ACIT, Central Circle- 30, New Delhi V. Rajnil Sales Pvt. Ltd., New Delhi

ITA 4049/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9833 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 19-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHMA SINGH
• Keywords: Reopening of assessment; Unexplained cash credit; Unexplained expenditure; Search and seizure; Principle of natural justice; Source of fund; Tangible material; Corroborative evidences; Accommodation entries; Block assessment; Revocable transfer; Retraction; Reason to believe; Reassessment proceedings; Capital Gains
• Section: 133(6); 13; 22; 153C; 147; 68; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER I .T.AS. NO.4049/DEL/2017 ASSESSMENT YEARS: 2008-09 ACIT, CENTRAL CIRCLE-30, NEW DELHI. VS. RAJNI SALES (P) LTD., ROOM NO.91, 4 TH FLOOR, 2B GRANT LANE KOLKATA. TAN/PAN: AABCR3491C (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI AJAY WADHWA, ADV. DEPARTMENT BY: SHRI SUSHMA SINGH, CIT-D.R. DATE OF HEARING: 12 04 2021 DATE OF PRONOUNCEMENT: 9 07 2021 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL BEEN FILED BY THE REVENUE AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) XXX , NEW DELHI FOR THE A.Y.2008-09, WHEREIN THE ASSESSMENT HAS BEE N QUASHED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 2. THE GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT BEFORE US ARE REPRODUCED UNDER: ITA NO.4049/DEL/2017 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O TO D ELETE THE ADDITION MADE I.T.AS. NO. 4049/DEL/2017 2 U/S 68 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINED CA SH CREDITS AMOUNTING TO RS. 8,73,24,240/- ON PROTECTIVE BASIS. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O TO D ELETE THE ADDITION OF RS. 4,36,621/- AS UNEXPLAINED EXPENDITURE ON ACCOUNT OF BROKERAGE 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAD ERRED IN LAW AND ON FACTS IN HOLDING THAT THE INITI ATION OF ACTION U/S 147 OF THE ACT, IS INVALID AND VOID AB-INITIO 4 THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, A LTER OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. THE BRIEF FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF INVESTMENT, SALES AND PURCHASE OF SHARE S AND HAS FILED ITS RETURN OF INCOME ON 31.03.2009. THE ASSESSEES CASE WAS REOPENED U/S.148 BY ISSUANCE OF NOTICE ON 18.08.2015 ON THE FOLLOWING REASONS RECORDED:- M/S. RAJNI SALES PVT. LTD. A.Y. 2008-09 IN THIS CASE, THE RETURN DECLARING INCOME OF RS.3,4 69/- WAS E-FILED ON 31.03.2009 VIDE ACKNOWLEDGMENT NO.66842781310309. I T WAS PROCESSED U/S.143(1) OF THE IT ACT AT RETURNED INCO ME. A SEARCH AND SEIZURE ACTION IN SURYA PRAKASH GROUP OF CASES WAS CARRIED OUT ON 30.10.2012. DURING SEARCH, IN HIS STATEMENT RECORDED U/S.. 132( 4) OF THE IT ACT ON 11.10.2012, CHAIRMAN OF M/S. PRAKASH INDUSTRIES LTD ., SHRI VED PRAKASH AGARWAL ADMITTED THAT ACCOMMODATION ENTRIES FROM PAPER COMPANIES WERE RECEIVED IN VARIOUS GROUP COMPANIES INCLUDING M/S. RAJNI SALES PVT. LTD. I.T.AS. NO. 4049/DEL/2017 3 STATEMENT OF SHRI SHIV SHANKAR VANKA WAS TAKEN ON 3 0.10.2012 DURING THE SEARCH PROCEDURE IN WHICH HE ADMITTED TH AT HE PROVIDED THE ACCOMMODATION ENTRY TO M/S. PRAKASH INDUSTRIES LTD. GROUP COMPANIES THROUGH SHRI ASHOK AGGARWAL. STATEMENT OF SHRI SHIV SHANKAR BANKA, AN ENTRY OPERATOR IS MADE PART OF REASONS AS ANNEXU RE-III. SHRI VED PRAKASH AGGARWAL, THE CHAIRMAN OF M/S. PRA KASH INDUSTRIES LTD. ADMITTED THAT UNACCOUNTED CASH WAS INTRODUCED IN THE BOOKS OF ACCOUNT AT SHARE CAPITAL ARRANGED THROUGH SHRI. ASHOK AGGARWAL. SHRI ASHOK AGGARWAL THROUGH AFFIDAVIT DAT ED 24 TH JANUARY, 2013 CONFIRMED THAT HE INTRODUCED SHRP PL GUPTA EMP LOYEE/DIRECTOR OF M/S. PRAKASH INDUSTRIES LTD. WITH ENTRY OPERATOR SH RI SHIV SHANKAR BANKA. STATEMENT OF SHRI VED PRAKASH AGGARWAL, CHAI RMAN OF M/S. PRAKASH INDUSTRIES LTD. IS MADE PART OF REASONS AS ANNEXURE-III. STATEMENT OF SHRI ASHOK KUMAR AGGARWAL THE ERSTWHIL E DIRECTOR OF THE COMPANY WAS ALSO RECORDED U/S.131 OF IT ACT ON 22.01.2013. HE STATED THAT HE WAS DIRECTOR OF RAJNIL SALES PVT. LT D. FROM 2005 TO 2009 AND DOES NOT KNOW ABOUT THE NATURE OF ACTIVITIES OF THE COMPANY. HE ALSO DID NOT KNOW ABOUT THE SHARE HOLDING OF THE CO MPANY. HE WAS ALSO ASKED ABOUT THE MANNER IN WHICH THE SHARE CAPITAL O F THE COMPANY WAS RAISED. IN RESPONSE TO THTAT EH STATED THAT HE DID NOT KNOW ANYTHING ABOUT THIS MATTER. HE FURTHER STATED THAT HE SIMPLY SIGNS WHATEVER DOCUMENTS WERE GIVEN TO HIM. HE NEVER VISITED THE C OMPANY OFFICE. HE KNEW NOTHGIN ABOUT INCORPORATION OF COMPANY, AUDITO R OF COMPANY. HE NEVER INVOLVED IN ACTIVITIES OF COMPANY. HE GOT RS. 2 TO 3000 PER MONTH FROM COMPANY FOR BEING SIGNATORY OF DOCUMENTS. STAT EMENT OF SHRI ASHOK KUMAR AGGARWAL, ERSTWHILE DIRECTOR FO M/S. PR AKASH INDUSTRIES LTD. AS MADE PART OF REASONS AS ANNEXURE-III. M/S. RAJNIL SALES PVT. LTD. WAS A PAPER COMPANY WIT HOUT HAVING ANY TANGIBLE ASSETS AND AS INVESTMENTS WERE ALSO IN PAP ER COMPANIES. AS I.T.AS. NO. 4049/DEL/2017 4 SUCH THE SHARE CAPITAL AND SHARE PREMIUM INTRODUCED IN ITS BOOKS WAS BOGUS. THE INVESTMENTS WERE MADE IN PAPER COMPANIES WHICH DID NOT HAVE ANY SUBSTANTIVE BUSINESS ACTIVITIES AND SOME O F THEM WERE FOUND NON EXISTENT AT THE ADDRESSES GIVEN. THE FACT HAS B EEN ADMITTED BY THE CHAIRMAN OF THE GROUP AND THE ENTRY OPERATOR. FROM THE EXAMINATION OF RECORDS OF COMPANY, IT IS F OUND THAT THE AMOUNT OF RS.8.32 CRORE HAS BEEN INVESTED IN M/S. P RAKASH INDUSTRIES LTD. GROU. THE FUNDS RAISED BY ASSESSEE BY WAY OF S HARE APPLICATION AND INVESTMENTS ARE SHOWN TO HAVE BEEN RECEIVED FRO M COMPANIES WHICH ARE PAPER COMPANIES AND RUN BY ENTRY OPERATOR S. HENCE THE SOURCE OF FUNDS IS NON GENUINE. THE SAID AMOUNT IS LIABLE TO BE TAXED. THEREFORE I HAVE REASON TO BELIEVE THAT INCOME OF R S.8.32 CRORE HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09 BY REASON FO FAILURE ON PART OF ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. THEREFORE IN MY OPINI ON IT IS A FIT CASE FOR ISSUE OF NOTICE U/S..148. 4. THEREAFTER, ASSESSEE HAS FILED DETAILED OBJEC TION AGAINST INITIATION OF PROCEEDINGS WHICH HAVE BEEN DISPOSED OF BY THE LD. ASSESSING OFFICER. IN THE ASSESSMENT ORDER, THE ASS ESSING OFFICER HAS MADE FOLLOWING ADDITIONS. A. UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT RS. 8,73,24,240/- ON PROTECTIVE BASIS. B. UNEXPLAINED EXPENDITURE ON ACCOUNT OF BROKERAGE @ 0.5% I.E, RS. 4,36,621/- 5. LD. CIT (A) HAS QUASHED THE ASSESSMENT ON THE GR OUND THAT THE ASSESSING OFFICER HAS ENTERTAINED REASON TO BELIEVE ONLY FOR MAKING I.T.AS. NO. 4049/DEL/2017 5 PROTECTIVE ASSESSMENT WHICH CANNOT BE HELD. THE REL EVANT OBSERVATION AND FINDING IS AS UNDER:- FROM THE ABOVE, FOLLOWING FACTS EMERGED: THE ASSESSING OFFICER HAS RECORDED THE REASON TO B ELIEVE THAT INCOME OF RS.8.32 CRORE, HAS ESCAPED ASSESSMEN T, ON THE BASIS OF STATEMENT RECORDED U/S. 132(4) OF THE ACT OF SHRI VED PRAKASH AGARWAL AND SHRI SHIV SHANKAR BANKS, WH O HAS ACCEPTED THAT THE ACCOMMODATION ENTRIES HAVE BE EN TAKEN, TO INTRODUCE THE UNRECORDED PROFITS OF M/S. PRAKASH INDUSTRIES LTD. / BENEFICIARY COMPANY, THROUGH LAYE RING. IN THE CASE OF APPELLANT / INVESTOR COMPANY, AS WEL L AS IN THE CASE OF M/S PRAKASH INDUSTRIES LTD. / BENEFICIARY C OMPANY, IT IS CLEAR THAT THERE IS A SUSPICION IN THE MIND O F THE A.O. REGARDING IN WHOSE HANDS, THE ALLEGED AMOUNT IN QUE STION WAS TO BE ASSESSED. FROM THE ABOVE, IT IS CLEAR TOT TO A.O. HAS SIMPLY RELIED UPON ON THE INFORMATION RECEIVED FROM INVESTIGATION WING AND TH EREFORE, THERE IS NON APPLICATION OF MIND BY THE A.O. FURTHER, IT IS ALSO CLEAR, THAT THE A.O. HAS RESORTED TO PROTECTIVE ASSESSMENT ONLY, WH ICH IS AGAINST THE SPIRIT OF SECTION 147 OF THE ACT SINCE, HAVING REASON TO BELIEVE THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT FOR TO S AID A.Y., IS SINE QUA NON FOR ASSUMPTION OF JURISDICTION TO OPEN THE CASE U/S. 147 OF THE ACT, IS FOUND MISSING IN THE CASE OF APPELLANT. THEREFORE, OPENING OF ASSESSMENT IN THE CASE OF APPELLANT U/S. 147 OF THE ACT, IS NOT CORRECT. THE FACTS OF THE APPELLANT, ARE SQU ARLEY COVERED BY THE ABOVE 2 DECISION OF HIGH COURT DELHI (SUPRA). IN VIEW OF TO ABOVE, I AM OF TO CONSIDERED OPINION THAT TO ISSUE OF NOTICE U/S. 148 OF TO ACT, IS NOT DONE BY FOLLOWING PROPER PROCEDURE OF LAW AND WITHOUT APPLICATION OF MIND, FOR RECORDI NG REASON U/S 147. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, 1 AG REE WITH THE ARGUMENTS OF THE APPELLANT AND THEREFORE, THE INITI ATION OF ACTION U/S 147, IS HELD TO BE INVALID AND VOID AB-INLTIO. I.T.AS. NO. 4049/DEL/2017 6 ACCORDINGLY, GROUND NO. 1 TO 3 ARE HEREBY ALLOWED. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT REOPENING HAS BEEN DONE MERELY ON THE BASIS OF STATE MENT GIVEN BY SHRI VED PRAKASH AGARWAL, CHAIRMAN OF PRAKASH IND USTRIES LTD. ALLEGEDLY ADMITTED THAT UNACCOUNTED CASH WAS I NTRODUCED IN THE BOOKS AS SHARE CAPITAL WHICH ACCORDING TO THE A SSESSING OFFICER CONSTITUTES MATERIAL FOR REOPENING. FIRST O F ALL, HE CLARIFIED THAT THE SHARE CAPITAL OF RS.8.32 CRORE WAS NOT REC EIVED DURING THE IMPUGNED ASSESSMENT YEAR, THEREFORE, ENTIRE REASONS TO BELIEVE STANDS AT A WRONG FOOTING AND THERE IS NO ESCAPEMEN T OF INCOME FOR THIS ASSESSMENT YEAR. HE FURTHER SUBMITTED THAT THE AMOUNT OF RS.8.32 CRORE IS FACTUALLY INCORRECT AND IS RS.8.73 CRORE OUT OF WHICH RS.4.36 CRORE WAS INVESTED IN PRAKASH INDUSTR IES LTD. DURING THE RELEVANT ASSESSMENT YEAR ONLY. EVEN OTHERW ISE DETAIL RETRACTION WAS MADE BY SHRI VED PRAKASH AGARWAL IN N OVEMBER, 2012 ONLY AND THE REASON TO BELIEVE HAVE BEEN RECORD ED ON 18.02.2015 AND THERE WAS NO SUCH CONFESSION BY SHRI VED PRAKASH AGARWAL AS TO THE SHARE CAPITAL BEING AN AC COMMODATION ENTRY. MOST IMPORTANTLY ASSESSING OFFICER HAS SOUGHT TO REOPEN ONLY TO MAKE PROTECTIVE ADDITION IN THE HANDS OF THE ASSESSEE WHICH MEANS THAT ASSESSING OFFICER WAS NOT SURE IN HIS REASON TO BELIEVE THAT IN WHOSE HAND INCOME SOUGHT TO BE ASSE SSED. ALREADY SUBSTANTIVE ADDITION HAS BEEN DONE IN THE HANDS OF PRAKASH INDUSTRIES LTD. ON 31.03.2016 IN THE ASSESSMENT ORD ER PASSED IN THAT CASE AND BEFORE THAT ONLY ASSESSING OFFICER HAS TRIED TO REOPEN THE CASE FOR MAKING PROTECTIVE ADDITION IN H IS REASON I.T.AS. NO. 4049/DEL/2017 7 RECORDED ON 31.03.2015. IN THE WRITTEN SUBMISSIONS, THE ASSESSEE HAS MADE FOLLOWING SUBMISSION. REASONS TO BELIEVE ARE FACTUALLY AND LEGALLY INCORRECT, VAGUE AND CONTAIN SERIOUS GRAVE ERRORS;REOPENING ON THE BASIS OF INCORRECT REASONS TO BELIEVENOT JUSTIFIED 1. AT THE VERY OUTSET, WE RESPECTFULLY SUBMIT THAT THE REASONS ARE FACTUALLY AND LEGALLY INCORRECT AND THA T THERE IS NO MATERIAL IN POSSESSION OF THE DEPARTMENT TO E VEN REMOTELY SUGGEST THAT THE AMOUNT OF RS. 8.32 CRORES IS THE UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. 2. ON PERUSAL OF REASONS TO BELIEVE RECORDED BY THE LD. AO WE FIND THAT AT LAST PARA OF THE REASONS HE RECORDED THAT FROM EXAMINATION OF ACCOUNTS OF THE COMPANY, IT IS FOUND THAT AMOUNT OF RS. 8.32 CRORES HAS BEEN INVESTED IN PRAKASH INDUSTRIES LTD. GROUP. THE FUNDS BY WAY OF SHARE CAPITAL PREMIUM ARE SHOWN TO HAVE BEEN RECEIVED FROM THE COMPANIES WHICH ARE PAP ER COMPANIES AND RUN BY THE ENTRY OPERATORS. HENCE THE SOURCE OF FUNDS IS NON GENUINE. THE SAID AMOUNT IS LIABLE TO BE TAXED UNDER I. TAX ACT. THEREFORE I HAVE REASONS TO BELIEVE THAT INCOME OF RS. 8.32 CRORES HAS BEEN ESCAPED ASSESSMENT FOR THE ASS T. YEAR 2008-09 BY REASON OF FAILURE ON PART OF ASSESS EE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT. REFER PAGE NO. 19 OF THE PAPER BOOK. I.T.AS. NO. 4049/DEL/2017 8 3. FIRST OF ALL WE WISH TO STATE THAT IN THE ENTIRE REASONS TO BELIEVE THERE IS NO REFERENCE OF ITR FIL ED BY THE ASSESSEE FROM WHERE THE LD. AO FOUND THAT THE ASSES SEE HAD FAILED TO DISCLOSE ANY MATERIAL FACT WHICH LED TO REOPENING OF ASSESSMENT. 4. THE STATEMENT OF LD. AO THAT ASSESSEE HAD FAILED TO DISCLOSE ALL THE FULLY AND TRULY ALL MATERIAL FA CTS IS NOT SUPPORTED BY ANY EVIDENCE ON RECORD. IT IS JUST A B ALD STATEMENT. 