2021 (3) TMI 833

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....ageria and Aarti Sureka. The assessee company filed its return of income on 15.10.2010 for assessment year under appeal declaring income at Rs. 62,360/- which was processed u/s 143(1) of the Act on 17.02.2012. The AO received information from DIT(Inv.) dated 12.03.2013 mentioning therein that a search operation was carried out in the case of Shri S.K. Jain group of cases, wherein after intensive and extensive enquiry and examination of the documents seized during the course of search, it has been noticed that the said group is involved in providing accommodation entries and the name of the assessee company also figures in the list as one of the beneficiaries of the accommodation entries. The AO recorded reasons for reopening of the assessment and issue a notice u/s 148 of the Act. The assessee in response to the same submitted before AO that return of income filed originally may be treated as return having been filed in response to notice u/s 148 of the Act. The AO noted that the return of income filed by the assessee shows that assessee has received share capital of Rs. 50 lakhs and unsecured loans of Rs. 2,10,84,386/- in assessment year under appeal. The AO referred to Annexure B....

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....4. The assessee challenged the reopening of the assessment as well as above additions before Ld. CIT(A). Detailed submission of the assessee is reproduced in the appellate order, however, Ld. CIT(A) dismiss the appeal of the assessee. 5. Ld. Counsel for assessee referred to PB 34 which is copy of the reasons recorded for initiation of the reassessment proceedings. The same reads as under: "Name of the assessee: M/s Savita Holdings P. Ltd. AY 2010-11 PAN: AABCS3394P ASSESSMENT YEAR: 2010-11 REASONS FOR ISSUE OF NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 The return of income for the AY 2009-10 has been filed by the assessee company on 15.10.2010 declaring total income amounting to Rs. 62,360/-. The same was processed u/s 143(1) on 03.11.2010. No assessment u/s 143(3) for the AY 2010-11 has been made in this case. In this case information has been shared by DIT (Investigation)-II (letter flagged as Annexure A) on the basis of search in the case of Sh. Surendra Kr. Jain group of cases (entry operator) New Delhi that during the FY 2009-10. It is informed that the aforementioned assessee has introduced its own money by way of takin....

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....ed when no evidence/material regarding the payment of cash in lieu of cheques to the search group is discussed. The role of middleman is not discussed and nor is there any indication that he was examined by the Investigation Wing or the AO. The conclusion of the AO is not supported by any evidence or material on record. The reasons recorded do not refer evidence or any confessional statement of any entry provider, cash payment by assessee/payment of commission etc. Non disclosure of specific material in the process of formation of prima facie belief shows that either the material referred in the information of Investigation Wing was not available to the AO or if it was there, the same have not been considered by the AO. He has relied upon judgment of the Hon'ble Delhi High Court in the case of CIT Vs. Meenakshi Overseas Pvt. Ltd. 395 ITR 677 (Del.), wherein it was held that "reproduction of information without showing how the material referred therein does not show application of mind by the AO in absence of any specific discussion on the material on the basis of which independent prima facie belief is reached that income has escaped assessment". Ld. Counsel for the assessee in ....

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....ocument by S.K. Jain group to Sh. Vimal Bhageria during the period 01.05.2009 to 30.05.2009. Therefore, the ground taken by the AO in the reasons that cash is paid by middleman of assessee to Sh. S.K. Jain is not supported by the seized material. The AO recorded incorrect facts in the reasons for giving cash to S.K. Jain group of cases for taking accommodation entry. He has submitted that even the name of middleman is incorrectly recorded because Sh. Vimal Bhageria is one of the Director of the assessee company. Ld. Counsel for assessee, therefore, submitted that since incorrect and wrong facts are recorded in the reopening of the assessment, therefore, it is invalid and bad in law. In support of his contention, he has relied upon the judgment of Delhi High Court in the case of M/s SNG Developers Ltd., 404 ITR 312 (Del.) in which departmental SLP has been dismissed by the Supreme Court vide order dated 09.02.2018. He has also relied upon the judgment of Delhi High Court in the case of Shamshad Khan 395 ITR 265 (Del.), judgment of (P&H) in the case of Atlas Cycle Industries 180 ITR 319 and judgment of Bombay High Court in the case of Siemens Information System Ltd. 293 ITR 548. N....

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....an Timber Industries 281 CTR 241 and Kishinchand Chellaram 125 ITR 713 (SC). Ld. Counsel for the assessee, therefore, submitted that reopening of the assessment is bad in law and is liable to be quashed. 7. On the other hand, Ld. DR relied upon the orders of the authorities below and submitted that sufficiency of the reasons are not to be looked into at the stage of reopening of the assessment. The AO recorded reasons for reopening of the assessment based on information received from Investigation Wing and has applied his mind to such information. Therefore, reopening of the assessment is justified. 8. We have considered the rival submission. It is well settled law that validity of the reassessment proceedings is to be determined with reference to the reasons recorded for reopening of the assessment. The copy of the reasons recorded for reopening of the assessment is reproduced above. It is admitted fact that assessee filed original return of income which was processed u/s 143(1). The AO later on received information from Investigation Wing that search was carried out in the case of S.K. Jain group of cases, wherein after detailed enquiry and examination of document seized du....

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.... and nothing more. It would also not indicate that cheques have been issued in lieu of the cash. Annexure C is again details of transaction in the month of March 2010 and December 2009. These details do not pertain to the period of the month of May, 2009. It does not provide of any details for accommodation entries. Annexure D is differently as mentioned above in which it is mentioned that cash payment of Rs. 50 lakhs is paid to middleman and not that middleman has paid any cash payment to S.K. Jain group of cases. The AO subsequently in the show-cause notice dated 23.02.2016 has mentioned that assessee has received accommodation entries of Rs. 17.05 crores from the searched group which fact is also incorrect. Shri Vimal Bhageria is not the middleman as mentioned in the reasons. He is one of the director of the assessee company. The AO in the assessment order has specifically mentioned that the return of income filed originally u/s 139(1) shows assessee has received share capital of Rs. 50 lakhs and unsecured loans of Rs. 2.10 crores in assessment year under appeal. Thus, there was no reason for the AO to mention in the reasons recorded for reopening of the assessment that there is....