TaxTMI 
TaxTMI 
2023 (3) TMI 1147
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....legal, unjustified, arbitrary and against the facts of case. Relief may please be granted by quashing the reassessment proceeding being illegal and void ab initio. 2. In the facts and circumstances of the case and in law, Id.CIT(A) has erred in confirming the action of the Id AO in making addition of Rs. 18,43,234, under Section 68 of the Income Tax Act, 1961. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of case. Relief may please be granted by deleting the entire such addition made by the Id. AO and confirmed by the ld. CIT(A). 3. In the facts and circumstances of the case and in law, Id.CIT(A) has erred in confirming the action of Id AO in making addition of Rs. 18,43,234, without carrying out any independent enquiry before making addition in hand of the assessee. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of case. Relief may please be granted by deleting the entire such additions made by the Id. AO and confirmed by the Id. CIT(A). 4. In the facts and circumstances of the case and in law, Id.CIT(A) has erred in confirming the action of Id AO in making addition of Rs. 18,....
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.... way of booking bogus Sub-contractors Expenses and for material. The assessee is one of the entity who has received amount against expenses incurred by Dineshchandra R. Agarwal Infracon Private Limited as subcontractor expenses. The ld. AO based on these set of information hold a view that the assessee is one of the entity/beneficiary who has received amount against expenses incurred by Dineshchandra R. Agarwal Infracon Private Limited as sub-contractor. Thus, the receipt is not a contract receipt but is in the nature of other receipts should be taxed under the head income from other sources. During the assessment proceeding, details / information were furnished from where the ld. AO hold that the assessee has received Rs. 20,03,515/-, on which the assessee has already declared profit of Rs.1,60,281/- @ of 8 % thus, the balance amount of Rs. 18,43,234/- is required to be added treating it as other receipts u/s. 68 r.w.s. 115 BBE of the Act vide order dated 17.11.2018. 4. Being aggrieved, from the order of the assessing officer the assessee carried the matter in appeal before the ld CIT/NFAC. The appeal of the dismissed vide order dated 30.08.2021. The relevant finding of the ld.....
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....ent and construction services in different sectors across Gujarat. IV. Thereafter, information was received by the jurisdictional Assessing Officer of the assessee. On the basis of such information, it was concluded by the ld. AO that the contract receipts, as received by the assessee of Rs. 20,03,515 from M/s Dineshchandra R Agrawal Infracon Pvt. Ltd., during the year under consideration were bogus. Case of the assessee was reopened under Section 148 and order under Section 143(3), read with Section 147, was passed in the case of the assessee. V. In such order entire receipts, as generated by the assessee, from M/s Dineshchandra R Agrawal Infracon Pvt. Ltd. of Rs. 20,03,515, during the year under consideration were held to be bogus. Accordingly, addition of Rs. 18,43,234, being Rs. 20,03,515 minus Rs. 1,60,281 [which was 8% of Rs. 20,03,515, already offered for tax], was made to the income of the assessee. Such addition was made under Section 68 of the ITA and also the provisions of Section 115BBE were invoked. VI. Thereafter, assessee, against the additions made by the ld. AO, preferred appeal before the National Faceless Appeal Centre ("NFAC"). NFAC di....
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....ieve" that any income chargeable to tax has escaped assessment. It is thus, formation of reason to believe that is subject matter of examination. AO, being a quasi judicial authority, is expected to arrive at a subjective satisfaction, independently based on objective criteria. 1.8. Information from the Investigation Wing, might constitute part of the material to investigate further, however, the process of arriving at such satisfaction cannot merely be such information. Recording of reasons to believe and not reasons to suspect is the prerequisite to the assumption of jurisdiction under Section 147. 1.9. In Ganga Saran and Sons Pvt. Ltd. (1991) 130 ITR 1 (SC), Hon'ble Apex Court observed that the words "reason to believe" are stronger than the words "reason to be satisfied". Since the words used are reason to believe the satisfaction theory would not apply but the belief must be reasonable and based on relevant materials. It is clear, that in the instant case of the assessee, reopening action was driven by HEARSAY. 1.10. For reopening the case of the assessee, in the reasons recorded, reliance has solely been placed on information received from the Joint....
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....oing 'fishing or roving inquiry' without proper reason to believe, which is not permissible. Special Leave Petition, filed by the Department, against the aforementioned judgment of the Gujarat High Court, was dismissed by the Hon'ble Supreme Court, vide order dated 4.01.2019 [2019] 101 taxmann.com 259 (SC). 1.16. Hon'ble Jurisdictional High Court of Rajasthan, in the case of Sandeep Stocks Pvt. Ltd., in Civil Writ Petition No. 16705/2018, held that no reopening can be done only on the basis of information received from the Investigation Wing. It was held that the reasons recorded by the Assessing Officer cannot in any way be vague. 1.17. The present reopening has been done on the basis of certain incriminating documents found during the course of search on DRPL. The same has also been referred to in the reasons recorded by ld AO for reopening the case. However, while providing the copy of the reasons recorded, ld AO did not enclose all the relevant documents on the basis of which belief was formed that the income of the assessee had escaped assessment. 1.18. In case of Deepraj Hospital (P) Ltd., ITA 41/AGRA/2017, Hon'ble ITAT, Agra Bench, vide order dated....
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....f the fact of the escapement of income. No conclusive proof of escapement of income needs to be established at the time of reopening the case of the assessee. 1.26. Ld. CIT(A) has misplaced his reliance on the decision of Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd. (Supra). Ld. CIT(A) has ignored the factual position that the entire reopening has been done by the ld. AO solely on the basis of the information received. Ld. AO while reopening the case of the assessee was not having requisite evidences with him which could minutely establish the link of the assessee in entering into bogus transaction. 1.27. It is also pertinent to note that in the reasons recorded ld. AO has alleged that there is escapement of income of Rs. 71,29,023 of the assessee, for the year under consideration. Ld. AO was not aware of the fact that the assessee during the year under consideration had only entered into transaction of Rs. 20,03,515 with DRPL. If the relevant documents were available with the ld. AO, then this mistake would not have been committed by the assessee, in the reasons recorded. Accordingly, the reasons have been recorded on the basis of on....
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....tunity to the assessee to cross examine any person. In this regard, submission was made before the ld. CIT(A), however, the same was rejected by ld. CIT(A) at page 6 of his order by simply stating that the assessee never requested for cross examination or the relevant documents, before the ld. AO. It is submitted that the ld. AO, as a quasi-judicial body, was duty bound to provide the relevant documents to assessee, before placing any reliance. Also, opportunity to the assessee should have been provided of cross examination. This aspect should have been considered by the ld. CIT(A). 1.6. The reason, as stated by ld. CIT(A), for upholding the additions made by the ld. AO was that assessee did not submit evidences of the expenses incurred by him, with respect to the work executed for the DRPL. It is submitted that the assessee offered his income tax, just like any other small contractor, under Section 44AD, on presumptive basis. Accordingly, assessee was not required to maintain evidences of the expenses incurred for execution of the work. As a result, the same could not be presented before the lower authorities. 1.7. Assessee during the proceeding and the subsequen....
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....n submission so filed submitted that the assessee is acting as a small job worker engaged in the small paint work related to marking on the road, pavement, sign boards under the name and style as M/s. Rajshree Construction Company. This works he undertake a sub-contractor. The ld. AO has not doubted the other receipt of job work offered by the assessee except the work of Dineshchandra R. Agarwal Infracon Private Limited.(DRA). The ld. AR of the assessee drawn our attention to page 13 & 14 being the work order issued by DRA. The work order is for painting of Runway at Air Force Station, Nal Site Bikaner. Considering the nature of work the ld. AO has not done any independent inquiry because the work in the military area/organization is to be strictly based on the evidence and attendance is strictly under observation in that matter how the expenditure of this work can be considered as bogus. The reasons recorded are vague and not specific information that the work carried out is bogus and considering the air force work how it can be considered as bogus. The assessee was never confronted with the information or statement if any relied upon and there is no finding except the general all....
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....k is to be executed by the assessee at runway resurfacing project at Nal AF Station Bikaner. From the paper book filed by the assessee we have also noted that the assessee has submitted this work order copy to the assessing officer but he has not cross verified with the relevant military organization to confirm the averments of the assessee and merely based on the information so received from the search for which no details were confronted to the assessee the addition was made by the assessing officer. On the contrary we have observed that the ld. CIT(A) dismissed the appeal of the assessee stating that the nowhere the assessee had requested for any documents from the AO or any cross examination and therefore, with this observation the appeal of the assessee was dismissed. 10. Based on the entire episode bench noted that there is no discussion in the assessment order about the tangible material or statement the addition made. It is based on the general information received the assessment was re-opened. The ld. AR of the assessee demonstrated before us that he has discharged primary onus casted upon him and has proved the performance of the work and the same is supported by the t....