5. FACTUAL ERROR: - AMOUNT OF RS. 8.32 CRORES INVESTED IN M/S PRAKASH INDUSTRIES. WHICH IN FACT IS 8.73 CRORES. IF THE LD. AO HAD RECORDED REASONS AFT ER EXAMINING THE BOOKS OF ACCOUNT OF THE ASSESSEE AND APPLYING HIS MIND, THEN HE WOULD HAVE KNOWN THAT TH E TOTAL AMOUNT INVESTED IN M/S PRAKASH INDUSTRIES DUR ING THE YEAR WAS RS. 4.36 CRORES. THIS FACT CAN BE VERI FIED FROM THE AUDITED FINANCIALS OF THE ASSESSEE ATTACHED AT PAGE NO. 2-9 OF THE PAPER BOOK. OUT OF RS. 8.32 CRORES, SUM OF RS. 4.36 CRORES WAS INVESTED IN A.Y. 2007-08. THEREFORE LD. AO DID NOT PROCEED LEGALLY TO ADD THE ENTIRE AMOUNT IN THE REL EVANT ASSESSMENT YEAR. 6. FACTUAL AND LEGAL ERROR: - RS. 8.32 CRORES HAS BEEN ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09. IF THE LD. AO HAD RECORDED THE REASONS AFTER EXAMINING THE BOOKS OF THE ASSESSEE AND APPLYING HI S MIND, THEN HE WOULD HAVE KNOWN THAT THE ASSESSEE DI D I.T.AS. NO. 4049/DEL/2017 9 NOT RECEIVE ANY SHARE CAPITAL DURING THE RELEVANT ASSESSMENT YEAR.IN FACT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DID NOT RECEIVE CREDIT O F RS. 8.73 CRORES. THE PROVISIONS OF SECTION 68 SPECIFICA LLY STATES THAT THE IF ANY SUM IS FOUND CREDITED IN THE BOOKS FOR ANY PREVIOUS YEAR,.THE SUM SO CREDITED MAY BE CHARGED TO THE INCOME TAX AS THE INCOME OF ASSESSEE OF THAT PREVIOUS YEAR. 7. REASONS ARE VAGUE: I. THE LD. AO IN THE ENTIRE REASONS TO BELIEVE DID NOTMENTION ANY MATERIAL TO CORROBORATE HIS CONCLUSI ON EXCEPT FOR THE RETRACTED STATEMENTS. II. IN THE REASONS THE LD. AO MENTIONED THAT FROM EXAMINATION OF BOOKS IT IS FOUND THAT RS. 8.32 CROR ES HAS BEEN INVESTED BUT THE RELEVANT PAGE OF FROM WHERE H E FOUND SUCH INFORMATION IS NOT PROVIDED. III. IT IS MENTIONED IN THE REASONS THAT ASSESSEE HAD NOT DISCLOSED TRULY AND MATERIALLY NOT DISCLOSED MA TERIAL FACT BUT DID NOT MENTION WHICH MATERIAL FACT IS NOT DISCLOSED IN THE ITR. 8. THE STATEMENTS ON THE BASIS OF WHICH REASONS WERE RECORDED WERE RETRACTED WITHIN THE REASONABLE TIME BY THE PERSONS AND THEREFORE SUCH RETRACTED STATEMENTS WIT HOUT I.T.AS. NO. 4049/DEL/2017 10 ANY CORROBORATING EVIDENCE CANNOT BE MADE BASIS OF REOPENING. 9. ALL THESE FACTUAL ERRORS WERE MENTIONED BY THE ASSE SSEE IN HIS OBJECTION FILED ON 03.03.2015 ATTACHED AT PA GE NO. 24-25 OF THE PAPER BOOK. 10. THE ASSESSEE HAD FILED VARIOUS CREDIBLE EVIDENCES I N ITS POSSESSION TO ESTABLISH THAT THE TOTAL INVESTMENT I N PRAKASH INDUSTRIES DURING THE YEAR WAS RS. 4.36 CRO RES AND THE SOURCE OF FUNDS OF SUCH AMOUNT WERE SALE PROCEEDS OF SHARES. REFER POINT NO. IX ON MERITS WHERE THE ASSESSEE EXPLAINED EACH AND EVERY FACT AND THE DOCUMENT RELATING TO THE TRANSACTION. 11. NEEDLESS TO ADD WE ARE UNABLE TO UNDERSTAND HOW THE GENUINE TRANSACTION OF INVESTMENT IN SHARES OF M/S PRAKASH INDUSTRIES BECOME IN-GENUINE MERELY BECAUSE OF THE RETRACTED STATEMENTS OF SOME PERSONS WITHOUT AN Y CORROBORATING MATERIAL. 12. ALL THE ABOVE SHOWS THE LACK OF APPLICATION OF MIND BY THE LD. AO AND INCORRECT BELIEF WHILE RECORDING REASONS. 13. IT IS SETTLED LAW IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. [2010] 320 ITR 561 (SC) WHERE HONBLE APEX COURT HAS HELD THAT ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO CO ME TO CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT; REASONS MUST HAVE A LIVE LINK WITH FORM ATION I.T.AS. NO. 4049/DEL/2017 11 OF BELIEF. ASSESSEE ALSO RELIES ON THE FOLLOWING JU DGEMENTS OF THE JURISDICTIONAL COURT: 14. CIT VS. ASHIAN NEEDLES (P.) LTD.[2016] 384 ITR 144 (DELHI): HONBLE DELHI HIGH COURT HAS HELD THAT 6. THE DECISION OF THE ITAT APPEARS TO HAVE TURNED ENT IRELY ON FACTS. IT IS OBSERVED BY THE ITAT THAT THERE WAS NOTHING ON RECORD BEFORE THE AO EVEN IN THE FORM OF ANY SPE CIFIC INFORMATION THAT THE ASSESSEE HAD CONVERTED BLACK M ONEY INTO WHITE THROUGH AN ENTRY PROVIDER. FURTHER, WHIL E IN THE NOTICE ISSUED TO THE ASSESSEE FOR FOUR YEARS, THE A O HAD OBSERVED THAT RS.27 LAKHS, RS.62 LAKHS, RS.4.80 CRO RES AND RS.6.96 CRORES RESPECTIVELY HAD ESCAPED ASSESSM ENT, THE ADDITIONS ACTUALLY MADE FOR THE RESPECTIVE YEAR S WERE RS. 27LAKHS, RS.10 LAKHS, RS.1.5 CRORES AND RS. 10 LAKHS RESPECTIVELY. THIS MEANT THAT THE AO WAS HIMSELF 'N OT SURE THAT THE ENTIRE AMOUNT WHICH WAS MENTIONED IN THE REPORT OF THE INVESTIGATION WAS ON ACCOUNT OF THE E SCAPED INCOME OF THE ASSESSEE.' THIS ALSO SHOWED THAT THE AO HAD NOT APPLIED HIS MIND BEFORE ISSUING NOTICE UNDE R SECTION 148 OF THE ACT. 15. DR.AJIT GUPTA V. ACIT (2016) 383 ITR 361 (DELHI) (HC): IT HAS BEEN HELD BY HONBLE DELHI HIG H COURT THAT THEREASONFORTHEREOPENINGOFTHEASSESSMENTWASAMISTAKEN FACTUALPREMISETHATTHEASSESSEEHAD CHANGED THE SYSTEM OF ACCOUNTING FROM MERCANTILE TO THE CASH SYSTEM. I T WAS MORE THAN ADEQUATELY EXPLAINED BY THE ASSESSEE THAT THIS I.T.AS. NO. 4049/DEL/2017 12 WAS AN INADVERTENT ERROR. THE ASSESSEE HAS CONVINCINGLY SHOWN THAT HE HAS CONSISTENTLY BEE N FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING NOT O NLY FOR ASSESSMENT YEARS IN QUESTION BUT FOR THE EARLIER AN D LATER ASSESSMENT YEARS AS WELL. HENCE, REASSESSMENT NOTIC E WAS TO BE QUASHED. 16. CIT VS. ATUL JAIN [2007] 212 CTR 42 (DELHI): HONBLE DELHI HIGH COURT HAS HELD THAT17. LOOKED A T IN THE LIGHT OF THE DECISIONS PLACED BEFORE US AND THE LAW LAID DOWN THEREIN, IT IS NECESSARY TO APPRECIATE TH E INFORMATION AVAILABLE WITH THE ASSESSING OFFICER IN THE PRESENT CASE. THE ONLY INFORMATION IS THAT THE ASSE SSEES HAD TAKEN A BOGUS ENTRY OF CAPITAL GAINS BY PAYING CASH ALONG WITH SOME PREMIUM FOR TAKING A CHEQUE OF THAT AMOUNT. THE INFORMATION DOES NOT INDICATE THE SOURC E OF THE CAPITAL GAINS (WHICH IN THIS CASE ARE SHARES). WE DO NOT KNOW WHICH SHARES HAVE BEEN TRANSACTED AND WITH WHOM HAS THE TRANSACTION TAKEN PLACE. THERE ARE ABSOLUTELY NO DETAILS AVAILABLE AND THE INFORMATION SUPPLIED IS EXTREMELY SCANTY AND VAGUE. INSOFAR AS THE BASIS FOR THE REASONS IS CONCERNED, EVEN THIS IS AB SENT. THE ASSESSING OFFICER DID NOT VERIFY THE CORRECTNES S OF THE INFORMATION RECEIVED BY HIM BUT MERELY ACCEPTED THE TRUTH OF THE VAGUE INFORMATION IN A MECHANICAL MANNER. TH E ASSESSING OFFICER HAS NOT EVEN RECORDED HIS SATISFA CTION ABOUT THE CORRECTNESS OR OTHERWISE OF THE INFORMATI ON OR I.T.AS. NO. 4049/DEL/2017 13 HIS SATISFACTION THAT A CASE HAS BEEN MADE OUT FOR ISSUING A NOTICE UNDER SECTION 148 OF THE ACT. READ IN THIS LIGHT, WHAT HAS BEEN RECORDED BY THE ASSESSING OFFICER AS HIS 'REASONS TO BELIEVE' IS NOTHING MORE THAN A REPORT GIVEN BY HIM TO THE COMMISSIONER OF INCOME-TAX. AS HELD B Y THE SUPREME COURT IN CHHUGAMALRAJPALS CASE (SUPRA) THE SUBMISSION OF A REPORT IS NOT THE SAME AS RECORDING OF REASONS TO BELIEVE FOR ISSUING A NOTICE. THE ASSESS ING OFFICER HAS CLEARLY SUBSTITUTED FORM FOR SUBSTANCE AND, THEREFORE, THE ACTION OF THE RESPONDENT FALLS FOUL OF THE LAW LAID DOWN BY THE SUPREME COURT IN CHHUGAMALRAJPALS CASE (SUPRA) WHICH IS CLEARLY APPLICABLE TO THE FAC TS OF THESE APPEALS. 17. ORIENTAL INSURANCE COMPANY VS CIT (DELHI HIGH COURT) [2015] 378 ITR 421 (DELHI) IT IS NOT DISPUTED THAT THE REASONS THAT LED THE AS SESSING OFFICER TO REOPEN THE ASSESSMENT WERE FACTUALLY INC ORRECT. IT IS NOT DISPUTED THAT THE ASSESSEE WAS CARRYING O N ONLY ONE BUSINESS - GENERAL INSURANCE BUSINESS, WHICH IS REGULATED UNDER THE INSURANCE ACT, 1938. INDISPUTAB LY, THE INSURERS CANNOT CARRY ON ANY BUSINESS OTHER THA N THE INSURANCE BUSINESS OR ANY PRESCRIBED BUSINESS. THE BUSINESS OF GENERAL INSURANCE IS REGULATED AND THER E IS NO ALLEGATION THAT THE REGULATORY AUTHORITY HAS FOU ND THE ASSESSEE TO BE IN DEFAULT OF ANY PROVISIONS OF THE INSURANCE ACT, 1938. THE REVENUE ALSO DID NOT DISPU TE THAT THE ASSESSING OFFICER'S ASSUMPTION THAT THE AS SESSEE I.T.AS. NO. 4049/DEL/2017 14 WAS CARRYING ON TWO STREAMS OF BUSINESS WAS INCORRE CT. THUS, THIS REASON TO BELIEVE THAT THE ASSESSEE'S IN COME HAD ESCAPED ASSESSMENT IS CLEARLY WITHOUT ANY FACTU AL BASIS. [PARA 11] BEFORE THE TRIBUNAL, THE REVENUE HAD CONTENDED THAT THE ERRORS IN THE REASONS RECORDED WERE MINOR ERRORS, W HICH DID NOT DETRACT FROM THE FACT THAT INCOME HAD ESCAP ED ASSESSMENT. THIS CONTENTION IS WITHOUT MERIT AS REA SONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT IS A NECESSARY PRE-CONDITION WHICH ENABLES THE ASSESSING OFFICER TO ASSUME JURISDICTION TO PROCEED FURTHER. IN THE EVENT SUCH REASONS ARE FOUND TO BE ERRONEOUS, THE ASSESSING OFFICER WOULD NOT HAVE THE JURISDICTION T O MAKE AN ASSESSMENT AND ANY PROCEEDINGS INITIATED ON THE BASIS OF PALPABLY ERRONEOUS REASONS WOULD BE WITHOU T AUTHORITY OF LAW. THEREFORE, EVEN IF IT IS ASSUMED THAT, INFACT, THE ASSESSEE'S INCOME HAS ESCAPED ASSESSMEN T, THE ASSESSING OFFICER WOULD HAVE NO JURISDICTION TO ASSESS THE SAME IF HIS REASONS TO BELIEVE WERE NOT BASED O N ANY COGENT MATERIAL. IN ABSENCE OF THE JURISDICTIONAL P RE- CONDITION BEING MET TO REOPEN THE ASSESSMENT, THE QUESTION OF ASSESSING OR REASSESSING INCOME UNDER SECTION 147 WOULD NOT ARISE. THUS, THE PROCEEDINGS UNDER SECTION 147 ARE LIABLE TO BE QUASHED AS BEING WITHO UT JURISDICTION. [PARAS 13 AND 14] I.T.AS. NO. 4049/DEL/2017 15 18. CIT VS. CHINTOOTOMAR [2015] 229 TAXMAN 260 (DELHI) 5.THE REASONS SO RECORDED SHOULD HAVE SOME BASIS OR SUPPORT AND NOT A MERE GOSSIP. THE REASONS CANNOT B E A MERE PRETENCE AND SHOULD BE HELD IN GOOD FAITH. THE EXPRESSION 'REASONS TO BELIEVE' PREDICATES A BELIEF WHICH IS FOUNDED AND INDUCED BY EXISTENCE OF PALPABLE OR COGENT MATERIAL OR INFORMATION. REASON TO SUSPECT CANNOT A MOUNT TO REASON TO BELIEVE. AS IT IS THE BEGINNING OF THE INQUIRY, HAVING A PRIMA FACIE OPINION IS SUFFICIENT; AND IRR EBUTTABLE CONCLUSIVE EVIDENCE OR FINDING IS NOT REQUIRED. BUT THE PRIMA FACIE FORMATION OF BELIEF SHOULD BE RATIONAL, COHERENT AND NOT EX FACIE INCORRECT AND CONTRARY TO WHAT IS ON RECORD. AS NOTICED IN PARAGRAPH 3 ABOVE, THE FACTS RECORDED ARE INCORRECT. SECONDLY, THE REASONS MUST HAVE LIVE NEXUS AND MUST DISCLOSE ON WHAT BASIS OR EVIDE NCE THE ASSESSING OFFICER FEELS AND HAS REASON TO BELIE VE THAT INCOME CHARGEABLE HAS ESCAPED ASSESSMENT. THE REASO NS MUST BE GERMANE AND GENUINE. FOR GROUNDS ELUCIDATED IN PARAGRAPH 4 ABOVE, THIS REQUIREMENT FALTERS. THE RE ASONS RECORDED BY THE ASSESSING OFFICER DO NOT MEET AND S ATISFY THE SAID BASIC AND LIMITED PRE-JURISDICTIONAL REQUI REMENT. THERE IS NO RATIONAL CONNECTION BETWEEN THE REASON RECORDED AND THE FORMATION OF BELIEF THAT INCOME HA D ESCAPED ASSESSMENT. I.T.AS. NO. 4049/DEL/2017 16 I. REASONS TO SUSPECT CANNOT BE EQUATED WITH REASONS TO BELIEVE WHICH IS A NECESSARY PRECONDITION FOR AN Y ACTION U/S 147 NO ACTION OF REASSESSMENT U/S 147 OF THE ACT IS PERMISSIBLE FOR FRAMING PROTECTIVE ASSESSMENT IN THE ABSENCE OF SUBSTANTIVE ASSESSMENT TILL THE DATE OF ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT. 1. THE ASSESSING OFFICER CAN ASSUME JURISDICTION FOR REASSESSMENT PROCEEDINGS IF HE HAS REASONS TO BELIE VE, BUT THE SAME CANNOT BE TAKEN RECOURSE TO ON THE BAS IS OF REASONS TO SUSPECT. 2. THE LD. AO RECORDED REASONS THAT AMOUNT OF RS. 8.32 CRORES ESCAPED ASSESSMENT.HOWEVER HE MADE PROTECTIVE ADDITION OF RS. 8.73 CRORES IN THE ASSES SMENT ORDER PASSED UNDER SECTION 147 OF THE ACT. 3. THEABOVE ITSELF SHOWS THE SUSPICION IN THE MIND OF THE LD. AO. 4. IT IS ALSO IMPORTANT TO NOTE HERE THAT THE ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE WAS PA SSED ON 31.03.2015 BY MAKING PROTECTIVE ADDITION OF RS. 8.73 CRORES WHEREAS THE SUBSTANTIVE ADDITION IN THE CASE OF M/S PRAKASH INDUSTRIES WAS MADE ON 31.03.2016DATE I.T.AS. NO. 4049/DEL/2017 17 I.E, MUCH AFTER THE DATE OF ASSESSMENT ORDER PASSED IN THE CASE OF ASSESSEE. 