TaxTMI 
TaxTMI 
2017 (7) TMI 575
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.... appeal on 15th February, 2017, the following question of law was framed by the Court for consideration: Did the ITAT and the CIT(A) fall into error in holding that the reassessment was not justified in law in the circumstances of the case? 3.The Assessee filed its return of income on 25th November, 2003 for AY 2003-04 declaring an income of Rs. 76,340. 4. On 31st March, 2010, the Assessing Officer ('AO') served a notice on the Assessee under Section 148 of the Act stating that he has reasons to believe that income of Rs. 95,65,510 had escaped assessment which was based on a report of the Directorate of Income-Tax (Investigation). The 'reasons to believe' as noted by the AO and as supplied to the Assessee read as under: "Return ....
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....evant assessment records to the Addl. Commissioner of Income Tax, Range-9, New Delhi for consideration and necessary approval in accordance with the provisions of section 15l (2) of the IT Act, 1961 for issuance of notice u/s 148 of the 1.T. Act. 5. Annexure B to the reasons set out the details of the entries which were 19 in number totalling Rs. 95,65,510/-. 6. The objections raised by the Assessee were rejected by the AO by an order dated 24th September, 2010. The AO proceeded to pass an assessment order under Section 144 read with Section 147 of the Act on 16th December, 2010 making an addition of Rs. 95,65,510 to the declared income of the Assessee. 7. The Assessee then went in appeal before the CIT (A), who by order dated 19th....
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....s particular item did not feature as part of the reasons to believe recorded by the AO in that case in support of the notice issued under Section 147 of the Act. The Court had analysed the material placed on record and found that the total amount of alleged accommodation entries worked out to Rs. 55,44,816 and in that regard the Assessee's explanation "was somewhat accepted". It was to the limited extent of Rs. 1, 10,896/- that was held to constitute the commission that could be said to be reasonably earned by the Assessee. Therefore, this was not a case of non-application of mind by the AO to the material available with him prior to the reopening of the assessment. 10. The second decision relied upon by Mr Kaushik is A.G. Holdings Pvt. ....
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....t to the returned income of the Assessee. This is a classic case of non-application of mind by the AO. 12. In a recent decision in Principal Commissioner of Income Tax-6 v. Meenakshi Overseas (P) Ltd. [2017] 82 taxmann.com 300 (Delhi), this Court observed as under: "22. As rightly pointed out by the ITAT, the 'reasons to believe' are not in fact reasons but only conclusions, one after the other. The expression 'accommodation entry' is used to describe the information set out without explaining the basis for arriving at such a conclusion. The statement that the said entry was given to the Assessee on his paying "unaccounted cash" is another conclusion the basis for which is not disclosed. Who is the accommodation entry ....