TaxTMI 
TaxTMI 
2020 (10) TMI 1008
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....iness as dealer in Iron and Steel, filed its return of income for the assessment year under consideration on 15.09.2009 declaring the total income of Rs. 7,92,587/- The return was processed u/s 143 (1) of the Act. Subsequently, the case was reopened on the basis of information received from DGIT (Inv.), Mumbai that the assessee had obtained accommodation bills from bogus dealers in order to inflate purchases. Accordingly, the AO issued notice u/s 148 of the Act. In response to the notice u/s 142 (1) of the Act, the authorized representative (AR) of the assessee appeared before the AO and furnished some of the details called for by the AO. Thereafter, neither the assessee nor the representative appeared before the AO any details/documents were furnished before the AO. Accordingly, the AO passed the assessment order on the basis material available on record and determined the total income of the assessee at Rs. 5,38,54,780/- after making various additions. The assessee challenged the assessment order before the Ld. CIT (A). The Ld. CIT (A) after hearing the assessee partly allowed the appeal. Still aggrieved, the assessee is in appeal before this Tribunal. 3. The assessee has chal....
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..... Lender Amount 1 Gamhirdas D. Shah Rs. 3,00,000/- 2 Kajal Jethwa Rs. 3,50,000/- Total Rs. 6,50,000/- In sustaining such addition CIT (A) ignored his own findings in ground of appeal no. 1 before him." 4. Before us, the Ld. counsel for the assessee submitted that the Ld. CIT (A) has erred in sustaining the addition made by the Assessing Officer on the issues not related to the reasons recorded for issuing notice u/s 148 and travelling beyond the scope of reassessment and making addition to the total income on matters not related to reasons recorded for the assessment. The Ld. counsel further pointed out that the Ld. CIT (A) even after holding that the Assessing Officer cannot make fishing enquiry in the course of reassessment, the Ld. CIT (A) has confirmed the addition made by the AO in the issues not relating to the reasons recorded for reopening. The Ld. counsel for the assessee placing reliance on the judgment of the Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs. CIT 336 ITR 136 (Delhi) submitted that Explanation 3 to section 147 does not empower the AO to make roving enquiries in respect of other matters....
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....om 74 (Delhi), if during the course of reassessment proceeding, the AO comes to conclusion that some items have escaped assessment then notwithstanding that those items were not included in reasons to believe as recorded for initiation of proceedings and notice the AO can make assessment of those items. The Ld. DR further contended that since the AO had made additions in accordance with the law laid down by the Hon'ble Delhi High Court, the Ld. CIT (A) has rightly confirmed the addition of Rs. 2,85,180/- on account of various expenses in P & L account, Rs. 6,50,000/- on account of borrowed funds, Rs. 2,85,180/- on account of expenses related to Staff welfare, Salary, Crane, Conveyance, Travelling, Hamali, Loading and Unloading, Oil and painting, and Printing & Stationery amounting to Rs. 2,85,180/- and addition of Rs. 6,50,000/- on account of unexplained cash credit u/s 68 of the Act apart from the addition of Rs. 17,19,214/- on account of bogus purchases. 7. We have heard the rival submissions of parties and also perused the material on record including the cases relied upon by the parties. As pointed out by the Ld. counsel for the assessee, the assessee challenged the assessme....
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....ment of the Ld. counsel that the finding of the Ld. CIT (A) has attained finality and the department cannot raised this plea before the Tribunal that the Ld. CIT (A) has wrongly decided the legal issue in favour of the assessee. In the case of Ranbaxy Laboratory Ltd. vs. CIT (supra), the Hon'ble High Court has explained the effect of Explanation 3 to section 147 inserted by Finance Act, 2009 which empowers the AO to assess the any income which comes to his notice subsequently even though no reasons have been recorded in respect thereof holding that Explanation 3 does not empower the AO to make roving enquiries in respect of other matters. Since, the Ld. CIT (A) has held in principle that the AO has made fishing enquiry in the course of reassessment proceedings and allowed the legal ground raised by the assessee for statistical purposes and since the department has not challenged the findings of the Ld. CIT (A), in our considered view, the addition made by the AO except the addition made on account of bogus purchases which was the subject matter of reassessment, are not sustainable. Once, it is established that the AO has made fishing and roving enquiry, the additions made as a resu....
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.... the total income on matters not related to reasons recorded for reassessment, though in principle the CIT (A) agreed with the contention of the appellant that assessing officer cannot make fishing enquiry in the course of reassessment. Nature f Addition/Disallowance Relevant ground no. before CIT(A) Amt. of/Addition/Disallowance Sustained Various expenses debited to Profit & Loss A/c Ground No. 4 Rs. 6,20,512/- Interest expense Ground No. 5 Rs. 5,36,251/- Borrowed Funds Ground No. 8 Rs. 9,50,000/- 2. In the facts and circumstances of the case and in law, the learned CIT (A) Mumbai has erred in confirming the action of the assessing officer in considering genuine purchase made from following parties as non-genuine purchase and adding the whole amount u/s 69C. Sr. No. Name of Party Amount 1 M/s Prayan Trading Co. Rs. 6,52,090/- 2 M/s Sampark Steels Rs. 6,25,185/- Total Rs. 12,77,275/- 3. In the facts and circumstances of the case and in law, the learned CIT (A), Mumbai has erred in confirming the action of the assessing officer in considering, various expenses aggregate to Rs. 6,20,512/-....