SJM International Ltd., New Delhi V. DCIT, Circle- 24(20, New Delhi

ITA 3762/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9088 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 18-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RAKASH DUBEY SENIOR
• Keywords: Unexplained cash credit; Search and seizure; Tangible material; Difference of opinion; Accommodation entries; Reason to believe; Change of opinion; Set aside
• Section: 143(3); 234B; 143(1); 139(1); 13; 147; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.3762/DEL./2018 (ASSESSMENT YEAR : 2009-10) M/S. SJM INTERNATIONAL LTD., VS. DCIT, CIRCLE 24( 2), 561/2, UDYOG NAGAR, NEW DELHI. SWARN PARK, MUNDKA, NEW DELHI 110 041. (PAN : AAACS3173M) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. YADAV, ADVOCATE REVENUE BY : SHRI PRAKASH DUBEY, SENIOR DR DATE OF HEARING : 12.07.2021 DATE OF ORDER : 09.08.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. SJM INTERNATIONAL LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOU GHT TO SET ASIDE THE IMPUGNED ORDER DATED 08.03.2018 PASSED BY THE C OMMISSIONER OF INCOME-TAX (APPEALS)-28, NEW DELHI QUA THE ASSES SMENT YEAR 2009-10 ON THE GROUNDS INTER ALIA THAT :- ITA NO.3762/DEL./2018 2 1. THAT THE ORDER OF CIT(A) IS BAD IN LAW AND ON FACTS. 2. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, THE ASSESSMENT FRAMED BY THE AO U/S 147/143(3) IS VOID AB INITIO AS THE JURISDICTION ASSUMED BY THE AO U/S 147 IS BAD I N LAW AND ON FACTS. 3. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, THE JURISDICTION ASSUMED BY THE AO U/S 147, IS BAD IN L AW, AS THE AO HAS PRESUMED EXISTENCE OF NON-EXISTING FACTS/ INCOR RECT FACTS. 4. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE AO HAS ERRED IN RELYING ON THE STATEMENT OF SH. ASE EM GUPTA, IGNORING THAT STATEMENTS RECORDED ON OATH UNDER SUR VEY HAVE NO EVIDENTIARY VALUE. 5. THE AO HAS FURTHER ERRED IN OVERLOOKING THE GUID ELINES OF CBDT VIS-A-VIS RELYING ON THE STATEMENT OF THIRD PA RTY WITHOUT THERE BEING ANY CROSS EXAMINATION. 6. THE JURISDICTION ASSUMED BY THE AO U/S 147 READ WITH 148 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELE VANT ASSESSMENT YEAR, IS BAD IN LAW AS THERE IS NO WHISPER IN THE R EASONS RECORDED THAT THERE IS FAILURE ON THE PART OF ASSESSEE TO DI SCLOSE THE MATERIAL FACTS FULLY AND TRULY, PARTICULARLY WHERE ORIGINAL ASSESSMENT HAS BEEN MADE U/S 143(3) OF THE ACT. . 7. THE JURISDICTION ASSUMED BY THE AO U/S 147 READ WITH 148 IS BAD IN LAW AS IT IS A CASE REOPENED AFTER THE EX PIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, AND HENCE IT IS INCUMBENT ON AO TO SATISFY THE REQUIREMENTS OF THE PROVISO OF SECTION 147. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE A O HAS FAILED TO APPRECIATE THAT FOR ASSUMING JURISDICTION U/S 147 THERE MUST BE REASON TO BELIEVE AND THE JURISDICTION CANN OT BE ASSUMED FOR SCRUTINISING THE RETURNS FILED U/S 139(1) OF TH E ACT. 9. WITHOUT PREJUDICE TO THE ABOVE IT IS SETTLED POS ITION OF LAW THAT JURISDICTION U/S 147 CANNOT BE ASSUMED FOR REA PPRAISAL OF THE ALREADY EXAMINED FACTS, AS PER THE PRINCIPLE OF CHA NGE OF OPINION. 10. WITHOUT PREJUDICE TO THE ABOVE THE SANCTION ACC ORDED BY THE CIT WAS MECHANICAL AS IS EVIDENT FROM THE SANCT ION GRANTED U/S 151 OF THE ACT. 11. THE CIT (A) HAS ERRED IN SUSTAINING THE ADDITIO N OF RS.50,00,000/- AS UNEXPLAINED CASH CREDIT U/S 68 IG NORING THAT THE ASSESSEE HAS SUCCESSFULLY DISCHARGED HIS BURDEN AND THE AO FAILED TO ENFORCE THE ATTENDANCE AS PER THE PROVISIONS OF SECTION 131 OF THE ACT. ITA NO.3762/DEL./2018 3 12. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN SU STAINING THE ADDITIONS MADE BY THE AO IGNORING THAT AO HAS F AILED TO REFUTE THE DOCUMENTARY EVIDENCE FILED BY ASSESSEE V IS-A-VIS ESTABLISHING THE INGREDIENTS OF SECTION 68. 13. THE CIT (A) HAS ERRED IN SUSTAINING THE DIRECTI ON TO CHARGE INTEREST U/S 234B AND 234A. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY FILED RE TURN OF INCOME FOR AY 2009-10 ON 29.09.2009 WHICH WAS PROCESSED UN DER SECTION 143 (1) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT). THEREAFTER, ASSESSEES CASE WAS REASSESSED AT THE R ETURNED INCOME OF RS.58,49,432/- ON 27.03.2014 U/S 147/143(3) OF T HE ACT. AGAIN, AO RECEIVED INFORMATION FROM INVESTIGATION WING VID E LETTER DATED 15.03.2012 THAT ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIES AMOUNTING TO RS.50,00,000/- UNDER THE GARB OF SHARE CAPITAL/SHARE PREMIUM FROM ASEEM GUPTA GROUP, WHOSE RESIDENTIAL A ND BUSINESS PREMISES WERE SEARCHED/SURVEYED BY THE INVESTIGATIO N WING ON 26.03.2010. DETAILS OF SHARE CAPITAL/SHARE PREMIUM ARE AS UNDER :- NAME OF COMPANY USED FOR PROVIDING ACCOMMODATION ENTRY CHEQUE/ INSTRUMENT CHEQUE DATE BANK NAME AND ADDRESS AMOUNT MODERATE CREDIT CORP LTD. RTGS 09.03.2009 CORP BANK, CP, NEW DELHI 17,00,000 MODERATE CREDIT CORP LTD. RTGS 12.03.2009 CORP BANK, CP, NEW DELHI 8,00,000 MODERATE CREDIT CORP LTD. RTGS 24.03.2009 CORP BANK, CP, NEW DELHI 25,00,000 ITA NO.3762/DEL./2018 4 3. ACCORDINGLY, AO HAS ISSUED A NOTICE U/S 148 OF T HE ACT ANNEXED WITH REASONS RECORDED. ON RECEIPT OF NOTIC E U/S 148 OF THE ACT, ASSESSEE HAS FILED RETURN OF INCOME AND HAS AL SO FILED REPLY TO EXPLAIN THE RECEIPT OF SHARE APPLICATION MONEY. DE CLINING THE CONTENTIONS RAISED BY THE ASSESSEE, AO PROCEEDED TO CONCLUDE THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES AMOUNT ING TO RS.50,00,000/-, THE IMMEDIATE SOURCE OF THIS AMOUNT WAS FOUND IN THE ENTITIES CONTROLLED BY ASEEM GUPTA AND THEREBY MADE AN ADDITION OF RS.50,00,000/- AS THE ASSESSEE HAS FAIL ED TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND ASSESSED THE TO TAL INCOME AT RS.1,08,49,430/-. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING APPEAL WHO HAS CONFIRMED THE ADDITION BY DIS MISSING THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME U P BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) CONTENDED INTER ALIA THAT AO WHILE RECORDING THE REASONS FOR REOPENING HAS RECORDED IN CORRECT FACTS; ITA NO.3762/DEL./2018 5 THAT AO HAS REOPENED THE ASSESSMENT WITHOUT APPLYIN G INDEPENDENT MIND; THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS FULLY AND TRULY DURING THE ASSESSMENT PROCEEDINGS; THAT THE LD. CIT (A) HAS ALSO NOT APPL IED HIS INDEPENDENT MIND RATHER ACCORDED MECHANICAL APPROVA L; THAT REOPENING IN THIS CASE AMOUNTS TO CHANGE OF OPINIO N AND RELIED UPON THE DECISIONS RENDERED BY HONBLE SUPREME COUR T, HONBLE HIGH COURTS AND COORDINATE BENCH OF THE TRIBUNAL TO BE DISCUSSED IN THE SUCCEEDING PARAGRAPHS. 7. LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELIE D UPON THE ORDER PASSED BY THE AO AS WELL AS LD. CIT (A) AND F URTHER CONTENDED INTER ALIA THAT WHEN THE ASSESSEE HAS NOT DISCLOSED SHARE PREMIUM RECEIPT, THE INFORMATION SUPPLIED BY INVEST IGATION WING FROM THE CASE OF ASEEM GUPTA WAS AN ADDITIONAL FACT ON THE BASIS OF WHICH ASSESSMENT HAS BEEN FRAMED; AND THAT VALID APPROVAL HAS BEEN ACCORDED BY THE LD. ADDL. CIT/PR.CIT AFTER PER USING THE ENTIRE RECORD. 