SBS Realtors Pvt. Ltd., New Delhi V. ITO, Ward-22(4), New Delhi

ITA 7791/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0104 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 07-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA; RAJESH KUMAR ADDITIONAL
• Assessee Lawyers: RAJESH JAIN CAS
• Keywords: Reopening of assessment; Tangible material; Accommodation entries; Reason to believe; Borrowed satisfaction
• Section: 143(3); 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH G GG G : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, G.D. AGRAWAL, G.D. AGRAWAL, G.D. AGRAWAL, VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT AND AND AND AND MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA ITAITA ITA NO NONO NO . .. . 7791/DEL/2018 7791/DEL/2018 7791/DEL/2018 7791/DEL/2018 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2009 2009 2009 2009 - -- - 10 1010 10 M/S SBS REALTORS (P) LTD., M/S SBS REALTORS (P) LTD., M/S SBS REALTORS (P) LTD., M/S SBS REALTORS (P) LTD., B BB B- -- -14/C, FIRST FLOOR, 14/C, FIRST FLOOR, 14/C, FIRST FLOOR, 14/C, FIRST FLOOR, FREEDOM FREEDOM FREEDOM FREEDOM FIGHTERS ENCLAVE, FIGHTERS ENCLAVE, FIGHTERS ENCLAVE, FIGHTERS ENCLAVE, NEB SARAI, NEB SARAI, NEB SARAI, NEB SARAI, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 068. 110 068. 110 068. 110 068. PAN : AALCS5106R. PAN : AALCS5106R. PAN : AALCS5106R. PAN : AALCS5106R. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -22(4), 22(4), 22(4), 22(4), NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 002. 110 002. 110 002. 110 002. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KAPIL GOEL AND SHRI RAJESH JAIN, CAS. RESPONDENT BY : SHRI S.S. R ANA, CIT - DR AND SHRI RAJESH KUMAR, ADDITIONAL CIT. DATE OF HEARING : 11.03.2019 11.03.2019 11.03.2019 11.03.2019 DATE OF PRONOUNCEMENT : 01.04.2019 01.04.2019 01.04.2019 01.04.2019 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, PER G.D. AGRAWAL, PER G.D. AGRAWAL, PER G.D. AGRAWAL, VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT : :: :- -- - THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2009-10 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-28, NE W DELHI DATED 16 TH NOVEMBER, 2018. 2. GROUND NO.1, 1.1 AND 1.2 READ AS UNDER :- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), HAS ERRED BOTH IN LAW AND ON FACTS IN SU STAINING THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT AND, COMPLETION OF ASSESSMENT U/S 147/143(3) OF THE ACT WHICH WERE WITHOUT JURISDICTION AND DESERVES TO BE QUASHED AS SUCH. 1.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT, THERE WAS NO ITA-7791/DEL/2018 2 TANGIBLE, RELEVANT, SPECIFIC AND RELIABLE MATERIAL ON RECORD ON THE BASIS OF WHICH, IT COULD BE HELD THAT, THERE WAS ANY REASON TO BELIEVE WITH THE LEARNED ASSESSING OFFICE R THAT INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT AND, IN VIEW THEREOF, THE PROCEEDINGS INITIATED WERE ILLEGA L, UNTENABLE AND THEREFORE, UNSUSTAINABLE. THE REASON S AS NOTED BY THE ASSESSING OFFICER WERE MECHANICAL ON INFORMATION RECEIVED FROM INVESTIGATION WING. THE SATISFACTION OF THE ASSESSING OFFICER WAS BORROWED SATISFACTION. 1.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO FAILED TO APPRECIATE THAT APPROV AL GRANTED U/S 151 OF THE ACT WAS A MECHANICAL APPROVA L AND HENCE INITIATION OF PROCEEDINGS U/S 147 OF THE ACT ON THIS GROUND IS INVALID. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT IN THIS CASE, THE ASSESSEE HAS FILED T HE RETURN ON 20 TH SEPTEMBER, 2009 WHICH WAS PROCESSED UNDER SECTION 1 43(1) ON 17 TH JANUARY, 2011. THE ASSESSMENT WAS REOPENED UNDER S ECTION 148 VIDE REASONS RECORDED ON 20 TH SEPTEMBER, 2015. HE HAS TAKEN US THROUGH THE REASONS RECORDED AND STATED THAT THE ASSESSMENT HAS BEEN REOPENED FOR THE VERIFICATION OF THE AMOUNT RECEIVE D BY THE ASSESSEE FROM SHRI S.K. JAIN GROUP OF CASES. THAT THE ASSES SMENT CANNOT BE REOPENED FOR THE PURPOSE OF VERIFICATION FOR WHICH THERE IS ALREADY A SPECIFIC PROVISION UNDER THE INCOME-TAX ACT I.E., S ECTION 143(2). IF THE ASSESSING OFFICER HAS FAILED TO MAKE NECESSARY VERI FICATION UNDER SECTION 143(2), THE SAME CANNOT BE DONE UNDER THE G ARB OF SECTION 148. HE ALSO ALLEGED THAT THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OFFICER. THE ASSESSMENT HAS BEEN MECHANICALLY REOPENED ON THE BASIS OF SOME INFORMATION CLAIMED T O HAVE BEEN RECEIVED FROM DIT(INVESTIGATION). IN THE REASONS R ECORDED, NO REASON HAS BEEN GIVEN FOR THE ALLEGATION THAT THE AMOUNT R ECEIVED FROM SHRI S.K. JAIN GROUP OF CASES IS BOGUS ACCOMMODATION ENT RIES. THE ASSESSING OFFICER HAS MECHANICALLY REOPENED THE ASS ESSMENT WITHOUT ANY INDEPENDENT VERIFICATION AT HIS END. HE, THERE FORE, STATED THAT THE ALLEGED REOPENING OF ASSESSMENT IS NOT VALID. HE A LSO STATED THAT NOT ITA-7791/DEL/2018 3 ONLY THE REASONS RECORDED IS MECHANICAL, EVEN THE A PPROVAL GIVEN BY THE ADDITIONAL COMMISSIONER IS MECHANICAL AND WITHO UT APPLICATION OF ANY INDEPENDENT MIND. IN SUPPORT OF HIS CONTENTION , HE RELIED UPON THE FOLLOWING DECISIONS :- (I) SARTHAK SECURITIES CO.P.LTD. VS. ITO [2010] 3 29 ITR 110 (DELHI). (II) SIGNATURE HOTELS P.LTD. VS. ITO [2011] 338 I TR 51 (DELHI). (III) PCIT VS. G AND G PHARMA INDIA LTD. [2016] 3 84 ITR 147 (DELHI). (IV) PCIT VS. RMG POLYVINYL (I) LTD. [2017] 396 I TR 5 (DELHI). (V) PCIT VS. MEENAKSHI OVERSEAS PVT.LTD. [2017] 3 95 ITR 677 (DELHI). 4. LEARNED DR, ON THE OTHER HAND, STATED THAT IT IS A CASE WHERE THE ORIGINAL RETURN WAS ACCEPTED UNDER SECTION 143(1) A ND THERE WAS NO REGULAR ASSESSMENT UNDER SECTION 143(3). THE ASSES SING OFFICER HAD RECEIVED THE SPECIFIC INFORMATION FROM DIT(INVESTIG ATION) THAT ON SEARCH IN THE CASE OF SHRI S.K. JAIN GROUP OF CASES, NEW D ELHI, IT WAS FOUND THAT THEY WERE INDULGING INTO PROVIDING ACCOMMODATION EN TRIES TO VARIOUS ASSESSEES. SHRI S.K. JAIN GROUP OF CASES WERE ENTR Y OPERATORS AND ON THE BASIS OF INFORMATION GATHERED DURING THE COURSE OF SEARCH OF THEIR PREMISES, IT WAS GATHERED THAT VARIOUS COMPANIES OF SHRI S.K. JAIN GROUP HAVE PROVIDED ACCOMMODATION ENTRIES TO THE EX TENT OF `2,35,00,000/-. THE INVESTIGATION WING HAS SUPPLIE D THE COMPLETE INFORMATION I.E., THE NAME OF THE COMPANY WHO PROVI DED THE ENTRY, THE CHEQUE NUMBERS, NAME OF THE BANK, DATE OF CHEQUE AN D NAMES OF MIDDLEMEN. THE ASSESSING OFFICER HAS VERIFIED THE ABOVE ENTRIES FROM THE ASSESSEES BALANCE SHEET AND THEREAFTER HAS ARR IVED AT THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME. THE REFORE, REOPENING OF ASSESSMENT BY THE ASSESSING OFFICER WAS PERFECTL Y IN ACCORDANCE WITH LAW AND THE SAME HAS RIGHTLY BEEN UPHELD BY TH E LEARNED CIT(A). IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE FO LLOWING DECISIONS :- ITA-7791/DEL/2018 4 (I) PCIT VS. PARAMOUNT COMMUNICATION (P) LTD. 201 7-TIOL-253-SC- IT. (II) PCIT VS. PARAMOUNT COMMUNICATION (P) LTD. [2 017] 392 ITR 444 (DELHI). (III) ARADHNA ESTATE (P) LTD. VS. DCIT [2018] 91 TAXMANN.COM 119 (GUJARAT). (IV) PUSHPAK BULLION (P) LTD. VS. DCIT [2017] 85 TAXMANN.COM 84 (GUJARAT). (V) ANKIT FINANCIAL SERVICES LTD. VS. DCIT [2017] 78 TAXMANN.COM 58 (GUJARAT). (VI) AASPAS MULTIMEDIA LTD. VS. DCIT [2017] 83 TA XMANN.COM 82 (GUJARAT). 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE RE ASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 148 READ AS UNDER :- NAME OF THE ASSESSEE : M/S SBS REALTORS P.LTD. A.Y . 2009-10 PAN : AALCS5106R ASSESSMENT YEAR : 2009-10 REASONS FOR ISSUE OF NOTICE U/S 148 OF THE INCOME T AX ACT, 1961 THE RETURN OF INCOME FOR THE A.Y. 2009-10 HAS BEEN FILED BY THE ASSESSEE COMPANY ON 20.09.2009 DECLARING NIL TOTAL INCOME. THE SAME WAS PROCESSED U/S 143(1) ON 17.01.2011. NO AS SESSMENT U/S 143(3) FOR THE A.Y. 2009-10 HAS BEEN MADE IN THIS C ASE. IN THIS CASE INFORMATION HAS BEEN SHARED BY DIT(IN VESTIGATION)-II (LETTER FLAGGED AS ANNEXURE A) ON THE BASIS OF SEAR CH IN THE CASE OF SH. SURENDRA KR. JAIN GROUP OF CASES (ENTRY OPERATOR) N EW DELHI THAT DURING THE FINANCIAL YEAR 2008-09 THE AFOREMENTIONED ASSES SEES HAS INTRODUCED ITS OWN MONEY BY WAY OF TAKING BOGUS ACC OMMODATION ENTRIES PROVIDED BY SH. S.K. JAIN GROUP OF CASES (E NTRY OPERATOR) THE DETAILS OF ACCOMMODATION ENTRY AMOUNT RECEIVED AS B ENEFICIARY IS GIVEN AS UNDER AS PROVIDED BY INVESTIGATION WING : S.NO. BENEFICIARIES NAME OF ENTRY PROVIDER AMOUNT TOTAL AMOUNT ITA-7791/DEL/2018 5 1 M/S SBS REALTORS P.LTD. S.K. JAIN GROUP 235,00,000/ - 235,00,000/ - IN THE LIGHT OF INFORMATION PROVIDED BY THE INVESTI GATION WING, IT IS NECESSARY TO EXAMINE AND VERIFY THE GENUINENESS, ID ENTIFICATION AND CREDITWORTHINESS OF THE AFORESAID TRANSACTION. I HAVE PERUSED DETAILS OF THE CHEQUES/PO RECEIVED BY THE ABOVE COMPANY, THE AMOUNT, THE ISSUING COMPANY, THE RECIP IENT COMPANY, MIDDLEMEN BANK ETC. AS TABULATED BELOW: S.NO. FROM COMPANY NAME TO COMPANY NAME NAME OF THE ISSUING BANK CHQ./RTGS/ PO CH./DATE AMOUNT NAME OF THE MIDDLE MEN 1 AD FIN CAPITAL SERVICES P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.023905 17.04.2008 1,000,000/- RAJESH AGGARWAL 2 SHAKINI HOLDING LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.025624 10.06.2008 3,000,000/- RAJESH AGGARWAL 3 MANI MALA DELHI PRO PVT.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.025623 10.06.2008 2,500,000/- RAJESH AGGARWAL 4 EURO ASIA MERCANTILE PVT.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.025622 10.06.2008 2,500,000/- RAJESH AGGARWAL 5 VIRGIN CAPITAL SERVICES P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.025711 13.06.2008 1,000,000/- RAJESH AGGARWAL 6 VICTORY SOFTWARE P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.026398 09.07.2008 2,500,000/- RAJESH AGGARWAL 7 HUMTUM MARKETING P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.026397 09.07.2008 2,000,000/- RAJESH AGGARWAL 8 EAGLE INFATECH SBS REALTORS PVT.LTD. AXIS P.O. NO.027056 02.08.2008 1,500,000/- RAJESH AGGARWAL 9 VICTORY SOFTWARE P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.027055 02.08.2008 1,000,000/- RAJESH AGGARWAL 10 LOTUS REALCOM P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.027123 04.08.2008 2,500,000/- RAJESH AGGARWAL 11. ZENITH AUTOMOTIVE P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.027201 18.03.2009 2,000,000/- RAJESH AGGARWAL 12 MEGA TOP PROMOTERS P.LTD. SBS REALTORS PVT.LTD. AXIS P.O. NO.027200 18.03.2009 2,500,000/- RAJESH AGGARWAL ITA-7791/DEL/2018 6 I HAVE REASON TO BELIEF THAT THE INCOME PERTAINING TO THE ASSTT. YEAR 2009-10 HAS ESCAPED ASSESSMENT TO THE EXTENT OF RS. 23500000/- UPON RECEIPT OF THE ABOVE INFORMATION, I HAVE COMPARED T HE FIGURES IN THE BALANCE SHEETS FILED BY THE ASSESSEE VIDE E-RETURN FOR AYS 2008-09 & 2009-10. IT IS FOUND THAT IN AY 2009-10 ISSUED SUB SCRIBED AND PAID UP SHARE CAPITAL HAS INCREASED BY RS.23,50,000/- AND S ECURITIES PREMIUM HAS INCREASED BY RS.2,11,50,000/- I.E., BOTH TOTAL LING TO RS.235,00,000/-. THE SAME HAS ESCAPED ASSESSMENT O N ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FU LLY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THE AY 2009-10. IN ORDER TO VERIFY THE GENUINENESS, IDENTIFICATION AND CREDI TWORTHINESS OF THE AFORESAID TRANSACTION THE CASE NEEDS TO BE REOPENED U/S 147 OF THE I.T. ACT 1961. SINCE MORE THAN FOUR YEAR HAVE BEEN ELAPSED FROM TH E END OF THE RELEVANT A.Y. I.E. 2009-10, NECESSARY STATUTORY APP ROVAL U/S 151(2) OF THE I.T. ACT MAY KINDLY BE ACCORD TO ISSUE NOTICE U /S 148 FOR THE A.Y. 2009-10 FOR THE PURPOSE OF REOPENING OF THE CASE U/ S 147 OF THE I.T. ACT, 1961. SD/- (R.O. BHUTIA) INCOME TAX OFFICER WARD-22(4), NEW DELHI 6. FROM A PERUSAL OF THE ABOVE REASONS, IT IS SEEN THAT THE INVESTIGATION WING HAS SUPPLIED CERTAIN INFORMATION TO THE ASSESSING OFFICER WITH REGARD TO RECEIPT OF CHEQUES BY THE AS SESSEE FROM VARIOUS COMPANIES WHO ARE CONSIDERED TO BE S.K. JAIN GROUP COMPANIES BY THE INVESTIGATION WING. AS PER THE INVESTIGATION WING, THE ABOVE CHEQUES PAID BY S.K. JAIN GROUP COMPANIES WERE ACCOMMODATIO N ENTRIES TO M/S SBS REALTORS PVT.LTD. I.E., THE ASSESSEE. HOWEVER, WHAT IS THE MATERIAL FOUND DURING THE COURSE OF SEARCH OF S.K. JAIN GROU P CASES WHICH HAD LED TO FORM THE BELIEF THAT ALL THOSE COMPANIES ARE PROVIDING ACCOMMODATION ENTRIES IS NOT MENTIONED IN THE REASO NS RECORDED. IT IS ALSO NOT MENTIONED WHETHER ANY OF THE DIRECTORS OF THE ABOVE COMPANIES HAVE PROVIDED ACCOMMODATION ENTRIES TO M/ S SBS REALTORS PVT.LTD. IT IS ALSO NOT MENTIONED WHETHER ANY DOCU MENT WAS FOUND WHICH LED TO THE BELIEF OF GIVING OF ACCOMMODATION ENTRIES BY THOSE TWELVE COMPANIES TO THE ASSESSEE. ON RECEIPT OF AB OVE INFORMATION, ITA-7791/DEL/2018 7 THE ASSESSING OFFICER COMPARED THE FIGURES IN THE B ALANCE SHEET OF THE ASSESSEE FILED FOR ASSESSMENT YEAR 2009-10 AND HE F OUND THAT THE SHARE CAPITAL HAS INCREASED BY `2,35,00,000/-. AFT ER RECORDING THE ABOVE FACTUAL FINDING, THE ASSESSING OFFICER HAS CO NCLUDED THE SAME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT FOR THE AY 2009-10 . IN ORDER TO VERIFY THE GENUINENESS, IDENTIFICATION AND CREDITWORTHINESS OF THE AFORESAI D TRANSACTION THE CASE NEEDS TO BE REOPENED U/S 147 OF THE I.T. ACT 1 961 . THE CONCLUSION OF THE ASSESSING OFFICER AT THE END OF T HE REASONS RECORDED AS NOTED ABOVE IS CONTRADICTORY. IN THE FIRST TWO LINES, THE ASSESSING OFFICER HAS RECORDED THE FINDING THAT THE SUM OF `2 ,35,00,000/- HAS ESCAPED ASSESSMENT BUT IN THE LAST TWO LINES, HE HA S RECORDED THAT THE CASE IS BEING REOPENED TO VERIFY THE GENUINENESS, I DENTIFICATION AND CREDITWORTHINESS OF THE AFORESAID TRANSACTIONS. IF THE CASE IS BEING REOPENED FOR THE PURPOSE OF VERIFICATION OF THE GEN UINENESS, HOW CAN THERE BY SATISFACTION OF ESCAPEMENT OF INCOME. ANY SATISFACTION WITH REGARD TO ESCAPEMENT OF INCOME OR OTHERWISE CAN BE RECORDED ONLY AFTER THE VERIFICATION OF GENUINENESS, IDENTIFICATI ON AND CREDITWORTHINESS OF THE TRANSACTION AND NOT EARLIER . THUS, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER HAS REOPENED THE CASE UNDER SECTION 147 FOR THE PURPOSE OF VERIFICATION OF GENUINENESS, IDENTIFICATION AND CREDITWORTHINESS OF THE TRANSACTIONS MENTIONED IN T HE INFORMATION SUPPLIED BY THE DIT (INVESTIGATION) AND THIS IS WHA T THE ASSESSING OFFICER HAS CONCLUDED AT THE END OF THE REASONS REC ORDED FOR ISSUE OF NOTICE UNDER SECTION 148. NOW, THE QUESTION REMAIN S WHETHER AN ASSESSMENT CAN BE REOPENED UNDER SECTION 147 FOR TH E PURPOSE OF VERIFICATION OF GENUINENESS, IDENTIFICATION AND CRE DITWORTHINESS OF ANY TRANSACTION. IN OUR OPINION, THE REPLY IS CLEARLY NO. THERE IS SECTION 143(2) OF THE INCOME-TAX ACT UNDER WHICH THE ASSESS ING OFFICER CAN ISSUE NOTICE FOR THE PURPOSE OF VERIFICATION. THE SAID SECTION READS AS UNDER :- ITA-7791/DEL/2018 8 143(2). WHERE A RETURN HAS BEEN FURNISHED UNDER SECTION 139, OR IN RESPONSE TO A NOTICE UNDER SUB-S ECTION (1) OF SECTION 142, THE ASSESSING OFFICER OR THE PR ESCRIBED INCOME-TAX AUTHORITY, AS THE CASE MAY BE, IF, CONSI DERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCE SSIVE LOSS OR HAS NOT UNDER-PAID THE TAX IN ANY MANNER, S HALL SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM, ON A DATE TO BE SPECIFIED THEREIN, EITHER TO ATTEND THE OFFICE O F THE ASSESSING OFFICER OR TO PRODUCE, OR CAUSE TO BE PRO DUCED BEFORE THE ASSESSING OFFICER ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN: PROVIDED PROVIDED PROVIDED PROVIDED THAT NO NOTICE UNDER THIS SUB-SECTION SHAL L BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONT HS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN I S FURNISHED. 7. THUS, IF THE ASSESSING OFFICER CONSIDERED IT NEC ESSARY TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME, H E CAN ISSUE THE NOTICE UNDER SECTION 143(2). HOWEVER, PROVISO TO A BOVE SECTION PROVIDES THE TIME LIMIT WITHIN WHICH SUCH NOTICE CA N BE ISSUED. ONCE THAT TIME LIMIT IS EXPIRED, IN OUR OPINION, THE ASS ESSING OFFICER CANNOT INVOKE SECTION 148 JUST FOR THE PURPOSE OF VERIFICA TION. THEREFORE, IN OUR OPINION, IN THE CASE UNDER CONSIDERATION, THE R EOPENING OF ASSESSMENT FOR THE PURPOSE OF VERIFICATION OF GENUI NENESS, IDENTIFICATION AND CREDITWORTHINESS OF THE TRANSACT ION IS NOT PERMISSIBLE UNDER LAW AND IS LIABLE TO BE QUASHED. 8. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO ME NTIONED THAT THE NOTICE HAS BEEN ISSUED MECHANICALLY WITHOUT APP LICATION OF MIND AND THE SATISFACTION BY THE ASSESSING OFFICER IS ON LY THE BORROWED SATISFACTION OF THE INVESTIGATION WING. THE ASSESS ING OFFICER, WITHOUT APPLYING HIS MIND, HAS SIMPLY ON THE BASIS OF INFOR MATION OF THE INVESTIGATION WING JUMPED TO THE CONCLUSION THAT TH ERE IS ESCAPEMENT OF INCOME. FROM A PERUSAL OF THE AFORESAID REASONS , WE DO NOT FIND ANY APPLICATION OF MIND BY THE ASSESSING OFFICER FOR RE ACHING TO THE ITA-7791/DEL/2018 9 CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME EXCE PT THE INFORMATION FROM THE INVESTIGATION WING. AFTER GET TING THE INFORMATION FROM THE INVESTIGATION WING, THE ASSESSING OFFICER COMPARED THE FIGURES IN THE BALANCE SHEET AND HAS FOUND THAT THE ASSESSEE HAS ISSUED SHARE CAPITAL OF `2,35,00,000/-. THE ISSUE OF SHARE CAPITAL BY ITSELF IS NOT SUFFICIENT TO REACH TO THE CONCLUSION OF ESCAPEMENT OF INCOME. THE INVESTIGATION WING HAS ALLEGED THAT 12 COMPANIES WHO HAVE GIVEN CHEQUES TO THE ASSESSEE COMPANY WERE ACC OMMODATION ENTRIES. HOWEVER, THE BASIS OF SUCH ALLEGATION IS NOT MENTIONED IN THE REASONS RECORDED. WHETHER SUCH CONCLUSION IS REACH ED BY THE INVESTIGATION WING ON THE BASIS OF STATEMENT OF DIR ECTOR OF ANY COMPANY OR ON THE BASIS OF SOME MATERIAL SEIZED DUR ING THE COURSE OF SEARCH OF THOSE COMPANIES, IS NOT MENTIONED IN THE REASONS RECORDED. WHETHER THERE WAS ANY MATERIAL WITH THE ASSESSING O FFICER WHILE ISSUING NOTICE UNDER SECTION 148 IS NOT CLEAR. THE REFORE, FROM THE REASONS RECORDED, WE DO NOT FIND ANY BASIS FOR REAC HING TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME BY T HE ASSESSING OFFICER. LEARNED DR HAS RELIED UPON THE DECISION O F HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS. P ARAMOUNT COMMUNICATION PVT.LTD. [2017] 392 ITR 444 (DELHI) , WHEREIN ON THE BASIS OF REPORT OF THE INVESTIGATION WING, HON'BLE JURISDICTIONAL HIGH COURT HAS UPHELD THE ISSUE OF NOTICE UNDER SECTION 148. THEIR LORDSHIPS HELD AS UNDER :- HELD, THAT HAVING REGARD TO THE CONTENTS OF THE NO TICE ISSUED UNDER SECTION 148 OF THE INCOME-TAX ACT, 196 1, THE FINDINGS OF THE APPELLATE TRIBUNAL WERE NOT SUSTAIN ABLE. IT CONSTITUTED REFERENCE TO TANGIBLE MATERIAL OUTSIDE THE RECORD WHICH WAS INFORMATION BASED UPON THE INVESTI GATION OF THE COMMISSIONER OF CENTRAL EXCISE. TO HAVE REQ UIRED THE REVENUE TO DISCLOSE FURTHER DETAILS REGARDING T HE NATURE OF DOCUMENTS OR OF CONTENTS THEREOF WOULD BE REWRITING THE CONDITIONS IN SECTION 147 WHICH MEREL Y AUTHORISED THE ISSUANCE OF NOTICE TO REOPEN WITH CONDITIONS. FOR THE ASSESSMENT YEARS 2004-05 AND 2 005- 06, THE NOTES DISCLOSED THE SOURCE OF INFORMATION, THE ITA-7791/DEL/2018 10 DIRECTORATE OF REVENUE INTELLIGENCE, WHICH HAD SENT INFORMATION BASED UPON THE COMMISSIONER OF CENTRAL EXCISES INVESTIGATIONS. TO ADD FURTHER CONDITIONS TO BE NATURE OF DISCUSSIONS OR REASONS THAT THE OFFICER AUTHORIZING THE NOTICE WOULD HAVE TO DISCUSS IN THE NOTE OR DECISION WAS BEYOND THE PURVIEW OF THE COURTS AND W AS NOT JUSTIFIED. THE ORDERS OF THE APPELLATE TRIBUNAL CO ULD NOT BE SUSTAINED. THE APPELLATE TRIBUNAL WAS DIRECTED TO HEAR THE DEPARTMENTS APPEALS ON THEIR MERITS. 9. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSES SEE HAS RELIED UPON THE CATENA OF JUDGMENT BEFORE AND AFTER THE DA TE OF ABOVE JUDGMENT OF HON'BLE DELHI HIGH COURT WHEREIN THE NO TICE UNDER SECTION 148 SIMPLY ON THE BASIS OF REPORT OF THE INVESTIGAT ION WING HAS BEEN QUASHED. THE SAME IS AS UNDER:- (I) SARTHAK SECURITIES CO.P.LTD. VS. ITO [2010] 3 29 ITR 110 (DELHI). (II) SIGNATURE HOTELS P.LTD. VS. ITO [2011] 338 I TR 51 (DELHI). (III) PCIT VS. G AND G PHARMA INDIA LTD. [2016] 3 84 ITR 147 (DELHI). (IV) PCIT VS. RMG POLYVINYL (I) LTD. [2017] 396 I TR 5 (DELHI). (V) PCIT VS. MEENAKSHI OVERSEAS PVT.LTD. [2017] 3 95 ITR 677 (DELHI). 10. LEARNED DR HAS ALSO RELIED UPON FEW DECISIONS O F HONBLE GUJARAT HIGH COURT. HOWEVER, WHEN THERE ARE LARGE NUMBER O F DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT, THE SAME WOULD B E BINDING ON US. THEREFORE, WE CONSIDER ALL THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT RELIED UPON BY EITHER SIDE. 11. WE FIND THAT THE EARLIER DECISIONS OF HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE OF SARTHAK SECURITIES CO.P.LTD. ( SUPRA), SIGNATURE HOTELS P.LTD. (SUPRA) AND G AND G PHARMA INDIA LTD. (SUPRA) WERE NOT BROUGHT TO THE KNOWLEDGE OF THEIR LORDSHIPS WHILE D ECIDING THE CASE OF PARAMOUNT COMMUNICATION (P) LTD. (SUPRA). WE FIND THAT THE DECISION IN THE CASE OF RMG POLYVINYL (I) LTD. (SUPRA) AND M EENAKSHI OVERSEAS ITA-7791/DEL/2018 11 PVT.LTD. (SUPRA) ARE SUBSEQUENT TO THE DECISION OF PARAMOUNT COMMUNICATION (P) LTD. (SUPRA). HOWEVER, IT SEEMS THAT NEITHER IN THE CASE OF MEENAKSHI OVERSEAS PVT.LTD. (SUPRA) NOR IN THE CASE OF RMG POLYVINYL (I) LTD. (SUPRA), THE DECISION OF PARAMOU NT COMMUNICATION (P) LTD. (SUPRA) WAS BROUGHT TO THE KNOWLEDGE OF THEIR LORDSHIPS. THUS, THERE ARE TWO VIEWS BY THE HON'BLE JURISDICTIONAL H IGH COURT. WHILE IN THE CASE OF PARAMOUNT COMMUNICATION (P) LTD. (SUPRA ), THE ISSUE OF NOTICE ON THE BASIS OF INFORMATION FROM INTELLIGENC E WING OF THE INCOME TAX DEPARTMENT HAS BEEN UPHELD, IN THE CASE OF SART HAK SECURITIES CO.P.LTD. (SUPRA), SIGNATURE HOTELS P.LTD. (SUPRA), G AND G PHARMA INDIA LTD. (SUPRA), RMG POLYVINYL (I) LTD. (SUPRA) AND MEENAKSHI OVERSEAS PVT.LTD. (SUPRA), THE NOTICE ISSUED ON THE BASIS OF DIT(INVESTIGATION) HAS BEEN QUASHED. IT IS A SETTL ED LAW THAT WHEN THERE ARE TWO VIEWS, THE VIEW IN FAVOUR OF THE ASSE SSEE IS TO BE FOLLOWED AND MOREOVER, THERE ARE AT LEAST TWO DECIS IONS SUBSEQUENT TO THE DECISION OF PARAMOUNT COMMUNICATION (P) LTD. (S UPRA), WHEREIN THEIR LORDSHIPS HAVE QUASHED THE NOTICE ISSUED UNDE R SECTION 148 ON THE BASIS OF INFORMATION FROM THE INVESTIGATION WIN G. THE FACTS IN THE CASE OF THE ASSESSEE ARE ALMOST IDENTICAL TO THE FA CTS IN THE CASE OF RMG POLYVINYL (I) LTD. (SUPRA) AND MEENAKSHI OVERSE AS PVT.LTD. (SUPRA). THEREFORE, THEY WOULD BE SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. CONSEQUENTLY, WE HOLD THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT TO BE INVALID FOR TWO REASONS :- (I) THE NOTICE IS ISSUED FOR THE PURPOSE OF VERIFIC ATION OF GENUINENESS, IDENTIFICATION AND CREDITWORTHINESS OF THE TRANSACTION, WHICH IS NOT PERMISSIBLE; (II) THE ASSESSING OFFICER HAS RECORDED HIS SATISFA CTION ON THE BASIS OF MERE REPORT FROM THE INVESTIGATION WING. THERE IS NO CRUCIAL LINK BETWEEN THE INFORMATION MADE AVAILABLE TO THE ASSES SING OFFICER AND THE FORMATION OF BELIEF OF ESCAPEMENT OF INCOME. T HERE IS NO BASIS FOR ITA-7791/DEL/2018 12 COMING TO THE CONCLUSION THAT THE ASSESSEE RECEIVED ACCOMMODATION ENTRIES. THE INVESTIGATION WING ALLEGED THAT THE C OMPANIES WHICH ISSUED CHEQUES TO THE ASSESSEE COMPANY ARE COMPANIE S OF SHRI S.K. JAIN GROUP AND THEY ARE ENTRY PROVIDERS. HOWEVER, THE BASIS FOR SUCH CONCLUSION IS MISSING. THERE IS NO MENTION THAT AN Y DOCUMENT WAS SEIZED FROM SHRI S.K. JAIN GROUP OR ANY DIRECTOR OF THE 12 COMPANIES WHICH HAVE GIVEN CHEQUES TO THE ASSESSEE HAS GIVEN THE STATEMENT THAT THEY HAVE PROVIDED ACCOMMODATION ENTRIES TO TH E ASSESSEE. THE ASSESSING OFFICER HAS SIMPLY REOPENED THE CASE ON T HE BASIS OF INFORMATION PROVIDED BY THE INVESTIGATION WING WITH OUT ANY INDEPENDENT APPLICATION OF MIND. THERE IS NO TANGI BLE MATERIAL WHICH FORMED THE BASIS FOR THE BELIEF THAT INCOME HAS ESC APED ASSESSMENT. 12. WHILE TAKING THE ABOVE VIEW, WE DERIVE SUPPORT FROM THE LATEST DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF RMG POLYVINYL (I) LTD. (SUPRA) AND MEENAKSHI OVERSEAS P VT.LTD. (SUPRA). IN VIEW OF THE ABOVE, WE QUASH THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT AND CONSEQUENTLY, THE ASSESSMENT COMPLETED IN P URSUANCE THERETO. ACCORDINGLY, GROUND NOS.1, 1.1 AND 1.2 OF THE ASSESSEES APPEAL ARE ALLOWED. 13. SINCE THE NOTICE ISSUED U/S 148 IS QUASHED, THE ASSESSMENT ORDER PASSED IN PURSUANCE TO SUCH NOTICE IS ALSO QUASHED. ONCE THE ASSESSMENT ORDER ITSELF HAS BEEN QUASHED, THE OTHER GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL DO NOT REQUIRE ANY ADJUD ICATION ON MERITS. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 01.04.2019 . SD/- SD/- (SUCHITRA KAMBLE (SUCHITRA KAMBLE (SUCHITRA KAMBLE (SUCHITRA KAMBLE ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT VK. ITA-7791/DEL/2018 13 COPY FORWARDED TO: - 1. APPELLANT : M/S SBS REALTORS (P) LTD., M/S SBS REALTORS (P) LTD., M/S SBS REALTORS (P) LTD., M/S SBS REALTORS (P) LTD., B BB B- -- -14/C, FIRST FLOOR, FREED 14/C, FIRST FLOOR, FREED 14/C, FIRST FLOOR, FREED 14/C, FIRST FLOOR, FREEDOM FIGHTERS ENCLAVE, OM FIGHTERS ENCLAVE, OM FIGHTERS ENCLAVE, OM FIGHTERS ENCLAVE, NEB SARAI, NEW DELHI NEB SARAI, NEW DELHI NEB SARAI, NEW DELHI NEB SARAI, NEW DELHI 110 068. 110 068. 110 068. 110 068. 2. RESPONDENT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -22(4), NEW DELHI 22(4), NEW DELHI 22(4), NEW DELHI 22(4), NEW DELHI 110 002. 110 002. 110 002. 110 002. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR