AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 372
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....ed on 26.09.2011 declaring income of Rs. 46,11,710/- which was revised on 23.08.2012. The turnover returned was Rs. 37.58 crores. Subsequently, assessment was reopened pursuant to the information received from the Deputy Director of Income Tax [Inv.]-III, Gurgaon, who, in his information, brought to the notice of the Assessing Officer that a search action u/s 132 of the Act was conducted in the case of Spaze Group of cases on 17.02.2016 and it was informed that this group was indulging in providing purchase accommodation entries through various non-genuine proprietorship/partnership concerns. 4. Pursuant to this information, the Assessing Officer recorded reasons for reopening the assessment which reads as under: "In this case, the return of income was filed by the assessee on 26.09.2011 vide e-filing acknowledgement no. 292682331260911 at Income of Rs. 46,11,710/-. The assessee filed a revised return of income on 20.03.2012 vide e-filing acknowledgement no. 356514221200312 at income of Rs. 46,11,710/-. The return was processed u/s 143(1) of the I.T. Act on 23.08.2012. The assessee has not declared its type of business in the ITR but declared turnover of Rs. 37,58,71....
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....ssion @ 1% from parties who were taking accommodation entries for bogus sales and commission @ 0.5% from all other parties. He also admitted that no goods were physically delivered for any purchase or sales. 4. Shri Kishori Sharan Goyal, in his statement recorded on 17.02.2016, also provided a list of bogus concerns used by him for the purpose of providing accommodation entries for bogus purchases and sales. The list of such bogus entities include M/s Sai Kirpa Enterprises. Plot No. 803, Village Mundka, Delhl-110041 ,and M/s Balaji Enterprises, G-239 A, Lajpat Nagar, Sahibabad, Ghaziabad and Plot No. 803, Mundka, New Delhi. The DDIT (Inv.), Unit-Ill, Gurgaon, also provided a list of beneficiaries who obtained bogus purchase/sale entries from the concerns controlled by Shri Kishori Sharan Goyal. One of such beneficiaries is the assessee M/s A K. Lumbers Ltd. which received following amounts from the concerns controlled by Shrl Kishori Sharan Goyal during the FY 2010-11 Name of the concern Bank Account No. concern Bank & Branch Date of receipt Amount Received Sai Kripa Enterprises 8761131004535 Oriental Bank of Commerce, Pitampura, Delhi 0....
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....by him only and were engaged in providing accommodation entries for bogus purchases and sales. Had the Assessing Officer applied his mind, he would have known that Shri K.S. Goyal never mentioned the name of the appellant. 7. A perusal of the information received from the Inv. Wing shows that the assessee has sold goods to Sai Kripa Enterprises and Balaji Enterprises amounting to Rs. 10 lakhs each. It is claimed that the bank statements of these two enterprises were made available which contained transactions in cash. Had the Assessing Officer applied his mind before reopening assessment and had he examined the bank statement, he would have known that the transaction with Sai Kripa Enterprises amounted to Rs. 27,41,837 and the transactions with Balaji Enterprises amounted to Rs. 65,93,089/-. 8. It appears that the Assessing Officer has simply relied upon the information from the INV Wing and without applying his mind reopened the assessment by giving the aforesaid reasons for reopening. Had the Assessing Officer applied his mind to the nature of the business of the assessee, he would have known that before selling the log woods, the assessee had to take permission from the Fo....
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....Court in the case of Prem Casting Ltd and Moti Lal Padampat Udyog Limited. Both these decisions of the Hon'ble High Court are totally on different set of facts and do not lay down any ratio in so far as the opportunity of cross examination is concerned. 15. The Hon'ble Supreme Court in the case of Andaman Timber Vs. CIT in Civil Appeal No. 4228 of 2006 has categorically laid down the ratio that denial of natural justice would make an assessment void. 16. The Hon'ble Delhi High Court in the case of Pradeep Kumar Gupta 203 ITR 95 had the occasion to consider the situation where assessment was framed on statement of a third party and the assessee requested for cross examination which was denied. The Hon'ble High Court observed as under: "4. Having heard learned Counsel for the parties at great length, we are of the view that the Order of the ITAT is unassailable. In this case, the assessment had not been completed under Section 143(3) of the IT Act. There are banking transactions between the assesseds and Shri Anand Prakash and, therefore, initiation of reassessment Proceedings under Sections 147/148 may be impregnable even to the charge of legitimacy of....
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....s mandatory for the Revenue to produce Shri Anand Prakash for cross-examination by the assesseds on their specific demand in this regard. The facts on which the decision to invoke Sections 147/148 are predicated may in some cases be sufficient both for decision to carry out a reassessment as well to justify or sustain the fresh assessment. However, there may well be instances where the former said reopening may pass muster in the light of some facts, but those facts by themselves may turn out to be insufficient to preserve the assessment itself. Once Sections 147/148 are resorted to, the AO must first discharge the burden of showing that income has escaped assessment. It is only thereafter that the assessed has to provide all the answers. We find no reason why the initial burden of proof should not rest on the AO even where the Assessment has gone through under Section 143(1) of the Act. The Tribunal has, therefore, arrived at the correct conclusion. 17. On identical set of facts, the Tribunal had the occasion to decide the appeal in ITA No. 4271/DEL/2019 wherein also the reopening of assessment was challenged which was made pursuant to the information received from the INV Wing....
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....above discussion and following the reasons for decision in the case of M/s. KLF Food (India) Ltd., (supra), hold that assumption of jurisdiction by the Assessing Officer for reopening of the assessment is illegal and bad in Law. We, accordingly, set aside the ITA.No.4271/Del./2019 Shri Devki Nandan Bindal, Delhi. orders of the authorities below and quash the reopening of assessment in the matter. Resultantly, all additions stand deleted. In view of the above, there is no need to decide the Departmental Appeal on merit in which Ld. CIT(A) has already deleted the addition. 12. In the result Appeal of the Department is dismissed and the cross-objection of the Assessee is allowed. 13. To sum-up, both Cross-Objections of different Assessees are allowed and both Departmental Appeals are dismissed." 18. The ld. DR, in his written submissions, has placed reliance on several judicial decisions to buttress his view that information received from INV Wing was good enough to reopen the assessment order. 19. We are not into the information received from the INV Wing, but, on application of mind of the Assessing Officer before issuing such notice. As explained elsewhere, ....