TMI Blog2022 (2) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... n money to the assessee-company which has been explained by the assessee before the ld.CIT(A) vide its letter dated 10.10.2017, the same was not considered by the ld.CIT(A) and however confirmed the additions - on the validity of re- assessment notice issued on the ground of borrowed reasons , the CIT(A) has not followed jurisdictional Tribunal s decision and upheld the reopening of the assessment, which is not in accordance with law and following judicial discipline. Appeal of the assessee is allowed - ITA No.463/Ahd/2018 - - - Dated:- 18-2-2022 - S/Shri Waseem Ahmed, Accountant Member And T.R. Senthil Kumar, Judicial Member For the Assessee : Shri P.F. Jain, CA For the Revenue : Shri Urjit Shah, Sr.DR ORDER PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER: This appeal is filed by the assessee against order dated 16.07.2018 in appeal no. CIT(A)-2/377/ITO, Wd.2(1)(2)/2016-17 passed by the Ld.Commissioner of Income-tax (Appeals)-2, Ahmedabad [for short Ld.CIT(A)] relating to the assessment year 2009-10. 2. This appeal is filed with a delay of 51 days. The assessee has filed an affidavit stating that there were number of legal proceedings agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing accommodation entries of unsecured loans and bogus purchase. The assessee-company has also obtained accommodation entries of ₹ 1,37,815/- during the Asstt.Year 2009-10 in the form of purchases from one of the benami, Rajendra Jain. Further information was also received from additional CIT(Inv.), Uni-1, Ahmedabad in respect of accommodation entries paid by the companies and controlled by Shri Pratik Shah wherein it is noticed that the assessee-company has also obtained accommodation entries of ₹ 25 lakhs each by cheque from Poineer Mercantile Ltd. and another from Jupiter Business Ltd. In view of the above information, the AO reopened assessment under section 147 for the second time by issue of notice under section 148 on 30.3.2016. In response to the notice, the assessee vide letter dated 21.8.2016 requested to treat the return filed originally on 12.10.2019 as a return in response to the notice under section 148 of the Act. Thereafter, the AO completed re-assessment by making addition of ₹ 51,37,815/- as income escaped assessment and brought to tax the same. 6. Aggrieved against this second the reassessment order, the assessee filed an appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013. During the search and seizure, the list of the beneficiaries who have benefited from the entries obtained from these group was compiled. The main activities of these benami concerns are providing accommodation entries of unsecured loans and bogus purchase. The assessee company has also obtained accommodation entries of ₹ 1,37,815/- during the year under consideration in the form of purchase from the one of the benami concern of Rajendra Jain. Further, information received from the Addl. DIT (Investigation)-Unit-l, Ahmedabad in respect of accommodation entries paid by the companies and controlled by shri pratik shah wherein it is noticed that the assessee company has also obtained accommodation entries of ₹ 50,00,000/- during the year under consideration as tabulated hereunder: Sr. Date Cheque No. Bank name Party name Amount Name of the entry giving company 1. 20 March 09 RTGS DCB Kalyan Jewels P.Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as noted in the reasons recorded for reopening the assessment- furnished to the assessee vide Assessing Officer's letter dated 25th April 2012, on the following ground: During the financial year 2007-08, the assessee has made transaction of ₹ 10,24,100 (deposits in cash) in his saving bank account but no return of income was filed by the assessee. As such, it was reason to believe that there is an escapement of income at ₹ 10,24,100 on the part of the assessee. Therefore, in the light of the above fact that the income chargeable to tax for the assessment year 2008-09 has escaped assessment within meanings of section 147 of the Income Tax Act, notice was issued under section 148 on 14.9.2009 which was served upon the assessee through his counsel Sri Arun Kumar Agarwal, Advocate, on 14/09/2009. 4. The short question that we are required to adjudicate is whether or not, on the basis of the above reasons, reassessment proceedings can be lawfully initiated. This aspect of the matter was not examined by the CIT(A), but, as is the settled legal position in the light of Hon'ble Supreme Court's judgment in the case of National Thermal Power Co. Ltd Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to disclose and open his mind through the reasons recorded by him. He has to speak through the reasons. Their Lordships added that The reasons recorded should be self- explanatory and should not keep the assessee guessing for reasons. Reasons provide link between conclusion and the evidence.... . Therefore, the reasons are to be examined only on the basis of the reasons as recorded. The next important point is that even though reasons, as recorded, may not necessarily prove escapement of income at the stage of recording the reasons, such reasons must point out to an income escaping assessment and not merely need of an inquiry which may result in detection of an income escaping assessment. Undoubtedly, at the stage of recording the reasons for reopening the assessment, all that is necessary is the formation of prima facie belief that an income has escaped the assessment and it is not necessary that the fact of income having escaped assessment is proved to the hilt. What is, however, necessary is that there must be something which indicates, even if not establishes, the escapement of income from assessment. It is only on this basis that the Assessing Officer can form the belief th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere fact that these deposits have been made in a bank account does not indicate that these deposits constitute an income which has escaped assessment. The reasons recorded for reopening the assessment do not make out a case that the assessee was engaged in some business and the income from such a business has not been returned by the assessee. As we do not have the liberty to examine these reasons on the basis of any other material or fact, other than the facts set out in the reasons so recorded, it is not open to us to deal with the question as to whether the assessee could be said to be engaged in any business; all that is to be examined is whether the fact of the deposits, per se, in the bank account of the assessee could be basis of holding the view that the income has escaped assessment. The answer, in our humble understanding, is in negative. The Assessing Officer has opined that an income of ₹ 10,24,100 has escaped assessment of income because the assessee has ₹ 10,24,100 in his bank account but then such an opinion proceeds on the fallacious assumption that the bank deposits constitute undisclosed income, and overlooks the fact that the sources of deposit need n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome was indeed to have been taxed in its hands but then in the case before us the only reason for reassessment proceedings was the fact of deposit of bank account which by itself does not lead to income being taxed in the hands of the assessee. Learned Departmental Representative has referred to several other judicial precedents in support of the proposition that at the stage of initiation of reassessment proceedings, all that is to be seen as existence, rather than adequacy, of the material to come to the conclusion that income has escaped assessment. To us, there cannot be any, and there is no, doubt on the correctness of this proposition but then, as we have elaborately explained earlier in this order, the material must indicate income escaping assessment rather than desirability of further probe in the matter which may or may not lead to income escaping the assessment. On the basis of reasons as recorded in this case, such an inference about income escaping assessment, in our humble understanding, cannot be drawn. 10. In view of the reasons set out above, as also bearing in mind entirety of the case, we are of the considered view that the reasons recorded by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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