M/s. Statcon Power Controls Limited, New Delhi V. ITO, New Delhi

ITA 5953/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6477 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 22-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 03-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Accommodation entries; Assessment record; Reason to believe; Reassessment proceedings
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SM C - I , NEW DELHI BEFORE SH. N. K. SAINI, A CCOUNTANT M EMBER ITA NO. 5953/DEL/2014 : ASSTT. YEAR : 200 5 - 0 6 M/S STATCON POWER CONTROLS LTD., 19 - E, POCKET - II, KON DLI GHAROLI - II, MAYUR VIHAR, PHASE - III, NEW DELHI - 1100 92 VS INCOME TAX OFFICER, WARD - 9(2), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A BCS1814N ASSESSEE BY : SH. ANIL JAIN , ADV. REVENUE BY : SH. F. R. MEENA , SR. DR DATE OF HEARI NG : 22 .09 .201 6 DATE OF PRONOUNCEMENT : 16 . 12 .201 6 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 04.09.2014 OF LD. CIT(A) - XII , NEW DELHI . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE LD. CIT(A) H AS ERRED IN CONFIRMING THE ORDER OF THE AO IN MAKING THE ASSESSMENT AT THE INCOME OF RS. 27,05,220 AS AGAINST THE RETURNED INCOME OF RS, 15,05,220. 2. THE LD CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD . AO IN ISSUING NOTICE UNDER SECTION 148 AND S UBSEQUENT PROCEEDINGS THEREAFTER AGAINST THE APPELLANT COMPANY. 3. THE LD CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. AO IN TREATING THE INVESTMENT BY M/S GEECEE FINANCE LIMITED IN SHARES OF THE APPELLANT COMPANY AS AN ACCOMMODATION ENTRY AND CON SEQUENTLY ADDING IT BACK TO INCOME OF THE APPELLANT UNDER SECTION 68 OF INCOME TAX ACT,1961. ITA NO. 5953 /DEL /201 4 STATCON POWER CONTROLS LTD. 2 4. THE ORDER OF THE CIT(A) IS AGAINST LAW AND FACTS OF THE CASE. 5. THE APPELLANT CRAVES THE RIGHT TO ADD, AMEND OR WITHDRAW ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE REOPENING THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND MAKING THE ADDITION OF RS.12,00,000/ - U/S 68 OF THE ACT. 4 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 31.10.2005 DECLARING AN INCOME OF RS.15,05,220/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM THE INVESTIGATION WING, DELHI THA T THE ASSESSEE WAS ONE OF THE BENEFICIARIES OF THE BOGUS/ACCOMMODATION ENTRIES AS DETAILED BELOW: S. NO. VALUE OF ENTRY TAKEN (RS.) DATE ON WHICH ENTRY TAKEN NAME OF THE ACCOUNT HOLDER OF ENTRY PROVIDER 1. RS.12,00,000 24.02.2005 GEEFCEE FINANCE LIMITED 5 . ACCORDINGLY, NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE FOR REOPENING THE ASSESSMENT U/S 147 OF THE ACT. THE ASSESSEE ASKED THE AO TO PROVIDE ALL THE MATERIAL FOR WHICH THE PROCEEDINGS U/S 148 OF THE ACT HAD BEEN INITIATED . THE AO SUPPLIED TH E COPY OF STATEMENT OF SH. TARUN GOYA L. IN RESPONSE, THE ASSESSEE REPLIED AS UNDER: ITA NO. 5953 /DEL /201 4 STATCON POWER CONTROLS LTD. 3 'WE HAVE FURNISHED THE DOCUMENTARY EVIDENCE AND CONFIRMATION OF M/S GEE CEE FI NANCE LIMITED TO WHOM SHARES HA S B EEN ALLOTTED AND IT HAS BEEN REF ERRED AS THE ENTRY OPERATOR IN THE REASONS RECORDED U/S 148. AS PER THE LIST OF TH E SHARE HOLDERS FILED EVERY WITH THE REGISTER OF COMPANIES THE DETAILS OF THIS PARTY HA S BEEN SEND AS THE HOLDER OF THE SHARES. THE LIST OF SH AREHOLDERS AS ON 30.09.2009 IS AL SO ENCLOSED IN WHICH THE A BOVE NAMED COMPANY HAS BEEN SHOWN AS THE SHAREHOLDER OF THE COMPANY. THE SHARES ARE ALLOTTED IN 2005 AND THIS COMPANY HOLD THE SHARES FOR A LONG TIME WHICH SHOWS THE GENUITY OF THE TRANSACTIONS. IT IS NOT AN ISSUE OF ONE TIME INVESTMENT. AS PER THE LIST OF SHAREHOLDERS YOUR GOODSELF WILL FIND THAT ALL THE SHAREHOLDERS ARE INDIVIDUALS AND THIS IS THE ONLY COMPANY HOLDING THE SHARES.. ...... IT H AS BEEN OBSERVED IN THE REASONS RECORDED THAT SHRI TARUN GOYAL HAS STATED THAT HE OWNS THE COMPANY M/S GEE CEE FINA NCE LIMITED THROUGH WHOM HE IS CARRYING ON THE BUSINESS OF ENTRY OPERATOR. WHILE GOING THROUGH THE STATEMENT OF TARUN GOYAL. WE HAVE NOWH ERE FOUND THAT THIS COMPANY IS IN THE BUSINESS OF ENTRY OPERATOR AND NEITHER HE HAS MENTIONED THE TRANSACTION WITH ASSE SSEE COMPANY TO BE IN THE NATURE OF PROVIDING AN E NTRY. THIS IS NO MATERIAL IN THE STATEMENT TO SHOW THAT M/S GEE CEE FINANCE LIMITED HAS ISSUED A CHEQUE TO M/S STATCON POWER CONTROLS LIMITED AGAINST CASH IN VIEW OF THE CHEQUE. THE TRANSACTION OF THE ASSES SEE COMPANY WITH THE M/S GEE CEE FINANCE LIMITED IS GENUINE IN SUPPORT OF WHICH THE DETAILS O/SHARE ALLOTTED HAS ALREADY BEEN FILE D IN CUR EARLIER SUBMISSIONS ..........' 6 . HOWEVER, T HE AO DID NOT FIND MERIT IN THE SUBMISSION OF THE ASSESSEE AND MADE THE ADDITION OF RS.12,00,000/ - WHICH WAS RECEIVED FROM M/S GEE CEE FINANCE LTD., BY TREATING THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. ITA NO. 5953 /DEL /201 4 STATCON POWER CONTROLS LTD. 4 7 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND CHALLENGED THE VALIDITY OF THE ISSUING THE NO TICE U/S 148 OF THE ACT AND SUBMITTED AS UNDER: A) THAT AO HAS REOPENED THE CASE OF THE APPELLANT WITHOUT PROPER APPLICATION OF HIS MIND WHICH IS A MANDATORY REQUIREMENT AND HAS SOLELY RELIED UPON THE INFORMATION RECEIVED FROM DIT (INVESTIGATION WING), NE W DELHI, .AS PER THE REASONS SUPPLIED BY THE AO TO THE APPELLANT HE HAS MENTIONED THAT AN INFORMAT ION REGARDING ENTRY OPERATORS AN D THEIR BENEFICIARIES WAS RECEIVED FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT THAT APPELLANT HAS RECEIVED THE AC COMMODATION ENTRY OF RS. 12,00,000 FROM M/S GEECEE FINANCE LIMITED AND THAT THESE ACCOMMODATION ENTRIES INVOLVING TOTAL AMOUNT OF RS 12,00,000 REPRESENT ASSESSEE'S OWN UNACCOUNTED MONEY AND THEREFORE HE HAS REASON TO BELIEVE THAT INCOME OF RS 12,00,000 HAS ESCAPED ASSESSMENT. THESE REASONS SHOWS THAT THE AO HAS NOT APPLIED HIS MIND AND HAS WITHOUT ENQUIRING INTO THE AUTHENTICITY OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING HAS JUST REOPENED THE CASE OF THE APPELLANT WHICH ITSELF MAKES THE PROCEED INGS ILLEGAL. THE AO HAS FORMED HIS SO CALLED REASONABLE BELIEF ON VAGUE AND UNCERTAIN GROUNDS AS HE HAS NOT PROBED INTO THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AND SOLELY RELYING ON IT FOR REOPENING THE CASE OF THE APPELLANT. B) THAT THE AO RELIED UPON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT THAT DURING THE RELEVANT ASSESSMENT YEAR THE APPELLANT HAD RECEIVED THE ACCOMMODATION ENTRY OF RS 12,00,000 FROM M/S GEECEE FINANCE LIMITED. THE AO HAS NOT MENTIO NED ANYTHING IN HIS REASONS RECORDED THAT HE HAS MADE ANY EFFORTS TO ENQUIRE OR PROBE INTO THE MATTER FURTHER ON BY GOING THROUGH CERTAIN D OCUMENTS OR MATERIAL BEFORE HIM , IF ANY , TO CONFIRM THE GENUINENESS AND TRUTHFULNESS OF THE INFORMATION RECEIVED FROM ITA NO. 5953 /DEL /201 4 STATCON POWER CONTROLS LTD. 5 THE INVESTIGATION WING . INSTEAD HE SIMPLY WITHOUT APPLYING HIS MIND BELIEVING THE INFORMATION SENT TO HIM TO BE TRUE HAD REOPENED THE CASE OF THE APPELLANT BY STATING THAT THIS AMOUNT REPRESENT ASSESSEE'S OWN UNACCOUNTED MONEY. C) THAT IN THE REASONS RE CORDED BY THE AO, THE SAME ARE VAGUE AS MUCH AS NO DATE OF THE TRANSACTION IS MENTIONED TO SHOW THAT THE TRANSACTION FALLS IN THE RELEVANT ASSESSMENT YEAR FOR WHICH REOPENING IS DONE. FURTHER IN THE REASONS RECORDED WHICH ARE ON BASIS OF INFORMATION RECEIV ED FROM THE INVESTIGATION WING OF INCOME TAX DEPARTMENT NO WHERE THE DETAILS OF THE TRANSACTION I.E . THE INSTRUMENT NUMBER , DATE ETC THROUGH WHICH SUCH AMOUNT OF RS 12,00,000 WAS PAID TO THE APPELLANT COMPANY AND THE NAME AND ADDRESS OF THE BANK IS ALSO N OT PROVIDED OR MENTIONED THEREIN LEAVING ASIDE THE DATE OF THE SAID TRANSACTION WHICH IS ALSO NOT MENTIONED HEREIN MAKING THE SAID INFORMATION VAGUE AND REOPENING ON BASIS OF SUCH INCOMPLETE INFORMATION IS WRONG AND LIABLE TO BE DROPPED. D) THAT FROM THE REASONS RECORDED IT IS NOT EVIDENT THAT ANY APPROVAL HAS BEEN RECEIVED FROM THE CIT OR NOT. E) THAT THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE AMOUNT RECEIVED BY THE APPELLANT COMPANY IS AN ACCOMMODATION ENTRY OR APPELLANT' OWN UNACCOUNTED MONEY. TH E ALLEGATION ON WHICH THE REOPENING HAS BEEN DONE IS WITHOUT ANY BASIS. F) THAT AS PER COPY OF THE REASONS RECORDED IT IS EVIDENT THAT THE NOTICE U/S 148 HAS BEEN ISSUED ON BASIS OF INFORMATION RECEIVED FROM ADIT(INV.) UNIT IV, NEW DELHI WHICH ITSELF WA S BASED ON THE INVESTIGATION DONE AND STATEMENT RECORDED OF SHRI TARUN GOYAL CA WHO IS MENTIONED TO BE AN ENTRY OPERATOR. THUS NO SUCH COPIES OF THE STATEMENTS WERE SUO MOTO PROVIDED TO THE APPELLANT BY THE AO AND ONLY WHEN SPECIFIC REQUEST FOR THE SAME WA S MADE VIDE LETTER DATED 22/02/2013 THE AO ITA NO. 5953 /DEL /201 4 STATCON POWER CONTROLS LTD. 6 PROVIDED THE COPIES OF STATEMENTS OF SHRI TARUN GOEL TO THE APPELLANT ON 22/02/2013. G) THAT THE APPELLANT HAS MADE A SPECIFIC REQUEST VIDE ITS LETTER DATED 28.02.2013 TO PROVIDE AN OPPORTUNITY OF CROSS EXAMININ G SHRI TARUN GOYAL ON EXPENSES OF THE APPELLANT ON BASIS OF WHOSE STATEMENT THE CASE OF THE APPELLANT WAS REOPENED BUT THE LD AO HAS NOT PROVIDED ANY OPPORTUNITY TO THE APPELLANT TO CROSS EXAMINE SHRI TARUN GOYAL THEREBY MAKING THE REASSESSMENT PROCEEDINGS ILLEGAL AND VOID. H) THAT IN RESPECT OF THE STATEMENTS PROVIDED BY THE AO OF SHRI TARUN GOEL WE WOULD LIKE TO SUBMIT AS FOLLOWS WHICH WE ALSO MENTIONED BEFORE AO VIDE LETTER DATED 28.02.2013 (PB 110 - 111): THAT ON PAGE 204 OF THE STATEMENT RECORDED (PB 1 32} OF SHRI TARUN GOYAL HE HAS MENTIONED THAT HE IS INTO BUSINESS OF PROVIDING MAIL AND MESSAGE SERVICES AND ACCOUNTING AND BOOK KEEPING SERVICES TO _ VARIOUS COMPANIES FROM TIME TO TIME . FURTHER ON PAGE 205 OF HIS STATEMENT (PB 133)ON BEING ASKED ABOUT T HE DETAILS OF COMPANIES OF WHICH BOOKS OF ACCOUNTS ARE LYING AT HIS PREMISES , SHRI TARUN GOEL GAVE THE FOLLOWING NAMES : A) COMPARI FISCAL SERVICES (P) LTD. B) ADONIS FINANCE LIMITED. C) DELHI SHARE SHOPPEE. D) BHAWANI PORTFOLIO PVT. LTD. .. E) TAURAS IRON AND STEEL CO. (P) LTD. F) THAR STEELS PVT. LTD. G) GEEFCEE FINANCE LIMITED H) CORPORATE FINANCE PVT. LTD. ITA NO. 5953 /DEL /201 4 STATCON POWER CONTROLS LTD. 7 THAT SHRI TARUN GOYAL DID NOT SAY THAT THE A BOVE COMPANIES ARE HIS COMPANIE S OR HE IS DOING ENTRY BUSINESS FROM THESE COMPANIES INSTEAD HE HAS ON LY STATED THAT BOOKS OF ACCOUNTS OF THESE COMP AN IES ARE LYING AT HIS PREMISES AT TIME OF RECORDING OF THE. STATEMENT . FURTHER ON PAGE 210 - 211 (PB 138 - 139) OF THE STATEMENT RECORDED ON BEING ASKED ABOUT OTHER COMPANIES INCLUDING ONE M/S BHAWANI PORTFOLIO PV T. LTD HE STATED THAT HE HAS NO OTHER INTEREST EXCEPT ACCOUNTING AN D BOOK KEEPING. SO SINCE THE BOOKS OF ACCOUNTS OF THIS COMPANY WERE ALSO LYING THERE ALONGWITH M/S GEEFCEE FINANCE LIMITED AT PREMISES OF THE APPELLANT IT IS VERY MUCH EVIDENT THAT COMPANIE S WHOSE BOOKS OF ACCOUNTS ARE LYING AT PREMISES OF TARUN GOYAL AS MENTIONED ON PB 133 ARE THE CLIENTS FOR WHOM SHRI TA RUN GOYAL IS DOING A CCOUNTING AND BOOK KEEPING WORK . THIS IS ALSO SUPPORTED BY THE FACT THAT SHRI TARUN GOYAL HAS NO WHERE MENTIONED THAT M/S GEEF CEE FINANCE LIMITED IS HIS COMPANY AND/OR IS INVOLVED INTO THE WORK OF ENTRY OPERATORS. IT IS JUST THAT SINCE THE BOOKS OF ACCOUNTS OF THESE COMPANIES INCLUDING M/S GEEFCEE FINANCE LIMITED WERE FOUND AT PREMISES OF SHRI TARUN GOYAL AT TIME OF HIS S TATEMENT RECORDING THEREFORE THE INVESTIGATION WING HAS CONCLUDED THE TRANSACTION OF M/S GEEFCEE FINANCE LIMITED WITH APPELLANT COMPANY TO BE AN ACCOMMODATION ENTRY WITHOUT PROPERLY INQUIRING INTO THE SAME. THAT NOWHERE IN THE STATEMENTS RECORDED IT IS M ENTIONED THAT SHRI TARUN GOYAL IS THE OWNER OF M/S GEEFCEE FINANCE LIMITED AND THAT NOTHING IS MENTIONED ABOUT THE TRANSACTION WITH THE APPELLANT COMPANY OF M/S GEEFCEE FINANCE LIMITED. SINCE NO SPECIFIC REFERENCE IS THERE OF THE APPELLANT COMPANY IN THE S TATEMENT RECORDED OF SHRI TARUN GOYAL ON BASIS OF WHICH CASE OF THE APPELLANT WAS REOPENED THEREF ORE THE REOPENING IS BAD IN LAW. ( RELYING ITA NO. 5953 /DEL /201 4 STATCON POWER CONTROLS LTD. 8 ON THE CASE OF COSMOS FIBRE GLASS LIMITED V. INCOME TAX OFFICER (2009) 18 DTR 307) I) THAT AO HAS ISSUED THE REAS ONS TO THE APPELLANT AND HAS REOPENED ITS CASE WITHOUT APPLYING HIS MIND WHICH MAKES THE SEC. 148 PROCEEDINGS TO BE ILLEGAL AND VOID. THERE ARE A PLETHORA OF JUDGMENTS BY VARIOUS HIGH COURTS AS WELL AS THE SUPREME COURT SUPPORTING THIS VIEW. THE LATEST BEI NG THE CASE OF SIGNATUR E HOTELS (P.) LTD. VS. ITO AND A NR. (2011) 60 DTR 30 B Y THE HON'BLE DELHI HIGH COURT. 8 . THE RELIANCE WAS ALSO PLACED ON THE FOLLOWING CASE LAWS: CALCUTTA DISCOUNT CO. VS ITO AND ANR. (1961) 41 ITR 191 (SC) GANGA SARAN AND SONS P. LTD. VS ITO AND ANR. (1981) 130 ITR 1 (SC) 9 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE NOTICE U/S 148 OF THE ACT WAS ISSUED AFTER PROPER RECORDING OF REASONS FOR REOPENING AND STATUTORY APPROVAL WAS TAKEN. HE FUR THER OBSERVED THAT THE NOTICE WAS ISSUED ON TIME I.E. 31.03.2012 AND THE ASSESSEE HAD REGULARLY PARTICIPATED IN THE ASSESSMENT PROCEEDINGS, SO THERE WAS NO REASON TO RAISE GROUNDS AGAINST SUSTENANCE OF NOTICES AND RECORDING OF REASON. ACCORDINGLY, THE REOP ENING WAS HELD AS VALID. 10 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE AO REOPENED THE ASSESSMENT ONLY ON THE BASIS OF INFORMATION FROM THE I NVESTIGATION WING AND DID NOT APPLY HIS OWN ITA NO. 5953 /DEL /201 4 STATCON POWER CONTROLS LTD. 9 MIND. IT WAS FURTHER SUBMITTED THAT OPPORTUNITY TO CROSS - EXAMINE SH. TARUN GOYAL ON THE BASIS OF WHOSE STATEMENT, THE CASE OF THE ASSESSEE WAS REOPENED WAS NOT GIVEN AND EVEN IN THE STATEMENT GIVEN BY SH. TARUN G OYAL NAME OF THE ASSESSEE WAS NOT APPEARING. A REFERENCE WAS MADE TO PAGE NOS. 128 TO 133 OF THE ASSESSEE S PAPER BOOK WHICH IS THE COPY OF THE STATEMENT OF SH. TARUN GOYAL. IT WAS SUBMITTED THAT THE REASONS RECORDED CLEARLY REVEALED THAT THE NOTICE U/S 14 8 OF THE ACT WAS ISSUED ONLY ON THE BASIS OF INFORMATION FROM INVESTIGATION WING AND NO MIND WAS APPLIED BY THE AO. A REFERENCE WAS MADE TO PAGE NOS. 5 & 6 OF THE ASSESSEE S PAPER BOOK WHICH IS THE COPY OF THE REASONS RECORDED AND IT WAS SUBMITTED THAT REO PENING ON THE BASIS OF INFORMATION FROM THE INVESTIGATION WING AND WITHOUT APPLYING THE MIND BY THE AO WAS NOT VALID. THE RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX - 4 VS G & G PHARMA LTD. REPORTED AT 384 ITR 147. 11 . IN HIS RIVAL SUBMISSIONS THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE INCOME OF RS.12,00 ,000/ - ES CAPED ASSESSMENT, T HEREFORE, THE REOPENING U/S 148 OF THE ACT WAS VALID. 12 . I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. TO RESOLVE THE PRESENT CONTROVERSY , IT IS RELEVANT TO DISCUSS THE REASONS RECORDED BY THE AO ITA NO. 5953 /DEL /201 4 STATCON POWER CONTROLS LTD. 10 WHILE ISSUING THE NOTICE U/S 148 OF THE AC T AND SUBSEQUENTLY REOPENING THE ASSESSMENT U/S 147 OF THE ACT. THE COPY OF THE SAID REASONS IS PLACED AT PAGE NO. 6 OF THE ASSESSEE S PAPER BOOK AND READS AS UNDER: RETURN OF INCOME IN THIS CASE WAS FILED ON 31.10.2005 DECLARING TOTAL INCOME OF RS. 15,05 ,220/ - . SUBSEQUENTLY, THE CASE WAS PROCESSED U/S 143(1) ON 22.02.2006 AT AN INCOME OF RS. 15,05,220/ - . THE DIRECTORATE OF INCOME TAX (INV.), NEW DELHI HAS CARRIED OUT A DETAILED ENQUIRY ABOUT THE PERSONS/COMPANIES ENGAGED IN THE BUSINESS OF PROVIDING ACCO MMODATION ENTRIES TO VARIOUS COMPANIES. INFORMATION HAS BEEN RECEIVED ALONGWITH THE STATEMENTS OF PERSONS WHO HAD ADMITTED THAT THEY WERE IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES AND THEY WERE NOT DOING ANY BUSINESS BUT WERE ENGAGED IN THE ACTIVI TY OF PROVIDING ACCOMMODATION ENTRIES TO OTHER CONCERNS. THESE PERSONS USED TO ISSUE CHEQUES IN LIEU OF CASH RECEIVED AFTER DEDUCTING THEIR COMMISSION AND THESE CHEQUES WERE GENERALLY ISSUED AS SHARE APPLICATION MONEY/UNSECURED LOANS. AN INFORMATION REGAR DING ENTRY OPERATORS AND THEIR BENEFICIARIES WAS RECEIVED FROM ADDL. DIT(INV.), UNIT - IV, NEW DELHI VIDE LETTER NO. ADDL. DIT(INV.)/UNIT - IV/BENEFICIARIES/2008 - 09/391 DATED 31 - 03 - 2009 CONTAINING A LIST OF BENEFICIARIES OF ACCOMMODATION ENTRIES PROVIDED BY SH . TARUN GOYAL, C.A, 13/34. WEA ARYA SAMAJ ROAD, KAROL BAGH, NEW DELHI AND TOOK ENTRY FROM THE ENTRY OPERATOR AS DETAILED BELOW: - NAME OF BENEFICIARIES NAME OF COMPANY FLOATED BY SH/TARUN GOYA L AMOUNT TOTAL STATCON POWER CONTROLS LTD. GEEFCEE FINANCE LI MITED 12,00,000 12,00,000 THESE ACCOMMODATION ENTRIES IN VOLVING TOTAL AMOUNT OF RS. 12,00,000/ - REPRESENT THE ASSESSEE'S OWN UNACCOUNTED MONEY. THE ESCAPEMENT OF INCOME HAS BEEN ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOS E ALL THE MATERIAL FACTS ITA NO. 5953 /DEL /201 4 STATCON POWER CONTROLS LTD. 11 NECESSARY FOR ASSESSMENT. IN VIEW OF ABOVE, I HAVE REASON TO BELIEVE TH AT AN INCOME OF RS.12,00,000 / - HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT , 1 961 . SINCE, THE ASSESSMENT WAS NOT MADE IN THIS CA SE U/S 143( 3) OR 147 OF THE ACT AND PERIOD OF 4 YEARS HAS ELAPSED PROPOSAL IS HEREBY SUBMITTED ALONGWITH THE RELEVANT ASSESSMENT RECORDS TO THE COMMISSIONER OF INCOME TAX, DELHI - III, NEW DELHI FOR CONSIDERATION AND NECESSARY APPROVAL IN ACCORDANCE WITH THE PROVISIONS, OF SECTION 151(1) OF THE IT ACT, 196 1 FOR ISSUANCE OF NOTICE U/S 148 OF THE I . T. ACT. 13 . ON A SIMILAR ISSUE THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX - 4 VS G & G PHARMA LTD. (2016) 384 ITR 1 47 HELD AS UNDER: THE BASIC REQUIREMENT OF LAW FOR REOPENING AN ASSESSMENT IS APPLICATION OF MIND BY THE ASSESSING OFFICER, TO THE MATERIALS PRODUCED PRIOR TO REOPENING THE ASSESSMENT, TO CONCLUDE THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASS ESSMENT. UNLESS THAT BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED A POST MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT MAKE AN INHERENTLY DEFECTIVE REASSESSMENT ORDER VALID. IT HAS FURTHER BEEN HELD AS UNDER: WITH OUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR HIM TO HAVE SIMPLY CONCLUDED THAT IT WAS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES. THE B ASIC JURISDICTIONAL REQUIREMENT WAS APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE MATERIAL PRODUCED BEFORE ISSUING THE NOTICE FOR REASSESSMENT. WITHOUT ANALYSING AND FORMING A PRIMA FACIE OPINION ON THE BASIS OF MATERIAL PRODUCED, IT WAS ITA NO. 5953 /DEL /201 4 STATCON POWER CONTROLS LTD. 12 NOT POSSIBLE FOR THE ASSESSING OFFICER TO CONCLUDE THAT HE HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. 14. IN THE PRESENT CASE ALSO THE AO SIMPLY ACTED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE IT DEPARTMENT AND NO OTHER MATERIAL WAS IN HIS POSSESSION. HE DID NOT APPLY H IS INDEPENDENT MIND. THEREFORE, THE REOPENING U/S 147 OF THE ACT BY ISSUING THE NOTICE U/S 148 OF THE ACT WAS NOT VALID. IN THAT VIEW OF THE MATTER, THE REASSESSMENT FRA MED BY THE AO IS QUASHED. 15 . SINCE , I HAVE S ET ASIDE THE ASSESSMENT, THEREFORE, NO FINDINGS ARE GIVEN ON THE ISSUE RAISED BY THE ASSESSEE ON MERIT. 1 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . (ORDER PRON OUNCED IN THE CO URT ON 16 /12 /2016) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DAT ED: 16 /12 /2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR