TaxTMI 
TaxTMI 
2016 (6) TMI 741
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....facts may be noted from Special Civil Application No.17935 of 2015. Petitioner is a partnership firm and is engaged in the business of manufacturing and export of diamond studded jewelery. Petitioner's manufacturing unit is situated in the Special Economic Zone and the entire export income is exempt from tax under section 10AA of the Income Tax Act 1961 ('the Act' for short). 2. For the assessment year 2008-09, the petitioner filed its return of income on 10.08.2008, declaring nil income after claiming exemption of Rs. 3.87 Crores (rounded off) under Section 10AA of the Act. The return of the assessee was taken in scrutiny. The Assessing Officer framed the assessment on 28.12.2010 denying the exemption under section 10AA as c....
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....39; statement on oath was also recorded who have admitted that they were only namesake partners/ directors/ proprietors. The said information has been received from the DIT (Inv)II, Mumbai vide letter No.DIT (Inv)II/Information/BLJ/SAL/201415/ 305 dated 16.7.2014. It has come to notice that the assessee has accepted bogus accommodation entries for purchase of Rs. 90.17 Lacs from Maridian Gems in A.Y. 2008-2009 to inflate purchases. This information was not available at the time of passing the original assessment order. Further the statements of Bhanwarlal Jain and other associated persons were also not available with the Department which is crucial documentary proof of such bogus entry. Hence, entire bogus accommodation entries of the said ....
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....ssee to disclose truly and fully all material facts and that therefore, reopening of assessment beyond a period of four years from the end of relevant assessment year was not permissible. III.In any case, there is no escapement of income. The assessee enjoyed 100% exemption under section 10AA of the Act. Therefore, even if the Revenue's theory of bogus purchases by the assessee is established, the same can only result into disallowance of business expenditure, thereby increasing the assessee's profit. This in any case would have no tax implication since even such additional income would be exempt under section 10AA of the Act. In support of this contention, counsel relied upon following decisions. * In case of Baijnath Saboo a....
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....unsel also relied on the decision of Division Bench of this Court in case of Yogendrakumar Gupta v. IncomeTax Officer, reported in 366 ITR 186. 7. Regarding the first contention of the counsel for the petitioner, we have perused the reasons recorded by the Assessing Officer for issuing notice for reopening. We have also perused the original file produced by the department. Relevant documents from the file were also shown to the counsel of the petitioner. In the reasons recorded itself, the Assessing Officer has noted that search and seizure action was initiated in the premises of one Bhanwarlal Jain and other family members on 11.10.2013, during which, statement on oath of Bhanwarlal Jain was recorded. In such statement, he had disclosed....
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....rnment departments, if the material so collected through inquiry or investigation provides primafacie information, a tangible material; which enables the Assessing Officer to form a belief that income chargeable to tax has escaped assessment. There is nothing to prevent the Assessing Officer from recording such satisfaction and to proceed to issue notice for reopening. An independent decision by the Assessing Officer to enable her to come to the conclusion that income chargeable to tax has escaped assessment is sinequanon for reopening an assessment. This would undoubtedly require application of mind on her part when certain materials collected by some other wing of the department is placed before her. There can however be no straightjacket....
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....hown purchases of goods worth Rs. 90.17 lakhs from one of the bogus entities created by Bhanwarlal Jain. There was no genuine purchase. All that was done was that the assessee had paid such amount in cheque without making any purchases. The seller after receiving such amount, would return substantial portion thereof in cash retaining his commission. This circuitous route would ensure that cost of purchases made by the assessee would be artificially inflated, thereby deflating the profit. In that view of the matter, even if the department is correct, all that would be done even if the assessment is permitted, is to disallow the expenditure of Rs. 90.17 lacs. Correspondingly, the income of the assessee would increase by the said sum of Rs. 90....