Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2023 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (2) TMI 426 - HC - Income TaxReopening of assessmnet u/s 147 - “reason to believe” OR “reason to suspect” - transaction made by the assessee with M/s Magnum Tradex Pvt. Ltd, which is a shell company foated for the purpose of providing accommodation entries - HELD THAT:- In the reasoning recorded, it is not clear as to how M/s Magnum Tradex Pvt. Ltd. is sought to be connected with Rajeev Khushwaha. It has not been alleged in the reasons that M/s Magnum Tradex Pvt. Ltd., with whom the Petitioner made an alleged sale was being run by Rajeev Khushwaha, although, in the reply affidavit, it is stated by the revenue that M/s Magnum Tradex Pvt Ltd, was one of the entities which was foated by Rajeev Khushwaha for the purpose of providing accommodation entries. It is settled law that the issue of reopening of assessment has to be tested only on the basis of the reasons recorded, which reasons can neither be improved upon nor substituted by an affidavit or oral submissions (See First Source Solution Ltd case[2021 (9) TMI 248 - BOMBAY HIGH COURT] Therefore, the action of the assessing Officer for the purpose of reopening of reassessment has to be tested on the basis of reasons recorded by the said Officer and cannot, therefore, be improved upon the reply affidavit. Reasons also do not furnish any explanation as to on what basis and material the assessing Officer came to a conclusion that M/s Magnum Tradex Pvt. Ltd., was indeed a shell entity. The verification of the VAT returns referred to in the reasons recorded suggest only transaction between the Petitioner and M/s Magnum Tradex Pvt. Ltd., in regard to goods sold - There was, thus, no material or basis for the assessing Officer to hold the transaction between the Petitioner and M/s Magnum Tradex Pvt. Ltd., as not a genuine transaction of sale or for that reason to hold that M/s Magnum Tradex Pvt. Ltd. was a shell entity. Reasons recorded do not suggest at all whether pursuant to receipt of information, the assessing Officer had independently applied its mind to the information received or conducted its own inquiry into the matter for the purpose of coming to a conclusion that indeed income assessable to tax had escaped assessment or that the transaction in question with the alleged shell entity was only a paper transaction. - Decided in favour of assessee.
|