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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI G.D. AGRAWALG.D. AGRAWAL & AND BEFORE SHRI G.D. AGRAWALG.D. AGRAWAL & AND SHRI I.C. SUDHIR SHRI I.C. SUDHIRSHRI I.C. SUDHIR SHRI I.C. SUDHIR
PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP :- PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP This appeal by the assessee for the assessment year 2004-05 is directed against the order of learned CIT(A)-XXXIII, New Delhi dated 7th June, 2013.
Ground Nos.1 & 2 of the assessee’s appeal read as under:-
“1. That on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals)-XXXIII, New Delhi erred in rejecting appellant’s contention that assessment order made by Assessing Officer was bad in law and void ab-initio.
2. That without prejudice, on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals)-XXXIII New Delhi erred in upholding the assumption of jurisdiction u/s 147 by the Assessing Officer and in making the assessments in pursuance thereof.”
2 ITA-4984/Del/2013
At the time of hearing before us, it is stated by the learned counsel that this issue is squarely covered by the decision of ITAT in the case of USG Buildwell Pvt.Ltd. vide order dated 15th February, 2016. He referred to the reasons recorded noted at page 2 of the assessment order in the case of present assessee and also referred to reasons recorded in the case of USG Buildwell Pvt.Ltd. which are reproduced in paragraph 9 of the ITAT’s order and pointed out that both the reasons recorded are same in verbatim. He, therefore, submitted that the decision of ITAT in the case of USG Buildwell Pvt.Ltd. would be squarely applicable.
We have carefully considered the arguments of both the sides and have perused the material placed before us. On perusal of the order of the ITAT in the case of USG Buildwell Pvt.Ltd. (supra) and the assessment order in the case under appeal before us, we find the contention of the learned counsel to be correct. The reasons recorded in the case of the assessee are identical to the reasons recorded by the Assessing Officer in the case of USG Buildwell Pvt.Ltd. In both the cases, assessment has been reopened on the basis of some opinion received from ACIT, Central Circle-19 on the basis of survey operations conducted in the case of S.K. Gupta group. Paragraph 2 of the reasons recorded both in the case of the assessee under appeal before us and USG Buildwell Pvt.Ltd. is in verbatim the same. Paragraph 3 & 4 are also almost same except the modification in the amount of cheque received by the assessee under appeal before us and the cheque received by USG Buildwell Pvt.Ltd. But, in substance, the reasons recorded in both these cases are identical. Therefore, we agree with the learned counsel that the decision of ITAT in the case of USG Buildwell Pvt.Ltd. would be squarely applicable. In the above case, the ITAT held that reopening u/s 147 is not valid. The relevant finding of the ITAT reads as under:-
3 ITA-4984/Del/2013
“10. The very perusal of the reasons, it is apparent that these were based on the information received from ACIT, Central Circle-19, New Delhi after narration of which, the Assessing Officer has simply recorded that she has reason to believe that amount/income of Rs.20 lacs has escaped assessment for the assessment year 2004-05 for failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment within the meaning of sec. 147 of the Income-tax Act, 1961. Notice under sec. 148 of the Act has accordingly been issued by the Assessing Officer. In the above cited decisions of the Hon’ble High Court, it has been observed by the Hon’ble High Court that such type of conclusion is unhelpful in understanding whether the Assessing Officer had applied his mind to the materials that he talks about particularly since he did not describe what those material were. Hon’ble High Court has observed further that once the date on which the so-called accommodation entries were provided is known, it would not have been difficult for the Assessing Officer, 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 14.11.2004 and was processed under sec. 143(3) of the Act. It was held that without forming a prima facie opinion, on the basis of such material, it was not possible for the Assessing Officer 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. The basic requirement is that the Assessing Officer must apply his mind to the material in order to form reasons to believe that the income of the assessee has escaped assessment. Such basic requirement while recording the reasons for initiation of proceedings under sec. 147 of the Act is missing in the present case before us. As it is evident in the reasons recorded, reproduced hereinabove, the Assessing Officer has simply recorded the information received from her colleague and without making any exercise of her mind on those information to form her own reasons to believe for the escaped assessment of Rs.20 lacs, has issued notice under sec. 148 of the Act. We thus respectfully following the ratios laid down by the Hon'ble Jurisdictional High Court of Delhi in the case of CIT vs. G&G Pharma India Ltd. (supra) hold that the reasons to believe recorded by the Assessing Officer in the present case to initiate the proceedings under sec. 147 of the Act without application of her own mind on the information received were not as per the requirement of the provisions of the law laid down
4 ITA-4984/Del/2013 under sec. 147 of the Act, hence, the initiation of the proceedings was not valid and nor the assessment made in furtherance to the said initiation of the proceedings. The assessment framed under sec. 147 read with 143(3) of the Act in the present case in question is thus held as void-ab- initio. The ground Nos.1 and 2 are accordingly allowed.”
Since the facts in the case of the assessee are identical, we, respectfully following the above decision of ITAT in the case of USG Buildwell Pvt.Ltd., hold the reopening of assessment in the case of the assessee under appeal before us to be invalid. Accordingly, the notice issued u/s 148 of the Act is quashed and the consequential assessment order passed in pursuance thereto is also quashed.
Once the assessment order itself has been quashed, the other grounds raised by the assessee which are against the merit of the addition sustained by the learned CIT(A) do not survive for adjudication.
In the result, the appeal of the assessee is allowed. Decision pronounced in the open Court on 28.06.2016.