VIJ BUILDCON PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

PER B.P. JAIN, ACCOUNTANT MEMBER:

1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. Page 1 of 6

2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in passing the order without giving assessee a proper and adequate opportunity of being heard in clear violation of principle of natural justice.

3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the order passed by the AO under Section 147 read with Section 148 of the Act despite the fact that procedure for initiation of proceeding as provided under the Act has not been followed. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the order passed by the AO under Section 147 despite the fact that reasons on the basis of which the proceedings have been initiated are vague and not as per the facts of the case. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the order passed by the AO under Section 147 despite the fact that the notice under section 148 having been issued after the end of four years from the end of relevant assessment year and assessee having disclosed fully and truly all material facts relevant to assessment during proceedings under Section 143(3) of the Act, the reopened proceedings are barred by limitation.”

“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 February 2003, from four entities which were termed as accommodation entries, which information was given to him by the Directorate of Investigation, the AO stated: "I have also perused various materials and report from Investigation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money in its bank account by way of above accommodation Page 3 of 6 entries." The above conclusion is unhelpful in understanding whether the AO 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 called accommodation entries were provided is known, it would not have been difficult for the AO, 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 Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to 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 considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case.”