TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 1192
X X X X Extracts X X X X
X X X X Extracts X X X X
....having any material as regards bogus purchases. 3. That the appellant reserves the right to add, alter or amend any ground of appeal." 2. Succinctly stated, on the basis of information received by the Assessing Officer from CIB that the assessee as a beneficiary had obtained accommodation bills for bogus purchases aggregating to Rs. 9,53,492/-, the case of the assessee was reopened u/s 147 of the Act. 3. During the course of assessment proceedings, the Assessing Officer backed by the aforesaid information that the assessee had booked bogus purchases of Rs. 9,53,492/-, thus, brought the said amount to tax by dubbing the same as an unexplained investment. Accordingly, the Assessing Officer vide his order passed u/s 143(3) of the Act, dated 27.03.2015 determined the income of the assessee at Rs. 12,42,930/-. 4. Aggrieved, the assessee carried the matter before the CIT(Appeals). However, the CIT(Appeals) not finding any infirmity in the view taken by the Assessing Officer upheld the addition made by him and dismissed the appeal. 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter before us. 6. At the time of hearing of appeal, the Ld. Auth....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., it was submitted by the Ld. AR that though the case of the assessee was reopened for the reason that he had allegedly made bogus purchases to suppress his profits, however, the addition was thereafter made in his hands on the ground that he had made unexplained investment as regards the purchases in question. It was submitted by the Ld. AR that the addition made by the Assessing Officer had no rationale nexus with the very basis on which the case of the assessee was reopened u/s.147 of the Act. It was further submitted by the ld. A.R that a perusal of the 'reasons to believe' on the basis of which the case of the assessee was reopened revealed beyond doubt that the A.O had merely acted upon the information shared with him by CIB and had failed to apply his mind to the material before him. Backed by his aforesaid contention, it was submitted by the ld. A.R that as the case of the assessee had been reopened by the A.O on the basis of a borrowed satisfaction, therefore, the assessment framed by him u/ss. 147/43(3) could not be sustained and was liable to be quashed. 7. Per contra, the Ld. Departmental Representative (in short 'DR') relied on the orders of the lower authorities. It ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Assessing Officer on the basis of which he could have arrived at a bonafide belief that the income of the assessee chargeable to tax has escaped assessment, however, we find that he had failed to apply his mind to the material/information before him and had reopened the case of the assessee by merely referring to the information that was received by him from CIB. As per the settled position of law, the reopening of a concluded assessment presupposes application of mind by the Assessing Officer to the material/information before him, on the basis of which he arrives at a bonafide belief that the income of the assessee chargeable to tax had escaped assessment. However, in the case before us, the Assessing Officer had merely acted in a mechanical manner on the information that was received by him from the CIB, and without applying his mind to the said information/material had reopened the case of the assessee u/s.147 of the Act. In our considered view, the Assessing Officer by reopening the case of the assessee on the basis of a borrowed satisfaction, had thus, wrongly assumed jurisdiction u/s.147 of the Act, which, thus, on the said count itself on the said count itself cannot be up....
X X X X Extracts X X X X
X X X X Extracts X X X X
....veen Kumar Jain, however, he had not even done the bare minimum by pointing out the nature of the impugned accommodation entries that were allegedly stated to have been received by the assessee as a beneficiary. On a careful perusal of the 'reasons to believe', it can safely be gathered that the A.O had merely referred to the information that was received by him from the DGIT(Inv.), Mumbai and had dispensed with the statutory obligation that was cast upon him as regards formation of an independent and a bonafide belief that the income of the assessee chargeable to tax had escaped assessment. As observed by us hereinabove, the A.O by not even referring to the nature of the accommodation entries i.e as to whether they were accommodation entries in the nature of sales or unsecured loans or share application money, which as per the impugned information shared by the DGIT(Inv.), Mumbai were stated to have been received by the assessee as a beneficiary from Shri. Praveen Kumar Jain thus, clearly reveals that he had failed to apply his mind to the material on record to arrive a bonafide reason to believe that the income of the assessee chargeable to tax had escaped assessment. In sum and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the basis of which the A.O forms the reasons to believe, but the process of arriving at such satisfaction/belief cannot be a mere repetition of the report of the Investigation wing. As observed by the Hon'ble High Court, the reasons to believe must demonstrate link between the tangible material and the formation of the belief or the reason to believe that the income of the assessee chargeable to tax had escaped assessment. Also, a similar view was earlier taken by the Hon'ble High Court of Delhi in the case of PCIT Vs. G & G Pharma India Ltd. (2016) 384 ITR 147 (Del). In the case before the Hon'ble High Court, it was observed that the A.O in his reasons to believe after setting out four entries which were stated to have been received by the assessee on a single date i.e 10th February, 2003 from four entities which were termed as accommodation entries, which information was received from the Directorate of Investigation, had therein stated : "I have also perused various materials and report from Investigation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money in its bank account by way of above accommodation entries." In the back....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... supplied by the Directorate of IT(Inv.) about the alleged bogus/ accommodation entries provided by certain individuals/companies without applying his own mind, he was not justified in invoking jurisdiction under Sec. 147. 9. As observed by us at length hereinabove, the A.O in his 'reasons to believe' in the case of the assessee before us had merely referred to the information that was received by him from the DGIT(Inv.), Mumbai that the assessee as a beneficiary had received accommodation entries from two concerns, and dispensing with even the bare minimum requirement of pointing out the nature of the impugned accommodation entries i.e as to whether they were accommodation entries in the nature of sales or unsecured loans or share application money, on the basis of vague and scanty information and without any further verification, examination or any other exercise had jumped to the conclusion that the income of the assessee in respect of the accommodation entries had escaped assessment for the year in question. Accordingly, in the backdrop of the aforesaid factual matrix it can safely be held that the A.O had blatantly failed to apply his mind to the material available on recor....