HEMA C. SHAH, MUMBAI V. ACIT- CC-5(4), MUMBAI

ITA 3201/MUM/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6821 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURUBINDER SINGH
• Keywords: Reopening of assessment; Bogus purchase; Search and seizure; Tangible material; Accommodation entries; Assessment record; Reason to believe
• Section: 143(3); 143(1); 48; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.3201/M/2018 ASSESSMENT YEAR: 2008-09 MS. HEMA C. SHAH, 5, URMI BUILDING, 5 TH FLOOR, 65, A.G. ROAD, WORLI SEA FACE, MUMBAI 400 018 PAN: AAJPS 8892D VS. ACIT-CC-5(4), AIR INDIA BUILDING, NARIMAN POINT, MUMBAI (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MANI JAIN, A.R. REVENUE BY : SHRI GURUBINDER SINGH, D.R. DATE OF HEARING : 17.06.2021 DATE OF PRONOUNCEMENT : 20.07.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 12.02.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLA NT'S CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THAT THE APPELLANT HAS ENTERED INTO ACCOMMODATION TRANSACTIONS WITH M/S. D IAMOND LINK. 2. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S C ASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION MADE BY THE LD. AO AMOUNTING TO RS. 7,02,12.9017- ON ACCOUN T OF UNSECURED LOAN TAKEN FROM M/S DIAMOND LINK BY TREATING THE SAME AS BOGUS TRANSACTION. 3. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLAN T'S CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION MADE BY THE LD. AO AMOUNTING TO RS. 85,2107- ON ACCOUNT OF DIFFERENCE IN CLOSING BALANCE OF BANK STATEMENTS. ITA NO.3201/M/2018 MS. HEMA C. SHAH 2 4. THE APPELLANT CRAVES LEAVES TO ADD, TO AMEND, ALTER, MODIFY AND 7 OR WITHDRAW ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, EACH OF WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER. THE APPELLANT PRAYS THIS HON'BLE TRIBUNAL TO DELETE THE ADDITION/DISALLOWANCES MADE BY THE LD. ASSESSING OFFICER, WHICH IS CONFIRM ED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 3. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS VIDE LETTER DATED 30.08.2009 WHICH ARE REPRODUCED BELOW: 1. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLA NT'S CASE AND IN LAW THE LD A.O. ERRED IN RE-OPENING THE ASSESSMENT U/S 147 BY ISSUE OF NOTICE DATED 31.03.2015 U/S 148, WHICH IS MERELY DUE TO CHANGE IN OPINION AND T HEREFORE REOPENING IS BAD IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLAN T'S CASE AND IN LAW THE LD A.O. ERRED IN RE-OPENING THE ASSESSMENT U/S 147 BY ISSUE OF NOTICE U/S 148 DATED 31.03.2015, WHICH IS BARRED BY LIMITATION OF LAW IN VIEW OF THE FIRST PROVISO TO THE SEC 147 OF THE INCOME TAX ACT, 1961. 3. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLAN T'S CASE AND IN LAW THE LD A.O. ERRED IN PASSING THE ORDER U/S 143(3) R.W.S 147 WIT HOUT DISPOSING OFF THE OBJECTIONS FILED BY THE APPELLANT DURING THE COURSE OF ASSESSM ENT PROCEEDINGS. 4. THE APPELLANT CRAVES LEAVES TO ADD, TO AMEND, ALTER, MODIFY AND / OR WITHDRAW ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, EACH OF WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER. 4. WE WOULD LIKE TO ADJUDICATE THE ADDITIONAL GROUN DS FIRST. THE ISSUE RAISED IN 1 ST GROUND OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A) AFFIRMING THE REOPENING OF ASSESSMENT UN DER SECTION 147 OF THE ACT BY THE AO BY ISSUING NOTICE UNDER SE CTION 148 DATED 31.03.2015. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OR INCOME ON 31.03.2009 DECLARING AN INCOME OF RS.7,09 ,949/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . A SEARCH AND SEIZURE ACTION WAS CARRIED OUT BY THE DDIT(INV) , MUMBAI ON 05.05.2014 ON THE ASSESSEE AND ITS GROUP COMPANY M/ S. DECENT DIA JEWELS PVT. LTD. WHICH WAS EARLIER A PARTNERSHI P CONCERN KNOWN AS M/S. DECENT DIAMOND AND ALSO ANOTHER GROUP CONCERN M/S. BRILLARE REALITY PVT. LTD. DURING TH E COURSE OF ITA NO.3201/M/2018 MS. HEMA C. SHAH 3 SEARCH, THE SEARCH TEAM FOUND THAT THE ASSESSEE GRO UP COMPANY M/S. DECENT DIA JEWELS PVT. LTD. WAS BENEFICIARY OF HAWALA/ACCOMMODATION ENTRIES/UNSECURED LOANS WHICH CAME TO LIGHT DURING THE COURSE OF SEARCH BY DGIT (INV.) MU MBAI ON SHRI RAJENDRA JAIN, MUMBAI, SHRI SANJAY CHAUDHARI AND M/ S. DHARNI CHAND GROUP ON 03.10.2013. THE AO OBSERVED ON THE BASIS OF INFORMATION AND ON PERUSAL OF RECORDS OF A SSESSEE THAT ASSESSEE HAS RECEIVED AN UNSECURED LOAN FROM HAWALA PARTY M/S. DIAMOND LINK OF RS.7,02,12,901/- AND ACCORDING LY THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 OF THE ACT AFTER RECORDING REASONS FOR REOPENING UNDER SECTION 148(2) OF THE ACT AND AFTER OBTAINING NECESSARY APPROVAL UNDER SE CTION 151(2) OF THE ACT AND NOTICE UNDER SECTION 148 OF THE AC T DATED 31.03.2015 WAS ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE COMPLIED THE NOTICE ISSUED UNDER SECTION 1 48 VIDE LETTER DATED 16.02.2016 REQUESTING THE AO TO TREAT THE RETURN FILED ORIGINALLY ON 31.03.2009 AS RETURN FILED IN C OMPLIANCE TO NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THEREA FTER, THE STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE A SSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO CALLED FOR VARIOUS DETAILS AND EXPLANATION FROM THE ASSESSEE T O PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTIONS AND ASSESSEE FILED THE NECESSARY EVIDENCES DURING T HE COURSE OF ASSESSMENT PROCEEDINGS SUCH AS NAME, ADDRESS, PAN N UMBER, BALANCE SHEET, CONFIRMATION AND BANK STATEMENTS ETC . TO PROVE IDENTITY, CREDITWORTHINESS OF THE LENDER AND GENUIN ENESS OF THE TRANSACTIONS. HOWEVER, DURING THE COURSE OF ASSESS MENT PROCEEDINGS IT WAS ALSO SUBMITTED THAT ASSESSEE HAS NOT RAISED THIS LOAN FROM ANY HAWALA PARTY BUT FROM A CONCERN OWNED BY ITA NO.3201/M/2018 MS. HEMA C. SHAH 4 ASSESSEES BROTHER IN LAW AND THEREFORE IT IS NOT A CASE OF BOGUS/HAWALA ENTRIES. HOWEVER, THE AO FRAMED THE A SSESSMENT VIDE ORDER DATED 28.03.2016 PASSED UNDER SECTION 14 7 READ WITH SECTION 143(3) OF THE ACT BY MAKING AN ADDITION OF RS.7,62,12,901/- ON ACCOUNT OF UNSECURED LOAN COMPR ISING RS.7,02,12,901/- FROM M/S. DIAMOND LINK AND RS.60,0 0,000/- FROM M/S. SUPER JEWELS. 6. THE ASSESSEE CHALLENGED THE ORDERS OF THE AO BEF ORE THE LD. LD. CIT(A). HOWEVER, THE APPEAL OF THE ASSESSEE WA S PARTLY ALLOWED BY CONFIRMING THE ADDITION OF RS.7,02,12,90 1/- BEING LOAN FROM SALIESH SHAH, PROPRIETOR OF M/S. DIAMOND LINK WHEREAS THE OTHER ADDITION OF RS.60,00,000/- WAS DE LETED BY LD. CIT(A). THE ASSESSEE DISMISSED THE APPEAL OF THE A SSESSEE ON LEGAL ISSUE OF NON DISPOSAL OF OBJECTIONS FILED BY THE ASSESSEE TO REOPENING THE PROCEEDINGS. NOW THE ASSESSEE HAS TA KEN THE LEGAL ISSUE OF REOPENING UNDER SECTION 147 OF THE A CT BEING BAD IN LAW FOR THE FIRST TIME BEFORE THE TRIBUNAL. THE LD. A.R. SUBMITTED THAT THIS IS BEING A LEGAL ISSUE AND CAN BE RAISED BEFORE ANY APPELLATE FORUM AT ANY POINT OF TIME AS NO FURTHER VERIFICATION OF FACTS IS REQUIRED AS ALL THE FACTS ARE EMANATING FROM ASSESSMENT RECORDS. 7. THE LD. D.R., ON THE OTHER HAND, OPPOSED THE LEG AL ISSUE RAISED BY THE ASSESSEE ON THE GROUND THAT THIS ISSU E IS BEING RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL AND M AY KINDLY BE DISMISSED. 8. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ISSUE OF REOPENING OF A SSESSMENT ITA NO.3201/M/2018 MS. HEMA C. SHAH 5 AND ALL CONNECTED FACTS WERE AVAILABLE ON RECORD AN D NO FURTHER VERIFICATION OF FACTS IS REQUIRED TO BE DONE. THER EFORE, ASSESSEE IS WITHIN HER RIGHT TO FILE THE SAME BEFORE US AND AC CORDINGLY WE ARE INCLINED TO ADMIT THE SAME FOR ADJUDICATION. 9. THE LD. A.R. SUBMITTED BEFORE US THAT THERE IS N O APPLICATION OF MIND WHILE RECORDING THE REASON UNDE R SECTION 148(2) OF THE ACT. THE LD. A.R. WHILE TAKING US TH ROUGH THE ASSESSMENT ORDER POINTED OUT THAT THE CASE OF THE A SSESSEE WAS REOPENED ON THE GROUND THAT ASSESSEE HAS RECEIVED U NSECURED LOAN OF RS.7,02,12,901/- FROM HAWALA PARTIES NAMELY M/S. DIAMOND LINK. THE LD. A.R. SUBMITTED THAT ONLY ON THIS BASIS THE CASE OF THE ASSESSEE WAS REOPENED. THE LD. A.R . SUBMITTED BEFORE US THAT THIS IS NOT A CASE OF HAWALA PARTY B UT IN FACT THE ASSESSEE HAS RAISED THE LOAN FROM A PROPRIETARY CON CERN OF HER BROTHER IN LAW SHRI SAILESH SHAH AND THEREFORE THE VERY FOUNDATION OF THE REASON RECORDED IS WRONG AND FALL ACIOUS WHICH GOES TO THE ROOT OF THE ASSESSMENT AND THEREFORE TH E REOPENING ON THE BASIS OF SUCH INCORRECT REASONS IS WRONG, IN VALID AND VOID AB-INITIO. THE LD. A.R. SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2007-08 IN ITA NO.3750/M/2017 WHEREIN THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT SINCE THERE IS NO APPLICATION OF MIND BY THE AO AT THE TIME OF RECORDING THE REASONS, THE REOPENING IS BAD IN LAW. THE LD. A.R. ALSO REFERRED TO THE OTHER TWO DECISIO NS OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF BHATI YA DIAMOND PVT. LTD. VS. ITO IN ITA NO.2822/DEL/2018 AND DCIT VS. SUPER TECH INDIA PVT. LTD. ITA NO.7012/DEL/2014 THE LD. A .R. THE LD. A.R. FINALLY SUBMITTED THAT IN VIEW OF NON APPLICAT ION OF MIND IN ITA NO.3201/M/2018 MS. HEMA C. SHAH 6 RECORDING INCORRECT REASONS, THE REOPENING IS BAD I N LAW AND MAY BE QUASHED. 10. THE LD. D.R., ON THE OTHER HAND, RELIED HEAVILY ON THE ORDER OF AUTHORITIES BELOW BY SUBMITTING THAT THE REOPENI NG IS ONLY A STARTING POINT WHERE THE AO HAS TO FORM AN OPINION THAT INCOME HAS ESCAPED ASSESSMENT AND ALL THE OTHER VERIFICATI ON OF FACTS IS DONE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, THE LD. D.R. SUBMITTED THAT THE ISSUE RAISED BY THE ASSESSEE, WHICH TOO FOR THE FIRST TIME BEFORE THE TRIBUNAL, MAY KINDLY BE DISMISSED. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE OBSERVE THAT IN THIS CASE THE REASONS HAVE BEEN RECORDED BY THE AO THAT ASSES SEE HAS RAISED UNSECURED LOAN OF RS.7,02,12,901/- FROM HAWA LA PARTIES NAMELY M/S. DIAMOND LINK AND ACCORDINGLY THE ASSESS MENT WAS REOPENED UNDER SECTION 147 OF THE ACT BY ISSUING NO TICE UNDER SECTION 148 OF THE ACT DATED 31.03.2015. 12. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS RAISED THIS LOAN FROM SHRI SAILESH SHAHS PROPRIETARY CONCERN O F M/S. DIAMOND LINK, WHO IS BROTHER IN LAW OF THE ASSESSEE . THE REASONS RECORDED ARE REPRODUCED AS UNDER FOR THE SA KE OF READY REFERENCE: 5. ON THE BASIS OF THE INFORMATION, AND PERUSAL OF REC ORDS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, IT WAS REVEALED THAT THE ASSESSEE HAD RECEIVED UNSECURED LOAN FROM THE FOLLOWING HAWALA PARTY AS UNDER: NAME OF HAWALA PARTIES F.Y. BILL AMOUNT (RS.L [M/S DIAMOND LINK _ 2007-OB 7,02,12,901 ITA NO.3201/M/2018 MS. HEMA C. SHAH 7 IN VIEW OF THE ABOVE, THE CASE OF ASSESSEE WAS RE-O PENED FOR THE IT A.Y. 2008-09, UNDER THE PROVISION OF SECTION 147 OF THE I.T. ACT, DULY RECORDING THE REASONS FOR RE- OPENING AND OBTAINING STATUTORY UNDER THE PROVISION OF SECTION 151(2) OF THE I.T. ACT, 1961. A U/S. 148 DATED 31/03/2015 WAS ISSUED TO THE ASSESSEE, WHICH WAS DULY SERVED UPON HER ON THE SAME DAY I.E 31/03/2015. 13. AFTER PERUSING THE REASONS RECORDED , WE FIND T HAT THERE IS A COMPLETE LACK OF APPLICATION OF MIND BY THE AO WH ILE RECORDING THE REASONS AS THE AO HAS WRONGLY RECORDED THE REA SON THAT THE LOAN IS RAISED FROM THE HAWALA PARTY M/S. DIAMOND L INK WHEREAS M/S. DIAMOND LINK IS NOT A HAWALA PARTY BUT A PROPRIETARY CONCERN OF SHRI SAILESH SHAH WHO HAPPEN S TO BE BROTHER IN LAW OF THE ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCES, THE REOPENING OF THE ASSESSMENT AS D ONE BY THE AO IS WRONG AND VOID AB-INITIO. THE CASE OF THE AS SESSEE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.3750/M/2017 FOR A.Y. 2007-08. T HE OPERATIVE PART WHEREOF IS REPRODUCED AS UNDER: WE ALSO NOTICE THAT THE REASONS RECORDED BY THE AO FOR REOPENING OF ASSESSMENT ARE VAGUE, I.E., THE REASONS SHOW THAT THE ASSESSIN G OFFICER WAS NOT CLEAR IN HIS MIND ABOUT THE ESCAPEMENT OF INCOME, WHEN HE REOPENED TH E ASSESSMENT. FOLLOWING OBSERVATIONS MADE BY THE AO IN THE REASONS FOR REOP ENING MAKES THIS POINT CLEAR: - (A) THE AO HAS MENTIONED ABOUT 'ACCOMMODATION BILLS ' ALLEGED TO HAVE BEEN AVAILED BY THE ASSESSEE. (B) THE AO STATES IN PARAGRAPH 3 THAT 'THE RECORDS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION REVEAL THAT THE ASSESSEE H AS ADOPTED THIS MODUS OPERANDI DURING THE YEAR UNDER CONSIDERATION'. IN F ACT, THE RECORDS OF THE ASSESSEE DID NOT INDICATE ANY MODUS OPERANDI, INSTE AD, THE SEARCH AND SEIZURE OPERATION IN THE CASES OF RAJENDRA JAIN AND OTHER GROUPS ONLY REVEALED ABOUT THE ACCOMMODATION ENTRIES. (C) IN THE REASONS, THE NAME OF THE COMPANY WAS MEN TIONED AS 'SPARSH', WHERE AS THE NAME OF THE COMPANY FROM WHICH THE ASS ESSEE HAD AVAILED UNSECURED LOAN WAS 'SPARSH EXPORT P LTD'. THIS FACT SHOWS THAT THE ASSESSING OFFICER WAS ALSO NOT CLEAR ABOUT THE NAME OF THE CO NCERN FROM WHICH THE ASSESSEE HAD AVAILED ACCOMMODATION ENTRIES. (D) IN PARAGRAPH 5, THE AO STATES THAT THE INCO ME CHARGEABLE TO TAX, AS INDICATED ABOVE, TO THE TUNE OF RS.45,00,000/- OR A NY OTHER INCOME ITA NO.3201/M/2018 MS. HEMA C. SHAH 8 CHARGEABLE TO TAX WHICH COMES TO MY NOTICE SUBSEQU ENTLY IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR RE-ASSESSMENT HAS ESCAPE D ASSESSMENT FOR A.Y 2007-08.' BY THE EXPRESSION 'AS INDICATED ABOVE', THE AO IS REFERRING TO ACCOMMODATION BILLS. FURTHER, HE ALSO STATES THAT ANY OTHER INCOME....,', MEANING THEREBY, HE WAS NOT SURE AS TO THE NATURE O F INCOME THAT HAS ESCAPED ASSESSMENT. (E) THE AO FURTHER STATES THAT HE IS SATISFIED THAT THE ASSESSEE HAS FAILED TO DISCLOSE TRUE AND COMPLETE PARTICULARS OF ITS IN COME FOR THE YEAR UNDER CONSIDERATION. IN THE INSTANT CASE, THE ASSESSING O FFICER HAS REOPENED THE ASSESSMENT AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. HENCE THE AO HAS OBSERVED SO IN ORDER TO COMPLY WIT H THE REQUIREMENT OF THE FIRST PROVISO TO SEC. 147 OF THE ACT. WHEN THE AO IS NOT CLEAR ABOUT THE NATURE OF INCOME THAT HAS ESCAPED THE ASSESSMENT, T HEN HOW THE AO COULD CHARGE THE ASSESSEE THAT THERE WAS FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. 16. ALL THESE POINTS WOULD SHOW THAT THE AO WAS NOT CLEAR IN HIS MIND AS TO THE INCOME, WHICH HAS ESCAPED THE ASSESSMENT. WHEN THER E IS NO APPLICATION OF MIND BY THE AO, THE REOPENING IS LIABLE TO CANCELLED. IT WAS SO HELD BY THE JAIPUR BENCH OF ITAT IN THE CASE OF M./S DAMODAR OIL MILLS COMPANY P LTD VS. ITO (ITA NO.515/JP/2016 DATED 11-05-2018). IN THIS CASE ALSO , THE AO REOPENED THE ASSESSMENT ON THE REASONING THAT THE SAID ASSESSEE HAS AVAILED ACCOMMODATION ENTRIES BY WAY OF BOGUS PURCHASE BILLS. IT WAS NOTI CED THAT THE ASSESSEE HAD ACTUALLY RECEIVED SHARE APPLICATION MONEY. ACCORDINGLY IT WA S HELD THAT THE REOPENING OF ASSESSMENT IS BAD IN LAW. FOR THE SAKE OF CONVENIEN CE, WE EXTRACT BELOW THE OPERATIVE PORTION OF THE ORDER PASSED BY THE JAIPUR BENCH OF TRIBUNAL: - '7. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. WE HAVE CONSIDERED THE CASE LAWS RELIED UPON BY BOTH THE SIDES. WE HAVE AL SO GONE THROUGH THE REASONS RECORDED BY THE ASSESSING OFFICER FOR ISSUI NG THE NOTICE U/S 148 OF THE ACT ON 25/3/2014. IT IS NOTICED THAT THE ASSESS ING OFFICER RECEIVED INFORMATION FROM DGIT(INV), MUMBAI. THE DETAILS OF THE ENTRY PROVIDER COMPANY AND NATURE OF ENTRY AND AMOUNT WAS PROVIDED . HOWEVER, WHILE RECORDING THE REASONS, THE ASSESSING OFFICER HAS WRITTEN THAT THE ASSESSEE HAS OBTAINED ENTRIES OF BOGUS PURCHASE S. FURTHER IN FINALLY RECORDED THE SATISFACTION TO ISSUE THE NOTIC E U/S 148 OF THE ACT, THE ASSESSING OFFICER HAS RECORDED THE REASO NS, WHICH ARE REPRODUCED HEREUNDER: THE ACCOMMODATION ENTRIES OF BOGUS SALES PROVIDED BY THE ABOVE COMPANIES CONSTITUTE BOGUS PURCHASES IN THE HANDS O F THE ASSESSEE. THE ASSESSEE HAS SUPPRESSED ITS PROFITS BY TAKING A CCOMMODATION ENTRIES OF BOGUS PURCHASES. THEREFORE, I HAVE REASO NS TO BELIEVE THAT MINIMUM INCOME OF RS,65,00,000/- HAS REMAINED ESCAP ED TO BE TAXED IN TERMS OF SECTION 147 R.W.S. 148 OF THE L.T . ACT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION.' ITA NO.3201/M/2018 MS. HEMA C. SHAH 9 THUS THE ASSESSING OFFICER HAS CATEGORICALLY RECORD ED IN THE REASONS THAT THE ASSESSEE HAS SUPPRESSED ITS PROFITS BY TAKING ACCOM MODATION ENTRIES OF BOGUS PURCHASES. THE INTIMATION FROM DGIT (IHV), MU MBAI WAS ABOUT THE BOGUS INVESTMENT /SHARE APPLICATIONS. THUS, THE ASS ESSING OFFICER HAS NOT AT ALL APPLIED HIS MIND WHILE RECORDING THE REASONS. T HE FACTS ON RECORD CLEARLY ESTABLISHES THAT THE ASSESSING OFFICER HAS NOT APPL IED HIS MIND SO AS TO COME TO A CONCLUSION THAT HE HAS REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT FOR THE YEAR UNDER CONSIDERATION. THE RE ASONS RECORDED ARE VAGUE AND ARE NOT BASED ON ANY TANGIBLE MATERIAL AS WELL AS ON THE FACTS ACCEPTABLE IN THE EYES OF LAW. THE REASONS RECORDED ALSO SUGGEST THAT THE ASSESSING OFFICER HAS MECHANICALLY ISSUED NOTICE U/ S 148 OF THE ACT EVEN NOT BOTHERING REGARDING THE NATURE OF INFORMATION RECEI VED FROM THE DGIT (INV), NEW DELHI. SUCH VAGUENESS IN THE REASONS RECORDED M AKE REOPENING BAD IN LAW AND DESERVED TO BE QUASHED. SUCH VIEW IS ALSO S UPPORTED BY THE VARIOUS DECISIONS OF THE HON'BLE HIGH COURTS AND THE TRIBUN ALS AS STATED (SUPRA). THEREFORE, WE QUASH THE REOPENING OF THE ASSESSMENT .' 17. IN THE INSTANT CASE ALSO, THERE IS NO TANGIBLE MATERIAL TO SHOW THAT THE ASSESSEE HAS AVAILED ACCOMMODATION BILLS. FURTHER, THE AO IS NOT CLEAR IN HIS MIND AS TO WHAT INCOME HAS ACTUALLY ESCAPED INCOME. THE AO IS REFERRING TO THE RECORD OF THE ASSESSEE AND HAS OBSERVED THAT THE ASSESSEE HAS ADOPTED THE MODUS OPERANDI, WHERE AS THE ABOVE SAID MODUS OPERANDI CAME TO LIGH T TO THE DEPARTMENT ONLY DURING THE COURSE OF SEARCH OPERATIONS CONDUCTED IN THE CASE OF RAJENDRA JAIN AND OTHER GROUPS. THOUGH THE AO IS STATING THAT THERE W AS FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL F ACTS, YET THERE IS NO MATERIAL TO SUPPORT THE SAME. ALL THESE FACTS WOULD SHOW THAT T HE AO HAS REOPENED THE ASSESSMENT IN A MECHANICAL MANNER, WITHOUT APPLICAT ION OF MIND. IT WILL MAKE THE REOPENING BAD IN LAW AS HELD BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAMDHENU STEEL & ALLOYS LTD & ORS (2012)(68 DTR 38)(DEL). HENCE REOP ENING OF ASSESSMENT, IN THE INSTANT CASE, IS LIABLE TO BE QU ASHED ON THIS GROUND. 14. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, WE ARE IN CLINED TO HOLD THAT REOPENING PROCEEDINGS ARE BAD IN LAW AND SO IS THE ASSESSMENT FRAMED BY THE AO UNDER SECTION 143(3) RE AD WITH SECTION 147 OF THE ACT. THE ADDITIONAL GROUND NO.1 IS ALLOWED. 15. SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSE E ON JURISDICTIONAL ISSUE, THE OTHER GROUNDS RAISED BY T HE ASSESSEE ON LEGAL ISSUES AS WELL AS ON MERIT ARE NOT BEING ADJU DICATED. ITA NO.3201/M/2018 MS. HEMA C. SHAH 10 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.07.2021. SD/- SD/- ( RAVISH SOOD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 20.07.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.