5. YOUR HONOURS, IT IS A TRITE LAW THAT NO ACTION OF REASSESSMENT U/S 147 OF THE ACT IS PERMISSIBLE FOR FRAMING PROTECTIVE ASSESSMENT IN THE ABSENCE OF SUBSTANTIVE ASSESSMENT TILL THE DATE OF ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT. 6. HONBLE HIGH COURT OF BOMBAY IN THE CASE OF DHFL VENTURE CAPITAL FUND VS. ITO (34 TAXMANN.COM 300) HAS EXPLAINED THAT: 15. THE JURISDICTIONAL REQUIREMENT FOR REOPENING A N ASSESSMENT UNDER SECTION 148 IS THE FORMATION OF A REASON TO BELIEVE BY THE ASSESSING OFFICER THAT INC OME HAS ESCAPED ASSESSMENT. THE FORMATION OF THE REASON TO BELIEVE AND THE EXISTENCE OF THAT REASON MUST BE IN THE PRESENT. RECOURSE CAN BE TAKEN TO THE PROVISIONS OF SECTION 148 WHERE THE ASSESSING OFFICER HAS A REASON IN PRESENT, MEANING THEREBY, A REASON WHICH IS PRESENT TO HIS MIND WHEN HE FORMS HIS REASON TO BELIEVE, THAT INCOME HAS ESCAPED ASSESSMENT. RECOURSE TO SECTION 148 CANNOT BE FOUNDED IN LAW ON A HYPOTHESIS OF WHAT WOULD BE THE POSITION IN FUTURE SHOULD AN APPEAL BEFORE THE APPELLATE AUTHORITY, BEING THE TRIBUNAL OR THE HIGH COURT, RESULT IN A PARTICULAR OUTCOME.THE STATUTE DOES NOT I.T.AS. NO. 4049/DEL/2017 18 CONTEMPLATE THE REOPENING OF AN ASSESSMENT UNDER SECTION 148 ON SUCH A HYPOTHESIS OR A CONTINGENCY WHICH MAY EMERGE IN THE FUTURE. 16. THE BASIS ON WHICH THE ASSESSING OFFICER HAS PURPORTED TO REOPEN THE ASSESSMENT IS PLACED BEYOND ANY DOUBT BY THE AFFIDAVIT WHICH HAS BEEN FILED IN REPLY TO THE PETITION. AS WE HAVE NOTED, THERE IS NO AMBIGUITY WHATSOEVER IN THE REASONS WHICH HAVE BEEN COMMUNICATED TO THE ASSESSEE IN THE ORDER DATED 18 MAY 2012, BUTIN THE AFFIDAVIT IN REPLY, IT HAS BEEN STA TED THAT THE INCOME OF RS.32.83 CRORES ARISING FROM THE INVE STMENT OF CONTRIBUTIONS OF THE CONTRIBUTORS TO THE VENTURE CAPITAL FUND WHICH HAS BEEN CLAIMED AS EXEMPT IN THE HANDS OF THE PETITIONER SHOULD BE ASSESSED AS INCOME IN THE HANDS OF THE AOP OF THE CONTRIBUTORS OF THE PETITIONER ' ON A PROTECTIVE BASIS'. AGAIN IT HAS BEEN STATED THAT THE ISSUE OF TAXING THE AOP OF THE CONTRIBUTORS OF THE PETITIONER 'HAS ARISEN FROM THE SUBMISSION OF THE PETITIONER BEFORE THE APPELLATE AUTHORITIES' WHERE THE PETITIONER HAS CONTENDED THAT THE TRANSACTIONS AMOU NT TO A REVOCABLE TRANSFER AND THAT THE INCOME WHICH WOUL D ARISE SHOULD BE TAXED IN THE HANDS OF THE INDIVIDUA L CONTRIBUTORS. THE REOPENING OF AN ASSESSMENT UNDER SECTION 148 ON THE BASIS OF A SUBMISSION WHICH IS RAISED BEFORE THE APPELLATE AUTHORITY BY THE ASSESSEE IS CLEARLY IMPERMISSIBLE BECAUSE WHAT SECTION 147 REQUIRES IS A FORMATION OF A REASON TO I.T.AS. NO. 4049/DEL/2017 19 BELIEVE BY THE ASSESSING OFFICER. IN THE PRESENT CA SE, THERE IS CLEARLY A WANT OF COMPLIANCE WITH THE JURISDICTIONAL CONDITION. THE ASSESSING OFFICER HAS NOT FORMED A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT SINCE THE REOPENING IS BASED PURELY ON A CONTINGENCY THAT MAY ARISE UPON A PARTICULAR OUTCOME BEFORE THE APPELLATE TRIBUNAL. 7. ASSESSEE ALSO RELIES ON THE FOLLOWING DECISIONS: A. HONBLE ITAT DELHI IN THE CASE OF G.K. CONSULTANTS LTD. VS. INCOME TAX OFFICER (1502/DEL/2013) HAS HELD THAT: ON THE BASIS OF FOREGOING DISCUSSION, WE REACH TO A CONCLUSION THAT THE AO ASSUMED JURISDICTION TO INIT IATE AND REOPEN REASSESSMENT U/S 147 OF THE ACT ON THE B ASIS OF RETRACTED STATEMENT OF SHRI SUBODH GUPTA WHICH W AS RECORDED DURING THE SURVEY ON SHRI SUBODH GUPTA IN HIS INDIVIDUAL CAPACITY AND THE AO ALSO PROCEEDED TO MAKE A PROTECTIVE ASSESSMENT/ADDITION WITHOUT ANY SUBSTANTIVE ASSESSMENT/ADDITION AND WITHOUT MAKING ANY FURTHER INVESTIGATION AND INQUIRY ABOUT THE MATERIAL AND INFORMATION BEFORE HIM AT THE TIME OF RECORDING REASONS. 23. ACCORDINGLY, WE HAVE NO HESITATION TO HOLD THAT THE AO ASSUMED JURISDICTION FOR REOPENING OF ASSESSMENT U/S 147 OF THE ACT AND FOR ISSUING NOTIC E U/S 148 OF THE ACT ON WRONG PREMISE AND WITHOUT I.T.AS. NO. 4049/DEL/2017 20 ANY JUSTIFIED, COGENT AND LEGAL REASON. WE, THEREFORE, FURTHER HOLD THAT THERE EXISTED NO GOOD OR SUFFICIENT GROUND OR REASON FOR REOPENING OF THE CASE AND ISSUANCE OF NOTICES U/S 148 OF THE ACT AGAINST THE ASSESSEE COMPANY. WE ALSO HOLD THAT THE CONDITION PRECEDENT FOR VALID INITIATION OF REASSESSMENT IS NOT BEING SATISFIED AS THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT DOES NOT EXIST ON THE DATE OF ASSUMING JURISDICTION U/S 147 OF THE ACT. THEREFORE, ALL SUBSEQUENT PROCEEDINGS INCLUDING ISSUANCE OF NOTICE U/S 148 OF THE ACT WERE ILLEGAL AND BAD IN LAW. ACCORDINGLY, GROUND NO. 2, 3 AND 4 OF THE ASSESSEE ARE ALLOWED AND WE HOLD THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO FOR ASSUMING JURISD ICTION U/S 147 OF THE ACT AND ISSUING NOTICE U/S 148 OF TH E ACT TO THE ASSESSEE FOR REOPENING OF ASSESSMENT AND, TH US, ALL PROCEEDINGS U/S 147 AND 148 OF THE ACT TO THE ASSES SEE INCLUDING NOTICES ARE HEREBY QUASHED. B. HONBLE ITAT MUMBAI IN THE CASE OF M.P. RAMACHANDRAN VS. DCIT (32 SOT 592) HAS HELD THAT: THUS, PROTECTIVE ASSESSMENT IS ALWAYS SUCCESSIVE TO THE SUBSTANTIVE ASSESSMENT. THERE MAY BE A SUBSTANTIVE ASSESSMENT WITHOUT ANY PROTECTIVE ASSESSMENT, BUT THERE CANNOT BE ANY PROTECTIVE I.T.AS. NO. 4049/DEL/2017 21 ASSESSMENT WITHOUT THERE BEING A SUBSTANTIVE ASSESSMENT. IN SIMPLE WORDS, THERE HAS TO BE SOME SUBSTANTIVE ASSESSMENT/ADDITION FIRST WHICH ENABLES THE ASSESSING OFFICER TO MAKE A PROTECTIVE ASSESSMENT/ADDITION. SUBSTANTIVE ADDITION/ASSESSMENT IS MADE IN THE HANDS OF THE PERSON IN WHOSE HANDS T HE ASSESSING OFFICER PRIMA FACIE HOLDS THE OPINION THA T THE INCOME IS RIGHTLY TAXABLE. HAVING DONE SO AND WITH A VIEW TO PROTECT THE INTEREST OF THE REVENUE, IF THE ASSE SSING OFFICER IS NOT SURE THAT THE PERSON IN WHOSE HANDS HE HAD MADE THE SUBSTANTIVE ADDITION RIGHTLY, HE SHOULD EM BARK UPON THE PROTECTIVE ASSESSMENT. THUS, THE PROTECTIVE ASSESSMENT IS BASICALLY BASED ON THE DOUBT OF THE ASSESSING OFFICER AS DISTINCT FROM HIS BELIEF WHICH IS THERE IN THE SUBSTANTIVE ASSESSMENT. OBVIOUSLY, THERE IS NO PLACE FOR DOUBT IN THE SCHEME OF REASSESSMENT, AS IT HAS TO BE A BELIEF OF THE ASSESSING OFFICER ABOUT THE ESCAPEMENT OF INCOME, WHICH IS THE FOUNDATION FOR ASSESSMENT OR REASSESSMENT UNDER SECTION 147.EVEN IF FOR A MOMENT, THE DEPARTMENTAL VIEW IS ACCEPTED THAT THE PROTECTIVE ADDITION IS DIFFERENT FROM SUBSTANTIVE ADDITION AND, HENCE, THE REASSESSMENT PROCEEDINGS BE UPHELD, ULTIMATELY THE SAME CONCLUSION WILL FOLLOW IF THE SUBSTANTIVE ADDITION IS STRUCK DOWN A T A PLACE WHERE IT WAS MADE. IN SUCH A SCENARIO, THE PROTECTIVE ADDITION WILL GET CONVERTED INTO