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2016 (4) TMI 381

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..... land transportation of 84100US$ were incurred and charged to the profit and loss account but ₹ 14,29,604/- were incurred and charged to the profit and loss account as transportation charges overseas paid to ALIA Jordan in Jordan for which proper bills, vouchers and bank advice are available. We are of the considered view that in the light of the facts as stated above the re-opening of assessment cannot be justified by the AO by just mechanically recording the reasons without any application of mind. We therefore annul and quash the re-assessment proceedings and also the consequent order of assessment passed u/s 143(3) /147 of the Act by allowing the appeal of the assessee on technical ground in favour of assessee - I.T.A. No 4266/Mum .....

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..... lity of action of the A.O. in initiating, and completing the reassessment in case of the Appellant u/s 147 of the Act. 2.2 It is submitted that in the facts and the circumstances of the case, and in law, the reassessment was bad, illegal and void as mandatory preconditions for initiating reassessment proceedings, as well as completion thereof, were not complied with. 2.3 It is prayed that the reassessment being annulled and be held as null and void WITHOUT FURTHER PREJUDICE TO THE ABOVE 3.1 The Id. CIT (A) erred in confirming the addition / disallowance made by the AO on account of the following items: a) Inland transportation fees (ITF) Rs.14,29,604/- .....

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..... ASSF ₹ 86,64,762/- and Inland Transportation charges ₹ 14,29,604/- which was upheld by the CIT(A) by holding that the AO was justified in making the additions by disallowing inland transportation charges and ASSF as these amount were actually paid to Iraqi authorities either directly or through an agent for procuring the contract in Iraq and further held that Volkar Committee report could not doubted otherwise the committee would not have reported the payments. 3. At the outset, the ld AR for the assessee submitted that the ground no 1 is in support of ground no 2 and 3.The first issue raised by the AR is that the proceedings initiated u/s 147 r.w.s. 148 of the Act were bad in law because the reasons as recorded u/s 148(2) f .....

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..... ges were incurred out of genuine business needs and were paid in Jordan not to the govt. of Iraq. Ultimately the ld counsel submitted that the re-opening was not covered by the proviso to section 147 and thus case of the assessee was wrongly re-opened. 4. Per contra the ld DR relied on the orders of authorities below. 5. We have considered the rival submissions and perused the materials on records and orders of authorities below. We find that the CBDT on the basis of Volckar committee report sent a memorandum to the AO intimating the list of companies involved in the paying kickbacks to Iraqi Government during supplies made under Oil for Food Programme and the AO recorded reasons u/s 148(2) of the Act for re-opening the assessment wh .....

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..... e company made illegal payment in the shape of ASSF and Inland Transportation Fee , contract fee etc by inflating the cost of goods supplied to the Government of Iraq and accordingly by reasons of doing so by the assessee , income attributable to the extent of illegal commission incurred has escaped assessment within the meaning of section 147 of the Act and this gives me reasons to believe that income chargeable to tax has escaped assessment 6. As is seen from the above reasons recorded by the AO that same were recorded on the basis of CBDT Memorandum that some companies including assessee were involved in giving kickbacks to Iraqi Government in the supplies made by these companies in Oil for Food Programme. We note that the AO had mecha .....

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