSIDERED VIEW OF THE COURT, IN LIGHT OF TH E LAW EXPLAINED WITH SUFFICIENT CLARITY BY SUPREME COURT IN THE DECISION S DISCUSSED HEREINBEFORE, THE BASIC REQUIREMENT THAT THE AO MUS T APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE T HAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESE NT CASE. 13. MR. SWHNEY TOOK THE COURT THROUGH THE ORDER OF THE CIT (A) TO SHOW HOW THE CIT (A) DISCUSSED THE MATERIALS PRODUCED DU RING THE HEARING OF THE APPEAL. THE COURT WOULD LIKE TO OBSERVE THAT THIS I S IN THE NATURE OF A POSTMORTEM EXERCISE AFTER THE EVENT OF REOPENING OF THE ASSESSMENT HAS TAKEN PLACE. WHILE THE CIT MAY HAVE PROCEEDED ON TH E BASIS THAT THE REOPENING OF THE ASSESSMENT WAS VALID, THIS DOES NO T SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO THE REOPENING OF THE ASSESSMEN T, THE AO HAS TO, APPLYING HIS MIND TO THE MATERIALS, CONCLUDE THAT HE HAS REA SON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. UNLESS THAT BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED, A POST MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT RESCU E AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALIDITY. 9. IN THE PRESENT CASE ALSO IT IS SEEN THAT THE AO HAS MERELY RELIED ON THE REPORT OF THE INVESTIGATION WING BUT IT IS APPARENT THAT HE HAS NOT APPLIED HIS MIND TO THE MATERIALS WHICH WERE BEFORE HIM. IN OUR VIEW, WITHOUT FORMING A PRIMA FACIE OPINION ON THE BASIS OF ONLY THE REPORT OF THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT, IT WAS NOT LEGAL FOR THE AO TO HAVE SIMPLY CONCLUDED THAT HE HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. UNLESS THE BASIC REQUIREMENT I S SATISFIED, AN EXERCISE IN ANALYSING THE MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT RESCUE ITA NO. 3103/DEL/2013 RASALIKA TRADIN G & INVESTMENT CO. (P) LTD. VS ITO 11 AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALI DITY. IN THE CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON BLE HIGH COURT OF DELHI IN THE CASE OF PR. COMMISSIONER OF INCOME TAX-4 VS. G& G PHARMA INDIA LTD. (SUPRA) WE HOLD THAT THE REOPENING OF THE CASE OF T HE ASSESSEE FOR THE ASSESSMENT YEAR IS BAD IN LAW AND WE ACCORDINGLY QU ASH THE REASSESSMENT PROCEEDINGS. THE OTHER GROUNDS ARE NOT BEING DEALT WITH AS THE SAME HAVE BECOME ACADEMIC IN NATURE. 10. IN THE RESULT THE APPEAL FILED BY THE ASSESS EE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2015. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICI AL MEMBER DATED: THE 27. 11. 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ITA NO. 3103/DEL/2013 RASALIKA TRADIN G & INVESTMENT CO. (P) LTD. VS ITO 12 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 19.11.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER