TMI Blog2022 (9) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus billings. CIT(A) also noted that during the scrutiny proceedings and remand proceedings none other directors of the said company appeared before the assessing officer and the AO rightly identified nine shell companies who are providing bogus purchase bills and accordingly held that the assessee has deposited its own unaccounted cash in the bank account and confirmed the findings of the assessing officer. Unfortunately, the tribunal failed to examine any of the factual details which have been brought out by the AO as well as the CIT(A) but merely went on the basis as to what are the conditions to be fulfilled in order to reopen the assessment. As pointed out earlier, reasons given by the learned tribunal to distinguish the decision in Peass Industrial Engineers is not tenable. We are of the view that the order passed by the tribunal has ignored the crucial aspects of the matter which are relevant to the reopening of the assessment. Thus, we are of view that the order impugned calls for interference. Appeal of revenue allowed. - HON BLE MR. JUSTICE T.S. SIVAGNANAM AND HON BLE MR. JUSTICE HIRANMAY BHATTACHARYYA Appearance:- Mr. Prithu Dudhoria, Adv.. .For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed with the authorised representative of the assessee, written objections were also filed by the assessee. After perusal of the reply given by the assessee to the show cause notice issued on 11.12.2018, the assessing officer completed the assessment by order dated 31.12.2018. The assessing officer pointed out that the assessee has failed to substantiate the transactions made in its account maintained with ICICI Bank, VK Road Branch, Kolkata. Further with regard to the claim made by the assessee that they had effected purchase transactions with 10 entities to the tune of Rs. 68,58,39,462/- and Rs. 8,70,81,602/-, the assessing officer held the transactions to be not genuine as the assessee failed to produce the parties related to those transactions and the summons issued to them were also not complied with. Further the assessing officer pointed out that in the scrutiny assessment made under Section 143(3) dated 27.03.2014,the assessing officer held that the assessee is habitual in taking accommodation entries from different shell companies and an addition was made under Section 68 of the Act to the tune of Rs. 1,50,00,000/-. The assessing officer noted the decision of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... com 60 (Bombay) for the proposition that where information was received from investigation wing about certain companies that they were involved in giving accommodation entries to several beneficiaries and the assessee being one of them, information supplied by the investigation wing to the assessing officer, thus, formed a prima facie basis to enable the assessing officer to form a belief of income chargeable to tax having escaped assessment. Reliance was also placed on the decision of the High Court of Gujarat in Peass Industrial Engineers Private Limited Versus Deputy Commissioner of Income Tax (2016) 73 Taxmann.com 185 (Gujarat) wherein it was held that after scrutiny assessment, the assessing officer received information from investigation wing that entry operators provide bogus entries to various beneficiaries and the assessee therein was one such beneficiary and therefore, the assessing officer was justified in reopening the assessment. With regard to the cash deposit, the CIT(A) referred to the remand report submitted by the assessing officer and held that the claim of the appellants that they had sufficient cash balance in its books was held to be not acceptable, more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough those shell/paper companies. Further, the funds which were transferred to bank account of the assessee was immediately transferred to other entities and at times followed by cash withdrawals from the said accounts. The above is the reasons set out for reopening the assessment. 8. The question would be as to what is the expected of an assessing officer to do if he receives information from the investigation wing with regard to the huge cash transactions done by the assessee in its bank account and the cash stood deposited in the assessee s bank account by shell/paper companies. More or less an identical factual scenario was in the case of Peass Industrial Engineers Private Limited. In the said case, the assessee was engaged in the business of the manufacturing textile machinery and spare parts. The DGIT (Investigation), Ahmedabad submitted a report stating that two persons are well known entry operators of Kolkata and have been giving entries of bogus share capital bank, bogus bills of expenses and bogus long terms capital gains to various beneficiaries throughout the country and the assessee therein was also a beneficiary to the tune of Rs. 201.43 lakhs. As was argued befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that when the Authority is armed with the tangible material in the form of specific information received by the Investigation Wing, Ahmedabad is thoroughly justified in issuing a notice for reassessment. It is revealed from the said additional material available on hand a reasonable belief is formed by the Assessing Authority that income of the petitioner has escaped assessment and therefore, once the reasonable belief is formulated by the Authority on the basis of cogent tangible material, the Authority is not expected to conclude at this stage the issue finally or to ascertain the fact by evidence or conclusion, we are of the opinion that function of the assessing authority at this stage is to administer the statute and what is required at this stage is a reason t believe and not establish fact of escapement of income and therefore, looking to the scope of Section 147 as also Sections 148 to 152 of the Act, even if scrutiny assessment has been undertaken, if substantial new material is found in the form of information on the basis of which the assessing authority can form a belief that the income of the petitioner has escaped assessment, it is always open for the assessing au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated by the Assessing Officer on the basis of material provided by the Principal Director (Investigation). It is also required to be noted that the genuineness of the various companies who made share applications are doubted. The assessee is alleged to have been engaged in bogus share applications from various bogus concerns operated by PKJ. The assessee is the beneficiary of the said transactions of share application by those bogus concerns. In the wake of information received by the Assessing Officer, when the Assessing Officer formed a belief that the investment made from the funding of such companies which are bogus, the Assessing Officer has rightly assumed jurisdiction of initiating the reassessment proceedings. The Assessing Officer, on the basis of information subsequently having come to his knowledge, recognized untruthfulness of the facts furnished earlier. In the present case, since both the necessary conditions to reopen the assessment have been duly fulfilled, sufficiency of the reasons is not to be gone into by this Court. Information furnished at the time of original assessment, when by subsequent information received from the Principal Director (Investigation), its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was not the case where the assessing officer received information from the investigation wing of the department. 13. In the case on hand the reassessment proceedings, the assessee was unable to justify the genuineness of the transactions. The assessee failed to produce original cash memos and bills for the sales alleged to have been effected and to substantiate the cash deposit into their bank accounts. During the scrutiny assessment based on the information received from the investigation wing, notice under Section 142(1) was issued to the assessee requiring the assessee to provide details and produce the entities involved in the transaction mentioned in the reasons for reopening along with the details of the transactions. The assessing officer notes that the assessee submitted details and documents but failed to produce the Directors of those entities. The summons issued under Section 131 of the Act to the various entities for whom the assessee had transactions were not complied with as none appeared in response to such summons. Three entities appear to have submitted certain replies. Summons sent to five other entities were returned unanswered. The directors of the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to the operators based companies who are also engaged in the business of providing accommodation entries and bogus billings. The CIT(A) also noted that during the scrutiny proceedings and remand proceedings none other directors of the said company appeared before the assessing officer and the assessing officer rightly identified nine shell companies who are providing bogus purchase bills and accordingly held that the assessee has deposited its own unaccounted cash in the bank account and confirmed the findings of the assessing officer. Unfortunately, the tribunal failed to examine any of the factual details which have been brought out by the assessing officer as well as the CIT(A) but merely went on the basis as to what are the conditions to be fulfilled in order to reopen the assessment. As pointed out earlier, reasons given by the learned tribunal to distinguish the decision in Peass Industrial Engineers is not tenable. 14. Thus, we are of the view that the order passed by the tribunal has ignored the crucial aspects of the matter which are relevant to the reopening of the assessment. Thus, we are of view that the order impugned calls for interference. 15. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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