M/s. Mini Leisure City Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 6153/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82070 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 17-09-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 11-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKER
• Keywords: Reopening of assessment; Bogus Share capital; Reasonable cause; Tangible material; Accommodation entries; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 147; 68; 148

Judgement Text

ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES E NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO. 6153/DEL/2012 ASSTT.YEAR: 2001-02 ITA NO. 6163/DEL/2012 ASSTT.YEAR: 2002-03 MINI LEISURE CITY PVT. LTD., VS IN COME TAX OFFICER, C/O KAPIL GOEL, ADVOCATE, WARD 6(4), A-1/25, SECTOR 15, NEW DELHI. ROHINI, NEW DELHI. (PAN NO. AAACCM9982E) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI KAPIL GOEL, ADV. RESPONDENT BY: SHRI J.P. CHANDRAKER, SR .DR O R D E R PER CHANDRAMOHAN GARG, J.M. THESE APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS OF THE CIT(A)-IX, NEW DELHI BOTH DATED 14.9. 2012 IN APPEAL NO.116/08-09 AND 112/07-08 FOR AY 2001-02 AND 2002- 03 RESPECTIVELY. ITA NO. 6153/DEL/2012 2. THE ASSESSEE HAS RAISED LEGAL CONTENTIONS REGARD ING VALIDITY OF REOPENING U/S 147 AND 148 OF THE INCOME TAX ACT, 1961 WHICH R EAD AS UNDER:- ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 2 VALIDITY OF REOPENING U/S 148 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LEARNED CIT-A ERRED IN UPHOLDING THE REOPEN ING ACTION OF LD AO WHICH STANDS VITIATED INTER ALIA FOR FOLLOWIN G REASONS: A. NOTICE U/S 148 IS VAGUE AND DO NOT MEET TESTIMON Y OF LAW; B. BORDER LINE REASONS ARE RECORDED BELATEDLY ON BA SIS OF STALE INFORMATION AND CONSEQUENTIAL NOTICE U/S 148 COULD HAVE BEEN ISSUED IN MARCH 2007, INSTEAD WAITING FOR LAST DATE THEREBY MAKING ASSESSEE'S TASK DIFFICULT U/S 68 ; C. TOTAL LACK OF TANGIBLE MATERIAL/REASONABLE CAUSE AND JUSTIFICATION D. ABSENCE OF NEXUS (MUCH LESS LIVE NEXUS) BETWEEN ALLEGED INFORMATION (UNKNOWN WHETHER EXISTS ON FILE OR NOT) AND TENTATIVE INFERENCE DRAWN; E. NON APPLICATION OF MIND MUCH LESS INDEPENDENT APPLICATION OF MIND F. TOTAL LACK OF CLARITY ON NATURE OF TRANSACTI ON IN REASONS RECORDED . 3. APROPOS ABOVE GROUND OF THE ASSSESSEE, WE HAVE H EARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RECORD, INTER A LIA REJECTION OF OBJECTIONS OF THE ASSESSEE TO INITIATION OF PROCEEDINGS U/S 147/148 O F THE ACT, REASSESSMENT ORDER AND IMPUGNED ORDER OF THE CIT(A). WE HAVE ALSO CON SIDERED THE RATIO OF THE DECISIONS RELIED BY BOTH THE PARTIES. 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON T HE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN UPHOLDI NG THE REOPENING ACTION OF THE AO WHICH STANDS VITIATED AS NOTICE U/S 148 OF THE A CT IS VAGUE AND DOES NOT MEET ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 3 THE TESTIMONY OF LAW. LD. COUNSEL FURTHER CONTENDE D THAT THE AO HAS RECORDED BELATEDLY BORDER LINE REASONS ON THE BASIS OF STALE INFORMATION AND CONSEQUENTIAL NOTICE U/S 148 OF THE ACT WHICH HAVE BEEN ISSUED IN MARCH 2007. LD. COUNSEL FURTHER SUBMITTED THAT THERE IS A TOTAL LACK OF TAN GIBLE MATERIAL, REASONABLE CAUSE AND JUSTIFICATION FOR INITIATION OF REASSESSMENT PR OCEEDINGS IN ABSENCE OF NEXUS BETWEEN THE ALLEGED INFORMATION AND TENTATIVE INFER ENCE DRAWN BY THE AO BY NON-APPLICATION OF INDEPENDENT MIND. LD. COUNSEL V EHEMENTLY CONTENDED THAT THERE IS A TOTAL LACK OF CLARITY ON THE NATURE OF T RANSACTION IN THE REASONS RECORDED. LD. COUNSEL REITERATED ITS OBJECTIONS TO THE INITIA TION OF REASSESSMENT PROCEEDINGS U/S 147 AND 148 OF THE ACT WHICH WAS SU BMITTED BEFORE THE AO VIDE LETTER DATED 28.11.2008 AND SUBMITTED THAT THE ASSE SSEE HAS SOUGHT TO MAKE A CASE OF JUDICIAL INFIRMITY AND THE ISSUANCE OF NOTI CE U/S 148 OF THE ACT MAINLY ON THE GROUND THAT THE AO HAS MERELY ACTED UPON THE DI RECTION OF THE INVESTIGATION WING. THE ASSESSEE STRONGLY CONTENDED THAT THE DET AILS OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE HAD BEEN DULY SUBMIT TED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT. LD. COUNSEL ALSO CONTENDED THAT THE NOTICE HAS BEEN ISSUED AFTER EXP IRY OF FOUR YEARS FROM THE END OF ASSESSMENT YEAR. 5. LD. COUNSEL HAS DRAWN OUR ATTENTION TOWARDS REAS ONS RECORDED AND SUBMITTED THAT THE WHOLE REOPENING WAS MADE ON THE BASIS OF BORROWED SATISFACTION WITHOUT APPLICATION OF MIND AS THE REA SONS RECORDED ARE BASED ON ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 4 VAGUE AND SKETCHY INFORMATION AND REFLECT TOTAL NON -APPLICATION OF MIND ON THE PART OF REASON RECORDING AUTHORITY I.E. THE ASSESSI NG OFFICER. LD. COUNSEL FURTHER CONTENDED THAT THERE IS NO MINIMAL DISCUSSION IN TH E REASONS AS TO HOW THE AO HAS INDEPENDENTLY BELIEVED THAT THE AMOUNT IS INCOM E ESCAPING ASSESSMENT IN THE HANDS OF ASSESSEE COMPANY FOR THE PERIOD UNDER CONSIDERATION. 6. LD. COUNSEL HAS ALSO PLACED HIS RELIANCE ON VARI OUS DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT INCLUDING DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF SIGNATURES HOTELS PVT . LTD. VS ITO AND ANOTHER (2011) 338 ITR 51 (DELHI) , CIT VS INSECTIC IDES (INDIA) LTD. (2013) 357 ITR 330 AND DECISION OF ITAT E BENCH DATED 27 .08.2013 IN THE CASE OF ITO VS ON EXIM PVT. LTD. IN ITA NO. 1116/DEL/2011 F OR AY 2001-02. 7. REPLYING TO THE ABOVE, LD. DR SUPPORTED THE ACTI ON OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE AO HAS REASON TO BELIE VE THAT THE ASSESSEE HAS RECEIVED TWO AMOUNTS OF RS.2,50,000/- EACH FROM ALL EGED ACCOMMODATION ENTRY PROVIDERS AND, THEREFORE, THERE WAS ESCAPEMENT OF A SSESSMENT BY THE ASSESSEE. THE DR HAS ALSO DRAWN OUR ATTENTION TOWARDS REASONS RECORDED BY THE AO PRIOR TO ISSUANCE OF NOTICE U/S 148 OF THE ACT AND SUBMIT TED THAT THE ASSESSEE HAS TAKEN AFTER PAYING UNACCOUNTED CASH TO THE ENTRY PROVIDER S AS THE STATEMENT OF CONCERNED PERSONS OF THESE CONCERNS TO THIS EFFECT HAVE BEEN RECORDED BEFORE THE INVESTIGATION WING. ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 5 8. AT THE OUTSET, WE DEEM IT APPROPRIATE TO REPRODU CE THE REASONS RECORDED BY THE AO FOR INITIATION OF REASSESSMENT PROCEEDINGS U /S 147 OF THE ACT AND ISSUANCE OF NOTICE U/S 148 OF THE ACT WHICH READS A S UNDER:- IN THIS CASE INFORMATION HAS BEEN RECEIVED FROM DI RECTOR OF INCOME TAX, (INVESTIGATION), NEW DELHI THAT THE ASSESSE HAS RECEIVED TWO AMOUNTS OF RS.250000/- EACH FROM FNS CONSULTANCY P LTD. & MAESTRO MARKETING & ADVRT. P L TD VIDE INSTRUMENTS NO 916272 AND 172200 DRAWN ON FEDERAL B ANK, KAROL BAGH AND KARUR VYSYA BANK KAROL BAGH RESPECTI VELY. THE SAID INSTRUMENTS ARE IN THE NATURE OF AN ACCOMM ODATION CARIES, WHICH THE ASSESSE HAS TAKEN AFTER PAYING UN ACCOUNTED CASH TO THESE CONCERNS WHO ARE THE KNOWN ENTRY OPER ATORS AS THE STATEMENT OF THE CONCERNED PERSONS OF THESE CON CERNS TO THIS EFFECT HAVE BEEN RECORDED BEFORE THE INVESTIGATION WING. IN ADDITION THE ASSESSE HAS GIVEN SOME COMMISSION TO T HE ENTRY OPERATOR IN CASH. THEREFORE, I HAVE REASON TO BELIE VE THAT AN INCOME OF RS. 5,00,000/- AND COMMISSION @ 1 % AMOUN TING TO RS. 500000/- HAS ESCAPED ASSESSMENT IN THE ASSESSME NT YEAR 2001-02 AND THE CASE IS FIT FOR ISSUING NOTICE U/S 148 OF THE I.T. ACT, 1961. 9. IN THE CASE OF M/S ON EXIM PVT. LTD. (SUPRA), TH E COORDINATE BENCH OF THIS TRIBUNAL HAS HELD AS UNDER:- 10. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO RELIED UPON THE VARIOUS DECISIONS OF HON'BLE JURISDICTIONA L HIGH COURT IN SUPPORT OF HIS CONTENTION THAT THE NOTICE HAS BEEN ISSUED ON THE BASIS OF VAGUE INFORMATION ALLEGED TO HAVE BEEN RECEIVED FROM THE INVESTIGATION WING. WE FIND THAT HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SIGNATURE HOTELS P.LTD. (SUPRA) HELD AS UNDER:- ALLOWING THE PETITION, THAT THE REASSESSMENT PROCE EDINGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME-TAX (INVESTIGATION) THAT THE PET ITIONER HAD INTRODUCED MONEY AMOUNTING TO RS.5 LAKHS DURING FIN ANCIAL YEAR 2002-03 AS STATED IN THE ANNEXURE. ACCORDING T O THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY, S, WAS ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 6 NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIR EMENTS OF SECTION 147 OF THE ACT. THERE WAS NO REFERENCE TO A NY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANN EXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THA T PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DIS CLOSED ESCARPMENT OF INCOME. THE ANNEXURE WAS NOT A POINTE R AND DID NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, THE ASS ESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATI ON AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THERE WAS NO DISPUTE THAT THE COMPANY, S, HAD A PAID-UP CAPIT AL OF RS.90 LAKHS AND WAS INCORPORATED ON JANUARY 4, 1989, AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER, 2 001. THUS, IT COULD NOT BE HELD TO BE A FICTITIOUS PERSO N. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LI ABLE TO BE QUASHED. 11. SIMILAR VIEW IS TAKEN IN THE CASE OF SARTHAK SE CURITIES CO.P. LTD. (SUPRA), WHEREIN THEIR LORDSHIPS HELD AS UNDER:- ALLOWING THE PETITION, THAT THE FORMATION OF BELIE F WAS A CONDITION PRECEDENT AS REGARDS THE ESCAPEMENT OF TH E TAX PERTAINING TO THE ASSESSMENT YEAR BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS REQUIRED TO FORM AN OPINION B EFORE HE PROCEEDED TO ISSUE A NOTICE. THE VALIDITY OF REASON S, WHICH WERE SUPPOSED TO SUSTAIN THE FORMATION OF AN OPINIO N, WAS CHALLENGEABLE. THE REASONS TO BELIEVE WERE REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER. ONCE THE INGREDIENTS OF SECTION 147 WERE FULFILLED, THE ASSESSING OFFICER W AS COMPETENT IN LAW TO INITIATE THE PROCEEDINGS UNDER SECTION 14 7. THE ASSESSING OFFICER WAS AWARE OF THE EXISTENCE OF THE FOUR COMPANIES WITH WHOM THE ASSESSEE HAD ENTERED INTO TRANSACTION. BOTH THE ORDERS SHOWED THAT THE ASSESS ING OFFICER WAS MADE AWARE OF THE SITUATION BY THE INVESTIGATIO N WING AND THERE WAS NO MENTION THAT THESE COMPANIES WERE FICT ITIOUS COMPANIES. NEITHER THE REASONS IN THE INITIAL NOTIC E NOR THE COMMUNICATION PROVIDING REASONS REMOTELY INDICATED INDEPENDENT APPLICATION OF MIND. THOUGH CONCLUSIVE PROOF WAS NOT GERMANE AT THIS STAGE THE FORMATION OF BELIEF M UST BE ON THE BASE OR FOUNDATION OR PLATFORM OF PRUDENCE WHIC H A REASONABLE PERSON WAS REQUIRED TO APPLY. FROM THE P ERUSAL OF THE REASONS RECORDED AND THE ORDER OF REJECTION OF OBJECTIONS, THE NAMES OF THE COMPANIES WERE AVAILABLE WITH THE AUTHORITY ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 7 AND THEIR EXISTENCE WAS NOT DISPUTED. THE ASSESSEE IN ITS OBJECTIONS HAD STATED THAT THE COMPANIES HAD BANK A CCOUNTS AND PAYMENTS WERE MADE TO THE ASSESSEE THROUGH BANK ING CHANNEL. THE IDENTITY OF THE COMPANIES WAS NOT DISP UTED. UNDER THESE CIRCUMSTANCES, THE INITIATION OF PROCEE DINGS UNDER SECTION 147 AND ISSUANCE OF NOTICE UNDER SECTION 14 8 OF THE ACT WERE TO BE QUASHED. 12. WHEN WE EXAMINE THE REASONS RECORDED IN THE LIG HT OF ABOVE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COUR T, WE ARE OF THE OPINION THAT THE RATIO OF THE ABOVE DECISION S WOULD OPERATE IN FAVOUR OF THE ASSESSEE BECAUSE IN THE AP PEAL BEFORE US ALSO, THE ONLY INFORMATION RECEIVED BY THE ASSES SING OFFICER WAS THAT M/S AAYUSHI STOCK BROKERS (P) LIMITED IS F OUND TO BE PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF BOGU S SHARE TRANSACTIONS, BOGUS SHARE CAPITAL ETC. THEN, THERE IS A MENTION THAT THE ASSESSEE HAS RECEIVED BOGUS ACCOMMODATION ENTRIES FROM SUCH PARTY, DETAIL OF WHICH IS AS UNDER:- S.NO. DATE NAME & NATURE OF LEDGER NO. AMT. A/C 1 13/03/01 FEDERAL BANK -/502 500000/- 2 21/03/01 694205/550 10,00,000/- 3 24/03/01 694235/562 10,00,000/- 4 28/03/01 694238/605 450000/- 13. HOWEVER, THE DETAIL GIVEN IS ONLY WITH REGARD T O NAME OF THE BANK, LEDGER ACCOUNT NUMBER AND AMOUNT. EVEN THE NATURE OF TRANSACTIONS IS NOT GIVEN, MUCH LESS TO E STABLISH THAT THE ABOVE TRANSACTIONS ARE IN THE NATURE OF ACCOMMO DATION ENTRIES. IT HAS BEEN STATED BY THE LEARNED COUNSEL AT THE TIME OF HEARING BEFORE US THAT THE ASSESSEE HAS ONLY SOLD T HE SHARES THROUGH M/S AAYUSHI STOCK BROKERS (P) LIMITED AND T HE SALE PROCEED HAS DULY BEEN CONSIDERED WHILE COMPUTING TH E INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSI DERATION. IN VIEW OF THE ABOVE, IN OUR OPINION, THE RATIO OF THE ABOVE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT WOUL D BE SQUARELY APPLICABLE AND, RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE REASONS DID NOT SATISFY THE REQUIREME NT OF SECTION 147. ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 8 14. IN VIEW OF THE TOTALITY OF ABOVE FACTUAL AS WEL L AS LEGAL POSITION, WE HOLD THAT THE NOTICE ISSUED UNDER SECT ION 148 WAS NOT VALID. THE SAME IS QUASHED. ONCE THE NOTICE ISS UED UNDER SECTION 148 IS QUASHED, THE ASSESSMENT ORDER PASSED IN PURSUANCE THERETO IS ALSO QUASHED. 10. IN VIEW OF ABOVE, TURNING TO THE FACTUAL MATRIX OF THE PRESENT CASE AND FROM THE REASONS RECORDED BY THE AO, WE CLEARLY SEE THAT EVEN THE NATURE OF THE TRANSACTION HAS NOT BEEN GIVEN BY THE AO IN THE REA SONS RECORDED, MUCH LESS TO ESTABLISH THAT THE IMPUGNED TRANSACTIONS ARE IN THE NATURE OF ACCOMMODATION ENTRIES. IT HAS BEEN STATED BY THE LD. COUNSEL OF THE ASSESSEE DURING THE COURSE OF HEARING BEFORE US THAT THE ASSESSEE HAS ONLY SOLD T HE SHARES THROUGH M/S FNS CONSULTANCY P. LTD. AND MAESTRO MARKETING & ADVRT. P. LTD. AND THE SALE CONSIDERATION WAS RECEIVED THROUGH BANKING CHANNELS . LD. COUNSEL HAS ALSO STATED THAT THE SALE PROCEEDS HAVE BEEN DULY CONSID ERED WHILE COMPUTING THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDE R CONSIDERATION. IN VIEW OF ABOVE, WE ARE INCLINED TO HOLD THAT THE FACTUM OF T HE CASE OF ON EXIM (SUPRA) ARE SIMILAR TO THE FACTS OF THE PRESENT CASE, HENCE, IN OUR OPINION, THE RATIO OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DE LHI IN THE CASE OF SIGNATURE HOTELS PVT. LTD. (SUPRA) AND SARTHAK SECURITIES CO. P. LTD. (SUPRA), THE DECISION OF ITAT BENCH DELHI IN THE CASE OF ON EXIM (SUPR A) WOULD BE SQUARELY APPLICABLE TO THE PRESENT CASE AND RESPECTFULLY FOL LOWING THE SAME, WE HOLD THAT THE REASONS DID NOT SATISFY THE REQUIREMENT OF SECT ION 147 OF THE ACT. ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 9 11. WE ALSO NOTE THAT THE DR HAS NOT DISPUTED THIS FACT THAT THE ASSESSEE HAS RECEIVED SALE PROCEED AND THE SHARES THROUGH BANKIN G CHANNELS AND THE SALE CONSIDERATION HAS BEEN DULY CONSIDERED WHILE COMPUT ING THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N. UNDER THESE CIRCUMSTANCES AND TOTALITY OF THE ABOVE FACTUAL AS WELL AS LEGAL POSITION, WE HOLD THAT THE NOTICE ISSUED U/S 148 WAS NOT VALID AND TH E SAME IS QUASHED. SINCE NOTICE U/S 148 OF THE ACT HAS BEEN QUASHED BY THE E ARLIER PART OF THIS ORDER, REASSESSMENT ORDER PASSED IN PURSUANCE THERETO ALSO DESERVES TO BE QUASHED AND WE QUASH THE SAME. ACCORDINGLY, LEGAL OBJECTIONS I N GROUND OF THE ASSESSEE TOWARDS VALIDITY OF REOPENING AND ISSUANCE OF NOTIC E U/S 147 AND 148 OF THE ACT ARE HEREBY ALLOWED. 12. SINCE WE HAVE QUASHED NOTICE U/S 148 OF THE ACT AND REASSESSMENT ORDER PASSED IN PURSUANCE THERETO, THEREFORE, OTHER GROUN DS OF THE ASSESSEE ON MERITS DO NOT SURVIVE FOR ADJUDICATION AND WE ALSO DISMISS THE SAME. ITA NO. 6163/DEL/2012 FOR AY 2002-03 13. IN THE BEGINNING, BOTH THE PARTIES AGREED THAT THE GROUND OF THE ASSESSEE REGARDING VALIDITY OF REOPENING OF ASSESSMENT U/S 1 47/148 OF THE ACT MAY BE CONSIDERED FIRST. THE LEGAL GROUND RAISED BY THE A SSESSEE IN THIS REGARD READS AS UNDER:- ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 10 VALIDITY OF REOPENING U/S 148 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LEARNED CIT-A ERRED IN UPHOLDING THE REOPEN ING ACTION OF LD AO WHICH STANDS VITIATED FOR FOLLOWING REASONS: A. TOTAL LACK OF TANGIBLE MATERIAL/REASONABLE CAUSE AND JUSTIFICATION B. ABSENCE OF NEXUS (MUCH LESS LIVE NEXUS) BETWEEN ALLEGED INFORMATION (UNKNOWN WHETHER EXISTS ON FILE OR NOT) AND TENTATIVE INFERENCE DRAWN; C. NON APPLICATION OF MIND MUCH LESS INDEPENDENT APPLICATION OF MIND AS APPARENT FROM FACT THAT 3 DI FFERENT FIGURES ARE MENTIONED FOR INCOME ESCAPEMENT IN REASONS RECO RDED. D. TOTAL LACK OF CLARITY ON NATURE OF TRANSACTION I N REASONS RECORDED . 14. LD. COUNSEL OF THE ASSESSEE REFERRING TO THE RE ASONS RECORDED BY THE AO POINTED OUT THAT IN THE REASONS RECORDED, THE AO SI MPLY REPRODUCED CERTAIN DETAILS RECEIVED FROM THE INVESTIGATION WING WITHOU T ANY APPLICATION OF MIND AND ISSUED NOTICE U/S 148 OF THE ACT. LD. COUNSEL OF THE ASSESSEE REFERRED TO THE DETAILS AND TABLE IN THE REASONS RECORDED AND POINT ED OUT THAT IN THE FIRST TABLE, THERE ARE FOUR ENTRIES OF RS. 1.5 LAKH EACH WHICH C OMES TO RS.6 LAKH IN PARA (II). THE AMOUNT OF TRANSACTION INVOLVED HAS BEEN MENTION ED AS RS.9,50,000/- IN PARA (III), THE INCOME OF RS. 10 LAKH HAS ESCAPED HIS ME NTION. LD. COUNSEL VEHEMENTLY CONTENDED THAT THE AO HAS TAKEN THREE DI FFERENT AMOUNTS IN THE SCRIPT OF REASON TO BELIEVE WHICH SHOW THAT THE AO HAS NOT APPLIED HIS MIND TOWARDS DETAILS AND INFORMATION RECEIVED FROM THE I NVESTIGATION WING AND THIS CONDUCT CLEARLY SHOWS NON-APPLICATION OF MIND BY TH E AO, THEREFORE, INITIATION OF REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT AND ISSUANCE OF NOTICE U/S 148 OF ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 11 THE ACT IS NOT VALID AND SUSTAINABLE. LD. COUNSEL HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI:- I) CIT VS SUREN INTERNATIONAL PVT. LTD. (2013) 357 IT R 24 (DEL) II) SIGNATURE HOTELS (P) LTD. VAS ITO (SUPRA) III) DECISION OF ITAT B BENCH DELHI IN ITA NO. 428/D/2 010 DATED 14.8.2014 IN THE CASE OF ITO VS M/S COMERO LEASING & FINANCIAL PVT. LTD. 15. REPLYING TO THE ABOVE, LD. DR SUBMITTED THAT TH E AO HAD RECEIVED DEFINITE INFORMATION FROM THE DIT, NEW DELHI WITH REGARD TO ACCOMMODATION ENTRIES BEING PROVIDED BY VARIOUS ACCOMMODATION ENTRY OPERA TORS. THE DR FURTHER CONTENDED THAT THE ASSESSEE WAS BENEFICIARY OF SUCH ACCOMMODATION ENTRIES AND DURING THE COURSE OF INVESTIGATION, INVESTIGATION W ING FOUND THAT SUCH INFORMATION WAS FORWARDED TO THE AO FOR NECESSARY A CTION. THE DR FURTHER SUBMITTED THAT THE AO HAS REOPENED THE ASSESSMENT O N THE BASIS OF SPECIFIC INFORMATION WITH REGARD TO ACCOMMODATION ENTRIES TA KEN BY THE ASSESSEE, THE DETAILS OF WHICH ARE GIVEN IN THE REASONS RECORDED WHICH SHOWS COMPLETE DETAIL WITH REGARD TO THE DATE ON WHICH THE ENTRIES WERE R ECEIVED, ACCOUNT FROM WHICH THESE ENTRIES WERE RECEIVED, NAME AND BRANCH OF THE BANK AND THE AMOUNT. LD. DR SUPPORTED THE ACTION OF THE AUTHORITIES BELOW AN D SUBMITTED THAT THE AO HAD CERTAINLY HAD VALID REASON TO BELIEVE THAT THE INCO ME OF THE ASSESSEE HAD ESCAPED ASSESSMENT, THEREFORE, REOPENING OF THE ASSESSMENT WAS VALID. ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 12 16. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL PLACED BEFORE US. TH E REASONS RECORDED BY THE AO FOR ISSUING NOTICE U/S 148 OF THE ACT READ AS UNDER :- (I) CERTAIN INVESTIGATIONS WERE CARRIED OUT BY THE DIRECTORATE OF INVESTIGATION, UNIT, V. JHANDEWALAN, NEW DELHI IN RESPECT OF THE BOGUS/ACCOMMODATION ENTRIES PROVI DED BY THE CERTAIN INDIVIDUALS / COMPANIES. THE NAME OF THE AP PELLANT FIGURES AS ONE OF THE BENEFICIARIES OF THESE ALLEGE D BOGUS TRANSACTIONS GIVEN BY THE DIRECTORATE AFTER MAKING THE NECESSARY ENQUIRIES. IT HAS BEEN REVEALED THAT THE FOLLOWING ENTRIES HAVE BEEN RECEIVED BY THE APPELLANT:- BENEFICIARY NAME BENEFICIARY BANK BENEFICIARY BANK BRANCH VALUE OF ENTRY TAKEN INSTRUMENT NO. I II III IV V M/S MINI LEISURE P. LTD. VIJAYA BANK KAROL BAGH, NEW DELHI RS.1,50,000 2169 M/S MINI LEISURE P. LTD. VIJAYA BANK KAROL BAGH, NEW DELHI RS.1,50,000 P924448 M/S MINI LEISURE P. LTD. VIJAYA BANK KAROL BAGH, NEW DELHI RS.1,50,000 805 M/S MINI LEISURE P. LTD. VIJAYA BANK KAROL BAGH, NEW DELHI RS.1,50,000 811 DATE OF ENTRY NAME OF ACCOUNT HOLDER OF ENTRY BANK FROM WHICH BRANCH OF ENTRY ACCOUNT NO.ENTRY VI VII VIII IX X 02/01/2002 M/S MAESTRO MKT.& ADV.P.LTD. RATNAKAR BANK KAROL BAGH, NEW DELHI 46 02/01/2002 M/S ARUN FINVEST P.LTD. KARUR VYSYA BANK KAROL BAGH, NEW DELHI CA 2813 02/01/2002 SH. KAMAL DHAWAN RATNAKAR BANK KAROL BAGH, NEW DELHI 213 02/01/2002 SH. RAJAN JASSAL RATNAKAR BANK KAROL BAGH, NEW DELHI 212 ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 13 (II) THE TRANSACTIONS INVOLVING RS.9,50,000/- MENT IONED IN THE MANNER ABOVE, CONSTITUTES FRESH INFORMATION IN RESPECT OF THE APPELLANT AS A BENEFICIARY OF BOGUS ACCOMMODATI ON ENTRIES PROVIDED TO IT. (III) ON THE BASIS OF THIS NEW INFORMATION, I HAVE REASON TO BELIEVE THAT THE INCOME OF RS.10,00,000/- HAS ES CAPED ASSESSMENT AS DEFINED BY SEC. 147 OF THE INCOME TAX ACT IN THE AY 2002-03. THEREFORE, THIS IS A FIT CASE FOR THE ISSUANCE TO THE NOTICE U/S 148. 17. FROM CAREFUL READING OF ABOVE REASONS RECORDED BY THE AO, WE FIND THAT IN THE FIRST TABLE, THE AMOUNT OF FOUR ENTRIES OF R S.1,50,000 EACH HAS BEEN SHOWN WHICH COMES TO A TOTAL OF RS. 6 LAKH. IN PARA (II), THE AMOUNT OF TRANSACTION OF BOGUS ACCOMMODATION ENTRIES HAS BEEN MENTIONED AS R S.9,50,000 AND IN PARA (III), THE INCOME OF RS. 10,00,000 HAS ESCAPED ASSE SSMENT AS MENTIONED. IN THIS SITUATION, WE CLEARLY OBSERVE THAT THE AO HAS TAKEN THREE DIFFERENT AMOUNTS IN THE REASONS RECORDED FOR REOPENING OF ASSESSMENT U/ S 147 OF THE ACT AND FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT. AT THIS POI NT, WE TAKE NOTE OF THE DECISION OF ITAT DELHI B BENCH IN THE CASE OF ITO VS M/S C OMERO LEASING & FINANCIAL PVT. LTD. (SUPRA) WHEREIN AFTER CONSIDERI NG THE RATIO OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS SUREN INTERNATIONAL PVT. LTD. (SUPRA), IT HAS BEEN HELD THAT IF THE AO HAD N OT APPLIED HIS MIND IN THE REASONS RECORDED, THEN THERE WOULD BE NO BELIEF THA T INCOME HAS ESCAPED ASSESSMENT WHICH CAN BE STATED TO HAVE BEEN FORMED BASED ON SUCH REASONS AS RECORDED BY THE AO FOR ISSUANCE OF NOTICE U/S 148 O F THE ACT. THE RELEVANT ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 14 OPERATIVE PART OF THIS ORDER OF THE TRIBUNAL IN THE CASE OF M/S COMERO LEASING & FINANCIAL PVT. LTD. (SUPRA):- WE FIND THAT THE IDENTICAL CASE WAS CONSIDERED BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SUREN INTE RNATIONAL P.LTD. (SUPRA), WHEREIN, AT PAGE 32 OF THE REPORT, THEIR LORDSHIPS HELD AS UNDER:- '13. WE HAVE HEARD COUNSEL FOR THE PARTIES AT LENGT H. 14. THE LEARNED COUNSEL FOR THE APPELLANT CONTENDED THAT EVEN THOUGH THERE IS NO SPECIFIC ALLEGATION THAT THE ASS ESSEE HAD FAILED TO DISCLOSE ALL THE MATERIAL FACTS BUT THE SAME CAN BE GLEANED FROM THE REASONS ITSELF. WE ARE UNABLE TO ACCEPT TH IS CONTENTION. IN THE FIRST INSTANCE, WE DO NOT FIND THE REASONS A S RECORDED BY THE ASSESSING OFFICER TO BE REASONS IN LAW, AT ALL. A BARE PERUSAL OF THE TABLE OF ALLEGED ACCOMMODATION ENTRIES INCLU DED IN THE REASONS AS RECORDED, DISCLOSES THAT THE SAME ENTRIE S HAVE BEEN REPEATED SIX TIMES. THIS IS CLEARLY INDICATIVE OF T HE CALLOUS MANNER IN WHICH THE REASONS FOR INITIATING REASSESS MENT PROCEEDINGS ARE RECORDED AND WE ARE UNABLE TO COUNT ENANCE THAT ANY BELIEF BASED ON SUCH STATEMENTS CAN EVER BE ARR IVED AT. THE REASONS HAVE BEEN RECORDED WITHOUT ANY APPLICATION OF MIND AND THUS NO BELIEF THAT INCOME HAS ESCAPED ASSESSMENT C AN BE STATED TO HAVE BEEN FORMED BASED ON SUCH REASONS AS RECORD ED. ' 8. THE FACTS IN THE ASSESSEE'S CASE ARE IDENTICAL. IN THIS CASE ALSO, THE ASSESSING OFFICER, EXCEPT PREPARING THE TABLE O F ALLEGED ACCOMMODATION ENTRIES FROM THE DETAILS CLAIMED TO H AVE BEEN RECEIVED FROM THE INVESTIGATION WING, HAS NOT AT AL L APPLIED HIS MIND. FROM A BARE PERUSAL OF THE TABLE OF THE ALLEG ED ACCOMMODATION ENTRIES, IT IS EVIDENT THAT THE SAME ENTRIES HAVE BEEN REPEATED FIVE TIMES. THIS IS THE CLEAR INDICAT ION OF NON- APPLICATION OF MIND BY THE ASSESSING OFFICER. THERE FORE, THE ABOVE DECISION OF HONBLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. 18. IN THE APPEAL BEFORE US, THE CONTENTION OF THE ASSESSEE IS THAT THE AO ISSUED A NOTICE U/S 148 OF THE ACT MECHANICALLY WIT HOUT APPLICATION OF MIND AND ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 15 WITHOUT FORMING A PRIMA FACIE BELIEF THAT THE INCOM E HAS ESCAPED ASSESSMENT, SIMPLY ON THE BASIS OF INFORMATION ALLEGED TO HAVE BEEN RECEIVED FROM THE INVESTIGATION WING. ON THE ABOVE FACTS OF THIS CAS E, WE FIND THIS CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE TO BE CORRECT AND, MOREOVER, ON IDENTICAL FACTS, HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF SUREN INTERNATIONAL PVT. LTD. (SUPRA) HELD THAT THE REASONS RECORDED WI THOUT ANY APPLICATION OF MIND CANNOT BE SAID TO BE A PROPER BELIEF WITH REGARD TO ESCAPEMENT OF INCOME. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF H ONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS SUREN INTERNAT IONAL PVT. LTD. (SUPRA), QUASH THE INITIATION OF REASSESSMENT PROCEEDINGS AND NOTI CE U/S 147 AND 148 OF THE ACT RESPECTIVELY AND REASSESSMENT ORDER IN PURSUANCE TH ERETO IS ALSO QUASHED. ACCORDINGLY, LEGAL GROUND NO. 1 OF THE ASSESSEE IS HEREBY ALLOWED. GROUND NO. 2 & 3 OF THE ASSESSEE 19. SINCE WE HAVE QUASHED NOTICE U/S 148 OF THE ACT AND REASSESSMENT ORDER PASSED IN PURSUANCE THERETO, THUS, OTHER GROUNDS OF THE ASSESSEE DO NOT SURVIVE FOR ADJUDICATION ON MERITS AND WE DISMISS THE SAME. 20. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE HEREBY ALLOWED AS INDICATED ABOVE. ITA NO. 6153, 6163/DEL/2012 ASSTT.YEAR: 2001-02, 2002-03 16 ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 28.11.2 014. SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GA RG) VICE PRESIDENT JUDICIAL MEMB ER DT. 28 TH NOVEMBER 2014 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT..REGISTRARS