TMI Blog2006 (8) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee claimed brokerage expenses of Rs. 47,00,000 against brokerage income received at Rs. 70,50,000. The claim of the assessee was excessive in nature and was not supported by any evidence. Therefore, the income to the extent of claim of expenses of Rs. 47,00,000 escaped assessment and notice under section 148 was issued and served on the assessee." Thereafter the assessee was required to furnish the details in regard to genuineness of the claim of the expenses for the purpose of completion of assessment. As per the order of Assessing Officer, the assessee has not co-operated, therefore, he completed the assessment under section 143(3) by making disallowance of brokerage expenses of Rs. 47 lakhs and further making addition of Rs. 3 lakhs under section 68 of the Act. The assessee preferred appeal before the CIT(A) before whom, the order of the Assessing Officer was challenged in making the addition of Rs. 47 lakhs on account of disallowance of expenses of brokerage and making addition of Rs. 3 lakhs under section 68. The CIT(A) deleted the addition of Rs. 3 lakhs made by the Assessing Officer under section 68. However, he confirmed the addition of Rs. 47 lakhs on account of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perly of his own, therefore, he took help of Shri Pradeep Agarwal, Director of Lahiri Laminates Pvt. Ltd. (LLPL) with whom the MoU was signed. With the efforts of Shri Pradeep Agarwal, Director of LLPL, the sale was matured and the assessee received commission of Rs. 70,50,000 and paid further commission of Rs. 47 lakhs to Shri Pradeep Agarwal as per MoU. It was further submitted that the Director Shri Pradeep Agarwal of LLPL could not appear before the authorities as he met with a serious accident during the proceedings before the lower authorities. Therefore, he has written a letter on 1-3-2006 directly to the Assessing Officer accepting in having received of Rs. 47 lakhs through account payee cheque as brokerage from the assessee. Copy of confirmatory letter sent to the Assessing Officer directly is placed at page 20 of the paper book. The copy of receipt of return of income and computation along with the copies of accounts of M/s. LLPL are placed from pages 21 to 25, copies of cheques or demand drafts issued in the name of LLPL placed at pages 26 to 29 of the paper book. The copy of the affidavit of Shri Pradeep Agarwal, Director of LLPL is placed at page 31 of the paper book b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rage income paid at Rs. 47 lakhs has escaped. How it is escaped, nothing has been mentioned in the reasons recorded by the Assessing Officer except that the commission paid is excessive and not supported by any evidence. How Assessing Officer arrived at conclusion that commission is excessive is not borne out either from the reasons recorded which are part of Assessing Officer s order or from the order of the Assessing Officer itself. Regarding the observation that there is no evidence is also not understandable what evidence is to be enclosed along with return. The Profit and Loss Account duly audited and along with audit report was enclosed with the return filed by the assessee on 31-10-1996. On the basis of computation and P L Account etc., the assessment was completed under section 143(1)( a ) of the Act. If thereafter some material is found or seen or any other information was with the Assessing Officer then only it can be said that there was reason to believe that some income has escaped assessment. Without any information or material, an assessment cannot be reopened. This is a settled principle of law. Various Benches of the Tribunal and various High Courts have clearly hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer had not issued notice under section 132(2) for verification of the return. Thus, the assessment in respect of the return had become final. There was no fresh information available with the Assessing Officer on the basis of which, it could be said with some amount of certainly that income of the assessee had escaped assessment. The issues raised by the Assessing Officer were such that inquiries could be made and issues determined after consideration of the material on record, the evidence, if any, furnished by the assessee and submissions made by the assessee. Such a course is not open under section 147. Before a notice under section 148 is issued for reopening of assessment under section 147, the Assessing Officer has to form an opinion on the basis of material on record, that the income of the assessee has escaped assessment. On the basis of material available to the Assessing Officer at the time of assessment under section 143(3) or 143(1), the Assessing Officer cannot change his opinion for the purpose of making reassessment. There has got to be some material on the basis of which the Assessing Officer could have reasons to believe that the income of the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer that any income has escaped assessment. Therefore, taking into the totality of the facts and the circumstances of the case and taking into consideration the decisions referred above, we quash the reopening of the assessment by holding that the same is bad in law. 6. Though, we have quashed the reopening of the assessment, however, arguments were advanced by the parties on merit also, therefore, we dispose off the grounds on merit also in the following manner. 7. After considering the submissions and perusing the other material on record, we find that the assessee has discharged its onus by providing complete details of payee to whom the commission was paid. The copies of MoU entered into between the parties were filed. The details of payment made to the M/s. LLPL was filed. Complete address was given. Notice was issued by the department; however, none could appear on behalf of the LLPL as the Director of the company met with a serious accident. A letter of Shri Pradeep Agarwal, Director of LLPL confirming the transaction was filed and the copy of which is placed at page 20 of the paper book. He has also confirmed the transaction through his affidavit. He ..... X X X X Extracts X X X X X X X X Extracts X X X X
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