Sushil Kumar, Delhi V. ITO, New Delhi

ITA 3117/DEL/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4374 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 30-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Bogus purchase; Search and seizure; Principle of natural justice; Deemed to accrue or arise in india; Question of law; Accommodation entries
• Section: 153A; 143(1); 13; 147; 148

Judgement Text

1 ITA NO. 3117/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 3117/DEL/20 16 (A.Y 2007-08) (THROUGH VIDEO CON FERENCING) SUSHIL KUMAR (PROP OF M/S SHREE RAM OVERSEAS), 5520 BASTI HARPHOOL SINGH, SADAR BAZAR, DELHI AALPK5068M (APPELLANT) VS ITO WARD-63(3) NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 31/03/2016 PASSED BY CIT(A)-20, NEW DELHI FOR ASSESSMENT YEA R 2007-08. 2. THE GROUNDS OF APPEAL ARE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF CASE AND I N LAW, THE NOTICE U/S 148 ISSUED IN THIS CASE IS ILLEGAL, VOID, BARRED BY LIM ITATIONS AND WITHOUT JURISDICTION AND THE CIT(A) ERRED IN NOT HOLDING SO . 2. ON THE FACTS AND CIRCUMSTANCES- OF CASE AND IN L AW, THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.8651758/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED BOGUS PURCHASES. APPELLANT BY SH. AMIT GOEL & SH. NIPPUN MITTAL, CA RESPONDENT BY SH. PRAKASH DUBEY, SR. DR DATE OF HEARING 15.09.2021 DATE OF PRONOUNCEMENT 04.10.2021 2 ITA NO. 3117/DEL/2016 3. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE CIT(A) ERRED IN NOT DELETING THE ADDITION OF RS.8651758/- MADE BY THE A SSESSING OFFICER ON ACCOUNT OF ALLEGED BOGUS PURCHASE. 4. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE CIT(A) ERRED IN ENHANCING THE ADDITIONS TO RS. 10425365/-. 5. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE ENHANCEMENT TO INCOME DONE BY THE CIT(A) IS TOTALLY ARBITRARY AND ERRONEOUS. 6. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE CIT(A) ERRED IN PASSING EXPARTE ORDER. 7. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE ORDER PASSED BY CIT(A) IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE . 3. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE O N 29/10/2007 DECLARING AN INCOME OF RS.8,84,000/-. THE SAME WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961. LATER ON, INFORMATION WAS RECEIVED FROM ACIT, CENTRAL CIRCLE, 10, NEW DELHI, VIDE LETTER DATED 13/3/2013 FORWARDE D THROUGH CIT, CENTRAL II, NEW DELHI AND THE CCIT, DELHI (I) VIDE LETTERS DATE D 19/3/2013 & 26/3/2013 RESPECTIVELY THEREIN PROVIDING CD WHERE IN THE LIST OF PARTIES TO WHOM THE BOGUS PURCHASES/ACCOMMODATION ENTRIES PROVIDED BY SH. RAK ESH GUPTA, SHRI VISHESH GUPTA, SH. NAVNEET JAIN AND SH. VAIBHAV JAI N WERE APPEARING. AFTER GOING THROUGH THE COMPLETE LIST AND IDENTIFYING PAR TIES WHOSE TERRITORIAL JURISDICTION LIES WITH THE PRESENT ASSESSEES WARD, THE ASSESSING OFFICER RECORDED THE REASONS FOR FORMING THE BELIEF THAT TH E INCOME OF RS. 86,51,758/- HAS ESCAPED ASSESSMENT IN THE CASE OF M/S SHRI RAM OVER YEARS, PROPRIETOR SHSUHIL KUMAR, THAT IS THE ASSESSEE AND TAKING ADM INISTRATIVE APPROVAL FROM THE JCIT, RANGE-39, NEW DELHI GRANTED ON 13/3/2014, THE ASSESSMENT OF THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 WAS REOPENED A S PER SECTION 147 OF INCOME TAX ACT. THE ASSESSING OFFICER MADE ADDITION OF RS. 86,51,758/- ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT (A) DISMISSED THE APPEAL OF THE AS SESSEE. 3 ITA NO. 3117/DEL/2016 5. THE LD. AR SUBMITTED THAT THE REOPENING WAS DONE MERELY ON THE ASSUMPTION BASIS ONLY ON THE GROUND THAT FACTS IN R ESPECT OF IDENTICAL REASONS INCORPORATED IN VARIOUS CASES. THE LD. AR FURTHER SUBMITTED THAT ALL THE INFORMATION AND EVIDENCES WERE PRODUCED BEFORE THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ITSELF. THEREFORE, THE LD. AR SUBMITTED THAT THE REASONS RECORDED U/S 148 ASSUME JURISDICTION U/S 148 OF THE ACT ARE NOT VALIDLY RECORDED IN ACCORDANCE WITH LAW AND ACCORDINGLY ALL THE SUBSEQUENT ACTIONS FOUNDED ON SUCH REASONS NAMELY NOTICE ISSUED U/S 14 8, THE ORDER PASSED BY THE ASSESSING OFFICER AND THE CIT(A) ARE VOID-AB-IN ITIO AND RESERVED TO BE QUASHED. 6. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS RIGHTLY RECORDED THE REASONS AND REOPENING IS JUST AND PROPER. THE LD. DR ALSO RELIED UPON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). BU T THE LD. DR COULD NOT DISTINGUISH THE FACTS OF THE ASSESSEES CASE AND TH AT OF THE VARIOUS TRIBUNALS DECISION CITED BY THE LD. AR. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE LD. AR DURING THE COURSE OF HEARING SUBMITTED ALMOST 10 DECISIONS OF THE TRIBUN AL WHEREIN THE REASONS RECORDED FOR REOPENING ARE IDENTICAL AND IN FACT TH E NAME OF THE ACCOMMODATION ENTRIES PROVIDER ARE EXACTLY THE SAME. THE LD. DR ALSO COULD NOT POINT OUT ANY DISTINGUISHING FACTS WITH THESE ORDERS OF THE TRIBU NALS. WE ARE REPRODUCING THE ORDER CITED BY THE ASSESSEE IN CASE OF RAJENDER PRA SAD VS. ITO IN ITA NO. 7060/DEL/2017 DATED 7/9/2018. THE TRIBUNAL HELD AS UNDER:- 5. REASONS FOR REOPENING ASSESSMENT READ AS UNDER; A LETTER BEARING F.NO. ADDL.CIT/(HQ)/(COORD.)/ACCO MMODATION ENTRY/2012- 13/15016 DATED 26.03.2013 WAS RECEIVED FROM THE OFF ICE OF THE CHIEF COMMISSIONER OF I. TAX, DELHI-I, NEW DELHI THEREIN FORWARDING LE TTER BEARING F.NO. CIT(C)-II/2012- 13/3898 DATED 19.03.2013 RECEIVED FROM THE COMMISSI ONER OF I. TAX, CENTRAL-LL, NEW 4 ITA NO. 3117/DEL/2016 DELHI ALONG WITH A CD CONTAINING THE DETAILS OF ACC OMMODATION ENTRIES PROVIDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEE T JAIN & SH. VAIBHAV JAIN IN THE SHAPE OF BOGUS PURCHASES AND DIRECTING THIS OFF ICE TO TAKE NECESSARY ACTION AS PER SECTION 148 IN RESPECT OF ENTRIES PERTAINING TO A.Y. 2006-07, WHICH WERE GOING TO BE BARRED BY LIMITATION ON 31.03.2013. THE INFORMAT ION PROVIDED BY THE CIT, CENTRAL- LL, NEW DELHI VIDE HIS LETTER DATED 19.03.2013 READ S AS UNDER :- KINDLY FIND ENCLOSED HEREWITH LETTER DATED 13.03.2 013 OF ACIT, CENTRAL CIRCLE-10 DULY FORWARDED BY THE ADDL. CIT, CENTRAL RANGE-IV, ALONG WITH ITS ENCLOSURES ON THE SUBJECT MENTIONED ABOVE. 2. THE ASSESSMENT OF SEARCH CASES OF SH. RAKESH GUPTA , SH. VISHESH GUPTA, SH. NAVNEET JAIN & SH. VAIBHAV JAIN ARE UNDER PROCESS W ITH THE ACIT, CENTRAL CIRCIE-10. DURING THE ASSESSMENT PROCEEDINGS U/S 153A IN THE A FORESAID CASES, DETAILS REGARDING ACCOMMODATION ENTRIES GIVEN BY THE ABOVE ENTRY PROVIDERS HAS BEEN OBTAINED BY THE A.O. 3. THE LIST OF ACCOMMODATION ENTRY RECIPIENTS HAS BEE N OBTAINED FROM SH. RAKESH GUPTA AND SH. VISHESH GUPTA. HARD COPY OF THE LIST IS ENCLOSED AS ANNEXURE A, DULY SIGNED BY SH. VISHESH GUPTA. THE LIST GIVES THE NAM E OF THE FIRM WHICH HAS PROVIDED THE ACCOMMODATION ENTRY ALONG WITH THE NAME AND ADD RESS OF THE RECIPIENTS OF ACCOMMODATION ENTRY. 4. SH. NAVNEET JAIN & SH. VAIBHAV JAIN HAS PROVIDED A CCOMMODATION ENTRY THROUGH THIRTY- SEVEN PAPER ENTITIES. THE LIST OF THE FIRMS GIVING ACCOMMODATION ENTRY IS ENCLOSED AS ANNEXURE- B. THE LIST OF ACCOMMODATION ENTRY RECIPIENTS, HAS BEEN OBTAINED FROM SH. NAVENEET JAIN & SH. VAIBHAV JAIN. IT DOES NOT GIVE YEAR WISE BIFURCATION. HARD COPY OF THE LIST IS ENCLOSED AS A NNEXURE-C, DULY SIGNED BY SH. VAIBHAV JAIN. THUS, THE FIRMS MENTION IN THE LIST B ' HAVE PROVIDED ACCOMMODATION ENTRIES TO THE FIRMS MENTIONED IN LIST C. 5. THE SOFT COPY OF THE INFORMATION IN RESPECT TO A NNEXURE A, B & C IS ALSO ENCLOSED. 6. THE INFORMATION OF ACCOMMODATION ENTRY INCLUDES A.Y. 2006-07 ALSO, WHICH IS A TIME BARRING YEAR FOR TAKING ACTION U/S 148 OF THE ACT 7. THIS INFORMATION IS FORWARDED TO YOU FOR EARLY DISSEMINATION TO VARIOUS FIELD OFFICES IN DELHI (SOFT COPY ALSO ENCLOSED).'' 5 ITA NO. 3117/DEL/2016 IT IS EVIDENT FROM THE ASSESSMENT ORDER PASSED BY T HE ACIT, CENTRAL CIRCLE-10, NEW DELHI ON 28.03.2013 THAT SH. RAKESH GUPTA & SH. VIS HESH GUPTA AND SH. NAVNEET JAIN & SH. VAIBHAV JAIN DURING THE COURSE OF SEARCH PROCEEDINGS, IN POST SEARCH PROCEEDINGS AND IN ASSESSMENT PROCEEDINGS U/S 153A OF ( TAX ACT ADMITTED THAT THEY HAVE GIVEN ACCOMMODATION ENTRIES TO THE PARTIE S WHOSE LISTS HAVE BEEN PROVIDED BY THEM TO THE ACIT, CENTRAL CIRCLE-10, NEW DELHI. THEREFORE, THE ASSESSMENT OF THE FIRMS/CONCERNS/INDIVIDUALS FOR A.Y. 2006-07, WHOSE NAMES WERE APPEARING IN THE SAID LIST OF ACCOMMODATION ENTRIES PROVIDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA, SH. NAVNEET JAIN & SH. VAIBHAV JAIN AND WHOS E TERRITORIAL JURISDICTION WAS LYING WITH THIS WARD, WERE REOPENED U/S 147 OF I.TA X ACT AND NOTICES U/S 148 OF I. TAX ACT WERE ISSUED. AFTER MAKING NECESSARY VERIFICATION AND DISPOSING O FF THE OBJECTIONS FILED BY MOST OF THE ASSESSEES' AGAINST REOPENING OF THEIR CASES U/S 147 OF I.TAX ACT AND AFTER CONSIDERING THE REPLIES/DETAILS/DOCUMENTS FURNISHED BY THE ASSESSEES' IN THEIR RESPECTIVE CASES, INCLUDING THE CASE OF THE ASSESSE S, IT WAS HELD THAT NO SATISFACTORY EXPLANATION ABOUT THE SOURCES OF BOGUS PURCHASES MA DE FROM SH. RAKESH GUPTA AND SH VISHESH GUPTA COULD BE FURNISHED. HENCE KEEPING IN VIEW THE PROVISIONS OF SECTION 09C OF I TAX ACT READ WITH SECTION 4, 5 AND 14 I. TAX ACT, THE AMOUNT OF SUCH BOGUS PURCHASES WERE TREATED AS DEEMED INCOME OF TH E ASSESSEE FOR A.Y. 2006-07. SINCE THE ACCOMMODATION ENTRIES PROVIDED BY SH. RAK ESH GUPTA & SH. VISHESH GUPTA AND SHI NAVNEET JAIN & SH. VAIBHAV JAIN IN TH E SHAPE OF BOGUS PURCHASES WERE TREATED AS DEEMED T INPOME OF THE ASSESSEES FOR A.Y. 2006-07 AND IN T HE SAID LIST, NAMES OF THE CONCERNS/JIFERSONS WHO HAVE TAKE N ACCOMMODATION ENTRIES IN THE SHAPE OF BOGUS PURCHASES IN SUBSEQUENT ASSESSMENT Y EARS WERE ALSO APPEARING, INCLUDING A.Y.2007-08, THEREFORE, THIS OFFICE IS OF THE FIRM VIEW THAT THESE CASES ALSO NEED TO BE REOPENED U/S 147 OF I. TAX ACT. ACCORDINGLY, ON EXAMINING THE LIST OF ACCOMMODATION ENTRIES PROVIDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & SH . VAIBHAV JAIN PERTAINING TO A.Y. 2007- OS, IT IS NOTICED THAT THE FOLLOWING ACC OMMODATION ENTRIES HAVE BEEN TAKEN BY THE ASSESSEE NAMELY M/S FRIYA ENTERPRISES IN A.Y. 2007-08 AND WHOSE TERRITORIAL JURISDICTION LIES WITH THIS WARD 6 ITA NO. 3117/DEL/2016 ALSO THE DETAILS OF INCOME TAX RETURN FILED BY M/S PRIYA ENTERPRISES FOR A.Y. 2007- 08 AND PROCESSING DONE U/S 143(1) OF I. TAX ACT THE REOF WERE TRIED TO BE TAKEN OUT FROM ITD SYSTEM, HOWEVER, THE SAME WERE NOT FOUND A VAILABLE THERE. THUS, AS PER OUR RECORD, THE ASSESSEE HAS NOT FILED ANY RETURN O F INCOME FOR A.Y. 2007-08. FURTHER, NO SCRUTINY ASSESSMENT WAS DONE IN A.Y. 2007-08. TH EREFORE, I HAVE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO RS. 10,93,580/- FOR THE F.Y. 2006-07 RELEVANT TO A.Y. 2007-08 HAS ESCAPED ASSESS MENT. BESIDES THIS, ANY OTHER INCOME CHARGEABLE TO TAX THAT HAS ESCAPED ASSESSMEN T, WHICH WILL COME TO THE NOTICE OF THIS OFFICE DURING ASSESSMENT PROCEEDINGS SHALL ALSO BE ADDED BACK. THUS, I HAVE REASONS TO BELIEVE THAT IT IS A FIT CASE FOR INITIA TION OF PROCEEDINGS U/S 147 OF THE ACT. PROPOSAL IN THE PRESCRIBED FORM FOR THE A.Y. 2007-0 8 (F.Y. 2006-07) IS SUBMITTED HEREWITH FOR KIND CONSIDERATION AND NECESSARY APPRO VAL U/S 151(2) OF THE I. TAX ACT, 1961 AS [GETTING BARRED BY LIMITATION ON 31.03.2014 . [PAWAN KUMAR VASH IST] INCOME TAX OFFICER WARD-39 (3 ), NEW DELHI 6. A PERUSAL OF THE ABOVE CLEARLY SHOWS THAT THE AS SESSING OFFICER HAS BORROWED THE FINDINGS. MOREOVER, THE ENTRIES PERTA IN TO ASSESSMENT YEAR 2006-07 AS IS CLEARLY EVIDENT FROM THE REASONS RECORDED MENTIONED HEREINABOVE. IT CAN BE FURTHER SEEN THAT THERE IS A REFERENCE TO SOME SI. NO . ACCOMMODATION ENTRY PROVIDED BY NAME OF PARTY TO WHOM ACCOMMODATION ENTRY IS PROVIDED AMOUNT OF ACCOMMODATION ENTRY 1. SHREE BANKEY BIHARI TRADING COMPANY M/S PRIYA ENTERPRISES RS. 3,69,408/- 2. OM AGENCIES M/S PRIYA RS. 7,24,172/- TOTAL AMOUNT OF ENTRIES = RS. 10,93,580/- 7 ITA NO. 3117/DEL/2016 VERIFICATION AND DISPOSING OFF THE OBJECTIONS FILED BY MOST OF THE ASSESSEES AGAINST REOPENING OF THEIR CASES U/S 147 OF THE ACT. ON THE STRENGTH OF THE FATE OF THE OTHER ASSESSEES, THE AS SESSING OFFICER FORMED A BELIEF THAT THE ASSESSEE HAS ALSO MADE BOG US PURCHASES AND THE SAME HAS TO BE TREATED AS INCOME OF THE ASSESSE E FOR ASSESSMENT YEAR 2006-07. 7. IN THE PENULTIMATE PARA, THE ASSESSING OFFICER H AS EMPHASISED THAT THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WHEREAS, AS MENTIONED ELSEWHERE, ON P AGE 2 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HIMSELF HAS ADMITTED THAT RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED ON 18.10.2007. CONSIDERING THE REASONS RECORDED BY TH E ASSESSING OFFICER, WHICH ARE UNDISPUTEDLY BORROWED FROM SOMEW HERE ELSE AND CONSIDERING THE FACT THAT HE ASSESSING OFFICER HAS EMPHASISED THAT THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME BY CONTR ADICTING HIMSELF IN THE BODY OF THE ASSESSMENT ORDER BY ADMITTING THAT RETURN WAS FILED ON 18.10.2007 ESTABLISHES ONLY AND ONLY ONE THING, THA T NOTICE U/S 148 VIS A VIS REASONS ARE DEVOID OF ANY APPLICATION OF MIND . 8. FROM THE REASONS, IT CAN BE SAFELY CONCLUDED THA T THE ASSESSING OFFICER PROCEEDED TO MAKE OPINION ON THE BASIS OF B ORROWED REASONS AND THERE IS NO INDEPENDENT APPLICATION OF MIND AND IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE, REOPENING OF T HE ASSESSMENT U/S 147 OF THE ACT IS BAD IN LAW AND IS ACCORDINGLY DIR ECTED TO BE QUASHED. 9. OUR VIEW IS FORTIFIED BY THE DECISION IN THE CAS E OF G & G PHARMA INDIA LTD 545/DEL/2015 WHEREIN RELIANCE WAS PLACED ON 384 ITR 147 AND THE SAME READ AS UNDER: IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENTRIE S, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEBRUARY 20 03, FROM FOUR ENTITIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, THE AO STATED: 'I HAV E ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGATION WING AND ON THAT BASI S IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF 8 ITA NO. 3117/DEL/2016 ABOVE ACCOMMODATION ENTRIES.' THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE AO APPLIED HIS MIND TO THE MATERIALS TH AT HE TALKS ABOUT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE . ONCE THE DATE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN , IT WOULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDE D IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER 2004 AND WAS PROCESSED UNDER SECTION 143(31 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 THA T THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES'. IN THE CONSIDERED VIEW OF THE COURT, IN L IGHT OF THE LAW EXPLAINED WITH SUFFICIENT CLARITY BY THE SUPREME COURT IN THE DECI SIONS DISCUSSED HEREINBEFORE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND T O THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE.' 10. ON IDENTICAL SET OF FACTS IN THE CASE OF SAPRA METAL COMPANY 2910/DEL/2016, THE BENCH HAD OCCASION TO CONSIDER T HE REOPENING OF THE ASSESSMENT ON THE BASIS OF VERY SAME INFORMATIO N WHICH WAS CONSIDERED IN THE CASE IN HAND AND WHILE QUASHING T HE REOPENING, THE BENCH HAD CONSIDERED THE FOLLOWING JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SARTHAK SE CURITIES PVT. LTD 329 ITR 110. THE HON'BLE HIGH COURT HAS HELD AS UNDER: IN THE CASE AT HAND, AS IS EVINCIBLE, THE ASSESSI NG OFFICER WAS AWARE OF THE EXISTENCE OF FOUR COMPANIES WITH WHOM THE ASSESSEE HAD ENTERED INTO TRANSACTION. BOTH THE ORDERS CLEARLY EXPOSIT THAT THE ASSESSING OFFICER WAS MADE AWARE OF THE SITUATION BY THE INVESTIGATION WING AND THERE IS NO MENTION THAT THESE COMPANIES ARE FICTITIOUS COMPANIES. NEITHER THE REASONS IN THE IN ITIAL NOTICE NOR THE COMMUNICATION PROVIDING REASONS REMOTELY INDICATE INDEPENDENT APP LICATION OF MIND. TRUE IT IS, AT THAT STAGE, IT IS NOT NECESSARY TO HAVE THE ESTABLI SHED FACT OF ESCAPEMENT OF INCOME BUT WHAT IS NECESSARY IS THAT THERE IS RELEVANT MAT ERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQUISITE BELIEF. TO E LABORATE, THE CONCLUSIVE PROOF IS 9 ITA NO. 3117/DEL/2016 NOT GERMANE AT THIS STAGE BUT THE FORMATION OF BELI EF MUST BE ON THE BASE OR FOUNDATION OR PLATFORM OF PRUDENCE WHICH A REASONAB LE PERSON IS REQUIRED TO APPLY. AS IS MANIFEST FROM THE PERUSAL OF THE SUPPLY OF RE ASONS AND THE ORDER OF REJECTION OF OBJECTIONS, THE NAMES OF THE COMPANIES WERE AVAILAB LE WITH THE AUTHORITY. THEIR EXISTENCE IS NOT DISPUTED. WHAT IS MENTIONED IS THA T THESE COMPANIES WERE USED AS CONDUITS. IN THAT VIEW OF THE MATTER, THE PRINCIPLE LAID DOWN IN LOVELY EXPORTS (P) LTD. (SUPRA) GETS SQUARELY ATTRACTED. THE SAME HAS NOT B EEN REFERRED TO WHILE PASSING THE ORDER OF REJECTION. THE ASSESSEE IN HIS OBJECTIONS HAD CLEARLY STATED THAT THE COMPANIES HAD BANK ACCOUNTS AND PAYMENTS WERE MADE TO THE ASSESSEE COMPANY THROUGH BANKING CHANNEL. THE IDENTITY OF THE COMPAN IES WAS NOT DISPUTED. UNDER THESE CIRCUMSTANCES, IT WOULD NOT BE APPROPRIATE TO REQUIRE THE ASSESSEE TO GO THROUGH THE ENTIRE GAMUT OF PROCEEDINGS. IT IS TOTA LLY UNWARRANTED. RESULTANTLY, THE INITIATION OF PROCEEDINGS UNDER SECTION 147 AND ISS UANCE OF NOTICE UNDER SECTION 148 OF THE ACT ARE HEREBY QUASHED. 12 IN THE CASE OF SIGNATURE HOTELS P LTD VS. ITO 3 38 ITR 51, IT HAS BEEN HELD AS UNDER: THE FIRST SENTENCE OF THE REASONS STATES THAT INFO RMATION HAD BEEN RECEIVED FROM DIRECTOR OF INCOME-TAX (INVESTIGATION) THAT THE PET ITIONER HAD INTRODUCED MONEY AMOUNTING TO RS.5 LACS DURING FINANCIAL YEAR 2002-0 3 AS PER THE DETAILS GIVEN IN W.P. (C) NO. 8067/2010 PAGE 12 ANNEXURE. THE SAID ANNEXU RE, REPRODUCED ABOVE, RELATES TO A CHEQUE RECEIVED BY THE PETITIONER ON 9TH OCTOB ER, 2002 FROM SWETU STONE PV FROM THE BANK AND THE ACCOUNT NUMBER MENTIONED THER EIN. THE LAST SENTENCE RECORDS THAT AS PER THE INFORMATION, THE AMOUNT RECEIVED WA S NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. THE AFO RESAID REASONS DO NOT SATISFY THE REQUIREMENTS OF SECTION 147 OF THE ACT. THE REASONS AND THE INFORMATION REFERRED TO IS EXTREMELY SCANTY AND VAGUE. THERE IS NO REFERENC E TO ANY DOCUMENT OR STATEMENT, EXCEPT ANNEXURE, WHICH HAS BEEN QUOTED ABOVE. ANNEX URE CANNOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWS OR ESTA BLISHES NEXUS OR LINK WHICH DISCLOSES ESCAPEMENT OF INCOME. ANNEXURE IS NOT A P OINTER AND DOES NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, IT IS APPARENT THAT THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE T HE BASIS AND MATERIAL OF THE INFORMATION. THE ASSESSING OFFICER ACCEPTED THE PLE A ON THE BASIS OF VAGUE INFORMATION IN A MECHANICAL MANNER. THE COMMISSIONE R ALSO ACTED ON THE SAME 10 ITA NO. 3117/DEL/2016 BASIS BY MECHANICALLY GIVING HIS APPROVAL. THE REAS ONS RECORDED REFLECT THAT THE ASSESSING OFFICER DID NOT INDEPENDENTLY APPLY HIS M IND TO THE W.P. (C) NO. 8067/2010 PAGE 13 INFORMATION RECEIVED FROM THE DIR ECTOR OF INCOME-TAX (INVESTIGATION) AND ARRIVE AT A BELIEF WHETHER OR N OT ANY INCOME HAD ESCAPED ASSESSMENT. THE COMPANY WAS INCORPORATED ON 4TH JAN UARY, 1989 AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER, 2 001. THE FACTS INDICATED ABOVE DO NOT SHOW THAT SS LTD IS A NON EXISTING AND A FIC TITIOUS ENTITY/PERSON. FOR THE REASONS STATED ABOVE, WRIT OF THE CERTIORARI IS ISS UED QUASHING THE PROCEEDINGS U/S 148 OF THE ACT. 13. IN THE CASE OF CIT VS. SFIL STOCKBROKING CO. 32 5 ITR 285, IT HAS BEEN HELD AS UNDER THE FIRST SENTENCE OF THE SO-CALLED REASONS RECOR DED BY THE ASSESSING OFFICER IS MERE INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION). THE SECOND SENTENCE IS A DIRECTION GIVEN BY THE VERY SA ME DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) TO ISSUE A NOTICE UNDER SECTION 148 AND THE THIRD SENTENCE AGAIN COMPRISES OF A DIRECTION GIVEN BY THE ADDITIONAL CO MMISSIONER OF INCOME TAX TO INITIATE PROCEEDINGS UNDER SECTION 148 IN RESPECT O F CASES PERTAINING TO THE RELEVANT WARD. THESE THREE SENTENCE ARE FOLLOWED BY THE FOLL OWING SENTENCE, WHICH IS THE CONCLUDING PORTION OF THE SO-CALLED REASONS:- 'THUS, I HAVE SUFFICIENT INFORMATION IN MY POSSESSI ON TO ISSUE NOTICE U/S 148 IN THE CASE OF M/S SFIL STOCK BROKING LTD. ON THE BASIS OF REASONS RECORDED AS ABOVE.' 10. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER REFERRED TO THE INFORMATION AND THE TWO DIRECTIONS AS REASONS ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE UNDER SECTION 148. WE ARE AFRAID THAT THESE CANNOT BE THE REASONS FOR PROCEEDING UNDER SECTION 147/148 OF THE SAID ACT. T HE FIRST PART IS ONLY AN INFORMATION AND THE SECOND AND THE THIRD PARTS OF T HE BEGINNING PARAGRAPH OF THE SO- CALLED REASONS ARE MERE DIRECTIONS. FROM THE SO-CAL LED REASONS, IT IS NOT AT ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF T HAT, ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPED ASSESSM ENT. CONSEQUENTLY, WE FIND THAT THE TRIBUNAL HAS ARRIVED AT THE CORRECT CONCLU SION ON FACTS. THE LAW IS WELL SETTLED. THERE IS NO SUBSTANTIAL QUESTION OF LAW WH ICH ARISES FOR OUR CONSIDERATION. 11 ITA NO. 3117/DEL/2016 11. IN VIEW OF THE ABOVE DISCUSSION, FACTS OF THE C ASE IN HAND, VIS A VIS THE JUDICIAL DECISIONS MENTIONED HEREINABOVE, I HAVE NO HESITATION IN HOLDING THAT REOPENING OF THE ASSESSMENT IS WITH OUT ANY APPLICATION OF MIND AND EXAMINATION OF THE FACTS. ACCORDING, R EOPENING IS HELD TO BE INVALID AND THE SAME IS QUASHED. GROUND NO. 1 I S ACCORDINGLY ALLOWED. 12. SINCE THE REOPENING HAS BEEN HELD TO BE INVALID , I DO NOT FIND IT NECESSARY TO DWELL INTO THE MERITS OF THE CASE. FROM THE PERUSAL OF THE REASONS RECORDED IN THE PRE SENT ASSESSEES CASE, IT CAN BE CLEARLY SEEN THAT THE ASSESSING OFFICER HAS SIMP LICTOR TAKEN THE REASONS RECORDED IN ANOTHER CASES. IN FACT, FROM FIRST PAGE OF THE REASONS IT IS MENTIONED THAT THE INFORMATION OF ACCOMMODATION ENTRY INCLUDE S A.Y. 2006-07. IT CAN BE FURTHER SEEN THAT THERE IS A REFERENCE TO SOME VERI FICATION AND DISPOSING OFF THE OBJECTIONS FILED BY MOST OF THE ASSESSEES AGAINST R EOPENING OF THEIR CASES U/S 147 OF THE ACT. THUS, TAKING THE REASONS AS IT IS WITHOUT VERIFYING THE ASSESSEE CASE, THE ASSESSING OFFICER FORMED A BELIEF THAT TH E ASSESSEE HAS ALSO MADE BOGUS PURCHASES AND THE SAME HAS TO BE TREATED AS I NCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 2007-08. THE ASSESSING OFFICER PROC EEDED TO MAKE OPINION ON THE BASIS OF BORROWED REASONS AND THERE IS NO INDEP ENDENT APPLICATION OF MIND AND IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE, RE OPENING OF THE ASSESSMENT U/S 147 OF THE ACT IS BAD IN LAW AND IS ACCORDINGLY DIRECTED TO BE QUASHED. THUS, THE ISSUE CONTESTED HEREIN IS IDENTICAL AS IN THE AFORESAID APPEAL I.E. ITA NO. 7060/DEL/2017 FOR THE A.Y. 2007-08. SO RESPECTF ULLY FOLLOWING THE SAID ORDER DATED 07.09.2018, WE HOLD THAT THE ASSESSEE S UCCEEDS ON THE LEGAL GROUND REGARDING VALIDITY OF REASSESSMENT PROCEEDIN G, THEREFORE, WE ARE NOT ADJUDICATING THE GROUNDS ON MERIT AS THE SAME BECOM ES ACADEMIC IN NATURE. THE APPEAL OF THE ASSESSEE IS ALLOWED. 12 ITA NO. 3117/DEL/2016 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 04 TH DAY OF OCTOBER, 2021 SD/- SD/- (PRASHANT MAHARISHI) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04/10/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI