Peethambra Buildcon Ltd., New Delhi V. ITO, Ward- 19(3), New Delhi

ITA 637/DEL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5266 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Assessee Lawyers: SUNIL JAIN
• Keywords: Reopening of assessment; Unexplained cash credit; Unexplained investment; Document seized; Difference of opinion; Accommodation entries; Reason to believe; Documents seized; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 133(6); 147; 131; 68; 148; 132; 139

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH D+SMC, NEW DELHI BEFORE : SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 637/DEL/2018 ASSESSMENT YEAR: 2009-10 PEETHAMBRA BUILDCON LTD., D-46, EAST OF KAILASH, NEW DELHI.(PAN- AADCP 5251R) (APPELLANT) VS. INCOME - TAX OFFICER, WARD 19(3), NEW DELHI (RESPONDENT) APPELLANT BY SHRI SUNIL JAIN, FCA RESPONDENT BY SH. KAUSHLENDRA TIWARI, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A)- VII, NEW DELHI DATED 16.10.2017 FOR THE ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE NOTICE DATED 21.03.216 ISSUED BY THE LEARNED ASSESSING OFF ICER UNDER SECTION 148 OF THE ACT IS WRONG AND BAD IN LAW AND THE LEARNED CIT(APPEALS) HAS ERRED IN UPHOLDING THE VALIDITY OF THE NOTICE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE NOTICE DATED21.03.2016 ISSUED BY THE LEARNED ASSESSING OFF ICER UNDER SECTION 148 DATE OF HEARING 14.08.2018 DATE OF PRONOUNCEMENT 23 .10.2018 ITA NO. 637/DEL/2018 2 OF THE ACT WAS WRONG AND BAD IN LAW AS IT WAS BARRE D BY LIMITATION AND THE LEARNED CIT(APPEALS) ERRED IN UPHOLDING THE VALI DITY OF THE NOTICE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED IN UPHOLDING AN ADDITION OF RS. 50 LACS AS INCOME OF THE ASSESSEE BY TREATING THE SHARE CAPITAL AS UN ACCOUNTED MONEY OF ASSESSEE. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(APPEALS) HAS ERRED IN UPHOLDING AN ADDITION OF R S. 90000/- MADE BY THE LEARNED AO AS UNEXPLAINED INVESTMENT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT OF THE ASSESSEE WAS COMPLETED U/S. 143(3) ON 30.12.2011. THE CASE WAS R EOPENED BY ISSUING NOTICE U/S. 148 DATED 21.03.2016 AFTER OBTAINING AP PROVAL OF THE APPROPRIATE AUTHORITY. THE REASONS FOR REOPENING OF ASSESSMENT WERE RECORDED AS UNDER : THE COMPANY FILED ITS RETURN OF INCOME ON 29.09.200 9 FOR- THE ASSESSMENT YEAR 2009-10 DECLARING INCOME AT NIL THEREAFTER THE RETU RN WAS PROCESSED UNDER 143(1) OF THE I.T. ACT ON 02.11.2010. 2. IN THIS CASE, THE INFORMATION HAS BEEN RECEIVED FROM THE OFFICE OF THE DIRECTOR OF INCOME-TAX (INVESTIGATION-II) JHANDEWALAN EXT. NEW DELHI VIDE LETTER NO. F. NO. DIT(LNV)II/U/S.148/2012-13/197, DATED 12.03.2013 ME NTIONING THEREIN THAT A SEARCH- OPERATION-WAS CARRIED OUT IN THE CASE OF SH. SUREND RA KUMAR JAIN GROUP OF CASES (HEREIN AFTER KNOWN AS ENTRY OPERATOR) WHEREIN AFTER SCRUTI NY OF INCRIMINATING DOCUMENTS SEIZED DURING COURSE OF SEARCH AND SUBSEQUENT POST SEARCH ENQUIRY, IT HAS BEEN NOTICED THAT THE SAID GROUP WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES TO THE PERSONS WHICH WERE NAMED IN THE REPORT. THE ASSESSEE COMPANY ALSO FIGU RES IN THE LIST AS ONE OF THE BENEFICIARIES OF THE ACCOMMODATION ENTRIES PROVIDED BY THE GROUP. 3. AS PER THE REPORT OF INVESTIGATION WING, NAME O F VARIOUS COMPANIES/ PERSONS USED BY THE GROUP TO PROVIDE ACCOMMODATION ENTRIES AS WE LL AS 'LIST OF BENEFICIARY COMPANIES, FIRM AND OTHER ENTITIES WERE IDENTIFIED AFTER EXTEN SIVE VERIFICATION OF DOCUMENTS SEIZED AS A RESULT OF SEARCH OPERATION. THE INCRIMINATING DOCUM ENT SEIZED DURING SEARCH (DATE OF SEARCH 14.09.2010) REVEALED THAT ACCOMMODATION ENTR IES WERE OBTAINED BY WAY OF SHARE CAPITAL/ SHARE PREMIUM/LOANS. THE DETAILS OF ACCOMM ODATION ENTRIES VIZ. AMOUNT RECEIVED ITA NO. 637/DEL/2018 3 BY BENEFICIARY COMPANIES, THE CHEQUE/ PO NUMBER, TH E NAME OF COMPANY ENGAGED IN PROVIDING ACCOMMODATION ENTRIES, THE MEDIATOR/ MIDD LE MAN, BANK ETC. NOTED FROM SCRUTINY OF THE SEIZED DOCUMENTS HAVE BEEN TABULATE D AND ENCLOSED WITH THE REPORT. 4. IN THE APPRAISAL REPORT OF SH. SURENDRA KUMAR J AIN GROUP, HAS SUMMARIZED EVIDENCES WHICH HAD PROVED THAT SH. SURENDRA KUMAR JAIN AND HIS BROTHER I3H. VIRENDRA JAIN WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCO MMODATION ENTRIES. THE MODUS OPERANDI FOR PROVIDING ACCOMMODATION ENTRIES IN LIE U OF CASH AS ADOPTED BY THE JAIN BROTHERS HAVE-BEEN DISCUSSED BELOW IN BRIEF: A. DURING THE COURSE OF SEARCH PROCEEDINGS IN THE S H. S.K. JAIN GROUP IT WAS FOUND THAT A NUMBER OF COMPANIES WERE RUNNING FROM THE RE SIDENTIAL AS WELL AS OTHER PREMISES RELATED TO SH. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN. HOWEVER, ALL THE BOOKS OF ACCOUNTS AND OTHER RELEVANT PAPERS OF THESE COMPANI ES WERE FOUND AT THE RESIDENCE OF SR. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN ITS ELF AND NO DOCUMENTS WAS FOUND AT THE OTHER ADDRESSES WHICH WERE MENTIONED IN THE STATUTO RY RECORDS OF THESE COMPANIES. THE ABOVE FACTS AND RESULT OF POST SEARCH ENQUIRIES HAV E REVEALED SHRI SURENDRA KUMAR JAIN AND SHRI VIRENDRA KUMAR JAIN COMPANIES ARE CONTROLLED B Y/ THROUGH DUMMY DIRECTORS / PRINCIPAL OFFICERS OF THESE COMPANIES. B. THE SEIZED RECORDS INCLUDE BLANK UNSIGNED AS WEL L AS BLANK SIGNED CHEQUE BOOK,ACKNOWLEDGEMENT OF FILING OF RETURN OF THESE C OMPANIES, USER ILL AND PASSWORD OF ALL COMPANIES OF E-FILING OF THEIR RETURN, BANK ACCOUNT OPENING AND CLOSING LETTERS, AUTHORIZATION LETTERS FOR ATTENDING ASSESSMENT PROC EEDINGS, BOOK OF ACCOUNT IN TALLY FORMAT AS WELL AS FORMAT FOR FILING THE RETURN, PROOF OF U SE OF MOBILE NUMBERS OF SH. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN IN BANK ACCO UNT OPENING FORMS WHERE OPTION OF MOBILE BANKING WAS REQUIRED. THE COMPANIES WERE USE D- IN BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. C. THE INVESTIGATION WING HAS LISTED 99 COMPANIES W HICH WERE CONTROLLED BY S.K. JAIN GROUP. 5. THE INVESTIGATION WING HAS SENT RELEVANT DETAIL S OF ACCOMMODATION ENTRIES TO THE ASSESSING OFFICERS HAVING JURISDICTION OVER BENEFIC IARIES WHICH HAD OBTAINED ACCOMMODATION ENTRIES FROM S.K. JAIN GROUP. SCANNED COPY OF THE RELEVANT DOCUMENTS SEIZED FROM S.K.JAIN GROUP WHEREIN THE RELEVANT DET AILS OF ACCOMMODATION ENTRY TAKEN BY THE BENEFICIARY FROM S.K. JAIN GROUP COMPANY WERE R ECORDED WERE ALSO SENT ALONG WITH THE REPORT. ITA NO. 637/DEL/2018 4 6. A CAREFUL SCRUTINY OF THE DETAILS AND COPIES OF SEIZED DOCUMENTS HAVE REVEALED THAT THE ASSESSEE COMPANY HAS TAKEN ACCOMMODATION ENTRY AMOUNTING TO RS 50,00,000/- IN F.Y. 2008-09 FROM THE FOLLOWING S.K. JAM GROUP COMPANIES : NAME OF THE BENEFICIARY A.Y AMOUNT NAME OF ENTRY OPERATORS DETAILS MIS PEETHAMBRA BUILDCON LTD 2009 - 10 10,00,000 AD FIN CAPITAL SERVICES P.LTD. MIS PEETHAMBRA BUILDCON LTD 2009 - 10 10,00,000 SHALINI HOLDINGS LTD. MIS PEETHAMBRA BUILDCON LTD 2009 - 10 10,00,000 MANI MALA DELHI PRO. P. LTD. MIS PEETHAMBRA BUILDCON LTD 2009 - 10 10,00,000 VIP LEASING & FINANCES P. LTD. MIS PEETHAMBRA BUILDCON LTD 2009 - 10 10,00,000 VIRGIN CAPITAL SERVICES P. LTD. TOTAL 50,00,000 7. I HAVE CAREFULLY EXAMINED THE REPORT OF INVESTI GATION WING ALONG WITH DETAILS OF TRANSACTION AS RECORDED IN THE SEIZED DOCUMENTS WH ICH REVEALED FOLLOWING IMPORTANT FACTS: I. THAT PASSBOOKS AND CHEQUE BOOKS OF APPROXIMATELY 200 PERSONS/FIRMS/COMPANIES ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES ALONG WITH DETAILS OF BENEFICIARY COMPANIES / ENTRIES WERE FOUND AND SEIZED, FROM THE RESIDENCE OF SH. SURENDRA KUMAR JAIN AND S H. VIRENDRA KUMAR. . II. UNDATED BLANK CHEQUE AND SIGNED BY ENTITIES ENG AGED IN PROVIDING ACCOMMODATION ENTRIES WERE ALSO SEIZED FROM CUSTODY AND CONTROL OF JAIN. III. THAT COMPUTER HARD DISCS SEIZED FROM THE RESID ENCE OF SH. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN CONTAINED CONFIDENTIAL DETAILS LIKE USER NAME, PASSWORDS AND IDS OF THE VARIOUS COMPANIES ENGAGED IN PROVIDING ACCOMMODATION ENTRIES REQUIRED FOR FILING OF E-RETURNS OF THESE C OMPANIES, AUTHORITY LETTER OF THESE COMPANIES AUTHORIZING TO REPRESENT THESE COMPANIES IN VARIOUS GOVT. DEPARTMENT. THESE COMPANIES WERE USED TO PROVIDE ACCOMMODATION ENTRIES OF BENEFICIARY INCLUDING ASSESSEE COMPANY. . IV. THAT DETAILS OF FUNDS TRANSFERRED THROUGH CHEQU E / RTGS/PAY ORDER TO VARIOUS ENTITIES / PERSONS THROUGH THESE DUMMY COMPANIES MA INTAINED BY SH. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN IN EXCEL SHE ETS FOUND AND SEIZED DURING THE COURSE OF SEARCH. ITA NO. 637/DEL/2018 5 V. THAT MAINTENANCE OF BOOKS OF ACCOUNTS-IN TALLY F ORMAT AS WELL AS IN THE FORMAT REQUIRED FOR PREPARING INCOME TAX RETURN OF THESE C OMPANIES IN THE COMPUTER HARD DISCS FOUND AND SEIZED FROM THE RESIDENCE OF SH. SU RENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN. . VI. THAT DAILY CASH BOOKS, BALANCE SHEET AND CHEQUE BOOKS FOUND AND SEIZED FROM SH. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN WHE REIN DETAILS OF CASH RECEIVED FROM DIFFERENT BENEFICIARY COMPANIES/ PERSONS THROU GH VARIOUS MIDDLEMAN/ AGENTS IN LIEU OF ACCOMMODATION ENTRIES PROVIDED TO THEM O N DIFFERENT DATES HAVE BEEN RECORDED . VII. THAT ONE OF THE MEDIATORS SH. RAJESH AGGARWAL ADMITTED THAT HE ARRANGED ACCOMMODATION ENTRIES FOR A GROUP THROUGH A PERSON NAMED SH. RAVINDER GOEL THROUGH VARIOUS. COMPANIES DIRECTLY CONTROLLED BY S H. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN AND ALSO ACCEPTED THE FACT THAT HE KNEW SINCE LONG THAT SH. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN ARE ENGAGED IN THE BUSINESS OF PROVIDING THE ACCOMMODATION ENTRIES IN LIEU OF CASH CHARGING A CERTAIN AMOUNT OF COMMISSION FOR THE SAME. VLIL. THAT THESE DUMMY COMPANIES ARE RUNNING THEIR ACTIVITIES FROM THE RESIDENTIAL AND THE OTHER PREMISES OF SH. SURENDRA KUMAR JAIN A ND SH. VIRENDRA KUMARJAIN. IX. THAT EXISTENCE OF THIRD' PARTY CORRESPONDENCE W ITH THESE COMPANIES IN THE CUSTODY OF SH. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN HAVE BEEN RECOVERED FROM S.K. JAIN GROUP COMPANY. X. THAT S.K. JAIN! VIRENDRA JAIN ARE / WERE DIRECTO R IN MANY OF THESE COMPANIES IN THESE COMPANIES PRESENTLY OR AT ONE POINT OF TIME I N THE PAST. 8. IT HAS BEEN FURTHER NOTICED THAT OUT OF 99 COM PANIES CONTROLLED BY SHRI SURENDER KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN, USED FOR PR OVIDING ACCOMMODATION ENTRIES A LARGE-NUMBER OF COMPANIES WERE REGISTERED AT FOLLOW ING COMMON ADDRESSES: I. 106, PALCO HOUSE, T-10, MAIN PATEL ROAD, PATEL NAGAR, DELHI (12 COMPANIES). II. 3198-15, 4 TH FLOOR, GALI NO.1, SANGATRASHAN, PAHARGANJ, NEW DE LHI(14,COMPANIES). III. 209, BHANOT PLAZA, 3, D.B. GUPTA ROAD, PAHARG ANJ, NEW DELHI. (11 COMPANIES) 9. IN ORDER TO VERIFY THE GENUINENESS AND THE EXIS TENCE OF THESE COMPANIES AT THE ABOVE MENTIONED ADDRESSES, A SIMULTANEOUS SURVEY ACTION 1 33A OF THE I.T. ACT, 1961 WAS CARRIED ITA NO. 637/DEL/2018 6 OUT ON 14.09.2010 ON ABOVE REFERRED TO ADDRESS BY O FFICERS OF INVESTIGATION WING ON THE DEPARTMENT WHICH RESULTED FOLLOWING FACTS: A. ON THE ADDRESS, 106, PALCO HOUSE; T-10, MAIN P ATEL ROAD, PATEL NAGAR, DELHI, THE SURVEY PARTY FOUND ONLY ONE PERSO N NAMED SH. MUKESH KUMAR S/O SH. SATYENDER KUMAR, R/O VILLAGE G AZERA, DISTT. PAURI GADHWAL IN THIS PREMISES. HE DEPOSED BEFORE THE SURVEY PARTY THAT HIS EMPLOYER AND OWNER OF THAT PLACE IS ONE S H. VIRENDRA JAIN R/O SOMEWHERE IN RAJENDER NAGAR, DELHI AND PROVIDED HI S TELEPHONE NO. AS 9891095232. IT WAS ALREADY PROVED FROM THE CALL RECORDS THAT THIS TELEPHONE NUMBER PERTAINED TO SH. VIRENDRA JAIN.'RE SIDENT OF 221/, NEW RAJINDER NAGAR; NEW DELHI. HE ALSO DISCLOSED TH AT SHRI VIRENDRA JAIN USED TO VISIT THE PLACE ONCE IN A WHILE. SH. M UKESH KUMAR ALSO TOLD THAT NO BOOKS OF ACCOUNT OF COMPANIES REGISTERED ON THIS ADDRESS WAS AVAILABLE IN THE PREMISES I.E. 106, PALCO HOUSE, :I -10, MAIN PATEL ROAD. PATEL NAGAR, DELHI. B. DURING THE COURSE OF THE SURVEY AT PREMISE NO. 3198-15, 4 TH FLOOR, GALI NO. 1, SANGATRASHAN, PAHARGANJ, NEW DELHI, IT WAS FOUND THAT THIS PREMISE WAS A SMALL ROOM, WHICH WAS INCAPABLE OF AC COMMODATING SO MANY COMPANIES-AND : PERSONS. BOOKS OF ACCOUNTS AND ' DOCUMENT OF COMPANIES REGISTERED AT THIS ADDRESS WAS NOT FOUND . C. AT THE THIRD PREMISES 209, BHANOT PLAZA, 3, D.B. GUPTA ROAD, PAHARGAN], NEW DELHI, THERE WAS SINGLE ROOM OFFICE OCCUPIED BY ONE SH. JAIKISHAN TIKKU S/O LATE SH. PREM NATH TIKKU, W HO WAS RUNNING HIS COURIER BUSINESS FROM IN THE NAME AND STYLE OF M/S LINKERS COURIERS SINCE AUG. 2006. MR. TIKKU HAD TOLD THE SURVEY TEAM THAT HE WAS A TENANT OF SH. SURENDRA KUMAR JAIN AND WAS PAYING HI M MONTHLY RENT OF RS.3,000/- IN CASH EVERY MONTH. IT IS EVIDENT FROM THE FINDINGS OF THE SURVEY THAT THE COMPANIES CONTROLLED BY SHRI S.K. JAIN HAVING REGISTERED OFFICE AT THE ABOVEMENT IONED THREE ADDRESSES, DID NOT EXIST AT THOSE ADDRESSES. NEITHER BOOKS OF ACCOUNT AND DOCUM ENT RELATING TO BUSINESS NOR WAS EMPLOYEE OF THESE COMPANIES FOUND AT THOSE ADDRESS ES. FROM A SINGLE ADDRESS A NUMBER OF COMPANIES WERE REGISTERED AS WELL AS THIS ADDRESS W AS ALSO DECLARED AS THE RESIDENTIAL ADDRESS OF VARIOUS DIRECTORS OF DIFFERENT COMPANIES AND PARTNERS/ PROPRIETORS OF VARIOUS FIRMS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. A S MENTIONED ABOVE, DURING THE COURSE OF SURVEY OPERATION AT THESE-ADDRESSES, THE PREMISE S WERE FOUND TO BE VERY SMALL DWELLING UNITS. ITA NO. 637/DEL/2018 7 10. I HAVE TAKEN NOTE OF ANOTHER FACT THAT WAS HIG HLIGHTED BY INVESTIGATION WING THAT : DURING THE COURSE OF POST SEARCH ENQUIRIES, THEY HA D OBTAINED THE BANK DETAILS OF COMPANIES OF S.K. JAIN GROUP FOR EXAMPLE ACCOUNT OPENING FORM S, INTRODUCERS' FORM AND STATEMENT OF ACCOUNTS ETC. FOR LAST FEW YEARS. IT WAS POINTED OU T THAT IN SOME CASES WHERE THE OPTION OF MOBILE BANKING WAS EXERCISED, THE MOBILE NUMBERS OF EITHER OF SH. SURENDRA KUMAR JAM AND SH. VIRENDRA KUMAR JAIN WERE PROVIDED, IN THE' ACCOUNT OPENING. FORMS OF THOSE SPECIFIC COMPANIES/FIRMS/PERSONS. SOME OF THESE BANK ACCOUNT S AS ILLUSTRATION ARE MENTIONED IN THE FOLLOWING TABLE. NAME OF THE BANK ACCOUNT NO. NAME OF THE COMPANY MOBILE N O. PERSON TO WHOM THIS NO. BELONGS AXIS BANK 22401020000 5906 EAGLE INFRATECH PVT. LTD. 9891095232 VIRENDRA JAIN 22401020000 7160 KAILASH TEXTILES 9891095232 VIRENDRA JAIN 22301020002 0846 MANI MALA DELHI PROPERTIES PVT. LTD. 9891095232 VIRENDRA JAIN 22401020000 5890 SINGHAL SECURITIES PVT. LTD. 9310395234 SURENDRA KUMAR JAIN 224010200000 7016 ROSHAN LAL LALIT KUMAR & CO. 9310395234 SURENDRA KUMAR JAIN 22401020000 5845 FINAGE LEASING & FINANCE LTD. 9310395234 SURENDRA KUMAR JAIN 22301020001 2014 MANI MALA DELHI PROPERTIES PVT. LTD. 9310395234 SURENDRA KUMAR JAIN 22401020000 6989 ERODE CLOTHING EMPIRE 9310395234 SURENDRA KUMAR JAIN THE ABOVE FACTS PROVE BEYOND DOUBTS THAT THE 200 OD D ENTITIES, DATA PERTAINING TO WHICH WERE FOUND AND SEIZED FROM THE PREMISES OF S. K. JAIN GROUP, WERE CONTROLLED AND USED BY SHRI S.K. JAIN HIS BROTHER SHRI VIRENDRA KU MAR JAIN FOR PROVIDING ACCOMMODATION ENTRIES. 11. IT IS ALSO NOTICED FROM THE FOLLOWING FINDING AS RECORDED IN THE REPORT OF INVESTIGATION WING THAT INCRIMINATING DOCUMENTS IN THE FORM OF HAND WRITTEN CASH BOOKS WERE ALSO SEIZED FROM THE RESIDENCE OF SHRI S.K. JA IN SHOWING THE RECEIPTS OF CASH BY SH. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN TO PROVIDE ACCOMMODATION ENTRIES. FINDING IN THIS REGARDS MAY BE SUMMARIZED AS UNDER : ITA NO. 637/DEL/2018 8 A. CASH BOOKS SEIZED DURING SEARCH OPERATION WERE M AINTAINED ON DAILY BASIS TO KEEP A RECORD OF THEIR DAILY TRANSACTIONS OF RECEIPTS AN D PAYMENTS OF CASH AS WELL AS TO KEEP THEM UPDATED IN RESPECT OF ACCOMMODATION ENTRI ES PROVIDED AS WELL AS ACCOMMODATION ENTRIES PENDING IN LIEU OF THE CASH W HICH THEY HAD RECEIVED. HOWEVER, THE CASH TRANSACTIONS WHICH WERE BEING REC ORDED BY-THEM IN HAND WRITTEN CASH BOOKS WERE NOT RECORDED IN THEIR REGULAR BOOK S OF ACCOUNTS, TO INTRODUCE AND CHANNELIZE THIS UNEXPLAINED CASH IN THEIR BOOKS, TH EY HAVE SHOWN THE SALES OF VARIOUS ITEMS INCLUDING RICE ETC., MADE THROUGH THE BOGUS PROPRIETARY! PARTNERSHIPS FIRMS DIRE~T1Y CONTROLLED BY THEM. B. THUS, THE CASH RECEIVED FROM' THE RECIPIENT PAR TIES FOR PROVIDING THE ACCOMMODATION ENTRIES WAS FIRST DEPOSITED IN THE AC COUNTS OF THESE DUMMY FIRMS! COMPANIES IN THE DISGUISE OF THE CASH RECEIVED AGAI NST THE BOGUS SALES; DULY SHOWN IN THE BOOKS OF ACCOUNTS. LATER, THIS CASH WAS TRAN SFERRED TO DIFFERENT PAPER COMPANIES FLOATED BY SH. SURENDRA KUMAR JAIN AND SH .VIRENDRA KUMAR JAIN THROUGH COMPLEX SERIES OF TRANSACTIONS, SO AS TO HIDE THE A CTUAL SOURCES OF FUNDS. C. AS PART OF WELL DEVISED MODUS OPERANDI THE RESER VE & SURPLUSES AND THE CAPITAL ACCOUNT OF A SPECIFIC SET OF COMPANIES WERE ENHANCE D WITH THE HELP OF THE UNEXPLAINED: CASH RECEIVED BY SH. SURENDRA KUMAR JA N AND SH. VIRENDRA KUMAR JAIN, WHICH WAS ROUTED TO THESE COMPANIES THROUGH THEIR D UMMY CONCERN/ FIRM /COMPANIES. ONCE THE FUNDS OF THESE COMPANIES WERE INCREASED SUFFICIENTLY, ACCOMMODATION ENTRIES THROUGH RTGS/CHEQUE/P.O. IN T HE SHAPE OF THE SHARE CAPITAL, SHARE PREMIUM, CAPITAL GAINS OR LOANS AS PER THE SP ECIFIC REQUIREMENT OF THE RECIPIENT CLIENTS WERE PROVIDED TO BENEFICIARY IN L IEU OF THE CASH RECEIVED FROM THEM. IN THIS WAY, THE CHAIN FOR PROVIDING AN ACCOMMODATI ON ENTRY GETS COMPLETED. D. THE ABOVE FINDINGS CORROBORATED WITH THE SEIZURE OF DOCUMENTS BY INVESTIGATION WING EVIDENCING THE ABOVE MENTIONED PROCESS USED BY SH. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN FOR PROVIDING ACCOMMODATION ENTRY. 12. AS SEQUEL TO THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, COPIES OFAVAILABLE ASSESSMENT ORDERS & CIT(A) ORDERS OF ME MBERS OF ACCOMMODATION' ENTRY GROUP WERE OBTAINED FROM ASSESSMENT WING FOR EXAMINATION. REASON FOR FORMATION OF BELIEF: 13. I HAVE CAREFULLY PERUSED AND CONSIDERED THE RE TURN OF INCOME OF THE ASSESSEE, INFORMATION RECEIVED FROM INVESTIGATION WING, COPIE S OF INCRIMINATING DOCUMENTS SEIZED FROM CUSTODY AND CONTROL OF JAIN BROTHERS, COPIES O F ASSESSMENT ORDER AND APPEAL ORDER AS ITA NO. 637/DEL/2018 9 DISCUSSED ALONG WITH EVIDENCES RELATED TO THE ASSES SEE AND HAVE REACHED THE-FOLLOWING CONCLUSION: A. THAT S.K. JAIN GROUP WAS ENGAGED IN THE BUSINES S OF PROVIDING ACCOMMODATION ENTRIES TO BENEFICIARIES IN LIEU BY E NTITIES CONTROLLED BY THEM IN CASH. B. DURING THE COURSE OF SEARCH OPERATION AND S.K. JAIN GROUP VARIOUS INCRIMINATING DOCUMENTS WERE BEEN SEIZED WHICH SHOW ED THAT ALL THE COMPANIES/ENTITIES CONTROLLED BY THE GROUP DO NOT H AVE ANY KNOWN BUSINESS ACTIVITIES AND LACK OF INDEPENDENT EXISTENCE AS A S EPARATE ENTITY AND WERE A PART OF GROUP OF COMPANIES ENGAGED IN PROVIDING ACC OMMODATION ENTRIES. C. THE ABOVE CONCLUSION WAS CORROBORATED WITH THE FOLLOWING EVIDENCES FOUND AND SEIZED DURING THE COURSE OF SEARCH FROM THEIR C USTODY AND CONTROL S.K. JAIN GROUP: SEIZURE OF PASSBOOKS AND/OR CHEQUE BOOKS IN THE NAM E OF APPROX. 200 PERSONS/FIRMS/COMPANIES I.E. ENTRY PROVIDER COMPANI ES.. COMPUTER HARD DISKS CONTAINING' CONFIDENTIAL DETAIL S NAMELY USER NAME PASSWORD, ID OF VARIOUS COMPANIES ETC. DOCUMENTS CONTAINING THE DETAILS OF FUNDS TRANSFERR ED THROUGH CHEQUE/RTGS/PAY ORDER TO VARIOUS ENTITIES/PERSONS T HROUGH THESE ENTRIES PROVIDER. SEIZURE OF DAILY CASH -BOOKS WHEREIN DETAILS OF CAS H RECEIVED FROM BENEFICIARY COMPANIES/ PERSONS THROUGH VARIOUS MIDDLEMEN/AGENTS BY_JAIN BROTHERS IN LIEU OF ACCOMMODATION ENTRIES PROVIDED TO BENEFICIA RY ON DIFFERENT DATES. ' THAT ENTRY PROVIDER COMPANIES WERE RUNNING THEIR AC TIVITIES FROM THE RESIDENTIAL AND THE OTHER PREMISES OF SH. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN THROUGH ENTRY PROVIDER COMPANIE S. THAT THIRD PARTY CORRESPONDENCE WITH ENTRY PROVIDER COMPANIES WERE SEIZED FROM THE CUSTODY OF SH. SURENDRA KUMAR JAIN AND SH. VIRENDRA KUMAR JAIN. THAT S.K. JAIN / VIRENDRA JAIN AND THERE CLOSE ASSO CIATES WERE DIRECTORS OF THESE ENTRY PROVIDER COMPANIES DURING RELEVANT BUT DIFFERENT TIME PERIOD. SEIZURE OF DOCUMENTS HAD REVEALED THAT COMMISSION I NCOME WERE EARNED BY JAIN BROTHERS AND MEDIATOR. ITA NO. 637/DEL/2018 10 D. IT WAS FURTHER PROVED THAT EVIDENCE RELATING TO ALL THE STEPS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES BY ENTRY PROVIDER C OMPANIES IN LIEU OF CASH PAYMENT TO JAIN BROTHERS ON CHARGING COMMISSIO N WERE SEIZED FROM CUSTODY AND CONTROL OF JAIN BROTHERS. E. A PERUSAL OF DOCUMENTS AS SEIZED FROM THE PREMIS ES OF SHRI S.K. JAM GROUP AND ENCLOSED ALONG WITH THIS NOTE AS ANNEXTURE HAS REVEALED THAT ACCOMMODATION ENTRY AMOUNTING TO RS. 50,00,000/- BY ASSESSEE FROM S.K.JAIN GROUP COMPANIES WERE NOTED ON THE SEIZED D OCUMENTS. 14. A CAREFUL SCRUTINY OF INFORMATION RECEIVED FRO M THE INVESTIGATION WING AND SUBSEQUENT ANALYSIS OF REPORT OF INVESTIGATION WING , COPIES OF SEIZED DOCUMENT AND VERIFICATION OF ASSESSMENT AND APPEAL ORDER IN CASE OF JAIN BROTHERS LEAD TO AN IRRESISTIBLE CONCLUSION THAT IN BUSINESS OF PROVIDING ACCOMMODAT ION ENTRIES IN LIEU OF CASH PAYMENT BY BENEFICIARY INCLUDING ASSESSEE BY CHARGING COMMISSI ON, ACCORDINGLY, AN AMOUNT OF RS. 50,00,000/-. REPRESENTS UNEXPLAINED CREDIT U/S 68 O F THE ACT IN BOOKS OF A/C OF THE ASSESSEE. INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT 15. CONSIDERING THE ABOVE REFERRED TO CREDIBLE INF ORMATION, INCRIMINATING SEIZED DOCUMENT U/S 132 OF THE ACT AND ENQUIRIES AND INVES TIGATION SUBSEQUENT TO THE INFORMATION, I HAVE REASON TO BELIEVE THAT AN AMOUN T AT LEAST OF RS 50,00,000/-HAS ESCAPED ASSESSMENT IN CASE THE OF THE ASSESSEE FOR THE RELE VANT YEAR. 16. PRIOR TO 1989 SECTION 147 PROVIDED FOR TWO G ROUNDS TO REOPEN CONCLUDED ASSESSMENTS: (I)ON BASIS OF INFORMATION RECEIVED BY THE ASSESSIN G OFFICER ASSESSMENT COULD BE RE- OPENED. THIS HAD TO BE WITHIN FOUR YEARS. (II) WHERE FACTS MATERIAL FOR ASSESSMENT ARE NOT DI SCLOSED IN THE COURSE OF ASSESSMENT, WHETHER WITHIN OR BEYOND FOUR YEARS. SUPERVENING THESE TWO REQUIREMENTS IN THE ALTERNATI VE, THE INITIAL CONDITION IS THAT THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT TH ERE IS ESCAPEMENT OF INCOME. THE FIRST REQUIREMENT REGARDING INFORMATION IS NOW DROPPED BY 1989 AMENDMENT AND THEREFORE FOR REOPENING OF ASSESSMENT WITHIN A PERIOD OF 4 YEARS FROM THE END OF THE ASSESSMENT YEAR THE ONLY REQUIREMENT IS REASON TO BELIEVE'. FOR A PERIOD BEYOND 4 YEARS FURTHER ITA NO. 637/DEL/2018 11 REQUIREMENT WAS THE NON-DISCLOSURE OF MATERIAL FACT S NECESSARY FOR ASSESSMENT BY THE ASSESSEE. 17. THE ASSESSMENT/RE-ASSESSMENT PROCEEDINGS IN TH IS CASE FOR A.Y. 2009-10 PERIOD BEYOND FOUR YEARS BUT BEFORE THE EXPIRY OF SIX YEAR S FROM THE DATE OF ISSUE OF NOTICE THIS CASE ASSESSMENT HAS BEEN COMPLETED FOR THE A. Y 200 9-10 U/S. 143(3) ON 30.1. HOWEVER THE ASSESSEE HAS NOT FULLY AND TRULY DISCLOSED ALLS THE MATERIAL FACTS NECESSARY ASSESSMENT FOR THE ASSESSMENT YEAR . 18. MOREOVER, AS THE CASE PERTAINS TO A PERIOD BEY OND FOUR YEARS FROM THE END OF ASSESSMENT YEARS AT THE TIME OF ISSUE OF NOTICE, NE CESSARY SANCTION HAS TO BE OBTAINED FROM CHIEF COMMISSIONER OF INCOME TAX OR PR. COMMISSIONE R OF INCOME TAX OR COMMISSIONER INCOME TAX, IN VIEW OF THE AMENDED PROVISION OF SEC TION 151(1) W.E.F. 01.06.2015 NECESSARY SANCTION IN THIS REGARD IS BEING OBTAINED SEPARATELY FROM PR. COMMISSIONER INCOME TAX, DELHI -7 BEFORE THE ISSUE OF NOTICE U/ S 148. 3. IN THE REASSESSMENT PROCEEDINGS, THE ASSESSEE SU BMITTED THAT THE RETURN FILED ORIGINALLY U/S. 139 MAY BE TREATED AS THE RET URN FILED IN RESPONSE TO NOTICE U/S. 148. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE U/S. 143(2) ON 03.05.2016 AND THE ASSESSEE FILED OBJECTIONS AGAINS T REOPENING OF COMPLETED ASSESSMENT ON 09.06.2016 WHICH WERE DISPOSED OF BY THE ASSESSING OFFICER ON 04.08.2016 THROUGH SPEAKING ORDER. AS PER INFORMATI ON RECEIVED FROM THE INVESTIGATION WING, THE ASSESSEE HAS RECEIVED RS.50 .00 LACS FROM ABOVE FIVE PARTIES AS SHARE CAPITAL. ACCORDINGLY, TO VERIFY TH E TRANSACTIONS, NOTICES U/S. 133(6) DATED 06.09.2016 WERE ISSUED AT THE ADDRESSE S PROVIDED BY THE ASSESSEE ASKING FOR THE DETAILS AS MENTIONED IN THE NOTICES FOR SUCH TRANSACTIONS. IN SOME CASES, THE NOTICES RETURNED B ACK AND IN OTHER CASES, NO REPLY WAS RECEIVED AS FOLLOWS : NAME OF ENTRY OPERATORS COMMENTS AD FIN CAPITAL SERVICES P. LTD. NO REPLY RECEI VED SHALINI HOLDINGS LTD. NOTICE RETURNED BACK ITA NO. 637/DEL/2018 12 MANI MALA DELHI PRO. P. LTD. NO REPLY RECEIVED VIP LEASING & FINANCES P. LTD. NO REPLY RECEIVED VIRGIN CAPITAL SERVICES P. LTD. NOTICE RETURNED BACK VARIOUS OPPORTUNITIES WERE GIVEN TO THE ASSESSEE AN D NOTICES U/S. 131 WERE ALSO ISSUED TO PRODUCE THE DIRECTORS, BUT NEITHER T HEY ATTENDED ON THE APPOINTED DATE NOR ANY REPLY RECEIVED FROM THE ASSE SSEE. ON 25.11.2016, SHRI SUNIL JAIN ATTENDED AND HE ASKED TO CONFRONT THE RE LEVANT DOCUMENTS, WHICH WERE SEIZED ON THE SEARCH OF S.K. JAIN GROUP, WHICH WAS ALREADY CONFRONTED EARLIER BY THE ASSESSING OFFICER. THE ONUS FOR PROD UCING THE DIRECTORS AS PER SUMMONS ISSUED WAS NOT DISCHARGED BY THE ASSESSEE. THE LAST OPPORTUNITY WAS ALSO GRANTED ON 28.11.2016. BUT THE ASSESSEE DI D NOT PRODUCE THE DIRECTORS. THE ASSESSING OFFICER OBSERVED THAT THE CONTROLLER OF THE ENTRY PROVIDER COMPANY HAS HIMSELF ADMITTED FOR SUCH ACCO MMODATION ENTRY AND ALSO THE RELATED DOCUMENTS WERE FOUND DURING THE SE ARCH OPERATION, WHICH HAD ALREADY BEEN CONFRONTED TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND FOR WANT OF NON-COMPLIANCE OF NOTIC ES, THE ASSESSING OFFICER ADDED A SUM OF RS.50 LACS U/S. 68 OF THE ACT AND AL SO ADDED 1.8% AS COMMISSION FOR RECEIVING ACCOMMODATION ENTRIES OF R S. 50 LACS, THEREBY THE ASSESSING OFFICER MADE ADDITION OF RS.50,90,000/- A ND COMPLETED THE ASSESSMENT U/S. 144/143(3)/147 OF THE ACT. FEELING AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A) AND CHALLENGED THE R EOPENING OF ASSESSMENT AS WELL AS MERITS OF ADDITION AND ALSO SUBMITTED A WRI TTEN SUBMISSIONS RELYING ON MANY CASE LAWS. THE LD. CIT(A) AFTER CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE AND ORDER OF THE ASSESSING OFFICER CONFIRM ED THE ACTION OF THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS IN AP PEAL BEFORE THE TRIBUNAL. ITA NO. 637/DEL/2018 13 4. THE LD. AR OF THE ASSESSEE REITERATED THE SUBMIS SIONS MADE BEFORE THE LOWER AUTHORITIES AND SUBMITTED ON LEGAL GROUND THA T THE ASSESSING OFFICER HAD NO JURISDICTION TO REOPEN THE COMPLETED ASSESSM ENT BEYOND THE PERIOD OF FOUR YEARS WITHOUT BRINGING ANYTHING ON RECORD AS T O THE FAILURE OF ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY NECESSA RY FOR ASSESSMENT. HE SUBMITTED THAT IN THE ORIGINAL ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER RAISED QUESTIONNAIRE BY ISSUING NOTICE U/S. 142(1) DATED 03.03.2011, REQUIRING THE DETAILS OF SHARE CAPITAL AT SL. NO. 6 & 7, WHICH WAS DULY COMPLIED BY THE ASSESSEE AND ACCEPTED BY THE ASSESSING OFFIC ER. THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS FOR COMPLETING THE ASSESSMENT AND THEREFORE, THE REOPEN ING OF ORDER BEYOND THE PERIOD OF FOUR YEARS IS NOT JUSTIFIED AT ALL. RELIA NCE IS PLACED ON THE FOLLOWING DECISIONS : (I). SABH INFRASTRUCTURE LTD. V. ACIT (WP(C) 1357/2 016 DATED 25.09.2017 (DELHI H.C.) (II). CIT VS. SUREN INTERNATIONAL (P) LTD. (APPEAL NO. 289 OF 2012) DATED 07.05.2013 (DELHI HIGH COURT) (III). ALLIED STRIPS LTD. VS. ACIT, (2016) 69 TAXM ANN.COM 444(DELHI). 5. HE FURTHER SUBMITTED THAT REOPENING ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING IS ALSO NOT JU STIFIED BECAUSE SAME ISSUE HAD ALREADY BEEN EXAMINED BY THE ASSESSING OFFICER IN ORIGINAL ASSESSMENT ITA NO. 637/DEL/2018 14 PROCEEDINGS. THEREFORE, IT IS A COMPLETE CHANGE OF OPINION. THEREFORE, THE REOPENING IS UNJUSTIFIED. THE ASSESSEE ALSO FILED A PAPER BOOK CONTAINING 161 PAGES AND COPIES OF SUBMISSIONS MADE BEFORE THE ASS ESSING OFFICER ALSO. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE R OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE HAS NOT DISCLOSED F ULLY AND TRULY ALL MATERIAL FACTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING, T HE REOPENING IS JUSTIFIED BEYOND FOUR YEARS. AS PER REASONS RECORDED, S.K. JA IN GROUP HAD ACCEPTED CLEARLY THAT THEY WERE ENGAGED IN PROVIDING ACCOMMO DATION ENTRIES AND THE ASSESSEE IS ONE OF THE BENEFICIARIES. THE AMOUNTS A CCEPTED BEFORE THE INVESTIGATION WING, ARE REFLECTED IN THE BOOKS OF T HE ASSESSEE. THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDI NGS DID NOT MAKE ANY ENQUIRY REGARDING THE SHARE APPLICATION MONEY RECEI VED BY THE ASSESSEE. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE THE DIRECTORS OF THE SHARE APPLICANT COMPAN IES, BUT IN SPITE OF NUMBER OF OPPORTUNITIES PROVIDED, HE DID NOT COMPLY WITH I T. THE CASE LAWS CITED BY THE ASSESSEE ARE ON DIFFERENT FOOTINGS AND ARE NOT APPLICABLE IN THE PRESENT CASE. 7. AFTER HEARING BOTH THE SIDES AND PERUSING THE EN TIRE MATERIALS AVAILABLE ON RECORD, WE OBSERVE FROM THE PAPER BOOK FILED BY THE ASSESSEE AND THE SUBMISSIONS BEFORE THE ASSESSING OFFICER, THAT IN T HE NOTICE ISSUED U/S. 142(1) ITA NO. 637/DEL/2018 15 DATED 03.03.2011 (PB-46 TO 49), AT SL. NO. 6 & 7, T HE ASSESSING OFFICER SOUGHT FOLLOWING INFORMATION : (I) NAMES OF THE SHAREHOLDERS AND THEIR SHAREHOLDING IN THE PRESCRIBED FORMAT, AS GIVEN IN THE NOTICE. (II) DETAILS OF SHARE CAPITAL/SHARE APPLICATION MONEY/SH ARE PREMIUM RAISED DURING THE YEAR ALONGWITH CONFIRMATI ONS, IF ANY. (III) DETAILS OF SUCH SHARE APPLICANTS GIVING THEIR NAME, ADDRESSES, PAN, SOURCE OF THEIR INVESTMENTS, MODE OF TRANSACTI ONS & BANK STATEMENTS. (IV) TO ESTABLISH THESE SHARE APPLICANTS CREDITWORTHINE SS AND GENUINENESS OF THEIR TRANSACTIONS. (V) CONFIRMED COPY OF LEDGER ACCOUNT FROM THE CONCERNED PARTIES. IN RESPONSE TO THE ABOVE QUESTIONNAIRE, THE ASSESSE E HAD SUBMITTED THE REPLY BEFORE THE ASSESSING OFFICER ALONG WITH ITRS, SHARE APPLICATION FORMS, ACKNOWLEDGEMENT OF RECEIPTS OF SHARES, BANK STATEME NTS OF THE SHARE APPLICANTS, NAMES AND ADDRESSES OF THE SHARE HOLDER S AND VALUE AND QUANTITY OF SHARES ETC. AND OTHER EVIDENCES AS REQUIRED BY T HE ASSESSING OFFICER. THE ASSESSING OFFICER HAD ACCEPTED THE REPLY OF THE ASS ESSEE AND DID NOT MAKE ANY ADDITION ON THIS COUNT. THE CASE OF THE ASSESSEE HA S BEEN REOPENED ON THE SAME ISSUE REGARDING THE SHARE APPLICATION MONEY RE CEIVED FROM THE ABOVE FIVE PARTIES ON THE BASIS OF INFORMATION RECEIVED F ROM INVESTIGATION WING. THE ASSESSEE, THUS, HAD DISCLOSED ALL MATERIAL FACTS NE CESSARY FOR COMPLETION OF ITA NO. 637/DEL/2018 16 ASSESSMENT. THE ASSESSING OFFICER HAS NOT SPELLED O UT IN THE ASSESSMENT ORDER AS TO WHAT MATERIAL FACTS OR EVIDENCES WERE NOT DIS CLOSED/PRODUCED BY THE ASSESSEE RELATING TO SHARE CAPITAL INCREASED DURING THE YEAR UNDER CONSIDERATION. THEREFORE, IN OUR CONSIDERED OPINION , THE ASSESSING OFFICER WAS NOT JUSTIFIED TO REOPEN THE ASSESSMENT ONLY ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING, THAT TOO BEYOND P ERIOD OF LIMITATION OF FOUR YEARS. FOR THIS VIEW OF OURS, WE STAND FORTIFIED BY A RECENT DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SABH INFRASTRUCTURE LTD. (SUPRA), WHERE, THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER : ANALYSIS AND FINDINGS 10. THE LAW ON THIS SUBJECT IS WELL SETTLED. AS HEL D IN KELVINATOR (SUPRA), THE POWERS UNDER SECTION 147 OF THE ACT HAVE TO BE EXERCISED AFTER A PERIOD OF F OUR YEARS ONLY IF THERE IS A FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND INFORMATION, BY THE ASSESSEE. THIS LEGAL POSITION HAS BEEN REITERATED R ECENTLY BY THIS COURT IN ORACLE INDIA PVT. LTD. V. ACIT 2017 SCC ONLINE DEL 9360, UNITECH LIMITED V. DCIT 2017 SCC ONLINE DEL 9408, BDR BUILDERS AND DEVELOPERS PVT. LTD. V. ACIT 2017 SCC ONLINE DEL 9425 AND IN JUDGMENT DATED 30TH AUGUST, 2017 IN W.P.(C) 5807/2014 ( SWAROVSKI INDIA PVT. LTD. V. DEPUTY COMMISSIONER OF INCOME TAX ). 11. THUS, IT IS ALSO NOW WELL SETTLED THAT THE REAS ONS TO BELIEVE HAVE TO BE SELF EXPLANATORY. THE REASONS CANNOT BE THEREAFTER SUPPO RTED BY ANY EXTRANEOUS MATERIAL. THE ORDER DISPOSING OF THE OBJECTIONS CAN NOT ACT AS A SUBSTITUTE FOR THE REASONS TO BELIEVE AND NEITHER CAN ANY COUNTER AFFI DAVIT FILED BEFORE THIS COURT IN WRIT PROCEEDINGS. 12. IN THE PRESENT CASE, THE REASONS TO BELIEVE CON TAINED THE NAMES OF THE VERY SAME FIVE COMPANIES WHICH WERE INITIALLY DISCLOSED BY TH E PETITIONER DURING THE ASSESSMENT PROCEEDINGS. THE NUMBER OF SHARES SUBSCR IBED TO BY THE SAID COMPANIES IS THE SAME AND THE AMOUNT RECEIVED HAS BEEN DISCLO SED BY THE ASSESSEE. THERE IS NO NEW MATERIAL WHICH HAS BEEN FOUND OR MENTIONED IN T HE REASONS TO BELIEVE WHICH WERE NOT CONTAINED IN THE INFORMATION PROVIDED BY T HE ASSESSEE PRIOR TO THE CONCLUSION OF ASSESSMENT UNDER SECTION 143 (3) OF THE ACT. 13. IN FACT, THE PETITIONER, AFTER INITIALLY SUBMIT TING THE DETAILS OF THE COMPANIES AND THE SHARES SUBSCRIBED TO, FURTHER PROVIDED CONFIRMA TIONS FROM THE SAID COMPANIES. THE PETITIONER ALSO SUBMITTED COPIES OF THE BALANCE SHEETS OF THE SAID COMPANIES FOR ITA NO. 637/DEL/2018 17 THE RELEVANT AYS SHOWING THAT THESE AMOUNTS WERE DU LY REFLECTED THEREIN. THE SAID COMPANIES WERE ALSO ASSESSED TO TAX. THUS, IT APPEA RS THAT THE AO WAS SATISFIED WITH THE DETAILS AND INFORMATION PROVIDED BY THE PETITIO NER. 14. A PERUSAL OF THE ORDER DISPOSING OF THE OBJECTI ONS REVEALS THAT IT PROCEEDS ON THE BASIS THAT THE INFORMATION SOUGHT FOR BY THE PETITI ONER WHICH FORMED THE BASIS FOR THE REASONS TO BELIEVE, INCLUDING THE EVIDENCE COLL ECTED, WAS REQUIRED TO BE PROVIDED ONLY IN THE FURTHER ASSESSMENT PROCEEDINGS. THE SAI D ORDER OVERLOOKS THE FACT THAT THE REASONS FOR REOPENING DO NOT MENTION AS TO WHAT FACT OR INFORMATION WAS NOT DISCLOSED BY THE PETITIONER. THIS IS VERY VITAL AND IN FACT GOES TO THE ROOT OF THE MATTER. AN ALLEGATION THAT THE COMPANIES ARE `PAPER COMPANIES' WITHOUT FURTHER FACTS IS BY ITSELF INSUFFICIENT TO REOPEN ASSESSMEN TS THAT STAND CLOSED AFTER PASSING OF ORDERS UNDER SECTION 143 (3) OF THE ACT. 15. THE ASSESSMENT PROCEEDINGS, ESPECIALLY THOSE UN DER SECTION 143 (3) OF THE ACT, HAVE TO BE ACCORDED SANCTITY AND ANY REOPENING OF T HE SAME HAS TO BE ON A STRONG AND SOUND LEGAL BASIS. IT IS WELL SETTLED THAT A ME RE CONJECTURE OR SURMISE IS NOT SUFFICIENT. THERE HAVE TO BE REASONS TO BELIEVE AND NOT MERELY REASONS TO SUSPECT THAT INCOME HAS ESCAPED ASSESSMENT. IN THIS CASE, T HE REASONS FAILED TO MENTION WHAT FACTS OR INFORMATION WAS WITHHELD BY THE PETITIONER . MERELY RELYING UPON THE STATEMENT OF MR. NAVNEET KUMAR SINGHANIA THAT THE C OMPANIES IN QUESTION WERE 'PAPER COMPANIES', BY ITSELF, IS INSUFFICIENT TO RE OPEN THE ASSESSMENT, UNLESS THE AO HAD FURTHER INFORMATION THAT THESE COMPANIES WERE N ON-EXISTENT AFTER MAKING FURTHER INQUIRIES INTO THE MATTER. IT IS CLEAR THAT THE AO DID NOT MAKE ANY INQUIRY OR INVESTIGATION, IF THESE COMPANIES WERE IN FACT 'PAP ER COMPANIES'. NO EFFORT HAS BEEN MADE TO ESTABLISH THE CONNECTION BETWEEN THE STATEM ENT OF MR. NAVNEET KUMAR SINGHANIA AND THE FIVE COMPANIES. 16. MR. CHAUDHARY'S SUBMISSION THAT THIS COURT CANN OT DICTATE THE MANNER AND CONTENT OF WHAT IS TO BE WRITTEN IN THE REASONS TO BELIEVE IS CORRECT AS A LEGAL PROPOSITION. HOWEVER, THE COURT HAS TO EXAMINE THE REASONS TO BELIEVE TO SEE IF IT SATISFIES THE RIGOUR OF THE PROVISIONS. THE OBSERVA TIONS OF THIS COURT IN MULTIPLEX (SUPRA) ARE RELEVANT IN THIS RESPECT AND ARE SET OU T BELOW: '24. IN OUR VIEW, THE QUESTION WHETHER THE ASSESSEE COULD HAVE BEEN STATED TO DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS HAV E TO BE EXAMINED IN THE LIGHT OF FACTS OF EACH CASE AND ALSO THE REASONS THAT LED THE AO TO BELIEVE THAT INCOME OF AN ASSESSEE HAS ESCAPED ASSESSMENT. IN A CASE WHERE THE PRIMARY FACTS HAVE BEEN TRULY DISCLOSED AND THE ISSUE IS ON LY WITH RESPECT TO THE INFERENCE DRAWN, THE AO WOULD NOT HAVE THE JURISDIC TION TO REOPEN ASSESSMENT. BUT IN CASES WHERE THE PRIMARY FACTS AS ASSERTED BY THE ASSESSEE FOR FRAMING OF ASSESSMENT ARE SUBSEQUENTLY DISCOVER ED AS FALSE, THE REOPENING OF ASSESSMENT MAY BE JUSTIFIED'.' ITA NO. 637/DEL/2018 18 17. IN THE FACTS OF THIS CASE, THE PRIMARY FACTS HA VE NOT BEEN SHOWN TO BE FALSE. THE FIVE COMPANIES DO EXIST. THEY DID SUBSCRIBE TO THE SHARE CAPITAL OF THE PETITIONER. THEY DID PAY THE MONEY TO THE PETITIONER. ALL THE F IVE COMPANIES ARE ASSESSED TO TAX. THESE ARE THE PRIMARY FACTS. THE REASONS TO BELIEVE RELY UPON A LETTER RECEIVED FROM THE INVESTIGATION WING AND MR. CHAUDHARY SUBMITS TH AT THIS LETTER WAS IN FACT AN INVESTIGATION REPORT. THE REPORT DOES NOT FORM PART OF THE REASONS AND NEITHER WAS IT ANNEXED TO THE REASONS. INTERESTINGLY, EVEN THE COU NTER AFFIDAVIT IS SILENT AS TO THE MATERIAL WHICH HAS NOT BEEN DISCLOSED BY THE PETITI ONER. THE COUNTER AFFIDAVIT MERELY STATES THAT THE INFORMATION WAS SPECIFIC AND THE INFORMATION WOULD BE PROVIDED TO THE PETITIONER DURING THE ASSESSMENT PR OCEEDINGS. THUS, IF THE REVENUE HAD ANY BASIS TO SHOW THAT THE PRIMARY FACTS WERE I NCORRECT, THE SAME OUGHT TO HAVE BEEN SET OUT IN THE REASONS TO BELIEVE. THAT HAS NO T BEEN DONE IN THE PRESENT CASE. 18. THUS, THE PETITIONER CANNOT BE SAID TO HAVE FAI LED TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS. THIS BEING A JURISDICTIONAL ISS UE, THE ASSUMPTION OF JURISDICTION UNDER SECTIONS 147 AND 148 OF THE ACT WAS ERRONEOUS. THE NOTICE DATED 20TH MA RCH, 2015 AND THE SUBSEQUENT ORDER DATED 1ST FEBRUARY, 2 016 DESERVE TO BE AND ARE HEREBY QUASHED. 19. BEFORE PARTING WITH THE CASE, THE COURT WOULD L IKE TO OBSERVE THAT ON A ROUTINE BASIS, A LARGE NUMBER OF WRIT PETITIONS ARE FILED C HALLENGING THE REOPENING OF ASSESSMENTS BY THE REVENUE UNDER SECTIONS 147 AND 148 OF THE ACT AND DESPITE NUMEROUS JUDGMENTS ON THIS ISSUE, THE SAME ERRORS A RE REPEATED BY THE CONCERNED REVENUE AUTHORITIES. IN THIS BACKGROUND, THE COURT WOULD LIKE THE REVENUE TO ADHERE TO THE FOLLOWING GUIDELINES IN MATTERS OF REOPENING OF ASSESSMENTS: (I) WHILE COMMUNICATING THE REASONS FOR REOPENING T HE ASSESSMENT, THE COPY OF THE STANDARD FORM USED BY THE AO FOR OBTAINING THE APPR OVAL OF THE SUPERIOR OFFICER SHOULD ITSELF BE PROVIDED TO THE ASSESSEE. THIS WOU LD CONTAIN THE COMMENT OR ENDORSEMENT OF THE SUPERIOR OFFICER WITH HIS NAME, DESIGNATION AND DATE. IN OTHER WORDS, MERELY STATING THE REASONS IN A LETTER ADDRE SSED BY THE AO TO THE ASSESSEE IS TO BE AVOIDED; (II) THE REASONS TO BELIEVE OUGHT TO SPELL OUT ALL THE REASONS AND GROUNDS AVAILABLE WITH THE AO FOR RE-OPENING THE ASSESSMENT - ESPECIA LLY IN THOSE CASES WHERE THE FIRST PROVISO TO SECTION 147 IS ATTRACTED. THE REASONS TO BELIEVE OUGHT TO ALSO PARAPHRASE ANY INVESTIGATION REPORT WHICH MAY FORM THE BASIS O F THE REASONS AND ANY ENQUIRY CONDUCTED BY THE AO ON THE SAME AND IF SO, THE CONC LUSIONS THEREOF; (III) WHERE THE REASONS MAKE A REFERENCE TO ANOTHER DOCUMENT, WHETHER AS A LETTER OR REPORT, SUCH DOCUMENT AND/ OR RELEVANT PORTIONS OF SUCH REPORT SHOULD BE ENCLOSED ALONG WITH THE REASONS; (IV) THE EXERCISE OF CONSIDERING THE ASSESSEE'S OBJ ECTIONS TO THE REOPENING OF ASSESSMENT IS NOT A MECHANICAL RITUAL. IT IS A QUAS I- JUDICIAL FUNCTION. THE ORDER DISPOSING OF THE OBJECTIONS SHOULD DEAL WITH EACH O BJECTION AND GIVE PROPER REASONS ITA NO. 637/DEL/2018 19 FOR THE CONCLUSION. NO ATTEMPT SHOULD BE MADE TO AD D TO THE REASONS FOR REOPENING OF THE ASSESSMENT BEYOND WHAT HAS ALREADY BEEN DISC LOSED. THERE ARE SEVERAL OTHER DECISIONS OF HONBLE JURISD ICTIONAL HIGH COURT ON THIS ISSUE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISI ON OF HONBLE JURISDICTIONAL HIGH COURT, AS REPRODUCED ABOVE, WE ARE OF THE CONS IDERED OPINION THAT THE LD. AUTHORITIES BELOW FELL IN ERROR IN JUSTIFYING THE R EOPENING OF ASSESSMENT BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF ASS ESSMENT YEAR IN QUESTION. ACCORDINGLY, THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED ONLY ON THIS COUNT. NO ARGUMENTS WERE MADE BY EITHER PARTY ON M ERITS OF THE ADDITIONS. 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD OCTOBER, 2018. SD/- SD/- (AMIT SHUKLA) (L.P. S AHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23 RD OCTOBER, 2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI