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TMI Blog2018 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... pinions of other authorities, are also not allowed for reopening of the completed assessment proceedings. Therefore, Notice u/s. 147/148 is liable to be quashed and all collateral proceedings are also liable to be annulled and / or set aside. 2. Ld.A.O. has not brought any documents and evidence in respect of information's in respect of vendors in dispute, no materials are available on record and if available not given to the Appellant at any stage of proceedings, therefore, there is a clear violation of rules of natural justice by Ld. A.O. and for the reasons assessment order passed is liable to be set aside on this count also with impugned appeal order. 3. Ld.A.O. and Ld-CIT (Appeals) did not considered the Paper Book submitted during the course of assessment proceedings at all and/or not properly considered while deciding the matter of the Appellant. Allegations of non productions of details called for are false, baseless and against the evidence on record. 4. Additions made by Ld. A.O. and sustained by Ld. CIT(Appeals) are based on suspicion, conjectures, surmises based on third parties opinion. Appellant has declared his initial burden by advising and producing the detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gister etc. The assessee was also asked to produce purchase parties to prove the genuineness of above purchases. Further, notices u/s 133(6) of the Income Tax Act was issued to above mentioned hawala parties but all the notices received back with the remark 'left/not known'. The assessee was also asked to show cause as to why the expenditure claimed in respect of purchases shown to have made from the aforesaid dealer should not be disallowed. The assessee vide order sheet noting dated 10.11.2015 has furnished copies of (a) ledger account of the purchase party; and (b) Purchase Bill. Before the Assessing Officer, the assessee submitted that he/she has shown corresponding sales of material alleged to be purchased from hawala parties and had offered the income thereon for taxation. There can be no sale without purchase, therefore requested to treat the purchases as genuine. However, the Assessing Officer noted that till date the assessee has neither submitted the confirmation of above purchases from respective purchase parties nor produced the broker/agents or the suppliers before the undersigned. Hence, he proceeded to make a disallowance of 12.5% of the purchase. 6. Against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as any delivery challan, one-to-one correspondence of purchases and sales, whether there were proper stock in register entries, whether if the products were subject to Octroi/EXCISE there were proper gate passes et cetera to prove the movement of goods; there is no contention in respect of delivery challans. Even in the case of N1KUNJ EXIMP which is relied upon by the assessee there was Ledger account confirmation from the parties concerned it was based on those Ledger account party CONFIRMATIONS and non-production of the alleged suppliers that it was held that mere nonproduction of the alleged suppliers cannot lead to a sustainable addition. But in the instant case there were not even CONFIRMATIONS which distinguishes and sets apart the addition. 7. Against the above order of ld. Commissioner of Income Tax (Appeals), the assessee is in appeal before the ITAT. 8. I have heard both the counsel and perused the records. 9. As regards the reopening of the assessee, on a careful consideration, I note that in this case information was received by the Assessing Officer from DGIT Investigation (Mumbai) there are some parties who are engaged in the hawala transactions and are also invol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer to assess or reassess income chargeable to lax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the AO has cause or justification to know or suppose (hat income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Managnese Ore Co, ltd. v. ITO(1991) 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been able to produce any of the parties. The assessing officer has noted that there is no cogent evidence of the provision of goods. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. 13. Hence purchase bills from these non-existent the/bogus parties cannot be taken as cogent evidence of purchases, in light of the overwhelming evidence the revenue authorities cannot put upon blinkers and accept these purchases as genuine. This proposition is duly supported by Hon'ble Apex Court decision in the case of Sumati Dayal 214 ITR 801 and Durga Prasad More 82 ITR 540. In the present case the assessee wants that the unassailable fact that the suppliers are non-existent and thus bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable in light of above apex court decisions. 14. In these circumstances learned departmental representative has referred to Hon'ble Gujarat High Court decision in the case of Apex Appeal No. 240 of 2003 in the case of N K Industries vs Dy CIT, order dated 20.06.2016, wherein hundred p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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