TaxTMI 
TaxTMI 
2020 (10) TMI 991
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....tter dated 27.03.2017 alongwith report of the Investigation Wing, Unit 3(1), Kolkata without making an independent enquiries. b) The figures recorded in the reasons viz. buying, selling and profit are factually incorrect which also shows non application of mind on the part of the AO. c) There was no proper valid and legal service of notice under section 148 of the IT Act on the Appellant. d) Requisite sanction as required from the competent authority under section 151 of IT Act has been granted in a mechanical manner. e) The reasons recorded indicate that the AO has acted on mere surmises and suspicion for making fishing and roving enquires. The requirement of law is "reason to believe" and not "reason to suspect". f) There is no nexus between the reasons recorded and escapement of income. g) There is no failure on the part of the Assessee to disclose fully and truly all material facts necessary for assessment. 2. That the Ld. CIT (A) erred on facts and in law in confirming the addition of Rs. 1,31,08,895/- u/s 68 read with section 115BBE of I.T. Act as against profit of Rs. 1,49,19,900 declared on account of commodity tradin....
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.... assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 5. Before proceeding further, the reasons recorded by the AO to initiate proceedings u/s 147/148 of the Act for AY 2010-11 are extracted for ready perusal as under :- "Reasons recorded in the case of M/s. Gangeshwari Metals Pvt. Ltd. - A.Y. 2010-11 for initiating proceedings u/s 147/148 of the Income-tax Act, 1961 Name of the assessee M/s. Gangeshwari Metals Pvt. Ltd. PAN AAACM0267E Status Company Assessment Year 2010-11 The assessee company had filed return of Income on 17.09.2010 declaring a total income of Rs.l,88,519/-, which has been adjusted against brought forward losses and net taxable Income of Rs Nil has been returned. Even the Book Profit u/s 115JB has been declared at Rs Nit. The return was processed us 143(1} and the case of the year under consideration was not completed in scrutiny assessment....
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....ers/brokers created dummy entities to accommodate bogus loss. (vi) Some of the entities/beneficiaries who took especially profit from these 50 entities was checked randomly and it is found that they had not filed their Income Tax and did not show income earned through commodities profit for the concerned assessment year. Based upon investigation, the Investigation wing has prepared a list of beneficiaries and as per information provided by the Investigation directorate, the assessee is one of the beneficiary and has taken bogus profit as per following transactions during AY 2010-11 :- Total buying Rs. 37,26,450/- Total Selling Rs. 38,63,700/- Total Profit Rs. 1,37,250/- The above Information provided by the Investigation Wing was examined the regard to the record of the assessee. It is seen that the assessee has shown profit on commodity transaction in excess of the above mentioned amount. Further, it is seen that the above bogus profit has been taken to adjust the brought forward business losses and no tax has been paid by the assessee. Even in the MAT provisions no tax has been paid by the assessee. Thus by this process, the a....
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....against brought forward losses and relied upon the decision rendered by Hon'ble Supreme Court in case of Raymond Woolen Mills Ltd. vs. ITO (1999) 236 ITR 34 SC. 8. Bare perusal of the reasons recorded extracted in the preceding para goes to prove that name of the assessee as a broker has nowhere mentioned in the reasons recorded. Reasons have been recorded by the Investigating Officer without making any verification of facts and figures forwarded by the Investigation Wing what to talk of conducting independent enquiry. Because in the reasons recorded assessee is shown to have earned profit of Rs. 1,37,250/- from trading commodities allegedly as bogus profit during 2010-11 which is extracted as under :- Total buying Rs. 37,26,450/- Total Selling Rs. 38,63,700/- Total Profit Rs. 1,37,250/- 9. Ld. AR for the assessee to prove the fact that the reasons recorded are vague and factually incorrect taken us to the audited balance sheet, profit & loss account and Schedule IX, Sales and Other Income, available at pages 13 to 32 of the paper book, particularly Schedule IX depicting sales and other income, available at page 27 of the paper book, which shows....
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.... material per se without a further enquiry having been undertaken by the Assessing Officer, who had deprived himself of that opportunity by proceeding on the erroneous premise that the assessee had not filed a return for the assessment year, 2004-05, when in fact it had. In his assessment order, the Assessing Officer had, instead of adding a sum of Rs. 78 lakhs, even going by the reasons for reopening of the assessment, added a sum of Rs. 1.13 crores and the basis for such addition had not been explained. No error was committed by the Appellate Tribunal in holding that reopening of the assessment under section 147 was bad in law. No question of law arose." 14. So, in view of what has been discussed above and following the aforesaid decisions rendered by Hon'ble Delhi High Court, we are of the considered view that firstly "reasons to believe" recorded by the AO, which is replica of information received from the Investigation Wing, cannot be a tangible material per se sufficient to form reasons to believe; that even figures of buying, selling and profit booking qua commodity trading, recorded at page 2 of "reasons to believe", are not in accordance with the audited financials ....
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....sessee. Assessee has shown to have earned the profit on account of commodity trading at Rs. 1,49,19,900/- as is evident from the financials/schedule, available at page 27 of the paper book on which income-tax has been paid. 18. Assessee has duly brought before the AO/CIT (A) the documents viz. copy of account of the assessee company in the books of R.K. Commodities (P) Ltd. as well as copies of accounts of assessee company in the books of Smrat Commodity Broker Pvt. Ltd. with whom trading of Rs. 59,56,410/- and Rs. 89,63,490/- respectively was made and these documents are available at pages 75 to 118 of the paper book. Surprisingly, all these documents have not been examined nor controverted by the AO as well as ld. CIT(A). Moreover, all these transactions are proved to have been made through banking channels from the assessee's HDFC Bank statement, available at pages 119 to 133 of the paper book. 19. AO reported to have issued notices u/s 133 (6) on 07.12.2017 to NMCE Head Office, Ahmedabad and MCX but reply received thereto have never been confronted to the assessee nor copies thereof have been supplied. This issue was specifically raised by the assessee before the ld. ....