2022 (4) TMI 1059

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....sessee was reopened by issuing notice dated 30.03.2017 u/s 148 of the Act which remained un-complied. 2.1 Thereafter, a notice u/s 142(1)/129 was also issued on 04.07.2017 along with reasons for selection of the case of the Assessee, in response to which, the Assessee vide letter dated 17.07.2017 submitted a copy of ITR originally filed u/s 139(1) of the Act wherein the Assessee had declared the income of Rs. 1,01,35,990/- and requested to treat the same as filed in response to the notice dated 30.03.2017 u/s 148 of the Act. 2.2 The Assesssing officer finally passed the assessment order dated30-11-2017 and added the amount of Rs. 25 lakhs in the total income of the Assessee as per section 69/ 69C of the Act, by observing that during the year under consideration the Assessee had taken accommodation entry of Rs. 25 lakhs from M/s. Neel Kanth Steel, Faridabad and inflated expenses through bogus billings with the intention to reduce its taxable income or made earning of an equal sum by way of routing of money. The genuineness of the transaction were tried to verify from the various sources but the same could not be verified at all, as the Assessee had failed to produce documentary ev....

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....s 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the a.y. concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Provided that where an assessment under subsection (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Explanation 1.- Production before the assessing officer of account books or other evidence from which material evidence could with due diligence ha....

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.... was found and the same as under: a. Shri Munish Kumar S/o, Shri Govind Lal is the proprietor of M/s. Neel Kanth Steel having PAN ARFPK7578K. b. The bank account statement of account no, 102505000755 of M/s, Neel Kanth Steel shows that the account has been credited through transfer mainly from the bank account of M/s. Technicom Holdings Pvt Ltd. c. Total deposits in the bank account no, 10250500755 made in the F.Y.2009-10 are Rs. 41.24,189/-. Most of the withdrawals have been malde through cash paid self. Total cash withdrawal during the period were Rs. 4046,0000/-. During the investigation the Asstt. Director of Income Tax (Inv)-II, Faridabad has also observed that the following:- a. M/s. Neel Kanth Steel, FCA 2402, Gali No.8, 25 feet Road, SGM Nagar, Faridabad has been found to be non-existant and non traceable. b. ShriMunish Kumar Prop. Of M/s. Neel Kanth Steel has not filed his income tax return in any finance year fill date. c. ShriMunish Kumar Prop. Of M/s. Neel Kanth Steel has not filled his VAT return in any financial year till date in spite of having substantial sales and purchase transaction. d. ShriMunish Kumar Prop. Of M/s. Neel Kanth Steel is not regist....

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....o the superior authority for directions for issuance of notice u/s 148 of the Act. 5.5 On the basis of reasons stated above, issue emerge as to whether reopening of case can be made u/s 147/148 of the Act, on the basis of information received from the investigation agency, without being corroborated and verifying independently by the AO. 5.6 The Hon‟ble Jurisdictional High Court in the case of PCIT Vs. RMG (396 ITR 5) dealt with the identical issue and held as under:- "As in the above case, even in the present case, the Court is unable to discern the link between the tangible material and the formation of the reasons to believe that income had escaped assessment. In the present case too, the information received from the Investigation Wing cannot be said to be tangible material per se without a further inquiry being undertaken by the AO". 5.7 Further in the case of CIT Vs. SPL‟s Siddhartha Ltd 345 ITR 223 also dealt with the identical issue and held as under:- "In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the AO one after the other. There is no independent application of mind by the AO to the tang....