Eminent Computers Pvt Ltd, New Delhi V. ITO WARD - 8(2), New Delhi

ITA 6372/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2946 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 30-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH SINGH SENIOR
• Keywords: Reopening of assessment; Bogus purchase; Search and seizure; Question of law; Reasonable cause; Accommodation entries; Assessment record; Block assessment; Reason to believe; Documents seized; Reassessment proceedings; Set aside
• Section: 143(3); 143(2); 64; 48; 13; 147; 131; 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.6372/DEL./2019 (ASSESSMENT YEAR : 2010-11) M/S. EMINENT COMPUTERS PVT. LTD., VS. ITO WARD 8 ( 2), S-363, GREATER KAILASH 1, NEW DELHI. NEW DELHI 110 048. (PAN : AAACE2256K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHAANTANU JAIN, ADVOCATE REVENUE BY : SHRI JAGDISH SINGH, SENIOR DR DATE OF HEARING : 19.10.2020 DATE OF ORDER : 24.11.2020 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. EMINENT COMPUTERS PVT. LTD. (HEREIN AFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 24.05.2019 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-34, NEW DELHI QUA THE ASSESSMENT YEAR 2010-11 ON THE GROUNDS INTER ALIA T HAT :- ITA NO.6372/DEL./2019 2 1. BECAUSE THE ACTION FOR INITIATION, CONTINUATION AND CONCLUSION OF REASSESSMENT PROCEEDINGS IS BEING CHA LLENGED ON FACTS AND LAW. 2. BECAUSE THE ACTION FOR THE ASSUMPTION OF JURISDI CTION OF REASSESSMENT PROCEEDINGS AND THE MISAPPLICATION OF THE JURISDICTION SANCTION BEING A FIT CASE FOR ISSUE O F NOTICE' IS BEING CHALLENGED ON FACTS AND LAW. 3. BECAUSE THE ACTION FOR INITIATION OF RE-ASSESSME NT PROCEEDINGS IS UNREASONABLE SINCE WHILE RECORDING R EASONS, THERE IS NON-APPLICATION OF MIND MUCH LESS INDEPENDENT AP PLICATION OF MIND AND MERELY RELYING UPON INVESTIGATION REPORT B Y AO, FURTHER REASONS RECORDED ARE VAGUE, LACKING TANGIBL E MATERIAL/ REASONABLE CAUSE AND JUSTIFICATION. 4. BECAUSE THE ACTION IS BEING CHALLENGED SINCE THE ADDITION OF RS 45,00,000/ - HAS BEEN MADE WITHOUT HAVING PRO VIDED THE CROSS EXAMINATION OF THE PERSON ON WHOSE STATEMENT OR INFORMATION THE PROCEEDINGS UNDER SECTION 147 WERE INITIATED WHICH IS IN VIOLATION OF THE SETTLED PRINCIPLE OF L AW. 5. BECAUSE THE ACTION IS BEING CHALLENGED SINCE THE ADDITION OF RS 45,00,000/ - HAS BEEN MADE WITHOUT MAKING PRO PER INVESTIGATION FROM THE OTHER PARTY WHEREBY ASSESSEE HAS DISCHARGED THE ONUS BY PROVIDING RELEVANT DOCUMENTS 6. BECAUSE THE ACTION FOR ADDITION U/S 68 AMOUNTING RS.45,00,000/- IS BEING CHALLENGED ON FACTS AND LAW WHILE ALL PARAMETERS FOR THE PROVISION OF LAW REQUIRED BY ASS ESSEE FULFILLED AS REVEALED IN FINDINGS FROM ACQUIESCENCE BY SILENC E. 7. BECAUSE THE ACTION FOR ENHANCEMENT OF ADDITION O N ACCOUNT OF COMMISSION RS. 45,000/ - IS BEING CHALLE NGED ON FACTS AND LAW AS NO SPECIFIC SHOW CAUSE NOTICE ISSUED BY CIT(A) ON ASSESSEE. 8. BECAUSE THE ACTION IS BEING CHALLENGED ON FACTS AND LAW FOR MAKING ADDITION ON ACCOUNT OF COMMISSION PAID A MOUNTING RS.45,000/ - AT THE RATE OF 1 % OF RS.45,00,000/-. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : INITIALLY RETURN OF INCOM E FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2010-11 DECLARING AN INCOME OF RS.7,15,990/- WAS PROCESSED UNDER SECTION 143 ( 1) OF THE ITA NO.6372/DEL./2019 3 INCOME-TAX ACT, 1961 (FOR SHORT THE ACT). SUBSEQ UENTLY, ON RECEIPT OF INFORMATION FROM THE INVESTIGATION WING FOR PROVIDING ACCOMMODATION ENTRIES TO DIFFERENT BENEFICIARIES BY THE COMPANIES FLOATED BY PRADEEP KUMAR JINDAL GROUP ON THE BASIS OF SEARCH AND SEIZURE OPERATION CARRIED OUT ON 18.11.2015 AND FRO M THE DOCUMENTS IMPOUNDED/SEIZED & FROM THE SUBMISSIONS O F PRADEEP KUMAR JINDAL AND DUMMY DIRECTORS OF HIS FRONT COMPA NIES, IT WAS FOUND THAT PRADEEP KUMAR JINDAL PROVIDED BOGUS ENTR IES TO VARIOUS BUSINESS ENTITIES AND INDIVIDUALS BY ACCEPTING CASH FROM THEM. IT WAS ALSO FOUND THAT 15 COMPANIES FLOATED BY PRADEEP KUMAR JINDAL, WHICH WERE SUBJECTED TO SEARCH AND SURVEY P ROCEEDINGS, HAVE NO GENUINE BUSINESS ACTIVITIES BUT HAVE BEEN M ADE FRONT COMPANIES FOR PROVIDING ACCOMMODATION ENTRIES OF VA RIOUS NATURE. STATEMENTS OF DUMMY DIRECTORS WERE RECORDED. 