TaxTMI 
TaxTMI 
2018 (8) TMI 750
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....otal income of Rs. 1,08,86,710/- by adding an estimated disallowance of Rs. 30,000/- out of vehicle running expenses on account of nonmaintenance of logbook. Subsequently, the Assessing Officer reopened the assessment u/s 148 by recording the following reasons :- "Reasons recorded for re-opening the case of 147/148 of Income Tax Act. In this case assessee has furnished Income Tax Return declaring income of Rs. 1,08,56,711/- and assessment was completed u/s 143(3) at Rs. 1,08,86,711/-. The assessee company had received accommodation entries amounting to Rs. 2 crores as under during the F.Y. 2004-05. S. No. Name of the party Amount Date of receipt 1. Sino Credit 10,00,000 22-02-2005 2. Champ Finvest 10,00,000 22-02-2005 3. Sino Credit 10,00,000 23-02-2005 4. Sino Credit 10,00,000 23-02-2005 5. Vishrut Marketing 15,00,000 25-02-2005 6. Vishrut Marketing 15,00,000 25-02-2005 7. Vishrut Marketing 10,00,000 28-02-2005 8. Champ Finvest 10,00,000 28-02-2005 9. Champ Finvest 10,00,000 28-02-2005 10. Sino Credit 10,00,000 03-03-2005 11. Sino Credit 15,00,000 03-03-2005 12. Champ Finvest 10,00,000 &n....
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....he assessment. However, the ld. CIT(A) was not satisfied with the arguments advanced by the assessee on account of reopening of the assessment and he upheld the reopening by observing as under :- "3.3 I have considered the order of the AO and the submissions of the assessee and I do not find any merit in the submissions of the assessee. The AO had received the information about the accommodation entry and accordingly had recorded the reasons, supplied the reasons to the assessee and has also passed the order u/s 147 regarding the objection of the assessee and as such the AO has fulfilled all the condition and has followed the proper procedure u/s 147 and has redressed the grievance of the assessee regarding the reopening of the assessment. After considering all the facts and circumstances of the case, I am of the view that the AO has followed the proper law and procedure for reopening the assessment and accordingly the action of the AO is confirmed." 6. He, however, deleted the addition of Rs. 2 crores made by the Assessing Officer u/s 68 by observing as under :- "4.3 I have considered the order of the AO and the submissions of the assessee and I find considerable merit in th....
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....g the jurisdictional one in the following cases, (i) Sumati Dayal Vs. CIT [80 Taxman 89 (SC)], (ii) T.P.Abdulla Vs. ACIT [207 Taxmann 24 (Kerala)], (iii) Nova Promoters & Finlease P. Ltd. [342 ITR 169 (Delhi)] and (iv) CIT Vs. N.R. Portfolio Ltd. [29 taxmann.com 291 (Delhi)]. 3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 8. The assessee in his Cross Objection has raised the following grounds :- "1. That the Learned CIT (Appeals) XXI has grossly erred in facts and circumstances of the case in not quashing the assessment order passed pursuant to illegal assumption of jurisdiction under section 147/148 of the Act. 2. That the Learned CIT (Appeals) XXI has grossly erred in not holding that the issue of notice by the Assessing Officer under section 148 of the Act, was illegal and bad in law." 9. The ld. counsel for the assessee at the outset referred to page 4 of the Paper Book and drew the attention of the Bench to reasons recorded for reopening of the case u/s 147/148 for assessment year 2005-06 which has been supported to the case of the assesse....
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....t best can be called as reopening on borrowed satisfaction and there is absence of live link between the reopening of the assessment and material on record. Referring to various decisions including the decisions of the Hon'ble Delhi High Court in the case of Pr.CIT vs. Meenakshi Overseas (P) Ltd. reported in 395 ITR 677, Pr.CIT vs. G&G Pharma reported in 384 ITR 147, Pr.CIT vs. Sabh Infrastructure reported in 398 ITR 19 and Pr.CIT vs. RMG Polyvinyl (I) Ltd. reported in 396 ITR 5, he submitted that the Hon'ble Delhi High Court in the above decisions has categorically held that reopening of the assessment on the basis of report of the Investigation Wing without independent application of mind by the Assessing Officer is invalid. He accordingly submitted that since the assessment in the instant case has been reopened on the basis of report of the Investigation Wing and there is no independent application of mind by the Assessing Officer, therefore, the reopening of the assessment u/s 147 is void ab-initio. 11. So far as merit of the case is concerned, he relied on the order of the ld. CIT(A). 12. The ld. DR on the other hand heavily relied on the order of the ld. CIT(A). He submitte....
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....uch reopening does not satisfy the requirement of law. It has been held in the said decision that the conclusion of the Assessing Officer is at best a reproduction of the conclusion in the investigation report. Indeed it is borrowed satisfaction. The reasons failed to demonstrate the live link between the tangible material and formation of the reasons to believe that income has escaped assessment. 14. We find, following the above decisions the Hon'ble Delhi High Court in the case of RMG Polyvinyl (I) Ltd. (supra) has quashed the reassessment proceedings on the basis of report of the Investigation Wing by observing as under :- "12. Recently, in its decision dated 26th May, 2017 in ITA No.692/2016 (Principal Commissioner of Income Tax-6 v. Meenakshi Overseas Pvt. Ltd.), this Court discussed the legal position regarding reopening of assessments where the return filed at the initial stage was processed under Section 143(1)of the Act and not under Section 143(3) of the Act. The reasons for the reopening of the assessment in that case were more or less similar to the reasons in the present case, viz., information was received from the Investigation Wing regarding accommodation entries....