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TMI Blog2018 (8) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... to initiate proceedings u/s 147 of the I.T.Act. 2) That on the facts & circumstances of the case and under the provisions of law, the Commissioner has erred in uphold the disallowance of expenses laid out wholly and exclusively for the business aggregating to Rs. 19,87,460/-. He has further erred in adding an amount of Rs. 49,687/- as alleged commission on the disallowed purchases." 2. Brief facts of the case are as under : Assessee filed its return of income on 31/10/05 declaring total income of Rs. 60,41,680/-. The return was processed under section 143 (1) of the Act. Subsequently a search was conducted in Sh. S.K. Gupta group of cases, by investigating wing on 12/12/06. During search operation, it was gathered that this group was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived from the ACIT, Central Circle-9, New Delhi that the assessee is a beneficiary of accommodation entries received from certain established entry operators during the period relevant to A.Y. 2005-06. As per the report the assessee is the beneficiary of accommodation entry from such entry operators as per transaction totaling a sum of Rs. 58,87,460/- in the garb of bogus expenditure under the head printing & stationary in the names of the concerns of entry operators. The A.O. also recorded that no scrutiny assessment was completed in the case and the return filed by the assessee was simply processed u/s 143(1). 4.1.2 There was information in respect of the assessee as a beneficiary of bogus accommodation entries which represented undis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held when the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, the law does nto require that Assessing Officer should have finally ascertained the fact of legal evidence or conclusion. The material required for conclusively proving the escapement of income is not concerned at the stage of reopening. Hon'ble Delhi High Court in the case of A.G.Holdings (P) Ltd. vs. ITO in W.P.(C) 8031/2011 and in the case of CIT vs. Nova Promoters & Finlease (P) Ltd. (2012) 18 Taxmann.com 217 (Delhi) has held that at the time of issuing the notice to reopen the assessment, the Assessing Officer is only expected to form a prima facie or tentative belief that income chargeable to tax had escaped assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.1: Assessee challenges validity of initiation of reassessment proceedings on the ground that reasons to believe are mere suspicion and based on ambiguous information. Ld.AR submitted that there has been no information of belief and proceedings have been initiated in a routine and casual manner. It was submitted by Ld. AR that Assessing Officer issued notice under section 147 without verifying information forwarded to it by investigating wing. 9. On the contrary Ld.Sr.DR submitted that, as per report of Investigating wing, assessee is one of the beneficiary of accommodation entry from concerns of S.K. Gupta group. As no scrutiny assessment was completed in assessee's case, Ld.AO based upon information, made a 'reasonable belief' that du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasoning and observations of Ld.CIT (A) in dismissing the ground of assessee and upholding reopening of assessment by Ld. AO. Accordingly this ground raised by assessee stands dismissed. Ground No. 2 12. This ground has been raised by assessee, challenging addition made by Ld.AO of Rs. 30,87,460/-, as bogus expenditures. Assessee submitted that it had admittedly made purchases of folders and banners printed pamphlets from 2 group concerns of S.K. Gupta group to extent of Rs. 19,87,460/-. He also submitted that out of these expenses assessee had submitted that an amount of Rs. 11 Lacs was never claimed or debited to P&L account. Ld.AR, thus, submitted that entire addition made by Ld.AO deserves to be deleted. 13. On the contrary Ld.Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the same is upheald.
16. However in the concluding paragraph, Ld.CIT (A) has in a way enhanced addition by charging 2% commission for providing accommodation entries to assessee. He has thus made addition of Rs. 49,686/-. It is observed that assessee was not given any notice of enhancement by Ld.CIT (A), thereby not following due process of law, as per section 251 of the Act. We are therefore inclined to delete addition made by Ld.CIT (A) to of 2% as commission for providing accommodation entry to assessee. Accordingly, this ground raised by assessee stands partly allowed.
In the result appeal filed by assessee stands partly allowed.
Order pronounced in the open court on 8th August, 2018. X X X X Extracts X X X X X X X X Extracts X X X X
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