TaxTMI 
TaxTMI 
2019 (9) TMI 857
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....l the appeals i.e. ground no. 1 which are identical in all the 03 appeals. For the sake of convenience, the legal ground raised by the Assessee in ITA No. 6677/Del/2018 (AY 2011-12) is reproduced as under:- "1. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the order passed by the AO u/s. 147/143(3) without appreciating that assumption of jurisdiction u/s. 148 by AO was in violation of mandatory jurisdictional conditions stipulated under the Act; 1.1 That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in sustaining the order passed by the AO u/s. 147/143(3) without appreciating that "Rubber Stamp" reasons in present case are based on borrowed satisfaction and are without independent application of mind." 3.1. Ld. Counsel for the assessee stated that AO has completed the assessment in dispute u/s. 147/143(3) of the Income Tax Act, 1961 (in short "Act") without appreciating the facts and circumstances of the case and wrongly assumed the jurisdiction u/s. 148 of the I.T. Act, 1961, which is in violation of mandatory jurisdictional conditions as stipulated under the Act. He further stated that Ld.....
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....m a perusal of the reasons, it is seen that the notice u/s. 148 of the Act has been issued mechanically without application of mind and the satisfaction by the Assessing Officer is only the borrowed satisfaction of the Investigation Wing. The Assessing Officer, without applying his mind, has simply on the basis of information of the Investigation Wing jumped to the conclusion that there is escapement of income. From the perusal of the aforesaid reasons, I do not find any application of mind by the AO for reaching to the conclusion that there was escapement of income except the information from the Investigation Wing. Therefore, I find considerable cogency in the contention of the Ld. Counsel for the assessee that AO has completed the assessment in dispute u/s. 147/143(3) of the Act without appreciating the facts and circumstances of the case and wrongly assumed the jurisdiction u/s. 148 of the Act, 1961, which is in violation of mandatory jurisdictional conditions as stipulated under the Act. He further stated that Ld. First Appellate Authority has wrongly upheld the order of the AO and dismissed the appeal of the assessee without passing any reasonable and elaborate finding as wel....
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....(entry operator) New Delhi that during the financial year 2008-09 the aforementioned assessees has introduced its own money by way of taking bogus accommodation entries provided by Sh. S.K. Jain group of cases (entry operator) the details of accommodation entry amount received as beneficiary is given as under as provided by Investigation Wing : S.No. Beneficiaries Name of Entry Provider Amount Total Amount 1 M/s SBS Realtors P.Ltd. S.K. Jain group 235,00,000/- 235,00,000/- In the light of information provided by the investigation wing, it is necessary to examine and verify the genuineness, identification and creditworthiness of the aforesaid transaction. I have perused details of the cheques/PO received by the above company, the amount, the issuing company, the recipient company, middlemen bank etc. as tabulated below: S. No. From company name To company name Name of the issuing bank Chq./RTGS/ PO Ch./Date Amount Name of the middle men 1 AD Fin Capital Services P.Ltd. SBS Realtors Pvt.Ltd. Axis P.O. No.023905 17.04.2008 1,000,000/ - Rajesh Aggarwal 2 Shakini Holding Ltd. SBS Realtors Pvt.Ltd. Axis P.O. No.025624 10.06.2008 3,000,000....
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.... perusal of the above reasons, it is seen that the Investigation Wing has supplied certain information to the Assessing Officer with regard to receipt of cheques by the assessee from various companies who are considered to be S.K. Jain group companies by the Investigation Wing. As per the Investigation Wing, the above cheques paid by S.K. Jain group companies were accommodation entries to M/s SBS Realtors Pvt.Ltd. i.e., the assessee. However, what is the material found during the course of search of S.K. Jain group cases which had led to form the belief that all those companies are providing accommodation entries is not mentioned in the reasons recorded. It is also not mentioned whether any of the directors of the above companies have provided accommodation entries to M/s SBS Realtors Pvt.Ltd. It is also not mentioned whether any document was found which led to the belief of giving of accommodation entries by those twelve companies to the assessee. On receipt of above information, the Assessing Officer compared the figures in the balance sheet of the assessee filed for assessment year 2009-10 and he found that the share capital has increased by Rs. 2,35,00,000/-. After recording th....
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....ither to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished." 7. Thus, if the Assessing Officer considered it necessary to ensure that the assessee has not understated the income, he can issue the notice under Section 143(2). However, proviso to above Section provides the time limit within which such notice can be issued. Once that time limit is expired, in our opinion, the Assessing Officer cannot invoke Section 148 just for the purpose of verification. Therefore, in our opinion, in the case under consideration, the reopening of assessment for the purpose of verification of genuineness, identification and creditworthiness of the transaction is not permissible under law and is liable to be quashed. 8. The learned counsel for the assessee has also mentioned that the notice has been issued mechanically without application of mind and the satisfaction by the Assessing Offic....
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....tions. For the assessment years 2004- 05 and 2005-06, the notes disclosed the source of information, the Directorate of Revenue Intelligence, which had sent information based upon the Commissioner of Central Excise's investigations. To add further conditions to be nature of discussions or reasons that the Officer authorizing the notice would have to discuss in the note or decision was beyond the purview of the courts and was not justified. The orders of the Appellate Tribunal could not be sustained. The Appellate Tribunal was directed to hear the Department's appeals on their merits." 9. On the other hand, learned counsel for the assessee has relied upon the catena of judgment before and after the date of above judgment of Hon'ble Delhi High Court wherein the notice under Section 148 simply on the basis of report of the Investigation Wing has been quashed. The same is as under:- (i) Sarthak Securities Co.P.Ltd. Vs. ITO - [2010] 329 ITR 110 (Delhi). (ii) Signature Hotels P.Ltd. Vs. ITO - [2011] 338 ITR 51 (Delhi). (iii) PCIT Vs. G And G Pharma India Ltd. - [2016] 384 ITR 147 (Delhi). (iv) PCIT Vs. RMG Polyvinyl (I) Ltd. - [2017] 396 ITR 5 (Delhi). (v) PCIT Vs. ....
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....enuineness, identification and creditworthiness of the transaction, which is not permissible; (ii) the Assessing Officer has recorded his satisfaction on the basis of mere report from the Investigation Wing. There is no crucial link between the information made available to the Assessing Officer and the formation of belief of escapement of income. There is no basis for coming to the conclusion that the assessee received accommodation entries. The Investigation Wing alleged that the companies which issued cheques to the assessee company are companies of Shri S.K. Jain group and they are entry providers. However, the basis for such conclusion is missing. There is no mention that any document was seized from Shri S.K. Jain group or any director of the 12 companies which have given cheques to the assessee has given the statement that they have provided accommodation entries to the assessee. The Assessing Officer has simply reopened the case on the basis of information provided by the Investigation Wing without any independent application of mind. There is no tangible material which formed the basis for the belief that income has escaped assessment. 12. While taking the above view....