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2020 (10) TMI 991 - ITAT DELHIReopening of assessment u/s 147 - Non independent application of mind - addition u/s 68 read with section 115BBE as against profit declared on account of commodity trading - HELD THAT:- Name of the assessee as a broker has nowhere mentioned in the reasons recorded. Reasons have been recorded by the Investigating Officer without making any verification of facts and figures forwarded by the Investigation Wing what to talk of conducting independent enquiry. Assessee to prove the fact that the reasons recorded are vague and factually incorrect taken us to the audited balance sheet, profit & loss account and Schedule IX, Sales and Other Income, particularly Schedule IX depicting sales and other income,which shows that assessee has booked profit from commodities at ₹ 149,19,900/- and not ₹ 1,37,250/-. This fact goes to prove that the AO has proceeded merely on the basis of report given by the Investigation Wing and has not preferred to verify the same from the audited financials brought before him by the assessee and in these circumstances, it is difficult to believe that he has applied his mind before recording the reasons requires for initiating the proceedings u/s 147/148. When AO was not even aware as to the actual profit earned by assessee from commodities and this fact has also not been verified by the Principal CIT from audited financial of the assessee, then it is difficult to believe as to how and under what circumstances he has made himself satisfied to proceed against the assessee u/s 147/148 of the Act. So, the entire process as to initiating the reopening is merely mechanical without any application of mind by the AO as well as sanctioning authority, Principal CIT, which has vitiated the entire proceedings. "Reasons to believe" recorded by the AO, which is replica of information received from the Investigation Wing, cannot be a tangible material per se sufficient to form reasons to believe; that even figures of buying, selling and profit booking qua commodity trading, are not in accordance with the audited financials of the assessee company which shows that there is absolutely no application of mind on the part of the AO - Decided in favour of assessee. Addition u/s 68 read with section 115BB - When assessee has specifically proved on record that it has earned profit of ₹ 59,56,410/- on commodity trading through R.K. Commodities (P) Ltd. registered with NMCE but AO has wrongly taken this amount as ₹ 41,45,405/- and treated the same as the profit earned by the assessee through manipulations without examining the evidence available on file, it is proved on record that all these documents were placed before the AO by the assessee vide letters dated 06.12.2017 and 29.12.2017,but he has not drawn any adverse inference against the claim of the assessee. Rather AO as well as ld. CIT (A) kept on essay writing spree on the basis of surmises in making the impugned addition by completely ignoring the evidence available on record, hence addition made by the AO and confirmed by the ld. CIT (A) is not sustainable on merit also. So, this ground is determined in favour of the assessee.
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