TMI Blog2020 (12) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... such income at ₹ 11,80,571/- which is appearing at page-3 of the assessment order, but, after examination this figure was also found incorrect and A.O. has ultimately restricted the addition to ₹ 7,72,469/- i.e., for income only but no addition is made of transaction of MCX Investment. A.O. has recorded wrong, incorrect and non-existing facts in the reasons recorded for reopening of the assessment that assessee has made transaction in commodity exchange contract of ₹ 10 lakhs. A.O. in the assessment order has mentioned that assessee has made investment of ₹ 10 lakhs in purchase of mutual funds which fact is also incorrect and is contradictorily recorded in the reasons for reopening of the assessment for ₹ 2 lakhs only. A.O. in the assessment order has also recorded same statement that assessee has made contract in commodity exchange exceeding ₹ 10 lakhs which fact was ultimately found incorrect by the A.O. himself and he has made part addition as against the income mentioned in the show cause notice. In case incorrect, wrong and non-existing reasons are recorded by the A.O. for reopening of the assessment and A.O. failed to verify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings the assessee furnished copy of Form No.16, Form No 26AS, statement of his bank accounts maintained with different Banks, copy of the computation of income and documents relating to MCX business made with Aditya Birla Commodities Broking Ltd. The assessee also filed copy of the sale deed of property at Gurgaon Dated 21.03.2011 sold by assessee for a consideration of ₹ 1.20 crores. The A.O. issued detailed show cause notice to the assessee and after considering the reply of the assessee, made certain additions and computed the total income at ₹ 84,37,210/-. The net income of the assessee is computed as under : 1. Income from salary as discussed in para 3.1. ₹ 4,34,338/- 2. Income from interest as discussed in para 3.2. ₹ 1,59,237/- 3. Income from MCX business as discussed in para 3.3. ₹ 7,72,461/- 4. Income from unexplained cash deposits as discussed in para 3.4 ₹ 59,50,000/- 5. Income from unexplaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted that no notice under section 142(1) or any query under section 133(6) have been issued. No letter have been delivered to the assessee. 5. On the other hand, Ld. D.R. relied upon the Orders of the authorities below as regards reopening of the assessment. 6. We have considered the rival submissions and perused the material on record. It is well settled Law that validity of the re-assessment proceedings is to be judged with reference to the reasons recorded for reopening of the assessment. The copy of the reasons for reopening of the assessment are placed on record which reads as under : 1. Name and Address of the Assessee Monie Natrajan 1408, Beverley Part-II, DLF-II, Gurgaon. 2. PAN AAFPN2890N 3. Status INDL 4. Ward/Circle/Range Ward-2(5), Gurgaon 5. Assessment Year 2011-12 6. Date 11.02.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year. Therefore, such information received by A.O. was totally wrong, incorrect and non-existing and thus the fact mentioned in the reasons recorded for reopening of the assessment as regards investment made in purchase of mutual fund is wrong, non-existing and incorrect. The A.O. has recorded wrong, incorrect and non-existing reasons for reopening of the assessment which is not permissible under Law. As regards the transaction in commodity exchange contract of ₹ 10 lakhs, Learned Counsel for the Assessee referred to para-3.3 of the assessment order in which the A.O. has made addition of ₹ 7,72,461/- on account of profit on the MCX business. The A.O. has also mentioned in the same para that in the show cause notice he has mentioned such income at ₹ 11,80,571/- which is appearing at page-3 of the assessment order, but, after examination this figure was also found incorrect and A.O. has ultimately restricted the addition to ₹ 7,72,469/- i.e., for income only but no addition is made of transaction of MCX Investment. Therefore, A.O. has recorded wrong, incorrect and non-existing facts in the reasons recorded for reopening of the assessment that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, such information received by the A.O. is not in accordance with Law and would not provide any information to the A.O. to record reasons for reopening of the assessment as regards escapement of income for making the investment in purchase of mutual funds or transaction of different commodity exchange contract. Thus the entirety of facts clearly show that A.O. recorded wrong, incorrect and non-existing reasons for reopening of the assessment without application of mind. It may also be noted that A.O. himself has mentioned in the reasons that whatever information he has received through NMS needs examination in the light of information in his possession, but, he did not make any examination prior to recording reasons for reopening of the assessment and totally vague, non-existing, wrong and incorrect facts have been mentioned in the reasons recorded for reopening of the assessment. Further, the reopening of the assessment would be invalid if the A.O. wanted to make investigation out of information. Such exercise should have been prior to recording of the reasons. In support of our findings, we rely upon the following decisions. 6.2. The Hon ble Punjab Haryana High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the correct income i.e. ₹ 69,71,191 was put before the Commissioner at the time of seeking his approval, he might have taken a different view. There was nothing on record to show that the clerical mistake of substituting ₹ 20,56,145 for ₹ 69,71,191 was ever brought to the notice of the Commissioner either before or after approval or sanction under section 151(1) of the Act. The initiation of the case for reopening of the assessment was erroneous and without application of mind especially since the Assessing Officer had not examined the return filed, which would have revealed that the assessee had filed regular returns, had sufficient opening balance in his account and the withdrawals therefrom substantiated the donation made. Therefore, the reopening of the assessment was unsustainable in law and the notice issued under section 147 of the Act was to be quashed. 6.5. The Hon ble Bombay High Court in the case of Siemens Information Systems Ltd., vs., ACIT Others [2007] 293 ITR 548 (Bom.) held as under : The petitioner had several EOU/STP units engaged in the business of export of software. In response to the notice for reopening the assessment fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application of mind to information received from Directorate of Investigation and no prima facie opinion formed re-assessment order invalid . 6.9. In the case of Sarthak Securities Co. (P) Ltd., 329 ITR 110 (Del.), the Hon ble Delhi High Court held as under : [ No independent application of mind by the Assessing officer but acting under information from Inv. Wing - Notice U/s. 147 to be quashed . 6.10. The crux of the above Judgments had been that in case incorrect, wrong and non-existing reasons are recorded by the A.O. for reopening of the assessment and A.O. failed to verify the information received due to non application of mind to information, reopening of the assessment would be unjustified and is liable to be quashed. Considering the totality of the facts and circumstances of the case and in the light of material on record, we are of the view that reopening of the assessment is illegal and bad in Law and is liable to be quashed. We, accordingly, set aside the Orders of the authorities below and quash the reopening of the assessment. Resultantly, all additions stand deleted. In view of the above, there is no need to decide other issues raised in the present appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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