TMI Blog2022 (8) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... to notice of the Assessing Officer and Assessing Officer rejected the same and proceeded to make the additions merely relying on the investigation report without any independent application of mind and further, he applied suspicion and preponderance of probability and proceeded to make additions invoking provisions of section 68 - Since the facts are very clear that assessee has received its own money from the defaulted supplier and may be the supplier having an account with Central Bank of India it does not mean that the transactions can become doubtful. We are in agreement with the findings of the Ld.CIT(A) and accordingly, we deem it fit and proper not to interfere with the findings of the CIT(A). Accordingly, grounds raised by the revenue are dismissed. - ITA NO. 1384/MUM/2020 - - - Dated:- 3-8-2022 - SHRI AMIT SHUKLA , HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , HON'BLE ACCOUNTANT MEMBER Assessee by : None Department by : Shri Nihar Ranjan Samal ORDER PER S. RIFAUR RAHMAN ( AM ) 1. This appeal is filed by the revenue against order of Learned Commissioner of Income Tax (Appeals)-24, Mumbai [hereinafter in short Ld.CIT(A) ] dated 28.11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough which it reached the beneficiary account. One such account with the Central Bank of India belongs to MCPL and the beneficiary being the assessee company, accordingly, he proceeded to make the addition by relying on the few case laws and proceeded to make the addition u/s. 68 of the Act. 6. Aggrieved assessee preferred an appeal before the Ld.CIT(A) 24, Mumbai and before him assessee filed detailed submissions vide letter dated 26.07.2019, for the sake of clarity it is reproduced below: - A. The appellant has received its own money back At the outset we would like to state that Ld. AO has completely missed out the important facts while passing the assessment order. The fact that the appellant had given an advance of Rs. 10.80 crore to M/s. Manorath Commercial (p) Ltd. in March 2008 for the purchase of 2 Automation PLC machines and the appellant has received Rs.6.94 crore from the M/s. Manorath Commercial (p) Ltd. during the FY.2009-10. This fact was not disputed by the department during the relevant assessment year and department accepted the returned income of the assessee. Therefore, it can be said that appellant has given advance on the basis of purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the machine. In this regard, we would like to state that, the impugned transaction of the appellant is genuine business transaction and the appellant can provide any information which your honor feels reasonable to prove the genuineness of the transaction. The appellant further submitting the following details which had not submitted before the Ld. AO and which is important for the case are: Copy of Purchase order, Details of the make of the machine, Letter of communication with Delta Steel Company Ltd.(Nigeria), Copy of civil suit for damages filed against Mumbai based company, Purchase Order given by Delta Steel (Nigeria) for supply of Automation system, Communication letters between Premiere Supplies and M/s. Manorath Commercial Pvt. Ltd. Since the above documents was not filed in the assessment proceedings, the same shall be treated as additional Evidences. We request your honour to kindly accept these additional evidences as the same is very crucial for the matter of the appellant and those documents were not asked by the Ld. AO in the reassessment proceedings. B. Ld. AO has framed his opinion by looking into some fragments of the entire transaction and do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aids in creation of internal logic for factory and assembly line programming. Just like any commercial computer, a PLC essentially runs on a 'Central Processing Unit or CPU. Similarly, it also has a power supply, programming device, input devices (buttons and switches) and output devices (indicator lights, relays and signaling columns). The PLC is commonly used in civil appliances like washing machines and refrigerators, and for controlling traffic signals and elevators. They are used in many industries to monitor and control production processes and building systems. Hence, it can be seen that above equipment is in line with the business activities performed by the appellant. On perusal of above documents, it is quite clear that the transaction undertaken by the appellant is purely a business transaction. D. The appellant had dealt in identical transactions in the past During the course of assessment proceedings, the appellant has stated the Ld. AO the appellant had also dealt in the identical type of machinery in the past, but the Ld. AO had not considered the arguments of the appellant. Before your honour we are now submitting copy of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer has merely acted upon the information submitted to him by the investigation wing that there is material to suggest that Mudra had paid cash amount to AB D whereas, the material collected during the survey against Mudra prima facie suggests such cash payment to AD. This would demonstrate total lack of application of mind on the part of the Assessing Officer. If he had perused the material supplied to him by the investigation wing, he would have immediately noticed that material referred would suggest cash payment to AD and not AB D i.e. the present petitioner. 7. Even in a case where the return filed by the assessee is accepted without scrutiny, as per the settled law, the Assessing Officer can issue a notice of reopening of assessment provided he has reason to believe that income chargeable to tax has escaped assessment. The Assessing Officer cannot proceed mechanically and also on erroneous information that may have been supplied to him. In fact, we note that in the present case the Assessing Officer had issued a notice to a wrong person. The impugned notice is, therefore, set aside. 8. Petition is disposed of accordingly. CIT vs. SFIL S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. Where reassessment was resorted to on basis of information from DIT(Investigation) that assessee had received accommodation entry but and there was no independent application of mind by Assessing Officer to tangible material and reasons failed to demonstrate link between tangible material and formation of reason to believe that income had escaped assessment, reassessment was not justified. Harikishan Sunderlal Virmani vs. DCIT [88 taxmann.com 548 (Gujarat)] Section 147 of the Income-tax Act, 1961 - Income escaping assessment General (Illustrations) - Assessment year 2009-10 - Reopening of assessment beyond four years on basis of information received from external source, viz., Principal Director of Income Tax (Investigation), was not justified when there was no allegation of assessee's failure to disclose truly and fully material facts necessary for assessment [In favour of assessee] On the basis of the information received from another agency, there cannot be any reassessment proceedings. However, after considering the information/material received from other source, the Assessing Officer is required to consider the material on record in case of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of chartered accountants, used to write regular accounts. The assessee had produced confirmatory letters from all the producers regarding the correctness of payments shown to have been made by them. ACIT vs. Prabhat Oil Mills 52 TTJ 533 (Ahmadabad) In this case a diary was seized from the premises of a third party which indicated the alleged unrecorded sales made to the party by the assessee. The AO relied only on the entries of the said diary and did not bring on record any corroborative material to prove that such sales were made outside the books. It was held that mere entries in the accounts of third parties were not sufficient to prove that the assessee indulged in such transactions. G. Ld.AO had no 'reason to believe' that income has escaped assessment and notice issued u/s.148 based on suspicion is bad in law and without jurisdiction. This ground is covered in favour of the appellant by the decisions of jurisdictional High Court. PELICAN PORTFOLIO SERVICES PVT. LTD. vs. ITO [97 CCH 142 (Bom. HC)] In this case assesses had filed return and same was processed u/s. 143(1), In the Notice of Reassessment, it was contended that A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eve that income chargeable to tax has escaped assessment. Decided in favour of assessee. H. Decisions relied by the Ld. AO is distinguishable on following grounds In the assessment order, Ld. AO has provided various case laws to contend the issue and also mentioned some self made fundamental tests for applying the provisions of section 68 (unexplained cash credit) of the Act. Ld. AO also mentioned few case laws out of which one of the case law is of apex court in case of Navodya Castle (P) Ltd. vs CIT 230 Taxman 268 (SC), to emphasize upon the three fundamental tests. Here, we want to submit to your honor, that invoking section 68 and applying the above fundamental test does not worth reliance in our case, the Ld. AO had erred in applying section 68. The principles arising out of above mentioned case laws are not relatable in our case. Our case is simply a matter of taking back one's own money. In this case assessee company has received share application money through bogus transactions and due to this they hide all party movement of money involved in that transaction, such conduct arises suspicion in the mind of Ld. AO and hence he checked not only the ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pability to perform transaction also in case of CIT vs Smt. P.K. Noorjahan 237 ITR 570 (SC), has similar phraseology employs the word may and not shall . Thus, the un-satisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of assessee. Ld. AO should also look into corroborative evidence before applying section 68 in any case. We also place reliance on following case laws in this regard: CIT vs Expo Globe India Ltd., (2014) 361 ITR 147 (Del) The provisions of section 68 held not applicable where the share application money and its source had been satisfactorily been explained being a finding of fact Sarogi Credit Corporation v. CIT, (1976) 103 ITR 344, 349-50 (Pat) The Assessing Officer's rejection, not of the explanation of the assessee, but of the explanation regarding the source of income of the depositor, cannot by itself lead to any inference regarding the non-genuine or fictitious character of the entries in the assessee's books of account. Hence, it at can be easily inferred that Ld. AO has applied those conditions and provisions of section 68 of the Act wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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