TaxTMI 
TaxTMI 
2024 (10) TMI 544
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.... to the assessment year (AY) 2020-2021. 2. The Assessing Officer (hereafter the AO) had issued a notice dated 30.03.2024 under Section 148A (b) of the Act proposing to reassess the income of the petitioner for the AY 2020-2021 and called upon the petitioner to show cause why a notice under Section 148 of the Act be not issued. The Annexure to the said notice indicates that the petitioner's assessment for the AY 2020-2021 was sought to be reopened on account of information received from the investigation wing of tax department regarding two of the entities from whom the petitioner had availed the supplies. It was alleged that the petitioner had availed supplies worth Rs.22,12,474/- from one M/s S.P. Trading and supplies of a value of Rs.87,....
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....10 respectively. In view of the above it was construed that M/s S.P Trading and M/s N.B Agency are paper entities with no financial worth and are used for providing accommodation entries in the guise of invoice issuance Therefore, transactions made by the entities were sham transactions and all the sales made by the entity are bogus and all the sales proceeds in the hand of Shri Raghav Gargare actually bogus purchases. Therefore, it was concluded that Shri Raghav Garg has made bogus purchase to the tune of Rs. 1,09,50,285/- during the F.Y. 2019-20. The information available with this office under risk management strategy formulated by CBDT suggests that income to the tune of Rs 1,09,50,285/- chargeable to tax has escaped assessment in the c....
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....ng that he had purchased Cooper Scrap from M/s S P Trading and M/s N B Agency during the year under consideration. Reply of the assessee has duly been considered, however, it is not found tenable due to the fact that during the course of investigation it was found that M/s S.P Trading and M/s N.B Agency did not exist at the registered address M/s S.P Trading and M/s N.B Agency and they are paper entities with no financial worth and are used for providing accommodation entries in the guise of invoice issuance. Therefore, transactions made by the entities were sham transactions. Considering that the assessee has not given satisfactory reply/explanation, such transactions represent the undisclosed income of the assessee for the year under cons....
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....ourt (sic the Supreme Court) in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147 (a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the forma....