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Mr. Shree Bhagwan, H. No. 9, Village Naya Bans, Near Narela, Delhi 110036 Vs. Ito, Ward 21(4), New Delhi
September, 11th 2015
                                                                ITA NO. 877/DEL/2012


                IN THE INCOME TAX APPELLATE TRIBUNAL
                      DELHI BENCH "G", NEW DELHI
               BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
                                  AND
                 SHRI O.P. KANT, ACCOUNTANT MEMBER


                    I.T.A. NO. 877/DEL/2012
                          A.Y. : 2003-04
MR. SHREE BHAGWAN,                       ITO, WARD 21(4),
H. NO. 9, VILLAGE NAYA BANS,        VS. NEW DELHI
NEAR NARELA,
DELHI ­ 110036
(PAN:AUPPB5795C)
(APPELLANT)                                 (RESPONDENT)

            Assessee by               :    Shri V.K. Aggarwal, A.R.
           Department by              :    Shri Sujit Kumar, Sr. DR


                      Date of Hearing : 17-08-2015
                      Date of Order       : 10-09-2015
                             ORDER
PER H.S. SIDHU : JM
     The    Appeal filed by the Assessee emanate out of the Order
dated 5.12.2011 passed by the Ld. CIT(A)-XXII, New Delhi relevant
to assessment year 2003-04.

2.   The following grounds have been raised in the Assessee's
Appeal:-

                 "1. Under the facts and circumstances of the case,
                        the appellate order passed by the Ld. CIT(A) is
                        illegal being against the principles of natural
                        justice and against the provisions of I.T. Act,
                        1961.




                                      1
                                                ITA NO. 877/DEL/2012


2.   The Ld. CIT(A) has grossly erred on facts as
     well as in law in not holding that notice u/s.
     148 is invalid and without jurisdiction.

3.   The Ld. CIT(A) has        grossly erred on facts as
     well as in law in not annulling the assessment
     order based on an invalid / illegal notice u/s.
     148.

4.   The Ld. CIT(A) has grossly erred on facts as
     well as in law in holding that bank pass book is
     books of accounts for the purposes of section
     68.

5.   The Ld. CIT(A) has grossly erred on facts as
     well as in law in confirming the addition of Rs.
     20,34,000/-       u/s.   68    on   account     of    cash
     deposited in the back account.

6.   The Ld. CIT(A) has grossly erred on facts as
     well as in law in confirming the addition of Rs.
     1,10,000/-    without         assigning   any     reason
     except that it is the threshold limit for levying
     tax.




7.   The Ld. CIT(A) has grossly erred on facts as
     well as in law in confirming charging of
     interest under various sections of the I.T. Act,
     1961.

8.   The appellant craves leave to add, alter,
     modify and without any ground of appeal
     before or during the appellate proceedings.




                   2
                                                               ITA NO. 877/DEL/2012


3.   The brief facts of the case are that an information from ADIT
(Inv.), New Delhi has been received on 29.3.2010 that a Tax Evasion
Petition against Sh. Harish Pawar Prop. Amrit Impex (India) was
received on 28.12.2008.           During the investigation, it has been
noticed that Sh. Shree Bhagwan Prop. Shree Agencies, House No. 9,
Village Naya Bans, Near Narela has maintained and             operated          a
bank account in HDFC Bank Limited, Pusa Road, Bazar Marg,
Rajinder Nagar, New Delhi and in this account cash of Rs.
20,34,000/-   was     deposited     during    the   period   28.4.2002         to
25.1.2003. The account was used for transferring fund to the bank
of Sh. Harish Pawar who provided accommodation entry. Whereas
Sh. Shree Bhagwan in his reply dated 20.8.2009 has admitted that
he has no other bank account except in Panchvati Azadpur, New
Delhi and SBI Khera Khurd.          The cash deposit in the above said
HDFC Bank account has not been properly recorded. The case of
the assessee has been reopened u/s. 147 of the I.T. Act, 1961 after
recording the reason and taking approval of the Ld. ADIT, Range-21,
New Delhi. Notice u/s. 148 of the I.T. Act, 1961 dated 29.3.2010,
issued which remained un-complied. No return has been filed by the
assessee u/s. 139(1) and even in response of notice u/s. 148 of the
I.T. Act, 1961. Despite, issuing notices to the assessee u/s. 142(1) /
143(2)   of   the   I.T.   Act,   1961,      neither   assessee   nor       any
representative from the assessee has attended the hearing.             In the
absence of return filed by the assessee u/s. 139(1) and in response
of notice u/s. 148. The AO estimated the income of the assessee at
Rs. 1,10,000/- being the minimum amount chargeable to tax and
since no explanation alongwith source of cash deposit of Rs.
20,34,000/- in HDFC Bank was filed by the assessee, the same was
treated as unexplained and added to the income of the assessee
vide order dated 16.12.2010 passed u/s. 144/147 of the I.T. Act,
1961.

                                      3
                                                           ITA NO. 877/DEL/2012


4.    Aggrieved by the order dated 16.12.2010, Assessee filed an
Appeal before the Ld. CIT(A), who vide impugned order dated
5.12.2011 dismissed the appeal of the assessee.

4.1   Aggrieved by the impugned order dated 5.12.2011, assessee
filed the Appeal before the Tribunal.

5.    Ld. Counsel of the assessee has submitted that notice u/s. 148
has been issued in a mechanical manner on the basis of vague
information from ADIT (Inv.) received on 29.3.2010 and also stated
that AO has not mentioned any material which has led him to
believe that the cash deposited in the bank account represented
undisclosed income which has escaped assessment. He has simply
filled up a proforma mentioning the information received and sent
the Proforma Report to the Addl. CIT for approval, hence, the notice
u/s. 148 is patently illegal. In this regard, he placed reliance of the
various decisions of Hon'ble Delhi High Court including the decision
in the case of Signatures Hotels (P) Ltd. vs. ITO & Anr. (2011) 338
ITR 51 (Del.) and stated that the present case is covered by the
aforesaid decision of the Hon'ble Delhi High Court, hence, the
reopening is required to be quashed.

6. On the other hand, Ld. DR controverted the contentions raised
by the Ld. Counsel of the assessee and stated that the lower
authorities have passed the well reasoned order which does not
need any interference on the part of the Tribunal, therefore, the
orders of the revenue authorities may be upheld.

7. We have heard both the counsel and perused the records. We
find that in the present case the undated reasons recorded by the
AO for initiation of proceedings read as under:-

      "As per information received from the Asstt. Director of Income
      Tax (Inv.) Unit-II(2), New Delhi vide his letter no. F.No. ADIT

                                   4
                                                           ITA NO. 877/DEL/2012


      (Inv.)/UnitII(2)/2009-10/96 dated 29.3.2010, that Mr. Shree
      Bhagwan Prop. M/s Shree Agencies has deposited in cash of
      Rs. 20,34,000/- in his saving bank account.

           "I have reason to believe that Rs. 20,34,000/- has
           escaped assessment and is to be taxed u/s. 68 of the I.T.
           Act, 1961."
7.1   On perusal of the aforesaid reasons indicates that notice uls
148 has been issued in a mechanical manner on the basis of vague
information from ADIT (Inv.), New Delhi received on 29/3/2010. The
information received was that the assessee has deposited cash of
Rs. 20,34,000/- in his savings bank account. The information did not
say that the cash represents undisclosed income. The AO did not
dwell upon the veracity and the basis of information received. He
has not mentioned any material which has led him to believe that
the cash deposited in the bank account represented undisclosed
income which has escaped assessment. He has simply filled up a
proforma   mentioning    the    information received and     sent        the
Performa report to the Addl CIT, for approval.   Therefore, the notice
u/s. 148 is patently illegal.     We also note that the facts and
circumstances of the present case are similar and identical to that of
the case in the Signature Hotels (P) Ltd. vs. ITO & Anr. (2011) 338
ITR 51 (Del.) decided by the Hon'ble Delhi High Court. In the said
case during the assessment proceedings similar reasons were
recorded by the AO which reads as under:-

      "7. In the present case the undated reasons recorded by the
      AO for initiation of proceedings; read as under:

           Information received from the office of the Director of IT
           (Inv.)- VI, New Delhi revealed that Mls Signature Hotels




                                   5
                                                           ITA NO. 877/DEL/2012


           (P) Ltd. has introduced unaccounted money in its books
           of account during financial       year 2002-03 through
           accommodation entry from Mls Swetu Stone PV for Rs.
           5lacs.

           In view of the above, I have reasons to believe that
           taxable income to the tune of Rs. 5 lac has escaped
           assessment within the meaning of s. 147 of the IT Act,
           1961."

7.2   From reading of the above, it is crystal clear that the aforesaid
reasons do not satisfy the requirements of s. 147 of the Act. The
reasons and the information referred to is extremely scanty and
vague. There is no reference to any document or statement, except
Annexure, which has been quoted above. Annexure cannot be
regarded as a material or evidence that prima facie shows or
establishes nexus or link which discloses escapement of income.
Annexure is not a pointer and does not indicate escapement of
income. Further, it is apparent that the AO did not apply his own
mind to the information and examine the basis and material of the
information. The AO accepted the plea on the basis of vague
information in a mechanical manner. The CIT also acted on the same
basis by mechanically giving his approval. The reasons recorded
reflect that the AO did not independently apply his mind to the
information received from the Director of I.T. (Inv.) and arrive at a
belief whether or not any income had escaped assessment.                 We
further find considerable cogency in the assessee's submission that
the present case is squarely covered by the Order of the Hon'ble
Delhi High Court dated 21.7.2011 passed in the case of Signature
Hotels P. Ltd. vs. Income Tax Officer [2011] 338 ITR 0051, wherein
the Hon'ble Court has held as under:-






                                   6
                                                                   ITA NO. 877/DEL/2012


                "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 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."

8.   In the background of the aforesaid discussions, we are of the
considered opinion that the facts and circumstances of the present
case are similar to that of Hotel Signature's case which was decided
by the Hon'ble Delhi High Court, as aforesaid, therefore, respectfully
following the same reasoning, we decide the legal issue in dispute

                                     7
                                                           ITA NO. 877/DEL/2012


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.

9.    In the result, the appeal filed by the Assessee stands allowed.




      Sd/-                                              Sd/-

[O.P. KANT]                                       [H.S. SIDHU]
ACCOUNTANT MEMBER                              JUDICIAL MEMBER

Date 10/9/2015
"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




                                   8

 
 
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