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M/s Modinagar Rolls Ltd., C/o M/s SS Gupta & Co, 165, Sardhana Road, B.C. Lines, Vs. Addl. Commissioner Of Income Tax, Range-1, Ghaziabad
June, 01st 2015
                                                    ITA NOS. 330 to 332 & 334/Del/2015


                 IN THE INCOME TAX APPELLATE TRIBUNAL
                        DELHI BENCH "E", NEW DELHI
            BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER
                                    AND
                      SHRI H.S. SIDHU, JUDICIAL MEMBER
              I.T.A. Nos. 330, 331, 332 & 334/Del/2015
               A.Yrs. : 2007-08, 2008-09, 2009-10 & 2011-12
M/s Modinagar Rolls Ltd.,                   Addl. Commissioner Of
C/o M/s SS Gupta & Co,                VS. Income Tax,
165, Sardhana Road,                         Range-1,
B.C. Lines,                                 Ghaziabad
Meerut Cantt- 250001
(PAN: AABCM0137C)
(APPELLANT)                                        (RESPONDENT)

          Assessee by                  :    Sh. OP Sapra, Adv. & Sh. Pankaj
                                            Gupta, CA
         Department by                 :    Sh. P. Dam Kanunjna, Sr. DR


                       Date of Hearing : 13-05-2015
                       Date of Order       : 29-05-2015
                               ORDER
PER BENCH
     Assessee has filed these appeals against the separate Orders
passed by       the   Ld.   Commissioner      of    Income      Tax     (Appeals),
Ghaziabad pertaining to assessment years 2007-08, 2008-09, 2009-
10 & 2011-12. Since the issues involved in these appeals are
common and identical, we are therefore, proceeding to dispose of
these appeals by passing this consolidated order, by dealing with
the ITA No. 330/Del/2015 (A.Y. 2007-08) for the sake of convenience.

2.   The grounds raised in the assessment year 2007-08 are
reproduced hereunder:-

           1.     That the      Learned      Additional      Commissioner of
           Income Tax, Range-1, Ghaziabad has erred in law by

                                       1
                                            ITA NOS. 330 to 332 & 334/Del/2015


         making an addition of Rs. 1,50,00,000/- to the Income of
         the Assessee's company being issued capital U/S 68 of
         the Income Tax Act, 1961.

         2.   That the Learned A.O. has erred in law and facts of
         the case in not considering the various details, pleadings
         and written submissions made from time to during the
         course of assessment proceedings.

         3.   That the interest as charged under Section 234B
         and 234C is illegal on various factual and legal grounds.

         4.   That the demand of Rs. 91,38,760/- created,
         pursuant to this assessment which is a disputed demand,
         be kindly stayed till disposal of the Appeal.

         5.   That   the     several   observations     as    made      and
         inferences drawn are untenable, incorrect, unwarranted
         and uncalled for.

         6.   That the Appellant may take any other Ground or
         Grounds at the time of hearing of Appeal with the kind
         permission of the learned I.T.A.T.

3.   The grounds raised in the assessment year 2008-09 are
reproduced hereunder:-

         1.   That the       Learned   Additional    Commissioner of
         Income Tax, Range-1, Ghaziabad has erred in law by
         making an addition of Rs. 1,50,00,000/- to the Income of
         the Assessee's company being issued capital U/S 68 of
         the Income Tax Act, 1961.

         2.   That the Learned A.O. has erred in law and facts of
         the case is not considering the various details, pleadings

                                  2
                                            ITA NOS. 330 to 332 & 334/Del/2015


         and written submissions made from time to during the
         course of assessment proceedings.

         3.   That the interest as charged under Section 234B
         and 234C is illegal on various factual and legal grounds.

         4.   That the demand of Rs. 88,51,260/- created,
         pursuant to this assessment which is a disputed demand,
         be kindly stayed till disposal of the Appeal.

         5.   That   the     several   observations     as    made      and
         inferences drawn are untenable, incorrect, unwarranted
         and uncalled for.

         6.   That the Appellant may take any other Ground or
         Grounds at the time of hearing of Appeal with the kind
         permission of the learned I.T.A.T.

4.   The grounds raised in the assessment year 2009-10 are
reproduced hereunder:-

         1.   That the       Learned   Additional    Commissioner of
         Income Tax, Range-1, Ghaziabad has erred in law by
         making an addition of Rs. 2,30,00,000/- to the Income of
         the Assessee's company being issued capital U/S 68 of
         the Income Tax Act, 1961.

         2.   That the Learned A.O. has erred in law and facts of
         the case is not considering the various details, pleadings
         and written submissions made from time to during the
         course of assessment proceedings.

         3.   That the interest as charged under Section 234B
         and 234C is illegal on various factual and legal grounds.



                                  3
                                            ITA NOS. 330 to 332 & 334/Del/2015


         4.   That the demand of Rs. 1,22,93420/- created,
         pursuant to this assessment which is a disputed demand,
         be kindly stayed till disposal of the Appeal.

         5.   That   the     several   observations     as    made      and
         inferences drawn are untenable, incorrect, unwarranted
         and uncalled for.

         6.   That the Appellant may take any other Ground or
         Grounds at the time of hearing of Appeal with the kind
         permission of the learned I.T.A.T.

5.   The grounds raised in the assessment year 2011-12 are
reproduced hereunder:-

         1.   That the       Learned   Additional    Commissioner of
         Income Tax, Range-1, Ghaziabad has erred in law by
         making an addition of Rs. 2,00,00,000/- to the Income of
         the Assessee's company being issued capital U/S 68 of
         the Income Tax Act, 1961.

         2.   That the Learned A.O. has erred in law and facts of
         the case is not considering the various details, pleadings
         and written submissions made from time to during the
         course of assessment proceedings.

         3.   That the interest as charged under Section 234B
         and 234C is illegal on various factual and legal grounds.

         4.   That the demand of Rs.1,22,93,420/- created,
         pursuant to this assessment which is a disputed demand,
         be kindly stayed till disposal of the Appeal.




                                  4
                                                    ITA NOS. 330 to 332 & 334/Del/2015


              5.     That     the    several   observations     as    made      and
              inferences drawn are untenable, incorrect, unwarranted
              and uncalled for.

              6.     That the Appellant may take any other Ground or
              Grounds at the time of hearing of Appeal with the kind
              permission of the learned I.T.A.T.

6.   The brief facts of the case are that this case has been selected
for scrutiny on the information received from DIT(Inv.)-II, Delhi
regarding accommodation entries provided by Shri Surendra Kumar
Jain Group of cases to various beneficiary companies and other.
Accordingly, after obtaining approval for issuance of notice u/s. 148
read with section 147 of the I.T. Act, 1961, a notice u/s. 148 dated
25.3.2013 was issued and served upon the assessee fixing the date
for compliance within 15 days from the date of service of notice.
Subsequently         notice   u/s.    142(1)   dated    4.10.2014       alongwith
questionnaire was also issued by the AO requiring various details
and information as considered necessary for scrutiny of the case. In
compliance to these notices assessee's counsel Sh. Ramit Kakkar,
Advocate attended the proceedings from time to time.                              He
requested for supply of reasons recorded before issuance of Notice
u/s. 148 which were duly supplied to him. The assessee is a Limited
Company specializing in the line of manufacturing rolls for various
industries.        The main supply to the customers by the company
include Paper, Steel, Textile, Vinyl, Laminates, Packaging, Asbestos
Sheet manufacturers, Leather, Aluminum and Cooper Foils, Coating
Plants and Poly Films, related industries. As per AO the assessee
company has failed to prove existence of third party and ability to
advance money as books of account of said companies have not
been produced and what business activity they are conducting has
not been proved. The Investigation Wing of this Department has

                                          5
                                              ITA NOS. 330 to 332 & 334/Del/2015


established that the said companies are dummy/ paper companies
used by Shri Surendera Kumar Jain and Shri Virendra Kumar Jain as a
conduit to provide accommodation entries to beneficiaries through
RTGS/cheques/PO/DD in lieu of cash and charging commission from
them. AO is of the view that the assessee has taken accommodation
entries from dummy firms/ paper companies. Therefore, an addition
of Rs. 1,50,00,000/- on account of bogus entries, treating it as
unexplained share application money, u/s. 68 is being made to the
income of the assessee and completed the assessment at a total
income of Rs. 1,77,41,068 u/s. 147/143(3) of the I.T. Act vide his
order dated 20.2.2014.

7.   Against the order of the Ld. AO, assessee appealed before the
Ld. CIT(A), who vide       impugned order dated 13.11.2014 has
dismissed the appeal of the assessee.

