TaxTMI 
TaxTMI 
2014 (12) TMI 51
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....mation and consequential notice u/s 148 could have been issued in March 2007, instead waiting for last date thereby making assessee's task difficult u/s 68; c. Total lack of tangible material/reasonable cause and justification d. Absence of nexus (much less live nexus) between alleged information (unknown whether exists on file or not) and tentative inference drawn; e. Non Application of mind much less independent application of mind f. Total lack of clarity on nature of transaction in reasons recorded ." 3. Apropos above ground of the asssessee, we have heard arguments of both the sides and carefully perused the record, inter alia rejection of objections of the assessee to initiation of proceedings u/s 147/148 of the Act, reassessment order and impugned order of the CIT(A). We have also considered the ratio of the decisions relied by both the parties. 4. Ld. Counsel for the assessee submitted that on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the reopening action of the AO which stands vitiated as notice u/s 148 of the Act is vague and does not meet the testimony of law. Ld. Counsel further contended that the AO has reco....
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....horities below and submitted that the AO has reason to believe that the assessee has received two amounts of Rs. 2,50,000/- each from alleged accommodation entry providers and, therefore, there was escapement of assessment by the assessee. The DR has also drawn our attention towards reasons recorded by the AO prior to issuance of notice u/s 148 of the Act and submitted that the assessee has taken after paying unaccounted cash to the entry providers as the statement of concerned persons of these concerns to this effect have been recorded before the Investigation Wing. 8. At the outset, we deem it appropriate to reproduce the reasons recorded by the AO for initiation of reassessment proceedings u/s 147 of the Act and issuance of notice u/s 148 of the Act which reads as under:- "In this case information has been received from Director of Income Tax, (Investigation), New Delhi that the assesse has received two amounts of Rs. 250000/- each from FNS Consultancy P Ltd. & Maestro Marketing & Advrt. P Ltd vide instruments No 916272 and 172200 drawn on Federal Bank, Karol Bagh and Karur Vysya Bank Karol Bagh respectively. The said instruments are in the nature of an accommodation carie....
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....a), wherein their Lordships held as under:- "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 required to form an opinion before he proceeded to issue a notice. The validity of reasons, which were supposed to sustain the formation of an opinion, was challengeable. The reasons to believe were required to be recorded by the Assessing Officer. Once the ingredients of section 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 that the Assessing Officer was made aware of the situation by the investigation wing and there was no mention that these companies were fictitious companies. Neither the reasons in the initial notice nor the communication providing reasons remotely indicated independent application of mind. Though conclusive proof was not germane at this stage the formation of belief must be on the base or foundation or platfo....
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....ction 148 is quashed, the assessment order passed in pursuance thereto is also quashed." 10. In view of above, turning to the factual matrix of the present case and from the reasons recorded by the AO, we clearly see that even the nature of the transaction has not been given by the AO in the reasons recorded, much less to establish that the impugned transactions are in the nature of accommodation entries. It has been stated by the ld. Counsel of the assessee during the course of hearing before us that the assessee has only sold the shares through M/s FNS Consultancy P. Ltd. and Maestro Marketing & Advrt. P. Ltd. and the sale consideration was received through banking channels. Ld. Counsel has also stated that the sale proceeds have been duly considered while computing the income of the assessee for the assessment year under consideration. In view of above, we are inclined to hold that the factum of the case of On Exim (supra) are similar to the facts of the present case, hence, in our opinion, the ratio of the decision of Hon'ble Jurisdictional high Court of Delhi in the case of Signature Hotels Pvt. Ltd. (supra) and Sarthak Securities Co.P. Ltd. (supra), the decision of ITAT &E....
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....ut any application of mind and issued notice u/s 148 of the Act. Ld. Counsel of the assessee referred to the details and table in the reasons recorded and pointed out that in the first table, there are four entries of Rs. 1.5 lakh each which comes to Rs. 6 lakh in para (ii). The amount of transaction involved has been mentioned as Rs. 9,50,000/- in para (iii), the income of Rs. 10 lakh has escaped his mention. Ld. Counsel vehemently contended that the AO has taken three different amounts in the script of reason to believe which show that the AO has not applied his mind towards details and information received from the Investigation Wing and this conduct clearly shows non-application of mind by the AO, therefore, initiation of reassessment proceedings u/s 147 of the Act and issuance of notice u/s 148 of the Act is not valid and sustainable. Ld. Counsel has placed reliance on the following decisions of Hon'ble Jurisdictional High Court of Delhi:- i) CIT vs Suren International Pvt. Ltd. (2013) 357 ITR 24 (Del) ii) Signature Hotels (P) Ltd. vas ITO (supra) iii) Decision of ITAT 'B' Bench Delhi in ITA No. 428/D/2010 dated 14.8.2014 in the case of ITO vs M/s Comero Leasing & Fin....
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.... lakh. In para (ii), the amount of transaction of bogus accommodation entries has been mentioned as Rs. 9,50,000 and in para (iii), the income of Rs. 10,00,000 has escaped assessment as mentioned. In this situation, we clearly observe that the AO has taken three different amounts in the reasons recorded for reopening of assessment u/s 147 of the Act and for issuance of notice u/s 148 of the Act. At this point, we take note of the decision of ITAT Delhi 'B' Bench in the case of ITO vs M/s Comero Leasing & Financial Pvt. Ltd. (supra) wherein after considering the ratio of the decision of Hon'ble Jurisdictional High Court in the case of CIT vs Suren International Pvt. Ltd. (supra), it has been held that if the AO had not applied his mind in the reasons recorded, then there would be no belief that income has escaped assessment which can be stated to have been formed based on such reasons as recorded by the AO for issuance of notice u/s 148 of the Act. The relevant operative part of this order of the Tribunal in the case of M/s Comero Leasing & Financial Pvt. Ltd. (supra):- "We find that the identical case was considered by Hon'ble Jurisdictional High Court In the case of Suren I....