TMI Blog2021 (8) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... 1999 stating that specifically that the ld. CIT has directed him to invoke provisions of section 147 of the Act and therefore, the reopening was made - it is not the 'reason to believe' of the AO about escapement of income which is basic mandatory requirement of law for reopening u/s. 147 - Opinion of ld. AO is clearly manifest that he thought it is case of erroneous order, which is prejudicial to interest of revenue. Reopening is made at the direction of the ld. CIT. The ld. CIT when he did not find time to invoke provision of section 263 of the act, he directed ld. AO to initiate action u/s. 147 of the Act. Therefore, we do not find any reason to uphold the reopening of the assessment. - Decided in favour of assessee. - ITA No. 2037/Del/2002 - - - Dated:- 29-7-2021 - Amit Shukla, Member (J) And Prashant Maharishi, Member (A) For the Appellant : Sachit Jolly, Advocate For the Respondents : Avikal Manu, Sr. DR ORDER Per Prashant Maharishi, AM 1. This appeal is filed by the assessee against the order of the ld. CIT(A)-XV dated 07.03.2002 for assessment year 1994-95, wherein the appeal filed by the Assessee against the order passed u/s. 143(3) rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iles Pvt. Ltd. Coimbatore L.S. Mills Ltd Prashanth Textiles Pvt. Ltd. Spindles drafting frames 40,00,000 6 Naga Agencies Tiruchirapalli Nagalaxmi Flour Mills Sievers 25,00,000 7 Emerald Textiles (P) Ltd. Aruppukottai Sriganpathy Mills Spindles 25,00,000 8 Ram Bhagat Hari Prasad Bankura Durgapur Oxygen (P) Ltd. Oxygen cylindei 8,12,025 9 Steel form/ Diamond Engineering Works, Calcutta J.G. Engineers Pvt. Ltd Shattering Equipment i 10,78,841 10 Everest Kanto Cylinders Ltd. Tarapur Maharashtra Kohlapur Oxygen and Acetylene (P) Ltd. Credit Capital Venture Gas Cylind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A). The Assessee challenged the reopening of the assessment. The ld. CIT(A) held that the ld. AO had sufficient evidence in the form of enquiry report from Investigation Wing, Coimbatore which cannot be ignored and therefore, he confirmed the action of the ld. AO u/s. 147 of the Act. 5. On the merits of the addition he analyzed facts of 13 suppliers and out of that the transaction with APSEB which is Govt Corporation he held that Govt Corporation cannot be a party to a sham transaction and therefore, to that extent he decided the issue in favour of the Assessee and directed the ld. AO to allow deprecation on asset leased to APSEB. 6. With respect to the other parties he confirmed the disallowances for the following reasons:- i. Mere filing of a suit is no evidence to prove that the transaction is genuine; Assessee has failed to establish the existence of the parties. ii. No evidence is produced to prove the existence of the suppliers at specified address. No alternate address was provided. Assessee failed to file valuation report, delivery challans, letter inviting quotation from the parties that could prove that the transactions are genuine. 7. Accordingly, exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in law. With respect to the merits of the claim he submitted that the issue is squarely cover in favour of the Assessee by the decision of the coordinate bench in Assessee's own case in 1993-94 and 1995-96. 12. The ld. DR vehemently supported the order of the ld. AO. 13. We have carefully considered the rival contentions and perused the orders of the lower authorities. We find that i. on 04.08.1997 there were an audit objection which shows that assessment on the Assessee was completed for Assessment Year 1994-95 on scrutiny by passing an order u/s. 143 (3) dated 26.03.1997. The Assessee was allowed a deduction of ₹ 4,64,55,842/- as deprecation on various assets. The Assessee claimed 100% deprecation on some assets as cost of each plant and machinery was less than ₹ 5000/-. Audit scrutiny revealed that Assessee is in leasing business and items of plant and machinery were purchased in bulk and also leased out in bulk and therefore, it was not correct for Assessee to claim deprecation @100% on items of plant and machinery and even though individually cost is less than ₹ 5000/-. According to audit objection, the entire bulk purchase should have been t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vii. On 03.02.1999 the ld. AO wrote to the Assessee that in some of the cases where the address are given by the Assessee of the parties are either incomplete or parties are not found therefore, to furnish the complete address of the suppliers. viii. On 11.02.1999, the ld. CIT wrote a letter to the ld. AO referring to the proposal u/s. 263 of the Act stating that the order has to be passed by the ld. CIT by 31.03.1999 after giving Assessee an opportunity of hearing. Therefore, it was stated that report called from the office of the ld. AO of CIT on 23.09.1998 has not been received by CIT so far and therefore, it was directed to AO to expedite the same. ix. On 23.02.1999, the ld. AO submitted a report to the CIT. It was stated that on enquiry by him with respect to all the parties, letters came back unserved in cases of four parties and in case of another four parties did not furnish reply of query letter u/s. 133(6) of the Act. The ld. AO further noted that Assessee was requested to give the correct address of the parties and it was not responded. Therefore, the ld. AO requested the CIT as per para 4 of that letter to set aside the issue on 100% depreciation on leased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t available. This fact is also mentioned in one of the correspondence of CIT with ld. AO when he requested ld. AO to expedite the inquiries. Therefore, the ld. CIT directed the ld. AO to initiate action u/s. 147 of the Act. The ld. AO recorded the reasons on 30.03.1999 stating that specifically that the ld. CIT has directed him to invoke provisions of section 147 of the Act and therefore, the reopening was made. From the above fact it is clear that it is not the 'reason to believe' of the AO about escapement of income which is basic mandatory requirement of law for reopening u/s. 147 of the Act. Opinion of ld. AO is clearly manifest that he thought it is case of erroneous order, which is prejudicial to interest of revenue. Hence, Reopening is made at the direction of the ld. CIT. The ld. CIT when he did not find time to invoke provision of section 263 of the act, he directed ld. AO to initiate action u/s. 147 of the Act. Therefore, we do not find any reason to uphold the reopening of the assessment. Accordingly, we quash the reassessment proceedings initiated by the ld. AO. Accordingly, ground No. 1 and 2 of the appeal of the Assessee is allowed. 15. In view of our order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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