Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH : SMC : NEW DELHI
Before: SHRI R.K. PANDA
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI (Through Virtual Hearing)
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA No.3269/Del/2019 Assessment Year: 2010-11 Saraswati Realtech P. Ltd., Vs. ITO, B-23, Ground Floor, Ward-22(3), Pushpanjali Enclave, New Delhi. Pitampura, New Delhi. PAN: AAMCS0744G (Appellant) (Respondent) Assessee by : Shri Rajesh Jain, CA & Shri Hemant Pahwa, CA Revenue by : Shri R.K. Gupta, Sr.DR Date of Hearing : 14.10.2021 Date of Pronouncement : 29.10.2021 ORDER
This appeal by the assessee is directed against the order dated 1st February, 2019 of the CIT(A)-8, New Delhi, relating to Assessment Year 2010-11.
This appeal was earlier dismissed by the Tribunal as withdrawn under the Vivad Se Vishwas Scheme, 2020. Subsequently, the assessee filed a Miscellaneous Application seeking rectification of the order of the Tribunal on the ground that it was inadvertently dismissed as withdrawn under Vivad Se
ITA No.3269/Del/2019 Vishwas Scheme, 2020. The Tribunal, vide MA No.95/Del/2021, order dated 16th July, 2021, recalled its earlier order. Hence, this is a recalled matter.
Although a number of grounds have been raised by the assessee, however, these all relate to the order of the CIT(A) in upholding the validity of the reassessment proceedings and confirming the addition of Rs.45 lakhs on account of unexplained cash credit.
Facts of the case, in brief, are that the assessee is a private limited company engaged in the business of real-estate, income from brokerage and commission on sale/purchase/renting of properties. It filed its original return of income on 29th September, 2010 declaring the total income of Rs.1,01,648/-. This return was processed u/s 143(1) of the Act. Subsequently, on the basis of information received from the Director of Income-tax (Investigations), New Delhi, that the assessee has taken accommodation entry amounting to Rs.45 lakhs from three companies belonging to Shri Surendra Kumar Jain group of companies, i.e, M/s Attractive Finlease Pvt. Ltd., M/s Sunny Cart & Forge Ltd. and M/s Aasheesh Capital Services Pvt. Ltd. in the F.Y. 2009-10, the AO recorded reasons to believe that income had escaped assessment and after recording reasons, issued notice u/s 148 of the Act dated 25th March, 2013. The AO completed the assessment u/s 143(3)/147 accepting the returned income on 28th February, 2014. Subsequently, the AO issued another notice u/s 148 on 3rd March, 2017 by reopening the case after recording the following reasons:-
ITA No.3269/Del/2019
“In this case, very vital and credible information relating to evasion of income taxes has been received from the following three sources: -
(i) Detailed Report of the Director of Income tax (Investigation), Investigation Wing of Income tax Department, Delhi after the search and seizure action was carried out u/s 132 of the Income tax Act, on 14.09.2010, at the premises of Shri S. K. Jain, his family members and associated persons/entities. This report meticulously establishes a case of money laundering and tax evasion against these persons to the tune of Rs. 3,800 Crores duly supported by relevant primary and secondary documents.
(ii) Copies of the important documents including hand written cash books, names of intermediaries, amounts of cash received from intermediaries and the amounts of accommodation entries given to the beneficiaries including cheque nos., names of entry providing entities controlled by Jain brothers, etc., seized from the residence and offices of Shri Surendra Kumar Jain and his family members and office premises of related persons/entities.
(iii) Detailed investigation report of the Serious Fraud Investigation Office (SFIO) of the Ministry of Corporate Affairs, Govt, of India dated 31.3.2016 ( Report of 418 pages supported by thousands of pages of related documents, statements, supporting extracts from seized documents etc.)
This report has established a case of large scale money laundering to the tune of Rs. 3,800 Crores against these persons/groups, large scale tax evasion, fraud, cheating, criminal conspiracy and violation of various statues/laws and has recommended strong action to the SIT on Black Money appointed by Hon’ble Supreme Court of India, RBI, Enforcement Directorate (ED), SEBI, Income tax Department, ICAI, ICSI, Bar Council of India and other agencies.
Detailed report of the SFIO was received from the SFIO, Ministry of Corporate Affairs, Govt, of India dated 31.3.2016. The report has been examined carefully and its contents, annexures, statements and other documents have been perused. These have also examined with reference to the return filed by the assessee and earlier proceedings u/s 147/148 of the Income tax Act, 1961.The information received from investigation wing was not considered while finalizing the assessment and the assessment was completed at returned income.
