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 Income Tax Addition Made Towards Unsubstantiated Share Capital Is Eligible For Section 80-IC Deduction: Delhi High Court

Ratan Pal Kein Akhilesh Kumar, Advocate, Chamber No. 206-207, Ansal Satyam, RDC Raj Nagar, Ghaziabad vs. Income Tax Officer Ward 2 (2) Ghaziabad
May, 22nd 2019

Referred Sections:
section 147 of the I.T. Act,
section 153C of the Act
section 148 of the Act.
section 139(1) of the Act
section 132 of the Act
Section 143(3) of the Act.

Referred Cases / Judgments
Delhi High Court in Signature Hotels Pvt. Ltd. Vs. ITO 338 ITR 51 (Del.);
CIT Vs. S. Goyanka Lime and Chemical Ltd. 56 taxman.com 390 (MP).
Rajat S. Chhaterji Vs. ACIT in ITA. No. 2430 (Del) of 2015 [order dated 20.05.2016]
Signature Hotels Pvt. Ltd. Vs. ITO
CIT vs Kelvinator of India Ltd.

                                 1                   ITA No. 1273/Del/2018


           IN THE INCOME TAX APPELLATE TRIBUNAL
               (DELHI BENCH: `SMC', NEW DELHI)

         BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER
                  ITA No:-1273/Del/2018
                (Assessment Year: 2009-10)

Ratan Pal Kein                Income Tax Officer
Akhilesh Kumar, Advocate, Vs. Ward 2 (2)
Chamber No. 206-207,          Ghaziabad
Ansal Satyam,
RDC Raj Nagar,
Ghaziabad
PAN No. AKRPP4393G
APPELLANT                     RESPONDENT

          Assessee by      :   Sh. Akhilesh Kumar, Advocate
                               Sh. Mohit Aggarwal, CA
          Revenue by       :   Sh. S. L. Anuragi, Sr. DR

          Date of Hearing      :            20.05.2019
          Date of Pronouncement :           22 .05.2019


                          ORDER

PER: N. K. BILLAIYA, AM


     This appeal by the assessee is directed against the order of the

Commissioner of Income Tax [Appeals] Ghaziabad dated 03.11.2017

for Assessment Year 2009-10.


2.   Vide Ground N0. 1 to 3, the assessee has challenged the

reopening of the assessment and by Ground No. 4, the assessee has
                                  2
                                                      ITA No.-1273/Del/2018


challenged the addition of Rs.33,15,990/- made to the returned

income of the assessee.



3.   Briefly stated the facts of the case are that on the basis of the

information received from DDIT Investigation, Unit 5 (1), New Delhi.

The A.O came to know that the assessee has paid donation of Rs.12

lcas in cash, Rs. 16.50 lacs through demand draft and Rs. 1.62

lacs in cash against regular fee for admission of his daughter

Vaishali Kein in Santosh Medical College, Ghaziabad. As per the

A.O, the said information was found during the search and seizure

operation carried out on 27/06/2013 in Santosh Group of

Institutions and Dr. P. Mahalingam, Ghaziabad. On the basis of

this information, and after recording reasons and obtaining prior

approval from the PCIT, Ghaziabad, notice u/s 148 of the Act was

issued and served upon the assessee along with questionnaire.



4.   The assessee was confronted with the information and was

asked to explain the sources of funds from which the assessee has

made the impugned payments. In its reply, the assessee stated that

he has paid Rs. 1, 60,000/-, his daughter has paid Rs. 50,000/-
                                     3
                                                        ITA No.-1273/Del/2018


and his wife has contributed Rs. 2 lacs and the total fees paid for

the year was Rs. 4.10 lacs.



5.    Not accepting the submissions of the assessee, the A.O was of

the   firm   belief   that   the   information   received   from    DDIT,

Investigation shows that the assessee has paid donation of Rs. 12

lacs in cash 16.50 lacs through DD and 1.62 lacs in cash. And

accordingly treated the amount of Rs.30.12 lacs as unexplained

made out of undisclosed sources and added the same to the income

of the assessee.



6.    The assessee strongly agitated the matter before the CIT (A)

but the CIT(A) was convinced with the findings of the A.O and

dismissed the appeal.



7.    Before me, the Counsel for the assessee vehemently stated

that the A.O without making any enquiry/investigation has simply

borrowed the information given by the Investigation Wing without

applying his own mind before the issue of notice u/s 148 of the Act.

It is the say of the Counsel that the total tuition fees for the first
                                  4
                                                     ITA No.-1273/Del/2018


year was only Rs. 4 lacs and the complete fee of four and half years

course was Rs. 18 lacs. Therefore, the claim of the A.O that the

assessee has paid Rs. 30.12 lacs is in correct and, therefore, not

only the reopening should be quashed but the addition made

should also be deleted. Per contra, the DR strongly supported the

findings of the A.O and read the operative part of the order of the

CIT(A).



8.   I have given a thoughtful consideration of the orders to the

authorities below and with the assistance of the Learned Counsel. I

have considered the relevant documentary evidences brought on

record in the form of paper book in the light of Rule 18 (6) of the

ITAT Rules. Exhibit 18 is part of the information received from the

office of DDIT Investigation and at Serial No. 33 the name of the

student Vaishali Kein has been mentioned.          And as per this

schedule the assessee has paid Rule 30.12 lacs which includes

donation of Rs. 12 lacs, regular fee paid through demand draft Rs.

16.50 lacs, regular fee paid in cash Rs. 1.62 lacs. At the same time,

I find a certificate issued by the Office of the Finance & Accounts

Maharaji   Education    Trust   Santosh    Group    of   Institutions,
                                                  5
                                                                             ITA No.-1273/Del/2018







Ghaziabad, which is exhibited at Page 27 of the paper book and the

same read as under:-

                                "OFFICE OF THE FINANCE & ACCOUNTS
                                    MAHARAJI EDUCATIONAL TRUST
                                     Santosh Group of Institutions
                        No: H-l Santosh Nagar, Pratap Vihar, Ghaziabad - 201 009


                                                                             Date: 06-09-2008
         To Whom It May Concern

         This is to certify that Mr.Vaishali Kain D/o. Shri.Ratan Pal Kain has been admitted
         in MBBS Course in 2008-2009 Batch in our.             Santosh Medical College run by
         Maharaji Educational Trust. Course is Recognised by the Medical Council of India.
         The duration of the course is Four and Half years.

                                      Fee
         Structurec 1st Year Tuition Fees
         tuition   Fees                           4,00,000/-
         IInd Year Tuition Fees
          Tuition Fees                            4,00,000/-
         Illrd Year Tuition Fees
          Tuition Fees                            4,00,000/-
         IVth Year Tuition Fees
          Tuition Fees                            4,00,000/-
         Final Year Tuition Fees
         Tuition Fees                             2,00,000/-

The Demand Draft should be drawn in favour of "Maharaji Educational Trust" payable at
Ghaziabad. This certificate is issued exclusively to enable the student to obtain financial
assistance from Bank/Financial Institution. The fee is subject to revision in the forthcoming
years.
                                                                            Sd/-

                                                           For Maharaji Education Trust
                                                                   Accountant
                                        6
                                                                ITA No.-1273/Del/2018




9.    A perusal of the aforementioned certificate shows that the

tuition fees for the first year is Rs. 4 lacs and the total tuition fees

for the entire course of four and half years is 18 lacs. I find that

neither the A.O nor the CIT(A) has made any enquiry from the

Institution regarding this certificate.



10. There is no dispute that the A.O has simply borrowed the

information received from DDIT, Investigation.                      The reasons

recorded for reopening the assessment read as under:-

     "Reasons for      the    belief        that   income     has    escaped
     assessment.
       An information has been received from DDI (1.pv.) Unit-5(1), New
     Delhi that Sh. Ratan Pal Kein, has paid donation of Rs. 12,00,000/-
     in cash, Rs. 16,50,000/- through DD and Rs. 1,62,000/- in cash
     against regular fee for the admission in MMBS course of his
     daughter Ms. Vaishali Kein, during the F.Y. 2008-09 relevant to A.Y.
     20C9-10   in   Santosh   Medical       College,   Ghaziabad.   The   above
     information was found during the search and seizure operation
     carried out on 27/06/2013 in Santosh Group of Institution & P.
     Mahalingam, Ghaziabad.

          I have gone through the contents of letter of DDI (Inv.) New
     Delhi and found that the sources of above deposits are not known
     and it is assumed that above deposits have been made by the
     assesses out of undisclosed sources which was not offered to tax for
                                              7
                                                                       ITA No.-1273/Del/2018


    A.Y. 2009-10.

          Therefore,    I   have   reasons    to   believe    that   the   income    of
    Rs.30,12,000/- (Rs. 12,00,000/- + Rs. 16,50,000/- + Rs. 1,62,000/-),
    has escaped assessment within the meaning of section 147 of the I.T.
    Act, which was chargeable to tax for A.Y. 2009-10. If approved, notice
    u/s 148 of the I.T. Act, 1961, may be issued."



11. On identical set of facts the Co-ordinate Bench in ITA No.

4035/Del/2017 has decided the appeal in favour of the assessee

and against the Revenue. The relevant findings of the Co-ordinate

Bench read as under:-


    "6. Assessee aggrieved with the order has preferred the appeal before
    us.

    7. The learned authorized representative submitted :-

    (i) That the reasons recorded by the Assessing Officer are based on
    information        supplied    by   the   Investigation    Wing;   there    is   no
    independent application of mind by the Assessing Officer. He referred
    to the reason which clearly shows, according to him, that there is no
    enquiry made by the Assessing Officer. He, therefore, submitted that
    the issue is squarely covered in favour of the assessee by the decision
    of the Hon'ble Delhi High Court in Signature Hotels Pvt. Ltd. Vs. ITO
    338 ITR 51 (Del.);

    (ii) He further stated that satisfaction recorded by the approving
    authority has merely mentioned "Yes". He submitted that such
    satisfaction without any reasoning is incorrect. He referred to the
                                   8
                                                          ITA No.-1273/Del/2018


decision of the Hon'ble M.P. High Court in CIT Vs. S. Goyanka Lime
and Chemical Ltd. 56 taxman.com 390 (MP). He further stated that
Hon'ble Supreme Court has dismissed SLP against the same;

(iii) He further stated that information was received during the course
of search and, therefore, the learned Assessing Officer should have
invoked the provisions of section 153C of the Act and not section 148
of the Act. For this he relied upon the decision of Co-ordinate Bench in
Rajat S. Chhaterji Vs. ACIT in ITA. No. 2430 (Del) of 2015 [order dated
20.05.2016];

(iv) On the merits of the case he submitted that assessee has not paid
any money other than Rs.15 lakhs to the institute and, therefore, in
absence of any evidence, addition cannot be made;

(v) He further submitted that no cross examination of the person
whose statement was recorded was given to the assessee and in
absence of cross examination when assessee specifically denied such
payment no addition can be made in the hands of the assessee.

7.1 In the end, he submitted that re-opening is invalid and further the
addition on the merit also cannot be sustained.

8. The learned Departmental Representative contested the arguments
of the learned authorized representative and submitted that there is a
definite information received by the Assessing Officer in the letter that
assessee has paid Rs.70 lakhs for the admission of his son. The
learned Assessing Officer has reason to believe that income of the
assessee has escaped assessment. With respect to the merits he
submitted that copy of the statement was given to the assessee and
there is no request of cross examination. He, therefore, submitted that
assessee does not have any case on the merits. He supported the
orders of the lower authorities.
                                         9
                                                                ITA No.-1273/Del/2018


9. We have carefully considered the rival contentions and also the
orders of the lower authorities. The assessee is an Individual, who filed
his    return   of   income         under section   139(1) of   the    Act    at
Rs.1,52,100/-. During the course of search, under section 132 of the
Act on 27.06.2013 on Santosh Group of Institutes and Dr. P.
Mahalingam, certain documents were seized. The documents revealed
receipt of donation over and above the regular course fees. Dr. P.
Mahalingam, in his statement under section 132(4) has admitted the
receipt of un-accounted money. From those papers it was found that
assessee's son, Dr. Neeraj Goel, who is pursuing MD course in that
institute on 3.02.2010 has paid Rs.15 lakhs as regular fees and Rs.55
lakhs as donation. This information was received by the Assessing
Officer vide letter dated 11.03.2015. Based on this, the learned
Assessing Officer recorded the reasons for re-opening under section
147 of the Act, which are placed at page No. 1 of the paper book. The
same is as under :-

        "ANNEXURE ­ A

      Reasons recorded for issuing Notice u/s 148 of the Act.

      Name of the assessee :            Shri Shiv Charan Goel
      Address                   :       1/7032, Shivaji Park, Shahdara,
                                         Delhi - 110 032.
      PAN                   :            Not-available.
      Assessment year   :                2010-11




 A letter dated 05.03.2015 has been received from the Deputy Director
of Income Tax (INV.), Unit-5(1), New Delhi in respect of information
regarding fee of Rs.70,00,000/- paid in cash to Santosh Medical
College, Ghaziabad by Shri Shiv Charan Goel F/O Dr. Neeraj Kumar
Goel R/o 1/7032, Shivaji park, Shahdara, Delhi - 110 032.
                                   10
                                                            ITA No.-1273/Del/2018


 Based on the above information I am satisfied that the fee paid of
Rs.70,00,000/- in cash is assessee's own unexplained income from
undisclosed sources and liable to be assessed in the hands of the
assessee. Therefore, I have reason to believe that unexplained cash
paid towards fee is chargeable to tax and the same has escaped
assessment for the year under consideration and is a fit case for
reopening u/s 148 of I.T. Act.

 The proposal for obtaining kind approval of the competent authority;
to initiate proceedings u/s 147/148 is hereby put up for necessary
approval. Submitted for further directions and approval please.

                                                           Sd/-
                                                     (Deepak Kumar )
                                                     Income Tax Officer
                                                     Ward 56 (4), New Delhi.

Whether the Addl. CIT, Range-56, N. Delhi satisfied on the reasons
recorded by the AO that it is fit case for the issue of notice u/s. 148.

                                                           Yes
                                                   Sd/- 27/3/2015.
                                        Addl. Commissioner of Income Tax,
                                               Range-56, New Delhi. "

9.1    On the same date the reasons were approved by the Addl.
Commissioner of Income Tax, Range 56, New Delhi. While approving
he has simply mentioned "Yes". Therefore, now the question arises
that whether the re-opening has been correctly initiated by the learned
Assessing Officer or he has simply acted on the information received
from the Investigation Wing. On perusal of the reasons recorded it is
apparent that the learned Assessing Officer referred to the letter dated
5.03.2015 received from the Dy. Director of Income Tax, Investigation,
and based on that information he stated that he is satisfied that the
fee paid of Rs.70 lakhs in cash is assessee's unexplained income from
                                  11
                                                          ITA No.-1273/Del/2018


undisclosed sources. According to the provisions of section 147 of the
Income Tax Act if the Assessing Officer has reason to believe that
income has escaped the assessment then only he can re-open the
assessment. The reason has to be of the assessee and cannot be
borrowed one. The Hon'ble Delhi High Court in para No. 15 in
Signature Hotels Pvt. Ltd. Vs. ITO (supra) has held that there is no
reference to the document or statement in this case except the letter of
the Investigation Wing, which has been quoted in the reasons. The
Annexure also does not show prima facie or establishes nexus for link
which discloses escapement of income. Further the Assessing Officer
did not apply his own mind to the information and examined the basis
and material or the information. The Addl. Commissioner also granted
his approval mechanically. The facts are similar to the facts before the
Hon'ble Delhi High Court. The Hon'ble Delhi High Court then held that
the reasons do not satisfy the requirement of section 147 of the Act.
Therefore, respectfully following the decision of the Hon'ble Delhi High
Court, we also hold that re-opening in this case also does not satisfy
provisions of section 147 of the Act. In view of this the order passed by
the learned Assessing Officer does not stand the test of the ratio Page
| 9 I.T.A. No. 4035 (Del) of 2017 - Shri Shiv Charan Goel, Delhi laid
down by the Hon'ble Delhi High Court. The learned CIT (Appeals) while
upholding the action under section 147 has held that assessee has not
filed any return of income. However, when we look at the assessment
order, the addition made by the learned Assessing Officer is to the
original returned income of Rs.1,52,100/-. Therefore, this finding of
the learned CIT (Appeals) is not in conformity with the records. With
respect to the finding of the learned CIT (Appeals) that Addl. Director
was in possession of adequate information so merely writing "Yes"
fulfills the requirement of approval. We note that it is not the Addl.
Director, who has approved the re-opening mechanically. Further such
approval is also not in conformity with the decision of Hon'ble M.P.
                                     12
                                                               ITA No.-1273/Del/2018


   High Court. In view of the above facts, we reverse the finding of the
   lower authorities and set aside the assessment order passed by the
   learned Assessing Officer holding that re-opening under section 147 is
   not valid.


12. The    Co-ordinate      Bench     in   another      case     in    ITA     No.
1106/Del/2018 had the occasion to consider the appeal again on
similar set of facts and once again decided the issue in favour of
the assessee and against the Revenue. The relevant findings of the
Co-ordinate Bench read as under:-

    6. I have heard both the parties and carefully considered the
   same. I note that in this case the AO while recording the reasons
   for the belief that income has escaped assessment has recorded
   the reasons as under:-

      "In this case, as per record the assessee has not filed her
      return of income for AY 2007-08. Further, as per
      information received. Ms. Megha Gupta, r/o 2-E, Kamla
      Nagar, Delhi PAN ALBPG3157A, during the F.Y. 2006-07
      relevant AY 2007-08, has given donation in cash of Rs.
      21,00,000/- for admission in the course of MBBS to the
      Santosh Medical College, Ghaziabad. As, the assessee
      has not filed her return of income for the relevant
      assessment year i.e. AY 2007-08. Therefore, all the cash
      transaction made treated as her income from undisclosed
      sources.

      In view of the above, I have reason to believe that
      assessment Ms. Megha Gupta, PAN ALBPG3147A has
      escaped her income of Rs. 21,00,000/-. The income of
      Rs. 21,0,000/- is escaped assessment within the
                                      13
                                                                  ITA No.-1273/Del/2018


   meaning    of   section   147(b)        and   is   to   be   taxed
   accordingly."

6.1 After perusing the aforesaid reasons recorded, I find that it is a
case where action has been taken mechanically on the basis of
information received from investigation wing, and, not on an
independent application of mind and therefore on this ground too,
the proceedings are without jurisdiction. It is apparent from the
fact that according to the AO, Investigation Wing has informed that
assessee has paid cash of Rs. 21,00,000/- for admission in the
course of MBBS to Santosh Medical College, Ghaziabad. It has
been further noted that the assessee has not filed return of income
for the relevant assessment year i.e. Assessment year 2007-08
and, AO has invoked section 148 of the Act to verify the source of
cash paid of Rs. 21,00,000/-. Thus, the AO has acted mechanically
and without any independent application of mind. It is also evident
that while alleging cash payment of Rs. 21 lacs it is not even
known or stated on which date and on what basis such sums was
allegedly paid by assessee; the reasons recorded are therefore
vague, highly non specific and reflect complete non-application of
mind. That reasons recorded are 'reason to suspect' and, is a mere
attempt to carry out fishing and roving expedition. It is also noted
that in the absence of specific and incriminating material much
less tangible and, relevant material to form even prime facie belief
that there was alleged payment of Rs. 21,00,000/- is also apparent
from the fact that the alleged document found and seized during
the course of search/survey action u/s 132/133A of the Act does
not reflect any figure of Rs. 21 lacs and in the absence of any
independent enquiry or examination of facts on record or noticing
the content of alleged documents in the reasons recorded and,
reasons being silent as to the specific facts, the vague allegation
                                         14
                                                                ITA No.-1273/Del/2018


     shows that action has been taken mechanically on the basis of
     alleged report of investigation wing, and, not on independent
     application of mind and therefore on this ground too, the
     proceedings are without jurisdiction. It is also noted that there is
     no live link or direct nexus between alleged material and,
     inference. It is a case of investigation in the garb of action u/s 148
     of the Act on the basis that proceedings have been initiated on the
     basis of no material much less any tangible and, relevant material
     and as such reasons record do not constitute valid reason to
     believe for initiating proceedings u/s 147 of the Act. In this regard,
     I draw support from the decision of the Hon'ble Supreme
     Court 320 ITR 561 (SC) CIT vs Kelvinator of India Ltd. It is further
     noted that initiation of proceedings is also based on non
     application of mind much less independent application of mind but
     is a case of borrowed satisfaction. To support this view, I draw
     support from the following decisions:-

i) 384 ITR 147 (Del) Pr. CIT v. G&G Pharma India Ltd. (introduction of share
capital)

           "Today when the case was called out, Mr. Sawhney produced
           before the Court the very same letter of the AO dated 15th
           September 2010 which has been reproduced in its entirely in the
           impugned order of the ITAT. He submitted that the AO was
           himself present in the Court and further efforts would be made
           to locate the materials on the basis of which the AO formed his
           opinion regarding reopening of the assessment. The Court was
           not prepared to grant further time for this purpose since it was
           not clear that the materials were, in fact, available with the
           Department. In the present case, after setting out four entries,
           stated to have been received by the Assessee on a single date
           i.e. 10th February 2003, from four entities which were termed as
                                        15
                                                                ITA No.-1273/Del/2018







        accommodation entries, which information was given to him by
        the Directorate of Investigation, the AO stated: I have also
        perused various materials and report from Investigation Wing
        and on that basis it is evident that the assessee company has
        introduced its own unaccounted money in its bank account by
        way of above accommodation entries." The above conclusion is
        unhelpful in understanding whether the AO applied his mind to
        the materials that he talks about particularly since he did not
        describe what those materials were. Once the date on which the
        so called accommodation entries were provided is known, it
        would not have been difficult for the AO, 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 14th November 2004 and was processed
        under Section 143(3) of the Act. Without forming a prima facie
        opinion, on the basis of such material, it was not possible for the
        AO 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". In the considered view of the
        Court, in light of the law explained with sufficient clarity by the
        Supreme Court in the decisions discussed hereinbefore, the basic
        requirement that the AO must apply his mind to the materials in
        order to have reasons to believe that the income of the Assessee
        escaped assessment is missing in the present case."

ii) 395 ITR 677 (Del) Pr. CIT v. Meenakshi Overseas (P) Ltd. v. ITO

        "36. In the present case, as already noticed, the reasons to
       believe contain not the reasons but the conclusions of the AO one
       after the other. There is no independent application of mind by the
       AO to the tangible material which forms the basis of the reasons
                                         16
                                                                  ITA No.-1273/Del/2018


       to believe that income has escaped assessment. The conclusions
       of the AO are at best a reproduction of the conclusion in the
       investigation report. Indeed it is a 'borrowed satisfaction'. The
       reasons fail to demonstrate the link between the tangible material
       and the formation of the reason to believe that income has
       escaped assessment.

       37. For the aforementioned reasons, the Court is satisfied that in
       the facts and circumstances of the case, no error has been
       committed by the ITAT in the impugned order in concluding that
       the initiation of the proceedings under Section 147/148 of the Act
       to reopen the assessments for the AYs in question does not satisfy
       the requirement of law.

       38. The question framed is answered in the negative, i.e., in
       favour of the Assessee and against the Revenue. The appeal is,
       accordingly, dismissed but with no orders as to costs.

iii) 396 ITR 5 (Del) Pro CIT v. RMG Plyvinyl (I) Ltd.

      11. There can be no manner of doubt that in the instant there was
      a failure of application of mind by the AO to the facts. In fact he
      proceeded on two wrong premises - one regarding alleged non-
      filing of the return and the other regarding the extent of the so-
      called accommodation entries.

      12. Recently, in its decision dated 26th May, 2017 in ITA
      NO.692/20l6     (Principal   Commissioner     of   Income   Tax-6     v.
      Meenakshi Overseas Pvt.

      Ltd.), this Court discussed the legal position regarding reopening of
      assessments where the return filed at the initial stage was
      processed under Section 143(1) of the Act awl not under Section
                                 17
                                                         ITA No.-1273/Del/2018


143(3) of the Act. The reasons for the reopening of the assessment
in that case were more or less similar to the reasons in the present
case, viz., information was received from the Investigation Wing
regarding    accommodation    entries   provided   by   a   'known'
accommodation entry provider.

There, on facts, the Court came to the conclusion that the reasons
were, in fact, in the form of conclusions "one after the other" and
that the satisfaction arrived at by the AO was a "borrowed
satisfaction" and at best "a reproduction of the conclusion in the
investigation report."

13. As in the above case, even in the present case, the Court is
unable to discern the link between the tangible material and the
formation of the reasons to believe that income had escaped
assessment. In the present case too, the information received from
the Investigation Wing cannot be said to be tangible material per se
without a further inquiry being undertaken by the AO. In the
present case the AO deprived himself of that opportunity by
proceeding on the erroneous premise that Assessee had not filed a
return when in fact it had.

14. To compound matters further the in the assessment order the
AO has, instead of adding a sum of 78 lakh, even going by the
reasons for reopening of the assessment, added a sum of Rs.1.13
crore. On what basis such an addition was made has not been
explained.

15. For the aforementioned reasons, the Court is satisfied that no
error was committed by the ITAT in holding that reopening of the
assessment under Section 147 of the Act was bad in law."
                                      18
                                                             ITA No.-1273/Del/2018


   6.2 Keeping in view of the facts and circumstances of the case as
   explained above and respectfully following the precedents, as
   aforesaid, the proceedings initiated by invoking the provisions
   of section 147 of the Act by the AO and upheld by the Ld. CIT(A) are
   nonest in law and without jurisdiction, hence, the assessment is
   quashed. Since I have already quashed the assessment, the other
   grounds have become academic and are therefore not adjudicated
   and accordingly, the assessee's appeal is allowed."




13. The facts of the case in hand are identical to the facts

considered by the Co-ordinate Benches (supra).                      Therefore,

respectfully following the findings of the Co-ordinate Benches, I am

of the considered view that the proceedings initiated by invoking

provisions of Section 147 of the Act are non east of law and without

jurisdiction.    Hence, the assessment is quashed.                  Since, the

assessment order has been quashed by me.                    I do no find it

necessary to well into merits of the case.               Appeal filed by the

assessee is accordingly allowed.

14. In the result, appeal filed by the assessee is allowed.

Order pronounced in the open court on           22 .05.2019.

                                                             Sd/-

                                                  (N.K.BILLAIYA)
                                            ACCOUNTANT MEMBER
Dated:   22 .05.2019
                                        19
                                                               ITA No.-1273/Del/2018


R.N

Copy forwarded to:
  1.   Appellant
  2.   Respondent
  3.   CIT
  4.   CIT(Appeals)
  5.   DR: ITAT


                                                             ASSISTANT REGISTRAR
                                                                ITAT NEW DELHI




        Date of dictation                                21.05.2019

        Date on which the typed draft is placed before   21.05.2019
        the dictating Member
        Date on which the typed draft is placed before
        the Other Member

        Date on which the approved draft comes to
        the Sr. PS/PS

        Date on which the fair order is placed before
        the Dictating Member for pronouncement

        Date on which the fair order comes back to       22.05.2019
        the Sr. PS/PS
        Date on which the final order is uploaded on     22.05.2019
        the website of ITAT

        Date on which the file goes to the Bench Clerk 22.05.2019

        Date on which the file goes to the Head Clerk

        The date on which the file goes to the
        Assistant Registrar for signature on the order

        Date of dispatch of the Order
20
     ITA No.-1273/Del/2018

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