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TMI Blog2024 (9) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... the case and in law, whether the Ld. CIT(A)-12, Pune was justified in holding that the AO had recorded the reasons for reopening the case for verification. Whereas in fact, the issue on which reasons recorded for escapement of income was not suffixed by the word "needs to verify". 3. On the facts and circumstance of the case and in law, whether the Ld.CIT(A)-12, Pune was justified in holding that reasons recorded before issue of notice u/s. 148 is merely for verification of the facts. 4. On the facts and circumstance of the case and in law, whether the Ld.CIT(A)-12, Pune was right in setting aside the case without going into merits of the case and appreciating facts mentioned in assessment order. 5. On the facts and circumstance of the case and in law, whether the - Ld.CIT(A)-12, Pune was justified in holding that there was no tangible material which suggests that escapement of income. Whereas in fact tangible material in the form of ledger abstract was available with AO on the basis of which he has formed his reasons 6. On the facts and circumstance of the case and in law, whether the Ld.CIT(A)-12, Pune erred in appreciating the fact that tangible material have direct nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Rs. 1,68,24,239/- is required to be taxed in the hands of M/s Brahma Steels. iii. The following bills issued by M/s Shidrah Multi Trade Link, which were booked as purchases by H.A. Khan (Scrap Dealer, A'bad) as well as M/s. Brahma Steel, A'bad, needs to be verified. Bill No. Date Qty. Material Description Lorry No. Amount 40 31/05/13 19575 Off cuts of MS Sheet MH20-AT/6155 595794 41 31/05/13 16870 Off cuts of MS Sheet MH20-AT/6155 513463 75 25/06/13 13235 Off cuts of MS Sheet MH20-AT/6155 404216 79 27/06/13 9695 Off cuts of MS Sheet MH20-AT/6155 296099 Total 1809574 1.3 Based on the above information, ACIT Circle-2, Aurangabad issued notice u/s 148 of the Income Tax Act, 1961 on 09.10.2017 after recording reasons to believe and seeking prior approval of the Addl. Commissioner of Income Tax, Range-2, Aurangabad. Subsequently, the case of the assessee was centralized to DCIT, Central Circle-2, Aurangabad by Pr. Commissionerof Income Tax- 2, Aurangabad vide order u/s 127, dated 23.07.2018. The assessment proceedings u/s 143(3) r.w.s 147 of the IT Act was completed on 20.12.2018. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on information available in return of Income. The reason recorded In case of Nivi Trading Ltd. was as under: 'It is verified from the return of income filed by the assessee for A.Y. 2009-10 that it has shown LTCG from investment in shares amounting to Rs. 1,54,81,620/- and had shown dividend of Rs. 9,74,420/-. During the A.Y. 2010-11 assessee had shown LTCG of Rs. 33,48,191/- and dividend income of Rs. 14,44,763/- and shown Rs. 1,21,33,429 as gift. Hence it is seen that assessee had gifted these shares without any consideration. This fact needs to be verified as per section 47(iii) of the I. T. Act. Also it has to be verified whether the value of these shares have been computed on the market rate as on the date of such transfer'. Hence, I have reasons to believe that income chargeable to tax amounting to Rs. 1,21,33,429/- as per provision u/s. 147 of the Act has escaped assessment in this case for A.Y. 2010-11'. In the light of above reason the Hon'ble Bombay High Court held that the revenue proceeds on the footing that these shares were gifted without consideration. It is this fact which it wants to verify and particularly whether the value of these shares h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the foreign entity M/s. First land Holdings Limited, Mauritius remains unexplained needs further investigation. In this respect reference to the competent authorities of Mauritius through FT & TR Division has been made". In this context the Hon'ble Bombay High Court held that the investigation into the source of genuineness and creditworthiness of the investor company would fall within the realm of fishing enquires, which is wholly impermissible in law in context of the reopening of the assessment. The facts in the present case of the assessee, is altogether different. In the case of the assessee there was concrete information received from TRO-2 with regard to difference outstanding credit balance of the assessee and other party, inflated purchase and cash 'payments made by the assessee which is discussed in para 3.1 above. Therefore the decision of Hon'ble Bombay High Court in the case of NuPower Renewables Pvt. Ltd. Vs. ACIT is not squarely applicable to the case of the assessee as held by Ld. CIT(A) in para 7.4 of the appellate order. 3.5 The facts of the case in decision of ITAT Pune in the case of Smt. Parveen Sewak Nayyar Vs. ITO on CIT(A) has relied ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 463 75 25/06/13 13235 Off cuts of MS Sheet MH20-AT/6155 404216 79 27/06/13 9695 Off cuts of MS Sheet MH20-AT/6155 296099 Total 1809574 On verification of ledger abstracts of M/s Shidrah Multi Trade Link and M/s Brahma Steels in their respective books of accounts, it can be seen that M/s Brahma Steels has shown total purchases at Rs. 2,98,93,153/- in his books of accounts, whreas M/s Shidrah Multi Trade Link has shown total sales at Rs. 2,62,36,903/-. Therefore, it is evident that M/s Brahma Steels has shown bogus purchases to the tune of Rs. 36,56,250/- and suppressed the gross profit for the year under consideration. Also, The M/s Shidrah Multi Trade Link has shown cash receipts of Rs. 93,88,389/- from M/s Brahma Steels and shown the outstanding balance of Rs. 28,32,967/- In his books of accounts. On the other hand, M/s Brahma Steels has shown outstanding balance of Rs. 1,96,57,205/- in his books of accounts. Hence the difference amount of Rs. 1,68,24,239/- needs to be verified. Also, the information provided in para (iii) needs to be verified. Therefore, I have reasons to believe for A. Y. 2014-15, income to the tune ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended by the assessee before the Ld. CIT(A). The information was received from TRO, Aurangabad wherein the TRO also mentioned in para (ii) that Rs. 1,68,24,239/- being difference amount needs to be taxed and certain verification needs to be done. However the Ld. AO has given explicit finding with respect to bogus purchases of Rs. 36,56,250/- and suppression of gross profit. Further, reason to believe is based on escapement of income to tune of Rs. 36,56,250/-. Thus Ld. AO had formed her own independent opinion with respect to reason to believe in escapement of income as required by Section 148 of the I T Act 1961. With respect to difference amount of Rs. 1,68,24,239/-needs to be verified, this is an additional issue that needed to be checked by Ld.AO. On this ground, reliance is placed on judgement of Hon'ble Supreme Court in case of Raymond Woolen Mills Vs ITO wherein the observation is reproduced for perusal "3. In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Off cuts of MS Sheet MH20-AT/6155 296099 TOTAL 1809574 On verification of ledger abstracts of M/s Shidrah Multi Trade Linkand M/s Brahma Steels in their respective books of accounts, it can be seen that M/s Brahma Steels has shown total purchases at Rs. 2,98,93,153/- in his books of accounts, whreas M/s Shidrah Multi Trade (.ink has shown total sales at Rs. 2,62,36,903/-. Therefore, it is evident that M/s Brahma Steels has shown bogus purchases to the tune of Rs. 36,56,250/- and suppressed the gross profit for the year under consideration. Also, The M/s Shidrah Multi Trade Link has shown cash receipts of Rs. 93,88,389/- from M/s Brahma Steels and shown the outstanding balance of Rs. 28,32,967/- in his books of accounts. On the other hand, M/s Brahma Steels has shown outstanding balance of Rs. 1,96,57,205/- in his books of accounts. Hence the difference amount of Rs. 1,68,24,239/- needs to be verified. Also, the information provided in para (iii) needs to be verified. Therefore, 1 have reasons to believe that for A.Y. 2014-15, income to the tune of Rs. 36,56,250/-has escaped assessment within the meaning of Section 147." Submission of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gross profit for the year under consideration..................... Therefore, 1 have reasons to believe that for A.Y. 2014-15, income to the tune of Rs. 36,56,250/-has escaped assessment within the meaning of Section 147" 5.3 Thus, it can be observed from the above part of the paragraphs reproduced, that the Assessing Officer(AO) in the reasons has specifically mentioned that Rs. 1,68,24,239/- is required to be taxed in the hands of the assessee. Similarly, AO has mentioned that assessee has suppressed gross profit to the tune of Rs. 36,56,250/- and hence, there is an escapement of income of Rs. 36,56,250/-. Thus, in the reasons AO has properly recorded after analysing the ledger accounts, that there was an escapement of income to the extent of Rs. 36,56,250/-(within the meaning of Section 147 of the Act). In certain parts, AO does have mentioned that he needs to verify certain amounts. However, one needs to read the reasons recorded in totality. We can appreciate the reasons only when we read the entire reasons in totality. Therefore, after reading the entire reasons, we are convinced that AO has properly recorded the satisfaction regarding escapement of income. The mere ment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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