TaxTMI 
TaxTMI 
2017 (12) TMI 1122
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee-company is engaged in business of Retailer of Iron, Steel and Machinery, filed its return of income for relevant AY on 27.09.2009 declaring total income of Rs. 1,45,65,720/-. The assessment was completed on 25.03.2011 under section 143(3). The AO made addition of Rs. 68,000/- on account of interest received which was not offered to income. Subsequently, the assessment was re-opened under section 147 of the Act. The assessment was re-opened on the basis of information that the assessee has obtained bogus bills of Rs. 42,95,62,364/- from the entity listed in the website of Sales Tax Department, Government of Maharashtra, which were declared as hawala dealers. The notice under section 148 dated 20.03.2014 was served on the assessee. The assessee in response to the notice under section 148 vide its reply dated 22.03.2014 contended that return already filed by assessee on 27.09.2009 (wrongly mentioned as16.07.2014) may be treated as return of income in response to the notice under section 148 of the Act. The assessing officer recorded the following reasons; "In the instant case, information gathered/ available in the office revealed that M/s Shree Sai Steel Industries Private ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. Ground No.1 relates to the validity of reopening. The ld. AR of the assessee argued that during the assessment proceeding, complete details were furnished including the Tax Audit Report, details of sundry debtor and creditor and the list of the parties from whom the assessee has shown the purchases. The AO after verifying the facts passed the assessment order under section 143(3) of the Act on 25.03.2011. In the reasons of re-opening, no specific disclosure about the information received from Investigation Wing was disclosed. The AO has not supplied the copy of information received from the DGIT(Inv.) to enable the assessee to make his submission against such information. The assessment was re-opened on the basis of third party information. It was argued that re-opening of the assessment can be made only with the approval of Joint Commissioner of Income-tax(JCIT). In absence of prior approval of JCIT of Income-tax, the re-opening is invalid. In the alternative submission, the ld. AR of the assessee argued that the assessment was re-opened without application ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ock Broker Pvt. Ltd. vs. ACIT (291 ITR 500) held that at the initial stage, what is required is reason to believe, but not the established fact about escapement of income. The Hon'ble Gujarat High Court in case of Peass Industrial Engineers (P.) Ltd. vs. Deputy Commissioner of Income-tax[2016] 76 taxmann.com 122 (Gujarat) held that section 147 authorizes and permits the Assessing Officer to assess or re-assess the income chargeable to tax if he has reason to believe that income for any assessment year has escaped the assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification and after considering and analyzing the provision, it has been propounded that the expression cannot be read to mean that Assessing Officer should have finally ascertained the fact of legal evidence or conclusion. It was also held that at the initial stage what is required is reason to believe but, not established fact of escapement of income. Therefore, at this stage only question whether there was relevant material to form a reasonable belief is to be seen and in the background of present facts, there is a specific information received during the investig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aders is not shown in the list of hawala dealers by the Sale Tax Department. Thus, the transaction with Hanuman Steel Traders cannot be treated as bogus. The purchases shown from SB Metal Corporation were through Account Payee Cheque. The purchases made from SB Metal Corporation are very small amount. The ld. AR of the assessee prayed for deleting the entire addition. On the other hand, the ld. DR for the Revenue supported the order of authorities below. The ld. DR for the Revenue further argued that the ld. CIT(A) restricted the addition @ 12.5% as no delivery of material was proved by the assessee. The ld. DR for the Revenue prayed for dismissal of the appeal. 8. We have considered the rival submission of the parties and have gone through the orders of authorities below. During the re-assessment proceedings the assessee was asked to substantiate the purchases and to furnish the documents related to the purchases and to produce the parties for verification. The assessee failed to produce the parties for verification and the relevant documents to prove the genuineness of the purchases. The AO on his observation that that the assessee failed to produce the genuineness of transactio....