AK Lumber Limited, Delhi V. ACIT, Circle-1(1), New Delhi

ITA 8761/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8475 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 11-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH SINGH DAHIYA
• Keywords: Reopening of assessment; Bogus purchase; Business income; Principle of natural justice; Tangible material; Accommodation entries; Revised return; Reason to believe; Reassessment proceedings; Set aside
• Section: 143(3); 143(1); 207; 13; 131; 68; 148; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCING] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH, JUDICI AL MEMBER ITA NO. 8761/DEL/2019 [ASSESSMENT YEAR: 2011-12] M/S A.K. LUMBERS LTD VS. THE A.C.I.T 92/4, WHS BLOCK - 2 CIRCLE 1(1) KIRTI NAGAR, NEW DELHI NEW DELHI PAN: AACCA 6546 N [APPELLANT] [RESPONDENT] DATE OF HEARING : 08.07. 2020 DATE OF PRONOUNCEMENT : 1 0.07.2020 ASSESSEE BY : SHRI AJAY WADHWA, ADV REVENUE BY : SHRI JAGDISH SINGH DAHIYA, SR. D R ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE VA LIDITY OF THE ASSESSMENT ORDER FRAMED U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHOR T] AND ADDITION OF RS. 93,34,926/- BEING BOGUS SALES AND RS. 93,349/- BEIN G COMMISSION PAID ON THE ALLEGED ACCOMMODATION ENTRIES. 2 2. THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTA NCE OF THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENC ES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 1 8(6) OF ITAT RULES AND HAVE ALSO PERUSED THE JUDICIAL DECISIONS RELIED UPON BY BOTH THE SIDES. 3. FACTS ON RECORD SHOW THAT ORIGINAL RETURN OF INC OME WAS E-FILED ON 26.09.2011 DECLARING INCOME OF RS. 46,11,710/- W HICH WAS REVISED ON 23.08.2012. THE TURNOVER RETURNED WAS RS. 37.58 CRORES. SUBSEQUENTLY, ASSESSMENT WAS REOPENED PURSUANT TO T HE INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME TAX [IN V.]-III, GURGAON, WHO, IN HIS INFORMATION, BROUGHT TO THE NOTICE OF T HE ASSESSING OFFICER THAT A SEARCH ACTION U/S 132 OF THE ACT WAS CONDUCT ED IN THE CASE OF SPAZE GROUP OF CASES ON 17.02.2016 AND IT WAS INFOR MED THAT THIS GROUP WAS INDULGING IN PROVIDING PURCHASE ACCOMMODA TION ENTRIES THROUGH VARIOUS NON-GENUINE PROPRIETORSHIP/PARTNERS HIP CONCERNS. 4. PURSUANT TO THIS INFORMATION, THE ASSESSING OFFI CER RECORDED REASONS FOR REOPENING THE ASSESSMENT WHICH READS AS UNDER: 3 IN THIS CASE, THE RETURN OF INCOME WAS FILED BY TH E ASSESSEE ON 26.09.2011 VIDE E-FILING ACKNOWLEDGEMENT NO. 292682331260911 AT INCOME OF RS. 46,11,710/-. THE A SSESSEE FILED A REVISED RETURN OF INCOME ON 20.03.2012 VIDE E-FILING ACKNOWLEDGEMENT NO. 356514221200312 AT INCOME OF RS . 46,11,710/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT ON 23.08.2012. THE ASSESSEE HAS NOT DECLARED IT S TYPE OF BUSINESS IN THE ITR BUT DECLARED TURNOVER OF RS. 37,58,71,947/-. 2. AN INFORMATION HAS BEEN RECEIVED FROM THE DY. DI RECTOR OF INCOME TAX (INV.) ILL, GURGAON VIDE LETTER NO. D DIT(LNV.)- LLL/GGN/2017-18 DATED 11.09.2017 THAT A SEARCH ACTI ON U/S 132 OF THE I. T. ACT, 1961 WAS CONDUCTED IN SPAZE G ROUP OF CASES ON 17.02.2016. THE MAIN ALLEGATION AGAINST TH E ASSESSEE GROUP WAS THAT THIS GROUP WAS INDULGING IN PROVIDIN G PURCHASE ACCOMMODATION ENTRIES THROUGH VARIOUS NON-GENUINE PROPRIETORSHIP/ PARTNERSHIP CONCERNS. DURING THE CO URSE OF SEARCH/ POST-SEARCH PROCEEDINGS, STATEMENTS OF VARI OUS PROPRIETORS/ PARTNERS OF THE CONCERNS THROUGH WHICH THE GROUP WAS ALLEGEDLY PROVIDING ACCOMMODATION ENTRIES , WAS RECORDED U/S 131(1A) OF THE I.T. ACT, 1961. MOST OF THE PERSONS WHOSE STATEMENTS WERE RECORDED, STATED THAT THEY WERE MADE PROPRIETOR / PARTNER IN THE SAID CONCERN BY ONE SHRI KISHORI SHARAN GOYAL. THE STATEMENT OF SHRI KI SHORI SHARAN GOYAL WAS RECORDED U/S 131 OF THE I.T. ACT, 1961, 4 DURING THE COURSE OF SEARCH PROCEEDING ON 17.02.201 6. HIS STATEMENT WAS AGAIN RECORDED ON OATH ON 28.03.2016 AND 16.06.2016. SHRI KISHORI SHARAN GOYAL ADMITTED IN H IS STATEMENT THAT THESE FIRMS WERE CONTROLLED AND MANA GED BY HIM ONLY AND THESE FIRMS WERE NOT DOING ANY REAL BU SINESS AND WERE MERE PAPER CONCERNS. 3. I HAVE STUDIED STATEMENTS OF SHRI KISHORI SHARAN GOYAL RECORDED ON OATH ON 17.02.2016, 28.03.2016 AND 16.0 6.2016. SHRI KISHORI SHARAN GOYAL HAS ADMITTED IN HIS STATE MENT RECORDED ON 17.02.2016 U/S 131 OF THE I.T. ACT THAT HE USED TO EARN COMMISSION FROM 'BOGUS BILLING'. HE EXPLAIN ED 'BOGUS BILLING' BUSINESS AS OPERATING VARIOUS FIRMS WHICH ARE NOT DOING ANY REAL BUSINESS BUT ARE INDULGING IN PROVIDING AC COMMODATION ENTRIES FOR BOGUS PURCHASES AND BOGUS SALES. HE STA TED THAT HE USED TO TAKE CHEQUES FROM THE INTERESTED BUSINES SMEN (WHO WERE IINTERESTED IN BOOKING BOGUS PURCHASES) W HICH WOULD BE DEPOSITED IN THE FIRMS CONTROLLED BY HIM A ND AFTER THAT IT WOULD BE ROUTED THROUGH 2-3 FIRMS AND FINAL LY TRANSFERRED TO INTERESTED BUSINESS MEN WHO WERE INT ERESTED IN BOOKING BOGUS SALES. HE ALSO ADMITTED THAT HE US ED TO TAKE UNACCOUNTED CASH FROM THE PARTIES WHO WERE INTEREST ED IN BOOKING BOGUS SALES AND THIS CASH WAS GIVEN TO THE PARTIES WHICH HAD GIVEN CHEQUES FOR BOOKING BOGUS PURCHASES . THIS WAY, NO UNACCOUNTED CASH WAS DEPOSITED IN THE BANK ACCOUNTS AS PER HIS STATEMENT. HE ALSO ADMITTED THAT HE USED TO CHARGE 5 COMMISSION @ 1% FROM PARTIES WHO WERE TAKING ACCOMMODATION ENTRIES FOR BOGUS SALES AND COMMISSIO N @ 0.5% FROM ALL OTHER PARTIES. HE ALSO ADMITTED THAT NO GOODS WERE PHYSICALLY DELIVERED FOR ANY PURCHASE OR SALES . 4. SHRI KISHORI SHARAN GOYAL, IN HIS STATEMENT RECO RDED ON 17.02.2016, ALSO PROVIDED A LIST OF BOGUS CONCERNS USED BY HIM FOR THE PURPOSE OF PROVIDING ACCOMMODATION ENTRIES FOR BOGUS PURCHASES AND SALES. THE LIST OF SUCH BOGUS ENTITIE S INCLUDE M/S SAI KIRPA ENTERPRISES. PLOT NO. 803, VILLAGE MU NDKA, DELHL-110041 ,AND M/S BALAJI ENTERPRISES, G-239 A, LAJPAT NAGAR, SAHIBABAD, GHAZIABAD AND PLOT NO. 803, MUNDK A, NEW DELHI. THE DDIT (INV.), UNIT-ILL, GURGAON, ALSO PRO VIDED A LIST OF BENEFICIARIES WHO OBTAINED BOGUS PURCHASE/SALE E NTRIES FROM THE CONCERNS CONTROLLED BY SHRI KISHORI SHARAN GOYAL. ONE OF SUCH BENEFICIARIES IS THE ASSESSEE M/S A K. LUMBERS LTD. WHICH RECEIVED FOLLOWING AMOUNTS FROM THE CONC ERNS CONTROLLED BY SHRL KISHORI SHARAN GOYAL DURING THE FY 2010-11 NAME OF THE BANK ACCOUNT NO. BANK & BRANCH DATE OF AMOUNT CONCERN CONCERN RECEIPT RECEIVED SAI KRIPA 8761131004535 ORIENTAL BANK OF 05.03.2011 RS. ENTERPRISES COMMERCE, PITAMPURA, 10,00,000/ - DELHI BALAJI 08761131004511 ORIENTAL BANK OF 05.03.2011 RS. ENTERPRISES COMMERCE, OVERSEAS BRANCH, GURGAON 10,00,000/ - TOTAL RS, 20,00,000/- 6 5. THE DDIT (INV.) UNIT-3 GURGAON HAS ALSO SENT COP IES OF BANK STATEMENTS OF BOGUS CONCERNS CONTROLLED BY SHR I KISHORI SHARAN GOYAL INCLUDING THE AFORESAID BANK STATEMENT S. I HAVE PERUSED THESE BANK STATEMENTS. ALTHOUGH SHRI KISHOR I SHARAN GOYAL HAS STATED IN HIS J STATEMENT THAT NO CASH WAS DEPOSITED IN THE BANK ACCOUNTS, THE STATEMENTS OF B OTH THE ABOVE ACCOUNTS SHOW HEAVY CASH DEPOSITS. BOTH THESE STATEMENTS SHOW DEBIT ENTRIES OF RS. 10,00,000/- EA CH ON 05.03.2011 FOR TRANSFER OF FUNDS TO 'A K'. THE STAT EMENT OF SAI KRIPA ENTERPRISES WITH OBC, PITAMPURA DELHI SHO WS TRANSFER OF RS. 10,00,000/- ON 05.03.2011 TO THE AS SESSEE THROUGH CHEQUE NO. 770656. THE STATEMENT OF BALAJI ENTERPRISES WITH OBC GURGAON SHOWS TRANSFER OF RS. 10,00,000/- ON 05.03.2011 TO THE ASSESSEE THROUGH C HEQUE NO. 771654. IT SHOWS THAT A TOTAL AMOUNT OF RS. 20, 00,000/- WAS TRANSFERRED TO THE ACCOUNT OF M/S A K LUMBERS L TD. FOR BOGUS SALES AGAINST WHICH M/S A K LUMBERS LTD. PROV IDED UNACCOUNTED CASH TO SHRI KISHORI SHARAN GOYAL. APAR T FROM THIS M/S A K LUMBERS LTD. WOULD ALSO HAVE PAID COMM ISSION @ 1% TO SHRI KISHORI SHARAN GOYAL FOR TAKING ENTRY OF B OGUS SALES WHICH AMOUNTS TO RS. 20,000/-. THUS, M/S A K LUMBERS LTD. PROVIDED TOTAL UNACCOUNTED CASH OF RS. 20,20,0 00/- TO SHRI KISHORE SHARAN GOYAL DURING THE F.Y. F.Y. 2010 -11. 7 6. IN VIEW OF ABOVE FACTS, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO RS. 20,20,000 /- FOR THE A.Y. 2011-12 HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FA CTS FULLY AND TRULY. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), NEW DELHI 5. THE CHALLENGE BEFORE US IS THAT WHILE RECORDING REASONS FOR REASSESSMENT, THE ASSESSING OFFICER HAS NOT AT ALL APPLIED HIS MIND. 6. A PERUSAL OF THE AFORESAID REASONS WOULD SHOW TH AT STATEMENT OF ONE SHRI KISHORI SHARAN GOYAL WAS RECORDED U/S 131 OF THE ACT DURING THE COURSE OF SEARCH PROCEEDINGS CONDUCTED IN SPAZE GROUP OF CASES ON 17.02.2016. SHRI K.S. GOYAL WAS ONCE AGAIN EXAMINE D AND HIS STATEMENT WAS RECORDED ON OATH ON 28.03.2016 AND 16 .06.2016, WHO IN HIS STATEMENT, ADMITTED THAT THESE CONCERNS/FIRMS W ERE CONTROLLED AND MANAGED BY HIM ONLY AND WERE ENGAGED IN PROVIDING A CCOMMODATION ENTRIES FOR BOGUS PURCHASES AND SALES. HAD THE ASS ESSING OFFICER APPLIED HIS MIND, HE WOULD HAVE KNOWN THAT SHRI K.S . GOYAL NEVER MENTIONED THE NAME OF THE APPELLANT. 8 7. A PERUSAL OF THE INFORMATION RECEIVED FROM THE I NV. WING SHOWS THAT THE ASSESSEE HAS SOLD GOODS TO SAI KRIPA ENTER PRISES AND BALAJI ENTERPRISES AMOUNTING TO RS. 10 LAKHS EACH. IT IS CLAIMED THAT THE BANK STATEMENTS OF THESE TWO ENTERPRISES WERE MADE AVAIL ABLE WHICH CONTAINED TRANSACTIONS IN CASH. HAD THE ASSESSING OFFICER APPLIED HIS MIND BEFORE REOPENING ASSESSMENT AND HAD HE EXAMINE D THE BANK STATEMENT, HE WOULD HAVE KNOWN THAT THE TRANSACTION WITH SAI KRIPA ENTERPRISES AMOUNTED TO RS. 27,41,837 AND THE TRANS ACTIONS WITH BALAJI ENTERPRISES AMOUNTED TO RS. 65,93,089/-. 8. IT APPEARS THAT THE ASSESSING OFFICER HAS SIMPLY RELIED UPON THE INFORMATION FROM THE INV WING AND WITHOUT APPLYING HIS MIND REOPENED THE ASSESSMENT BY GIVING THE AFORESAID REASONS FOR REOPENING. HAD THE ASSESSING OFFICER APPLIED HIS MIND TO THE NATURE OF THE BUSINESS OF THE ASSESSEE, HE WOULD HAVE KNOWN THAT BEFORE SELLING T HE LOG WOODS, THE ASSESSEE HAD TO TAKE PERMISSION FROM THE FOREST DEP ARTMENT. WE FIND THAT SUCH CERTIFICATES ARE PLACED IN THE PAPER BOOK S WHICH CONTAIN THE NAMES OF THE AFOREMENTIONED TWO PARTIES, ALONGWITH TRANSPORTERS NAMES AND TRUCK NUMBERS. 9 9. A PERUSAL OF THE RECORD SHOWS THAT THE ASSESSING OFFICER HAS NOT EXAMINED SUCH DOCUMENTS AND REOPENED THE ASSESSMENT SOLELY ON THE HALF-BAKED INFORMATION RECEIVED FROM THE INV WING. 10. THE ENTIRE ADDITIONS REVOLVE AROUND THE ENQUIRI ES MADE THROUGH AN INSPECTOR WHO, IN HIS REPORT, STATED THAT THE TR ANSPORTERS WERE NOT AVAILABLE ON THE GIVEN ADDRESS. TRANSACTIONS TOOK PLACE IN THE YEAR 2011 AND THE ENQUIRIES WERE MADE BY THE INSPECTOR I N THE YEAR 2018. IF AFTER A LAPSE OF 7 YEARS THE PARTIES ARE NOT AVA ILABLE AT THE GIVEN ADDRESS, IN OUR VIEW, THE ASSESSEE CANNOT BE FOUND FAULTED WITH. 11. HAD THE ASSESSING OFFICER APPLIED HIS MIND, THE N HE WOULD HAVE NOT BELIEVED THE THEORY OF THE INVESTIGATION WING T HAT THE APPELLANT IS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES AS THE T OTAL TURNOVER OF THE APPELLANT IS RS. 37.58 CRORES AND THE QUARREL I S ONLY IN RESPECT OF SALES MADE TO THE TWO PARTIES TOTALLING TO RS. 94.2 8 LAKHS. 12. AT THIS POINT, IT WOULD BE PERTINENT TO MENTION THAT SALES MADE TO THESE TWO PARTIES WERE DULY RECORDED IN THE BOOKS O F ACCOUNT UNDER THE HEAD SALES AND THE ASSESSING OFFICER HAS MADE SAME ADDITION ONCE AGAIN U/S 68 OF THE ACT. ONCE THE ASSESSEE HA S HIMSELF INCLUDED 10 THE AMOUNT AS ITS INCOME, THE ACTION OF THE ASSESSI NG OFFICER IS NOTHING BUT DOUBLE ADDITION OF THE SAME AMOUNT. AT THE MOS T, THE ASSESSING OFFICER SHOULD HAVE DISREGARDED THE SALES AND INCRE ASED THE STOCK IN TRADE OF THE APPELLANT BY THAT AMOUNT. 13. HAD THE ASSESSING OFFICER APPLIED HIS MIND BEFO RE ISSUING NOTICE U/S 148 OF THE ACT, HE WOULD HAVE KNOWN THAT THIS I S NOT A CASE OF SOME UNSECURED LOAN/CASH CREDITS TAKEN BY THE ASSES SEE. THE INFORMATION WAS THAT THE ASSESSEE HAS PROVIDED ACCO MMODATION BILLS TO TWO PARTIES NAMELY, SAI KRIPA ENTERPRISES AND BALAJ I ENTERPRISES AND, THAT TOO, INFORMATION WAS ONLY IN RESPECT OF SALES MADE OF RS. 10 LAKHS EACH. AS MENTIONED ELSEWHERE, TOTAL SALES TO THESE TWO PARTIES WAS AROUND RS. 94.28 LAKHS. 14. ON SEVERAL OCCASIONS, THE ASSESSEE ASKED THE AS SESSING OFFICER TO GIVE OPPORTUNITY TO CROSS EXAMINE SHRI KISHORE SHAR AN GOYAL BUT THAT WAS DENIED BY THE ASSESSING OFFICER WHO RELIED UPON SOME DECISIONS OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF PRE M CASTING LTD AND MOTI LAL PADAMPAT UDYOG LIMITED. BOTH THESE DECIS IONS OF THE HON'BLE HIGH COURT ARE TOTALLY ON DIFFERENT SET OF FACTS AN D DO NOT LAY DOWN ANY RATIO IN SO FAR AS THE OPPORTUNITY OF CROSS EXAMINA TION IS CONCERNED. 11 15. THE HON'BLE SUPREME COURT IN THE CASE OF ANDAMA N TIMBER VS. CIT IN CIVIL APPEAL NO. 4228 OF 2006 HAS CATEGORICA LLY LAID DOWN THE RATIO THAT DENIAL OF NATURAL JUSTICE WOULD MAKE AN ASSESSMENT VOID. 16. THE HON'BLE DELHI HIGH COURT IN THE CASE OF PRA DEEP KUMAR GUPTA 203 ITR 95 HAD THE OCCASION TO CONSIDER THE SITUATI ON WHERE ASSESSMENT WAS FRAMED ON STATEMENT OF A THIRD PARTY AND THE AS SESSEE REQUESTED FOR CROSS EXAMINATION WHICH WAS DENIED. THE HON'BL E HIGH COURT OBSERVED AS UNDER: 4. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES AT GREAT LENGTH, WE ARE OF THE VIEW THAT THE ORDER OF THE IT AT IS UNASSAILABLE. IN THIS CASE, THE ASSESSMENT HAD NOT BEEN COMPLETED UNDER SECTION 143(3) OF THE IT ACT. THERE ARE BANKING TRANSACTIONS BETWEEN THE ASSESSEDS AND SHRI ANAND PRAKASH AND, THEREFORE, INITIATION OF REASSESSMENT PROCEEDINGS UNDER SECTIONS 147 / 148 MAY BE IMPREGNABLE EVEN TO THE CHARGE OF LEGITIMACY OF INVOCATION OF SECTIONS 147 / 148 . IN OTHER WORDS, SINCE THERE WERE BANKING TRANSACTIO NS BETWEEN THESE PERSONS, AND SHRI ANAND PRAKASH HAD, IN FACT, DEPOSED THAT HE HAD PROVIDED BOGUS TRANSACTIONS TO THE ASSESSES THAT WOULD CONSTITUTE REASONS FOR THE AO T O BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMEN T JUSTIFYING ACTION UNDER SECTIONS 147 / 148 . SHRI ANAND PRAKASH 12 CANNOT BE SEEN AS A BUSYBODY OR AN INFORMER OR A ST OCK WITNESS WHOLLY UNCONNECTED WITH THE ASSESSED CONCER NED. LEARNED COUNSEL FOR THE REVENUE HAD DRAWN OUR ATTEN TION TO PHOOL CHAND BAJRANG LAL V. INCOME-TAX OFFICER WHERE THE ITO HAD LEARNT THAT THE PARTY FROM WHOM THAT ASSESS ED HAD ALLEGEDLY BORROWED RS. 50,000/- IN CASH HAD NOT ACT UALLY DONE SO. INFORMATION PERTAINING TO THE FALSE NATURE OF T HESE TRANSACTIONS WAS EXCHANGED BETWEEN THE RESPECTIVE I NCOME- TAX OFFICERS. THEIR LORDSHIPS OPINED THAT - 'ACQUIR ING FRESH INFORMATION, SPECIFIC IN NATURE AND RELIABLE IN CHA RACTER, RELATING TO A CONCLUDED ASSESSMENT WHICH WENT TO EX POSE THE FALSITY OF THE STATEMENT MADE BY THE ASSESSED AT TH E TIME OF THE ORIGINAL ASSESSMENT WAS DIFFERENT FROM DRAWING A FRESH INFERENCE FROM THE SAME FACTS AND MATERIAL AVAILABL E WITH THE INCOME-TAX OFFICER AT THE TIME OF THE ORIGINAL ASSE SSMENT PROCEEDINGS'. THIS DECISION, HOWEVER, DOES NOT EMPO WER THE AO TO RELY ONLY ON THE DEPOSITION OF A THIRD PARTY IN ORDER TO UPSET THE RETURN FILED BY AN ASSESSED. 5. THIS IS WHERE THE FAILURE OF THE REVENUE TO PROD UCE SHRI ANAND PRAKASH FOR CROSS-EXAMINATION BY THE ASSESSED S, ASSUMES FATAL CONSEQUENCES. REASSESSMENT PROCEEDING S HAVE BEEN INITIATED AFTER SEVERAL YEARS OF THE ACCEPTANC E OF THE RETURN UNDER SECTION 143(1) OF THE IT ACT. THE ASSESSEDS HAVE THEMSELVES RELIED ON THE BANKING TRANSACTIONS BETWEEN THEMSELVES AND SHRI ANAND PRAKASH; SECONDLY ON BILL S ISSUED 13 BY THEM TO SHRI ANAND PRAKASH, AND ON THE UNASSAILE D PAYMENT OF RENT TO SHRI MOOL CHAND. IT IS TRUE THAT THE ASS ESSEDS FAILURE TO PRODUCE SHRI KISHAN CHAND HAD THE CONSEQ UENCE OF NOT PROVING THAT THE SAID PERSON WAS TILLING THE LA ND ON THEIR BEHALF. THIS FAILURE CANNOT INEXORABLY LEAD TO THE CONCLUSION THAT NO AGRICULTURAL INCOME HAD BEEN GENERATED BY T HE ASSESSEDS. SUCH AN INFERENCE CAN ONLY BE DRAWN FROM THE STATEMENT OF SHRI ANAND PRAKASH TO THE EFFECT THAT THE TRANSACTIONS BETWEEN HIM AND THE ASSESSES WERE BOGU S. THEREFORE, IT WAS MANDATORY FOR THE REVENUE TO PROD UCE SHRI ANAND PRAKASH FOR CROSS-EXAMINATION BY THE ASSESSED S ON THEIR SPECIFIC DEMAND IN THIS REGARD. THE FACTS ON WHICH THE DECISION TO INVOKE SECTIONS 147 / 148 ARE PREDICATED MAY IN SOME CASES BE SUFFICIENT BOTH FOR DECISION TO CARRY OUT A REASSESSMENT AS WELL TO JUSTIFY OR SUSTAIN THE FRES H ASSESSMENT. HOWEVER, THERE MAY WELL BE INSTANCES WH ERE THE FORMER SAID REOPENING MAY PASS MUSTER IN THE LIGHT OF SOME FACTS, BUT THOSE FACTS BY THEMSELVES MAY TURN OUT T O BE INSUFFICIENT TO PRESERVE THE ASSESSMENT ITSELF. ONC E SECTIONS 147 / 148 ARE RESORTED TO, THE AO MUST FIRST DISCHARGE THE BURDEN OF SHOWING THAT INCOME HAS ESCAPED ASSESSMEN T. IT IS ONLY THEREAFTER THAT THE ASSESSED HAS TO PROVIDE AL L THE ANSWERS. WE FIND NO REASON WHY THE INITIAL BURDEN O F PROOF SHOULD NOT REST ON THE AO EVEN WHERE THE ASSESSMENT HAS GONE THROUGH UNDER SECTION 143(1) OF THE ACT. THE TRIBUNAL HAS, THEREFORE, ARRIVED AT THE CORRECT CONCLUSION. 14 17. ON IDENTICAL SET OF FACTS, THE TRIBUNAL HAD THE OCCASION TO DECIDE THE APPEAL IN ITA NO. 4271/DEL/2019 WHEREIN ALSO TH E REOPENING OF ASSESSMENT WAS CHALLENGED WHICH WAS MADE PURSUANT T O THE INFORMATION RECEIVED FROM THE INV WING WHEN SEARCH WAS CONDUCTED IN THE SPAZE GROUP OF CASES AND STATEMENT OF SHRI KISH ORE SHARAN GOYAL WAS RECORDED ON OATH. THE RELEVANT FINDINGS OF TH E CO-ORDINATE BENCH READ AS UNDER: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THE ISSUE IS SAME AS HAVE BEEN CONSIDERED IN THE CA SE OF M/S. KLF FOOD (INDIA) LTD., (SUPRA) EXCEPT THAT IN THIS CASE THERE IS NO ASSESSMENT UNDER SECTION 143(3) OF THE INCOME- TAX ACT, 1961. THE HON'BLE BOMBAY HIGH COURT IN THE CAS E OF SIEMENS INFORMATION SYSTEM LTD., VS. ACIT & OTHERS (2007) ITA.NO.4271/DEL./2019 SHRI DEVKI NANDAN BINDAL, DELHI. 293 ITR 548 (BOM.) HELD THAT 'WHEN N OTICE FOR REASSESSMENT BASING ON NON-EXISTING REASONS AND PRO VISIONS INAPPLICABLE AT RELEVANT TIME - NOT CONSTITUTING RE ASONS TO BELIEVE. NOTICE INVALID.' THE HON'BLE PUNJAB AND HA RYANA HIGH COURT IN THE CASE OF CIT VS., ATLAS CYCLE INDUSTRIES (1989) 180 ITR 319 (P&H) HELD AS UNDER : 'HELD, (I) THAT THE TRIBUNAL WAS RIGHT IN CANCELLIN G THE REASSESSMENT AS BOTH THE GROUNDS ON WHICH THE REASS ESSMENT NOTICE WAS ISSUED WERE NOT FOUND TO EXIST, AND, THE REFORE, THE 15 INCOME-TAX OFFICER DID NOT GET JURISDICTION TO MAKE A REASSESSMENT.' 11.1. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ANKITA A. CHOKSEY VS. INCOME TAX OFFICER AND OTHERS (2019) 411 ITR 207 (BON.) HELD THAT 'CONDITION PRECEDENT FOR ISSUE OF NOTICE FOR REASSESSMENT IS THAT THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT MUST BE BASED ON CORRECT FAC TS. NOTICE BASED ON WRONG FACTS IS WITHOUT JURISDICTION AND IS TO BE QUASHED.' 11.2. IN THE INSTANT CASE, THE ASSESSING OFFICER HA S RECORDED VAGUE REASONS BASED ON WRONG FACTS. THE ESCAPEMENT OF INCOME BASED ON ACCOMMODATION ENTRY AS INFORMED BY INVESTIGATION WING HAVE BEEN MENTIONED AT RS.3.20 C RORES WHICH IN FACT WAS RS 2.20 CRORES. SUCH FACT IS MENT IONED IN THE BALANCE SHEET OF THE ASSESSEE, COPY OF WHICH IS , FILED AT PAGE-10 OF THE PAPER BOOK, WHICH IS ALSO SUPPORTED BY THE LIST OF INVESTORS FILED AT PAGE-21 OF THE PAPER BOOK. TH E ASSESSING OFFICER IN THE REASONS FOR REOPENING HAS ALSO MENTIONED INCORRECT F.Y. 2007-2008 INSTEAD OF F.Y. 2006- 2007. THEREFORE, THE REASONS ARE BASED ON WRONG FAC TS, WHICH CLEARLY SHOW THAT THERE WAS NO APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER WHILE RECORDING REASONS FO R REOPENING OF THE ASSESSMENT. WE, THEREFORE, CONSIDE RING THE ABOVE DISCUSSION AND FOLLOWING THE REASONS FOR DECI SION IN THE CASE OF M/S. KLF FOOD (INDIA) LTD., (SUPRA), HOLD T HAT 16 ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT IS ILLEGAL AND BAD IN L AW. WE, ACCORDINGLY, SET ASIDE THE ITA.NO.4271/DEL./2019 SH RI DEVKI NANDAN BINDAL, DELHI. ORDERS OF THE AUTHORITIES BEL OW AND QUASH THE REOPENING OF ASSESSMENT IN THE MATTER. RE SULTANTLY, ALL ADDITIONS STAND DELETED. IN VIEW OF THE ABOVE, THERE IS NO NEED TO DECIDE THE DEPARTMENTAL APPEAL ON MERIT IN WHICH LD. CIT(A) HAS ALREADY DELETED THE ADDITION. 12. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISMI SSED AND THE CROSS-OBJECTION OF THE ASSESSEE IS ALLOWED. 13. TO SUM-UP, BOTH CROSS-OBJECTIONS OF DIFFERENT A SSESSEES ARE ALLOWED AND BOTH DEPARTMENTAL APPEALS ARE DISMI SSED.' 18. THE LD. DR, IN HIS WRITTEN SUBMISSIONS, HAS PLA CED RELIANCE ON SEVERAL JUDICIAL DECISIONS TO BUTTRESS HIS VIEW THA T INFORMATION RECEIVED FROM INV WING WAS GOOD ENOUGH TO REOPEN THE ASSESSM ENT ORDER. 19. WE ARE NOT INTO THE INFORMATION RECEIVED FROM T HE INV WING, BUT, ON APPLICATION OF MIND OF THE ASSESSING OFFICER BEF ORE ISSUING SUCH NOTICE. AS EXPLAINED ELSEWHERE, THE ENTIRE ASSESSME NT BASED UPON THE INFORMATION RECEIVED IS DEVOID OF ANY APPLICATION O F MIND. AT THIS JUNCTURE, IT IS PERTINENT TO MENTION THAT NEITHER S HRI KISHORE SHARAN 17 GOYAL NOR SAI KRIPA ENTERPRISES AND BALAJI ENTERPRI SES ARE RELATED TO THE ASSESSEE. 20. AT THE COST OF REPETITION, THE TRANSACTION IS N OT OF UNSECURED LOAN/CASH CREDITS WHERE THE ASSESSEE HAS INTRODUCED ITS OWN UNACCOUNTED CASH IN THE FORM OF SALES. SALES ARE S UPPORTED BY C FORMS, VAT NOS AND SALES TAX NUMBERS OF THE PARTIES , FURTHER SUPPORTED BY THE CERTIFICATES FROM THE FOREST DEPAR TMENT. ALL THESE HAVE NOT BEEN EXAMINED BY THE ASSESSING OFFICER AND HAD HE EXAMINED THESE DOCUMENTS/EVIDENCES OR MADE NECESSARY ENQUIRI ES, HE MAY NOT HAVE ISSUED NOTICE U/S 148 OF THE ACT BUT FOR NON-A PPLICATION OF MIND, THE ASSESSMENT WAS REOPENED. 21. THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF RMG POLYVINYL LTD 396 ITR 5 HAD THE OCCASION TO CONSIDER THE ISSUE WH ETHER NOTICE ISSUED BY THE ASSESSING OFFICER TO REOPEN ASSESSMENT ON TH E BASIS OF INFORMATION RECEIVED FROM INV WING COULD BE SAID TO BE TANGIBLE MATERIAL, THE HON'BLE HIGH COURT HELD THAT INFORMA TION RECEIVED FROM INV WING COULD NOT BE SAID TO BE TANGIBLE MATERIAL PER SE WITHOUT A FURTHER ENQUIRY BEING UNDERTAKEN BY THE ASSESSING O FFICER TO ESTABLISH 18 LINK BETWEEN TANGIBLE MATERIAL AND FORMATION OF REA SON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 22. CONSIDERING THE UNDERLYING FACTS IN ISSUES, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE SUCCEEDS ON BO TH THE COUNTS REOPENING IS DEVOID OF ANY APPLICATION OF MIND AND ADDITIONS ARE SOLELY BASED UPON ASSUMPTIONS, CONJECTURES AND SURMISES. THEREFORE, THE ASSESSEE SUCCEEDS ON BOTH THE COUNTS. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 8761/DEL/2019 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 10. 07.2020. SD/-/- SD/- [KULDIP SINGH ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 TH JULY, 2020. VL/ 19 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ASST. REGISTRAR 4. CIT(A) ITAT, NEW DELHI 5. DR DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER