TMI Blog2015 (2) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... has suppressed sales for the purpose of making payment of excise duty. A perusal of recorded reasons does not show that the AO verified the particulars declared by the assessee in its income-tax return. Nowhere in the recorded reasons, the sale declared by the assessee in its income-tax return, has been brought on record. Information contained in the show cause notice of the Excise Department can be reason to suspect by the AO, but without verifying the relevant particulars declared in the income-tax return, it cannot be reason to believe about the escapement of taxable income under the Income Tax Act. Reopening of the assessment based on the above recorded reasons, is bad in law and cannot be sustained - Decided in favour of assessee. - ITA No. 95, 96, 97 & 98/RJT/2013 And ITA No.128, 129, 130 and 131/RJT/2013 - - - Dated:- 27-2-2015 - Shri N.S. Saini, Accountant Member And Shri Kul Bharat, Judicial Member For the Revenue : Shri M.L. Meena, CIT-DR and Shri Avinash Kumar, DR. For the Assessee(s) : Shri Vijay Ranjan, Advocate and Shri J.C. Ranpura, CA. ORDER PER BENCH : 1. ITA No.95/RJT/2013 and 128/RJT/2013 are cross appeals filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilarly for Asstt.Year 2005-06, the assessee filed its return on 20.5.2005 disclosing total income at ₹ 8,37,470/-. The return was processed under section 143(1) of the Act at the same figure. Similarly for the Asstt.Year 2006-07, the assessee filed its return of income on 11.9.2006 at a total loss of ₹ 17,15,070/-. The assessment was completed under section 143(3) of the Act on 18.12.2008 at the same figure. Similarly, for the Asstt.Year 2007-08, the assessee filed its return of income on 14.10.2007 declaring total income at Rs.NIL. The return was processed under section 143(1) of the Act at the same figure. 7. Thereafter, the AO issued notice under section 148 of the Act for escapement of income assessable to tax on 22.3.2011 for the Asstt.Years 2004-05 and 2005-06 and on 16.3.2011 for the Asstt.Year 2006-07 and 2007-08, and the reasons recorded for reopening of the assessment reads as under. The reasons recorded for these assessment years are exactly similar. 1. The assessee is engaged in the business of manufacturing of ceramic tiles. The case of the assessee was centralized with this Circle with the sole purpose of assessing the income of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exhaustive show cause issued by the CED. Discreet verification from the banks revealed that, over ₹ 1000 crores were exchanged hands as unaccounted cash amounts, in the aforesaid manner, through a number of shroffs situated in Morbi, Rajkot, Himmatnagar and Ahmedabad. Therefore, the DGCEI conducted a detailed investigation in the matter and factory premises of the assessee was covered under search on 17.1.2008 during which several incriminating documents were recovered, which lead to the confirmation of the intelligence. Records and documents as listed in the annexures to the panchnamas dated 17.1.2008 drawn at the factory premises of the assessee, were seized by them for further investigation. Report on such detailed investigation is contained in the show cause notice issued by the Excise department. In the said report, corroborative evidences were also gathered and kept on record by the Excise department. Hence, the said report of the excise department is foolproof and there is substantial material evidence of suppression of sale. The show cause notice by the Excise department also quantified the extent of suppressed sale. 3. I have, therefore reasons to believe t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons as recorded, that the AO has firstly recorded the nature of the business of the assessee and the background under which the AO recorded that Director General of Central Excise Intelligence, Ahmedabad (DGCEI) in the case of the assessee found that there was a suppression of sales for the purpose of levy of excise duty, and accordingly, issued show cause notice, a copy of which was received by him from CIT, Central-2, Ahmedabad. Thereafter, the AO recorded the background under which the DGCEI made investigation and search in the case of the assessee and the background under which show cause notice came to be issued in the case of the assessee by the DGCEI. 17. According to the AO, the report contained in the show cause notice of Excise Department is foolproof, and there is substantial material evidence of suppression of sales and the said show cause notice also quantified the extent of suppressed sale. According to the AO for the above reasons, he believed that the assessee s income to the extent of the sale found by the Excise Department to have been suppressed for levy of excise duty has escaped assessment under the Income Tax Act, and such escapement was for omission and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t without verifying the relevant particulars declared in the income-tax return, it cannot be reason to believe about the escapement of taxable income under the Income Tax Act. 22. In view of this, in our considered view, the reopening of the assessment based on the above recorded reasons, is bad in law and cannot be sustained. We, therefore, hold accordingly, and consequently, cancel the impugned reassessment orders for both the years. 23. In view of our above decision in respect of ground nos.2 and 3 of the appeals of the assessee for Assessment Years 2004-05, 2005-06, 2006-07 and 2007-08 involving jurisdictional issue, the other grounds of appeals taken by the assessee have become infructuous/academic in nature. Therefore, the other grounds of appeals are not required to be adjudicated separately by us. 24. As we have quashed the reassessment order for the Assessment Years 2004-05, 2005-06, 2006-07 and 2007-08 all dated 15.12.2011, while disposing of appeals of the assessee, the appeals filed by the Revenue for the Assessment Years 2004-05, 2005-06, 2006-07 and 2007-08 have become infructuous and hence dismissed. 25. In the result, the appeals of the assessee for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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