TaxTMI 
TaxTMI 
2021 (10) TMI 613
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....t of alleged bogus purchase. 4. On the facts and circumstances of case and in law, the CIT(A) erred in enhancing the additions to Rs. 10425365/-. 5. On the facts and circumstances of case and in law, the enhancement to income done by the CIT(A) is totally arbitrary and erroneous. 6. On the facts and circumstances of case and in law, the CIT(A) erred in passing ex parte order. 7. On the facts and circumstances of case and in law, the order passed by CIT(A) is against the principles of natural justice." 3. The return of income was filed by the assessee on 29/10/2007 declaring an income of Rs. 8,84,000/-. The same was processed u/s. 143(1) of the Income Tax Act, 1961. Later on, information was received from ACIT, Central Circle, 10, New Delhi, vide letter dated 13/3/2013 forwarded through CIT, Central ii, New Delhi and the CCIT, Delhi (i) vide letters dated 19/3/2013 & 26/3/2013 respectively therein providing CD where in the list of parties to whom the bogus purchases/accommodation entries provided by Sh. Rakesh Gupta, Shri Vishesh Gupta, Sh. Navneet Jain and Sh. Vaibhav Jain were appearing. After going through the complete list and identifying p....
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....d as under; "A letter bearing F. No. Addl. CIT/(Hq)/(Coord.)/Accommodation entry/201213/15016 dated 26.03.2013 was received from the Office of the Chief Commissioner of I. Tax, Delhi-I, New Delhi therein forwarding letter bearing F. No. CIT(C)-II/2012-13/3898 dated 19.03.2013 received from the Commissioner of I. Tax, Central-II, New Delhi along with a CD containing the details of accommodation entries provided by Sh. Rakesh Gupta & Sh. Vishesh Gupta and Sh. Navneet jain & Sh. Vaibhav Jain in the shape of bogus purchases and directing this office to take necessary action as per section 148 in respect of entries pertaining to A.Y. 2006-07, which were going to be barred by limitation on 31.03.2013. The information provided by the CIT, Central-II, New Delhi vide his letter dated 19.03.2013 reads as under:- "Kindly find enclosed herewith letter dated 13.03.2013 of ACIT, Central Circle-10 duly forwarded by the Addl. CIT, Central Range-IV, along with its enclosures on the subject mentioned above. 2. The assessment of search cases of Sh. Rakesh Gupta, Sh. Vishesh Gupta, Sh. Navneet Jain & Sh. Vaibhav Jain are under process with the ACIT, Central Circie-10. During....
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....ainst reopening of their cases u/s. 147 of I. Tax Act and after considering the replies/details/documents furnished by the assessees' in their respective cases, including the case of the assesses, it was held that no satisfactory explanation about the sources of bogus purchases made from Sh. Rakesh Gupta and Sh. Vishesh Gupta could be furnished. Hence keeping In view the provisions of section 09C of I Tax Act read with section 4, 5 and 14 I. Tax Act, the amount of such bogus purchases were treated as deemed income of the assessee for A.Y. 2006-07. Since the accommodation entries provided by Sh. Rakesh Gupta & Sh. Vishesh Gupta and Shi Navneet Jain & Sh. Vaibhav Jain in the shape of bogus purchases were treated as deemed income of the assessees' for A.Y. 2006-07. and in the said list, names of the concerns persons who have taken accommodation entries in the shape of bogus purchases in subsequent assessment years were also appearing, including A.Y. 2007-08, therefore, this office is of The firm view that these cases also need to be reopened u/s. 147 of I. Tax Act. Accordingly, on examining the list of accommodation entries provided by Sh. Rakesh Gupta & Sh. ....
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....essee for assessment year 2006-07. 7. In the penultimate para, the Assessing Officer has emphasised that the assessee did not file any return of income for the year under consideration whereas, as mentioned elsewhere, on page 2 of the assessment order, the Assessing Officer himself has admitted that return of income for the year under consideration was filed on 18.10.2007. Considering the reasons recorded by the Assessing Officer, which are undisputedly borrowed from somewhere else and considering the fact that he Assessing Officer has emphasised that the assessee did not file any return of income by contradicting himself in the body of the assessment order by admitting that return was filed on 18.10.2007 establishes only and only one thing, that notice u/s. 148 vis-a-vis reasons are devoid of any application of mind. 8. From the reasons, it can be safely concluded that the Assessing Officer proceeded to make opinion on the basis of borrowed reasons and there is no independent application of mind and in such circumstances and facts of the case, reopening of the assessment u/s. 147 of the Act is bad in law and is accordingly directed to be quashed. 9. Our ....
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....vincible, the assessing officer was aware of the existence of four companies with whom the assessee had entered into transaction. Both the orders clearly exposit that the assessing officer was made aware of the situation by the investigation wing and there is no mention that these companies are fictitious companies. Neither the reasons in the initial notice nor the communication providing reasons remotely indicate independent application of mind. True it is, at that stage, it is not necessary to have the established fact of escapement of income but what is necessary is that there is relevant material on which a reasonable person could have formed the requisite belief. To elaborate, the conclusive proof is not germane at this stage but the formation of belief must be on the base or foundation or platform of prudence which a reasonable person is required to apply. As is manifest from the perusal of the supply of reasons and the order of rejection of objections, the names of the companies were available with the authority. Their existence is not disputed. What is mentioned is that these companies were used as conduits. In that view of the matter, the principle laid down in Lovely Expo....
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....essment. The company was incorporated on 4th January, 1989 and was also allotted a permanent account number in September, 2001. The facts indicated above do not show that SS Ltd. is a non existing and a fictitious entity/person. For the reasons stated above, writ of the certiorari is issued quashing the proceedings u/s. 148 of the Act." 13. In the case of CIT Vs. SFIL Stockbroking Co. 325 ITR 285, it has been held as under: "The first sentence of the so-called reasons recorded by the Assessing Officer is mere information received from the Deputy Director of Income Tax (Investigation). The second sentence is a direction given by the very same Deputy Director of Income Tax (Investigation) to issue a notice under Section 148 and the third sentence again comprises of a direction given by the Additional Commissioner of Income Tax to initiate proceedings under Section 148 in respect of cases pertaining to the relevant ward. These three sentence are followed by the following sentence, which is the concluding portion of the so-called reasons:- "Thus, I have sufficient information in my possession to issue notice u/s. 148 in the case of M/s. SFIL Stock Broking Ltd....