IN THE INCOME TAX APPELLATE TRIBUNAL
`F' : NEW DELHI
DELHI BENCH `F
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND
SUDHIR, JUDICIAL MEMBER
SHRI I.C. SUDHIR,
No.101/Del/2013
ITA No.
2004-05
Assessment Year : 2004-
M/s RKG International Vs. Income Tax Officer,
Pvt.Ltd., Ward-15(1),
Ward-
C/o Kapil Goel, Advocate, New Delhi.
Sector-15,
A-1/25, Sector-
Rohini,
Delhi 110 085.
PAN : AAACR4388P.
(Appellant) (Respondent)
Appellant by : Shri Kapil Goel, Advocate.
Respondent by : Shri Vikram Sahay, Sr.DR.
ORDER
AGRAWAL, VP :
PER G.D. AGRAWAL,
This appeal by the assessee is directed against the order of
learned CIT(A)-XVIII, New Delhi dated 19th October, 2012 for the AY
2004-05.
2. Ground No.1 of the assessee's appeal reads as under:-
"Validity of Reopening u/s 148
1. That on the facts and in the circumstances of the
case and in law, learned CIT-A erred in upholding the
reopening action of ld. AO which stands vitiated inter
alia for following reasons :
a. Total lack of tangible material/reasonable cause
and justification.
b. Absence of nexus (much less live nexus) between
alleged information (unknown whether exists on file or
not) and tentative inference drawn;
c. Non application of mind much less independent
application of mind.
2 ITA-101/Del/2013
d. Total lack of clarity on nature of transaction in
reasons recorded."
3. We have heard the arguments of both the sides and perused
relevant material placed before us. The copy of reasons recorded for
reopening of assessment is at page 1 & 2 of the assessee's paper
book, the relevant portion of which reads as under:-
"11. Reasons for the belief that income has escaped
assessment :
Return in this case has been filed on 30.07.2004 which
has been processed u/s 143(1) at an income of
Rs.184240/-.
As per information received from ACIT, Circle-1,
Faridabad, Haryana vide letter No.ACIT/FBD/10-
11/23543 dated : 24.03.2011 that the above noted
assessee (beneficiary) has taken accommodation entry,
it was discovered that the assessees who have
unaccounted money (hereinafter called as entry, takers
or beneficiaries) and want to introduce the same in the
books of accounts without paying tax approach another
person (entry operator) and hand over cash (plus
commission) and take cheques/DDs/POs. The cash is
deposited by the entry operator in a bank account
either in his own name or in the name of relative/friends
or other person hired by him. For the purpose of
opening bank account. The entry operator thereafter
issues cheque/DD/PO in the name of beneficiary from
the same account (in which the cash is deposited) or
another account in which funds are transferred through
banking in two or more stages. The beneficiary in turn
deposits these instruments in his bank accounts. The
money comes to his regular books of account in the
form of gift, share application money, loan through
banking channels and the transaction looks genuine.
It is noticed from the list of entries that the assessee
M/s RKG International P.Ltd. has taken following
accommodation entries to the following persons
(beneficiary) as per details hereunder:-
Amount Instrument Date Name of Name Branch A/c No.
(Rs.) No. entry of bank of bank Entry
3 ITA-101/Del/2013
provider giving
account
500000 983304 19- Shimmer KVB Karol CA
Apr-03 Marketing Bagh 3339
P Ltd.
In view of the report received from the DIT (Inv.) New
Delhi, and in view of the facts narrated above, it is clear
that the assessee has not disclosed fully and truly all
material facts necessary for its assessment for that
assessment year. I have therefore, reason to believe
that the sum of Rs.500000/- chargeable to tax has
escaped assessment. Thus the same is to be brought
to tax under section 148 of the I.T. Act, 1961."
4. From the above, it is evident that the reasoning given by the
Assessing Officer is of general nature i.e. the system being followed by
the persons who have the unaccounted money and want to introduce
the same unaccounted money in their books of account. For that
purpose, they take the help of entry operator and the Assessing Officer
has explained the modus operandi how the nexus between the persons
having black money and entry operator works. However, apart from
that general theory, there is no specific details which may justify the
forming of belief that the income has escaped assessment in the case
of the assessee. In the reasoning, it is mentioned that the beneficiaries
i.e. the persons who are having black money introduced the amount in
their books of account in the form of gift, share application money,
loan etc. However, it was not specified in which form the money has
been introduced by the assessee in its books of account and how it is
the unaccounted money. So far as the assessee's case is concerned,
only the detail of some amount having been received from M/s
Shimmer Marketing Pvt.Ltd. through KVV Bank, Karol Bagh Branch is
mentioned. But, merely because the assessee has received a cheque
from some party to whom the department doubts to be entry operator
itself is not sufficient to arrive at the conclusion that the amount
received by the assessee is also in the form of accommodation entry
without there being any further detail to reach to such conclusion. It
4 ITA-101/Del/2013
has not been pointed out whether this amount is in the form of gift,
share application money or loan and whether this amount is shown in
the assessee's books of account or not. At the time of hearing before
us, it was pointed out by the learned counsel that the assessee was
having 50,000 shares of `10/- each and the said shares were sold at
cost to M/s Shimmer Marketing Pvt.Ltd. and the sum of `5 lakhs has
been received as a sale consideration of shares which were already
disclosed in the assessee's books of account. The purchase of shares
as well as sale of shares both have been disclosed in the assessee's
books of account and it has not generated either any profit or loss in
the books of account nor any additional flow of capital in the
assessee's books of account. These facts stated by the learned
counsel could not be controverted by the Revenue. On these facts, in
our opinion, the decision of Hon'ble Jurisdictional High Court in the case
of Signature Hotels P.Ltd. Vs. Income-tax Officer and Another [2011]
338 ITR 51 (Delhi) would be squarely application wherein their
Lordships held as under:-
"Held, allowing the petition, that 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 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 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. 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
5 ITA-101/Del/2013
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."
5. Respectfully following the same, we hold that the reopening of
assessment under Section 148 on the above facts was not justified.
We, therefore, quash the issue of notice under Section 148 and
consequently, the assessment order passed in pursuance to such
notice is also quashed.
6. Since we have already quashed the assessment order, the other
grounds raised by the assessee need no adjudication.
7. In the result, the appeal of the assessee is allowed.
Decision pronounced in the open Court on 14th November, 2014.
Sd/- Sd/-
SUDHIR)
(I.C. SUDHIR) AGRAWAL)
(G.D. AGRAWAL)
JUDICIAL MEMBER VICE PRESIDENT
Dated : 14.11.2014
VK.
Copy forwarded to: -
1. Appellant : M/s RKG International Pvt.Ltd.,
C/o Kapil Goel, Advocate,
Sector-15, Rohini, Delhi 110 085.
A-1/25, Sector-
2. Respondent : Income Tax Officer,
Ward-
Ward-15(1), New Delhi.
3. CIT
4. CIT(A)
5. DR, ITAT
Assistant Registrar
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