IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI INTURI RAMA RAO ITA No. 54/Del/2015 Ass

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI INTURI RAMA RAO ITA No. 54/Del/2015 Assessment Years: 2005-06 Advance India Projects Ltd., vs. Assistant CIT, 232B, 3 rd Floor, Okhla Ind. Est Central Circle-10, New Delhi. (PAN: AACCA9859J) (Appellant) New Delhi. (Respondent) ITA Nos. 55 & 56/Del/2015 Assessment Years: 2005-06 Advance India Projects Ltd., vs. Assistant CIT, (In the matter of Amalgamated Co. M/s. Maggpie Projects (P) Ltd., 232B, 3 rd Floor, Okhla Ind. Estate, New Delhi. (PAN: AACCA9859J) (Appellant) Central Circle-10, New Delhi. (Respondent) Appellant by: Shri V.K. Aggarwal, AR Respondent by: Shri Ravi Jain, CIT(DR) Date of hearing : 08.07.2015 Date of pronouncement: 14:08.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER In the above three appeals, ITA Nos.55 and 56/Del/2015 are related to amalgamated company Mallard Projects (P) Ltd. and ITA No. 54/Del/2015 is related to Advance India Projects Ltd., all for the same assessment year 2005-06. Their respective grounds raised by the assessee against the First

2 Appellate Order are being reproduced while dealing with each of these appeals: Ground in ITA No.54/Del/2015: 1. Under the facts and circumstances of the case, the appellate order passed by the Learned CIT(Appeals) is illegal being against the principles of natural justice and against the provisions of Incometax Act, 1961. 2. The Learned CIT(Appeals) has grossly erred on facts as well as in law in holding that notice u/s. 148 is legally valid. 3. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that the notice u/s. 148 is ab-initio void because the Ld. A.O. had not taken the approval from CIT u/s. 151 before issue of such notice though the assessment reopened was completed u/s. 143(3). 4. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that no action u/s.147/148 can be taken against the assessment completed u/s. 153A/143(3). 5. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that no addition can be made while completing assessment u/s. 153A/148/143(3) as no incriminating document was found during the course of search and no assessment proceeding was pending on the date of search. 6. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that the reasons recorded do not indicate any satisfaction of the Ld. A.O. that there is any escapement of income

3 due to failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. 7. The Learned CIT(Appeals) has grossly erred on facts as well as in law in confirming the addition of Rs.45,00,000 on account of investment in shares of the assessee. 8. The Learned CIT(Appeals) has grossly erred on facts as well as in law in rejecting the additional documents filed before her though they were only clarificatory in nature and in public domain which do not require any application u/s. 46A. 9. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that cross examination of Mr. S.K. Gupta was not provided by the Ld. A.O. inspite of the specific request vide letter dated 19.03.2013. 10. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that the Ld. A.O. neither provided the statement of Sh.S.K. Gupta to the assessee nor other documents used against the assessee. 11. The appellant craves to add, alter, modify and withdraw any ground of appeal before or during the appellate proceedings. Besides the above grounds, the assessee has also moved application for admission of the following proposed additional ground: The impugned assessment order u/s. 147/143(3) dated 26.03.2013 is illegal and without proper jurisdiction as notice u/s. 143(2) was not issued and therefore, it deserves to be annulled.

4 2. The Learned AR submitted that the issue raised in the additional ground is legal in nature which goes to the root of the matter and adjudication of which does not require consideration of fresh material. The Learned AR submitted further that though in the ground Nos. 2 to 6, the assessee has already questioned the validity of issuance of notice under sec. 148 of the Act and the assessment framed in consequence thereto but still to avoid any technical difficulty on specific contention regarding validity of assessment in absence of notice issued under sec. 143(2) of the Act has been raised. 3. The learned CIT(DR) on the other hand objected the application. 4. Considering the above submission that the issue raised is legal in nature which goes to the root of the mater and adjudication of issue raised in the additional ground does not require consideration of fresh material outside the record, we allow the application and in result additional ground is admitted for our adjudication. We will deal with it along with ground Nos. 2 to 6 in the succeeding paragraphs. 5. The relevant facts are that the assessee engaged in real estate business had filed its return of income at Rs.9,68,170 which was processed under sec. 143(1) of the Act. Search was conducted on 18.1.2007 and assessment was

5 framed under sec. 153A/143(3) of the Income-tax Act, 1961 on 31.12.2008 on the same income. On 30.3.2012, notice under sec. 148 of the Act was issued and reasons recorded were supplied to the assessee on 11.02.2013. The assessee filed objections on 08.03.2013 which were rejected on the same day. Thereafter, notice under sec. 142(1) of the Act was issued on 11.3.2013 along with query regarding investment of Rs.45 lacs and the reassessment was completed on 26.3.2013 under sec. 147/143(3) of the Act. In this reassessment, the Assessing Officer made an addition of Rs.45 lacs under sec. 68 of the Act on account of alleged accommodation entries in respect of investment in the share capital. 6. In ground No.1, the assessee has raised the issue of violation of principles of natural justice and the provisions of Income-tax Act, 1961. No argument has been advanced against the violation of principle of natural justice by the Learned CIT(Appeals). It is according subjected. So far as violation of the provisions of the Income-tax Act, 1961 is concerned, it is general in nature and does not need an independent adjudication. 7. In support of ground Nos. 2 to 6 and the additional ground on the issue of validity of notice issued under sec. 148 and the assessment framed in furtherance thereto, the Learned AR submitted that notice under sec. 148

6 was issued on 30.3.2012 i.e. after the expiry of four years from the end of the assessment year 2005-06. The Assessing Officer under sec. 151(1) of the Act was required to obtain approval from the CIT before issuance of notice under sec. 148 of the Act which was not obtained. The Learned CIT(Appeals) had called for the assessment record and after examining it, he came to the conclusion that the approval was obtained from Additional CIT. Notice issued under sec. 148 was thus without jurisdiction. In support, he placed reliance on the decision of Hon'ble Bombay High Court in the case of Smt. Suman Waman Chaudhary, ITA No. 398 of 2001 judgment dated 12.2.2008 holding that the notice issued under sec. 148 was without jurisdiction for want of prior approval of the concerned authority under sec. 151(2) of the Act. He pointed out that SLP preferred by the Revenue against this decision has been rejected by the Hon'ble Supreme Court on 16.3.2009 in SLP(C) No. 6757 of 2009. 8. The Learned AR submitted further that in the reasons recorded, the Assessing Officer had not indicated that income has escaped assessment by reasons of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment which is a pre-condition as per proviso to section 147 of the Act. There is also no whisper in the purported

7 reasons of the assessee having failed to disclose fully and truly all the material facts necessary for its assessment. The notice issued under sec. 148 of the Act was thus without jurisdiction in view of this provision as well. He placed reliance on the following decisions: i) EI Dupont India Pvt. Ltd. vs. DCIT 213- TIOL- 145- S.C- Del; ii) Shivalik Bimetal Ltd. vs. ITO 213-TIOL-75-S.C-Del; iii) Rural Electrification Corporation Ltd. vs. CIT 213 TIOL- 366-Hon'ble High Court-Del & Ors. 9. The Learned AR contended further that reasons to belief based on confession from creditors without naming the assessee cannot lead to reasons to belief that income has escaped in the case of the assessee. In support, he placed reliance on the decision of Hon'ble Supreme Court in the case of ITO vs. Lakhmani Mewal Das (1976) -130 ITR 437 (S.C) and others. 10. The Learned AR contended that once search has been conducted and all the escaped income has been taxed under sec. 153A of the Act, there does not remain any scope for invocation of section 147 of the Act. He submitted that perusal of the reasons indicate that notice under sec. 148 has been issued in a mechanical manner on the basis of vague information from Investigation

8 Wing as the information is so vague that it does not even mention the names and addresses of the entities providing the so-called accommodation entries and the purpose for which they were provided i.e. loan, gift, investment etc. There is no reference to any corroborative material in the possession of the Assessing Officer. He has not mentioned any material which led him to belief that the information received, is based on some relevant material and the income has escaped assessment. He cited following decisions in support: i) G & G Pharma India Ltd. vs. ITO (2015) TIOL-191-ITAT- Delhi; ii) Signatures Hotel (P) Ltd. vs. ITO (2011) 338 ITR 51 (Del.); iii) CIT vs. Atul Jain (2008) 299 ITR 383 (Del.). iv )Smt. Shakuntala Devi ITA No. 3751/Del/2011- Order dated 20.4.2012; v ) Sardhak Security Co. (P) Ltd. vs. ITO-329 ITR 110 (Delhi); & vi) CIT vs. SFIL Stock Broking Ltd. (2010)- 325 ITR 258 (Del.) 11. The Learned AR submitted that such a vague information as indicated in the reasons recorded, may lead the Assessing Officer to have reasons to suspect but cannot lead him to have reasons to belief because the information does not provide even the names and addresses of the entities

9 which gave the alleged accommodation entries. In support, he placed reliance on the decisions in the case of CIT vs. Gupta Abhushan Pvt. Ltd. (2009) 312 ITR 166 (Del.) and Ors. 12. The Learned AR contended further that the reassessment order under sec. 147/143(3) of the Act is illegal as notice under sec. 143(2) was never issued, which is mandatory. He cited following decisions in support: i) ACIT vs. Hotel Bluemoon (2010) 321 ITR 362 (S.C); ii) B.R. Arora vs. ACIT (2014) TIOL- 491-ITAT-Del.; iii) Mohinder Kumar Chhabra Vs. ITO (2014) 31 ITR (Trib.) 93 (Del.); iv) Gr. Noida Industrial Dev. Authority vs. ACIT (2015) TIOL 227 ITAT- (Del.); 13. The Learned DR on the other hand tried to justify the orders of the authorities below on the issue of validity of notice issued under sec. 148 of the Act and the assessment framed in furtherance thereto under sec. 147/143(3) of the Act. He submitted that statements of Mr. S.K. Gupta were recorded during the course of survey based upon which reasons to belief have been formed. Thus, it cannot be said that the information received by the Assessing Officer from the investigating wing of the department, that the income has escaped assessment, was not vague. In support, he placed reliance on the following decisions:

10 i) OPG Metal vs. Finsec Ltd. vs. CIT (2014) 41 Taxman.com 21 (Del.); ii) Money Growth Investment & Consultants (P) Ltd. vs ITO (2012)- 21 Taxman.com 438 (Del.); iii) AGR Investment Ltd. vs. Addl. CIT (2011) 333 ITR 146 (Del.); He submitted further that as per the cited decisions by the Learned AR, the Assessing Officer has to demonstrate that there was failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessments and it is not required that the Assessing Officer should write it in specific phraseology that assessee has failed to disclose fully and truly all the material facts necessary for its assessment while recording reasons to belief. 14. Considering the above submissions on the issue of validity of the initiation of reopening proceedings, we find that the conclusion of the ld CIT(A) at Page No.19 of the First Appellate Order that the approval was obtained from the Additional CIT, has not been rebutted by the revenue. The contention of the assessee in this regard remained that under the provisions of Section 151(1) of the IT Act, the Assessing Officer was required to obtain approval from the CIT before issue of notice u/s 148 which was not taken. In

11 support the decision of the Hon ble Bombay High Court in the case of Smt. Suman Waman Choudhury (supra) approved by the Hon ble Supreme Court in SLP (C) No.6757 of 2009 judgment dated 16.03.2009 has been cited by the Learned AR, holding that the notice was without jurisdiction for want of prior approval of the concerned authority u/s 151(2) of the Act. Admittedly in the present case before us prior approval of the prescribed authority i.e. Commissioner of Income Tax has not been obtained before issuance of notice u/s 148 of the Act. Hence, we respectfully following the ratio laid down in the cited decision in the case Smt. Suman Waman Choudhury (supra) hold that the notice u/s 148 of the Act issued in the present case was without jurisdiction hence the assessment framed in furtherance thereto is void ab inito and is thus quashed. 14. We also find substance in the contention of the ld AR that the Assessing Officer had issued notice u/s 148 of the Act only on the basis of borrowed satisfaction of the ACIT and not on the basis of his own satisfaction because he has simply mentioned perusal of information received from ACIT, CC-22, vide letter No, it came to notice that the above named assessee has received accommodation entries from Shri SK

12 Gupta without any verification. For a ready reference, the reasons recorded are being reproduced hereunder: Perusal of information received from ACIT, Central Circle- 22, vide letter no. ACIT/CC-22/2011-12/491 Dated 29.03.2012, it came to notice that the above named the assessee has received accommodation entries from Sh. S.K. Gupta. A survey u/s. 133A of the I.T.Act, was conducted by the Investigation Wing of the offices of Sh. S.K. Gupta chartered accountant and his companies on 20.11.2007. During the course of survey operation, Sh. S.K. Gupta found to have been indulged in providing accommodation entries to different parties through the bank cheques operated by him in the name of different companies, individual and others. In his statement recorded during the course of search as well as appellate proceedings Sh.S.K. Gupta had admitted on oath that he had provides accommodation entries to the beneficiaries after receiving equivalent amount of cash from them. The details of accommodation entries received by the above named assessee from Sh.S.K. Gupta is as under: S.No. Date Cheque No. Amount 1 30.03.2005 000010 2000000 2 29.03.2005 772504 2000000 In the light of above information, it is clear that the credit entries appearing in the assessee s books of account to the extent mentioned above are not

13 genuine and assessee has introduced its own undisclosed income rooting it through the accommodation entry operator Sh.S.K. Gupta by giving him cash and accepting cheques in lieu of the Act. I, therefore, have reason to believe that the income chargeable to tax amounting to Rs.40,00,000 has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961. The assessee has contended that vide letter dated 08.03.2013 it had requested the Assessing Officer to provide the following information to the assessee, but the Assessing Officer did not provide the required information, which suggests that the Assessing Officer did not have any corroborative evidence: i) The letter dated 27.03.2012 received from the office of ACIT, Central-22, New Delhi ii) The documentary evidence and basis on which such opinion is formed by ACIT, Central-22, New Delhi iii) How such documents are verified by you and what sort of enquiry was made prior to issuance of notice under section 148 iv) Result of the enquiry made be communicated upon the basis of which it is inferred by you that the income already assessed under section 143(3) required Revenue-assessment under section 148 after the expiry of 4 years.

14 15. The contention of the ld AR remained that the information received from the Investigating Wing which was passed to the Assessing Officer is vague and he does not even mention the names and addresses of the entities providing the so called accommodation entries and the purposes for which they were provided, i.e. loan, gift, investment etc. There is no reference to any corroborative material in the possession of the Assessing Officer. He has not mentioned any material, which has led him to believe that the information received is based on some relevant material and the income has escaped assessment. Several decisions of Hon ble jurisdictional Delhi High Court have been cited in support by the ld AR propounding a ratio that basis of the believe should be discernible from the material on record which was available with the Assessing Officer when he recorded the reason. There should be a link between the reasons and the material available with the Assessing Officer. The Assessing Officer will apply his own mind to the information and examine the basis of the information. He will not accept the information in a mechanical manner. In the present case before us we find that the Assessing Officer did not bother himself to verify the correctness of the information received by him but merely accepted the truth of the information in a mechanical manner. What sort of enquiry or verification of information received by him from the Investigation Wing of the Department

15 was made by the Assessing Officer prior to issuance of notice u/s 148 and the result of such enquiry has not been made available even on the request of the assessee to the Assessing Officer vide letter dated 08.03.2013. We thus find substance in the contention of the assessee that in absence of any reference to any corroborative material in the possession of the Assessing Officer leading him to believe that the information received was based on some relevant material and the income has escaped assessment, the Assessing Officer had issued notice u/s 148 in a mechanical manner on the basis of vague information from the investigation wing of the department. The assessee thus succeeds on this contention as well to arrive at a conclusion that notice issued u/s 148 was not valid. 16. The further contention of the ld AR on the validity of the assessment framed u/s 147/143(3) also remained that notice u/s 143(2) was never issued. In support assessment order itself was referred wherein no where it has been mentioned that notice u/s 143(2) was issued. There is no dispute that it is mandatory to issue notice u/s 143(2) of the Act for framing of a valid assessment u/s 143(3) of the Act and this proposition is well supported by several decision including decision of the Hon ble Supreme Court in the case of ACIT Vs. Hotel Blue Moon (supra) cited by the ld AR. Respectfully

16 following the ratio laid down in this case of the Hon ble Supreme Court we concur with the contention of the assessee and hold that in absence of issuance of notice u/s 143(2) of the Act, the assessment in question framed u/s 147/ 143(3) of the Act is void ab initio. 17. In view of above finding, the initiation of reopening proceeding, acquisition of jurisdiction by the Assessing Officer for the proceedings and the assessment framed in furtherance to the said invalid notice u/s 148 of the Act is held invalid on counts discussed above. In view of this finding, other contentions do not need adjudication. The issues raised in this regard in Ground Nos. 2 to 6 and additional grounds to the above extent are accordingly allowed. 18. In view of above findings on the validity of the very assessment itself, the other grounds questioning the additions upheld by the ld CIT(A) have become infructuous and academic only. These grounds thus do not need any adjudication. 19. In the result appeal is allowed. ITA No. 55/Del/2015: 20. The assessee has questioned First Appellate Order on the following grounds:

17 1. Under the facts and circumstances of the case, the appellate order passed by the Learned CIT(Appeals) is illegal being against the principles of natural justice and against the provisions of Income-tax Act, 1961. 2. The Learned CIT(Appeals) has grossly erred on facts as well as in holding that notice u/s. 148 is legally valid. 3. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that notice u/s. 148 was issued without any application of mind by the Ld. A.O. as reasons recorded clearly indicate repeated entries to the extent of Rs.40,00,000. 4. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that notice u/s. 148 is ab-initio void because the Ld. A.O. had not taken the approval from JCIT u/s. 151(2) before issue of such notice though the assessment re-opened was completed u/s. 143(1). 5. The Learned CIT(Appeals) has grossly erred on facts as well as in law in confirming the addition of Rs.2,00,00,000 on account of investment in shares of the assessee. 6. The Learned CIT(Appeals) has grossly erred on facts as well as in law in rejecting the additional documents filed before her though they were only clarificatory in nature and in public domain which do not require any application u/s.46a. 7. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that cross-examination of Mr. S.K. Gupta was not provided by the Ld. A.O. inspite of the specific request vide letter dated 19.03.2013. 8. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that the Ld. A.O. neither provided the statement of Sh.S.K. Gupta to the assessee nor other documents used against the assessee. 9. The appellant craves to add, alter, modify and withdraw any ground of appeal before or during the appellate proceedings.

18 Besides above grounds, the assessee has also raised following proposed additional ground vide application dated 27.2.2015 praying admission thereof: The impugned assessment order u/s. 147/143(3) dated 26.3.2013 is illegal and without proper jurisdiction as notices u/s. 148 as well as u/s. 143(2) were not issued and also there was noncompliance u/s. 143(3) in as much as the sum payable by the assessee on the basis of assessment was not determined and therefore, it deserves to be annulled. 21. The Learned AR submitted that the issue raised in the additional ground is legal in nature which goes to the root of the matter and adjudication of which does not require consideration of fresh material. The Learned AR submitted further that though in the ground Nos. 2 to 6, the assessee has already questioned the validity of issuance of notice under sec. 148 of the Act and the assessment framed in consequence thereto but still to avoid any technical difficulty on specific contention regarding validity of assessment in absence of notices issued under sec. 148 as well as sec. 143(2) of the Act has been raised. 22. The learned CIT(DR) on the other hand objected the application. 23. Considering the above submission that the issue raised is legal in nature which goes to the root of the mater and adjudication of issue raised in the additional ground does not require consideration of fresh material

19 outside the record, we allow the application and in result additional ground is admitted for our adjudication. We will deal with it along with ground Nos. 2 to 4 in the succeeding paragraphs. 24. In ground No.1, the assessee has raised the issue of violation of principles of natural justice and the provisions of Income-tax Act, 1961. No argument has been advanced against the violation of principle of natural justice by the Learned CIT(Appeals). It is according subjected. So far as violation of the provisions of the Income-tax Act, 1961 is concerned, it is general in nature and does not need an independent adjudication. Ground Nos. 2 to 4: 25. In support of these grounds, the Learned AR raised several contentions regarding the validity of notice issued under sec. 148, acquisition of jurisdiction by the Assessing Officer to initiate reopening proceedings and validity of the assessment framed under sec. 147/143(2) of the Act. His first contention remained regarding the maintainability of the notice issued under sec. 148 of the Act on a non-existent assessee. He submitted that notice under sec. 148 of the Act was issued on 30.3.2012 on Magpie Projects Pvt. Ltd. which did not exist as it got amalgamated w.e.f.

20 01.04.2011 with Advance India Projects Ltd. He contended that it is now well settled proposition of law that notice on non-existent company is illegal. In support, he placed reliance on the following decisions: i) Saraswati Industrial Syndicate Ltd. Vs. CIT 2002 TIOL 1048- S.C-IT-LB; ii) iii) Computer Engineering Services India (P) Ltd. vs. ACIT ITA No. 5874/Del/2013 order dated 29.5.2015; CIT vs. Micron Steels Pvt. Ltd. 2015 TIOL S.C- DEL-IT; 26. The Learned AR submitted further that once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of sec. 292B of the Act. A jurisdictional defect such as nullity shakes the entire proceedings and does not rendered the order a mere irregularity. In support, he placed reliance on the following decisions: i) Spice Entertainment Ltd. vs. Commissioner of Service-tax- 2011- TIOL-971-S.C-Del-IT; ii) CIT vs. Norton Motors 275 ITR 595. The Learned AR pointed out the above issue of non-existent company was also raised before the Learned CIT(Appeals) supported with evidence

21 including approval by the Hon'ble High Court of Delhi on 29.3.2012 on the scheme of amalgamation but the assessee could not succeed. 27. The Learned AR contended further that the notice issued under sec. 148 of the Act on the basis of borrowed satisfaction of the investigation wing is also not valid in absence of his own satisfaction of the Assessing Officer. The Assessing Officer in the present case has simply mentioned perusal of information received from ACIT, CC-22, vide letter No.., is came to notice that the above named assessee has received accommodation entries from Shri S.K. Gupta, without any verification. In support he placed reliance on the following decisions: i) CIT vs. Shri Rajasthan Syntex Ltd. (2009) 313 ITR 231 (Raj.); ii) ITO vs. Vijender Kumar (2012) 67 DTR(Del) (Trib.) 283. 28. The Learned AR contended further that the expression reasons to believe has been explained by the Hon'ble Supreme Court in the case of ITO vs. Lakhmani Mewal Das (1976) 103 ITR 437 (S.C) holding that if the confession from the creditors does not name the assessee, the confession cannot lead to reasons to believe that income has escaped in the case of the assessee.

22 29. Learned AR contended that there was no application of mind by the Assessing Officer before issuing notice under sec. 148 of the Act. The Assessing Officer vide letter dated 08.03.2013 was requested to provide the following information but no information/document was provided to the assessee and the Assessing Officer rejected the objection in haste and completed the assessment: i) The letter dated 27.03.2012 received from the office of ACIT, central-22, New Delhi. ii) The documentary evidence and basis on which such opinion is formed by ACIT, Central-22, New Delhi. iii) How such documents are verified by you and what sort of enquiry was made prior to issuance of notice under section 148. iv) Result of the enquiry made be communicated upon the basis of which it is inferred by you that the income already assessed under sec. 143(3) required reassessment order under sec. 148 after the expiry of 4 years. 30. The Learned AR submitted that the action of the Assessing Officer in not providing any information/document as mentioned above clearly proves that he did not have any corroborative evidence. He submitted that a perusal of reasons indicates that notice under sec. 148 has been issued in a

23 mechanical manner on the basis of vague information from ACIT, Central Circle-22. The Assessing Officer did not dwell upon the veracity and the basis of information received. As per reasons recorded, ACIT, Central Circle-22 received certain information from Investigation Wing which was passed on to him. The information is so vague that it does not even mention the names and addresses of the entities providing the so called accommodation entries and the purpose for which they were provided, i.e. loan, gift, investment etc. There is no reference to any corroborative material in the suggestion of A.O. He has not mentioned any material, which has led him to believe that information received, is based on some relevant material and the income has escaped assessment. Therefore, notice under sec. 148 is patently illegal. In support, he placed reliance on the following decisions: 1. ACIT vs. Shri Devesh Kumar 2015-TIOL-16-ITAT-Del; 2. C&G Pharma India Ltd. vs. ITO 2015-TIOL-ITAT-Del; 3. Signatures Hotel (P) Ltd. Vs. ITO (2011) 338 ITR 51 (Del.); 4. CIT vs. Atul Jain, 2008-299 ITR 383 (Del.); 5. Smt. Shakuntala Devi ITA No. 3751/Del/2011 order dated 20.4.2012; 6. Sharthak Security Co. (P) Ltd. vs. ITO 329 ITR 110 (Del.); 7. CIT vs. SFIL Stock Broking Ltd. (2010) 325 ITR 285 (Del.);

24 31. Learned AR submitted that the Learned CIT has also given the permission in a mechanical manner without giving any reasons for his satisfaction. He has not referred to any material on the basis of which he had arrived at the satisfaction. He placed reliance on the following decisions: i) The Central India Electric Supply Co. Ltd. vs. ITO ITA No. 17/1999 dated 28.01.2011 (Delhi High Court); ii) Arjun Singh vs. ADIT (2000)- 246 ITR 363 (MP); 32. The Learned AR submitted that notice under sec. 148 cannot be supported by any other fact than the reasons recorded. The reasons recorded cannot be supplemented later on even while rejecting the objections filed by the assessee. He placed reliance on the following decisions: i) Additional DIT vs. Indivest Pte. Ltd., SLP Civil No. 36562/2012 order dated 23.3.2013; ii) Northern Exim (P) Ltd. vs. DCIT- 2012 TIOL-220-S.C-Del- IT; iii) Prashant S. Joshi vs. ITO (2010) 1 Taxman.com 103 (Bom.) 33. The Learned AR contended that the reassessment order in question is illegal also because notice under sec. 143(2) was never issued before completing the reassessment. Reliance was placed on the following decisions:

25 1) Greater Noida Industrial Development Authority vs. ACIT- 2015-TIOL-227-ITAT-Del, order dated 9.1.2015; 2) CIT vs. Rajiv Sharma (2010) 192 Taxman 197 (All.); 3) Alpine Electronic Asia Pte Ltd. vs. DIT (2012) 18 Taxman.com 246 (Del.); 4) Mohinder Kumar Chhabra vs. ITO (2014) 31 ITR (Trib.)- 93 (Del); 5) ACIT vs. Hotel Blue Moon (2010)- 321 ITR 362 (S.C); 34. The learned CIT(DR) on the other hand tried to justify the validity of notice issued under sec. 148 and the assessment made in furtherance thereto. He submitted that investigation wing had informed about the indulgence of the assessee in the affair of accommodation entries on the basis of statement of Shri S.K. Aggarwal recorded during the course of survey. Thus, there was sufficient material to form reasons to believe on the part of the Assessing Officer to initiate reopening proceedings. In support, he placed reliance on the following decisions: i) OPG Metal vs. Finsec Ltd. vs. CIT (2014) 41 Taxman.com 21 (Del.); ii) Money Growth Investment & Consultants (P) Ltd. vs ITO (2012)- 21 Taxman.com 438 (Del.); iii) AGR Investment Ltd. vs. Addl. CIT (2011) 333 ITR 146 (Del.);

26 35. Considering the above submissions in view orders of the authorities below, material available on record and the decisions relied upon, we find substance in the above contentions of the Learned AR that notice issued under sec. 148 of the Act on non-existent company was illegal. The submissions of the fact in this regard by the Learned AR that Magpie Projects Pvt. Ltd. was amalgamated w.e.f. 01.04.2011 with Advance India Projects Ltd. has not been rebutted, hence we hold that notice under sec. 148 of the Act issued on 30.3.2012 on Magpie Projects Pvt. Ltd., a nonexistent company was invalid. The Hon'ble Supreme Court in the case of Saraswati Industrial Syndicate Ltd. vs. CIT (supra) has been pleased to hold that the Hon'ble High Court was in error in holding that even after amalgamation of two companies, the parent company did not become nonexistent instead it continued its entity in a blended form with the assessee. The Hon'ble Supreme Court approved the decision of the ITAT that amalgamating company ceased to exist in the eye of law, therefore, the assessee was not liable to pay tax. The Hon'ble jurisdictional Delhi High Court in the case of CIT vs. Micron Steels Pvt. Ltd. (supra) while approving the decision of the ITAT in the appeal preferred by the Revenue has been pleased to hold that on amalgamation, the company ceases to exist in the eyes of the law. Thus, assessment upon a dissolved company is

27 impermissible as there is no provision in Income-tax Act, 1961 to make an assessment thereupon. We thus respectfully following the ratio laid down in the above cited decisions hold that the notice under sec. 148 of the Act issued on 30.3.2012 on Magpie Projects Pvt. Ltd., a non-existent company was illegal. 36. We also find substance in the contentions of the Learned AR that before completing assessment under sec. 143(3), it is mandatory to issue notice under sec. 143(2) of the Act, otherwise the assessment order is illegal. On perusal of the assessment order framed under sec. 147/143(3) of the Income-tax Act, 1961, we nowhere find that the Assessing Officer has mentioned about the issuance of notice under sec. 143(2) of the Act which is mandatory as per the ratios laid down in the cited decisions including the decision of Hon'ble Supreme Court in the case of ACIT vs. Hotel Blue Moon (supra). Hon'ble Delhi High Court in the case of Alpine Electronics Asia Pvt. Ltd. vs. DCIT (supra) has been pleased to hold in para No. 24 of the decision that section 143(2) is applicable to the proceedings under sec. 147/148 of the Income-tax Act, 1961. Proviso to section 148 of the Act protects and grants liberty to the Revenue to serve notice under sec. 143(2) of the Act before passing of the assessment order for returns furnished on or

28 before 01.10.2005. In respect of returns filed pursuant to notice under sec. 148 of the Act after 01.10.2005, it is mandatory to serve notice under sec. 143(2) of the Act, within the stipulated time limit. It is also an established proposition of law that such defect in the exemption of jurisdiction by the Assessing Officer cannot be cured by taking recourse to the deeming fiction under sec. 292BB of the Act. 37. In view of the above findings, we hold that notice issued under sec. 148 of the Income-tax Act, 1961 on a non-existent assessee was invalid and the assessment made in furtherance thereto inconsequence was invalid and void. The assessment in absence of issuance of mandatory notice under sec. 143(2) of the Act was also void ab-initio. In view of this finding, the remaining contentions on the issue of validity of notice issued under sec. 148 of the Act, reasons recorded, etc. raised by the Learned AR have become infructuous and thus do not need adjudication. The ground Nos. 2 to 4 and additional ground to the above extent are thus allowed. 38. In view of the above findings holding the assessment in question itself void, the issues raised in the remaining ground Nos. 5 to 8 have become infructuous and thus do not need any adjudication. 39. In result, the appeal is allowed.

29 ITA No. 56/Del/2015: 40. The assessee has impugned First Appellate Order on the following grounds: 1. Under the facts and circumstances of the case, the appellate order passed by the Learned CIT(Appeals) is illegal being against the principles of natural justice and against the provisions of Incometax Act, 1961. 2. The Learned CIT(Appeals) has grossly erred on facts as well as in holding that notice u/s. 148 is legally valid. 3. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that notice u/s. 148 is ab-initio void because the Ld. A.O. had not taken the approval from JCIT u/s. 151(2) before issue of such notice though the assessment re-opened was completed u/s. 143(1). 4. The Learned CIT(Appeals) has grossly erred on facts as well as in law in confirming the addition of Rs.40,00,000 on account of investment in shares of the assessee. 5. The Learned CIT(Appeals) has grossly erred on facts as well as in law in rejecting the additional documents filed before her though they were only clarificatory in nature and in public domain which do not require any application u/s.46a. 6. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that cross-examination of Mr. S.K. Gupta was not

30 provided by the Ld. A.O. inspite of the specific request vide letter dated 19.03.2013. 7. The Learned CIT(Appeals) has grossly erred on facts as well as in law in ignoring that the Ld. A.O. neither provided the statement of Sh.S.K. Gupta to the assessee nor other documents used against the assessee. 8. The appellant craves to add, alter, modify and withdraw any ground of appeal before or during the appellate proceedings. Besides above grounds, the assessee vide application dated 27.2.2015 has also prayed for admission of the following proposed additional ground: The impugned assessment order u/s. 147/143(3) dated 26.3.2013 is illegal and without proper jurisdiction as notices u/s. 148 as well as u/s. 143(2) were not issued and also there was noncompliance u/s. 143(3) in as much as the sum payable by the assessee on the basis of assessment was not determined and therefore, it deserves to be annulled. 41. The Learned AR submitted that the issue raised in the additional ground is legal in nature which goes to the root of the matter and adjudication of which does not require consideration of fresh material. The Learned AR submitted further that though in the ground Nos. 2 to 6, the assessee has already questioned the validity of issuance of notice under sec. 148 of the Act and the assessment framed in consequence thereto but still to avoid any technical difficulty on specific contention regarding validity of

31 assessment in absence of notices issued under sec. 148 as well as sec. 143(2) of the Act has been raised. 42. The learned CIT(DR) on the other hand objected the application. 43. Considering the above submission that the issue raised is legal in nature which goes to the root of the mater and adjudication of issue raised in the additional ground does not require consideration of fresh material outside the record, we allow the application and in result additional ground is admitted for our adjudication. We will deal with it along with ground Nos. 2 to 4 in the succeeding paragraphs. 44. Similar grounds involving identical issues as raised hereinabove in ITA No. 55/Del/2015 have been raised and similar arguments have been advanced by the parties to support their respective cases. 45. Following the decisions taken by us in ITA No. 55/Del/2015 on identical issues, we hold that the issuance of notice under sec. 148 of the Act on a non-existent assessee was invalid and the assessment framed in furtherance to the said notice in consequence was also void. The assessment in question in absence of issuance of mandatory notice under sec. 143(2) of

32 the Act was also void and the same is quashed as such. The ground Nos. 2 to 4 and additional ground to the above extent are thus allowed. 46. The remaining grounds have become infructuous, hence, do not need adjudication. 47. In result, the appeal is allowed. 48. In summary, all the three appeals preferred by the assessee are allowed. Order pronounced in the open court on 14.08.2015 Dated: 14/08/2015 Mohan Lal Sd/- Sd/- ( INTURI RAMA RAO ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER Copy forwarded to: 1) Appellant 2) Respondent 3) CIT 4) CIT(Appeals) 5) DR:ITAT ASSISTANT REGISTRAR

33 Date Draft dictated on computer 13.08.2015 Draft placed before author 13.08.2015 Draft proposed & placed before the second member Draft discussed/approved by Second Member. Approved Draft comes to the Sr.PS/PS 20.08.2015 Kept for pronouncement on 14.08.2015 File sent to the Bench Clerk 20.08.2015 Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order.