TaxTMI 
TaxTMI 
2021 (11) TMI 853
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....s) has erred in law and in facts in upholding the validity of impugned reassessment order passed by the Assessing Officer without considering the fact that the notice under section 143(2) of the Act was not properly served to the assessee. 3. The learned Commissioner of Income-tax (Appeals) has erred in law and in facts in partially confirming the addition of alleged bogus purchases made by the Assessing Officer without appreciating the fact that the impugned bogus purchases have not been claimed as expenses in profit and loss account in view of the fact that the asses see acted as commission agent on behalf of principals and commission income on such transactions have already been credited to profit and loss account. 4. The learned Commissioner of Income-tax (Appeals) has erred in law and in facts in partially confirming the addition of impugned bogus purchases of Rs. 35,96,388 (being 12.50 per cent. of total alleged bogus purchases of Rs. 2,87,71,098 made by the Assessing Officer. The learned Commissioner of Income-tax (Appeals) has relied on irrelevant consideration and factor while omitting to consider relevant facts and law in adjudicating the appeal filed by the assessee.....
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....bjection raised by the assessee was disposed of, by the Assessing Officer, by passing a speaking order dated January 21, 2015, which was duly served upon the assessee. 5. In response to the notice, the assessee, has attended personally and filed his reply dated April 25, 2014 mentioning to treat the original return as filed by the him in due course for the assessment year 2007-08 and asked to provide him with reasons for reopening of the assessment, which was provided to him on March 28, 2014. During the course of assessment proceedings, it was noted by the Assessing Officer that the assessee is a commission agent. The Assessing Officer observed that a search action was mounted on one Shri Rajendra Jain group of cases in Mumbai, wherein he has admitted that he has floated many concerns as proprietary concerns, firms, and companies in the name of his trusted people and he has given bogus purchase bills and accommodation entries to many parties to help them to show in accounts. The assessee is one of the beneficiary of those alleged accommodation entries. The report of the Investigation Wing, Mumbai has been referred by the learned Assessing Officer in his assessment order. After gi....
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....Officer had received report from the Investigation Wing, Mumbai, which indicated that the assessee was beneficiary of accommodation entry operators. The said accommodation entry operator has admitted before the Investigation Wing that he had given bogus purchase bills to many persons including the assessee. Based on this report, the learned Assessing Officer had "reason to believe" that income has escaped the assessment. In the facts and circumstances, the re- opening in this case is justified. Therefore, the addition made by the Assessing Officer may be confirmed. The learned Departmental representative for the Revenue further submits that the assessee has not raised any objection against the validity of reopening and the jurisdiction of the Assessing Officer as prescribed under section 124(3) of the Income-tax Act. The assessee participated in the reassessment proceeding without making any objection, hence he precluded for raising objection against the jurisdiction of the Assessing Officer. The assessee was very well aware about the grounds of reasons for reassessment. At the time of reopening, the Assessing Officer is not required to give subjective satisfaction. The learned Dep....
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....modus operandi and made additions or bogus purchases for Rs. 71,92,775. On appeal, the learned Commissioner of Income-tax (Appeals) restricted the addition from 25 per cent. to 15 per cent. of purchases. Aggrieved, the assessee is in appeal before us. 11. Since the assessee has challenged the reopening of assessment under section 147/148 of the Act, therefore, first of all, we should examine the reasons recorded by the Assessing Officer. The reasons recorded by the Assessing Officer is reproduced below for ready reference : 11. Reasons for the belief that income has escaped assessment- Search action was carried out by the Investigation Wing, Mumbai on various groups which are involved in providing accommodation entries by way of issuing non-genuine bills. On examination of the above information, I have reason to believe that the abovenamed assessee is a beneficiary of non-genuine transactions of Rs. 2,87,71,098 during the financial year 2006-07 from the following parties. S. No. Name of the party/concern Amount involved (in Rs.) 1. M/s. AVI Exports 2,43,00,310 2. Vitrag Jewels 44,70,788 Total 2,87,71,098 In view of th....
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....rification'. 9. If on the basis of information made available to him and upon applying his mind to such information, the Assessing Officer had formed a belief that income chargeable to tax has escaped assessment, the court would have readily allow him to reassess the income. In the present case however, he recorded that the information required deep verification. In plain terms therefore, the notice was being issued for such verification. His later recitation of the mandatory words that he believed that income chargeable to tax has escaped assessment, would not cure this fundamental defect. 10. The learned counsel for the Revenue however urged us to read the reasons as a whole and come to the conclusion that the Assessing Officer had independently formed a belief on the basis of information available on record that income in case of the assessee had escaped assessment. Accepting such a request would in plain terms require us to ignore an important sentence from the reasons recorded, viz., if needs deep verification. 11. Before closing, we can only lament at the possible revenue loss. The law and the principles noted above are far too well-settled to have escaped the not....
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....Officer. Hence, the proceeding is itself bad in law. Reliance is placed on the judgment of the hon'ble Delhi High Court in the case of Pr. CIT v. RMG Polyvinyl (I) Ltd. [2017] 396 ITR 5 (Delhi) (I. T. A. No. 29 of 2017), wherein it was held as follows (page 7) : "5. As it transpired subsequently there were at least two glaring errors in the above reasons. The first error was that the Assessing Officer proceeded on the basis that 'no return of income is available in the AST database of Income-tax Department. Therefore, it is clear that the assessee has not filed return of income for the assessment year 2004-05 and consequently has not offered any income for taxation'. In the assessment order dated December 30, 2011 passed consequent upon the reopening of the assessment, the very first line states that the assessee had filed return declaring income of Rs. 4,38,958 on October 31, 2004 which was processed under section 143(1) of the Act on January 4, 2005. 6. The second glaring error in the reasons was that the total of the accommodation entries was set out as Rs. 1.56 crores. In the same assessment order dated December 30, 2011 in para 2.3 it is stated as under : ....
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....hich the reasons for initiating reassessment proceedings are recorded and we are unable to countenance that any belief based on such statements can ever be arrived at. The reasons have been recorded without any application of mind and thus no belief that income has escaped assessment can be stated to have been formed based on such reasons as recorded'. 11. There can be no manner of doubt that in the instant there was a failure of application of mind by the Assessing Officer to the facts. In fact he proceeded on two wrong premises one regarding alleged non-filing of the return and the other regarding the extent of the so- called accommodation entries. 12. Recently, in its decision dated May 26, 2017 in I. T. A. No. 692 of 2016 (Pr. CIT v. Meenakshi Overseas Pvt. Ltd. [2017] 395 ITR 677 (Delhi)), this court discussed the legal position regarding reopening of assessments where the return filed at the initial stage was processed under section 143(1) of the Act and not under section 143(3) of the Act. The reasons for the reopening of the assessment in that case were more or less similar to the reasons in the present case, viz., information was received from the Investigation Win....