M/s. Advance India Projects Ltd., New Delhi V. ACIT, New Delhi

ITA 54/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97033 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: V K AGGARWAL
• Keywords: Gift; Principle of natural justice; Validity of assessment; Accommodation entries; Procedural lapse; Scheme of amalgamation; Assessment record; Reason to believe; Borrowed satisfaction
• Section: 143(3); 142(1); 133A; 32; 147; 68; 148; 12; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI INTURI RAMA RAO ITA NO. 54/DEL/2015 ASSESSMENT YEARS: 2005-06 ADVANCE INDIA PROJECTS LTD., VS. ASSISTANT CIT, 232B, 3 RD FLOOR, OKHLA IND. EST CENTRAL CIRCLE-10, NEW DELHI. NEW DELHI. (PAN: AACCA9859J) (APPELLANT) (RESPONDENT) ITA NOS. 55 & 56/DEL/2015 ASSESSMENT YEARS: 2005-06 ADVANCE INDIA PROJECTS LTD., VS. ASSISTANT CIT, (IN THE MATTER OF AMALGAMATED CO. M/S. CENTRAL CIR CLE-10, MAGGPIE PROJECTS (P) LTD., NEW DELHI. 232B, 3 RD FLOOR, OKHLA IND. ESTATE, NEW DELHI. (PAN: AACCA9859J) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI V.K. AGG ARWAL, AR RESPONDENT BY: SHRI RAVI JAIN, CIT(DR) DATE OF HEARING : 08.07.2015 DATE OF PRONOUNCEMENT: 14:08.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER IN THE ABOVE THREE APPEALS, ITA NOS.55 AND 56/DEL/ 2015 ARE RELATED TO AMALGAMATED COMPANY MALLARD PROJECTS (P) LTD. AND I TA NO. 54/DEL/2015 IS RELATED TO ADVANCE INDIA PROJECTS LTD., ALL FOR THE SAME ASSESSMENT YEAR 2005-06. THEIR RESPECTIVE GROUNDS RAISED BY THE ASS ESSEE AGAINST THE FIRST 2 APPELLATE ORDER ARE BEING REPRODUCED WHILE DEALING WITH EACH OF THESE APPEALS: GROUND IN ITA NO.54/DEL/2015 : 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLATE ORDER PASSED BY THE LEARNED CIT(APPEALS) IS ILLEGAL BEING AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND AGAINST THE PROVI SIONS OF INCOME- TAX ACT, 1961. 2. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN HOLDING THAT NOTICE U/S. 148 IS LEGALLY VALI D. 3. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT THE NOTICE U/S. 148 IS AB-INIT IO VOID BECAUSE THE LD. A.O. HAD NOT TAKEN THE APPROVAL FROM CIT U/S. 1 51 BEFORE ISSUE OF SUCH NOTICE THOUGH THE ASSESSMENT REOPENED WAS C OMPLETED U/S. 143(3). 4. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT NO ACTION U/S.147/148 CAN BE T AKEN AGAINST THE ASSESSMENT COMPLETED U/S. 153A/143(3). 5. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT NO ADDITION CAN BE MADE WHILE COMPLETING ASSESSMENT U/S. 153A/148/143(3) AS NO INCRIMINATING DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH AND NO ASSESS MENT PROCEEDING WAS PENDING ON THE DATE OF SEARCH. 6. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT THE REASONS RECORDED DO NOT IN DICATE ANY SATISFACTION OF THE LD. A.O. THAT THERE IS ANY ESCA PEMENT OF INCOME 3 DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. 7. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN CONFIRMING THE ADDITION OF RS.45,00,000 ON A CCOUNT OF INVESTMENT IN SHARES OF THE ASSESSEE. 8. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN REJECTING THE ADDITIONAL DOCUMENTS FILED BEF ORE HER THOUGH THEY WERE ONLY CLARIFICATORY IN NATURE AND IN PUBLI C DOMAIN WHICH DO NOT REQUIRE ANY APPLICATION U/S. 46A. 9. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT CROSS EXAMINATION OF MR. S.K. GUPTA WAS NOT PROVIDED BY THE LD. A.O. INSPITE OF THE SPECIFIC RE QUEST VIDE LETTER DATED 19.03.2013. 10. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT THE LD. A.O. NEITHER PROVIDED THE STATEMENT OF SH.S.K. GUPTA TO THE ASSESSEE NOR OTHER DOCUMENTS U SED AGAINST THE ASSESSEE. 11. THE APPELLANT CRAVES TO ADD, ALTER, MODIFY AND WITH DRAW ANY GROUND OF APPEAL BEFORE OR DURING THE APPELLATE PRO CEEDINGS. BESIDES THE ABOVE GROUNDS, THE ASSESSEE HAS ALSO MO VED APPLICATION FOR ADMISSION OF THE FOLLOWING PROPOSED ADDITIONAL GROU ND: THE IMPUGNED ASSESSMENT ORDER U/S. 147/143(3) DATE D 26.03.2013 IS ILLEGAL AND WITHOUT PROPER JURISDICTION AS NOTICE U /S. 143(2) WAS NOT ISSUED AND THEREFORE, IT DESERVES TO BE ANNULLED. 4 2. THE LEARNED AR SUBMITTED THAT THE ISSUE RAISED I N THE ADDITIONAL GROUND IS LEGAL IN NATURE WHICH GOES TO THE ROOT OF THE MATTER AND ADJUDICATION OF WHICH DOES NOT REQUIRE CONSIDERATIO N OF FRESH MATERIAL. THE LEARNED AR SUBMITTED FURTHER THAT THOUGH IN THE GRO UND NOS. 2 TO 6, THE ASSESSEE HAS ALREADY QUESTIONED THE VALIDITY OF ISS UANCE OF NOTICE UNDER SEC. 148 OF THE ACT AND THE ASSESSMENT FRAMED IN CONSEQU ENCE THERETO BUT STILL TO AVOID ANY TECHNICAL DIFFICULTY ON SPECIFIC CONTENTI ON REGARDING VALIDITY OF ASSESSMENT IN ABSENCE OF NOTICE ISSUED UNDER SEC. 1 43(2) OF THE ACT HAS BEEN RAISED. 3. THE LEARNED CIT(DR) ON THE OTHER HAND OBJECTED T HE APPLICATION. 4. CONSIDERING THE ABOVE SUBMISSION THAT THE ISSUE RAISED IS LEGAL IN NATURE WHICH GOES TO THE ROOT OF THE MATER AND ADJU DICATION OF ISSUE RAISED IN THE ADDITIONAL GROUND DOES NOT REQUIRE CONSIDERATIO N OF FRESH MATERIAL OUTSIDE THE RECORD, WE ALLOW THE APPLICATION AND IN RESULT ADDITIONAL GROUND IS ADMITTED FOR OUR ADJUDICATION. WE WILL DEAL WITH IT ALONG WITH GROUND NOS. 2 TO 6 IN THE SUCCEEDING PARAGRAPHS. 5. THE RELEVANT FACTS ARE THAT THE ASSESSEE ENGAGED IN REAL ESTATE BUSINESS HAD FILED ITS RETURN OF INCOME AT RS.9,68,170 WHICH WAS PROCESSED UNDER SEC. 143(1) OF THE ACT. SEARCH WAS CONDUCTED ON 18.1.200 7 AND ASSESSMENT WAS 5 FRAMED UNDER SEC. 153A/143(3) OF THE INCOME-TAX ACT , 1961 ON 31.12.2008 ON THE SAME INCOME. ON 30.3.2012, NOTICE UNDER SEC. 148 OF THE ACT WAS ISSUED AND REASONS RECORDED WERE SUPPLIED TO THE AS SESSEE ON 11.02.2013. THE ASSESSEE FILED OBJECTIONS ON 08.03.2013 WHICH W ERE REJECTED ON THE SAME DAY. THEREAFTER, NOTICE UNDER SEC. 142(1) OF T HE ACT WAS ISSUED ON 11.3.2013 ALONG WITH QUERY REGARDING INVESTMENT OF RS.45 LACS AND THE REASSESSMENT WAS COMPLETED ON 26.3.2013 UNDER SEC. 147/143(3) OF THE ACT. IN THIS REASSESSMENT, THE ASSESSING OFFICER MADE AN ADDITION OF RS.45 LACS UNDER SEC. 68 OF THE ACT ON ACCOUNT OF ALLEGED ACCO MMODATION ENTRIES IN RESPECT OF INVESTMENT IN THE SHARE CAPITAL. 6. IN GROUND NO.1 , THE ASSESSEE HAS RAISED THE ISSUE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THE PROVISIONS OF INCOME-TAX ACT, 1961. NO ARGUMENT HAS BEEN ADVANCED AGAINST THE VIOLATION OF PRINCIPLE OF NATURAL JUSTICE BY THE LEARNED CIT(APPEALS). IT IS ACCORDIN G SUBJECTED. SO FAR AS VIOLATION OF THE PROVISIONS OF THE INCOME-TAX ACT, 1961 IS CONCERNED, IT IS GENERAL IN NATURE AND DOES NOT NEED AN INDEPENDENT ADJUDICATION. 7. IN SUPPORT OF GROUND NOS. 2 TO 6 AND THE ADDITIO NAL GROUND ON THE ISSUE OF VALIDITY OF NOTICE ISSUED UNDER SEC. 148 A ND THE ASSESSMENT FRAMED IN FURTHERANCE THERETO, THE LEARNED AR SUBMITTED TH AT NOTICE UNDER SEC. 148 6 WAS ISSUED ON 30.3.2012 I.E. AFTER THE EXPIRY OF FO UR YEARS FROM THE END OF THE ASSESSMENT YEAR 2005-06. THE ASSESSING OFFICER UNDER SEC. 151(1) OF THE ACT WAS REQUIRED TO OBTAIN APPROVAL FROM THE CIT BE FORE ISSUANCE OF NOTICE UNDER SEC. 148 OF THE ACT WHICH WAS NOT OBTAINED. T HE LEARNED CIT(APPEALS) HAD CALLED FOR THE ASSESSMENT RECORD A ND AFTER EXAMINING IT, HE CAME TO THE CONCLUSION THAT THE APPROVAL WAS OBTAIN ED FROM ADDITIONAL CIT. NOTICE ISSUED UNDER SEC. 148 WAS THUS WITHOUT JURIS DICTION. IN SUPPORT, HE PLACED RELIANCE ON THE DECISION OF HON'BLE BOMBAY H IGH COURT IN THE CASE OF SMT. SUMAN WAMAN CHAUDHARY, ITA NO. 398 OF 2001 J UDGMENT DATED 12.2.2008 HOLDING THAT THE NOTICE ISSUED UNDER SEC. 148 WAS WITHOUT JURISDICTION FOR WANT OF PRIOR APPROVAL OF THE CONC ERNED AUTHORITY UNDER SEC. 151(2) OF THE ACT. HE POINTED OUT THAT SLP PREFERRE D BY THE REVENUE AGAINST THIS DECISION HAS BEEN REJECTED BY THE HON'BLE SUPR EME COURT ON 16.3.2009 IN SLP(C) NO. 6757 OF 2009. 8. THE LEARNED AR SUBMITTED FURTHER THAT IN THE REA SONS RECORDED, THE ASSESSING OFFICER HAD NOT INDICATED THAT INCOME HAS ESCAPED ASSESSMENT BY REASONS OF FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT WHICH IS A PRE-CONDITION AS PER PROVISO TO SECTION 147 OF THE ACT. THERE IS ALSO NO WHISPER IN THE PURPORTED 7 REASONS OF THE ASSESSEE HAVING FAILED TO DISCLOSE F ULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. THE NO TICE ISSUED UNDER SEC. 148 OF THE ACT WAS THUS WITHOUT JURISDICTION IN VIEW OF THIS PROVISION AS WELL. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) EI DUPONT INDIA PVT. LTD. VS. DCIT 213- TIOL- 145- S.C- DEL; II) SHIVALIK BIMETAL LTD. VS. ITO 213-TIOL-75-S.C-D EL; III) RURAL ELECTRIFICATION CORPORATION LTD. VS. CIT 213 TIOL- 366-HON'BLE HIGH COURT-DEL & ORS. 9. THE LEARNED AR CONTENDED FURTHER THAT REASONS T O BELIEF BASED ON CONFESSION FROM CREDITORS WITHOUT NAMING THE ASSESS EE CANNOT LEAD TO REASONS TO BELIEF THAT INCOME HAS ESCAPED IN THE CA SE OF THE ASSESSEE. IN SUPPORT, HE PLACED RELIANCE ON THE DECISION OF HON' BLE SUPREME COURT IN THE CASE OF ITO VS. LAKHMANI MEWAL DAS (1976) -130 ITR 437 (S.C) AND OTHERS. 10. THE LEARNED AR CONTENDED THAT ONCE SEARCH HAS B EEN CONDUCTED AND ALL THE ESCAPED INCOME HAS BEEN TAXED UNDER SEC. 15 3A OF THE ACT, THERE DOES NOT REMAIN ANY SCOPE FOR INVOCATION OF SECTION 147 OF THE ACT. HE SUBMITTED THAT PERUSAL OF THE REASONS INDICATE THAT NOTICE UN DER SEC. 148 HAS BEEN ISSUED IN A MECHANICAL MANNER ON THE BASIS OF VAGUE INFORM ATION FROM INVESTIGATION 8 WING AS THE INFORMATION IS SO VAGUE THAT IT DOES NO T EVEN MENTION THE NAMES AND ADDRESSES OF THE ENTITIES PROVIDING THE SO-CALL ED ACCOMMODATION ENTRIES AND THE PURPOSE FOR WHICH THEY WERE PROVIDED I.E. L OAN, GIFT, INVESTMENT ETC. THERE IS NO REFERENCE TO ANY CORROBORATIVE MATERIAL IN THE POSSESSION OF THE ASSESSING OFFICER. HE HAS NOT MENTIONED ANY MATERIA L WHICH LED HIM TO BELIEF THAT THE INFORMATION RECEIVED, IS BASED ON S OME RELEVANT MATERIAL AND THE INCOME HAS ESCAPED ASSESSMENT. HE CITED FOLLOW ING DECISIONS IN SUPPORT: I) G & G PHARMA INDIA LTD. VS. ITO (2015) TIOL- 191-ITAT- DELHI; II) SIGNATURES HOTEL (P) LTD. VS. ITO (2011) 338 ITR 51 (DEL.); III) CIT VS. ATUL JAIN (2008) 299 ITR 383 (DEL.). IV )SMT. SHAKUNTALA DEVI ITA NO. 3751/DEL/2011- O RDER DATED 20.4.2012; V ) SARDHAK SECURITY CO. (P) LTD. VS. ITO-329 ITR 1 10 (DELHI); & VI) CIT VS. SFIL STOCK BROKING LTD. (2010)- 325 ITR 258 (DEL.) 11. THE LEARNED AR SUBMITTED THAT SUCH A VAGUE INFO RMATION AS INDICATED IN THE REASONS RECORDED, MAY LEAD THE ASSESSING OFF ICER TO HAVE REASONS TO SUSPECT BUT CANNOT LEAD HIM TO HAVE REASONS TO BELI EF BECAUSE THE INFORMATION DOES NOT PROVIDE EVEN THE NAMES AND ADD RESSES OF THE ENTITIES 9 WHICH GAVE THE ALLEGED ACCOMMODATION ENTRIES. IN SU PPORT, HE PLACED RELIANCE ON THE DECISIONS IN THE CASE OF CIT VS. GU PTA ABHUSHAN PVT. LTD. (2009) 312 ITR 166 (DEL.) AND ORS. 12. THE LEARNED AR CONTENDED FURTHER THAT THE REASS ESSMENT ORDER UNDER SEC. 147/143(3) OF THE ACT IS ILLEGAL AS NOTICE UND ER SEC. 143(2) WAS NEVER ISSUED, WHICH IS MANDATORY. HE CITED FOLLOWING DECI SIONS IN SUPPORT: I) ACIT VS. HOTEL BLUEMOON (2010) 321 ITR 362 (S .C); II) B.R. ARORA VS. ACIT (2014) TIOL- 491-ITAT-D EL.; III) MOHINDER KUMAR CHHABRA VS. ITO (2014) 31 ITR (TRIB.) 93 (DEL.); IV) GR. NOIDA INDUSTRIAL DEV. AUTHORITY VS. ACIT (2015) TIOL 227 ITAT- (DEL.); 13. THE LEARNED DR ON THE OTHER HAND TRIED TO JUST IFY THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF VALIDITY OF NOTIC E ISSUED UNDER SEC. 148 OF THE ACT AND THE ASSESSMENT FRAMED IN FURTHERANCE TH ERETO UNDER SEC. 147/143(3) OF THE ACT. HE SUBMITTED THAT STATEMENT S OF MR. S.K. GUPTA WERE RECORDED DURING THE COURSE OF SURVEY BASED UPON WHI CH REASONS TO BELIEF HAVE BEEN FORMED. THUS, IT CANNOT BE SAID THAT THE INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM THE INVESTIGATING WING O F THE DEPARTMENT, THAT THE INCOME HAS ESCAPED ASSESSMENT, WAS NOT VAGUE. IN SU PPORT, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: 10 I) OPG METAL VS. FINSEC LTD. VS. CIT (2014) 41 TA XMAN.COM 21 (DEL.); II) MONEY GROWTH INVESTMENT & CONSULTANTS (P) LTD. VS ITO (2012)- 21 TAXMAN.COM 438 (DEL.); III) AGR INVESTMENT LTD. VS. ADDL. CIT (2011) 333 ITR 146 (DEL.); HE SUBMITTED FURTHER THAT AS PER THE CITED DECISION S BY THE LEARNED AR, THE ASSESSING OFFICER HAS TO DEMONSTRATE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERI AL FACTS NECESSARY FOR ITS ASSESSMENTS AND IT IS NOT REQUIRED THAT THE ASSESSI NG OFFICER SHOULD WRITE IT IN SPECIFIC PHRASEOLOGY THAT ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT WHI LE RECORDING REASONS TO BELIEF. 14. CONSIDERING THE ABOVE SUBMISSIONS ON THE ISSUE OF VALIDITY OF THE INITIATION OF REOPENING PROCEEDINGS, WE FIND THAT T HE CONCLUSION OF THE LD CIT(A) AT PAGE NO.19 OF THE FIRST APPELLATE ORDER T HAT THE APPROVAL WAS OBTAINED FROM THE ADDITIONAL CIT, HAS NOT BEEN REBU TTED BY THE REVENUE. THE CONTENTION OF THE ASSESSEE IN THIS REGARD REMAINED THAT UNDER THE PROVISIONS OF SECTION 151(1) OF THE IT ACT, THE ASSESSING OFFI CER WAS REQUIRED TO OBTAIN APPROVAL FROM THE CIT BEFORE ISSUE OF NOTICE U/S 14 8 WHICH WAS NOT TAKEN. IN 11 SUPPORT THE DECISION OF THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF SMT. SUMAN WAMAN CHOUDHURY (SUPRA) APPROVED BY THE HONB LE SUPREME COURT IN SLP (C) NO.6757 OF 2009 JUDGMENT DATED 16.03.200 9 HAS BEEN CITED BY THE LEARNED AR, HOLDING THAT THE NOTICE WAS WITHOUT JURISDICTION FOR WANT OF PRIOR APPROVAL OF THE CONCERNED AUTHORITY U/S 151(2 ) OF THE ACT. ADMITTEDLY IN THE PRESENT CASE BEFORE US PRIOR APPROVAL OF THE PRESCRIBED AUTHORITY I.E. COMMISSIONER OF INCOME TAX HAS NOT BEEN OBTAINED BE FORE ISSUANCE OF NOTICE U/S 148 OF THE ACT. HENCE, WE RESPECTFULLY F OLLOWING THE RATIO LAID DOWN IN THE CITED DECISION IN THE CASE SMT. SUMAN W AMAN CHOUDHURY (SUPRA) HOLD THAT THE NOTICE U/S 148 OF THE ACT IS SUED IN THE PRESENT CASE WAS WITHOUT JURISDICTION HENCE THE ASSESSMENT FRAMED IN FURTHERANCE THERETO IS VOID AB INITO AND IS THUS QUASHED. 14. WE ALSO FIND SUBSTANCE IN THE CONTENTION OF THE LD AR THAT THE ASSESSING OFFICER HAD ISSUED NOTICE U/S 148 OF THE ACT ONLY ON THE BASIS OF BORROWED SATISFACTION OF THE ACIT AND NOT ON THE BA SIS OF HIS OWN SATISFACTION BECAUSE HE HAS SIMPLY MENTIONED PERUS AL OF INFORMATION RECEIVED FROM ACIT, CC-22, VIDE LETTER NO, IT CAME TO NOTICE THAT THE ABOVE NAMED ASSESSEE HAS RECEIVED ACCOMMODATION ENT RIES FROM SHRI SK 12 GUPTA WITHOUT ANY VERIFICATION. FOR A READY REFER ENCE, THE REASONS RECORDED ARE BEING REPRODUCED HEREUNDER: PERUSAL OF INFORMATION RECEIVED FROM ACIT, CENTRAL CIRCLE- 22, VIDE LETTER NO. ACIT/CC-22/2011-12/491 DATED 29 .03.2012, IT CAME TO NOTICE THAT THE ABOVE NAMED THE ASSESSEE HAS RECEIVED ACCOMMODATION ENTRIES FROM SH. S.K. GUPTA. A SURVEY U/S. 133A OF THE I.T.ACT, WAS CONDUCTED BY THE INVE STIGATION WING OF THE OFFICES OF SH. S.K. GUPTA CHARTERED ACC OUNTANT AND HIS COMPANIES ON 20.11.2007. DURING THE COURSE OF S URVEY OPERATION, SH. S.K. GUPTA FOUND TO HAVE BEEN INDULG ED IN PROVIDING ACCOMMODATION ENTRIES TO DIFFERENT PARTIE S THROUGH THE BANK CHEQUES OPERATED BY HIM IN THE NAME OF DIF FERENT COMPANIES, INDIVIDUAL AND OTHERS. IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH AS WELL AS APPELLATE PR OCEEDINGS SH.S.K. GUPTA HAD ADMITTED ON OATH THAT HE HAD PROV IDES ACCOMMODATION ENTRIES TO THE BENEFICIARIES AFTER RE CEIVING EQUIVALENT AMOUNT OF CASH FROM THEM. THE DETAILS OF ACCOMMODATION ENTRIES RECEIVED BY THE ABOVE NAMED A SSESSEE FROM SH.S.K. GUPTA IS AS UNDER: S.NO. DATE CHEQUE NO. AMOUNT 1 30.03.2005 000010 2000000 2 29.03.2005 772504 2000000 IN THE LIGHT OF ABOVE INFORMATION, IT IS CLEAR THAT THE CREDIT ENTRIES APPEARING IN THE ASSESSEES BOOKS OF ACCOUNT TO THE EXTENT ME NTIONED ABOVE ARE NOT 13 GENUINE AND ASSESSEE HAS INTRODUCED ITS OWN UNDISCL OSED INCOME ROOTING IT THROUGH THE ACCOMMODATION ENTRY OPERATOR SH.S.K. GU PTA BY GIVING HIM CASH AND ACCEPTING CHEQUES IN LIEU OF THE ACT. I, T HEREFORE, HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX AMOUNTING TO RS.40,00,000 HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 14 7 OF THE INCOME-TAX ACT, 1961. THE ASSESSEE HAS CONTENDED THAT VIDE LETTER DATED 0 8.03.2013 IT HAD REQUESTED THE ASSESSING OFFICER TO PROVIDE THE FOLLOWING INFO RMATION TO THE ASSESSEE, BUT THE ASSESSING OFFICER DID NOT PROVIDE THE REQUI RED INFORMATION, WHICH SUGGESTS THAT THE ASSESSING OFFICER DID NOT HAVE AN Y CORROBORATIVE EVIDENCE: I) THE LETTER DATED 27.03.2012 RECEIVED FROM THE OFFIC E OF ACIT, CENTRAL-22, NEW DELHI II) THE DOCUMENTARY EVIDENCE AND BASIS ON WHICH SUCH OP INION IS FORMED BY ACIT, CENTRAL-22, NEW DELHI III) HOW SUCH DOCUMENTS ARE VERIFIED BY YOU AND WHAT SOR T OF ENQUIRY WAS MADE PRIOR TO ISSUANCE OF NOTICE UNDER SECTION 148 IV) RESULT OF THE ENQUIRY MADE BE COMMUNICATED UPON THE BASIS OF WHICH IT IS INFERRED BY YOU THAT THE INCOME ALREADY ASSESSED UNDER SECTION 143(3) REQUIRED REVENUE-ASSESSMENT UN DER SECTION 148 AFTER THE EXPIRY OF 4 YEARS. 14 15. THE CONTENTION OF THE LD AR REMAINED THAT THE I NFORMATION RECEIVED FROM THE INVESTIGATING WING WHICH WAS PASSED TO THE ASSESSING OFFICER IS VAGUE AND HE DOES NOT EVEN MENTION THE NAMES AND AD DRESSES OF THE ENTITIES PROVIDING THE SO CALLED ACCOMMODATION ENTRIES AND T HE PURPOSES FOR WHICH THEY WERE PROVIDED, I.E. LOAN, GIFT, INVESTMENT ETC . THERE IS NO REFERENCE TO ANY CORROBORATIVE MATERIAL IN THE POSSESSION OF THE ASSESSING OFFICER. HE HAS NOT MENTIONED ANY MATERIAL, WHICH HAS LED HIM TO BE LIEVE THAT THE INFORMATION RECEIVED IS BASED ON SOME RELEVANT MATE RIAL AND THE INCOME HAS ESCAPED ASSESSMENT. SEVERAL DECISIONS OF HONBLE JU RISDICTIONAL DELHI HIGH COURT HAVE BEEN CITED IN SUPPORT BY THE LD AR PROPO UNDING A RATIO THAT BASIS OF THE BELIEVE SHOULD BE DISCERNIBLE FROM THE MATER IAL ON RECORD WHICH WAS AVAILABLE WITH THE ASSESSING OFFICER WHEN HE RECORD ED THE REASON. THERE SHOULD BE A LINK BETWEEN THE REASONS AND THE MATERI AL AVAILABLE WITH THE ASSESSING OFFICER. THE ASSESSING OFFICER WILL APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS OF THE INFORMATIO N. HE WILL NOT ACCEPT THE INFORMATION IN A MECHANICAL MANNER. IN THE PRESENT CASE BEFORE US WE FIND THAT THE ASSESSING OFFICER DID NOT BOTHER HIMSELF T O VERIFY THE CORRECTNESS OF THE INFORMATION RECEIVED BY HIM BUT MERELY ACCEPTED THE TRUTH OF THE INFORMATION IN A MECHANICAL MANNER. WHAT SORT OF EN QUIRY OR VERIFICATION OF INFORMATION RECEIVED BY HIM FROM THE INVESTIGATION WING OF THE DEPARTMENT 15 WAS MADE BY THE ASSESSING OFFICER PRIOR TO ISSUANCE OF NOTICE U/S 148 AND THE RESULT OF SUCH ENQUIRY HAS NOT BEEN MADE AVAILA BLE EVEN ON THE REQUEST OF THE ASSESSEE TO THE ASSESSING OFFICER VIDE LETTER D ATED 08.03.2013. WE THUS FIND SUBSTANCE IN THE CONTENTION OF THE ASSESSEE TH AT IN ABSENCE OF ANY REFERENCE TO ANY CORROBORATIVE MATERIAL IN THE POSS ESSION OF THE ASSESSING OFFICER LEADING HIM TO BELIEVE THAT THE INFORMATION RECEIVED WAS BASED ON SOME RELEVANT MATERIAL AND THE INCOME HAS ESCAPED A SSESSMENT, THE ASSESSING OFFICER HAD ISSUED NOTICE U/S 148 IN A ME CHANICAL MANNER ON THE BASIS OF VAGUE INFORMATION FROM THE INVESTIGATION W ING OF THE DEPARTMENT. THE ASSESSEE THUS SUCCEEDS ON THIS CONTENTION AS WE LL TO ARRIVE AT A CONCLUSION THAT NOTICE ISSUED U/S 148 WAS NOT VALID . 16. THE FURTHER CONTENTION OF THE LD AR ON THE VALI DITY OF THE ASSESSMENT FRAMED U/S 147/143(3) ALSO REMAINED THAT NOTICE U/S 143(2) WAS NEVER ISSUED. IN SUPPORT ASSESSMENT ORDER ITSELF WAS REFERRED WHE REIN NO WHERE IT HAS BEEN MENTIONED THAT NOTICE U/S 143(2) WAS ISSUED. THERE IS NO DISPUTE THAT IT IS MANDATORY TO ISSUE NOTICE U/S 143(2) OF THE ACT FOR FRAMING OF A VALID ASSESSMENT U/S 143(3) OF THE ACT AND THIS PROPOSITI ON IS WELL SUPPORTED BY SEVERAL DECISION INCLUDING DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON (SUPRA) CITED BY T HE LD AR. RESPECTFULLY 16 FOLLOWING THE RATIO LAID DOWN IN THIS CASE OF THE H ONBLE SUPREME COURT WE CONCUR WITH THE CONTENTION OF THE ASSESSEE AND HOLD THAT IN ABSENCE OF ISSUANCE OF NOTICE U/S 143(2) OF THE ACT, THE ASSES SMENT IN QUESTION FRAMED U/S 147/ 143(3) OF THE ACT IS VOID AB INITIO. 17. IN VIEW OF ABOVE FINDING, THE INITIATION OF REO PENING PROCEEDING, ACQUISITION OF JURISDICTION BY THE ASSESSING OFFICE R FOR THE PROCEEDINGS AND THE ASSESSMENT FRAMED IN FURTHERANCE TO THE SAID IN VALID NOTICE U/S 148 OF THE ACT IS HELD INVALID ON COUNTS DISCUSSED ABOVE. IN V IEW OF THIS FINDING, OTHER CONTENTIONS DO NOT NEED ADJUDICATION. THE ISSUES RA ISED IN THIS REGARD IN GROUND NOS. 2 TO 6 AND ADDITIONAL GROUNDS TO THE AB OVE EXTENT ARE ACCORDINGLY ALLOWED. 18. IN VIEW OF ABOVE FINDINGS ON THE VALIDITY OF TH E VERY ASSESSMENT ITSELF, THE OTHER GROUNDS QUESTIONING THE ADDITIONS UPHELD BY THE LD CIT(A) HAVE BECOME INFRUCTUOUS AND ACADEMIC ONLY. THESE GROUNDS THUS DO NOT NEED ANY ADJUDICATION. 19. IN THE RESULT APPEAL IS ALLOWED. ITA NO. 55/DEL/2015: 20. THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORD ER ON THE FOLLOWING GROUNDS: 17 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE APPELLATE ORDER PASSED BY THE LEARNED CIT(APPEALS) IS ILLEGAL BEING AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND AGAINST THE P ROVISIONS OF INCOME-TAX ACT, 1961 . 2. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN HOLDING THAT NOTICE U/S. 148 IS LEGALLY VALID. 3. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT NOTICE U/S. 148 WAS ISSUED WIT HOUT ANY APPLICATION OF MIND BY THE LD. A.O. AS REASONS RECO RDED CLEARLY INDICATE REPEATED ENTRIES TO THE EXTENT OF RS.40,00 ,000. 4. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT NOTICE U/S. 148 IS AB-INITIO V OID BECAUSE THE LD. A.O. HAD NOT TAKEN THE APPROVAL FROM JCIT U/S. 151(2) BEFORE ISSUE OF SUCH NOTICE THOUGH THE ASSESSMENT RE-OPENE D WAS COMPLETED U/S. 143(1). 5. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN CONFIRMING THE ADDITION OF RS.2,00,00,000 ON ACCOUNT OF INVESTMENT IN SHARES OF THE ASSESSEE. 6. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN REJECTING THE ADDITIONAL DOCUMENTS FILED BEF ORE HER THOUGH THEY WERE ONLY CLARIFICATORY IN NATURE AND IN PUBLI C DOMAIN WHICH DO NOT REQUIRE ANY APPLICATION U/S.46A. 7. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT CROSS-EXAMINATION OF MR. S.K. GUPTA WAS NOT PROVIDED BY THE LD. A.O. INSPITE OF THE SPECIFIC RE QUEST VIDE LETTER DATED 19.03.2013. 8. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT THE LD. A.O. NEITHER PROVIDED THE STATEMENT OF SH.S.K. GUPTA TO THE ASSESSEE NOR OTHER DOCUMENTS U SED AGAINST THE ASSESSEE. 9. THE APPELLANT CRAVES TO ADD, ALTER, MODIFY AND WITH DRAW ANY GROUND OF APPEAL BEFORE OR DURING THE APPELLATE PRO CEEDINGS. 18 BESIDES ABOVE GROUNDS, THE ASSESSEE HAS ALSO RAISE D FOLLOWING PROPOSED ADDITIONAL GROUND VIDE APPLICATION DATED 27.2.2015 PRAYING ADMISSION THEREOF: THE IMPUGNED ASSESSMENT ORDER U/S. 147/143(3) DATE D 26.3.2013 IS ILLEGAL AND WITHOUT PROPER JURISDICTION AS NOTICES U/S. 148 AS WELL AS U/S. 143(2) WERE NOT ISSUED AND ALSO THERE WAS NONC OMPLIANCE U/S. 143(3) IN AS MUCH AS THE SUM PAYABLE BY THE ASSESSE E ON THE BASIS OF ASSESSMENT WAS NOT DETERMINED AND THEREFORE, IT DES ERVES TO BE ANNULLED. 21. THE LEARNED AR SUBMITTED THAT THE ISSUE RAISED IN THE ADDITIONAL GROUND IS LEGAL IN NATURE WHICH GOES TO THE ROOT OF THE MATTER AND ADJUDICATION OF WHICH DOES NOT REQUIRE CONSIDERATIO N OF FRESH MATERIAL. THE LEARNED AR SUBMITTED FURTHER THAT THOUGH IN THE GRO UND NOS. 2 TO 6, THE ASSESSEE HAS ALREADY QUESTIONED THE VALIDITY OF ISS UANCE OF NOTICE UNDER SEC. 148 OF THE ACT AND THE ASSESSMENT FRAMED IN CONSEQU ENCE THERETO BUT STILL TO AVOID ANY TECHNICAL DIFFICULTY ON SPECIFIC CONTENTI ON REGARDING VALIDITY OF ASSESSMENT IN ABSENCE OF NOTICES ISSUED UNDER SEC. 148 AS WELL AS SEC. 143(2) OF THE ACT HAS BEEN RAISED. 22. THE LEARNED CIT(DR) ON THE OTHER HAND OBJECTED THE APPLICATION. 23. CONSIDERING THE ABOVE SUBMISSION THAT THE ISSUE RAISED IS LEGAL IN NATURE WHICH GOES TO THE ROOT OF THE MATER AND ADJU DICATION OF ISSUE RAISED IN THE ADDITIONAL GROUND DOES NOT REQUIRE CONSIDERATIO N OF FRESH MATERIAL 19 OUTSIDE THE RECORD, WE ALLOW THE APPLICATION AND IN RESULT ADDITIONAL GROUND IS ADMITTED FOR OUR ADJUDICATION. WE WILL DEAL WITH IT ALONG WITH GROUND NOS. 2 TO 4 IN THE SUCCEEDING PARAGRAPHS. 24. IN GROUND NO.1 , THE ASSESSEE HAS RAISED THE ISSUE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THE PROVISIONS OF INCOME-TAX ACT, 1961. NO ARGUMENT HAS BEEN ADVANCED AGAINST THE VIOLATION OF PRINCIPLE OF NATURAL JUSTICE BY THE LEARNED CIT(APPEALS). IT IS ACCORDIN G SUBJECTED. SO FAR AS VIOLATION OF THE PROVISIONS OF THE INCOME-TAX ACT, 1961 IS CONCERNED, IT IS GENERAL IN NATURE AND DOES NOT NEED AN INDEPENDENT ADJUDICATION. GROUND NOS. 2 TO 4 : 25. IN SUPPORT OF THESE GROUNDS, THE LEARNED AR RAI SED SEVERAL CONTENTIONS REGARDING THE VALIDITY OF NOTICE ISSUED UNDER SEC. 148, ACQUISITION OF JURISDICTION BY THE ASSESSING OFFICE R TO INITIATE REOPENING PROCEEDINGS AND VALIDITY OF THE ASSESSMENT FRAMED U NDER SEC. 147/143(2) OF THE ACT. HIS FIRST CONTENTION REMAINED REGARDING TH E MAINTAINABILITY OF THE NOTICE ISSUED UNDER SEC. 148 OF THE ACT ON A NON-EX ISTENT ASSESSEE. HE SUBMITTED THAT NOTICE UNDER SEC. 148 OF THE ACT WAS ISSUED ON 30.3.2012 ON MAGPIE PROJECTS PVT. LTD. WHICH DID NOT EXIST AS I T GOT AMALGAMATED W.E.F. 20 01.04.2011 WITH ADVANCE INDIA PROJECTS LTD. HE CONT ENDED THAT IT IS NOW WELL SETTLED PROPOSITION OF LAW THAT NOTICE ON NON- EXISTENT COMPANY IS ILLEGAL. IN SUPPORT, HE PLACED RELIANCE ON THE FOLL OWING DECISIONS: I) SARASWATI INDUSTRIAL SYNDICATE LTD. VS. CIT 20 02 TIOL 1048- S.C-IT-LB; II) COMPUTER ENGINEERING SERVICES INDIA (P) LTD. VS . ACIT ITA NO. 5874/DEL/2013 ORDER DATED 29.5.2015; III) CIT VS. MICRON STEELS PVT. LTD. 2015 TIOL S.C- DEL-IT; 26. THE LEARNED AR SUBMITTED FURTHER THAT ONCE IT I S FOUND THAT ASSESSMENT IS FRAMED IN THE NAME OF NON-EXISTING EN TITY, IT DOES NOT REMAIN A PROCEDURAL IRREGULARITY OF THE NATURE WHICH COULD B E CURED BY INVOKING THE PROVISIONS OF SEC. 292B OF THE ACT. A JURISDICTIONA L DEFECT SUCH AS NULLITY SHAKES THE ENTIRE PROCEEDINGS AND DOES NOT RENDERED THE ORDER A MERE IRREGULARITY. IN SUPPORT, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) SPICE ENTERTAINMENT LTD. VS. COMMISSIONER OF SERVIC E-TAX- 2011- TIOL-971-S.C-DEL-IT; II) CIT VS. NORTON MOTORS 275 ITR 595. THE LEARNED AR POINTED OUT THE ABOVE ISSUE OF NON-E XISTENT COMPANY WAS ALSO RAISED BEFORE THE LEARNED CIT(APPEALS) SUPPORT ED WITH EVIDENCE 21 INCLUDING APPROVAL BY THE HON'BLE HIGH COURT OF DEL HI ON 29.3.2012 ON THE SCHEME OF AMALGAMATION BUT THE ASSESSEE COULD NOT S UCCEED. 27. THE LEARNED AR CONTENDED FURTHER THAT THE NOTIC E ISSUED UNDER SEC. 148 OF THE ACT ON THE BASIS OF BORROWED SATISFACTIO N OF THE INVESTIGATION WING IS ALSO NOT VALID IN ABSENCE OF HIS OWN SATISF ACTION OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IN THE PRESENT CASE HAS SIMPLY MENTIONED PERUSAL OF INFORMATION RECEIVED FROM ACIT, CC-22, VIDE LETTER NO.., IS CAME TO NOTICE THAT THE ABOVE NAMED ASSESSEE HAS RE CEIVED ACCOMMODATION ENTRIES FROM SHRI S.K. GUPTA , WITHOUT ANY VERIFIC ATION. IN SUPPORT HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) CIT VS. SHRI RAJASTHAN SYNTEX LTD. (2009) 313 ITR 231 (RAJ.); II) ITO VS. VIJENDER KUMAR (2012) 67 DTR(DEL) (TRIB.) 283. 28. THE LEARNED AR CONTENDED FURTHER THAT THE EXPRE SSION REASONS TO BELIEVE HAS BEEN EXPLAINED BY THE HON'BLE SUPREME COURT IN THE CASE OF ITO VS. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (S. C) HOLDING THAT IF THE CONFESSION FROM THE CREDITORS DOES NOT NAME THE ASSESSEE, THE CONFESSION CANNOT LEAD TO REASONS TO BELIEVE THAT INCOME HAS E SCAPED IN THE CASE OF THE ASSESSEE. 22 29. LEARNED AR CONTENDED THAT THERE WAS NO APPLICAT ION OF MIND BY THE ASSESSING OFFICER BEFORE ISSUING NOTICE UNDER SEC. 148 OF THE ACT. THE ASSESSING OFFICER VIDE LETTER DATED 08.03.2013 WAS REQUESTED TO PROVIDE THE FOLLOWING INFORMATION BUT NO INFORMATION/DOCUMENT W AS PROVIDED TO THE ASSESSEE AND THE ASSESSING OFFICER REJECTED THE OBJ ECTION IN HASTE AND COMPLETED THE ASSESSMENT: I) THE LETTER DATED 27.03.2012 RECEIVED FROM THE O FFICE OF ACIT, CENTRAL-22, NEW DELHI. II) THE DOCUMENTARY EVIDENCE AND BASIS ON WHICH SU CH OPINION IS FORMED BY ACIT, CENTRAL-2 2, NEW DELHI. III) HOW SUCH DOCUMENTS ARE VERIFIED BY YO U AND WHAT SORT OF ENQUIRY WAS MADE PRIOR TO ISSUANCE OF NOTICE UNDER SECTION 148. IV) RESULT OF THE ENQUIRY MADE BE COMMUNICATED UPON THE BASIS OF WHICH IT IS INFERRED BY YOU THAT THE INCOM E ALREADY ASSESSED UNDER SEC. 143(3) REQUIRED REASSESSMENT OR DER UNDER SEC. 148 AFTER THE EXPIRY OF 4 YEARS. 30. THE LEARNED AR SUBMITTED THAT THE ACTION OF THE ASSESSING OFFICER IN NOT PROVIDING ANY INFORMATION/DOCUMENT AS MENTIONED ABOVE CLEARLY PROVES THAT HE DID NOT HAVE ANY CORROBORATIVE EVIDENCE. HE SUBMITTED THAT A PERUSAL OF REASONS INDICATES THAT NOTICE UNDER SEC. 148 HAS BEEN ISSUED IN A 23 MECHANICAL MANNER ON THE BASIS OF VAGUE INFORMATION FROM ACIT, CENTRAL CIRCLE-22. THE ASSESSING OFFICER DID NOT DWELL UPON THE VERACITY AND THE BASIS OF INFORMATION RECEIVED. AS PER REASONS RECOR DED, ACIT, CENTRAL CIRCLE-22 RECEIVED CERTAIN INFORMATION FROM INVESTI GATION WING WHICH WAS PASSED ON TO HIM. THE INFORMATION IS SO VAGUE THAT IT DOES NOT EVEN MENTION THE NAMES AND ADDRESSES OF THE ENTITIES PROVIDING T HE SO CALLED ACCOMMODATION ENTRIES AND THE PURPOSE FOR WHICH THE Y WERE PROVIDED, I.E. LOAN, GIFT, INVESTMENT ETC. THERE IS NO REFERENCE T O ANY CORROBORATIVE MATERIAL IN THE SUGGESTION OF A.O. HE HAS NOT MENTIONED ANY MATERIAL, WHICH HAS LED HIM TO BELIEVE THAT INFORMATION RECEIVED, IS BASED ON SOME RELEVANT MATERIAL AND THE INCOME HAS ESCAPED ASSESSMENT. THEREFORE, N OTICE UNDER SEC. 148 IS PATENTLY ILLEGAL. IN SUPPORT, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: 1. ACIT VS. SHRI DEVESH KUMAR 2015-TIOL-16-ITAT- DEL; 2. C&G PHARMA INDIA LTD. VS. ITO 2015-TIOL-ITAT- DEL; 3. SIGNATURES HOTEL (P) LTD. VS. ITO (2011) 338 ITR 51 (DEL.); 4. CIT VS. ATUL JAIN, 2008- 299 ITR 383 (DEL.); 5. SMT. SHAKUNTALA DEVI ITA NO. 3751/DEL/2011 ORDER DATED 20.4.2012; 6. SHARTHAK SECURITY CO. (P) LTD. VS. ITO 329 IT R 110 (DEL.); 7. CIT VS. SFIL STOCK BROKING LTD. (2010) 325 IT R 285 (DEL.); 24 31. LEARNED AR SUBMITTED THAT THE LEARNED CIT HAS A LSO GIVEN THE PERMISSION IN A MECHANICAL MANNER WITHOUT GIVING AN Y REASONS FOR HIS SATISFACTION. HE HAS NOT REFERRED TO ANY MATERIAL ON THE BASIS OF WHICH HE HAD ARRIVED AT THE SATISFACTION. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) THE CENTRAL INDIA ELECTRIC SUPPLY CO. LTD. VS. I TO ITA NO. 17/1999 DATED 28.01.2011 (DELHI HIGH COURT); II) ARJUN SINGH VS. ADIT (2000)- 246 ITR 363 (MP); 32. THE LEARNED AR SUBMITTED THAT NOTICE UNDER SEC . 148 CANNOT BE SUPPORTED BY ANY OTHER FACT THAN THE REASONS RECORD ED. THE REASONS RECORDED CANNOT BE SUPPLEMENTED LATER ON EVEN WHILE REJECTIN G THE OBJECTIONS FILED BY THE ASSESSEE. HE PLACED RELIANCE ON THE FOLLOWING D ECISIONS: I) ADDITIONAL DIT VS. INDIVEST PTE. LTD., SLP CIVIL NO . 36562/2012 ORDER DATED 23.3.2013; II) NORTHERN EXIM (P) LTD. VS. DCIT- 2012 TIOL-220-S. C-DEL- IT; III) PRASHANT S. JOSHI VS. ITO (2010) 1 TAXMAN.COM 103 (BOM.) 33. THE LEARNED AR CONTENDED THAT THE REASSESSMENT ORDER IN QUESTION IS ILLEGAL ALSO BECAUSE NOTICE UNDER SEC. 143(2) WAS N EVER ISSUED BEFORE COMPLETING THE REASSESSMENT. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: 25 1) GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY V S. ACIT- 2015-TIOL-227-ITAT-DEL, ORDER DATED 9.1.2015; 2) CIT VS. RAJIV SHARMA (2010) 192 TAXMAN 197 (A LL.); 3) ALPINE ELECTRONIC ASIA PTE LTD. VS. DIT (2012) 18 TAXMAN.COM 246 (DEL.); 4) MOHINDER KUMAR CHHABRA VS. ITO (2014) 31 ITR (TRI B.)- 93 (DEL); 5) ACIT VS. HOTEL BLUE MOON (2010)- 321 ITR 362 (S.C); 34. THE LEARNED CIT(DR) ON THE OTHER HAND TRIED TO JUSTIFY THE VALIDITY OF NOTICE ISSUED UNDER SEC. 148 AND THE ASSESSMENT MAD E IN FURTHERANCE THERETO. HE SUBMITTED THAT INVESTIGATION WING HAD INFORMED A BOUT THE INDULGENCE OF THE ASSESSEE IN THE AFFAIR OF ACCOMMODATION ENTRIES ON THE BASIS OF STATEMENT OF SHRI S.K. AGGARWAL RECORDED DURING THE COURSE OF SURVEY. THUS, THERE WAS SUFFICIENT MATERIAL TO FORM REASONS TO BELIEVE ON T HE PART OF THE ASSESSING OFFICER TO INITIATE REOPENING PROCEEDINGS. IN SUPPO RT, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) OPG METAL VS. FINSEC LTD. VS. CIT (2014) 41 TA XMAN.COM 21 (DEL.); II) MONEY GROWTH INVESTMENT & CONSULTANTS (P) LTD. VS ITO (2012)- 21 TAXMAN.COM 438 (DEL.); III) AGR INVESTMENT LTD. VS. ADDL. CIT (2011) 333 ITR 146 (DEL.); 26 35. CONSIDERING THE ABOVE SUBMISSIONS IN VIEW ORDER S OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIO NS RELIED UPON, WE FIND SUBSTANCE IN THE ABOVE CONTENTIONS OF THE LEARNED A R THAT NOTICE ISSUED UNDER SEC. 148 OF THE ACT ON NON-EXISTENT COMPANY W AS ILLEGAL. THE SUBMISSIONS OF THE FACT IN THIS REGARD BY THE LEARN ED AR THAT MAGPIE PROJECTS PVT. LTD. WAS AMALGAMATED W.E.F. 01.04.201 1 WITH ADVANCE INDIA PROJECTS LTD. HAS NOT BEEN REBUTTED, HENCE WE HOLD THAT NOTICE UNDER SEC. 148 OF THE ACT ISSUED ON 30.3.2012 ON MAGPIE PROJEC TS PVT. LTD., A NON- EXISTENT COMPANY WAS INVALID. THE HON'BLE SUPREME C OURT IN THE CASE OF SARASWATI INDUSTRIAL SYNDICATE LTD. VS. CIT (SUPRA) HAS BEEN PLEASED TO HOLD THAT THE HON'BLE HIGH COURT WAS IN ERROR IN HOLDING THAT EVEN AFTER AMALGAMATION OF TWO COMPANIES, THE PARENT COMPANY D ID NOT BECOME NON- EXISTENT INSTEAD IT CONTINUED ITS ENTITY IN A BLEND ED FORM WITH THE ASSESSEE. THE HON'BLE SUPREME COURT APPROVED THE DECISION OF THE ITAT THAT AMALGAMATING COMPANY CEASED TO EXIST IN THE EYE OF LAW, THEREFORE, THE ASSESSEE WAS NOT LIABLE TO PAY TAX. THE HON'BLE JUR ISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. MICRON STEELS PVT. LTD . (SUPRA) WHILE APPROVING THE DECISION OF THE ITAT IN THE APPEAL PREFERRED BY THE REVENUE HAS BEEN PLEASED TO HOLD THAT ON AMALGAMATION, THE COMPANY C EASES TO EXIST IN THE EYES OF THE LAW. THUS, ASSESSMENT UPON A DISSOLVED COMPANY IS 27 IMPERMISSIBLE AS THERE IS NO PROVISION IN INCOME-TA X ACT, 1961 TO MAKE AN ASSESSMENT THEREUPON. WE THUS RESPECTFULLY FOLLOWI NG THE RATIO LAID DOWN IN THE ABOVE CITED DECISIONS HOLD THAT THE NOTICE UNDE R SEC. 148 OF THE ACT ISSUED ON 30.3.2012 ON MAGPIE PROJECTS PVT. LTD., A NON-EXISTENT COMPANY WAS ILLEGAL. 36. WE ALSO FIND SUBSTANCE IN THE CONTENTIONS OF TH E LEARNED AR THAT BEFORE COMPLETING ASSESSMENT UNDER SEC. 143(3), IT IS MANDATORY TO ISSUE NOTICE UNDER SEC. 143(2) OF THE ACT, OTHERWISE THE ASSESSMENT ORDER IS ILLEGAL. ON PERUSAL OF THE ASSESSMENT ORDER FRAMED UNDER SEC . 147/143(3) OF THE INCOME-TAX ACT, 1961, WE NOWHERE FIND THAT THE ASSE SSING OFFICER HAS MENTIONED ABOUT THE ISSUANCE OF NOTICE UNDER SEC. 1 43(2) OF THE ACT WHICH IS MANDATORY AS PER THE RATIOS LAID DOWN IN THE CITED DECISIONS INCLUDING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF AC IT VS. HOTEL BLUE MOON (SUPRA). HON'BLE DELHI HIGH COURT IN THE CASE OF ALPINE ELECTRONICS ASIA PVT. LTD. VS. DCIT (SUPRA) HAS BEEN PLEASED TO HOLD IN PARA NO. 24 OF THE DECISION THAT SECTION 143(2) IS APPLICABLE TO T HE PROCEEDINGS UNDER SEC. 147/148 OF THE INCOME-TAX ACT, 1961. PROVISO TO SEC TION 148 OF THE ACT PROTECTS AND GRANTS LIBERTY TO THE REVENUE TO SERVE NOTICE UNDER SEC. 143(2) OF THE ACT BEFORE PASSING OF THE ASSESSMENT ORDER F OR RETURNS FURNISHED ON OR 28 BEFORE 01.10.2005. IN RESPECT OF RETURNS FILED PURS UANT TO NOTICE UNDER SEC. 148 OF THE ACT AFTER 01.10.2005, IT IS MANDATORY TO SERVE NOTICE UNDER SEC. 143(2) OF THE ACT, WITHIN THE STIPULATED TIME LIMIT . IT IS ALSO AN ESTABLISHED PROPOSITION OF LAW THAT SUCH DEFECT IN THE EXEMPTIO N OF JURISDICTION BY THE ASSESSING OFFICER CANNOT BE CURED BY TAKING RECOURS E TO THE DEEMING FICTION UNDER SEC. 292BB OF THE ACT. 37. IN VIEW OF THE ABOVE FINDINGS, WE HOLD THAT NOT ICE ISSUED UNDER SEC. 148 OF THE INCOME-TAX ACT, 1961 ON A NON-EXISTENT A SSESSEE WAS INVALID AND THE ASSESSMENT MADE IN FURTHERANCE THERETO INCONSEQ UENCE WAS INVALID AND VOID. THE ASSESSMENT IN ABSENCE OF ISSUANCE OF MAND ATORY NOTICE UNDER SEC. 143(2) OF THE ACT WAS ALSO VOID AB-INITIO. IN VIEW OF THIS FINDING, THE REMAINING CONTENTIONS ON THE ISSUE OF VALIDITY OF N OTICE ISSUED UNDER SEC. 148 OF THE ACT, REASONS RECORDED, ETC. RAISED BY THE LE ARNED AR HAVE BECOME INFRUCTUOUS AND THUS DO NOT NEED ADJUDICATION. THE GROUND NOS. 2 TO 4 AND ADDITIONAL GROUND TO THE ABOVE EXTENT ARE THUS ALLO WED. 38. IN VIEW OF THE ABOVE FINDINGS HOLDING THE ASSES SMENT IN QUESTION ITSELF VOID, THE ISSUES RAISED IN THE REMAINING GROUND NOS . 5 TO 8 HAVE BECOME INFRUCTUOUS AND THUS DO NOT NEED ANY ADJUDICATION. 39. IN RESULT, THE APPEAL IS ALLOWED. 29 ITA NO. 56/DEL/2015 : 40. THE ASSESSEE HAS IMPUGNED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLATE ORDER PASSED BY THE LEARNED CIT(APPEALS) IS ILLEGAL BEING AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND AGAINST THE PROVI SIONS OF INCOME- TAX ACT, 1961 . 2. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN HOLDING THAT NOTICE U/S. 148 IS LEGALLY VALID. 3. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT NOTICE U/S. 148 IS AB-INITIO V OID BECAUSE THE LD. A.O. HAD NOT TAKEN THE APPROVAL FROM JCIT U/S. 151(2) BEFORE ISSUE OF SUCH NOTICE THOUGH THE ASSESSMENT RE-OPENE D WAS COMPLETED U/S. 143(1). 4. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN CONFIRMING THE ADDITION OF RS.40,00,000 ON A CCOUNT OF INVESTMENT IN SHARES OF THE ASSESSEE. 5. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN REJECTING THE ADDITIONAL DOCUMENTS FILED BEF ORE HER THOUGH THEY WERE ONLY CLARIFICATORY IN NATURE AND IN PUBLI C DOMAIN WHICH DO NOT REQUIRE ANY APPLICATION U/S.46A. 6. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT CROSS-EXAMINATION OF MR. S.K. GUPTA WAS NOT 30 PROVIDED BY THE LD. A.O. INSPITE OF THE SPECIFIC RE QUEST VIDE LETTER DATED 19.03.2013. 7. THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED ON FACTS AS WELL AS IN LAW IN IGNORING THAT THE LD. A.O. NEITHER PROVIDED THE STATEMENT OF SH.S.K. GUPTA TO THE ASSESSEE NOR OTHER DOCUMENTS U SED AGAINST THE ASSESSEE. 8. THE APPELLANT CRAVES TO ADD, ALTER, MODIFY AND WITH DRAW ANY GROUND OF APPEAL BEFORE OR DURING THE APPELLATE PRO CEEDINGS. BESIDES ABOVE GROUNDS, THE ASSESSEE VIDE APPLICATIO N DATED 27.2.2015 HAS ALSO PRAYED FOR ADMISSION OF THE FOLLOWING PROPOSED ADDITIONAL GROUND: THE IMPUGNED ASSESSMENT ORDER U/S. 147/143(3) DATE D 26.3.2013 IS ILLEGAL AND WITHOUT PROPER JURISDICTION AS NOTICES U/S. 148 AS WELL AS U/S. 143(2) WERE NOT ISSUED AND ALSO THERE WAS NONC OMPLIANCE U/S. 143(3) IN AS MUCH AS THE SUM PAYABLE BY THE ASSESSE E ON THE BASIS OF ASSESSMENT WAS NOT DETERMINED AND THEREFORE, IT DES ERVES TO BE ANNULLED. 41. THE LEARNED AR SUBMITTED THAT THE ISSUE RAISED IN THE ADDITIONAL GROUND IS LEGAL IN NATURE WHICH GOES TO THE ROOT OF THE MATTER AND ADJUDICATION OF WHICH DOES NOT REQUIRE CONSIDERATIO N OF FRESH MATERIAL. THE LEARNED AR SUBMITTED FURTHER THAT THOUGH IN THE GRO UND NOS. 2 TO 6, THE ASSESSEE HAS ALREADY QUESTIONED THE VALIDITY OF ISS UANCE OF NOTICE UNDER SEC. 148 OF THE ACT AND THE ASSESSMENT FRAMED IN CONSEQU ENCE THERETO BUT STILL TO AVOID ANY TECHNICAL DIFFICULTY ON SPECIFIC CONTENTI ON REGARDING VALIDITY OF 31 ASSESSMENT IN ABSENCE OF NOTICES ISSUED UNDER SEC. 148 AS WELL AS SEC. 143(2) OF THE ACT HAS BEEN RAISED. 42. THE LEARNED CIT(DR) ON THE OTHER HAND OBJECTED THE APPLICATION. 43. CONSIDERING THE ABOVE SUBMISSION THAT THE ISSUE RAISED IS LEGAL IN NATURE WHICH GOES TO THE ROOT OF THE MATER AND ADJU DICATION OF ISSUE RAISED IN THE ADDITIONAL GROUND DOES NOT REQUIRE CONSIDERATIO N OF FRESH MATERIAL OUTSIDE THE RECORD, WE ALLOW THE APPLICATION AND IN RESULT ADDITIONAL GROUND IS ADMITTED FOR OUR ADJUDICATION. WE WILL DEAL WITH IT ALONG WITH GROUND NOS. 2 TO 4 IN THE SUCCEEDING PARAGRAPHS. 44. SIMILAR GROUNDS INVOLVING IDENTICAL ISSUES AS R AISED HEREINABOVE IN ITA NO. 55/DEL/2015 HAVE BEEN RAISED AND SIMILAR AR GUMENTS HAVE BEEN ADVANCED BY THE PARTIES TO SUPPORT THEIR RESPECTIVE CASES. 45. FOLLOWING THE DECISIONS TAKEN BY US IN ITA NO. 55/DEL/2015 ON IDENTICAL ISSUES, WE HOLD THAT THE ISSUANCE OF NOTI CE UNDER SEC. 148 OF THE ACT ON A NON-EXISTENT ASSESSEE WAS INVALID AND THE ASSE SSMENT FRAMED IN FURTHERANCE TO THE SAID NOTICE IN CONSEQUENCE WAS A LSO VOID. THE ASSESSMENT IN QUESTION IN ABSENCE OF ISSUANCE OF MANDATORY NOT ICE UNDER SEC. 143(2) OF 32 THE ACT WAS ALSO VOID AND THE SAME IS QUASHED AS SU CH. THE GROUND NOS. 2 TO 4 AND ADDITIONAL GROUND TO THE ABOVE EXTENT ARE THU S ALLOWED. 46. THE REMAINING GROUNDS HAVE BECOME INFRUCTUOUS, HENCE, DO NOT NEED ADJUDICATION. 47. IN RESULT, THE APPEAL IS ALLOWED. 48. IN SUMMARY, ALL THE THREE APPEALS PREFERRED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 .08.2015 SD/- SD/- ( INTURI RAMA RAO ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14/08/2015 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR 33 DATE DRAFT DICTATED ON COMPUTER 13.08.2015 DRAFT PLACED BEFORE AUTHOR 13.08.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 20.08.201 5 KEPT FOR PRONOUNCEMENT ON 14.08.2015 FILE SENT TO THE BENCH CLERK 20.08.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.