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2015 (3) TMI 648 - HC - Income TaxReopen of assessment invoking Explanation 2 to Section 153 - remission or cessation of liability during the relevant assessment year - Tribunal directing AO to reopen the assessment of an earlier year which would amount to enhancement of income - Held that:- In the case on hand, admittedly, credit balances are lying in the names of third parties for long number of years and there are no purchases by the assessee from those parties after 1996-1997. That apart, it was found that no such persons reside in the addresses given by the assessee. Under such circumstances, necessarily these amounts have to be determined under one head or the other. If Section 41(1) of the Act does not apply to the facts of the present case, it has to be determined how the credit balances should be treated. The assessee had conceded before the Tribunal that assessment of the earlier assessment years relating to such purchases can be reopened and he has no objection to the same. The purpose of such concession is to determine the correct tax liability. It was under such circumstances, the Assessing Officer was directed to reopen the assessment of the year in which such purchases were made from third parties to examine whether such purchases were bogus or not. The net result of such a direction may also go in favour of the assessee, if he is able to prove the bona fides. The effect would be that the correct tax liability will thereafter be determined. We find that such a direction is in consonance with the provisions of Explanation 2 to Section 153 of the Act. Such a direction passed by the Tribunal in the present factual scenario, in our considered opinion, cannot be said to be erroneous. - Decided in favour of the revenue
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