TaxTMI 
TaxTMI 
2019 (3) TMI 571
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....abad, standing in the name of M/s. Tushar Building Material Supplier, Gautam Budh Nagar. Bank Authorities were requested to put the balance of Rs. 1,78,35,905/- standing to credit in A/c. No.xxx2277 of M/s. A.K. Traders under restraint. Meanwhile, the team immediately visited Punjab National Bank and it was found that by that time the entire amount of Rs. 2.78 crores had been withdrawn in cash. The Bank premises of HDFC, Ghaziabad in the case of Bank A/c. xxx2277 of M/s. A.K. Traders was searched on 11th October, 2010 and balance standing to the credit was seized. The statement of assessee was recorded in which he has stated that he does not know about the source of the amount credited to the account and the entire affairs were being looked after by his brother in law Shri Pankaj Sharma. The A.O. recorded that so many concerns are being operated and the amounts in the accounts have been credited by transfer through RTGS or otherwise and accommodation entries have been provided. A list showing names of beneficiaries and numerous firms who had been given accommodation entries by assessee and others are noted at pages 5 to 13 of the assessment order. The A.O. on the basis of the searc....
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....bmitted that all facts are available on record and it is not in dispute that return of income was filed on 14th March, 2013 and on the same day, A.O. issued notice under section 143(2). Therefore, entire assessment order is a illegal and vitiated and is liable to be quashed. He has submitted that additional ground may be admitted for hearing. PB 35 is order sheet to show that return of income was filed on 14th March, 2013 and on the same day, notice under section 143(2) have been issued to assessee. PB 24 is notice under section 143(2) dated 14th March, 2013. He has a submitted that the issue is covered in favour of the assessee by the order of ITAT, Delhi A-Bench, in the case of Ashtech Industries Pvt. Ltd., Delhi vs. DCIT, Circle-3(2), New Delhi, in ITA.No.2332/Del./2018, Dated 20th December, 2018. He has submitted that a similar view have been taken by ITAT, Delhi SMC-Bench in the case of Satish Kumar, New Delhi vs. ITO, Ward-2(3), Faridabad in ITA.No.3586/Del./2018, Dated 14th January, 2019. 5. On the other hand, Ld. D.R. referred to page 28 of the Ld. CIT(A) order and submitted that assessee did not cooperate with the A.O, therefore, there was no time left with the A.O. to ....
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.... any non-compliance or non cooperation on the part of the assessee as is contended by the Ld. D.R. The contention of the Ld. D.R. is, therefore, rejected. It, therefore, stands established that the A.O. issued notice under section 143(2) on the same day when the return of income was filed by the assessee. Thus, there was no application of mind on the part of the A.O. The entire assessment proceedings are vitiated and are bad in the eye of Law. The issue is covered in favour of the assessee by order of the ITAT, Delhi Bench in the case of Ashtec Industries Pvt. Ltd., Delhi vs. DCIT, Circle-3(2), New Delhi (supra) which is reproduced as under. "IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: 'A' NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. No. 2332/Del/2018 Assessment Year: 2009-10 ASHTECH INDUSTRIES PVT. LTD., D-49, MANSAROVAR PARK, SHAHDARA, DELHI - 110 032 (PAN: AAECA0120G) VS. DCIT, CIRCLE 3(2), NEW DELHI (ASSESSEE) (RESPONDENT) Assessee by: SH. KAPIL GOEL, ADVOCATE Revenue by: SH. SRIDHAR DORA, SR. DR. ORDER PER H.S. SIDHU, JM This appeal is fil....
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....reating the vague and general information of investigation wing and of the AO of the searched party M/s Jain Brothers as sacrosanct without examination with reference to the seized material and the facts of the assessee's case. 11. That the Id CIT(A) has erred in importing approval of the higher authorities u/s 151 on assumptions without existence of the actual correspondence regarding approval and without confronting the assessee with the same.. 12. The appellant craves leave and sanction of the Hon'ble ITAT to file additional evidence, if so required for proper prosecution of the case, based on facts and circumstances, which has not been or could not be adduced or filed before lower authorities either because proper and sufficient opportunity was not provided or because it was not solicited or its need was not appreciated. 13. The appellant craves leave to and permission of the Hon'ble ITAT to add to or alter any of the grounds of appeal at any time up to the final decision of the appeal. 14. The assessment may please be set aside as null and void and addition of Rs. 1,85,00,000/- be deleted or such other relief as your Honors may deem fit under the circum....
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....d in detail as summons have been duly served on them. Mere non production of share holder companies director is argued to be no valid reason for making addition u/s 68 of the Act dehors voluminous evidences filed which has not been objectively and lawfully controverted in manner known to law, in view of following coordinate benches decisions, where similar argument in identical circumstances of additions based on S.K.Jain group search has been deleted u/s 68 of the Act. • Kautilya Monetary Services Pvt ltd ITA 5975/Del/2014 D bench (30/11/2018) ITAT Delhi • Moti Adhesives P Ltd ITA: 3133/Del/2018 SMC 25/06/2018 ITAT Delhi • Heat Flex Cables P Ltd ITA: 2376/Del/2018 SMC 1/8/2018 ITAT Delhi  Alok Fintrade P Ltd ITA: 180/JP/2015 ITAT JAIPUR BENCH • Signature Buildwell Pvt Ltd ITAT Delhi D Bench ITA: 4249/Del/2015 12/12/2018 • SRM Securities Pvt Ltd ITAT G bench ITA 7825/Del/2017 11/12/2018 6. On the contrary, Ld. Sr. DR vehemently opposed the request of Ld. counsel for the assessee and prayed for dismissal of additional ground application. However, on the merit of the case, he argued that without production....
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....sessment proceedings to confront the back material as referred in reasons recorded namely in letters dated 07/06/2016, 20/10/2016 which request of assessee has not been adverted to by the AO is patent from objection disposal order dated 17/05/2016 and further notices dated 09/08/2016 u/s 142(1) and show cause notice dated 13/10/2016. In none of these notices as placed in paper book, we could find the back material being confronted to assessee as specifically requested by assessee. We note here that the Tribunal in various decisions specially one which is referred by Ld counsel for the assessee extensively in case of Moti Adhesives (ITA 3133/Del/2018) in order dated 25/06/2018 copy placed before us, has been consistently holding while taking support from Hon'ble Apex court leading decision in Andaman Timber Industries case (Civil Appeal No. 4228 OF 2006) reported at 127 DTR 241 that violation of principle of natural justice (here withholding of back material referred in reasons which is specifically requested for repeatedly) is a serious flaw and results in nullity of the order so passed, which is squarely applicable to present case. Be that as it may, even on merits, for the com....
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....uashed by the ITAT and Hon'ble High Court, are mentioned herein below: i) Hon'ble Delhi ITAT in case of Micron Enterprises Pvt. Ltd. Vs. ITO in I.T.A .No. 901/DEL/2016 (A.Y .2006- 07) order dated 14/05/2018 ii) Hon'ble Delhi ITAT in Harsh Bhatia case ITA Nos. 1262/& 1263/DEL/2017 [A.Ys. 2008-09 & 2009-10] Order dated 17.10.2017 iii) Hon'ble Delhi High Court in the case of Director of Income Tax Vs. Society for Worldwide Inter Bank Financial, Telecommunications in ITA No. 441/2010, reported at 323 ITR 249 iv) Section 292BB & Section 143(2) are both dealt succinctly in Delhi High Court decision in case of Silver Line reported at 383 ITR 455 wherein it has been held as under:- "...12. The Court first proposes to consider the question as to whether in terms of the proviso to Section 292BB of the Act, the Assessee was precluded, at the stage of the proceedings before the ITAT, from raising a contention regarding failure of the AO to issue a notice under Section 143(2) of the Act. The legal position appears to be fairly well settled that Section 292BB of the Act talks of the drawing of a presumption of service of notice on an Assessee and is basically a rule of evidence. I....
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.... non application of mind and undue haste on part of AO in issuing notice at same time when return u/s 143(2) of the Act is filed as admitted in order itself, which is sine qua non u/s 143(2) of the Act which uses the phrase "if considers it necessary or expedient", and on expression "considers it necessary" we draw our kind attention to Hon'ble Apex Court decision in case of Bhikubhai Patel vs State of Gujarat (4 SCC 144) relevant extract of which is reproduced below for sake of ready reference (which directly fits in extant facts to support proposition put forth): "...24. Proviso opens with the words where the State Government is of opinion that substantial modifications in the draft development plan and regulations are necessary ..These words are indicative of the satisfaction being subjective one but there must exist circumstances stated in the proviso which are conditions precedent for the formation of the opinion. Opinion to be formed by the State Government cannot be on imaginary grounds, wishful thinking, however, laudable that may be. Such a course is impermissible in law. The formation of the opinion, though subjective, must be based on the material disclosing that a....
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....e reasoning from ITAT decision in case of Micron Enterprises Pvt. Ltd.(supra) on which no contrary decision is brought to our attention: "Learned Counsel for the Assessee submitted that assessee filed reply to the notice under section 148 of the I.T. Act on dated 26.11.2013 which is noted in the assessment order, copy of which, is filed at page-11 of the paper book, in which, assessee explained that the return already filed under section 139(1) may be treated as return filed in response to notice under section 148 of the I.T. Act. He has submitted that on the same day A.O. issued notice under section 143(2) i.e., on 26.11.2013, copy of which, is filed at page-12 of the paper book. He has, therefore, submitted that the A.O. has not validly assumed jurisdiction under section 147 and 143(3) of the I.T. Act to pass the assessment order against the assessee. He has submitted that the issue is covered in favour of the assessee by the judgment of the Hon'ble Delhi High Court in the case of Director of Income Tax vs. Society for Worldwide Interbank Financial Telecommunications (2010) 323 ITR 249 (Del.) in which it was held as under : "Both the CIT(A) and the Tribunal have returned a con....
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....count also, the assessment deserves to be quashed. Accordingly, under the facts and circumstances of the case, the legal grounds of the assessee are allowed." 7. On the other hand, Ld. D.R. submitted that assessee did not file return under section 148 within the specified period. Therefore, this ground of appeal of assessee may be dismissed. 8. After considering the rival submissions, I am of the view that the issue is covered in favour of the assessee by the Judgment of Hon'ble Delhi High Court in the case of Director of Income Tax vs. Society for Worldwide Interbank Financial Telecommunications (supra) and Order of ITAT, Delhi Bench in the case of Shri Harsh Bhatia, New Delhi vs. ITO, Ward-50(3), New Delhi (supra). It is an admitted fact that assessee filed reply in response to the notice under section 148 of the I.T. Act on 26.11.2013 and submitted before A.O. that original return filed before him may be treated as return filed in response to the notice under section 148 of the I.T. Act. The A.O. on the same day served notice under section 143(2) upon assessee-company whose signature tally on the said notice. Therefore, notice issued under section 143(2) is invalid and resultant....
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....fied ground to draw adverse inference u/s 68 of the Act where those share holders are found to be existing and identified in detail as summons have been duly served on them. Mere non production of share holder companies director is argued to be no valid reason for making addition u/s 68 of the Act dehors voluminous evidences filed which has not been objectively and lawfully controverted in manner known to law. For this Ld counsel for the assessee placed before us during the course of hearing a comprehensive chart of case laws from coordinate benches of ITAT where similar argument in identical circumstances of additions based on S.K.Jain group search has been deleted u/s 68 of the Act. Our view is fortified by the following decisions:-  Kautilya Monetary Services Pvt ltd ITA 5975/Del/2014 D bench (30/11/2018) ITAT Delhi (held in crux that "..The Assessing Officer, after going through the evidences furnished by the assessee sat with folded hands and did not make any effort and not made any independent enquiry and made the addition only by relying on the report of the Investigation Wing...")  Moti Adhesives P Ltd ITA: 3133/Del/2018 SMC 25/06/2018 ITAT Delhi (auth....
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....s have held that the Assessing Officer cannot sit back with folded hands and then come forward to merely reject the explanation so made, without carrying out any verification or enquiry into the material placed before him by the assessee. If the Assessing Officer harbours any doubts of the legitimacy of any subscription he is empowered, nay duty-bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the Company. 22. Further, being the reassessment proceedings, where the AO is ceased of certain information and documents, it is incumbent upon him to confront the same to the assessee and allow the latter to file its objections and rebuttal. The additions made, merely relying on these information and documentation, without confronting the assessee cannot be accepted. Besides furnishing the reasons for reopening the assessment to the assessee company, there is nothing on record that such information/documentation was confronted to the assessee. Further, the AO has relied upon the statement of third parties....
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....come tax particulars of share holders, bank statement of share holders and form 2 for allotment of shares along with their audited final a/c in support of share capital recd. to establish its case as stated in reply to Ld AO dated 07/06/2016 (paper book pages 47 to 50). We further find that no where any shareholder company was found to be fictitious or non existing rather all share holder companies are duly found to be existing as summons have been served on them. (Refer Hon'ble Supreme court in Orissa Corporation case 159 ITR 78). We further find that no cogent material is brought on records in assessment order by Ld AO to demolish the copious evidences furnished by assessee. We furtehr find that Ld AO has no where confronted any back material to assessee as stated in facts above. We find that Ld AO nowhere made any independent enquiry from concerned and competent AO of share holder companies etc. We find that only on basis of investigation wing report (unconfronted to assessee) acting purely on borrowed satisfaction without any independent application of mind addition has been made u/s 68 by Ld AO. We find that no where in entire assessment order Ld AO framed his own indepe....