3. ASSESSING OFFICER RECEIVED THE INFORMATION THAT IN THE CASE AT HAND, SHARE CAPITAL PREMIUM OF RS.45,00,000/- HAVE BEEN RECEIVED FROM M/S. HAJIMA RESORTS LTD., M/S. JUNEJA NAGPAL C ONSTRUCTION PVT. LTD. AND M/S. LUSTRE FINLEASE & INVESTMENT LTD .. ONE SHRI SUBODH KUMAR KHANDELWAL, ONE OF THE DIRECTORS OF M/ S. JUNEJA NAGPAL CONSTRUCTION PVT. LTD. GOT RECORDED HIS STAT EMENT THAT HE HAS BEEN SHOWN DIRECTOR IN 34 COMPANIES BY PRADEEP KUMAR ITA NO.6372/DEL./2019 4 JINDAL WITHOUT HIS KNOWLEDGE AND THE SAID 34 COMPAN IES WERE BELONGING TO PRADEEP KUMAR JINDAL ONLY. 4. AO NOTICED THAT ASSESSEES NAME ALSO FIGURED IN THE NAME OF BENEFICIARIES OF TAKING ACCOMMODATION ENTRIES TO TH E TUNE OF RS.45,00,000/- IN AY 2010-11 FROM THREE CORPORATE E NTITIES MANAGED AND CONTROLLED BY PRADEEP KUMAR JINDAL, AS SHOWN IN THE REPORT OF INVESTIGATION WING, WHICH ARE AS UNDER :- S.NO. FROM TO AMOUNT DATE 1. M/S. HAJIMA RESORTS LTD. M/S. EMINENT COMPUTERS PVT. LTD. RS.15,00,000 23.06.2009 2. M/S. JUNEJA NAGPAL CONSTRUCTIONS PVT. LTD. M/S. EMINENT COMPUTERS PVT. LTD. RS.18,00,000 23.06.2009 3. M/S. LUSTRE FINLEASE & INVESTMENT PVT. LTD. M/S. EMINENT COMPUTERS PVT. LTD. RS. 3,00,000 23.06.2009 4. M/S. LUSTRE FINLEASE & INVESTMENT PVT. LTD. M/S. EMINENT COMPUTERS PVT. LTD. RS. 9,00,000 25.06.2009 RS.45,00,000 5. AO, AFTER EXAMINING THE REPORT OF INVESTIGATION WING RECORDED REASONS TO BELIEVE THAT INCOME HAS ESCAP ED ASSESSMENT AND AFTER GETTING PRIOR APPROVAL OF THE COMPETENT A UTHORITY, INITIATED PROCEEDINGS U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 OF THE ACT AND IN RESPONSE THERETO, ASSESSEE OPTED TO TREAT HIS RETURN OF INCOME FILED ON 24.09.2010 FOR AY 2010-11 AS REPLY TO THE NOTICE ITA NO.6372/DEL./2019 5 U/S 148 OF THE ACT. AFTER COMPLETING PROCEDURAL FO RMALITIES BY PROVIDING REASONS RECORDED AND ISSUANCE OF NOTICE U/S 143(2) & 142(1), INFORMATION WAS CALLED FROM AFORESAID THREE COMPANIES. AFTER CONSIDERING THE CONTENTIONS RAISED BY THE ASS ESSEE, AO PROCEEDED TO CONCLUDE THAT IDENTITY, CREDITWORTHINE SS AND GENUINENESS OF THE TRANSACTIONS OF AFORESAID THREE COMPANIES WERE NOT ESTABLISHED AND FROM THE STATEMENTS OF SHRI SUB ODH KUMAR KHANDELWAL, MS. SEEMA KHANDELWAL, MS. MEERA MISHRA, SHRI LAXMAN SINGH, SHRI SATYA AND SHRI PRADEEP KUMAR JIN DAL RELATED TO AFORESAID THREE CORPORATE COMPANIES FROM WHOM RS .45,00,000/- CLAIMED TO HAVE BEEN MADE, ADMITTED THAT THESE THRE E COMPANIES WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODA TION ENTRIES IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM ETC. AND THEREBY MADE ADDITION OF RS.45,00,000/- AND CONSEQUENTLY, F RAMED THE ASSESSMENT AT RS.52,15,990/- U/S 143(3)/147 OF THE ACT. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS NOT ONLY CONFIRMED THE AD DITION BUT ALSO ENHANCED THE SAME TO THE EXTENT OF RS.45,000/- I.E. @ 1% ON ACCOUNT OF COMMISSION FOR OBTAINING ACCOMMODATION E NTRIES TO THE TAXABLE INCOME OF THE ASSESSEE. FEELING AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT (A), THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. ITA NO.6372/DEL./2019 6 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. BY MOVING A SEPARATE APPLICATION, ASSESSEE COMPA NY SOUGHT TO RAISE ADDITIONAL LEGAL GROUNDS ON THE GROUND THA T THE SAME GO TO THE ROOT OF THE CASE WHICH ARE AS UNDER :- (I) BECAUSE THE ACTION FOR INITIATION OF REASSESSM ENT PROCEEDINGS IS UNREASONABLE SINCE THE APPROVAL GRAN TED BY PR.CIT WAS A MECHANICAL APPROVAL AND HENCE INITIATI ON OF PROCEEDINGS U/S 147 OF THE ACT ON THIS GROUND IS IN VALID. (II) BECAUSE THE ACTION FOR INITIATION, CONTINUATIO N & COMPLETION OF REASSESSMENT PROCEEDINGS IS UNREASONA BLE SINCE IN VIEW OF THE FACTS THAT THE AO HAS NOT FOLLOWED T HE DUE PROCESS OF LAW AS HELD BY THE APEX COURT IN CKN DRI VE SHAFT (SUPRA) BEFORE FRAMING THE REASSESSMENT. 9. LD. DR FOR THE REVENUE OPPOSED THE ADDITIONAL GR OUND ON THE GROUND THAT AT NO POINT OF TIME, ASSESSEE HAS R AISED ANY SUCH GROUND BEFORE THE AO OR LD. CIT (A) AND, AS SUCH TH E SAME IS NOT MAINTAINABLE. 10. KEEPING IN VIEW THE FACT THAT THE ADDITIONAL GR OUNDS SOUGHT TO BE RAISED BY THE ASSESSEE, WHICH ARE LEGAL GROUN DS AND CAN BE RAISED AT ANY STAGE OF THE PROCEEDINGS, AND ARE OTH ERWISE NECESSARY FOR COMPLETE ADJUDICATION OF THE CONTROVERSY AT HAN D, THE APPLICATION FOR ADDITIONAL GROUND IS HEREBY ALLOWED IN VIEW OF THE ITA NO.6372/DEL./2019 7 LAW LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF NTPC VS. CIT 229 ITR 383 (SC) . 11. UNDISPUTEDLY, AO ON RECEIPT OF INFORMATION FROM ADIT (INV.), UNIT 2(1), NEW DELHI REOPENED THE ASSESSMEN T BY ISSUING NOTICE DATED 29.03.2017 U/S 148 OF THE ACT BY RECOR DING FOLLOWING REASONS :- RECORDING OF REASONS FOR REOPENING THE CASE OF M/S. EMINENT COMPANIES PVT. LTD. FOR THE A.Y. 2010-11 PAN : AAACE2256K IN THIS CASE RETURN OF INCOME HAS BEEN FILED BY TH E ASSESSEE ON 24.09.2010 AT A RETURN INCOME OF RS.7,1 5,990/-. NOW IT IS FOUND THAT THE ADIT (INV.)-UNIT 2 (1), N EW DELHI VIDE HIS LETTER F.NO.ADIT (INV.)/UNIT 2(1)/PK J/2016- 17/155 DATED 21.03.2017 HAS INFORMED THAT A SEARCH AND SEIZURE ACTION WAS CARRIED OUT ON 18.11.2015 ON ENTRY PROVI DER SH. PRADEEP KUMAR JINDAL, RESIDENT OF H-1/1A, MODEL TOW N NEW DELHI WHO WAS INVOLVED IN PROVIDING VARIOUS TYPES O F ACCOMMODATION ENTRIES IN LIEU OF CASH TO A LARGE NU MBER OF BENEFICIARIES THROUGH FRONT/NON-DESCRIPT COMPANIES MANAGED AND CONTROLLED BY HIM WITH THE HELP OF DUMMY DIRECT ORS, SIMULTANEOUSLY, SEARCH AND SEIZURE ACTION WAS CARRI ED OUT ON FARIDABAD BASED SH. SAJAN KUMAR JAIN GROUP WHO HAD TAKEN ACCOMMODATION ENTRIES OF MORE THAN 100 CRORES IN TH E FORM OF BOGUS SHARE PREMIUM, EXEMPT LTCG AND ADVANCE AGAINS T PROPERTY ETC. MAJORITY FROM FRONT AND NON-DESCRIPT COMPANIES OF SH. PRADEEP KUMAR JINDAL. PRE-SEARCH ENQUIRIES HAD REVEALED THAT SH. PRADEEP KUMAR JINDAL IS MANAGING AND CONTROLLING A WEB FRON T/NON- DESCRIPT COMPANIES THROUGH DUMMY DIRECTORS AND HAS PROVIDED ACCOMMODATION ENTRIES OF SHARE CAPITAL AND PREMIUM AND UNSECURED LOANS TO A LARGE NUMBER OF BENEFICIAR IES. THE FRONT COMPANIES OF SH. PRADEEP KUMAR JINDAL HAVE NO CREDITWORTHINESS TO INVEST SUCH HUGE AMOUNTS IN SHA RE CAPITAL/PREMIUM OR TO ISSUE LOANS AND ADVANCES. TH E ENQUIRIES HAD REVEALED THAT THE INVESTING COMPANIES WERE SHEL L COMPANIES. THE SO CALLED DIRECTORS OF THE SHELL CO MPANIES HAD BEEN EVADING INCOME TAX SUMMONS/LETTERS ISSUED TO T HEM FROM TIME TO TIME. ITA NO.6372/DEL./2019 8 THE BANK STATEMENTS OF VARIOUS FRONT COMPANIES OF SH. PRADEEP KUMAR JINDAL WAS PROVIDED BY VAISH CO-OPERA TIVE BANK LTD., NAI SARAK, DELHI U/S 131 (1A) OF THE INC OME TAX ACT 1961 ANALYSIS OF THE BANK STATEMENT REVEALED THAT H UGE CASH IS BEING DEPOSITED IN SUCH BANK ACCOUNT AND RTGS/CHEQU E ISSUED IMMEDIATELY TO OTHER BANK ACCOUNT IN THE SAME BANK FOR PURPOSE OF LAYING AND ON 3 RD AND 4 TH STAGE FINALLY RTGS/CHEQUE IS ISSUED TO THE BENEFICIARIES FOR PURPOSE OF PROVI DING ACCOMMODATION ENTRIES. DURING THE COURSE OF SEARCH ON 18.11.2015 AND POST SEARCH INVESTIGATION THE STATEMENT OF SMT. MEERA MI SHRA, SH. LAXMAN SINGH SATYAPAL, SH. SUBODH KHANDELWAL, SMT. SEEMA KHANDELWAL, SMT. RENU JINDAL, SH. AJAY JINDAL AND S H. UTTAM KUMAR SRIVASTAVA (VARIOUS DUMMY DIRECTORS OF FRONT AND NON DESCRIPT COMPANIES) WAS RECORDED U/S 132 AND 131 (1 A) OF THE INCOME TAX ACT, 1961 WHEREIN ALL OF THEM STATED THA T THEY ARE NAMESAKE DIRECTORS IN FRONT COMPANIES OF SH. PRADEE P KUMAR JINDAL, THAT IS MANAGING ALL THE FRONT COMPANIES W HERE THEY HAVE BEEN APPOINTED AS DIRECTORS, THAT SH. PRADEEP KUMAR JINDAL IS INVOLVED IN PROVIDING ACCOMMODATION ENTRI ES OF VARIOUS NATURE TO A LARGE NUMBER OF BENEFICIARIES I N LIEU OF CASH, BESIDES, SH. LAXMAN SINGH SATYAPAL AND SH. UT TAM KUMAR SHRIVASTAVA HAVE ADMITTED THAT BESIDES BEING THE DUMMY DIRECTORS THEY WERE ALSO CASH HANDLERS OF SH. PRADEEP KUMAR JINDAL AND EXPLAINED THEIR ROLE IN THIS CAPAC ITY. THE STATEMENT OF SH. PRADEEP KUMAR JINDAL WAS ALSO RECO RDED DURING SEARCH AND POST SEARCH INVESTIGATION U/S 132 AND 131 (1A) OF THE INCOME TAX ACT, 1961, WHEREIN HE STATED AND EXPLAINED ENTIRE MODUS OPERANDI OF PROVIDING ACCOMM ODATION ENTRIES TO VARIOUS BENEFICIARIES. LATER ON TWO CON SEQUENTIAL SURVEYS WERE ALSO CARRIED OUT ON 01.02.2016 IN THE CASE OF SH. PRADEEP KUMAR JINDAL AT 514, USHA KIRAN BUILDING CO MPLEX, AZADPUR COMMERCIAL COMPLEX, AZADPUR, DELHI, LARGE N UMBER OF PHYSICAL DOCUMENTS AND SOFT DATA MAJORITY TALLY DATA OF THE FRONT COMPANIES OF SH. PRADEEP KUMAR JINDAL WAS FOU ND AND IMPOUND DURING THE SURVEY OPERATION ON 25.05.2016. THE DOCUMENTS/DIGITAL DATA SEIZED IMPOUNDED DURING SEARCH/SURVEY ACTION AND THE ADMISSION OF SH. PRADE EP KUMAR JINDAL, DUMMY DIRECTORS OF HIS FRONT COMPANIES & BE NEFICIARIES HAS ESTABLISHED BEYOND DOUBT THAT SH. PRADEEP KUMAR JINDAL PROVIDES BOGUS ENTRIES TO VARIOUS BUSINESS ENTITIES AND INDIVIDUAL BY ACCEPTING CASH FROM THEM. THE DETAIL ED ANALYSIS OF DIGITAL DATA AND ANNEXURES SEIZED/IMPOUNDED REVE ALED THAT SH. PRADEEP KUMAR JINDAL HAS PROVIDED ACCOMMODATION ENTRIES OF SHARES CAPITAL/PREMIUM, SHARE FORFEITURE , EXEMPT LONG TERM CAPITAL GAIN/LOSS, SHORT TERM CAPITAL GAI N/LOSS ITA NO.6372/DEL./2019 9 ADVANCE AGAINST PROPERTY, UNSECURED LOANS, TRANSFER OF COMPANY, BOGUS SALE-PURCHASE ETC. THE NAME OF INDIVIDUALS OF SH. PRADEEP KUMAR JINDA L GROUP WHOSE BANK ACCOUNTS HAVE BEEN USED BY HIM FOR PURPOSE OF PROVIDING ACCOMMODATION ENTRIES ARE :- S. NO. NAME OF THE INDIVIDUAL ADDRESS OF THE INDIVIDUAL RELATION WITH SH. PRADEEP KR. JAIN 1. PRADEEP KUMAR JINDAL H-1/1A, MODEL TOWN, DELHI SELF 2. MAMTA JINDAL H-1/1A, MODEL TOWN, DELHI WIFE AND DUMMY DIRECTOR 3. ARCHIT JINDAL H-1/1A, MODEL TOWN, DELHI DUMMY DIRECTOR AND CASH HANDLER 4. MEERA MISHRA K-31/6, MODEL TOWN-III, DELHI DUMMY DIRECTOR 5. RENU JINDAL 4/429, KACHERI GHAT, AGRA SISTER-IN- LAW AND DUMMY DIRECTOR 6. AJAY KUMAR JINDAL 4/429, KACHERI GHAT, AGRA BROTHER AND DUMMY DIRECTOR 7. SUBODH KUMAR KHANDEWAL 88, BALDEV PARK, PARWANA ROAD, DELHI DUMMY DIRECTOR 8. UTTAM KUMAR SHRIVASTAVA 88, BALDEV PARK, PARWANA ROAD, DELHI DUMMY DIRECTOR AND CASH HANDLER 9. LAXMAN SINGH SATYAPAL GALI NO.10, BLOCK A, BABA COLONY, BURARI, DELHI DUMMY DIRECTOR AND CASH HANDLER DURING THE COURSE OF POST-SEARCH INVESTIGATION IT HAS BEEN FOUND THAT THE ASSESSEE WAS USING ACCOMMODATIO N ENTRIES IN THE FORM OF SHARE PREMIUM/SHARE APPLICATION MONEY/UNSECURED LOAN/BOGUS PURCHASE/ADVANCE AGAINST PROPERTY/ TRANSFER OF COMPANY ETC. ITA NO.6372/DEL./2019 10 3.1 COMMISSION RATE CHARGED BY SH. PRADEEP KUMAR JINDAL AND AS ADMITTED BY HIM 3.1.1 COMMISSION ADMITTED BY SH. PRADEEP KUMAR JINDAL ON DATE OF SEARCH I.E. 18.11.2015 3.1.2 COMMISSION ADMITTED BY SH. PRADEEP KUMAR JINDAL DURING HIS STATEMENT DATED 21.03.2016 3.2 EVIDENCE OF COMMISSION RATE CHARGED BY SH. PRADEEP KUMAR JINDAL FOUND IN POST SEARCH INVESTIGATION SH. PRADEEP KUMAR JINDAL HAS ADMITTED TO HAVE CHARGED COMMISSION IN CASH @ 2% FROM VARIOUS BENEFI CIARIES FOR PROVIDING ACCOMMODATION ENTRIES IN LIEU OF CASH . HOWEVER, DURING THE COURSE OF POST SEARCH INVESTIGATION, EVI DENCE HAVE BEEN FOUND THAT SH. PRADEEP KUMAR JINDAL HAS CHARGE D COMMISSION IN CASH @ 2.5% ON THE ACCOMMODATION ENTR IES. THE COMMISSION PAID IN CASH @ 2.5% BY THE BENEFICIA RY TO PRADEEP JINDAL ON ACCOUNT OF ACCOMMODATION ENTRIES HAS TO BE ADDED INCOME OF THE BENEFICIARY ASSESSEE. S. NO. NAME & ADDRESS OF THE BENEFICIARY AMOUNT DATE OF ENTRY ENTRY PROVIDED BY 1. M/S. EMINENT COMPUTERS PVT. LTD. 18,00,000 23.06.2009 M/S. JUNEJA NAGPAL CONSTRUCTION PVT. LTD. 2. M/S. EMINENT COMPUTERS PVT. LTD. 3,00,000 23.06.2009 M/S. LUSTER FINLEASE & INVESTMENT PVT. LTD. 3. M/S. EMINENT COMPUTERS PVT. LTD. 9,00,000 23.06.2009 M/S. LUSTER FINLEASE & INVESTMENT PVT. LTD, THESE AFORESAID TRANSACTIONS ARE FOUND RECORDED AT VARIOUS DOCUMENTS SEIZED FROM PRADEEP KUMAR JINDAL GROUP OF COMPANIES, A COPY OF WHICH WAS SUPPLIED ALONG WI TH THE REPORT AS SCANNED DOCUMENTS IN THE CD. I HAVE CAREFULLY EXAMINED THE ABOVE REFERRED INFORMATION AS RECEIVED ALONG WITH THE RETURN OF TH E ASSESSEE FOR A.Y. 2010-11. THE RETURN OF INCOME FILED BY TH E ASSESSEE HAS ALSO BEEN ANALYZED WITH REFERENCE TO THE INFORM ATION RECEIVED FROM THE INVESTIGATION WING AND KEEPING IN VIEW THE FACTUAL POSITION FOUND BY THE INVESTIGATION WING ON THE BASIS OF DOCUMENTS SEIZED IN THE SEARCH OPERATION AND POST S EARCH INQUIRIES, AS DISCUSSED ABOVE. CONSIDERING ALL THE SE MATERIAL IN ITA NO.6372/DEL./2019 11 TOTALITY THERE IS ENOUGH MATERIAL ON RECORD TO HAVE A REASON TO BELIEVE THAT SHARE APPLICATION MONEY/SHARE PREMIUM CONSIDERATION ARE MERELY AND ACCOMMODATION ENTRIES FOR WHICH THE ASSESSEE COMPANY HAS PAID CASH FROM ITS COFFER AND COMMISSION THEREON. THE ASSESSEE HAS RECEIVED UNEXPLAINED SUMS AS ACCOMMODATION ENTRIES THROUGH PRADEEP KUMAR JINDAL AS PER THE ABOVE DETAILS AS PER INFORMATION AVAILABLE WITH THE UNDERSIGNED. AS EXPLAINED ABOVE, THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS WI TH THESE PERSONS/SUBSCRIBERS AS ACCOMMODATION WAS FOUND TO B E DUBIOUS. THE TRANSACTION AMOUNT OF RS.30,00,000/- RECEIVED AS DISCUSSED ABOVE LEADS TO A CREDIBLE QUESTION ON THE GENUINENESS OF SHARE CAPITAL/ SHARE APPLICATION MONEY RECEIVED ETC., DURING THE YEAR WITHIN THE MEANING OF SECTION 68 OF THE IN COME TAX ACT, 1961, ON THE BASIS OF FACTS DISCUSSED ABOVE RE LATING TO THE SO CALLED SUBSCRIBERS. IT IS EVIDENT FROM THE PERU SAL OF THE RETURN THAT ASSESSEE HAS NOT DISCLOSED ITS INCOME T O THE TUNE OF RS.30,00,000/-. KEEPING IN VIEW THE ABOVE FACTS, I HAVE REASON TO BELIEVE THAT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT FOR ABOVE ASSESSMENT YEAR 2010-11, THE INCOME CHARGEABL E TO TAX TO THE EXTENT OF ABOVE MENTIONED ACCOMMODATION ENTRY AMOUNTING TO RS.30,00,000/- AS MENTIONED ABOVE HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147/148 OF THE ACT. MOREOVER, AS THE CASE PERTAINS TO A PERIOD BEYOND FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEARS, FO R ISSUING THE NOTICE U/S 148, NECESSARY APPROVAL/ SANCTION MAY KI NDLY BE ACCORDED BY THE PR. COMMISSIONER OF INCOME TAX, DEL HI, IN VIEW OF THE AMENDED PROVISION OF SECTION 151 W.E.F. 01.06.2015. SD/-. (VIRENDRA SINGH) INCOME TAX OFFICER, WARD 8(2), NEW DELHI. 12. LD. AR FOR THE ASSESSEE CONTENDED INTER ALIA TH AT PRINCIPAL CIT HAS ACCORDED SANCTION WITHOUT APPLYING JUDICIAL MIND WHICH IS NOT SUSTAINABLE; THAT AO HAS NOT APPLIED HIS INDEPE NDENT JUDICIAL MIND WHILE RECORDING REASONS FOR REOPENING THE ASSE SSMENT RATHER ITA NO.6372/DEL./2019 12 REASONS ARE BASED UPON ALLEGED ADMISSION OF PRADEEP KUMAR JINDAL, SHRI SUBODH KUMAR KHANDELWAL, MS. SEEMA KHA NDELWAL & MS. MEERA MISHRA. 13. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVE NUE TO REPEL THE ARGUMENTS ADDRESSED BY THE LD. AR FOR THE ASSES SEE CONTENDED INTER ALIA THAT ONLY PRIMA FACIE MATERIAL IS TO BE SEEN FOR THE PURPOSE OF REOPENING; THAT SANCTION HAS BEEN ACCORDED BY PR INCIPAL CIT FOR REOPENING AFTER PERUSING ENTIRE ASSESSMENT RECORD P REPARED BY THE AO AS WELL AS REPORT OF THE INVESTIGATION WING AFTE R DULY APPLYING HIS MIND. LD. DR FOR THE REVENUE FURTHER SUPPORTED THE ORDER PASSED BY LD. CIT(A) BY PLACING ON RECORD, ANNEXURE A, WHICH IS SUMMARY OF THE CASE PURPORTEDLY PUT UP BEFORE PR . CIT FOR ACCORDING APPROVAL FOR INITIATING PROCEEDINGS U/S 1 48 OF THE ACT. WE ARE OF THE CONSIDERED VIEW THAT NEITHER FROM THE APPROVAL DT. 29.03.2017 NOR FROM ANNEXURE A IT IS MADE OUT IF PR. CIT HAS APPLIED HIS MIND BEFORE WRITING IN CL. 13 OF THE AP PROVAL THAT, I AM SATISFIED. LD. DR HAS ALSO FILED WRITTEN SUBMISS IONS TO SUPPORT HIS ARGUMENTS WHICH ARE MADE PART OF THE RECORD. 14. FIRST OF ALL, LD. AR FOR THE ASSESSEE DREW OUR ATTENTION TOWARDS THE SANCTION ACCORDED BY THE LD. PRINCIPAL CIT FOR REOPENING THE ASSESSMENT WHICH IS AVAILABLE AT PAGE S 14 & 15 OF THE PAPER BOOK. ON PERUSAL OF THE SANCTION ACCORDE D BY THE LD. ITA NO.6372/DEL./2019 13 PRINCIPAL CIT IN THE PRESCRIBED PROFORMA GOES TO SH OW THAT THERE IS A QUESTION NO.13 VIZ.: WHETHER THE PR. COMMISSIONER OF INCOME TAX IS SATI SFIED ON THE REASONS RECORDED BY THE A.O. THAT IT IS A FIT CASE FOR ISSUE OF NOTICE U/S 148 OF THE I.T. ACT, 1961. 15. IN RESPONSE TO THE AFORESAID QUESTION NO.13 IN THE PRESCRIBED PROFORMA FOR ACCORDING SANCTION, LD. PRINCIPAL CIT HAS WRITTEN YES, I AM SATISFIED. 16. NO DOUBT, COLUMN OF REASONS RECORDED ARE THER E IN THE PRESCRIBED PROFORMA SHOWN AS ANNEXURE A, AVAILABLE AT PAGE 14 OF THE PAPER BOOK, AND IT IS MENTIONED IN COLUMN NO.11 THAT REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. IN RESPONSE TO THE SAID QUESTION AS CONTAINED IN COLUMN NO.11, IT IS MENTIONED BY THE AO THAT AS PER ANNEXURE A. BUT NO SUCH ANNEX URE A HAS BEEN BROUGHT ON RECORD BEFORE THE BENCH FOR PERUSAL . IN THESE CIRCUMSTANCES, IT IS DIFFICULT TO MAKE OUT AS TO WH AT WERE THE REASONS FOR BELIEF THAT INCOME HAS ESCAPED ASSESSM ENT WITH THE AO ON THE BASIS OF WHICH PRINCIPAL CIT HAS ACCORDED SANCTION BY MERELY WRITING I AM SATISFIED. 17. APPARENTLY, FROM THE APPROVAL RECORDED AND WORD S USED THAT 'YES. I AM SATISFIED.', IT IS PROVED ON RECORD THAT THE SANCTION IS ACCORDED IN MECHANICAL MANNER AND PR.CIT HAS NOT AP PLIED INDEPENDENT MIND WHILE ACCORDING SANCTION AS THERE IS NOT AN IOTA ITA NO.6372/DEL./2019 14 OF MATERIAL ON RECORD AS TO WHAT DOCUMENTS HE HAD P ERUSED AND WHAT WERE THE REASONS FOR HIS BEING SATISFIED TO AC CORD THE SANCTION TO INITIATE THE REOPENING OF ASSESSMENT U/SS 147/14 8 OF THE ACT. 18. EVEN THE AO HAS NOT APPLIED HIS JUDICIAL MIND I NDEPENDENTLY WHILE RECORDING THE REASONS FOR INITIATING PROCEEDI NGS U/S 147/148 OF THE ACT. BARE PERUSAL OF THE REASONS RECORDED S HOWS THAT THE ENTIRE EMPHASIS IS PLACED ON THE REPORT OF THE INVE STIGATION WING, WHICH HAS OTHERWISE BEEN BASED UPON THE STATEMENTS OF PRADEEP KUMAR JINDAL, SHRI SUBODH KUMAR KHANDELWAL, MS. SEE MA KHANDELWAL & MS. MEERA MISHRA WHO HAVE FURNISHED TH E LIST OF COMPANIES STATED TO BE NOT DOING ANY BUSINESS BUT E NGAGED IN PROVIDING ACCOMMODATION ENTRIES. BEFORE ISSUING T HE NOTICE, THE AO HAS NOT EXAMINED THE PROFILE OF THE SAID COMPANI ES TO ARRIVE AT THE LOGICAL CONCLUSION SO AS TO ISSUE NOTICE U/S 14 8 OF THE ACT. 19. BARE PERUSAL OF THE REASONS RECORDED FURTHER SHOWS THAT THE REOPENING HAS BEEN MADE ON THE ALLEGATION THAT THE ACCOMMODATION ENTRY TO THE TUNE OF RS.30,00,000/- HAVE BEEN PROVI DED BY M/S. JUNEJA NAGPAL CONSTRUCTION PVT. LTD. AND M/S. LUSTR E FINLEASE & INVESTMENT LTD., HOWEVER AFTER INITIATING THE REASS ESSMENT PROCEEDINGS U/S 147/148 OF THE ACT, AO ROPED IN ONE M/S. HAJIMA RESORTS LTD. FOR PROVIDING ACCOMMODATION ENTRY TO T HE TUNE OF ITA NO.6372/DEL./2019 15 RS.15,00,000/- TO THE ASSESSEE AND PROCEEDED TO MAK E ADDITION OF RS.45,00,000/-. 20. NEITHER ANY REASON HAS BEEN RECORDED WHICH IS SUFFICIENT TO BELIEVE THAT INCOME TO THE TUNE OF RS.15,00,000/- R ECEIVED FROM M/S. HAJIMA RESORTS LTD. HAS ESCAPED ASSESSMENT NOR ANY SUCH NOTICE HAS BEEN GIVEN TO THE ASSESSEE. ALL THESE FA CTS GOES TO PROVE THAT THE AO HAS NOT APPLIED HIS JUDICIAL MIND BEFOR E RECORDING THE REASONS TO BELIEVE THAT SUCH AND SUCH INCOME HAS ESCAPED ASSESSMENT RATHER PROCEEDED TO INITIATE THE PROCEED INGS U/S 147/148 OF THE ACT BY BLINDLY FOLLOWING THE REPORT OF THE I NVESTIGATION WING. BEFORE ACCORDING APPROVAL, LD. PRINCIPAL CIT HAS ALSO NOT EXAMINED ALL THESE FACTS RATHER ACCORDED THE APPROV AL IN A MECHANICAL MANNER. 21. COORDINATE BENCH OF THE TRIBUNAL IN CASE CITED AS ITO, WARD 17 (4), NEW DELHI VS. M/S. VIRAT CREDIT & HOLD INGS PVT. LTD. IN ITA NO.89/DEL/2012 & M/S. VIRAT CREDIT & HO LDINGS PVT. LTD. VS. ITO, WARD 17 (4), NEW DELHI IN CO NO.57/DEL/2012 ORDER DATED 09.02.2018 DEALT WITH THE IDENTICAL ISSUE ARISING OUT OF THE SEARCH AND SEIZURE OPERATI ON CONDUCTED BY THE INVESTIGATION WING ON 18.11.2015 ON PRADEEP KUM AR JINDAL GROUP OF COMPANIES WHO WERE ALLEGEDLY ENGAGED INTO PROVIDING ACCOMMODATION ENTRIES, QUASHED THE REASSESSMENT ON THE GROUND ITA NO.6372/DEL./2019 16 THAT AO HAS NOT APPLIED HIS JUDICIAL MIND INDEPENDE NTLY AND THAT LD. PRINCIPAL CIT HAS ACCORDED MECHANICAL APPROVAL BY MERELY WRITING WORDS THAT YES, I AM SATISFIED. WITHOUT APPLYING HIS JUDICIAL MIND BY RETURNING FOLLOWING FINDINGS :- 10. FIRST OF ALL, LD. AR FOR THE ASSESSEE COMPANY DREW OUR ATTENTION TOWARDS SANCTION ACCORDED BY THE ADDL.CIT FOR REOPENING OF THE ASSESSMENT OBTAINED BY MOVING AN A PPLICATION UNDER RIGHT TO INFORMATION ACT, 2005, AVAILABLE ON FILE AS ANNEXURE 'A'. PERUSAL OF THE SANCTION ACCORDED BY A DDL. CIT IN THE PRESCRIBED PROFORMA SHOWS THAT THERE IS A QUEST ION NO.13 VIZ : '13. WHETHER THE ADDL. CIT IS SATISFIED ON THE REAS ONS RECORDED UNDER SECTION 147 THAT IT IS A FIT CASE FO R ISSUE OF NOTICE UNDER SECTION 148 OF THE IT ACT. 11. IN RESPONSE TO AFORESAID QUESTION NO.13 IN THE PRESCRIBED PROFORMA, ADDL. CIT HAS WRITTEN 'YES. I AM SATISFIE D.' NO DOUBT, COLUMNS OF REASONS RECORDED WAS THERE AND IT IS ALS O MENTIONED IN COLUMN NO.12 THAT REASONS FOR BELIEF THAT INCOME HAS ESCAPED ASSESSMENT ARE AS PER ANNEXURE ENCLOSED BUT SUCH AN NEXURE HAS NOT BEEN PRODUCED BEFORE THE BENCH FOR PERUSAL. 12. APPARENTLY, FROM THE APPROVAL RECORDED AND WOR DS USED THAT 'YES. I AM SATISFIED.', IT HAS PROVED ON RECOR D THAT THE SANCTION IS MERELY MECHANICAL AND ADDL.CIT HAS NOT APPLIED INDEPENDENT MIND WHILE ACCORDING SANCTION AS THERE IS NOT AN IOTA OF MATERIAL ON RECORD AS TO WHAT DOCUMENTS HE HAD PERUSED AND WHAT WERE THE REASONS FOR HIS BEING SATISFIED T O ACCORD THE SANCTION TO INITIATE THE REOPENING OF ASSESSMENT U/ S 148 OF THE ACT. 13. EVEN AO WHILE RECORDING THE REASONS FOR INITIA TING THE REOPENING OF ASSESSMENT HAS NOT APPLIED HIS MIND IN DEPENDENTLY. WHEN WE PERUSE THE REASONS RECORDED, AVAILABLE AT P AGES 31-32 OF THE PAPER BOOK, THE ENTIRE REASONS HAVE BEEN BAS ED ON THE STATEMENT OF ONE SHRI P.K. JINDAL, WHO HAS FURNISHE D THE LIST OF COMPANIES STATED TO BE NOT DOING ANY BUSINESS ACTIV ITIES BUT ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. BEFORE ISSUING THE NOTICE AO APPEARED TO HAVE NOT EXAMINED THE PROFILE OF THE SAID COMPANIES TO ARRIVE AT A LOGICAL CONCLUSION SO AS T O ISSUE THE NOTICE U/S 148 OF THE CO NO.57/DEL/2012 ACT. WHEN T HIS FACT IS ITA NO.6372/DEL./2019 17 EXAMINED IN THE LIGHT OF THE COMPLETED ASSESSMENT O F THE ASSESSEE U/S 143 (3), ALL THE DOCUMENTS CONCERNING SHARE APP LICATION MONEY, NOW AVAILABLE AT PAGES 1 TO 30 OF THE PAPER BOOK, WERE SUPPLIED TO THE AO. THIS FACT HAS NOT BEEN TAKEN IN TO CONSIDERATION BY THE AO BEFORE INITIATING THE PROCE EDINGS U/S 147/148 OF THE ACT. HOWEVER, SINCE REOPENING OF ASS ESSMENT IN THIS CASE IS OTHERWISE NOT SUSTAINABLE, WE ARE NOT ENTERING INTO ANY MERITS. 14. HON'BLE SUPREME COURT IN CASE CITED AS CIT VS. S. GOYANKA LIME & CHEMICAL LTD. - (2015) 64 TAXMANN.CO M 313 (SC) EXAMINED THE IDENTICAL ISSUE AS TO ACCORDING T HE SANCTION FOR REOPENING THE ASSESSMENT U/S 148 OF THE ACT BY MERELY RECORDING 'YES. I AM SATISFIED.' AND HELD THAT REOP ENING ON THE BASIS OF MECHANICAL SANCTION IS INVALID BY RETURNIN G FOLLOWING FINDINGS :- ' SECTION 151, READ WITH SECTION 148 OF THE INCOME- TAX ACT, 1961 - INCOME ESCAPING ASSESSMENT - SANCTI ON FOR ISSUE OF NOTICE (RECORDING OF SATISFACTION) - H IGH COURT BY IMPUGNED ORDER HELD THAT WHERE JOINT COMMISSIONER RECORDED SATISFACTION IN MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND TO ACCORD SANCTION FOR ISSUING NOTICE UNDER. SECTION 148, REO PENING OF ASSESSMENT WAS INVALID - WHETHER SPECIAL LEAVE PETITION FILED AGAINST IMPUGNED ORDER WAS TO BE DIS MISSED - HELD, YES [IN FAVOUR OF ASSESSEE] SEARCH AND SEIZURE-PROCEDURE FOR BLACK ASSESSMENT- SEARCH WAS CONDUCTED AT RESIDENTIAL AND BUSINESS PREMISES OF ASSESSEE AND NOTICE FOR BLOCK ASSESSMENT U/S. 158-BC WAS ISSUED- FOR BLOCK PERIOD , RETURNS WERE FILED THAT WERE PROCESSED U/S. 143 (1) - HOWEVER, NOTICE U/S. 148 WAS ISSUED BY AO, ON BASIS OF CERTAIN REASONS RECORDED-ASSESSEE OBJECTED TO SAME BEFORE AO, THAT WAS REJECTED AND ASSESSMENT WAS COMPLETED U/SS. 143(3) AND CO NO.57/DEL/2012 147-CIT(A) FOUND THAT REASON RECORDED BY JOINT COMMISSIONER OF INCOME TAX , FOR ACCORDING SANCTION, WAS MERELY RECORDING 'I AM SATISFIED'-ACTION FOR SANCTION WAS ALLEGED TO BE WI THOUT APPLICATION OF MIND AND TO BE DONE IN MECHANICAL MANNER-HELD, WHILE ACCORDING SANCTION, JOINT COMMISSIONER, INCOME TAX ONLY RECORDED 'YES, I AM SATISFIED'-MECHANICAL WAY OF RECORDING SATISFACTION BY JOINT COMMISSIONER, THAT ACCORDED SANCTION FOR ISSU ING NOTICE U/S. 147, WAS CLEARLY UNSUSTAINABLE-ON SUCH CONSIDERATION, BOTH APPELLATE AUTHORITIES INTERFERE D INTO MATTER- NO ERROR WAS COMMITTED WARRANTING RECONSIDERATION-AS FAR AS EXPLANATION TO S. 151, BR OUGHT INTO FORCE BY FINANCE ACT, 2008 WAS CONCERNED, SAME ONLY ITA NO.6372/DEL./2019 18 PERTAINED TO ISSUANCE OF NOTICE AND NOT WITH REGARD TO MANNER OF RECORDING SATISFACTION-AMENDED PROVISION DID NOT HELP REVENUE-NO QUESTION OF LAW INVOLVED IN MAT TER, THAT WARRANTED RECONSIDERATION-REVENUE'S APPEALS DISMISSED.' 15. THE HON'BLE DELHI HIGH COURT HAS ALSO DECIDED THIS LEGAL ISSUE IN CASE CITED AS PR. CIT VS. N.C. CABLES LTD. IN ITA 335/2015 ORDER DATED 11.01.2017 BY RETURNING FOLLOW ING FINDINGS:- ' REASSESSMENT-ISSUANCE OF NOTICE-SANCTION FOR ISSU E OF NOTICE-ASSESSEE HAD IN ITS RETURN FOR A Y 2001-02 C LAIMED THAT SUM OF RS. 1 CRORE WAS RECEIVED TOWARDS SHARE APPLICATION AMOUNTS AND A FURTHER SUM OF THIRTY FIV E LAKHS WAS CREDITED TO IT AS AN ADVANCE TOWARDS LOAN - ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3)-HOWEVE R, PURSUANT TO REASSESSMENT NOTICE, WHICH WAS DROPPED DUE TO TECHNICAL REASONS, AND LATER NOTICE WAS ISSUED A ND ASSESSMENTS WERE TAKEN UP AFRESH-AFTER CONSIDERING SUBMISSIONS OF ASSESSEE AND DOCUMENTS PRODUCED IN REASSESSMENT PROCEEDINGS, AO ADDED BACK A SUM OF RS.1,35,00,000-CIT(A) HELD AGAINST ASSESSEE ON LEGA LITY OF REASSESSMENT NOTICE BUT ALLOWED ASSESSEE'S APPEAL O N MERITS HOLDING THAT AO DID NOT CONDUCT APPROPRIATE ENQUIRY TO CONCLUDE THAT SHARE INCLUSION AND ADVANC ES RECEIVED WERE FROM BOGUS ENTITIES-TRIBUNAL ALLOWED ASSESSEE'S APPEAL ON MERITS-REVENUE APPEALED AGAINS T APPELLATE ORDER ON MERITS-ASSESSEE'S CROSS APPEAL W AS ON CORRECTNESS OF REOPENING OF ASSESSMENT- TRIBUNAL UP HELD ASSESSEE'S CROSS-OBJECTIONS AND DISMISSED REVENUE'S APPEAL HOLDING THAT THERE WAS NO PROPER APPLICATION OF MIND BY CONCERNED SANCTIONING AUTHORITY U/S SECTION 151 AS A PRE- CONDITION FOR ISSUING NOTICE U/S 147/148- HELD, SECTION 151 STIPULATES THAT CIT (A), WHO WAS COMPET ENT AUTHORITY TO AUTHORIZE REASSESSMENT NOTICE, HAD TO APPLY HIS MIND AND FORM OPINION- MERE APPENDING OF EXPRESSION 'APPROVED' SAYS NOTHING-IT WAS NOT AS IF CIT (A) HAD TO RECORD ELABORATE REASONS FOR AGREEING WI TH NOTING PUT UP-AT SAME TIME, SATISFACTION HAD TO BE RECORDED OF CO NO.57/DEL/2012 GIVEN CASE WHICH COUL D BE REFLECTED IN BRIEFEST POSSIBLE MANNER- IN PRESEN T CASE, EXERCISE APPEARS TO HAVE BEEN RITUALISTIC AND FORMA L RATHER THAN MEANINGFUL, WHICH WAS RATIONALE FOR SAFEGUARD OF APPROVAL BY HIGHER RANKING OFFICER- REVENUE'S APPEAL DISMISSED.' ITA NO.6372/DEL./2019 19 22. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT ACCORDING SANCTION IS NOT A SU PERVISORY ROLE RATHER IT IS A QUASI-JUDICIAL FUNCTION TO BE PERFOR MED BY THE PRINCIPAL CIT/CIT, AS THE CASE MAY BE, AS REQUIRED U/S 151 OF THE ACT. WE FAIL TO UNDERSTAND THAT WHEN THE REVENUE D EPARTMENT IS MANNED BY HIGHLY QUALIFIED OFFICERS HAVING EXPERIEN CE OF AT LEAST 20 YEARS TILL REACHING IN THE RANK OF PRINCIPAL CIT , THEY ARE REQUIRED TO EVOLVE LEGALLY SUSTAINABLE STANDARD OPERATING P ROCEDURE CONTAINING SELF-SPEAKING REASONS FOR ACCORDING SA NCTION WHILE DISCHARGING SUCH QUASI-JUDICIAL FUNCTION. 23. HON'BLE HIGH COURT OF DELHI IN CASE CITED AS SABH INFRASTRUCTURE LTD. VS. ACIT IN WP (C) 1357/2016 OR DER DATED 25.09.2017 HAS ISSUED GUIDELINES TO THE REVENUE AUTHORITIES WH ILE CO NO.57/DEL/2012 DECIDING THE ISSUE OF REOPENING U /S 147/148 OF THE ACT. OPERATIVE PART OF WHICH IS REPRODUCED AS U NDER:- '19. BEFORE PARTING WITH THE CASE, THE COURT WOULD LIKE TO OBSERVE THAT ON A ROUTINE BASIS, A LARGE NUMBER OF WRIT PET ITIONS ARE FILED CHALLENGING THE REOPENING OF ASSESSMENTS BY THE REV ENUE UNDER SECTIONS 147 AND 148 OF THE ACT AND DESPITE NUMEROU S JUDGMENTS ON THIS ISSUE, THE SAME ERRORS ARE REPEATED BY THE CONCERNED REVENUE AUTHORITIES. IN THIS BACKGROUND, THE COURT WOULD LIKE THE REVENUE TO ADHERE TO THE FOLLOWING GUIDELINES I N MATTERS OF REOPENING OF ASSESSMENTS: (I) WHILE COMMUNICATING THE REASONS FOR REOPENING T HE ASSESSMENT, THE COPY OF THE STANDARD FORM USED BY T HE AO FOR OBTAINING THE APPROVAL OF THE SUPERIOR OFFICER SHOU LD ITSELF BE PROVIDED TO THE ASSESSEE. THIS WOULD CONTAIN THE CO MMENT OR ITA NO.6372/DEL./2019 20 ENDORSEMENT OF THE SUPERIOR OFFICER WITH HIS NAME, DESIGNATION AND DATE. IN OTHER WORDS, MERELY STATING THE REASON S IN A LETTER ADDRESSED BY THE AO TO THE ASSESSEE IS TO BE AVOIDE D; (II) THE REASONS TO BELIEVE OUGHT TO SPELL OUT ALL THE REASONS AND GROUNDS AVAILABLE WITH THE AO FOR RE- OPENING THE A SSESSMENT - ESPECIALLY IN THOSE CASES WHERE THE FIRST PROVISO T O SECTION 147 IS ATTRACTED. THE REASONS TO BELIEVE OUGHT TO ALSO PAR APHRASE ANY INVESTIGATION REPORT WHICH MAY FORM THE BASIS OF TH E REASONS AND ANY ENQUIRY CONDUCTED BY THE AO ON THE SAME AND IF SO, THE CONCLUSIONS THEREOF; (III) WHERE THE REASONS MAKE A REFERENCE TO ANOTHER DOCUMENT, WHETHER AS A LETTER OR REPORT, SUCH DOCUMENT AND/ O R RELEVANT PORTIONS OF SUCH REPORT SHOULD BE ENCLOSED ALONG WI TH 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 QUASI- JUDICIAL FUNCTION. THE ORDER DISPOSING OF THE OBJEC TIONS SHOULD DEAL WITH EACH OBJECTION AND GIVE PROPER REASONS FO R THE CONCLUSION. NO ATTEMPT SHOULD BE MADE TO ADD TO THE REASONS FOR CO NO.57/DEL/2012 REOPENING OF THE ASSESSMENT BEYON D WHAT HAS ALREADY BEEN DISCLOSED.' 24. PERUSAL OF THE WRITTEN SUBMISSIONS FILED BY THE LD. DR FOR THE REVENUE GOES TO PROVE THAT HE HAS RELIED UPON THE O RDER PASSED BY THE AO AS WELL AS LD. CIT (A). CASE LAW RELIED UPO N BY THE LD. DR IS TOUCHING THE MERITS OF THE CASE. SINCE THE VERY INITIATION OF PROCEEDINGS U/S 147/148 OF THE ACT IS NOT SUSTAINAB LE IN THE EYES OF LAW, WE ARE NOT INCLINED TO ENTER INTO THE MERITS O F THE ADDITIONS, SO CASE LAW RELIED UPON BY THE LD. DR IS NOT APPLICABL E TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 25. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT REASSESSMENT OPENED BY THE AO AND SUSTAINED BY THE LD. CIT (A) IN THIS CASE IS NOT SUSTAINABLE IN THE EYES OF LAW, ITA NO.6372/DEL./2019 21 HENCE HEREBY QUASHED. CONSEQUENTLY, APPEAL FILED B Y THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF NOVEMBER , 2020. SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 24 TH DAY OF NOVEMBER, 2020 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-34, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.