TaxTMI 
TaxTMI 
2019 (12) TMI 977
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....uch proceeding, statement of Sh. Kishori Sharan Goel was recorded on oath. The Investigation report, statement and other details were perused, examined and placed on record. As per statement of Shri Kishori Sharan Goel recorded under section 131(1A) of I.T Act, 1961, he is in business of providing bogus billing/accommodation entries of sales/ purchases to various parties/and the modus operandi was receiving cheque from beneficial concern [that bogus sales] and returning the amount through the bank accounts of the concern operated by Shri Kishori Sharan Goel and returning the same in case after withdrawn from the Bank Account on the same day or very next day to the beneficial entity after deducting commission. Also receiving cash from beneficial concerns who took bogus sales and returning the amount through bank accounts of the concern operated by Shri Kishori Sharan Goel and his Associates. In his statement, Shri Kishori Sharan Goel has admitted that certain concerns were controlled by him through the proprietors that are merely signing authorities and were used for providing bogus bills/accommodation entries of sales/ purchases to various parties. In his statement, he has specific....
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....e further addition of Rs. 52,91,51,396/- and passed the assessment order under section 144/147 of the Income Tax Act, 1961, Dated 26th December 2017. 4. The assessee challenged the reopening of the assessment as well as both the additions before the Ld. CIT(A). The detailed written submissions of the assessee is reproduced in the appellate order. The assessee in the same has submitted that notice issued under section 148 is barred by time and that notice issued under section 148 have returned to the A.O. and have not been served upon the assessee. It was also submitted that the reasons to believe recorded are not reasons but conclusion of the A.O. only by reproducing report of the Investigation Wing. It was a borrowed satisfaction only. It was submitted that no notice have been served upon the assessee on last known address. It was submitted that all the additions are based on incorrect facts. The A.O. in the rejoinder reiterated the facts stated in the assessment order. Copy of the speed post record is reproduced in the appellate order, in which, at Sl. No.9 name of the assessee have been mentioned with the following details - "Devki Nandan Bindal, Proprietor, M/s. Yogesh Tradi....
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....f Ranbaxy Laboratories Ltd., vs. CIT 336 ITR 136 (Del.) on the proposition that "for second addition which is not mentioned in the reasons, if no fresh notice have been issued under section 148, reopening would be bad in Law." He has relied upon Order of ITAT, Mumbai G-Bench in the case of Juliet Industries Limited, Mumbai vs., ITO 6(3)(3), Mumbai in ITA.No.5452 & 5975/Mum/2016 Dated 4th April, 2018, in which the Tribunal "following the Judgment of the Hon'ble Bombay High Court in the case of Ranbaxy Laboratories Limited (supra) in similar circumstances quashed the reopening of assessment". He has also relied upon the Order of ITAT, Kolkata B-Bench in the case of M/s. Arati Engineering & Construction Co., Hooghly vs., ITO, Ward-1(2), Hooghly in ITA.No.2152/Kol./2014, Dated 22.11.2019 in which the appeal of assessee has been allowed by holding that "we note that if the recorded reasons shout contradiction and inconsistency, it means necessary satisfaction in terms of statutory provision has not been recorded at all." Learned Counsel for the Assessee, therefore, submitted that reopening of the assessment is bad in Law, illegal and is liable to be quashed. 6. On the other hand, Ld.....
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....ntry of sales/purchase to various parties and the modes operandi was receiving cheque from beneficiary concern (that booked bogus purchase) in the bank accounts of his concerns and returning the same in case after withdrawing from the bank account on the same day or the very next day to the beneficiary entity after deducting commission. Also, receiving cash from beneficiary concerns (that booked bogus sales) and returning the amount trough the bank accounts of the concerns operated by Mr. Kishori Sharan Goel and his associates. In his statement Sh. Kishori Sharan Goel has admitted that certain concerns were controlled by him through the proprietors that are merely signing authorities and were used for providing bogus billing/accommodation entry of sales/purchase to various parties. In his statement he has specifically admitted in his reply to question no.17 that the firm M/s JMD International whose proprietor is Sh. Anand Singh has been used for providing bogus accommodation entries. I have examined the statement of the Bank Accounts No.910020000560939 of M/s. JMD International maintained with Axis Bank, and found that M/s Yogesh Trading Co., 6244-C, Kucha Shiv Ma....
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.... wrong and incorrect findings that payment of Rs. 15 lakh was made to M/s. JMD International and in the same line it is stated that it is nothing but an accommodation entry taken by the assessee. Again he has held in the assessment order that assessee has taken accommodation entry of Rs. 15 lacs from M/s. JMD International which has to be added in his hand. However, while concluding the issue, he has made addition of Rs. 15 lacs on account of unexplained expenditure. All these facts clearly show that A.O. has not applied his mind to the information received from Investigation Wing. It is only a borrowed satisfaction. The A.O. without any justification has recorded in the reasons that assessee has taken accommodation entry from M/s. JMD International. Further it is not a denying fact that assessee has made payment to M/s. JMD International. Therefore, it can never be unexplained expenditure of the assessee. The A.O, therefore, recorded in correct and wrong facts in the reasons for reopening of assessment as well as in the assessment order. In the case of DCIT, Rohtak Circle, Rohtak vs., M/s. KLA Foods (India) Ltd., New Delhi in ITA.No.2846/Del./ 2015 & C.O.No.333/Del./2015 in ITA.No....
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.... ITA.No.2846/Del./2015 & CO.No.333/Del./2015 M/s. KLF Food (India) Ltd., - A.Y. 2007-2008 : 3. Briefly the facts of the case are that on the basis of information received by Assessing Officer from DIT (Inv.)-II, New Delhi, Dated 15th March, 2013 that the assessee has taken accommodation entries amounting to Rs. 1.50 crore in the shape of share capital from various companies, in order to verify the genuineness of the said investors, notice under section 148 was issued on 28th March, 2013. The Assessing Officer asked the assessee to explain the share capital received from 07 Investors. The Assessing Officer after considering the material on record, in the light of report of Investigation Wing, made the addition of Rs. 1.50 crores on account of unexplained credit. 3.1. The assessee challenged the addition before the the Ld. CIT(A). Ld. CIT(A) noted that all the investor companies are assessed to tax under section 153C/153A of the Income Tax Act, 1961 and nothing adverse was found against the assessee during the course of assessment. Therefore, addition was deleted. 3.2. The Revenue is in appeal challenging the deletion of addition of Rs. 1.50 cror....
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....id not say if assessment have already been framed under section 143(3). Even the nature of the credit is not mentioned in the reasons. No particulars of accommodation entries have been mentioned. He has relied upon decision of Delhi High Court in the case of Signature Hotels (P) Ltd., 338 ITR 51 (Del.) He has submitted that reassessment is initiated on mere suspicion only. He has referred to page-1 of the paper book filed by the Departmental Representative in which the ACIT of the Investigation Wing has directed to issue notice under section 147/148 of the Income Tax Act, 1961 after recording reasons. He has submitted that all the Investors are assessed to tax and no material found during the course of search have been supplied to the assessee. He has submitted that proceedings are initiated on mere suspicion which is not reason to believe and based on no tangible material. He has submitted that reopening of assessment may be quashed. 4. On the other hand, Learned Departmental Representative relied upon order of the Assessing Officer and referred to information received from Investigation Wing, copy of which, is filed at Page-1 of the paper book of the Department, which is....
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....his Circle, has availed the following accommodation book entries :- Sr.No. Name of the Company PAN F.Y. 2006-07 Amount (Rs.) 1. M/s. KLA Foods (India) Ltd., AACCK8299G 1,50,00,000/- Therefore, I have reason to believe that income to the tune of Rs. 1,50,00,000/- has escaped assessment. Issue Notice under section 148 of the Income-tax Act, 1961 for the assessment year 2007-2008. Dated : 25th March, 2013 Sd/- S. Dayal Assistant Commissioner of Income-tax, Rohtak Circle, Rohtak". 5.1. The relevant provision of Section 147 of the Income Tax Act provides as under : "147. If the [Assessing] Officer [has reason to believe] that any income chargeable to tax has escaped assessment for any assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereaft....
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....Officer examined the issue of share capital and charging of share premium and ultimately assessed the income at NET LOSS, without making any addition on account of share capital/share premium. The Assessing Officer did not mention in the reasons if assessee filed original return of income and whether assessee has been assessed under section 143(3) of the Income Tax Act. The Investigation Wing has required the Assessing Officer to reopen the assessment. It, therefore, appears that reassessment proceedings are initiated on mere suspicion and that reason to suspect is not the same thing as "reason to believe". The A.O. recorded vague reasons based on no evidence at the dictate of Investigation Wing only. Thus, there is totally non- application of mind on the part of the Assessing Officer to record reasons for reopening of the assessment. The Assessing Officer did not mention any material facts in the reasons, therefore, reopening of assessment is clearly illegal and bad in law. In the case of Signature Hotels P. Ltd., vs., Income Tax Officer And Another (2011) 338 ITR 51 (Del.) the Hon'ble Delhi High Court held as under : "Held allowing the petition, that the reassessment pro....
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....ready assessed under section 143(3) in the original assessment, in which, Assessing Officer has already examined the issue of share capital/premium and what was the material produced before him regarding accommodation entry. The Assessing Officer did not record as to who has provided accommodation entry to assessee in the reasons. Thus, there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment under section 147 of the Income Tax Act, 1961. 5.7. In view of the above, it is clear that in the instant case the Assessing Officer reopened the assessment after 04 years from the end of the assessment year and Assessing Officer has failed to specify if there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment under section 147 of the Income Tax Act, therefore, conditions of Section 147 of the Income Tax Act are not satisfied in this case. Further, the reasons are vague and do not disclose any incriminating material against the assessee. The decisions relied upon by Learned Counsel for the Assessee squarely apply to facts of case. Therefore, reopening of the ....
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....ived from DIT (Inv.)-II, New Delhi, vide letter F.No.DIT (Inv.)-II under section 148/2012-13 dated 15.03.2013. On the basis of search in the cases of Shri Surendra Kumar Jain group of cases (entry operator) and further enquiries the DDIT (Inv.) has suggested the notice under section 148 in following cases for the A.Y. 2007-08 is required to be issued to bring to tax the undisclosed income regarding the accommodation entries obtained by the companies. 2. After going through entries it is revealed that M/s. Param Exim Ltd., who is assessed with this Circle, has availed the following accommodation book entries :- Sr.No. Name of the Company PAN F.Y. 2007-08 Amount (Rs.) 1. M/s. Param Exim Ltd., AACCP9669B 3,20,00,000/- Therefore, I have reason to believe that income to the tune of Rs. 3,20,00,000/- has escaped assessment. Issue Notice under section 148 of the Income-tax Act, 1961 for the assessment year 2007-2008. Dated : 25th March, 2013 Sd/- S. Dayal Asst. Commissioner of Income-tax, Rohtak Circle, Rohtak". 9.1. Learned Counsel for the Assessee submitted that apart from the fact that the issue is same as ha....
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....dation entry as informed by Investigation Wing have been mentioned at Rs. 3.20 crores which in fact was Rs. 2.20 crores. Such fact is mentioned in the balance sheet of the assessee, copy of which is, filed at Page-10 of the paper book, which is also supported by the list of Investors filed at Page-21 of the paper book. The Assessing Officer in the reasons for reopening has also mentioned incorrect F.Y. 2007-2008 instead of F.Y. 2006-2007. Therefore, the reasons are based on wrong facts, which clearly show that there was no application of mind on the part of the Assessing Officer while recording reasons for reopening of the assessment. We, therefore, considering the above discussion and following the reasons for decision in the case of M/s. KLF Food (India) Ltd., (supra), hold that assumption of jurisdiction by the Assessing Officer for reopening of the assessment is illegal and bad in Law. We, accordingly, set aside the orders of the authorities below and quash the reopening of assessment in the matter. Resultantly, all additions stand deleted. In view of the above, there is no need to decide the Departmental Appeal on merit in which Ld. CIT(A) has already deleted the addition. ....
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....ation entry taken by the assessee ? The Ld. D.R. admitted that no notice have been issued by the A.O. while proposing to make this addition of Rs. 52.91 crores. The issue is, therefore, covered in favour of the assessee against the Department by Judgment of Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Limited vs., CIT [2011] 336 ITR 136 (Del.) in which in para 18 it was held as under : "We are in complete agreement with the reasoning of the Division Bench of the Bombay High Court in the case of CIT vs., Jet Airways (I) Limited [2011] 331 ITR 236 (Bom.). We may also note that the heading of section 147 is "income escaping assessment" and that of section 148 "issue of notice where income escaped assessment". Sections 148 is supplementary and complimentary to section 147. Sub-section (2) of section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or re-compute the escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer that the income chargeable to tax has escaped assessment. ....