TaxTMI 
TaxTMI 
2022 (8) TMI 447
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....proceedings vide letter dated 28.11.2017. The objections of the assessee were rejected vide order dated 28.11.2017, and on the request of the assessee vide letter dated 30.11.2017 the reasons for reopening was provided to the assessee. 4. During re-assessment proceedings, Assessing Officer enquired about the transactions with M/s. Manorath Commercial Pvt. Ltd., (for short "MCPL") and also asked the assessee to substantiate the transactions with documentary evidences. In response assessee submitted that during Financial Year 2007-08, assessee had placed purchase order with MCPL for purchase of Automation PLC which was valued at Rs..10.80 crores and as per the terms of purchase order advance payment of Rs..10.80 crores was made. It was further stated that the party was not able to deliver the material within the stipulated time and accordingly the order was cancelled and the assessee company had demanded the return of the advance money. MCPL had returned Rs..8.54 cores out of the above said Rs..10.80 Crores. Out of the balance outstanding MCPL has returned Rs..1.6 crores during the Financial Year 2010-11. It was submitted that still balance of Rs..2.26 crores is yet to be recovered ....
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....n was related to ordinary course of business activity of appellant. Therefore, if we see on the basis of rationalism and prudency, appellant has only received his own money back and such transaction is already accepted in previous year. Therefore, in our case the question of proving the capability and creditworthiness of party does not arise because the source of money in the first leg of transaction which was paid as advance is genuine and thereafter receiving that money only should also be considered as true and correct. Hence, the question of legality of transaction and its source do not arise in our case. Since the Ld. AO has not given any adverse comments regarding return of advance of Rs.6.94 crore, hence it can be concluded that the Ld. AO has treated this receipt as genuine receipt and Ld. AO has considered this transaction legal in earlier assessment year. Hence, if this part of the receipt is treated as genuine, then how can the other part of the receipts be considered as bogus. During the course of assessment proceedings the appellant has submitted various details regarding the said transaction to prove its genuineness, like; Copy of Ledger account of Manorath Co....
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.... as bogus merely because of some search and seizer operations made by Investigation wing. Therefore, if we look into the logical premise of the whole issue, it can be said that either the whole transaction should be considered as bogus or full transaction should be treated as genuine and merely questioning the legality of the part of transaction is irrational and groundless. C. Transaction undertaken by the appellant is its "ordinary course of business activity" In this regard, we would like to provide brief description of the business of appellant. The appellant is a esteemed merchant trading company cum export house. It is Supplier of Raw Material, Castable Parts (Molds), Mechanical Parts, Heavy Machinery Plants, Electric Products and Rolling Mill Rolls. The appellant is a renowned export house and eams prosperous revenue essentially from exports. The turnover of the appellant in preceding years is mentioned below S. No. Financial Year Turnover (Sales) in Cr. (Rs.) 1. 2007-08 56.44 2. 2008-09 130.94 3. 2009-10 44.18 4. 2010-11 30.48 Therefore, as a part of its business activity, appellant had placed an order to purchase automation PLC, a brief description abo....
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.... assessment is bad in law. We rely on the following case decisions in this regard: Akshar Builders & Developers WP No.14490 OF 2018 (Bombay) Facts:- In this case assessee is a partnership firm. For A. Y. 2011-12 assessee filed its return of income and the was accepted by the department u/s 143(1). Thereafter, Ld. AO received some information from Investigation wing (Ahemdabad) that M/s Akshar Builders have received amount of cash from M/s Mudra Real estate as M/s Akshar Builders was also co partner in project of construction '4-D square' in Gandhi Nagar Road, Ahemdabad. Director of M/s Mundra Real estate also stated during recording of statement u/s 131 of the Income Tax Act that M/s Akshar Builders was also co developer in the project of 4- D square'. Hence Ld. AO made addition in income of the amount Rs. 3,54,82,000/- on receiving information that M/s Akshar Builders has received such amount in cash from M/s Mudra Real estate. Then the matter travelled to High Court. Held:- In this case after considering the fact that the Firm M/s Akshar developers (AD) referred in the report of investigation is not related to assessee as the name of assessee partnership firm i....
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.... foundation for initiating proceedings is bad and notice initiating proceedings must be quashed - Held, yes Whether after a foundation based on information is set up, there must still be some reasons which warrant holding of a belief so as to necessitate issuance of a notice under section 148-Held, yes - Whether mere statement of facts in form of a report is not a substitute for reasons that are required to be recorded before issuing a notice under section 148-Held, yes CIT vs. Meenakshi Overseas Pvt. Ltd. [2017 (5) TMI 1428- Del. HC] Reopening of assessment - reasons to believe - Held that: 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 tangible material which forms the basis of the reasons to believe that income has escaped assessment. The conclusions of the AO are at best a reproduction of the conclusion in the investigation report. Indeed it is a 'borrowed satisfaction'.-the initiation of the proceedings under Section 147/148 to reopen the assessments for the AYS in question does not satisfy the requirement of law. ....
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....ent to prove that the assessee is indulged in such transactions. We are relying on following case decisions: Amar Singh vs ITO 53 TTJ 692 (Delhi): Where no incriminating documents were found in the premises of the assessee firm but some incriminating papers were found in the premises of the other firm, the addition made on the basis of such papers as found in the premises of another firm was not justified. Kishanchand Chelaram 125 ITR 713 (SC): In this case, Hon'ble Supreme Court had given a principle that Burden of proof was on the department to prove that amount in dispute belongs to the assessee. If the department does not came with material evidence to prove the same, then the same amount cannot be added as undisclosed income of the assessee. ACIT vs Lata Mangeshkar: 97 ITR 696 (BOM) In this case, the assessee, who is an acknowledged play-back singer, disclosing professional receipts of Rs.1,43,650/- Rs. 1,38,251/- and Rs. 1,19,850/ respectively, which were principally based upon the diaries which were maintained by the assessee in which proper entries were made in respect of receipts received by her for the professional work done by her as a play-back singer. F....
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....ies Ltd. vs. DCIT 2017 (1) TMI 904 (Bombay HC) Reopening of assessment basis for forming the belief-We note that the reasons in support of the impugned notice accept the fact that as a matter of regular business practice, a broker in the stock exchange makes modifications in the client code on sale and/or purchase of any securities, after the trading is over so as to rectify any error which may have occurred while punching the orders. The reasons do not indicate the basis for the Assessing Officer to come to reasonable belief that there has been any escapement of income on the ground that the modifications done in the client code was not on account of a genuine error, originally occurred while punching the trade. The material available is that there is a client code modification done by the Assessee's broker but there is no link from there to conclude that it was done to escape assessment of a part of its income. Prima facie, this appears to be a case of reason to suspect and not reason to believe that income chargeable to tax has escaped assessment. In the above view, prima facie, we are of the view that the impugned notice is without jurisdiction as it lacks reason to belie....
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.... Hence, it can be seen that asseesee is required to explain the nature and source of sum received by it but Ld. AO has invoked section 68 not on the basis of law prevailing in the relevant financial year but Ld. AO has invoked section by referring into other conditions like identity of creditor, creditworthiness of the creditor and genuineness of the transactions and such conditions were not mentioned in the section earlier. In our case, appellant has explained the source of funds through which it has paid advance as the appellant is export house and was earning substantial revenue during preceding years and has also offered profits in its books. Thereafter, appellant has received refund of advance money. Hence, in our case there is no question of invoking extended version of the section which was not applicable in the appellant's case. In regard to above, we would also like to state that, phraseology of section 68 clearly explains that absence of satisfactory explanation about cash credit but does not mentions the capability and creditworthiness of other parties involved in the transaction, in our case appellant has explained his capability to perform transaction also in....