TaxTMI 
TaxTMI 
2018 (6) TMI 1170
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....which the said person was associated to elicit the authenticity of the contents of the statements, (iii) without giving complete copies of the statements of said person for rebuttal by the assessee and (iv) without giving complete copies of the statements of other persons referred to in the statements of said person for rebuttal by the assessee. 2. The learned CIT (Appeals) further erred in holding purchases of diamonds aggregating Rs. 22576041/= as bogus and sustaining addition of Rs. 3386406/- in the A.Y. 2007-08 and Rs. 200783361/= as verified and sustaining addition of Rs. 3011750/- by applying profit rate of 15.00% on said purchases from concerns in which the aforesaid person stated to be associated. 3. Without prejudice to above, the learned CIT (Appeals) has further erred in applying profit rate of goods which are different in nature and value and also not giving any consideration to the CBDT circular applicable to profit rate in "Diamond" trade. 2. Since the common issue is involved in both these appeals, therefore, the same are heard together and for the sake of convenience and brevity, a common order is being passed. 3. In the ground No. 1 of both these appeals, the i....
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....case of Seth Brothers Vs. CIT reported in 169 CTR 519 has laid down following principles for the reopening of the assessment u/s 148 of the Income Tax Act, 1961: (APB 1-10) "11 (a) There must be material for belief (b) Circumstances must exist and cannot be deemed to exist for arriving at an opinion. (c) Reason to believe must be honest and not based on suspicion, gossip, rumour or conjuncture. (d) Reasons referred must disclose the process of reasoning by which he holds 'reasons to believe' and change of opinion does not confer jurisdiction to reassess. (e) There must be nexus between material and belief. (f) The reasons referred must show application of mind by the assessing officer. The validity of initiation of reassessment proceedings has to be judged with regard to the material available with the officer at the point of time of issue of notice u/s 148 and cannot be sought to be substantiated by reference to material that may have come to light subsequently in the course of reassessment proceedings. In the light of what is stated above, we hold that there was no material with the AO for having reasons to believe that the income as chargeable to tax, has escaped a....
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....ion of belief that income escaped assessment - Assessing Officer treating share application money as bogus accommodation entries - Payments through banking channel and companies investing money genuine - No independent application of mind by Assessing Officer but acting under information from investigation wing - Notice to be quashed - Income Tax Act, 1961, ss. 147, 148. It is also a matter of fact that no search was taken place in case of assessee and documents under reference were not found and seized from the possession of the assessee thus the presumption u/s 132(4) is rebuttable and cannot be applied against the assessee, as has been done blindly by the Id. AO. In the circumstances it is submitted that since no independent application of mind was applied by Ld. AO while issuing notice u/s 148 and he simply proceeded on borrowed satisfaction reached by some other officials on the basis of statements recorded in the case of third party which stood retracted by the person who made those statements thus the same has no evidentiary value, therefore, the entire proceedings initiated u/s 148 deserves to be hold bad in law. It is further submitted that during the course of assessme....
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....ndia Ltd. (SC) Reassessment - Reason to believe - Change of opinion - After 1st April, 1989, power to reopen is much wider - However, mere "change of opinion " cannot per se be reason to reopen - AO has power to reassess but no power to review - If the concept of "change of opinion" is removed, as contended on behalf of the Department review would take place in the grab of reopening of assessment - Concept of "change of opinion " is an in-built test to check abuse of power by the AO - Hence, after 1st April, 1989 AO has power to reopen the assessment under section 147 provided there is tangible material to come to the conclusion that there is escapement of income from assessment reasons must have a live link with the formation of the belief Jai Hotels Co. Limited Vs. Asst. DIT, (2009) 24 DTR 37 (Del): The Delhi High Court has held that there being no new material in the hands of the Revenue leading to view that there was reason to believe that income had escaped assessment, the case is a classic instance of a change of opinion. The High Court further observed that when copies of statement of income, trading account, profit and loss account, audit report etc., were appended to th....
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....hat the validity of reassessment proceedings has to be judged with the material available with the Assessing Officer and opinion are strictly based on documents and information in possession of the Assessing Officer. No reopening can be made in mechanical manner. It is also pertinent to note that reopening cannot be based on borrowed satisfaction. The independent satisfaction of the Assessing Officer is basic necessity. The Hon'ble Delhi High Court in the case of Sarthak Securities Co. Pvt. Ltd. Vs. ITO (supra) has quashed the notice where no independent application of mind by the Assessing Officer was available and Assessing Officer's action was on the basis of information from Investigation Wing only. In assessee's case, there was no search operation. Statement recorded in other searched cannot be applied on the assessee blindly and without providing cross examination. From the above facts and circumstances of the case suggest that the Assessing Officer proceeded for reopening on borrowed satisfaction rather than his own satisfaction. Once the assessment was completed by rejecting the books of account and G.P. rate was estimated then trading accounts including the purchases stood....
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....e from those 12 parties, the AO has accepted the genuineness of the purchases including the two parties, namely M/s. Maridian Gems and M/s. Millennium Star. Even if the subsequent information received from the DIT Investigation Wing Mumbai renders the assessment order passed under section 143(3) defective and erroneous for want of proper verification and investigation, the same would not turn the case in the category that the assessee has failed to disclose fully and truly all the particulars necessary for assessment. It is not the case of the AO that the assessee has not furnished the requisite documents and details of purchase rather the AO conducted a detailed enquiry during the original assessment on the issue of genuineness of purchases. Thus the information received by the AO from Investigation Wing Mumbai would not amount to non disclosure of particulars by the assessee, rather it was the subject matter of enquiry by the AO in the original assessment. Therefore, if the AO failed to conduct proper enquiry regarding the genuineness of the purchases, the same would not give jurisdiction to the AO to review the order or remove the defect based on subsequent information. The stat....