TMI Blog2021 (2) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the ld. CIT(A) in his order passed on merits has found these bills to be relating to purchase of fixed assets and has accordingly, made the disallowance of only depreciation relating to the same, which has not been challenged by the Revenue before us. It is clearly evident that on receiving information from the Commercial Tax Department, the ld. AO did not even care to verify the same from his records from where all these factual inaccuracies would have been brought out. Non application of mind by the AO and the belief of escapement of income is definitely not his own but borrowed from that of the commercial tax officer who had forwarded the information. The basic requirement of law for reopening an assessment is application of mind by the AO to the material or information in his possession to conclude and arrive at a satisfaction therefrom that income has escaped assessment. Both application of mind and satisfaction/belief of the AO are lacking in the present case. The reassessment therefore we hold is invalid. The case laws relied upon by the Ld.Counsel for the assessee support the case of the assessee. The order passed by the AO is, therefore, set aside. - ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the satisfaction for escapement of income was not his own but borrowed. Our at tent ion was drawn to the reasons recorded, copy of which was placed before us on Paper Book page No. 35 to 37, as under : REASONS FOR ISSUE OF NOTICE U/S 148 OF THE ACT IN THE CASE OF M/S FORTUNE METALIKS LTP.FOR THE.A.Y.2011-12. The assessee is a limited company and engaged in business of rolling mills. The assessee has filed return of income through e-filling 30.09.2011 for A.Y.2011-12 declaring income of Rs. Nil (₹ 38,43,004/- u/s 115JB)/-. Further return of income assessed u/s 115JB at ₹ 38,43,004/- ort 20.03.2014. 2. This office is in the possession of the information received from ADIT (Inv.), Unit-I, Central Revenue Building, Civil Lines, Riapur (C.G) on 12.03.2018 in the case of M/s Fortune Metaliks Ltd. 3. In his report ADIT (Inv.), Unit-I, Riapur, has made following observations:- The Commercial Tax Department, Chhattisgarh has detected and identified the concerns in whose name bogus sale bills have been isssued. Such bogus sale bills were detected with the help of specialized software of the Commercial Tax Department. After detection of such bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... believe that income has escaped assessment for the year under consideration have been recorded above. I have carefully considered the assessment records containing the submission made by the assessee in response to various notices issued during the assessment /reassessment proceedings and have noted that the assessee has not fully and truly disclosed the following material facts necessary for his assessment for the year under consideration: Unexlpained expenditure. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration thereby necessitating reopening u/s 147 of the Act. It is true that the assessee has filed a copy of annual report and audited P L a/c and balance sheet alongwith return of income where various information/material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced books of account, annual report, audited P L a/c and balance' sheet or other evidence as mentioned ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to purchase of fixed assets and had not been debited to the Profit Loss Account. The ld. counsel for the assessee contended, that the satisfaction being based on incorrect facts it could not form the basis for re-opening the case. In this regard, he placed reliance on the following decisions of the ITAT holding that satisfaction of the AO of escapement of income based on incorrect facts would not empower the AO to reopen the case : Smt .Monika Rani v s ITO ITA No.582/Chd/2019 dt 28-02-2020 Sagar Enterprises V/s ACIT 257ITR335 GUJ-HC Baba Kartar Singh Dukki Educational Trust V/s ITO 158 ITD 0965 CHD-TRIB Van Oord Dredging and Marine Contractors BV V/s ADIT ITANO.495/MUM/2016 Shri Ram Mohan Rawat V/s Income Tax Officer ITANO.1014/JP/2018 Shri Allen De Noronha V/s ACIT ITA No. 338/LKW/2015 LKW-TRIB IOT Infrastructure Energy Services Ltd V/s ACIT ANR 329 ITR0547BOM-HC The ld. counsel for the assessee contended that it is evident that the AO had not cared to apply his mind at all to the information before him and the satisfaction of the AO of escapement of income was without application of mind and was in fact borrowed satisfaction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the AO in the present case were invalid since the reasons recording his satisfaction of escapement of income were based on incorrect facts and there was no application of mind at all by the AO. The fallacies in the facts pointed out by the ld. counsel for the assessee, regarding the quantum of bogus purchases noted by the AO in his reasons as also name of one of the parties, has not been disputed or controverted by the Revenue. Further, even the fact recorded by the AO in the reasons that the bogus bills had been debited to the Profit Loss Account was incorrect which is evident from the fact that the ld. CIT(A) in his order passed on merits has found these bills to be relating to purchase of fixed assets and has accordingly, made the disallowance of only depreciation relating to the same, which has not been challenged by the Revenue before us. It is clearly evident that on receiving information from the Commercial Tax Department, the ld. AO did not even care to verify the same from his records from where all these factual inaccuracies would have been brought out. There was clearly total non application of mind by the AO and the belief of escapement of income is definitel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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