2013 (5) TMI 47

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.... the assessment on the following ground:    "The assessee, Shri Hitesh R.Shah, proprietor of M/s.Jainam Trading Co. assessed to tax for A.Y. 2004-05 with the charge of the undersigned, i.e., ITO-25(2)(1). Therefore, the assessee has not filed in his Return of Income for A.Y. 2006-07, the time limit for which has already been exhausted. Further, I am in possession of information which suggests that Shri Hitesh R.Shah, Prop. of M/s.Jainam Trading Co. has obtained accommodation entries from one Mr.Bhavesh Lakhani, Prop. of M/s.Pratik Sales Corporation. Since the assessee has not filed his ROI for A.Y. 2006-07. I have reasons to believe that the income of Shri Hitesh Shah, exceeds the maximum amount which is not chargeable to tax for....

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....tiated for failure of the appellant to file his return, he ought to have dropped the reassessment proceedings and if necessary he could have initiated fresh re-assessment proceedings after recording factually correct reasons." However, the CIT(A) made it clear that the reassessment proceedings were cancelled only because of the incorrect statement recorded by the Assessing Officer and he shall be free to initiate reassessment again if adequate material is available on the record. The Revenue has carried the matter in appeal to the Tribunal where the appeal is pending. A fresh notice has been issued to the Petitioner on 28 March 2012 seeking to reopen the assessment. The reasons which have been furnished to the Petitioner are as follows: &....

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....e return does not apparently reflect true income of the assessee for the year under consideration and it appears that substantial amount of income has escaped assessment. Profit margin in such type of trade/activities is considered at 1%of total turnover and therefore income of the assessee ought to have been Rs.28,48,011/-, whereas the assessee has shown income of Rs.1,62,115/- only. Since the assessee is reportedly involved in obtaining accommodation entries and issuing false bills without delivery of goods, I have reason to believe that the income of Rs.26,85,896/- has escaped assessment within the meaning of Section 147 of the I.T.Act, 1961 for the A.Y. 2006-07. The said income chargeable to tax has escaped assessment for A.Y. 2006-07 b....

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.... Officer had proceeded on the basis that the assessee had not filed his return of income though he has taxable income. The CIT(A) was of the view that once it was brought to his notice that the assessee had filed his return of income, he ought to have dropped the proceedings under Section 148 and if necessary could have initiated reassessment proceedings again by recording correct reasons. As a matter of fact, this is evident from the following observations in the order of the CIT(A) :    "It is made clear that the reassessment proceedings have been cancelled only because of incorrect reasons recorded by the AO and he shall be free to initiate re-assessment proceedings again if there are adequate material available on record, aft....