M/S BALAJI HEALTH CARE PVT. LTD., JAIPUR V. INCOME TAX OFFICER, WARD-4-3, JAIPUR

ITA 566/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5418 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 27-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MEENA
• Keywords: Reopening of assessment; Unexplained investment; Search and seizure; Document seized; Principle of natural justice; Tangible material; Difference of opinion; Valuation report; Accommodation entries; Competent authority; Assessment record; Reason to believe; Documents seized; Change of opinion; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 234B; 133(6); 143(1); 147; 68; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 566 & 567/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 & 2007-08 M/S BALAJI HEALTH CARE PVT. LTD., B-2, JAIPUR TOWER, MI ROAD, JAIPUR. CUKE VS. THE ITO, WARD-4(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACB 7551 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RAJEEV SOGANI (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K.C. MEENA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 01/11/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 30/01/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE RESPECTIVE ORDERS OF LD. CIT(A), JODHPUR (CAMP AT J AIPUR) DATED 16.03.2018 FOR THE ASSESSMENT YEAR 2006-07 AND DATE D 19.03.2018 FOR THE ASSESSMENT YEAR 2007-08 RESPECTIVELY. 2. IN ITA NO. 566/JP/2018, THE ASSESSEE HAS TAKEN T HE FOLLOWING GROUNDS OF APPEAL:- ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 2 1.1 THE IMPUGNED ORDER U/S 147/143(3) DATED 18.02. 2014 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISD ICTION, BARRED BY LIMITATION AND VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. 1.2 THE ACTION TAKEN U/S 147 BY THE LD. AO CONFIRME D BY THE LD. CIT(A) IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE TH E SAME MAY KINDLY BE QUASHED. 2. RS. 25,00,000/- : THE LD. CIT(A) HAS GROSSLY ERR ED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION OF RS. 25,00,000/- MADE BY THE LD. AO ON ACCOUNT OF ALLEGE D ACCOMMODATION ENTRIES RECEIVED FOR SHARE APPLICATIO N MONEY AND ALSO ERRED IN IGNORING THE VARIOUS EVIDENCE SUBMITT ED WITHOUT REBUTTING AND AO ALSO ERRED IN NOT PROVIDING THE CR OSS EXAMINATIONS. HENCE THE ADDITION SO MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS BEING TOTALLY CONTRA RY TO THE PROVISIONS OF LAW AND FACT ON THE RECORD AND HENCE THE ADDITION MAY KINDLY BE DELETED IN FULL. 3. THE LD. AO HAS GROSSLY ERRED IN LAW AS WELL AS O N THE FACTS OF THE CASE IN CHARGING INTEREST U/S 234A, 234B & 234C ,. THE APPELLANT TOTALLY DENIES IT LIABILITY OF CHARGING O F ANY SUCH INTEREST. THE INTEREST, SO CHARGED, BEING CONTRARY TO THE PRO VISIONS OF LAW AND FACTS, MAY KINDLY BE DELETED IN FULL. 3. BRIEFLY THE FACTS OF THE CARE ARE THAT THE ASSES SEE ENGAGED IN THE BUSINESS OF REAL ESTATE AND CONSTRUCTION OF FLATS F ILED ITS RETURN OF INCOME ON 30.11.2006 ADMITTING THE TOTAL INCOME AT NIL. SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM INVESTIGATION WING , NEW DELHI THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THE CASE SHRI SURENDRA KUMAR JAIN AND SHRI VIRENDRA KUMAR JAIN, DELHI AND IN THEIR STATEMENT RECORDED, THEY HAD CATEGORICALLY STATED THAT THERE WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES OF SHAR E CAPITAL/SHARE ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 3 PREMIUM TO VARIOUS BENEFICIARIES AND THE ASSESSEE C OMPANY WAS ALSO ONE OF THE BENEFICIARIES IN RESPECT OF SHARE CAPITA L/SHARE PREMIUM OF RS. 25,00,000/-. ACCORDINGLY, THE AO INITIATED THE PROCEEDINGS U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 DATED 23.03.20 13. IN RESPONSE, THE ASSESSEE STATED THAT RETURN FILED ORIGINALLY ON 30. 11.2006 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 1 48 OF THE ACT. AFTER HEARING THE ASSESSEE, THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT ON 18.02.2014 DETERMINING THE TOTAL INCOME BY MAKING ADDITION OF RS. 25,00,000/- TO THE TOTAL INCOME OF THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE SAID AD DITION AND NOW THE ASSESSEE IN BEFORE US. 4. IN GROUND NO. 1, THE ASSESSEE HAS CHALLENGED THE ORDER PASSED BY THE ASSESSING OFFICER U/S 147 OF THE IT ACT. IN THIS REGARD, THE LD. AR SUBMITTED THAT IT IS A SETTLED LEGAL PROPOSITION TH AT THE AO IS DUTY BOUND TO CARRY OUT FORMATION OF BELIEF WITH DUE DILIGENCE AFTER DUE APPLICATION OF MIND AND NOT IN A CASUAL AND MECHANICAL MANNER. IN THE PRESENT CASE, FROM PERUSAL OF REASONS RECORDED, IT IS EVIDE NT THAT AO RECEIVED A LETTER FROM THE OFFICE OF CIT, JAIPUR-II ON 21.03.2 013 BY WHICH A REPORT OF INVESTIGATION WING WAS FORWARDED TO HIM. THEREAF TER, THE ASSESSING OFFICER ON THE VERY NEXT DAY, RECORDED THE REASONS TO BELIEVE THAT INCOME TO THE TUNE OF RS. 25,00,000/- HAS ESCAPED A SSESSMENT. IT WAS SUBMITTED THAT FROM THE REASONS SO RECORDED BY THE AO AND SUBSEQUENT LETTER WRITTEN BY THE AO TO ACIT, DELHI ON 30.08.20 13, IT IS MANIFEST THAT FORMATION OF BELIEF OF ESCAPEMENT WAS NOT BASED ON ANYTHING OTHER THAN REPORT OF INVESTIGATION WING AND WITHOUT ANY I NDEPENDENT ENQUIRY ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 4 CONDUCTED BY THE AO. IT WAS SUBMITTED THAT AS PER THE SETTLED PRINCIPLES OF REOPENING, WHAT IS EXPECTED FROM AO I S CORROBORATION, CHECKING AND CROSS CHECKING OF THE INFORMATION, REC EIVED FROM THE INVESTIGATION WING, WITH INDEPENDENT EVIDENCES AND ESTABLISHING A CLEAR TRAIL SUGGESTING, EVEN IF PRIMA FACIE, FLOW OF UNAC COUNTED MONEY FROM THE ASSESSEE. HOWEVER, IN THE PRESENT CASE, REOPENI NG HAS BEEN DONE BY DIRECTLY JUMPING ON TO THE INFORMATION RECEIVED FROM THE INVESTIGATION WING BY CONSIDERING IT TO BE SACROSAN CT. IT WAS ACCORDINGLY SUBMITTED THAT THE AO RECORDED THE REAS ONS IN THE MOST ARBITRARY MANNER WITHOUT APPLICATION OF ANY MIND AN D, THUS, THIS IS NOTHING BUT A CASE OF BORROWED SATISFACTION WHICH R ENDERS THE ENTIRE PROCEEDINGS OF REOPENING TO BE ILLEGAL AND VOID-AB- INITO. IN SUPPORT, RELIANCE WAS PLACED ON THE DECISION OF HONBLE DELH I HIGH COURT IN CASE OF RMG POLYVINYL (I) B LTD [2017] 83 TAXMANN.COM 3 48, MEENAKSHI OVERSEAS PVT. LTD. [2017] 395 ITR 677 AND N.C. CABL ES LTD. [2017] 88 TAXMANN.COM 649 WHEREIN IT WAS HELD THAT WHERE REAS SESSMENT WAS RESORTED ON THE BASIS OF INFORMATION FROM DIT (INVE STIGATION) STATING THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRY AND AO FAILS TO INDEPENDENTLY APPLY HIS MIND DEMONSTRATING LINK BET WEEN TANGIBLE MATERIAL AND FORMATION OF REASON TO BELIEVE, REASSE SSMENT WAS NOT JUSTIFIED. 5. IT WAS FURTHER SUBMITTED THAT THE REOPENING WAS BASED ON THE REPORT SENT BY THE INVESTIGATION WING, DELHI, NO UN DERLYING RECORDS WERE AVAILABLE WITH AO AT THE TIME OF RECORDING OF REASONS AND THIS FACTUM IS PROVED BY THE ORDER OF THE COORDINATE BEN CH IN CASE OF BASESAR PROPERTIES (P) LTD. VS. ITO [2017] 88 TAXMA NN.COM 634 WHERE ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 5 REOPENING WAS QUASHED WHICH WAS INITIATED ON THE BA SIS OF SAME REPORT OF INVESTIGATION WING IN THE CASE OF SHRI SURENDRA KUMAR JAIN AND SHRI VIRENDRA KUMAR JAIN. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER VIDE HIS LETTER DATED 30.08.2013 HAS REQUESTED TO A CIT, NEW DELHI TO PROVIDE COPIES OF ALL RELEVANT DOCUMENTS SUCH AS ST ATEMENTS OF SURENDRA KUMAR JAIN, VIRENDRA KUMAR JAIN AND MEDIA TOR PC AGARWAL WHICH STRENGTHENS THE AFORESAID FACT THAT THE AO HA S ARRIVED AT THE SATISFACTION OF ESCAPEMENT WITHOUT ANALYZING ANY DO CUMENTS. IT WAS FURTHER SUBMITTED THAT THE STATEMENT OF KEY PERSONS I.E. P.C. AGARWAL, RAJESH AGARWAL AND RAVINDRA GOEL DOES NOT EXIST. TH EREFORE, IN THE ABSENCE OF SUCH STATEMENTS, HOW COULD THE AO FORMED THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. IT WAS FURTHER SUBM ITTED THAT THE AO HAS VIOLATED THE PRINCIPLES OF NATURAL JUSTICE BY N OT PROVIDING THE ASSESSEE COMPANY COPY OF REPORT OF INVESTIGATION WI NG WHICH WAS THE BASIS OF ENTIRE REOPENING THE ASSESSMENT. WITHOUT PREJUDICE, IT WAS FURTHER SUBMITTED THAT THE AO WAS DUTY BOUND TO OBT AIN NECESSARY SANCTION FROM LD. JCIT/ADD.CIT CONTAINING HIS SATIS FACTION THAT THE CASE IS FIT FOR REOPENING, HOWEVER, ON PERUSAL OF PROFOR MA FOR OBTAINING APPROVAL, IT CAN BE SEEN THAT THE AO OBTAINED SANCT ION FROM LD. ADD.CIT, HOWEVER, THE NAME OF LD. ADD.CIT IS NOT ME NTIONED AND THEREFORE, THE VALIDITY OF SANCTION IS IN DOUBT. IT WAS FURTHER SUBMITTED THAT EVEN WHERE IT IS CONSIDERED THAT THE SANCTION WAS RECEIVED FROM A COMPETENT AUTHORITY, THE SAME WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW. THE LD. ADD.CIT HAS JUST AFFIXE D HIS SIGNATURE AND HAS NOT WRITTEN EVEN A SINGLE WORD WHICH COULD LEA D TO A CONCLUSION THAT ANY MIND APPLICATION WAS MADE AND HE WAS SATIS FIED THAT IT WAS A FIT CASE FOR REOPENING. IT WAS SUBMITTED THAT THE R EASONS WERE RECORDED ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 6 ON 22.03.2013 AND THEREAFTER, THE NOTICE U/S 148 O F THE ACT WAS ALSO ISSUED ON 22.03.2013, THUS WITHIN A SINGLE DAY REAS ONS WERE RECORDED, SANCTION WAS GRANTED AND NOTICE WAS ISSUED WHICH FU RTHER SPEAKS OF THE QUALITY OF SO CALLED SANCTION WHICH WAS GRANTED BY THE LD. ADD.CIT. IN SUPPORT, RELIANCE WAS PLACED ON THE DECISION OF HON BLE SUPREME COURT IN CASE OF CHHUGAMAL RAJPAL VS S.P. CHALIHA (1971) 79 ITR 603, CIT VS. S. GOYANKA LIME & CHEMICAL LTD. 64 TAXMANN.COM 313 (SC) AND DECISION OF HONBLE DELHI HIGH COURT IN CASE OF PCI T VS. N.C. CABLES LTD. 88 TAXMANN.COM 649 BESIDES VARIOUS OTHER HIGH COURT S AND COORDINATE BENCH DECISIONS. 6. ON MERITS, IT WAS SUBMITTED THAT THE AO BY PLAC ING SOLE RELIANCE ON THE REPORT OF THE INVESTIGATION WING, NEW DELHI AND DOCUMENTS SEIZED BY INVESTIGATION WING, CONSIDERED THE SHARE APPLICATION MONEY OF RS. 25,00,000/- RECEIVED BY THE ASSESSEE COMPANY AS BOGUS. IT WAS SUBMITTED THAT THE ASSESSEE COMPANY ISSUED 10,000 S HARES OF RS 10 EACH AT A PREMIUM OF RS 240 PER SHARE TO M/S PELICO N FINANCE & LEASE LTD. IT WAS SUBMITTED THAT THE ASSESSEE COMPANY DU LY DISCHARGED ITS ONUS AS REQUIRED U/S 68 OF THE IT ACT BY SUBMITTING THE FOLLOWING EVIDENCES AS UNDER:- PARTICULARS PAPER BOOK PAGES SHARE APPLICATION FORM 5-7 BOARD RESOLUTION OF M/S PELICON FINANCE & LEASING LTD. 8 BANK STATEMENT EVIDENCING PAYMENT THROUGH BANKING CHANNEL 9,188-190 INCOME TAX RETURN DULY CONTAINING PAN 10,172 ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 7 AUDITED FINANCIALS 11-25,179-186 MEMORANDUM OF ASSOCIATION 26-83 ASSESSMENT ORDER U/S 143(3) OF M/S PELICON FINANCE & LEASE LTD FOR A.Y. 2006-07 I.E. THE YEAR UNDER CONSIDERATION. 84-88 7. IN SUPPORT OF ITS AFORESAID CONTENTION THAT WHER E THE ASSESSEE HAS DISCHARGED THE INITIAL ONUS, NO ADDITION CAN BE MADE IN ITS HANDS, RELIANCE WAS PLACED ON THE DECISIONS OF HONBLE RAJ ASTHAN HIGH COURT IN CASE OF CIT VS. ARL INFRATECH LTD. 394 ITR 383, BAR KHA SYNTHETICS LTD. VS ACIT 283 ITR 377, CIT VS. BHAVAL SYNTHETICS 217 TAXMAN 23 AND CIT VS. MORANI AUTHOMOTIVES (P) LTD. 264 CTR 86 BESIDES VARIOUS OTHER DECISIONS. 8. IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY WAS PROVIDED WITH THE COPIES OF STATEMENTS OF MR. SURENDRA KUMAR JAIN AND MR. VIREN DRA KUMAR JAIN. IN THE STATEMENTS BOTH THE BROTHERS HAVE CATEGORICALLY DENIED TO HAVE PROVIDED ANY ACCOMMODATION ENTRY TO ANY PERSON. LD. AO HAS NOT REBUTTED THE STATEMENTS OF JAIN DUO. FURTHER, IN TH E STATEMENTS THERE WAS NO WHISPER OF M/S PELICON FINANCE & LEASE LTD A S WELL AS THE ASSESSEE COMPANY AND, THEREFORE, NO ADVERSE INFEREN CE CAN BE DRAWN. IT WAS FURTHER SUBMITTED THAT THE AO ALSO PLACED RE LIANCE ON THE STATEMENTS OF MR. RAJESH AGARWAL WHO ALLEGEDLY ADMI TTED THAT HE WAS ENGAGED IN ARRANGING THE ACCOMMODATION ENTRIES FOR RAVINDRA GOEL THROUGH COMPANIES MANAGED BY MR. SURENDRA KUMAR JAI N AND MR. VIRENDRA KUMAR JAIN. HOWEVER, SUCH STATEMENTS WERE NOT PROVIDED TO ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 8 THE ASSESSEE COMPANY AND NO OPPORTUNITY OF CROSS EX AMINATION WAS PROVIDED IN SPITE OF REPEATED REQUESTS. THE ONLY RE ASONABLE INFERENCE WHICH COULD BE DRAWN IS THAT NO SUCH STATEMENTS EXI STED AND, THEREFORE, THERE IS NO BASIS FOR THE DEPARTMENT TO ALLEGE THAT MR. SURENDRA KUMAR JAIN AND MR. VIRENDRA KUMAR JAIN WERE ENGAGED IN TH E BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. EVEN OTHERWISE THE RE IS NO CLAIM OF LD. AO THAT RAJESH AGARWAL OR RAVINDRA GOEL HAD ADM ITTED HAVING ARRANGED ANY ENTRY FOR THE ASSESSEE COMPANY. IT WAS FURTHER SUBMITTED THAT EVEN IF IT IS ASSUMED THAT THE JAIN DUO WERE E NGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES THEN AL SO SUCH FACT MAY BE RELEVANT FOR SUSPICION BUT IT IPSO FACTO DOES NO T LEAD TO CONCLUSION THAT ALL OF THE TRANSACTION ENTERED INTO WOULD BE B OGUS. LOWER AUTHORITIES HAVE ERRED IN INFERRING THAT AN ENTITY WHICH PROVIDES ACCOMMODATION ENTRY TO ONE PERSON, PROVIDES ACCOMMO DATION ENTRY TO ALL. 9. IT WAS FURTHER SUBMITTED THAT THE AO AT PAGE 4 O F ASSESSMENT ORDER DISCUSSED THE CONTENTS OF SEIZED DOCUMENTS IN WHICH THE NAME OF THE ASSESSEE COMPANY WAS APPEARING AND ALLEGED THAT THE ASSESSEE COMPANY ARRANGED AN ACCOMMODATION ENTRY, THROUGH ME DIATOR BEING A PERSON CALLED P.C. AGARWAL, FROM M/S PELICON FINANC E & LEASE LTD. IT IS SUBMITTED THAT P.C. AGARWAL WAS THE PRIME WITNESS A ND MAIN EVIDENCE AND HIS STATEMENTS WOULD HAVE DECIDED THE FATE OF T HE ALLEGATIONS OF LD. AO. HOWEVER, HIS STATEMENTS WERE NOT RECORDED DURIN G SEARCH, POST- SEARCH, BEFORE REOPENING THE ASSESSMENT AND NOT EVE N DURING THE COURSE OF REASSESSMENT PROCEEDINGS AS THEY ARE NOT AVAILABLE IN THE RECORD OF LD. AO. THE NON-RECORDING OF STATEMENTS, AT VARIOUS STAGES, OF ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 9 ABOVE KEY PERSONS, CANNOT BE ACCIDENTAL OR A MERE L APSE. THE VERY FACT THAT THESE PERSONS (P.C. AGARWAL, RAJESH AGARWAL AN D RAVINDRA GOEL) EVER EXISTED IS HIGHLY DOUBTED. 10. IT WAS FURTHER SUBMITTED THAT THE AO ISSUED NOT ICE U/S 133(6) TO M/S PELICON LEASING FINANCE LTD WHICH WAS DULY SERV ED AND DULY RESPONDED. M/S PELICON LEASING FINANCE LTD HAS CONF IRMED THAT IT HAD GIVEN SHARE APPLICATION MONEY TO THE ASSESSEE COMPA NY. RELIANCE IS PLACED ON THE DECISION OF HONBLE ITAT DELHI IN THE CASE OF PRINKU LANDFIN (P.) LTD. VS. INCOME TAX OFFICER, WARD-14(4 ), NEW DELHI [2018] 91 TAXMANN.COM 120 (DELHI - TRIB.). WHERE THE AO N OT BEING SATISFIED WITH THE OUTCOME OF 133(6) ENQUIRIES (WHICH WERE SU BSTANTIATING THE CASE OF THE ASSESSEE COMPANY) SHOULD HAVE CONDUCTED FURTHER ENQUIRY. WITHOUT SUCH ENQUIRY, UNDER THE LAW, HE HAD NO AUTH ORITY TO DISBELIEVE THE OUTCOME OF THE ENQUIRY. IT WAS SUBMITTED THAT THE AO HAD INFORMATION/ EVIDENCE FROM TWO SOURCES I.E. ONE FRO M M/S PELICON FINANCE & LEASE LTD IN RESPONSE TO NOTICE U/S 133(6 ) AND ANOTHER IN THE FORM OF REPORT OF INVESTIGATION WING. BOTH THE INFO RMATION, FROM DIFFERENT SOURCES, WERE CONTRADICTORY. LD. AO HAS D ISREGARDED ONE AND RELIED ON THE OTHER TO SUIT HIS OWN REQUIREMENT. OT HERWISE ALSO INFORMATION FROM INVESTIGATION WING PER SE WITHOUT FURTHER ENQUIRY CANNOT BE USED AGAINST THE ASSESSEE COMPANY. RELIAN CE WAS PLACED ON THE VARIOUS DECISIONS WHEREIN THE COURTS HAVE CATEG ORICALLY HELD THAT WHEREVER ANY INFORMATION IS RECEIVED FROM INVESTIGA TION WING, LD. AO IS DUTY BOUND TO CARRY OUT INTENSIVE INVESTIGATION HIM SELF. ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 10 11. IT WAS FURTHER SUBMITTED THAT SECTION 68 OF THE IT ACT, 1961 HAS BEEN AMENDED W.E.F. 01.04.2013. PRIOR TO AMENDMENT THE ONLY ONUS CONTAINED IN SECTION 68 WAS PROVING THE IDENTITY, G ENUINENESS AND CREDITWORTHINESS. THE PRESENT CASE OF THE ASSESSEE COMPANY FALLS IN THE PRE AMENDMENT PERIOD AND, THEREFORE, PLACING ON REC ORD THE EVIDENCES AS MENTIONED ABOVE AND PROVING THAT THE MONEY WAS R ECEIVED THROUGH BANKING CHANNEL WILL LEAD TO SUFFICIENT COMPLIANCE WITH REGARD TO SECTION 68. THUS, THE ADDITION MADE AND CONFIRMED IS BAD IN LAW. RELIANCE IS PLACED ON THE DECISION OF HONBLE HIGH COURT OF BOM BAY IN THE CASE OF CIT-1 V. M/S GAGANDEEP INFRASTRUCTURE PVT. LTD. [20 17] 80 TAXMANN.COM 272 (BOMBAY) WHEREIN IT WAS HELD THAT T HE AMENDMENT IN SECTION 68 IS PROSPECTIVE AND NOT RETROSPECTIVE. 12. IT WAS FURTHER SUBMITTED THAT THE AO, WHILE REJ ECTING THE CLAIM OF THE ASSESSEE COMPANY, ALSO HELD THAT THE PREMIUM TH AT WAS CHARGED WAS TOO HIGH AND DOES NOT APPEAR LOGICAL KEEPING IN VIEW THE BUSINESS ACTIVITIES AND REPUTATION OF THE COMPANY. IT WAS SU BMITTED THAT LD. AO OVER-STEPPED HIS AUTHORITY BY ANALYZING WHETHER THE PREMIUM WAS LOGICAL OR NOT. IT IS ONLY AND ONLY THE INVESTOR WH O HAS TO ANALYZE AND NEGOTIATE ON THE AMOUNT OF PREMIUM. IT IS FURTHER S UBMITTED THAT LD. AO JUST MADE BALD STATEMENTS AND DID NOT ALSO GIVE ANY WORKING TO SUPPORT HIS CONTENTION THAT THE PREMIUM CHARGED WAS TOO HIG H. IT IS PERTINENT TO NOTE THAT IT IS NOT THE CASE WHERE ASSESSEE COMPANY ISSUED SHARES AT PREMIUM FOR THE VERY FIRST TIME. ASSESSEE COMPANY, IN PREVIOUS ASSESSMENT YEARS AS WELL AS IN SUBSEQUENT ASSESSMEN T YEARS ISSUED SHARES ON PREMIUM AND THE PREMIUM IS SUPPORTED BY T HE VALUATION REPORT. ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 11 13. IT WAS FURTHER SUBMITTED THAT LD. CIT(A) ERRED IN NOT APPRECIATING THE FACTS OF THE PRESENT CASE OF THE ASSESSEE COMPA NY IN CORRECT PERSPECTIVE AND ASSESSEES REBUTTAL OF THE FINDINGS OF LD. CIT(A) ARE AS UNDER: I) LD. CIT(A) HELD THAT CREDITWORTHINESS AND GENUINENE SS WAS NOT PROVED AS THE FACT OF THAT M/S PELICON FINANCE AND LEASING LTD. WAS CARRYING OUT ANY BUSINESS ACTIVITY WAS NOT ESTA BLISHED. IT IS SUBMITTED THAT THE ASSESSEE COMPANY DURING THE ASSE SSMENT PROCEEDINGS SUBMITTED THE FINANCIAL STATEMENTS OF S HAREHOLDER FOR AY 2005-06 FROM WHICH THE BUSINESS ACTIVITIES WERE EVIDENT. THEREAFTER, IN RESPONSE TO NOTICE U/S 133(6) M/S PE LICON FINANCE AND LEASING LTD. SUBMITTED ITS FINANCIAL STATEMENTS FOR AY 2006- 07 FROM WHICH AGAIN IT WAS EVIDENT THAT IT WAS ENGAGED IN REGULAR BUSINESS OF INVESTING AND FINANCING. IT IS FURTHER SUBMITTED THAT LOWER AUTHORITIES HAVE ALSO NOT PROVED THAT IT WAS A PAPER COMPANY. II) LD. CIT(A) AT PAGE 23 HELD THAT THE ASSESSEE COMPAN Y FAILED TO FILE CONFIRMATION OF THE SHAREHOLDER. IT IS SUBMITT ED THAT M/S PELICON FINANCE AND LEASING LTD. ITSELF IN RESPONS E TO NOTICE U/S 133(6) SUBMITTED CONFIRMATION OF ACCOUNTS. THUS, TH E CONFIRMATION WAS ALREADY ON RECORD. III) LD. CIT(A) AT PAGE 23 HELD THAT MR. SURENDRA KUMAR JAIN AND MR. VIRENDRA KUMAR JAIN STATED THAT M/S PELICON FINANCE AND LEASING ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 12 LTD. WAS A DUMMY COMPANY MANAGED BY THEM. IT IS SUB MITTED THAT THE JAIN DUO CATEGORICALLY MANY TIMES IN THEIR STATEMENTS DENIED THAT THEY MAINTAIN OR RUN ANY DUMMY COMPANY . IV) LD. CIT(A) DOUBTED THE GENUINENESS OF TRANSACTION B Y HOLDING THAT M/S PELICON FINANCE AND LEASING LTD. TRANSFERR ED THE AMOUNT IMMEDIATELY AFTER THE RECEIPT. IT IS SUBMITTED THAT FROM PERUSAL OF BANK ACCOUNT OF M/S PELICON FINANCE AND LEASING LTD . IT IS CLEAR THAT THERE WERE NO CASH DEPOSITS. IT IS FURTHER SUB MITTED THAT LD. AO HAS ALSO NOT POINTED OUT ANY INFUSION OF CASH IN THE BANK ACCOUNT OF M/S PELICON FINANCE AND LEASING LTD. REL IANCE IS PLACED ON THE LATEST DECISION HONBLE DELHI HIGH CO URT IN CASE OF PCIT VS. ORIENTAL INTERNATIONAL CO. PVT. LTD. ITA 9 /2018 PRONOUNCED ON 08.01.2018 WHEREIN IT WAS HELD AS UND ER: FURTHERMORE, ITS BANK DETAILS TOO WERE FURNISHED T O THE AO. IF THE AO WERE TO CONDUCT HIS TASK DILIGENTLY, HE OUGH T TO HAVE AT LEAST SOUGHT THE MATERIAL BY WAY OF BANK STATEMENTS ETC. TO DISCERN WHETHER IN FACT THE AMOUNTS WERE INFUSED IN TO THE SHARE HOLDERS ACCOUNT IN CASH AT ANY POINT OF TIME OR TH AT AMOUNT OF RS. 1.3 CRORES- IN THE CASE OF M/S CREATIVE FINANCI AL SERVICES PVT. LTD. AND RS. 3.7 CRORES IN THE CASE OF OTHER SHARE APPLICANTS WERE SUCH AS TO BE BEYOND THEIR MEANS. IN THE ABSENCE OF ANY SUCH ENQUIRY, THE COURT IS OF THE OPINION THAT THE FINDI NGS HOLDING THAT THE ASSESSEE HAD NOT DISCHARGED THE ONUS PLACED UPO N IT BY LAW CANNOT BE CONSIDERED UNREASONABLE. NO QUESTION OF L AW ARISES. 10. THE APPEAL IS ACCORDINGLY DISMISSED. ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 13 V) LD. CIT(A) HELD THAT THE ALLOTMENT OF SHARES AT A P REMIUM OF RS. 240 PER SHARE, ITSELF IS INDICATIVE OF THE FACT THAT THE TRANSACTION WAS NOT GENUINE AND THE ASSESSEE COMPAN Y HAS INTRODUCED ITS OWN INCOME BY ROUTING THE SAME THROU GH DUMMY COMPANY BY WAY OF SHARE APPLICATION/SHARE PREMIUM M ONEY. IT IS SUBMITTED THAT THE ASSESSEE COMPANY, IN ORDER TO JU STIFY ITS PREMIUM, FURNISHED A CERTIFICATE OF CHARTERED ACCOU NTANT, YOGESH GAUTAM (M. NO.072676) DATED 27.06.2016 BEFORE CIT(A ). AS PER THE CERTIFICATE, FOR THE YEAR UNDER CONSIDERATION, FAIR VALUE OF THE SHARE OF THE ASSESSEE COMPANY WAS RS. 281.48. IT I S FURTHER NOT THE CASE OF LD. CIT(A) THAT ANY DEFECT WAS FOUND IN THE SAID CERTIFICATE. 14. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) H AS NOT AT ALL APPROPRIATELY EVALUATED AND CONSIDERED THE SPECIFIC AND PECULIAR FACTS OF THE CASE. BEFORE LD. CIT(A), FOLLOWING BINDING JUDI CIAL PRECEDENTS OF HONBLE RAJASTHAN HIGH COURT AND HONBLE ITAT JAIPU R BENCH WERE CITED: CIT VS. FIRST POINT FINANCE LTD. 286 ITR 477 (RAJ), CIT VS. BARKHA SYNTHETICS 182 CTR 175 (RAJ), LABHCHAND BOHRA VS. I TO (2008) 8 DTR 44 (RAJ), KANHIALAL JANGID VS. ACIT (2008) 8 DTR 38 (RAJ), PREMLATA KEDIA VS. DCIT 22 TW 481 (JPR), NIRMAL KUMAR DUGAR 31 TW-112 (JP),NARAYAN SINGH VS.ITO 31 TW 191 (JP) AND MOHAN SUKHANI VS. ITO 31 TW 61 (JP). THE LD CIT(A) HAS NEITHER FOLLOWED T HE ABOVE JUDGEMENTS NOR HAS DISTINGUISHED THE SAME AND THE D ECISIONS RELIED UPON BY THE LD CIT(A) ARE DISTINGUISHABLE. IT WAS FINALLY SUBMITTED THE ASSESSEE COMPANY HAS DISCHARGED ITS INITIAL ONUS LA ID DOWN U/S 68, THE SUMMARY OF WHICH IS AS UNDER: ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 14 PARTICULARS REMARKS IDENTITY SHAREHOLDER IS A COMPANY AND IS HAVING A V ALID PAN. LD. CIT(A) ALSO AT PAGE 23 ADMITS THAT IDENTIT Y STOOD ESTABLISHED. CREDITWORTHINESS BANK ACCOUNT STATEMENTS OF SHAREHO LDER AND AO ORDER U/S 143(3) WHEREIN NO ADDITIONS WERE MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT ARE ON RECORD GENUINENESS PREMIUM AMOUNT IS JUSTIFIED BY CERTIFIC ATE OF VALUATION WHICH WAS NOT CONTROVERTED BY LD. CIT(A). IN VIEW OF ABOVE THE ADDITION MADE BY LD. AO AND CO NFIRMED BY LD. CIT(A) IS UNJUSTIFIED AND DESERVES TO BE DELETED. 15. PER CONTRA, THE LD. DR SUBMITTED THAT THE INFOR MATION RECEIVED BY THE ASSESSING OFFICER FROM THE DIT (INVESTIGATION), DELHI CONTAINS FACTUAL INFORMATION AND ON THE BASIS OF THIS INFORM ATION, THE AO PRIMA FACIE FORMED A BELIEF THAT THE INCOME HAS ESCAPED A SSESSMENT. IT WAS FURTHER SUBMITTED THAT IT IS A CASE WHERE THERE WAS NO SCRUTINY ASSESSMENT IN RESPECT OF ORIGINAL RETURN FILED AND THEREFORE, THERE CANNOT BE A QUESTION OF CHANGE OF OPINION. IT WAS S UBMITTED THAT THE FROM THE REASONS RECORDED BY THE ASSESSING OFFICER, IT IS AMPLY CLEAR THAT THE AO FORMED HIS BELIEF ON THE BASIS OF SPECI FIC INFORMATION ARISEN OUT OF SEARCH PROCEEDINGS IN THE CASE OF PERSONS WH O WERE BOGUS ENTRY PROVIDERS AND FOR THE PURPOSE OF REASSESSMENT PROCE EDINGS, WHAT HAS TO BE SEEN IS WHETHER THERE IS ANY PRIMA FACIE SOME MATERIAL ON THE ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 15 BASIS OF WHICH THE AO COULD REOPEN THE CASE. THE SU FFICIENCY OR THE CORRECTNESS OF THE MATERIAL IS NOT TO BE CONSIDERED AT THIS STAGE OF RECORDING OF THE REASONS. IT WAS FURTHER SUBMITTED THAT ONCE THE AO HAS RECEIVED SPECIFIC INFORMATION FROM DIT (INVESTIGATI ON), DELHI REGARDING BOGUS ENTRIES OF SHARE CAPITAL/ PREMIUM RECEIVED ON THE BASIS OF SUCH INFORMATION, THE AO HAS RECORDED REASONS FOR REOPEN ING, IT CANNOT BE HELD THAT THE REASONS WERE NOT THOSE OF THE ASSESSI NG OFFICER AND MERELY AMOUNTED TO MECHANICAL REPRODUCTION OF THE E XERCISE UNDERTAKEN BY THE DIT (INVESTIGATION), DELHI. IT WA S ACCORDINGLY SUBMITTED THAT THERE IS NOTHING WHICH PREVENT THE A SSESSING OFFICER TO RELY ON THE EXERCISE UNDERTAKEN BY OTHER WINGS OF T HE DEPARTMENTS, IF THE MATERIAL SO COLLECTED THROUGH INQUIRY OR INVEST IGATION PROVIDES PRIMA FACIE INFORMATION, WHICH ENABLES THE ASSESSING OFFI CER TO FORM A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. IT WAS FURTHER SUBMITTED THAT IT WOULD UNDOUBTEDLY REQUIRE APPLICATION OF MIND ON TH E PART OF THE ASSESSING OFFICER WHEN CERTAIN MATERIALS COLLECTED BY OTHER WINGS OF THE DEPARTMENT IS PLACED BEFORE HIM, HOWEVER, THERE CAN NOT BE ANY STRAIGHT JACKET FORMULA OF THE MANNER IN WHICH MIND CAN BE A PPLIED OR SHOWN TO HAVE BEEN APPLIED AND THE SAME MAY BE GATHERED FROM THE REASONS RECORDED AND OTHER CONTEMPORANEOUS MATERIAL ON RECO RD. IT WAS ACCORDINGLY SUBMITTED THAT THERE IS NO INFIRMITY IN THE ACTION OF THE ASSESSING OFFICER IN INITIATING THE PROCEEDINGS U/S 147 OF THE ACT ON THE BASIS OF INFORMATION RECEIVED FROM DIT (INVESTIGATI ON), DELHI. IT WAS FURTHER SUBMITTED THAT THE NOTICE U/S 147 HAS BEEN ISSUED AFTER SEEKING APPROVAL FROM THE APPROPRIATE AUTHORITY AND IN SUPP ORT, THE ASSESSMENT RECORDS WERE PRODUCED WHICH CLEARLY SHOW APPLICATIO N OF MIND BEFORE GRANTING APPROVAL ON THE PART OF THE APPROPRIATE AU THORITY. ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 16 16. ON MERITS, THE LD. DR HAS DRAWN OUR REFERENCE T O THE FINDINGS OF THE ASSESSING OFFICER WHICH ARE CONTAINED AS UNDER: - I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE ASSE SSEE AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CONTENTIONS RAISED BY THE ASSESSEE ARE DEALT WITH AS UNDER:- (I) SINCE THE ASSESSEE COMPANY HAD NOT ISSUED A NY SHARES DURING THE YEAR UNDER CONSIDERATION EXCEPT SHARE AL LOTTED TO THE COMPANY M/S PELICON FINANCE AND LEASE LTD., NEW DEL HI, MANAGED BY SH. S.K. JAIN N.K. JAIN THAT TOO AT MUCH HIGH PR EMIUM OF RS 240/- PER SHARE. THE GENUINENESS OF THE TRANSACTION IS NOT ESTABLISHED. FURTHER THE SEIZED DOCUMENTS I.E. (PAG E NO. 43 OF ANNEXURE A-52 , PAGE 25 OF ANNEXURE A-53, PAGE 6 OF ANNEXURE A-54) WHICH IS DAILY CASH BOOK SEIZED FROM THE RESI DENCE OF SH. S.K. JAIN SHOWS RECEIPT OF CASH OF RS. 5,00,000/- T HROUGH MEDIATOR SH. P.C. AGARWAL ON 25.02.2006 AND ON THE SAME DATE AN ENTRY OF RS 5,00,000/- VIDE CHQUE NO. 048736 HAS BEEN PROVIDED TO THE ASSESSEE COMPANY OF KOTAK BANK , TH ROUGH A DUMMY COMPANY NAMED AS PELICON FINANCE & LEASE LTD , RECEIPT OF CASH OF RS. 10,00,000/- THROUGH MEDIATOR SH. P.C . AGARWAL ON 17.03.2006 AND ON THE SAME DATE AN ENTRY OF RS. 10, 00,000/- VIDE CHEQUE NO. 005134 HAS BEEN PROVIDED TO THE ASS ESSEE COMPANY OF UTI BANK THROUGH A DUMMY COMPANY NAMED A S PELICON FINANCE & LEASE LTD., AND RECEIPT OF CASH O F RS 10,00,000/- ON 22.03.2006 AND ON THE SAME DATE A N ENTRY OF RS 10,00,000/- VIDE CHEQUE NO. 051886 HAS BEEN PROV IDED TO THE ASSESSEE COMPANY OF KOTAK BANK THROUGH A DUMMY COMP ANY ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 17 NAMED AS PELICON FINANCE & LEASE LTD, MANAGED BY SH . S.K. JAIN /V.K. JAIN. THESE ENTRIES CLEARLY ESTABLISHED THAT THE AMOUNT OF RS 25,00,000/- ROUTED THROUGH SH. P.C. AGARWAL THEN COMPANY M/S PELICON LTD, NEW DELHI THE ASSESSEE FOR OBTAINI NG ACCOMMODATION ENTRY THEREFORE THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. (II) THE CONTENTION OF THE ASSESSEE THAT ASSESSEE COMPAN Y IS A UN-NATURAL PERSONAL AND A LEGAL ENTITY AND IS NOT CAPABLE OF EARNING UNACCOUNTED MONEY IS NOT TENABLE BECAUSE TH E DAY TO DAY AFFAIRS OF THE COMPANY ARE BEING LOOKED AFTER BY TH E DIRECTORS AS WELL AS EMPLOYEES OF THE COMPANY AND THEY ARE RESPO NSIBLE FOR THEIR ACTION DONE ON BEHALF OF THE COMPANY WHICH IS A LEGAL ENTITY AS STATED BY THE ASSESSEE. (III) THE 3 RD AND 4 TH GROUND TAKEN BY THE ASSESSEE IS THAT THE ASSESSEE COMPANY HAS NOT PAID ANY CASH TO OBTAI N THE ACCOMMODATION ENTRY TO SHRI P.C. AGARWAL AND IT MAY BE THAT SOME MR. P.C. AGARWAL WHO HAD GIVEN MONEY TO M/S PE LICON LTD, NEW DELHI TO INVEST THAT AMOUNT IN ASSESSEE CO MPANY FROM HIS POCKET AS REAL-ESTATE SECTOR IS SUN-SHINING SEC TOR IN THESE DAYS. IN THIS REGARD IT IS POINTED OUT THAT SEIZED PAPERS (PAGENO.43 OF ANNEXURE A-52 , PAGE 25 OF ANNEXURE A -53, PAGE 6 OF ANNEXURE A-54) WHICH IS DAILY CASH BOOK SEIZED FROM THE RESIDENCE OF SH. S.K. JAIN SHOWS RECEIPT OF CASH OF RS. 5,00,000/- THROUGH MEDIATOR SH. P.C. AGARWAL ON 25. 02.2006 AND ON THE SAME DATE AN ENTRY OF RS. 5,00,000/- VID E CHEUQE NO. 048736 HAS BEEN PROVIDED TO THE ASSESSEE COMPAN Y OF ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 18 KOTAK BANK, THROUGH A DUMMY COMPANY NAMED AS PELICO N FINANCE & LEASE LTD., RECEIPT OF CASH OF RS. 10,00, 000/- THROUGH MEDIATOR SH. P.C AGARWAL ON 17.03.2006 AND ON THE SAME DATE AN ENTRY OF RS. 10,00,000/- VIDE CHEQUE N O. 005134/- HAS BEEN PROVIDED TO THE ASSESSEE COMPANY OF UTI BANK THROUGH A DUMMY COMPANY NAMED AS PELICON FINAN CE & LEASE LTD., AND RECEIPT OF CASH OF RS 10,00,000/- O N 22.03.2006 AND ON THE SAME DATE AN ENTRY OF RS 10,00,000/- VID E CHEQUE NO. 051886 HAS BEEN PROVIDED TO THE ASSESSEE COMPANY OF KOTAK BANK THROUGH A DUMMY COMPANY NAMED AS PELICON FINAN CE & LEASE LTD, MANAGED BY SH. S.K. JAIN /V.K. JAIN. THE SE ENTRIES CLEARLY ESTABLISHED THAT THE AMOUNT OF RS 25,00,000 /- ROUTED THROUGH SH. P.C. AGARWAL THEN COMPANY - M/S PELICON LTD, NEW DELHI THE ASSESSEE FOR OBTAINING ACCOMMODATION ENTR Y THEREFORE THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. (IV) THE CONTENTION OF THE ASSESSEE THAT ISSUE OF NOTICE U/S 148 IS AGAINST THE LAW IS NOT TENABLE AS THE SEIZED PAPERS (PAGE NO.43 OF ANNEXURE A-52 , PAGE 25 OF ANNEXURE A-53, PAGE 6 OF ANNEXURE A-54) WHICH IS DAILY CASH BOOK SEIZED FROM THE RESIDENCE OF SH. S.K. JAIN SHOWS RECEIPT OF CASH OF RS. 5,00,000/- THROUGH MEDIATOR SH. P.C. AGARWAL ON 25. 02.2006 AND ON THE SAME DATE AN ENTRY OF RS 5,00,000/- VIDE CHQUE NO. 048736 HAS BEEN PROVIDED TO THE ASSESSEE COMPANY OF KOTAK BANK , THROUGH A DUMMY COMPANY NAMED AS PELICON FIN ANCE & LEASE LTD, RECEIPT OF CASH OF RS. 10,00,000/- THROU GH MEDIATOR SH. P.C. AGARWAL ON 17.03.2006 AND ON THE SAME DATE AN ENTRY ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 19 OF RS. 10,00,000/- VIDE CHEQUE NO. 005134 HAS BEEN PROVIDED TO THE ASSESSEE COMPANY OF UTI BANK THROUGH A DUMMY CO MPANY NAMED AS PELICON FINANCE & LEASE LTD. , AND RECEIPT OF CASH OF RS 10,00,000/- ON 22.03.2006 AND ON THE SAME DATE A N ENTRY OF RS 10,00,000/- VIDE CHEQUE NO. 051886 HAS BEEN PROV IDED TO THE ASSESSEE COMPANY OF KOTAK BANK THROUGH A DUMMY COMPANY NAMED AS PELICON FINANCE & LEASE LTD, MANAGED BY SH . S.K. JAIN N.K. JAIN. THESE ENTRIES CLEARLY ESTABLISHED THAT T HE AMOUNT OF RS 25,00,000/-ROUTED THROUGH SH. P.C. AGARWAL THEN COMPANY M/S PELICON LTD, NEW DELHI THE ASSESSEE FOR OBTAINI NG ACCOMMODATION ENTRY THEREFORE THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. (V) THE 6 TH GROUND TAKEN BY THE ASSESSEE IS REGARDING ISSUE OF SHARES AT HIGH PREMIUM AT RS. 240/- PER SHARE, T HE CONTENTION OF THE ASSESSEE IS THAT IT WAS ENTERING INTO NEW VE NTURE OF REAL ESTATE AND ALSO GOT ALLOTMENT FROM JDA WHICH GAVE E XTRA BENEFIT TO THE INVESTORS AND THEREFORE ALLOTMENT OF SHARES AT THE FACE VALUE OF RS. 10/-AND ON HIGH PREMIUM OF RS. 240/- I S JUSTIFIED. IN THIS REGARD IT IS SUBMITTED THAT DURING THE YEAR NO SHARES WERE ALLOTTED BY THE ASSESSEE COMPANY EXCEPT 10,000 SHAR ES ALLOTTED TO THE AFORESAID DUMMY COMPANY NAMED PELICON FINANCE & LEASE LTD, NEW DELHI. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE. LOOKING TO THE BUSINESS ACTIVITY OF THE COMPANY, AND REPUTATION OF THE COMPANY THE ALLOTMENT OF SHAR ES AT A PREMIUM OF RS. 240/- PER SHARE DOES NOT APPEAR LOGI CAL, PARTICULARLY WHEN NO SUCH SHARES AT A HIGHER PREMIU M WAS ALLOTTED ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 20 TO ANYONE. THIS ITSELF IS AN INDICATIVE OF THE FACT THAT THE TRANSACTION OF THE ASSESSEE COMPANY WITH THE DUMMY COMPANY NAMED PELICON FINANCE & LEASE LTD NEW DELHI IS NOT GENUINE AND THE ASSESSEE HAS INTRODUCED ITS OWN INCOME FROM UND ISCLOSED SOURCES BY ROUTING THE SAME THROUGH THE DUMMY COMPA NY BY WAY OF SHARE APPLICATION/SHARE PREMIUM MONEY. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FOR ASSUMPTION OF JURISDICTION U/S 147, THE ASSESSING OFFICER HAS TO SATISFY THE FOLLOWING CARD INAL TESTS SO LAID DOWN BY THE COURTS AND ONLY ON SATISFACTION OF SUCH TEST S, HE CAN ASSUME JURISDICTION UNDER SECTION 147: (I) THE ASSESSING OFFICER MUST FORM A TENTATIVE OR PRIMA FACIE OPINION ON THE BASIS OF MATERIAL THAT THERE IS UNDER-ASSESS MENT OR ESCAPEMENT OF INCOME; (II) HE MUST RECORD THE PRIMA FACIE OPINION INTO WR ITING; (III) THE OPINION FORMED IS SUBJECTIVE BUT THE REAS ONS RECORDED OR THE INFORMATION AVAILABLE ON RECORD MUST SHOW THAT THE OPINION IS NOT A MERE SUSPICION. (IV) REASONS RECORDED AND/OR THE DOCUMENTS AVAILABLE ON RECORD MUST SHOW A NEXUS OR THAT IN FACT THEY ARE GERMANE AND R ELEVANT TO THE SUBJECTIVE OPINION FORMED BY THE ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME. (V) THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RE CORDED BY THE ASSESSING OFFICER. NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENC E CAN BE ALLOWED TO BE DRAWN ON THE BASIS OF REASONS NOT RECORDED. IT I S FOR THE ASSESSING ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 21 OFFICER TO DISCLOSE AND OPEN HIS MIND THROUGH THE R EASONS RECORDED BY HIM AND HE HAS TO SPEAK THROUGH THE REASONS. (VI) IN CASES WHERE THE FIRST PROVISO APPLIES, THERE IS AN ADDITIONAL REQUIREMENT THAT THERE SHOULD BE FAILURE OR OMISSIO N ON THE PART OF THE ASSESSEE IN DISCLOSING FULL AND TRUE MATERIAL FACTS . EXPLANATION TO THE SECTION STIPULATES THAT MERE PRODUCTION OF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS FROM WHICH THE ASSESSING OFFICER COULD HA VE, WITH DUE DILIGENCE, INFERRED MATERIAL FACTS, DOES NOT AMOUNT TO 'FULL AND TRUE DISCLOSURE OF MATERIAL FACTS'. 18. IN THE PRESENT CASE, THE REASONS RECORDED BY TH E ASSESSING OFFICER BEFORE ISSUANCE OF NOTICE U/S 148 READS AS UNDER: REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASS ESSMENT:- THE COMMISSIONER OF INCOME-TAX, JAIPUR II VIDE OF FICE LETTER NO. 3022 DATED 21.03.2013 HAS FORWARDED A LETTER NO. 293 DAT ED 15.03.2015 ALONG WITH ITS ENCLOSURES OF THE DIRECTOR OF INCOME -TAX (INV.)-III, NEW DELHI. AS INFORMED, A SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 14.09.2010 IN THE CASE OF SH. SURENDRA KUMAR JAIN A ND HIS BROTHER SH. VIRENDRA KUMAR JAIN IN DELHI. DURING THE COURSE OF SEARCH AND POST SEARCH INVESTIGATION IT HAS BEEN ESTABLISHED THAT T HEY ARE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES OF SHARE CAPITA AND SHARE PREMIUM TO VARIOUS BENEFICIARIES THROUGH CHEQ UES THROUGH A NUMBER OF PAPER AND DUMMY COMPANIES IN LIEU CASH. THE ASSESSEE COMPANY M/S BALAJI HEALTHCARE PVT. LT D. JAIPUR HAS ALSO OBTAINED ACCOMMODATION ENTRIES IN THE FORM OF SHARE ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 22 CAPITAL/PREMIUM/LOAN DURING THE FINANCIAL YEAR 2005 -06 FOR A AMOUNT OF RS. 25,00,000/- WITH THE HELP OF THE AFORESAID ACCO MMODATION ENTRY PROVIDERS, THE DETAILS OF WHICH ARE REPRODUCED AS U NDER:- DATE FROM TO BANK CHEQUE /RTGS/ PO NO CHEQUE DATE AMOUNT NAME OF MIDDLE MAN/MEDIATOR ANNEX URE NO. PAG E NO. 25.02.20 06 PELICON FINANCE & LEASE LTD. BALAJI HEALTHC ARE PVT. LTD. KOTAK P/O NO. 048736 25.02.2006 RS. 5,00,000/- P. C. AGARWAL A-52 43 17.03.20 06 PELICON FINANCE & LEASE LTD. BALAJI HEALTHC ARE PVT. LTD. UTI P/O NO. 005134 17.03.2006 RS. 10,00,000/- P. C. AGARWAL A-53 25 22.03.20 06 PELICON FINANCE & LEASE LTD. BALAJI HEALTHC ARE PVT. LTD . KOTAK P/O NO. 051886 22.03.2006 RS. 10,00,000/- P. C. AGARWAL A-54 6 RS. 25,00,000/- I HAVE PERUSED AND GONE THROUGH THE CONTENTS OF THE REPORT OF THE INVESTIGATION WING, NEW DELHI AND AM SATISFIED THAT THE AMOUNT IS UNDISCLOSED INCOME WHICH HAS BEEN ROUTED BACK TO TH E BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY IN THE FORM OF SHA RE CAPITAL. THUS, IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT IN COME TO THE TUNE OF RS. 25,00,000/- FOR THE AY 2006-07 HAS ESCAPED ASSE SSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961 ON ACC OUNT OF FAILURE ON THE PART OF ASSESSEE TO DISCLOSURE FULLY AND TRULY ALL MATERIAL FACTS IN RESPECT OF THE SHARE CAPITAL/PREMIUM FOR WHICH A NO TICE U/S 148 OF THE ACT IS REQUIRED TO BE ISSUED. IN VIEW OF THE ABOVE REASON, IT IS REQUESTED THAT NECESSARY APPROVAL AS LAID DOWN UNDER SUB-SECTION (2) OF SECT ION 151 OF THE I.T. ACT, 1961 MAY KINDLY BE ACCORDED. ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 23 19. THE ASSESSEE HAS ORIGINALLY FILED ITS RETURN OF INCOME ON 30.11.2006, THEREAFTER NOTICE U/S 148 WAS ISSUED ON 23.03.2013 AFTER RECORDING THE REASONS AND SEEKING THE NECESSARY APP ROVAL FROM THE ADD.CIT. GIVEN THAT THE ORIGINAL RETURN WAS NOT AS SESSED AND NO ORDER U/S 143(3) WAS ISSUED, THE PROVISO TO SECTION 147 D OESNT APPLY EVEN THOUGH THE NOTICE U/S 148 HAS BEEN ISSUED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ADDITIONAL CONDITION SO SPECIFIED IN PROVISO TO SECTION 147 IN TERMS OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR ITS ASSESSMENT FOR THE ASSUMPTION OF JURISDICTION U /S 147 DOESNT APPLY IN THE INSTANT CASE. THEREFORE, THE ASSESSING OFFI CER ASSUMPTION OF JURISDICTION FOR THE REASONING THAT INCOME HAS ESCA PED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO D ISCLOSE FULLY AND TRULY ALL MATERIAL FACTS IN RESPECT OF SHARE CAPITAL/PREM IUM IS NOT CORRECT AND CANNOT BE ACCEPTED WHERE THERE IS NO SUCH REQUIREME NT AT FIRST PLACE. 20. FURTHER, THE MATERIAL AND INFORMATION ON THE B ASIS OF WHICH REASONS HAVE BEEN RECORDED THAT INCOME IN THE HANDS OF THE ASSESSEE HAS ESCAPED ASSESSMENT RELATES TO SEARCH AND SEIZURE OP ERATION IN CASE OF SURENDRA KUMAR JAIN AND VIRENDRA KUMAR JAIN CONDUCT ED ON 14.09.2010 AND THE REPORT OF THE DIRECTOR OF INCOME TAX (INV)- II, NEW DELHI. THE REASONS STATES THAT DURING THE COURSE OF SEARCH AND POST SEARCH INVESTIGATION, IT HAS BEEN ESTABLISHED THAT THESE T WO PERSONS ARE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES OF SHARE CAPITA AND SHARE PREMIUM TO VARIOUS BENEFICIARIES T HROUGH CHEQUES THROUGH A NUMBER OF PAPER AND DUMMY COMPANIES IN LI EU CASH. THE REASONS FURTHER STATES THAT THE ASSESSEE COMPANY HA S ALSO OBTAINED ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 24 ACCOMMODATION ENTRIES IN THE FORM OF SHARE CAPITAL/ PREMIUM/LOAN DURING THE FINANCIAL YEAR 2005-06 FOR AN AMOUNT OF RS. 25,00,000/- WITH THE HELP OF THE AFORESAID ACCOMMODATION ENTRY PROVI DERS. THEREAFTER, THE ASSESSING OFFICER GIVES DETAILS OF THE TRANSACT IONS AND STATES THAT HE HAD PERUSED AND GONE THROUGH THE CONTENTS OF THE RE PORT OF THE INVESTIGATION WING, NEW DELHI AND AM SATISFIED THAT THE AMOUNT IS UNDISCLOSED INCOME WHICH HAS BEEN ROUTED BACK TO TH E BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY IN THE FORM OF SHA RE CAPITAL. WE THEREFORE FIND THAT BASED ON PERUSAL OF THE REPORT OF THE DIT, INVESTIGATION WING, NEW DELHI, THE ASSESSING OFFICE R HAS FORMED NOT MERELY A PRIMA FACIE BELIEF BUT HAS REACHED A CONCL USION THAT THE ASSESSEE HAS ROUTED BACK HIS UNDISCLOSED INCOME IN THE FORM OF SHARE CAPITAL. FOR REACHING SUCH A DECISIVE FINDING THAT IT IS ASSESSEES UNDISCLOSED INCOME WHICH HAS REACHED THE INVESTOR C OMPANY M/S PELICON FINANCE & LEASE LTD AND THEREAFTER, THE LAT TER HAS INVESTED THE AMOUNT SO RECEIVED IN THE ASSESSEES COMPANY BY WAY OF SHARE CAPITAL, THERE IS NOTHING WHICH HAS BEEN STATED IN THE REASO NS SO RECORDED. AS WE HAVE NOTED ABOVE, THE SATISFACTION OF THE ASSESS ING OFFICER SHOULD BE DISCERNABLE FROM THE REASONS SO RECORDED ONLY AND N OTHING CAN BE ADDED OR SUPPLEMENTED TO THE REASONS. IN THE INSTA NT CASE, THE PARTICULARS OF THE TRANSACTIONS HAVE BEEN GIVEN IN TERMS OF NAME OF THE INVESTOR COMPANY, DATE OF INVESTMENT, MODE AND AMOU NT OF INVESTMENT. A READING OF SUCH PARTICULARS DOESNT GIVE ANY PRIMA FACIE IMPRESSION THAT THESE ARE TRANSACTIONS WHERE THE AS SESSEE OWN MONEY HAS BEEN ROUTED BACK IN FORM OF SHARE CAPITAL. THE REFORE, WITHOUT ESTABLISHING THE NEXUS, THE ASSESSING OFFICER HAS N OT JUST FORMED A PRIMA FACIE VIEW BUT HAS CONCLUDED THAT THE AMOUNT INVESTED IS ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 25 UNDISCLOSED INCOME WHICH HAS ESCAPED ASSESSMENT CAN NOT BE ACCEPTED. FURTHER, IT IS NOTED THAT AFTER RECORDING OF THE RE ASONS, THE ASSESSING OFFICER HAS SUBSEQUENTLY WRITTEN A LETTER ON 30.08. 2013 TO ACIT NEW DELHI REQUESTING FOR COPY OF STATEMENTS OF SURENDRA KUMAR JAIN, VIRENDRA KUMAR JAIN AT WHOSE PREMISES THE SEARCH WA S CONDUCTED AND P C AGARWAL, SO CALLED MEDIATOR IN THESE TRANSACTIO NS. GIVEN THAT SEARCH PROCEEDINGS IN RESPECT OF THESE TWO PERSONS HAVE FO RMED THE BASIS FOR THE PRESENT REASSESSMENT PROCEEDINGS IN THE HANDS O F THE ASSESSSEE, IT WAS ESSENTIAL TO ATLEAST EXAMINE THE STATEMENTS OF THESE THREE PERSONS AND SEIZED MATERIAL IF ANY FOUND DURING THE COURSE OF SEARCH WHICH IN ANY WAYS INDICATE THAT THESE TWO PERSONS HAVE CARRI ED OUT CERTAIN TRANSACTIONS WITH THE ASSESSEE AND PRIMA FACIE THES E TRANSACTIONS ARE SUSPECTED TO BE ACCOMMODATION ENTRIES AND NOT ACTUA L TRANSACTIONS. HOWEVER, THERE IS NOTHING IN THE REASONS SO RECORDE D THAT THE ASSESSING OFFICER HAS GONE THROUGH THE STATEMENTS SO RECORDED DURING THE COURSE OF SEARCH AND THE SEIZED MATERIAL TO SHOW PRIMA FAC IE LINKAGE OF ASSESSEES UNDISCLOSED INCOME BEING ROUTED BACK IN FORM OF SHARE CAPITAL. THIS SHOWS THAT THE ASSESSING OFFICER HAS MERELY GONE BY THE REPORT OF THE DIT, INVESTIGATION WING AND THE SAID REPORT EVEN DIDNT HAVE THE STATEMENTS OF THESE PERSONS WHICH EITHER F IND MENTION IN THE REPORT OR AS ENCLOSURES WHEN THE SAME WAS FORWARDED TO THE ASSESSING OFFICER. THEREFORE, IT TRANSPIRES THAT THERE IS NO FURTHER EXAMINATION WHICH HAS BEEN CARRIED OUT BY THE ASSESSING OFFICER . THE FACT THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME U/S 139(1) WAS VERY MUCH IN THE KNOWLEDGE OF THE ASSESSING OFFICER AND THE LATTER C OULD HAVE VERIFIED THE TRANSACTIONS WITH THE REPORTED TRANSACTIONS IN THE FINANCIAL STATEMENTS AND COULD HAVE ASKED FOR MORE INFORMATION TO ESTABL ISH THE NECESSARY ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 26 NEXUS, HOWEVER NOTHING OF THAT SORT HAS BEEN DONE B Y THE ASSESSING OFFICER AND HE HAS MERELY GONE BY THE REPORT OF DIT , INVESTIGATION WING. IT IS TRUE THAT THE ASSESSING OFFICER CAN RE LY ON THE REPORT OF DIT, INVESTIGATION WING BUT AT THE SAME TIME, WHERE HE I S ASSUMING JURISDICTION U/S 147, HE IS REQUIRED TO CARRY OUT F URTHER EXAMINATION AND ANALYSIS IN ORDER TO ESTABLISH THE NEXUS BETWEEN TH E MATERIAL AND FORMATION OF BELIEF THAT INCOME HAS ESCAPED ASSESSM ENT AND IN ABSENCE THEREOF, THE ASSUMPTION OF JURISDICTION U/S 147 HAS NO LEGAL BASIS AND RESULTANT REASSESSMENT PROCEEDINGS DESERVE TO BE SE T-ASIDE. OUR VIEW IS FORTIFIED BY THE DECISION OF THE HONBLE DELHI H IGH COURT IN CASE OF MEENAKSHI OVERSEAS PVT LTD (SUPRA) WHEREIN IT WAS H ELD AS UNDER: 19. A PERUSAL OF THE REASONS AS RECORDED BY THE AO REV EALS 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 IN FORMATION IS IN THE FORM OF DETAILS OF THE AMOUNT OF CREDIT RECEIVED, THE PAYER, THE PA YEE, THEIR RESPECTIVE BANKS, AND THE CHEQUE NUMBER. THIS INFORMATION BY ITSELF CANNOT BE SAID TO BE TANGIBLE MATERIAL. 20. COMING TO THE SECOND PART, THIS TELLS US WHAT THE AO DID WITH THE INFORMATION SO RECEIVED. HE SAYS: 'THE INFORMATION SO RECEIVED HAS BEEN GONE THROUGH.' ONE WOULD HAVE EXPECTED HIM TO POINT OUT WHAT HE FOUND WHEN H E WENT THROUGH THE INFORMATION. IN OTHER WORDS, WHAT IN SUCH INFORMATION LED HIM TO FORM THE BELIEF THAT INCOME ESCAPED ASSESSMENT. BUT THIS IS ABSENT. HE STRAIGHT AWAY RECORDS THE CONCLUSION THAT 'THE ABOVESAID INSTRUMENTS ARE IN THE NATURE OF ACC OMMODATION ENTRY WHICH THE ASSESSEE HAD TAKEN AFTER PAYING UNACCOUNTED CASH TO THE ACCOMMODATION ENTRY GIVEN (SIC GIVER)'. THE AO ADDS THAT THE SAID ACCOMMODATI ON WAS 'A KNOWN ENTRY OPERATOR' THE SOURCE BEING 'THE REPORT OF THE INVESTIGATION W ING'. 21. THE THIRD AND LAST PART CONTAINS THE CONCLUSION DR AWN BY THE AO THAT IN VIEW OF THESE FACTS, 'THE ALLEGED TRANSACTION IS NOT THE BO NAFIDE ONE. THEREFORE, I HAVE REASON TO BE BELIEVE THAT AN INCOME OF RS. 5,00,000 HAS ES CAPED ASSESSMENT IN THE AY 2004- 05 DUE TO THE FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT... ' 22. AS RIGHTLY POINTED OUT BY THE ITAT, THE 'REASONS T O BELIEVE' ARE NOT IN FACT REASONS BUT ONLY CONCLUSIONS, ONE AFTER THE OTHER. THE EXPR ESSION 'ACCOMMODATION ENTRY' IS USED TO DESCRIBE THE INFORMATION SET OUT WITHOUT EX PLAINING THE BASIS FOR ARRIVING AT SUCH A CONCLUSION. THE STATEMENT THAT THE SAID ENTR Y WAS GIVEN TO THE ASSESSEE ON HIS PAYING 'UNACCOUNTED CASH' IS ANOTHER CONCLUSION THE BASIS FOR WHICH IS NOT DISCLOSED. WHO IS THE ACCOMMODATION ENTRY GIVER IS NOT MENTION ED. HOW HE CAN BE SAID TO BE 'A ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 27 KNOWN ENTRY OPERATOR' IS EVEN MORE MYSTERIOUS. CLEA RLY 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 APPR ECIATE HOW THE CONCLUSIONS FLOW THEREFROM. 23. THUS, THE CRUCIAL LINK BETWEEN THE INFORMATION MAD E AVAILABLE TO THE AO AND THE FORMATION OF BELIEF IS ABSENT. THE REASONS MUST BE SELF EVIDENT, THEY MUST SPEAK FOR THEMSELVES. THE TANGIBLE MATERIAL WHICH FORMS THE B ASIS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT MUST BE EVIDENT FROM A READING O F THE REASONS. THE ENTIRE MATERIAL NEED NOT BE SET OUT. HOWEVER, SOMETHING TH EREIN WHICH IS CRITICAL TO 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 CERTAINLY CANNOT BE INVOKED CASUALLY OR MECHANICALLY. THE HEART OF THE PROVISION IS THE FORMATION OF BELIEF BY THE AO THAT INCOME HAS ESCAPED ASSESSMENT. THE REASONS SO RECORDED HAVE TO BE BASED ON SOME TA NGIBLE MATERIAL AND THAT SHOULD BE EVIDENT FROM READING THE REASONS. IT CANNOT BE S UPPLIED SUBSEQUENTLY EITHER DURING THE PROCEEDINGS WHEN OBJECTIONS TO THE REOPENING AR E CONSIDERED OR EVEN DURING THE ASSESSMENT PROCEEDINGS THAT FOLLOW. THIS IS THE BAR E MINIMUM MANDATORY REQUIREMENT OF THE FIRST PART OF SECTION 147 (1) OF THE ACT. 25. AT THIS STAGE IT REQUIRES TO BE NOTED THAT SINCE T HE 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 WOR DS, 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 NECESSARY FOR THE AO TO SHOW THAT THERE WAS ANY FAILURE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSME NT. 26. THE FIRST PART OF SECTION 147 (1) OF THE ACT REQUI RES THE AO TO HAVE 'REASONS TO BELIEVE' THAT ANY INCOME CHARGEABLE TO TAX HAS ESCA PED ASSESSMENT. IT IS THUS FORMATION OF REASON TO BELIEVE THAT IS SUBJECT MATT ER 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 I NVESTIGATION WING MIGHT CONSTITUTE THE MATERIAL ON THE BASIS OF WHICH HE FORMS THE REA SONS TO BELIEVE THE PROCESS OF ARRIVING AT SUCH SATISFACTION CANNOT BE A MERE REPE TITION OF THE REPORT OF INVESTIGATION. THE RECORDING OF REASONS TO BELIEVE AND NOT REASONS TO SUSPECT IS THE PRE- CONDITION TO THE ASSUMPTION OF JURISDICTION UNDER SECTION 147 OF THE ACT. THE REASONS TO BELIEVE MUST DEMONSTRATE LINK BETWEEN THE TANGIBLE MATERIAL AND THE FORMATION OF THE BELIEF OR THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSES SMENT. 36. IN THE PRESENT CASE, AS ALREADY NOTICED, THE REASO NS 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 TANGIBLE MATER IAL WHICH FORMS THE BASIS OF THE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT. 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 DEMONS TRATE THE LINK BETWEEN THE TANGIBLE MATERIAL AND THE FORMATION OF THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 28 37. FOR THE AFOREMENTIONED REASONS, THE COURT IS SATIS FIED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, NO ERROR HAS BEEN COMMIT TED BY THE ITAT IN THE IMPUGNED ORDER IN CONCLUDING THAT THE INITIATION OF THE PROC EEDINGS UNDER SECTION 147/148 OF THE ACT TO REOPEN THE ASSESSMENTS FOR THE AYS IN QUESTI ON DOES NOT SATISFY THE REQUIREMENT OF LAW. SUBSEQUENTLY, THE HONBLE DELHI HIGH COURT IN CASE OF RMG POLYVINYL LTD (SUPRA) HAS HELD AS UNDER: 12. RECENTLY, IN ITS DECISION DATED 26TH MAY, 2017 IN ITA NO. 692/2016 PR. CIT V. MEENAKSHI OVERSEAS, THIS COURT DISCUSSED THE LEGAL POSITION REGARDING REOPENING OF ASSESSMENTS WHERE THE RETURN FILED AT THE INITIAL S TAGE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND NOT UNDER SECTION 143(3) OF T HE ACT. THE REASONS FOR THE REOPENING OF THE ASSESSMENT IN THAT CASE WERE MORE OR LESS SIMILAR TO THE REASONS IN THE PRESENT CASE, VIZ., INFORMATION WAS RECEIVED FR OM THE INVESTIGATION WING REGARDING ACCOMMODATION ENTRIES PROVIDED BY A 'KNOW N' ACCOMMODATION ENTRY PROVIDER. THERE, ON FACTS, THE COURT CAME TO THE CO NCLUSION THAT THE REASONS WERE, IN FACT, IN THE FORM OF CONCLUSIONS 'ONE AFTER THE OTH ER' AND THAT THE SATISFACTION ARRIVED AT BY THE AO WAS A 'BORROWED SATISFACTION' AND AT B EST 'A REPRODUCTION OF THE CONCLUSION IN THE INVESTIGATION REPORT.' 13. AS IN THE ABOVE CASE, EVEN IN THE PRESENT CASE, TH E COURT IS UNABLE TO DISCERN THE LINK BETWEEN THE TANGIBLE MATERIAL AND THE FORMATIO N OF THE REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. IN THE PRESENT CASE TOO, THE INFORMATION RECEIVED FROM THE INVESTIGATION WING CANNOT BE SAID TO BE TA NGIBLE MATERIAL PER SE WITHOUT A FURTHER INQUIRY BEING UNDERTAKEN BY THE AO. IN THE PRESENT CASE THE AO DEPRIVED HIMSELF OF THAT OPPORTUNITY BY PROCEEDING ON THE ER RONEOUS PREMISE THAT ASSESSEE HAD NOT FILED A RETURN WHEN IN FACT IT HAD. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRETY O F FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSUMPTION OF JURISD ICTION AND INITIATION OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT TO REOPEN THE ASSESSMENT PROCEEDINGS DOES NOT SATISFY THE REQUIRE MENT OF LAW AND IS HEREBY SET-ASIDE. IN THE RESULT, GROUND NO. 1 OF T HE ASSESSEES APPEAL IS ALLOWED. 21. NOW, COMING TO THE MERITS OF THE ADDITION MADE BY THE ASSESSING OFFICER, WE FIND THAT THE ASSESSEE HAS DISCHARGED T HE INITIAL ONUS CAST ON IT IN TERMS OF IDENTITY, CREDITWORTHINESS AND GENUI NENESS OF THE ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 29 TRANSACTION. NOTABLY, THE ASSESSMENT PROCEEDINGS U /S 143(3) HAVE BEEN COMPLETED IN CASE OF THE INVESTOR COMPANY M/S PELICON FINANCE & LEASE FOR A.Y 2006-07 WHEREIN INVESTMENT IN THE ASS ESSEES COMPANY HAS BEEN ACCEPTED BY THE REVENUE. THERE CANNOT BE A SITUATION WHERE THE SAME TRANSACTION IS HELD TO BE GENUINE IN HANDS OF INVESTOR COMPANY AND DISPUTED IN THE HANDS OF THE INVESTEE C OMPANY. FURTHER, M/S PELICON FINANCE & LEASE HAS RESPONDED TO NOTICE U/S 133(6) AND HAS CONFIRMED THE AMOUNT INVESTED BY WAY OF SHARE CAPIT AL IN THE ASSESSEE COMPANY. BESIDES, NECESSARY DOCUMENTATION IN TERMS OF BOARD RESOLUTION, SHARE APPLICATION FORM, BANK STATEMENTS OF THE INVESTOR COMPANY, ANNUAL FINANCIAL STATEMENTS, ETC HAS BEEN SUBMITTED BY THE ASSESSEE COMPANY BEFORE THE ASSESSING OFFICER. FURT HER, WE FIND THAT THERE IS NO MENTION OF EITHER THE ASSESSEE COMPANY OR THE INVESTOR COMPANY IN THE STATEMENTS SO RECORDED OF SURENDRA K UMAR JAIN AND VIRENDRA KUMAR JAIN. THE STATEMENT OF THE SO CALLE D MEDIATOR P C AGARWAL IS ALSO NOT ON RECORD WHO IS CLAIMED BY THE REVENUE TO HAVE FACILITATED THE TRANSACTION. THEREFORE, WE DONOT F IND ANY LINKAGE WHICH CAN BE SAID TO HAVE BEEN ESTABLISHED BY THE REVENUE BETWEEN THE ASSESSEES UNDISCLOSED INCOME WHICH IS ROUTED BACK IN FORM OF SHARE CAPITAL. IN LIGHT OF THE SAME, MERELY RELYING ON THE REPORT OF THE INVESTIGATION WING WITHOUT ANY FURTHER EXAMINATION OR INVESTIGATION OR DISPUTING THE DOCUMENTATION SUBMITTED BY THE ASSESS EE COMPANY, THE ADDITION CANNOT BE SUSTAINED IN THE HANDS OF THE AS SESSEE COMPANY AND IS HEREBY DIRECTED TO BE DELETED. IN THE RESULT, G ROUND NO. 2 OF THE ASSESSEES APPEAL IS ALLOWED. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 30 23. IN ITA NO. 567/JP/2018 FOR A.Y. 2007-08, THE AS SESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1.1 THE IMPUGNED ORDER U/S 147/143(3) DATED 14.03. 2014 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISD ICTION, BARRED BY LIMITATION AND VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. 1.2 THE ACTION TAKEN U/S 147 BY THE LD. AO CONFIRME D BY THE LD. CIT(A) IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE TH E SAME MAY KINDLY BE QUASHED. 2. RS. 30,00,000/- : THE LD. CIT(A) HAS GROSSLY ERR ED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION OF RS. 30,00,000/- MADE BY THE LD. AO ON ACCOUNT OF ALLEGE D ACCOMMODATION ENTRIES RECEIVED FOR SHARE APPLICATIO N MONEY AND ALSO ERRED IN IGNORING THE VARIOUS EVIDENCE SUBMITT ED WITHOUT REBUTTING AND AO ALSO ERRED IN NOT PROVIDING THE CR OSS EXAMINATIONS. HENCE THE ADDITION SO MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS BEING TOTALLY CONTRA RY TO THE PROVISIONS OF LAW AND FACT ON THE RECORD AND HENCE THE ADDITION MAY KINDLY BE DELETED IN FULL. 3. THE LD. AO HAS GROSSLY ERRED IN LAW AS WELL AS O N THE FACTS OF THE CASE IN CHARGING INTEREST U/S 234A, 234B & 234C ,. THE APPELLANT TOTALLY DENIES IT LIABILITY OF CHARGING O F ANY SUCH INTEREST. THE INTEREST, SO CHARGED, BEING CONTRARY TO THE PRO VISIONS OF LAW AND FACTS, MAY KINDLY BE DELETED IN FULL. 24. BOTH THE PARTIES FAIRLY SUBMITTED THAT THE FACT S AND CIRCUMSTANCES OF THE CASE ARE EXACTLY IDENTICAL TO FACTS AND CIRC UMSTANCES OF APPEAL IN ITA NO. 566/JP/2018 AND THEREFORE, OUR FINDING AND DIRECTIONS CONTAINED IN ITA NO. 566/JP/2018 SHALL EQUALLY MUTATIS MUTANDIS TO THIS APPEAL AS WELL. IN THE RESULT, THE APPEAL OF THE A SSESSEE IS ALLOWED. ITA NO. 566 & 567/JP/2018 M/S BALAJI HEALTH CARE PVT. LTD. VS. ITO 31 IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSE SSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/01/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30/01/2019. *GANESH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S BALAJI HEALTH CARE PVT. LTD., JA IPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD- 4(3), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 566 &567/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR