TaxTMI 
TaxTMI 
2016 (3) TMI 1159
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....IT(A) erred in upholding the reopening *action of ld. Assessing Officer which stands vitiated inter alia for following reasons: a) Total lack of tangible material/reasonable cause and justification. b) Absence of nexus (much less live nexus) between alleged information (unknown whether exists on file or not) and tentative inference drawn. c) Non Application of mind much less independent application of mind. d) Total lack of clarity on nature of transaction in reasons recorded. 2. The brief facts of the case are as under: The return of income for the AY 2004-05 was filed on 30.10.2004 declaring an income of Rs. 2,050/-. The same was processed u/s 143(1) of the Act. Subsequently, the case was reopened u/s 147, and assessment was com....
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....so far as this amount is concerned. Therefore, this case is fit for issuing notice u/s 148 of the Income Tax Act, 1961. In this case the assessment was made u/s 143(1), not u/s 143(3) of the I.T. Act, 1961. I am therefore, satisfied that the said income, on account of accommodation entry worth Rs. 5,00,000/- received by the assessee has escaped assessment and accordingly after recording the above said reasons as laid down under the provisions of section 148(2) of the Income Tax Act, 1961notice u/s 148 is being issued." 2.2 Subsequently, the assessment was completed u/s 143(3) read with 147 of the Act at an income of Rs. 76,01,050/- making an addition of Rs. 74,50,000/- u/s 68 of the Act and commission of Rs. 1,49,000/-. 3. Aggrieved by th....
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....to the facts and circumstances of the case before us. The ld. AR submitted that reasons to believe cannot be the reason to suspect. He submitted that reason to believe must be based on tangible materials on record, which leads to the formation of a prima facie opinion of escapement of income in the hands of the assessee. The ld. AR placed his reliance on various judgments of Hon'ble Supreme Court, Hon'ble High Court and coordinate Benches of this Tribunal, to substantiate his arguments. 7. On the contrary the ld. DR submitted that assessment has been reopened on the basis of the investigation report obtained from the Investigation Wing. The ld. DR submitted that the decision of Hon'ble Jurisdictional High Court in the case of Nova Promoter....
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.... said tabulated instrument are in the nature of accommodation entry. The Assessing Officer proceeded to take action u/s 147/148 of the Act, solely by mentioning the details received from DIT(Inv.) and without any further verification, examination or any other exercise. He then proceeded to initiate reassessment proceedings and notice u/s 147/148 of the Act. It is relevant to note that the Assessing Officer has not mentioned nature of transaction which was effected for alleged accommodation entry and even without mentioning the date of recording of reasons. 7.3. The ld. AR relied upon the decision of Hon'ble jurisdictional High Court in the case of CIT vs. G&G Pharma in ITA no. 545/2015 vide order dated 08.10.2015, wherein the lordships hel....
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....ty by the Supreme Court in the decisions discussed hereinbefore, 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." 8. In the facts of the present case the ld. Assessing Officer has set out the entry, stated to have been received by the assessee amounting to Rs. 5 lacks. The ld. AR submits that Rs. 5 lacks has been paid by the assessee in the name of Shubham Electronics by way of share application money. The ld. Assessing Officer termed these entries as accommodation entry, which information was given to him by the Directorate of Investigation. The ld. Assessing Officer has stated that "the above instr....