Akshay Verma, Chandigarh V. DCIT, Chandigarh

ITA 920/CHANDI/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0097 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 30-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ADITYA KUMAR
• Keywords: Unexplained cash credit; Income from undisclosed sources; Source of fund; Tangible material; Bad and doubtful debts; Accommodation entries; Block assessment; Sham transactions; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 147; 68; 148; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NOS. 920 & 921/CHD/2008 A.YS: 1999-2000 & 2000-2001 M/S GEETANJALI CREDIT & VS THE ITO, CAPITAL LTD., SCO 1104-05, WARD 3(3), SECTOR 22-B, CHANDIGARH. CHANDIGARH. PAN: AADCS1991C (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI ASHWANI KUMAR & SHRI ADITYA KUMAR RESPONDENT BY : SHRI SUSHIL KUMAR, CIT- DR DATE OF HEARING : 07.04.2016 DATE OF PRONOUNCEMENT : 22.04.2016 O R D E R PER BHAVNESH SAINI,JM BOTH THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST COMMON ORDER OF LD. CIT(APPEALS) CHANDIGARH DATED 19.09.2008 FOR ASSESSMENT YEARS 1999-2000 AND 2000-01. 2. THE ASSESSEE IN ASSESSMENT YEAR 1999-2000 RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT ORDER PASSED U/S 250(6) IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS THE LD. COMMISSIONER OF I NCOME (APPEALS) WAS NOT JUSTIFIED/TO UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN REOPENING THE ASSESSMENT BY RE SORT TO PROVISIONS OF SEC. 148. 2 2. THE LD. CIT( APPEALS) WAS FURTHER NOT JUSTIFIED TO HOLD THAT THE ADDITION MADE BY THE LD. ASSESSING OFFICER AT RS. 2.10 CRORES ON PROTECTIVE BASIS WAS TO BE ASSESSED IN THE HANDS OF APPELLANT ON SUBSTANTIVE BASIS. CREDITS IN THE ACCOUNTS OF THE APPELLANT COMPANY REPRESENTED THE S ALE PROCEEDS OF THE SHARES MADE THROUGH THEM. THE ENTIR E AMOUNT DESERVED TO BE DELETED. 3. THAT ORDER PASSED BY THE LD. CIT (APPEALS) IS AGAI NST LAW AND FACTS ON THE FILE IN AS MUCH AS NO REASONAB LE OPPORTUNITY WAS PROVIDED TO THE APPELLANT TO DEFEND ITS CASE AND LOT OF IRRELEVANT DATA HAS BEEN MARSHALED AGAIN ST THE APPELLANT WITHOUT CONFRONTING THE SAME. 3. IN ASSESSMENT YEAR 2000-01, THE ASSESSEE HAS RAI SED THE FOLLOWING IDENTICAL GROUNDS : 1. THAT ORDER PASSED U/S 250(6) IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS THE LD. COMMISSIONER OF I NCOME (APPEALS) WAS NOT JUSTIFIED/TO UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN REOPENING THE ASSESSMENT BY RE SORT TO PROVISIONS OF SEC. 148. 2. THE LD. CIT( APPEALS) WAS FURTHER NOT JUSTIFIED TO HOLD THAT THE ADDITION MADE BY THE LD. ASSESSING OFFICER AT RS. 40,00,000/- ON PROTECTIVE BASIS WAS TO BE ASSESSED IN THE HANDS OF APPELLANT ON SUBSTANTIVE BASIS. CREDITS IN THE ACCOUNTS OF THE APPELLANT COMPANY REPRESENTED THE S ALE PROCEEDS OF THE SHARES MADE THROUGH THEM. THE ENTIR E AMOUNT DESERVED TO BE DELETED. 3. THAT ORDER PASSED BY THE LD. CIT (APPEALS) IS AGAI NST LAW AND FACTS ON THE FILE IN AS MUCH AS NO REASONAB LE OPPORTUNITY WAS PROVIDED TO THE APPELLANT TO DEFEND ITS CASE AND LOT OF IRRELEVANT DATA HAS BEEN MARSHALED AGAIN ST THE APPELLANT WITHOUT CONFRONTING THE SAME. 3 4. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. REPRESENTATIVES OF BOTH THE PARTIES MAINLY ARGUED I N ASSESSMENT YEAR 1999-2000 AND STATED THAT ISSUE IS SAME IN ASSESSMENT YEAR 2000-01 AS WELL, THEREFORE, FOR THE PURPOSE OF DISPOSAL OF BOTH THE APPEALS, THE FA CTS ARE CONSIDERED FROM ASSESSMENT YEAR 1999-2000. (A.Y. 1999-2000) 5. THE FACTS OF THE CASE ARE THAT THE ADDITIONAL DIRECTOR OF INCOME TAX (INVESTIGATION) CHANDIGARH A T PANCHKULA VIDE D.O. LETTER DATED 04.09.2003 RECEIVE D THROUGH ADDL. CIT RANGE-III, CHANDIGARH ON 09.09.20 03, INFORMED THAT DURING THE COURSE OF SEARCH OPERATION IN THE CASE OF M/S LADA LIQUOR GROUP IT WAS FOUND THAT M/S GEETANJALI CREDIT & CAPITAL LTD. (FORMERLY SHUB H INTERNATIONAL LTD.) SCO 1104-05, SECTOR 22-B, CHANDIGARH CLAIMED TO HAVE INVESTED RS. 2.50 CR WIT H M/S TARANJIT SINGH & CO., CHANDIGARH THE MONEY WAS INVESTED IN THE MONTH OF FEBRUARY, MARCH AND APRIL, 1999 AND TILL DATE, THIS AMOUNT WAS NOT REPAID, HEN CE INVESTIGATION WING, CHANDIGARH HAS CARRIED OUT INVESTIGATION ABOUT THE GENUINENESS OF THE SO CALLE D INVESTMENT. DURING ENQUIRIES, IT WAS FOUND THAT ASSESSEE COMPANY HAS FIRST DEPOSITED THE AMOUNT IN ITS BANK ACCOUNT NO. 60140 MAINTAINED WITH BANK OF BARODA, LUDHIANA AND THEN CHEQUES WERE ISSUED IN 4 FAVOUR OF M/S TARANJIT SINGH & CO., CHANDIGARH. SI NCE AMOUNT DEPOSITED IN THE BANK ACCOUNT OF ASSESSEE COMPANY, THE AMOUNT DEPOSITED REMAINED UNEXPLAINED, ACCORDINGLY A NOTICE UNDER SECTION 148 WAS ISSUED T O THE ASSESSEE COMPANY ON 30.07.2004 WHICH WAS SERVED UPO N THE ASSESSEE. 6. THE ASSESSEE COMPANY SUBMITTED BEFORE ASSESSING OFFICER THAT RETURN ORIGINALLY FILED MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 14 8 OF THE ACT. THE ASSESSING OFFICER, THEREAFTER ISSUED STATUTORY NOTICE TIME TO TIME, CALLED FOR INFORMATI ON. THE ASSESSING OFFICER NOTED THAT ASSESSEE COMPANY I S AN INVESTMENT COMPANY. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS ADVANCED RS.2.10 CR THROUGH DEMAND DRAFTS TO M/S TARANJIT SINGH & CO., CHANDIGARH. THE SOURCE OF THESE DEPOSITS AND DETAI LS OF DRAFTS PREPARED FROM THESE DEPOSITS ARE REPRODUCED AT PAGES 3 TO 5 OF THE ASSESSMENT ORDER WHICH GIVE THE DETAILS AS DRAFT NUMBER, DATE, AMOUNT, CLEARING CRE DIT ON AND THE NAME OF THE BANK ON WHICH CHEQUES HAVE BEEN DRAWN. IT IS, THUS, NOTED THAT ASSESSEE RECEI VED VARIOUS CHEQUES WHICH WERE CREDITED TO THE ACCOUNT OF THE ASSESSEE IN A SUM OF RS. 2.10 CR. THE A.O. AS REGARDS THE SOURCE OF THESE DRAFTS NOTED THAT FIRST LY THE AMOUNT WAS TRANSFERRED THROUGH CHEQUES FROM THREE BROKERS INTO THE BANK ACCOUNT OF THE ASSESSEE COMPA NY WITH BANK OF BARODA, LUDHIANA. OUT OF THESE AMOUNT S, 5 THE DRAFTS WERE PREPARED IN THE NAME OF M/S TARANJI T SINGH & CO., CHANDIGARH. 7. IN ORDER TO ASCERTAIN THE FINANCIAL STATUS OF TH E ASSESSEE COMPANY AND HOW THE MONEY WAS TRANSFERRED TO THE ACCOUNT OF M/S TARANJIT SINGH & CO., CHANDIGARH , REPRODUCED THE STATEMENT OF SHRI BHARAT BHUSHAN GOYAL, DIRECTOR OF THE ASSESSEE COMPANY RECORDED BY THE DDIT (INVESTIGATION) CHANDIGARH ON 03.09.2002 IN TH E ASSESSMENT ORDER AT PAGES 3 TO 7. THE ASSESSING OFFICER, CONSIDERING THE STATEMENT OF SHRI BHARAT BHUSHAN GOYAL NOTED THAT HE DID NOT KNOW HOW SHRI TARAJNIT SINGH COULD MANAGE TO ENCASH THE INVESTMEN T OF THE COMPANY FOR MORE THAN 2 CRORES. THE VALUE O F THE INVESTMENT WAS NOT WORTH THE LIABILITY OF THE COMPA NY. IT SHOWS THAT THE AMOUNT WAS INTRODUCED IN THE BANK ACCOUNT OF THE COMPANY BY THE DIRECTORS FROM THE SOURCES BEST KNOWN TO THEM OUT OF WHICH, AMOUNT WAS ADVANCED TO M/S TARANJIT SINGH & CO., CHANDIGARH. 8. A PERUSAL OF THE BANK ACCOUNT WITH BANK OF BARODA, LUDHIANA MAINTAINED BY ASSESSEE WAS ALSO EXAMINED BY ASSESSING OFFICER IN DETAIL AND IT WAS FUND THAT DURING THE RELEVANT YEAR, AMOUNTS WERE CREDITE D THROUGH CLEARING FROM DIFFERENT PARTIES. ON FURTHE R VERIFICATION, IT WAS NOTICED THAT ASSESSEE COMPANY HAS RECEIVED AMOUNT THROUGH CHEQUES FROM THREE SHARE BROKERS NAMELY M/S ESS ARR & CO., LUDHIANA, M/S S.K . SHARMA & CO., LUDHIANA AND M/S USHA GARG AND CO. 6 THE DETAILS OF CHEQUES AND BANKS WITH AMOUNT HAVE BEEN MENTIONED IN DETAIL AT PAGE 8-9 OF THE ASSESSM ENT ORDER. THE ASSESSING OFFICER FURTHER NOTICED THAT THE PARTIES M/S USHA GARG & CO. AND M/S ESS ARR & CO. WERE EXAMINED BY DDIT (INVESTIGATION) AND THEIR STATEMENTS WERE RECORDED. THE RELEVANT PORTION OF THE STATEMENT OF SHRI SHAGUN GARG, AUTHORIZED SIGNATORY OF M/S USHA GARG & CO., LUDHIANA AND SHRI H.K.PUNNI, AUTHORIZED SIGNATORY OF M/S ESS ARR & CO. HAVE ALSO BEEN REPRODUCED IN THE ASSESSMENT ORDER AT PAGES 9 TO 12 OF THE ASSESSMENT ORDER. 8(I) THE ASSESSING OFFICER ALSO NOTED THAT SHRI SHA GUN GARG WAS ALSO EXAMINED BY HIM. THE ASSESSING OFFIC ER NOTED FROM THESE STATEMENTS THAT SHRI SHAGUN GARG D ID NOT KNOW THE NAME OF THE PERSONS WHO ARE REPRESENTI NG THE ASSESSEE COMPANY AND ALSO FAILED TO SUPPLY DISTINCTIVE NUMBER OF SHARES AND NAMES OF THE COMPANIES IN WHOSE NAMES THESE SHARES STAND AT THE TIME OF SALE. IT CLEARLY SHOWS THAT CASH WAS DEPOS ITED IN THE BANK ACCOUNTS OF M/S USHA GARG & CO. AND THEN CHEQUES WERE ISSUED TO THE ASSESSEE COMPANY WHO IN TURN ISSUED THE DRAFTS IN FAVOUR OF M/S TARANJIT SI NGH & CO., CHANDIGARH. THE ASSESSING OFFICER ALSO NOTED F ROM THE STATEMENT OF SHRI H.K.PUNNI, AUTHORIZED SIGNATO RY OF M/S ESS ARR & CO. RECORDED BY DDIT (INVESTIGATION) THAT SHARES WERE SOLD ON BEHALF OF THE ASSESSEE COMPANY. THE REPRESENTATIVE OF THE COMPANY USED TO BRING BUYERS IN 7 WHOSE NAMES SHARES WERE TO BE TRANSFERRED, THE CASH PAYMENTS WERE RECEIVED FROM THE BUYERS BY THE REPRESENTATIVE OF THE COMPANY. THE CASH BROUGHT BY THE SO CALLED BUYERS WAS DEPOSITED IN THE BANK ACCOUNT AND CHEQUES WERE HANDED OVER TO THE REPRESENTATIVE OF T HE ASSESSEE COMPANY. SHRI HARI KISHAN PUNNI HAS FAILE D TO FURNISH THE INFORMATION REGARDING NAME OF THE COMPANIES WHOSE SHARES WERE PURCHASED/SOLD ON BEHAL F OF THE ASSESSEE COMPANY, THE NAME AND COMPLETE ADDRESS OF THE BUYERS AND DISTINCT NUMBER OF THE SH ARES SOLD. THE ASSESSING OFFICER, THEREFORE, OBSERVED T HAT DIRECTORS HAVE INTRODUCED THE MONEY IN THE BANK ACCOUNT OF THE COMPANY FROM THE SOURCE BEST KNOWN T O THEM FROM WHICH THE AMOUNT WAS FURTHER ADVANCED TO M/S TARANJIT SINGH & CO., CHANDIGARH. 8(II). THE ASSESSING OFFICER FURTHER NOTED THAT DUR ING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2000- 01 IN THE CASE OF THE ASSESSEE, STATEMENT OF SHRI S UDHIR KUMAR SHARMA, PROPRIETOR, M/S S.K.SHARMA & CO., LUDHIANA STOCK EXCHANGE WAS RECORDED ON 11.03.2005 BY THE ASSESSING OFFICER AND RELEVANT PORTION IS REPRO DUCED IN THE ASSESSMENT ORDER AT PAGE 13. THE ASSESSING OFF ICER FROM THIS STATEMENT NOTED THAT M/S S.K. SHARMA AND CO. ON 21.03.2005 FURNISHED COPIES OF ACCOUNT OF ASSESSEE IN THEIR BOOKS BUT FAILED TO FURNISH NAME AND ADDRESS OF THE COMPANY WHOSE SHARES WERE SOLD BY HIM, HENCE IT WAS HELD IN ASSESSMENT YEAR FOR ASSESSMENT YEAR 2000-01 THAT 8 DIRECTORS OF THE ASSESSEE COMPANY HAS INTRODUCED TH EIR UNEXPLAINED MONEY IN GUISE OF SALE OF SHARES FROM W HICH THE AMOUNT WAS FURTHER TRANSFERRED TO M/S TARANJIT SINGH & CO., CHANDIGARH. 8(III) THE ASSESSING OFFICER FURTHER NOTED THAT ASS ESSEE HAS FAILED TO SUPPLY COMPLETE ADDRESS OF THE COMPANIES, SHARE OF WHICH WERE SOLD BY THE STOCK BROKERS ABOVE. BEF ORE DDIT (INVESTIGATION) THE ASSESSEE COULD NOT FILE DE TAILS OF SHAREHOLDINGS OF VARIOUS COMPANIES IN WHICH TOTAL INVESTMENT OF THE ASSESSEE AMOUNTED TO RS. 1,02,08, 000/-. THE ASSESSING OFFICER, THEREFORE, OBSERVED THAT THE RE IS NO SALE OF SHARES AND ONLY ACCOMMODATION ENTRIES HAVE BEEN GIVEN BY THE BROKERS TO ASSESSEE AND ASSESSEE BY IS SUING THE CHEQUES AMOUNTING TO RS. 2.10 CR ADVANCED MONEY TO M/S TARANJIT SINGH & CO., CHANDIGARH. 9. THE ASSESSING OFFICER FURTHER NOTED THAT SEARCH WAS CONDUCTED IN THE CASE OF M/S LADA LIQUOR WHEREB Y IT WAS NOTICED THAT M/S TARANJIT SINGH & CO., CHANDIGARH TOOK THE ENTRIES OF RS.2.50 CR ( RS.2.10 CR IN THE ORDER UNDER CONSIDERATION) IN THE NAME OF ASSESSEE THROUGH THE DEMAND DRAFTS. PERUSAL OF THE BANK ACCOUNT OF THE ASSESSEE SHOWS THAT THESE DEMAN D DRAFTS WERE ISSUED BY THE ASSESSEE AFTER RECEIVING VARIOUS CHEQUES AS NOTED ABOVE. THESE CHEQUES WERE RECEIVED BY ASSESSEE FROM THREE BROKERS ABOVE IN LI EU OF SALE OF INVESTMENTS BY THE DIRECTORS OF THE ASSESSE E IN CONNIVANCE WITH SHRI TARANJIT SINGH. THE STOCK BRO KERS 9 FAILED TO GIVE LEDGER FOLIO NUMBERS/DISTINCTIVE NUM BERS OF THE SHARES SOLD AND IDENTITY OF THE BUYERS. IN ADD ITION, PAYMENTS FROM SO CALLED BUYERS WHICH WERE BROUGHT B Y THE REPRESENTATIVES OF THE ASSESSEE HAVE BEEN ALLEGEDLY RECEIVED IN CASH BY THE STOCK BROKERS. IN TERMS, STOCK BROK ERS ISSUED CHEQUES TO THE ASSESSEE AND THE ASSESSEE TRANSFERRED RS. 2.10 CR TO THE ACCOUNT OF M/S TARAN JIT SINGH & CO., CHANDIGARH THROUGH DEMAND DRAFTS. THE DIRECTOR OF THE ASSESSEE COMPANY ACCEPTED THAT MARK ET VALUE OF THE SHARES HELD BY THEM WERE NEGLIGIBLE. THE ASSESSING OFFICER, THEREFORE, OBSERVED THAT THE SAL E CONSIDERATION OF RS. 2.50 CR IS NOT POSSIBLE. IT W AS, THEREFORE, HELD TO BE SHAM TRANSACTION. UNACCOUNTE D CASH IS NOTHING BUT THE UNACCOUNTED INCOME OF THE ASSESSEE COMPANY. THE DIRECTOR OF THE COMPANY SHRI BHARAT BHUSHAN HAS STATED THAT THE CONTROL OF THE C OMPANY WAS HANDED OVER TO SHRI TARANJIT SINGH THOUGH LEGA L FORMALITIES COULD NOT BE COMPLETED AS SHRI TARANJIT SINGH EXPIRED IN APRIL,2000 AND SHRI TARANJIT SINGH SOLD THE INVESTMENTS OF THE ASSESSEE COMPANY. SHRI TARANJIT SINGH MIGHT HAVE SOLD INVESTMENTS OF THE COMPANY IN ORDER TO BRING HIS OWN UNACCOUNTED MONEY INTO THE ASSESSEE COMPANY. SINCE THE AMOUNT WAS PAID OUT OF THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH BANK OF BARODA, LUDHIANA, ADDITION OF RS. 2.10 CR IS MADE O N PROTECTIVE BASIS IN THE HAND OF THE ASSESSEE COMPAN Y WITHOUT PREJUDICE TO ANY ACTION IN THE HANDS OF M/S TARANJIT SINGH & CO., CHANDIGARH. 10 10. THE ASSESSING OFFICER FURTHER NOTED THAT COUNSE L FOR THE ASSESSEE COMPANY CONFIRMED THAT FACTS OF TH IS CASE ARE SIMILAR AS NOTED IN THE ASSESSMENT YEAR 2010-11 AND CLAIMED THAT THE SIMILAR ADDITION IS MA DE BY ACIT, CENTRAL CIRCLE IN THE CASE OF M/S TARANJIT SINGH & CO., CHANDIGARH, THEREFORE, IT WOULD AMOUNT TO DOUBLE ADDITION. THE ASSESSING OFFICER, HOWEVER, N OTED THAT IN ASSESSMENT YEAR 2000-01, ADDITION OF RS. 40 LACS WAS MADE ON PROTECTIVE BASIS IN RESPECT OF THE ENTR IES PERTAINING TO THAT YEAR. IN THE ASSESSMENT YEAR UN DER APPEAL, THE ENTRIES PERTAIN TO RS. 2.10 CR, THEREFO RE, PROTECTIVE ASSESSMENT WOULD NOT AMOUNT TO DOUBLE ADDITION AS CLAIMED BY ASSESSEE. THE ASSESSING OFFI CER, ACCORDINGLY, MADE ADDITION OF RS.2.10 CR IN THE HAN DS OF THE ASSESSEE COMPANY ON PROTECTIVE BASIS AND COMPLE TED THE ASSESSMENT VIDE ORDER DATED 16.03.2006. 11. THE ASSESSEE CHALLENGED THE RE-OPENING OF THE ASSESSMENT AS WELL AS ADDITION ON MERIT BEFORE LD. CIT(APPEALS). 12. THE LD. CIT(APPEALS) NOTED IN THE IMPUGNED ORDE R THAT ASSESSMENTS WERE FRAMED ON PROTECTIVE BASIS IN THE CASE OF ASSESSEE AND IT WAS INTIMATED DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THAT IN THE CASE OF M/S TARANJIT SINGH & CO., CHANDIGARH, SUBSTANTIVE ADDIT ION IS MADE, THE ASSESSMENTS WERE QUASHED BY THE LD. CIT(APPEALS) VIDE ORDER DATED 30.03.2006 ON THE TECHNICAL ISSUE THAT THERE IS NO MATERIAL FOUND DUR ING 11 THE COURSE OF SEARCH, THEREFORE, CASE OF THE ASSESS EE WOULD NOT FALL WITHIN THE SCOPE OF CHAPTER XIV-B OF THE INCOME TAX ACT. IT WAS ALSO LEARNT THAT ITAT HAS A LSO DISMISSED THE DEPARTMENTAL APPEAL ON THE SAME REASONING THAT SINCE NO MATERIAL WAS FOUND DURING T HE COURSE OF SEARCH, THEREFORE, NO SUCH ADDITION COULD BE MADE IN THE BLOCK ASSESSMENTS. 13. THE LD. CIT(APPEALS), ACCORDINGLY, ISSUED A LET TER TO THE ASSESSEE INFORMING THAT SINCE DEPARTMENT HAS LOST THE CASE IN THE CASE OF M/S TARANJIT SINGH & CO., CHANDIGARH, WHEREIN, SUBSTANTIVE ADDITION WAS MADE THEREFORE, ASSESSEE WAS FURTHER INFORMED THAT NOW I T IS TO BE CONSIDERED WHETHER SUBSTANTIVE ADDITION SHALL HAVE TO BE MADE IN THE CASE OF THE PRESENT ASSESSEE . THE CONTENTS OF THE LETTER ARE REPRODUCED IN THE APPELLATE ORDER. THE ASSESSEE OBJECTED TO THE PROP OSAL OF THE LD. CIT(APPEALS) BY REITERATING THE SAME FAC TS AND IT WAS INFORMED THAT THE AMOUNTS WERE TRANSFERRED THROUGH CHEQUES FROM THE THREE BROKERS IN THE BANK ACCOUNT OF THE ASSESSEE AND BROKERS HAVE NOT DENIED CONDUCTING THE DEALINGS ON BEHALF OF THE ASSESSEE. THEY HAVE CONFIRMED THAT SHARES HAVE BEEN SOLD ON BEHALF OF THE ASSESSEE. THE BUSINESS PRACTICE WAS ALSO ACCEP TED BY THEM. THERE WAS NO EVIDENCE ON RECORD TO HOLD T HAT ASSESSEE HAS INTRODUCED UNACCOUNTED MONEY IN THE GUISE OF SALE OF SHARES. THERE IS NO EVIDENCE ON R ECORD TO PROVE THAT ASSESSEE INTRODUCED OWN MONEY. EVEN 12 THERE IS NO CIRCUMSTANTIAL OR DOCUMENTARY EVIDENCE ON RECORD TO MAKE ADDITION AGAINST THE ASSESSEE. 13(I) THE LD. CIT(APPEALS), HOWEVER, DID NOT ACCEP T CONTENTION OF THE ASSESSEE AND NOTED THAT THE SHARE S HELD BY ASSESSEE WERE HAVING NO WORTH AND THESE HAV E BEEN SOLD AT MORE HEFTY PRICE AND THESE WERE ACCOMMODATION ENTRIES ONLY. THE LD. CIT(APPEALS) REFERRED TO THE STATEMENT OF DIRECTOR OF THE ASSESS EE COMPANY AND THE BROKERS RECORDED BY THE DDIT (INVESTIGATION) AND THE ASSESSING OFFICER AND CONSI DERED THE ISSUE IN THE LIGHT OF HUMAN PROBABILITY, CONFIR MED THE ADDITION ON SUBSTANTIVE BASIS. THE LD. CIT(APP EALS) ALSO CONFIRMED THE RE-OPENING OF THE ASSESSMENT IN THE LIGHT OF JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PVT. LTD. 291 ITR 500. THE LD. CIT(APPEALS), ACCORDINGLY, DISMISSED THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 1999-2000. FOLLOWING THE FINDINGS IN ASSESSMENT YEAR 1999-2000 , THE LD. CIT(APPEALS) ALSO DISMISSED THE APPEAL OF T HE ASSESSEE FOR ASSESSMENT YEAR 2000-01. 14. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO REASONS RECORD ED FOR RE-OPENING OF THE ASSESSMENT UNDER SECTION 148 OF T HE INCOME TAX ACT, COPY OF WHICH IS FILED AT PB-40 DAT ED 30.03.2004 AND SUBMITTED THAT THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAD ONLY GIVEN ENTRY TO 13 M/S TARANJIT SINGH & CO., CHANDIGARH, THEREFORE, TH ERE IS NO QUESTION OF ASSESSING OFFICER HAVING ANY REAS ON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. HE HAS SUBMITTED THAT IN ASSESSMENT YE AR 2000-01, THE RE-ASSESSMENT ORDER WAS PASSED ON 30.03.2005 UNDER SECTION 143(3) THEREFORE, IT IS WR ONGLY MENTIONED IN THE IMPUGNED ORDERS THAT SUBSTANTIVE ADDITION IS MADE IN THE CASE OF M/S TARANJIT SINGH & CO., CHANDIGARH BECAUSE BLOCK ASSESSMENT ORDER IN T HE CASE OF SHRI TARANJIT SINGH THROUGH LEGAL HEIR SMT. MOHINDER KAUR WAS PASSED UNDER SECTION 158BC ON 22.08.2005. THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT IN BOTH THE ASSESSMENT YEARS UNDER APPEAL, ADDITIONS HAVE BEEN MADE MERELY ON PROTECTIVE BASIS . HE HAS ALSO REFERRED TO THE FINDINGS OF THE ASSESSI NG OFFICER IN THE CASE OF SMT. MOHINDER KAUR, LEGAL HE IR OF LATE SHRI TARANJIT SINGH UNDER SECTION 158BC DATED 22.08.2005, COPY OF WHICH IS FILED AT PB-91 OF THE PAPER BOOK IN WHICH THE ASSESSING OFFICER, CONSIDERING TH E IDENTICAL FACTS HAS OBSERVED THAT TRANSACTIONS OF SALE OF SHARES ARE SHAM TRANSACTIONS. THE ALLEGED SALE OF SHARES THROUGH BROKERS AT LUDHIANA STOCK EXCHANGE B Y ASSESSEE WAS NOT GENUINE. THE AMOUNT WAS DEPOSITED IN THE BANK ACCOUNT OF THE BROKERS IN CASH WAS THEREAF TER TRANSFERRED TO THE BANK ACCOUNT OF THE ASSESSEE FRO M WHERE DRAFTS IN FAVOUR OF M/S TARANJIT SINGH & CO., CHANDIGARH WERE ISSUED BELONG TO SHRI TARANJIT SING H. SHRI TARANJIT SINGH ROUTED HIS UNDISCLOSED FUNDS IN THE 14 NAME OF ASSESSEE COMPANY IN THE BUSINESS OF M/S TARANJIT SINGH & CO., CHANDIGARH AND ULTIMATELY INVESTED IN HIS PERSONAL BUSINESS AND FOR ACQUIRING VARIOUS ASSETS IN HIS NAME AND IN THE NAME OF HIS W IFE. THE AMOUNT SO INTRODUCED IS ASSESSABLE IN THE HANDS OF LATE SHRI TARANJIT SINGH AS HIS UNDISCLOSED INCOME . 14(I) THE LD. COUNSEL FOR THE ASSESSEE ALSO REFERRE D TO INTERNAL PAGE OF BLOCK ASSESSMENT IN THE CASE OF SM T. MOHINDER KAUR, LEGAL HEIR OF SHRI TARANJIT SINGH IN WHICH, ADDITION OF RS. 2,50,00,000/- HAVE BEEN MADE ON ACCOUNT OF ENTRY FROM THE ASSESSEE COMPANY IN PUNJA B NATIONAL BANK. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT IT IS THE CLEAR STAND OF THE REVENUE DEPARTMENT THAT AMOUNT IN QUESTION I.E. RS. 2.50 CR IN BOTH THE ASSESSMENT YEARS BELONG TO SHRI TARANJIT SINGH, THEREFORE, SUBSTANTIVE ADDITION WAS MADE LATER ON IN THE CASE OF SHRI TARANJIT SINGH IN THE BLOCK ASSESSMENT ORDER. THUS, THERE WAS NO REASON FOR THE ASSESSING OFFICER TO BELIEVE THAT INCOME CHARGE ABLE TO TAX HAS ESCAPED ASSESSMENT IN THE CASE OF THE PR ESENT ASSESSEE COMPANY. PB-121 IS THE ORDER OF THE LD. CIT(APPEALS)-XVIII DATED 12.09.2005 IN THE CASE OF SMT. MOHINDER KAUR, LEGAL HEIR OF SHRI TARANJIT SINGH IN WHICH THE ADDITION OF RS. 2.50 CR HAVE BEEN DELETED BY HIM HOLDING THAT SINCE THE DEPOSITS FROM THE ASSESS EE COMPANY HAVE BEEN DISCLOSED IN THE BOOKS OF ACCOUNT THEREFORE, IT COULD NOT BE TREATED AS UNDISCLOSED I NCOME 15 WITHIN THE MEANING OF CHAPTER XIV-B OF THE INCOME T AX ACT I.E. ASSESSMENT FOR BLOCK PERIOD. THE LD. COUN SEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO CASH DEPOS ITED IN THE BANK ACCOUNT OF THE ASSESSEE COMPANY. 14(II) THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGES 2 TO 5 OF THE ASSESSMENT ORDER TO SHOW THAT THE ASSESSING OFFICER HAS MENTIONED THAT ASSESSEE COMPA NY IS INVESTMENT COMPANY AND DURING ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE COMPANY HAS ADVANCED RS. 2.10 CR THROUGH DEMAND DRAFTS TO M/S TARANJIT SINGH & CO., CHANDIGARH. THE SOURCE OF THE DEPOSIT S ARE ON ACCOUNT OF CREDIT ENTRIES APPEARING IN THE B ANK ACCOUNT OF THE ASSESSEE ON VARIOUS DATES IN WHICH AMOUNTS HAVE BEEN RECEIVED THROUGH CHEQUES THROUGH CLEARING THROUGH VARIOUS BANK ACCOUNTS. HE HAS, THEREFORE, SUBMITTED THAT IN THE BANK ACCOUNT OF TH E ASSESSEE, THE SALE CONSIDERATION OF THE SHARES/INVESTMENTS HAVE BEEN RECEIVED THROUGH BANKI NG CHANNEL AND THE SOURCE OF THE DEPOSIT WAS ON ACCOUN T OF SALE OF SHARES THROUGH THREE BROKERS OF LUDHIANA ST OCK EXCHANGE. ALL THE BROKERS IN THEIR STATEMENTS BEFO RE DDIT, INVESTIGATION WING AND ASSESSING OFFICER HAVE CONFIRMED THE TRANSACTIONS WITH THE ASSESSEE AND PA YING THE SALE CONSIDERATION OF THE SHARES THROUGH BANKIN G CHANNEL AND ALSO PROVED THE GENUINENESS OF THE TRANSACTIONS. HE HAS SUBMITTED THAT THE STATEMENTS OF THE BROKERS RECORDED BY DDIT (INVESTIGATION) AND 16 ASSESSING OFFICER HAVE NOT BEEN CONFRONTED TO THE ASSESSEE COMPANY AND NO RIGHT TO CROSS EXAMINE HAVE BEEN GIVEN. THEREFORE, EVEN THOUGH THESE STATEMENT S WERE IN FAVOUR OF THE ASSESSEE, BUT THESE CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE COMPANY AND RELIED UPON DECISION OF SUPREME COURT IN THE CASE OF KISHA N CHAND CHELA RAM VS CIT 125 ITR 713. HE HAS SUBMITTED THAT SINCE BROKERS HAVE CONFIRMED GIVING SALE CONSIDERATION THROUGH BANKING CHANNEL AND SUBSTANTI VE ADDITION HAVE BEEN MADE IN THE CASE OF M/S TARANJIT SINGH & CO., CHANDIGARH, THEREFORE, THERE WAS NO RE ASON FOR THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT IN THE CASE OF ASSESSEE AND THERE WAS ALSO NO JUSTIFIC ATION TO MAKE ADDITION IN THE HANDS OF THE ASSESSEE. 14(III) HE HAS SUBMITTED THAT LD. CIT(APPEALS), A FTER DELETION OF THE ADDITION IN THE CASE OF SMT.MOHINDE R KAUR, LEGAL HEIR OF SHRI TARANJIT SINGH, ISSUED A L ETTER DATED 21.11.2007 FOR MAKING SUBSTANTIVE ADDITION IN THE HANDS OF THE ASSESSEE WHICH WAS WITHOUT ANY BASIS A ND WITHOUT ANY JUSTIFICATION. THE ASSESSEE FILED A RE PLY BEFORE LD. CIT(APPEALS) EXPLAINING THAT THERE WAS N O REASON TO MAKE SUBSTANTIVE ADDITION OR TO CONFIRM T HE ADDITION IN THE CASE OF THE ASSESSEE. HE HAS SUBMI TTED THAT IT WOULD SHOW THAT EVEN THE LD. CIT(APPEALS) DOUBTED THE ADDITION IN THE CASE OF SHRI TARANJIT S INGH. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS MERELY A BORROWED SATISFACTION OF THE ASSESSING OFF ICER 17 ON THE BASIS OF LETTER RECEIVED FROM DDIT (INVESTIG ATION) AND ASSESSING OFFICER DID NOT EXAMINE THE INFORMATI ON RECEIVED FROM DDIT (INVESTIGATION) INDEPENDENTLY AN D IT WAS CLEARLY AGAINST THE STAND OF THE DEPARTMENT TAK EN IN THE CASE OF SHRI TARANJIT SINGH. HE HAS RELIED UPO N FOLLOWING DECISIONS : 1. DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS ANUPAM KAPOOR 299 ITR 179, IN WHICH IT WAS HELD AS UNDER : HELD, DISMISSING THE APPEAL, THAT THERE WAS NO MATE RIAL BEFORE THE ASSESSING OFFICER, WHICH COULD HAVE LED TO A CONCLUSION THAT THE TRANSACTION WAS A DEVICE TO CAMOUFLAGE ACTIVITIES TO DEFRAUD THE REVENUE. NO SU CH PRESUMPTION COULD BE DRAWN BY THE ASSESSING OFFICER MERELY ON SURMISES AND CONJECTURES. THE TRIBUNAL TO OK INTO CONSIDERATION THAT IT WAS ONLY ON THE BASIS OF A PRESUMPTION THAT THE ASSESSING OFFICER CONCLUDED TH AT THE ASSESSEE HAD PAID CASH AND PURCHASED THE CHEQUE. IN THE ABSENCE OF ANY COGENT MATERIAL IN THIS REGARD, HAVI NG BEEN PLACED ON RECORD, THE ASSESSING OFFICER COULD NOT HAVE REOPENED THE ASSESSMENT. THE ASSESSEE HAD MADE AN INVESTMENT IN A COMPANY, EVIDENCE WHEREOF WAS WITH THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICER COULD NOT HAVE ADDED THE INCOME, WHICH WAS RIGHTLY DELETE D BY THE COMMISSIONER (APPEALS) AS WELI AS THE TRIBUNAL . 2. DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS PARAMJIT KAUR 311 ITR 38, IN WHICH IT WAS HELD AS UNDER HELD, THAT THE ASSESSING OFFICER HAD NOT EXAMINED THE INFORMATION RECEIVED FROM THE SURVEY CIRCLE BEFORE 18 RECORDING HIS OWN SATISFACTION OF ESCAPED INCOME AND INITIATING REASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAD THUS ACTED ONLY ON THE BASIS OF SUSPICI ON AND IT COULD NOT BE SAID THAT IT WAS BASED ON BELIEF TH AT THE INCOME CHARGEABLE TO TAX HAD ESCAPED INCOME. THE ASSESSING OFFICER HAD TO ACT ON THE BASIS OF 'REASO NS TO BELIEVE' AND NOT ON 'REASONS TO SUSPECT'. THE TRIBU NAL RIGHTLY CONCLUDED THAT THE ASSESSING OFFICER HAD FA ILED TO INCORPORATE THE MATERIAL AND HIS SATISFACTION FOR REOPENING THE ASSESSMENT AND THEREFORE THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT FOR REASSESSMEN T PROCEEDINGS WAS NOT VALID. 3. DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS SFIL STOCK BROKING LTD. 325 ITR 285 (DEL) IN WHICH IT WAS HELD AS UNDER : HELD, DISMISSING THE APPEAL, THAT THE FIRST S ENTENCE OF THE REASONS RECORDED BY THE ASSESSING OFFICER WAS M ERE INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATION). THE SECOND SENTENCE WAS A DIRECTION GIVEN BY THE SAME DEPUTY DIRECTOR OF INCO ME- TAX (INVESTIGATION) TO ISSUE A NOTICE UNDER SECTION 148 AND THE THIRD SENTENCE AGAIN COMPRISED A DIRECTION GIVEN BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX TO INI TIATE PROCEEDINGS UNDER SECTION 148 IN RESPECT OF CASES PERTAINING TO THE RELEVANT WARD. THE ASSESSING OFFI CER REFERRED TO THE INFORMATION AND THE TWO DIRECTIONS AS REASONS ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE UNDER SECTION 148 . THESE COULD NOT BE THE R EASONS FOR PROCEEDING UNDER SECTION 147/148 OF THE ACT. AS THE FIRST PART WAS ONLY AN INFORMATION AND THE SECOND A ND THE THIRD PARTS OF THE REASONS WERE MERE DIRECTIONS, IT WAS NOT AT ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF THAT, ON THE BASI S OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPE D 19 ASSESSMENT. THERE WAS NO SUBSTANTIAL QUESTION OF LA W FOR CONSIDERATION. 4. DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF SARTHAK SECURITIES CO. P. LTD. V ITO 329 ITR 110 (DEL) IN WHICH IT WAS HELD AS UNDER : HELD, ALLOWING THE PETITION, THAT THE FORMATION OF BELIEF WAS A CONDITION PRECEDENT AS REGARDS THE ESCAPEMENT OF THE TAX PERTAINING TO THE ASSESSMENT YEAR BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS REQUIR ED TO FORM AN OPINION BEFORE HE PROCEEDED TO ISSUE A NOTI CE. THE VALIDITY OF REASONS, WHICH WERE SUPPOSED TO SUS TAIN THE FORMATION OF AN OPINION, WAS CHALLENGEABLE. THE REASONS TO BELIEVE WERE REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER. ONCE THE INGREDIENTS OF SECT/ON 147 WERE FULFILLED, THE ASSESSING OFFICER WAS COMPETENT IN LAW TO INITIATE THE PROCEEDINGS UNDER SECTION 147 . THE ASSESSING OFFICER WAS AWARE OF THE EXISTENCE OF THE FOUR COMPANIES WITH WHOM THE ASSESSEE HAD ENTERED INTO TRANSACTION. BOTH THE ORDERS SHOWED CHAT THE ASSESS ING OFFICER WAS MADE AWARE OF THE SITUATION BY THE INVESTIGATION WING AND THERE WAS NO MENTION THAT TH ESE COMPANIES WERE FICTITIOUS COMPANIES. NEITHER THE RE ASONS IN THE INITIAL NOTICE NOR THE COMMUNICATION PROVIDI NG REASONS REMOTELY INDICATED INDEPENDENT APPLICATION OF MIND. THOUGH CONCLUSIVE PROOF WAS NOT GERMANE AT TH IS STAGE THE FORMATION OF BELIEF MUST BE ON THE BASE O R FOUNDATION OR PLATFORM OF PRUDENCE WHICH A REASONAB LE PERSON WAS REQUIRED TO APPLY. FROM THE PERUSAL OF T HE REASONS RECORDED AND THE ORDER OF REJECTION OF OBJECTIONS, THE NAMES OF THE COMPANIES WERE AVAILAB LE WITH THE AUTHORITY AND THEIR EXISTENCE WAS NOT DISP UTED. THE ASSESSES IN ITS OBJECTIONS HAD STATED THAT THE COMPANIES HAD BANK ACCOUNTS AND PAYMENTS WERE MADE TO THE ASSESSEE THROUGH BANKING CHANNEL. THE IDENTI TY OF THE COMPANIES WAS NOT DISPUTED. UNDER THESE 20 CIRCUMSTANCES, THE INITIATION OF PROCEEDINGS UNDER SECTION 147 AND ISSUANCE OF NOTICE UNDER SECTION 14 8 OF THE ACT WERE TO BE QUASHED. 15. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED THAT ITAT CHANDIGARH BENCH IN THE CASE OF SMT. MOHINDER KAUR, LEGAL HEIR OF SHRI TRANJIT SINGH VID E ORDER DATED 26.04.2012 QUASHED AND SET ASIDE THE BL OCK ASSESSMENT ORDER, COPY OF THE ORDER IS PLACED ON RE CORD. HE HAS SUBMITTED THAT THE INFORMATION RECEIVED FROM DDIT (INVESTIGATION) WAS, THEREFORE, NOT CORRECT AN D EVEN THE LD. CIT(APPEALS) DID NOT BELIEVE THE INFORMATIO N RECEIVED FROM DDIT (INVESTIGATION) ON MAKING SUBSTANTIVE ADDITION IN THE CASE OF THE ASSESSEE. HE HAS SUBMITTED THAT SINCE MERE PROTECTIVE ASSESSMENT HAV E BEEN MADE IN THE CASE OF THE ASSESSEE, THEREFORE, T HERE MAY NOT BE A REASON TO BELIEVE THAT INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT IN THE CASE OF THE ASSESSEE. HE HAS SUBMITTED THAT ON PROTECTIVE ADDI TION, RE-OPENING OF THE ASSESSMENT UNDER SECTION 148 IS B AD IN LAW. IN SUPPORT OF HIS CONTENTION, HE HAS RELIE D UPON FOLLOWING DECISIONS : 1. DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS SMT. SARASWATI DEVI 212 ITR 445 (RAJ) IN WHICH IT WAS HELD AS UNDER : THE ASSESSEE FILED A RETURN SHOWING AN INCOME OF RS. 5,995 FOR THE ASSESSMENT YEAR 1978-79. DURING THE COU RSE OF THE 21 ASSESSMENT PROCEEDINGS, IT WAS FOUND BY THE INCOME- TAX OFFICER THAT THE ASSESSEE DID NOT HAVE ANY CAPITAL TO START THE BUSINESS AND THE INVESTMENT WAS MADE BY HER MOTHER- IN-LAW AND IT WAS THE INCOME OF THE ASSESSEE'S HUSBAND. IN THESE CIRCUMSTANCES, A PROTECTIVE ASSESSMENT WAS MADE IN THE HANDS OF THE ASSESSEE AND UNEXPLAINED CASH CREDITS AND OT HER ITEMS OF RS. 13,080 WERE ADDED. THE TRIBUNAL HELD THAT NO AD DITION COULD BE MADE AND DIRECTED THE INCOME-TAX OFFICER TO MAKE THE SUBSTANTIVE ASSESSMENT ON THE ASSESSEE AND HER HUSB AND. ON A REFERENCE: HELD, THAT THE POSITION OF THE TWO PERSONS, NAM ELY, THE ASSESSEE AND HER HUSBAND, HAD TO BE TAKEN TOGETHER WITH REGARD TO THEIR FINAL LIABILITY AND THEN THE QUESTION OF A DDITIONS HAD TO BE CONSIDERED. THE TRIBUNAL WAS JUSTIFIED IN NOT UP HOLDING THE ADDITIONS WHICH WAS MADE ON A PROTECTIVE BASIS AND DIRECTING THE REVENUE NOW TO PROCEED WITH THE SUBSTANTIVE ASS ESSMENT (SEE P. 448E, F). 2. DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SMT. HEMLATA AGARWAL VS CIT 64 ITR 428 (ALL) IN WHICH IT WAS HELD AS UNDER : HELD, THE CONDITION PRECEDENT FOR THE ISSUE OF A NO TICE UNDER SECTION 34(L)(A) IS 'REASON TO BELIEVE, WHICH MEAN S, ANYTHING BUT REASON TO SUSPECT THAT INCOME HAD ESCAPED ASSESSMEN T. THERE MUST BE SOME MATERIAL ON THE RECORD FOR THE REASON ENTERTAINED BY THE INCOME-TAX OFFICER. WHEN THE TRIBUNAL ITSELF I S NOT ABLE TO MAKE UP ITS MIND, AND THE INCOME-TAX OFFICER ALSO N OT ABLE TO MAKE UP HIS MIND, IT IS IMPOSSIBLE TO SAY THAT THE INCOME-TAX OFFICER ENTERTAINED A REASONABLE BELIEF THAT SOME I NCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THE INCOME-TAX OFF ICER CANNOT BLOW HAD AND COLD IN THE SAME BREATH. THE NOTICE UN DER SECTION 34 ON THE ASSESSEE AND THE ASSESSMENT BASED ON THAT NO TICE WERE, THEREFORE, ILLEGAL. 4. DECISION OF HON'BLE GUJRAT HIGH COURT IN THE CASE OF SAGAR ENTERPRISES VS ASSTT. 22 COMMISSIONER 257 ITR 335 (GUJ) IN WHICH IT WAS HELD AS UNDER : HELD, THAT IT WAS APPARENT THAT THE FACT OF NON-FIL ING OF THE RETURN FOR THE ASSESSMENT YEAR 1991-92 HAD WEIGHED WITH THE RESPONDENT FOR ARRIVING AT THE SATISFACTION ABOUT T HE FAILURE ON THE PART OF THE ASSESSEE AND ESCAPEMENT OF ASSESSME NT OF INCOME. HOWEVER, THE MATERIAL ON RECORD SHOWED THAT THE RETURN HAD BEEN FILED. IN SUCH CIRCUMSTANCES, IT CO ULD NOT BE SAID WITH CERTAINTY AS TO WHICH FACT WOULD HAVE WEI GHED WITH THE OFFICER CONCERNED AND ONCE IT WAS SHOWN THAT AN IRRELEVANT FACT HAD BEEN TAKEN INTO CONSIDERATION, TO WHAT EXT ENT THE DECISION WAS VITIATED WOULD BE DIFFICULT TO SAY. MO REOVER THE INCOME-TAX OFFICER HAD STATED THAT THE PAYMENT WHIC H WAS STATED TO BE UNDISCLOSED INCOME RELEVANT FOR THE ASSESSMENT YEA R 1991- 92 COULD HAVE BEEN MADE DURING THE FINANCIAL YEAR 1990 -91 RELEVANT TO THE ASSESSMENT YEAR 1991-92 AND HENCE, 'TO COVER UP THAT PROBABILITY, PROTECTIVE ADDITION WAS MADE I N THE ASSESSMENT YEAR 1992-93' . THE FIRST APPELLATE AUTHORITY DECIDED THE APPEAL FOR THE ASSESSMENT YEAR 1992-93 ON JANUARY, 1996, AND THE REASONS HAD BEEN RECORDED THEREAFTER ON AUGUST 18, 1997. THE NOTICE OF REASSESSMENT WAS NOT VALID AND WAS LIABLE TO BE QUASHED. 5. DECISION OF ITAT BANGALORE BENCH IN THE CASE OF DCIT VS BULLION INVESTMENTS AND FINANCIAL SERVICES (P) LTD. 314 ITR 187 (AT) IN WHICH IT WAS HELD AS UNDER : HELD, DISMISSING THE APPEAL, (I) THAT THE ASSESSING OFFICER HAD TO FORM A BELIEF THAT INCOME HAD ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE-COMPANY. THERE WAS NO FURTHER MATERIAL TO COME TO THE CONCLUSION THAT SUCH INCOME WHICH HAD ESCAPED A SSESSMENT BELONGED TO THE ASSESSEE, SINCE IT HAD BEEN HELD TH AT SUCH INVESTMENT BELONGED TO THE MANAGING DIRECTOR OF THE ASSESSEE- COMPANY. THE COMMISSIONER (APPEALS) WAS JUSTIFIED I N CANCELLING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE-COMPANY . 23 (II) THAT THE BASIC REQUIREMENT FOR REOPENING THE A SSESSMENT WAS THAT THE ASSESSING OFFICER SHOULD HAVE REASON TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT REMAINED NOT SATISFIED IN THE CASE. THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN HOLDING THAT THE ASSESSMENT COULD NOT BE REOPENE D FOR MAKING PROTECTIVE ADDITION. 16. THE LD. COUNSEL FOR THE ASSESSEE, ON MERIT ALSO SUBMITTED THAT THERE WAS NO CASH CREDIT ENTERED INT O THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE SOL D THE SHARES THROUGH BROKERS AND BROKERS HAVE CONFIRMED S ALE OF THE SHARES/INVESTMENTS OF THE ASSESSEE AND GIVIN G SALE CONSIDERATION THROUGH BANKING CHANNELS. THE SOURCES HAVE BEEN ACCEPTED BY THE BROKERS ALONGWITH GENUINENESS OF THE TRANSACTION. THE SUBSTANTIVE ADDITION ON MERIT WAS MADE IN THE CASE OF LATE SHRI TARANJIT SINGH. THEREFORE, THERE WAS NO REASON TO M AKE SUBSTANTIVE ADDITION IN THE CASE OF THE ASSESSEE COMPANY. HE HAS SUBMITTED THAT ASSESSING OFFICER H AS WRONGLY RECORDED IN THE ASSESSMENT ORDER THAT LD. COUNSEL FOR THE ASSESSEE MADE THE STATEMENT THAT SUBSTANTIVE ADDITION MADE IN THE CASE OF SHRI TARAN JIT SINGH BECAUSE THE REASONS FOR RE-OPENING OF ASSESSM ENT WERE RECORDED EARLIER PRIOR TO THE BLOCK ASSESSMENT ORDER PASSED IN THE CASE OF LATE SHRI TARANJIT SING H. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMIT TED THAT THERE WAS NO JUSTIFICATION TO REOPEN THE ASSES SMENT IN THE CASE OF THE ASSESSEE UNDER SECTION 148 OF TH E ACT AND ALSO THERE WAS NO JUSTIFICATION TO MAKE THE ADD ITION ON MERITS. 24 16(I) ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. LD. DR SUBMITTED THAT ASSES SEE ENTERED INTO SHAM TRANSACTION ON ACCOUNT OF RECEIPT OF MONEY FROM THREE BROKERS, THEREFORE, SECTION 68 OF THE ACT WILL APPLY IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER HAS NOT RECORDED ANYWHERE ABOUT INVESTMENTS MADE IN THE CASE OF M/S TARANJIT SINGH & CO., CHANDIGARH. THE ITAT IN ONE OF THE CASE HAS DECIDED THE ISSUE AGAINST ONE OF THE PARTY SHRI S.K.SHARMA. IN THE REASONS, THE ASSESSING OFFICER WANTED TO VERIFY SOURCE OF THE DEPOSIT OF RS. 2.10 CR IN THE BANK ACCOUNT OF THE ASSESSEE. HE HAS SUBMITTED THAT ASSESSING OFFICER HAS REOPENED ASSESSMENT AFTE R CONSIDERING RELEVANT INFORMATION RECEIVED FROM ADIT (INVESTIGATION), STATEMENT OF SHRI BHARAT BHUSHAN G OYAL RECORDED BY DDIT (INVESTIGATION) AND STATEMENTS OF SHRI SHAGUN GARG AND SHRI HARIKISHAN PUNNI, BROKERS RECORDED BY THE DDIT (INVESTIGATION). THE ASSESSIN G OFFICER, THUS, FORMED HIS BELIEF BASED UPON THE EXAMINATION/ANALYSIS OF THE ABOVE INFORMATION PRESE NT BEFORE HIM. THE ASSESSING OFFICER, THEREFORE, APPL IED HIS MIND AND RIGHTLY REOPENED THE ASSESSMENT. 17. THE LD. DR SUBMITTED THAT THE DECISIONS CITED B Y THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE CASE. THE CASE WAS REOPENED IN THE CA SE OF THE ASSESSEE DURING PENDENCY OF ASSESSMENT PROCEEDI NGS IN THE CASE OF SHRI TARANJIT SINGH. THE REASONS RE CORDED 25 BY ASSESSING OFFICER WOULD NOT INDICATE IF THE SAME WERE RECORDED FOR MAKING PROTECTIVE ADDITION IN THE HAND S OF THE ASSESSEE. HE HAS RELIED UPON DECISION OF MADRA S HIGH COURT IN THE CASE OF STERLITE INDUSTRIES (INDIA) LTD. VS ACIT 302 ITR 275 IN WHICH IN HEAD NOTE, IT IS HE LD AS UNDER : RE-ASSESSMENT- NOTICE VALIDITY OF NOTICE INFORMATION FROM ENFORCEMENT DIRECTORATE SHOWING POSSIBLE INFLATION OF PURCHASES NOTICE VALID INCOME TAX ACT, 1961, SS. 147, 148. 17(I) DECISION OF DELHI HIGH COURT IN THE CASE OF A GR INVESTMENT LTD. V ADDL. CIT & ANOTHER 333 ITR 146, IN WHICH IN THE HEAD NOTE, IT WAS HELD AS UNDER : RE-ASSESSMENT WRIT INFORMATION RECEIVED FROM DIRECTORATE OF INVESTMENT THAT ASSESSEE BENEFICIARY OF BOGUS ACCOMMODATION ENTRIES ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME ESCAPED ASSESSMENT SUFFICIENCY OF REASON CANNOT BE CONSIDERED IN WRIT PETITION ASSESSEE TO PARTICIPATE IN RE-ASSESSMENT PROCEEDINGS AND TO SATISFY THAT NO ESCAPEMENT OF TAXABLE INCOME INCOME TAX ACT,1961 SS. 147, 148 CONSTITUTION OF INDIA, ART. 226. AND RELIED UPON ORDER OF THE ITAT JAIPUR BENCH IN T HE CASE OF SHALIMAR BUILDCON (P) LTD. VS ITO, WARD 2(2 ), JAIPUR 128 ITD 396 IN WHICH THE ASSESSEE WAS SHOWN TO HAVE CREDITED CERTAIN AMOUNTS TO HIS SHARE CAPITAL ACCOUNT AND SHARE PREMIUM ACCOUNT AND AS PER DOCUMENTS ATTACHED WITH THE RETURN, IT WAS NOT MADE CLEAR AS TO WHOM SHARES HAD BEEN ALLOTTED. IN SUCH CIRCUMSTANCES, REASONS RECORDED BY THE ASSESSING 26 OFFICER INITIATING RE-ASSESSMENT PROCEEDINGS COULD NOT BE TERMED AS IRRATIONAL. 18. THE LD. DR FURTHER SUBMITTED THAT IT IS SETTLED LAW THAT INCOME SHOULD BE ASSESSED IN THE CORRECT HANDS AND RELIED UPON DECISION OF HON'BLE SUPREME COURT I N THE CASE OF ITO VS CH. ATCHAIAH 218 ITR 239. THE L D. DR SUBMITTED THAT ASSESSING OFFICER RECEIVED INFORMATION FROM INVESTIGATION WING THAT ASSESSEE H AS RECEIVED ACCOMMODATION ENTRIES, THEREFORE, ON SUCH INFORMATION, RE-OPENING OF THE ASSESSMENT IS JUSTIF IED. THE LD. DR RELIED UPON FOLLOWING DECISIONS IN SUPPO RT OF THE ABOVE CONTENTION :- I) ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF ISHWAR DASS GARG VS ACIT ITA 977/2012 DATED 06.07.2015. II) JUDGEMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S PIYUSH INFRASTRUCTURE LTD. VS CIT, CWP NO. 5926/2014 DATED 28.03.2014. III) JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF RATTAN GUPTA VS UOI 234 ITR 220. IV) JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF ITO VS PURUSHOTTAM DAS BANGUR 90 TAXMAN 541. V) JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF RAJAT EXPORT IMPORT INDIA PVT. VS ITO 18 TAXMAN.COM 311. VI) JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS MULTIPLEX TRADING & INDUSTRIAL CO. LTD. 63 TAXMAN.COM 170. 27 19. WE HAVE CONSIDERED RIVAL SUBMISSIONS. THE VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS SHALL HAV E TO BE DETERMINED WITH REFERENCE TO THE REASONS RECORDE D FOR RE-OPENING OF THE ASSESSMENT. THE ASSESSING OFFICER RECORDED REASONS FOR RE-OPENING OF THE ASSESSMENT O N 30.03.2004 IN ASSESSMENT YEAR 1999-2000, COPY OF TH E SAME IS FILED AT PAGE 40 OF THE PAPER BOOK WHICH RE ADS AS UNDER : M/S SHUBH INTERNATIONA LTD. SCO 1104-05, SECTOR 22-B,CHANDIGARH ASSESSMENT YEAR 1999-2000 REASONS FOR ISSUE OF NOTICE UNDER SECTION 148 THE COMPANY M/S SHUBH INTERNATIONAL LTD., SCO 1104-05, SECTOR 22-B, CHANDIGARH FILED ITS RETURN OF INCOME ON 31.12,1999 DECLARING INCOME AT RS. 6,899/-. THE SAME WAS PROCE SSED U/S 143(1) ON 5.6.2000. AS PER IN FORMATION RECEIVED FROM ADDL . DIRECTOR OF INCOME TAX (INV.), PANCHKULA VIDE LETTER NO. ADDL.D IT (INV.)/CHD/2002-03/1777 DATED 4.9.2003, RECEIVED TH ROUGH THE ADDL. CLT RANGE-III OFFICE LETTER NO. 2416 DATED 9. 9.2003, THE COMPANY, SHUBH INTERNATIONAL LTD. , CHANDIGARH CLAI MED TO HAVE INVESTED RS. 2,10,000,00/- WITH M/S TARANJIT SINGH & CO. LIQUOR CONTRACTORS, CHANDIGARH DURING THE F:Y: 1998-99 REL EVANT TO THE A:Y: 1999-2000. TILL NOW THIS AMOUNT WAS NOT REPAID AS PER INQUIRIES CONDUCTED BY INVESTIGATION WING SHUBH INTERNATIONAL LTD. HAS GIVEN ONLY ENTRY AND ACTUALLY NO DEPOSITS/INVESTMENTS WER E MADE WITH M/S TARANJIT SINGH & CO., CHANDIGARH. SINCE TH E AMOUNT RS. 2,10,00,000/- WAS FIRST DEPOSITED IN THE ACCOUNT OF THE COMPANY MAINTAINED WITH BANK OF BARODA, PAKHOWAL ROAD, LUDH IANA, THE SOURCE OF THIS AMOUNT REMAINED UNEXPLAINED WITHIN T HE MEANING OF THE SECTION 148 OF THE IT ACT IN THE HANDS OF SHUBH INT ERNATIONAL LTD. I HAVE THEREFORE REASONS TO BELIEVE THAT INCOME TO TH E EXTENT OF RS. 2,10,00,000/- HAS ESCAPED ASSESSMENT. HENCE, A NOTI CE U/S 148 IS BEING ISSUED TO M/S SHUBH INTERNATIONAL LTD. FOR THE A:Y: 1999-2000 28 SD/- SEAL (AMRIK SINGH)30.3.04 INCOME TAX OFFICER,WARD 3(3) CHANDIGARH . 20. THE RECORD REVEALED THAT SEARCH & SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT W AS CONDUCTED AT THE RESIDENTIAL AND BUSINESS PREMISES OF SMT. MOHINDER KAUR AND OTHERS ON 23.05.2002. LATE SHRI TARANJIT SINGH WAS HUSBAND OF SMT. MOHINDER KAUR, HAD BEEN DOING LIQUOR BUSINESS AT CHANDIGARH AND PANCHKULA. AFTER HIS DEATH ON 19.04.2000, BUSINESS WAS TAKEN OVER AND CARRIED OUT BY HIS WIFE SMT. MOHINDER KAUR TILL THE DATE OF THE SEARCH. THE REAS ONS RECORDED WOULD, THEREFORE, CLEARLY SUGGEST THAT INFORMATION WAS RECEIVED FROM ADIT (INVESTIGATION) PANCHKULA VIDE LETTER DATED 04.09.2003, WAS IN REFERENCE TO THE SEARCH CONDUCTED IN THE CASES OF S MT. MOHINDER KAUR, LEGAL HEIR OF LATE SHRI TARANJIT SIN GH. 21 IN THE REASONS, THE ASSESSING OFFICER ON THE BAS IS OF INFORMATION RECEIVED FROM ADIT (INVESTIGATION) N OTED THAT ASSESSEE COMPANY HAS INVESTED RS. 2.10 CR WITH M/S TARANJIT SINGH & CO., CHANDIGARH, LIQUOR CONTRA CTOR IN ASSESSMENT YEAR UNDER APPEAL AND TILL DATE, THIS AMOUNT HAS NOT BEEN REPAID AS PER ENQUIRIES CONDUCT ED BY INVESTIGATION WING. IT IS ALSO NOTED IN THE REA SONS FOR RE-OPENING OF THE ASSESSMENT THAT ASSESSEE HAD GIVEN ONLY ENTRY AND ACTUALLY NO DEPOSITS/INVESTMEN TS 29 WERE MADE WITH M/S TARANJIT SINGH & CO., CHANDIGARH . THIS INFORMATION SUPPLIED BY THE INVESTIGATION WING WOULD REVEAL THAT ACTUALLY NO INVESTMENTS HAVE BEEN MADE BY ASSESSEE COMPANY WITH M/S TARANJIT SINGH & CO., CHANDIGARH. 22 THE ASSESSING OFFICER, IN THE BLOCK ASSESSMENT UNDER SECTION 158BC OF THE ACT IN THE CASE OF SMT. MOHINDER KAUR, WIFE OF LATE SHRI TARANJIT SINGH DAT ED 22.08.2005 OBSERVED THAT AFTER DETAILED ENQUIRIES A ND ANALYSIS OF THE STATEMENTS OF DIRECTORS ON RECORD, IT EMERGED THAT TRANSACTIONS OF SALE OF SHARES ARE SHA M TRANSACTIONS AND SALE TRANSACTION BY ASSESSEE THROU GH THE BROKER WAS NOT GENUINE. THE AMOUNT WAS DEPOSITE D IN THE BANK ACCOUNT OF THE BROKER IN CASH, THEREAFT ER TRANSFERRED TO BANK ACCOUNT OF THE ASSESSEE COMPANY FROM WHERE DRAFTS IN FAVOUR OF M/S TARANJIT SINGH & CO., CHANDIGARH WERE ISSUED BELONG TO SHRI TARANJIT SING H. IT IS ALSO OBSERVED THAT SHRI TARANJIT SINGH ROUTED HIS UNDISCLOSED FUNDS IN THE NAME OF ASSESSEE COMPANY I N THE BUSINESS OF M/S TARANJIT SINGH & CO., CHANDIGAR H AND ULTIMATELY INVESTED IN HIS PERSONAL BUSINESS AN D FOR ACQUIRING VARIOUS ASSETS IN HIS NAME AND IN THE NAM E OF HIS WIFE. THE AMOUNT SO INVESTED IS ASSESSABLE IN THE HANDS OF LATE SHRI TARANJIT SINGH AS HIS UNDISCLOSE D INCOME. THE TOTAL AMOUNT INVOLVED IN BOTH ASSESSME NT YEARS UNDER APPEAL IN A SUM OF RS. 2.50 CR, WAS ASSESSED AS UNDISCLOSED INCOME IN THE HANDS OF LATE 30 SHRI TARANJIT SINGH, ON SUBSTANTIVE BASIS. IT WOUL D, THEREFORE, MAKE IT VERY CLEAR THAT ON THE BASIS OF INVESTIGATION CONDUCTED AFTER SEARCH IN THE CASE OF SMT. MOHINDER KAUR, LEGAL HEIR OF LATE SHRI TARANJIT SIN GH, IT CAME ON THE RECORD OF THE REVENUE DEPARTMENT THAT T HE ENTIRE DEPOSIT OF RS. 2.50 CR WAS THE MONEY OF SHRI TARANJIT SINGH FROM HIS UNDISCLOSED FUNDS WHICH WAS ROUTED THROUGH THE BROKERS INTO THE BANK ACCOUNT OF THE ASSESSEE COMPANY AND THEN TRANSFERRED TO M/S TARANJ IT SINGH & CO., CHANDIGARH. THIS WAS THE SOLE REASON FOR INITIATING THE RE-ASSESSMENT PROCEEDINGS AGAINST TH E ASSESSEE. THEREFORE, WHERE IS QUESTION OF HOLDING THAT ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN THE HAN DS OF THE ASSESSEE COMPANY. THE ASSESSING OFFICER ALS O DID NOT EXAMINE THIS INFORMATION RECEIVED FROM ADIT (INVESTIGATION) AND WITHOUT APPLYING HIS MIND ACCEP TED THE SAME TO BE CORRECT. IN THE ASSESSMENT ORDER, ASSESSING OFFICER HAS REFERRED TO STATEMENTS RECORD ED BY DDIT (INVESTIGATION) CHANDIGARH OF SHRI BHARAT BHUS HAN GOYAL, DIRECTOR OF THE ASSESSEE COMPANY IN WHICH HE HAS BRIEFLY EXPLAINED THAT SINCE INCORPORATION OF THE ASSESSEE COMPANY, THERE WERE NO MANUFACTURING ACTIVITIES. THEREFORE, ASSESSEE COMPANY STARTED MA KING INTER-CORPORATE INVESTMENTS. LIST OF MANY INVESTME NTS WAS PRODUCED AND FILED. 31 23. SHRI TARANJIT SINGH, WHO WAS FRIEND OF THE DIRECTOR, WANTED TO CONTROL THE ASSESSEE COMPANY BU T THE FORMALITIES COULD NOT BE COMPLETED BUT ACTUALLY HE STARTED CONTROLLING THE CO, HE SOLD/LIQUIDATED THE INVESTMENTS OF COMPANY. ORIGINAL CERTIFICATES AND TRANSFER DEEDS WERE GIVEN TO HIM. BANK ACCOUNT OPE NED AND OPERATED IN HIS CONSULTATION. SHRI TARANJIT SIN GH, BY THAT TIME EXPIRED. SINCE SHRI TARANJIT SINGH WA NTED TO TAKE OVER CONTROL OF THE ASSESSEE COMPANY, THERE FORE, HE SOLD/LIQUIDATE THE SHARES OF THE ASSESSEE COMPAN Y AND FOR THAT PURPOSE, HE WANTED TO MAKE HIM AS A PARTNER IN HIS LIQUOR BUSINESS. THE BOARD OF DIREC TORS OF THE ASSESSEE COMPANY PASSED A RESOLUTION FOR SEL LING THE INVESTMENTS. THE INVESTMENTS WERE TO BE SOLD THROUGH SHRI TARANJIT SINGH. HE HAS CONFORMED IN H IS STATEMENT THAT INVESTMENT OF RS. 2.10 CR WAS INITIA LLY MADE IN MARCH, 1999 AND RS. 40 LACS WAS INVESTED IN APRIL, 1999. THE ASSESSING OFFICER, HOWEVER, TOOK IT ADVERSELY AGAINST THE ASSESSEE COMPANY. THE SOURCE OF THE DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE WE RE FROM THE THREE BROKERS THROUGH THE BANKING CHANNEL AND ALL THE BROKERS HAVE CONFIRMED SELLING INVESTMENTS OF THE ASSESSEE COMPANY THROUGH THEM AND PAYMENTS MADE BY THEM THROUGH BANKING CHANNEL. THE ASSESSING OFFICER DID NOT BELIEVE THEIR STATEMENT BECAUSE THE BROKERS HAVE NOT MENTIONED THE LEDGER FOLIO NUMBER/DISTINCT NUMBER AND NAME OF THE PURCHASER ET C. 32 IN THE RECORD. IT MAY BE NOTED THAT IN LEDGER, GEN ERALLY NO DETAILS OF SHARES ARE MENTIONED. 23(I) THE ASSESSING OFFICER ALSO NOTED THAT ASSESSE E HAS FAILED TO SUPPLY COMPLETE ADDRESS OF THE COMPANIES, THE SHARES OF WHICH WERE SOLD THROUGH THREE BROKERS. T HE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE RECE IVED CHEQUES FROM THESE THREE BROKERS IN LIEU OF SALE OF INVESTMENTS BY THE DIRECTORS OF THE ASSESSEE IN CONNIVANCE WITH SHRI TARANJIT SINGH, THEREFORE, THE WHOLE COMPLEXION OF THE FINDINGS OF THE ASSESSING OFFICER WOULD REVEAL THAT EVERYTHING WAS DONE BY SH RI TARNJIT SINGH IN ORDER TO CONTROL THE BUSINESS AFFA IRS OF THE ASSESSEE COMPANY AND EVEN THE SHARES/INVESTMENT S OF THE ASSESSEE COMPANY WERE SOLD BY THE THREE BROK ERS THROUGH SHRI TARANJIT SINGH. IN THIS WAY, THE REVE NUE DEPARTMENT HAD TAKEN A STAND THAT THE ENTIRE AMOUNT SHALL HAVE TO BE ADDED ON SUBSTANTIAL BASIS IN THE HANDS OF SHRI TARANJIT SINGH WHICH, IN-FACT WAS ALSO DONE IN THE CASE OF SHRI TARANJIT SINGH THROUGH THE LEGAL H EIR IN BLOCK ASSESSMENT. THE ASSESSING OFFICER, THEREFORE , ON THE BASIS OF THE SAME, MADE THE PROTECTIVE ASSESSME NT IN THE CASE OF THE PRESENT ASSESSEE COMPANY. THE ASSESSING OFFICER ALSO NOTED IN THE ASSESSMENT ORDE R THAT PROTECTIVE ASSESSMENT IS MADE BECAUSE LD. COUN SEL FOR THE ASSESSEE INTIMATED HIM THAT SUBSTANTIVE ADD ITION IS MADE IN THE CASE OF M/S TARANJIT SINGH & CO., CHANDIGARH WHICH FACT IS INCORRECT BECAUSE THE ORDE R FOR 33 ASSESSMENT YEAR 2000-01 WAS PASSED EARLIER ON 30.03.2005 AND BLOCK ASSESSMENT ORDER IN THE CASE O F SMT. MOHINDER KAUR WAS PASSED ON 22.08.2005. THESE FACTS WOULD CLEARLY REVEAL THAT ASSESSING OFFICER D ID NOT APPLY MIND TO THE INFORMATION RECEIVED FROM THE ADI T (INVESTIGATION), PANCHKULA AND DID NOT EXAMINE ANY INFORMATION ON THE MATTER IN ISSUE. HE WAS HAVING NO TANGIBLE MATERIAL WITH HIM TO SHOW THAT THERE WAS A NY REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THER E WERE NO REFERENCE TO ANY DOCUMENT OR MATERIAL EXCEP T THE INFORMATION RECEIVED FROM ADIT (INVESTIGATION), PANCHKULA WHICH COULD NOT BE RECORDED AS A MATERIAL OR EVIDENCE THAT PRIMA-FACIE SHOWED OR ESTABLISHED NEX US OR LINK WHICH DISCLOSED ESCAPEMENT OF INCOME. THE INFORMATION RECEIVED FROM ADIT (INVESTIGATION) WAS NOT A POINTER AND DID NOT INDICATE ESCAPEMENT OF INCOME I N THE CASE OF THE ASSESSEE. 24. HON'BLE GUJRAT HIGH COURT IN THE CASE OF INDUCTOTHERM (INDIA) P. LTD. V M. GOPALAN, DCIT, 35 6 ITR 481 HELD AS UNDER : THE POWER TO REOPEN AN ASSESSMENT IS AVAILABLE EITH ER IN A CASE WHERE A RETURN HAS BEEN ACCEPTED UNDER SECTION 143(1) OF THE INCOME TAX ACT,1961, OR A SCRUTINY ASSESSMENT HAS BEEN FRAMED UNDER SECTION 143(3) OF THE ACT. A COMMON REQUIREMENT IN BOTH CA SES IS THAT THE ASSESSING OFFICER SHOULD HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED 34 ASSESSMENT. THERE SHOULD BE TANGIBLE MATERIAL TO CO ME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOM E FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. IT WAS ALSO NOTED, (II) THAT IN TWO OUT OF THE FO UR REASONS RECORDED BY THE ASSESSING OFFICER FOR RE-OP ENING THE ASSESSMENT, HE STATED THAT HE NEEDED TO VERIFY THE CLAIMS TO BAD DEBTS AND THE ADMISSIBILITY OF THE BA D DEBTS WRITTEN OFF. FOR MERE VERIFICATION OF THE CL AIM, POWER FOR RE-OPENING OF THE ASSESSMENT COULD NOT BE EXERCISED. THE ASSESSING OFFICER IN THE GUISE OF P OWER TO REOPEN AN ASSESSMENT, CANNOT SEEK TO UNDERTAKE A FISHING OR ROVING INQUIRY AND SEEK TO VERIFY THE CL AIMS AS IF IT WERE A SCRUTINY ASSESSMENT. 24(I) HON'BLE DELHI HIGH COURT IN THE CASE OF SIGNA TURE HOTELS P. LTD. VS ITO & ANOTHER 338 ITR 51 HELD AS UNDER : HELD, ALLOWING THE PETITION THAT THE RE-ASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMAT ION RECEIVED FROM THE DIRECTOR OF INCOME-TAX (INVESTIGA TION THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS. 5 LAKHS DURING FINANCIAL YEAR 2002-03 AS STATED IN THE ANNEXURE. ACCORDING TO THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIREMENTS OF SECTION 147 OF THE ACT. THERE WAS N O REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DISCLOSED ESCAPEMEN T OF INCOME. THE ANNEXURE WAS NOT A POINTER AND DID N OT INDICATE ESCAPEMENT OF INCOME. FURTHER, THE ASSESS ING 35 OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATI ON AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATI ON. THERE WAS NO DISPUTE THAT THE COMPANY, S, HAD A PAI D- UP CAPITAL OF RS. 90 LACS AND WAS INCORPORATED ON JANUARY,4, 1989, AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER,2001. THUS, IT COULD N OT BE HELD TO BE A FICTITIOUS PERSON. THE RE-ASSESSME NT PROCEEDINGS WERE NOT VALID AND WERE LIABLE TO BE QUASHED. 24(III) HON'BLE BOMBAY HIGH COURT IN THE CASE OF CI T VS SMT. MANIBEN VALJI SHAH 283 ITR 453 HELD AS UNDE R : THE ASSESSEE PURCHASED A FLAT IN THE ACCOUNTING YEA R RELEVANT TO THE ASSESSMENT YEAR 1988-89 FOR RS. 2,5 0,000 AND FILED A RETURN BUT NO REGULAR ASSESSMENT ORDER WAS PASSED. A NOTICE WAS ISSUED TO THE ASSESSEE ON OCTO BER 10,1991, UNDER SECTION 148 ON THE GROUND THAT DETAI LS REGARDING THE SOURCE OF FUNDS FOR THE PURCHASE HAD NOT BEEN FURNISHED. THE TRIBUNAL HELD THAT NOTICE WAS N OT VALID. ON APPEAL TO THE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT A BARE PERUSAL OF THE NOTICE DATED OCTOBER 10, 1991, CLEARLY INDICATED TH AT THE OFFICER WANTED TO KNOW THE DETAILS WITH REGARD TO T HE SOURCE OF FUNDS FOR PURCHASE OF THE FLAT FOR A SUM OF RS. 2,50,000. OBVIOUSLY THERE WAS NO QUESTION OF THE ASSESSING OFFICER HAVING ANY BASIS TO REASONABLY ENTERTAIN THE BELIEF THAT ANY PART OF THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THE NOTICE WAS NOT VALID. 25. THE ASSESSING OFFICER IN THE REASONS FURTHER NO TED THAT SINCE THE AMOUNT OF RS. 2.10 CR WAS FIRST DEPO SITED IN THE ACCOUNT OF THE ASSESSEE COMPANY MAINTAINED W ITH BANK OF BARODA, LUDHIANA AND SOURCE OF THIS AMOUNT 36 REMAINED UNEXPLAINED WITHIN THE MEANING OF SECTION 148 OF THE ACT, THEREFORE, HE HAS REASON TO BELIEVE THA T INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. T HIS ALLEGED BELIEF WAS ALSO NOT TENABLE IN LAW BECAUSE ONCE IT IS A STAND OF THE REVENUE DEPARTMENT THAT THE EN TIRE UNDISCLOSED MONEY BELONG TO SHRI TARANJIT SINGH AS PER BLOCK ASSESSMENT ORDER PASSED IN THE CASE OF SMT. MOHINDER KAUR, LEGAL HEIR OF SHRI TARANJIT SINGH WH ICH WAS ROUTED THROUGH THE BANK ACCOUNT OF THE ASSESSEE , THEREFORE, THERE IS NO REASON TO BELIEVE THAT INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN THE CAS E OF THE ASSESSEE COMPANY. THERE IS, THUS, CHANGE IN TH E STAND OF THE DEPARTMENT FOR THE PURPOSE OF MAKING T HE ADDITION IN THE HANDS OF THE ASSESSEE. 25(I) AS PER INFORMATION, ALL BROKERS EXIST. ASSES SING OFFICER WAS AWARE OF TRANSACTION OF SALE AND PURCHA SE OF SHARES/INVESTMENTS THROUGH BROKERS PRIOR TO RECORDI NG OF REASONS FOR RE-OPENING OF ASSESSMENT. SOURCE OF DEPOSIT IN BANK ACCOUNT OF THE ASSESSEE WAS SALE OF SHARES/INVESTMENTS, WITHIN KNOWLEDGE OF ASSESSING OFFICER. THE BROKERS PRIOR TO RECORDING OF REASONS UNDER SECTION 148 OF INCOME TAX ACT IN THEIR STATEMENTS T O DDIT (INVESTIGATION) CONFIRMED SELLING OF SHARES/INVESTMENTS OF ASSESSEE COMPANY. IT IS ALSO INTERESTING TO NOTE THAT A.O. IN ASSESSMENT ORDER OBSERVED, DIRECTORS HAVE INTRODUCED THE MONEY IN BA NK ACCOUNT OF ASSESSEE COMPANY FROM THE SOURCE BEST 37 KNOWN TO THEM. THEREFORE, DECISION IN CASE OF SARA SWATI DEVI (SUPRA) APPLY IN FAVOUR OF ASSESSEE. NO INFORM ATION HAS BEEN RECEIVED BY ASSESSING OFFICER FROM INVESTIGATION WING THAT ASSESSEE COMPANY RECEIVED A NY ACCOMMODATION ENTRY. THE REASONS, HOWEVER, RECORDS THAT ASSESSEE COMPANY GIVEN ENTRY TO SHRI M/S TARAN JIT SINGH & CO.. THE CASE LAW CITED BY LD. DR ARE MAIN LY ON ACCOUNT OF BOGUS/ACCOMMODATION ENTRIES RECEIVED BY ASSESSEES. THEREFORE, THERE MAY NOT BE A JUSTIFICA TION TO REOPEN ASSESSMENT IN CASE OF ASSESSEE COMPANY. 25(II) IT MAY BE NOTED HERE THAT THE LD. CIT(APPEAL S) IN THE CASE OF SMT. MOHINDER KAUR, LEGAL HEIR OF SHRI TARANJIT SINGH DELETED THE ENTIRE ADDITION OF RS.2. 50 LACS VIDE ORDER DATED 12.09.2005 MAINLY ON THE REAS ON THAT SINCE THE DEPOSITS FROM THE ASSESSEE COMPANY H AVE BEEN DULY DISCLOSED AND NO MATERIAL WAS DETECTED DU RING THE COURSE OF SEARCH TO PROVE UNDISCLOSED INCOME IN THE HANDS OF LATE SHRI TARANJIT SINGH, THEREFORE, SAME WOULD NOT FALL WITHIN THE MEANING OF CHAPTER XIV-B OF THE BLOCK ASSESSMENT. THE ENTIRE ADDITION OF RS. 2.50 CR WAS DELETED IN THE CASE OF LATE SHRI TARANJIT SINGH . ON FURTHER APPEAL BY THE REVENUE AND THE ASSESSEE, ITA T VIDE ORDER DATED 26.04.2012 SET ASIDE AND QUASHED T HE BLOCK ASSESSMENT BEING BAD IN LAW AND WITHOUT JURISDICTION BECAUSE NO WARRANT OF AUTHORIZATION WA S ISSUED IN THE NAME OF SMT. MOHINDER KAUR, LEGAL HEI R OF LATE SHRI TARANJIT SINGH, THEREFORE, NO BLOCK ASSES SMENT 38 ORDER COULD BE FRAMED IN THIS CASE. IT WOULD, THER EFORE, SHOW THAT TECHNICALLY, THE ADDITION HAS BEEN DELETE D IN THE CASE OF SHRI TARANJIT SINGH BY QUASHING THE BLO CK ASSESSMENT PROCEEDINGS BUT THE FINDING OF FACT RECO RDED BY THE REVENUE DEPARTMENT WOULD REMAIN SAME THAT SHRI TARANJIT SINGH DISCLOSED THE FACT OF RECEIPT O F RS. 2.50 CR FROM THE ASSESSEE COMPANY IN HIS BOOKS OF ACCOUNT. THEREFORE, THE FINDING GIVEN BY THE ASSES SING OFFICER IN THE BLOCK ASSESSMENT THAT THE ENTIRE MON EY WAS OF SHRI TARANJIT SINGH ROUTED THROUGH THE NAME OF THE ASSESSEE COMPANY IN HIS BUSINESS REMAIN UNCHALLENGED AND AS SUCH, REVENUE DEPARTMENT CANNOT TAKE A SOMERSAULT IN THE CASE OF THE ASSESSEE FOR T HE PURPOSE OF RE-OPENING OF THE ASSESSMENT OR TO MAKE ADDITION ON SUBSTANTIVE BASIS LATER ON. 26. WE MAY NOTE HERE AGAIN THAT THE ASSESSING OFFIC ER IN THE CASE OF THE PRESENT ASSESSEE, FIRST PASSED T HE ASSESSMENT ORDER UNDER SECTION 148/143(3) ON 30.03.2005 FOR ASSESSMENT YEAR 2000-01 AND NO BLOCK ASSESSMENT ORDER WAS PASSED BY THAT DATE IN THE CAS E OF LATE SHRI TARANJIT SINGH, THEREFORE, PASSING OF THE PROTECTIVE ASSESSMENT IN THE CASE OF ASSESSEE COMPA NY WOULD ALSO SUPPORT OUR FINDING THAT THE ASSESSING OFFICER WAS HAVING NO REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN THE CAS E OF ASSESSEE COMPANY, OTHERWISE, ASSESSING OFFICER WOUL D NOT HAVE MADE THE PROTECTIVE ASSESSMENT IN THE CASE OF 39 THE PRESENT ASSESSEE COMPANY. THE DECISIONS RELIED UPON BY LD. COUNSEL FOR THE ASSESSEE, AS REPRODUCED ABOVE, CLEARLY SUPPORT THE CASE OF THE ASSESSEE THA T IT IS NOT A FIT CASE OF RE-OPENING OF THE ASSESSMENT ON T HE FACTS AND CIRCUMSTANCES OF THE CASE FOR MERELY MAKI NG PROTECTIVE ASSESSMENT IN THE HANDS OF THE ASSESSEE. RE- OPENING OF ASSESSMENT WOULD BE BAD IN LAW. THE DECISION CITED BY LD. DR WOULD NOT SUPPORT CASE OF REVENUE. 27. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, NOTED ABOVE IN THE LIGHT OF THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT ASS ESSING OFFICER HAS NOT APPLIED HIS MIND TO THE INFORMATION RECEIVED FROM ADIT (INVESTIGATION) AND HE WAS HAVIN G NO TANGIBLE MATERIAL WITH HIM TO FORM HIS BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. RATHER, THERE WAS NO MATERIAL AVAILABLE WITH THE ASSESSING OFFICER TO FORM HIS BELIEF THAT INCOME CHARGEABLE T O TAX HAS ESCAPED ASSESSMENT IN THE CASE OF THE ASSESSEE COMPANY. THERE WAS NO REASON TO BELIEVE THAT INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE RE- OPENING OF THE ASSESSMENT HAS, THUS, NOT BEEN DONE VALIDLY IN ACCORDANCE WITH LAW. THE RE-OPENING OF ASSESSMENT IS BAD IN LAW. WE, ACCORDINGLY, SET ASI DE THE ORDERS OF AUTHORITIES BELOW AND QUASH THE RE- OPENING OF THE ASSESSMENT UNDER SECTION 147/148 OF THE INCOME TAX ACT. 40 28. IT MAY ALSO BE NOTED HERE THAT THE ASSESSEE EXPLAINED THAT INVESTMENTS/SHARES HAVE BEEN SOLD BY THE ASSESSEE COMPANY THROUGH THREE BROKERS. THE BROKERS IN THEIR STATEMENTS HAVE CONFIRMED SELLING THE SHARES/INVESTMENTS ON BEHALF OF THE ASSESSEE COMPAN Y. THEY HAVE ALSO CONFIRMED GIVING OF SALE CONSIDERATI ON THROUGH BANKING CHANNEL TO THE ASSESSEE COMPANY IN THEIR STATEMENTS. THE EXISTENCE OF BROKERS NOT DIS PUTED. THE ASSESSEE PROVED IDENTITY OF BROKERS AND THEIR C REDIT- WORTHINESS AND GENUINENESS OF TRANSACTION. THE ASSESSEE PROVED SOURCE OF MONEY DEPOSITED IN THEIR BANK ACCOUNT ON ACCOUNT OF SALE OF SHARES/INVESTMENTS. IT IS NOT A CASE OF A.O. THAT DESPITE SALE OF SHARES/INVESTMENTS, ASSESSEE STILL POSSESSED AND CONTROLLED THE SAME SHARES/INVESTMENTS. THE ASSESS ING OFFICER DID NOT RECORD ANYWHERE IN THE ASSESSMENT O RDER IF THESE STATEMENTS RECORDED BY DDIT (INVESTIGATION ) OF THE BROKERS HAVE BEEN SUPPLIED TO THE ASSESSEE FOR THE COMMENTS OF THE ASSESSEE AND WHETHER ASSESSEE HAS BEEN GIVEN ANY OPPORTUNITY TO CROSS-EXAMINE THESE BROKERS. IN THE ABSENCE OF ANY EVIDENCE OR MATERIA L ON RECORD, IT IS DIFFICULT TO BELIEVE THAT ASSESSEE HA S BEEN GIVEN ANY OPPORTUNITY TO CROSS-EXAMINE THE STATEMEN TS OF THESE THREE BROKERS ON BEHALF OF THE ASSESSEE. THEREFORE, WHEN THESE BROKERS HAVE CONFIRMED SELLIN G THE SHARES ON BEHALF OF THE ASSESSEE COMPANY AND GI VING SALE CONSIDERATION THROUGH BANKING CHANNEL TO THE ASSESSEE COMPANY AND THEIR STATEMENTS ARE NOT ADVER SE 41 IN NATURE AGAINST ASSESSEE, BUT IN THE ABSENCE OF G IVING RIGHT OF CROSS-EXAMINATION OF THEIR STATEMENT, THEI R STATEMENTS CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE ON CERTAIN POINTS WHICH HAVE BEEN CONSIDER ED BY ASSESSING OFFICER TO BE ADVERSE IN NATURE. WE R ELY UPON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF KISHAN CHAND CHELA RAM (SUPRA). 29. IT MAY ALSO BE NOTED HERE THAT ASSESSING OFFICE R HAS RECORDED TWO STATEMENTS IN BOTH ASSESSMENT YEAR AS PER ASSESSMENT ORDER BUT ASSESSING OFFICER HAS N OT RECORDED ANY FACT IF ASSESSEE HAS BEEN ALLOWED TO C ROSS- EXAMINE THESE BROKERS AT ASSESSMENT STAGE. THEREFO RE, ON THE SAME ANALOGY, EVEN IF THEIR STATEMENTS ARE N OT ADVERSE IN NATURE AGAINST ASSESSEE BUT SAME CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE FOR THE PURPO SE OF MAKING ADDITION. IT MAY ALSO BE NOTED HERE THAT ASSESSING OFFICER HIMSELF HAS MENTIONED IN THE ASSESSMENT ORDER THAT SALE CONSIDERATION AND SOURCE OF GIVING ADVANCE TO M/S TARANJIT SINGH & CO., CHANDIG ARH IS THE AMOUNT RECEIVED THROUGH THREE BROKERS THROUG H BANKING CHANNEL, THEREFORE, ASSESSING OFFICER CANNO T ASK THE ASSESSEE TO PROVE SOURCE OF THE SOURCE. TH E ASSESSING OFFICER HAS ALSO NOT BROUGHT ANY EVIDENCE ON RECORD THAT DESPITE SELLING THE INVESTMENTS THROUGH THE BROKERS, ASSESSEE COMPANY WAS STILL HAVING OWNERSHI P AND POSSESSION OVER THE SAME INVESTMENTS HELD BY TH E ASSESSEE COMPANY. THESE FACTS AND MATERIAL ON RECO RD 42 CLEARLY SUGGEST THAT ASSESSEE GENUINELY SOLD THE INVESTMENTS/SHARES THROUGH THREE BROKERS AND RECEIV ED THE SALE CONSIDERATION THROUGH BANKING CHANNEL. THEREFORE, SUCH CONSIDERATION COULD NOT BE TREATED AS UNDISCLOSED UNACCOUNTED INCOME OF THE ASSESSEE. 30. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF THE MATERIAL, EVIDENCES ON REC ORD AND ABOVE DISCUSSION, WE ARE OF THE VIEW ASSESSEE H AS BEEN ABLE TO PROVE THAT IT HAS RECEIVED THE SALE CONSIDERATION ON ACCOUNT OF SALE OF SHARES/INVESTME NTS AND HAS GENUINELY ENTERED INTO THE BANK ACCOUNT. THEREFORE, NO ADDITION AGAINST THE ASSESSEE COULD B E MADE. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 2. 10 CR CONVERTED BY LD. CIT(APPEALS) ON SUBSTANTIVE BASIS. 31. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ASSESSMENT YEAR 2000-01 32. THE LD. REPRESENTATIVES OF BOTH THE PARTIES SUBMITTED THAT THE GROUNDS OF APPEAL ARE SAME AS HA VE BEEN CONSIDERED IN ASSESSMENT YEAR 1999-2000. THEREFORE, FOLLOWING THE REASONS FOR DECISION FOR ASSESSMENT YEAR 1999-2000, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND QUASH THE RE-OPENING OF THE ASSESSMENT UNDER SECTION 147/148 OF THE INCOME TAX 43 ACT AND ALSO DELETE THE ADDITION OF RS. 40 LACS MAD E BY LD. CIT(APPEALS) ON SUBSTANTIVE BASIS. 33. THE APPEAL OF THE ASSESSEE IS ALLOWED. 34. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (BHAVNESH S AINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 ND APRIL, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD