TaxTMI 
TaxTMI 
2016 (10) TMI 1109
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.... income from other sources by the AO is unjust, illegal, arbitrary and against the facts and circumstances of the case. 3. Action of the CIT(A) in confirming the addition of Rs. 3,50,986/- made by AO based upon the presumption that the appellant has taken accommodation entry and ignoring all the documentary evidence filed by the appellant in this regard and without confronting the appellant with the documentary evidence and statements relied upon by the AO is unjust, illegal, arbitrary and against the facts and circumstances of the case. 4. Action of the CIT(A) in confirming the charge of interest of Rs. 782,818/- u/s. 234B of the I.T. by the AO is unjust, illegal, arbitrary and against the facts and circumstances of the case. 3. The following grounds raised in ITA No. 2037/Del/2010:- 1. Action of the CIT(A) in confirming the assessment made by the AO u/s. 148 of the I.T. Act in respect of income already disclosed in the original return and taxes paid thereon as applicable is unjust, illegal, arbitrary and against the facts and circumstances of the case. 2. Action of the CIT(A) in confirming the treatment of Short Term Capital Gain of Rs. 98,219/- as income from other sour....
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....g the action of the AO in framing the impugned assessment order without assuming jurisdiction u/s. 147 and that too without complying with the mandatory conditions as prescribed under section 147 to 151 of the I.T. Act, 1961 and the reasons recorded are invalid and contrary to law and facts. He further draw our attention towards the copy of reasons for reopening the case u/s. 148 and stated that no proper reasons were recorded; no nexus between the materials relied upon and the belief formed for escapement of income; no application of mind; no proper satisfaction was recorded before issue of notice u/s. 148; no independent conclusion that there was escapement of income. It was further stated that the case was reopened only on the basis of Investigation Wing information which suffers with serious debility and lacks definiteness, without describing the basic aspects of alleged transaction and in the absence of the same, whole action of the AO gets vitiated. To support his contention he submitted that the issue in dispute is squarely covered in favour of the assessee by the ITAT decision dated 09.1.2015 in the case of G&G Pharma India Limited vs. ITO passed in ITA No. 3149/Del/2013 (A....
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....h PNB, Nehru Place, ND (Source of information floppy disc of DIT (Inv.)-I, New Delhi). Such entires are only in the form of accommodation entries which were taken by the 'A' either agt. Cash payment or in the form of bogus sale/ purchase of shares and share capital. Since the amount of Rs. 35.05 lacs has escaped assessment within the meaning of section 147 of the I.T. Act in the hands of the 'A' for the AY 2002-03, therefore, I have reason to believe that it is a fit case for issue of notice u/s. 148 for issue of notice u/s. 148 for taking necessary action u/s. 147 of the I.T. Act for the F.Y. ending 31.3.03 pertaining to assessment year 2002-03." 9.1 On going through the above reasons recorded by the AO, we are of the view that AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. In our view the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the Directorate of Income Tax (Investigation)-I, New Delhi. Keeping in v....
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.... to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity . 14. In the circumstances, the conclusion reached by the ITAT cannot be said to be erroneous. No substantial question of law arises. 15. The appeal is dismissed." (b) Signature Hotels (P)_ Ltd. vs. ITO and another reported in 338 ITR 51 (Del) has under similar circumstances as follows:- "For the A.Y. 2003-04, the return of income of the assessee company was accepted u/s.143(1) of the Income-tax Act, 1961 and was not selected for scrutiny. Subsequently, the Assessing Officer issued notice u/s.148 which was objected b....