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

9.   The aforesaid case came up for hearing before the Bench
many times and adjourned on one and another pretext. During the
pendency of the appeal, the assesee's counsel filed an additional
grounds   of appeal.     The contents of the additional ground are
reproduced as under:-

                "Permission is hereby carved to raise the following
                ground of appeal:

                  "On facts and under the law,            notice u/s. 148
                  issued by the Ld. AO in this case is arbitrary,
                  unjust, illegal and   consequently, the impugned
                  assessment order passed u/s. 147 by the Ld. AO
                  is liable to be quashed."


                                  6
                                   ITA NOS. 330 to 332 & 334/Del/2015


     The above additional ground of appeal was not
raised before the Ld. CIT(A) by assessee's counsel
through oversight. Though the issue of notice u/s.
148 of the I.T. Act by the Ld. AO on the basis of
information received from Investigation Wing is
wholly unjustified and illegal.          A Certificate of the
Counsel who had           prepared and filed the appeal
before    the   Ld.       CIT(A)   Sh.     Pankaj      Gupta      is
reproduced below:-

     "To whom it may concern"
     This is to certify and confirm that I had
     prepared the grounds of appeal in the appeals
     of M/s Modinagar Rolls Ltd., Modinagar for the
     assessment years 2007-08, 2008-09 and
     2009-10 filed before the Ld. CIT(A),
     Ghaziabad. It was through oversight that I did
     not raise the additional ground of appeal as
     mentioned in the accompanying application
     though objections to the issue of notice u/s.
     148/147 were duly filed before the AO.
                                   For S.S. Gupta & Co.
                                   Chartered Accountants
                                              Sd/-
                                              Partner
     Place: Meerut
     Date: 18/03/2015"



         The appellant relies on the following case
laws on the admission of additional ground of
appeal by the ITAT:

     -    229 ITR 383 National Thermal Power Corpn.
          Co. Ltd. VS CIT [SC]




                      7
                                                 ITA NOS. 330 to 332 & 334/Del/2015


                      -   30 ITD, Indo Java & Co. vs. IAC (Delhi ITAT,
                          Special Bench)
                      -   193 ITR 624 CIT vs. Kerala State Coop.
                          Marketing      Federation     Ltd.    (Kerala     High
                          Court)
                      -   194      ITR     448      Inventors         Industrial
                          Corporation Ltd. vs. CIT (Bombay High
                          Court)
                      -   198 ITR 3 Taylor Instrument Co. (India) Ltd.
                          CIT (Delhi High Court)
                      -   200 ITR 275 CIT vs. Mahalakshmi Sugar
                          Mills Co. (Delhi High Court)

                      It is prayed that the above additional ground
                may kindly be entertained and disposed of on
                merits after hearing the appellant's Counsel."

10.   At the time of hearing i.e. on 13.5.2015, Ld. Counsel of the
assessee requested that before proceeding on merit in the case of
the assessee, first the additional ground raised by the assessee may
be considered and decided.

11.   Ld. DR although objected to the request of the assessee's
counsel, but could not controvert the factual matrix narrated by the
Ld. Counsel for the assessee.




12.   We have heard both parties on the admission                of additional
grounds, as aforesaid. After going through the written submissions
filed by the assessee on admission of additional grounds in which
the Ld. Counsel of the assessee has cited various decisions on the
legal issues raised by the assessee, we are of the view that in the
interest of justice, the additional grounds raised by the assessee
mentioned in para no. 9 at page no. 6-7 of this order are purely legal

                                    8
                                                 ITA NOS. 330 to 332 & 334/Del/2015


and do not require fresh facts which is to be investigated and go to
the root of the matter.      In the interest of justice, we admit the
additional ground raised by the assessee, in view of the decision of
the Hon'ble Supreme Court of India in the case of NTPC Limited 229
ITR 383 and proceed to decide the additional ground first.

13.     Ld. Counsel of the assessee stated that on the facts and
under the law, notice u/s. 148 issued by the AO in this case is
arbitrary,   unjust,   illegal   and       consequently,     the     impugned
assessment order passed u/s. 147 by the AO is liable to be quashed.
In    support of his contention assessee's counsel filed the Written
Synopsis.     For the sake of convenience, we are reproducing
herewith the Written Synopsis filed by the Assessee as under:-

                "Synopsis with regard to additional ground of appeal
                against the validity and legality of reassessment
                order passed u/s 147/148 of LT. Act
                1.     The AO had recorded his reasons for issuing
                notice u/s 147 of IT. Act as per copy placed at page
                41 of the paper book.

