Integrated Global Solutions Pvt. Ltd, New Delhi V. ACIT, New Delhi

ITA 4993/DEL/2012

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0199 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 21-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N MEENA
• Keywords: Reopening of assessment; Gift; Search and seizure; Tangible material; Difference of opinion; Accommodation entries; Reason to believe; Change of opinion; Reassessment proceedings; Borrowed satisfaction; TDS; Set aside
• Section: 143(3); 133(6); 13; 147; 131; 145; 148; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI C BEN CH, NEW DELHI BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER SHRI N.K. BILLAIYA, ACCOUNTANT MEMBE R ITA NO. 4993/DEL/2012 [A.Y 2006-07] INTEGRATED GLOBAL SOLUTIONS PVT LTD VS. THE A .C.I.T [FORMERLY KNOWN AS SPICE GLOBAL PVT LTD CENTRA L CIRCLE 9 60D-STREET NO. C-5, SAINIK FARMS NEW DELHI NEW DELHI PAN: AACCM 7292 F (APPLICANT) ( RESPONDENT) ASSESSEE BY : SHRI ASHWANI KUMAR, CA DEPARTMENT BY : SHRI S.N. MEENA, SR. DR DATE OF HEARING : 18.12.2019 DATE OF PRONOUNCEMENT : 31.12.2019 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS] XXXII, DELHI DATED 31.07.2012 PERTAINING TO ASSESSMENT YEAR 2006-07. 2 2. THE SUBSTANTIVE GRIEVANCE OF THE ASSESSEE RELATE S TO THE ASSUMPTION OF JURISDICTION U/S 147 OF THE INCOME-TA X ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'] FOR FRAMING THE ASSESSMENT ORDER U/S 143(3) R.W.S 147 OF THE ACT AND THE OTHER GRIEV ANCES RELATE TO THE ADDITIONS MADE IN REASSESSMENT PROCEEDINGS 3. THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTA NCE OF THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENC ES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 1 8(6) OF ITAT RULES. JUDICIAL DECISIONS RELIED UPON WERE CAREFULLY PERUS ED. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT R ETURN OF INCOME DECLARING INCOME OF RS. 1,92,74,350/- WAS FILED BY THE ASSESSEE ON 15.12.2006. RETURN WAS SUBJECTED TO SCRUTINY ASSES SMENT AND THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE OR DER DATED 10.07.2008. 5. SUBSEQUENTLY, A NOTICE U/S 148 OF THE ACT WAS IS SUED AND SERVED UPON THE ASSESSEE. REASONS FOR REOPENING THE ASSES SMENT READ AS UNDER: 3 REASONS FOR ISSUE OF NOTICE U/S 148 IN THE CASE OF M/S SPICE GLOBAL PVT LTD (A. Y. 2006-07) ASSESSME NT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 10.07.2008 BY THE DCIT, CIRCLE 19(1), NEW DELHI AT THE RETURNED INCOME OF R S. 192,74,350/-, THE RETURN OF INCOME HAVING BEEN FILE D ON 15.12.2006. SUBSEQUENTLY THE JURISDICTION OVER THIS CASE WAS TRANSFERRED TO F THIS CIRCLE VIDE THE COMMISSIO NERS OF INCOME TAX, DELHI-ILL, NEW DELHI ORDER I U/S 127 DA TED 01.09.2008. 2. IT HAS BEEN NOTICED THAT DURING THE PREVIOUS YEAR RELEVANT TO THE 'ASSESSMENT YEAR 2006-07 THE ASSESS EE COMPANY HAS BEEN FOUND TO HAVE MADE TRANSACTIONS AMOUNTING TO RS. 3.05.22.660/- WITH M/S CAMSOFT (IN DIA) PVT LTD AND M/S BT TECHNET LTD OF THE GROUP OF COMP ANIES MANAGED AND CONTROLLED BY SH. S. K. GUPTA. THE DETA ILS OF SUCH TRANSACTIONS ARE AS TABULATED BELOW: 4 SR NO NAME OF THE COMPANY MANAQED & CONTROLLED BY SH. S. K. GUPTA PARTICULARS STATED IN THE BILL/INVOICE INVOICE NO/BILL NO DATE AMOUNT 1 CAM SOFT (INDIA) PVT. LTD. DEVELOPMENT OF SOFTWARE 2005- 06/09/52 30/09/2005 800000 2 CAM SOFT (INDIA) PVT. LTD. DEVELOPMENT OF SOFTWARE 2005- 06/09/50 28/09/2005 3150000 3 BT TECHNET LTD. SOFTWARE USAGES CHARGES 2005- 2006/07/53 25/07/05 3520032 4 BT TECHNET LTD. SOFTWARE USAGES CHARGES 2005- 2006/10/83 7/10/2005 I 5177693 5 BT TECHNET LTD. SOFTWARE USAGES CHARGES 2005- 2006/11/187 18/11/05 1924225 6 BT TECHNET LTD. SOFTWARE USAGES CHARGES 2005- 2006/12/192 8/12/2005 1397430 7 BT TECHNET LTD. SOFTWARE USAGES CHARGES 2005- 2006/01/201 4/1/2006 1917305 8 BT TECHNET LTD. SOFTWARE USAGES CHARGES 2005- 2006/02/219 5/2/2006 2028788 5 A SUCH A SEARCH & SEIZURE ACTION WAS CONDUCTED ON 1 2-12-2006 AT BUSINESS AND RESIDENTIAL PREMISES OF SHRI S.K. G UPTA ALONG WITH VARIOUS CONCERNS IN WHICH HE AND HIS FAMILY ME MBERS WERE INTERESTED. SIMILARLY ACTION U/S 132 OF IT ACT, 196 1 WAS CONDUCTED IN THE CASE OF VARIOUS COMPANIES- OWNED OR CONTROLLED BY HIM AND ALSO IN THE CASE OF DIFFERENT INDIVIDUALS CONNECTED WITH THE SAID COMPANIES. DURING THE COURS E OF THE SEARCH OPERATION, IT WAS FOUND THAT A LARGE NUMBER OF COMPANIES WERE BEING OPERATED AND CONTROLLED BY SHRI S.K GUPT A FROM HIS MAIN OFFICE PREMISES AT H- 108, CONNAUGHT PLACE. M/ S CAM SO FT (INDIA) PVT LTD AND M/S BT TECHNET LTD ARE TWO OF S UCH COMPANIES. THESE COMPANIES HAD OSTENSIBLY BEEN CREATED FOR PRO VIDING A VARIETY OF SERVICES RANGING FROM CONSULTANCY TO ADV ERTISING TO SOFTWARE DEVELOPMENT. ACCORDINGLY BILLS/INVOICES HA D BEEN 9 BT TECHNET LTD. SOFTWARE USAGES CHARGES 2005- 2006/03/234 3/3/2006 2750469 10 BT TECHNET LTD. SOFTWARE USAGES CHARGES 2005- 2006/03/308 30/03/06 2819245 11 BT TECHNET LTD. SOFTWARE USAGES CHARGES 2005- 2006/12/192 8/12/2005 1318378 12 BT TECHNET LTD. SOFTWARE USAGES CHARGES 2005- 2006/11/187 18/11/05 1866105 13 BT TECHNET LTD. SOFTWARE USAGES CHARGES 2005- 2006/01/201 4/1/2006 1852990 TOTAL 3052266 6 ISSUED IN THE NAMES OF THESE COMPANIES BUT IN FACT NO ACTUAL SERVICES HAD BEEN RENDERED BY THEM TO THE BENEFICIA RIES. DURING THE COURSE OF SEARCH IT WAS FOUND THAT SHRI S.K GUPTA DID NOT HAVE THE NECESSARY INFRASTRUCTURE OR THE RE QUISITE MANPOWER TO PROVIDE THE ACTUAL SERVICES AND THUS IT BECAME EVIDENT THAT THE COMPANIES CONTROLLED BY HIM WERE M ERELY ENGAGED IN THE BUSINESS OF ISSUING ACCOMMODATION BI LLS TO OTHER ENTITIES TAT THE OTHER OFFICE PREMISES OF SHRI S.K GUPTA AT 231 GULMOHAR1 ENCLAVE, HUGE NUMBER OF SUCH ACCOMMODATI ON INVOICES/BILLS ISSUED BY THE 'T VARIOUS COMPANIES WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH. APART FROM THESE INVOICES/BILLS, THERE WAS NO OTHER EVIDENCE WHICH W AS FOUND FROM ANY OF THE PREMISES WHICH WOULD SUGGEST THAT ACTUAL SERVICES WERE BEING RENDERED BY ANY OF THE COMPANIES CONTROL LED BY SHRI S.K GUPTA. NO DOCUMENTARY OR WRITTEN EVIDENCE IN SU PPORT OF GENUINENESS OF THESE TRANSACTIONS WAS FOUND DURING THE COURSE OF SEARCH WHICH LEADS TO THE OBVIOUS CONCLUSION THA T THE COMPANIES CONTROLLED BY SHRI S.K GUPTA WERE ENGAGED IN THE BUSINESS OF ISSUING ACCOMMODATION BILLS ONLY. THE FACT OF PROVIDING ACCOMMODATION ENTRIES GETS FU RTHER STRENGTHENED BY THE STATEMENTS AND INQUIRES CONDUCT ED BY THE DEPARTMENT. SHRI S.K GUPTA HAS ADMITTED IN HIS STAT EMENT RECORDED IN THE, COURSE OF SEARCH PROCEEDINGS THAT BILLS WERE RAISED IN THE NAMES OF VARIOUS COMPANIES BY HIS GRO UP CONCERNS, THE CHEQUES WERE RECEIVED BUT CASH WAS RETURNED TO THE RESPECTIVE PARTIES OR CHEQUE PAYMENTS WERE MADE TO THEM 7 THROUGH OTHER GROUP ENTITIES. SH GUPTA HAS ADMITTED THAT HIS GROUP CONCERNS/COMPANIES WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES OF THE FOLLOWING NATURE: (I) PROVIDING ACCOMMODATION SALES / EXPENSES BILLS TO T HE BENEFICIARY COMPANIES (II) PROVIDING ACCOMMODATION INVESTMENT ENTRIESI N THE FORMS OF SHARE CAPITAL AND/OR LOANS TO THE BENEFICIARY COMPANIES (II) DURING THE COURSE OF THE ASSESSMENT PROCEED INGS ALSO, IT WAS PROVED BEYOND DOUBT THAT THE COMPANIES/CONCERNS OF S.K GUPTA GROUP WERE ENGAGED IN THE ACCOMMODATION ENTRY BUSINESS AN D NOT DOING ANY GENUINE U SALE & PURCHASE AS CLAIMED IN THE FINAL A CCOUNT STATEMENTS ANNEXED WITH THEIR RESPECTIVE RETURNS OF INCOME. TH E SAID CONCERNS/COMPANIES FOUND TO HAVE NOT MAINTAINED ANY REGULAR BOOKS OF ACCOUNT, SALE & PURCHASE AND EXPENSES VOUCHERS, AS SUCH THE BOOK RESULTS SHOWN BY THEM WERE REJECTED BY TAKING RECOU RSE TO PROVISIONS OF SECTION 145 (3) OF IT ACT 1961. THESE CONCERNS/C OMPANIES HAVE FAILED TO ESTABLISH THAT ANY GENUINE BUSINESS ACTIV ITY WAS BEING CARRIED OUT OTHER THAN THE ACCOMMODATION ENTRY BUSINESS. NO PHYSICAL EVIDENCE OF SUPPORTING INFRASTRUCTURE W AS FOUND BY THE INVESTIGATION WING AT THE TIME OF SEARCH OR SUBSEQU ENTLY DURING THE ASSESSMENT PROCEEDINGS. AS A RESULT IT BECAME CLEAR THAT THE CONCERNS / COMPANIES OF SK GUPTA GROUP OF CASES HAVE NOT DON E ANY GENUINE BUSINESS AND THEY WERE SIMPLY ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF SALES / EXPENSES BILLS AND I NVESTMENT ENTRIES OF 8 SHARE CAPITAL / LOANS. THE UNDERSIGNED HAS, THEREFORE, REASONS TO BELIEVE THAT THE TRANSACTIONS AMOUNTING TO RS. 3,05,22,660/- CLAIMED TO HAVE BEEN CARRIED OUT BY THE ASSESSEE COMPANY WITH M/S C AMSOFT (INDIA) PVT LTD AND BT TECHNET LTD DURING THE PREVIOUS YEAR RELEVAN T TO THE ASSESSMENT YEAR 2006 07 ARE OF THE NATURE OF ACCOMM ODATION ENTRIES AND THAT INCOME TO THIS EXTENT HAS ESCAPED ASSESSME NT. DATED THE 8 TH OF JUNE, 2010 (D. K.CHAUHAN) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-9, NEW 6. A PERUSAL OF THE