2009 (8) TMI 59

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....o reopen the assessment. In the said notice, the following reasons were given by the A.O. "The Sahara Group had made certain land deals in Gurgaon wherein certain plots of agricultural land were purchased in the name of certain employees of various Sahara Companies. It was found that two Sahara companies had advanced loan aggregating to Rs.31.93 cr. From F.Y. 1997-98 to F.Y. 1999-2000 to the employees of the Sahara Group for the purchase of 233 plots of agricultural land at Chauma Village at Tehsil Gurgaon. The amount of loan sanctioned to the employees against the equitable mortgages of lands were deposited in their bank accounts and therefore, the payments were made to the sellers through Mrs. Rainee Singh, Proprietor Rainee's Creation....

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....hi Ispat Ltd. The CIT(A), after considering the matter in detail, allowed the said appeal and quashed the assessment proceedings inter alia on the following grounds. (a) A finding of fact was recorded that M/s Rathi Ispat Ltd. was not a loss making company and in fact in all three years it had earned profits. Profits earned before payment of tax were as under:- Assessment year1997-1998 Rs.1,00,30,467/- Assessment year 1998-1999 Rs.1,19,49,220/- Assessment year 1999-2000 Rs.1,32,84,376/- (b) M/s Rathi Ispat Ltd. had also paid tax on the aforesaid income which included the income received from the assessee herein in the form of against the services rendered to the assessee. From this, the CIT(A) recorded that when the ....

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.... made by the appellant to M/s Rathi Ispat Ltd it was sent through a letter. Copy of all such letters were submitted by the appellant during the appellate proceedings. Each letter indicates the date, number and amount of the pay order and the bank on which it was drawn. Likewise whenever such payment was received a receipt was issued by M/s Rathi Ispat Ltd acknowledging the payment and all these find place in the books of M/s Rathi Ispat Ltd and their bank account. It would also be pertinent to mention here that the assessment of M/s Rathi Ispat Ltd was also completed by the DCIT, Circle 15(1) New Delhi under Section 147/143(3) wherein all these transactions were examined in detail. Copy of assessment order for assessment year 2000-01 dated ....

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....t to satisfy himself as to whether the information received from the office of the DGIT(investigation) has some basis or not and thus it is to be held that the reassessment proceedings are initiated in a mechanical manner on vague grounds. In the light of the decision of the jurisdictional High Court (supra), as well as the decision of the Hon'ble P.& H.High Court(supra), we are of the view that the reopening of assessment, based on mere suspicion, is invalid in law and therefore unable to be quashed. As declared in the Open Court we hold that the reopening of assessment is bad in law and therefore the reassessment proceedings are hereby quashed. In view of our conclusion that the reopening is bad in law, it is not necessary for us to go in....