TaxTMI 
TaxTMI 
2021 (5) TMI 660
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....is part of a Syndicate involved in smuggling of Red Sanders Wood run by one Shri Shekhar. The syndicate involved in trading of banned items across the borders such as exotic herbs, such as Ashwagandha, Peacock feather and a host of items wide name :pyaaz, "Aalu", "Adrak" and "Seb". After considering carefully the contents and nature of the information available before me, I have reason to believe that income chargeable to tax has escaped assessment in the case of M/s VSR Enterprises for Asstt. Year 2007-08. Hence, proceeding u/s 147 of the I.T. Act, 1961 initiated. Issue notice u/s 148 for the Asstt. Year 2007-08" 3. The Assessing Officer accordingly issued notice u/s 148 of the Act on 13.04.2011. In response to the same, the assessee vide letter dated 28.10.212 stated that the return filed originally on 30.10.2007 may be treated as return filed in response to notice u/s 148 of the Act. 4. During the course of assessment proceedings, the Assessing Officer asked the assessee to explain the various credit entries appearing in the bank account and also explain the reasons for cash withdrawal from the bank account. Various opportunities were granted by the Assessing Officer to th....
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.... 8/6/2006 Taken from partner 230,000.00 10/06/2006 Taken from partner 575,000.00 12/06/2006 Taken from partner 100,000.00 Total 27,29,000.00 CIT (Appeals) has erred in law and in facts in not deleting the addition on account of amount taken from partner. Ground No.2 In its impugned order, the CIT (Appeals) has relied on the information available with assessing officer and has passed the order dismissing the appeal filed by the aggrieved assessee in the CIT (Appeals) As per Section 250(6) of the Income Tax Act, 1961, the CIT (Appeals) should dispose the appeal in writing and shall state the points for determination of the decision thereon and the reason for such determination. CIT (Appeals) have not decided the appeals on merits. He has not gone through the facts of appeals filed and has given no findings on the grounds of appeal. Therefore, the mandate of the statute is that the CIT (Appeals) has to give his findings on merits on the basis of material information available with the assessing officer and presented by the assessee to be considered. There is no exception provided for order .A reasoned order based on the merits of the case is pre r....
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....that under identical circumstances, the Tribunal has admitted the additional ground raised by the assessee. He accordingly submitted that additional grounds raised by the assessee should be admitted. 11. After hearing the arguments advanced by the learned counsel for the assessee and the counter argument advanced by the Learned DR and considering the fact that identical additional grounds have been admitted by the Tribunal in assessee's own case for AY 2008-09, the additional grounds raised by the assessee are admitted for adjudication. 12. The learned counsel for the assessee, referring to the decision of the Tribunal in assessee's own case in the immediately succeeding year, drew the attention of the Bench to the order of the Tribunal and submitted that identical reasons were recorded by the Assessing Officer for reopening of the assessment for AY 2008-09. The Tribunal, after considering the rival arguments made by both the sides has allowed the additional grounds and quashed the reassessment proceedings. Since, facts of the impugned appeal are identical to the facts of the case decided by the Tribunal in assessee's own case for AY 2008-09, therefore, reopening of the assessmen....
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....ltimately did not make any addition against the assessee of the impugned amounts as have been mentioned in the reasons recorded for reopening of the assessment. The A.O. has also not made any addition against the assessee on account of any income earned by assessee through smuggling activities. The A.O, thus, recorded wrong, incorrect and non-existing reasons in the reasons recorded for reopening of the assessment. It would also show that A.O. did not apply his mind to the information received from REIC through ITO, Ward-43(4), New Delhi. The A.O. without any basis has recorded wrong, incorrect and non-existing reasons for reopening of the assessment. The A.O. also did not mention in the reasons that as to how much amount, the income chargeable to tax has escaped assessment in the case for assessee for assessment year under appeal. All these facts clearly support the explanation of assessee that A.O. without any cause or justification recorded wrong, incorrect and non-existing reasons for reopening of the assessment. The ITAT, Delhi EBench, Delhi in the case of Shri Natrajan Monie, Gurgaon vs., ITO, Ward- 2(5), Gurgaon vide Order Dated 07.12.2020 in ITA.No.1817/Del./2017, relying u....
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....t proceedings the assessee furnished copy of Form No.16, Form No 26AS, statement of his bank accounts maintained with different Banks, copy of the computation of income and documents relating to MCX business made with Aditya Birla Commodities Broking Ltd. The assessee also filed copy of the sale deed of property at Gurgaon Dated 21.03.2011 sold by assessee for a consideration of Rs. 1.20 crores. The A.O. issued detailed show cause notice to the assessee and after considering the reply of the assessee, made certain additions and computed the total income at Rs. 84,37,210/-. The net income of the assessee is computed as under : 1. Income from salary as discussed in para 3.1. Rs. 4,34,338/- 2. Income from interest as discussed in para 3.2. Rs. 1,59,237/- 3. Income from MCX business as discussed in para 3.3. Rs. 7,72,461/- 4. Income from unexplained cash deposits as discussed in para 3.4 Rs. 59,50,000/- 5. Income from unexplained cash credits as discussed in para 3.5(i). Rs. 9,85,000/- 6. Income from profit on redemption of MF/FD as discussed in para 3.5(ii) Rs. 1,32,174/- TOTAL Rs. 84,37,210/- 3.1. The assessee challenged the reopening of the....
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....ceedings is to be judged with reference to the reasons recorded for reopening of the assessment. The copy of the reasons for reopening of the assessment are placed on record which reads as under : 1. Name and Address of the Assessee Monie Natrajan 1408, Beverley Part- II, DLF-II, Gurgaon. 2. PAN AAFPN2890N 3. Status INDL 4. Ward/Circle/Range Ward-2(5), Gurgaon 5. Assessment Year 2011-12 6. Date 11.02.2015 Reasons for initiating proceedings u/s. 147/148 of the Income Tax Act, 1961. Information has been received through NMS (P-1 category that during the period under consideration, the assessee had made investment of Rs. 200000/- for purchase of mutual fund and transaction in commodity exchange contract of Rs. 10,00,000/- during the assessment year 2011- 12. As per record assessee do not have file return of income for the Assessment year 2011-12. The income chargeable to tax amounting to Rs. 1200000/- which is chargeable to tax has escaped assessment and any other income found during the course of assessment proceedings which is chargeable to tax has escaped assessment. I have reasons to believe that the above said income/transaction of Rs. 1200000/- ....
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....e assessment order, but, after examination this figure was also found incorrect and A.O. has ultimately restricted the addition to Rs. 7,72,469/- i.e., for income only but no addition is made of transaction of MCX Investment. Therefore, A.O. has recorded wrong, incorrect and nonexisting facts in the reasons recorded for reopening of the assessment that assessee has made transaction in commodity exchange contract of Rs. 10 lakhs. It may also be noted here that A.O. in the assessment order in para-2 has mentioned that assessee has made investment of Rs. 10 lakhs in purchase of mutual funds which fact is also incorrect and is contradictorily recorded in the reasons for reopening of the assessment for Rs. 2 lakhs only. The A.O. in the assessment order has also recorded same statement that assessee has made contract in commodity exchange exceeding Rs. 10 lakhs which fact was ultimately found incorrect by the A.O. himself and he has made part addition as against the income mentioned in the show cause notice. These facts clearly show that A.O. did not apply his mind to the information received through NMS and also recorded wrong, incorrect and non-existing facts in the reasons recorded fo....
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....ening of the assessment. Further, the reopening of the assessment would be invalid if the A.O. wanted to make investigation out of information. Such exercise should have been prior to recording of the reasons. In support of our findings, we rely upon the following decisions. 6.2. The Hon'ble Punjab & Haryana High Court in the case of CIT vs., Atlas Cycle Industries [1989] 180 ITR 319 (P&H) held as under : "Held, (i) that the Tribunal was right in cancelling the reassessment as both the grounds on which the reassessment notice was issued were not found to exist, and, therefore, the Income-tax Officer did not get jurisdiction to make the reassessment." 6.3. The Hon'ble Delhi High Court in the case of Pr. CIT vs., SNG Developers Ltd., [2018] 404 ITR 312 (Del.) in which it was held as under : "Held, dismissing the appeal, that the reasons recorded by the Assessing Officer for reopening the assessment under section 147, issuing a notice under section 148 did not meet the statutory conditions. As already held by the Appellate Tribunal, there was a repetition of at least five accommodation entries and the total amount constituting the so-called accommodation entries would therefor....
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....Bombay High Court in the case of Siemens Information Systems Ltd., vs., ACIT & Others [2007] 293 ITR 548 (Bom.) held as under : "The petitioner had several EOU/STP units engaged in the business of export of software. In response to the notice for reopening the assessment for the assessment year 1999-2000, the petitioner, objecting to the issuance of the notice, stated that the reasons furnished by the authority had quoted the provisions of section 10A as amended by the Finance Act, 2000, with effect from the assessment year 2001-02 and as such could not have been made applicable to the assessment year 1999-2000 and the notice had been issued under the mistaken belief about the correct position of law. However, opportunity to show cause was given to the petitioner as to why the loss claimed should not be disallowed to be carried forward. On a writ petition : Held, allowing the petition, (i) that it would be clear from the reasons given that the authority proceeded on the presumption that the law applicable was the law after the amendment and not the law in respect of which the petitioner had filed the return for the year 1999-2000. This by itself clearly demonstrated that there ....
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....o be quashed. We, accordingly, set aside the Orders of the authorities below and quash the reopening of the assessment. Resultantly, all additions stand deleted. In view of the above, there is no need to decide other issues raised in the present appeal which are left with academic discussion only. Accordingly, appeal of the Assessee is allowed. 7. In the result, appeal of the Assessee allowed." 9.1. Considering the above discussion in the light of decision of ITAT, Delhi E-Bench, Delhi in the case of Shri Natrajan Monie, Gurgaon vs., ITO, Ward-2(5), Gurgaon (supra), it is clear that A.O. has recorded incorrect, wrong and non-existing reasons in the reasons recorded for reopening of the assessment reproduced above and have also did not apply his mind to the information received from REIC through ITO, Ward- 43(4), New Delhi. Therefore, we are of the view that reopening of the assessment is illegal and bad in Law and liable to be quashed. We, accordingly, set aside the Orders of the authorities below and quash the reopening of the assessment. Resultantly, all additions stand deleted. In view of the above, there is no need to decide other issues raised in the present appeal on meri....