TMI Blog2018 (7) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case and in law, the Learned Commissioner (Appeals) erred in confirming the reopening of assessment under section 147 of the Act on the following grounds a. The Commissioner (Appeal) failed to appreciate that the notice under section 148 was issued without any valid reason for reopening. b. The Commissioner (Appeals) failed to appreciate that the Assessing Officer had failed to give reasons for reopening to the Appellant and proceeding with the assessment proceedings without authority. c. The Commissioner (Appeals) failed to appreciate that a mere mention of name from whom the Appellant had purchased goods from certain parties list by Sales Tax Department does not by itself a information within the meaning of section 147 and thereby a ground for reopening of assessment. 2. On the facts and circumstances of the case and in law, the Learned Commissioner (Appeals) erred in holding the purchases of ₹ 104,23,000 /- as non genuine under section 69C of the Act. 3. On the facts and circumstances of the case and in law, the Learned Commissioner (Appeals) erred in arriving at a disallowance by adopting a Gross Profit ratio of 12.50% on alleged bogus p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer asked the assessee to file documentary evidence to establish the genuineness of the purchases shown from these parties. In response to this query the assessee filed copies of purchase bills and ledger accounts of the above listed parties. The assessee however could not file copies of lorry receipts and octroi payment receipts to establish delivery of the goods to the appellant's premises. The notices issued by the Assessing Officer u/s. 133(6) of the I.T. Act to these parties were received back unserved with the remark left/not known . The appellant could not produce any of the parties before the Assessing Officer. The Assessing Officer therefore held that the assessee had failed to establish the genuineness of the purchases from the above listed parties and added the amount of ₹ 1,04,23,000/- to the assessee's income on account of unproved purchases. 6. Against the above order, the assessee appealed before the ld. Commissioner of Income Tax (Appeals). The ld. Commissioner of Income Tax (Appeals) confirmed the action of the assessing officer in making addition of 12.5% of the bogus purchase. 7. Against the above order of ld. Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer has live link with reason to believe that income has escaped assessment. On this incriminating tangible material information, assessment was reopened. At this stage there has to be prima facie belief based on some tangible and material information about escapement of income and the same is not required to be proved to the guilt. In this regard, I refer to the decision of the Hon'ble Apex Court in the case of CIT(A) Vs. Rajesh Jhaveri Stock Brokers P. Ltd, 291 ITR 500:- Section 147 authorises and permits 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 Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has obtained bogus purchase bills. Mere preparation of documents for purchases cannot controvert overwhelming evidence that the provider of these bills are bogus and non-existent and there is no cogent evidence of transportation of goods. The sales tax Department in its enquiry have found the parties to be providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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