8. UNDISPUTEDLY, ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE ON 29.09.2009 WAS PROCESSED U/S 143(3) OF THE ACT A ND THEREAFTER, ON RECEIPT OF INFORMATION FROM CIT, CENTRAL-II, NEW DELHI, ASSESSEES CASE WAS REOPENED AND ASSESSMENT WAS FRA MED U/S 147 READ WITH SECTION 143(3) OF THE ACT VIDE ORDER DATE D 27.03.2014. IT ITA NO.3762/DEL./2018 6 IS ALSO NOT IN DISPUTE THAT AGAIN ON 22.03.2016, RE ASONS WERE RECORDED ON RECEIPT OF INFORMATION FROM INVESTIGATI ON WING AND CASE OF THE ASSESSEE WAS REOPENED SECOND TIME. IT IS ALSO NOT IN DISPUTE THAT WHEN THE ASSESSEES CASE WAS REOPENED FOR THE FIRST TIME INFORMATION AS TO THE RECEIPT OF SHARE APPLICA TION MONEY OF RS.50,00,000/- BY THE ASSESSEE FROM ENTITY, NAMELY, M/S. MODERATE CREDIT CORP LTD. OF ASEEM GUPTA GROUP OF COMPANIES WAS AVAILABLE WITH THE AO AND AGAIN ON RECEIPT OF SOME INFORMATION FROM THE INVESTIGATION WING, CASE WAS REOPENED SECO ND TIME. 9. BEFORE PROCEEDING FURTHER, WE WOULD EXTRACT THE REASONS RECORDED BY THE AO FOR THE PURPOSE OF REOPENING AS UNDER :- REASONS FOR REOPENING THE CASE OF M/S SJM INTERNAT IONAL LIMITED, AY 2009-10, U/S 147/148 OF THE INCOME TAX ACT,1961:- AS PER INFORMATION RECEIVED FROM COMMISSIONER OF INCOME TAX, CENTRAL-II, NEW DELHI VIDE HIS LETTER F .NO.CIT- II/2011-12/2068 DATED 15.03.2012 THE ABOVE ASSESSEE HAS RECEIVED AND IS A BENEFICIARY OF ACCOMMODATION ENTR IES PROVIDED BY ENTRY OPERATOR SH ASEERN KUMAR GUPTA, C A (ANNEXURE-A). THE INVESTIGATION WING OF THE DEPARTM ENT HAD CARRIED OUT SEARCH/SURVEY OPERATIONS AT VARIOUS RES IDENTIAL AND BUSINESS PREMISES OF THE ENTRY OPERATOR SH ASEEM KU MAR GUPTA GROUP ON 26.03.2010. AS INFORMED BY THE INVES TIGATION WING OF THE DEPARTMENT, SH ASEEM GUPTA HAS ADMITTED TO PROVIDE ACCOMMODATION ENTRIES TO SEVERAL BENEFICIAR IES WITH THE HELP OF SEVERAL BANK ACCOUNT OPENED IN THE NAME OF SEVERAL PROPRIETARY CONCERNS AND COMPANIES IN WHICH EITHER HE HIMSELF, OR HIS EMPLOYEES, WERE DIRECTOR OR PROPRIE TOR. 2. THE GENERAL MODUS OPERANDI OF SH. ASEEM KUMAR GUPTA WAS TO ACCEPT CASH FROM THE BENEFICIARIES. TH E CASH WAS DEPOSITED IN THE BANK ACCOUNTS AND CHEQUES WERE THE N ISSUED TO THE BENEFICIARIES. IN ORDER TO DISGUISE HIS TRAN SACTIONS AS GENUINE, SH. ASEERN KUMAR GUPTA HAS BEEN FOLLOWING LAYERING OF ACCOUNTS, WHEREBY CASH WAS INTRODUCED I N VARIOUS ITA NO.3762/DEL./2018 7 BANK ACCOUNTS IN THE NAMES. OF PROPRIETARY CONCERNS OF HIS EMPLOYEES AND BENEFICIARIES WERE ISSUED CHEQUES FRO M ONE OF HIS INTERMEDIARY COMPANY AFTER ROUTING THE FUNDS AM ONG SEVERAL INTERMEDIARIES. 3. IT IS INFORMED BY THE INVESTIGATION WING OF THE DEPARTMENT THAT FROM THE VERIFICATION OF THE DOCUME NTS SEIZED, IT CLEARLY APPEARS THAT THE FOLLOWING ACCOMMODATION ENTRIES WERE PROVIDED FROM VARIOUS PAPER COMPANIES OF SH. A SEERN KUMAR GUPTA GROUP TO THE ABOVE ASSESSEE: NAME OF THE COMPANY USED FOR PROVIDING ACCOMMODATING ENTRY CHEQUE/ INSTRU- MENT CHEQUE DATE BANK NAME & ADDRESS AMOUNT MODERATE CREDIT CORP LTD. RTGS 09.03.2009 CORP BANK, CP, NEW DELHI 17,00,000 MODERATE CREDIT CORP LTD. RTGS 12.03.2009 CORP BANK, CP, NEW DELHI 8,00,000 MODERATE CREDIT CORP LTD. RTGS 24.03.2009 CORP BANK, CP, NEW DELHI 25,00,000 TOTAL 50,00,000/- I HAVE GONE THROUGH INFORMATION OF THE CIT, CENTRAL CIRCLE-II, NEW DELHI AND HAVE PERUSED THE DOCUMENTS /DATA AVAILABLE WITH THIS OFFICE VIZ, RETURN OF INCOME FO R AY 2008-09 AND SUBSEQUENT ASSESSMENT YEARS. THE FACTS WHICH HA VE EMERGED OUT ARE AS UNDER: 1. THE COMPANY HAS FILED ITS RET.URN OF INCOME ON 29.09.2009 FOR THE ASSESSMENT YEAR 2009-10. THEREAF TER, THE RETURN WAS PROCESSED UNDER 143(1) OF THE LT. ACT AT AN INCOME OF RS.58,49,430/- ON 4.2.2011. HOWEVER, THE CASE WA S NOT SELECTED FOR SCRUTINY. 2. SUBSEQUENT TO THE PROCESSING OF THE CASE U/S 14 3(1) OF THE IT ACT,1961 ON 04-02-2011, AN INFORMATION WAS R ECEIVED FROM CIT CENTRAL CIRCLE-II VIDE LETTER DATED 15.3.2 012. 3. IN THE LIGHT OF THE ABOVE INFORMATION, RETURN O F THE ASSESSEE FOR THE A.Y. 2008-09 & 2009-10 (PLACED AS ANNEXURE- B) WAS DOWNLOADED FROM THE ITD. IT IS SEEN FROM THE RETURN OF THE ASSESSEE FOR THE AY 2009-10 THAT IT E-FILED THE RETURN OF INCOME FOR THE AY 2009-10 ON 29.09.2009 DECLARING T OTAL INCOME OF RS.28,49,430/-. THE CASE WAS PROCESSED U/ S 143(1) OF THE INCOME TAX ACT, 1.961 ON 04.02.2011. WHEN COMPA RED WITH ITA NO.3762/DEL./2018 8 THE RETURN OF AY 2008-09 IT IS SEEN THAT ASSESSEE H AS RECEIVED SHARE CAPITAL OF RS.5,00,000/- AND SECURITY PREMIUM OF RS.45,00,000/- DURING FY 2008-09 RELEVANT TO AY 200 9-10, THUS TOTAL RECEIPT IS OF RS.50,00,000/- WHICH EXACTLY MA TCHES WITH THE INFORMATION RECEIVED FROM CIT CENTRAL CIRCLE-IL, VI DE LETTER DATED 15.3.2012. 4. DURING THE COURSE OF SURVEY U/S 133A, SH. ASEEM KUMAR GUPTA, ADMITTED IN HIS STATEMENT RECORDED UND ER OATH THAT HE WAS DERIVING COMMISSION INCOME FROM THE ACCOMMODATION ENTRY BUSINESS (ANSWER OF Q.3 OF STAT EMENT OF SH.ASEEM KUMAR GUPTA DURING THE COURSE OF SURVEY). IN VIEW OF THE FACTS AS MENTIONED ABOVE, THE CASE O F THE ASSESSEE COMPANY NEEDS TO BE RE-OPENED, AS THE ABOVE ENTRIES HAS BEEN OBTAINED THROUGH THE ENTRY OPERATOR. I, THEREFORE, HAVE REASONS TO BELIEVE THAT THIS AMOUNT OF 50,00,000/- REPRESEN TS INCOME OF THE ASSESSEE CHARGEABLE TO TAX AND WHICH HAS ESCAPE D ASSESSMENT FOR THE A.Y. 2009-10. IN ORDER TO VERIFY THE GENUINENESS, IDENTIFICATION AND CREDITWORTHINESS OF THE AFORESAID TRANSACTIONS, THE CASE NEEDS TO BE RE-OPE NED U/S 147 OF THE I.T. ACT, 1961. SINCE MORE THAN FOUR YEARS HAVE BEEN ELAPSED FROM T HE END OF THE RELEVANT A.Y. I.E. 2009-10, NECESSARY STATUTORY APPROVAL U/S 151(2) OF THE LT. ACT MAY KINDLY BE ACCORDED TO ISS UE NOTICE U/S 148 FOR THE A.Y. 2009-10 FOR THE PURPOSE OF REO PENING OF THE CASE U/S 147 OF THE LT. ACT. 1961. THE LIMITATION F OR ISSUING THE NOTICE IS EXPIRING ON 31.03.2016. SUBMITTED FOR KIND PERUSAL AND APPROVAL PLEASE. SD/- 22.03.2016 (RAGHUNATH) DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-23(2), NEW DELHI 10. LD. AR FOR THE ASSESSEE CONTENDED THAT FIRST OF ALL, HE WOULD ARGUED ON THE LEGAL GROUND THAT, THE ASSESSMENT FRAMED BY AO U/S 147/143(3) OF THE ACT IS VOID AB INITIO AS THE JURI SDICTION ASSUMED BY THE AO U/S 147 IS BAD IN LAW AND ON FACTS. ITA NO.3762/DEL./2018 9 11. CHALLENGING THE IMPUGNED REOPENING, LD. AR FOR THE ASSESSEE CONTENDED THAT FACTUALLY INCORRECT FACTS HAVE BEEN RECORDED BY THE AO IN THE REASONS RECORDED JUST TO JUSTIFY THE RE OPENING THAT, THIS CASE WAS NOT SELECTED FOR SCRUTINY , WHEREAS IT IS ADMITTED FACT THAT THIS CASE WAS SUBJECTED TO SCRUTINY AND A SSESSMENT WAS FRAMED VIDE ORDER DATED 30.03.2003 U/S 147 READ WIT H SECTION 143(3) OF THE ACT. BARE PERUSAL OF THE REASONS REC ORDED, AVAILABLE AT PAGES 5 & 6 OF THE PAPER BOOK, SHOWS THAT AO HAS CATEGORICALLY RECORDED THE FACT THAT, THIS CASE WAS NOT SELECTED FOR SCRUTINY . AT THE SAME TIME, AO RECORDED IN THE ASSESSMENT ORDER THAT EARLIER ASSESSMENT WAS FRAMED VIDE ORDER DATED 27.03.2014 U /S 147 READ WITH SECTION 143(3) OF THE ACT. ALL THESE FACTS GO TO PROVE THAT THE AO HAS PROCEEDED WITH REOPENING AND THEREAFTER FRAM ING ASSESSMENT AS PER HIS WHIMS AND FANCIES AND NOT IN ACCORDANCE WITH LAW. WE ARE OF THE CONSIDERED VIEW THAT WHEN REASONS RECORDED ARE BASED ON FACTUALLY WRONG FACTS, ASSUMP TION OF JURISDICTION IS BAD IN LAW. 12. FURTHER, IT WAS CONTENDED BY THE LD. AR FOR THE ASSESSEE THAT THE ENTIRE INVESTIGATION MADE BY THE AO IS BASED UP ON INFORMATION RECEIVED FROM INVESTIGATION WING AND WITHOUT APPLYI NG HIS MIND, HE HAS MADE THE ADDITION. SO, WITHOUT INDEPENDENTL Y EXAMINING AND CORROBORATING THE INFORMATION RECEIVED FROM INV ESTIGATION ITA NO.3762/DEL./2018 10 WING, AO HAS ACTED LIKE A POST OFFICE. AO TO ACHIE VE THE DESIRED RESULT HAS CATEGORICALLY IGNORED THE FACT OF EARLIE R ASSESSMENT FRAMED VIDE ORDER DATED 27.03.2014 WHEREIN THE ISSU E AS TO RECEIPT OF ACCOMMODATION ENTRY OF RS.50,00,000/- WAS LOOKED INTO AND DECIDED BY THE AO. LD. AR FOR THE ASSESSEE DREW OU R ATTENTION QUA THE STATEMENT OF JASDEEP SINGH, SON OF BALDIP SINGH RECORDED U/S 131(1) OF THE ACT BY SHRI VIKAS SINGH, DCIT, CIRCLE 7 (1), NEW DELHI (AO) DURING THE ASSESSMENT PROCEEDINGS ON THE BASIS OF WHICH ASSESSMENT U/S 147/143(3) DATED 27.03.2014 WA S FRAMED, AVAILABLE AT PAGES 9 & 10 OF THE PAPER BOOK. AO, D URING THE REMAND ASSESSMENT PROCEEDINGS U/S 147/143(3) OF THE ACT, PUT PERTINENT QUESTIONS NO.4 & 5 TO JASDEEP SINGH WHICH ARE AS UNDER :- QUE 4 I HAVE ASKED QUERY OF SHARE CAPITAL (BALANCE SHEET, P&L ACCOUNT, CONFIRMATION FROM COMPANY INVES TED IN YOUR COMPANY AS SHARE CAPITAL) ON 06.01.2014 AND FU RTHER ON 21.01.2014 WHICH WERE NOT SUBMITTED BY YOUR COUNSEL S TILL DATE? I AM AGAIN CONFRONTING YOU THE QUERIES AND Y OU ARE DIRECTED TO GIVE YOUR REPLY ON THE RAISED QUERIES? ANS SINCE WE HAVE TO CALL THE DETAILS FROM KOLKATA IT IS TAKEN TIME AND ALL THESE DETAILS ARE UNDER COMPI LATION, THEREFORE, I REQUEST YOU TO GRANT SOME TIME TO SUBM IT THEM THROUGH MY COUNSELS. THE TIME TILL 14.03.2014 MAY B E GRANTED TO SUBMIT THE DETAILS. QUE 5 I HAVE ISSUED A NOTICE TO M/S. MODERATE CRED IT CORPORATION LTD. WHICH IS BEING CONFRONTED TO YOU F OR FURNISHING CONFIRMATION OF SHARE CAPITAL, COPY OF I TR & BANK STATEMENT BUT THEY NOT RESPONDED TILL DATE? ANS AFTER PERUSING YOUR NOTICE IT IS SEEN THAT THE NOTICE HAS BEEN SENT ON THE OLD ADDRESS AND THE COM PANY M/S. MODERATE CREDIT CORPORATION LTD. HAS CHANGED ITS AD DRESS AND THE NEW ADDRESS WILL BE COMMUNICATED TO YOU BY 13.0 3.2014. ITA NO.3762/DEL./2018 11 THEREAFTER, YOU MAY SOUGHT DETAILS FROM THEM FROM T HE NEW ADDRESS. 13. AFORESAID QUESTIONS AND ANSWERS GIVEN THERETO A PPARENTLY BRING ON RECORD THE FACT THAT DUE ENQUIRY WAS MADE BY THE AO REGARDING SHARE CAPITAL RECEIVED FROM M/S. MODERATE CREDIT CORPORATION LTD. AND AFTER BEING SATISFIED, HE ACCE PTED THE RETURNED INCOME OF THE ASSESSEE VIDE ORDER DATED 27.03.2014 PASSED U/S 147/143(3) OF THE ACT. AO WHILE FRAMING ASSESSMENT ORDER DATED 27.03.2014 BY WAY OF FIRST REOPENING RECORDED THE F ACT THAT, THE STATEMENT OF ASSESSEE HAS BEEN RECORDED U/S 131(1) OF THE ACT AND THE FACTS WERE AGAIN VERIFIED DURING THE COURSE OF STATEMENT UNDER OATH. THESE FACTS AGAIN GO TO PROVE THAT AO HAS REOPENE D THE ASSESSMENT SECOND TIME WITHOUT APPLICATION OF MIND SOLELY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATIO N WING WHICH IS BAD IN LAW. 14. PERUSING OF THE REASONS RECORDED AND ASSESSMENT ORDER FRAMED IN THIS CASE FURTHER SHOWS THAT, THE ENTIRE REOPENING AND ASSESSMENT PROCEEDINGS HAVE BEEN BASED UPON THE INF ORMATION RECEIVED BY THE AO FROM THE INVESTIGATION WING OF I NCOME-TAX, WHERE ASEEM GUPTA HAD ADMITTED TO PROVIDE ACCOMMODA TION ENTRIES TO SEVERAL BENEFICIARIES WITH THE HELP OF S EVERAL BANK ACCOUNTS OPENED IN THE NAME OF SEVERAL PROPRIETARY CONCERNS AND ITA NO.3762/DEL./2018 12 COMPANIES IN WHICH EITHER HE HIMSELF OR HIS EMPLOYE ES WERE DIRECTOR OR PROPRIETOR. APART FROM THIS INFORMATION, WHICH HAS BEEN TAKEN AS GOSPEL TRUTH BY THE AO, NO INDEPENDEN T ENQUIRY HAS BEEN MADE TO COLLATE AND CORROBORATE THIS STATEMENT AND INFORMATION PROVIDED BY ASEEM GUPTA TO INVESTIGATIO N WING. BECAUSE ASEEM GUPTA HAS RETRACTED HIS SAID STATEMEN T RECORDED WITH INVESTIGATION WING AND THIS FACT HAS BEEN RECO RDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SUN GROW IMPEX IN ITA NO.4183/DEL/2019 ORDER DATED 19.03.2021 AND PROCEEDED TO HOLD THAT STATEMENT RECORDED ON OATH OF ASEEM GU PTA WOULD HAVE NO EVIDENTIARY VALUE AGAINST THE ASSESSEE BECA USE HE HIMSELF HAS RETRACTED HIS OWN STATEMENT RECORDED ON OATH. 15. IT IS FURTHER CONTENDED BY THE LD. AR FOR THE ASSESSEE THAT EVEN THE APPROVAL ACCORDED IN THIS CASE BY LD. CIT IS MECHANICAL WITHOUT APPLYING HIS MIND. BARE PERUSAL OF REASONS RECORDED AND SHOW-CAUSE NOTICE ISSUED DOES NOT DISCLOSE AN IOTA OF FACT THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS DURING ASSESSMENT FOR ESCAPEMENT OF INCOME OF RS.50,00,000/-, BUT REASONS RECORDED, SHOW-CAUSE NO TICE ISSUED AND APPROVAL ACCORDED ARE PRIMARILY BASED UPON THE REAS ONS THAT AN INCOME OF RS.50,00,000/- HAS ESCAPED ASSESSMENT FOR AY 2009-10 DUE TO FAILURE OF THE ASSESSEE. FURTHERMORE, WHILE RECORDING OF ITA NO.3762/DEL./2018 13 REASONS FOR REOPENING AO HAS RECORDED FACTUALLY INC ORRECT FACTS THAT THIS CASE WAS NOT SUBJECTED TO SCRUTINY WHER EAS ASSESSMENT ORDER DATED 27.03.2014 WAS PASSED U/S 147/143(3) OF THE ACT IN THIS CASE. ALL THESE MATERIAL FACTS GO TO PROVE THAT LD . CIT HAS ACCORDED APPROVAL IN A MECHANICAL MANNER WITHOUT APPLICATION OF MIND. HAD HE GONE INTO FACTUAL DETAILS PUT FORTH BY THE AO FO R GRANT OF APPROVAL, THE APPROVAL WOULD NOT HAVE BEEN GRANTED. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT M ECHANICAL APPROVAL GRANTED BY THE CIT MAKES THE ENTIRE ASSESS MENT PROCEEDINGS NULLITY. 16. AS DISCUSSED IN THE PRECEDING PARAS, THE ISSUE IN QUESTION THAT ASSESSEE COMPANY HAS RECEIVED ACCOMMODATION EN TRY FROM MODERATE CORPORATE CORP. BELONGING TO ONE ASEEM GUP TA, CA WAS SUBJECT MATTER OF THE EARLIER ASSESSMENT FRAMED U/S 147 READ WITH SECTION 143 (3) OF THE ACT. 17. LD. DR FOR THE REVENUE CONTENDED THAT RETURN OF INCOME FILED BY THE ASSESSEE COMPANY DOES NOT DISCLOSE THE FACTUM OF SHARE PREMIUM RECEIVED, SO THIS ISSUE WAS NOT DISCUSSED E ARLIER. WE ARE OF THE CONSIDERED VIEW THAT WHEN ASSESSMENT WAS REO PENED FOR THE FIRST TIME THIS ISSUE WAS BEFORE THE AO WHO RECORDE D STATEMENT OF JASDEEP SINGH QUA THE ISSUE IN QUESTION AND HAS ALS O DURING THE ASSESSMENT PROCEEDINGS PERUSED BALANCE SHEETS, STAT EMENT OF ITA NO.3762/DEL./2018 14 ACCOUNTS, ITR, BANK STATEMENTS, TO ENQUIRE INTO THE SHARE CAPITAL RECEIVED BY THE ASSESSEE FROM M/S. MODERATE CORPORA TE CORP., REOPENING ON THE SAME ISSUE CERTAINLY AMOUNTS TO C HANGE OF OPINION WHICH IS NOT PERMISSIBLE UNDER THE LAW. 18. HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) W HILE EXAMINING THE IDENTICAL ISSUE AS TO REOPENING ON THE BASIS OF CHA NGE OF OPINION HAS HELD THAT IT WOULD GIVE ARBITRARY POWER TO THE AO TO REOPEN ASSESSMENT U/S 147 ON THE BASIS OF MERE CHANGE OF OPINION, WHICH CANNOT BE PER SE REASON TO REOPEN. OPERATIVE PART OF THE JUDGMENT IS EXTRACTED FOR READY PERUSAL AS UNDER :- 6. ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MAD E TO SECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, REOPENING COULD BE DONE UNDE R THE ABOVE TWO CONDITIONS AND FULFILLMENT OF THE SAID CONDITIO NS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE ACT (WITH EFF ECT FROM 1ST APRIL, 1989), THEY ARE GIVEN A GO-BY AND ONLY ONE CONDITIO N HAS REMAINED, VIZ., THAT WHERE THE ASSESSING OFFICER HAS REASON T O BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. THEREFORE, POST-1ST APRIL, 1989, POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSE SSING OFFICER TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST AL SO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REV IEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW ; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE B ASED ON FULFILLMENT OF CERTAIN PRE-CONDITIONS AND IF THE CO NCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF T HE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVI EW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPI NION' AS AN IN- BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 1989, THE ASSESSING OFFICER HAS PO WER TO REOPEN, ITA NO.3762/DEL./2018 15 PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO TH E CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REAS ONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR V IEW GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 OF THE ACT, AS QUOTED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BE LIEVE' BUT ALSO INSERTED THE WORD' OPINION' IN SECTION 147 OF THE A CT. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES AGAIN ST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIAMENT REINTRODU CED THE SAID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GR OUND THAT IT WOULD VEST ARBITRARY POWERS IN THE ASSESSING OFFICE R. WE QUOTE HEREIN BELOW THE RELEVANT PORTION OF CIRCULAR NO. 5 49 DATED OCTOBER 31, 1989 ([1990] 182 ITR (ST.) I, 29), WHICH READS AS FOLLOWS: 7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO R EINTRODUCE THE EXPRESSION 'REASON TO BELIEVE' IN SECTION 147.- A NUMBER OF REPRESENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS 'REASON TO BELIEVE' FROM SECTION 147 AND THEIR SUBS TITUTION BY THE 'OPINION' OF THE ASSESSING OFFICER. IT WAS POINTED OUT THAT THE MEANING OF THE EXPRESSION, 'REASON TO BELIEVE' HAD BEEN EXPLAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WE LL SETTLED AND ITS OMISSION FROM SECTION 147 WOULD GIVE ARBITRARY POWE RS TO THE ASSESSING OFFICER TO REOPEN PAST ASSESSMENTS ON MER E CHANGE OF OPINION. TO ALLAY THESE FEARS, THE AMENDING ACT, 19 89, HAS AGAIN AMENDED SECTION 147 TO REINTRODUCE THE EXPRESSION ' HAS REASON TO BELIEVE' IN PLACE OF THE WORDS 'FOR REASONS TO BE R ECORDED BY HIM IN WRITING, IS OF THE OPINION'. OTHER PROVISIONS OF TH E NEW SECTION 147, HOWEVER, REMAIN THE SAME.' FOR THE AFORESTATED REASONS, WE SEE NO MERIT IN THE SE CIVIL APPEALS FILED BY THE DEPARTMENT; HENCE, DISMISSED WITH NO O RDER AS TO COSTS. 19. FURTHERMORE, IT IS CONTENDED BY THE LD. AR FOR THE ASSESSEE THAT IN THE REASONS RECORDED, AO HAS OBSERVED THAT HE HAS ASSUMED THE JURISDICTION TO EXAMINE GENUINENESS AND CREDITW ORTHINESS OF THE ALLEGED ENTITIES, WHICH CANNOT BE A GROUND TO REOPE N THE ASSESSMENT. 20. LAST SENTENCE OF THE REASONS RECORDED APPARENTL Y GOES TO PROVE THAT AO HAS REOPENED ASSESSMENT U/S 147/148 O F THE ACT TO ITA NO.3762/DEL./2018 16 VERIFY THE GENUINENESS, IDENTIFICATION AND CREDITWO RTHINESS OF THE AFORESAID TRANSACTION. IT IS SETTLED PRINCIPLE OF LAW THAT JURISDICTION U/S 147 CAN ONLY BE ASSUMED TO ENQUIRE INTO THE ESC APEMENT OF INCOME OR ON THE BASIS OF SOME TANGIBLE MATERIAL. IDENTICAL ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN CASE OF SBS REALTORS IN ITA NO.7791/DEL/2018 ORDER DATED 01.04.2018 AND HELD THAT JURISDICTION U/S 147 OF THE ACT CANN OT BE ASSUMED FOR VERIFICATION OF THE CASH CREDIT ENTRY B Y RETURNING FOLLOWING FINDINGS :- THE CONCLUSION OF THE ASSESSING OFFICER AT THE END OF THE REASONS RECORDED AS NOTED ABOVE IS CONTRADICTORY. I N THE FIRST TWO LINES, THE ASSESSING OFFICER HAS RECORDED THE FINDI NG THAT THE SUM OF RS.2,35,00,000/- HAS ESCAPED ASSESSMENT BUT IN T HE LAST TWO LINES, HE HAS RECORDED THAT THE CASE IS BEING REOPE NED TO VERIFY THE GENUINENESS, IDENTIFICATION AND CREDITWORTHINES S OF THE AFORESAID TRANSACTIONS. IF THE CASE IS BEING REOPEN ED FOR THE PURPOSE OF VERIFICATION OF THE GENUINENESS, HOW CAN THERE BY SATISFACTION OF ESCAPEMENT OF INCOME. ANY SATISFACT ION WITH REGARD TO ESCAPEMENT OF INCOME OR OTHERWISE CAN BE RECORDED ONLY AFTER THE VERIFICATION OF GENUINENESS, IDENTIF ICATION AND CREDITWORTHINESS OF THE TRANSACTION AND NOT EARLIER . THUS, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER HAS REOPE NED THE CASE UNDER SECTION 147 FOR THE PURPOSE OF VERIFICATION O F GENUINENESS, IDENTIFICATION AND CREDITWORTHINESS OF THE TRANSACT IONS MENTIONED IN THE INFORMATION SUPPLIED BY THE DIT (INVESTIGATI ON) AND THIS IS WHAT THE ASSESSING OFFICER HAS CONCLUDED AT THE END OF THE REASONS RECORDED FOR ISSUE OF NOTICE UNDER SEE/ION 148. NOW, THE QUESTION REMAINS WHETHER AN ASSESSMENT CAN BE REOPE NED UNDER SECTION 147 FOR THE PURPOSE OF VERIFICATION OF GENU INENESS, IDENTIFICATION AND CREDITWORTHINESS OF ANY TRANSACT ION. IN OUR OPINION, THE REPLY IS CLEARLY NO. 21. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT ASSESSMENT FRAMED IN THIS CASE IS NOT SUSTAINABLE SINCE THE VERY JURISDICTION ASSUMED BY THE AO U/S 147 ITA NO.3762/DEL./2018 17 OF THE ACT IS BAD IN LAW AND ASSESSMENT FRAMED ON T HE BASIS OF CHANGE OF OPINION U/S 147/143 (3) IS VOID AB INIT IO AND IS NOT SUSTAINABLE IN THE EYES OF LAW, HENCE QUASHED. SIN CE ASSESSMENT FRAMED IS NOT SUSTAINABLE IN THE EYES OF LAW ON LEG AL GROUNDS, GROUNDS RAISED ON MERITS ARE NOT REQUIRED TO BE DIS POSED OFF. CONSEQUENTLY, APPEAL FILED BY THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON THIS 9 TH DAY OF AUGUST, 2021. SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 9 TH DAY OF AUGUST, 2021. TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-28, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.