AFORESAID REASONS FOR REOPENING THE ASSESSMENT SHOW THAT COMPLETED ASSESSMENT HAS BEEN REOPENED PU RSUANT TO THE SEARCH AND SEIZURE ACTION CONDUCTED AT THE BUSINESS AND RESIDENTIAL PREMISES OF ONE SHRI S.K. GUPTA ON 12.12.2006. SIM ILAR ACTIONS WERE CONDUCTED IN THE CASE OF VARIOUS COMPANIES OWNED / CONTROLLED BY SHRI S.K. GUPTA AND HIS FAMILY MEMBERS. THERE IS A REFE RENCE TO TWO COMPANIES, NAMELY, M/S CFAM SOFT [INDIA] PVT LTD AN D M/S BT TECHNET LTD. NOWHERE IN THE REASONS FOR REOPENING ASSESSME NT THERE IS A MENTION OF WHAT RELATIONSHIP SHRI S.K. GUPTA OR ANY OF HIS FAMILY MEMBERS HAD WITH THESE TWO COMPANIES AND WHETHER TH EY WERE 9 SHAREHOLDERS HAVING SUBSTANTIAL INTEREST, OR MDS/DI RECTORS OF THESE COMPANIES. 7. THE REASONS FURTHER SHOW THAT HUGE NUMBER OF ACC OMMODATION INVOICES/BILLS ISSUED BY VARIOUS COMPANIES IN WHICH SHRI S.K. GUPTA OR HIS FAMILY MEMBERS HAD INTEREST WERE FOUND AND SEIZ ED. THOUGH THERE IS A REFERENCE TO THE STATEMENT OF SHRI S.K. GUPTA WHO HAS ADMITTED IN HIS STATEMENT THAT THE BILLS WERE RAISED IN NAMES O F VARIOUS COMPANIES BY HIS GROUP CONCERNS. CHEQUES WERE RECEIVED BUT C ASH WAS RETURNED TO THE RESPECTIVE PARTIES OR CHEQUE PAYMENTS WERE M ADE TO THEM THROUGH OTHER GROUP ENTITIES. BUT, THERE IS NO REF ERENCE TO WHICH THE COMPANIES SHRI S.K. GUPTA WAS REFERRING TO. 8. AS MENTIONED ELSEWHERE, ON THE STRENGTH OF THE S TATEMENT OF SHRI S.K. GUPTA AND SOME MATERIAL SEIZED FROM HIS PREMIS ES, THE ASSESSING OFFICER FORMED A BELIEF THAT THE TRANSACTIONS WITH M/S CFAM SOFT [INDIA] PVT LTD AND M/S BT TECHNET LTD. DONE BY THE ASSESSEE WERE NOT GENUINE TRANSACTIONS BUT ONLY ACCOMMODATION BILLS W ERE TAKEN FROM THEM AND HENCE REOPENING WAS JUSTIFIED. 10 9. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER RAISED SPECIFIC QUERIES IN RELATI ON TO TRANSACTIONS DONE WITH THE AFOREMENTIONED TWO COMPANIES AND REPL Y OF THE ASSESSEE READS AS UNDER: DEAR SIR, THE CAPTIONED CASE IS FIXED FOR HEARING BEFORE YOUR GOODSELF TODAY. AS REQUIRED VIDE YOUR QUESTIONNAIRE DATED, WE ARE P LEASED TO SUBMIT AS UNDER: 1. THE DETAIL OF ADDITION TO FIXED ASSETS, AS REQUIRED VIDE QUERY NO. 11 OF THE QUESTIONNAIRE, ALONGWITH COPIES OF ALL THE B ILLS IS ENCLOSED HEREWITH AND MARKED AS ANNEXURE-I. 2. THE REQUIRED COPIES OF ACKNOWLEDGEMENTS ALONGWITH NECESSARY DETAIL TOWARDS FILING OF QUARTERLY TDS RETURN ON FO RM NO 26Q FOR ALL THE FOUR QUARTERS ARE ENCLOSED HEREWITH AND COL LECTIVELY MARKED AS ANNEXURE-II, AS REQUIRED BY YOUR GOODSELF VIDE QUERY NO. 19 OF THE QUESTIONNAIRE. 2. THE REQUIRED DETAIL OF MAJOR EXPENSES IN THE CAS E OF FOLLOWING IS ENCLOSED HEREWITH AND MARKED AS ANNEXURE-III: COMPUTER MAINTENANCE EXPENSES CONSULTANCY CHARGES ELECTRICITY/ DG RUNNING EXPENSES OFFICE MAINTENANCE EXPENSES RECRUITMENT & TRAINING EXPENSES SOFTWARE ROYALTY TRANSPORTATION CHARGES 11 VEHICLE EXPENSES TRAVELLING EXPENSES THE RELEVANT BILLS AND VOUCHERS IN CONNECTION WITH THE ABOVE EXPENSES ARE PRODUCED FOR YOUR NECESSARY VERIFICATI ON AND PERUSAL PLEASE. WE HOPE YOUR GOODSELF WILL FIND THE ABOVE IN ORDER. IN SUPPORT OF THE ABOVE ALL THE BOOKS OF ACCOUNTS AND VOUCHERS ARE PRODUCED FOR YOUR NECESSARY VERIFICATION AND PE RUSAL PLEASE. 10. EXHIBITS 23 TO 34 OF THE PAPER BOOKS ARE COPIES OF INVOICES/BILLS SUPPORTING THE GENUINENESS OF THE TRANSACTIONS. VI DE LETTER DATED 30.04.2008, THE ASSESSEE ALSO FILED A CONFIRMATION IN CONNECTION WITH THE PAYMENT OF SOFTWARE CHARGES FROM M/S BT TECHNET LTD. 11. IT CAN BE SEEN THAT SPECIFIC QUERIES WERE RAISE D DURING THE ORIGINAL ASSESSMENT PROCEEDINGS TO WHICH SPECIFIC R EPLIES WERE FILED ALONGWITH SUPPORTING DOCUMENTARY EVIDENCES. IT IS THE SAY OF THE LD. DR THAT THE ASSESSING OFFICER DID NOT MAKE ANY ENQU IRIES AND HAS ACCEPTED THE BILLS/INVOICES. WE FAIL TO UNDERSTAND WHAT PREVENTED THE ASSESSING OFFICER TO MAKE NECESSARY ENQUIRIES AS PE R PROVISIONS OF LAW. NEITHER THE ASSESSING OFFICER ISSUED ANY NOTICE U/S 133(6) OF THE ACT NOR HE CARED TO SUMMON THE OFFICERS OF THE TWO COMP ANIES U/S 131 OF 12 THE ACT. 12. A PERUSAL OF THE ASSESSMENT ORDER FRAMED U/S 14 3(3) R.W.S 147 OF THE ACT SHOWS THAT ENTIRE ASSESSMENT ORDER IS DEVOI D OF ANY REFERENCE TO THE STATEMENT OF SHRI S.K. GUPTA. IT IS NOT KNO WN AS TO WHAT QUESTION SHRI S.K. GUPTA SAID THAT M/S CFAM SOFT [I NDIA] PVT LTD AND M/S BT TECHNET LTD. WERE PROVIDING ACCOMMODATION BI LLS. FURTHER, WE FIND THAT THE