Asstt.Commissioner of Income tax 1(2), RAIPUR (CG) V. M/s Maruti Clean Coal & Power Ltd, Raipur(CG)

ITA 98/BIL/2012

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8915 (ITAT-RAIPUR)
• Duration Of Justice: 5 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 13-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Assessee Lawyers: SALIL KAPOOR ADV RA MAN CHAWLA; SO UMYA SIN
• Keywords: Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Question of law; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 143(3); 153A; 147; 68; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER) ITA.NO:98/RAIPUR/2012 & C.O. NO. 01/RAIPUR/2016 (ASSESSMENT YEAR: 2004-05) ASSTT. COMMISSIONER OF INCOME TAX 1(2), RAIPUR MARUTI CLEAN COAL & POWER LTD. HIRA ARCADE, PANDRI RAIPUR(CG) V/S V/S MARUTI CLEAN COAL & POWER LTD. HIRA ARCADE, PANDRI RAIPUR(CG) ASSTT. COMMISSIONER OF INCOME TAX 1(2), RAIPUR (APPELLANT) (RESPONDENT) ITA.NO:187/RAIPUR/2014 (ASSESSMENT YEAR: 2004-05) DEPUTY COMMISSIONER OF INCOME TAX 1(2), RAIPUR V/S MARUTI CLEAN COAL & POWER LTD. FLAT NO. 301- 302, RAM RESIDENCY, SHANKAR NAGAR, RAIPUR(CG) (APPELLANT) (RESPONDENT) PAN: AADCN4801C APPELLANT BY : SHRI P.K. MISHRA, D.R. RESPONDENT BY : SHRI SALIL KAPOOR, ADV. , RA MAN CHAWLA, C.A. & SO UMYA SINGH, ADV. ( )/ ORDER ITA NO. 98/RPR/2012 & C.O. NO. 01/RPR/16 AND OTHERS . A.Y. 2004-05 2 DATE OF HEARING : 05 -03-201 8 DATE OF PRONOUNCEMENT : 07 -03-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. THIS APPEAL BY THE REVENUE AND CROSS OBJECTION OF T HE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), RAIPUR DATED 3 0.04.2012 PERTAINING TO A.Y. 2004-05. 2. THE GRIEVANCE OF THE REVENUE RELATES TO THE DELETIO N OF THE ADDITION OF RS. 35 LACS MADE BY THE A.O. U/S. 68 OF THE ACT. IN ITS CR OSS OBJECTION, THE ASSESSEE HAS CHALLENGED THE REOPENING OF THE ASSESSMENT BY T HE ISSUE OF NOTICE U/S. 148 OF THE ACT. 3. SINCE THE CROSS OBJECTION OF THE ASSESSEE GOES TO T HE ROOT OF THE MATTER, WE TAKE UP THE CROSS OBJECTION FIRST. IN THIS CASE, THE ORI GINAL ASSESSMENT WAS FRAMED U/S. 153A R.W.S. 143(3) OF THE ACT VIDE ORDER DATED 31.12.2008. A NOTICE U/S. 148 WAS ISSUED AND SERVED ON 31.03.201. SINCE THE I MPUGNED ASSESSMENT YEAR IS 2004-05, THEREFORE, IT CAN BE SAFELY CONCLUDED THAT THE NOTICE U/S. 148 OF THE ACT WAS ISSUED BEYOND 4 YEARS FROM THE END OF THE A SSESSMENT YEARS. 4. THE REASONS FOR REOPENING THE ASSESSMENT ARE AS UND ER:- ANNEXURE-A IN THE COURSE OF INVESTIGATION MADE BY THE INVESTIG ATION WING UNDER THE DIT (INVESTIGATION), NEW DELHI INTO THE CASES OF VARIOUS ENTRY OPERATORS AND HAD CIRCULATED A CD CONTAINING THE STATEMENT AND DETAILS OF THE ENTRY OPERATORS AND THE BENEFICI ARIES. THE DATE IN THE CD SHOWS THAT M/S MARUTI CLEAN COAL & POWER LTD. PAN NO. AADCH4810C HAS TAKE N ACCOMMODATION ENTRIES OF RS. 35,00,000/- DURING THE F.Y. 2003-04 RELATING TO A.Y . 2004-05 FROM THE LABORATORIES OVERSEAS (P) LTD., PARKASH PUNIT COMMERCE & CONSULTANT, RUBIK EX PORT LTD, SATWANT SINGH SODHI CONSTRUCTION, MESTRO MARKETING & ADVERTISING (P) LT D, ETHNIC CREATIONS (P) LTD. AND BALDEV HARISH ELECTRICALS (P) LTD. THE ACIT HAS MADE ASSES SMENT U/S 153A WITH SECTION 143(3) OF IT ACT, 1961 IN THE ASSESSES CASE. THE ACCOMMODATION ENTRI ES FROM THE VARIOUS PARTIES MENTIONED ABOVE, WHICH DID NOT FIND PLACE IN THE ASSESSEES BOOK OF ACCOUNT. ACCORDINGLY, I HAVE REASONS TO BELIEVE ITA NO. 98/RPR/2012 & C.O. NO. 01/RPR/16 AND OTHERS . A.Y. 2004-05 3 THAT THE ABOVE INCOME CHARGEABLE TO TAX ESCAPED ASS ESSMENT AND IT IS PROPOSED TO ASSESS/ RE- ASSESS THAT INCOME AND SUCH OTHER INCOME WHICH COME S TO NOTICE SUBSEQUENTLY DURING COURSE OF INVESTIGATION BY DIT (INVESTIGATION). THEREFORE, NO TICE U/S 148 IS ISSUED FOR A.Y. 2004-05 G.N. SINGH ASSTT. COMMISSIONER OF IT, CIRCLE-1(2), RAIPUR (36 GARH) 5. WE ARE UNABLE TO UNDERSTAND WHEN IN THE REASONS SO RECORDED, THE A.O. HIMSELF IS STATING THAT THE ACCOMMODATION ENTRIES FROM THE VARIOUS PARTIES MENTIONED ABOVE, WHICH DID NOT FIND PLACE IN THE ASSESSEES B OOKS OF ACCOUNT, THEREFORE, HE HAS REASONS TO BELIEVE THAT THE INCOME CHARGEABL E TAX HAS ESCAPED ASSESSMENT. WHEN THE ENTRIES ARE NOT FOUND IN THE B OOKS OF THE ASSESSEE HOW THE SAME COULD BE MADE BASIS FOR REOPENING THE COMP LETED ASSESSMENT. IN OUR UNDERSTANDING OF THE LAW, VERACITY OF THE NOTICE U/ S. 148 OF THE ACT HAS TO BE TESTED ON THE BASIS OF THE NOTICE ITSELF. AS MENTIO NED ELSEWHERE, THE NOTICE IS ISSUED AFTER FOUR YEARS FROM THE END OF THE RELEVAN T ASSESSMENT YEARS, FIRST PROVISO TO SECTION 147 OF THE ACT SQUARELY APPLY AN D THE SAME IS AS UNDER:- PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF S ECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHA LL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMEN T YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN R ESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FU LLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. 6. THE MANDATE OF THIS PROVISO IS THAT INCOME THAT HAS TO BE TAXED MUST HAVE ESCAPED ASSESSMENT BY REASONS OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT. ITA NO. 98/RPR/2012 & C.O. NO. 01/RPR/16 AND OTHERS . A.Y. 2004-05 4 7. THERE IS NOT EVEN A WHISPER IN THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSEE RELATING TO NON DISCLOSURE OF FULL AND TRU E FACTS BY THE ASSESSEE. THE HONBLE HIGH COURT OF DELHI IN THE CASE OF HARYANA ACRYLIC MANUFACTURING COMPANY 308 ITR 38 HAD THE OCCASION TO CONSIDER A S IMILAR ISSUE AND OBSERVED AS UNDER:- 20. IN THE REASONS SUPPLIED TO THE PETITIONER, THER E IS NO WHISPER, WHAT TO SPEAK OF ANY ALLEGATION, THAT THE PETITIONER HAD FAILED TO DISCLOSE FULLY AN D TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THAT BECAUSE OF THIS FAILURE THERE HAS BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. MERELY HAVING A REASON TO BELIEVE THAT INCOME HAD ESC APED ASSESSMENT, IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE FOUR YEAR PERIOD INDI CATED ABOVE. THE ESCAPEMENT OF INCOME FROM ASSESSMENT MUST ALSO BE OCCASIONED BY THE FAIL URE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS, FULLY AND TRULY. THIS IS A NECESSAR Y CONDITION FOR OVERCOMING THE BAR SET UP BY THE PROVISO TO SECTION 147. IF THIS CONDITION IS NOT SAT ISFIED, THE BAR WOULD OPERATE AND NO ACTION UNDER SECTION 147 COULD BE TAKEN. WE HAVE ALREADY MENTIONE D ABOVE THAT THE REASONS SUPPLIED TO THE PETITIONER DOES NOT CONTAIN ANY SUCH ALLEGATION. CO NSEQUENTLY, ONE OF THE CONDITIONS PRECEDENT FOR REMOVING THE BAR AGAINST TAKING ACTION AFTER THE SAI D FOUR YEAR PERIOD REMAINS UNFULFILLED. IN OUR RECENT DECISION IN WEL INTERTRADE (P.) LTD.S WE HA D AGREED WITH THE VIEW TAKEN BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF DULI CHAND SINGHA NIA THAT, IN THE ABSENCE OF AN ALLEGATION IN THE REASONS RECORDED THAT THE ESCAPEMENT OF INCOME HAD OCCURRED BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, ANY ACTION TAKEN BY THE ASSESSING OFFICER UNDER SECTION 147 BEYOND THE FOUR YEAR PERIOD WOULD BE WHOLLY WITHOUT JURISDICTION. REITERATING OUR VIEWPOI NT, WE HOLD THAT THE NOTICE DATED 29-3-2004 UNDER SECTION 148 BASED ON THE RECORDED REASONS AS SUPPLIED TO THE PETITIONER AS WELL AS THE CONSEQUENT ORDER DATED 2-3-2005 ARE WITHOUT JURISDI CTION AS NO ACTION UNDER SECTION 147 COULD BE TAKEN BEYOND THE FOUR YEAR PERIOD IN THE CIRCUMSTAN CES NARRATED ABOVE. 8. A SIMILAR VIEW WAS TAKEN BY THE HONBLE HIGH COURT OF PUNJAB AND HARAYANA IN THE CASE OF DULICHAND SINGHANIA 269 ITR 192, THE RELEVANT PART READS AS UNDER:- 13. THE ENTIRE THRUST OF THE FINDINGS RECORDED BY THE AO IN HIS ORDER DT. 13TH MARCH, 2003 IS TO JUSTIFY HIS SATISFACTION ABOUT ESCAPEMENT OF INCOME . ACCORDING TO HIM, IT WAS A CLEAR CASE OF ESCAPEMENT OF INCOME AS DEFINED IN EXPLN. 2 TO SECT ION 147 AS THE ASSESSEE HAD BEEN ALLOWED ITA NO. 98/RPR/2012 & C.O. NO. 01/RPR/16 AND OTHERS . A.Y. 2004-05 5 EXCESSIVE RELIEF UNDER SECTION 80O OF THE ACT. HOWEVE R, IT IS NOT NECESSARY FOR US TO GO INTO THE MERITS OF THIS FINDING AS THE SECOND REQUIREMENT OF THE PROVISO HAS NOT BEEN SATISFIED OBVIOUSLY. THE REASONS RECORDED BY THE AO FOR INITIATION OF PR OCEEDINGS UNDER SECTION 147 OF THE ACT HAVE ALREADY BEEN REPRODUCED ABOVE. A BARE PERUSAL OF THE SAME SHOWS THAT THE SATISFACTION RECORDED THEREIN IS MERELY ABOUT ESCAPEMENT OF INCOME. THERE IS NOT EVEN A WHISPER OF AN ALLEGATION THAT SUCH ESCAPEMENT HAD OCCURRED BY REASON OF FAILURE O N THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT. ABSENCE OF THIS FINDING, WHICH IS A 'SINE QUO NON' FOR ASSUMING JURISDICTION UNDER SECTION 14 7 OF THE ACT IN A CASE FALLING UNDER THE PROVISO THERETO, MAKES THE ACTION TAKEN BY THE AO WHOLLY WI THOUT JURISDICTION. AS ALREADY OBSERVED, THE LEARNED COUNSEL FOR THE REVENUE HAS CONCEDED THAT NE ITHER IN THE REASONS RECORDED NOR IN THE ORDER DT. 13TH MARCH, 2003, HAS THE ASSESSEE BEEN C HARGED WITH FAILURE TO DISCLOSE, FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. IN FENNEI (INDIA) LTD. V. DY. CTT (2000) 241 ITR 672 (MAD), SIMILAR MATTER HAD COME UP FOR CONSIDERATION BEFORE THE MADRAS HIGH COURT AND IT HAS BEEN HELD AS UNDER: THE PRECONDITION FOR THE EXERCISE OF THE POWER UND ER SECTION 147 IN CASES WHERE POWER IS EXERCISED WITHIN A PERIOD OF FOUR YEARS FROM THE EN D OF THE RELEVANT ASSESSMENT YEAR IS THE BELIEF REASONABLY 'ENTERTAINED BY THE AO THAT ANY INCOME C HARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT ASSESSMENT YEAR. HOWEVER, WHEN THE POWER IS IN VOKED AFTER THE EXPIRY OF THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR, A FURTHE R PRECONDITION FOR SUCH EXERCISE IS IMPOSED BY THE PROVISO NAMELY, THAT THERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SECTION 142 OR SECTION 148 OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. UNLESS, THE CONDITION IN THE PROVISO IS SATISFIED, THE AO DOES NOT ACQUIRE JURISDICTION TO INITIATE ANY PROCEEDING UNDER SECTI ON 147 OF THE ACT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. THUS, IN CASES WHERE THE INITIATION OF THE PROCEEDINGS IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR, THE AO MUST NECESSARILY RECORD NOT ONLY HIS REASONABLE BELIEF THAT INCOME H AS ESCAPED ASSESSMENT BUT ALSO THE DEFAULT OR FAILURE COMMITTED BY THE ASSESSEE. FAILURE TO DO SO WOULD VITIATE THE NOTICE AND THE ENTIRE PROCEEDINGS. THE RELEVANT WORDS IN THE PROVISO ARE, ' .......UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE.....' MERE ESCAPE OF INCOME IS INSUFFICIENT TO JUSTIFY TH E INITIATION OF ACTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. SUCH ESC APEMENT MUST BE BY REASON OF THE FAILURE ON ITA NO. 98/RPR/2012 & C.O. NO. 01/RPR/16 AND OTHERS . A.Y. 2004-05 6 THE PART OF THE ASSESSEE EITHER TO FILE A RETURN RE FERRED TO IN THE PROVISO OR TO TRULY AND FULLY DISCLOSE THE MATERIAL FACTS NECESSARY FOR THE ASSES SMENT. WHENEVER A NOTICE IS ISSUED BY THE AO BEYOND A PERIO D OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, SUCH NOTICE BEING ISSUED WITHOUT R ECORDING THE REASONS FOR HIS BELIEF THAT INCOME ESCAPED ASSESSMENT, IT CANNOT BE PRESUMED IN LAW TH AT THERE IS ALSO A FAILURE ON THE PART OF THE ASSESSEE TO FILE THE RETURNS REFERRED TO IN THE PRO VISO OR A FAILURE TO FULLY AND TRULY DISCLOSE THE MATERIAL FACTS. THE REASONS REFERRED TO IN THE MAIN PARAGRAPH OF SECTION 147 WOULD, IN CASES WHERE THE PROVISO IS ATTRACTED, INCLUDE REASONS REFE RRED TO IN THE PROVISO AND IT IS NECESSARY FOR THE AO TO RECORD THAT ANYONE OR ALL THE CIRCUMSTANC ES REFERRED TO IN THE PROVISO EXISTED BEFORE THE ISSUE OF NOTICE UNDER SECTION 147.' SIMILARLY, IN AIVIND MILLS LTD. V. DY. CTT (2000) 242 ITR 173 (GUJ) IT WAS HELD AS UNDER: 'IT IS A CLEAR CASE WHERE THE AO HAS NO REASON TO L INK ESCAPEMENT OF INCOME FROM ASSESSMENT WITH NON-DISCLOSURE OF ANY MATERIAL FACT NECESSARY FOR HIS ASSESSMENT AT THE TIME OF ORIGINAL ASSESSMENT BUT IS DUE TO AN ERRONEOUS DECISION ON T HE QUESTION OF LAW BY THE AO. THUS, THE CASE IS SQUARELY COVERED BY THE PROVISO TO SECTION 147 AND N OT SECTION 149. INITIATION OF PROCEEDINGS UNDER THE PROVISO BEING CLEARLY BARRED BY TIME, THE AO COULD NOT HAVE ASSUMED JURISDICTION BY ISSUING NOTICE UNDER SECTION 148 IN RESPECT OF THE ASST. YR. 1982-83.' 9. WE FIND THAT DURING THE COURSE OF THE ASSESSMENT PR OCEEDING U/S 153A/143(3) OF THE ACT, THE ASSESSEE HAS FILED COMPLETE DETAILS OF SHARE APPLICATION MONEY RECEIVED AND REFUNDED ALONG WITH NAMES/ADDRESSES/PA N DETAILS FOR A.Y. 2001-02 TO 2007-08. 10. COMING BACK TO THE REASONS RECORDED FOR REOPENING O F THE ASSESSMENT AS MENTIONED ELSEWHERE, IT CAN BE SEEN THAT THERE IS N O INDEPENDENT APPLICATION OF MIND BY THE A.O. IT APPEARS THAT THE A.O. HAS BORRO WED THE INVESTIGATION MADE BY THE INVESTIGATION WING UNDER THE DIT (INVESTIGAT ION), NEW DELHI. THE ITA NO. 98/RPR/2012 & C.O. NO. 01/RPR/16 AND OTHERS . A.Y. 2004-05 7 HONBLE HIGH COURT OF DELHI IN THE CASE OF G & G PH ARMA INDIA LTD. 384 ITR 147 HAS OBSERVED AS UNDER: 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENT RIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEBRUARY 2003, FROM FOUR ENTITIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES , WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, T HE AO STATED: I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGA TION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODU CED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODA TION ENTRIES. THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER TH E AO APPLIED HIS MIND TO THE MATERIALS THAT HE TALKS ABOUT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE ON WHICH THE SO CALLE D ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WOULD NOT HAVE BEEN DIFF ICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE T O THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE A SSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER 2004 AND WAS PROCESSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMO DATION ENTRIES. IN THE CONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW E XPLAINED WITH SUFFICIENT CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCUSSED HER EINBEFORE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. 11. THE HONBLE HIGH COURT OF DELHI IN 338 ITR 51 HAD T HE OCCASION TO CONSIDER IDENTICAL SET OF FACTS AND OBSERVED AS UNDER:- 13 ANNEXURE ATTACHED TO THE SAID PROFORMA PLACED ON RECORD OF THE PETITIONER READS AS UNDER: BENEFICIARYS NAME VALUE OF ENTRY TAKEN INSTRUMENT NO. BY WHICH ENTRY TAKEN DATE ON WHICH ENTRY TAKEN SIGNATURE HOTELS PVT. LTD. 500000 (AC NO.-21060) 09-OCT-02 NAME OF ACCOUNT BANK FROM WHICH ENTRY BRANCH OF ENTRY GIVING A/C NO. ENTRY ITA NO. 98/RPR/2012 & C.O. NO. 01/RPR/16 AND OTHERS . A.Y. 2004-05 8 HOLDER OF ENTRY GIVING ACCOUNT GIVEN BANK GIVING ACCOUNT SWETU STONE PV SBP DG 50106 14. THE FIRST SENTENCE OF THE REASONS STATES THAT I NFORMATION HAD BEEN RECEIVED FROM DIRECTOR OF INCOME-TAX (INVESTIGATION) THAT THE PETITIONER HAD I NTRODUCED MONEY AMOUNTING TO RS.5 LACS DURING FINANCIAL YEAR 2002-03 AS PER THE DETAILS GI VEN IN W.P. (C) NO. 8067/2010 PAGE 12 ANNEXURE. THE SAID ANNEXURE, REPRODUCED ABOVE, RELAT ES TO A CHEQUE RECEIVED BY THE PETITIONER ON 9TH OCTOBER, 2002 FROM SWETU STONE PV FROM THE BANK AND THE ACCOUNT NUMBER MENTIONED THEREIN. THE LAST SENTENCE RECORDS THAT AS PER THE INFORMATION, THE AMOUNT RECEIVED WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. 15. THE AFORESAID REASONS DO NOT SATISFY THE REQUIR EMENTS OF SECTION 147 OF THE ACT. THE REASONS AND THE INFORMATION REFERRED TO IS EXTREMELY SCANTY AND VAGUE. THERE IS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT ANNEXURE, WHICH HAS B EEN QUOTED ABOVE. ANNEXURE CANNOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWS OR ESTABLISHES NEXUS OR LINK WHICH DISCLOSES ESCAPEMENT OF INCOME. ANNEXURE IS NOT A P OINTER AND DOES NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, IT IS APPARENT THAT THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF T HE INFORMATION. THE ASSESSING OFFICER ACCEPTED THE PLEA ON THE BASIS OF VAGUE INFORMATION IN A MECHANICAL MANNER. THE COMMISSIONER ALSO ACTED ON THE SAME BASIS BY MECHANICALLY GIVING HIS APPROVAL. THE REASONS RECORDED REFLECT THAT THE ASSESSING OFFICER DID NOT INDEPENDENTLY AP PLY HIS MIND TO THE W.P. (C) NO. 8067/2010 PAGE 13 INFORMATION RECEIVED FROM THE DIRECTOR OF IN COME-TAX (INVESTIGATION) AND ARRIVE AT A BELIEF WHETHER OR NOT ANY INCOME HAD ESCAPED ASSESS MENT. 12. CONSIDERING THE FACTS OF THE CASE IN HAND IN TOTALI TY QUA THE REASONS FOR REOPENING THE ASSESSMENT IN THE LIGHT OF THE JUDICI AL DECISIONS DISCUSSED HEREINABOVE, WE HAVE NO HESITATION TO HOLD THAT THE NOTICE ISSUED U/S. 148 OF THE ACT IS WITHOUT JURISDICTION AND THE SAME IS SET ASIDE. 13. ITA NO. 98/AHD/2012 IS THE APPEAL BY THE REVENUE ON MERITS OF THE CASE SINCE WE HAVE QUASHED THE RE-ASSESSMENT ORDER ITSEL F, WE DO NOT FIND IT NECESSARY TO DWELL INTO THE MERITS OF THE CASE. APP EAL DISMISSED. ITA NO. 98/RPR/2012 & C.O. NO. 01/RPR/16 AND OTHERS . A.Y. 2004-05 9 14. ITA NO. 187/RAIPUR/2014 IS APPEAL BY THE REVENUE PR EFERRED AGAINST THE ORDER OF THE LD. CIT(A), RAIPUR DATED 05.06.2014 PERTAINI NG TO 2004-05. 15. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE REVEN UE IS THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1.50 CRORES M ADE U/S. 68 OF THE ACT. THE REVENUE IS FURTHER AGGRIEVED THAT THE LD. CIT(A) HA S OVERLOOKED THE COMPLIANCE OF SPECIFIC DIRECTIONS ISSUED BY THE ITAT. 16. THIS IS THE SECOND ROUND OF LITIGATION. IN THE FIRS T ROUND OF LITIGATION, THE ASSESSMENT TRAVELLED UP TO THE TRIBUNAL AND THE TRI BUNAL VIDE ORDER DATED 10.02.2012 IN IT(SS)A NO. 08/BLPR/2010 HAD SET ASID E THE MATTER BEFORE THE A.O. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER:- HOWEVER PRINCIPLES OF NATURAL JUSTICE DEMAND THAT WHEN THE ASSESSEE WANTS TO CROSS EXAMINE A PERSON AN OPPORTUNITY SHOULD BE GRA NTED TO HIM SO AS TO MAKE THE ADDITION JUSTIFIED. FURTHER THE A.O. HAS NOT EN QUIRED FROM THE ALLEGED SHAREHOLDERS AS TO WHETHER THEY HAVE RECEIVED THE M ONEY PRIOR TO ISSUE OF CHEQUES. THE BANK ACCOUNTS OF THE SHAREHOLDERS HAVE NOT BEEN EXAMINED BY THE A.O. TO FIND OUT WHETHER CASH OF EQUIVALENT AMOUNT HAS BEEN DEPOSITED PRIOR TO ISSUE OF CHEQUES OR THERE WERE SUFFICIENT BALANCE I N THE VARIOUS BANK ACCOUNTS OUT OF WHICH CHEQUES HAVE BEEN ISSUED. UNDER THESE CIRC UMSTANCES AND IN THE INTEREST OF JUSTICE WE DEEM IT PROPER TO RESTORE TH E ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO AFFORD AN OPPORTUNITY TO THE AS SESSEE TO CROSS-EXAMINE SHRI NEERAJ JAIN AND DECIDE THE ISSUE IN THE LIGHT OF OU R OBSERVATIONS ABOVE AND IN ACCORDANCE WITH LAW. NEEDLES TO SAY, THE A.O. SHALL GIVE DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDING LY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PUR POSE. 17. PURSUANT TO THE DIRECTIONS OF THE TRIBUNAL, THE ASS ESSMENT WAS ONCE AGAIN FRAMED BY MAKING SIMILAR ADDITION VIDE ORDER DATED 28.03.2013. ITA NO. 98/RPR/2012 & C.O. NO. 01/RPR/16 AND OTHERS . A.Y. 2004-05 10 18. WHEN THE MATTER WAS AGITATED BEFORE THE LD. CIT(A), THE LD. CIT(A) OBSERVED THAT THE A.O. HAS ONLY RELIED ON STATEMENT OF SHRI NEERAJ JAIN WHICH CANNOT BE USED AGAINST ASSESSEE IN THE ABSENCE OF CROSS OBJEC TION. THE LD. CIT(A) FURTHER OBSERVED THAT THE ADDITION WAS MADE PARTLY ON EVIDE NCE AND PARTLY ON SUSPICION. THE LD. CIT(A) CONCLUDED BY HOLDING THAT THE A.O. RELIED UPON THE MATERIAL WITHOUT CONDUCTING THE ENQUIRY PRESCRIBED BY THE TRIBUNAL AND PROCEEDED BY DELETING THE ADDITIONS MADE BY THE A.O . 19. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. THE L D. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. IT IS THE SAY OF THE LD. D .R. THAT IT IS INCORRECT TO SAY THAT THE A.O. DISREGARDED THE DIRECTIONS OF THE TRI BUNAL. THE LD. D.R. VEHEMENTLY STATED THAT THE A.O. ISSUED NOTICE TO SH RI NEERAJ JAIN AT THE LAST AVAILABLE ADDRESS AND THE SAME RETURNED UNSERVED. T HE LD. D.R. CONTINUED BY SAYING THAT THE A.O. DID AFFORD THE OPPORTUNITY OF CROSS EXAMINATION OF SHRI NEERAJ JAIN BUT SINCE THE NOTICES/SUMMONS COULD NO T BE SERVED UPON SHRI NEERAJ JAIN, IT CANNOT BE SAID THE A.O. HAS VIOLATE D THE DIRECTIONS OF THE TRIBUNAL. 20. REPLYING TO THE SUBMISSIONS OF THE LD. D.R. THE LD. COUNSEL FOR THE FIRST TIME TOOK THE PLEA THAT THE ENTIRE ASSESSMENT IS BAD IN LAW AS IT HAS BEEN FRAMED U/S. 153A R.W.S. 143(3) OF THE ACT WITHOUT THERE BEING A NY INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH. STRONG RELIANCE WAS PL ACED IN ON THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF KABU L CHAWLA 380 ITR 573 AND THE DECISION OF THE TRIBUNAL KOLKATA BENCH IN THE C ASE OF PEERLESS GENERAL FINANCE AND INVESTMENT COMPANY LTD. 21 SOT 440. ITA NO. 98/RPR/2012 & C.O. NO. 01/RPR/16 AND OTHERS . A.Y. 2004-05 11 21. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE WILL FIRST ADHERE TO THE CHALLENGE OF THE ASSESSMENT ON THE GROUND THAT NO INCRIMINATING MATERIAL WAS FOUND AT THE TIM E OF SEARCH. TO THIS EXTENT, THERE IS NO DISPUTE BECAUSE NEITHER THE ASSESSING O FFICER NOR THE FIRST APPELLATE AUTHORITY HAS REFERRED TO ANY INCRIMINATI NG MATERIAL FOUND AT THE TIME OF SEARCH. THE ADDITIONS MADE BY THE A.O. ARE ON TH E BASIS OF SOME MATERIAL FOUND DURING THE COURSE OF SURVEY OPERATIONS IN THE PREMISES OF SOME THIRD PERSON. ON THE CONTRARY, THE FIRST APPELLATE AUTHOR ITY HAS CATEGORICALLY HELD THAT NO INCRIMINATING MATERIAL WAS FOUND AT THE TIM E OF SEARCH. 22. NOW THE QUESTION IS WHETHER THIS NEW GROUND CAN BE TAKEN UP FOR THE FIRST TIME IN SET ASIDE PROCEEDING BEFORE THE TRIBUNAL. WE FIN D THAT THE ISSUE REGARDING THE RIGHT OF THE ASSESSEE TO CHALLENGE THE LEGAL VALIDI TY OF THE ORDER. IN THE SECOND ROUND OF LITIGATION WAS CONSIDERED BY THE HONBLE G UJARAT HIGH COURT IN THE CASE OF P.V. DOSHI 113 ITR 22. IN THAT CASE, A REASSESSMENT ORDER UNDER SECTION 147 WAS PASSED BY THE ASSESSING OFFICER AND IN AN APPEAL BEFORE THE AAC AGAINST THAT REASSESSME NT ORDER, THE ASSESSEE GAVE UP THE CONTENTION REGARDING THE VALIDITY OF THE NOTI CE OF REASSESSMENT. THE AAC DISMISSED THE ASSESSEE'S APPEAL ON MERITS. O N FURTHER APPEAL, THE TRIBUNAL REMANDED THE CASE TO THE ASSESSING OFFICER WITH DIRE CTIONS TO CROSS-EXAMINE A WITNESS. ON SECOND ROUND OF APPEAL BEFORE THE AAC FROM T HE ORDER PASSED ON REMAND, THE ASSESSEE CONTENDED THAT THE REASSESSMENT PROCEEDINGS WERE NOT VALIDLY INITIATED. THE AAC OBSERVING THAT NO REASONS HAD BEEN RECORDED BY THE ASSESSING OFFICER AS REQUIRED BY SECTION 148(2) , ANNULLED THE ORDER OF REASSESSMENT. ON APPEAL BY THE DEPARTMENT, THE TRIBUNAL HELD THAT ONCE THE TRIBUNAL PASSED AN ORDER, THE MATTER BECAME FINAL AND THAT THE ORDER RESTORING THE CASE TO THE FILE OF THE ITO WITH CLEAR INSTRUCTIONS ONLY TO CROSS- EXAMINE A WITNESS MEANT THAT THE ONLY POINT THAT WAS LEFT OPEN WAS IN R ESPECT OF THE ISSUE SET ASIDE AND NOT THE LEGAL OR JURISDICTIONAL ASPECT WHETHER T HE REASSESSMENT PROCEEDINGS WERE CORRECTLY INITIATED. ON A REFERENCE, THE HON'BLE HIGH COURT HELD AS UNDER: 'THAT AS A JURISDICTIONAL PROVISION WHICH WAS MANDATORY AND ENACTED IN PUBLIC INTEREST COULD NEVER BE WAIVED AND THE WANT OF JURISDICTION WAS DISCOVERED BY THE APPELLATE ASSISTANT COMMISSIONER, THERE WAS NO QUESTION OF WAIVER BY THE ASSESSEE. NO QUESTION OF FINALITY OF THE REM AND ITA NO. 98/RPR/2012 & C.O. NO. 01/RPR/16 AND OTHERS . A.Y. 2004-05 12 ORDER OF THE TRIBUNAL COULD ARISE BECAUSE THE MANDATORY CONDITIONS FOR FOUNDING JURISDICTION FOR INITIATING REASSESSMENT PROCEEDINGS HAD NOT BEEN FULFILLED. THE ORDER OF REASSESSMENT WAS, THEREFORE, NOT VALID.' IN VIEW OF THE RATIO OF THE ABOVE DECISION OF HON'BLE GUJARAT HIGH COURT, I T IS EVIDENT THAT JURISDICTIONAL PROVISION, WHICH IS MANDATORY, CAN BE TAKEN UP IN THE SECOND ROUND OF LITIGATION. WE, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HON'BLE GUJARAT HIGH COURT PERMIT THE ASSESSEE TO RAISE THE ISSUE RELATING TO VALIDITY OF THE ORDER IN SECOND ROUND OF LITIGATION. ACCORDINGLY, W E PROCEED TO EXAMINE THE ASSESSEE'S CONTENTION ON MERITS. 23. COMING TO THE MERITS OF THE CASE AS MENTIONED ELSEW HERE, THERE IS NO DISPUTE THAT NO INCRIMINATING MATERIAL HAS BEEN FOUND AT TH E TIME OF SEARCH AND THEREFORE IT IS NOW SETTLED PROPOSITION OF LAW THAT NO ASSESSMENT U/S. 153A OF THE ACT CAN BE FRAMED IN THE ABSENCE OF ANY INCRIMI NATING MATERIAL FOUND AT THE TIME OF SEARCH. FOR THIS PROPOSITION, WE DRAW SUPPO RT FROM THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF KABUL CH AWLA (SUPRA). 24. IN THE LIGHT OF THE ABOVE DISCUSSION, WE HAVE NO HE SITATION TO HOLD THAT THE IMPUGNED ASSESSMENT ORDER IS BAD IN LAW AND IS ACCO RDINGLY QUASHED. THE APPEAL OF THE REVENUE BECOMES A NULLITY. ORDER PRONOUNCED IN OPEN COURT ON 07- 03- 20 18 SD/- SD/- (RAM LAL NEGI) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER RAIPUR: DATED 07/03/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED.