J.D. Sons Steel Pvt. Ltd., Faridabad v. ACIT, Faridabad

ITA 1061/DEL/2015 | 2009-2010
Pronouncement Date: 31-08-2021 | Result: Allowed

Appeal Details

RSA Number 106120114 RSA 2015
Assessee PAN AAACJ9814A
Bench Delhi
Appeal Number ITA 1061/DEL/2015
Duration Of Justice 6 year(s) 6 month(s) 5 day(s)
Appellant J.D. Sons Steel Pvt. Ltd., Faridabad
Respondent ACIT, Faridabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-08-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 31-08-2021
Assessment Year 2009-2010
Appeal Filed On 23-02-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI AMIT SHUKLA JUDICIAL MEMBER & DR. B.R.R. KUMAR ACCOUNTANT MEMBER I.T.A. NO.1060 & 1061/DEL/2015 ASSESSMENT YEAR 2007-08 & 2009-10 J.D. SONS STEEL PVT. LTD. B-17 FIRST FLOOR NEHRU GROUND NIT FARIDABAD. V. ACIT CIRCLE-II FARIDABAD. TAN/PAN: AAACJ9814A (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJESH JAIN CA RESPONDENT BY: SHRI UMESH TAKIYAR SR.D.R. DATE OF HEARING: 05 07 2021 DATE OF PRONOUNCEMENT: 31 08 2021 O R D E R PER AMIT SHUKLA J.M. THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSESS EE AGAINST SEPARATE IMPUGNED ORDER OF EVEN DATE 10.12 .2014 PASSED BY LD. CIT (A) FARIDABAD FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 FOR THE ASS ESSMENT YEARS 2007-08 AND 2009-10. SINCE ISSUES INVOLVED IN BOTH THE APPEALS ARE COMMON ARISING OUT OF IDENTICAL SET OF FACTS THEREFORE SAME WERE HEARD TOGETHER AND ARE BEING D ISPOSED OF BY WAY OF THIS CONSOLIDATE ORDER. 2. IN VARIOUS GROUNDS OF APPEAL THE ASSESSEE HAS CHALLENGED THE VALIDITY OF RE-ASSESSMENT PROCEEDING S INITIATED U/S.148 ON VARIOUS GROUNDS AND MAINLY ON THE GROUND THAT REASONS RECORDED BY THE ASSESSING OFFICER ARE VAGUE WITHOUT I.T.AS. NO.1060 & 1061/DEL/2015 2 ANY REFERENCE TO ANY MATERIAL ON RECORD AND THERE I S NO PROPER NEXUS OR LIVE LINK BETWEEN INFORMATION/MATERIAL AND THE FORMATION OF THESE ESCAPEMENT OF INCOME. APART FROM THAT THE ASSESSEE HAS CHALLENGED THE ADDITIONS MADE U/S.68 F OR SUMS AGGREGATING TO RS.1 25 00 000/- IN THE ASSESSMENT Y EAR 2007-08; AND RS.50 LAC IN ASSESSMENT YEAR 2009-10. 3. THE FACTS IN BRIEF QUA THE LEGAL ISSUE RAISED BY THE ASSESSEE IN BOTH THE YEARS ARE THAT FOR THE ASSESS MENT YEAR 2007-08 THE ASSESSEE HAS ITS FILED RETURN OF INCOME U/S.139 ON 30.10.2007 DECLARING INCOME OF RS.40 00 030/- WH ICH WAS PROCESSED AND ACCEPTED U/S.143(1). LIKEWISE FOR THE ASSESSMENT YEAR 2009-10 THE ASSESSEE HAS FILED RET URN OF INCOME ON 30.09.2009 U/S.139(1) DECLARING INCOME OF RS.52 90 460/- WHICH WAS PROCESSED U/S.143(1). THER EAFTER ON THE BASIS OF INFORMATION THAT THE ASSESSEE HAS R ECEIVED ACCOMMODATION ENTRY OF RS.1 25 00 000/- IN ASSESSME NT YEAR 2007-08 AND RS. 50 LAC IN ASSESSMENT YEAR 2009-10 F ROM SHRI SURENDER KUMAR JAIN GROUP CASES WHO WAS AN ENT RY OPERATOR THE CASES WERE REOPENED U/S 147. 3.1 THE REASONS RECORDED FOR ASSESSMENT YEARS 200 7-08 AND 2009-10 ARE INCORPORATED AS UNDER: REASONS RECORDED U/S 148(2) BEFORE ISSUE OF NOTICE U/S 148(1) OF THE INCOME TAX ACT 1961 1. NAME & ADDRESS OF THE ASSESSES M/S J.D. SONS STEELS PVT. LTD. B- 17 1ST FLOOR. NEHRU GROUND NIT FARIDABAD. 2 PAN NO. AAACJ9814A 3 . STATUS COMPANY 4 . WARD/( C IRC 1 E/ RANGE CIRCLE - II FARIDABAD 5 ASSESSMENT YEAR IN RESPECT OF WHI CH IT IS PROPOSED TO ISSUE NOTICE U/S 148 2007-08 I.T.AS. NO.1060 & 1061/DEL/2015 3 REASONS: THERE IS AN INFORMATION WITH THE ASSESSING OFFICER RECEIVED FROM THE DIT (INV.)-II NEW DELHI VIDE LET TER F. NO. DIT (INV )-II/ U/S./148/2012-13/269 DATED 15.03.2013 T HAT ASSESSES HAS OBTAINED ACCOMMODATION ENTRIES FOR RS. 1.25.00. 000/- DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSTT . YEAR 2007- 08. FROM SHRI SURENDRA KUMAR JAIN GROUP CASES WHO IS AN ENTRY PROVIDER. 2. THEREFORE IN VIEW OF ABOVE. 1 HAVE REASON TO BE LIEVE THAT THE ASSESSES HAS FAILED TO DISCLOSE FULLY AND TRULY MAT ERIAL FACTS AND HENCE INCOME OF RS. 1 25 00 000/- AS DISCUSSED ABOVE HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF DIE INCOME TAX ACT 1961. ACCORDINGLY NOTICE U/S 148 FO R THE ASSTT. YEAR 2007-08 IS BEING ISSUED AFTER GETTING NECESSAR Y APPROVAL OF THE ADDITIONAL COMMISSIONER OF INCOME TAX RANGE -II FARIDABAD (PARIKSHIT SINGH IRS) ASSTT COMMISSIONER OF INCOME TAX CIRCLE-II FARIDABAD. 4.1 REASONS RECORDED U/S 148(2) BEFORE ISSUE OF N OTICE U/S 148(1) OF THE INCOME TAX ACT 1961 1. NAME & ADDRESS OF THE ASSESSEE M/S. J.D. SONS STEELS PVT. LTD. B -17 1ST FLOOR NEHRU GROUND. NIT FARIDABAD 2. PAN NO. AAACJ98I4A 3. STATUS COMPANY 4. W ARD'C IRE LE ' RANGE CIRCLE-11 FARIDABAD 5. ASSESSMENT YEAR IN RESPECT OF WHICH IT IS PROPOSED TO ISSUE NOTICE US 148 2009- 10 I.T.AS. NO.1060 & 1061/DEL/2015 4 REASONS: THERE IS AN INFORMATION WITH THE ASSESSING OFFICER RECEIVED FROM THE DU (INV.)-H. NEW DELHI THAT ASSESSEE HAS O BTAINED ACCOMMODATION ENTRIES FOR RS.50 00 000/- DURING THE FINANCIAL YEAR 2008-09 RELEVANT TO ASSTT. YEAR 2009 -10 FROM SHRI SURENDRA KUMAR JAIN GROUP CASES WHO IS ENTRY PROVIDER. 2. IN VIEW OF ABOVE I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO LAX AMOUNTING TO RS.50 00 000/- AND A NY OTHER INCOME WHICH SUBSEQUENTLY COMES TO NOTICE HAS ESCAP ED ASSESSMENT FOR ASSESSMENT YEAR 2009-10 WITHIN THE M EANING OF SECTION 147 OF THE INCOME TAX ACT. ACCORDINGLY A NOTICE U/S 148 IS BEING ISSUED FOR THE ASSESSMENT YEAR 200 9-10. (PARIKTSHIT SINGH IRS) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE - II FARIDABAD . 4. IN THE IMPUGNED ASSESSMENT ORDER THE LD. ASSESS ING OFFICER HAS INCORPORATED CERTAIN EXTRACTS OF REPORT OF INVESTIGATION WING NEW DELHI ON THE OUTCOME OF SUC H PROCEEDINGS IN THE CASE OF SHRI SURENDER KUMAR JAIN AND SHRI VIRENDER KUMAR JAIN AND ALSO DISCUSSED GENERAL MODUS OPERANDI CARRIED OUT BY THESE TWO PERSONS THROUGH V ARIOUS ENTITY. THEREAFTER ASSESSING OFFICER HAS ALSO EXTR ACTED CERTAIN INFORMATION PERTAINING TO ASSESSEE. THUS ASSESSING OFFICER CAME TO THE CONCLUSION THAT ASSESSEE HAS TAKEN BOGU S ACCOMMODATION ENTRY IN THE FORM OF SHARE APPLICATIO N MONEY/SHARE CAPITAL. AFTER DETAILED DISCUSSION HE HAS MADE AN ADDITION OF RS.1 25 00 000/- IN THE ASSESSMENT Y EAR 2007-08 AND RS.50 LACS IN THE ASSESSMENT YEAR 2009- 10. I.T.AS. NO.1060 & 1061/DEL/2015 5 5. BEFORE THE LD. CIT (A) THE ASSESSEE HAS CHALLEN GED THE VALIDITY OF RE-ASSESSMENT PROCEEDINGS AND THE REASO NS RECORDED BY THE ASSESSING OFFICER WHICH HAVE BEEN R EJECTED BY THE LD. CIT (A) AFTER OBSERVING AND HOLDING AS UNDE R: ITA NO.1060-D-2015 10. GROUND NOS. 1 2 AND 3. TAKING UP THE FIRST ISS UE RAISED BY THE APPELLANT IS REGARDING THE VALIDITY OF THE R EASSESSMENT PROCEEDINGS U/S 147/148. I HAVE CONSIDERED THE FACT S OF THE CASE OBSERVATIONS OF THE AO AND SUBMISSIONS OF THE APPELLANT. FOR REOPENING AN ASSESSMENT MADE UNDER SECTION 148 OF THE ACT THE FOLLOWING CONDITIONS ARE REQUIRED TO BE SATISFI ED:- (I) THE ASSESSING OFFICER MUST FORM A TENTATIVE OR PRIMA FACIE OPINION ON THE BASIS OF MATERIAL THAT THERE IS UNDE R-ASSESSMENT OR ESCAPEMENT OF INCOME; (II) HE MUST RECORD THE PRIMA FACIE OPINION INTO W RITING; (III) THE OPINION FORMED IS SUBJECTIVE BUT THE REAS ONS RECORDED OR THE INFORMATION AVAILABLE ON RECORD MUST SHOW THAT THE OPINION IS NOT A MERE SUSPICION. (IV) REASONS RECORDED AND/OR THE DOCUMENTS AVAILAB LE ON RECORD MUST SHOW A NEXUS OR THAT IN FACT THEY ARE GERMANE AND RELEVANT TO THE SUBJECTIVE OPINION FORMED BY THE ASSESSING O FFICER REGARDING ESCAPEMENT OF INCOME. (V) IN CASES WHERE THE FIRST PROVISO APPLIES THE RE IS AN ADDITIONAL REQUIREMENT THAT THERE SHOULD BE FAILURE OR OMISSION ON THE PART OF THE ASSESSEE IN DISCLOSING FULL AND TRUE MATERIAL FACTS. EXPLANATION TO THE SECTION STIPULATES THAT M ERE PRODUCTION OF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS FROM WHICH THE I.T.AS. NO.1060 & 1061/DEL/2015 6 ASSESSING OFFICER COULD HAVE WITH DUE DILIGENCE I NFERRED MATERIAL FACTS DOES NOT AMOUNT TO 'FULL AND TRUE D ISCLOSURE OF MATERIAL FACTS 11. COMING TO THE SPECIFIC FACTS OF THE CASE THE AO HAS RECORDED THE REASONS ON THE BASIS OF THE INFORMATION RECEIVE D FROM THE INVESTIGATION WING. A PERUSAL OF THE REASONS RECORD ED BY THE AQ. CLEARLY SHOWS THAT THE APPELLANT HAS TAKEN ACCOMMOD ATION ENTRIES FROM SH. SURINDER KUMAR JAIN GROUP OF CASES DURING THE F.Y. 2006-07. THE QUANTUM OF ENTRIES I.E. 1.25 CROR ES HAS BEEN SPECIFICALLY MENTIONED AND THUS TO THIS EXTENT THE APPELLANT'S RELIANCE ON A JUDGMENT OF DELHI K HIGH COURT IN THE CASE OF CIT VS. INSECTICIDES (INDIA) LTD. 357 ITR 330 (DELHI) C AN BE CLEARLY DISTINGUISHED FROM THE CASE OF THE INSTANT CASE. IN FACT IN THE CASE OF ITO VS. PURSHOTTAM DASS BANGUR (1997) 224 I TR 362 (SC) THE HON'BLE SUPREME COURT HAS CLEARLY HELD THAT LET TER FROM DEPUTY DIRECTOR (INVESTIGATION) CONSTITUTES INFORMA TION AND REASONS TO BELIEVE THAT INCOME HAVE ESCAPED ASSESSM ENT. IN FACT HEREIN THE HON'BLE SUPREME COURT HAS ALSO HELD THAT MERELY BECAUSE THE NOTICE WAS SENT ON THE NEXT DAY OF THE RECEIPT OF THE INFORMATION FROM THE DDIT (LNV.) DOES NOT MEAN THE ITO HAS NOT APPLIED HIS MIND. IN VIEW OF THIS I HAVE NO HESITAT ION IN HOLDING THAT THE AO HAD VALID REASONS TO BELIEVE THAT INCOM E HAD ESCAPED ASSESSMENT AND THAT THE APPROVAL U/S 151 WA S ACCORDED IN A MECHANICAL MANNER. RELIANCE IS ALSO P LACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F PHOOL CHAND BAJRANG LAL AND ANOTHER VS. ITO &ANOTHER 203 ITR 456 (SC) THE HEAD NOTE FOR WHICH READS AS BELOW : 'SUFFICIENCY OF REASONS FOR REOPENING ASSESSMENTS I S NOT FOR THE COURT TO JUDGE. SECTION: 147(A) -FAILURE TO DISCLOS E TRULY AND FULLY I.T.AS. NO.1060 & 1061/DEL/2015 7 MATERIAL FACTS - CASH LOANS - ORIGINALLY ACCEPTED A S GENUINE SUBSEQUENT INFORMATION FROM 4.0. OF A COMPANY THAT ITS M.D. HAS CONFESSED - HE OR HIS COMPANY HAS NOT ADVANCED ANY LOAN TO ANY PERSON DURING THE RELEVANT PERIOD - SUBSEQUE NT INFORMATION IS DEFINITE SPECIFIED AND RELIABLE. SU FFICIENCY OF REASONS FOR FORMATION OF BELIEF IS NOT FOR THE COUR T TO JUDGE. REASSESSMENT NOTICES ARE VALID. [APPLIED/FOLLOWED I N- 208 ITR 196 (RAJ) : 208 ITR 266 (DEL): 209 ITR 01 (BOM) :209 ITR 135(BOM) : ASSAM FOREST PRODUCTS (P) LTD. - VS.-CIT : 211 ITR 447 (SC): 214ITR 669 (RAJ) : 221ITR 538 (SC) :226 ITR :52 (GUH): 237ITR 549 (BOM):248 ITR 493 (P&H) :ITO - VS- SELECTED DAL URBAND COAL CO.PVT. LTD. 217ITR 597 (SC) :253 TR 83 (DEL) 257 ITR 481 (GUJ)] AND RELIANCE IS PLACED ON HONABLE MADRAS HIGH COURT IN THE CASE OF STERLITE INDUSTRIES (INDIA) LTD. V ASS1STANTC.OMMISSIONER OF INCOME-TAX AND ANOTHER [2008)302 ITR275 (MAD.) THE HEAD NOTE FOR WHICH REA DS AS UNDER REASSESSMENT -NOTICEVALIDITY OF NOTICE - INFORMATI ON FROM ENFORCEMENT DIRECTORATE SHOWING POSSIBLE INFLATION OF PURCHASES -NOTICE VALID -INCOME- TAXACT 1961 SS.147 148. 12. PERUSAL OF THE ASSESSMENT ORDER SPECIALLY PARA 2.2 TO PARA 2.6 ALSO CLEARLY SHOW THAT THE AO HAD SUFFICIENT REASON S TO REOPEN THE ASSESSMENT PROCEEDINGS U/S 147. THUS IN VIEW OF THE ABOVE FACTS AND JUDICIAL PRECEDENTS I HAVE NO HESITATION IN HOLDING THAT T H E AO HAS RIGHTLY REOPENED ERRED THE ASSESSMENT PROCEEDINGS A ND THE APPROVAL ACCORDED BY THE ADDL. COMMISSIONER OF INCOME TAX R ANGE-II FARIDABAD HAS NOT BEEN DONE IN PURELY MECHANICAL MANNER. THUS GROUND NOS. 1 2 AND 3 OF THE APPELLANT ARE DISMISSED. '. I.T.AS. NO.1060 & 1061/DEL/2015 8 6. SIMILARLY IN A.Y. 2009-10 THAT IS IN APPEAL NO. ITA NO.1061-D-2015 LD. CIT(A) HAS GIVEN FOLLOWING REASONS TO REJECT THE CONTENTION OF THE ASSESSEE ON VALIDITY O F REOPENING U/S 147:- 8. GROUND NO.1 AND 2. TAKING UP THE FIRST ISSUE RAI SED BY THE APPELLANT IS REGARDING THE VALIDITY OF THE REASSESS MENT PROCEEDINGS U/S.147/148. I HAVE CONSIDERED THE FACTS OF THE CAS E OBSERVATIONS OF THE AO AND SUBMISSIONS OF THE APPELLANT. FOR REOPEN ING AN ASSESSMENT MADE UNDER SECTION 148 OF THE ACT THE F OLLOWING CONDITIONS ARE REQUIRED TO BE SATISFIED. (I) THE ASSESSING OFFICER MUST FORM A TENTATIVE OR PRIMA FACIE OPINION OR~ THE BASIS OF MATERIAL THAT THERE IS UNDERASSESS MENT OR ESCAPEMENT OF INCOME; (II) HE MUST RECORD THE PRIMA FACIE OPINION INTO W RITING; (III) THE OPINION FORMED IS SUBJECTIVE BUT THE REA SONS RECORDED OR THE INFORMATION AVAILABLE ON RECORD MUST SHOW THAT THE OPINION IS NOT A MERE SUSPICION. (IV) REASONS RECORDED AND/OR THE DOCUMENTS AVAILAB LE ON RECORD MUST SHOW A NEXUS OR THAT IN FACT THEY ARE GERMANE AND RELEVANT TO THE SUBJECTIVE OPINION FORMED BY THE 'ASSESSING OFF ICER REGARDING ESCAPEMENT OF INCOME. (V) IN CASES WHERE THE FIRST PROVISO APPLIES THER E IS AN ADDITIONAL REQUIREMENT THAT THERE SHOULD BE FAILURE OR OMISSIO N ON THE PART OF THE ASSESSEE IN DISCLOSING FULL AND TRUE MATERIAL FACTS . EXPLANATION TO THE SECTION STIPULATES THAT MERE PRODUCTION OF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS FROM WHICH THE ASSESSING OFFICER COULD HA VE WITH DUE DILIGENCE INFERRED MATERIAL FACTS DOES NOT AMOUNT TO 'FULL AND TRUE DISCLOSURE OF MATERIAL FACTS'. I.T.AS. NO.1060 & 1061/DEL/2015 9 9. COMING TO THE SPECIFIC FACTS OF THE CASE THE AO HAS RECORDED THE REASONS ON THE BASIS OF THE INFORMATION RECEIVED FR OM THE INVESTIGATION WING. A PERUSAL OF THE REASONS RECORDED BY THE AO C LEARLY SHOWS THAT THE APPELLANT HAS TAKEN ACCOMMODATION ENTRIES FROM SH. SURINDER KUMAR JAIN GROUP OF CASES DURING THE F.Y. 2006-0?. TNE QUANTUM OF ENTRIES I.E. 50 LACS HAS BEEN SPECIFICALLY MENTIONE D AND THUS TO THIS EXTENT THE APPELLANT'S RELIANCE ON A JUDGMENT OF DE LHI HIGH COURT IN THE CASE OF CIT VS. INSECTICIDES (INDIA) LTD. 357 I TR 330 (DELHI) RANBAXY LAB VS CIT 306 ITR 343 (DEL) CAN BE CLEARLY DISTINGUISHED FROM THE CASE OF THE INSTANT CASE. THE REASONS RECO RDED BY THE AO ARE AS BELOW: 'THERE IS AN INFORMATION WITH THE ASSESSING OFFICER RECEIVED FROM THE DIT(LNV.)-LL NEW DELHI THAT ASSESSED HAS OBTAI NED ACCOMMODATION ENTIRES FOR RS.50 00 000/- DURING THE FINANCIAL YEAR 2008-09 RELEVANT TO ASSTT. YEAR 2009-10 FROM SHRI SURENDRA KUMAR JAIN GROUP CASES WHO IS ENTRY PROVIDER. 2. IN VIEW OF ABOVE I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO RS.50 00 000/- AND A NY OTHER INCOME WHICH SUBSEQUENTLY COMES TO NOTICE HAS ESCAP ED ASSESSMENT FOR ASSESSMENT YEAR 2009-10 WITHIN THE M EANING OF SECTION 147 OF THE INCOME TAX ACT. ACCORDINGLY A N OTICE U/S 148 IS BEING ISSUED FOR THE ASSESSMENT YEA; 2009-10.' 10. PERUSAL OF THE REASONS SHOW THAT THE AO WAS IN POSSESSION OF INFORMATION FROM THE INVESTIGATION WING THAT THE AP PELLANT HAD TAKEN ACCOMMODATION ENTRIES TO THE TUNE OF RS. 50 LACS FR OM THE SURENDER KUMAR JAIN GROUP AND ULTIMATELY THE ADDITION HAS BE EN MADE BY THE AO ON THE BASIS OF BOGUS SHARE APPLICATION MONEY (A CCOMMODATION ENTRIES) TO THE TUNE OF RS. 50 LACS (10 LAC EACH FR OM FIVE PARTIES). THUS THE APPELLANT'S CONTENTION THAT AO HAS MADE ADDITIO NS ON ISSUES WHICH WERE NOT RECORDED FOR REOPENING THE ASSESSMEN T ARE MISPLACED. I.T.AS. NO.1060 & 1061/DEL/2015 10 SIMILARLY HIS RELIANCE ON THE CASE OF RANBAXY LAB VS CIT BY THE HON'BLE DELHI HIGH COURT IS ALSO MISPLACED. 11. IN FACT IN THE CASE OF ITO VS PURSHOTTAM DASS B ANGUR (199/224 ITR 351 (SC) THE HON'BLE SUPREME COURT HAS CLEARLY HELD THAT LETTER FROM DEPUTY DIRECT: (INVESTIGATION) CONSTITUTES INF ORMATION AND REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. IN F ACT HEREIN THE HON'BLE SUPREME COURT HAS ALSO HELD THAT MERELY BEC AUSE THE NOTICE WAS SENT ON THE NEXT DAY OF THE RECEIPT OF THE INFO RMATION FROM THE DDIT (LNV.) DOES NOT MEAN THE ITO HAS NOT APPLIED H IS MINE IN VIEW OF THIS I HAVE NO HESITATION IN HOLDING THAT THE AO HA D VALID REASONS TC BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND THAT THE APPROVAL U/S 151 WAS ACCORDED IN A MECHANICAL MANNER. RELIAN CE IS ALSO PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF PHOOL CHAND BAJRANG LAL AND ANOTHER VS. ITO &ANOTHE R 203 ITR 456 (SC) THE HEAD NOTE FOR WHICH READS AS B ELOW: SUFFICIENCY OF REASONS FOR REOPENING ASSESSMENTS IS NOT FOR THE COURT TO JUDGE. SECTION: 147(A) - FAILURE TO DISCLOSE TRULY AND FULLY MATERIAL FACTS - CASH LOANS -ORIGINALLY ACCEPTED AS GENUINE SUBSEQ UENT INFORMATION FROM A.O. OF A COMPANY THAT ITS M.D. HAS CONFESSED - HE OR HIS COMPANY HAS NOT ADVANCED ANY LOAN TO ANY PERSON DUR ING THE RELEVANT PERIOD - SUBSEQUENT INFORMATION IS DEFINIT E SPECIFIED AND RELIABLE. SUFFICIENCY OF REASONS FOR FORMATION OF B ELIEF IS NOT FOR THE COURT TO JUDGE. REASSESSMENT NOTICES ARE VALID. [AP PLIED/FOLLOWED IN- 208 ITR 196 (RAJ) : 208 ITR 266 (DEL): 209 ITR 01 ( BOM) :209 ITR 135(BOM) : ASSAM FOREST PRODUCTS (P) LTD. - VS.-CIT : 211 ITR 447 (SC): 214ITR 669 (RAJ) : 221ITR 538 (SC) :226 ITR 3 52 (6UH): 237ITR 549 (BOM):248 ITR 493 (P&H) :ITO - VS- SELECTED DAL URBAND COAL CO.PVT. LTD. 217ITR 597 (SC) :253 ITR 83 (DEL) 257 ITR 481 (GUJ)] 12. AND RELIANCE IS PLACED ON HONABLE MADRAS HIGH COURT IN THE CASE OF STERLITE INDUSTRIES (INDIA) LTD. V ASSISTANTCOMMISSIONER OF INCOME- TAX AND ANOTHER I.T.AS. NO.1060 & 1061/DEL/2015 11 [2008]302 ITR275 (MAD.) THE HEAD NOTE FOR WHICH REA DS AS UNDER: REASSESSMENT -NOTICEVALIDITY OF NOTICE - INFORMATI ON FROM ENFORCEMENT DIRECTORATE SHOWING POSSIBLE INFLATION OF PURCHASES - NOTICE VALID -INCOME- TAX ACT 1961 SS. 147 148. 13. PERUSAL OF THE ASSESSMENT ORDER SPECIALLY PARA 2.2 TO PARA 2.6 ALSO CLEARLY SHOW THAT THE AO HAD SUFFICIENT RE ASONS TO REOPEN THE ASSESSMENT PROCEEDINGS U/S 147. THUS IN VIEW OF THE ABOVE FACTS AND JUDICIAL PRECEDENTS I HAVE NO HESITATION IN HOLDING THAT THE AO HAS RIGHTLY REOPENED THE ASSESSMENT PROCEEDINGS AND THE APPROVAL ACCORDED BY THE ADDL. COMMISSIONER OF INCOME TAX R ANGE-LL FARIDABAD HAS NOT BEEN DONE IN PURELY MECHANICAL MA NNER. THUS GROUND NOS. 1 AND 2 OF THE APPELLANT ARE DISMISSED. 7. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT FROM A BARE PERUSAL OF THE REASONS RECORDED IT CA N BE SEEN THAT THESE ARE PURELY VAGUE AND GENERAL AND NO CORR ELATION OF REASON TO BELIEVE WITH ANY MATERIAL INFORMATION ON RECORD. THE REASONS RECORDED MUST AT LEAST PRIMA FACIE DISCUSS THE MATERIAL HAVING PROXIMATE NEXUS WITH THE ESCAPEMENT OF THE INCOME. THE VALIDITY OF RE-ASSESSMENT PROCEEDINGS H AS TO BE TESTED ON THE BASIS OF MATERIAL REFERRED TO IN THE REASONS RECORDED ALONE. HERE IN THIS CASE WHAT HAS BEEN ME NTIONED IN THE REASONS RECORDED HAS NO CORRELATION WITH MAT ERIAL WHICH HAS BEEN DISCUSSED IN THE ASSESSMENT ORDER AN D SINCE ALL THIS IS NOT PART OF REASONS RECORDED THEREFORE SAME CANNOT BE CONSIDERED AS RELEVANT MATERIAL FOR PURPOSE OF C ONSIDERING THE VALIDITY OF REASONS RECORDED. 8. ON THE OTHER HAND LD. DR AFTER REFERRING TO THE OBSERVATION MADE BY THE ASSESSING OFFICER AND LD. C IT(A) I.T.AS. NO.1060 & 1061/DEL/2015 12 SUBMITTED THAT HERE IN THIS CASE THE ASSESSING OFFI CER HAS DISCUSSED THE ENTIRE DETAILS AND THE INVESTIGATION REPORT WHEREIN THE ASSESSEE WAS FOUND BENEFICIARY OF ACCOMMODATION ENTRY IN THE SEARCH CONDUCTED IN THE CASE OF SHRI S.K. JAIN GROUP. HE FURTHER STATED THAT THE IN FORMATION RECEIVED FROM INVESTIGATION WING WAS A VALID INFORM ATION/ MATERIAL AVAILABLE WITH THE AO REOPENING THE CASE. THE INVESTIGATION REPORT RECEIVED ALONG WITH THE RELEVA NT EXTRACT OF ANALYSIS AND MODUS OPERANDI OF PROVIDING ACCOMMODAT ION ENTRIES IN GARB OF SHARE APPLICATION MONEY IS ELABO RATELY DISCUSSED IN THE INVESTIGATION REPORT. THE ANNEXURE S RECEIVED WITH THE REPORT AND COMPLETE INVESTIGATION CARRIED THROUGH THE BANKS STATEMENTS OF THE ACCOMMODATION ENTRY PR OVIDERS AND BENEFICIARIES OF THE ENTRIES DOCUMENTS SEIZED FROM THE PREMISES OF SH. S.K JAIN AND HIS BROTHER V.K JAIN A MPLY ESTABLISH THAT BOGUS ACCOMMODATION ENTRIES IN GARB OF SHARE APPLICATION MONEY WERE TAKEN BY THE ASSESSEE. IN SO FAR AS FORMING A BELIEF OF INCOME ESCAPING ASSESSMENT AND SUBSEQUENTLY RECORDING OF REASONS IS CONCERNED IT IS SEEN FROM ABOVE THAT THERE WAS MORE THAN SUFFICIENT MATE RIAL ON RECORD TO FORM THE BELIEF THAT ASSESSEES INCOME HA D ESCAPE ASSESSMENT FOR THE RELEVANT YEAR. THE INVESTIGATION REPORT WAS NOT SOME FRIVOLOUS CRYPTIC MUNDANE PAPER ON THE B ASIS OF WHICH THE AO HAD FORMED A BELIEF. IT WAS A VOLUMINO US REPORT RUNNING INTO HUNDREDS OF PAGES WHEREIN THE ASSESSEE S ROLE AS A BENEFICIARY AND THE AMOUNT TAKEN THROUGH VARIOUS BOGUS COMPANIES OF THE ENTRY OPERATOR SH. S.K JAIN WAS ES TABLISHED I.T.AS. NO.1060 & 1061/DEL/2015 13 UNAMBIGUOUSLY AND CORROBORATED BY STATEMENTS RECORD ED AND BANK INQUIRIES CONDUCTED BY THE WING. SO WITH THIS BACKGROUND AVAILABILITY OF MATERIAL ON RECORD FOR FORMING A PRIMA FACIE BELIEF OF ESCAPEMENT OF INCOME IS NOT E VEN QUESTIONABLE. MOREOVER IT IS A SETTLED LAW THAT FO R REOPENING OF ASSESSMENT THE AO IS REQUIRED ONLY TO FORM A PR IMA FACIE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT AND N O CONCLUSIVE PROOF IS REQUIRED FOR THE SAME. IT IS DU RING THE COURSE OF ASSESSMENT THAT THE AO IS REQUIRED TO DO SO BY WAY OF FURTHER INVESTIGATION AND INQUIRIES. FURTHER TH E OBJECTION RAISED BY THE ASSESSEE REGARDING NON-APPLICATION OF MIND BY THE AO WHILE RECORDING REASONS IS ALSO BASELESS AND DEVOID OF MERIT. IT CAN BE APPRECIATED IN THIS BACKGROUND THA T A NATIONWIDE SEARCH WAS CARRIED OUT BY THE INVESTIGAT ION WING ON THE S. K JAIN GROUP AND BUSTED THE ACCOMMODATION ENTRY OPERATING RACKET PREVALENT IN THE COUNTRY INVOLVING SUM OF CRORES OF RUPEES BENEFICIARIES RUNNING INTO THOUSA NDS OF INDIVIDUALS AND COMPANIES. LOT OF INCRIMINATING MAT ERIAL WAS FOUND WHICH (WHICH I SHALL REFER DURING COURSE OF H EARING) WAS FOLLOWED BY EXTENSIVE BANK INQUIRIES AND RECORDING OF STATEMENTS OF THE INVOLVED PARTIES UNDER OATH. THER EAFTER THE INFORMATION WAS ORGANIZED AND REPORT WAS GENERATED WHICH WAS PASSED OVER TO THE FIELD UNITS FOR NECESSARY AC TION ALONG WITH COPY OF SEIZED ANNEXURES OF THE INCRIMINATING MATERIAL. IN CASE OF THE ASSESSEE THE COMPLETE DETAILS OF THE AMOUNT OF ACCOMMODATION ENTRIES TAKEN IN GARB OF SHARE APPLIC ATION MONEY TAKEN THE DETAILS OF BOGUS COMPANIES THE BA NK WHERE I.T.AS. NO.1060 & 1061/DEL/2015 14 IN THE DETAILS OF THE ACCOMMODATION ENTRY TAKEN BY THE ASSESSEE DETAILS OF BANK ACCOUNTS USED FOR THE TRA NSACTIONS THE MIDDLE MAN/ THE AGENT INVOLVED DETAILS OF CHEQ UE NUMBER FOR EACH AMOUNT ETC WAS PASSED TO THE AO. NO W ON THE BASIS OF THIS MATERIAL IN POSSESSION OF THE AO THE REASONS WERE RECORDED. SO WHAT FURTHER APPLICATION OF MIND IS NECESSITATED WITH THIS BACKGROUND? AND PRECISELY WH AT WOULD INCORPORATE APPLICATION OF MIND WHEN ALREADY SUCH A N EXTENSIVE INVESTIGATION HAS BEEN CARRIED OUT? IT IS NOT THAT AS IF ON THE BASIS OF SOME RANDOM DUMB PAPER THE AO H AD REOPENED THE CASE WITHOUT APPLYING HIS MIND. IT IS A COMPLETE INVESTIGATION REPORT AND DOES NOT WARRANT ANY FURTH ER INVESTIGATION AT THIS STAGE AND APPLICATION OF MIND IS A REDUNDANT CONCEPT AT THIS STAGE BOTH THEORETICALLY AND PRACTICALLY. FURTHER WITHOUT PREJUDICE TO THE ABOVE IT IS IMPERATIVE TO POINT OUT THAT AO CANNOT CARRY OUT AN Y KIND OF INQUIRY LET ALONE A PRELIMINARY ENQUIRY IN CASE OF ANY ASSESSEE UNLESS ANY PROCEEDINGS ARE PENDING AGAINST THE ASSESSEE. SO THE STATUE BARS THE AO TO CARRY OUT I NVESTIGATION EXCEPT WHEN THE PROCEEDINGS ARE PENDING. SO IF APP LICATION OF MIND MEANS FURTHER INVESTIGATION THE LAW PRECLUDES THE AO FROM DOING IT. IN LIGHT OF ABOVE THE REVENUE FAILS TO UNDERSTAND AS TO WHAT DOES THE ASSESSEE MEANS BY APPLICATION OF MIND. ALSO IT WOULD BE APPRECIATE D BY THE HONBLE BENCH THAT REOPENING PROCEEDINGS PROVIDED I N THE STATUE ARE FOR BRINGING TO TAX THE INCOME OF THE TA XPAYER IN CASE IT HAS ESCAPED ASSESSMENT. THE AO CAN VERY WEL L DROP I.T.AS. NO.1060 & 1061/DEL/2015 15 THE PROCEEDINGS IF HE/SHE IS SATISFIED AFTER INQUIR Y AND INVESTIGATION IN THE CASE THAT NO INCOME HAS ESCAPE D ASSESSMENT WHICH IS NOT THE CASE WITH SCRUTINY PROC EEDINGS WHEREIN THERE IS NO PROVISION OF DROPPING THE PROCE EDINGS ONCE THE CASE IS SELECTED FOR SCRUTINY. SO BELIEF OF AO REGARDING INCOME ESCAPING ASSESSMENT RECORDING OF REASONS APPLICATION OF MIND SHOULD NOT BE TAKEN TO HYPER-TE CHNICAL LEVEL SUCH THAT IT CAN WORK AS VEHICLE TO VITIATE T HE WHOLE PROCEEDINGS AND RESULTANT ASSESSMENT WHICH IS OTHER WISE VERY STRONG ON MERIT. 9. LD. DR HAS ALSO RELIED UPON CATENA OF JUDGMENTS I N HIS WRITTEN SYNOPSIS WHICH ON PERUSAL OF THE SAME ARE N OT RELEVANT. THE JUDGMENTS RELIED UPON BY THE LD. DR AR E REPRODUCED HEREUNDER: 1. ARADHNA ESTATE (P.) LTD.VS DCIT F20181 91 TAXMANN.COM 119 (GUJARAT) WHERE HONBLE GUJARAT HIGH COURT HELD THAT WHERE REASSESSMENT PROCEEDINGS WERE INITIATED ON BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING THAT A SSESSEE HAD RECEIVED CERTAIN AMOUNT FROM SHELL COMPANIES WORKIN G AS AN ACCOMMODATION ENTRY PROVIDER MERELY BECAUSE THESE TRANSACTIONS WERE SCRUTINIZED BY ASSESSING OFFICER DURING ORIGINAL ASSESSMENT REASSESSMENT COULD NOT BE HELD UNJUSTIFIED. 2. PUSHPAK BULLION (P.) LTD. VS DCIT F20171 85 TAXMANN.COM 84 (GUJARAT) I.T.AS. NO.1060 & 1061/DEL/2015 16 WHERE HONBLE GUJARAT HIGH COURT HELD THAT WHERE INVESTIGATION WING OF DEPARTMENT HAD DURING COURSE OF INVESTIGATION IN CASE OF A THIRD PARTY FOUND THAT H E WAS INDULGED IN PROVIDING ACCOMMODATION ENTRIES AND BOG US BILLS AND ASSESSEE HAD MADE SIZEABLE PURCHASES FROM HIM REOPENING NOTICE AGAINST ASSESSEE WAS JUSTIFIED. 3. ANKIT FINANCIAL SERVICES LTD. VS DCIT T20171 78 TAXMANN.COM 58 (GUJARAT) WHERE HONBLE GUJARAT HIGH COURT HELD THAT WHERE MA TERIAL RECOVERED IN SEARCH OF ANOTHER PERSON INDICATED THA T ASSESSEE HAD RECEIVED BOGUS SHARE APPLICATIONS THROUGH ACCOM MODATION ENTRIES SINCE ASSESSEE WAS BENEFICIARY INITIATION OF RE-OPENING WAS JUSTIFIED. 4. AASPAS MULTIMEDIA LTD. VS DCIT F20171 83 TAXMANN.COM 82 (GUJARAT) WHERE HONBLE GUJARAT HIGH COURT HELD THAT WHERE REASSESSMENT WAS MADE ON BASIS OF INFORMATION RECEIVED FROM PRINCIPAL DIT (INVESTIGAT ION) THAT ASSESSEE WAS BENEFICIARY OF ACCOMMODATION ENTRIES B Y WAY OF SHARE APPLICATION PROVIDED BY A THIRD PARTY SAME WA S JUSTIFIED. 5. ANKIT AGROCHEM (P.) LTD. VS JCIT [2018] 89 TAXMANN.COM 45 (RAJASTHAN) WHERE HONBLE RAJASTHAN HIGH COURT HELD THAT WHERE DIT INFORMED THAT ASSESSEE- COMPANY HAD RECEIVED SHARE APPLICATION MONEY FROM SEVERAL ENTITIES WHICH WERE ONLY ENGAGED IN BUSINESS OF PROVIDING BOGUS ACCOMMODATIO N ENTRIES TO BENEFICIARY CONCERNS REASSESSMENT ON BASIS OF S AID INFORMATION WAS JUSTIFIED. I.T.AS. NO.1060 & 1061/DEL/2015 17 6. MONA MAHESH BHOJANI VS ITO (2017-TIOL-345-SC- IT) SLR DISMISSED AGAINST APPEAL CHALLENGING THE JUDGME NT WHEREBY THE HIGH COURT HAD HELD THAT REOPENING INIT IATED IN CASE OF AN ASSESSEE WHO HAD NOT FILED HIS RETURN C OULD NOT BE CLAIMED BY THE ASSESSEE TO BE BASED ON 'CHANGE OF O PINION'. THE ASSESSEE HAD ALSO CHALLENGED THE ACTION OF HIGH COU RT IN HOLDING THAT WHEN THE AO HAD TANGIBLE MATERIAL AT H IS COMMAND TO FORM A BONAFIDE BELIEF THAT INCOME CHARG EABLE TO TAX HAD ESCAPED ASSESSMENT THE WRIT COURT WOULD NO T INTERFERE WITH THE FORMATION OF SUCH BELIEF UNLESS IT IS SHOW N TO BE WHOLLY PERVERSE. 7. INDU LATA RANQWALA VS DCIT [2017]80TAXMANN.COM102(DELHI)/[2016] 384 ITR 337 (DELHI)/[2016] 286 CTR 474 (DELHI) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE INIT IAL RETURN OF INCOME IS PROCESSED UNDER SECTION 143(1) IT IS NOT NECESSARY IN SUCH A CASE FOR ASSESSING OFFICER TO COME ACROSS SO ME FRESH TANGIBLE MATERIAL TO FORM 'REASONS TO BELIEVE' THAT INCOME HAS ESCAPED ASSESSMENT. 8 KRISHNA DEVELOPERS AND CO VS DCIT (2018-TIOL-51- SC-IT) WHERE HONBLE SUPREME COURT HELD THAT REOPENING ON THE BASIS OF VERY SAME REASONS ON WHICH THE AO INITIALLY DESI RED TO MAKE ADDITIONS BUT HAD FAILED WAS JUSTIFIED IF THE ORI GINAL ASSESSMENT WAS DECLARED AS INVALID AS HAVING BEEN C OMPLETED WITHOUT SERVICE OF NOTICE ON THE ASSESSEE WITHIN TH E STATUTORY PERIOD. I.T.AS. NO.1060 & 1061/DEL/2015 18 9 THAKORBHAI MAGANBHAI PATEL VS ITO [2017] 78 TAXMANN.COM 201 (SC)/[2017] 245 TAXMAN 333 (SC) WHERE HONBLE SUPREME COURT DISMISSED SLP AGAINST H IGH COURT'S RULING WHERE REOPENING OF ASSESSMENT U/S 14 7 WAS HELD TO BE VALID DESPITE THE AO NOT PASSING SPEAKIN G ORDER AGAINST OBJECTIONS FILED BY THE ASSESSEE. 10. THAKORBHAI MAQANBHAI PATEL VS ITO [2017] 79 TAXMANN.COM 409 (DELHI)/[2017] 392 ITR 444 (DELHI) WHERE HONBLE DELHI HIGH COURT HELD AS FOLLOWS: IT IS TRUE THAT IN THE COMMUNICATIONS THE PETITIO NER HAS REQUESTED FOR SUPPLY OF DOCUMENTS. HOWEVER THE PET ITIONER ALSO RAISED THE OBJECTIONS TO THE ASSESSING OFFICER EXER CISING THE POWERS OF REASSESSMENT. IN TRUE SPIRIT IF THESE COM MUNICATIONS WERE EXAMINED THE ASSESSING OFFICER WOULD HAVE REA LISED THAT THE ASSESSEE WAS OBJECTING TO THE PROCESS OF REOPEN ING. IN TERMS OF DECISION OF SUPREME COURT IN CASE OF GKN D RIVESHAFTS (INDIA) LTD. V. ITO [2003] 259 ITR 19/[20021 125 TA XMAN 963 THE ASSESSING OFFICER OUGHT TO HAVE DISPOSED OF THE OBJECTIONS. ORDINARILY WE WOULD HAVE INSISTED ON ASSESSING OFF ICER DOING SO. HOWEVER FACTS IN THE PRESENT CASE ARE SOMEWHAT PECULIAR AND NO USEFUL PURPOSE WOULD BE SERVED IN ENSURING O NLY COSMETIC PURPOSE OF COMPLETION OF FORMALITY AND THE N INVITING A FRESH LITIGATION. UNDER THE CIRCUMSTANCES WE HAVE EXAMINED THE MERITS OF THE PETITIONER'S CHALLENGE TO THE REO PENING ALSO 11 MOHAMMEDALLY NOORBHOY BANDUKWALA TRUST VS ITO (2017-TIOL-341-HC-MUM-IT) WHERE HONBLE MUMBAI HIGH COURT HELD THAT ASSESSMEN T CANNOT BE TERMED AS INVALID FOR NON CONSIDERATION O F ASSESSEE'S I.T.AS. NO.1060 & 1061/DEL/2015 19 OBJECTIONS IF THERE WAS UNDUE DELAY ON THE PART OF ASSESSEE IN OBJECTING TO THE REASONS. 12. ARAVALI INFRAPOWER LTD. VS DCIT (2017-TIOL-42-SC-IT) (COPY ENCLOSED) WHERE HONBLE SUPREME COURT CONFIRMED THE DECISION OF HIGH COURT WHEREBY IT WAS HELD THAT REOPENING OF ASSESS MENT IS JUSTIFIED WHEN THE BANK STATEMENTS AS WELL AS THE ITR FORM DISCLOSING RETURNS RAISES MORE QUESTIONS THAN SATI SFYING THE QUERIES ALREADY RAISED. ARAVALI INFRAPOWER LTD. VS DCIT [2017] 77 TAXMANN.COM 322 (DELHI)/[2017] 390 ITR 456 (DELHI) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE ASSE SSEE- COMPANY FURNISHED ONLY CHEQUE NUMBERS BUT FAILED T O PROVIDE BANK DETAILS OF SHARE APPLICANTS AND IT WAS FOUND T HAT SHARE APPLICANTS HAD MEAGRE INCOME WHILE INVESTING HUGE S UM OF RS. 8 CRORES REOPENING NOTICE WAS JUSTIFIED 13. YOGENDRAKUMAR GUPTA VS ITO (51 TAXMANN.COM 383) (SC)/[2014] 227 TAXMAN 374 (SC) WHERE HONBLE SUPREME COURT HELD THAT WHERE SUBSEQU ENT TO COMPLETION OF ORIGINAL ASSESSMENT ASSESSING OFFICE R ON BASIS OF SEARCH CARRIED OUT IN CASE OF ANOTHER PERSON CA ME TO KNOW THAT LOAN TRANSACTIONS OF ASSESSEE WITH A FINANCE C OMPANY WERE BOGUS AS SAID COMPANY WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IT BEING A FRESH INFORMATION HE WAS JUSTIFIED IN INITIATING REASSESSMENT PROCEEDING IN CASE OF ASSESSEE. 14 RAYMOND WOOLLEN MILLS LTD. V. ITO AND OTHERS [236 ITR 34] I.T.AS. NO.1060 & 1061/DEL/2015 20 WHERE HON'BLE SUPREME COURT HELD THAT IN DETERMININ G WHETHER COMMENCEMENT OF REASSESSMENT PROCEEDINGS WAS VALID IT HAS ONLY TO BE SEEN WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED AT THIS STAGE. 15 R.K. MALHOTRA ITO VS KASTURBHAI LALBHAI [1977] 109 ITR 537 (SC) (COPY ENCLOSED) WHERE HONBLE SUPREME COURT HELD THAT THE INTIMATIO N WHICH THE INCOME-TAX OFFICER RECEIVED FROM THE AUDIT DEPA RTMENT WOULD CONSTITUTE 'INFORMATION' WITHIN THE MEANING O F SECTION 147(B). 16 CIT VS P.V.S. BEEDIES (P.) LTD. M9991 103 TAXMAN 294 (SO/[1999] 237 ITR 13 (SC/[1999] 155 CTR 538 (SC ) WHERE HONBLE SUPREME COURT HELD THAT AUDIT PARTY H AD MERELY POINTED OUT A FACT WHICH HAD BEEN OVERLOOKED BY ASS ESSING OFFICER AND THIS WAS NOT A CASE OF INFORMATION ON A QUESTION OF LAW. REOPENING OF CASE UNDER SECTION 147(B) ON BASI S OF FACTUAL INFORMATION GIVEN BY INTERNAL AUDIT PARTY WAS VALID IN LAW. 17 ACIT VS RAIESH JHAVERI STOCK BROKERS (P.) LTD [2007] 161 TAXMAN 316 (SC)/[2007] 291 ITR 500 (SC)/[2007] 210 CTR 30 (SC) WHERE HONBLE SUPREME COURT HELD THAT SO LONG AS TH E CONDITIONS OF SECTION 147 ARE FULFILLED THE ASSESS ING OFFICER IS FREE TO INITIATE PROCEEDINGS UNDER SECTION 147 AND FAILURE :O TAKE STEPS UNDER SECTION 143(3) WILL NOT RENDER THE ASSE SSING OFFICER POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS EVE N WHEN I.T.AS. NO.1060 & 1061/DEL/2015 21 INTIMATION UNDER SECTION 143(1) HAS BEEN ISSUED AD ANI EXPORTS V. DCIT[1999] 240 ITR 224 (GUJ) WAS DISTING UISHED. 18. MURLIBHAI FATANDAS SAWLANI VS ITO (2016-TIOL-370- HC-AHM-IT) WHERE HONBLE GUJARAT HIGH COURT HELD THAT IT IS NO T OPEN TO THE ASSESSEE TO OBJECT TO THE REOPENING BY ASKING THE A O TO PRODUCE THE SOURCE FROM WHERE THE AO HAS GATHERED THE INFOR MATION FOR FORMING A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PE RUSED THE MATERIAL REFERRED TO BEFORE US AT THE TIME OF H EARING. FROM THE PERUSAL OF THE REASONS RECORDED AS INCORPORAT ED ABOVE FOR THE ASSESSMENT YEARS 2007-08 AND 2009-10 IT IS SEE N THAT ASSESSING OFFICER HAS REFERRED TO INFORMATION RECEI VED FROM DIT (INVESTIGATION)-2 NEW DELHI VIDE LETTER DATED 15.03.2013 THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRY FOR RS.1 25 00 000/- DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08 FROM SHRI SURENDER KUMAR JAIN GROUP CASES WHO IS A ENTRY PROVIDER. SIMILARLY IN ASSESSMENT YEAR 2009-10 ALSO WORDING OF THE REASONS RECORDED A RE IDENTICAL EXCEPT FOR THAT THERE IS NO REFERENCE OF ANY LETTER NUMBER OR DATE OF INVESTIGATION WING. SIMPLY BASED ON THESE FOUR LINES THE ASSESSING OFFICER HAS STATED THAT HE HAS REASON TO BELIEVE THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND THEREFORE INCOME OF RS.1 25 00 000/- HAS ESCAPED ASSESSMENT FOR ASSESSM ENT YEAR 2007-08. FOR ASSESSMENT YEAR 2009-10 HE SIMPLY I.T.AS. NO.1060 & 1061/DEL/2015 22 MENTIONS THAT HE HAS REASON TO BELIEVE INCOME CHARG EABLE TO TAX AMOUNTING TO RS.50 LAC AND ANY OTHER INCOME WHI CH SUBSEQUENTLY COMES TO THE NOTICE HAS ESCAPED ASSESS MENT FOR ASSESSMENT YEAR 2009-10 WITHIN THE MEANING OF SECTI ON 147. 11. FIRST OF ALL THERE IS NEITHER ANY DISCUSSIO N OF ANY INVESTIGATION REPORT AS REFERRED TO BY THE ASSESSIN G OFFICER IN THE ASSESSMENT ORDER OR ANY REFERENCE OF ANY MATERI AL FROM THE REASONS RECORDED. IT IS NOT CLEAR FROM THE REAS ONS RECORDED AS TO WHAT IS NATURE OF THE ACCOMMODATION ENTRY; AN D SECONDLY FROM WHICH ENTITY OR COMPANIES THE ASSES SEE HAD RECEIVED ALLEGED ACCOMMODATION ENTRY. IT IS ALSO NO T CLEAR WHETHER IT IS ON ACCOUNT OF SHARE APPLICATION MONEY OR LOAN OR ANY OTHER KIND OF CREDIT ENTRY FROM ANY SUCH ENTITY . IT IS A WELL TRITE LAW THAT THE REASONS RECORDED AT LEAST SHOULD DISCLOSED THE PRIMA FACIE MATERIAL WHICH HAS PROXIMATE OR LIV E LINK NEXUS WITH SUCH INFORMATION OR MATERIAL THAT THE IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE ASSES SING OFFICER CAN ASSUME JURISDICTION FOR REOPENING THE AS SESSMENT ONLY ON THE BASIS OF MATERIAL REFERRED TO IN THE RE ASONS RECORDED AND REASONS RECORDED ALONE IS THE EDIFICE OR FOUNDATION OF JURISDICTION U/S.147. IF THE REASONS R ECORDED ARE SILENT OR THERE IS NO REFERENCE OF ANY MATERIAL TH EN OTHER EXTRANEOUS MATERIAL REFERRED SUBSEQUENTLY CANNOT JUS TIFY ACQUIRING OF JURISDICTION FOR REOPENING U/S 147. ANY ANNEXURE OR REPORT DISCUSSED IN THE ASSESSMENT ORDER WHICH I S NOT PART OF THE REASONS RECORDED CANNOT BE CONSTRUED AS MATE RIAL FORMING BELIEF U/S.147. THE FORMATION OF REASONS TO BELIEVE I.T.AS. NO.1060 & 1061/DEL/2015 23 CAN ONLY BE SEEN ON THE REASON RECORDED IN WRITING BY THE ASSESSING OFFICER BEFORE ISSUANCE OF NOTICE U/S.148 . THIS PROPOSITION HAS BEEN HELD SO BY THE HONBLE JURISDI CTIONAL HIGH COURT IN THE CASE OF CIT VS. INSECTICIDIES INDIA PVT. LTD. AS REPORTED IN (2013) 357 ITR 330 (DEL); SIGNATURE HOTELS PVT. LTD. VS. ITO REPORTED IN 338 ITR 51 (DEL) AND CIT VS. ATUL JAIN REPORTED IN (2008) 399 ITR 383 (DEL) . 12. EVEN IF THE INFORMATION RECEIVED FROM INVESTIG ATION WING WAS A VALID INFORMATION AND MATERIAL AVAILABLE WITH THE ASSESSING OFFICER THEN AT LEAST ASSESSING OFFICER AFTER APPLYING HIS MIND SHOULD HAVE BROUGHT ON RECORD AT THE TIME OF RECORDING THE REASONS THAT ASSESSEE HAS RECEIVED ACCOMMODATION ENTRY IN THE NATURE OF SHARE CAPITAL OR ANY BOGUS ENTRY BY ANY ENTRY PROVIDER. THE REASONS RECO RDED ITSELF GOES TO SHOW THAT IT IS PURELY BASED ON BORROWED SA TISFACTION AND WITHOUT APPLICATION OF MIND AND SUCH AN APPROAC H HAS BEEN FROWNED BY THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASES OF PCIT VS. MEENAKSHI OVERSEAS P. LTD. (2017) 395 ITR 677 (DEL) AND PCIT VS. RMG POLYVINYL (I) LTD. 396 ITR 5 . LD. DR BEFORE US HAS SUBMITTED THAT ASSESSING OFF ICER HAS DISCUSSED IN DETAIL MODUS OPERANDI IN THE LIGHT OF THE INVESTIGATION REPORT HOWEVER THE REASONS RECORDED DID NOT REFER TO ANY SUCH REPORT OR MATERIAL. WHILE CONSIDE RING THE VALIDITY OF THE REASONS RECORDED WHICH IS AN EVIDE NTIARY FACT AND BASIS NOTHING CAN BE READ OR TAKEN INTO CONSID ERATION WHICH HAS NOT BEEN STATED IN THE REASONS RECORDED. HONBLE DELHI HIGH COURT IN THE CASE OF SIGNATURE HOTELS (SUPRA) HAS I.T.AS. NO.1060 & 1061/DEL/2015 24 HELD THAT EVEN THE ANNEXURE TO THE REPORT GIVING DE TAIL OF ENTRY DID NOT CONSTRUE ANY MATERIAL. HERE IN THIS CASE TH ERE IS NO WHISPER OF ANY SUCH MATERIAL ON RECORD IN THE REASO NS RECORDED. THUS THE REASONS AS INCORPORATED ABOVE A RE NOT ONLY VAGUE BUT DOES NOT HAVE ANY LIVE LINK NEXUS OR CONNECTION FOR THE FORMATION OF BELIEVE IS A MATERI AL ON RECORD. SUCH A VAGUE REFERENCE THAT SINCE INFORMATION HAS B EEN RECEIVED FROM AN INVESTIGATION WING THAT THE ASSESS EE HAS TAKEN ACCOMMODATION ENTRY WITHOUT ANY REFERENCE TO ANY MATERIAL OR NATURE OF ENTRY PROVIDED OR NAME OF ENT ITY WHO HAS PROVIDED SUCH ENTRY IS PURELY VAGUE AND SUCH RE ASONS CANNOT CLOTHE TO THE ASSESSING OFFICER WITH THE JUR ISDICTION TO REOPEN ASSESSMENT U/S.147. ACCORDINGLY THE ENTIRE PROCEEDINGS U/S.143/147 IS VOID ABINITO AND ACCORDINGLY THE RE-ASSESSMENT PROCEEDINGS ARE QUASHED. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST 2021. SD/- SD/- [DR. B.R.R. KUMAR] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST AUGUST 2021 PKK: