Hemant Garg, New Delhi V. ITO, New Delhi

ITA 599/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52518 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 28-07-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 03-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: S C GARG
• Keywords: Share purchase agreement
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH C DELHI ] BEFORE SHRI I. P. BANSAL, JUDICIAL MEMBER AND SHRI K. G. BANSAL, ACCOUNTANT MEMBER I. T. APPEAL NO. 599 (DEL) OF 2011 ASSESSMENT YEAR : 2001-02. SHRI HEMANT GARG, THE INCOME-TAX OFFI CER, C/O. JAGDISH AGGARWAL & CO., C.AS.; VS. W A R D : 29 (1), S2, VIKAS HOUSE, 34/1, EAST PUNJABI BAGH, N E W D E L H I. N E W D E L H I 110 026. P A N / G I R NO. AAT PG 1428 M. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI S. C. GARG, C. A.; DEPARTMENT BY : SHRI SALIL MISHRA, SR. D. R . O R D E R. PER I. P. BANSAL, JM : THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER PASSED BY THE LD. CIT (APPEALS) DATED 16 TH JANUARY, 2009 FOR ASSESSMENT YEAR 2001-02. 2. GROUNDS OF APPEAL READ AS UNDER :- 1. THAT THE LD. CIT (APPEALS) ERRED IN LAW AND ON FACTS IN NO ADJUDICATING GROUND NO. 2 & 3 OF THE MEMORANDUM OF APPEAL; 2. THE LD. AO ERRED IN LAW AND ON FACTS IN A SSUMING JURISDICTION TO MAKE RE-ASSESSMENT UNDER SECTION 147 AND THE LD. CIT (AP PEALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF RE-OPENING UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 IN THE FACTS AND CIRCUMSTANCES OF THE CAS E; 2 I. T. APPEAL NO. 599 (DEL) OF 2011. 3. THE LD. CIT (APPEALS) ERRED IN LAW AND ON FACTS IN OBSERVING THAT THE AO HAD SPECIFIC AND SUFFICIENT INFORMATION IN HIS P OSSESSION AND THE AO WAS WITHIN HIS POWERS UNDER SECTION 147 AS AMENDED WITH EFFECT FROM 1/04/1989 TO RE-OPEN THE ASSESSMENT; 4. THAT THE LD. CIT (APPEALS) ERRED IN LAW AND ON F ACTS IN OBSERVING WITHOUT ANY MATERIAL THAT THE ASSESSEE WAS A BENEFI CIARY OF BOGUS ENTRY IN THE NAME OF CAPITAL GAIN; 5. THE LD. CIT (APPEALS) ERRED IN LAW AND ON FACTS IN NOT CONSIDERING VARIOUS CASE LAWS RELIED ON BY THE ASSESSEE AND ONLY MAKING A PASSING REFERENCE TO THE SAME IN PARA 4.2 OF THE IMPUGNED ORDER; 6. THAT THE LD. AO ERRED IN MAKING AND LD. CIT (APP EALS) ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.5,15,766/- TO THE RETURNED INCOME OF THE ASSESSEE IN THE FACTS AND CIRCUMSTANCES OF THE CASE; 7. THE LD. CIT (APPEALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.5,15,766/- TO THE INCOME OF THE ASSE SSEE WITHOUT ANY MATERIAL ADVERSE TO THE ASSESSEE ON RECORD AND PARTICULARLY ON THE BASIS OF IRRELEVANT MATERIAL, ASSUMPTIONS, PRESUMPTIONS AND CONJECTURES . THE LD. CIT (APPEALS) HAS SUBSTITUTED HIS OBSERVATIONS IN THE NAME OF AO; 8. THE LD. CIT (APPEALS) ERRED IN LAW AND ON FACTS IN SUMMARILY REJECTING THE EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THE AS SESSING OFFICER AS SELF SERVING DOCUMENTS WHEREAS THE SAME WERE NEITHER VER IFIED BY THE ASSESSING OFFICER NOR BY THE CIT (APPEALS); 9. THE LD. CIT (APPEALS) ERRED IN LAW AND ON FACTS IN NOT ADMITTING ADDITIONAL GROUND RAISED DURING THE COURSE OF APPELLATE PROCEE DINGS ON THE FAILURE OF THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 143 (2) OF THE INCOME TAX ACT, 1961 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, PARTICU LARLY WHEN THE LD. CIT (APPEALS) WAS PROVIDED ON HIS DIRECTIONS AN ADDITIONAL SET OF WRITTEN SUBMISSIONS MADE BEFORE CIT (APPEALS) WHICH THE LD. CIT (APPEALS) IN TENDED TO SEND TO THE AO FOR HIS COMMENTS. IN FACT, THE ADDITIONAL GROUND N EEDED NO VERIFICATION FROM THE AO SINCE THE FACTS WERE APPARENT FROM THE ASSES SMENT ORDER. 3.1 FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE H AD FILED HIS RETURN OF INCOME ON 31 ST OCTOBER, 2001 AT A TOTAL INCOME OF RS.1,85,145/-. RE-ASSESSMENT PROCEEDINGS WERE INITIATED VIDE NOTICE ISSUED UNDER SECTION 148 OF THE INCOME TAX A CT, 1961 [ACT] DATED 31 ST MARCH, 2008. COPY OF THE REASONS RECORDED IS FURNISHED AT PAGE 1 9 AND FAIR COPY OF CONTENTS THEREOF READ AS UNDER :- 3 I. T. APPEAL NO. 599 (DEL) OF 2011. COPY OF REASONS RECORDED AS SUPPLIED BY A.O. 31/03/2008 REASONS RECORDED FOR RE-OPENING ASSESSME NT UNDER SECTION 148 IN THE CASE OF SHRI HEMANT GARG, 4503/4 , KRISHNA BAZAR, CLOTH MARKET, DELHI FOR ASSESSMENT YEAR : 2001-02. DEPARTMENTS INVESTIGATION WING HAS CONDUCTED INVES TIGATION AND PREPARED DETAILED REPORT BY ADDITIONAL DIT (INV.) UNIT-VI, N EW DELHI GIVING DETAILS OF WORKING OF ENTRY OPERATORS ALONG WITH LIST OF BENEFICIARIES WH ICH WAS ATTACHED ALONG WITH ITS LETTER NO. ADDL. DIT (INV.)/U-VI/06-07/1141 DATED 26/03/20 08. M/S. H. B. RELAN & CO. IS ONE OF THE SUCH OPERATORS RUN THROUGH SHRI RAMESH RELAN , SPECIALIZED IN SHARE PROFIT / LOSS ENTRIES AND THROUGH THEIR ACCOUNT NO. 3374 (LUCKY E NTERPRISES) AND ACCOUNT NO. 3493 (SHRI GANESH ENTERPRISES) TO FACILITATE ISSUE OF CH EQUES FROM H. B. RELAN & CO. 3373 TO VARIOUS BENEFICIARIES. BESIDES THIS ONE MORE ACCOUN T NO. 3583 IN THE NAME OF M/S. AKANSHA AUTOMOBILES PVT. LTD. WAS USED BY THIS GROU P. THE TOTAL AMOUNT TRANSFERRED THROUGH THESE ACCOUNT ARE RS.28.89 CRORES. STATEME NT OF THE MASTERMIND OF THE GROUP OF ENTRY OPERATOR MR. S. M. AGGARWAL WAS RECORDED BUT HE HAS NOT ACCEPTED HIS ENTRY BUSINESS. HOWEVER, IN AN INFORMAL CHAT HE HAS ACCE PTED TO DOING ENTRY BUSINESS WHICH WAS RECORDED BY THE UNIT-I IN A VIDEO CAMERA. IN VIEW OF THE ABOVE FINDINGS AND THE ADVERSE MATER IAL IN POSSESSION OF THE DEPARTMENT AS STATED ABOVE, I HAVE REASONS TO BELIE VE THAT INCOME TO THE TUNE OF RS.5,15,766/- HAS ESCAPED ASSESSMENT PERTAINING TO THE FINANCIAL YEAR 2000-01 RELEVANT TO A Y 2001-02. NOTICE UNDER SECTION 148 OF THE I. T. ACT, 1961 ISS UED AFTER OBTAINING PRIOR APPROVAL FROM THE ADDITIONAL CIT RANGE 29, NEW DELH I. ( J. L. MEENA ) INCOME-TAX OFFICER, WARD 29 (1), NEW DELHI. 3.2 THOUGH IT HAS NOT BEEN MENTIONED IN THE ASSESSM ENT ORDER BUT THE ASSESSEE HAS FILED LETTER DATED 26 TH NOVEMBER, 2008 STATING THEREIN THAT RETURN AS ORIG INALLY FILED SHOULD BE TAKEN AS FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THE COPY OF SUCH LETTER IS PLACED AT PAGE 22 OF THE PAPER BOOK AND ALSO ASKED TO SUPPLY THE COPY OF REASONS FOR WHICH RS.50/- WERE DEPOSITED BY THE ASSESSEE AS PER RECEIPT NO. 2850 DATED 2 ND NOVEMBER, 2008 COPY OF WHICH IS PLACED AT PAGE 23 OF THE PAPER BOOK. THEREAFTER THE ASSESSEE HAS FILED TWO LETTERS BEFORE THE ASSESSING 4 I. T. APPEAL NO. 599 (DEL) OF 2011. OFFICER, FIRST LETTER IS DATED 01 ST DECEMBER, 2008 COPY OF WHICH IS PLACED AT PAGES 24 TO 26 OF THE PAPER BOOK AND SECOND LETTER IS DATED 22 ND DECEMBER, 2008 COPY OF WHICH IS PLACED AT PAGES 27 & 28 OF THE PAPER BOOK. 3.3 IN THE LETTER DATED 1 ST DECEMBER, 2008 THE ASSESSEE HAD RAISED OBJECTIONS FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS AND PRAYED FOR DROPPING O F INITIATION OF PROCEEDINGS UNDER SECTION 147 / 148 OF THE ACT. IN BRIEF THE CONTENTS OF THE SAID LETTER ARE THAT FROM THE COPY OF REASONS IT CAN BE SEEN THAT THERE IS NO REFERENCE OR EVEN WHIS PER TO THE ASSESSEES NAME AND, THEREFORE, THERE COULD NOT BE ANY REASONS TO BELIEVE. IT WAS SUBMIT TED THAT SO-CALLED REASONS ARE SELF- CONTRADICTORY WHEREIN IT WAS MENTIONED THAT IN THE STATEMENT OF MASTER-MIND RECORDED BY INVESTIGATION WING, THERE WAS NO ACCEPTANCE OF THE ALLEGATIONS LEVELED ON HIM AND THERE IS ALSO NO MATERIAL WHATSOEVER TO CLINCH THE ISSUE IN THE POSS ESSION OF THE DEPARTMENT. THEREFORE, IT WAS SUBMITTED THAT THERE IS NO QUESTION OF ASSESSING OF FICER HAVING REASONS TO BELIEVE TO ENABLE HIM TO RE-OPEN THE CASE. TECHNICAL OBJECTION WAS ALSO TAK EN THAT THE COPY OF APPROVAL STATED TO HAVE BEEN TAKEN FROM THE ADDL. COMMISSIONER HAS NOT BEEN PROVIDED TO THE ASSESSEE. IT WAS FURTHER MENTIONED THAT THOUGH THE NAME OF H. B. RELAN IS ME NTIONED AS OPERATOR, BUT THERE IS NO REFERENCE OF HIS STATEMENT BEING RECORDED BY THE IN VESTIGATION WING. IT WAS SUBMITTED THAT IF ANY INVESTIGATION HAS BEEN CARRIED OUT BY INVESTIGATION WING, THEN COPY OF SUCH REPORT IS NOT MADE AVAILABLE TO THE ASSESSEE. THE RELIANCE IS ONLY PL ACED ON THE INFORMAL CHAT RECORDED BY SOME OTHER UNIT AND IN ANY CASE ANY INFORMAL CHAT EVEN R ECORDED THROUGH VIDEO IS NOT ADMISSIBLE AS EVIDENCE IN THE COURTS. IT WAS SUBMITTED THAT NO S UCH ALLEGED ADVERSE MATERIAL HAS BEEN PROVIDED TO THE ASSESSEE TO MEET THE SAME. REFERENCE WAS AL SO MADE TO THE JUDICIAL PRONOUNCEMENTS, ACCORDING TO WHICH UNDER THE FACTS AND CIRCUMSTANCE S OF THE CASE, RE-ASSESSMENT PROCEEDINGS COULD NOT BE VALIDLY CARRIED OUT. ON MERITS THE AS SESSEE STATED THAT HE HAS SOLD 4,700 EQUITY SHARES OF OJSWI TRADES INVESTMENT & FINANCE LTD. FO R A TOTAL CONSIDERATION OF RS.5,15,766=25 VIDE BILL NO. P2-2612 DATED 26 TH DECEMBER, 2000 OF H.B. RELAN & CO., WHO IS MEMBER OF DELHI STOCK EXCHANGE AND COPY OF CONTACT NOTE WAS SUBMITT ED. IT WAS SUBMITTED THAT THOSE SHARES WERE PURCHASED THROUGH REGISTERED STOCK & SHARE BROKER A ND MEMBER OF RECOGNIZED STOCK EXCHANGE, NAMELY, M/S. MAHESHWARI SONS VIDE BILL DATED 29 TH APRIL, 1999 AGAINST CASH PAYMENT MADE ON 2 ND MAY, 1999 BY TAKING PHYSICAL DELIVERY OF THE SHARE S. COPY OF BILL ALONG WITH MEMO OF 5 I. T. APPEAL NO. 599 (DEL) OF 2011. CONFIRMATION ISSUED BY THE BROKER WAS ALSO SUBMITTE D. IT WAS SUBMITTED THAT 4,700 SHARES COMPRISED OF 47 SHARE CERTIFICATES NUMBERED FROM 13 39 TO 1385 WERE TRANSFERRED IN THE NAME OF THE ASSESSEE IN THE REGISTER OF MEMBERS MAINTAINED BY THE SAID COMPANY UNDER FOLIO NO. 6716. THUS, IT WAS SUBMITTED THAT THE ACQUISITION OF SHAR ES AS WELL AS SALE OF SHARES ARE EVIDENCED BY VALID DOCUMENTS ISSUED BY REGISTERED SHARE BROKERS. THEREFORE, ON MERITS IT WAS PLEADED THAT THERE COULD NOT BE ANY ESCAPEMENT OF INCOME IN THE LIGHT OF AFORE-MENTIONED DOCUMENTARY EVIDENCE. 3.4 SECOND LETTER IS DATED 22 ND DECEMBER, 2008 IN WHICH IT WAS SUBMITTED THAT A SP EAKING ORDER HAS NOT BEEN PASSED UPON THE OBJECTIONS RAISE D BY THE ASSESSEE ON THE REASONS RECORDED FOR RE-OPENING OF THE ASSESSMENT. IT WAS SUBMITTED THA T THE ASSESSEE AGAIN RAISE A SIMILAR OBJECTION, THEREFORE, THESE OBJECTIONS PREVAILED AND IT WILL B E IMPOSSIBLE UNDER LAW TO PROCEED WITH THE ASSESSMENT. WITHOUT PREJUDICE, APART FROM GIVING R EPLY TO THE VARIOUS QUERIES OF THE ASSESSING OFFICER, REFERENCE WAS MADE TO AFORE-MENTIONED DOCU MENTARY EVIDENCE AND IT WAS SUBMITTED THAT IF ANY ADVERSE INFERENCE IS DRAWN AGAINST THE ASSES SEE, THE SAME MAY BE CONFRONTED TO THE ASSESSEE AND THE ASSESSEE SHOULD BE ALLOWED A REASO NABLE OPPORTUNITY TO PUT FORWARD ITS CASE. IT WAS SUBMITTED THAT IF THE DEPARTMENT IS IN POSSESSI ON OF ANY STATEMENT EITHER OF M/S. MAHESHWARI SONS OR OF M/S. H. B. RELAN & CO., THE SAME MAY BE PROVIDED TO THE ASSESSEE. IF THERE IS ANY DOUBT REGARDING THE AUTHENTICITY OF DOCUMENT OR EVI DENCE FURNISHED BY THE ASSESSEE THEN ALSO THE ASSESSEE MAY BE ASKED TO CLARIFY THE SAME. 3.5 IN THIS MANNER THE ASSESSMENT PROCEEDINGS HAVE PROCEEDED BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER AFTER RE-PRODUCING T HE PORTION OF THE ASSESSEES REPLY OBSERVED THAT FROM THE REPLY OF THE ASSESSEE ITSELF IT IS ES TABLISHED THAT THE ASSESSEE HAS TRANSACTED WITH M/S. H. B. RELAN & CO. AND HAS ACQUIRED PROFIT ON S ALE OF SHARES AND THIS IS IN PURSUANCE OF INVESTIGATION MADE BY THE DEPARTMENT. THEREFORE, H E MADE THE ADDITION OF RS.5,15,766/- BEING BOGUS TRANSACTION SHOWN AS PROFIT ON SALE OF SHARES AND IN THIS MANNER THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT A SUM OF RS.7,00,910/- IN PLACE OF RETURNED INCOME OF RS.1,85,145/-. 6 I. T. APPEAL NO. 599 (DEL) OF 2011. 4. BEFORE THE LD. CIT (APPEALS) THE ASSESSEE HAS SP ECIFICALLY STATED IN THE STATEMENT OF FACT THAT ASSESSEE HAD FILED OBJECTIONS BEFORE THE ASSES SING OFFICER FOR THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT AND A SPECIFIC GROUND NO. 3 WAS TAKEN WHEREIN IT WAS CHALLENGED THAT THE ASSESSMENT MADE BY THE ASSESSING OFFICER IS BAD IN LAW AND ON FACTS AS THE SAME HAS BEEN FRAMED WITHOUT PASSING A SPEAKING ORDER ADDRESSING THE OBJ ECTIONS TAKEN BY THE ASSESSEE FOR THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT AND THE ASSE SSING OFFICER HAS FAILED TO EVEN TAKE NOTE OF THE FACT THAT ANY OBJECTIONS WERE TAKEN BY THE ASSESSEE TO THE ISSUANCE OF SUCH NOTICE. APART FROM THAT THE ASSESSEE HAS CHALLENGED THE INITIATION OF RE-ASSESSMENT PROCEEDINGS ON OTHER GROUNDS AND ADDITION WAS ALSO CHALLENGED ON MERITS. THE LD. CI T (APPEALS) HAS COMBINED THE GROUNDS. ACCORDING TO HIM GROUND NO. 3 AND 4 WERE IN RESPECT OF CHALLENGING THE PROCEEDINGS UNDER SECTION 147 AND GROUND NO. 5 TO 9 WERE CHALLENGING THE ADDITION MADE ON MERITS. THE LD. CIT (APPEALS) HAS RECORDED HIS FINDINGS WITH REGARD TO VALIDITY OF RE-ASSESSMENT PROCEEDING IN PARA 4.3 AND IN NUT SHELL HE HAS HELD THAT THE SUBMISSIO NS OF THE ASSESSEE HAVE NO MERITS AS THE ASSESSING OFFICER HAD SPECIFIC AND SUFFICIENT INFOR MATION IN HIS POSSESSION. SUFFICIENCY OF REASONS RECORDED BY THE ASSESSING OFFICER COULD NOT BE QUESTIONED AS PER DECISIONS OF HONBLE SUPREME COURT AND HIGH COURTS IN THE CASES OF : (I ) CALCUTTA DISCOUNT CO. LTD. VS. INCOME-TAX OFFICER [1961] 41 ITR 191 (SC); (II) PHOOL CHAND BAJRANG LAL & ANOTHER VS. INCOME-TAX OFFICER [1993] 203 ITR 456 (SC); (III) MAHANAGAR TELEPHONE NIGAM LTD. VS. CHAIRMAN, C.B.D.T. [2000] 246 ITR 173 (DEL.); (IV) RAYMOND WOOLLEN MILLS LTD. VS. INCOME-TAX OFFICER [1999] 236 ITR 34 (SC); AND ACIT VS. RAJESH JHAVE RI STOCK BROKERS P. LTD. [2007] 291 ITR 500 (SC). AFTER CONSIDERING THE FACTS AND CIRCUMST ANCES OF THE CASE, HE HELD THERE IS NO MERIT IN THE SUBMISSION OF THE ASSESSEE REGARDING THE INVALI DITY OF RE-ASSESSMENT PROCEEDINGS. 5. LD. CIT (APPEALS) HAS ALSO DECIDED THE ISSUE ON MERITS AND HE FOUND THAT THE ASSESSEE HAD MADE PURCHASES OF 4,700 SHARES AT A MEAGER SUM OF R S.4/- PER SHARE IN RESPECT OF SOME UN-KNOWN COMPANY IN CASH ON 2 ND MAY, 1999 WHICH WERE SOLD ON 26 TH DECEMBER, 2000 AT AN ASTONISHING PRICE @ RS.110/- PER SHARE WHICH FETCHED RS.5,15,76 6/- AND THUS A HUGE CAPITAL GAIN WAS EARNED OF AN AMOUNT OF RS.4,96,966/- WHICH INVOLVED ENTRY OPERATOR / BROKER, NAMELY, H. B. RELAN & CO. THE ASSESSING OFFICER HAD EXAMINED THE MATTER IN DETAIL AND FULL OPPORTUNITY WAS GIVEN TO THE ASSESSEE. THUS, THE ASSESSING OFFICER HAS COME TO RIGHT CONCLUSION THAT IT IS A BOGUS ENTRY TAKEN FROM ENTRY OPERATOR. THE EVIDENCE PRODUCED BY THE ASSESSEE WAS ONLY SELF-SERVING DOCUMENT 7 I. T. APPEAL NO. 599 (DEL) OF 2011. PREPARED BY THE ENTRY OPERATORS FOR THE PURPOSE OF DOCUMENTATION ONLY TO CHEAT THE DEPARTMENT. HE HELD THAT MERE PAYMENT BY CHEQUE WILL NOT HAVE S ANCTITY IN VIEW OF THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF INCOME-TAX OFFICER VS. DIZA HOLDINGS P. LTD. [2002] 120 TAXMAN 539 (KER.) AND ALSO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC) ACCORDING TO WHICH ONE HAS TO SEE THE SURROUNDING CIRCUMSTANCES AND ALSO THE NORMAL HUMAN PROBABILITI ES. HE ALSO REFERRED TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL V S. CIT [1995] 214 ITR 801 (SC) AND MC DOWELL & CO. LTD. VS. CTO [1985] 154 ITR 148 (SC) T O HOLD THAT THE COLOURABLE DEVICES CANNOT BE PART OF TAX PLANNING AND IT WILL BE WRONG OR ENT ERTAIN THE BELIEF THAT IT IS HONOURABLE TO AVOID THE PAYMENT OF TAX BY DUBIOUS METHODS. 6. AN ADDITIONAL GROUND WAS TAKEN BEFORE THE LD. CI T (APPEALS) ACCORDING TO WHICH, IT WAS CONTENDED THAT THE ASSESSEE DID NOT RECEIVE NOTICE UNDER SECTION 143(2) OF THE ACT. THE LD. CIT (APPEALS) DID NOT ENTERTAIN SUCH GROUND AND HE OBSE RVED THAT THE ASSESSEE DID NOT RAISE SUCH OBJECTION BEFORE THE ASSESSING OFFICER AND EVEN IF THE NOTICE UNDER SECTION 143(2) WAS NOT ISSUED THE SAME WAS PROTECTED BY 292-B AND 292-BB OF THE A CT. IN THIS MANNER THE LD. CIT (APPEALS) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE. TH E ASSESSEE IS AGGRIEVED, HENCE HAS RAISED THE AFORE-MENTIONED GROUNDS. 7.1 AFTER NARRATING THE FACTS IT WAS SUBMITTED BY T HE LD. AR THAT COPY OF REASONS WHICH ARE PLACED AT PAGE 20 OF THE PAPER BOOK WILL CLEARLY RE VEAL THAT THERE IS NO ALLEGATION AGAINST THE ASSESSEE BY THE SO-CALLED ENTRY PROVIDER. HE SUBMI TTED THAT ACCORDING TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SARTHAK SECURITIES CO. (P) LTD. VS. INCOME-TAX OFFICER 329 ITR 110 (DEL.) THE REASONS REQUIRE DISPLAY OF INDEPENDE NT APPLICATION OF MIND BY THE ASSESSING OFFICER AND REASONS MUST BE BASED ON REASONABLE FOUNDATION. HE SUBMITTED THAT FOLLOWING THE AFORE- MENTIONED DECISION OF HONBLE DELHI HIGH COURT, DEL HI BENCH OF THE TRIBUNAL IN THE FOLLOWING CASES HAS HELD AS UNDER :- (I) M/S. PRIYA FINANCIAL SERVICES PVT. LTD. V S. INCOME-TAX OFFICER [DECISION DATED 16 TH NOVEMBER, 2010] IN I.T. APPEAL NO. 1115 (DEL) OF 2 010. COPY OF DECISION 8 I. T. APPEAL NO. 599 (DEL) OF 2011. PLACED AT PAGES 7 TO 16 OF THE PAPER BOOK IN WHICH ITAT HELD THAT THE REASONS RECORDED SHOULD BE SELF-EXPLANATORY AND MUST BE BASED ON EVI DENCE AND SHOULD BE CLEAR UN- AMBIGUOUS AND NOT VAGUE; & (II) M/S. INTIMATE JEWELS PVT. LTD. VS. INC OME-TAX OFFICER [ORDER DATED 30 TH DECEMBER, 2010] IN I.T. APPEAL NO. 4498 (DEL) OF 20 10. COPY OF DECISION PLACED AT PAGES 17 TO 24 OF THE PAPER BOOK WHEREIN IT HAS BEE N HELD THAT THE REASONS RECORDED WERE VAGUE. NO REFERENCE OR ANY SPECIFIC INFORMATION TH AT THE ASSESSEE HAS RECEIVED ANY ACCOMMODATION ENTRY. THEREFORE, RE-ASSESSMENT PROC EEDINGS WERE NOT VALID. 7.2 HE FURTHER REFERRED TO THE FOLLOWING DECISIONS :- (A) CIT VS. ATUL JAIN 299 ITR 383 (DEL.) TO CO NTEND THAT IN CASE WHERE INFORMATION SUPPLIED WAS EXTREMELY SCANTY AND VAGUE , RE-ASSESSMENT PROCEEDINGS COULD NOT BE HELD VALID; (B) PIROJSHA FOUNDATION 133 TTJ 194 (MUM.) W HERE IT WAS HELD THAT FOR VALID RE-ASSESSMENT PROCEEDINGS THE REASONS RECORDE D SHOULD BE SELF-EXPLANATORY AND ARE REQUIRED TO BE READ JUST AS RECORDED BY THE ASSESSING OFFICER; (C) GULATI FABRICATION 217 CTR 494 (DEL.) WHE REIN IT WAS HELD THAT RE-ASSESSMENT PROCEEDINGS ARE NOT PERMISSIBLE IN A CASE WHERE THIRD PARTY ADMITTING TO BE AN ENTRY OPERATOR DO NOT SPECIFICAL LY NAMED ASSESSEE. HE SUBMITTED THAT REASONS WILL CLEARLY TELL THAT NONE OF THE SO-CALLED ENTRY OPERATOR HAS MENTIONED THE NAME OF THE ASSESSEE IN ANY OF TH E INVESTIGATION OR STATEMENT RECORDED BY THE DEPARTMENT. 8. ON MERITS REFERRING TO THE EVIDENCES PLACED ON R ECORD OF THE ASSESSING OFFICER AND THE LD. CIT (APPEALS) IT WAS SUBMITTED THAT ON MERITS ALSO ADDITION COULD NOT BE MADE OR SUSTAINED. HE SUBMITTED THAT REFERENCE CAN BE MADE TO THE DOCUMEN TARY EVIDENCE, COPY OF WHICH IS PLACED IN THE PAPER BOOK IN THE SHAPE OF COPIES OF BRIEF NOTE , PURCHASE AND SALE BILLS ISSUED BY THE SHARE BROKERS AND INTIMATION OF TRANSFER OF SHARES IN THE NAME OF THE ASSESSEE ALONG WITH THE COPIES OF 9 I. T. APPEAL NO. 599 (DEL) OF 2011. THE SHARE CERTIFICATES. HE SUBMITTED THAT THESE EV IDENCES ARE PLACED AT PAGES 35 TO 83 OF THE PAPER BOOK ALONG WITH COPY OF BANK STATEMENT OF THE ASSES SEE FOR THE YEAR UNDER CONSIDERATION, WHICH IS PLACED AT PAGES 29 TO 34 OF THE PAPER BOOK. HE ALSO SUBMITTED THAT TWO LETTERS WERE WRITTEN TO THE ASSESSING OFFICER, WHICH WERE SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ALONG WITH WHICH ALL THESE EVIDENCES WERE FILED BEFORE TH E ASSESSING OFFICER. THEREFORE, HE SUBMITTED THAT ON MERITS ALSO THE ACTION OF THE ASSESSING OFF ICER HAS WRONGLY BEEN SUSTAINED BY THE LD. CIT (APPEALS). 9. ON THE OTHER HAND, RELYING UPON THE FINDINGS REC ORDED BY THE ASSESSING OFFICER AND THE LD. CIT (APPEALS), IT WAS VEHEMENTLY PLEADED BY THE LD. SR. DR THAT VALIDITY OF RE-ASSESSMENT PROCEEDINGS HAS RIGHTLY BEEN UPHELD BY THE LD. CIT (APPEALS) AND THE ADDITION ON MERITS IS ALSO RIGHTLY UPHELD BY THE LD. CIT (APPEALS). 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THE REASONS AS RECORDED BY THE ASSESSIN G OFFICER HAVE ALREADY BEEN REPRODUCED IN THE ABOVE PART OF THIS ORDER. IT IS MENTIONED IN T HE REASONS THAT THE INVESTIGATION WING OF THE DEPARTMENT HAS CONDUCTED INVESTIGATION AND HAS PREP ARED A DETAILED REPORT GIVING THE DETAILS OF WORKING OF THE ENTRY OPERATORS ALONG WITH LIST O F BENEFICIARIES ATTACHED ALONG WITH LETTER OF ADDL. DIT DATED 26 TH MARCH, 2008. ACCORDING TO THE SAID INFORMATION, M /S. H. B. RELAN & CO. IS ONE OF SUCH OPERATORS RUNNING THROUGH SHRI RAMES H RELAN, WHO IS SPECIALIZED IN SHARE PROFIT / LOSS ENTRIES THROUGH ACCOUNT NUMBER 3374 I N THE NAME OF LUCKY ENTERPRISES AND ACCOUNT NUMBER 3493 IN THE NAME OF SHRI GANESH ENTERPRISES TO FACILITATE ISSUE OF CHEQUE FROM M/S. H. B. RELAN & CO. ACCOUNT NUMBER 3373 TO THE V ARIOUS BENEFICIARIES. BESIDES THAT ONE MORE ACCOUNT WAS ALSO USED FOR THE SAID PURPOSE, NA MELY, ACCOUNT NUMBER 3583 IN THE NAME OF M/S. AKANSHA AUTOMOBILES PVT. LTD. AND TOTAL AMO UNT TRANSFERRED THROUGH THIS ACCOUNT IS A SUM OF RS.28.89 CRORES. IT IS FURTHER MENTION ED IN THE REASONS THAT STATEMENT OF THE MASTER- MIND OF THE GROUP OF ENTRY OPERATORS, NAMELY, SHRI S. M. AGGARWAL WAS RECORDED, WHO DID NOT ACCEPT SUCH ENTRY BUSINESS. IT IS ONLY IN AN INFOR MAL CHAT HE HAS ACCEPTED TO BE DOING ENTRY BUSINESS AND WHICH CHAT WAS RECORDED BY UNITI IN A VIDEO CAMERA. THUS, IT HAS BEEN MENTIONED 10 I. T. APPEAL NO. 599 (DEL) OF 2011. IN THE REASONS THAT IN VIEW OF THE ABOVE FINDINGS A ND THE ADVERSE MATERIAL IN POSSESSION OF THE DEPARTMENT THE ASSESSING OFFICER HAS REASONS TO BEL IEVE THAT INCOME TO THE EXTENT OF RS.5,15,766/- HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2001 -02. IF THE CONTENTS OF REASONS ARE SEEN THEN IT HAS NOT BEEN MENTIONED THAT FROM WHERE THE NAME OF THE ASSESSEE HAS OBTAINED IN THE SAID REPORT. FROM THE REASONS IT ALSO DOES NOT COME OUT THAT ANY SPECIFIC PERSON INVOLVED IN THE ENTRY BUSINESS HAS TAKEN THE NAME OF THE ASSESSEE TO SAY THAT THE ENTRY PROVIDED TO THE ASSESSEE WAS A MERE PAPER ENTRY AND NOT THE REAL ENTRY. IF SUCH F ACTS ARE SEEN IN THE LIGHT OF REPLIES SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, IT WI LL BE OBSERVED THAT THE ASSESSEE RIGHT FROM THE BEGINNING IS DENYING TO HAVE INVOLVED IN TAKING ANY SUCH ENTRY FROM ALLEGED ENTRY OPERATOR. RATHER THE ASSESSEE HAS SUBMITTED ALL THE REQUIRED EVIDENCE TO SHOW THAT THE TRANSACTION DONE BY HIM IS A GENUINE TRANSACTION ENTERED INTO THROUGH R EGISTERED SHARE BROKER AND THE TRANSACTION IS SUPPORTED BY DOCUMENTARY EVIDENCE, COPY OF WHICH WA S PLACED BY THE ASSESSEE ON THE RECORD OF THE ASSESSING OFFICER. AFTER FURNISHING ALL THE SE EVIDENCE ASSESSEE HAS DISCHARGED THE ONUS LAID UPON HIM TO PROVE THE GENUINENESS OF THE TRANS ACTION ENTERED INTO BY HIM. AS IT APPEARS FROM THE ASSESSMENT ORDER, THE ASSESSING OFFICER HA S NOT MADE ANY ENQUIRY WHATSOEVER WITH REGARD TO DOCUMENTARY EVIDENCE FURNISHED BY THE ASS ESSEE. FROM THE REASONS AND THE PROCEEDINGS IT CAN BE SEEN THAT THE ASSESSING OFFIC ER HAS NOT APPLIED HIS MIND WHILE INITIATING THE RE-ASSESSMENT PROCEEDINGS AND HE HAS ALSO NOT A PPLIED HIS MIND WHILE MAKING THE ADDITION. THE SOLE RELIANCE OF THE LD. CIT (APPEALS) IS ON TH E SO-CALLED REPORT OF THE INVESTIGATION WING AND IT HAS NOT BEEN SHOWN THAT WHETHER IN THAT REPO RT NAME OF THE ASSESSEE HAS BEEN SPECIFICALLY MENTIONED THAT THE TRANSACTION OF RS.5,15,766/- WAS ADMITTED TO BE PAPER ENTRY BY THE SO-CALLED ENTRY OPERATOR. IN THE ABSENCE OF ANY SUCH ALLEGAT ION BY THE ENTRY PROVIDER, UNLESS A PROPER VERIFICATION IS MADE IN THIS REGARD, IT CANNOT BE S AID THAT THE ADDITION HAS RIGHTLY BEEN MADE OR SUSTAINED. MOREOVER, THE ASSESSEE HAS FILED THE OBJECTIONS FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS. THOSE OBJECTIONS HAVE NOT BEEN DISPOS ED OF BY THE ASSESSING OFFICER BY WAY OF A SPEAKING ORDER AND THAT GROUND OF THE ASSESSEE HAS SIMPLY BEEN IGNORED BY THE LD. CIT (APPEALS). LOOKING INTO THE ENTIRETY OF THESE FACTS, WE ARE OF THE OPINION THAT THE IMPUGNED ASSESSMENT CANNOT WITHSTAND THE TEST OF LAW EITHER IN RESPECT OF INITIATION OF RE-ASSESSMENT PROCEEDINGS OR IN RESPECT OF THE MERITS OF THE ADDITION. THE C ASE LAWS RELIED UPON BY THE LD. AR SUPPORT THE CASE OF THE ASSESSEE. THEREFORE, WE CANCEL THE IMPUGNED ASSESSMENT AND ALLOW THE APPEAL OF THE ASSESSEE. 11 I. T. APPEAL NO. 599 (DEL) OF 2011. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED, IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 05.08.20 11 . SD/- SD/- [ K. G. BANSAL ] [ I. P. BANSAL ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 05.08. 2011. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.