M/s. Goodluck Commercial Ltd., New Delhi V. ITO, New Delhi

ITA 3365/DEL/2014

• Counselvise Citation: 336520114 RSA 2014
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 23-09-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 02-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V K JIWANI
• Assessee Lawyers: O P MODY
• Keywords: Reopening of assessment; Gift; Income from undisclosed sources; Opportunity of being heard; Tangible material; Accommodation entries; Reason to believe; Borrowed satisfaction
• Section: 131; 68; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA.NOS.3364 & 3365/DEL./2014 ASSESSMENT YEARS 2001-2002 & 2002-03 GOO DLUCK COMMERCIALS LTD., KH NO.882, GROUND FLOOR, LAL DORA, VILLAGE BURARI, NEAR CHHAKU FACTORY, DELHI 110 084. PAN AAACG4081C VS. THE INCOME TAX OFFICER WARD NO.12(2) NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI O.P. MODY , ADVOCATE. FOR REVENUE : SHRI V.K. JIWANI, SR. DR ORDER THESE APPEALS BY ASSESSEE HAVE BEEN DIRECTED AGAIN ST THE RESPECTIVE ORDERS OF THE LD. CIT(A)-IV, NEW DELHI, BOTH DATED 27.3.2014 FOR THE A.YRS. 2001-2002 & 2002-03, CHALL ENGING THE REOPENING OF THE ASSESSMENT UNDER SECTION 147/148 O F THE I.T. ACT, 1961 AND ADDITIONS OF RS.4,60,000 & RS. 5,00,000/- UNDER SECTION 2 68 OF THE I.T. ACT, 1961. SINCE THE ISSUE INVOLVED IN THESE APPEALS ARE COMMON AND IDENTICAL, HENCE, FOR THE SAKE OF CO NVENIENCE, I AM DEALING WITH ONLY ITA NO. 3364/DEL/2014 (AY 2001-02 ) AND DISPOSED OF BOTH THE APPEALS BY THIS COMMON ORDER. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT RETURN O F INCOME DECLARING INCOME OF RS.1,22,630/- WAS FILED BY ASS ESSEE-COMPANY ON 29.10.2001. THE RETURN WAS PROCESSED UNDER SECTI ON 143(1) OF THE I.T. ACT ON 26.3.2002. AN INFORMATION WAS RECEI VED FROM O/O. DIT (INVESTIGATION), NEW DELHI, VIDE LETTER DATED 0 5.02.2007 THAT ASSESSEE HAD TAKEN ACCOMMODATION ENTRY OF RS.4,60,0 00/- FROM DUPAS LEASING & FINANCE PVT. LTD. AND ETISHA FINANC E & INVESTMENT PVT. LTD. ON 3.4.2000. THE ABOVE INFORMA TION AND ENQUIRIES MADE BY THE INVESTIGATION WING LED TO THE BELIEF THAT THE TRANSACTION IS CLEARLY AN ACCOMMODATION ENTRY AND B ELIEF WAS FORMED THAT ASSESSEE HAD TAKEN ACCOMMODATION ENTRY OF RS.4,60,000 IN LIEU OF UNACCOUNTED INCOME OF THE AS SESSEE. THE A.O. ACCORDINGLY, RECODED REASONS UNDER SECTION 148 OF THE I.T. ACT AND ISSUED NOTICE UPON ASSESSEE WHICH WAS SERVED. T HE ASSESSEE STATED THAT RETURN ALREADY FILED MAY BE TREATED AS RETURN HAVING 3 BEEN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE I.T. ACT. WHILE CARRYING OUT THE ENQUIRIES IN THE CASE OF ENT RY OPERATIONS, THE INVESTIGATION WING, NEW DELHI, HAD RECORDED STATEME NT OF SHRI PRADEEP KUMAR JINDAL UNDER SECTION 131 OF THE I.T. ACT ON 15 TH APRIL, 2004, IN WHICH, HE HAD ADMITTED THAT THROUGH THE VARIOUS COMPANIES FLOATED BY HIM, HE HAD CARRIED OUT THE BU SINESS ACTIVITIES OF PROVIDING BOGUS ACCOMMODATION ENTRIES. THE A.O. AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, MADE AD DITION OF RS.4,60,000/- UNDER SECTION 68 OF THE I.T. ACT FOR PROVIDING SUCH ACCOMMODATION ENTRIES. THE INCOME OF THE ASSESSEE W AS ASSESSED AT RS. 5,82,630/- VIDE ORDER DATED 03.12.2008 U/S. 148 /143(3) OF THE I.T. ACT, 1961. IN APPEAL, LD. CIT(A) CONFIRMED THE ADDITION IN DISPUTE AND DISMISSED THE APPEAL OF ASSESSEE. 3. DURING THE HEARING, LD. COUNSEL OF THE ASSESSEE FILED A PAPER BOOK CONTAINING PAGES 1 TO 67 HAVING THE COPY OF THE TRIBUNAL ORDER DATED 13.9.2017 PASSED BY THE SMC BE NCH OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEE IN ITA NO. 915 /DEL/2017 FOR THE AY 2000-01; COPY OF REASONS RECORDED U/S. 148(2 ) OF THE ACT; COPY OF SUBMISSIONS DATED 28.12.2012 BEFORE THE LD. CIT(A) 4 TOGETHER WITH ENCLOSURES THEREOF; COPY OF SUBMISSIO NS DATED 1.3.2014 BEFORE THE LD. CIT(A) TOGETHER WITH ENCLOS URES THEREOF; COPY OF AUDIT REPORT AND AUDITED FINANCIAL ACCOUNT FOR THE YEAR ENDED ON 31.3.2001 AND COPY OF ORDER OF REASSESSMEN T DATED 25.10.2010 PASSED IN THE CASE OF THE APPELLANT U/S . 147/143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2003-04. HE STATED THAT THE ISSUE INVOLVED IN THE PRESENT CASE IS SQUARELY COVERED BY THE AFORESAID DECISION OF THE SMC BENCH OF THIS TRIBUNAL IN THE C ASE OF THE ASSESSEE IN ITA NO. 915/DEL/2017 FOR THE AY 2000-01 , HENCE, HE RELIED UPON THE AFORESAID DECISION. FURTHER, THE LE ARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO PAGE-29 OF THE PAPER BOOK WHI CH IS REASONS RECORDED UNDER SECTION 148 OF THE I.T. ACT. HE HAS SUBMITTED THAT ALL ENTRIES ARE TAKEN IN THE BANK ACCOUNT OF THE AS SESSEE. COPIES OF THE CONFIRMATION OF ACCOUNTS OF THE PARTIES ARE FIL ED AT PAGE 33-34 OF THE PAPER BOOK. THE A.O. HAS MERELY COPIED THE REPO RT OF THE INVESTIGATION WING IN THE REASONS AND WITHOUT APPLY ING THE MIND, REOPENED THE ASSESSMENT. IN SUPPORT OF HIS CONTENTI ON, HE HAS RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. G&G PHARMA INDIA LTD., (2016) 384 IT R 147 (DEL.) AND 5 DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. MEENAKSHI OVERSEAS PVT. LTD., 395 ITR 677. HE HAS, THEREFORE, SUBMITTED THAT REOPENING OF THE ASSESSMENT IS BAD I N LAW IN THIS CASE. 4. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW AND SUBMITTED THAT AT THE STAGE O F REOPENING OF THE ASSESSMENT, ONLY PRIMA FACIE CASE IS TO BE SEEN WHICH IS THE BASIS FOR REOPENING OF THE ASSESSMENT BUT SUFFICIEN CY OR CORRECTNESS OF SUCH MATERIAL COULD NOT BE CONSIDERED. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE MATERIAL ON RECORD. IT IS WELL SETTLED LAW THAT VAL IDITY OF RE- ASSESSMENT PROCEEDINGS, HAVE TO BE JUDGED ON THE BA SIS OF THE REASONS RECORDED BY A.O. FOR REOPENING OF THE ASSES SMENT. THE ASSESSEE HAS FILED COPY OF THE REASONS RECORDED UND ER SECTION 148 OF THE I.T. ACT FOR THE PURPOSE OF REOPENING OF THE AS SESSMENT AT PAGE- 29 OF THE PAPER BOOK AND THE SAME IS REPRODUCED AS UNDER : ANNEX.A M/S. GOODLUCK COMMERCIALS LTD. (AAACG4081C) ASSESSMENT YEAR 2001-02 6 THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEA R UNDER CONSIDERATION VIDE RECEIPT NO.490 DATED 29.10.2001 DECLARING INCOME OF RS.122630/-. AS PER INFORMATION RECEIVED FROM THE OFFICE OF THE DIT (INV.), NEW DELHI VIDE LETTER NO.DIT(INV.)-I/2006-07/AE/132 2 DATED 31.01.2007 AND NO.1536 DATED 05.02.2007, THE ASSESS EE COMPANY HAS TAKEN FOLLOWING ACCOMMODATION ENTRIES T OTALING TO RS.4,60,000/- VALUE OF ENTRY TAKEN DT. OF ENTRY FROM WHOM TAKEN RS.2,53,000 19.01.2000 IKA PROCESSORS & DISTRIBUTOR S PVT. LTD., (A/C NO.19041 WITH UBI, AZADPUR). RS.2,07,000 15.01.2000 RIYA INVESTMENT (A/C NO.28265 WITH UBI, AZADPUR) THE SAID AMOUNT HAS BEEN CREDITED IN ASSESSEES BAN K ACCOUNTS MAINTAINED WITH UCO BANK, MODEL TOWN. APAR T FROM THE ABOVE, THE ASSESSEE HAD ALSO TRANSFERRED FUNDS OF RS. 11,75,000/- FROM ITS BANK ACCOUNT MAINTAINED WITH U CO BANK, MODEL TOWN TO BANK OF BARODA, SHALIMAR BAGH VIDE INSTRUMENT NO. 854337 DATED 21.7,.2000. THE SAID TR ANSACTION IS NOT VERIFIABLE FROM THE RETURN AND ON INVESTIGAT ION MADE BY THE INVESTIGATION WING IT HAS BEEN FOUND THAT THE A SSESSEE IS A BENEFICIARY OF TAKING THE AFORESAID ACCOMMODATION E NTRY. I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INV ESTIGATION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSE SSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BAN K BY WAY 7 OF ACCOMMODATION ENTRY, THEREFORE, I HAVE REASON TO BELIEVE THAT THE INCOME AMOUNTING TO RS. 4,60,000/- HAS ESCAPED ASSESSMENT. THE ESCAPEMENT OF INCOME HAS BEEN CLEAR LY ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO T RULY AND FULLY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMEN T. THUS, IT IS A FIT CASE FOR INITIATION OF PROCEEDINGS U/S. 147 O F THE ACT. FURTHER, THE HONBLE APEX COURT IN ITS VARIOUS JUDG MENTS HELD THAT POSSESSION OF SPECIFIC INFORMATION BY THE ASS ESSING OFFICER IS SUFFICIENT TO RE-OPEN THE ASSESSMENT PROCEEDINGS . SUBMITTED FOR KIND PERUSAL AND APPROVAL AS PER PROV ISIONS OF SECTION 151(2) OF THE ACT. SD/- ITO, WARD 12(2), NEW DELHI 5.1. LEARNED COUNSEL FOR THE ASSESSEE HAS FILED CO PIES OF THE LEDGER ACCOUNT AND LETTERS OF VARIOUS PARTIES WHO A RE MENTIONED IN THE REASONS RECORDED ABOVE WHO HAVE ALLEGEDLY PROVI DED ACCOMMODATION ENTRY TO ASSESSEE TO SHOW THAT EITHER THE AMOUNTS WERE OPENING BALANCE RELATING TO EARLIER YEARS, WH ICH WERE DUE TO THE ASSESSEE ON BEHALF OF THE DIFFERENT PARTIES. TH E HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. MEENAKSHI OVE RSEAS PVT. LTD., (SUPRA) IN PARAS 19 TO 38 HELD AS UNDER : 19. A PERUSAL OF THE REASONS AS RECORDED BY THE AO REVEALS THAT THERE ARE THREE PARTS TO IT. IN THE FI RST PART, THE AO 8 HAS REPRODUCED THE PRECISE INFORMATION HE HAS RECEI VED FROM THE INVESTIGATION WING OF THE REVENUE. THIS INFORMATION IS IN THE FORM OF DETAILS OF THE AMOUNT OF CREDIT RECEIVED, T HE PAYER, THE PAYEE, THEIR RESPECTIVE BANKS, AND THE CHEQUE NUMBE R. THIS INFORMATION BY ITSELF CANNOT BE SAID TO BE TANGIBLE MATERIAL. 20. COMING TO THE SECOND PART, THIS TELLS US WHAT THE AO DID WITH THE INFORMATION SO RECEIVED. HE SAYS: 'THE INFORMATION SO RECEIVED HAS BEEN GONE THROUGH.' ONE WOULD HAVE EXPECTED HIM TO POINT OUT WHAT HE FOUND WHEN HE WENT THROUGH THE INFORMATION. IN OTHER WORDS, WHAT IN SUCH INFORMATI ON LED HIM TO FORM THE BELIEF THAT INCOME ESCAPED ASSESSMENT. BUT THIS IS ABSENT. HE STRAIGHTAWAY RECORDS THE CONCLUSION THAT 'THE ABOVE SAID INSTRUMENTS ARE IN THE NATURE OF ACCOMMODATION ENTRY WHICH THE ASSESSEE HAD TAKEN AFTER PAYING UNACCOUNT ED CASH TO THE ACCOMMODATION ENTRY GIVEN (SIC GIVER)'. THE AO ADDS THAT THE SAID ACCOMMODATION WAS 'A KNOWN ENTRY OPERATOR' THE SOURCE BEING 'THE REPORT OF THE INVESTIGATION WING' . 21. THE THIRD AND LAST PART CONTAINS THE CONCLUSI ON DRAWN BY THE AO THAT IN VIEW OF THESE FACTS, 'THE A LLEGED 9 TRANSACTION IS NOT THE BONAFIDE ONE. THEREFORE, I H AVE REASON TO BE BELIEVE THAT AN INCOME OF RS.5,00,000 HAS ESCAPE D ASSESSMENT IN THE AY 2004-05 DUE TO THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR ITS ASSESSMENT... ' 22. AS RIGHTLY POINTED OUT BY THE ITAT, THE 'REAS ONS TO BELIEVE' ARE NOT IN FACT REASONS BUT ONLY CONCLUSIO NS, ONE AFTER THE OTHER. THE EXPRESSION 'ACCOMMODATION ENTRY' IS USED TO DESCRIBE THE INFORMATION SET OUT WITHOUT EXPLAINING THE BASIS FOR ARRIVING AT SUCH A CONCLUSION. THE STATEMENT THAT T HE SAID ENTRY WAS GIVEN TO THE ASSESSEE ON HIS PAYING 'UNACCOUNTE D CASH' IS ANOTHER CONCLUSION THE BASIS FOR WHICH IS NOT DISCL OSED. WHO IS THE ACCOMMODATION ENTRY GIVER IS NOT MENTIONED. HOW HE CAN BE SAID TO BE 'A KNOWN ENTRY OPERATOR' IS EVEN MORE MY STERIOUS. CLEARLY THE SOURCE FOR ALL THESE CONCLUSIONS, ONE A FTER THE OTHER, IS THE INVESTIGATION REPORT OF THE DIT. NOTHING FRO M THAT REPORT IS SET OUT TO ENABLE THE READER TO APPRECIATE HOW THE CONCLUSIONS FLOW THEREFROM. 10 23. THUS, THE CRUCIAL LINK BETWEEN THE INFORMATIO N MADE AVAILABLE TO THE AO AND THE FORMATION OF BELIEF IS ABSENT. THE REASONS MUST BE SELF EVIDENT, THEY MUST SPEAK FOR T HEMSELVES. THE TANGIBLE MATERIAL WHICH FORMS THE BASIS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT MUST BE EVIDENT FROM A READING OF THE REASONS. THE ENTIRE MATERIAL NEED NOT BE SET OUT. HOWEVER, SOMETHING THEREIN WHICH IS CRITICAL T O THE FORMATION OF THE BELIEF MUST BE REFERRED TO. OTHERW ISE THE LINK GOES MISSING. 24. THE REOPENING OF ASSESSMENT UNDER SECTION 147 IS A POTENT POWER NOT TO BE LIGHTLY EXERCISED. IT CERTAI NLY CANNOT BE INVOKED CASUALLY OR MECHANICALLY. THE HEART OF THE PROVISION IS THE FORMATION OF BELIEF BY THE AO THAT INCOME HAS E SCAPED ASSESSMENT. THE REASONS SO RECORDED HAVE TO BE BASE D ON SOME TANGIBLE MATERIAL AND THAT SHOULD BE EVIDENT FROM R EADING THE REASONS. IT CANNOT BE SUPPLIED SUBSEQUENTLY EITHER DURING THE PROCEEDINGS WHEN OBJECTIONS TO THE REOPENING ARE CO NSIDERED OR EVEN DURING THE ASSESSMENT PROCEEDINGS THAT FOLLOW. THIS IS THE 11 BARE MINIMUM MANDATORY REQUIREMENT OF THE FIRST PAR T OF SECTION 147 (1) OF THE ACT. 25. AT THIS STAGE IT REQUIRES TO BE NOTED THAT SI NCE THE ORIGINAL ASSESSMENT WAS PROCESSED UNDER SECTION 143 (1) OF THE ACT, AND NOT SECTION 143 (3) OF THE ACT, THE PROVISO TO SECTION 147 WILL NOT APPLY. IN OTHER WORDS, EVEN THOUGH THE REO PENING IN THE PRESENT CASE WAS AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT AY, IT WAS NOT NECESSARY FOR THE AO TO SHOW THAT THERE WAS ANY FAILURE TO DISCLOSE FULLY OR TRULY AL L MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. 26. THE FIRST PART OF SECTION 147 (1) OF THE ACT REQUIRES THE AO TO HAVE 'REASONS TO BELIEVE' THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS THUS FORMATION OF REASON TO BELIEVE THAT IS SUBJECT MATTER OF EXAMINATION. THE AO BEING A QUASI JUDICIAL AUTHORITY IS EXPECTED TO ARRIVE AT A SUBJECTIVE SATISFACTION INDEPENDENTLY ON AN OBJECTIVE CRITERIA . WHILE THE REPORT OF THE INVESTIGATION WING MIGHT CONSTITU TE THE MATERIAL ON THE BASIS OF WHICH HE FORMS THE REASONS TO BELIE VE THE PROCESS OF ARRIVING AT SUCH SATISFACTION CANNOT BE A MERE 12 REPETITION OF THE REPORT OF INVESTIGATION. THE RECO RDING OF REASONS TO BELIEVE AND NOT REASONS TO SUSPECT IS THE PRE- C ONDITION TO THE ASSUMPTION OF JURISDICTION UNDER SECTION 147 OF THE ACT. THE REASONS TO BELIEVE MUST DEMONSTRATE LINK BETWEEN TH E TANGIBLE MATERIAL AND THE FORMATION OF THE BELIEF OR THE REA SON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 27. EACH CASE OBVIOUSLY TURNS ON ITS OWN FACTS AN D NO TWO CASES ARE IDENTICAL. HOWEVER, THERE HAVE BEEN A LARGE NUMBER OF CASES EXPLAINING THE LEGAL REQUIREMENT TH AT REQUIRES TO BE SATISFIED BY THE AO FOR A VALID ASSUMPTION OF JURISDICTION UNDER SECTION 147 OF THE ACT TO REOPEN A PAST ASSESSMENT. 28.1. IN SIGNATURE HOTELS PVT. LTD. V. INCOME TAX OFFICER (SUPRA), THE REASONS FOR REOPENING AS RECORDED BY THE AO IN A PROFORMA AND PLACED BEFORE THE CIT FOR APPROVA L READ THUS: '11. REASONS FOR THE BELIEF THAT INCOME HAS ESCAP ED ASSESSMENT.- INFORMATION IS RECEIVED FROM THE DIT ( INV.-1), NEW DELHI THAT THE ASSESSEE HAS INTRODUCED MONEY AM OUNTING TO RS. 5 LAKH DURING THE F.Y. 2002-03 RELATING TO A .Y. 2003-04. DETAILS ARE CONTAINED IN ANNEXURE. AS PER INFORMATI ON AMOUNT 13 RECEIVED IS NOTHING BUT ACCOMMODATION ENTRY AND ASS ESSEE IS A BENEFICIARY.' 28.2. THE ANNEXURE TO THE SAID PROFORMA GAVE THE NAME OF THE BENEFICIARY, THE VALUE OF ENTRY TAKEN, THE NUMB ER OF THE INSTRUMENT BY WHICH ENTRY WAS TAKEN, THE DATE ON WH ICH THE ENTRY WAS TAKEN, NAME OF THE ACCOUNT HOLDER OF THE BANK FROM WHICH THE CHEQUE WAS ISSUED, THE ACCOUNT NUMBER AND SO ON. 28.3. ANALYSING THE ABOVE REASONS TOGETHER WITH T HE ANNEXURE, THE COURT OBSERVED: '14. THE FIRST SENTENCE OF THE REASONS STATES THAT INFORMATION HAD BEEN RECEIVED FROM DIRECTOR OF INCOME-TAX (INVE STIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS. 5 LACS DURING FINANCIAL YEAR 2002-03 AS PER THE DETAI LS GIVEN IN ANNEXURE. THE SAID ANNEXURE, REPRODUCED ABOVE, RELA TES TO A CHEQUE RECEIVED BY THE PETITIONER ON 9TH OCTOBER, 2 002 FROM SWETU STONE PV FROM THE BANK AND THE ACCOUNT NUMBER MENTIONED THEREIN. THE LAST SENTENCE RECORDS THAT A S PER THE INFORMATION, THE AMOUNT RECEIVED WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFI CIARY. 15. THE AFORESAID REASONS DO NOT SATISFY THE REQUIR EMENTS OF SECTION 147 OF THE ACT. THE REASONS AND THE INFORMATION REFERRED TO IS EXTREMELY SCANTY AND VAGUE. THERE IS NO REFERENCE 14 TO ANY DOCUMENT OR STATEMENT, EXCEPT ANNEXURE, WHIC H HAS BEEN QUOTED ABOVE. ANNEXURE CANNOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWS OR ESTABLISHES N EXUS OR LINK WHICH DISCLOSES ESCAPEMENT OF INCOME. ANNEXURE IS N OT A POINTER AND DOES NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, IT IS APPARENT THAT THE ASSESSING OFFICER DID NOT APPL Y HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS AND M ATERIAL OF THE INFORMATION. THE ASSESSING OFFICER ACCEPTED THE PLEA ON THE BASIS OF VAGUE INFORMATION IN A MECHANICAL MANNER. THE COMMISSIONER ALSO ACTED ON THE SAME BASIS BY MECHAN ICALLY GIVING HIS APPROVAL. THE REASONS RECORDED REFLECT T HAT THE ASSESSING OFFICER DID NOT INDEPENDENTLY APPLY HIS M IND TO THE INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME-TA X (INVESTIGATION) AND ARRIVE AT A BELIEF WHETHER OR N OT ANY INCOME HAD ESCAPED ASSESSMENT.' 28.4. THE COURT IN SIGNATURE HOTELS PVT. LTD. V. INCOME TAX OFFICER (SUPRA) QUASHED THE PROCEEDINGS UNDER SECTION 148 OF THE ACT. THE FACTS IN THE PRESENT CASE ARE MORE OR LESS SIMILAR. THE PRESENT CASE IS THERE FORE COVERED AGAINST THE REVENUE BY THE AFOREMENTIONED DECISION. 29.1. THE ABOVE DECISION CAN BE CONTRASTED WITH TH E DECISION IN AGR INVESTMENT V. ADDITIONAL COMMISSIONER OF 15 INCOME TAX (SUPRA), WHERE THE 'REASONS TO BELIEVE' READ AS UNDER: 'CERTAIN INVESTIGATIONS WERE CARRIED OUT BY THE DIR ECTORATE OF INVESTIGATION, JHANDEWALAN, NEW DELHI IN RESPECT OF THE BOGUS/ACCOMMODATION ENTRIES PROVIDED BY CERTAIN INDIVIDUALS/COMPANIES. THE NAME OF THE ASSESSEE FIG URES AS ONE OF THE BENEFICIARIES OF THESE ALLEGED BOGUS TRANSAC TIONS GIVEN BY THE DIRECTORATE AFTER MAKING THE NECESSARY ENQUIRIE S. IN THE SAID INFORMATION, IT HAS BEEN INTER-ALIA REPORTED AS UND ER: 'ENTRIES ARE BROADLY TAKEN FOR TWO PURPOSES: 1. TO PLOUGH BACK UNACCOUNTED BLACK MONEY FOR THE P URPOSE OF BUSINESS OR FOR PERSONAL NEEDS SUCH AS PURCHASE OF ASSETS ETC., IN THE FORM OF GIFTS, SHARE APPLICATION MONEY, LOANS E TC. 2. TO INFLATE EXPENSE IN THE TRADING AND PROFIT AND LOSS ACCOUNT SO AS TO REDUCE THE REAL PROFITS AND THEREBY PAY LE SS TAXES. IT HAS BEEN REVEALED THAT THE FOLLOWING ENTRIES HAV E BEEN RECEIVED BY THE ASSESSEE:....' 29.2. THE DETAILS OF SIX ENTRIES WERE THEN SET OUT IN THE ABOVE 'REASONS'. THESE INCLUDED NAME OF THE BENEFIC IARY, THE BENEFICIARY'S BANK, VALUE OF THE ENTRY TAKEN, INSTR UMENT NUMBER, DATE, NAME OF THE ACCOUNT IN WHICH ENTRY WAS TAKEN AND THE 16 ACCOUNT FROM WHERE THE ENTRY WAS GIVEN THE DETAILS OF THOSE BANKS. THE REASONS THEN RECORDED: 'THE TRANSACTIONS INVOLVING RS. 27,00,000/-, MENTIO NED IN THE MANNER ABOVE, CONSTITUTES FRESH INFORMATION IN RESP ECT OF THE ASSESSEE AS A BENEFICIARY OF BOGUS ACCOMMODATION EN TRIES PROVIDED TO IT AND REPRESENTS THE UNDISCLOSED INCOM E/INCOME FROM OTHER SOURCES OF THE ASSESSEE COMPANY, WHICH H AS NOT BEEN OFFERED TO TAX BY THE ASSESSEE TILL ITS RETURN FILE D. ON THE BASIS OF THIS NEW INFORMATION, I HAVE REASON TO BELIEVE THAT THE INCOME OF RS.27,00,000/- HAS ESCAPED ASSES SMENT AS DEFINED BY SECTION 147 OF THE INCOME TAX ACT. THEREFORE, THIS IS A FIT CASE FOR THE ISSUANCE OF THE NOTICE UNDER SECTION 148 .' 29.3. THE COURT WAS NOT INCLINED TO INTERFERE IN T HE ABOVE CIRCUMSTANCES IN EXERCISE OF ITS WRIT JURISDICTION TO QUASH THE PROCEEDINGS. A CAREFUL PERUSAL OF THE ABOVE REASONS REVEALS THAT THE AO DOES NOT MERELY REPRODUCE THE INFORMATION BU T TAKES THE EFFORT OF REVEALING WHAT IS CONTAINED IN THE INVEST IGATION REPORT SPECIFIC TO THE ASSESSEE. IMPORTANTLY HE NOTES THAT THE INFORMATION OBTAINED WAS 'FRESH' AND HAD NOT BEEN O FFERED BY THE ASSESSEE TILL ITS RETURN PURSUANT TO THE NOTICE ISSUED TO IT WAS FILED. THIS IS A CRUCIAL FACTOR THAT WENT INTO THE FORMATION OF 17 THE BELIEF. IN THE PRESENT CASE, HOWEVER, THE AO HA S MADE NO EFFORT TO SET OUT THE PORTION OF THE INVESTIGATION REPORT WHICH CONTAINS THE INFORMATION SPECIFIC TO THE ASSESSEE. HE DOES NOT ALSO EXAMINE THE RETURN ALREADY FILED TO ASCERTAIN IF THE ENTRY HAS BEEN DISCLOSED THEREIN. 30.1. IN COMMISSIONER OF INCOME TAX, NEW DELHI V. HIGHGAINFINVEST (P) LIMITED (2007) 164 TAXMAN 142 (DEL) RELIED UPON BY MR. CHAUDHARY, THE REASONS TO BELIEVE READ AS UNDER: 'IT HAS BEEN INFORMED BY THE ADDITIONAL DIRECTOR OF INCOME TAX (INVESTIGATION), UNIT VII, NEW DELHI VIDE LETTER NO . 138 DATED 8 TH APRIL 2003 THAT THIS COMPANY WAS INVOLVED IN THE GI VING AND TAKING BOGUS ENTRIES/ TRANSACTIONS DURING THE FINANCIAL YE AR 1996-97, AS PER THE DEPOSITION MADE BEFORE THEM BY SHRI SANJAY RAST OGI, CA DURING A SURVEY OPERATION CONDUCTED AT HIS OFFICE PREMISES B Y THE INVESTIGATION WING. THE PARTICULARS OF SOME OF THE TRANSACTION OF THIS NATURE ARE AS UNDER: DATE PARTICULARS OF CHEQUEDEBIT AMT. CREDIT AMT 18.11.96 305002 5 ,00,000 THROUGH THE BANK ACCOUNT NO. CA 4266 OF M/S. MEHRAM EXPORTS PVT. LTD. IN THE PNB, NEW ROHTAK ROAD, NEW DELHI. 18 NOTE: IT IS NOTED THAT THERE MIGHT BE MORE SUCH ENT RIES APART FROM THE ABOVE. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1997-9 8 WAS FILED BY THE ASSESSEE ON 4TH MARCH 1998 WHICH WAS ACCEPTED UNDER SECTION 143 (1) AT THE DECLARED INCOME OF RS. 4,200. IN VIEW O F THESE FACTS, I HAVE REASON TO BELIEVE THAT THE AMOUNT OF SUCH TRAN SACTIONS PARTICULARLY THAT OF RS. 5,00,000 (AS MENTIONED ABO VE) HAS ESCAPED THE ASSESSMENT WITHIN THE MEANING OF THE PROVISO TO SECTION 147 AND CLAUSE (B) TO THE EXPLANATION 2 OF THIS SECTION. SUBMITTED TO THE ADDITIONAL CIT, RANGE -12, NEW DEL HI FOR APPROVAL TO ISSUE NOTICE UNDER SECTION 148 FOR THE ASSESSMENT YEAR 1997-98, IF APPROVED.' 30.2. THE AO WAS NOT MERELY REPRODUCING THE INFOR MATION RECEIVED FROM THE INVESTIGATION BUT TOOK THE EFFORT OF REFERRING TO THE DEPOSITION MADE DURING THE SURVEY BY THE CHARTE RED ACCOUNTANT THAT THE ASSESSEE COMPANY WAS INVOLVED I N THE GIVING AND TAKING OF BOGUS ENTRIES. THE AO THUS IND ICATED WHAT THE TANGIBLE MATERIAL WAS WHICH ENABLED HIM TO FORM THE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT. IT WAS IN THOSE CIRCUMSTANCES THAT IN THE CASE, THE COURT CAME TO THE CONCLUSION THAT THERE WAS PRIMA FACIE MATERIAL FOR THE AO TO 19 COME TO THE CONCLUSION THAT THE ASSESSEE HAD NOT MA DE A FULL AND TRUE DISCLOSURE OF ALL THE MATERIAL FACTS RELEV ANT FOR THE ASSESSMENT. 31. IN COMMISSIONER OF INCOME TAX V. G&G PHARMA (SUPRA) THERE WAS A SIMILAR INSTANCE OF REOPENING OF ASSESSMENT BY THE AO BASED ON THE INFORMATION RECEI VED FROM THE DIT (I). THERE AGAIN THE DETAILS OF THE ENTRY P ROVIDED WERE SET OUT IN THE 'REASONS TO BELIEVE'. HOWEVER, THE C OURT FOUND THAT THE AO HAD NOT MADE ANY EFFORT TO DISCUSS THE MATER IAL ON THE BASIS OF WHICH HE FORMED PRIMA FACIE VIEW THAT INCO ME HAD ESCAPED ASSESSMENT. THE COURT HELD THAT THE BASIC R EQUIREMENT OF SECTION 147 OF THE ACT THAT THE AO SHOULD APPLY HIS MIND IN ORDER TO FORM REASONS TO BELIEVE THAT INCOME HAD ES CAPED ASSESSMENT HAD NOT BEEN FULFILLED. LIKEWISE IN CIT-4 V. INDEPENDENT MEDIA P. LIMITED (SUPRA) THE COURT IN SIMILAR CIRCUMSTANCES INVALIDATED THE INITIATION OF THE PRO CEEDINGS TO REOPEN THE ASSESSMENT UNDER SECTION 147 OF THE ACT. 32. IN ORIENTAL INSURANCE COMPANY LIMITED V. COMMISSIONER OF INCOME TAX 378 ITR 421 (DEL) IT WAS HELD THAT 'THEREFORE, EVEN IF IT IS ASSUMED THAT, IN FACT, TH E ASSESSEES 20 INCOME HAS ESCAPED ASSESSMENT, THE AO WOULD HAVE NO JURISDICTION TO ASSESS THE SAME IF HIS REASONS TO B ELIEVE WERE NOT BASED ON ANY COGENT MATERIAL. IN ABSENCE OF THE JUR ISDICTIONAL PRE-CONDITION BEING MET TO REOPEN THE ASSESSMENT, T HE QUESTION OF ASSESSING OR REASSESSING INCOME UNDER SECTION 147 OF THE ACT WOULD NOT ARISE.' 33. IN RUSTAGI ENGINEERING UDYOG (P) LIMITED (SUP RA), IT WAS HELD THAT '...THE IMPUGNED NOTICES MUST ALSO BE SET ASIDE AS THE AO HAD NO REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS HAD ESCA PED ASSESSMENT. CONCEDEDLY, THE AO HAD NO TANGIBLE MATE RIAL IN REGARD TO ANY OF THE TRANSACTIONS PERTAINING TO THE RELEVANT ASSESSMENT YEARS. ALTHOUGH THE AO MAY HAVE ENTERTAI NED A SUSPICION THAT THE ASSESSEES INCOME HAS ESCAPED AS SESSMENT, SUCH SUSPICION COULD NOT FORM THE BASIS OF INITIATI NG PROCEEDINGS UNDER SECTION 147 OF THE ACT. A REASON TO BELIEVE - NOT REASON TO SUSPECT - IS THE PRECONDITION FOR EXERCISE OF JURIS DICTION UNDER SECTION 147 OF THE ACT. ' 21 34. RECENTLY IN AGYA RAM V. CIT (SUPRA), IT WAS EMPHASIZED THAT THE REASONS TO BELIEVE 'SHOULD HAVE A LINK WITH AN OBJECTIVE FACT IN THE FORM OF INFORMATION OR MAT ERIALS ON RECORD...' IT WAS FURTHER EMPHASIZED THAT 'MERE ALL EGATION IN REASONS CANNOT BE TREATED EQUIVALENT TO MATERIAL IN EYES OF LAW. MERE RECEIPT OF INFORMATION FROM ANY SOURCE WOULD N OT BY ITSELF TANTAMOUNT TO REASON TO BELIEVE THAT INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENTS.' 35. IN THE DECISION OF THIS COURT DATED 16TH MARC H 2016 IN W.P. (C) NO. 9659 OF 2015 ( RAJIV AGARWAL V. CIT ) IT WAS EMPHASIZED THAT 'EVEN IN CASES WHERE THE AO COMES A CROSS CERTAIN UNVERIFIED INFORMATION, IT IS NECESSARY FOR HIM TO TAKE FURTHER STEPS, MAKE INQUIRIES AND GARNER FURTHER MA TERIAL AND IF SUCH MATERIAL INDICATES THAT INCOME OF AN ASSESSEE HAS ESCAPED ASSESSMENT, FORM A BELIEF THAT INCOME OF TH E ASSESSEE HAS ESCAPED ASSESSMENT.' 36. IN THE PRESENT CASE, AS ALREADY NOTICED, THE REASONS TO BELIEVE CONTAIN NOT THE REASONS BUT THE CONCLUSI ONS OF THE AO ONE AFTER THE OTHER. THERE IS NO INDEPENDENT APPLIC ATION OF MIND BY THE AO TO THE TANGIBLE MATERIAL WHICH FORMS THE BASIS OF THE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT. THE CONCLUSIONS OF THE AO ARE AT BEST A REPRODUCTION OF THE CONCLUSION IN THE INVESTIGATION REPORT. INDEED IT I S A 'BORROWED SATISFACTION'. THE REASONS FAIL TO DEMONSTRATE THE LINK BETWEEN 22 THE TANGIBLE MATERIAL AND THE FORMATION OF THE REAS ON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 37. FOR THE AFOREMENTIONED REASONS, THE COURT IS SATISFIED THAT IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, NO ERROR HAS BEEN COMMITTED BY THE ITAT IN THE IMPUGNE D ORDER IN CONCLUDING THAT THE INITIATION OF THE PROCEEDINGS U NDER SECTION 147 / 148 OF THE ACT TO REOPEN THE ASSESSMENTS FOR THE AYS I N QUESTION DOES NOT SATISFY THE REQUIREMENT OF LAW. 38. THE QUESTION FRAMED IS ANSWERED IN THE NEGATI VE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL IS, ACCORDINGLY, DISMISSED BUT WITH NO ORDERS AS TO COSTS. 5.2. THE REPORT OF THE INVESTIGATION WING MIGHT HA VE CONSTITUTED MATERIAL ON THE BASIS OF WHICH THE A.O. FORMED THE REASONS TO BELIEVE, THE PROCESS OF ARRIVING AT SUCH SATISFACTION, WOULD NOT BE A MERE REPETITION OF THE REPORT OF INV ESTIGATION WING. IN THE ASSESSEES CASE, THE CRUCIAL LINK BETWEEN TH E INFORMATION MADE AVAILABLE TO THE A.O. AND THE FORMATION OF THE BELIEF WAS ABSENT. THE REASONS TO BELIEVE RECORDED WERE NOT REASONS BUT ONLY CONCLUSIONS AND THE REPRODUCTION OF THE CONCLUSION IN THE INVESTIGATION REPORT RECEIVED FROM THE DIRECTOR OF INVESTIGATION. IT WAS A BORROWED SATISFACTION. THE EXPRESSION ACCOMMODATION ENTRY WAS USED TO DESCRIBE THE INFORMATION SET-OUT WITHOUT EXPLAINING 23 THE BASIS FOR ARRIVING AT SUCH CONCLUSION. THE BASI S FOR THE STATEMENT THAT ENTRY WAS GIVEN TO THE ASSESSEE TO I NTRODUCE ITS UNACCOUNTED MONEY, WAS NOT DISCLOSED. WHO WAS THE ACCOMMODATION ENTRY GIVER AND HOW HE COULD BE SAID TO BE AN ENTRY OPERATOR WERE NOT MENTIONED. THE SOURCE FOR ALL THE CONCLUSION WAS THE INVESTIGATION REPORT. THE TANGIBLE MATERIAL WHI CH FORMED THE BASIS, FOR THE BELIEF THAT INCOME HAD ESCAPED THE ASSESSMENT MUST BE EVIDENT FROM READING OF THE REASONS. LEARNED COU NSEL FOR THE ASSESSEE FILED COPY OF THE LEDGER ACCOUNT AND LETTE RS OF THE PARTIES WHO ARE NAMED IN THE REASONS RECORDED UNDER SECTION 148 OF THE I.T. ACT, TO SHOW THAT THE AMOUNTS WERE DUE TO THE ASSESSEE FROM EARLIER YEARS AND THE AMOUNTS IN QUESTION ARE REPAY MENT OF THE DEBTS IN ASSESSMENT YEAR UNDER APPEAL. THE A.O. REC ORDED INCORRECT FACTS IN REASONS FOR REOPENING OF ASSESSMENT. THE R EASONS FAILED TO DEMONSTRATE THAT THE LINK BETWEEN THE TANGIBLE MATE RIAL AND THE FORMATION OF THE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE A.O. HAD NOT INDEPENDENTLY CONSIDER ED THE TANGIBLE MATERIAL WHICH FORMED THE BASIS FOR THE RE ASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. THE A.O. MERELY REPRODUCED INFORMATION RECEIVED FROM INVESTIGATION WING AND EN QUIRIES 24 CONDUCTED BY THEM AND THEN, STRAIGHTAWAY CAME TO TH E CONCLUSION THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSME NT. IN THE PRESENT CASE, AS ALREADY NOTICED, THE REASONS TO BE LIEVE CONTAINED NOT THE REASONS BUT THE CONCLUSION OF THE A.O. THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE A.O. TO THE TANGIBLE MATERIAL WHICH FORM THE BASIS OF THE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE CONCLUSION OF THE A.O, AT B EST, ARE REPRODUCTION OF THE CONCLUSION OF THE INVESTIGATION REPORT. THUS, IT IS CLEARLY A BORROWED SATISFACTION. THE ISSUE IS, T HEREFORE, COVERED IN FAVOUR OF THE ASSESSEE BY JUDGMENT OF THE HONBLE D ELHI HIGH COURT IN THE CASE OF PR. CIT VS. GANDG PHARMA INDIA LTD., (SUPRA) AND MEENAKSHI OVESEAS PVT. LTD., (SUPRA) AS WELL AS ITA T, SMC, DELHI DECISION DATED 13.9.2017 PASSED IN ITA NO. 915/DEL/ 2017 FOR THE ASSESSMENT YEAR 2000-01 IN ASSESSEES OWN CASE. TH E REOPENING OF THE ASSESSMENT, THUS, IS BAD IN LAW AND CANNOT BE S USTAINED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. I, ACCORDINGLY , SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH THE REOPE NING OF THE ASSESSMENT UNDER SECTION 147/148 OF THE I.T. ACT. R ESULTANTLY, THE ADDITIONS MADE IN THE RE-ASSESSMENT ORDER STANDS DE LETED. IN VIEW 25 OF THESE FINDINGS, THERE IS NO NEED TO DECIDE THE A PPEAL OF ASSESSEE ON MERITS. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 13-03-2018. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATE: 13-03-2018 COPY TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASST. REGISTRAR : ITAT DELHI BENCHES : DELHI.