TaxTMI 
TaxTMI 
2022 (10) TMI 765
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..... That on the Facts and Circumstances of the Case and in Law, the Assessing Officer erred in not giving the appellant Opportunity to Cross Examine Shri Vishesh Gupta, whose statement has been used against the appellant and additions have been made. 4. That on the Facts and Circumstances of the Case and in Law, the Assessing Officer erred & not giving the Opportunity to Assessee to saw Books of Accounts of the Appellant. 5. That The A.O has failed to appreciate That In Page No. 11 & 16 Sh. Rakesh Gupta & Sh. Vishesh Gupta have admitted in Assessment Proceedings before ACIT, central circle 10, New Delhi on 04.02.2013 and 12.02.2013 resp. Submitted that they were making actual sales 10 % of their Total Sales." 3. Briefly stated, the facts of the case are that the assessee is a partnership firm engaged in the business of trading in ferrous and non ferrous metals etc. filed return of income on 19.09.2007 declaring income of Rs. 94,810/- which was processed u/s 143(1) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] and return was accepted as such. 4. Thereafter, reassessment proceedings were initiated u/s 148 of the Act and statutory notices were issued a....
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....modation entry along with the name and address of the recipients of accommodation entry. 4. Sh. Navneet Jain & Sh. Vaibhav Jain has provided accommodation entry through thirty seven paper entries. The list of the firms giving accommodation entry is enclosed as annexure-B. The list of accommodation entry recipients has been obtained from Sh. Navneet Jain & Sh. Vaibhav Jain. It does not give year wise bifurcation. Hard copy of the list is enclosed annexure-C, duly signed bySh. Vaibhav Jain. Thus, the firms mention in the list 'B' have provided accommodation entries to the firms mentioned in list 'C'. 5. The soft copy of the information in respect to annexure A, B& C is also enclosed. 6. The information of accommodation entry includes A. Y. 2007- 08 also, which is a time barring year for taking action u/s 148. 7. The information is forwarded to you for early dissemination to various field offices in Delhi (Soft copy also enclosed)" On examining the list of accommodation entries provided by Sh. Rakesh Gupta 8iVishesh Gupta and Sh. Navneet Jain & Sh. Vaibhav Jain pertaing to A. Y. 2007-08, it is noticed that the following entries have been taken by the assessee....
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.... of mind by the Assessing Officer in as much as the name of the appellant is Raj Metal Company whereas the information relates to N.J. Metal Udyog. 13. The Hon'ble Supreme Court in the case of Sheo Nath Singh 82 ITR 148 had the occasion to construe the expression "Reason to believe" and the Hon'ble Supreme Court observed as under: "There can be no manner of doubt that the words 'reason to believe' suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income-tax Officer may act on direct and circumstantial evidence but not on mere suspicion gossip or rumour. The Income-tax Officer would be acting without jurisdiction if the reason for this belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section The Court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the Court." 14. On identical facts, assessment of Unique Metal Industries was reopened and quarrel travelled upto this Tribunal and the co-ordinate bench in ITA No. 1372/DEL/2015 order dated 28.10.2015 after cons....
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....etter dated 20.12.2013, received by this office on 27.12.2013, forwarded his reply along with supporting documents, which were running into 92 pages. After going through the reply forwarded by the ACIT, Central Circle-10, New Delhi and the annexure enclosed therein, this office was of the view that the purchase bills provided by the 11 firms/concerns controlled and managed by Sh. Rakesh Gupta and Sh. Vishesh Gupt or their family members is nothing but bogus purchase bills/accommodation bills. " 9. The above facts stated by the Assessing Officer makes it abundantly clear that at the time of formation of the belief to reopen assessment the Assessing Officer not having the above said information. Only that he was having the letter along with list which was forwarded by the CIT, Central-2, New Delhi. 10. The above observation of the Assessing Officer also shows that it was letter dated 20.12.2013 received by him on 27.12.2013 on the basis of which the Assessing Officer could make a view that the purchase bills provided by these persons or their family members is nothing but bogus purchase bills. At the time of recording of the reasons the Assessing Officer apparently was not having a....
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....ust disclose process of reasoning by which the Assessing Officer holds reason to believe. There must be nexus between such material and belief. Further and most importantly the reasons referred to must show application of mind by the Assessing Officer. It is also a settled law that the validity of the initiation of the reassessment proceeding is to be judged with reference to the material available with the Assessing Officer at the point of time of the issue of notice under section 148. In the present case, as is evident from the assessment order, the Assessing Officer was having nothing except the list provided by the CIT, Central-2, New Delhi about the list of accommodation entries. Beyond that he was not having the copies of the statement of any of these persons. He was not having copy of the assessment orders and other details or document which would have enabled the Assessing Officer to apply his mind and form a belief that income has escaped assessment. In fact this information was not with the Assessing Officer till fag end of the reassessment proceedings, a fact admitted by the Assessing Officer himself in the assessment order. The judgment relied upon by the Learned AR als....
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.... from Director of IT (Inv.) that the petitioner had introduced money amounting to Rs. 5 lacs during financial year 2002-03 as per the details given in Annexure. The said Annexure relates to a cheque received by the petitioner on 9th Oct., 2002 from SS Ltd. from the bank and the account number mentioned therein. The last sentence records that as per the information, the amount received was nothing but an accommodation entry and the assessee was the beneficiary. The aforesaid reasons do not satisfy the requirements of s. 147. The reasons and the information referred to its extremely scanty and vague. There is no reference to any document or statement, except Annexure, Annexure cannot be regarded as a material or evidence that prima facie shows or established nexus or link which discloses escapement of income. Annexure is not a pointer and does not indicate escapement of income. Further, it is apparent that the AO did not apply his own mind to the information and examine the basis and material of the information. The AO accepted the plea on the basis of vague information in a mechanical manner. The CIT also acted on the same basis by . mechanically giving his approval. The reasons rec....
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....h he had before him, income had escaped assessment. Consequently, the Tribunal has arrived at the correct conclusion on facts. There is no substantial question of law, which arises for consideration." 13. In view of the above discussed facts of the present case, the reopening of the assessment is without application of mind and examination of the facts and accordingly the reopening is held to be invalid and accordingly the same is quashed. Accordingly the reopening is held to be bad in law and ground Nos.2 and 3 are allowed." 15. Similar view was taken by this Tribunal in ITA No. 1429/DEL/2015 order dated 30.11.2015 in the case of Radhey Shyam and Company wherein also, reasons recorded for reopening the assessment are identically worded as in the case of the present appeal and the coordinate bench held as under: "5. I found that the issue regarding the validity of the reassessment is duly covered by the decision of this Bench in the case of Unique Metal Industries Vs. ITO in ITA no. 1372/Del/2015 in which this Tribunal vide its order dated 28-1-2015 quashed the reassessment. I noted that in that case also similar type of reasons were recorded, as reproduced below: "Reasons fo....
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.... accommodation entry includes A.Y. 2006-07 also, which is a time barring year for taking action u/s 148. 7. This information is forwarded to you for early dissemination to various field offices in Delhi (Soft copy also enclosed)." On examining the list of accommodation entries provided by Sh. Rakesh Gupta & Sh. Vishesh Gupta and Sh. Navneet Jain & Sh. Vaibhav Jain pertaining to A.Y. 2006-07, it is noticed that the following accommodation entries have been taken by the assessee namely M/s Unique Metal Industries:- Sl. Accommodation entry provided by Amount, 1. Shree Shyam Trading Co. M/s Unique Metal Industries Rs. 2,44,399/- 2. Vishnu Trading Co. Rs. 8,12,542/- 3. Shree Bankey Bihari Rs. 3,28,368/- Total amount of entries = Rs. 13,85,309/- Since Sh. Rakesh Gupta & Sh. Vishesh Gupta and Sh. Navneet Jain & Sh. Valbhav Jain during the course of assessment proceedings u/s 153A of I. Tax Act have admitted that they have given accommodation entries to the parties whose lists have been provided by them to the ACIT, Central Circle-10, New Delhi, therefore, it is fair to conclude that M/s Radhay Shyam & Co., whose name is appearing in the said li....