M/S SHREYANS JAIN, HUF,KOLKATA vs. I.T.O.,WARD-36(2), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA (Before Sri J. Sudhakar Reddy, Hon’ble Accountant Member) ITA No. 1602/Kol/2019 Assessment Years: 2011-12 M/s. Shreyans Jain, HUF…………….………........................................................……………….…......Appellant 18, R.N. Mukherjee Road Dalhousie Square 6th Floor Kolkata – 700 001 [PAN : AATHS 2107 P] Vs. Income Tax Officer, Wd-36(2), Kolkata………………………………….............….……....…....Respondent Appearances by: Shri S.M. Surana, Advocate, appeared on behalf of the assessee. Shri Jayanta Khanra, JCIT Sr. D/R, appearing on behalf of the Revenue. Date of concluding the hearing : February 27th, 2020 Date of pronouncing the order : March 13th, 2020 ORDER Per J. Sudhakar Reddy, AM :-

This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) – 10, Kolkata, (hereinafter the “ld.CIT(A)”), passed u/s. 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 30/05/2019 for the Assessment Year 2011-12. 2. The ld. Counsel for the assessee challenges the reopening of assessment u/s 147 of the Act, as bad in law. 3. Heard rival contentions. The reasons recorded for reopening of assessment u/s 147 of the Act is as follows:-

2 ITA No. 1602/Kol/2019 Assessment Years: 2011-12 M/s. Shreyans Jain, HUF

3.1. A perusal of these reasons demonstrate that the allegation is that income offered A perusal of these reasons demonstrate that the allegation is that income offered A perusal of these reasons demonstrate that the allegation is that income offered by the assessee to the tune of Rs.5,00,500/ by the assessee to the tune of Rs.5,00,500/- is “bogus income”. Thus, thi ”. Thus, this is not a case where the Assessing Officer alleges in his reasons that the income subject to tax has where the Assessing Officer alleges in his reasons that the income subject to tax has where the Assessing Officer alleges in his reasons that the income subject to tax has escaped assessment. It is his case that escaped assessment. It is his case that “bogus income” has been offered to tax. has been offered to tax. When the Assessing Officer believes that this amount of Rs.5,00,500/ Assessing Officer believes that this amount of Rs.5,00,500/- is not income at all, the not income at all, the question of income escaping assessment does not arise. question of income escaping assessment does not arise. This, in my view, cannot be a This, in my view, cannot be a ground for reopening of assessment as it is against the mandate of the Act. ground for reopening of assessment as it is against the mandate of the Act. ground for reopening of assessment as it is against the mandate of the Act. 3.2. Moreover, the assessee has Moreover, the assessee has, in the profit and loss account and bala in the profit and loss account and balance sheet filed, disclosed these transactions and filed details pertaining to the same. This is clear from disclosed these transactions and filed details pertaining to the same. This is clear from disclosed these transactions and filed details pertaining to the same. This is clear from the computation of profit where the assessee has declared Rs.2,58,082.28/ the computation of profit where the assessee has declared Rs.2,58,082.28/ the computation of profit where the assessee has declared Rs.2,58,082.28/- as profit from speculation, after setting off business loss. from speculation, after setting off business loss. The schedules The schedules as well as the computation of income give the details. computation of income give the details. There is no dispute on the quantum of loss There is no dispute on the quantum of loss claimed by the assessee. Thus, this is a case where the reopening in question is made claimed by the assessee. Thus, this is a case where the reopening in question is made claimed by the assessee. Thus, this is a case where the reopening in question is made without prima facie verification of the information received by the Ass verification of the information received by the Ass verification of the information received by the Assessing Officer and without application of mind to the information received from the investigation wing of application of mind to the information received from the investigation wing of application of mind to the information received from the investigation wing of the Department. 4. This Bench of the Tribunal in the case of This Bench of the Tribunal in the case of Proficient Commodities Pvt. Ltd. vs. DCIT Proficient Commodities Pvt. Ltd. vs. DCIT in ITA Nos. 2307 & 2308/Kol/2017, order dt. 02 in ITA Nos. 2307 & 2308/Kol/2017, order dt. 02/11/2018, under similar circumstances , under similar circumstances held as follows:- “5.1. We find that this Bench of the Tribunal in the case of ACIT vs. M/s. Adhunik We find that this Bench of the Tribunal in the case of ACIT vs. M/s. Adhunik We find that this Bench of the Tribunal in the case of ACIT vs. M/s. Adhunik Cement Ltd. in ITA No. 1375/Kol/2017; Assessment Year 2009 Cement Ltd. in ITA No. 1375/Kol/2017; Assessment Year 2009-10, under identical 10, under identical facts and circumstances held as follow facts and circumstances held as follows:- 7.1. The Hon'ble Delhi High Court in the case of 7.1. The Hon'ble Delhi High Court in the case of Commissioner of Income Commissioner of Income-tax, IV v.Insecticides (India) Ltd v.Insecticides (India) Ltd[2013] 357 ITR 330 (Delhi) upheld the order of the ITAT [2013] 357 ITR 330 (Delhi) upheld the order of the ITAT Delhi Bench in ITA Nos. 2332 Delhi Bench in ITA Nos. 2332-2333/Del/2010, holding as follows:-

3 ITA No. 1602/Kol/2019 Assessment Years: 2011-12 M/s. Shreyans Jain, HUF

"7. We may point out at this juncture itself that the Tribunal did not go into the "7. We may point out at this juncture itself that the Tribunal did not go into the "7. We may point out at this juncture itself that the Tribunal did not go into the question of merits. It only examined the question of the validity of the proceedings question of merits. It only examined the question of the validity of the proceedings question of merits. It only examined the question of the validity of the proceedings under Section 147 Section 147 of the said Act. The Tribunal, in essence, held that the purported of the said Act. The Tribunal, in essence, held that the purported reasons for reopening the assessments were entirely vague and devoid of any reasons for reopening the assessments were entirely vague and devoid of any reasons for reopening the assessments were entirely vague and devoid of any material. As such, on the available material, no reasonable person could have any material. As such, on the available material, no reasonable person could have any material. As such, on the available material, no reasonable person could have any reason to believe t reason to believe that income had escaped assessment. Consequently, the Tribunal hat income had escaped assessment. Consequently, the Tribunal held that the proceedings under held that the proceedings under Section 147 of the said Act were invalid. of the said Act were invalid. I.T.A. No. 1375/Kol/2017 Assessment Year: 2009 I.T.A. No. 1375/Kol/2017 Assessment Year: 2009-10 M/s. Adhunik Ceme 10 M/s. Adhunik Cement Ltd 8. The Tribunal gave detailed reasons for concluding that the proceedings under 8. The Tribunal gave detailed reasons for concluding that the proceedings under 8. The Tribunal gave detailed reasons for concluding that the proceedings under Section 147 were invalid. Instead of adding anything to the said reasons, we think it were invalid. Instead of adding anything to the said reasons, we think it were invalid. Instead of adding anything to the said reasons, we think it would be appropriate if the sa would be appropriate if the same are reproduced:-- "In the case at hand, as is seen from the reasons recorded by the AO, we find that "In the case at hand, as is seen from the reasons recorded by the AO, we find that "In the case at hand, as is seen from the reasons recorded by the AO, we find that the AO has merely stated that it has been informed by the Director of Income the AO has merely stated that it has been informed by the Director of Income the AO has merely stated that it has been informed by the Director of Income-tax (Inv.), New Delhi, vide letter dated 16.06.2006 that the above named c (Inv.), New Delhi, vide letter dated 16.06.2006 that the above named c (Inv.), New Delhi, vide letter dated 16.06.2006 that the above named company was involved in giving and taking bogus entries/transactions during the relevant year, involved in giving and taking bogus entries/transactions during the relevant year, involved in giving and taking bogus entries/transactions during the relevant year, which is actually unexplained income of the assessee company. The AO has further which is actually unexplained income of the assessee company. The AO has further which is actually unexplained income of the assessee company. The AO has further stated that the assessee company has failed to disclose fully and truly all mater stated that the assessee company has failed to disclose fully and truly all mater stated that the assessee company has failed to disclose fully and truly all material facts and source of these funds routed through bank account of the assessee facts and source of these funds routed through bank account of the assessee facts and source of these funds routed through bank account of the assessee company. In the reasons recorded, it is nowhere mentioned as to who had given company. In the reasons recorded, it is nowhere mentioned as to who had given company. In the reasons recorded, it is nowhere mentioned as to who had given bogus entries/transactions to the assessee or to whom the assessee had given bogus bogus entries/transactions to the assessee or to whom the assessee had given bogus bogus entries/transactions to the assessee or to whom the assessee had given bogus entries or transactions. It is also nowhere mentioned as to on which dates and sactions. It is also nowhere mentioned as to on which dates and sactions. It is also nowhere mentioned as to on which dates and through which mode the bogus entries and transactions were made by the assessee. through which mode the bogus entries and transactions were made by the assessee. through which mode the bogus entries and transactions were made by the assessee. What was the information given by the Director of Income What was the information given by the Director of Income-tax (Inv.), New Delhi, tax (Inv.), New Delhi, vide letter dated 16.06.2006 ha vide letter dated 16.06.2006 has also not been mentioned. In other words, the s also not been mentioned. In other words, the contents of the letter dated 16.06.2006 of the Director of Income contents of the letter dated 16.06.2006 of the Director of Income-tax (Inv.), New tax (Inv.), New Delhi have not been given. The AO has vaguely referred to certain communications Delhi have not been given. The AO has vaguely referred to certain communications Delhi have not been given. The AO has vaguely referred to certain communications that he had received from the DIT(Inv.), New D that he had received from the DIT(Inv.), New Delhi; the AO did not mention the elhi; the AO did not mention the facts mentioned in the said communication except that from the informations facts mentioned in the said communication except that from the informations facts mentioned in the said communication except that from the informations gathered by the DIT (Inv.), New Delhi that the assessee was involved in giving and gathered by the DIT (Inv.), New Delhi that the assessee was involved in giving and gathered by the DIT (Inv.), New Delhi that the assessee was involved in giving and taking accommodation entries only and represented unsecured mone taking accommodation entries only and represented unsecured mone taking accommodation entries only and represented unsecured money of the assessee company is actually unexplained income of the assessee company or that it assessee company is actually unexplained income of the assessee company or that it assessee company is actually unexplained income of the assessee company or that it has been informed by the Director of Income has been informed by the Director of Income-tax (Inv.), New Delhi vide letter dated tax (Inv.), New Delhi vide letter dated 16.06.2006 that the assessee company was involved in giving and taking bogus 16.06.2006 that the assessee company was involved in giving and taking bogus 16.06.2006 that the assessee company was involved in giving and taking bogus entries/transactions during the relevant financial year. The AO did not mention the ries/transactions during the relevant financial year. The AO did not mention the ries/transactions during the relevant financial year. The AO did not mention the details of transactions that represented unexplained income of the assessee details of transactions that represented unexplained income of the assessee details of transactions that represented unexplained income of the assessee company. The information on the basis of which the AO has initiated proceedings company. The information on the basis of which the AO has initiated proceedings company. The information on the basis of which the AO has initiated proceedings u/s 147 of the Act u/s 147 of the Act are undoubtedly vague and uncertain and cannot be construed are undoubtedly vague and uncertain and cannot be construed to be sufficient and relevant material on the basis of which a reasonable person to be sufficient and relevant material on the basis of which a reasonable person to be sufficient and relevant material on the basis of which a reasonable person could have formed a belief that income had escaped assessment. In other words, the could have formed a belief that income had escaped assessment. In other words, the could have formed a belief that income had escaped assessment. In other words, the reasons recorded by the AO are t reasons recorded by the AO are totally vague, scanty and ambiguous. They are not otally vague, scanty and ambiguous. They are not clear and unambiguous but suffer from vagueness. The reasons recorded by the AO clear and unambiguous but suffer from vagueness. The reasons recorded by the AO clear and unambiguous but suffer from vagueness. The reasons recorded by the AO do not disclose the AO's mind as to what was the nature and amount of transaction do not disclose the AO's mind as to what was the nature and amount of transaction do not disclose the AO's mind as to what was the nature and amount of transaction or entries, which had been given or taken by or entries, which had been given or taken by the assessee in the relevant year. The the assessee in the relevant year. The reasons recorded by the AO also do not disclose his mind as to when and in what reasons recorded by the AO also do not disclose his mind as to when and in what reasons recorded by the AO also do not disclose his mind as to when and in what mode or way the bogus entries or transactions were given or taken by the assessee. mode or way the bogus entries or transactions were given or taken by the assessee. mode or way the bogus entries or transactions were given or taken by the assessee. From the reasons recorded, nobody can know what was th From the reasons recorded, nobody can know what was the amount and nature of e amount and nature of bogus entries or transactions given and taken by the assessee in the relevant year bogus entries or transactions given and taken by the assessee in the relevant year bogus entries or transactions given and taken by the assessee in the relevant year and with whom the transaction had taken place. As already noted above, it is well and with whom the transaction had taken place. As already noted above, it is well and with whom the transaction had taken place. As already noted above, it is well settled that only the reasons recorded by the AO for initiating proc settled that only the reasons recorded by the AO for initiating proceedings u/s 147 eedings u/s 147 of the Act are to be looked at or examined for sustaining or setting aside a notice of the Act are to be looked at or examined for sustaining or setting aside a notice of the Act are to be looked at or examined for sustaining or setting aside a notice issued u/s 148 of the Act. The reasons are required to be read as they were issued u/s 148 of the Act. The reasons are required to be read as they were issued u/s 148 of the Act. The reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No addition can recorded by the AO. No substitution or deletion is permissible. No addition can recorded by the AO. No substitution or deletion is permissible. No addition can be made to those reasons. Therefore, the details of entries or amount mentioned in the made to those reasons. Therefore, the details of entries or amount mentioned in the made to those reasons. Therefore, the details of entries or amount mentioned in the assessment order and in respect of which ultimate addition has been made by the assessment order and in respect of which ultimate addition has been made by the assessment order and in respect of which ultimate addition has been made by the AO, cannot be made a basis to say that the reasons recorded by the AO were with AO, cannot be made a basis to say that the reasons recorded by the AO were with AO, cannot be made a basis to say that the reasons recorded by the AO were with reference to those amounts mentioned in the assessment order. The reasons to those amounts mentioned in the assessment order. The reasons to those amounts mentioned in the assessment order. The reasons recorded by the AO are totally silent with regard to the amount and nature of recorded by the AO are totally silent with regard to the amount and nature of recorded by the AO are totally silent with regard to the amount and nature of bogus entries and transactions and the persons with whom the transactions had bogus entries and transactions and the persons with whom the transactions had bogus entries and transactions and the persons with whom the transactions had taken place. In this respect, we ma taken place. In this respect, we may rely upon the decision of Hon'ble jurisdictional y rely upon the decision of Hon'ble jurisdictional

4 ITA No. 1602/Kol/2019 Assessment Years: 2011-12 M/s. Shreyans Jain, HUF Delhi High Court in the case of Delhi High Court in the case of CIT v. Atul Jain [2000] 299 ITR 383, in which case [2000] 299 ITR 383, in which case the information relied upon by the AO for initiating proceedings u/s 1 the information relied upon by the AO for initiating proceedings u/s 1 the information relied upon by the AO for initiating proceedings u/s 147 of the Act did indicate the source of the capital gain and nobody knew which shares were did indicate the source of the capital gain and nobody knew which shares were did indicate the source of the capital gain and nobody knew which shares were transacted and with whom the transaction has taken place and in that case there transacted and with whom the transaction has taken place and in that case there transacted and with whom the transaction has taken place and in that case there were absolutely no details available and the information supplied was extremely were absolutely no details available and the information supplied was extremely were absolutely no details available and the information supplied was extremely scanty and vague and in that light of those facts, the Hon'ble Jurisdictional Delhi ty and vague and in that light of those facts, the Hon'ble Jurisdictional Delhi ty and vague and in that light of those facts, the Hon'ble Jurisdictional Delhi High Court held that initiation of proceedings u/s 147 of the Act by the AO was not High Court held that initiation of proceedings u/s 147 of the Act by the AO was not High Court held that initiation of proceedings u/s 147 of the Act by the AO was not valid and justified in the eyes of law. The recent decision of Hon'ble jurisdictional valid and justified in the eyes of law. The recent decision of Hon'ble jurisdictional valid and justified in the eyes of law. The recent decision of Hon'ble jurisdictional High Court of Delhi in the case of Signature Hotels (P.) Ltd. (supra) also supports ourt of Delhi in the case of Signature Hotels (P.) Ltd. (supra) also supports ourt of Delhi in the case of Signature Hotels (P.) Ltd. (supra) also supports the view we have taken above." the view we have taken above." 9. We do not see any reason to differ with the view expressed by the Tribunal. No 9. We do not see any reason to differ with the view expressed by the Tribunal. No 9. We do not see any reason to differ with the view expressed by the Tribunal. No substantial question of law arises for our consideration. The ap substantial question of law arises for our consideration. The appeals are dismissed. peals are dismissed. There shall be no order as to costs. There shall be no order as to costs. 7.2. The Hon'ble Delhi High Court in the case of 7.2. The Hon'ble Delhi High Court in the case of Principal CIT vs G&G Pharma India Principal CIT vs G&G Pharma India Ltd. in ITA 545/2015 vide order dt. 08.10.2015 at paras . in ITA 545/2015 vide order dt. 08.10.2015 at paras 12 and 13 was held as 12 and 13 was held as follows: "12. In the present case, after setting out four entries, stated to have been received "12. In the present case, after setting out four entries, stated to have been received "12. In the present case, after setting out four entries, stated to have been received by the assessee on a single date i.e. 10th Feb. 2003, from four entries which were by the assessee on a single date i.e. 10th Feb. 2003, from four entries which were by the assessee on a single date i.e. 10th Feb. 2003, from four entries which were received by the assessee on a single date i.e. 10th F received by the assessee on a single date i.e. 10th Feb. 2003, from four entries which eb. 2003, from four entries which were termed as accommodation entries, which information was given to him by the were termed as accommodation entries, which information was given to him by the were termed as accommodation entries, which information was given to him by the Director Investigation, the A.O. stated: 'I have also perused various materials and Director Investigation, the A.O. stated: 'I have also perused various materials and Director Investigation, the A.O. stated: 'I have also perused various materials and report from Investigation Wing and on that basis it is evi report from Investigation Wing and on that basis it is evident that the assessee dent that the assessee company has, introduced its own unaccounted money in its bank account by way of company has, introduced its own unaccounted money in its bank account by way of company has, introduced its own unaccounted money in its bank account by way of above accommodation entries'. The above conclusion is unhelpful in understanding above accommodation entries'. The above conclusion is unhelpful in understanding above accommodation entries'. The above conclusion is unhelpful in understanding whether the A.O. applied his mind to the materials that he talks about p whether the A.O. applied his mind to the materials that he talks about p whether the A.O. applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on which the so since he did not describe what those materials were. Once the date on which the so since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been called accommodation entries were provided is known, it would not have been called accommodation entries were provided is known, it would not have been difficult for the A.O., if he had in fact undertaken the exercise, to make a referenc difficult for the A.O., if he had in fact undertaken the exercise, to make a referenc difficult for the A.O., if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the to the manner in which those very entries were provided in the accounts of the to the manner in which those very entries were provided in the accounts of the assessee, which must have been tendered along with the return, which was filed on assessee, which must have been tendered along with the return, which was filed on assessee, which must have been tendered along with the return, which was filed on 14th November, 2004 and was processed u/s 143(3) of the Act. Without forming a 14th November, 2004 and was processed u/s 143(3) of the Act. Without forming a 14th November, 2004 and was processed u/s 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the A.O. to inion, on the basis of such material, it was not possible for the A.O. to inion, on the basis of such material, it was not possible for the A.O. to have simply concluded: 'it is evident that the assessee company has introduced its have simply concluded: 'it is evident that the assessee company has introduced its have simply concluded: 'it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries'. In the own unaccounted money in its bank by way of accommodation entries'. In the own unaccounted money in its bank by way of accommodation entries'. In the considered view of the C considered view of the Court, in light of the law explained with sufficient clarity by ourt, in light of the law explained with sufficient clarity by the Supreme Court in the decision discussed, the basic requirement that the A.O. the Supreme Court in the decision discussed, the basic requirement that the A.O. the Supreme Court in the decision discussed, the basic requirement that the A.O. must apply his mind to the materials in order to have reasons to believe that the must apply his mind to the materials in order to have reasons to believe that the must apply his mind to the materials in order to have reasons to believe that the income of the assessee escaped income of the assessee escaped assessment is missing in the present case. assessment is missing in the present case. 13. A perusal of the reasons recorded demonstrate total non application of mind by 13. A perusal of the reasons recorded demonstrate total non application of mind by 13. A perusal of the reasons recorded demonstrate total non application of mind by the A.O. Thus applying the proposition laid down by the Jurisdictional High Court in the A.O. Thus applying the proposition laid down by the Jurisdictional High Court in the A.O. Thus applying the proposition laid down by the Jurisdictional High Court in G&G Pharma India (supra) we hold that the r G&G Pharma India (supra) we hold that the reopening of assessment is bad in law" eopening of assessment is bad in law" 7.3. The Hon'ble Delhi High Court in the case of 7.3. The Hon'ble Delhi High Court in the case of Signature Hotels (P) Ltd. vs ITO and Signature Hotels (P) Ltd. vs ITO and another, reported in 338 ITR 51 (Delhi) has under similar circumstances held as , reported in 338 ITR 51 (Delhi) has under similar circumstances held as , reported in 338 ITR 51 (Delhi) has under similar circumstances held as follows: "For the A.Y. 2003 "For the A.Y. 2003-04, the return of income of the assessee company was accepted 04, the return of income of the assessee company was accepted u/s 143(1) of the u/s 143(1) of the Income-tax Act, 1961 and was not selected for scrutiny. , 1961 and was not selected for scrutiny. Subsequently, the Assessing Officer issue Subsequently, the Assessing Officer issued notice u/s 148 which was objected by the d notice u/s 148 which was objected by the assessee. The Assessing Officer rejected the objections. The assessee company filed assessee. The Assessing Officer rejected the objections. The assessee company filed assessee. The Assessing Officer rejected the objections. The assessee company filed writ petition and challenged the notice and the order on objections. writ petition and challenged the notice and the order on objections. The Delhi High Court allowed the writ petition and held as The Delhi High Court allowed the writ petition and held as under: '(i) under: '(i) Section 147 of the Income-tax Act, 1961, is wide but not plenary. The assessing Officer must tax Act, 1961, is wide but not plenary. The assessing Officer must tax Act, 1961, is wide but not plenary. The assessing Officer must have 'reasons to believe' that income chargeable to tax has escaped assessment. have 'reasons to believe' that income chargeable to tax has escaped assessment. have 'reasons to believe' that income chargeable to tax has escaped assessment. This is mandatory a This is mandatory and the 'reason to believe' are required to be recorded in writing nd the 'reason to believe' are required to be recorded in writing by the Assessing Officer. by the Assessing Officer. (ii) A notice u/s 148 can be quashed if the 'belief' is not bona fide, or one based on (ii) A notice u/s 148 can be quashed if the 'belief' is not bona fide, or one based on (ii) A notice u/s 148 can be quashed if the 'belief' is not bona fide, or one based on vague, irrelevant and non vague, irrelevant and non-specific information. The basis of the belief shou specific information. The basis of the belief should be discernible from the material on record, which was available with the Assessing discernible from the material on record, which was available with the Assessing discernible from the material on record, which was available with the Assessing Officer when he recorded the reasons. There should be a link between the reasons Officer when he recorded the reasons. There should be a link between the reasons Officer when he recorded the reasons. There should be a link between the reasons and the evidence material available with the Assessing Officer. and the evidence material available with the Assessing Officer.

5 ITA No. 1602/Kol/2019 Assessment Years: 2011-12 M/s. Shreyans Jain, HUF (iii) The reassessment p (iii) The reassessment proceedings were initiated on the basis of information roceedings were initiated on the basis of information received from the Director of Income received from the Director of Income-tax (Investigation) that the petitioner had tax (Investigation) that the petitioner had introduced money amounting to Rs.5 lakhs during F.Y.2002 introduced money amounting to Rs.5 lakhs during F.Y.2002-03 as stated in the 03 as stated in the annexure. According to the information, the annexure. According to the information, the amount received from a company, S, amount received from a company, S, was nothing but an accommodation entry and the assessee was the beneficiary. The was nothing but an accommodation entry and the assessee was the beneficiary. The was nothing but an accommodation entry and the assessee was the beneficiary. The reasons did not satisfy the requirements of reasons did not satisfy the requirements of section 147 of the Act. There was no of the Act. There was no reference to any document or statement, except the annexure. The annexure could ce to any document or statement, except the annexure. The annexure could ce to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established not be regarded as a material or evidence that prima facie showed or established not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a nexus or link which disclosed escapement of income. The annexure was not a nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicat pointer and did not indicate escapement of income. (iv) Further, the Assessing Officer did not apply his own mind to the information (iv) Further, the Assessing Officer did not apply his own mind to the information (iv) Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that and examine the basis and material of the information. There was no dispute that and examine the basis and material of the information. There was no dispute that the company, S, bad a paid up capital of Rs. 90 lakhs and was incorp the company, S, bad a paid up capital of Rs. 90 lakhs and was incorp the company, S, bad a paid up capital of Rs. 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September January 4, 1989, and was also allotted a permanent account number in September January 4, 1989, and was also allotted a permanent account number in September 2001. Thus, it could not be held to be a fictitious person. The reassessment 2001. Thus, it could not be held to be a fictitious person. The reassessment 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to the quashed. proceedings were not valid and were liable to the quashed. 7.4. In the case of 7.4. In the case of CIT vs Atul Jain reported in 299 ITR 383 it has been held as reported in 299 ITR 383 it has been held as follows: "Held dismissing the appeals, that the only information was that the "Held dismissing the appeals, that the only information was that the "Held dismissing the appeals, that the only information was that the assessee had taken a bogus entry of capital gains by paying cash assessee had taken a bogus entry of capital gains by paying cash along with some along with some premium for taking a cheque for that amount. The information did not indicate the premium for taking a cheque for that amount. The information did not indicate the premium for taking a cheque for that amount. The information did not indicate the source of the capital gains which in this case were shares. There was no source of the capital gains which in this case were shares. There was no source of the capital gains which in this case were shares. There was no information which shares had been transferred and with whom the transaction information which shares had been transferred and with whom the transaction information which shares had been transferred and with whom the transaction had taken place. The A.O. did not verify the correctness of information received by place. The A.O. did not verify the correctness of information received by place. The A.O. did not verify the correctness of information received by him but merely accepted the truth of the vague information in a mechanical him but merely accepted the truth of the vague information in a mechanical him but merely accepted the truth of the vague information in a mechanical manner. The A.O. had not even recorded his satisfaction about the correctness or manner. The A.O. had not even recorded his satisfaction about the correctness or manner. The A.O. had not even recorded his satisfaction about the correctness or otherwise of the informat otherwise of the information for issuing a notice u/s 148. What had been recorded ion for issuing a notice u/s 148. What had been recorded by the A.O. as his 'reasons to believe' was nothing more than a report given by him by the A.O. as his 'reasons to believe' was nothing more than a report given by him by the A.O. as his 'reasons to believe' was nothing more than a report given by him to the Commissioner. The submission of the report was not the same as recording of to the Commissioner. The submission of the report was not the same as recording of to the Commissioner. The submission of the report was not the same as recording of reasons to believe for issuing a reasons to believe for issuing a notice. The A.O. had clearly substituted form for notice. The A.O. had clearly substituted form for substance and therefore the action of the A.O. was not sustainable" substance and therefore the action of the A.O. was not sustainable" Applying the proposition of law laid down in these cases to the facts of the Applying the proposition of law laid down in these cases to the facts of the Applying the proposition of law laid down in these cases to the facts of the case we hold that the reopening is bad in law as the reason case we hold that the reopening is bad in law as the reasons recorded are without s recorded are without independent application of mind.” independent application of mind.” 5.2. We also note that the coordinate bench of this Tribunal in ITA No. 5.2. We also note that the coordinate bench of this Tribunal in ITA No. 5.2. We also note that the coordinate bench of this Tribunal in ITA No. 660/Kol/2011 for AY 2002 660/Kol/2011 for AY 2002-03 in the case of DCIT Vs. Great Wall Marketing (P) Ltd. 03 in the case of DCIT Vs. Great Wall Marketing (P) Ltd. vide order dated 03.02.2016 has held as unde vide order dated 03.02.2016 has held as under: " 8. We have heard the submissions of the learned counsel for the assessee both on 8. We have heard the submissions of the learned counsel for the assessee both on 8. We have heard the submissions of the learned counsel for the assessee both on the validity of initiation of re the validity of initiation of re-assessment proceedings as well as the merits of the assessment proceedings as well as the merits of the appeal. None appeared on behalf of the department. appeal. None appeared on behalf of the department. 8.1.We have considered the sub 8.1.We have considered the submissions of the learned counsel for the assessee. As missions of the learned counsel for the assessee. As far as the validity of initiation of re far as the validity of initiation of re-assessment proceedings are concerned the assessment proceedings are concerned the reasons recorded by the AO for initiating proceedings u/s 148 are as follows : reasons recorded by the AO for initiating proceedings u/s 148 are as follows : reasons recorded by the AO for initiating proceedings u/s 148 are as follows :- "No.DCIT/Cir-6/reasons for reopening/09 6/reasons for reopening/09-10 Dated 22/04/2009 To The Principal 0 Dated 22/04/2009 To The Principal Officer Greatwall Marketing (P) Ltd. Officer Greatwall Marketing (P) Ltd. c/o Sri. S.M. Daga 11, Clive Row, Room No. 2 .z c/o Sri. S.M. Daga 11, Clive Row, Room No. 2 .z-. Fir. Kolkata- 700001. 700001. Sir. Sub: Recorded Reasons for Reopening in the case of Greatwall Sub: Recorded Reasons for Reopening in the case of Greatwall Sub: Recorded Reasons for Reopening in the case of Greatwall Marketing (P) Ltd. for Asst. Yr. 02 (P) Ltd. for Asst. Yr. 02-03 Ref: Your letter dated 02/04/09 Please refer to 03 Ref: Your letter dated 02/04/09 Please refer to the above. the above. As per information received from investigation wing New Delhi the introduced As per information received from investigation wing New Delhi the introduced As per information received from investigation wing New Delhi the introduced share capital during the year. had been received from corporate bodies which a share capital during the year. had been received from corporate bodies which a share capital during the year. had been received from corporate bodies which are

6 ITA No. 1602/Kol/2019 Assessment Years: 2011-12 M/s. Shreyans Jain, HUF non existent and whose capacity to invest ( credit worthiness ) could not be non existent and whose capacity to invest ( credit worthiness ) could not be non existent and whose capacity to invest ( credit worthiness ) could not be established . Therefore I have reasons to believe that unexplained cash credit had established . Therefore I have reasons to believe that unexplained cash credit had established . Therefore I have reasons to believe that unexplained cash credit had been introduced in your books of accounts in the name of introduction of share been introduced in your books of accounts in the name of introduction of share been introduced in your books of accounts in the name of introduction of share capital and receipt of share application money. In absence of satisfactory identity ceipt of share application money. In absence of satisfactory identity ceipt of share application money. In absence of satisfactory identity and credit worthiness of the other parties. the entire introduced capital and share and credit worthiness of the other parties. the entire introduced capital and share and credit worthiness of the other parties. the entire introduced capital and share application money will be treated as your income for that year. application money will be treated as your income for that year. I will therefore continue the procee I will therefore continue the proceedings for reassessment of your return u/s 147. dings for reassessment of your return u/s 147. Statutory notices u/s 143(2) and 142(1) are enclosed herewith. Statutory notices u/s 143(2) and 142(1) are enclosed herewith. Yours faithfully. Sd/- ( Sanjay Mukherjee) DCIT /Cir ( Sanjay Mukherjee) DCIT /Cir-6/Kol " 8.2. The submissions of the learned counsel for the assessee before us was that 8.2. The submissions of the learned counsel for the assessee before us was that 8.2. The submissions of the learned counsel for the assessee before us was that the reasons reasons reasons recorded recorded recorded by by by the the the AO AO AO were were were mere mere mere information information information received received received from from from D.I.T.(Investigation), New Delhi. There was no independent application of mind by D.I.T.(Investigation), New Delhi. There was no independent application of mind by D.I.T.(Investigation), New Delhi. There was no independent application of mind by the AO based on which it can be said that he arrived at the satisfaction that the the AO based on which it can be said that he arrived at the satisfaction that the the AO based on which it can be said that he arrived at the satisfaction that the income of the assessee i income of the assessee is chargeable to tax has escaped assessment. It was s chargeable to tax has escaped assessment. It was submitted that information received by the AO was vague and uncertain and submitted that information received by the AO was vague and uncertain and submitted that information received by the AO was vague and uncertain and cannot be construed to be sufficient and relevant material on the basis of which cannot be construed to be sufficient and relevant material on the basis of which cannot be construed to be sufficient and relevant material on the basis of which reasonable person can form belief regarding escape reasonable person can form belief regarding escapement of income. Reliance was ment of income. Reliance was placed by the learned counsel for the assessee on the decision of the Hon'ble Delhi placed by the learned counsel for the assessee on the decision of the Hon'ble Delhi placed by the learned counsel for the assessee on the decision of the Hon'ble Delhi High Court in the case of High Court in the case of CIT vs Insceticides (India) Ltd 357 ITR 330 and 357 ITR 330 and CIT vs SFIL Stock Broking Ltd Stock Broking Ltd. 325 ITR 285 (Delhi). In both the aforesaid decisions the reasons . 325 ITR 285 (Delhi). In both the aforesaid decisions the reasons recorded by the AO for initiating proceedings u/s 148 of the Act the Hon'ble Delhi recorded by the AO for initiating proceedings u/s 148 of the Act the Hon'ble Delhi recorded by the AO for initiating proceedings u/s 148 of the Act the Hon'ble Delhi High Court upheld the order High Court upheld the order of the Tribunal quashing the proceedings. Reliance of the Tribunal quashing the proceedings. Reliance was also placed on the decision of ITAT, Kolkata 'C' Bench in the case of M/s. was also placed on the decision of ITAT, Kolkata 'C' Bench in the case of M/s. was also placed on the decision of ITAT, Kolkata 'C' Bench in the case of M/s. Controlla Electrotech (P)Ltd vs DCIT in ITA Nos.1443 & 1444/Kol/2014 wherein on Controlla Electrotech (P)Ltd vs DCIT in ITA Nos.1443 & 1444/Kol/2014 wherein on Controlla Electrotech (P)Ltd vs DCIT in ITA Nos.1443 & 1444/Kol/2014 wherein on identical facts the Tribunal was pleased to q identical facts the Tribunal was pleased to quash the reassessment proceedings. On uash the reassessment proceedings. On merits the learned counsel for the assessee relied on the order of CIT(A). merits the learned counsel for the assessee relied on the order of CIT(A). merits the learned counsel for the assessee relied on the order of CIT(A). 9. We have given a careful consideration of the submissions made by the learned 9. We have given a careful consideration of the submissions made by the learned 9. We have given a careful consideration of the submissions made by the learned counsel for the assessee. It is clear from the reasons record counsel for the assessee. It is clear from the reasons recorded by the AO that the AO ed by the AO that the AO acted only on the basis of a letter received from Investigation Wing, New Delhi. The acted only on the basis of a letter received from Investigation Wing, New Delhi. The acted only on the basis of a letter received from Investigation Wing, New Delhi. The reasons recorded does not give as to who has given the bogus entries to the reasons recorded does not give as to who has given the bogus entries to the reasons recorded does not give as to who has given the bogus entries to the assessee. The reasons recorded also does not mention as to on which da assessee. The reasons recorded also does not mention as to on which da assessee. The reasons recorded also does not mention as to on which dates and through which mode the bogus entries were made by the assessee. The reasons through which mode the bogus entries were made by the assessee. The reasons through which mode the bogus entries were made by the assessee. The reasons recorded which are extracted in the earlier part of the order does not show, what recorded which are extracted in the earlier part of the order does not show, what recorded which are extracted in the earlier part of the order does not show, what was the information given by DIT(Inv.),New Delhi. The date of the information was the information given by DIT(Inv.),New Delhi. The date of the information was the information given by DIT(Inv.),New Delhi. The date of the information received by the AO were not spelt out in the reasons recorded. The involvement of the AO were not spelt out in the reasons recorded. The involvement of the AO were not spelt out in the reasons recorded. The involvement of the assessee is also not spelt out, except mentioning the corporate bodies who had the assessee is also not spelt out, except mentioning the corporate bodies who had the assessee is also not spelt out, except mentioning the corporate bodies who had subscribed to the share capital of the assessee were non subscribed to the share capital of the assessee were non-existent and not existent and not creditworthy. On identical fa creditworthy. On identical facts the Hon'ble Delhi High Court in the case of cts the Hon'ble Delhi High Court in the case of CIT vs Insecticides (India) Ltd Insecticides (India) Ltd (supra) has taken a view that the reasons recorded were (supra) has taken a view that the reasons recorded were vague and uncertain and cannot be construed as satisfaction on the vague and uncertain and cannot be construed as satisfaction on the vague and uncertain and cannot be construed as satisfaction on the basis of the relevant material on the basis of which a reasonable person can form a belief that relevant material on the basis of which a reasonable person can form a belief that relevant material on the basis of which a reasonable person can form a belief that income has escaped assessment. The Hon'ble Delhi High Court has also come to the income has escaped assessment. The Hon'ble Delhi High Court has also come to the income has escaped assessment. The Hon'ble Delhi High Court has also come to the conclusion that the reasons recorded did not disclose the AO's mind regarding conclusion that the reasons recorded did not disclose the AO's mind regarding conclusion that the reasons recorded did not disclose the AO's mind regarding escapement of income. The Hon'ble Delhi High Court ultimately held that initiation scapement of income. The Hon'ble Delhi High Court ultimately held that initiation scapement of income. The Hon'ble Delhi High Court ultimately held that initiation of proceedings u/s 148 of the Act was not valid and justified in the eyes of law. The of proceedings u/s 148 of the Act was not valid and justified in the eyes of law. The of proceedings u/s 148 of the Act was not valid and justified in the eyes of law. The facts and circumstances in the present case are identical to the case decided by the facts and circumstances in the present case are identical to the case decided by the facts and circumstances in the present case are identical to the case decided by the Hon'ble Delhi High Court. Following the said decision we hold that initiation of re 'ble Delhi High Court. Following the said decision we hold that initiation of re 'ble Delhi High Court. Following the said decision we hold that initiation of re- assessment proceedings is not valid. On this ground, the assessment is liable to be assessment proceedings is not valid. On this ground, the assessment is liable to be assessment proceedings is not valid. On this ground, the assessment is liable to be annulled." 6. Applying the propositions of law laid down in these case Applying the propositions of law laid down in these case-law to the facts law to the facts of this case we hold that the re this case we hold that the re-opening is bad in law as the Assessing Officer has not opening is bad in law as the Assessing Officer has not independently applied his mind to the material and has recorded reasons which are independently applied his mind to the material and has recorded reasons which are independently applied his mind to the material and has recorded reasons which are

7 ITA No. 1602/Kol/2019 Assessment Years: 2011-12 M/s. Shreyans Jain, HUF vague and based on borrowed satisfaction. Hence this ground of the assessee for vague and based on borrowed satisfaction. Hence this ground of the assessee for vague and based on borrowed satisfaction. Hence this ground of the assessee for both the Assessment Years are allowed.” he Assessment Years are allowed.”

Sd/- [J. Sudhakar Reddy] Accountant Member Dated : 13.03.2020 {SC SPS} Copy of the order forwarded to: 1. M/s. Shreyans Jain, HUF 18, R.N. Mukherjee Road Dalhousie Square 6th Floor Kolkata – 700 001 2. Income Tax Officer, Wd-36(2), Kolkata 36(2), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), Kolkata Benches, Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata.