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2015 (9) TMI 121 - ITAT DELHI

2015 (9) TMI 121 - ITAT DELHI - TMI - Validity of reopening of assessment - credit balance in the account of two parties - Held that:- AO reproduced the observation of the CIT(A) and thereafter has recorded that there is a credit balance in the account of Bansal Polyvin (P) Ltd.; and M/s Ek Onkar Foundry, amounting to ₹ 5,40,175/-, which was created for the first time during the FY 2001-02 relevant to AY 2002-03. Thereafter, he recorded the finding that- “Therefore, on the basis of above r .....

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be a ground to arrive at the conclusion of escapement of income. In view of above, in our opinion, the decision of M/s Tejaskiran Pharmachem Industries Pvt. Ltd. (2015 (3) TMI 985 - BOMBAY HIGH COURT ) and M.B. Traders (2009 (7) TMI 1097 - ITAT NAGPUR ) would be squarely applicable to the facts of the assessee’s case. Respectfully following the same, we hold that the impugned reopening of assessment was not valid. - Decided in favour of assessee. - ITA no. 5016/Del/2010 - Dated:- 2-3-2015 - IN .....

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sdiction and the re-assessment order passed is illegal, bad in law and without jurisdiction. 2. That the notice issued u/s 148 has been issued without any approval of the higher authority and the approval, if any, is given without any application of mind. 3. The CIT(A) has erred on facts & in law in upholding the initiation of reassessment proceedings u/s 147 and upholding the validity of notice u/s 148. 3. At the time of hearing, before us, it was pointed out by the ld. counsel for the asse .....

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2-2010 (ITAT Ahmedabad); 4. The ld. DR, on the other hand, relied on the orders of the authorities below and stated that the AO, after considering the observations of the CIT(A) for AY 2003-04, has applied his mind independently and the allegation of the assessee s counsel that AO reopened the case without any independent application of mind, is incorrect. In this regard he referred the relevant portion of the reasons recorded for reopening of assessment. 5. We have carefully considered the argu .....

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material and the belief. (see ITO Vs. Lakhmani Mewal Das in 103 ITR 437 and CIT Vs. Kelvinator India Ltd. in 320 ITR 561). The material here is that the respondent- assessee has received a loan from three private limited companies but that by itself does not make it deemed dividend leading to reason to believe that income chargeable to tax has escaped assessment. Moreover, we also notice that the Assessing Officer in issuing the notice dated 7 March 2000 has acted at the directions of the CIT(A .....

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even though the assessment has been processed under Section 143 (1) (a) of the Act for the purposes of reopening of assessment, the condition stipulated for invoking jurisdiction under Section 147/148 of the Act has to be satisfied. 11. In view of the above, we see no reason to entertain the present appeal as the Tribunal by the impugned order has correctly held that the notice for reopening dated 10 February 2003 was without jurisdiction. 5.1. The ITAT Nagpur Bench in the case of M.B. Traders ( .....

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nterpreted from a perusal of s. 147 of the IT Act. The direction of higher authority should not be interpreted as a blanket direction by the AO. But that should be accompanied by the direct satisfaction of the AO with regard to the escapement of income. The appellate authorities or higher authorities cannot interfere on this power of the AO. It means the direction of the higher authorities and that of the appellate authorities must be acted upon by the AO with utter satisfaction. Taking initiati .....

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from p. 13 of the paper book filed by the learned counsel which is quoted below for better appraisal of facts : 5.2. The ITAT Ahmedabad Bench in the case of M/s Hotel Hero (supra) held as under: We have heard the rival contentions and gone through the facts and circumstances of the case. We find from the order of CIT(A) in appeal No. CAB/III-226/2002-03 dated 24-03-2004 that CIT(A) has specifically observed, "However, it was further observed that on merits of the case the appellant has not .....

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ded, wherein the Assessing Officer used the words "therefore" in the light of the observation of CIT(A), which itself proves that the AO has not applied his independent mind before issuing notice u/s 147 of the Act. In similar Circumstances, the Tribunal Nagpur Bench in the case of M. V. Traders v. ACIT (2010) 41 DTR 441 , (Nag) held that reassessment proceedings must be based on the "belief" of the Assessing Officer and not the "belief" of the Appellate Authority, .....

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of completed assessment of any year is required or not. He cannot reopen the completed assessment simply on the basis of some direction or observation of the CIT(A), without recording his own satisfaction with regard to escapement of income. 5.4. Let us now see the facts of the assessee s case. The copy of the reasons recorded for reopening of assessment is placed at page 27 of the assessee s paper book, which reads as under: To, Sh. Sandeep. Kumar, Prop. M/s Balaji Trading Co.. V.V. Inter Colle .....

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ome, no addition required in this year, However, remedial action should be taken by the A0 in the respective years where liabilities have been created for the first time in the hooks of the assessee appellant." In the case of Bansal Polyvin (P) Ltd. Samana and M/s Ek Onkar Foundry, Harayana liability totaling to ₹ 5,40,175/-was created for the first time during the financial year 2001-02 relevant to A. Y .2002-03. Therefore, , on the basis of above referred observations made, I have r .....

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