DCIT, NEW DELHI vs. GIRI BUILDWELL (P) LTD., NEW DELHI

The brief facts of the case are that the return of income filed by assessee on 29.10.2001 declaring total income of Rs.1,69,735/- was processed u/s. 143(1) on 20.06.2002. Thereafter, a notice u/s. 148 was issued on 19.03.2008 after recording the following reasons : The assessee has filed its return of income on 29.10.2001 at the income of Rs.1,69,740/-. The return was processed under section 143(1) on 20.06.2002. Information has been received from DIT, Investigation-I, Sh. P.K. Dubey by letter No. 1322 dated 02.03.2006 that the above said assessee has availed facilities of an entry operator to introduce unaccounted black money by way of bogus accommodation entries. The details of these entries are as under : Addressee Value of Instrument Date of Name of Bank Bank a/c entry No. entry account account Taken holder of from which entry giving entry given a/c Nainital 500750 491584 22.07.2000 Rajeev Kr. 3616 SBP Bank Agarwal DG Nainital 500750 493642 -Do- Murari Lal 14253 Bank Jailaxmi Coop. Bank Fatehpuri, Delhi Nainital 400600 652327 18.07.2000 Charm 435 Fedral Bank Investments Karol Bagh Pvt. Ltd.

In response to notice u/s. 148, the assessee submitted that the return filed originally on 29.10.2001 may be treated to have been filed in response to notice u/s. 148. The assessee further explained that the information so relied on for initiation of proceedings u/s. 147 is wrong and the assessee has neither received any such amount as mentioned in the information nor is there any credit entry thereof in any books of account maintained by assessee. The AO, however, did not accept the explanation of the assessee and made addition of Rs.24,03,100/- as escaped income on account unexplained cash credit u/s. 68 of the IT Act vide reassessment order dated 19.12.2008.

Apart from the above, the Assessing Officer further made following additions : (i). Share application money Rs.2,30,57,400/- (ii). Cessation of liability Rs. 20,50,000/- (iii). Unexplained Investments Rs.1,19,00,000/- (iv). Amount due to sundry creditors Rs.2,82,87,108/-

The assessee challenged the assessment order in appeal before the learned first appellate authority both on validity of proceedings u/s. 147/148 of the Act and on merits of additions. The ld. CIT(A) after considering the detailed submissions of the assessee held the reassessment as invalid and also deleted the additions on merits vide impugned order. Aggrieved, the Revenue is in appeal before the Tribunal, challenging the only deletion of additions of Rs.24,03,100/- made on account unexplained cash credits and Rs.2,30,57,400/- made on account of unexplained share application money.

The learned DR reiterating the contents of the assessment order, submitted that the ld. CIT(A) was not justified in deleting the additions on merits and to quash the reassessment on legal

On the other hand, the ld. Counsel for the assessee relied on the order of the ld. CIT(A) and submitted that the reassessment was made on the basis of wrong information, which did not pertain to the assessee and the Assessing Officer has not verified the same. Hence, the reason to believe formed by the AO for reopening the assessment u/s. 147 has rightly been held as invalid leading to assessment order void ab initio. It was submitted that once the transactions of accommodation entry as contained in the alleged information was not proved to pertain to the assessee and the original reason to believe escapement of income stood collapsed, the ld. Assessing Officer was not justified to acquire jurisdiction to assess other incomes even after insertion of Explanation 3 to section 147 by Finance Act,

We have considered the rival submissions and have gone through the entire material available on record including the orders of the authorities below and case laws relied upon and we find that the impugned order does not call for any interference. It is notable that the contention of the assessee from the beginning has been that they have not received any amount, whatsoever, from the four persons namely, Rajiv Kumar Aggarwal, Murari Lal, Charm Investments and MJM Investments, as mentioned in the alleged information noted above. It has also been submitted that there is no credit entry in the assessee’s bank account with ITA No. 1428/Del./2014 7 Nainital Bank, as mentioned in the said information, nor any such entry was there in any of the books of account of assessee. The bank statement and books of account were produced before the authorities below. An affidavit to this effect was also furnished before the lower authorities. The ld. Assessing Officer, however, while rejecting the explanation of assessee has only stated that the explanation of the assessee is not acceptable and this entry remains unexplained in the hands of assessee as has been arrived by the Investigation wing of the department. There is no rebuttal of assessee’s contention on the part of revenue or any application of mind by the AO to prove that the alleged accommodation entries as contained in the information were actually received by the assessee. Therefore, the reason to believe formed by AO on the basis of alleged accommodation entries of Rs.24,03,100/-, as contained in the information, stands collapsed, having been formed without any material on record and application of mind and accordingly, the addition so made on the basis of such unsustainable belief has rightly been deleted by the ld. CIT(A). The Coordinate Bench of Tribunal in the case of Mahadev Trading Co. (supra) has held that where the Assessing Officer proceeded