TaxTMI 
TaxTMI 
2018 (9) TMI 2035
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on the basis of the same books of account, application of G.P. rate of 9% and thereby, confirming trading addition of Rs. 62,44,358/- is whimsical, arbitrary and on surmises and conjectures. 3. The assessee craves to amend, alter and modify any of the grounds of appeal. 4. Necessary cost be awarded to the assessee." 2. Ground No.1 of the appeal is regarding validity of initiation of proceedings U/s 147/148 of the Income Tax Act, 1961 (in short the Act) and consequential reassessment order passed U/s 147 of the Act. The ld AR of the assessee has submitted that the assessee filed its return of income of 30th September, 2009 declaring total income of Rs. 54,350/-. The Assessing Officer completed the assessment U/s 143(3) of the Act on 22/12/2011 whereby the books of assessee were rejected U/s 145(3) of the Act and a trading addition of Rs. 2,50,000/- was made by the Assessing Officer. The ld AR has pointed out that the Assessing Officer in the original assessment framed U/s 143(3) of the Act has verified all the purchases made by the assessee and made a trading addition after rejection of books of account on specific grounds that certain purchases were found....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l assessment was completed U/s 143(3) of the Act and the assessment was reopened after expiry of four years. 3. On the other hand, the ld DR has submitted that the assessment was reopened which is based on new facts and information came to the knowledge of the Assessing Officer on the basis of the report of DIT(Inv.) as well as statement recorded by the Investigation Wing of one Shri Vijay dated 12/03/2016 has reopened the assessment while recording the reasons as under: "On the basis of information available on record it is gathered that during the year assessee has taken accommodation entry in the nature of bogus share application money/ bogus unsecured loan/ bogus sale and purchase. The assessee has obtained following accommodation entries:- S. No. Name of concern/ entry provider Transaction Amount Group Beneficiary Name 1. Kothari Impex Rs. 2,79,35,857/- Gautam Jain Group, Surat G.B.Impex Total Rs. 2,79,35,857/- The above concern is indulged in providing accommodation entries in lieu of cash obtained from the beneficiary and not doing any genuine business activities as divulged ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r bogus unsecured loan or bogus sales and purchases. In our considered view, the Assessing Officer cannot resort to the provisions of Section 147/148 of the Act only to conduct a roving and fishing the enquiry and then to decide whether any income assessable to tax has escaped assessment or not. In this case, the Assessing Officer has finally concluded that the transaction of purchases made by the assessee are in the category of unverifiable purchases instead of holding the bogus transaction and finally made an addition of 25% of such purchases. Therefore, the Assessing Officer has estimated the income of the assessee in the reassessment order passed U/s 143(3) read with Section 147 of the Act which was further estimated by the ld. CIT(A) by applying G.P. rate of 9%. It is pertinent to note that the original assessment was completed on the income which is also estimated by the Assessing Officer after rejection of books of account and a trading addition of Rs. 2,50,000/- was made, therefore, reassessment was done by the Assessing Officer only to reestimate the income of the assessee. There is no dispute that the notice issued U/s 148 of the Act on 12/3/2016 is after the expiry ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....O has accepted the genuineness of the purchases including the two parties, namely M/s. Maridian Gems and M/s. Millennium Star. Even if the subsequent information received from the DIT Investigation Wing Mumbai renders the assessment order passed under section 143(3) defective and erroneous for want of proper verification and investigation, the same would not turn the case in the category that the assessee has failed to disclose fully and truly all the particulars necessary for assessment. It is not the case of the AO that the assessee has not furnished the requisite documents and details of purchase rather the AO conducted a detailed enquiry during the original assessment on the issue of genuineness of purchases. Thus the information received by the AO from Investigation Wing Mumbai would not amount to non disclosure of particulars by the assessee, rather it was the subject matter of enquiry by the AO in the original assessment. Therefore, if the AO failed to conduct proper enquiry regarding the genuineness of the purchases, the same would not give jurisdiction to the AO to review the order or remove the defect based on subsequent information. The statute has provided segregat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....defect based on the subsequent information. In the case in hand, the Assessing Officer has duly examined the purchases made by the assessee and also observed that some of the purchases are not verifiable and accordingly made the addition being trading addition of Rs. 2,50,000/- while passing the order U/s 143(3) of the Act and therefore, the reopening after four years is not permitted just to review the earlier order passed by the Assessing Officer U/s 143(3) of the Act based on the information received from the Investigation Wing on the same issue, which was subject matter of enquiry and investigation by the Assessing Officer while passing the order U/s 143(3) of the Act. Even otherwise the reasons recorded by the Assessing Officer are very vague which suggests that the Assessing Officer has not applied his mind and just recorded the reasons as borrowed from the report of the Investigation Wing without specifying the nature of transaction whereas the assessee had only one transaction of purchase from the said party namely M/s Kothari Impex. Hence, in view of the facts and circumstances of the case as well as the decision of the Coordinate Bench (supra) we hold that the reopen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the income of the assessee by applying G.P. rate of 6.06% as against the G.P. rate declared by the assessee as 5.36%. Consequently, the Assessing Officer made trading addition of Rs. 13,50,711/-. The said order of the Assessing Officer was subsequently rectified by the Assessing Officer while passing the order U/s 154 of the Act dated 06/09/2013 wherein the Assessing Officer applied G.P. rate @ 8.32% and accordingly enhanced the addition to Rs. 57,83,670/-. 8. The assessee challenged the action of the Assessing Officer before the ld. CIT(A) and vide order dated 06/2/2015, the ld. CIT(A) had confirmed the disallowances by applying 15% of unverifiable purchases and consequently the addition was restricted to Rs. 7,84,442/-. 9. The revenue filed an appeal against the said order of the ld. CIT(A) before this Tribunal. However, the Tribunal vide order dated 13/5/2016 dismissed the appeal filed by the revenue in ITA No. 429/JP/2015 and upheld the order passed by the ld. CIT(A). Thereafter the Assessing Officer reopened the assessment by issuing the notice U/s 148 dated 25/3/2017 by recording the reasons as under: "The assessee firm has filed its return of income from the....