AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 1147
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....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. 18,43,234,without providing any opportunity of cross examining or providing ....
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.... 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. CIT(A) is reiterated here in below: "6.2 I have carefully considered the above subm....
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.... 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 dismissed the appeal of the assessee. Against the order of NFAC, present appeal has been preferred by the assessee before the Hon'ble ITAT,....
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.... 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 Commissioner of Income Tax (OSD) Central Circle -(2) (1), Ahmedabad. Thus, it is clearly discernible from the reasons recorded, that the case of the assessee has been reopened in an "AUTOMATIC MANNER" without any in....
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....019 [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 1.6.2018 held at Para 22-24 of the order that, if the reopening is based on information received from the Investigation Department, the reasons must show that the AO independently applied his mind to the information and formed his own opinion. If the reopening is done mechanically, it is voi....
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....tire 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 only information and hearsay and not on the basis of concrete evidence against the assessee. Reasons have been recorded without application of mind by the ld. AO In view of the above, reopening done by the ld. AO and upheld by the ld. CIT(A) deserves to be quashed GROUND NO. 2-4 ADDITION OF RS. 18,43,234 UNDER SECTION 68 1. SUBMISSIONS 1.1. Assessee is engaged in the b....
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....pect 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 subsequent years had been offering his income for tax under Section 44AD and, accordingly, was not maintaining the requisite details for the expenses incurred as the assessee, as was not required so under the law. Lower authorities could have ascertained the work completed by the assessee, using their wide powers as provided under the Act. Also, necessary enquiry could have been done from DRPL. 1.8. Lower authorities did not point any defect/discrepancy in the documents submitted before them, still went ahead in making additions to the income of the ass....
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....he 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 allegation made. Even the work carried out by the assessee is not doubted then there is no basis of doubting this work also. The ld. AR of the assessee alternatively submitted that even if the work can be considered as accommodative or bogus then in that case also the whole amount cannot be added to the income of the assessee but only the profit can be added. To drive home to this contention the ld. AR of the assessee relied upon the decision of Hon'ble Rajasthan High Court in the case of Khokhar Construction Co. 34 Taxmann.com 180 wherein the Hon'ble court dismissed the appeal of the department by holding that in case of civil contractor....
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....ed 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 tangible evidence placed on record. The records so produced was not disputed but also not tested for its correctness and in the absence of these exercise the documents placed on record cannot be placed a side and the decision be made merely based on some information on which there is no basis discussed or confronted to the assessee. As regards the allegation of work that is disputed by the revenue considering that the same are bogus in nature cannot be considered so because the assessee has demonstrated before us with the work order issued by M/s. Dineshchandra R. Agarwal Infracon Private Limited wherein the address of the work is mentioned a....