TMI Blog2021 (10) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... reopened the case of the assessee u/s. 147 of the IT Act, 1961, after recording reasons. 3. Accordingly, notice u/s. 148 of the Act was issued to the assessee on 29th March, 2017. In response to the same, the assessee submitted, vide letter dated 9th April, 2018 that the return already filed on 28th September, 2011 may be treated as return filed in response to notice u/s. 148 of the IT Act. During the course of assessment proceedings, the AO confronted the assessee regarding the taxability of accommodation entry to the tune of ₹ 19,64,235/-. Rejecting the various explanations given by the assessee, the AO made addition of ₹ 19,64,235/- to the total income of the assessee u/s. 68 of the IT Act being the bogus purchase made by him from M/s. Mayank Impex amounting to ₹ 19,64,235/-, the details of which are as under:- 4. Before CIT(A), the assessee, apart from challenging the addition of ₹ 19,64,235/-, also challenged the validity of reassessment proceedings. However, the ld. CIT(A) was not satisfied with the arguments advanced by the assessee and upheld the addition made by the AO as well as the reassessment proceedings initiated by him. 5. Aggrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and sustained by ld. CIT(Appeals) is arbitrary, unjust and unwarranted on facts and in law. 7. That based on such general statement the AO without verifying the facts, without bringing any adverse material on record, without carrying out any further investigation to substantiate the allegation that the purchase is not genuine and without giving an opportunity to the assessee to confront Mayank Impex in relation to the transaction with the assessee, making of addition of ₹ 19,64,235/- under Section 68 of the Act on account of bogus purchases in the hands of the assessee and sustained by ld. CIT(Appeals) was unjustified and unwarranted on facts and in law. 8. That the addition of ₹ 19,64,235/- made under Section 68 of the Act on account of bogus purchases in the hands of the assessee cannot be made merely because the purchases are not verifiable because as far as the assessee is concerned the purchase is duly supported by an invoice and payment by account payee cheque and those many diamonds are being utilized/sold to customers against payment by customer and against sale invoice issued to them by assessee. 9. The above grounds are independent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 08.08.2016). 7. The ld. DR, on the other hand, heavily relied on the order of the CIT(A). 8. I have heard the rival arguments made by both the sides and perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the AO in the instant case made addition of ₹ 19,64,235/- u/s. 68 of the IT Act, 1961 being bogus purchase made by the assessee from M/s. Mayank Impex in the order passed u/s. 143(3)/147 of the IT Act, 1961. A perusal of the reasons recorded for reopening the assessment, copy of which is placed at page 261 of the Paper Book, shows that the following reasons were recorded for reopening of the assessment:- Reasons for reopening the case u/s. 147/148 of the I.T. Act, 1961 For A.Y. 2008-09. The Addl. Commissioner of Income Tax, Central Range, Surat vide letter No. SRT/Addl. CIT/CR/Rajendra Jain, Dharmichand Jain, Sanjay Choudhary Gr./2014-15/506 dated 13/03/2015 has informed that a search and seizure operation u/s. 132 of the I.T. Act 1961 in the case of Sh. Rajendra Jain, Sh. Sanjay Choudhary and Sh. Dharmichand Jain Group was carried out on 03/10/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating in Mumbai, indulging in providing accommodation entries in the nature of bogus sales and unsecured loans. During investigation it was also revealed that besides above lender group, some other entry providers were also engaged in providing accommodation entry. As per information provided, M/s. N.N. Association, the assessee was one of the beneficiaries of such bogus accommodation entries. The complete details of the transactions between the entry provider and the assessee are as under:- From above it is clear that this issue could not be examined for the assessment year under consideration. Therefore, I have reasons to believe that the income of the assessee to the extent of ₹ 14,54,400/- for A.Y. 2008-09 has escaped assessment in terms of Section 147 of the I.T. Act 1961. Sd/- (G. Sathish) Assistant Commissioner of Income Tax Circle 30(1), New Delhi 8. I find identical issue had come up before the Tribunal in assessee's own case in the immediately preceding assessment year and the Tribunal vide ITA No. 1914/Del/2016 order dated 08.11.2016 held the reassessment proceedings as not valid by observing as under:- 6. I have considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. 13. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT (A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity. 8. In the present case, the reopening was done only on the basis of information received from Investigation Wing. Therefore, in view of the ratio laid down by the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