ITA No.3269/Del/2019
2.1 Report and extracts of important documents including hand written cash books, names of intermediaries, amounts of cash received from intermediaries and the amounts of accommodation entries given to the beneficiaries including cheque nos., names of entry providing entities controlled by Jain brothers, etc., seized from the residence and offices of Shri Surender Kumar Jain and his faniily members and office premises of related persons/entities, was also received from the office of the Director of Income-tax (Investigation-II) Jhandewalan Ext. New Delhi vide letter No. F. No. DIT(Inv)-II/U/s. 148/2012- 13/197, dated 12.03.2013 mentioning therein that a search operation was carried out in the case of Sh. Surendra Kumar Jain group of cases (herein after known as Entry operator) wherein after scrutiny of incriminating documents seized during course of search and subsequent post search enquiry, it has been noticed that the said group was involved in providing accommodation entries to the persons which were named in the report. The assessee company also figures in the list as one of the beneficiaries of the accommodation entries provided by the group. 2.2 As per the report of Investigation Wing, name of various companies/ persons used by the group to provide accommodation entries as well as list of beneficiary companies, firm and other entities were identified after extensive verification of documents seized as a result of search operation conducted against Sh. S.K. Jain Group (Entry Operator). The incriminating document seized during search (date of search 14.09.2010) revealed that accommodation entries were obtained by way of share capital/ share premium/ loans. The details of accommodation entries viz. amount received by beneficiary companies, the cheque/ PO number, the name of company engaged in providing accommodation entries, the mediator/ middle man, bank etc. noted from scrutiny of the seized documents have been tabulated, and enclosed with the report. 2.3 In the appraisal report of Sh. Surendra Kumar Jain Group, has summarized evidences which have been summarized which had proved that Sh. Surendra Kumar Jain and his brother Sh. Virendra Jain were engaged in the business of providing accommodation entries. The modus operandi for providing accommodation entries in lieu of cash as adopted by the Jain Brothers have been discussed below in brief: (i) During the course of search proceedings in the Sh. S.K. Jain Group it was found that a number of companies were running from the residential as well as other premises related to Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain. However, all the books of accounts and other relevant papers of these companies were found at the residence of Sr. Surendra Kumar Jain and Sh. Virendra Kumar Jain itself and no documents was found at the other addresses which were mentioned in the statutory records of these companies. The above facts and result of post search enquiries have 4
ITA No.3269/Del/2019
revealed Shri Surendra Kumar Jain and Shri Virendra Kumar Jain companies are controlled by through dummy directors / Principal officers of these companies. (ii) The seized records include blank unsigned as well as blank signed cheque book, acknowledgement of filing of return of these companies, user ID and password of all companies of e-filing of their return, bank account opening and closing letters, authorization letters for attending assessment proceedings, book of account in tally format as well as format for filing the return, proof of use of mobile numbers of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain in bank account opening forms where option of mobile banking was required. The companies were used in business of providing accommodation entries. (iii) The investigation wing has listed 99 companies which were controlled by S.K. Jain Group. 2.4 The investigation wing has sent relevant details of accommodation entries to the Assessing Officers having jurisdiction over beneficiaries which had obtained accommodation entries from S.K. Jain Group. The report has also included the name of companies controlled by S.K. Jain and used for providing accommodation entries to the beneficiaries. Scanned copy of the relevant documents seized from S.K. Jain Group wherein the relevant details of accommodation entry taken by the beneficiary from S.K. Jain Group Company were recorded were also sent along with the report. 2.5 A careful scrutiny of the details and copies of seized documents have revealed that the assessee company has taken accommodation entry amounting to Rs. 45,00,000/- in the F.Y. 2009-10 relevant to A.Y. 2010-11 from S.K. Jain Group Companies. These transaction were found recorded at various documents seized from S.K. Jain Group Company 3. Details of analysis of information received and collected material:- 3.1 I have carefully examined the above referred to information as received from investigation wing along with the return of the assessee for A.Y. 2010-11. It is evident from the return that assessee has received share application money/Loan amounting to Rs.45,00,000/-during the year under consideration. The disclosure in return of income matched with the information received about the receipt of accommodation entries by the assessee amounting to Rs. 45,00,000/- in form of share application money/loan. 3.2 I have carefully examined the report of investigation wing along with details of transaction as recorded in the seized documents which revealed following important facts: 5
ITA No.3269/Del/2019
i. That passbooks and cheque books of approximately 200 persons/ firms/ companies engaged in the business of providing accommodation entries along with details of beneficiary companies/ entries were found and seized from the residence of Sh. Surendra Kumar Jain and Sh. Virendra Kumar. ii. Undated blank cheque and signed by entities engaged in providing accommodation entries were also seized from custody and control of Jain. iii. That computer hard discs seized from the residence of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain contained confidential details like user name, passwords and IDs of the various companies engaged in providing accommodation entries required for filing of e- returns of these companies, authority letter of these companies authorizing to represent these companies in various Govt. Department. These companies were used to provide accommodation entries of beneficiary including assessee company. iv. That details of funds transferred through cheque / RTGS/pay order to various entities / persons through these dummy companies maintained by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain in excel sheets found and seized during the course of search on them. v. That maintenance of books of accounts in tally format as well as in the format required for preparing Income Tax Return of these companies in the computer Hard Discs found and seized from the residence of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain. vi. That daily cash books, balance sheet and cheque books found and seized from Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain wherein details of cash received from different beneficiary companies/ persons through various middleman/ agents in lieu of accommodation entries. vii. That one of the mediators Sh. Rajesh Aggarwal admitted that he arranged accommodation entries for a group through a person named Sh. Ravindcr Goel through various companies directly controlled by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain and also accepted the fact that he knew since long that Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain are engaged in the business of providing the accommodation entries in lieu of cash charging a certain amount of commission for the same.
ITA No.3269/Del/2019 viii. That these dummy companies are running their activities from the residential and the other premises of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain. ix. That existence of third party correspondence with these companies in the custody of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain have been re-covered from S.K. Jain Group Company. x. That S.K. Jain/ Virendra Jain are / were director in many of these companies presently or at one point of time in the past. It is proved from above facts that all the relevant documents pertaining to conduit companies/firm were found in custody and control of Shri S.K. Jain 3.3 It has been further noticed that out of 99 companies controlled by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain, used for providing accommodation entries a large number of companies were registered at following common addresses: (i) 106, Palco House, T-10, Main Patel Road, Patel Nagar, Delhi (12 companies). (ii) 3198-15, 4th Floor, Gali No.l, Sangatrashan, Paharganj, New Delhi (14 companies). (iii) 209, Bhanot Plaza, 3, D.B. Gupta Road, Paharganj, New Delhi. (11 companies). 4. In order to verify the genuineness and the existence of these companies at the above mentioned addresses, a simultaneous survey action 133A of the I.T. Act, 1961 was also carried out on 14.09.2010 , on above referred to address by officers of investigation wing of the department which resulted following facts: a. On the address, 106, Palco House, T-10, Main Patel Road, Patel Nagar, Delhi, the survey party found only one person named Sh. Mukesh Kumar, S/o Sh. Satyender Kumar, R/o Village Gazera, Distt, PauriGadhwal in this premises. He deposed before the survey party that his employer and owner of that place is one Sh. Virendra. Jain R/o somewhere in Rajender Nagar, Delhi and provided his telephone No. as 9891095232. It was already proved from the call records that this telephone number pertained to Sh. Virendra Jain resident of 221/, New Rajinder Nagar, New Delhi. He also disclosed that Sh. Virendra Jain used to visit the place once in a while. Sh. Mukesh Kumar also told that no books of account of companies registered, on this address was available in the premises i.e. 106, Palco House, T-10, Main Patel road, Patel Nagar, Delhi. 7
ITA No.3269/Del/2019
b. During the course of the survey at. premise no. 3198-15, 4th Floor, Gali No.l, Sangatrashan, Paharganj, New Delhi, it was found that this premise was a small room, which was incapable of accommodating so many companies and persons. Books of accounts and document of companies registered at this address was not found. c. At the third premises 209, Bhanot Plaza, 3, D.B. Gupta Road, Paharganj, New Delhi, there was single room office occupied by one Sh. Jaikishan Tikku S/o late Sh. PremNathTikku, who was running his courier business from there in the name and style of M/s Linkers Couriers since Aug. 2006. Mr. Tikku had told the survey team that he was a tenant of Sh. Surendra Kumar Jain and was paying him monthly rent of Rs.3,000/- in cash every month. d. It is evident from the findings of the survey that the companies controlled by Shri S.K. Jain having registered office at the above mentioned three addresses, did not exist at those addresses. Neither books of account, and document relating to business nor was employee of these companies found at those addresses. From a single address a number of companies were registered as well as this address was also declared as the residential address of various directors of different companies and partners/ proprietors of various firms engaged in providing accommodation entries. As mentioned above, during the course of survey operation at these addresses, the premises were found to be very small dwelling units. 5. I have taken note of another fact that was highlighted by investigation wing that during the course of post search enquiries they had obtained the bank details of companies of S.K. Jain Group for example account opening forms, introducers’ form and statement of accounts etc. for last few years. It was pointed out that in some cases where the option of mobile banking was exercised, the mobile numbers of either of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain were provided in the account opening forms of those specific companies/firms/persons. Some of these bank accounts as illustration are mentioned in the following table.
Name of Account No. Name of the Company Mobile NO. Person to whom this the bank number belongs Axis Bank 224010200005906 Eagle Infratech Pvt. Ltd. 98910&5232 Virendra Jain Axis Bank 224010200007160 Kailash Textiles 9891095232 Virendra jain Axis Bank 223010200020846 Mani Mala Delhi 9891095232 Virendra Jain Properties Pvt. Ltd. Axis Bank 224010200005890 Singhal Securities Pvt. 9310395234 Surendra Kumar Jain Ltd. 8
ITA No.3269/Del/2019
Axis Bank 224010200007016 Roshal Lai Lalit Kumar 9310395234 Surendra Kumar Jain & Co. Axis Bank 224010200005845 Finage Leasing & 9310395233 Surendra Kumar Jain Finance Ltd. Axis Bank 223010200012014 Mani Mala Delhi 9310395235 Surendra Kumar Jain Properties Pvt. Ltd. Axis Bank 224010200006989 Erode Clothing Empire 9310395235 Surendra Kumar Jain 5.1 The above facts prove beyond doubts that the 200 odd entities, data pertaining to which were found and seized from the premises of S.K. Jain Group, were controlled and used by Shri S.K. Jain his brother Shri Virendra Kumar Jain for providing accommodation entries. 6. It is also noticed from the following finding as recorded in the report of investigation wing that incriminating documents in the form of hand written cash books were also seized from the residence of Shri S.K. Jain showing the receipts of cash by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain to provide accommodation entries. Finding in this regards may be summarized as under: a. Cash books seized during search operation were maintained on daily basis to keep a record of their daily transactions of receipts and payments of cash as well as to keep them updated in respect of accommodation entries provided as well as accommodation entries pending in lieu of the cash which they had received. However, the cash transactions which were being recorded by them in hand written cash books were not recorded in their regular books of accounts. To introduce and channelize this unexplained cash in their books, they have shown the sales of various items including Rice etc., made through the bogus proprietary/ partnerships firms directly controlled by them. b. Thus, the cash received from the recipient parties for providing the accommodation entries was first deposited in the accounts of these dummy firms/ companies in the disguise of the cash received against the bogus sales, duly shown in the books of accounts. Later, this cash was transferred to different paper companies floated by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain through complex series of transactions, so as to hide the actual sources of funds. c. As part of well devised modus operandi the reserve & surpluses and the capital account of a specific set of companies were enhanced with the help of the unexplained cash received by Sh. Surendra Kumar Jan and Sh. Virendra Kumar Jain, which was routed to these companies through their dummy concern/ firm/companies. Once the funds of these companies were increased sufficiently, 9
ITA No.3269/Del/2019
accommodation entries through RTGS/Cheque/P.O. in the shape of the share capital, share premium, capital gains or loans as per the specific requirement of the recipient clients were provided to beneficiary in lieu of the cash received from them. In this way, the chain for providing an accommodation entry gets completed. d. The above findings corroborated with the seizure of documents by investigation wing evidencing the above mentioned process used by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain for providing accommodation entry. 7. I have also noted that various specific documents were seized from S.K. Jain Group which established that Sh. SK Jain and Sh. Virendra Jain were engaged in the business of providing accommodation entries by issuing cheque in lieu of cash through several paper companies controlled by them by charging a certain amount of commission. The contents of seized documents are summarized as under: (a). Pages No. 1 to 13 of the Annexure A-150 found and seized from the residence of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain contained one account in respect of one Sh. Satish Garg for a period spread over to three Financial Years i.e. April 2007 to March 2010. Below the printed table on page no. 2 the consolidated amount of commission on an aggregate amount of accommodation entries of Rs. 81,67,02,000/- provided to different companies through this above mentioned person Satish Garg was calculated at Rs. 14292285/- @ 1.75%. (b). Out of this total amount of commission of Rs. 14292285/- on the accommodation entries provided till 31.03.2010 an amount of Rs. 10159000/- was reduced, apparently being paid, and an amount of Rs. 342343/- was added to the balance of Rs. 4133285/- recording ‘new’ before it. Below these calculations three more amounts were recorded against three different dates which were apparently received by Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain apart from the amount of Rs. 10159000/- shown as received till 31.03.2010. The date wise and amount wise breakup of the receipts of Rs 10159000/- is given in a printed table on page no. 1 of this seized annexure A- 150. 8. It is further noted out that Sh. Surendra Kumar Jain and Sh, Virendra Kumar Jain kept a meticulous record of cheque/ RTGS(handwritten ‘cheque books’) issued from the bank accounts of these concerns to various beneficiary parties (in lieu of the cash) that had been regularly received by them over a period time and regularly entered in the cash books maintained by them in their own hand writing 9. Summary of evidences relating to the assessee: 10
ITA No.3269/Del/2019
9.1 Return of income 9.1.1 The return of income for the assessment year 2010-11 declaring income at Rs. 1,01,648/- was filed. Thereafter the return was processed under 143(1) of the I.T. Act. Thereafter, the case was reopened u/s 147 of the I.T. act, 1961 but the information received from the Investigation Wing was not taken into consideration while finalizing the assessment order & the income was assessed at returned in case of Rs. 1,01,648/- returned income. 9.1.2 The assessee has declared in its return of income that it has received share capital / loan of Rs. 45,00,000/- which matched with the information received from the investigation wing. 9.2 Relevant seized documents:- 9.2.1 I have also gone through various documents (relevant to the instant case) seized from the premises of Shri S.K. Jain Group during the course of search. These documents have been supplied by the Investigation Wing in the form of scanned copies of seized document in a CD along with the report. It is noted from the perusal of the copy of seized document that the name of the assessee appeared on these documents along with details of accommodation entries amounting to Rs.45,00,000/- from various companies controlled by S.K. Jain Group through intermediary Shri Rajesh Aggarwal/R. Aggarwal as evident from above discussion. 9.2.2 The analysis of hand written cash book and ledger maintained by the SK Jain Group, seized during the course of search operation of S.K. Jain Group, revealed that M/s. S.K. Jain Group (Accommodation entry operator) received the certain payments in cash through intermediary Shri Rajesh Aggarwal/R. Aggarwal as per details given below.
S. Particulars of Name of the Anne- Page Date No. cash intermediary/co xure Amount recorded in book/Ledger mpany cash book/cheque issued 1. Cash book/ Rajesh Aggarwal A-15 2 Rs. 20,00,000/- 02/01/2010 Back side Ledger Attractive Finlease P.O.No. 031558 02/01/2010 account PVt. Ltd. Axis Bank to Saraswati Realtors Pvt. Ltd. 2. Cash book/ Rajesh Aggarwal A-13 18 Rs. 10,00,000/- 22/03/2010 Back «» side
ITA No.3269/Del/2019
Ledger M/s Sunny Cart & P.O.No. 032686 22/03/2010 account Forge Ltd. Axis Bank to Saraswati Realtors Pvt. Ltd. 3. Cash book/ Rajesh Aggarwal A-13 18 Rsl5,00,000/- 22/03/2010 Back side Cash book / M/s Aasheesh Capital A-13 P.O.No. 032685 22/03/2010 Ledger Services Pvt. Ltd. account Axis Bank to Saraswati Realtors Pvt. Ltd. Total Rs. 45,00,000/- Amou nt It has been noticed from the above table that S.K. Jain Group had received Rs. 45,00,000/- in cash from the intermediary Shri Rajesh Aggarwal during the period from 01.04.2009 to 31.03.2010 and after that cheques of Rs 45.00.000/- were issued through intermediary Shri Rajesh Aggarwal M/s Attractive Finlease Pvt. Ltd. Rs. 20,00,000/-, M/s Sunny Cart 85 Forge Ltd. Rs.10.00.000/- and M/s Aasheesh Capital Services Pvt. Ltd. Rs. 15,00,000/- through AXIS Bank to the assessee company. The said information is corroborated with the Income tax returns of the assessee company and it is found that M/s Attractive Finlease Pvt. Ltd.-, M/s Sunny Cart 85 Forge Ltd and M/s Aasheesh Capital Services Pvt. Ltd. have made investment in the assessee company to the tune of Rs.20,00,000/- + Rs. 15,00,000/- + Rs. 15,00,000/- = Rs. 45,00,000/-, Further, a part of cash was used to issue cheques to the assessee company i.e. accommodation entries. The difference in the cash received from intermediary and cheques amounts issued to assessee company were on account of the intermediary acting on behalf of many beneficiaries including the instant assessee company. 9.2.3 . The return of income filed by the assessee has also been analyzed with reference to the information received from the Investigation Wing and keeping in view the findings of the Investigation Wing on the basis of documents seized during the search operation and post search enquiries, as discussed above. Considering all these material in totality there is enough credible material on record to have a reason to believe that share application money/loan received by the assessee company during the year under consideration are merely a accommodation entries for which the assessee company has paid cash from its coffer and commission thereon. 9.3 Details of examination and enquiry after receipt of information from investigation wing:- As sequel to the information received, from the Investigation Wing, copies of available assessment orders & CIT (A) orders of members of 12
ITA No.3269/Del/2019
accommodation entry group were obtained from assessment wing for examination. 9.4 Assessment Order in case of Shri S.K. Jain:- 9.4.1 Perusal of the assessment order for S.K. Jain for A.Y. 2005-06 has revealed that after examination of incrimination document seized during search and post search enquiry by the Investigation Wing the AO confronted these evidence to Sh. S.K. Jain and after considering explanation, the AO held that Jain brothers were engaged in the business of providing accommodation entries. Since Shri Jain chose not to explain the source of cash deposits, the entire cash received on unaccounted income and commission of 1.8% on providing accommodation entries were also charged to tax. The relevant portion of the AO’s order for A.Y. 2005-06 is re-produced as under for the sake of clarity. “Thus, in view of facts as discussed above, the estimated amount of the commission earned by Sh. Virendra Kumar Jain is calculated @ 1.8% on the entire cash received by for the purpose of providing accommodation entries to the persons/firms/companies from whom such cash was received by them during the different financial years. The aggregate amount of the cash received by Sh. Virendra Kumar Jain during the different financial years is reproduced year wise in a tabular form along with the average yearly commission income as below:
Sr. Financial Assessment Amount (Rs.) Average yearly No. Year Year commission income of the average rate of commission i.e. @1.8% of cash receipts 2004-05 2005-06 687,521,969 12375395 1 2005-00 2006-07 43558725.58 43558725.58 2 3 2006-07 2007-08 92924977.73 92924977.73 4 2007-08 2008-09 87235531 87235531 5 2008-09 2009-10 156366375 156366375 2009-10 223800570.6 223800570.6 6 2010-11 7 2010-11* 2011-12 67454026.2 67454026.2 TOTAL 3798,78,42,911 68,37,81,172.40
ITA No.3269/Del/2019
To sum up, various documents pertaining to various concerns (Companies as well as Firms) were seized from the premises of Sh. Virendra Jain during the course of search. These seized documents include blank unsigned as well as blank signed cheque books, acknowledgement of filing of returns of these companies, User Ids and password of these companies for e-filing of their returns, Bank A/c Opening & Closing letters, Authorization letters for attending the assessment proceedings, hooks of account in tally format as well as in the format required for filing a return, etc. Further, in the preceding paras, it has also been elaborately discussed that how Sh. Virendra Jain have used these companies to undertake various financial transactions to further their activities of providing accommodation entries to various beneficiaries. Jain Brothers have consistently refused to explain the various documents seized from their premises. It is apparent from seized record that Jain Brothers have been using a large no. of entities for the purpose of accommodation entries. Jain Brothers have also kept a meticulous record of cheques/RTGS issued from the bank accounts of these concerns lo various beneficiary partiesfapparently in lieu of the cash) that had been regularly received by them over a period of time and regularly entered, in the cash books maintained by them in their own hand writing”. The assessment orders of subsequent years were passed u/s 153A r.w.s. 143(3) of the Act on similar lines. 9.5 CIT(A)’s Order in case of Shri S.K. Jain 9.5.1 A careful perusal of the order of the CIT(A) in case of Sh. Surendra Kumar Jain (S.K. Jain) for A.Y. 2005-06 to 2011-12 revealed that the CIT(A) not only confirmed the finding of AO that Jain brothers were engaged in providing accommodation entries but had also confirmed the addition on substantiate basis. The relevant portion of the order is re- produced as below: “The assessing Officer has assessed the entire addition u/s. 68 on protective basis in the hands of both Sh Surendra Kumar Jain and Sh. Virendra Jain and assessed commission income in the hands of Sh. Surendra Jain or substantive basis and in the hands of Sh Surendra Jain on protective basis, on the ground that Sh. Virendra Kumar Jain has owned Up all the seized documents and role of Sh. Surendra Kumar Jain cannot be denied. I do not agree with the decision of the assessing officer Sh. Virendra Jain has after owning up the seized documents has not explained, the contents of the seized documents on one pretext or anothers. The documents were seized from the bed room of both the person Sh 14
ITA No.3269/Del/2019
S.K. Jain and Sh. Virendra Jain. The Assessing Officer himself has mentioned role of both the person in the assessment order. Mobile number of both brothers Sh. Virendra Jain and Sh S.K. Jain were given to the bank for e-mobile banking of various concerns. Third party during the statement, namely, Sh, Rajesh Agarwal has stated that it is known that Jain Brothers are in the business of entry operation. Seized documents are in the hand writing of Sh. Surendra Kumar Jain. This has not been denied by Sh Surendra Kumar Jain while recording the statement even after receiving the photocopy of seized documents. Sh Surendra Kumar Jain is the authorized representative of various concerns used for the purpose of accommodation entries for income tax proceedings. Search warrant was issued in the name of both the brothers. Therefore, in my view, the entire entry operation and seized document belong to both the brothers. Accordingly, addition u/s. 68 and commission income pertains to both the Jain Brothers. Accordingly, addition u/s. 68 and commission income for all assessment years are equally divided between Sh Surendra Kumar Jain and Sh Virendra Jain for all assessment years as both the brothers are equally involved in the accommodation entry business and maintaining documents and records unitedly. Accordingly, .all the grounds of appeal are here by dismissed in principle. Quantum of addition u/s. 68 and commission income is confirmed on substantive basis. On similar lines the appeal filed by Sh. Virendra Jain for all seven assessment years from A.Y. 2005-06 to A.Y. 2011-12 are also disposed offinlTA ns. 222-228/13-14/1373-1379.” 9.5.2 It is evident from the above facts that findings of the Investigation Wing were confirmed by the AO and the CIT(A) that Jain Brothers were engaged in the business of providing accommodation entries and earned the commission on provision, accommodation entries. These facts clearly provided that findings of the investigation wing constitute credible information, 10. Reason for formation of belief: 10.1 I have carefully perused and considered the return of income of the assessee, information received from Investigation Wing and SFIO, copies of incriminating documents seized from custody and control of Jain Brothers, copies of assessment order and appeal order as discussed along with evidences related to the assessee and have reached the following conclusion: i. That S.K. Jain Group was engaged in the business of providing accommodation entries to beneficiaries in lieu by entities controlled by them in cash.
ITA No.3269/Del/2019 ii. During the course of search operation and S.K. Jain Group various incriminating documents were been seized which showed that all the companies/entities controlled by the group do not have any known business activities and lack of independent existence as a separate entity and were a part of group of companies engaged in providing accommodation entries. iii. The above conclusion was corroborated with the following evidences found and seized during the course of search from their custody and control S.K. Jain Group:-
• Seizure of passbooks and/or cheque books in the name of approx. 200 persons/firms/companies i.e. entry provider companies. • Computer hard disks containing confidential details namely user name, password, id of various companies etc. • Documents containing the details of funds transferred through cheque/ RTGS/pay order to various entities/persons through these entries provider. • Seizure of daily cash books wherein details of cash received from beneficiary companies/ persons through various middlemen/agents by Jain Brothers in lieu of accommodation entries provided to beneficiary on different dates. • That entry provider companies were running their activities from the residential and the other premises of Sh. .Surendra Kumar Jain and Sh, Virendra Kumar Jain through entry provider companies. • That third party correspondence with entry provider companies were seized from the custody of Sh. Surendra Kumar Jain and Sh. Virendra Kumar Jain. • That S.K. Jain / Virendra Jain and there close associates were directors of these entry provider companies during relevant but different time period. • Seizure of documents had revealed that commission income were earned by Jain Brothers and mediator. iv. It was further proved that evidence relating to all the steps involved in providing accommodation entries by entry 16
ITA No.3269/Del/2019 provider companies in lieu of cash payment to Jain Brothers on charging commission were seized from custody and control of Jain Brothers. v. A perusal of documents as seized from the premises of Shri S.K. Jain Group and enclosed along with this note as Annexure has revealed that accommodation entry amounting to Rs.45,00,000/- by the assessee from S.K. Jain Group Companies were noted on the seized documents. 10.2 A careful scrutiny of information received from the investigation wing and subsequent analysis of report of investigation wing, copies of seized document and verification of assessment and appeal order in case of Jain Brothers lead to an irresistible conclusion that the assessee had received share capital/ loan of Rs.45,00,000/- from companies/ entities. engaged in business of providing accommodation entries in lieu of cash payment by beneficiary including assessee by charging commission, accordingly, an amount of Rs. 45,00,000/- represents unexplained credit u/s 58 of the Act in books of A/c of the assessee. 11. Income Chargeable to tax escaping assessment:- 11.1 Considering the above referred to credible information, incriminating seized documents u/s 132 of the Act and enquiries and investigation subsequent to the information, I have reason to believe that an amount at least, of Rs 45,00,000/- has escaped assessment in case the of M/s Saraswati Realtech (P) Ltd for the A.Y 2010-11 within the meaning of Section 147/148 of Income-tax Act, 1961. Moreover, as the case pertains to a period beyond four years from the end of relevant assessment years at the time of issue of notice necessary sanction has to be obtained from Pr. Chief Commissioner of Income-tax or Principal Commissioner of Income-tax or Commissioner of Income Tax in view of the amended provision of section 151 w.e.f. 01.06.2015. The necessary sanction in this regard is being obtained separately from Pr. Commissioner of Income Tax-08, Delhi before the issue of notice u/s 148. Income Tax Officer, Ward 22(3), New Delhi.”
Accordingly, the AO issued notice u/s 148 of the Act on 3rd March, 2017 5. asking the assessee to file the return within 30 days from the date of service of the notice. In response to the said notice, the assessee filed the return of income 17
ITA No.3269/Del/2019 on 25th May, 2017 declaring the same income and asked for reasons for reopening which was supplied to the assessee.
5.1 During the course of assessment proceedings, the AO asked the assessee to explain the nature of business carried on by the assessee, the latest communication address of M/s Attractive Finlease Pvt. Ltd., M/s Sunny Cart & Forge Ltd. and M/s Aasheesh Capital Services Pvt. Ltd., copy of bank statement for the period from 01.04.2009 to 31.03.2010, face value of share premium and to submit when the above companies ceased to be the shareholders and who bought the shares from them and at what price. The AO further asked the assessee to file the copy of income-tax return, audit report and the Profit & Loss Account. Rejecting the various explanations given by the assessee and observing that the share application money/loan of Rs.45 lakhs is not genuine and does not fulfill the ingredients of provisions of section 68 of the IT Act, the AO made addition of Rs.45 lakhs to the total income of the assessee.
Before the CIT(A), the assessee, apart from challenging the addition on merit, challenged the validity of the reassessment proceedings. However, the ld.CIT(A) upheld the validity of reassessment proceedings and also sustained the addition on merit. 7. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal.
ITA No.3269/Del/2019 [8. The ld. Counsel for the assessee, at the outset, submitted that the original assessment was reopened by issuing notice u/s 148 of the Act on the ground that the assessee has received accommodation entry of Rs.45 lakhs from three companies, namely, M/s Attractive Finlease Pvt. Ltd., M/s Sunny Cart & Forge Ltd. and M/s Aasheesh Capital Services Pvt. Ltd., belonging to Shri Surendra Kumar Jain. He submitted that after considering various submissions filed by the assessee, the AO completed the assessment u/s 143(3)/147 of the Act on 28th February, 2014 accepting the returned income, copy of which is placed at pages 70 and 71 of the paper book. He submitted that in the absence of any other tangible material before the AO, the second reassessment notice issued by him dated 3rd March, 2017 for the very same reason i.e., the income of Rs.45 lakhs has escaped assessment, reopened the assessment which is not in accordance with law. He submitted that the issue raised in the second reassessment was part of original assessment and, therefore, the second assessment is to be held as not valid.
8.1 Referring to the decision of the Hon’ble Delhi High Court in the case of CIT vs. Central Warehousing Corporation, 371 ITR 81, he submitted that the Hon’ble High Court, following the earlier order of the Hon’ble High Court in the case of Vodafone South Ltd. vs. Union of India, reported in 363 ITR 388, has held that the attempt of the AO to revisit the same issue for third time without any tangible or fresh material could not be held as valid. The action of the AO
ITA No.3269/Del/2019 was nothing, but, the tax authorities’ effort to overreach the law and, resultantly, a sheer harassment of the petitioner.
8.2 Referring to the decision of the Hon’ble Delhi High Court in the case of Vodafone South Ltd. vs. UOI, reported in 363 ITR 388, he submitted that the Hon’ble High Court in the said decision has held that re-appraisal of previously assessed returns based on change of opinion or improved understanding of the law could not be a ground for valid reassessment proceedings.
8.3. Referring to the decision of the Hon’ble Delhi High Court in the case of Best Buildwell Pvt. Ltd., vide Writ Petition (C) 1029/2017, CM Appeal No.41957/2017, order dated 4th July, 2018, he submitted that the Hon’ble High Court, in the said decision, has quashed the reassessment proceedings on the ground that the scope of the first reassessment notice was identical with what the Revenue seeks to examine or re-examine again. It was held that in the absence of fresh tangible material, outside the existing record, the view of the Revenue is nothing, but, an impermissible review, in line with the three judges’ ruling in CIT vs. Kelvinator of India. The Hon’ble Court held that the imperative of the provisos to section 147 is that the reasons recorded by the concerned officer (AO) inevitably point to the existence of some fresh material outside the existing record. Accordingly, in absence of any tangible material, the Hon’ble High Court quashed the reassessment order.
ITA No.3269/Del/2019 8.4 Referring to the decision of the Hon’ble Delhi High Court in the case of Le Passage to India Tours & Travels Pvt. Ltd. vs. Addl. CIT in W.P. (C) No.7550/2012, order dated 16th April, 2014, he drew the attention of the Bench to the following observations of the Hon’ble High Court:- “5. In the present case the “reasons to believe” – extracted above – nowhere reveal as to what tangible material which the AO came to obtain to justify the reassessment notice. In the previous instance, the reassessment notice was based on the assumption that a much larger income had accrued to the assessee whereas only a fraction of its was offered in the P & L account. In the present case, a somewhat similar, if not identical, ground has been made out i.e. that of expenses incurred abroad have not been revealed. This was an aspect which was known to the AO at the time of the original assessment; the explanations by the assessee appear to have been taken into account. At the time when the first reassessment notice was issued a facet of this was taken into consideration and in fact cited in the “reasons to believe”. A virtual assertion of the same reasons in different words does not clothe the reassessment notice, in the opinion of the Court, with any more sanctity, nor does it take away the vice of lack of jurisdiction noticed in the order in WP 8685/2010. Moreover, an assessment cannot be reopened merely to verify the genuineness of the expenses as that would amount to an impermissible fishing or rowing enquiry without any tangible material to show escapement of income. For the above reasons it is held that the impugned notice is not justified and beyond the authority of law. It is accordingly quashed and the writ petition is allowed.” 9. Relying on the decision of the Hon’ble Supreme Court in the case of CIT vs. Kelvinator India, reported in 320 ITR 561, he submitted that the Hon’ble Supreme Court in the said decision has held that after the amendment, the AO has to have reason to believe that income has escaped assessment, but, this does not imply that the AO can reopen an assessment on mere change of opinion. The concept of change of opinion must be treated as an inbuilt test to the check the abuse of power. Hence, after April 1, 1989, the AO has power to reopen an assessment provided there is ‘tangible material’ to come to the conclusion that
ITA No.3269/Del/2019 there was escapement of income from assessment. The reason must have a live link with the formation of belief. He also relied on the decision of the Hon’ble Delhi High Court in the case of Rasalika Trading and Investment Company Pvt. Ltd. vs. DCIT, reported in 365 ITR 447 and various other decisions.
The ld. Counsel for the assessee further submitted that there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. Therefore, the second notice issued u/s 148 of the Act dated 3rd March, 2017 by recording the same reasons that the assessee has received accommodation entry of Rs.45 lakhs from three companies owned by Shri Surender Kumar Jain group of companies is not in accordance with law.
The ld. DR, on the other hand, heavily relied on the order of the CIT(A) on the issue of reassessment proceedings. He submitted that the AO, after receipt of the letter and the information from SFIO dated 31.03.2016 has perused the said information along with other evidence and the modus operandi adopted by Surendra Kumar Jain, has framed the reasons to believe that the assessee has received accommodation entries of Rs.45 lakhs from the three entities operated and controlled by Shri Surendra Kumar Jain during the year under consideration. Thus, the AO has not acted mechanically before framing the reasons to believe, but, has applied his mind by considering all the information before him and, then, has taken the approval of the higher authorities as required u/s 151 of the Act
ITA No.3269/Del/2019 before issuing notice u/s 148. He submitted that the reasons recorded by the AO are based upon specific information and investigation conducted by the Department and, therefore, the reasons framed by the AO are based upon credible information about the bogus entries of Rs.45 lakhs. He accordingly submitted that the order of the CIT(A) upholding the validity of reassessment proceedings should be upheld and the ground raised by the assessee on this issue should be dismissed.
I have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. The reasons recorded for reopening of the assessment have already been reproduced in the preceding paragraph according to which the assessee has received accommodation entry of Rs.45 lakhs from three companies, namely, M/s Attractive Finlease Pvt. Ltd., M/s Sunny Cart & Forge Ltd. and M/s Aasheesh Capital Services Pvt. Ltd., belonging to Surendra Kumar Jain group. A perusal of the reasons recorded for issue of notice u/s 148 dated 25th March, 2013 shows that the AO had recorded the following reasons for issue of notice u/s 148:-
ITA No.3269/Del/2019
I find, the AO completed the assessment u/s 147/143(3) on 28th February, 13. 2014 after considering the various replies submitted by the assessee. The assessment order for A.Y. 2010-11 is being reproduced as under:-
ITA No.3269/Del/2019
Thus, a perusal of the reasons recorded for issue of the first notice u/s 148 of the Act and the reasons recorded for issue of the second notice u/s 148 of the Act clearly shows that such reopening was made on the ground that the assessee has received accommodation entry of Rs.45 lakhs from the three companies mentioned in the reasons supplied on both occasions and controlled by Mr. Surendra Kumar Jain. Therefore, the question that arises is as to whether in
ITA No.3269/Del/2019 absence of any other tangible material an issue, which was already considered in the first reassessment proceedings, can again be revisited by reopening the case in absence of any other tangible material. No doubt, the reasons recorded before issue of the second notice is quite lengthy containing the modus operandi adopted by Mr. Surendra Kumar Jain group of companies while giving accommodation entries in lieu of cash, but, the crux of the issue is the accommodation entry of Rs.45 lakhs received by the assessee from the three companies belonging to Mr. Surendra Kumar Jain group of companies. Therefore, the second reassessment notice issued by the AO is nothing, but, a change of opinion especially in absence of any other tangible material before him and there is no mention of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment completed u/s 143(3)/147 dated 28th February, 2014.
14.1 I find, the Hon’ble Delhi High Court in the case of Central Warehousing Corporation (supra), has held as under:-
“4. So far as the questions sought to be urged is concerned it is as evident from the above discussion that the second reassessment notice was based upon re-appreciation of the original record. This Court notices that the CIT as well as ITAT have concurrently ruled that whatever material or explanation in respect of the issues sought to be raised in the second reassessment notice to the assessee were part of the record and could have been noticed in the first reassessment proceedings. 5. Furthermore the CIT(Appeals) and the ITAT considered elaborately on the merits of the addition and held that the effort of the assessing officer ITA 575/2012 Page 3 to bring such amounts to tax was not justified. The ITAT pertinently noticed as under :
ITA No.3269/Del/2019
"The formation of such belief exhibiting the escapement of income or the reasons should have a direct nexus with the information enabling the Assessing Officer to form such belief. The interdiction provided in first proviso appended to section 147 puts and embargo upon the powers of the Assessing Officer. It contemplates that if an assessment under Sec. 143(3) has been made for the relevant assessment year and four years have expired from the end of the relevant assessment year then such notice would not be issued unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of assessee to make a return under Sec. 139 or in response to a notice issued under Sec.142(1) or Sec. 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Admittedly, the assessee has filed the return under Sec. 139 of the Income Tax Act, 1961. The only requirement left is whether the assessee can be charged with an allegation that it failed to disclose all material facts fully and truly in respect of the income escaped. Thus, operative force of the proviso is, that Assessing Officer should demonstrate, failure of assessee to disclose all material facts fully and truly, which gives rise to escapement of the income. In this connection, we have gone through the record carefully. The first item referred by the Assessing Officer in the reasons relates to allowability of certain expenditure which has to be ascertained whether incurred wholly and exclusively for the purpose of the business or not. Assessing officer thereafter referred to certain expenditure. In the questionnaire issued on 14.01.2005 at Sr. No.5, Assessing Officer called for the explanation of assessee on one item is :- "Expense incurred on engineering division has been charged to revenue instead of capitalizing it with the project/capital assets." Apart from this one query, the assessee has placed on record details of all other expenses referred by the Assessing Officer in the reasons. The learned counsel for the assessee at the time of hearing, referred Schedule No.5 at page Nos.125 & 126 of the paper book which contains details of miscellaneous expenses on page 125 at Sr.No.5, assessee has made a reference to deferred revenue expenses written off. Similarly at sr. No.8, it refers to Dunnage. At sr.No.24, expenses relating to quality improvement expenses (ISO) has been shown and at Sr.No.32, expenses related to unabsorbed overhead on capital work has been shown. The learned counsel for the assessee thereafter referred to page No.133 and pointed out that assessee has placed on record income and expenditure account relating to prior periods. In this connection, it has referred loss on write off assets also which is 27
ITA No.3269/Del/2019
sought to be enquired by Assessing Officer in these reasons. The net Rs.1,70,42,520 worked out by the assessee in the income and expenditure account has duly been taken in the computation of income. For buttressing this learned counsel for the assessee drew out attention towards Annexure B at page 22 of the paper book wherein computation of assessable income/loss has been placed on record. In this computation, he pointed out that prior period expenditure charged to the P&L account has been added at Rs.1,70,42,520. The learned counsel for the assessee similarly explained the other items. After going through all the details, we find that assessee has disclosed all the material facts fully and truly. The Assessing officer has merely made a mention in the reasons that it failed to disclose all material facts fully and truly. We have gone through the accounts which were made available to the assessing officer in the original round of litigation. When Assessing Officer sought to reopen the assessment at the first instance, he did not make reference to these aspects though he made a reference to the allowability of expenses under Sec. 37 of the Income Tax Act, 1961. In view of the above discussion, we are of the view that assessee has demonstrated on the record, that all facts relevant for the assessment of its income have been declared by it fully and truly." 6. This Court had in the judgment reported as Honda Siel Power Products Ltd. V. DCIT 340 ITR 53 held that page 81 para 13 held that a question as to whether there is failure or omission to disclose fully and truly material facts as essentially one of fact. This was affirmed by the Supreme Court in Honda Siel Power Product V. DCIT 340 ITR 64 (SC). The Supreme Court ruling in Commissioner of Income Tax vs. Kelvinator India Ltd. 320 ITR 561 (SC) is authority for the view that the "reason to believe" on which a reassessment can be validly ordered should necessarily be based on "tangible material" which an A.O. comes by after the assessment. Necessarily, such material is outside the record. Straying from this clear path would be sliding down the slippery slope into a quagmire of re- appreciation of existing material and -even the process of reasoning which is impermissible as it is a forbidden "merits review". Reassessment, if permitted in such instances would be a route which (to borrow the phrase from another context) "unlocks the gate which shuts" the A.O's review on merits. (Attorney General for New South Wales V. Quin 1990 (64) Aust LJR 237). 7. In view of the above discussion this Court is of the opinion that impugned order does not suffer from any infirmity. 8. The appeal is consequently dismissed.”
ITA No.3269/Del/2019
I find, the Hon’ble Delhi High Court in the case of Vodafone South (supra) has held that re-appraisal of previously assessed returns, based on change of opinion or improved understanding of the law could not be a ground for valid reassessment proceedings. The relevant observations of the Hon’ble High Court from para 8 onwards read as under:-
“8. What constitutes valid and justifiable grounds for re-opening of assessment is established. After Kelvinator (supra), it is now acknowledged that a tax administrator would act within jurisdiction if notice of reassessment is issued in a given case, based on "tangible" or fresh material. Re-appraisal of previously assessed returns, based on a change of opinion or an improved understanding of the law, would not pass muster as the basis for a valid reassessment proceeding, because the law would not uphold such change of opinion as it amounts to an impermissible review. Equally, an erroneous previous view warranting exercise of revisional jurisdiction cannot authorize a valid reassessment notice. 9. In the present instance, the Revenue had concededly raked up the issue of commission paid to dealers in the first reassessment proceeding. That too was despite the AO having gone into the question and disallowed the amount in question to the extent of 10%. As to the obligation to deduct tax, it was the specific subject matter of enquiry during the first re-assessment proceeding, because the notice, inter alia, alleged that "..If the commission would have been paid to parties by the assessee then TDS should have been deducted and deposited to the Government account which has not been done. The expenditure as a whole should have been disallowed and added back to the income of the assessee." In the assessee's letter in response to the first reassessment notice dated 15-12-2010, inter alia, this precise aspect - as to details of commission paid to dealers, and supporting material in respect of TDS deducted, was referred to (this is found at pages 163-166 of the present petition paper book). The assessee had relied on, and annexed copies of the reply to questionnaire and queries in the course of assessment proceedings, and annexed the response given at the time of assessment on 07-11-2007, as well as supporting documents. These were the subject of enquiry during the first reassessment proceeding. That the AO appears to have been satisfied about the explanation and, therefore, chosen not to bring to tax any amount on this aspect, is a matter of inference because in the first reassessment order, no addition was made on this score.
ITA No.3269/Del/2019 10. It is evident from the above discussion that during the assessment proceeding, and the first reassessment proceeding (pursuant to the earlier reassessment notice of 03-03-2010) the question of dealers' commission as well as TDS on those amounts, had been gone into. The attempt to revisit this issue a third time, in the given circumstances of the case, is nothing but the tax authorities' effort to overreach the law and resultantly a sheer harassment of the petitioner. The impugned notice and all further proceedings conducted pursuant to it are, therefore, without jurisdiction and hereby quashed. The writ petition is accordingly allowed but without any order on costs. “
The various other decisions relied on by the ld. Counsel for the assessee also support his case to the proposition that in absence of any tangible material, the AO cannot reopen the assessment on the same set of facts which have already been gone through and assessment has been made and the order passed u/s 143(3)/147 of the Act. In this view of the matter, I am of the considered opinion that the second reassessment proceedings initiated for bringing to tax the very same amount of Rs.45 lakhs as alleged accommodation entry, in my opinion, is not in accordance with the law. I, therefore, quash the reassessment proceedings initiated by the AO vide notice dated 3rd March, 2017 and subsequent proceedings are held to be null and void. The grounds raised by the assessee challenging the validity of reassessment proceedings are accordingly allowed. Since the assessee succeeds on this legal ground, the ground challenging the addition on merit becomes academic in nature and, therefore, is not being adjudicated.
ITA No.3269/Del/2019 17. In the result, the appeal filed by the assessee is allowed. Pronounced in the open court on 29.10.2021. Sd/- (R.K. PANDA) ACCOUNTANT MEMBER Dated: 29th October, 2021. dk Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi