TMI Blog2018 (3) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... whom the assessee had made payments, were situated, had made enquiries and found that they were non-existent. This information of bogus dealers as supplied by the ITO having jurisdiction over the disclosed address of the dealers, was relied on by the AO of the assessee to initiate reassessment. Non-disclosure of fully and truly of material facts required for assessment, it has to be noticed that the dealer had supplied the details of persons who were non-existent, in the returns filed. The dealer had claimed purchases from the said non-existent persons as also entered in the books of accounts payments made to them, which were also cash payments. Non-disclosure in the return, as also in the books of accounts, is insofar as the dealers having been shown as existing registered dealers to whom payments were made by the assessee in the course of their business. The non-disclosure germane to the facts herein was that the six dealers were bogus and there was in the regular assessment, no such question raised or enquiry conducted. - Decided in favour of the Revenue - I.T.A.No.377 of 2009 - - - Dated:- 15-3-2018 - Mr. K. Vinod Chandran And Mr. Ashok Menon, JJ. For The Appellant : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) as per Annexure R-I(c) computing a total income of ₹ 42,48,320/-. There were certain dis-allowances made and what is relevant to the present appeal is the dis-allowance of 20% of the expenditure under Section 40A(3) on the ground that the payments were made in excess of ₹ 20,000/- in cash and not by cheque or draft. The said dis-allowance has been over turned by the first appellate authority. Subsequently re-assessment proceedings were initiated with respect to ₹ 63,87,841- which were the payments made to six dealers allegedly from Tamil Nadu. This was included in the total dis-allowance made under Section 40A(3); which totalled ₹ 2,03,05,505/- as seen from Annexure R-I(c). 3. A notice was issued under Section 148 and the same related to six specific payments made to six dealers being M/s: Sree Ram Chandan Traders, C.Subramaniam, Guruswami Commission Agents, Raghunath Traders, C.Gani Co. and Barkath Stores. The reassessment was made on the basis of a report dated 26.9.1999 of the Income Tax Officer Tirupur, who had conducted enquiries about the said six dealers and found them to be non-existent. The assessee then was required to furnish the details of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Ltd. [(2002) 256 ITR 1 (Delhi)] and C.I.T. v. Usha International Ltd. [(2012) 348 ITR 485 (Delhi)] as also the decision of the Hon'ble Supreme Court in Asst.CIT v. ICICI Securities Primary Dealership Ltd. [2012] 348 ITR 299. 6. The thrust of the arguments of the assessee is based on the original assessment order which is produced as Annexure R-I(c). Admittedly, there was a discussion between the Assessing Officer and assessee regarding the payments made otherwise than by cheque or drafts amounting to ₹ 2,03,05,505/-. The issue was discussed only in the context of the dis-allowance proposed under Section 40A(3). The assessee offered an explanation that the payments were made at places where no bank facility was available. However, the Assessing Officer found that there was no evidence furnished to show the absence of banking facilities. The specific reliance placed is on the statement. All the above payments have been made to a few registered dealers of wheat at Tamil Nadu and they are all located in towns with bank facilities (sic-para-3 of Ann:R-1(c)) . Obviously, the finding of the Assessing Officer was on the submission of assessee that they were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made with respect to the dealers at the time of original assessment. 10. The Tribunal has noticed the report made by the ITO at Tirupur based on which the reassessment proceedings were initiated. The Tribunal has frowned upon the Assessing Officers delay in so far as action taken on the report of the ITO dated 26.09.1999; much later on 26.8.2002. We also see that there is considerable delay and if the reassessment proceedings were initiated immediately, then necessarily there would have been no question of non-disclosure, since then the action would have been justified, for mere escapement of income, without anything more, within the limitation period of four years. However, if there is non-disclosure fully and truly of material facts for assessment purposes, then despite the fact that there was a delay occurred in acting upon the report; if the period of six years has not elapsed, the proceedings cannot fall foul on the aspect of delay or limitation. In the present case there is no ground that the period of six years have elapsed. 11. Phool Chand Bajrang Lal was almost on similar facts. The assessee-firm had claimed borrowings from a Calcutta Company of ₹ 50,000/-, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T.O., Tirupur, which informed the Assessing Officer that the dealers to whom payments were said to have been made in cash, were bogus. 13. Usha International Ltd. laid down the following guidelines: ( 1) Reassessment proceedings can be validly initiated in case return of income is processed under section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion. ( 2) Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said cases will be hit by the principle of change of opinion . ( 3) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The assessment will be invalid because the Assessing Officer had formed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature and reliable in character relating to the concluded assessment in the present case. The Income Tax Officer having jurisdiction over the area in which certain dealers to whom the assessee had made payments, were situated, had made enquiries and found that they were non-existent. This information of bogus dealers as supplied by the ITO having jurisdiction over the disclosed address of the dealers, was relied on by the Assessing Officer of the assessee to initiate reassessment. 16. On the issue of non-disclosure of fully and truly of material facts required for assessment, it has to be noticed that the dealer had supplied the details of persons who were non-existent, in the returns filed. The dealer had claimed purchases from the said non-existent persons as also entered in the books of accounts payments made to them, which were also cash payments. The non-disclosure in the return, as also in the books of accounts, is insofar as the dealers having been shown as existing registered dealers to whom payments were made by the assessee in the course of their business. The non-disclosure germane to the facts herein was that the six dealers were bogus and there was in the regular as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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