TaxTMI 
TaxTMI 
2022 (8) TMI 447
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....ny raised objections against the re-assessment 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 b....
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....and thereafter received it through banking channel and all this transaction 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 regardi....
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....(p) Ltd, part of that advance was returned in FY 2009-10 and some part in 2010-11. It is really unreasonable and fallacious to treat a part of the transaction 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. ....
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....ction 147 of the Income Tax Act, it is the assessing officer who should have reason to believe that income has escaped assessment. Therefore, in the absence of independent satisfaction of assessing officer that income has escaped assessment, the reopening of 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....
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.... consideration. CIT vs. Smt. Vinita Jain [163 TAXMAN 325 (Del. HC)] Section 147 of the Income-tax Act, 1961 Income escaping assessment General - Assessment year 1997-98 - Whether there must be reason to believe warranting issuance of a notice under section 148 by Assessing Officer, if there are no reasons, then entire 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....
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....e Ld. AO was not having copies of those statements or any other details. If this is right then it means that the Ld. AO has solely relied on the Investigation wing report and not applied his mind or not made independent enquiry about the claim of the appellant. It is again gross violations of rules. Mere entries in the accounts of the third party or statement made by third party were not sufficient 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 assess....
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.... was absence of link between information obtained and escapement of income chargeable to tax-Thus, reasons, as recorded, did not prima facie indicate reasons to believe that income chargeable to tax had escaped assessment-Contention on behalf of Revenue that this would be done at time of assessment, did not satisfy jurisdictional requirement of AO having reason to believe that income chargeable to tax had escaped assessment at time of issuing the impugned notice. M/s. Coronation Agro Industries 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, originall....
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....tion of income without keenly viewing the prevalent provisions of section 68 of the Act. Full Text of Section 68 as per Finance Act 2010 is explained as under: "Cash credits 68. Where any sum is credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the "[Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." 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 a....
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....essing Officer and perusal of the record also reveals that nothing contrary to this has been established by the Assessing Officer. 8. Aggrieved revenue is in appeal before us raising following grounds in its appeal: - 1. "On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in deleting the addition of Rs.1,60,00,000/ made under section 68 of the I.T.Act. 2. "The appellant prays that the order of the Ld CIT(A) on the above grounds be set aside and that of the AO be restored." 3. "The applicant craves leave to add, amend or alter any grounds or add new ground, which may be necessary". 9. At the time of hearing, none appeared on behalf of the assessee nor sought any adjournment, therefore, we proceed to dispose of this appeal with the assistance of Ld.DR. Ld. DR brought to our notice the relevant facts on record. 10. Considered Ld. DR submissions and material placed on record, we observe from the record that assessee has placed purchase order with MCPL for purchase of Automation PLC and the quoted price of Rs..10.80 crores. As per the terms of the purchase order assessee has to make an advance payment of Rs..10.8 crores ....