|CORAM:||K. Narasimha Chary (JM), Prashant Maharishi (AM)|
|CATCH WORDS:||application of mind, bogus accomodation entries, Reopening of assessment|
|COUNSEL:||Prakash Chand Yadav|
|DATE:||April 6, 2018 (Date of pronouncement)|
|DATE:||April 19, 2018 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 147 Reopening: Passing the reassessment order before the expiry of 4 weeks of passing the order of objections renders the reassessment order void. Also, if the reasons state “bogus accommodation entries were provided/taken” and it is not clear whether the assessee has received or provided accommodation entries, it means there is no application of mind by the AO while recording reasons|
(i) In view of the decision of the Hon’ble Bombay High Court in the case of Bharat Jayantilal Patel vs. UOI (2015) 378 ITR 596 (Bom), learned AO held should have allowed four weeks’ time to the assessee to seek their legal remedies after rejection of the objections of the assessee. In view of the fact that the AO has disposed of the objections of the assessee on 22.11.11 and passed the assessment order on 19.12.2011, it is clear that no such time was granted to the assessee.
(ii) Further, the reasons recorded at the time of assumption of jurisdiction by the AO that the assessee has received an accommodation entry of Rs.15 lacs whereas at the time of framing of assessment, the assessee was assessed the share application money to the tune of Rs.2.15 crores.
(iii) We find reason in the submission of learned AR that in view of the decision in PCIT vs. RMG Polyvinyl (I) Ltd.386 ITR 5 (Bom), such an error indicates non application of mind by the learned AO. 10. Above all as submitted by the learned AR, the reasons recorded by the learned AO do not suggest whether the assessee has received or provided the accommodation entries inasmuch as the reasons read that “bogus accommodation entries were provided/taken”.
(iv) This clearly shows that the Investigation Wing had not analyzed the transaction of the accommodation entries prior to the Asstt. Year 2005-06 whereas the present case pertains to the Assessment Year 2004-05. Even the order of the learned AO does not reveal that he had undertaken any such exercise before the recording of the reasons. The reasons recorded do not specify the other party, who either received or provided the accommodation entries and they also do not establish the involvement of the assessee in the information unearthed by the Income-tax Department in respect of the huge money laundering mechanism.
(v) All these things, according to us, do not inspire any confidence in our mind to hold that the learned AO has reached any conscious decision that any income of the assessee has escaped assessment and the modus operandi thereof. We, therefore, while respectfully following the decision of the coordinate bench of the Tribunal in MRY Auto Components Ltd. (supra) hold that the satisfaction of the learned AO is not based on any sound reasoning and on that ground, we hold that the reopening of assessment is bad. Since we reached a conclusion that the reopening proceedings are bad in law and on facts, we do not propose to delve deeper into the merits of the case, suffice it to say that the assessment order dated 19.12.2011 is not legal or binding.