Accommodation entry: Reassessment based on mere inquiry in case of 3rd party not justified

M/s Sharmilee Furnishing P. Ltd Vs. I.T.O (ITAT Delhi)

There is no dispute to the fact that the department conducted inquiry in the case of third party where the name of the assessee was also written to have received accommodation entry and accordingly, the AO reached to a conclusion while recording reasons that the income of the assessee has escaped assessment and it is a fit case for initiation of proceedings u/s 148 of the Act and the case was selected for scrutiny and assessment was made by making necessary additions.

The information in list of beneficiary did not indicate escapement of any income. The Assessing officer did not examine and conduct any inquiry on this information provided by ADIT (Inv.) and did not verify the correctness of the same but accepted the information in mechanical The Assessing officer reproduced the same information in the reasons even without satisfying himself about the correctness or otherwise of the report and issued notice xx] s 148 was for escapement of income. There is no reference to any document except list of beneficiaries which could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income.