TMI Blog2018 (6) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchases stood merged in that estimation of the income and any further action U/s 148 of the Act for the reason that certain purchases were not verifiable shall amount to change in opinion which is not permitted by law. See ACIT Vs. ICICI Securities Primary Dealership [2012 (8) TMI 754 - SUPREME COURT] - Decided in favour of assessee. - ITA No. 995 & 996/JP/2016 - - - Dated:- 11-4-2018 - Shri Bhagchand, AM Shri Kul Bharat, JM Assessee by : Shri Manish Agarwal (CA) Revenue by : Shri J.C. Kulhari (JCIT) ORDER Per: Bhagchand, A.M. Both these appeals filed by the assessee emanates from the two separate orders of the ld. CIT(A)-II, Jaipur both dated 25/08/2016 for the A.Y. 2007-08 2008-09 respectively. The grounds of appeal in both the appeals are common except the difference in the amount of addition. Grounds of appeal are as under: 1. The learned CIT (Appeals) erred in upholding the reassessment based on (i) alleged information obtained from a person (i.e. the supplier) by way of statements u/s 132(4) of the Income Tax Act, 1961, without bringing on records the corroborative evidences to support the said statements, (the said statements were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter on the basis of an information received from Investigation Wing, Mumbai, a notice U/s 148 of the Act was issued wherein it was alleged that the assessee has obtained accommodation entries in respect of diamond from five parties. The assessee filed objection and requested to drop the proceeding and also requested to provide copies of documents and statements relied upon for reopening the assessment. The assessee also requested to cross examine Shri Rajendra Kumar Jain and other persons. The Assessing Officer made addition of ₹ 56,44,010/- being 25% of such purchases of ₹ 2,25,76,241/-. The ld CIT(A) reduced it to 15%. The ld AR further submitted that the assessment U/s 143(3) was completed after invoking the provisions of Section 145(3) of the Act and this reopening is solely based on information of Investigation Wing, Mumbai. He also pleaded that the Assessing Officer has not arrived at any objective conclusion by properly examining the information/evidences which has been made basis for forming the belief for reopening the assessment. The ld AR has further submitted as under: It is submitted that the Ld. AO ought to have considered the issue objectively and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice and for this reliance is placed on the decision of Hon ble Supreme court in the case of Andman Timber Products vs. CCE reported in 127 DTR 241 / 281 CTR 241 wherein it has been held as under: (case law paper book pages 11-13) Assessment - Natural justice - Denial of opportunity to cross-examine witnesses - Denial of opportunity to the assessee to cross-examine the witnesses whose statements were made the sole basis of the assessment is a serious flaw rendering the order a nullity in as much as it amounted to violation of principles of natural justice - Impugned order as passed by the Tribunal is set aside. Further the validity of initiation of reassessment proceedings has to be judged with regard to material available with the assessing officer and that too by framing the opinion strictly based on the documents and information in possession, that certain income has escaped assessment and not in the mechanical manner as has been done in the case in hand. The re-opening of the case based on the borrowed satisfaction on the information supplied by some other official without in any manner coming to his own independent satisfaction deserves to be held illegal. In this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening amounts to mere change of opinion. Recently under the similar circumstances this Hon ble bench in the case of M/s Dwarka Gems Ltd. in ITA No. 71/JP/2017 (APB 93-96) vide orders dt. 27/3/2018 has quashed the notice issued u/s 148 of the Act when the purchases have already been examined in first round. It is thus submitted that even the information by way of retracted statements as stated to have been supplied from the investigation wing, Mumbai could not be held as sufficient material for reopening the assessment more particularly when the Id. AO at the time of completion of the assessment u/s 143(3) has already been applied his mind on the entire purchases claimed, thus again doubting the same is nothing but mere change of opinion for which provisions of section 148 could not be resorted to. In the circumstances, it is humbly prayed that the re-opening u/s 148 of completed assessment is bad in law hence the re-assessment so framed deserves to be quashed and the assessee prays accordingly. Further reliance is also placed on the following case laws: ACIT Vs. ICICI Securities Primary Dealership [348 ITR 299 SC] Held that, where the assessee has disclosed full details i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mour or conjecture, reasons referred must disclose the process of reasoning by which he holds reasons to believe and change of opinion does not confer jurisdiction to reassess, there must be nexus between material and belief, the reasons referred must show application of mind by the Assessing Officer. The validity of initiation of reassessment proceedings has to be judged with regard to the material available with the office at the point of time of issue of notice U/s 148 and cannot be sought to be substantiated by reference to material that may have come to light subsequently in the course of reassessment proceedings. Further it is also pertinent to note that except the statement of Rajendra Kumar Jain recorded by the Investigation Wing, Mumbai during the course of search, there is no other corroborative evidence or material with the Assessing Officer to reopen the assessment. Further it is also noted that the revenue has not provided the cross examination of the witnesses which is a violation of principles of natural justice and in such a situation the Hon'ble Supreme Court in the case of Andman Timber Products Vs CCE (supra) has held that denial of opportunity to cross exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is manifest from the record that the AO while completing the original assessment under section 143(3) has conducted an enquiry in respect of the purchases made by the assessee and finally concluded that the purchases made by the assessee from the 12 parties were not verifiable and accordingly an addition of 25% of such purchases were made by the AO. Therefore, the issue of genuineness of purchases was duly examined by the AO while completing the scrutiny assessment under section 143(3). The AO, thereafter, issued a notice under section 148 on 21.11.2014 which is after four years from the end of the assessment year under consideration. The reasons recorded for reopening of the assessment are as under :- As per information it had been established that bogus sales entries were made in favour of M/s Dwarka Gems on various dated during F.Y. 2007-08 i.e. A.Y. 2008-09 total amounting to ₹ 31,40,818/-. These entries were provided by M/s Meridian Gems M/s Millenium Stars which are some of the bogus concerns of Bhanwar Lal Jain Group. Thus it is clear that the reopening of the assessment is based on the information received and to assess the income in respect of the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information received by the AO cannot remove or relax the said condition provided under the provisions of section 147 that the assessee failed to disclose fully and truly all the material necessary for assessment. In the case in hand, when the AO has already conducted an enquiry on the issue and the assessee is not expected to furnish more than what was already furnished during the assessment proceedings, then the reopening based on the information from the Investigation Wing on the same issue is nothing but change of opinion and to review the order passed by the AO under section 143(3) which is not permissible under law. Accordingly, in the facts and circumstances of the case, we hold that the reopening is not valid and, therefore, the reassessment framed by the AO is without jurisdiction and consequently the reassessment order passed is quashed. Respectfully following the ratio laid down by the Hon'ble Supreme Court as well as Hon'ble High Court in the decisions cited (supra) and the decision of the Coordinate Bench, we quash the reassessment order passed by the Assessing Officer and confirmed by the ld. CIT(A). Hence, ground No 1 of both these appeals are allowed. ..... 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