AI Drafter 
TaxTMI 
TaxTMI 
2016 (3) TMI 1344
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....ircumstances of the case and in law, Ld. CIT(A) erred in upholding the reopening action of AO which stands vitiated inter alia for following reasons:- a. Total lack of tangible material/ reasonable cause and jurisdiction. b. Absence of nexus (much less live nexus) between alleged information (unknown whether exists on file or not) and tentative inference drawn; c. Non Application of mind much less independent application of mind d. Total lack of clarity on nature of transaction in reasons recorded 2. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in arbitrarily applying factually distinguishable precedents to mechanically uphold the orchestrated additions m....
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....ing income of Rs. 3,811/-. The return was processed u/s 143(1) of the Income-tax Act, 1961 on 27.1.2003. An information has been received from the DIT(Investigation), New Delhi that the assessee company had received accommodation entries from various companies/ parties to the tune of Rs. 2,00,000/-. These entries are in the nature of accommodation entries and in the reality it is the assessee's own unaccounted money which has been shown in the books of accounts as a receipt from parties/ companies. Accordingly, the case was reopened u/s. 147 of the Income Tax Act after recording the reasons. A notice u/s. 148 of the I.T. Act was issued on 28.8.2006 and was served upon the assessee. In response to the said notice the assessee company vide it....
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....essee appealed before the Ld. CIT(A), challenging the validity of reassessment as well as the additions in dispute who vide impugned order dated 29.10.2012 has dismissed the appeal of the assesseee. 5. Aggrieved with the aforesaid order of the Ld. CIT(A), Assessee is in Appeal before the Tribunal. 6. At the time of hearing, Ld. Counsel of the assessee has only argued the legal ground challenging the validity of reopening u/s. 148 of the I.T. Act by stating that action of the Assessing Officer is illegal, because the same is lacking tangible material / reasonable cause and justification. The action of the Revenue Authorities is in absence of nexus between alleged information and tentative inference; non application of mind much less in....
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....tter no DIT (Inv)-I/2006-07/AE/258 at 16/6/2006 that the above said company have received accommodation entries as above:- Rs.l00000/- on 31.03.2002 from M/s. Rabik Exports Limited Through Corporation Bank Paschim Vihar A/c No.-52199. Rs. 100000/- on 31.03.2002 from Mis. Shashi Sales & Marketing Pvt. Limited Through Corporation Bank Paschim Vihar A/c No.-52351. In reality these accommodation represent the assessee own unaccounted money. The Assessment in this case was completed u/s 143(1) on 27.01.2003. These entries are not shown in the return of income filed on 31 October, 02. In view of the above I have reasons of believe that the income of Rs. 200000/- has escaped assessment for the A. Year 2....
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....uls 143(2) was issued and served. In response to the statutory notices, Shri Rishi Singhal, CA attended the proceedings from time to time. The case was discussed with him." 8.2 After going through the reasons recorded by the AO and the finding given by the Ld. CIT(A) in para 4.2 to 4.4 of pages 5 to 7 of the impugned order, 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 Direct....
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....es were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: "it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries". In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped ass....