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Judgment
PER SATBEER SINGH GODARA, JM
These three assessees M/s. Grand Realcon Pvt. Ltd., Focus Realcon Pvt. Ltd. and Starlite Builders Pvt. Ltd., have filed their instant twin appeals each, ITA Nos. 1261 & 1262/Del/2025; 1263 & 1264/Del/2025 and 1265 & 1266/Del/2025 for assessment years 2011-12 and 2012-13, against Commissioner of Income Tax (Appeals)-3, Gurgaon’s [in short the “CIT(A)”] orders dated 24.01.2025 & 23.01.2025 passed in case nos.10487, 10297, 10488, 10298, 10490 & 10295 CIT(A)-3/GGN/2018-19 & 2019-20, involving proceedings under section 147 r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), respectively. Heard all three assessees as well as the department at length. Case files perused.
We notice at the outset during the course of hearing that all these three assessees seek to canvass their first and foremost identical legal ground challenging validity of the impugned reopening(s) itself in their respective cases as not sustainable in law. It is made clear that there is no dispute between the three assessees on one side as well as the department that the learned Assessing Officer(s) had recorded his identical reopening reasons thereby initiating the impugned reopening(s) in their respective cases.
It is in this factual backdrop that our attention is invited to ITA No.1266/Del/2025 wherein the learned Assessing Officer’s reopening reasons recorded whilst proceedings against the assessee M/s. Starlite Builders Pvt. Ltd., reading as under:
“Reasons for issuing notice u/s 148 of the L.T. Act, 1961.
Return declaring Loss of Rs. 22,035/- was filed on 20.09.2012 for the A.Y. 2012-13. Later on information was received from the Joint Director of Income-tax (OSD)(Inv.), Unit-1(1), New Delhi vide his office letter F.No. JDIT(OSD) (Inv.)/U-1(1) Lotus Infrasolutons/2018-19 /3117 dated 22.03.2019 that the directors and operator of the assessee company had on statement recorded under oath admitted that it is a shell company and provides accommodation entry in lieu of commission. Subsequently even the address of the assessee company was found to be non-existent during search proceedings in the case of M3M group (D.O.S. 21.07.16). Further during search various incrementing documents were also seized which establish that assessee company had been used by M3M group for layering & transferring of funds.
In view of the above mentioned evidences and after analysis of bank statements of the assessee company was held to be an accommodation entry provider and Commission income added for the A.Y. 2011-12.
Subsequently information was also received from the Joint Director of Income-tax (OSD)(Inv.), Unit-1(I), New Delhi about details of debts and credits in the bank account of assessee for A.Y. 2012-13. The same is being presented below in the tabular manner:-
Total Credits in F.Y. 2011-12 Total Debits in F.Y. 2011-12 TOTAL 72,82,00,000/- 72,87,18,110/- 145,69,18,110/- The return of income for the assessee for A.Y. 2012-13 is examined. It is noted that returned income of assessee is (-) 22035/-. This is not commensurate with the volume of banking transactions. The assessee being an established accommodation entry provider in lieu of commission has not offered to taxation its commission income for the A.Y. 2012-13. Therefore the commission income of assessee amounting to Rs. 1,45,69,181/-(1% of Rs. 145,69,18,110/-) has escaped assessment for the said assessment year.
In view of the above, I have reasons to believe that the income of the assessee has escaped assessment for the assessment year 2012-13 to the tune of Rs. 1,45,69,181/-. I, therefore, propose to assess such escaped income and also any other income chargeable to tax which has escaped assessment within the meaning of section 147 read with section 148 of the Income Tax Act, 1961.”
Learned CIT(DR) vehemently argues that we ought to uphold the impugned reopening(s) since very much based on the corresponding tangible material indicating all these assessees as forming part of well-orchestrated accommodation entry network. Ms. Gupt further seeks to highlight the fact that these assessees’ stand all along has nowhere rebutted the same. The Revenue’s primary allegation is that they are part/beneficiary(ies) of the aforesaid accommodation entry network only. And that the learned departmental authorities had gathered enough material including the searched parties’ statements to proceed against all of them under section 148/147 of the Act.
We have given our thoughtful consideration to the assessees’ and Revenue’s foregoing respective stands against and in support of the impugned reopening(s). We find no reason to sustain the same. This is for the precise reason that all what the learned Assessing Officer appears to have uniformly recorded against these three assessees is that their income representing estimated commission @ 1% (supra) on various alleged entries had escaped assessment. We further wish to emphasize here that there is no material at all, be it collected during search or otherwise in post search enquiries, revealing such an actual commission income derived from alleged accommodation entries at all. The Revenue’s case that the same is based on the searched statements carries no merit in light of the CBDT’s landmark circular dated 10.03.2003 that the same do not have any significance in absence of supportive direct evidence(s) collected in course thereof. Hon’ble apex court’s landmark decision in CIT vs. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) has further settled the issue long back that such a reopening exercise ought to be based on tangible material only. And also Hindustan Lever Ltd. Vs. R.B. Wadkar (2004) 268 ITR 332 (Bom.) has rejected the Revenue’s stand thereby concluding that such reopening reasons ought to be read on standalone basis without any scope of improvement or substitution therein at a latter stage. We accordingly are of the considered view that the learned assessing authorities’ impugned action(s) initiating section 148/147 proceedings identically in all three assessees’ cases based on mere conjectures and surmises than tangible material, is non-est in the eyes of law, which is hereby quashed in very terms. These three assessees succeed in their instant first and foremost legal ground therefore.
All other remaining pleadings i.e legal as well as factual ones between the parties stand rendered academic.
These three assessees’ twin appeals each ITA Nos.1261 & 1262/Del/2025; 1263 & 1264/Del/2025 and 1265 & 1266/Del/2025 are allowed in above terms. A copy of this common order be placed in the respective case files.