I.T.AS. NO. 4049/DEL/2017 22 SUBSTANTIVE ADDITION IN THE REASSESSMENT. THAT WILL ALSO RUN CONTRARY TO THE FORMAT OF REASSESSMENT, BEING TO TAX AN INCOME WHICH HAS ESCAPED ASSESSMENT. IN THAT CASE AGAIN, IT WILL TANTAMOUNT TO REOPENING ASSESSMENT ON THE BASIS OF AN ITEM OF INC OME OR DISALLOWANCE, WHICH HAS ALREADY BEEN MADE IN BLO CK ASSESSMENT OF THE ASSESSEE, THEREBY LEAVING NO INCO ME ESCAPING ASSESSMENT. UNDER THESE CIRCUMSTANCES, HAV ING MADE AN ADDITION OF RS. 527.85 LAKHS IN THE BLOCK ASSESSMENT, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN FORMING THE BELIEF, EITHER ON SUBSTANTIVE OR PROTEC TIVE BASIS, THAT THE SAME INCOME HAD ESCAPED ASSESSMENT IN THE INSTANT YEAR. THEREFORE, THE INITIATION OF REAS SESSMENT PROCEEDINGS ON THIS COUNT COULD NOT BE UPHELD. [PAR A 22] II. ADDITION MADE IS WITHOUT CONSIDERING THE FACTS OF T HE CASE; NON APPLICATION OF MIND 1. THE LD. AO MADE ADDITION OF RS. 8.73 CRORES WITHOUT CONSIDERING THE FACTS OF THE CASE. 2. WHILE MAKING ADDITIONS THE LD. AO STATED THAT THE THE FUNDS RAISED BY THE ASSESSEE BY WAY OF SHARE APPLIC ATION AND INVESTMENTS ARE SHOWN TO HAVE BEEN RECEIVED FROM CO MPANIES WHICH ARE PAPER COMPANIES AND RUN BY ENTRY OPERATOR S. HENCE THE TOTAL SOURCE OF FUNDS IS NON GENUINE. ALL THE SHARE HOLDERS CHANGED DURING THE YEAR. AT PARA 18 HE STATED THAT THE A MOUNT OF RS. 8.73 SHOWN IN THE BOOKS IS TREATED AS UNEXPLAINED U NDER SECTION 68 OF THE ACT I.T.AS. NO. 4049/DEL/2017 23 3. HE ADDED THE ENTIRE NET WORTH OF THE COMPANY UNDER SECTION 68 WITHOUT CONSIDERING THAT THE ASSESSEE DID NOT RA ISE ANY SHARE CAPITAL DURING THE YEAR UNDER CONSIDERATION. 4. THE LD. AO DID NOT EVEN CONSIDER THAT DURING THE YE AR UNDER CONSIDERATION THE ASSESSEE INVESTED ONLY RS. 4.36 CRORES IN M/S PRAKASH INDUSTRIES. 5. THE ENTIRE ADDITION MADE IS WITHOUT APPRECIATING TH E PROVISIONS OF THE LAW AND WITHOUT APPLYING MIND TO THE FACTS OF THE CASE. III. THE ASSESSEE HAD DISCHARGED ITS ONUS BY FURNISHING ALL THE DOCUMENTARY EVIDENCES TO ESTABLISH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE APPLI CANTS 1. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DI D NOT ISSUE ANY SHARE CAPITAL OR RECEIVED ANY SHARE APPLI CATION MONEY FROM ANY PERSON. 2. THE ASSESSEE COMPANY HAS MADE INVESTMENT IN SHARES OF M/S PRAKASH INDUSTRIES LTD. FOR RS. 8.73 CRORES OUT OF WHICH RS. 4.36 CRORES WAS PAID AS SHARE APPLICATION MONEY IN EARLIER YEARS. THIS FACT CAN BE VERIFIED FROM THE FINANCIAL STATEM ENTS OF THE ASSESSEE COMPANY ATTACHED AT PAGE NO. 2-9 OF TH E PAPER BOOK . FROM SCHEDULE D IT IS APPARENT THAT AMOUNT OF RS. 4.36 CRORES WERE PAID IN THE EARLIER YEARS WHICH IS SHOW N AS SHARE APPLICATION MONEY. 3. THE ASSESSEE HAS PAID ONLY RS. 4.36 CRORES FOR INVE STMENT IN SHARES OF M/S PRAKASH INDUSTRIES IN THE RELEVANT ASSESSMENT YEAR. THE SOURCES OF FUNDS ARE THE SALE OF SHARES. I.T.AS. NO. 4049/DEL/2017 24 4. TO ESTABLISH THE SOURCES OF FUNDS INVESTED IN M/S P RAKASH INDUSTRIES THE ASSESSEE HAD SUBMITTED THE DETAILS O F SHARES SOLD DURING THE YEAR UNDER CONSIDERATION WHICH IS ATTACHED AT PAGE NO. 61-62 OF THE PAPER BOOK.THE LIST CONTAIN NAME, ADDRESS, PAN, OF THE PARTY TO WHOM SHARES HAVE BEEN SOLD AND THE NAME OF SCRIPT AND NO. OF SHARES SOLD. 5. THE ASSESSEE HAS ALSO FURNISHED BEFORE THE LD. AO A LL THE SALE INVOICES RAISED BY IT ON SALE OF SHARES WHICH ARE ATTACHED AT PAGE NO. 63 TO 77 OF THE PAPER BOOK. TO ESTABLISH THE IDENTITY OF THE SELLERS THE ASSESSEE HAS ALSO SUBMITTED THE ROC MASTER DATA OF EACH OF THE SELLER ATTACHED AT PAGE NO. 80-86 OF THE PAPER BOOK. 6. ALL THE TRANSACTION OF SALE OF SHARES WERE UNDERTAK EN THROUGH THE BANKING CHANNEL AND THE BANK STATEMENT OF THE ASSESSEE REFLECTING CREDIT IN THE BANK ACCOUNT ON S ALE OF SHARES IS ATTACHED AT PAGE NO. 78-79 OF THE PAPER BOOK. 7. THE ASSESSEE HAS ALSO FURNISHED BEFORE THE LD. AO T HE DETAILS OF OPENING AND CLOSING STOCK OF SHARES FOR THE F.Y. 2007-08 WHICH IS ATTACHED AT PAGE NO. 60 OF THE PAPER BOOK. 8. THE ASSESSEE HAS FURNISHED BEFORE THE LD. AO THE SH ARE CERTIFICATE OF M/S PRAKASH INDUSTRIES ALONG WITH TH E LEDGER ACCOUNT AND THE BANK STATEMENT HIGHLIGHTING ENTRIES OF AMOU NT INVESTED IN PRAKASH. REFER PAGE NO. 45-69 OF THE PAPER BOOK. 9. THE ASSESSEE IN RESPONSE TO THE NOTICE DATED 13.03. 2015 FILED ITS REPLY ON 20.03.2015 ATTACHED AT PAGE NO. 57-59 OF THE PAPER BOOK STATED THE NAME, ADDRESS, PAN ETC. ARE OF EACH OF THE PURCHASER OF SHARES HAVE BEEN GIVEN BY THE ASSESSEE AND YOUR GOOD SELF MAY SUMMON THE PARTIES UNDER SECTION 131/ 133(6) OF THE ACT SINCE THE PURCHASERSINFORMED THE ASSESSEE THAT THEY WOULD PROVIDE INFORMATION IF THE DEPARTMENT DIRECTLY ASK THEM TO PRODUCE. I.T.AS. NO. 4049/DEL/2017 25 10. HOWEVER THE LD. AO DID NOT UNDERTAKE ANY EXERCISE O F SUMMONING THE PARTIES HIMSELF BUT FORCED THE ASSESS EE TO PRODUCE THE PERSONS. 11. THE LD. AO DID NEVER POINT OUT ANY DEFECT OR CONTRO VERT THE EVIDENCES SUBMITTED BY THE ASSESSEE BUT REJECTED TH EM AND ONLY EMPHASISED ON PRODUCTION OF CONTROLLING PERSONS THE OPPORTUNITY OF WHICH WAS ALSO NOT PROVIDED IN SPITE OF THE REQUEST OF THE ASSESSEE TO DIRECTLY SUMMON SUCH PERSONS. 12. FURTHER IT IS A TRITE LAW THAT THE LD. AO CANNOT RE JECT THE CONTEMPORARY EVIDENCES SUBMITTED BY THE ASSESSEE WI THOUT POINTING ANY DEFECTS AND NON-PRODUCTION OF PARTIES CANNOT BE A GROUND FOR MAKING DISALLOWANCE. IV. ALL THE ALLEGATIONS MADE BY THE LD. AO ARE WITHOUT ANY BASIS;THE ASSESSEE HAD DULY REBUTTED ALL THE ALLEGATIONS OF T HE LD. AO- REFER PAGE NO. 37-39 OF THE ASSESSMENT ORDER S. NO. ALLEGATIONS OF LD. AO REBUTTAL OF ASSESSEE 1. STATEMENT OF ENTRY OPERATOR SHIV SHANKAR BANKA WAS RECORDED U/S 132(4) IN WHICH HE HAS ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRIES TO PRAKASH GROUP 1. THE DEPARTMENT HAS NO CORROBORATIVE EVIDENCE TO SUPPORT THE CONTENT OF THE STATEMENT. 2. MR. SHIV SHANKAR BANKA HAS RETRACTED THIS STATEMENT ON 05.11.2012 I.E, WITHIN A WEAK BY STATING THAT THE STATEMENT WAS RECORDED UNDER THE EXTREME PRESSURE AND HE WAS FORCED TO STATE WHAT IS WRITTEN IN THAT STATEMENT. REFER PAGE NO. 80-81 OF THE COMMON PAPER BOOK. 2. STATEMENT OF NEW DIRECTORS (AFTER TAKEN OVER OF THE INVESTOR COMPANY BY PRAKASH GROUP) OF THIS JAMAKHARCHI COMPANY HAS BEEN RECORDED AND THEY HAVE ADMITTED THAT THEY HAVE NO KNOWLEDGE OF THE AFFAIRS OF THESE COMPANIES AND THEY ARE ACTING ON THE INSTRUCTIONS OF PRAKASH GROUP MANAGEMENT. 1. THE STATEMENT REC ORDED BY THE LD. AO WAS NOT PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN SPITE OF SPECIFIC REQUEST AND WAS ONLY PROVIDED WITH THE ASSESSMENT ORDER. THIS IS IN GROSS VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. 2. WITHOUT PREJUDICE TO THE ABOVE, ON PERUSAL OF THE STATEMENT OF I.T.AS. NO. 4049/DEL/2017 26 DIRECTORS IT IS QUITE EVIDENT THAT NONE OF THE DIRECTOR STATED THAT THE ASSESSEE COMPANY IS A PAPER COMPANY. MERE BECAUSE THE DIRECTORS ARE UNWARE OF THE WORKING OF THE COMPANY IT DOES NOT NECESSARILY MEANS THAT THE COMPANY IS A BOGUS COMPANY. 3. FURTHER, CHEQUE BOOKS OF THE ASSESSEE COMPANY AS WELL AS INVESTOR COMPANIES WERE SEIZED FROM THE OFFICE PREMISES OF PRAKASH GROUP WHICH CLEARLY INDICATE THAT THE COMPANY WAS CONTROLLED BY PRAKASH GROUP. 1. AT THE VERY OUTSET IT IS SU BMITTED THAT THE SEIZED CHEQUE BOOKS WERE NEVER PROVIDED TO THE ASSESSEE FOR FILING ITS OBJECTIONS. THIS IS IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 2. THE DIRECTORS OF THE INVESTOR COMPANIES WERE THE EMPLOYEES OF THE PRAKASH INDUSTRIES AND THE SHRI. AGARWAL IS THE PROMOTER AND SUBSTANTIAL SHAREHOLDER OF THE ASSESSEE COMPANY. THEREFORE PRESENCE OF CHEQUE BOOK AT THE PREMISES OF PRAKASH WHERE DIRECTORS WERE SITTING IS NOT ILLEGAL AND CANNOT BE USED AGAINST THE ASSESSEE. THE ASSESSEE RESPECTFULLY SUBMITTED THAT THE CHEQUE BOOKS WERE LYING AT THE OFFICE OF THE DIRECTORS FOR THE PAYMENT OF STATUTORY DUES. 3. MOST IMPORTANTLY THE CHEQUE BOOK IS UNDATED WHICH DOES NOT PERTAIN TO ANY ASSESSMENT YEAR AND ON THE BASIS OF SUCH DOCUMENT ASSESSMENT UNDER SECTION 153C CANNOT BE RE-OPENED. MERE AVAILABILITY OF CERTAIN DOCUMENTS DOES NOT PROVE THAT THE DOCUMENTS WERE USED FOR MANIPULATING THE ACCOUNTS OF THE COMPANY. 4. ENQUIRIES REVEALED THAT AFFAIRS OF THESE INVESTOR COMPANIES HAVE BEEN MANAGED BY ENTRY OPERATOR WHO HAS GIVEN BY STATEMENT ON OATH THAT THE COMPANY HAS BEEN FLOATED AND SOLD TO PRAKASH INDUSTRIES GROUP FOR A 1.ANY SUCH ENQUIRY REPORT BACKED BY EVIDENCES WHICH SHOWS THAT THE PRAKASH GROUP HAS PURCHASED SUCH COMPANIES ON COMMISSION IS NEVER CONFRONTED TO THE ASSESSEE. 2. ALL THE STATEMENTS RECORDED BY THE DEPARTMENT WERE RETRACTED. I.T.AS. NO. 4049/DEL/2017 27 COMMISSION. 5. THE INVESTOR COMPANIES HAVE MEAGRE PROFITS AND ONLY BALANCE SHEET BASED COMPANIES. THE INVESTOR COMPANIESARE SITUATED AT A TABLE PLACE NOT WITH ANY INFRASTRUCTURES WHICH ARE REQUIRED TO CONDUCT PROPER BUSINESS OPERATIONS. 1. THEINVESTOR COMPANIESWEREDEALING IN SHARES AND SECURITIES. IT DOES NOT REQUIRE INFRASTRUCTURE AS IN CASE OF MANUFACTURING COMPANY. 2. IT IS ALSO SUBMITTED THAT THE EARNING ARE NOT THE CRITERIA TO DECIDE WHETHER THE COMPANY IS BOGUS COMPANY. 6. THE DIRECTORS WHO HAVE SAID TO BE CONDUCTING THE AFFAIRS OF THE COMPANIES ARE NOT TRACEABLE. THE SHAREHOLDER COMPANIES WHO HAVE CONTRIBUTED TO THE ASSESSEE FOR SHARE CAPITAL ARE ALSO NOT TRACEABLE AND BOGUS AND ONLY PAPER ENTITIES. THE ASSESSEE HAS ALSO FAILED TO PRODUCE THE PEOPLE INVOLVED IN RUNNING OF THE OPERATIONS OF ASSESSEE COMPANY AS WELL AS SHARE CAPITAL CONTRIBUTING COMPANIES. 1. DURING THE YEAR NO SHARE CAPITAL WAS ISSUED. 2. NAME, ADDRESS, PAN OF PURCHASER COMPANIES WERE GIVEN AND REQUEST WAS MADE TO ISSUE SUMMONS TO THEM. REFER PAGE NO. 4850 OF THE PAPER BOOK. 7. NO REGISTER OF MINUTES OF MEETING OF BOARD OF DIRECTORS HAVE BEEN PRODUCED OF THE ASSESSEE COMPANY SO FAR. ONLY THE SINGLE PAGE HAVING SIGNATURE OF ONE PERSON CANNOT SUFFICE. NO REGISTER OF ALLOTMENT OF SHARES OF ASSESSEE COMPANY HAS BEEN PRODUCED. 1. DURING THE YEAR NO SHARE CAPITAL WAS ISSUED 8. THE INVESTMENTS OF THE ASSESSEE COMPANY BEFORE TAKEN OVER BY ASSESSEE GROUP WAS IN BOGUS PAPER COMPANY. 1. ON PERUSAL OF ENQUIRY REPORT, IT IS NO-WHERE MENTIONED THAT THE ENQUIRIES IN RESPECT OF INVESTMENTS/LOANS/ADVANCES WERE ALSO MADE. REFER PAGE NO. 366-368 OF THE I.T.AS. NO. 4049/DEL/2017 28 THE SHAREHOLDERS OF ASSESSEE COMPANY BEFORE TAKEN OVER BY ASSESSEE GROUP WERE IN PAPER COMPANIES. PAPER BOOK. 2. THE ALLEGATION MADE BY THE LD. AO IS ONLY ON THE BASIS OF HIS ASSUMPTIONS. 9. BANK TRANSACTION TRAIL PREPARED REVEAL THAT BEFORE THE AMOUNTS CREDITED IN BOOKS OF ASSESSEE THERE WERE MULTIPLE LAYERING OF TRANSACTIONS ONLY TO GIVE COLOUR OF GENUINE TRANSACTIONS ROUTED THROUGH BANK 1. IT IS SUBMITTED THAT THE CASH TRAIL AS ALLEGED BY THE LD. AO HAVE NEVER BEEN PROVIDED TO THE ASSESSEEINSPITE OF THE SPECIFIC REQUEST OF THE ASSESSEE VIDE LETTER ATTACHED AT PAGE NO. 48-50 OF THE PAPER BOOK. . 2. THE LD. AO HAS FAILED TO ESTABLISH THAT ANY CASH HAS EXCHANGED HANDS. IN ABSENCE OF ANY MATERIAL TO SHOW THAT THE CASH WAS DEPOSITED BY THE ASSESSEE COMPANY THE ALLEGATION MADE BY THE LD. AO IS BASELESS. 10. THE CHAIRMAN OF BENEFICIARY GROUP HAS ADMITTED THAT UNACCOUNTED MONEY GENERATED BY THE PRAKASH INDUSTRIES WAS CONVERTED AS SHARE APPLICATION MONEY THROUGH VARIOUS PAPER COMPANIES INCLUDING THAT OF ASSESSEE COMPANY. ADMISSION OF SH. VED PRAKASH AGARWAL DURING STATEMENT RECORDED U/S 132(4) OF I.T. ACT PROVED THE MODUS OPERANDI USED TO CONVERT UNACCOUNTED MONEY INTO BOOKS OF ACCOUNTS. 1. THE STATEMENT CANNOT BE RELIED AS IT WAS RETRACTED BY SHRI. VED PRAKASH AGARWAL ON 02.11.2014. 2. BEFORE USING SUCH STATEMENT THE DEPARTMENT HAS TO BRING ON RECORD THE MATERIAL CORROBORATING SUCH STATEMENT. 11. THE TRANSACTION IN THE BANK ACCOUNT WERE FOR THE SAKE OF ROTATION IT IS SUBMITTED THAT THE CASH TRAIL AS ALLEGED BY THE LD. AO HAVE NEVER BEEN PROVIDED TO THE ASSESSEE. THE LD. AO HAS FAILED TO ESTABLISH THAT ANY CASH HAS EXCHANGED HANDS. IN ABSENCE OF ANY MATERIAL TO SHOW THAT THE CASH WAS DEPOSITED BY THE ASSESSEE COMPANY THE ALLEGATION MADE BY THE LD. AO IS BASELESS. 12. FROM INVESTMENT LIST OF THIS JAMAKHARCHI COMPANY IT IS EVIDENT 1. THE INSPECTOR REPORT REFERRED BY THE LD. AO WAS NEVER PROVIDED TO THE I.T.AS. NO. 4049/DEL/2017 29 THAT THE KOLKATA BASED COMPANIES IN WHICH INVESTMENTS WERE MADE ARE ALSO JAMAKHARCHI COMPANIES AS SEEN FROM THEIR ADDRESSES AND VERIFICATION MADE AT SOME OF THOSE COMPANIES. APPLICATION FORM PROVED THAT SAME CONTROLLING PERSONS ARE FOR MOST OF SHARE APPLICANT COMPANIES. ASSESSEE COMPANY FOR THE REBUTTAL. THIS IS IN GROSS VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. THE INSPECTOR REPORT WAS PROVIDED TO THE ASSESSEE ONLY AT THE TIME OF PROCEEDINGS BEFORE THE CIT(A). 2. ON PERUSAL OF INSPECTOR REPORT WE FOUND THAT THE NAME AND DESIGNATION OF THE INSPECTOR IS NOWHERE MENTIONED IN THE INSPECTOR REPORT NEITHER IT IS MENTIONED THAT WHEN THE ENQUIRIES WERE CONDUCTED . 3. THE ALLEGATION MADE BY THE LD. AO IS COMPLETELY BASELESS. IN THE ENQUIRY REPORT NAME OF THE VANSHI FARMS IN NOT MENTIONED ANYWHERE. NO ENQUIRY WAS MADE IN RESPECT OF THE INVESTOR COMPANY. 13. IT IS SEEN THAT MOST OF THE COMPANIES IN WHICH INVESTMENT HAS BEEN MADE BY THE JAMA KHARCHI COMPANIES HAVE BANK ACCOUNTS IN THE SAME BANK AND IN THE BANK THEY ARE SHOWN TO BE HAVING COMMON ADDRESS. 1. LD. AO NEVER PROVIDED THE COPIES OF SUCH ENQUIRY REPORT FOR REBUTTAL OF THE ASSESSEE. HENCE THE EVIDENCE GATHERED BEHIND THE BACK OF THE ASSESSEE CANNOT BE USED AGAINST THE ASSESSEE. 14. SHARES OF THESE JAMAKHARCHI COMPANIES WERE ALLOTTED AT A PREMIUM TO THE OTHER JAMAKHARCHI COMPANIES, ALTHOUGH THE SAID JAMAKHARCHI COMPANIES HAD NO NET WORTH COMPARABLES TO THE PRICE OF ITS SHARE. THE ALLEGATION IS GENERAL. ASSESSEE FAILS TO UNDERSTAND IN RESPECT OF WHICH COMPANY THE LD. AO IS ALLEGING. WITHOUT ANY SUPPORTING EVIDENCE, A GENERAL ALLEGATION CANNOT BE MADE A BASIS FOR ADDITION. 15. NO DIVIDEND WAS EVER PROVI DED BY THE ASSESSEE COMPANY AND THERE IS NO JUSTIFICATION OF INVESTMENT AT HUGE PREMIUM. YOUR HONOURS, THE DIVIDEND IS NEVER THE CRITERIA OF FOR RECEIVING THE SHARE CAPITAL AT HUGE PREMIUM. FURTHER THERE IS NO LAW WHICH HELD THE NON-DIVIDEND DECLARANT COMPANY AS BOGUS COMPANY. 16. ITR OF ALL NEW SHARE APPLICANTS HAVE BEEN FILED FROM THE SAME IP IT IS ALREADY SUBMITTED THAT THE ASSESSEE COMPANY IS A GROUP COMPANY I.T.AS. NO. 4049/DEL/2017 30 ADDRESS. THIS SHOWS THAT THE DOCUMENTS OF ALL PAPER COMPANY HAVE BEEN PREPARED AT SAME PLACE. OF THE PROMOTER GROUP PF M/S PRAKASH INDUSTRIES. THEREFORE IT CANNOT BE DOUBTED IF THE ITRS HAVE BEEN FILED FROM THE SAME IP ADDRESS. 17. PRAKASH GROUP HAVE PAID CASH TO THE ENTRY OPERATOR. THE ENTRY OPERATOR ROUTES THE CASH THROUGH MANY BANK ACCOUNTS AND THE INVESTMENT SIDE OF THESE COMPANIES THE INVESTMENTS ARE REPLACED WITH CASH/ BANK OR INVESTMENT IN GROUP COMPANIES OF PRAKASH GROUP. IT IS SUBMITTED THAT THE CASH TRAIL AS ALLEGED BY THE LD. AO HAVE NEVER BEEN PROVIDED TO THE ASSESSEE. THE LD. AO HAS FAILED TO ESTABLISH THAT ANY CASH HAS EXCHANGED HANDS. IN ABSENCE OF ANY MATERIAL TO SHOW THAT THE CASH WAS DEPOSITED BY THE ASSESSEE COMPANY THE ALLEGATION MADE BY THE LD. AO IS BASELESS. 18. IN F.Y. 2007 - 08 TOTAL SHAREHOLDING WAS PURCHASED BY PRAKASH GROUP. IT PROVES THE COMPANY WAS SPECIALLY FORMED FOR PRAKASH GROUP AND CASH WAS GIVEN BY PRAKASH GROUP AND CASH WAS GIVEN BY PRAKASH GROUP. 1. ALLEGATION OF LD. AO IS BASELESS. 2. THE LD. AO HAS MADE THIS ALLEGATION WITHOUT REFERRING TO THE TRAIL OF CASH EXCHANGING HANDS. 3. THE LD. AO HAS FAILED TO SHOW THE DEPOSIT OF CASH IN THE BANK ACCOUNT OF ANY OF THE COMPANY REFERRED BY HIM. ON ISSUE OF BROKERAGE: THE ADDITION OF BROKERAGE IS CONSEQUENTIAL TO THE M AIN ADDITION OF SHARE CAPITAL/INVESTMENTS AND SOLELY BASED ON TH E STATEMENT OF SHRI. V.P. AGARWAL. REFER PAGE NO. 47-48 OF THE ASSESSMENT ORDER. SINCE THE ADDITION OF SHARE CAPITAL MADE BY THE LD. AO IS BASELESS AND SHRI. VP AGARWAL RETRACT ED HIS STATEMENT WHICH WAS GIVEN UNDER THREAT AND COERCION ON THE VERY NEXT DAY. THE CONSEQUENTIAL ADDITION OF BROKER AGE DESERVES TO BE DELETED. I.T.AS. NO. 4049/DEL/2017 31 7. LD. CIT DR ON THE OTHER HAND RELIED UPON THE ORD ER OF THE ASSESSING OFFICER. 8. AFTER CONSIDERING THE SUBMISSIONS AND ON PERUSAL OF THE IMPUGNED ORDER AS WELL AS MATERIAL REFERRED TO BEFO RE US AT THE TIME OF HEARING. FROM A BARE PERUSAL OF THE ASSESSMENT O RDER, IT IS SEEN THAT LD. ASSESSING OFFICER HAS SOUGHT TO REOPEN THE CASE U/S.147 BY ISSUANCE OF NOTICE DATED 22.02.2015 FOR MAKING PROT ECTIVE ADDITION OF RS. 8,73,24,240/- AND UNEXPLAINED EXPENDITURE ON ACCOUNT OF BROKERAGE AT RS.4,36,621/-. APART FROM THAT, ANOTHE R GLARING POINT IS THAT THE AMOUNT MENTIONED IN THE INCOME ESCAPING AS SESSMENT IS INCORRECT, BECAUSE ONLY RS. 4.63 CRORE WAS INVESTED IN PRAKASH INDUSTRIES LTD. DURING THE RELEVANT ASSESSMENT YEAR , AND THEREFORE, ENTIRE ADDITION RS. 8,73,24,240/- COULD NOT HAVE B EEN MADE U/S. 68 IN THIS YEAR. ANOTHER INTRIGUING POINT IS THAT PROT ECTIVE ADDITION WAS MADE IN THE HANDS OF THE APPELLANT VIDE ORDER DATED 31.03.2015 EVEN BEFORE THE SUBSTANTIVE ADDITION WAS MADE IN THE HAN DS OF PRAKASH INDUSTRIES LTD. IN ORDER PASSED ON 31.03.2016. THUS , NEITHER AT THE TIME OF RECORDING THE REASONS, NOR AT THE TIME OF F RAMING THE ASSESSMENT, ASSESSING OFFICER WASNT SURE ABOUT WHO SE INCOME HAS ESCAPED ASSESSMENT. THUS, WE DO NOT FIND ANY REASON TO INTEREFERE WITH THE FINDINGS OF THE LD. CIT (A) THAT REOPENING FOR RESORTING TO MAKE PROTECTIVE ASSESSMENT CANNOT BE UPHELD. FUR5TH ER, ASSESSING OFFICER HAS ALSO NOT EVEN VERIFIED THE RECORDS THAT THE ALLEGED ESCAPEMENT OF INCOME OF RS.8.32 CRORE WAS RECEIVED IN THIS ASSESSMENT YEAR OR NOT. THUS, THERE IS A FALLACY IN T HE REASONS RECORDED ITSELF, AND THEREFORE, WE UPHOLD THE ORDER OF LD. CIT (A) IN QUASHING THE ORDER PASSED BY THE ASSESSING OFFICER U /S.147. I.T.AS. NO. 4049/DEL/2017 32 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JULY, 2021 SD/- SD/- [DR. B.R.R. KUMAR] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 9/07/2021 PKK: