AI Drafter 
TaxTMI 
TaxTMI 
2017 (9) TMI 181
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.... circumstances of the case, the order passed by the learned CIT(A) is bad, both in the eye of law and on the facts. 2. On the facts and circumstances of the case, CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the initiation of the reassessment proceedings and the reassessment order are bad both on facts and in law and liable to be quashed as the statutory conditions and procedure prescribed under the statute have not been complied with. 3.(i) On the facts and circumstances of the case, CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned A.O. are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts. (ii) On the facts and circumstances of the case, CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the reassessment order passed by the A.O. is bad and liable to be quashed as the same has been reopened on the basis of the reasons which are vague and has been recorded without application of mind ....
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....leted. 11. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in rejecting the contention of the assessee that the addition made by the learned AO is untenable in the eye of law having been made without providing opportunity to cross examine the person on the basis of whose statement the 4 allegations have been made against the assessee and without following the principle of natural justice. 3. Ground No. 1 is general in nature and need no adjudication at our end. 4. Ground Nos. 2 and 3, challenging the validity of reopening of assessment are legal grounds. 5. The brief facts of the case are that appellant filed its return of income on 31.10.2006 declaring an income of Rs. 1,07,000/-. The same was processed u/s. 131(1) of the Act on 29.01.2007. Subsequently, on the basis of information received from the Commissioner of Income Tax, Central-II that the assessee has received accommodation entries from entry providers, the AO reopened the case by issuing notice u/s. 148 after recording the reasons on 28.03.2013. The assessee raised objections on reopening of assessment, which stood disposed of by AO and after considering th....
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.... Reasons for the belief that the income has escaped assessment in the case of M/s Bright Metal Agencies the assessment year 2006-07 A letter bearing F.No.Addl.CIT/(Hq) /(Coord.) / Accommodation entry/2012-13/15016 dated 26.03.2013 was received from the Office of the Chief Commissioner of I.Tax, Delhi-1, New Delhi therein forwarding letter bearing F.No. CIT(C)-II/2012-13/3898 dated 19.03.2013 received from the Commissioner of I.Tax, Central-II, New Delhi along with a CD containing the details of accommodation entries provided by Sh. Rakesh Gupta & Sh. Vishesh Gupta & Sh. Navneet Jain & Sh. Vaibhav Jain and directing this office to take necessary action as per section 148 in respect of entries pertaining to A.Y. 2006-07, which is time barring on 31.03.2013. The information provided by the CIT, Central-II, New Delhi vide his letter dated 19.03.2013 reads as under: 1. "Kindly find enclosed herewith letter dated 13.03.2013 of ACIT, Central Circle-10 duly forwarded by the Addl. CIT, Central Range-IV, along with its enclosures on the subject mentioned above. 2. The assessment of search cases of Sh. Rakesh Gupta, Sh. Vishesh Gupta, Sh. Navneet Jain & Sh.....
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....-10, New Delhi, therefore, it is fair to conclude that M/s Bright Metal Agencies, whose name is appearing in the said list, has taken accommodation entries from Shri Rakesh Gupta & Sh. Vishesh Gupta and Sh. Navneet Jain & Sh. VaibhavJain pertaining to A.Y. 2006-07. Also the details of Income Tax Return filed by Bright Metal Agencies for A.Y. 2006-07 and processing done u/s 143(1) of I.Tax Act thereof were taken out from ITD System. Further, no scrutiny assessment was done in A.Y. 2006-07. Therefore, I have reasons to believe that income chargeable to tax amounting to Rs. 24,35,150/- for the F.Y. 2005-06 relevant to A.Y. 2006-07 has escaped assessment and it is a fit case for initiation of proceedings u/s 147 of the Act. Proposal in the prescribed form for the AY 2006-07 (F.Y. 2005- 06) is submitted herewith for kind consideration and necessary approval u/s 151(2) of the I.T. Act, 1961 as the same is getting barred by limitation on 31/03/2013. If approved, notice u/s 148 of the act may be issued. Sd/-(Pawan Kumar Vashist) 28.03.2013 Income Tax Officer, Ward 39(3), New Delhi 9 9. From the order of the Tribunal in the case of Unique Metal Indu....
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.... of I. Tax Act. 4. In response to these letters, the ACIT, Central Circle-10, New Delhi vide his letter dated 20.12.2013, received by this office on 27.12.2013, forwarded his reply along with supporting documents, which were running into 92 pages. After going through the reply forwarded by the ACIT, Central Circle-10, New Delhi and the annexure enclosed therein, this office was of the view that the purchase bills provided by the 11 firms/concerns controlled and managed by Sh. Rakesh Gupta and Sh. Vishesh Gupta or their family members is nothing but bogus purchase bills/accommodation bills. " 9. The above facts stated by the Assessing Officer makes it abundantly clear that at the time of formation of the belief to reopen assessment the Assessing Officer was not having the above said information. Only that he was having the letter along with list which was forwarded by the CIT, Central- 2, New Delhi. 10. The above observation of the Assessing Officer also shows that it was letter dated 20.12.2013 received by him on 27.12.2013 on the basis of which the Assessing Officer could make a view that the purchase bills provided by these persons or their family membe....
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....ion of law that there must be material for formation of a belief that income has escaped assessment. Further reasons referred to must disclose process of reasoning by which the Assessing Officer holds reason to believe. There must be nexus between such material and belief. Further and most importantly the reasons referred to must show application of mind by the Assessing Officer. It is also a settled law that the validity of the initiation of the reassessment proceeding is to be judged with reference to the material available with the Assessing Officer at the point of time of the issue of notice under section 148. In the present case, as is evident from the assessment order, the Assessing Officer was having nothing except the list provided by the CIT, Central-2, New Delhi about the list of accommodation entries. Beyond that he was not having the copies of the statement of any of these persons. He was not having copy of the assessment orders and other details or document which would have enabled the Assessing Officer to apply his mind and form a belief that income has escaped assessment. In fact this information was not with the Assessing Officer till fag end of the reassessment pro....
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....v.). The relevant observation of the Court reads as under:- "The first sentence of the reasons states that information had been received from Director of IT (Inv.) that the petitioner had introduced money amounting to Rs. 5 lacs during financial year 2002-03 as per the details given in Annexure. The said Annexure relates to a cheque received by the petitioner on 9th Oct., 2002 from SS Ltd. from the bank and the account number mentioned therein. The last sentence records that as per the information, the amount received was nothing but an accommodation entry and the assessee was the beneficiary. The aforesaid reasons do not satisfy the requirements of s. 147. The reasons and the information referred to is extremely scanty and vague. There is no reference to any 13 document or statement, except Annexure. Annexure cannot be regarded as a material or evidence that prima facie shows or establishes nexus or link which discloses escapement of income. Annexure is not a pointer and does not indicate escapement of income. Further, it is apparent that the AO did not apply his own mind to the information and examine the basis and material of the information. The AO accepted the plea on....
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....ernible as to whether the AO had applied his mind to the information and independently arrived at a belief that, on the basis of the material which he had before him, income had escaped assessment. Consequently, the Tribunal has arrived at the correct conclusion on facts. There is no substantial question of law which arises for consideration." 13. In view of the above discussed facts of the present case, the reopening of the assessment is without application of mind and examination of the facts and accordingly the reopening is held to be invalid and accordingly the same is quashed. Accordingly the reopening is held to be bad in law and ground nos.2 and 3 are allowed." 10. On careful consideration and vigilant perusal of the orders of the Tribunal including that of the Unique Metal Industries (supra), we observe that the AO had recorded similarly worded reasons and name of the parties form whom the assessee alleged to have made bogus purchases were also same except the amount mentioned therein in the reasons recorded in the tabular form, as in the case of the present assessee. We, therefore, respectfully following the above decisions of the Tribunal in the case of Unique....