TaxTMI 
TaxTMI 
2011 (3) TMI 1372
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.... an intimation has been received from Addl. Director of IT (Inv.) vide letter No. Addl. Director of IT (Inv.)/U/VIII/Survey/2005-06, dt. 28th Feb., 2006 which is as under : The assessee has purchased imported goods-chemicals etc., from three parties viz. (1) Casio Pharma, (2) M/s Vishnu Pharma Chem and (3) M/s Verma Pharmaceuticals. After verification it was found that these parties are bogus-non-genuine. Therefore, income earned through the transactions made with these parties is escaped from the total income. The unsecured loans shown in the balance sheet for asst. yr. 2002-03 of Rs. 1.14 crores in the name of above three parties. It has to be treated as non-genuine. Thus the income declared under guise of unsecured loan has escaped from the total income. Therefore, I have reason to belief that income escaped for asst. yr. 2002-03. A notice under section 148 is being issued." 2.1 In response to the statutory notices issued by the AO, the assessee appeared before him and filed various details from time to time. After satisfying himself, the AO accepted the return of income and made addition of Rs. 25,14,486 under section 40A(3) of the IT Act on account of cash purchases made f....
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....O is without application of mind, without making necessary inquiries or verification and the same does not clearly spell out the reasons of acceptance or rejections of the material placed by the assessee, if any, therefore, the same is not just erroneous but also prejudicial to the interests of the Revenue. He, accordingly, set aside the order of the AO and directed the AO to do the assessment de novo on the said issue after affording necessary opportunity to the assessee to represent his case. 6. Aggrieved with such order of the CIT, the assessee is in appeal here before us with the following grounds : "(i) On the facts and circumstances of the case and in law, the learned CIT(A) erred in considering the assessment order dt. 28th June, 2006 as erroneous and prejudicial to the interest of the Revenue and thus erred in setting aside the original assessment under section 263 of the IT Act, 1961. The order of the CIT may be quashed and that of the AO be restored. (ii) The learned CIT ought to have appreciated the fact that all the details were properly examined by the AO before passing the assessment order and hence the said order was not erroneous and prejudicial to the interest o....
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....ok filed on behalf of the assessee. We have also considered the various decisions cited by both the parties. There is no dispute to the fact that the AO, on the basis of the intimation sent by Director of IT (Inv.), has reopened the assessment and passed order under section 143(3)/147 determining the total income at Rs. 56,12,540 as against Rs. 30,98,050 returned by the assessee. There is also no dispute to the fact that the AO, in the said order has made only addition under section 40A(3) on account of cash purchases from M/s Verma Pharmaceuticals for Rs. 1,25,72,430. He has also noted that there is no purchase from Casio Pharma and Vishnu Pharmachem. According to the CIT, the order of the AO is erroneous since he has failed to investigate the various issues, as enumerated in the notice issued by him proposing initiation of proceedings under section 263. 8.1. It is the submission of the learned counsel for the assessee that on the basis of the notice issued by the AO, the assessee appeared before him from time to time and furnished various details. The AO after due application of his mind has passed the order; therefore, the same is not erroneous. 8.2. It is the settled proposit....
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....he decision of the Hon'ble Bombay High Court in the case of Ashoka Buildcon Ltd. v. Asstt. CIT [2010] 325 ITR 574. 8.4. We find, in the case Alagendran Finance Ltd. (supra) the assessment for the asst. yrs. 1994-95, 1995-96 and 1996-97 were completed in 1997 and 1998. In the orders of assessment, the assessee's claim relating to "lease equalisation fund" was accepted. Thereafter, orders of reassessment were initiated in respect of three other items but not the item relating to "lease equalisation fund" and reassessment were made. Thereafter, the CIT by an order dt. 29th March, 2004, initiated revision proceedings only in relation to the item 'lease equalisation fund'. The Tribunal held that the revision proceedings were barred by limitation as they were initiated more than four years after the original assessment, which was upheld by the Hon'ble High Court. On further appeal, the Hon'ble Supreme Court has held as under : (short note) "Affirming the decision of the High Court, that the CIT had sought to revise only that part of the order of assessment which related to lease equalisation fund; but the proceedings for reassessment had nothing to do with that item of income. The doct....