AI Drafter 
TaxTMI 
TaxTMI 
2022 (10) TMI 787
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....ssing Officer received information, indicating that assessee is a beneficiary of bogus accommodation entries provided by certain entities controlled by Shri Anand Sharma and Shri Janardan Chokhani. Based on such information, the Assessing Officer formed a belief that by entering into bogus purchase transaction with the aforesaid entities, the assessee has not disclosed income to the tune of Rs.40,00,000 for the year under consideration. Accordingly, he reopened the assessment under Section 147 of the Act. In response to the notice issued under Section 148 of the Act, assessee participated in the assessment proceedings and raised objections against reopening of assessment. As observed by the Assessing Officer, the objection filed by assessee were disposed of vide a separate order dated 29.11.2018. In course of assessment proceedings, the Assessing Officer, on 11.12.2018, called upon assessee to explain the genuineness of loan of Rs.40,00,000 availed from a company viz., New Wave Commercial Pvt. Ltd. and also to explain why the amount should not be added back to the income of the assessee. Further, the Assessing Officer called upon the assessee to furnish supporting documents, such a....
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....sposed of by the Assessing Officer through a speaking order, which is contrary to ratio laid down by the Hon'ble Supreme Court in case of GKN Driveshaft [259 ITR 19 (S.C)]. Further, she submitted, from the reasons recorded, it is evident, the Assessing Officer has acted mechanically without application of mind. Elaborating further, she submitted, in the reasons recorded neither the name of the lender company appears nor the nature of transaction has been correctly mentioned. 8. Drawing our attention to the reasons recorded, she submitted, the Assessing Officer has reopened the assessment on the basis that the assessee has taken accommodation entry in the form of bogus purchases. Whereas, she submitted, in the assessment order the Assessing Officer has dealt with loan taken by assessee. Thus, she submitted, the issue discussed by the Assessing Officer which ultimately formed the basis of addition in the assessment order is completely different from the issue of escaped income which forms the basis of reopening of assessment, as per reasons recorded. Thus, she submitted, there being inconsistency between the facts, forming the basis of reasons recorded and as mentioned in the ....
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....04] 42 taxmann.com 377 (Delhi); 8. Orient Trading Co. Ltd. vs. CIT [49 ITR 723] (Bombay H.C.); 9. Nemichand Kothari vs. CIT (264 ITR 254) (Gauhati H.C); 10. CIT vs. Metachem Industries [245 ITR 160] (Madhya Pradesh H.C.); 11. S. Hastimal vs. CIT [49 ITR 273] (Madras). 12. Learned Departmental Representative strongly relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 13. I have considered rival submissions in the light of the decisions relied upon and perused the material available on record. 14. At the outset, I intend to adjudicate the legal issue raised by assessee concerning the validity of reopening of assessment. Undisputedly, in case of assessee, assessment was originally completed under Section 143(3) of the Act. Therefore, the proviso to section 147 of the Act is attracted. The reasons recorded by the Assessing Officer for reopening of assessment, a copy of which is placed at pages 36-37 of the paper book, reads as under: "The assessee company was incorporated on 18.06.2007 under the Company Act, 1956. The company filed its return of income on 24.09.2011 for the assessment year 2011....
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.... 2011-12 with these shall companies. Hence, it is clear that M/s. Rajat Alloys Pvt. Ltd. has introduced its unaccounted cash through accommodation entry. 3. The above facts clearly establish that the assessee company M/s. Rajat Alloys Pvt. Ltd. has taken accommodation entry in the form of bogus purchase from the entry providing companies being controlled by Shri Anand Sharma and Shri Janardan Chokhani. As per information available on record i.e. ITR filed for A.Y. 2011-12, the full and true disclosure with regard to the above transactions have not made by the assessee company as the fact that the unaccounted cash is being introduced in the books through in the form of bogus sale/purchase from these dummy companies is nowhere disclosed by the assessee company. In view of explanation 2 to clause (c) of proviso of section 147 of the Income-Tax Act, 1961, where a return of income has been furnished by the assessee and it is noticed that case of the assessee has under assessed. Keeping in view all the above, I have reason to believe that income of Rs.40,00,000 has escaped in case of M/s. Rajat Alloys Pvt. Ltd. for the A.Y. 2011-12 within the meaning of Section 147/148 of Income....
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....A careful reading of the assessment order would reveal that in course of assessment proceedings, the Assessing Officer called upon the assessee to establish the identity, creditworthiness of the creditor and genuineness of the loan transaction. In response to the query raised by the Assessing Officer, the assessee furnished the following documentary evidences to prove the identity and creditworthiness of the creditors and genuineness of the transaction: • Confirmation of lenders with full addresses, PAN Nos. and complete details of cheques; • Photo copy of ITR-V of the lender M/s. New Wave Commercial Pvt. Ltd.; • Audited Financial Statements of the lender for the A.Y 2011-12 and AY 2012-13; • Details of interest paid on said loan and TDS deducted thereon; • Photo copy of bank statement showing the loans/borrowed fund; • Copy of relevant pages of ledger showing the creditors account; • Copy of Bank book of the lender M/s. New Wave Commercial Pvt. Ltd. for the relevant period; • Copy of Master Data from the site of Ministry of Corporate Affairs of M/s. New Wave Commercial Pvt. Ltd.....