TaxTMI 
TaxTMI 
2020 (2) TMI 459
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...., 1961 vide order dated 27.09.2007. Information had been received from the Investigation Wing of the Income Tax Department that the assessee is a beneficiary of accommodation entries received from various concerns floated by Shri S.K. Gupta in assessment year under appeal. The information contained in the report was perused and the evidences were gathered. The A.O. found that the assessee is in receipt of unexplained sum in the guise of share application money/premium from M/s. Vasudeva Champ Finvest of Rs. 10 lacs and M/s. Vasudeva Farms of Rs. 3.50 lacs on 18.03.2005. The A.O, therefore, recorded reasons to believe that income chargeable to tax in a sum of Rs. 13,50,000/- had escaped assessment and accordingly, notice under section 148 was issued on 29.03.2012 and duly served upon the assessee. The assessee was provided copy of the reasons recorded. The assessee asked for copy of the statement of Shri S.K. Gupta which was also supplied to the assessee vide Order Sheet entry Dated 12.03.2013. The A.O. considering the details on record found that assessee has received share application money/share premium of Rs. 2,23,50,000/- from 12 parties. The details of the same are noted in....
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....m M/s. Vasudeva Champ Finvest, Shri Suresh Gupta, Rs. 10 lakhs on 18.03.2005 and from M/s. Vasudeva Farms Rs. 3,50,000/- on 18.03.2005. PB-91 is objections Dated 10.12.2012 filed by assessee against reopening of the assessment which have not been disposed of by the A.O. PB-142 is copy of the bank statement of assessee to show that there is no entry of Rs. 10 lakhs or Rs. 3.50 lakhs received from the above parties on 18.03.2005. PB-92 is assessment order under section 143(3) Dated 27.09.2007 and PB-349 is the sanction granted under section 151 of the I.T. Act, 1961, which is illegal and bad in law in which the Addl. CIT merely recorded "Yes, I am satisfied" and CIT, Ghaziabad recorded "Yes, I am satisfied. It is a fit case to issue of notice under section 148." Learned Counsel for the Assessee in the background of these facts submitted that A.O. was not having any information, details or material at the time of reopening of the assessment that assessee has received any accommodation entries from Shri S.K. Gupta. The A.O. merely signed on the fax message. The A.O. did not apply her independent mind. The assessee has not received any entries of Rs. 13.50 lakhs from the above two pa....
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....in the form of bogus share capital/capital gains etc after routing the same through the bank account(s) of the entry operators floated by Shri S.K.Gupta. Entry operators were identified after thorough investigation on the basis of definitive analysis of their identity, creditworthiness and the source of the money ultimately received by the beneficiaries. In the instant case, the assessee is found to be the beneficiary of accommodation entry of Rs. 13.50 lacs from such entry operators controlled by Shri S.K.Gupta during the F.Y. 2004-05 relevant to the A.Y. 2005-06 as per the specific details of transaction The assessee has received unexplained sums from the entry operators as per the above details as per information available with the undersigned. As explained above, the identity, creditworthiness and genuineness of transactions with the persons found to be entry operators cannot be established. I therefore have reasons to believe that on account of failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment for above assessment year, the income chargeable to tax to the extent of accommodation entry mentioned above, has escap....
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....at the Tribunal was right in cancelling the reassessment as both the grounds on which the reassessment notice was issued were not found to exist, and, therefore, the Income-tax Officer did not get jurisdiction to make the re-assessment." 5.3. The Hon'ble Delhi High Court in the case of Pr. CIT vs., SNG Developers Ltd., [2018] 404 ITR 312 (Del.) in which it was held as under : "Held, dismissing the appeal, that the reasons recorded by the Assessing Officer for reopening the assessment under section 147, issuing a notice under section 148 did not meet the statutory conditions. As already held by the Appellate Tribunal, there was a repetition of at least five accommodation entries and the total amount constituting the so-called accommodation entries would therefore, not work out to Rs. 95,65,510. It was unacceptable that the Assessing Officer persisted with his "belief" that the amount had escaped assessment not only at the stage of rejecting the assessee's objections but also in the reassessment proceedings, where he proceeded to add the entire amount to the income of the assessee. Therefore there was non-application of mind on the part of the Assessing Officer. The Appel....
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....rnished by the authority had quoted the provisions of section 10A as amended by the Finance Act, 2000, with effect from the assessment year 2001-02 and as such could not have been made applicable to the assessment year 1999-2000 and the notice had been issued under the mistaken belief about the correct position of law. However, opportunity to show cause was given to the petitioner as to why the loss claimed should not be disallowed to be carried forward. On a writ petition : Held, allowing the petition, (i) that it would be clear from the reasons given that the authority proceeded on the presumption that the law applicable was the law after the amendment and not the law in respect of which the petitioner had filed the return for the year 1999-2000. This by itself clearly demonstrated that there was total non-application of mind on the part of the authority and consequently, the notice based on that reason would amount to non-application of mind. (ii) That the income derived by the assessee from an industrial undertaking to which section 10A applies could not be included in the total income of the assessee. Therefore, the petitioner was right in filing the return b....
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....ssessment under section 143(3) of the I.T. Act, 1961. The A.O. in the reasons did not record if there was any failure on the part of the assessee to disclose truly and correctly all material facts necessary for assessment. The A.O. has not even mentioned names of the parties from whom assessee has received accommodation entry in the reasons. Thus, the First proviso to Section 147 of the I.T. Act would apply in favour of the assessee and A.O. cannot take any action against the assessee for reopening of the assessment. The Hon'ble Delhi High Court in the case of Consulting Engineering Services (India) P. Ltd., vs., DCIT & Another [2015] 378 ITR 318 (Del.) held as under : "Held, allowing the petition, (i) that the Assessing Officer in the first instance had raised an issue as to whether the interest payments were to be on the revenue account or capital account. The assessee had claimed it as a revenue expense and that had been allowed in the original assessment proceedings. As could be seen from the reasons, the Assessing Officer had done nothing but to re-examine the records which were already available and had arrived at a different conclusion that the interest expenses oug....
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....ng terms "Yes, I am satisfied that it is a fit case for issue of notice under section 148 of the I.T. Act". The Hon'ble Delhi High Court considering the similarly worded approval did not approve the same and held that "In the present case, there has been no application of mind by Addl. CIT before granting approval." The Hon'ble Supreme Court in the case of CIT vs., S. Goyanka Lime & Chemical Ltd., [2015] 64 taxmann.com 313 (SC) approving the Judgment of Hon'ble Madhya Pradesh High Court in the case of CIT, Jabalpur vs., S. Goyanka Lime & Chemical Ltd., [2015] 56 taxmann.com 390 (M.P.) in which the Departmental SLP has been dismissed on the same reason because the Joint Commissioner of Income Tax recorded satisfaction in a mechanical manner and without application of mind. The Hon'ble Madhya Pradesh High Court in the case of Arjun Singh vs., ADIT [2000] 246 ITR 363 (M.P.) in which also similarly worded sanction under section 148 was not found valid. Therefore, we are of the view that reopening of the assessment is bad in Law and that sanction/approval granted by the Competent Authority is also invalid. Considering the totality of the facts and circumstances of the case, we are of....