Dilwara Leasing & Investment Ltd., Delhi V. ITO, Ward-7(3), New Delhi

ITA 3927/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7313 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Reopening of assessment; Bogus purchase; Depreciation; Principle of natural justice; Transactions in derivatives; Tangible material; Difference of opinion; Accommodation entries; Competent authority; Assessment record; Revised return; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 143(1); 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3927/DEL/2018 ASSESSMENT YEAR : 2009-10 DILWARA LEASING & INVESTMENT LTD., C/O KAPIL GOEL, ADV., F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: AAACD0488N) VS. ITO, WARD 7(3), NEW DELHI (APPELLANT) ( RESPONDENT) ASSESSEE BY : SH. KAPIL GOEL, ADV. DEPARTMENT BY : SH. S.L. ANURAGI, SR. DR. ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A)-3, DELHI ON 15.02.2018 IN RELATIO N TO THE ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN SUSTAINING THE ORDER PASSED BY AO U/S. 147/143 OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) WITHOUT APPRECIATING THAT ASSUMPTION OF JURISDICTION U/S. 148 OF THE ACT WAS BY AO WAS IN VIOLATION OF JURISDICTIONAL CONDITIONS STIPULA TED UNDER THE ACT; 2 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN SUSTAINING THE ORDER PASSED BY THE AO U/S. 147/143(3) WITHOUT APPRECIATING THAT RUBBER STAMP REASONS IN PRESENT CASE ARE BASED ON UNCONFRONTED APPRAISAL REPORT OF INVESTIGATION WING AND ARE WITHOUT INDEPENDENT APPLICATION OF MIND. 1.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 147/143(3) WITHOUT APPRECIATING THAT MATERIAL REFERRED IN REASONS HAS NOT BEEN CONFRONTED TO ASSESSEE NAMELY REPORT OF INVESTIGATION WING AHMEDABAD, BROKER SURVEYED U/SL33A, STATEMENT OF BROKER SURVEYED AND MATERIAL FOUND FROM SURVEY AND CONNECTION OF THAT BROKER WITH THE ASSESSEE, LACK OF WHICH VITIATES THE ENTIRE PROCEEDINGS AS COMPLETE REASONS WERE NOT FURNISHED TO THE ASSESSEE; 1.3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 147/143(3) WITHOUT APPRECIATING THAT LD AO ISSUED NOTICE U/S 143(2) ON 3 30/06/2016 WHEN REASONS WERE SUPPLIED ONLY ON 27/09/2016 WHICH VITIATES THE ENTIRE EXERCISE BEING DONE IN UNDUE HURRY AND HASTE; 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 147/143(3) WITHOUT APPRECIATING THAT ON BASIS OF SURFEIT AND INUNDATED EVIDENCES ON RECORDS BURDEN LYING ON ASSESSEE HAS BEEN FULLY DISCHARGED AND MET SO ADDITION MADE BY LD AO (RS 39,83,700) AND CONFIRMED BY CIT-A IN IMPUGNED ORDER DESERVES TO BE DELETED. 2.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES -OF THE CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 147/143(3) WITHOUT APPRECIATING THAT THERE IS NO BASIS OF ANY OF THE ADDITION OF RS 39,83,700 AS WHOLE ADDITION IS BASED MERELY ON ASSUMPTION , CONJECTURES AND SURMISES AND SUSPICION ONLY WITHOUT ANY IOTA OF EVIDENCE TO SUPPORT THE BALD ALLEGATION MADE. 2.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE 4 ORDER PASSED BY LD AO U/S 147/143(3) WITHOUT APPRECIATING THAT ALL THE ADDITIONS MADE ARE WITHOUT BRINGING LEGALLY ADMISSIBLE DOCUMENT; 2.3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 147/143(3) WITHOUT APPRECIATING THAT NONE OF EVIDENCE FILED BY ASSESSEE IS OVERRULED IN ACCORDANCE WITH LAW; 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT-A ERRED IN NOT RESTORING THE RETURNED INCOME DECLARED BY ASSESSEE IN ITS RETURN OF INCOME. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT-A ERRED IN NOT DELETING THE ADDITION MADE BY LD AO WHICH WAS ALSO UNLAWFUL AND MADE IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THAT THE APPELLANT CRAVES LEAVE TO ADD ADD/ALTER ANY/ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. THE FACTS IN BRIEF ARE THAT NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) WAS ISSUED ON 30.3.2016 TO THE ASSESSEE, A FTER RECORDING 5 THE REASONS WITH THE PRIOR APPROVAL OF THE COMPETENT AUTHORITY. IN RESPONSE TO THE SAME, THE A.R. FOR THE ASSESSEE ATTENDED THE P ROCEEDINGS AND FILED THE REPLY AND THE CASE WAS ADJOURNED FOR 16.5.2016. THEREAFTER, THE AR FOR THE ASSESSEE ATTENDED AND FILED REPLY ATTACHING THEREWIT H THE INCOME TAX RETURN DATED 4.3.2010 FOR THE AY 2009-10, REVISED R ETURN TREATED AS RETURN IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. AO ISSUED TH E NOTICE U/S. 143(2) OF THE ACT ON 30.6.2016 FIXING THE HEARING FOR 11.7.20 16 AND IN RESPONSE TO THE SAME, THE AR FOR THE ASSESSEE ATTENDED THE PROCEEDINGS FRO M TIME TO TIME. THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE INFORM ATION RECEIVED FROM ADIT(INV.), UNIT 1(3), AHMEDABAD BY WHICH A SUR VEY REPORT WAS DISSEMINATED IN THE CASE CASES OF BENEFICIARY CLIENTS WHO HA VE TAKEN CONTRIVED LOSSES AND SHIFTED OUT PROFITS USING CLIENT CODE MODIFICATION. AO OBSERVED THAT CLIENT CODE HAS BEEN MODIFIED IN ASSESSEE CASE AS PER THE REPORT OF THE INVESTIGATION. AO OBSERVED FROM THE DET AILS OF SHARE TRADING THAT ASSESSEE HAS MADE ONLY ONE TRANSACTION IN THE FY 2008 -09. NO OTHER TRANSACTIONS WERE MADE AND ASSESSEE ONLY MADE TRANSACTION I N THIS YEAR TO BOOK ARTIFICIAL LOSS THROUGH CLIENT CODE MODIFICATION AND HAS SET OFF THE INCOME EARNED THROUGH THIS ACTIVITY. HENCE, AO HELD THA T LOSS OF RS. 39,83,700/- CLAIMED BY THE ASSESSEE IS NOT GENUINE AND W AS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE VIDE ORDER DATED 31.12.2016 PASSED U/S. 147/143(3) OF THE ACT AND ASSESSED THE INCOME A T RS. 3918820/-. 6 3. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER DATED 31.12.2016, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IM PUGNED ORDER DATED 15.2.2018 HAS AFFIRMED THE ACTION OF THE AO AND DISMI SSED THE APPEAL OF THE ASSESSEE. 4. DURING THE HEARING, LD. COUNSEL OF THE ASSESSEE STATED THAT ASSESSEE HAS RAISED 4 GROUNDS OF APPEAL, BUT HE IS ONLY ARGUIN G THE GROUND NO. 1 & 1.1 WHICH ARE IN LEGAL IN NATURE AND STATED THAT LD. CIT(A) HAS ERRED IN SUSTAINING THE ORDER OF THE AO WITHOUT APPRECIATING TH AT ASSUMPTION OF JURISDICTION U/S. 148 BY THE AO WAS IN VIOLATION OF JU RISDICTIONAL CONDITION STIPULATED UNDER THE ACT. HE FURTHER STATED THAT AO H AS WRONGLY ASSUMED THE JURISDICTION U/S. 148 OF THE ACT WITHOUT APPLYING HIS MIND AND ISSUED NOTICE WITHOUT CONFRONTING THE APPRAISAL REPORT OF THE INVESTIGATION WING. HE DRAW MY ATTENTION TOWARDS THE ASSESSMENT ORDER AS WELL A S THE ORDER PASSED BY THE LD. CIT(A) AND STATED THAT THE SIMILAR ISSUE HAS ALREADY BEEN DECIDED BY THE ITAT, SMC, DELHI BENCH IN ITA NO. 4542/DEL/20 18 (AY 2010-11) IN THE CASE OF RADIANCE STOCK TRADERS PVT. LTD. VS. ITO, WARD 20(4), NEW DELHI. HE FURTHER DRAW MY ATTENTION TOWARDS DECISION OF THE TRIBUNAL MENTIONED AT PAGE NO. 15 TO 25 IN THE ORDER VIDE PARA NO. 6.1 TO 6.8. HE FURTHER DRAW MY ATTENTION TOWARDS PAGE NO. 39 TO 41 OF THE APPEAL FILE WHICH IS A COPY OF REASONS FOR ISSUE OF NOTICE U/S. 148 F OR REOPENING OF ASSESSMENT U/S. 147 OF THE ACT AND STATED THAT THE FACTS AN D CIRCUMSTANCES OF THE PRESENT CASE ARE SQUARELY COVERED BY THE AFORESAID DECISION OF THE 7 ITAT IN THE CASE OF RADIANCE STOCK TRADERS PVT. LTD. (S UPRA), HENCE, REQUESTED TO RESPECTFULLY FOLLOWING THE ABOVE PRECEDEN T AND QUASH THE REASSESSMENT. 5. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND STATED THAT ASSESSING OFFICER ISSUED THE NOTICE U/S. 148 AFTER DUE APPLICATION OF MIND. HE STATED THAT THE AO HAS FOLLO WED DUE PROCEDURE BEFORE ISSUING THE NOTICE U/S 148 OF THE I.T. ACT, 1961. THE ASSESSING OFFICER HAD TANGIBLE MATERIAL IN THE FORM OF INFORMATION RE CEIVED FROM THE INVESTIGATION WING. IN SUPPORT OF HIS CONTENTION, H E HAS FILED THE FOLLOWING WRITTEN SUBMISSION AND REQUESTED TO DISMISS THE APPEAL OF THE ASSESSEE. SUB: WRITTEN SUBMISSION IN THE ABOVE CASE- REG. IN THE ABOVE CASE, IT IS HUMBLY SUBMITTED THAT THE FOLLOWING DECISIONS, APART FROM RELYING ON THE DECISIO N OF LEARNED CIT(A), MAY KINDLY BE CONSIDERED WITH REGARD TO REOPENING OF CASES U/S 147 OF I.T. ACT : 1. YOGENDRA KUMAR GUPTA VS ITO (51 TAXMANN.COM 383) (SC)/F20141 227 TAXMAN 374 (SC) (COPY ENCLOSED) WHERE HONBLE SUPREME COURT HELD THAT WHERE SUBSEQUENT TO COMPLETION OF ORIGINAL ASSESSMENT, ASSESSING OFFICER, ON BASIS OF SEARCH CARRIED OUT IN CASE OF ANOTHER PERSON, CAME TO KNOW THAT LOAN TRANSACTIONS OF ASSESSEE WITH A FINANCE 8 COMPANY WERE BOGUS AS SAID COMPANY WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES, IT BEING A FRESH INFORMATION, HE WAS JUSTIFIED IN INITIATING REASSESSMENT PROCEEDING IN CASE OF ASSESSEE. 2. RAYMOND WOOLLEN MILLS LTD. V. ITO AND OTHERS [236 ITR 341 (COPY ENCLOSED) WHERE HONBLE SUPREME COURT HELD THAT IN DETERMINING WHETHER COMMENCEMENT OF REASSESSMENT PROCEEDINGS WAS VALID IT HAS ONLY TO BE SEEN WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASI S OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED AT THIS STAGE. 3. YUVRAJ V. UNION OF INDIA BOMBAY HIGH COURT [2009 1 315 ITR 84 (BOMBAY)/R20091 225 CTR 283 (BOMBAY) POINTS NOT DECIDED WHILE PASSING ASSESSMENT ORDER UNDER SECTION 143(3) NOT A CASE OF CHANGE OF OPINION. ASSESSMENT REOPENED VALIDLY. 4. ACIT VS RAJESH JHAVERI STOCK BROKERS (P.) LTD (2007) 161 TAXMAN 316 (SC)/R20071 291 ITR 500 (SC)/[2007] 210 CTR 30 (SC) 9 SO LONG AS THE CONDITIONS OF SECTION 147 ARE FULFILLED, THE ASSESSING OFFICER IS FREE TO INITIATE PROCEEDINGS UNDER SECTION 147 AND FAILURE TO TAKE STEPS UNDER SECTION 143(3 ) WILL NOT RENDER THE ASSESSING OFFICER POWERLESS TO INITIAT E REASSESSMENT PROCEEDINGS, EVEN WHEN INTIMATION UNDER SECTION 143(1) HAS BEEN ISSUED ADANI EXPORTS V. DCIT[1999] 240 ITR 224 (GUJ) DISTINGUISHED. 5. DEVI ELECTRONICS PVT LTD VS ITO BOMBAY HIGH COURT 2017-TIQL-92-HC-MUM- II THE LIKELIHOOD OF A DIFFERENT VIEW WHEN MATERIALS EXIST OF FORMING A REASONABLE BELIEF OF ESCAPED INCOME, WILL NOT DEBAR THE AO FROM EXERCISING HIS JURISDICTION TO ASSE SS THE ASSESSEE ON REOPENING NOTICE. 6. PRANAWA LEAFIN (P.) LTD. VS DCIT BOMBAY HIGH COURT T20131 33 TAXMANN.COM 454 (BOMBAY)/R20131 215 TAXMAN 109 (BOMBAY)(MAG.) WHERE THERE WAS FAILURE ON PART OF ASSESSEE TO MAKE TRUE AND COMPLETE DISCLOSURE IN RESPECT OF SHARE TRANSACTIONS ENTERED INTO BY IT, IN VIEW OF PROVISO TO SECTION 147, ASSESSING OFFICER WAS JUSTIFIED IN 10 INITIATING REASSESSMENT PROCEEDINGS EVEN AFTER EXPIRY OF FOUR YEARS FROM END OF RELEVANT ASSESSMENT YEAR. 7. ACORUS UNITECH WIRELESS (P.) LTD. VS ACIT DELHI HIGH COURT T20141 43 TAXMANN.COM 62 (DELHI)/R20141 223 TAXMAN 181 (DELHI)(MAG)/R20141 362 ITR 417 (DELHI) IN TERMS OF SECTION 148, LAW ONLY REQUIRES THAT INFORMATION OR MATERIAL ON WHICH ASSESSING OFFICER RECORDS HIS OR HER SATISFACTION HAS TO BE COMMUNICATED TO ASSESSEE, WITHOUT MANDATING DISCLOSURE OF ANY SPECIFIC DOCUMENT. 8. PCIT, VS PARAMOUNT COMMUNICATION (P.) LTD. DELHI HIGH COURT [20171 79 TAXMANN.COM 409 (DELHI)/R20171 392 ITR 444 (DELHI) INFORMATION REGARDING BOGUS PURCHASE BY ASSESSEE RECEIVED BY DRI FROM CCE WHICH WAS PASSED ON TO REVENUE AUTHORITIES WAS 'TANGIBLE MATERIAL OUTSIDE RECORD TO INITIATE VALID REASSESSMENT PROCEEDINGS. 9. PARAMOUNT COMMUNICATION (P.) LTD. VS PCIT SUPREME COURT 2017-TIQL-253- SC-IT 11 SLP OF ASSESSEE DISMISSED. INFORMATION REGARDING BOGUS PURCHASE BY ASSESSEE RECEIVED BY DRI FROM CCE WHICH WAS PASSED ON TO REVENUE AUTHORITIES WAS TANGIBLE MATERIAL OUTSIDE RECORD TO INITIATE VALID REASSESSMENT PROCEEDINGS. 10. AMIT POLYPRINTS (P.) LTD. VS PCIT GUJARAT HIGH COURT T2018L 94 TAXMANN.COM 393 (GUJARAT) WHERE REASSESSMENT PROCEEDINGS WERE INITIATED ON BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING THAT ASSESSEE HAD RECEIVED CERTAIN AMOUNT FROM SHELL COMPANIES WORKING AS AN ACCOMMODATION ENTRY PROVIDER, REASSESSMENT COULD NOT BE HELD UNJUSTIFIED. 11. AASPAS MULTIMEDIA LTD. VS PCIT GUJARAT HIGH COURT T20171 83 TAXMANN.COM 82 (GUJARAT) WHERE REASSESSMENT WAS MADE ON BASIS OF INFORMATION RECEIVED FROM PRINCIPAL DIT (INVESTIGATION) THAT ASSESSEE WAS BENEFICIARY OF ACCOMMODATION ENTRIES BY WAY OF SHARE APPLICATION PROVIDED BY A THIRD PARTY, SAME WAS JUSTIFIED. 