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2021 (9) TMI 802 - AT - Income TaxReopening of assessment u/s 147 - eligibility of reasons to believe - clandestine clearance/ suppressed sale - independent application of mind v/s borrowed satisfaction - HELD THAT:- A.O. in the present case has not formed his own belief but has rather acted upon borrowed satisfaction. Information relied upon being the SCN is based on a search conducted by the Central Excise Authorities and not by the Income Tax Department and that too at the premises of the Transporters and/or Dealers but not at the place of the assessee. Thus, the impugned reasons are clearly based upon wrong facts and are on the basis of third-party information which is unreliable. Apart from this, no material was found showing that the assessee was indulged in a clandestine clearance/ suppressed sale from its factory without paying excise duty and notices issued by the Excise Department is only on the basis of statement of third party or some information gathered from third party because no direct material or evidence was found or seized from the premises of the assessee. Neither any stock was seized nor was it found that it was the case of lesser stock or excess stock of finished goods or of raw materials found. Absolutely, no evidence was recovered nor has been placed on record to prove illicit transaction of money involved in the alleged transactions. Excise Department though alleged huge clandestine clearance of goods yet not an iota of evidence to prove procurement of huge quantities of raw materials has been placed on record, though the list of raw material suppliers was with the investigation. Without showing receipt of the raw material clandestinely, manufacture of such huge quantities of excisable goods and clandestine clearance thereof is impossible. Therefore, consequent suppressed sale and again undeclared income there from, is too remote even to be suspected. Although the A.O. categorically admitted that the assessee had filed a detailed reply on dated 18.03.2016, however, further held that such factual explanation dealing with each and every case was not relevant inasmuch as the CCE has already examined the issue and recorded his findings. This fact clearly shows that the AO has summarily rejected the contention of the assessee without examining the issue in hand, huge additions were made. Merely relied upon the findings of the CCE, however, it is important to mention that the CCE had passed the order under the provision of Central Excise Act, 1944 in that peculiar context of the case. However, such findings cannot be lifted and relied upon by the A.O. in a different factual context of Income Tax Laws. AO had merely borrowed satisfaction in respect of escapement from someone else, which is not sufficient to confer valid jurisdiction or power upon the AO to initiate reassessment proceedings. See SFIL STOCK BROKING LTD [2010 (4) TMI 102 - DELHI HIGH COURT] - Decided in favour of assessee.
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