                2.     The appellant had filed its objections against
                the issue of notice u/s 148, copy placed at pages 42-
                49 of the paper book.

                3.     The AO had not passed any order on the
                objections raised by the Assessee and consequently
                the impugned r:eassessment order as passed u/s
                147/148 is illegal and void ab-initio. Appellant relies
                on the decision of Hon'ble Apex Court in the case of
                GKN Driveshafts(lndia) Ltd. Vs. Income-tax Officer
                and Others - 259 ITR 19 (SC) in which it was held that
                the AO had to dispose of the objections, if filed, by


                                       9
                                   ITA NOS. 330 to 332 & 334/Del/2015


passing a speaking order before proceeding with the
assessments for those years.

Failure to pass such an order has vitiated the
impugned reassessment order uls 147/148 of the I.T.
Act which deserves to becancelled/quashed/annulled.

4.      The impugned reassessment is also illegal
because in the reasons recorded, there was no
specific allegation that the appellant had failed to
truly disclose any material facts at the time of
assessment      and        consequently,       the     impugned
reassessment proceedings are illegal and without
jurisdiction.   Reliance      is   placed     on     Delhi     H.C.
judgment in 357 ITR 24 CIT vs. Suren International P
Ltd.

5. Reliance is also placed on the following case laws:

- 357 ITR 646, CIT vs. Viniyas Finance & Investment
P Ltd (Delhi H.C.), in which it was held that in the
reasons for the notice uls 147, there was no mention
of the assessee not having made a full and true
disclosure of the          material facts       necessary for
assessment.

- 357 ITR 330 CIT vs. Insecticides India Ltd. (Delhi
H.C.)

- 338 ITR 51, Signature Hotels Pvt. Ltd. Vs. ITO (Delhi
H.C.). In this case, it was held that the reassessment
proceedings initiated on the basis of information
received from the DIT (Inv) that the petitioner had


                      10
                               ITA NOS. 330 to 332 & 334/Del/2015


introduced money amounting to Rs.5 Lacs from a Co.
S was nothing but an accommodation entry and the
Assessee was a beneficiary. The reasons did not
satisfy the requirement of section 148 of the LT. Act.
The AO did not apply his own mind to the information
and   examine    the   basis    and     material      of    the
information. The reassessment proceedings were not
valid and were liable to be quashed.

6.     There is yet another aspect of the matter. In
the reasons recorded, copy placed at page 41 of the
paper book, the Id. AO had issued notice uls 148 by
making the following observations:

"The assessee of this Range, M/s Modi Nagar Rolls
Ud. has taken entries from the concern entry
provider Shri Surender Kumar Jain Group of cases.
During the year under consideration Mls Modi Nagar
Rolls Ltd.   has taken an entry of Rs.1,45,OO,000/-
from Hillridge Investment Ltd. Nisha Holdings Ltd .
and Shalini Holdings Ltd.       by check through UTI,
HDFC and Axis Bank through Shri Pankaj of Meerut. I
have verified the record. It is pertinent to mention
here that in A.Y. 2010-11 assessment of above
referred company M/s Modi Nagar Rolls Ltd.                 was
passed by the undersigned. On enquiry made by
undersigned and non furnishing of complete detail of
capacity, credit worthiness and genuineness could
not be proved and addition of uls 68 was made in
case of entry receive from Mls Shalini Holdings and
Mls Apoorva Leasing Finance & Investment Pvt. Ltd.
Mls Shalini Holdings finds name in the list of entry
                  11
                                       ITA NOS. 330 to 332 & 334/Del/2015


provider. Hence, I have reason to believe that the
share application money taken by company is
nothing but their own unaccounted money introduce
by way of bogus share application money. Hence, I
have reason to believe that income has escaped
assessment".

From the above, it is evident that the Id. AO had
issued notice uls 148 in respect of the share
application money of Mls Shalini Holdings Ltd. which
had invested share application of Rs.25,OO,000/- only
and therefore, the Id. AO was not justified in making
additions of Rs.1,50,00,000/- by adding the share
application money provided by the other two limited
Cos. besides S/Sh. Aditya Gupta and Ashish Gupta.

7.     Moreover, the reasons have been recorded on
the basis of mere change of opinion because the Id.
AO had duly examined the share capital provided by
all the three limited Cos. and also by S/Sh. Aditya
Gupta and Ashish Gupta by proper application of his
mind    in    the        course    of      original         assessment
proceedings which stands proved from the following:

a)     Copies       of    the     order     sheet      entry      dated
27/10/2009,     attached          as    Annexure        I    to   these
Synopsis, relevant portion of which is reproduced
below at pages 6-7

"Attend Sh. Pankaj Gupta CA. He files asked details.
Please file the following details:




                         12
                                       ITA NOS. 330 to 332 & 334/Del/2015


     (i)      Complete     details     of     receipts       of   share
     application money, giving names and complete
     addresses, PAN, ward /circle of the investor. File
     confirmations, copy of bank Alc and their ITR.

b)   Copies of order sheet entry dated 04/11/2009,
     attached as Annexure I to these Synopsis, relevant
     portion of which is reproduced below at pages 7-8

       "Attend Sh. Pankaj Gupta CA. He files the details......

c)   Copy of the covering letter filed before the AO to the
     above order sheet entry attached as Annexure 11 to
     these     Synopsis,    relevant        portion    of     which    is
     reproduced below: at page 10.

     (i)      Complete detail of share application money as
     allotted is enclosed with Form No. 2 and Board
     Resolution, name and addresses of allottees and
     copy of challans from pages No. 544 to page No. 549.

     Copy of Form No. 2 as filed with ROC is placed at
     pages 96-100 of the paper book.

     (ii)     Complete copies of share application money,
     board     resolutions,     copy     of     bank        certificates,
     confirmation    letter     with    copy     of    incorporation
     certificate and income-tax acknowledgement are
     enclosed from page no. 504-543".

     Copies    of the share          applications      Forms, bank
     statements, balance sheets etc. are placed at pages
     101-176 of the paper book.



                           13
                                 ITA NOS. 330 to 332 & 334/Del/2015


    Therefore, the impugned reassessment proceedings
    initiated are illegal for which, reliance is placed on
    the following case laws:

-   360 ITR 380, NTPC Ltd. vs. Dy. CIT dated 07/03/2013
    (Delhi H.C.), Head notes are reproduced below:

    "The issue of change of opinion is equally relevant for
    matters in which the reopening is sought to be done
    beyond four years, as it is to cases where the
    reopening is within four years of the end of the
    relevant assessment year.

    Held, allowing the petitions, that notices issued under
    section 148 of the Income-tax Act, 1961, seeking to
    reopen the concluded assessments under section
    147 pertaining to the assessment years 1999-2000,
    2001-02, 2002-03 and 2003-04 were not valid".

-   363 ITR 603, NOT Systems and Another vs. ITO
    dated 04/12/2012 (Bombay High Court), in which at
    page 611 & 612, it was held as under:

    "Therefore, the impugned notice and the reasons in
    support thereof clearly indicates that it has been
    issued merely on the basis of change of opinion and
    would amount to a review of the Assessment Order
    dated 11/12/2003. Further, the reasons for reopening
    as communicated by the petitioner is not on the basis
    of any tangible material but merely on verification of
    the material   and primary facts already on record
    that the Assessing Officer has duly considered while
    passing the order dated 11/12/2003 for Assessment


                      14
                                                ITA NOS. 330 to 332 & 334/Del/2015


    Year 2007-08. There is no fresh tangible material
    which would warrant taking a view different from the
    one       taken        during         the       regular       assessment
    proceedings. In fact even the order dated 15/10/2012
    disposing of the objections clearly records that
    radiography charges and labor charges were made to
    various persons like Senior Technicians, Senior
    Radiographer and Jr. Technicians etc. from the chart
    submitted in the regular assessment proceeding
    leading to order dated 11/12/2009. Therefore, it is
    very clear that impugned notice for reassessing the
    assessment year 2007-08 has been issued merely on
    change of opinion and in fact seeks to review the
    assessment which is already completed.

    ...................................

    In view of the above, we find that the impugned
    notice dated 28/3/2012 is bad in law as the same has
    been issued merely on account of change of opinion
    and amounts to review of assessment order dated
    11/12/2009. In the circumstances, the petition is
    allowed and the notice dated 28/3/2012 issued under
    Section 148 of the Act is quashed and set aside".

-   362 ITR 72, Sidhi Vinayak Transport vs. ACIT dated
    22/04/2013 (Gujarat High Court), Head notes are
    reproduced below:

    "Held, Allowing the petition, that this was not a case
    where the' Assessing Officer, while framing the
    original scrutiny assessment, did not examine the
    assessee's claim to deduction. He was actually

                                15
                                              ITA NOS. 330 to 332 & 334/Del/2015


               conscious of such a claim and was also of the opinion
               that the entire claim was not required to be granted.
               He called for an explanation of the assessee and
               after taking into consideration the explanation, made
               disallowance to the extent he was convinced it was
               necessary. If, in the process, he made a legal error,
               the succeeding Assessing Officer could not correct
               such an error, through the process of reopening of
               the assessment. The notice was not valid".

               The above case laws apply to the facts of appellant's
               case also because at the time of original assessment
               proceedings,    the      amounts   received       from      the
               shareholder Cos. were duly examined and accepted
               by the AO by proper application of mind.

               In view of the above facts and the legal position, the
               reassessment proceedings initiated u/s 147/148 are
               illegal and it is, therefore, prayed that the same may
               kindly be quashed/annulled."

14.   On the other hand, Ld. DR relied upon the order passed by the

Ld. CIT(A).   He stated that assessee has not filed any evidence

regarding its filing the objections before the AO on the issuance of

notice u/s. 148 of the I.T. Act.     Secondly, he stated that the AO

should have decide the objections if any, but on this account

assessment cannot be declared void ab initio.          In support of his

contention, he relied upon the Division Bench decision of the

Hon'ble Delhi High Court in the case of CIT vs. Nova Promoters and

Finlease (P) Ltd. (2012) 342 ITR 169 (Del).
                                   16
                                                  ITA NOS. 330 to 332 & 334/Del/2015


15.   We have heard      both the parties and perused the records,

specially the Paper Book filed by the assessee, orders of the

Revenue authorities, Written Submissions filed by the Ld. Counsel of

the asessee. As regards the effective ground in this appeal relating

to reassessment proceedings u/s. 148 of the I.T. Act is concerned,

we are of the view that the AO has issued notice u/s. 148 of the I.T.

Act, after recording the following reasons which is at page 41 of the

Paper Book.


           "Reasons for the belief that income has escaped
           assessment

           Information   received        from   DIT(Inv.)-II,     ARA     Centre
           Jhandewalan Extn., New           Delhi letter F.No.DIT(Inv.)-
           II/U/s.148/2012-13/240,        Dated    15.03.2013         Regarding
           accommodation entries provided by Shri Surendra Kumar
           lain Group of Cases to various         beneficiary companies &
           others.

           The assessee of this Range. M/s. Modi Nagar Rolls Ltd.
           has taken entries from the concern entry provider Shri
           Surendra Kumar Jain Group of cases. During the Year
           under consideration M/s Modi Nagar Rolls Ltd. has taken
           an entry of Rs. 1,45,00,000/- from Hillridge Investment
           Ltd.,Nisha Holding Ltd and Shalini Holdings Ltd. by check
           through UTI, HDFC and Axis Bank through Shri Pankaj of
           Meerut. I have verified the record. It is pertinent to
           mention here that in A.Y. 2010-11 assessment of above
           referred company M/s. Modi Nagar Rolls Ltd. was passed
           by the undersigned, On enquiry made by undersigned
                                    17
                                            ITA NOS. 330 to 332 & 334/Del/2015


           and non furnishing of complete detail the capacity,
           creditworthiness and genuineness could not be proved
           and addition of uls 68 was made in case of entry received
           from M/s. Shalini Holding and MIs, Apoorva leasing
           Finance & Investment Pvt. Ltd. M/s Shalini Holding finds
           name in the list of entry provider. Hence, I have reason to
           believe that the share application money taken by
           company is nothing but their own unaccounted money
           introduce by way of bogus share application money.
           Hence, I have reason to believe that income has escaped
           assessment.

           25.03.2013

                                                               Sd/-
                                                   (Radhey Shyam)
                                  Addl. Commissioner of Income-Tax,
                                               Range-I. Ghaziabad..


15.1   After examining the Paper Book filed by the assessee
alongwith Written Submissions, we find that the assessee has also
filed its Objections dated 22.1.2014 to the AO on the issuance of
notice u/s. 148 of the I.T. Act copy of which is placed at page 42 of
the Paper Book, those were not decided by the AO till the
completion of the assessment.     In our view, this is contrary to the
prescribed law and the assessment completed by the AO is void ab
initio and deserve to be quashed and      accordingly, we quash the
assessment. Our view is supported by the judgment of the Hon'ble
Apex Court in the case of GKN Driveshafts(lndia) Ltd. Vs. Income-tax
Officer and Others - 259 ITR 19 (SC) in which it was held that "the
AO had to dispose of the objections, if filed, by passing a speaking
order before proceeding with the assessments for those years.


                                  18
                                            ITA NOS. 330 to 332 & 334/Del/2015


     Failure to pass such an order has vitiated the impugned
reassessment order uls 147/148 of the I.T. Act which deserves to be
annulled /quashed."

15.2 Ld. Counsel for the assessee argued that the AO reopened the
assessment of the assessee on the basis of the evidence already on
record with the AO which the assessee has filed during the course
of assessment proceedings meaning thereby AO has not brought
any fresh evidence which was not on record or in other words, no
fresh evidence was available with the AO for reopening the
assessment in dispute.      He requested that assessment in dispute
may be cancelled, because the AO has wrongly reopened the case
of the assessee by issuing the notice u/s. 148 of the I.T. Act without
any fresh evidence and similarly the Ld CIT(A) has also upheld the
invalid assessment by passing the impugned order which deserves
to be cancelled. He also filed the synopsis, as mentioned above in
which he has raised various issues for declaring the assessment
order invalid and   also mentioned various decisions rendered by the
Hon'ble Supreme Court of India, Hon'ble High Court of India and the
Tribunal.   Ld. Counsel of the assessee further requested that the
notice u/s. 148 is illegal and assessment may be cancelled.

15.3 After perusing the Written Submissions filed by the assessee

alongwith various decisions rendered by the Hon'ble Supreme Court

of India and the Hon'ble High Court on the issue in dispute. We have

perused the order sheet of the AO and we find that while recording

the reasons by the AO, the AO has mentioned the names of three

firms namely Hillridge Investment Ltd; Nisha Holdings Ltd and

Shalini Holdings Ltd. and stated that the AO had issued notice u/s


                                  19
                                                ITA NOS. 330 to 332 & 334/Del/2015


148 in respect of the share application money of M/sShalini Holdings

Ltd. We also find that vide the order sheet entry 27.10.2009 and

4.11.2009, the AO called the details of three parties and in

response   thereto the assessee      filed    complete details of          share

application money as allotted, Board Resolution, name and address

of allottees and copy of challans, copy of Form No. 2 as filed with

ROC,   copy of bank certificate, confirmation letter with copy of

incorporation certificate and income tax acknoweldgement, balance

sheets etc. before the AO.,       The AO examined the same and

completed the assessment u/s. 143(3) of the I.T. Act, meaning

thereby the AO has examined all the details, creditworthiness of the

transactions and identity of the creditor, hence, in view of the

above, the reassessment proceedings initiated u/s. 147/148 are

illegal and is liable to be quashed. Our view is supported by the

following judgments / decisions viz. :-


                 -     Hon'ble Jurisdictional High Court in the case of
                       Signature Hotels P. Ltd. vs.              Income Tax
                       Officer [2011] 338 ITR 0051 wherein the
                       Hon'ble High Court has held matter as under:-

                       "Held,   allowing      the    petition,      that     the
                       reassessment proceeding 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 lacs during the financial year 2002-03 as
                                   20
                                    ITA NOS. 330 to 332 & 334/Del/2015


    stated in the Annexure.                  According to the
    information, the amount received from a
    company,           S,     was         nothing        but      an
    accommodation entry and the assesee 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. 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 be quashed.

-     357 ITR 646, CIT vs. Viniyas Finance &
    Investment P Ltd (Delhi H.C.), in which it was
    held that in the reasons for the notice uls 147,
    there was no mention of the assessee not
    having made a full and true disclosure of the
    material facts necessary for assessment.

                  21
                             ITA NOS. 330 to 332 & 334/Del/2015


- 362 ITR 72, Sidhi Vinayak Transport vs. ACIT
  dated 22104/2013 (Gujarat High Court), Head
  notes are reproduced below:

  "Held, Allowing the petition, that this was not
  a case where the' Assessing Officer, while
  framing the original scrutiny assessment, did
  not     examine      the     assessee's        claim      to
  deduction. He was actually conscious of such a
  claim and was also of the opinion that the
  entire claim was not required to be granted.
  He called for an explanation of the assessee
  and     after    taking    into    consideration        the
  explanation, made disallowance to the extent
  he was convinced it was necessary. If, in the
  process, he made a legal error, the succeeding
  Assessing Officer could not correct such an
  error, through the process of reopening of the
  assessment. The notice was not valid

 -       360 ITR 380 NTPC ltd, vs. DCIT dated
 7.3.2013 (Delhi HC) (Supra).
 Held, allowing the petitions, that notices issued
 under section 148 of the Income-tax Act, 1961,
 seeking to reopen the concluded assessments
 under      section     147      pertaining        to     the
 assessment years 1999-2000, 2001-02, 2002-
 03 and 2003-04 were not valid.
     -   363 ITR 603 NDT Systems and another
     vs ITO dated 4.12.2001 (Bombay High Court)
     (Supra).


                  22
                                 ITA NOS. 330 to 332 & 334/Del/2015


 "Therefore, the impugned notice and the
reasons in support thereof clearly indicates
that it has been issued merely on the basis of
change of opinion and would amount to a
review       of     the     Assessment          Order      dated
11/12/2003.            Further,        the      reasons        for
reopening as communicated by the petitioner
is not on the basis of any tangible material
but merely on verification of the material and
primary facts already on record that the
Assessing Officer has duly considered while
passing       the      order      dated      11/12/2003        for
Assessment Year 2007-08. There is no fresh
tangible material which would warrant taking
a view different from the one taken during the
regular assessment proceedings. In fact even
the order dated 15/10/2012 disposing of the
objections clearly records that radiography
charges and labor charges were made to
various persons like Senior Technicians, Senior
Radiographer and Jr. Technicians etc. from the
chart submitted in the regular assessment
proceeding leading to order dated 11/12/2009.
Therefore, it is very clear that impugned
notice for reassessing the assessment year
2007-08 has been issued merely on change of
opinion and in fact seeks to review the
assessment which is already completed.
...................................
        In view of the above, we find that the
impugned notice dated 28/3/2012 is bad in
                  23
                                              ITA NOS. 330 to 332 & 334/Del/2015


                          law as the same has been issued merely on
                          account of change of opinion and amounts to
                          review of assessment order dated 11/12/2009.
                          In the circumstances, the petition is allowed
                          and the notice dated 28/3/2012 issued under
                          Section 148 of the Act is quashed and set
                          aside".



16.     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 squarely covered by the aforesaid decisions of the

different Hon'ble High Courts.        Hence, respectfully following the

above precedents, we decide the legal issue in dispute in favour 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.





17.     The legal issue in dispute in the other 3 appeals (ITA No. 331-

332 & 334/Del/2015 (A.Yrs. 2008-9, 2009-10 & 2011-12) is identical

to ITA No. 330/Del/2015 (AY 2007-08), as         admitted by both the

parties. Since we have decided the issue in dispute i.e. relating to

issuance of notice u/s. 148 of the I.T. Act in favor of the assessee

and quashed the assessment, in ITA No. 330/Del/2015 (A.Y. 2007-

08), following the same reasoning as aforesaid, we quash the

assessment in the other 03 Appeals i.e. ITA No. 331, 332 &


                                     24
                                            ITA NOS. 330 to 332 & 334/Del/2015


334/Del/2015 (AYrs. 2008-09, 2009-10 & 2011-12 also and decide

the     issue relating issuance of notice u/s. 148      in favor of the

assessee.


18.   In the result, all the four Appeals filed by the Assessee stand

allowed.


      Order pronounced in the Open Court on 29/05/2015.

      Sd/-                                                 Sd/-

[N.K. SAINI]                                      [H.S. SIDHU]
ACCOUNTANT MEMBER                              JUDICIAL MEMBER

Date 29/05/2015
"SRBHATNAGAR"
Copy forwarded to: -
1.    Appellant -

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


                           TRUE COPY
                                                   By Order,




                                                  Assistant Registrar,
                                                  ITAT, Delhi Benches




                                 25

 
 
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