TaxTMI 
TaxTMI 
2021 (10) TMI 9
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....ct. During the course of assessment proceedings, the AO confronted the assessee regarding the taxability of accommodation entry to the tune of Rs. 19,64,235/-. Rejecting the various explanations given by the assessee, the AO made addition of Rs. 19,64,235/- to the total income of the assessee u/s. 68 of the IT Act being the bogus purchase made by him from M/s. Mayank Impex amounting to Rs. 19,64,235/-, the details of which are as under:- 4. Before CIT(A), the assessee, apart from challenging the addition of Rs. 19,64,235/-, also challenged the validity of reassessment proceedings. However, the ld. CIT(A) was not satisfied with the arguments advanced by the assessee and upheld the addition made by the AO as well as the reassessment proceedings initiated by him. 5. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- "1. That the assumption of jurisdiction by the Assessing Officer under section 147 of the Income Tax Act, 1961, is arbitrary, unjust and bad in law and consequently order of ld. CIT(Appeals) as sustained is not tenable on facts and in law. 2. That there was no valid material with....
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....onfront Mayank Impex in relation to the transaction with the assessee, making of addition of Rs. 19,64,235/- under Section 68 of the Act on account of bogus purchases in the hands of the assessee and sustained by ld. CIT(Appeals) was unjustified and unwarranted on facts and in law. 8. That the addition of Rs. 19,64,235/- made under Section 68 of the Act on account of bogus purchases in the hands of the assessee cannot be made merely because the purchases are not verifiable because as far as the assessee is concerned the purchase is duly supported by an invoice and payment by account payee cheque and those many diamonds are being utilized/sold to customers against payment by customer and against sale invoice issued to them by assessee. 9. The above grounds are independent and without prejudice to one another. 10. Your appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal at the time of hearing." 6. The ld. Counsel for the assessee submitted that the assessee had purchased diamonds from M/s. Mayank Impex and had filed copy of purchase invoice dated 23rd October, 2010 and 11th March, 2011 mentioning the address, VAT TIN No. ....
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....9,64,235/- u/s. 68 of the IT Act, 1961 being bogus purchase made by the assessee from M/s. Mayank Impex in the order passed u/s. 143(3)/147 of the IT Act, 1961. A perusal of the reasons recorded for reopening the assessment, copy of which is placed at page 261 of the Paper Book, shows that the following reasons were recorded for reopening of the assessment:- "Reasons for reopening the case u/s. 147/148 of the I.T. Act, 1961 For A.Y. 2008-09. The Addl. Commissioner of Income Tax, Central Range, Surat vide letter No. SRT/Addl. CIT/CR/Rajendra Jain, Dharmichand Jain, Sanjay Choudhary Gr./2014-15/506 dated 13/03/2015 has informed that a search and seizure operation u/s. 132 of the I.T. Act 1961 in the case of Sh. Rajendra Jain, Sh. Sanjay Choudhary and Sh. Dharmichand Jain Group was carried out on 03/10/2013 by the DGIT (Inv.), Mumbai Charge. During investigation it was found that Sh. Rajendra Jain, Sh. Sanjay Choudhary and Sh. Dharmichand Jain were some of the entry providers operating in Mumbai, indulging in providing accommodation entries in the nature of bogus sales and unsecured loans. During investigation it was also revealed that besides above lender group, some other e....
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....such bogus accommodation entries. The complete details of the transactions between the entry provider and the assessee are as under:- From above it is clear that this issue could not be examined for the assessment year under consideration. Therefore, I have reasons to believe that the income of the assessee to the extent of Rs. 14,54,400/- for A.Y. 2008-09 has escaped assessment in terms of Section 147 of the I.T. Act 1961. Sd/- (G. Sathish) Assistant Commissioner of Income Tax Circle 30(1), New Delhi 8. I find identical issue had come up before the Tribunal in assessee's own case in the immediately preceding assessment year and the Tribunal vide ITA No. 1914/Del/2016 order dated 08.11.2016 held the reassessment proceedings as not valid by observing as under:- "6. I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case it is noticed from the reasons recorded for reopening the assessment placed on page No. 12 of the assessee's paper book that the reopening was done only on the basis of the information received from the Additional Director o....
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..... The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity." 8. In the present case, the reopening was done only on the basis of information received from Investigation Wing. Therefore, in view of the ratio laid down by the Hon'ble Jurisdictional High Court in the aforesaid referred to case, the reopening was not valid and the subsequent assessment framed was void ab initio. Accordingly, the same is set-aside. 9. In the result, the appeal of the assessee is allowed." 9. Since the facts and circumstances of the case are identical t....