TaxTMI 
TaxTMI 
2018 (6) TMI 1539
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....ity confirmed the same. Further aggrieved the assessee is in appeal before us by challenging the legality of reopening of assessment and addition made on merits. 3. The ld. Counsel for the assessee Shri Sunil Surana filed a paper book running into 157 pages and submitted that the reopening is bad in law as it suffers from nonapplication of mind by the AO and was based only on certain information received from DGIT(Inv.), Mumbai. He argued that the so called information was not verified or cross-examined. He made various submissions as to why the reopening had to be held as bad in law and also relied on certain case laws, which would be dealt by me during the course of the order. On merits he pointed out that the assessing officer himself has held in his order that, the assessee had made purchases of all the "Bearing" in question and it could have been a case where the purchases have been made from different parties and whereas the bills were obtained from hawla dealers in Mumbai. He took this Bench through the various evidences filed by the assessee including bills, payment by account payee cheques, delivery details and corresponding sales and the receipts of sale proceeds. He f....
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....ually been made. At page 6 of his order, the AO states as follows: " It is not been doubted that the goods sold by the assessee have not been purchases at all. The dispute is whether the assessee had actually purchased goods from the above mentioned parties." Later at page 7 of the order he held as follows: "There is no doubt that the assessee had purchased goods as reflected in the purchase bills and also sold the same. But the purchases were obviously not made from the above mentioned parties as no documents in support of movement and receipt of goods have been produced by the assessee and the Sales Tax Department, Govt. of Maharashtra has also found the aforesaid parties as non-genuine dealers who had issued false bills without delivery of goods. Thus, it is clear that the purchases were made from the some other parties but the details are the same have not been disclosed to the Department." 8. The above findings of the AO goes against his conclusion that the entire purchases of Rs. 25,17,112/- are bogus and the same has to be added to the income. When the purchase is said to have been made from some parties and when bill are obtained for those purchases ....
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.... counsel for the assessee. As far as the validity of initiation of re-assessment proceedings are concerned the reasons recorded by the AO for initiating proceedings u/s 148 are as follows :- "No. DCIT/Cir-6/reasons for reopening/09-10 Dated 22/04/2009 To The Principal Officer Greatwall Marketing (P) Ltd. c/o Sri. S.M. Daga 11, Clive Row, Room No. 2 .z-. Fir. Kolkata- 700001. Sir. Sub: Recorded Reasons for Reopening in the case of Greatwall Marketing (P) Ltd. for Asst. Yr. 02-03 Ref: Your letter dated 02/04/09 Please refer to the above. As per information received from investigation wing New Delhi the introduced share capital during the year. had been received from corporate bodies which are non existent and whose capacity to invest ( credit worthiness ) could not be established . Therefore I have reasons to believe that unexplained cash credit had been introduced in your books of accounts in the name of introduction of share capital and receipt of share application money. In absence of satisfactory identity and credit worthiness of the other parties. the entire introduced cap....
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.... the reasons recorded. The involvement of the assessee is also not spelt out, except mentioning the corporate bodies who had subscribed to the share capital of the assessee were non-existent and not creditworthy. On identical facts the Hon'ble Dlehi High Court in the case of CIT vs Insecticides (India) Ltd (supra) has taken a view that the reasons recorded were vague and uncertain and cannot be construed as satisfaction on the basis of the relevant material on the basis of which a reasonable person can form a belief that income has escaped assessment. The Hon'ble Delhi High Court has also come to the conclusion that the reasons recorded did not disclose the AO's mind regarding escapement of income. The Hon'ble Delhi High Court ultimately held that initiation of proceedings u/s 148 of the Act was not valid and justified in the eyes of law. The facts and circumstances in the present case are identical to the case decided by the Hon'ble Delhi High Court. Following the said decision we hold that initiation of re-assessment proceedings is not valid. On this ground, the assessment is liable to be annulled. 9.1. Even on merits we hold that the conclusion drawn....