Case Law Details
We have considered the rival submissions carefully and perused the order of the AO and the CIT(A). In this case of the assessee original assessment was framed in scrutiny assessment u/s 143(3) of the Act. Thereafter the completed assessment was sought to be reopened by the AO by issuance of the notice u/s 148 on the assessee on basis of reopening of the two assessments of the assessee by way of reasons recorded by the AO that information was received from investigation wing of the department as a result of search and seizure operation carried out against one Shri S.K. Gupta group of cases that he has floated paper entities and these companies have no supportive infrastructure whatsoever to render services so disclosed in the business.
We find that even if the reasons recorded by the AO that Shri S.K. Gupta has floated paper entities in the form of companies to provide accommodation entries to various persons is taken as correct, the same could not be made the basis for reopening the assessments of the appellant company before us till the revenue has some material brought on record to connect the act of providing accommodation entries by the said Shri S.K. Gupta group of companies with the appellant company. In the case before us the department has failed to provide any material to connect the assessee company with the so called paper entities floated by Shri S.K. Gupta. We find that CIT(A) vide his direction u/s 250(4) of the Act dated 27.2.2012 addressed to the AO has specifically mentioned that he was unable to find any reference of the transaction with the appellant company M/s. PCI Limited in the copy of sworn statement of Shri S.K. Gupta supplied to the office of the CIT(A). The AO was requested in the direction dated 27.2.2012 to verify the duly sworn statement and intimate whether any reference to the transactions with M/s PCI Limited in these sworn statements of Shri S.K. Gupta was there. The CIT(A) in para 2 of the direction dated 27.2.2012 recorded that it appears that no enquires were conducted in the address of both M/s Globex Tech India Ltd. and M/s. BT Tech Net Ltd.( group companies of Shri S.K. Gupta). The CIT(A) has further directed to depute the inspector to carry out necessary enquires etc. and the assessee may be asked to furnish copies of the bank account, details of the persons who have verified these payments etc. The AO has filed a detailed remand report dated 4.7.2012 admitting that the action u/s 147 of the Act was taken in the assessee’s case on the basis of information received from the investigation wing. The AO further submitted in the remand report that the copy of statement of Shri S.K. Gupta as recorded in the investigation wing and forwarded to CIT(A)’s office is presently not available in this office record. He further submitted that Shri S.K. Gupta has floated a number of paper concerns/entities and each concern gave huge number of accommodation entries of different natures to number of interested persons. He further recorded in his remand report the total of such entries / recipients parties was running into thousands and therefore it was certainly not possible for Shri S.K. Gupta to name each such recipients / transactions in his statement.
We find that the CIT(A) has categorically recorded in his direction u/s 250 (4) dated 27.2.2012 that he was unable to find any reference to the transaction with M/s. PCI Ltd. ( the appellant) in the copy of the sworn statement supplied to this office. This finding of the CIT(A) recorded in his direction u/s 250(4) dated 27.2.2012 could not be controverted by the revenue. The AO in his remand report dated 4.7.2012 has admitted that the statement of Shri S.K. Gupta as recorded by the investigation wing was presently not available in his office record. In these facts of the case we are unable to uphold the action of the AO in reopening the assessment by issuance of notice u/s 148 as the department has failed to connect the name of the appellant before us with the statements of the socalled entry provider Shri S.K. Gupta . According to the AO the statements of Shri S.K. Gupta as recorded by the investigation wing of the department were not available in his office. The CIT(A) has already held that he was unable to find any reference to the transaction with the appellant company M/s. PCI Ltd. in the copy of the sworn statements of Shri S.K. Gupta supplied to his office. Accordingly the reasons recorded by the AO for reopening the assessment u/s 148 were based on no material and are clearly unsustainable. In this view of the mater we hold that there was no valid reason with the AO to reopen the assessment for the relevant assessment years and accordingly the jurisdiction u/s 147 / 148 of the Act was wrongly assumed by the AO and the reopening is held void and the reassessment framed for both the relevant assessment years are cancelled and the grounds of appeal of the assessee relating to the legal issue of reopening of assessment for both the assessment years are allowed. In view of our decision holding that reopening of assessment in both the assessment years was void , we are not adjudicating the other grounds of appeal on merits of the additions made by the AO.
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