TaxTMI 
TaxTMI 
2021 (10) TMI 555
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....e seized and on the basis of the statement recorded during search of Shri Praveen Kumar Jain where he has accepted that he has engaged in providing accommodation entries of bogus unsecured loans bogus share application/capital etc. wherein the assessee was also found to be one of these beneficiaries who has taken accommodation entries by way of share application money to the tune of Rs. 20 lakh during F.Y. 2009-10 relevant to A.Y. 2010-11 from the bogus companies operated by Shri Praveen Kumar Jain reopening of assessment of the assessee company was made by issuing notice under Section 148 of the Act dated 27.03.2017 which was served upon the assessee. The assessee denied escapement of income and claimed to have been filed correct return. In fact, return was filed on 26.09.2017 in response to the notice under Section 148 of the act. The assessee's contention is this that the statement of Shri Praveen Kumar Jain was never supplied neither any opportunity to cross-examination was granted to the assessee. On the contrary, the addition to the tune of Rs. 20 lakh was made by the Ld. AO which was further confirmed by the Ld. CIT(A). Upon perusal of the orders passed by the authori....
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....e on the part of the assessee company to disclose fully and truly all material facts for the assessment year under consideration. The above amount of Rs. 20 Lakhs stated to have been received from above entities is merely accommodation entries and hence, income to the tune of Rs. 20 lakhs has escaped assessment for the A.Y. 2010-11. Therefore, it is a fit case for reopening of this assessment by invoking the provisions of section 147 of the Income tax Act, 1961. Accordingly, notice u/s. 148 of this Act is issued." 3. It appears that the assessee company received the share application money from the above 4 corporate entities of Shri Praveen Kumar Jain. It further appears from the records that while replying to the show-cause notice the assessee inter alia raised the following objections: "i) The assessee company most respectfully submit that the assessee company or any of its director or promoter do not know any Praveen Kumar Jain as well as has any connections and never meet or talk to any Praveen Kumar Jain, or anybody connected with any Praveen Kumar Jain and up to the their knowledge Praveen Kumar Jain is neither director nor promoter or share holder of the....
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....ctfully submitted that it rebut all the allegation made by you in your reasons recorded on 20/03/2017 for reopening of the completed assessment on the basis of facts mentioned above. It has also requested your good self to provide the report and statements of Praveen Kumar Jain if any as stated in your above referred letter for further rebuttal once the report/statement of the Praveen Kumar Jain is provided but you did not provide either any such report or any such statement of Praveen Kumar Jain. The assessee company has also requested your good self to provide an opportunity to cross examine the said Praveen Kumar Jain in person to rebut further in the matter and submit any further evidence if required to substantiate the facts and circumstance of the matter." 4. The assessee specifically requested for providing the details of search conducted under Section 132 of the Act against Shri Praveen Kumar Jain and supply of the statement of Shri Praveen Kumar Jain too. Further that an opportunity of cross-examine the said Praveen Kumar Jain to rebut further in the matter and to submit any further evidence has also been prayed for by the assessee in such reply. From the order impugned....
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....t jurisdiction to quash proceedings- Careful perusal of reasons revealed that AO did not merely reproduce information but takes effort of revealing what was contained in investigation report specific to Assessee-AO made no effort to set out portion of investigation report which contained information specific to Assessee, he did not also examine return already filed to ascertain if entry had been disclosed therein-AO was not merely reproducing information received from investigation but took effort of referring to deposition made during survey by Chartered Accountant that Assessee company was involved in giving and taking of bogus entries-AO thus indicated what tangible material was which enabled him to form reasons to believe that income had escaped assessment-It was in those circumstances that in case, Court came to conclusion that there was prima facie material for AO to come to conclusion that Assessee had not-made full and true disclosure of all material facts relevant for assessment-Reasons to believe contained not reasons but conclusions of AO one after other-There was no independent application of mind by AO to tangible material which formed basis of reasons to believe that ....
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....e ex factory prices, as we find them contravened and not normal price as envisaged under section 4(1), we find no reason to disturb the Commissioners orders." 15. The Hon'ble Apex Court held as under:- "According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of tire Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted ITA No. 726/Ahd/2017 Shantaben Parasmal jain vs. DCIT 2010-11 to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even d....