12 12. MURLIBHAI FATANDAS SAWLANI VS ITO GUJARAT HIGH COURT 2016-TIQL-370-HC- AHM-IT IT IS NOT OPEN TO THE ASSESSEE TO OBJECT TO THE REOPENING BY ASKING THE AO TO PRODUCE THE SOURCE FROM WHERE THE AO HAS GATHERED THE INFORMATION FOR FORMING A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 13. ANKIT AQROCHEM (P.) LTD. VS JCIT RAJASTHAN HIGH COURT T20181 89 TAXMANN.COM 45 (RAJASTHAN) WHERE DIT INFORMED THAT ASSESSEE-COMPANY HAD RECEIVED SHARE APPLICATION MONEY FROM SEVERAL ENTITIES WHICH WERE ONLY ENGAGED IN BUSINESS OF PROVIDING BOGUS ACCOMMODATION ENTRIES TO BENEFICIARY CONCERNS, REASSESSMENT ON BASIS OF SAID INFORMATION WAS JUSTIFIED. 14. RAKESH GUPTA VS CIT P&H HIGH COURT F20181 93 TAXMANN.COM 271 (PUNJAB & HARYANA) WHERE ASSESSING OFFICER RECEIVED INFORMATION FROM PRINCIPLE DIRECTOR OF INCOME TAX (INVESTIGATION) THAT ASSESSEE HAD RECEIVED BOGUS LOSS FROM HIS BROKER BY 13 CLIENT CODE MODIFICATION, REASSESSMENT ON BASIS OF SAID INFORMATION WAS JUSTIFIED. 15. ABHISHEK JAIN VS ITO DELHI HIGH COURT (2018) 94 TAXMANN.COM 355 (DELHI), 2018-TIQL- 1059-HC-DEL-IT DATE OF ORDER 01.06.20181 IN TERMS OF SECTION 124(3)(B) JURISDICTION OF AN ASSESSING OFFICER CANNOT BE CALLED IN QUESTION BY AN ASSESSEE AFTER EXPIRY OF ONE MONTH FROM DATE ON WHICH HE WAS SERVED WITH A NOTICE FOR REOPENING ASSESSMENT UNDER SECTION 148. 6. I HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDER ED THE CASE LAWS AND THE RELEVANT DOCUMENTS AVAILABLE ON RECORD, ESPECIAL LY THE IMPUGNED ORDER, PAPER BOOK AND THE CASE LAWS CITED BY BOTH THE P ARTIES. FROM THE ASSESSMENT ORDER, IT IS NOTED THAT NOTICE U/S. 148 OF T HE INCOME TAX ACT, 1961 WAS ISSUED ON 30.3.2016 TO THE ASSESSEE, AFTER RECORDI NG THE REASONS WITH THE PRIOR APPROVAL OF THE COMPETENT AUTHORITY. IN RESPONSE TO THE SAME, THE A.R. FOR THE ASSESSEE ATTENDED THE PROCEEDIN GS AND FILED THE REPLY AND THE CASE WAS ADJOURNED FOR 16.5.2016. THERE AFTER, THE AR FOR THE ASSESSEE ATTENDED AND FILED REPLY ATTACHING THEREWITH TH E INCOME TAX RETURN DATED 4.3.2010 FOR THE AY 2009-10, REVISED RETURN T REATED AS RETURN IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. AO ISSUED THE NOT ICE U/S. 143(2) OF 14 THE ACT ON 30.6.2016 FIXING THE HEARING FOR 11.7.20 16 AND IN RESPONSE TO THE SAME, THE AR FOR THE ASSESSEE ATTENDED THE PROCEEDINGS FRO M TIME TO TIME. THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE INFORM ATION RECEIVED FROM ADIT(INV.), UNIT 1(3), AHMEDABAD BY WHICH A SUR VEY REPORT WAS DISSEMINATED IN THE CASE CASES OF BENEFICIARY CLIENTS WHO HA VE TAKEN CONTRIVED LOSSES AND SHIFTED OUT PROFITS USING CLIENT CODE MODIFICATION. AO OBSERVED THAT CLIENT CODE HAS BEEN MODIFIED IN ASSESSEE CASE AS PER THE REPORT OF THE INVESTIGATION. AO OBSERVED FROM THE DET AILS OF SHARE TRADING THAT ASSESSEE HAS MADE ONLY ONE TRANSACTION IN THE FY 2008 -09. NO OTHER TRANSACTIONS WERE MADE AND ASSESSEE ONLY MADE TRANSACTION I N THIS YEAR TO BOOK ARTIFICIAL LOSS THROUGH CLIENT CODE MODIFICATION AND HAS SET OFF THE INCOME EARNED THROUGH THIS ACTIVITY. HENCE, AO HELD THA T LOSS OF RS. 39,83,700/- CLAIMED BY THE ASSESSEE IS NOT GENUINE AND W AS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE VIDE ORDER DATED 31.12.2016 PASSED U/S. 147/143(3) OF THE ACT AND ASSESSED THE INCOME A T RS. 3918820/-. I FURTHER NOTE THAT THE AO WHILE RECORD ING THE REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT HAS RECORDED THE REASONS AS UNDER:- REASONS FOR ISSUE OF NOTICE U/S 148 FOR REOPENING OF ASSESSME NT U/S 147 OF I T ACT 1961 FOR THE A.Y.2Q09-10 IN THE CASE OF M/S. DILWARA LEASING AND INVESTMENT LIMITED 1. THE ASSESSEE IS A COMPANY FILED ITS RETURN OF INCOME ON 04.03.2010 DECLARING INCOME OF RS. NIL /-.THEREAFTER, THE RETURN WAS PROCESSED UNDER 143(1) OF THE I.T. ACT ON 29.03.2011 AT AN INCOME OF 15 NIL DETERMINING A REFUND OF RS. 26,69,140 /- . THE CA SE WAS NOT PICKED UP FOR SCRUTINY, SO ASSESSMENT U/S 143(3) WAS NOT MADE. 2. SUBSEQUENTLY, INFORMATION THROUGH EMAIL WAS RECEIV ED ON 14/03/2016 FROM ASSTT. DIRECTOR OF INCOME TAX [INVESTIGA TION], UNIT 1(3), AHMEDABAD BY WHICH A SURVEY REPORT WAS DISSEMINAT ED IN CASES OF BENEFICIARY CLIENTS WHO HAVE TAKEN CONTRIVED LOSSES & SH IFTED OUT PROFITS USING CLIENT CODE MODIFICATION. 3. I HAVE GONE THROUGH THE REPORT AND GATHERED THAT CLIENT CODE IS A UNIQUE CODE WHICH IS ASSIGNED BY A BROKER TO ITS CLIEN TS. A BROKER CAN ISSUE JUST ONE CODE TO A CLIENT. CLIENT CODE MODIFICATI ON MEANS MODIFICATION / CHANGE OF THE CLIENT CODES AFTER EXECUTI ON OF TRADES. VIDE CIRCULAR NO. SMD /POLICY/CIR-/03 DATED | FEBRUA RY 6, 2003 SEBI MANDATED THAT THE STOCK EXCHANGES SHALL NOT NORMALLY PE RMIT CHANGES IN THE CLIENT CODE EXCEPT TO CORRECT FOR GENUINE MISTAKES. THE CLIENT CODE MODIFICATIONS PERMIT BROKERS TO RECTIFY HUMAN ERRO RS WHEN A CLIENT INADVERTENTLY PROVIDES A WRONG CODE OR WHEN OR A WRONG CODE IS PUNCHED IN BY THE BROKER WHILST EXECUTING THE TRADE. T HE BROKER IS ALLOWED TO CHANGE IT BETWEEN 3.30 PM AND 4 PM TO RECT IFY A GENUINE ERROR THAT MAY HAVE OCCURRED WHILE ENTERING THE CODE. THE FACILITY ENSURES SMOOTH FUNCTIONING OF THE SYSTEM AND IS TO BE USED AS AN EXCEPTION RATHER THAN ROUTINE. CLIENT CODE MODIFICATIO N MEANS MODIFICATION OF CLIENT . CODE AFTER THE EXECUTION OF T RADE. 4. OVER A PERIOD OF TIME, SOME PERSONS, IN CONNIVANCE WITH BROKERS STARTED USING CLIENT CODE MODIFICATIONS FOR PURPOSES OT HER THAN GENUINE ERRORS. CONTRARY TO ITS MOTIVE, CCM FACILITY WAS BEING MISUSED AND BROKERS TRANSFERRED GAINS OR LOSSES FROM ONE PERSON T O ANOTHER BY CHANGING THE CODE, IN THE GARB OF CORRECTING AN ERROR. THESE GAIN OR LOSS-BOOK ENTRIES WERE THEN USED TO EVADE TAXES. 5. NON GENUINE CCM WERE EARNED OUT TO BOOK CONTRIVE D LOSSES IN SOME CASES, THIS FACILITY WAS USED BY BROKERS TO TRANSFER G AINS OR LOSSES FROM ONE PARTY TO ANOTHER BY MODIFYING CLIENT CO DES IN THE GUISE OF RECTIFYING AN- ERROR IT. BECAME A PRACTICE TO LOOK A RTIFICIAL PROFITS OR TOSSES IN MARCH TO IMPACT TAX LIABILITIES IT IS GENERALLY DONE BY BUYING OR SELLING STOCKS INTRA-DAY SO AS TO SAY CONSCIOUSLY INCURS' A L OSS AND USE THAT AS A TAX OFFSET. 6. CLIENT CODE MODIFICATION (CCM) ESPECIALLY IN THE F UTURES AND OPTIONS SEGMENT (F&O) WAS BEING USED A DEVICE TO EVADE TAXES WHEREIN THE CLIENT CODES WERE MODIFIED FOR BOOKING AR TIFICIAL PROFITS OR LOSSES AT THE FAG END JAN TO MARCH) OF THE FINANCIAL YEA R WHEN THE BOOK PROFITS/LOSSES OF VARIOUS CLIENTS HAVE CRYSTALLIZED. T HIS IS DONE 16 WITH AN INTENTION TO IMPACT THE TAX LIABILITIES OF TH E PAIR OF CLIENTS WHOSE CODES ARE MODIFIED. 7. I HAVE EXAMINED THE REPORT OF DIT(INVESTIGATION ) AND THE DETAILS OF EXACT TRANSACTIONS BETWEEN THE ASSESSEE AND BROKER M/S A TO Z STOCK TRADE PRIVATE LIMITED ARE AS FOLLOWS:- B) THE TRANSACTIONS WHICH INVOLVED CCM, AS PER INFORMA TION RECEIVED UNDER THE REPORT OF THE INVESTIGATION WING ARE AS UND ER: C) THUS, THE ASSESSEE HAS SHIFTED IN ASCERTAINED LOSS OF RS. (-)39,83,700 THROUGH A TRANSACTION INVOLVING CCM. 8. THUS, A CAREFUL SCRUTINY OF INFORMATION; RECEIVED FR OM THE INVESTIGATION WING AND ANALYSIS OF REPORT, DATA OF TR ANSACTIONSAND VERIFICATION OF ITR/ASSESSMENT RECORD LEAD TO AN IRRESISTIB LE CONCLUSION THAT CLIENT CODE MODIFICATION HAD BEEN EARNED OUT I N THE CASE OF BR ID BROKER NAME? ORIGINAL ; CLIENT CODE NAME OF ORIGINAL CLIENT PAN OF ORIGINAL CLIENT MODIFIED CLIENT CODE NAME OF . MODIFIED CLIENT PAN OF MODIFIED CLIENT SCRIPT NAME FINAL DATE 12906 A TO Z STOCK TRADE PRIVATE LIMITED CK01 KTG COMDEX PRIVATE LIMITED AACCK7714N CD08 DILWARA LEASING AND INVESTMENT LTD AAACD0488N AKRUTI 26.9.09 BQTY BTOTAL SQTY STOTAL BASE EQUL. BASE VALUE NET P&L F.Y NO. OF CHARACTERS AS OCC NO. OF CHARACTER AS MCC 5400 9275760 5400 5292060 5400 5292060 ( - )3983700 2008 - 09 4 4 NAME OF THE BENEFICIARY CLIENT ADDRESS OF BENEFICIARY NAME OF BROKER WHEN OC (ASCERTAINED PROFIT SHIFTED OUT) WHEN MC (ASCERTAINED LOSSES SHIFTED IN) NET REDUCTION IN INCOME DUE TO CCM M/S DILWARA LEASING AND INVESTMENT LTD 4034, CHARKHEWALAN, CHAWRI BAZAR, DELHI-110006. A TO Z STOCK TRADE PRIVATE LIMITED 0 ( - )3983700 ( - )13983700 17 ASSESSEE TO SHIFT IN ASCERTAINED LOSSES OF RS. (-)39,83,700/- . BY SHIFTING IN THE ABOVE LOSSES THROUGH CONTRIVED TRANSACTION S BY MEANS OF CCM, THE ASSESSEE HAS ARTIFICIALLY DEPRESSED ITS PROFI TS. BY WITHHOLDING REPORTING THESE FACTS SURROUNDING THE TRANS ACTION WHILE FILING ITS RETURN OF INCOME, THE ASSESSEE HAS FAILED TO D ISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. 9. CONSIDERING THE ABOVE REFERRED CREDIBLE INFORMATI ON AND ANALYSIS SUBSEQUENT TO THE INFORMATION, I HAVE REASON TO; BELIE VE THAT AN AMOUNT AT LEAST OF RS. 39,83,700/-- HAS ESCAPED ASSESSMENT IN CASE THE OF M/S DILWARA LEASING AND INVESTMENT LTD. FOR THE A.Y 2009-10 WITHIN THE MEANING OF SECTION 147/148 OF INCOME TAX A CT, 1961. THE INCOME HAS ESCAPED ASSESSMENT DUE TO THE FAILURE OF THE ASSE SSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. THUS, THIS SPECIFIC CONDITION FOR REOPENING IS HEREBY FULFILLED IN THE INSTANT EASE AS ASSESSEE HAS FAILED TO DI SCLOSE SUCH MATERIAL FACTS ON ITS OWN EARLIER. THE CASE IS SQUARELY COV ERED UNDER PROVISIONS OF SECTION 147 OF INCOME- TAX ACT, 1961. 10. SINCE MORE THAN 4 YEARS FROM THE END OF THE RELE VANT ASSESSMENT YEAR HAVE ELAPSED, APPROVAL OF PR COMMISSIONER OF INCOME TAX, DELHI 3, IS SOLICITED IN TERMS OF THE PROVI SIONS OF SECTION 151(1) OF THE ACT. ITO, WARD 7(3), NEW DELHI 6.1 AFTER PERUSING THE AFORESAID REASONS RECORDED, I FI ND THAT INFORMATION WAS RECEIVED FROM ASSTT. DIRECTOR OF INCOME TAX (INVESTIGA TION) UNIT- 1(3), AHMEDABAD WITHOUT CONDUCTING PROPER ENQUIRY ON THE S AME BY ASSESSING OFFICER AND WITHOUT CONSIDERING THE FACT OF THE CASE OF A SSESSEE IN LIGHT OF THE ISSUE IS NOT A TANGIBLE AND RELEVANT MATERIAL TO FORM OPINION THAT INCOME HAS ESCAPED ASSESSMENT. IT IS FURTHER NOTED THAT LD. CIT(A) HAS WRONGLY SUSTAINED THE ORDER OF THE AO WITHOUT APPRECIATING THA T RUBBER STAMP 18 REASONS IN PRESENT CASE ARE BASED ON UNCONFRONTED APPRAI SAL REPORT OF INVESTIGATION WING AND ARE WITHOUT APPLICATION OF M IND. IT IS NOTED THAT THE PROCEEDINGS U/S. 147 OF THE ACT CAN BE INITIATED ONLY ON THE BASIS OF THE TANGIBLE MATERIAL AND NOT ON THE BASIS OF ASSUMPTIONS AN D PRESUMPTIONS. THE PRECONDITION U/S. 147 OF THE ACT IS REASON TO BELIE VE AND, THE EXPRESSION IS STRONGER THAN THE WORD SATISFIED. THE BE LIEF ENTERTAINED BY THE AO MUST NOT BE ARBITRARY OR IRRATIONAL, HOWEVER , IT MUST BE REASONABLE. IN OTHER WORDS, IT MUST BE BASED ON REASONS WHICH ARE REL EVANT AND MATERIAL. THE EXISTENCE OF TANGIBLE AND RELEVANT MAT ERIAL IS A PRECONDITION FOR ASSUMING JURISDICTION, AS HAS BEEN HELD IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. REPORTED IN 320 ITR 561 (SC) AND ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. REPORTED IN 291 ITR 500 (SC). HENCE, IN THIS CASE THE PROCEEDINGS HAVE BEEN INITIATED ON THE BASIS OF NO MAT ERIAL MUCH LESS ANY TANGIBLE AND, RELEVANT MATERIAL AND AS SUCH REASONS RECO RD DO NOT CONSTITUTE VALID REASON TO BELIEVE FOR INITIATING PROCEEDINGS U/S 147 OF THE ACT. IT IS A CASE OF REASON TO SUSPECT' AND NOT REASON TO BELIEVE. I FURTHER NOTE THAT THE ACTION OF THE AO HAS BEEN TAKEN MECHANICALLY ON THE BASIS OF ALLEGED REPORT OF INVESTIGATION WING. THE MERE RECORDING/ FO RMULATION OF REASONS ON THE BASIS OF REPRODUCTION OF INFORMATION FROM INVESTIG ATION WING AND, ISSUING NOTICE FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS D OES NOT CONSTITUTE APPLICATION OF MIND MUCH LESS INDEPENDENT APPL ICATION OF MIND. HENCE, THE PROCEEDINGS ARE WITHOUT JURISDICTION. IT IS SE TTLED LAW THAT AO 19 CANNOT ACT MECHANICALLY ON THE BASIS OF REPORT OF INVESTIG ATION WING AND TO SHOW THAT THE AO HAS APPLIED HIS MIND, HE MUST DISTINCT ALL THOSE MATERIALS AND HE MUST ALSO SHOW THAT WHAT WAS MATERIAL ON RECORD. HENCE, INITIATION OF PROCEEDINGS IS ALSO BASED ON NON-APPLICATION OF MIND MU CH LESS INDEPENDENT APPLICATION OF MIND. THIS VIEW IS FORTIFIED BY THE D ECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT V. G&G PHARMA INDIA LTD. REPORTED AT 384 ITR 147 (DEL). I FURTHER NOTE THAT IN THE REASONS RE CORDED ASSESSEE HAS RELIED UPON THE INFORMATION BY THE INVESTIGATION WIN G, AHMEDABAD, THE AO HAS STATED THAT HAVING PERUSED AND CONSIDERED THE INFORM ATION RECEIVED FROM INVESTIGATION WING HE HAS REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED WHICH HAS NOT BEEN CONFORMED TO THE ASSESSSE E COMPANY, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THOUGH IN VIEW OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF SA BH INFRASTRUCTURE LTD. VS. ACIT REPORTED IN 398 ITR 198 THE SAME WAS TO BE CO NFRONTED ALONGWITH REASONS. I FURTHER FIND THAT ON EXACTLY ON SIMILAR RE ASONS AND FACTS AND CIRCUMSTANCES OF THE CASE, ITAT SMC BENCH, DELHI IN THE CASE OF RADIANCE STOCK TRADERS PVT. LTD. IN ITA NO. 4542/D/2018 VIDE O RDER DATED 29.11.2018 ON IDENTICAL ISSUE OF CCM HAS QUASHED THE REASSESSMENT. FOR THE SAKE OF CLARITY, I AM REPRODUCING THE RELEVANT FINDINGS OF T HE TRIBUNAL IN THE CASE OF RADIANCE STOCK TRADERS PVT. LTD. AS UNDER:- 6. I HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THE CASE LAWS AND THE RELEVANT DOCUMENTS 20 AVAILABLE ON RECORD, ESPECIALLY THE IMPUGNED ORDER, P APER BOOK AND THE CASE LAWS CITED BY BOTH THE PARTIES. FROM T HE ASSESSMENT ORDER. I FIND THAT ASSESSEE HAD FILED ITS RETUR N OF INCOME ELECTRONICALLY ON 23.9.2010 DECLARING LOSS OF R S. 10,624/-. SUBSEQUENTLY, INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING, AHMEDABAD THAT CLIENT CODE IS A PRACTICE UNDER WHICH BROKERS CHANGE THE CLIENT CODES IN SALE AND PURCHASE ORDERS OF SECURITIES AFTER THE TRADES AR E CONDUCTED. THE CASE WAS ACCORDINGLY REOPENED U/S. 147 OF THE ACT AND NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 29.3.2017 TO THE ASSESSEE. THEREAFTER, ORDER U/S. 143(3)/147 OF THE ACT WAS PASSED ON 08.12.2017, ASSESSING THE INCOME AT RS. 5,95,410/- AFTER DISALLOWING LOSS OF RS. 6,02,335/- DUE TO CHANGE OF CLIENT CODE AND DISALLOWANCE OF RS. 3,702/- ON ACCOUNT OF COMMISSION OF 2% FOR THE ENTRY. I FURTHER NOTE THAT THE AO WHIL E RECORDING THE REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT HAS RECORDED THE REASONS AS UNDER:- REASONS FOR INITIATING PROCEEDINGS U/S. 148 AND FOR OBTAINING APPROVAL IN THE CASE OF M/S RADIANCE STOCK TRADERS PVT. LTD. FOR AY 2010-11 21 1 NAME AND ADDRESS OF THE ASSESSEE M/S RADIANCE STOCK TRADERS PVT. LTD. C-159, 1 ST FLOOR, PHASE- I, ASHOK VIHAR, NEW DELHI 52 2 PERMANENT ACCOUNT NO. AACCR8298Q) 3 STATUS COMPANY 4 DISTRICT/CIRCLE/RANGE WARD 20(4), NEW DELHI 5 ASSESSMENT YEAR IN RESPECT OF WHICH IT IS PROPOSED TO BE ISSUED NOTICE U/S. 148 OF THE INCOME TAX ACT. 2010-11 6. THE QUANTUM OF INCOME WHICH HAS ESCAPED ASSESSMENT RS. 6,02,335/- 7. WHETHER THE CLAUSES (A), (B) OR (C) OF THE EXPLANATION 2 TO THE SECOND PROVISO OF SECTION 147 ARE APPLICABLE. YES, PROVISIONS OF SECTION 147(B) APPLICABLE. 8 WHETHER THE ASSESSMENT IS PROPOSED TO BE MADE FOR THE FIRST TIME? IF REPLY IS IN AFFIRMATIVE, PLEASE STATE: YES (A) WHETHER ANY VOLUNTARY RETURN HAD ALREADY BEEN FILED. NO (B) IF SO, THE DATE OF FILING THE SAID RETURN. NA 9. IF THE ANSWER TO ITEM 8 IS IN NEGATIVE, PLEASE STATE (A) THE INCOME ORIGINALLY ASSESSED NA (B) WHETHER IT IS A CASE OF UNDER ASSESSMENT, ASSESSMENT AT TOO LOW A RATE WHICH HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIED OR ALLOWING EXCESSIVE LOSS OR DEPRECIATION NA 22 10 WHETHER THE PROVISIONS OF SECTION 150(1) ARE APPLYING. IF THE RELY IS IN THE AFFIRMATIVE, THE RELEVANT FACTS MAY BE STATED AGAINST ITEM NO. 11 AND IT MAY ALSO BE BROUGHT OUT THAT THE PROVISIONS OF SECTION 150(2) WOULD NOT STAND IN THE WAY OF INITIATING PROCEEDINGS U/S. 147. NO. 11. REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THE ASSESSEE IS A COMPANY FILED ITS RETURN OF INCOME FOR A Y 2010-11. AS PER RETURN FOR AY 2010-11, THE DETAILS OF THE DIRECTORS OF THE ASSESSEE COMPANY OBTAINED FROM RECORDS ARE HEREUNDER:- (A) SURESH ARORA, 581, WARD NO. 16, STREET DR. INDERJIT SINGH, ARYA SAMAJ ROAD, SIRSA, HARYANA-125055. (B) ANJALI ARORA, 581, WARD NO. 16, STREET DR. INDERJIT SINGH, ARYA SAMAJ ROAD, SIRSA, HARYANA-125055 2. IN THIS CASE, INFORMATION WAS RECEIVED ON 21./03/201 6 FROM ASSTT. DIRECTOR OF INCOME TAX (INVESTIGATION), UNIT 1(3) , AHMEDABAD BY WHICH A SURVEY REPORT WAS DISSEMINATED IN CASE OF BENEFICIARY CLIENTS WHO HAVE TAKEN CONTRIVED LOSSES AND SHIFTED OUT PROFITS USING CLIENT CODE MODIFICATION. 3. IT IS A DETAILED REPORT OF 589 PAGES. ON GOING THR OUGH THE REPORT AND GATHERED THAT CLIENT CODE IS A UNIQUE CO DE WHICH IS ASSIGNED BY A BROKER TO ITS CLIENTS. A BROKER CAN ISSUED JU ST ONE CODE TO A CLIENT. CLIENT CODE MODIFICATION MEANS MODIFI CATION / CHANGE OF THE CLIENT CODES AFTER EXECUTION OF TRADES. VI DE CIRCULAR NO. SMD/POLICY/CIR./03 DATED FEBRUARY 6, 200 3 SEBI MANDATES THAT THE STOCK EXCHANGES SHALL NOT NORMALLY PERM IT CHANGES IN THE CLIENT CODE EXCEPT TO CORRECT FOR GENUINE MISTAKES. THE CLIENT CODE MODIFICATIONS PERMIT BROKERS TO RECTIFY HUMAN ERRORS WHEN A CLIENT INADVERTENTLY PROVIDES A WR ONG CODE OR WHEN OR A WRONG CODE IS PUNCHED IN BY THE BROKER WH ILE EXECUTING THE TRADE. THE BROKER IS ALLOWED TO CHANGE I T BETWEEN 3.30 PM AND 4 PM TO RECTIFY A GENUINE ERROR THAT MAY HAVE OCCURRED WHILE ENTERING THE CODE. THE FACILITY ENSURES SMOOTH FUNCTIONING OF THE SYSTEM AND IS TO BE USED AS AN EXCEPTI ON RATHER THAN ROUTINE. CLIENT CODE MODIFICATION MEANS M ODIFICATION 23 OF CLIENT CODE AFTER THE EXECUTION OF TRADE. OVER A PERIOD OF TIME, SOME PERSONS, IN CONNIVANCE WITH BROKERS STARTED USING CLIENT CODE MODIFICATIONS FOR PURPOSES OTH ER THAN GENUINE ERRORS. CONTRARY TO ITS MOTIVE, CCM FACILITY W AS BEING MISUSED AND BROKERS TRANSFERRED GAINS OR LOSSES FROM ONE PE RSON TO ANOTHER BY CHANGING THE CODE, IN THE GARB OF CORRECT ING AN ERROR. THESE GAIN OR LOSS BOOK ENTRIES WERE THEN USED TO EVADE TAXES. 4. NON GENUINE CCM WERE CARRIED OUT TO BOOK CONTRIVE D LOSSES. IN SOME CASES, THIS FACILITY WAS USED BY BROKERS TO TRANSF ER GAINS OR LOSSES FROM ONE PARTY TO ANOTHER BY MODIFYING CLIENT CODES IN THE GUISE OF RECTIFYING AN ERROR. IT BECAME A P RACTICE TO BOOK ARTIFICIAL PROFITS OR LOSSES IN MARCH TO IMPACT TAX LIABILITIES. IT IS GENERALLY DONE BY BUYING OR SELLING STOCKS INTRAD AY SO AS TO SAY CONSCIOUSLY INCURS A LOSS AND USE THAT AS A TAX OFFSET. CLIENT CODE MODIFICATION (CCM) ESPECIALLY IN THE FUTU RES AND OPTIONS SEGMENT (F&O) WAS BEING USED A DEVISE TO EVADE TAXES WHEREIN THE CLIENT CODES WERE MODIFIED FOR BOOKING ART IFICIAL PROFITS OR LOSSES AT FAG END (JAN TO MARCH) OF THE FINAN CIAL YEAR WHEN THE BOOK PROFITS / LOSSES OF VARIOUS CLIENTS HAVE CRYST ALISED. THIS IS DONE WITH AN INTENTION TO IMPACT THE TAX LIABI LITIES OF THE PAIR OF CLIENTS WHOSE CODES ARE MODIFIED. ON THE BASIS OF INFORMATION RECEIVED, THE ASSESSEE COMPANY IN RESPECT OF FY 2009-10 RELEVANT TO AY 2010-11 AND THE FOLLOWING FACTS ARE NOTED THAT : A) DURING THE YEAR IT HAS UNDERTAKEN TRANSACTIONS IN SALE / PURCHASE OF SHARES, SECURITIES IN CASH SEGMENT AS WELL AS FUTURE AND OPTIONS SEGMENT AND ITS TURNOVER COULD HAV E INCLUDED THE TRANSACTIONS CONTRIVED BY WAY OF CCM. AS PE R THE INFORMATION RECEIVED FOR THE PERIOD OF 01.4.2009 TO 31.3.2010, IT HAS UNDERTAKEN LOSS WORTH RS. 6,02,335/-. B) THE TRANSACTIONS WHICH INVOLVED CCM, AS PER INFORMATION RECEIVED UNDER THE REPORT OF THE INVESTIGATION WING ARE AS UNDER:- NAME OF ADDRESS OF NAME OF WHEN OC WHEN MC NET 24 THE BENEFICIAR Y CLIENT BENEFICIAR Y BROKER (ASCERTAINE D PROFIT SHIFTED OUT) (ASCERTAINE D LOSSES SHIFTED IN) REDUCTIO N IN INCOME DUE TO CCM RADIANCE STOCK TRADERS PVT. LTD. C-159, 1 ST FLOOR, PHASE-I, ASHOK VIHAR, NEW DELHI 52 COMPETEN T FINMAN PVT. LTD. 0 -602335 -602335 C) THUS, THE ASSESSEE HAS SHIFTED IN ASCERTAINED LOSS OF RS. - 6,02,335/- THROUGH A TRANSACTION INVOLVING CMM. 4. THUS, A CAREFUL SCRUTINY OF INFORMATION RECEIVED FRO M THE INVESTIGATION WING AND ANALYSIS OF REPORT, DATA OF TR ANSACTIONS AND VERIFICATION OF ITR/ASSESSMENT RECORD LEAD TO AN IRRE SISTIBLE CONCLUSION THAT CLIENT CODE MODIFICATION HAD BEEN CARRI ED OUT IN THE CASE OF ASSESSEE TO SHIFT IN ASCERTAINED LOSS OF RS. - 06,02,335/- . BY SHIFTING IN THE ABOVE LOOSE THROUGH CONTRIVED TRANSACTIONS BY MEANS OF CMM, THE ASSESSEE HAS ARTIFICIALLY DEPRESSED ITS PROFITS. BY WITHHOLDING THESE FACTS SURRO UNDING THE TRANSACTION DURING THE REGULAR ASSESSMENT PROCEEDINGS , THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL THE MA TERIAL FACTS NECESSARY FOR ITS ASSESSMENT. 5. CONSIDERING THE ABOVE REFERRED CREDIBLE INFORMATI ON AND ANALYSIS SUBSEQUENT TO THE INFORMATION, I HAVE REASON T O BELIEVE THAT AN AMOUNT AT LEAST OF RS. -6,02,335/- HAS ESCAPED ASSESSMENT IN CASE OF M/S RADIANCE STOCK TRADERS PVT. LTD. FOR THE AY 2010-11 WITHIN THE MEANING OF SECTION 147/148 OF INCOME TAX ACT, 1961. THE INCOME HAS ESCAPED ASSESSMENT DUE TO THE FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. THUS, THIS SPE CIFIC CONDITION FOR REOPENING IS HEREBY FULLY FILLED IN THE INSTANT CASE AS ASSESSEE HAS FAILED TO DISCLOSE SUCH MATERIAL FACTS ON ITS OWN EARLIER. THE CASE IS SQUARELY COVERED UNDER THE PROVISIO NS OF SECTION 147 OF THE INCOME TAX ACT, 1961. 6. SINCE MORE THAN 4 YEARS FROM THE END OF THE SINCE M ORE THAN 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR HAV E ELAPSED, APPROVAL OF PR. COMMISSIONER OF INCOME TAX, D ELHI -7 IS SOLICITED IN TERMS OF THE PROVISIONS OF SECTION 151(1) OF THE ACT. SD/- 25 (PRADEEP) INCOME TAX OFFICER, WARD 20(3), NEW DELHI 12. WHETHER THE ADDL. CIT IS SATISFIED ON THE REASONS RECORDED BY THE AO THAT IT IS A FIT CASE FOR ISSUE OF NOTICE U/S. 148 OF THE I.T. ACT, 1961 ADDL. CIT, RANGE-20, NEW DELHI 13. WHETHER THE PR. COMMISSIONER OF INCOME TAX IS SATISFIED ON THE REASONS RECORDED BY THE DCIT, THAT IT IS A FIT CASE FOR THE ISSUE OF NOTICE U/S. 148. YES. I AM SATISFIED. SD/- PR. COMMISSIONER OF INCOME TAX, DELHI -7, NEW DELHI 6.1 AFTER PERUSING THE AFORESAID REASONS RECORDED, I FIN D THAT INFORMATION WAS RECEIVED ON 21.3.2016 FROM ASSTT. DIR ECTOR OF INCOME TAX (INVESTIGATION) UNIT- 1(3), AHMEDABAD WITH OUT CONDUCTING ANY ENQUIRY ON THE SAME BY ASSESSING OFFICER AN D WITHOUT CONSIDERING THE FACT OF THE CASE OF ASSESSEE IN LIGH T OF THE ISSUE IS NOT A TANGIBLE AND RELEVANT MATERIAL TO FORM OPINION THAT INCOME HAS ESCAPED ASSESSMENT. IT IS NOTED THAT THE PROCEEDINGS U/S. 147 OF THE ACT CAN BE INITIATED ONLY O N THE BASIS OF THE TANGIBLE MATERIAL AND NOT ON THE BASIS OF ASSUMP TIONS AND PRESUMPTIONS. THE PRECONDITION U/S. 147 OF THE ACT IS REASON TO BELIEVE AND, THE EXPRESSION IS STRONGER THAN THE WORD SATISFIED. THE BELIEF ENTERTAINED BY THE AO MUST NO T BE 26 ARBITRARY OR IRRATIONAL, HOWEVER, IT MUST BE REASONA BLE. IN OTHER WORDS, IT MUST BE BASED ON REASONS WHICH ARE RELEVANT A ND MATERIAL. THE EXISTENCE OF TANGIBLE AND RELEVANT MAT ERIAL IS A PRECONDITION FOR ASSUMING JURISDICTION, AS HAS BEEN HEL D IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. REPORTED IN 3 20 ITR 561 (SC) AND ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. REPORTED IN 291 ITR 500 (SC). HENCE, IN THIS CASE THE PROCEEDINGS HAVE BEEN INITIATED ON THE BASIS OF NO MATERIAL MUCH LESS ANY TANGIBLE AND, RELEVANT MATERIAL AND AS SUCH REASONS RECORD DO NOT CONSTITUTE VALID REASON TO BELIEVE FOR INITIATING PROCE EDINGS U/S 147 OF THE ACT. IT IS A CASE OF REASON TO SUSPECT' AND NO T REASON TO BELIEVE. 6.2 I FURTHER NOTE THAT THE ACTION OF THE AO HAS BEE N TAKEN MECHANICALLY ON THE BASIS OF ALLEGED REPORT OF INVESTIGA TION WING. THE MERE RECORDING/ FORMULATION OF REASONS ON THE BASIS OF REPRODUCTION OF INFORMATION FROM INVESTIGATION WI NG AND, ISSUING NOTICE FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS D OES NOT CONSTITUTE APPLICATION OF MIND MUCH LESS INDEPENDENT APPLICATION OF MIND. HENCE, THE PROCEEDINGS ARE WITHOUT JURISDICTION. IT IS SETTLED LAW THAT AO CANNOT ACT MECHAN ICALLY ON THE BASIS OF REPORT OF INVESTIGATION WING AND TO SHOW T HAT THE AO HAS APPLIED HIS MIND, HE MUST DISTINCT ALL THOSE MAT ERIALS 27 AND HE MUST ALSO SHOW THAT WHAT WAS MATERIAL ON RECORD. HENCE, INITIATION OF PROCEEDINGS IS ALSO BASED ON NON-APPLICATIO N OF MIND MUCH LESS INDEPENDENT APPLICATION OF MIND. THIS VIEW IS FORTIFIED BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT V. G&G PHARMA INDIA LTD. REPORTED AT 384 ITR 14 7 (DEL), WHEREIN IT HAS BEEN HELD AS UNDER:- TODAY WHEN THE CASE WAS CALLED OUT, MR. SAWHNEY PRODUCED BEFORE THE COURT THE VERY SAME LETTER OF THE AO DATED 15TH SEPTEMBER 2010 WHICH HAS BEEN REPRODUCED I N ITS ENTIRELY IN THE IMPUGNED ORDER OF THE ITAT. HE SUBMITTED THAT THE AO WAS HIMSELF PRESENT IN THE COURT AND FURTHER EFFORTS WOULD BE MADE TO LOCATE THE MATER IALS ON THE BASIS OF WHICH THE AO FORMED HIS OPINION REGARDI NG REOPENING OF THE ASSESSMENT. THE COURT WAS NOT PREPARED TO GRANT FURTHER TIME FOR THIS PURPOSE SINCE IT WAS NOT CLEAR THAT THE MATERIALS WERE, IN FACT, AVAILABLE WITH THE DEPARTMENT. 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENTRIES , STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEBRUARY 2003, FROM FOUR ENTITIES WHI CH WERE TERMED AS ACCOMMODATION ENTRIES, WHICH INFORMATIO N WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, THE 28 AO STATED: 'I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGATION WING AND ON THAT BASIS IT I S EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES.' THE ABOVE CONCLUSION IS UNHELPFU L IN UNDERSTANDING WHETHER THE AO APPLIED HIS MIND TO THE MATERIALS THAT 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 A O, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERE NCE 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 14 TH NOVEMBER 2004 AND WAS PROCESSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: 'IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES'. IN THE CONSIDER ED VIEW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WI TH SUFFICIENT CLARITY BY THE SUPREME COURT IN THE DECISI ONS 29 DISCUSSED HEREINBEFORE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. 6.3 I FURTHER NOTE THAT IN THE REASONS RECORDED ASSESSEE HAS RELIED UPON THE INFORMATION BY THE INVESTIGATION WING, AHMEDABAD, THE AO HAS STATED THAT HAVING PERUSED AND CONSIDERED THE INFORMATION RECEIVED FROM INVESTIGATION WING HE HAS REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED WHICH HAS NOT BEEN CONFORMED TO THE ASSESSSEE COMPANY, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THOUGH IN VIEW OF THE JUDGMENT OF HONBL E DELHI HIGH COURT IN THE CASE OF SABH INFRASTRUCTURE L TD. VS. ACIT REPORTED IN 398 ITR 198 THE SAME WAS TO BE CONFRONTED ALONGWITH REASONS WHEREIN IT HAS BEEN HELD A S UNDER: (III) WHERE THE REASONS MAKE A REFERENCE TO ANOTHER DOCUMENT, WHETHER AS A LETTER OR REPORT, SUCH DOCUMENT AND / OR RELEVANT PORTIONS OF SUCH REPORT SHOULD BE ENCLOSED ALONGWITH THE REASONS. 6.3.1 HENCE IN THE ABSENCE OF SUCH MATERIAL, THE ALLEGATION AND ASSUMPTIONS ARE NOTHING BUT FIGMENT O F 30 IMAGINATION AS THEY ARE BASED ON ASSUMPTION AND PRESUMPTION, APART FROM BEING WITHOUT BASIS. 6.4 IT IS FURTHER NOTED THAT THE APPROVAL GRANTED B Y THE COMPETENT AUTHORITY IS A MECHANICAL APPROVAL AND ACTION HAS BEEN TAKEN MECHANICALLY BECAUSE ON PERUSING THE REASONS RECORDED, IT DEMONSTRATES THAT PR. CIT HAS WRITTEN YES, I AM SATISFIED. WHICH ESTABLISHES THAT THE COMPETENT AUTHORITY HAS NOT RECORDED PROPER SATISFACTION / APPROVAL, BEFORE ISSUE OF NOTICE U/S. 148 OF THE I.T. A CT. THEREAFTER, THE AO HAS MECHANICALLY ISSUED NOTICE U/S. 1 48 OF THE ACT, ON THE BASIS OF INFORMATION ALLEGEDLY RECEI VED BY HIM FROM THE (INV.)), UNIT 1(3), AHMEDABAD. KE EPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESE NT CASE AND THE CASE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, I AM OF THE CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF THE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BAD IN LAW AND DESERVES TO BE QUASHED. MY AFORESAID VI EW IS FORTIFIED BY THE FOLLOWING DECISIONS:- (A) HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. M/S NC CABLES LTD. IN ITA NO. 335/2015 HAS HELD AS UNDER:- 11. SECTION 151 OF THE ACT CLEARLY STIPULATES THAT THE CIT(A), WHO IS THE COMPETENT AUTHORITY TO AUTHORIZE T HE REASSESSMENT NOTICE, HAS TO APPLY HIS MIND AND FORM AN OPINION. THE MERE APPENDING OF THE EXPRESSION APPROV ED SAYS NOTHING. IT IS NOT AS IF THE CIT(A) HAS TO RECORD ELABORATE REASONS FOR AGREEING WITH THE NOTING PUT U P. AT THE SAME TIME, SATISFACTION HAS TO BE RECORDED OF THE GIV EN 31 CASE WHICH CAN BE REFLECTED IN THE BRIEFEST POSSIBLE MANNER. IN THE PRESENT CASE, THE EXERCISE APPEARS TO HAVE BEEN RITUALISTIC AND FORMAL RATHER THAN MEANINGFUL , WHICH IS THE RATIONALE FOR THE SAFEGUARD OF AN APPROVAL B Y A HIGHER RANKING OFFICER, FOR THESE REASONS, THE COURT I S SATISFIED THAT THE FINDINGS BY THE ITAT CANNOT BE DISTURBED. (B). HONBLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF CIT VS. S. GOYANKA LIME & CHEMICALS LTD. REPORTED I N (2015) 56 TAXMANN.COM 390 (MP) HAS HELD AS UNDER:- 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND WE FIN D THAT WHILE ACCORDING SANCTION, THE JOINT COMMISSIONER, INCOME T AX HAS ONLY RECORDED SO YES, I AM SATISFIED. IN THE CASE O F ARJUN SINGH VS. ASSTT. DIT (2000) 246 ITR 363 (MP), THE SAME QUESTION HAS BEEN CONSIDERED BY A COORDINATE BENCH OF TH IS COURT AND THE FOLLOWING PRINCIPLES ARE LAID DOWN:- THE COMMISSIONER ACTED, OF COURSE, MECHANICALLY IN ORDER TO DISCHARGE HIS STATUTORY OBLIGATION PROPERLY IN THE M ATTER OF RECORDING SANCTION AS HE MERELY WROTE ON THE FORMAT YES, I AM SATISFIED WHICH INDICATES AS IF HE WAS TO SIG N ONLY ON THE DOTTED LINE. EVEN OTHERWISE ALSO, THE EXE RCISE IS SHOWN TO HAVE BEEN PERFORMED IN LESS THAN 24 HOURS OF TIME WHICH ALSO GOES TO INDICATE THAT THE COMMISISONER DI D NOT APPLY HIS MIND AT ALL WHILE GRANTING SANCTION. TH E SATISFACTION HAS TO BE WITH OBJECTIVITY ON OBJECTIVE MAT ERIAL 8. IF THE CASE IN HAND IS ANALYSED ON THE BASIS OF THE AFORESAID PRINCIPLE, THE MECHANICAL WAY OF RECORDING 32 SATISFACTION BY THE JOINT COMMISSIONER, WHICH ACCORDS SANCTION FOR ISSUING NOTICE UNDER SECTION 148, IS CLEARLY UNSUSTAINABLE AND WE FIND THAT ON SUCH CONSIDERATION BOT H THE APPELLATE AUTHORITIES HAVE INTERFERED INTO THE M ATTER. IN DOING SO, NO ERROR HAS BEEN COMMITTED WARRANTING RECONSIDERATION. ( C.) HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. S. GOYANKA LIME & CHEMICAL LTD. REPORTED IN (20 15) 64 TAXMANN.COM 313 (SC) IN THE HEAD NOTES HAS HELD THAT SECTION 151, READ WITH SECTION 148 OF INCOME TAX ACT, 1 961 INCOME ESCAPING ASSESSMENT SANCTION FOR ISSUE OF NOTICE (RECORDING OF SATISFACTION) HIGH COURT BY IMPUGNED ORD ER HELD THAT WHERE JOINT COMMISSIONER RECORDED SATISFACTION IN MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND TO A CCORD SANCTION FOR ISSUING NOTICE UNDER SECTION 148, REOPENING OF ASSESSMENT WAS INVALID WHETHER SPECIAL LEAVE PETITION F ILED AGAINST IMPUGNED ORDER WAS TO BE DISMISSED HELD, YES (IN FAVOUR OF THE ASSESSEE). 6.5 I FURTHER NOTE THAT IT IS WELL SETTLED LAW THAT R EASONS ALONE CAN BE LOOKED INTO AND, CANNOT BE SUPPORTED BY ANY SUPPLEMENTARY OR ADDITIONAL MATERIAL. 6.6 I FURTHER NOTE THAT ASSESSING OFFICER AT PAGE NO. 2 OF HIS ASSESSMENT ORDER DATED 8.12.2017 U/S. 147/143(3) OF THE ACT STATED AS UNDER:- OBJECTION TO REOPENING 33 ASSESSEE FILED OBJECTION VIDE LETTER DATED 24.11.2017 TO THE NOTICE U/S. 148/REASON RECORDED. REMOVAL OF OBJECTION THE OBJECTION FILED BY THE ASSESSEE WERE REJECTED VIDE ORDER DATED 27.11.2017. 6.6.1 AFTER PERUSING THE AFORESAID EXTRACTS FROM THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE ASSESSEE HAS RAISED OBJECTION TO INITIATION OF ASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT VIDE LETTER DATED 24.11.2017 AND THE AFORESAID OBJECTIONS WERE DISPOSED OF BY THE AO VIDE ORDER DATED 27.11.2017, WHICH SHOWS THAT THE AO DID N OT ACCEPT THE OBJECTIONS SO FILED, HE SHALL NOT PROCEED FURTH ER IN THE MATTER WITH IN A VERY SHORT PERIOD OF SERVICE O F ORDER DISPOSING OFF OBJECTION, HOWEVER, HE HAS MADE THE ORDE R OF ASSESSMENT U/S. 147/143(3) OF THE ACT ON 8.12.2017, WHICH IS NOT IN ACCORDANCE WITH LAW AND NOT PERMISSIBLE. THIS VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS:- I) ITA NO. 5780/D/2014 DATED 6.4.2018 META PLAST ENGINEERING (P) LTD. V. ITO 9. FURTHER, IN VIEW OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF BHARAT JAYANT PATEL (SUPRA), LEARNED AO HELD SHOULD HAVE ALLOWED FOUR WEEKS TIME TO THE ASSESSEE TO SEEK THEIR LEGAL 34 REMEDIES AFTER REJECTION OF THE OBJECTIONS OF THE ASSESSEE. IN VIEW OF THE FACT THAT THE AO HAS DISPOSED OF THE OBJECTIONS OF THE ASSESSEE ON 22.11.11 AND PASSED THE ASSESSMENT ORDER ON 19.12.2011, IT IS CLEAR THAT NO SUCH TIME WAS GRANTED TO THE ASSESSEE. FURTHER, THE REASONS RECORDED AT THE TIME OF ASSUMPTION OF JURISDICTION BY THE AO THAT THE ASSESSEE HAS RECEIVED AN ACCOMMODATION ENTRY OF RS.15 LACS WHEREAS AT THE TIME OF FRAMING OF ASSESSMENT, THE ASSESSEE WAS ASSESSED THE SHARE APPLICATION MONEY TO THE TUNE OF RS.2.15 CRORES. WE FIND REASON IN THE SUBMISSION OF LEARNED AR THAT IN VIEW OF THE DECISION IN PCIT VS. RMG POLYVINYL (I) LTD.386 ITR 5 (BOM), SUCH AN ERROR INDICATES NON APPLICATION OF MIND BY THE LEARNED AO. II) 296 ITR 90 (BOM) ASIAN PAINTS LTD. VS. DCIT 3. THE LEARNED SENIOR COUNSEL FOR THE PETITIONER POINTED OUT THAT IN SOME OF THE CASES AS SOON AS THE OBJECTIONS WERE REJECTED BY THE CONCERNED INCOME- TAX OFFICER, EVEN THE ASSESSMENT ORDER HAS BEEN PASSED WITHIN A VERY SHORT TIME WHEREBY THE ASSESSEE IS LEFT WITHOUT ANY REMEDY TO CHALLENGE SUCH AN ORDER OF REJECTION. 4. HENCE WE MAKE IT CLEAR THAT IF THE ASSESSING OFFICER DOES NOT ACCEPT THE OBJECTIONS SO FILED, HE SHALL NOT PROCEED FURTHER IN THE MATTER WITHIN A 35 PERIOD OF FOUR WEEKS FROM THE DATE OF RECEIPT OF SERVICE OF THE SAID ORDER ON OBJECTIONS, ON THE ASSESSEE. 5. ACCORDINGLY, RULE IS MADE ABSOLUTE. 6. WE ALSO DIRECT THAT THE INCOME TAX OFFICER CONCERNED SHALL FOLLOW THE ABOVE PROCEDURE STRICTLY IN ALL SUCH CASES OF REOPENING OF ASSESSMENT. 6.7 AS REGARDS CASE LAW CITED BY THE LD. DR IS CONCERNED, THE SAME IS AN EXPARTE ORDER AND ON DISTINGUISHED FACTS AND CIRCUMSTANCES OF THE CASE. 6.8 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENTS, AS AFORESAID, I AM OF THE CONSIDERED VIEW THAT PROCEEDINGS INITIATED BY INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT BY THE AO AND UPHELD BY THE LD. CIT(A) ARE NONEST IN LAW AND WITHOUT JURISDICTIO N, HENCE, THE RE-ASSESSMENT IS QUASHED. SINCE I HAVE ALREADY QUASHED THE RE-ASSESSMENT, THE OTHER GROUNDS HAVE BECOME ACADEMIC AND ARE THEREFORE NOT ADJUDICATED AND ACCORDINGLY, THE ASSESSEES APPEAL IS ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. 6.2 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF TH E PRESENT CASE AND CASE LAWS RELIED UPON BY BOTH THE PARTIES, I AM O F THE CONSIDERED VIEW THAT THAT CASE LAWS CITED BY THE LD. DR ARE ON DISTINGUI SHED FACTS AND 36 CIRCUMSTANCES OF THE CASE, HOWEVER, THE CASE LAW CITED BY THE LD. COUNSEL FOR THE ASSESSEE ARE EXACTLY ON SIMILAR FACTS AND CIRCUMSTANCE S OF THE PRESENT CASE, HENCE, RESPECTFULLY FOLLOWING THE PRECEDENT IN THE CASE OF RADIANCE STOCKS TRADERS PVT. LTD. IN ITA NO. 4542/DEL/2 018 (SUPRA), I AM OF THE CONSIDERED VIEW THAT PROCEEDINGS INITIATED BY I NVOKING THE PROVISIONS OF SECTION 147 OF THE ACT BY THE AO AND UPHELD BY THE LD. CIT(A) ARE NONEST IN LAW, WITHOUT JURISDICTION AND WITHOUT APPLYING HI S MIND AND AO ISSUED NOTICE WITHOUT CONFRONTING THE APPRAISAL REPORT OF TH E INVESTIGATION WING. HENCE, THE REASSESSMENT IS QUASHED AND ACCORDINGLY, I ALLOW T HE LEGAL GROUND NO. 1 TO 1.1 RAISED BY THE ASSESSEE. NO OTHER GR OUND HAS BEEN ADJUDICATED AS THE SAME HAS NOT BEEN ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAND S ALLOWED ORDER PRONOUNCED ON 11-01-2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATED: 11-01-2019 SRBHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.