ENTIRE TRANSACTIONS HAVE BEEN DONE TH ROUGH A/C PAYEE CHEQUES AND IT IS NOT THE CASE OF THE REVENUE THAT THE APPELLANT HAS PURCHASED THE ACCOMMODATION BILLS BY MAKING PAYMENT S THROUGH CHEQUES AND RECEIVING CASH THROUGH BACK DOOR. 13. IT IS PERTINENT TO MENTION HERE THAT SEARCH OPE RATIONS AT THE PREMISES OF SHRI S.K. GUPTA WERE CONDUCTED ON 12.12 .2006 AND ORIGINAL ASSESSMENT ORDER WAS FRAMED U/S 143(3) OF THE ACT V IDE ORDER DATED 10.07.2008. THIS MEANS THAT THE ASSESSING OFFICER HAD SUFFICIENT TIME TO GATHER INFORMATION RELATING TO SEARCH CONDUCTED AT THE PREMISES OF SHRI S.K. GUPTA AND YET THE ASSESSING OFFICER ACCEP TED THE TRANSACTIONS WITHOUT MAKING ANY ENQUIRY. 13 14. IN OUR CONSIDERED OPINION, REASONS FOR REOPENIN G THE ASSESSMENT ARE NOTHING BUT CHANGE OF OPINION WHICH IS NOT PERM ISSIBLE AS PER THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD 320 ITR 561 AS NO NEW TANGIBLE MATERIA L WAS IN POSSESSION OF THE ASSESSING OFFICER. THEREFORE, NOTICE U/S 14 8 OF THE ACT IS BAD IN LAW AND ASSESSMENT FRAMED PURSUANT TO THE NOTICE IS ALSO BAD IN LAW. 15. IT WOULD BE PERTINENT TO REFER TO THE JUDGMENT OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF MEENAKSHI OVERSE AS PVT. LTD 395 ITR 677, THE RELEVANT PART OF WHICH READS AS UNDER: 19. A PERUSAL OF THE REASONS AS RECORDED BY THE AO REVEALS THAT THERE ARE THREE PARTS TO IT. IN THE FIRST PART , THE AO HAS REPRODUCED THE PRECISE INFORMATION HE HAS RECEIVED FROM THE INVESTIGATION WING OF THE REVENUE. THIS INFORMATION IS IN THE FORM OF DETAILS OF THE AMOUNT OF CREDIT RECEIVED, T HE PAYER, THE PAYEE, THEIR RESPECTIVE BANKS, AND THE CHEQUE N UMBER. THIS INFORMATION BY ITSELF CANNOT BE SAID TO BE TAN GIBLE MATERIAL. 20. COMING TO THE SECOND PART, THIS TELLS US WHAT T HE AO DID WITH THE INFORMATION SO RECEIVED. HE SAYS: 'THE INF ORMATION SO RECEIVED HAS BEEN GONE THROUGH.' ONE WOULD HAVE EXPECTED HIM TO POINT OUT WHAT HE FOUND WHEN HE WENT THROUGH THE INFORMATION. IN OTHER WORDS, WHAT IN SUCH INFORMATI ON LED HIM 14 TO FORM THE BELIEF THAT INCOME ESCAPED ASSESSMENT. BUT THIS IS ABSENT. HE STRAIGHTAWAY RECORDS THE CONCLUSION T HAT 'THE ABOVESAID INSTRUMENTS ARE IN THE NATURE OF ACCOMMOD ATION ENTRY WHICH THE ASSESSEE HAD TAKEN AFTER PAYING UNA CCOUNTED CASH TO THE ACCOMMODATION ENTRY GIVEN (SIC GIVER)'. THE AO ADDS THAT THE SAID ACCOMMODATION WAS 'A KNOWN ENTRY OPERATOR' THE SOURCE BEING 'THE REPORT OF THE INVES TIGATION WING'. 21. THE THIRD AND LAST PART CONTAINS THE CONCLUSION DRAWN BY THE AO THAT IN VIEW OF THESE FACTS, 'THE ALLEGED TR ANSACTION IS NOT THE BONAFIDE ONE. THEREFORE, I HAVE REASON TO B E BELIEVE THAT AN INCOME OF RS. 5,00,000 HAS ESCAPED ASSESSME NT IN THE AY 2004-05 DUE TO THE FAILURE ON THE PART OF THE AS SESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT... ' 22. AS RIGHTLY POINTED OUT BY THE ITAT, THE 'REASON S TO BELIEVE' ARE NOT IN FACT REASONS BUT ONLY CONCLUSIO NS, ONE AFTER THE OTHER. THE EXPRESSION 'ACCOMMODATION ENTRY' IS USED TO DESCRIBE THE INFORMATION SET OUT WITHOUT EXPLAINING THE BASIS FOR ARRIVING AT SUCH A CONCLUSION. THE STATEMENT TH AT THE SAID ENTRY WAS GIVEN TO THE ASSESSEE ON HIS PAYING 'UNAC COUNTED CASH' IS ANOTHER CONCLUSION THE BASIS FOR WHICH IS NOT DISCLOSED. WHO IS THE ACCOMMODATION ENTRY GIVER IS NOT MENTIONED. HOW HE CAN BE SAID TO BE 'A KNOWN ENTRY OPERATOR' 15 IS EVEN MORE MYSTERIOUS. CLEARLY THE SOURCE FOR ALL THESE CONCLUSIONS, ONE AFTER THE OTHER, IS THE INVESTIGAT ION REPORT OF THE DIT. NOTHING FROM THAT REPORT IS SET OUT TO ENABLE THE READER TO APPRECIATE HOW THE CONCLUSIONS FLOW THERE FROM. 23. THUS, THE CRUCIAL LINK BETWEEN THE INFORMATION MADE AVAILABLE TO THE AO AND THE FORMATION OF BELIEF IS ABSENT. THE REASONS MUST BE SELF EVIDENT, THEY MUST SPEAK FOR T HEMSELVES. THE TANGIBLE MATERIAL WHICH FORMS THE BASIS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT MUST BE EVIDENT FROM A READING OF THE REASONS. THE ENTIRE MATERIAL NEED NOT BE SET OUT. HOWEVER, SOMETHING THEREIN WHICH IS CRITICAL T O THE FORMATION OF THE BELIEF MUST BE REFERRED TO. OTHERW ISE THE LINK GOES MISSING. 24. THE REOPENING OF ASSESSMENT UNDER SECTION 147 IS A POTENT POWER NOT TO BE LIGHTLY EXERCISED. IT CERTAI NLY CANNOT BE INVOKED CASUALLY OR MECHANICALLY. THE HEART OF T HE PROVISION IS THE FORMATION OF BELIEF BY THE AO THAT INCOME HA S ESCAPED ASSESSMENT. THE REASONS SO RECORDED HAVE TO BE BASE D ON SOME TANGIBLE MATERIAL AND THAT SHOULD BE EVIDENT F ROM READING THE REASONS. IT CANNOT BE SUPPLIED SUBSEQUE NTLY EITHER DURING THE PROCEEDINGS WHEN OBJECTIONS TO THE REOPE NING ARE CONSIDERED OR EVEN DURING THE ASSESSMENT PROCEEDING S THAT FOLLOW. THIS IS THE BARE MINIMUM MANDATORY REQUIREM ENT OF THE FIRST PART OF SECTION 147 (1) OF THE ACT. 16 25. AT THIS STAGE IT REQUIRES TO BE NOTED THAT SINC E THE ORIGINAL ASSESSMENT WAS PROCESSED UNDER SECTION 143 (1) OF THE ACT, AND NOT SECTION 143 (3) OF THE ACT, THE PROVISO TO SECTION 147 WILL NOT APPLY. IN OTHER WORDS, EVEN THOUGH THE REOPENING IN THE PRESENT CASE WAS AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT AY, IT WAS NOT N ECESSARY FOR THE AO TO SHOW THAT THERE WAS ANY FAILURE TO DI SCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. 26. THE FIRST PART OF SECTION 147 (1) OF THE ACT REQUIRES THE AO TO HAVE 'REASONS TO BELIEVE' THAT ANY INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS THUS FORMATION OF REASON TO BELIEVE THAT IS SUBJECT MATTER OF EXAMINATION. THE AO BEING A QUASI JUDICIAL AUTHORITY IS EXPECTED TO ARRIVE AT A SUBJECTIVE SATISFACTION INDEPENDENTLY ON AN OBJECTIVE CRITERIA . WHILE THE REPORT OF THE INVESTIGATION WING MIGHT CONSTITU TE THE MATERIAL ON THE BASIS OF WHICH HE FORMS THE REASONS TO BELIEVE THE PROCESS OF ARRIVING AT SUCH SATISFACTION CANNOT BE A MERE REPETITION OF THE REPORT OF INVESTIGATION. THE RECO RDING OF REASONS TO BELIEVE AND NOT REASONS TO SUSPECT IS TH E PRE- CONDITION TO THE ASSUMPTION OF JURISDICTION UNDER SECTION 147 OF THE ACT. THE REASONS TO BELIEVE MUST DEMONSTRAT E LINK BETWEEN THE TANGIBLE MATERIAL AND THE FORMATION OF THE BELIEF OR THE REASON TO BELIEVE THAT INCOME HAS ESCAPED AS SESSMENT. 17 27. EACH CASE OBVIOUSLY TURNS ON ITS OWN FACTS AND NO TWO CASES ARE IDENTICAL. HOWEVER, THERE HAVE BEEN A LAR GE NUMBER OF CASES EXPLAINING THE LEGAL REQUIREMENT THAT REQU IRES TO BE SATISFIED BY THE AO FOR A VALID ASSUMPTION OF JURIS DICTION UNDER SECTION 147 OF THE ACT TO REOPEN A PAST ASSESSMENT. 28.1 IN SIGNATURE HOTELS PVT. LTD. V. INCOME TAX OFFICER (SUPRA), THE REASONS FOR REOPENING AS RECORDED BY THE AO IN A PROFORMA AND PLACED BEFORE THE CIT FOR APPR OVAL READ THUS: '11. REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT.- INFORMATION IS RECEIVED FROM THE DIT ( INV.-1), NEW DELHI THAT THE ASSESSEE HAS INTRODUCED MONEY AM OUNTING TO RS. 5 LAKH DURING THE F.Y. 2002-03 RELATING TO A .Y. 2003- 04. DETAILS ARE CONTAINED IN ANNEXURE. AS PER INFOR MATION AMOUNT RECEIVED IS NOTHING BUT ACCOMMODATION ENTRY AND ASSESSEE IS A BENEFICIARY.' 28.2 THE ANNEXURE TO THE SAID PROFORMA GAVE THE NAM E OF THE BENEFICIARY, THE VALUE OF ENTRY TAKEN, THE NUMB ER OF THE INSTRUMENT BY WHICH ENTRY WAS TAKEN, THE DATE ON WH ICH THE ENTRY WAS TAKEN, NAME OF THE ACCOUNT HOLDER OF THE BANK FROM WHICH THE CHEQUE WAS ISSUED, THE ACCOUNT NUMBE R AND SO ON. 18 28.3 ANALYSING THE ABOVE REASONS TOGETHER WITH THE ANNEXURE, THE COURT OBSERVED: '14. THE FIRST SENTENCE OF THE REASONS STATES THAT INFORMATION HAD BEEN RECEIVED FROM DIRECTOR OF INCO ME-TAX (INVESTIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS. 5 LACS DURING FINANCIAL YEAR 2002- 03 AS PER THE DETAILS GIVEN IN ANNEXURE. THE SAID ANNEXURE, R EPRODUCED ABOVE, RELATES TO A CHEQUE RECEIVED BY THE PETITION ER ON 9TH OCTOBER, 2002 FROM SWETU STONE PV FROM THE BANK AND THE ACCOUNT NUMBER MENTIONED THEREIN. THE LAST SENTENCE RECORDS THAT AS PER THE INFORMATION, THE AMOUNT RECEIVED WA S NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. 15. THE AFORESAID REASONS DO NOT SATISFY THE REQUIR EMENTS OF SECTION 147 OF THE ACT. THE REASONS AND THE INFORMATION REFERRED TO IS EXTREMELY SCANTY AND VAGUE. THERE IS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT ANNE XURE, WHICH HAS BEEN QUOTED ABOVE. ANNEXURE CANNOT BE REG ARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWS OR ES TABLISHES NEXUS OR LINK WHICH DISCLOSES ESCAPEMENT OF INCOME. ANNEXURE IS NOT A POINTER AND DOES NOT INDICATE ESCAPEMENT O F INCOME. FURTHER, IT IS APPARENT THAT THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE T HE BASIS AND MATERIAL OF THE INFORMATION. THE ASSESSING OFFI CER ACCEPTED THE PLEA ON THE BASIS OF VAGUE INFORMATION IN A 19 MECHANICAL MANNER. THE COMMISSIONER ALSO ACTED ON T HE SAME BASIS BY MECHANICALLY GIVING HIS APPROVAL. THE REAS ONS RECORDED REFLECT THAT THE ASSESSING OFFICER DID NOT INDEPENDENTLY APPLY HIS MIND TO THE INFORMATION REC EIVED FROM THE DIRECTOR OF INCOME-TAX (INVESTIGATION) AND ARRI VE AT A BELIEF WHETHER OR NOT ANY INCOME HAD ESCAPED ASSESS MENT.' 28.4 THE COURT IN SIGNATURE HOTELS PVT. LTD. V. INCOME TAX OFFICER (SUPRA) QUASHED THE PROCEEDINGS UNDER SECTION 148 OF THE ACT. THE FACTS IN THE PRESENT CASE ARE MORE OR LESS SIMILAR. THE PRESENT CASE IS THEREFORE COVERED AGAI NST THE REVENUE BY THE AFOREMENTIONED DECISION. 29.1 THE ABOVE DECISION CAN BE CONTRASTED WITH THE DECISION IN AGR INVESTMENT V. ADDITIONAL COMMISSIONER OF INCOME TAX (SUPRA), WHERE THE 'REASONS TO BELIEVE' READ AS UN DER: 'CERTAIN INVESTIGATIONS WERE CARRIED OUT BY THE DIR ECTORATE OF INVESTIGATION, JHANDEWALAN, NEW DELHI IN RESPECT OF THE BOGUS/ACCOMMODATION ENTRIES PROVIDED BY CERTAIN INDIVIDUALS/COMPANIES. THE NAME OF THE ASSESSEE FIG URES AS ONE OF THE BENEFICIARIES OF THESE ALLEGED BOGUS TRA NSACTIONS GIVEN BY THE DIRECTORATE AFTER MAKING THE NECESSARY ENQUIRIES. IN THE SAID INFORMATION, IT HAS BEEN INT ER-ALIA REPORTED AS UNDER: 'ENTRIES ARE BROADLY TAKEN FOR TWO PURPOSES: 20 1. TO PLOUGH BACK UNACCOUNTED BLACK MONEY FOR THE P URPOSE OF BUSINESS OR FOR PERSONAL NEEDS SUCH AS PURCHASE OF ASSETS ETC., IN THE FORM OF GIFTS, SHARE APPLICATION MONEY , LOANS ETC. 2. TO INFLATE EXPENSE IN THE TRADING AND PROFIT AND LOSS ACCOUNT SO AS TO REDUCE THE REAL PROFITS AND THEREB Y PAY LESS TAXES. IT HAS BEEN REVEALED THAT THE FOLLOWING ENTRIES HAV E BEEN RECEIVED BY THE ASSESSEE:....' 29.2 THE DETAILS OF SIX ENTRIES WERE THEN SET OUT I N THE ABOVE 'REASONS'. THESE INCLUDED NAME OF THE BENEFICIARY, THE BENEFICIARY'S BANK, VALUE OF THE ENTRY TAKEN, INSTR UMENT NUMBER, DATE, NAME OF THE ACCOUNT IN WHICH ENTRY WA S TAKEN AND THE ACCOUNT FROM WHERE THE ENTRY WAS GIVEN THE DETAILS OF THOSE BANKS. THE REASONS THEN RECORDED: 'THE TRANSACTIONS INVOLVING RS. 27,00,000/-, MENTIO NED IN THE MANNER ABOVE, CONSTITUTES FRESH INFORMATION IN RESP ECT OF THE ASSESSEE AS A BENEFICIARY OF BOGUS ACCOMMODATION EN TRIES PROVIDED TO IT AND REPRESENTS THE UNDISCLOSED INCOM E/INCOME FROM OTHER SOURCES OF THE ASSESSEE COMPANY, WHICH H AS NOT BEEN OFFERED TO TAX BY THE ASSESSEE TILL ITS RETURN FILED. ON THE BASIS OF THIS NEW INFORMATION, I HAVE REASON TO BELIEVE THAT THE INCOME OF RS. 27,00,000/- HAS ESCAPED ASSE SSMENT AS DEFINED BY SECTION 147 OF THE INCOME TAX ACT. THEREFORE, 21 THIS IS A FIT CASE FOR THE ISSUANCE OF THE NOTICE U NDER SECTION 148 .' 29.3 THE COURT WAS NOT INCLINED TO INTERFERE IN THE ABOVE CIRCUMSTANCES IN EXERCISE OF ITS WRIT JURISDICTION TO QUASH THE PROCEEDINGS. A CAREFUL PERUSAL OF THE ABOVE REASONS REVEALS THAT THE AO DOES NOT MERELY REPRODUCE THE INFORMATI ON BUT TAKES THE EFFORT OF REVEALING WHAT IS CONTAINED IN THE INVESTIGATION REPORT SPECIFIC TO THE ASSESSEE. IMPO RTANTLY HE NOTES THAT THE INFORMATION OBTAINED WAS 'FRESH' AND HAD NOT BEEN OFFERED BY THE ASSESSEE TILL ITS RETURN PURSUA NT TO THE NOTICE ISSUED TO IT WAS FILED. THIS IS A CRUCIAL FA CTOR THAT WENT INTO THE FORMATION OF THE BELIEF. IN THE PRESENT CA SE, HOWEVER, THE AO HAS MADE NO EFFORT TO SET OUT THE P ORTION OF THE INVESTIGATION REPORT WHICH CONTAINS THE INFORMA TION SPECIFIC TO THE ASSESSEE. HE DOES NOT ALSO EXAMINE THE RETURN ALREADY FILED TO ASCERTAIN IF THE ENTRY HAS BEEN DI SCLOSED THEREIN. 30.1 IN COMMISSIONER OF INCOME TAX, NEW DELHI V. HIGHGAI N FINVEST (P) LIMITED (2007) 164 TAXMAN 142 (DEL) RELIED UPON BY MR. CHAUDHARY, THE REASONS TO BELIEVE READ AS UN DER: 'IT HAS BEEN INFORMED BY THE ADDITIONAL DIRECTOR OF INCOME TAX (INVESTIGATION), UNIT VII, NEW DELHI VIDE LETTE R NO. 138 DATED 8 TH APRIL 2003 THAT THIS COMPANY WAS INVOLVE D IN THE GIVING AND TAKING BOGUS ENTRIES/ TRANSACTIONS DURIN G THE 22 FINANCIAL YEAR 1996-97, AS PER THE DEPOSITION MADE BEFORE THEM BY SHRI SANJAY RASTOGI, CA DURING A SURVEY OPE RATION CONDUCTED AT HIS OFFICE PREMISES BY THE INVESTIGATI ON WING. THE PARTICULARS OF SOME OF THE TRANSACTION OF THIS NATURE ARE AS UNDER: DATE PARTICULARS OF CHEQUE DEBIT AMT. CREDIT AMT 18.11.96 305002 5,00,000 THROUGH THE BANK ACCOUNT NO. CA 4266 OF M/S. MEHRAM EXPORTS PVT. LTD. IN THE PNB, NEW ROHTAK ROAD, NEW DELHI. NOTE: IT IS NOTED THAT THERE MIGHT BE MORE SUCH ENT RIES APART FROM THE ABOVE. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1997-9 8 WAS FILED BY THE ASSESSEE ON 4TH MARCH 1998 WHICH WAS A CCEPTED UNDER SECTION 143 (1) AT THE DECLARED INCOME OF RS. 4,200. IN VIEW OF THESE FACTS, I HAVE REASON TO BELIEVE THAT THE AMOUNT OF SUCH TRANSACTIONS PARTICULARLY THAT OF RS. 5,00, 000 (AS MENTIONED ABOVE) HAS ESCAPED THE ASSESSMENT WITHIN THE MEANING OF THE PROVISO TO SECTION 147 AND CLAUSE (B) TO THE EXPLANATION 2 OF THIS SECTION. SUBMITTED TO THE ADDITIONAL CIT, RANGE -12, NEW DEL HI FOR APPROVAL TO ISSUE NOTICE UNDER SECTION 148 FOR THE ASSESSMENT YEAR 1997-98, IF APPROVED.' 23 30.2 THE AO WAS NOT MERELY REPRODUCING THE INFORMAT ION RECEIVED FROM THE INVESTIGATION BUT TOOK THE EFFORT OF REFERRING TO THE DEPOSITION MADE DURING THE SURVEY BY THE CHARTERED ACCOUNTANT THAT THE ASSESSEE COMPANY WAS INVOLVED IN THE GIVING AND TAKING OF BOGUS ENTRIES. THE AO THUS INDICATED WHAT THE TANGIBLE MATERIAL WAS WHICH ENABLED HIM TO FORM THE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. IT WAS IN THOSE CIRCUMSTANCES THAT IN T HE CASE, THE COURT CAME TO THE CONCLUSION THAT THERE WAS PRI MA FACIE MATERIAL FOR THE AO TO COME TO THE CONCLUSION THAT THE ASSESSEE HAD NOT MADE A FULL AND TRUE DISCLOSURE OF ALL THE MATERIAL FACTS RELEVANT FOR THE ASSESSMENT. 31. IN COMMISSIONER OF INCOME TAX V. G&G PHARMA (SUPRA) THERE WAS A SIMILAR INSTANCE OF REOPENING OF ASSESS MENT BY THE AO BASED ON THE INFORMATION RECEIVED FROM THE D IT (I). THERE AGAIN THE DETAILS OF THE ENTRY PROVIDED WERE SET OUT IN THE 'REASONS TO BELIEVE'. HOWEVER, THE COURT FOUND THAT THE AO HAD NOT MADE ANY EFFORT TO DISCUSS THE MATERIAL ON THE BASIS OF WHICH HE FORMED PRIMA FACIE VIEW THAT INCO ME HAD ESCAPED ASSESSMENT. THE COURT HELD THAT THE BASIC REQUIREMENT OF SECTION 147 OF THE ACT THAT THE AO SHOULD APPLY HIS MIND IN ORDER TO FORM REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT HAD NOT BEEN FULFILLED. LIKE WISE IN CIT-4 V. INDEPENDENT MEDIA P. LIMITED (SUPRA) THE COURT IN SIMILAR CIRCUMSTANCES INVALIDATED THE INITIATION OF THE 24 PROCEEDINGS TO REOPEN THE ASSESSMENT UNDER SECTION 147 OF THE ACT. 32. IN ORIENTAL INSURANCE COMPANY LIMITED V. COMMISSION ER OF INCOME TAX 378 ITR 421 (DEL) IT WAS HELD THAT 'THEREFORE, EVEN IF IT IS ASSUMED THAT, IN FACT, THE ASSESSEE S INCOME HAS ESCAPED ASSESSMENT, THE AO WOULD HAVE NO JURISDICTI ON TO ASSESS THE SAME IF HIS REASONS TO BELIEVE WERE NOT BASED ON ANY COGENT MATERIAL. IN ABSENCE OF THE JURISDICTION AL PRE- CONDITION BEING MET TO REOPEN THE ASSESSMENT, THE Q UESTION OF ASSESSING OR REASSESSING INCOME UNDER SECTION 147 OF THE ACT WOULD NOT ARISE.' 33. IN RUSTAGI ENGINEERING UDYOG (P) LIMITED (SUPRA ), IT WAS HELD THAT '...THE IMPUGNED NOTICES MUST ALSO BE SET ASIDE AS THE AO HAD NO REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS HAD ESCA PED ASSESSMENT. CONCEDEDLY, THE AO HAD NO TANGIBLE MATE RIAL IN REGARD TO ANY OF THE TRANSACTIONS PERTAINING TO THE RELEVANT ASSESSMENT YEARS. ALTHOUGH THE AO MAY HAVE ENTERTAINED A SUSPICION TH AT THE ASSESSEE S INCOME HAS ESCAPED ASSESSMENT, SUCH SUSPICION COULD NOT FORM THE BASIS OF INITIATING PROCEEDINGS UNDER SECTION 147 OF THE ACT. A REASON TO BELIEVE - NOT REASON 25 TO SUSPECT - IS THE PRECONDITION FOR EXERCISE OF JU RISDICTION UNDER SECTION 147 OF THE ACT. ' 34. RECENTLY IN AGYA RAM V. CIT (SUPRA), IT WAS EMPHASIZED THAT THE REASONS TO BELIEVE 'SHOULD HAVE A LINK WIT H AN OBJECTIVE FACT IN THE FORM OF INFORMATION OR MATERI ALS ON RECORD...' IT WAS FURTHER EMPHASIZED THAT 'MERE ALL EGATION IN REASONS CANNOT BE TREATED EQUIVALENT TO MATERIAL IN EYES OF LAW. MERE RECEIPT OF INFORMATION FROM ANY SOURCE WO ULD NOT BY ITSELF TANTAMOUNT TO REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENTS.' 35. IN THE DECISION OF THIS COURT DATED 16TH MARCH 2016 IN W.P. (C) NO. 9659 OF 2015 ( RAJIV AGARWAL V. CIT ) IT WAS EMPHASIZED THAT 'EVEN IN CASES WHERE THE AO COMES A CROSS CERTAIN UNVERIFIED INFORMATION, IT IS NECESSARY FOR HIM TO TAKE FURTHER STEPS, MAKE INQUIRIES AND GARNER FURTHER MA TERIAL AND IF SUCH MATERIAL INDICATES THAT INCOME OF AN ASSESS EE HAS ESCAPED ASSESSMENT, FORM A BELIEF THAT INCOME OF TH E ASSESSEE HAS ESCAPED ASSESSMENT.' 16. THE HON'BLE HIGH COURT FINALLY CONCLUDED AS UND ER: 36. IN THE PRESENT CASE, AS ALREADY NOTICED, THE R EASONS TO BELIEVE CONTAIN NOT THE REASONS BUT THE CONCLUSIONS OF THE AO ONE AFTER THE OTHER. THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE AO TO THE 26 TANGIBLE MATERIAL WHICH FORMS THE BASIS OF THE REAS ONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE CONCLUSIONS OF THE AO ARE AT BEST A REPRODUCTION OF THE CONCLUSION IN THE INV ESTIGATION REPORT. INDEED IT IS A 'BORROWED SATISFACTION'. THE REASONS FAIL TO DEMONSTRATE THE LINK BETWEEN TH E TANGIBLE MATERIAL AND THE FORMATION OF THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 37. FOR THE AFOREMENTIONED REASONS, THE COURT IS SA TISFIED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, NO ERROR H AS BEEN COMMITTED BY THE ITAT IN THE IMPUGNED ORDER IN CONC LUDING THAT THE INITIATION OF THE PROCEEDINGS UNDER SECTION 147 / 148 OF THE ACT TO REOPEN THE ASSESSMENTS FOR THE AYS IN QUESTION D OES NOT SATISFY THE REQUIREMENT OF LAW. 38. THE QUESTION FRAMED IS ANSWERED IN THE NEGATIVE , I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL IS, ACCORDINGLY, DISMISSED BUT WITH NO ORDERS AS TO COSTS. 17. IN ANOTHER CASE OF RMG POLYVINYL INDIA LTD THE HON'BLE JURISDICTIONAL HIGH COURT IN 396 ITR 5 HAS HELD AS UNDER: INFORMATION RECEIVED FROM INVESTIGATION WING COULD NOT BE SAID TO BE TANGIBLE MATERIAL PER SE WITHOUT A FURTHER IN QUIRY BEING UNDERTAKEN BY THE ASSESSING OFFICER TO ESTABLISH LI NK BETWEEN TANGIBLE MATERIAL AND FORMATION OF REASON TO BELIEV E THAT INCOME 27 HAD ESCAPED ASSESSMENT AND CONSEQUENTLY, RE ASSESSM ENT WAS UNJUSTIFIED. 18. CONSIDERING THE FACTS OF THE CASE IN HAND IN TH E LIGHT OF JUDICIAL DISCUSSIONS DISCUSSED HEREINABOVE, WE ARE OF THE CO NSIDERED OPINION THAT THE NOTICE ISSUED U/S 148 OF THE ACT IS BAD IN LAW AND HENCE THE SAME IS SET ASIDE. THE ASSESSMENT SO FRAMED IS QUA SHED. 19. FOR THE SAKE OF COMPLETENESS OF THE ADJUDICATIO N, WE WILL NOW ADDRESS TO THE MERITS OF THE CASE. AS MENTIONED EL SEWHERE, THE ASSESSEE HAS PURCHASED SOFTWARE FROM M/S CFAM SOFT [INDIA] PVT LTD AND M/S BT TECHNET LTD. THE LD. DR VEHEMENTLY STAT ED THAT AFTER THE COMPLETION OF ASSESSMENT OF THESE TWO COMPANIES, TH E ASSESSING OFFICER CAME TO KNOW THAT THESE TWO COMPANIES WERE PROVIDING ACCOMMODATION BILLS AND THE ASSESSEE IS ONE OF THE BENEFICIARIES. HOWEVER, WE FIND THAT DURING THE COURSE OF ASSESSME NT PROCEEDINGS ALSO, THE ASSESSEE FILED CONFIRMATIONS FROM THESE T WO COMPANIES RELATING TO THE TRANSACTIONS DONE WITH THEM. THE A SSESSING OFFICER DID NOT EVEN CONFRONT THE ASSESSEE WITH HIS FINDINGS GI VEN IN THE CASE OF THESE TWO COMPANIES NOR DID HE MAKE ANY ENQUIRY IN RESPECT OF THE CONFIRMATIONS FILED BY THE TWO COMPANIES. 28 20. AS MENTIONED ELSEWHERE, THE ASSESSEE IS INTO TH E BUSINESS OF CALL CENTRE SERVICES AND THE NATURE OF BUSINESS ACTIVITI ES IS SUCH THAT IT REQUIRES LATEST AND UPGRADED SOFTWARE. IF THE ASSE SSEE DID NOT PURCHASE ANY NEW UPGRADED SOFTWARE AND HAS ONLY TAK EN ACCOMMODATION BILLS, THEN WE FAIL TO UNDERSTAND HOW THE ASSESSEE GENERATED REVENUE OF RS. 5.33 CRORES IN F.Y. 2004-0 5 WHICH JUMPED TO RS. 12.45 CRORES DURING THE YEAR UNDER CONSIDERATIO N. THERE IS NOT EVEN AN IOTA OF EVIDENCE PRODUCED ON RECORD BY THE ASSESSING OFFICER TO DEMONSTRATE THAT EVEN THE SALES OF CALL CENTRE S ERVICES ARE BOGUS. 21. THE ASSESSING OFFICER HAS ACCEPTED THE NET PROF IT AS PER THE BOOKS OF ACCOUNT AND MERELY ON SURMISES AND CONJECT URES, TREATED THE PURCHASE OF SOFTWARE AS BOGUS YET ALLOWING DEPRECIA TION ON SOFTWARE WHICH IS EVIDENT FROM THE FIXED ASSETS SCHEDULE AT PAGE 8 OF THE PAPER BOOK. IN OUR CONSIDERED VIEW, SINCE THERE IS NO DE MONSTRATIVE EVIDENCE BROUGHT ON RECORD TO JUSTIFY THAT THE SOFT WARE PURCHASE IS BOGUS, WE DO NOT FIND ANY MERIT IN THE ADDITIONS MA DE BY THE ASSESSING OFFICER AND ACCORDINGLY, WE DIRECT THE ASSESSING OF FICER TO DELETE THE IMPUGNED ADDITIONS. 29 22. BEFORE PARTING, THE LD. DR TRIED TO BUTTRESS HI S SUBMISSIONS BY FILING A GIST OF UNREPORTED CASES. THE LD. COUNSEL FOR THE ASSESSEE WAS NOT IN A POSITION TO DISTINGUISH THE FACTS OF HIS C ASE WITH THE FACTS OF UNREPORTED DECISIONS. THEREFORE, WE DECLINE TO ACC EPT THE GIST OF UNREPORTED CASES. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO. 4993/DEL/2012 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31.12. 2019. SD/- SD/- [SUSHMA CHOWLA ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31 ST DECEMBER, 2019 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 30 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER