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January, 12th 2015
                                                          ITA NO. 3149/Del/2013

                      DELHI BENCH "C", NEW DELHI

                        I.T.A. No. 3149/DEL/2013
                                A.Y. : 2003-04
G&G PHARMA INDIA               VS.                    INCOME TAX
LIMITED,                                              OFFICER,
C/O KAPIL GOEL,                                       WARD 12(1),
ADVOCATE,                                             NEW DELHI
A-1/25, SECTOR-15,
DELHI ­ 110 085
(APPELLANT)                                           (RESPONDENT)

         Assessee by                  :    Sh. Kapil Goel, Adv.
        Department by                 :    Sh. Vikram Sahai, Sr. DR

                      Date of Hearing : 06-01-2015
                      Date of Order       : 09-01-2015


     Assessee has filed this Appeal against the           impugned order
dated 30.8.2011 passed by the Ld. CIT(A)-XV, New Delhi relevant to
assessment year 2003-04.

2.   The brief facts of the case are that the assessee has filed its
return on 14.11.2014 at Rs. 1190/- which was processed u/s. 143(3)
of the I.T. Act on 1.3.2004. Thereafter on the basis of information
received from the Directorate of Investigation, Jhandewalan, New
Delhi, AO issued notice u/s. 148 of the Act on 19.3.2010.               After

                                                                 ITA NO. 3149/Del/2013

recording the reasons for reopening of the assessment u/s. 148 and
after obtaining the due approval of the higher authority                     for re-
assessment.         Thereafter,    a       notice      u/s.   142(1)     alongwith
questionnaire was issued on 10.8.2010.              In response to the same
Director of the company appeared and filed the necessary details
and also filed certain objections to the issue of notice to the
assessee   u/s. 148 of the I.T. Act.          After applying the necessary
procedures, the AO completed the assessment in the case of the
assessee   by   making    various          additions     and     completed       the
assessment u/s. 143(3) r.w.s. 147 of the I.T. Act on 20.12.2010.

3.   The assessee has raised 09 grounds              in the appeal on legal as
well as on merit.    At the       time of hearing, Ld. Counsel of the
assessee has only argued the legal ground challenging the validity
of reopening u/s. 148 of the I.T. Act by stating that action of the
Assessing Officer is illegal, because the same is lacking tangible
material / reasonable cause and justification.                 The action of the
Revenue     Authorities is in absence of nexus between alleged
information and tentative inference; non application of mind much
less independent application of mind; total lack of clarity on nature
of transaction in reasons recorded; requisition sanction from
competent authority u/s. 151 was conspicuously missing on face of
reasons supplied to the assessee and the reasons recorded in the
case of the assessee.    Ld. Counsel of the assessee has filed a small
Paper Book which establish that the AO has not applied his mind
before issuing the notice for reopening the case of the assessee and
not making any independent enquiry.            Therefore, the reopening u/s.
148 of the Act is invalid, in view of the following decisions rendered
by the Hon'ble      Jurisdictional High Court and the ITAT, Delhi

                                             ITA NO. 3149/Del/2013

i)      CIT vs. Kamdhenu Steels & Alloys Ltd. & Ors. (2012)
        248 CTR (Del) 33, (DHC)

ii)     CIT vs. SFIL Stock Broking Ltd., (2010) 325 ITR 285

iii)    Sarthak Hotels Pvt. Ltd. vs. ITO & Anr. (2011) 338
        ITR 51 (DHC)

iv)     Signature Hotels Pvt. Ltd. vs. ITO & Anr. (2011) 338
        ITR 51 DHC)

v)      Hon'ble Jurisdictional High Court of Delhi in the case
        of CIT vs. Insecticides (India) Ltd. (2013) 357 ITR
        330 (Del.)

vi)     Decision of ITAT Delhi Bench in the case of ITO vs.
        On Exim Pvt. Ltd. (2013) 157 TTJ 633 (ITAT, Delhi)

vii)    Decision of ITAT, Delhi Bench in the case of ACIT vs.
        Shri Devesh Kumar (ITA NO. 2068/Del/2010) dated

viii)   Decision of ITAT, in the case of ITO vs. MB Jewellers
        P Ltd. ITA No. 2499/Del/2011 dated 14.11.2014 and

ix)     Decision of ITAT, in the case of RKG International
        (P) Ltd. vs. ITO (ITA No. 101Del/2013) order dated

        Ld. Counsel of the assessee      requested that the
reopening of the assessment in the case of the assessee
may be quashed and the appeal of the assessee may be

                                                   ITA NO. 3149/Del/2013

4.   Against the order of the Ld. AO, assessee appealed before the
Ld. CIT(A), who vide impugned order dated 30.8.2011 has dismissed
the appeal of the assessee.

5.     Aggrieved with the order of the Ld. CIT(A), Assessee is in
appeal before us.

6.   Ld. DR on the other hand relied upon the order of the Ld.
CIT(A) and stated that the AO has reopened the         case of the
assessee on the basis of various documentary evidence relating to
the assessee showing that the assessee have received various
bogus accommodation entries amounting to Rs. 20 lacs which has
introduced its own unaccounted money in its bank account by way
of above accommodation entries. Therefore, the assessee is a
beneficiary of taking the aforesaid accommodation entries which has
not been accounted for in the books of accounts of the assessee and
has escaped assessment and hence the income of the assessee is
escaped income and is a failure on the part of the assessee
company to disclose truly and fully all the material facts in the
assessment in dispute. He further submitted that the AO has rightly
reopened the case of the assessee on the basis of the documentary
evidence available with the AO. He has also filed the documentary
evidence in the shape of Paper Book containing pages 1 to 62 in
which he has attached the brief note on accommodation entries
from Investigation Wing; statements of S/Sh. Rajesh Kumar Jha,
Vipalav Bharti & P.N. Jha and the details of accommodation entries
taken by the assessee. In view of the above, he requested that the
appeal of the assesee may be dismissed.

7.   We have heard both the parties and perused the records
available with us specially the contentions raised by the assessee
alongwith various decisions cited by the assessee's counsel on the

                                                                                           ITA NO. 3149/Del/2013

issue in dispute as well as the documentary evidence filed by the Ld.
DR in the shape of Paper Book and orders                                                  of the Revenue
authorities. Before commenting upon the merits of the case and on
the arguments advanced by both the parties, we want to discuss the
reasons recorded for reopening of assessment in the case of the
assessee vide AO's letter dated 15.9.2010, which is reproduced

                            "Certain investigation were carried out by the
                            Directorate of Investigation, Jhandewalan, New
                            Delhi in respect of the bogus / accommodation
                            entries provided by certain individual / companies.
                            The name of the assessee figures as one of the
                            beneficiaries of these elected bogus                                 transactions
                            given by the Directorate after making the necessary
                            enquiries.           It has been revealed that the following
                            entries have been received by the assessee."

Beneficiary's   Beneficiary' s   Beneficiary's   Value of       Instrument   date on   Name     of   Bank    Branch   A/c no.
name            bank name        bank Branch     entry          no      by   which     account       from    of       entry
                                                 taken          which        entry     holder of     which   entry    giving
                                                                entry        taken     entry         entry   giving   account
                                                                taken                  giving        given   bank
G&G              STATE           KAROL           500,000        8603         10.2.03   Shubham       SBH     KB       50038
PHARMA          BANK   OF        BAGH                                                  Electronics
(INDIA) LTD     HYDERABAD                                                              and
G&G             STATE BANK       KAROL           500,000        10373        10.2.03   Garner        SBH     KB       50029
PHARMA          OF               BAGH                                                  Finance &
(INDIA) LTD     HYDERABAD                                                              Security
G&G             STATE BANK       KAROL           500,000        11112        10.2.03   Stering       SBH     KB       50030
PHARMA          OF               BAGH                                                  Securities
(INDIA) LTD     HYDERABAD                                                              and
G&G             STATE BANK       KAROL           500,000        12302        10.2.03   Aggragale     SBH     KB       50025
PHARMA          OF               BAGH                                                  Finance p
(INDIA) LTD     HYDERABAD                                                              Ltd

                  The above amount of Rs. 20,00,000/- has been credited
                  into       assesses's            bank            account         on      various           dates.
                  Investigation made by the investigation Wing of the
                  Department has found that assesse is a beneficiary of
                                                     ITA NO. 3149/Del/2013

          taking the aforesaid accommodation entries. L have also
          perused various materials and report from Investigation
          Wing and on that basis it is evident that the assesse
          company has introduced its own unaccounted money in
          its bank account by way of above accommodation
          entries. Therefore, I have reasons to believe that the
          income of the assessee company amounting to Rs
          20,00,0001- has escaped assessment. The escapement of
          income has been clearly on account of failure on the part
          of the assesse company to truly and fully disclosed all
          material facts necessary for assessment thus, it is fit case
          for initiation of proceedings u/s 147 of the income tax act,

8.   We have perused the aforesaid reasons       recorded by the AO

for reopening the assessment in dispute and we are               of the

considered view that the AO has not      applied his mind so       as to

come to an independent conclusion that he has reason to         believe

that income has escaped during the year. A mere reference is made

to certain information received from the Investigation    Wing which

was supplied to the assessee vide AO's letter dated 15.9.2010. In

our view the reasons are vague and are not based on any tangible

material as well as are not acceptable in the eyes of law. The AO

had mechanically issued notices u/s. 148 of the Act, on the basis of

information allegedly received by him from the Directorate of

Investigation, Jhandewalan, New Delhi.   Keeping in view of the facts

and circumstances of the present case and the law applicable in the

                                                      ITA NO. 3149/Del/2013

case of the assessee, we are of the considered view that the

reopening in the case of the assessee for the asstt. year in dispute is

bad in law and deserves to be quashed. We draw our support from

the judgments of the Hon'ble High Court of Delhi in the following


           (a) Signature Hotels (P)_ Ltd. vs. ITO and another reported
           in 338 ITR 51 (Del) has under similar circumstances as

           "For the A.Y. 2003-04, the return of income of the
           assessee company was accepted u/s.143(1) of the
           Income-tax Act, 1961 and was not selected for scrutiny.
           Subsequently, the Assessing Officer issued notice u/s.148
           which was objected by the assessee. The Assessing
           Officer rejected the objections. The assessee company
           filed writ petition and challenged the notice and the order
           on objections.

           The Delhi High Court allowed the writ petition and held as
           "(i) Section 147 of the Income-tax Act, 1961, is wide but
           not plenary. The Assessing Officer must have `reason to
           believe' that income chargeable to tax has escaped
           assessment. This is mandatory and the `reason to
           believe' are required to be recorded in writing by the
           Assessing Officer.
           (ii) A notice u/s.148 can be quashed if the `belief' is not
           bona fide, or one based on vague, irrelevant and non-
           specific information. The basis of the belief should be

                                             ITA NO. 3149/Del/2013

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
and the evidence/material available with the Assessing
(iii) The reassessment proceedings were initiated on the
basis of information received from the Director of
Income-tax    (Investigation)   that   the   petitioner     had
introduced money amounting to Rs.5 lakhs during F.Y.
2002-03 as stated in the annexure. According to the
information, the amount received from a company, S,
was nothing but an accommodation entry and the
assessee was the beneficiary. The reasons did not satisfy
the requirements of section 147 of the Act. There was no
reference 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 nexus or link which disclosed escapement of
income. The annexure was not a pointer and did not
indicate escapement of income.
(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
the company, S, had 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
2001. Thus, it could not be held to be a fictitious person.
The reassessment proceedings were not valid and were
liable to the quashed."

(b).   In the case of CIT vs. Atul Jain reported in 299 ITR
383 it has been held as under:-

                                                       ITA NO. 3149/Del/2013

             "Held, dismissing the appeals, that the only information

             was that the assessee had taken a bogus entry of capital

             gains by paying cash along with some 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 information which shares had

             been transferred and with whom the transaction had

             taken place.   The AO did not verify the correctness of

             information received by him but merely accepted the

             truth of the vague information in a mechanical manner.

             The AO had not even recorded his satisfaction about the

             correctness or otherwise of the information for issuing a

             notice u/s 148. What had been recorded by the AO 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 reasons to

             believe for issuing a notice.        The AO had clearly

             substituted form for substance and therefore the action

             of the AO was not sustainable."

9.      In view of above, we are of the considered view that above

issue    is exactly the   similar to the issue involved in the present

appeal and is squarely covered by the aforesaid decisions of the

Hon'ble High Court of Delhi.        Hence, respectfully following the

                                                      ITA NO. 3149/Del/2013

above precedent, we decide the legal issue in dispute in favor of the

Assessee and against the Revenue and accordingly quash the

reassessment proceedings. The other issues are not dealt with as

the same have become academic in nature.

10.   In the result, the Appeal filed by the Assessee stands allowed.

      Order pronounced in the Open Court on 09/01/2015.

      Sd/-                                              Sd/-

[G.D. AGRAWAL]                                    [H.S. SIDHU]
VICE PRESIDENT                                    JUDICIAL MEMBER

Date 09/01/2015
Copy forwarded to: -
1.    Appellant -

2.    Respondent -
3.    CIT
4.    CIT (A)
5.    DR, ITAT

                            TRUE COPY
                                                  By Order,

                                                  Assistant Registrar,
                                                  ITAT, Delhi Benches

     ITA NO. 3149/Del/2013

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