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2020 (1) TMI 157
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....ences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules. Judicial decisions relied upon were carefully perused. 4. Briefly stated, the facts of the case are that return of income declaring income of Rs. 1,92,74,350/- was filed by the assessee on 15.12.2006. Return was subjected to scrutiny assessment and the assessment was framed u/s 143(3) of the Act vide order dated 10.07.2008. 5. Subsequently, a notice u/s 148 of the Act was issued and served upon the assessee. Reasons for reopening the assessment read as under: "Reasons for issue of notice u/s 148 in the case of M/s Spice Global Pvt Ltd (A. Y. 2006-07) Assessment in this case was completed u/s 143(3) of the Income Tax Act, 1961 on 10.07.2008 by the DCIT, Circle 19(1), New Delhi at the returned income of Rs. 192,74,350/-, the return of income having been filed on 15.12.2006. Subsequently the jurisdiction over this case was transferred to f this Circle vide the Commissioner's of Income Tax, Delhi-Ill, New Delhi order I u/s 127 dated 01.09.2008. 2. It has been noticed that during the previous year relevant to the 'assessment year 2006-07 the assessee company has been....
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....(India) Pvt Ltd and M/s BT Technet Ltd are two of such companies. These companies had ostensibly been created for providing a variety of services ranging from consultancy to advertising to Software development. Accordingly bills/invoices had been issued in the names of these companies but in fact no actual services had been rendered by them to the beneficiaries. During the course of search it was found that Shri S.K Gupta did not have the necessary infrastructure or the requisite manpower to provide the actual services and thus it became evident that the companies controlled by him were merely engaged in the business of issuing accommodation bills to other entities TAT the other office premises of Shri S.K Gupta at 231 Gulmohar-1 Enclave, huge number of such accommodation invoices/bills issued by the '"T various Companies were found and seized during the course of search. Apart from these invoices/bills, there was no other evidence which was found from any of the premises which would suggest that actual services were being rendered by any of the companies controlled by Shri S.K Gupta. No documentary or written evidence in support of genuineness of these transa....
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.... year relevant to the assessment year 2006 07 are of the nature of accommodation entries and that income to this extent has escaped assessment. (D. K.Chauhan) Dated the 8th of June, 2010 Dy. Commissioner of Income Tax Central Circle-9, New 6. A perusal of the aforesaid reasons for reopening the assessment show that completed assessment has been reopened pursuant to the search and seizure action conducted at the business and residential premises of one Shri S.K. Gupta on 12.12.2006. Similar actions were conducted in the case of various companies owned / controlled by Shri S.K. Gupta and his family members. There is a reference to two companies, namely, M/s CFAM Soft [India] Pvt Ltd and M/s BT TechNet Ltd. Nowhere in the reasons for reopening assessment there is a mention of what relationship Shri S.K. Gupta or any of his family members had with these two companies and whether they were shareholders having substantial interest, or MDs/Directors of these companies. 7. The reasons further show that huge number of accommodation invoices/bills issued by various companies in which Shri S.K. Gupta or his family members had interest were found and s....
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....se." 10. Exhibits 23 to 34 of the paper books are copies of invoices/bills supporting the genuineness of the transactions. Vide letter dated 30.04.2008, the assessee also filed a confirmation in connection with the payment of software charges from M/s BT TechNet Ltd. 11. It can be seen that specific queries were raised during the original assessment proceedings to which specific replies were filed alongwith supporting documentary evidences. It is the say of the ld. DR that the Assessing Officer did not make any enquiries and has accepted the bills/invoices. We fail to understand what prevented the Assessing Officer to make necessary enquiries as per provisions of law. Neither the Assessing Officer issued any notice u/s 133(6) of the Act nor he cared to summon the officers of the two companies u/s 131 of the Act. 12. A perusal of the assessment order framed u/s 143(3) r.w.s 147 of the Act shows that entire assessment order is devoid of any reference to the statement of Shri S.K. Gupta. It is not known as to what question Shri S.K. Gupta said that M/s CFAM Soft [India] Pvt Ltd and M/s BT TechNet Ltd. were providing accommodation bills. Further, we find that the entire tra....
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...." the source being "the report of the Investigation Wing". 21. The third and last part contains the conclusion drawn by the AO that in view of these facts, "the alleged transaction is not the bonafide one. Therefore, I have reason to be believe that an income of Rs. 5,00,000 has escaped assessment in the AY 2004-05 due to the failure on the part of the Assessee to disclose fully and truly all material facts necessary for its assessment... " 22. As rightly pointed out by the ITAT, the 'reasons to believe' are not in fact reasons but only conclusions, one after the other. The expression 'accommodation entry' is used to describe the information set out without explaining the basis for arriving at such a conclusion. The statement that the said entry was given to the Assessee on his paying "unaccounted cash" is another conclusion the basis for which is not disclosed. Who is the accommodation entry giver is not mentioned. How he can be said to be "a known entry operator" is even more mysterious. Clearly the source for all these conclusions, one after the other, is the Investigation report of the DIT. Nothing from that report is set out to enable the read....
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....on of jurisdiction under Section 147 of the Act. The reasons to believe must demonstrate link between the tangible material and the formation of the belief or the reason to believe that income has escaped assessment. 27. Each case obviously turns on its own facts and no two cases are identical. However, there have been a large number of cases explaining the legal requirement that requires to be satisfied by the AO for a valid assumption of jurisdiction under Section 147 of the Act to reopen a past assessment. 28.1 In Signature Hotels Pvt. Ltd. v. Income Tax Officer (supra), the reasons for reopening as recorded by the AO in a proforma and placed before the CIT for approval read thus: "11. Reasons for the belief that income has escaped assessment.- Information is received from the DIT (Inv.-1), New Delhi that the assessee has introduced money amounting to Rs. 5 lakh during the F.Y. 2002-03 relating to A.Y. 2003- 04. Details are contained in Annexure. As per information amount received is nothing but accommodation entry and assessee is a beneficiary." 28.2 The Annexure to the said proforma gave the Name of the Beneficiary, the value of entry taken,....
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.... believe' read as under: "Certain investigations were carried out by the Directorate of Investigation, Jhandewalan, New Delhi in respect of the bogus/accommodation entries provided by certain individuals/companies. The name of the assessee figures as one of the beneficiaries of these alleged bogus transactions given by the Directorate after making the necessary enquiries. In the said information, it has been inter-alia reported as under: "Entries are broadly taken for two purposes: 1. To plough back unaccounted black money for the purpose of business or for personal needs such as purchase of assets etc., in the form of gifts, share application money, loans etc. 2. To inflate expense in the trading and profit and loss account so as to reduce the real profits and thereby pay less taxes. It has been revealed that the following entries have been received by the assessee:...." 29.2 The details of six entries were then set out in the above 'reasons'. These included name of the beneficiary, the beneficiary's bank, value of the entry taken, instrument number, date, name of the account in which entry was taken and the acc....
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....4266 of M/s. Mehram Exports Pvt. Ltd. in the PNB, New Rohtak Road, New Delhi. Note: It is noted that there might be more such entries apart from the above. The return of income for the assessment year 1997-98 was filed by the Assessee on 4th March 1998 which was accepted under Section 143 (1) at the declared income of Rs. 4,200. In view of these facts, I have reason to believe that the amount of such transactions particularly that of Rs. 5,00,000 (as mentioned above) has escaped the assessment within the meaning of the proviso to Section 147 and clause (b) to the Explanation 2 of this section. Submitted to the Additional CIT, Range -12, New Delhi for approval to issue notice under Section 148 for the assessment year 1997-98, if approved." 30.2 The AO was not merely reproducing the information received from the investigation but took the effort of referring to the deposition made during the survey by the Chartered Accountant that the Assessee company was involved in the giving and taking of bogus entries. The AO thus indicated what the tangible material was which enabled him to form the reasons to believe that income has escaped assessment. It was....
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....asized that the reasons to believe "should have a link with an objective fact in the form of information or materials on record..." It was further emphasized that "mere allegation in reasons cannot be treated equivalent to material in eyes of law. Mere receipt of information from any source would not by itself tantamount to reason to believe that income chargeable to tax has escaped assessments." 35. In the decision of this Court dated 16th March 2016 in W.P. (C) No. 9659 of 2015 (Rajiv Agarwal v. CIT) it was emphasized that "even in cases where the AO comes across certain unverified information, it is necessary for him to take further steps, make inquiries and garner further material and if such material indicates that income of an Assessee has escaped assessment, form a belief that income of the Assessee has escaped assessment." 16. The Hon'ble High Court finally concluded as under: "36. In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the AO one after the other. There is no independent application of mind by the AO to the tangible material which forms the basis of the reasons to believe that i....