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TMI Blog2021 (12) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... its return of income on 30.03.2012 for the assessment year 2010-11 declaring total income at Rs. Nil and showing loss of Rs. 17,13,32,790/- The case was selected for scrutiny assessment and assessment was completed u/s 143(3) vide order dated 26.03.2013 assessing total income at Rs. Nil. Subsequently, the Assessing officer(AO) initiated reassessment proceedings by issue of notice u/s 148 dated 31.03.2017 and assessment was completed making disallowance of purchases of Rs. 1,06,82,780/- made from M/s Praneta Industries Limited (Now known as M/s Adhaar Ventures India Limited). The AO has also added the disallowance to the book profit computed u/s 115JB of the Act. The AO has held the said purchases as bogus on the basis of information receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of jurisdiction. 2. On the facts and circumstances of the case and in law, both the Ld. AO and the Ld. CIT (A) erred in confirming the AO's action of reopening the assessment u/s. 147 by issue of notice dated 31.03.2017 u/s. 148, which is barred by limitation in view of the first proviso to section 147 of the Income Tax Act, 1961. 3.On the facts and in the circumstances of the assessee's case and in law the Ld. CIT(A) erred in confirming the addition to the extent of 12.5% of alleged total bogus purchases of Rs. 1,06,82,780/-. 4. On the facts and in the circumstances of the assessee's case and in law the Ld. CIT(A) erred in confirming the AO's action of making an addition of Rs. 1,06,82,780/- to the books profit u/s. 115JB in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the statements of Shirish Shah on the basis of which the reasons were recorded and reopening initiated, the AO did not provide the same. The AR has drawn our attention to para 3.4 of assessment order wherein, this fact was accepted by the AO. The AR contended that the AO has made additions solely on the basis of the statement recorded, without providing the copy of the said statement/s and without allowing an opportunity to verify the contents of the statement or to cross examine the person on whose statement, the AO has relied upon to make the addition. 6. Ld. DR has relied on the findings of the lower authorities to contend that the reopening is valid. He submitted that the same arguments put forth before CIT(A) and Ld CIT(A) has deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return of income u/s 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose ally and truly all material facts necessary for his assessment, for that assessment. In this view of the matter, we are supported by the judgement of the Jurisdictional High Court in the case of Ipca Laboratories. vs. Gajanand Meena & others (251 ITR 416) wherein it is held that 1st proviso to Section 147 of the Act clearly states that no action can be taken for reopening the assessment after four years unless the AO has reason to belief that income has escaped assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appropriately replied to by the assessee. The reply having been found satisfactory the assessment was completed accepting the claim of purchases. Once again the very same issue is sought to be raised for the purpose of reopening which is otherwise not permissible in law as the same is based on a change of opinion. It cannot be said that there was any failure on the part of the assessee to fully and truly disclose all the material facts. The present case, in our opinion, could be said to be squarely covered by the decision of the Supreme Court rendered in the case of CIT vs. Kelvinator India, reported in (2010) 2 SCC 723, wherein the Supreme Court observed as under; "5. On going through the changes, quoted above, made to Section 147 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the companies against omission of the words "reason to believe", Parliament reintroduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the assessing officer. 8. We quote hereinbelow the relevant portion of Circular No.549 dated 31-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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