TaxTMI 
TaxTMI 
2015 (7) TMI 1305
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....3. Vide ground Nos.1 and 2 of the appeal, the assessee has challenged the validity of reopening of the assessment under section 147/148 r.w.s. 143(3) of the Income Tax Act, 1961 (in short 'the Act'). 4. Briefly stated, the facts of the case are that for the assessment year 2002-03, the assessee submitted his return of income on 20.5.2002 declaring the total income at Rs. 1,74,390/-. The said return was processed under section 143(1) of the Act. Subsequently, on the basis of information received from Director of Investigation-1, New Delhi, proceedings under section 147 were initiated and notice under section 148 of the Act was issued on 30.3.2009, which was served upon the assessee on same day. In response to the notice under section 148 of the Act, the assessee submitted his return of income declaring the total income at Rs. 1,74,390/- on 29.4.2009. During the course of assessment proceedings, the Assessing Officer issued notices under sections 142(1) and 143(2) of the Act alongwith questionnaire. The Assessing Officer vide questionnaire dated 20.11.2009 required the assessee to show cause as to why the sum of Rs. 10,02,500/- should not be treated as investment from undisclosed so....
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....e at Rs. 1,74,390/-. It is therefore, evident that the assessee has invested a sum. of Rs.l0,02,500/- from his undisclosed income in obtaining these bogus accommodation entries. I have therefore, reasons to believe that income of Rs. 10,02,500/- as above, has escaped investment within meaning 148 of l.T. Act, 1961. Hence it is a fit case for initiation of proceedings u/s 147 of the I.T. Act, 1961. " The contention of the appellant the reopening was done, without examining the return of income of the appellant, is therefore not correct. 4.4 Copy of the reasons was duly provided to the appellant. Perusal of the reasons shows that AO had applied his mind to the information received from the O/o the Director of Income Tax (Inv.), New Delhi. He had compared the formation received with the information available in the return of income and thereafter had reasons to believe that income of Rs. 10,25,500/- had escaped Assessment. In these circumstances the contention of the appellant that the notice Was served without application of mind is not correct. The assessment proceedings Were reopened on the basis of information received from DIT(Inv.), New Delhi. For acquiring jurisdiction u/s ....
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.... 4.5 After initiation of proceedings, the A.O. could conclude on the basis of other information and explanation of the appellant that no income had escaped assessment, yet for acquiring the jurisdiction, the A.O. could still have valid basis on the basis of information available at the time of initiating action u/s 147/148 of the Act to have prima-facie reason to believe that such income escaped assessment. The information received by the A.O., as mentioned above, could very well make him prima-facie have such reason to believe that income escaped assessment. Further, as the AO has initiated the proceedings on the basis of above mentioned specific information it could not be said that the action of the A.O. was on the basis of certain surmises or conjectures only. It could also not be said that the material in possession of the A.O, could just make him have reason to suspect and not reason to believe that income escaped assessment. Moreover adequacy of satisfaction of AO is not justice-able as was held by Hon'ble Punjab & Haryana High Court in the case of Gurera Gas Cylinders Pvt. Ltd. Vs. CIT (258 ITR 170) and in case of Swaraj Engine Ltd, Vs. ACIT (260 ITR 202) following the ....
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.... Punjab and Haryana High Court dated 6.12.2010 in Income Tax Reference Nos. 15 of 2000, in the case of The Commissioner of Income Tax, Amritsar, Versus Rajbir Singh Karta of Ch. Kesho Dass (HUF), Pathankot. In view of the above facts and the case laws discussed above, this ground of appeal is dismissed." 6. I have heard the rival submissions and have also perused the materials available on record. Admittedly, in this case the return filed by the assessee on 20.5.2002 was processed under section 143(1) of the Act. Subsequently, information was received from the office of Director of Investigation-I, New Delhi to the effect that the assessee has received bogus accommodation entries for a total sum of Rs. 10,02,500/- from S/Shri Vipin Kumar and Ashok Kumar Vindal from bank account No.8378 and 11282 respectively in Jai Laxmi Cooperative Bank, Fatehpuri, New Delhi as under : Sr.No. Name of the persons having bank account in your branch Bank A/c No. Date Amount In favour of 1. Shri Vipin Kumar 8378 05.03.02 5,01,250/- Shri Ishwar Dass Garg, Ludhiana 2. Shri Ashok Kumar 11282 05.03.02 5,01,250/- Shri Ishwar Dass Garg, Ludhiana 7. In view of the nature of the ab....
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....stigation by reopening the case u/s 148 of the Income-tax Act, 1961. In view of the gift received by the assessee notice u/s 148 is issued for the assessment year 2002-03." 9. In the case of Ms.Sushila Singla (supra), the learned CIT (Appeals) observed that the information received by the Assessing Officer constituted 'reason to believe', prima facie that the income chargeable to tax had escaped assessment in the hands of the assessee. He further observed that the Assessing Officer has initiated the proceedings on the basis of specific information and, therefore, it cannot be said that the action of the Assessing Officer was on the basis of surmises or conjectures only. When the matter came up in appeal before the Tribunal, this Bench of the Tribunal uphold the order of the learned CIT (Appeals), observing as under : "9. In the present case originally return filed by the assessee on 6.9.2003 was processed u/s 143(1) of the Act and a notice u/s 148 was issued on 20.3.2008. The assessee has challenged the validity of reopening of assessment as per the submissions noted herein above. As regards the scope of the expression 'reason' in the phrase 'reason to believe' and also the scop....
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....nfer jurisdiction under section 147(a) two conditions were required to be satisfied : firstly the Assessing Officer must have reason to believe that income, profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso. 18. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to in....
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....nt No. 16503 of Shri Jagdish Duggal maintained with Canara Bank, Bharat Nagar Chowk, Ludhiana. The Assessing Officer has also this information that the nature of this entry was an accommodation entry. In my opinion, the above information / material received by the Assessing Officer was relevant and afforded a live link or nexus to the formation of the prima facie belief that income chargeable to tax had escaped assessment in the assessee's hands. Therefore, there is no merit in the submissions made on behalf of the assessee that reopening of the assessment was invalid. While taking such a view I am fortified by the decision of Hon'ble Delhi High Court in the case of Rajat Export Import India Pvt. Ltd v ITO (2012) 341 ITR 135 (Delhi) wherein the Hon'ble Delhi High Court observed as under:- "At the stage when reasons are recorded for reopening the assessment, the Assessing Officer is not required to build a fool proof case for making addition to the assessee's income ; all that he is required to do at that stage is to form a prima facie opinion or belief that income has escaped assessment. The relevancy of the material before the Assessing Officer is to be judged only from ....
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.... appeal. 11. Vide ground No.3 of the appeal, the assessee has challenged the action of the learned CIT (Appeals) in confirming the addition of Rs. 10,02,500/- allegedly borrowed from S/Shri Vipin Kumar and Ashok Kumar Vindal. The learned CIT (Appeals) confirmed the addition of Rs. 10,02,500/- for the reasons stated in paragraphs 7.3 to 7.8 of his order. The learned CIT (Appeals) confirmed the addition on the ground that the assessee failed to establish the genuineness of the transactions and the creditworthiness of the creditors. He further observed that by merely claiming that the credits were unsecured loans and by submitting the confirmations of so-called creditors, the genuineness of the transactions has not been proved. 12. I have heard the learned representatives of both the parties at length. It is well settled law that in order to discharge the onus, the assessee is required to prove the following ingredients : i) the identity of the creditor, ii) the capacity of the creditor to advance money; and iii) the genuineness of the transaction. 13. S/Shri Sudhir Sehgal and Ashok Goyal, learned counsel for the assessee submitted that during the course of assessment proceed....