TaxTMI 
TaxTMI 
2024 (11) TMI 758
X X X X Extracts X X X X
X X X X Extracts X X X X
....Hon'ble Supreme Court in the case of N.K. Proteins Ltd. Vs DCIT (2017) 84 taxmann.com 195 (SC in which the Hon'ble Apex Court has dismissed the SLP of the assessee against the decision of the Gujarat High Court [N.K.Industries Ltd.v DCIT (2016) 72 Taxmann.Com 289 (Gujarat) wherein 100% of the bogus p0urchases were added to the total income of the assessee. 2) The Ld. CIT(A) has erred in limiting the addition only to the extent of 25% of bogus purchases as against 100% made by the AO through he himself arrived at the conclusion that the alleged bogus purchases are bogus purchase and not inflated purchases and taxing only 25% of these bogus purchases goes against the principles of Section 68,69A and 69C of the Income Tax Act. The Ld. CIT(A) has erred in limiting the addition only to the extent of 25% of bogus purchases by arriving at the conclusion that since the corresponding sales have been accepted and so entire alleged purchases cannot be disallowed by not taking into consideration the business type of the assessee. The corresponding sales cannot be doubted in case of a pure trading firm but the assessee firm was also a colonizer and contractor and so the entire purchases wer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he same be deleted. 5. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred by upholding the decision of the A.O. regarding alleged bogus purchases of Rs. 17,17,58,348/- against reported by the Investigation Wing at Rs. 10,29,40,198/- communicated in the reasons recorded u/s 148 of the Act by the A.O. Therefore, the notice issued on mis-stated facts is unjustified, uncalled for and addition made in response to such notice is illegal. The same be deleted. 6. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred by upholding the findings of the A.O. that the alleged purchases made from Hitesh Industries and Akansha Enterprises are bogus without appreciating that the sales could not be made in the absence of purchases whereas sales are not in dispute especially when the purchases of Rs. 17,17,58,348/- made from Hitesh Industries and AkanshaEnterprises are ultimately used in the construction of Talwandi Sabo Thermal Plant. Therefore, the addition 7. On the facts and circumstances of the case as well as in the law, the Ld. CIT(A) has erred by holding that the sales made to M/s AVM Construction Co., Mansa ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....10,29,40,198/- during the year under consideration and on the basis of said information, the AO has formed reason to believe that the income to the tune of Rs. 10,29,40,198/- has escaped assessment and, for which, notice u/s 148, was issued to the assessee. 7. The assessee intimated the Assessing Officer that the return as originally filed u/s 139(1), may be treated as having been filed in response to notice u/s 148 and copy of the recorded reasons was also obtained and in course of proceedings detailed questionnaire was issued by the AO and the assessee responded through written submissions and explanations along with copies of ledger accounts of the purchases as made from the above two parties, namely, M/s. Hitesh Industries and M/s. Akansha Enterprises, (as per assessee books of accounts), supported by VAT-23 and VAT-24 returns, and copies of the purchase bills, invoices, bank records, and other evidences explaining and demonstrating that all payments has been made, through banking channels. It was further stated that that the material as purchased from these two ( alleged bogus ) parties was sold to one M/s AVM Construction Company, who, in turn, has sold the materials to vari....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ring the submissions and written arguments of the assessee, sustained the addition to 25% (twenty five percentage) of the alleged bogus purchase and deleted the balance 75% (seventy five percentage) due to reasons contained in the appellate order paragraph 4.17, which is reproduced for easy reference: Observation of CIT (A ) : "4.17 Now, to deal with the objection that when sales are not doubted then how purchase alone can be treated as bogus. The Ld. AO while dealing with the issue has relied upon the decision in the case of N.K. Proteins Ltd. Vs DCIT, 84 taxmann.com 195. The Hon'ble Supreme Court dismissed the SLP filed by the appellant and thus confirmed the addition of 25% held by the ITAT and not in contrary to said decision. The ratio and fact of the case is similar to the case in hand. However, while concluding the case he held that the purchases of Rs. 3,21,49,587/- from M/s Hitesh Industries, Sunam and purchases of Rs. 13,96,08,761/- from M/s Akanksha Enterprises are bogus and considered unexplained expenditure of the assessee, which correspondence to section 69C of the Act. The amount of Rs. 17,17,58,348/-debited by the assessee on account of alleged purchase is he....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent in respect of all the purchases to both the parties have been made through banking channel. 13. The Ld. CIT(A), gave his finding in para 4.3 of his order page 4 and 5, and held that the appellant could not demonstrate with any evidence that the issue of bogus purchase was examined during original assessment proceedings and hence, held the reopening u/s 148 of the Act 61, as valid and dismissed the ground of appeal of the assessee. 14. Regarding the addition of Rs. 17,17,58,348/-, it was stated by the CIT(A) in his order that no confirmed copy of account of two parties have been filed and also stated that the statement of Sh. Rajinder Kumar Prop. Hitesh Industries is on record, in which, he has denied making any purchases & sales and further as and when, the payments have been made by the assessee to M/s. Hitesh Industries and M/s. Akansha Enterprises, the amount have been withdrawn immediately by cash by the supplier and the assessee has failed to establish the genuineness of such purchases as made from the two parties. However, the CIT(A) held that M/s. AVM Construction, Mansa, to whom, the sales have been made in respect of the material purchased by the assessee, from both ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was replied by the assessee along with complete details in the form of list of parties, from whom purchases exceeding Rs. 50,000 were made along with copies of ledger account of the parties. The reply filed by the assessee along with relevant details is forming part of paper book from Pgs. 20-32 and details of the purchases is at page 22, where the names of two parties exist alongwith copies of account of both the disputed parties. 2. Thereafter, assessment order u/s 143(3) of the Act was passed dated 24.03.2014 as per copy of original assessment order forming part of PB at pages 33-38 and refer to page 33 of the Paper Book where the Assessing Officer has mentioned as under:- "Also produced books of account consisting of cash book, ledger, bill/vouchers, purchase/sale bills, which were examined on test c heck basis. Information/details as called for were furnished and the same are also test checked. The case was discussed with him." Thus, the Assessing Officer has duly applied his mind to the purchases specially to these two parties and above all, books of accounts and bills and other details were filed before Assessing Officer during assessment proceedings and details of two....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2,26,45,000/- has been made during this year to the said party. 6. From the above said facts, the recording of factually wrong reason cannot be a ground for reopening of the case u/s 148 and whereas on the other hand, the Assessing Officer had made an addition of bogus purchases to the tune of Rs. 17,17,58,348/-. 7. It is a settled law that if the wrong reasons have been recorded, then there cannot be valid reopening and for that, reliance is being placed on the judgment of Hon'ble Amritsar Bench of the ITAT in the case of Sh. Darshan Garg, copy placed at pages 34 to 44 of JS, and also on the recent Judgement of 'Kissan Fats' of the Chandigarh Bench of the ITAT, placed at pages 45 to 59 of Judgement Set and M/s Atlas Cycle Industries, as reported in 180 ITR 319, P&H High Court, placed at pages 66 to 70 in which, it has held has under:- "9. Adverting to the question referred regarding the reassessment proceedings, we are of the view that the Tribunal was right in cancelling the reassessment as both the grounds on which reassessment notice was issued were not found to exist, and the moment such is the position, the ITO does not get the jurisdiction to make a reassessment. This....
X X X X Extracts X X X X
X X X X Extracts X X X X
....partment, the ld. AO did not even care to verify the same from his records from where al l these factual inaccuracies would have been brought out. There was clearly total non-application of mind by the AO and the belief of escapement of income is definitely not his own but borrowed from that of the commercial tax officer who had forwarded the information. The basic requirement of law for reopening an assessment is application of mind by the AO to the material or information in his possession to conclude and arrive at a satisfaction therefrom that income has escaped assessment. Both application of mind and sat is faction /belief of the AO are lacking in the present case. The reassessment therefore we hold is invalid. The case laws relied upon by the Ld. Counsel for the assessee support the case of the assessee, The order passed by the AO is, therefore, set aside." Therefore, the reopening of the case made by the Ld. AO on the basis of incorrect facts and figures is void-ab-initio and the reassessment proceeding deserves to be quashed. 8. The reopening of the case of the assessee is bad in law as clear from the above fact that the details of purchases made have been already pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... purely based upon reasons to suspect: i) CIT vs Meenakshi Overseas Ltd. as reported in 395 ITR 677 ( Page 1 to 12 of Judgement Set) ii) PCIT vs G G Pharma India Ltd. as reported in 384 ITR 147 ( Page 13 to 18 of Judgement Set) iii) M/s Holy Faith International Pvt Ltd. Vs DCIT in ITA No. 181/Asr/2017 order dated 15.01.2019 (Page 19 to 33 of Judgement Set) iv) M/s. Supertech Forgings (India)Pvt Ltd. vs DCIT in ITA No. 563/Asr/2018 order dated 25.08.2021. (Page 71 to 105 of Judgement Set) Further the appeal of the department has even been dismissed by the Hon'ble Punjab & Haryana HC vide order dated 05.09.2023 in 1TA-101-2022 (O&M).Placed at pages 106 to 110. 1. As regards the reason recorded, nothing has been brought on record by the revenue that the A.O has applied his mind to the information of the ADI, Bathinda. On such borrowed satisfaction of the ADIT, Bathinda, section 147 does not confer power on the A.O to initiate reassessment proceedings as per the following case laws:- i) Mohd Yousuf Wani vs. lTO in ITA No. 372/Asr/2009(Amritsar ITAT): "In our considered view, reliance placed by the A.O on the letter of Vigilance Department was not sufficient to make ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o the tune of Rs. 8,22,90,198/- against purchases and then, again, it has been mentioned at page 44 in paragraph-2, that there are bogus purchases made from 'M/s Akansha Enterprises' to the tune of Rs. 8,22,90,198/- and, thus, there is no nexus between the alleged material before the Assessing Officer and the reason to believe. Reliance is being placed on the judgment of Lakhmi Mewal Dass, reported in 103 ITR 437, wherein, it has been held that there should be live link or close nexus between the material before the ITO and the believe which he has to form regarding the statement of income and in the present case both of them are missing. 13. Assessee argument on CHANGE OF OPINION The assessment was completed u/s 143(3) vide order, dated 24.03.2014 and copy of the audited balance sheet was there with the Assessing Officer alongwith copies of accounts of the parties and each and everything has been explained and the Assessing Officer examined the books of accounts including purchases from above two parties and complete satisfaction has been recorded by the Assessing Officer in the order u/s 143(3) and even the detailed replies in respect of purchases from these two parties and o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Assessing Officer would have come to the conclusion that there was no failure to disclose truly and fully all material facts necessary for assessment. The entire proceedings in this case would also be hit by proviso to section 147 which bars any reopening after the expiry of four years where assessment under section 143(3) has been completed unless there was failure to truly and fully disclose material facts. The relevant text of the section if being produced hereunder: - Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. 17. However, in the instant case, there is no allegation in the reasons recorded that there was an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er held that since Assessing Office was acting solely on basis of information and material already on record in original assessment, impugned reopening notice issued beyond period of four years was unjustified - An instant special leave petition was filed by revenue against said order passed by High Court - Whether SLP was to be dismissed against said impugned order of High Court - Held, yes [Para 2] [In favour of assessee] c) [2015] 59 taxmann.com 391 (Punjab & Haryana) HIGH COURT OF PUNJAB & HARYANA State Bank of Patiala v. Commissioner of Income-tax* Section 32, read with section 148, of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of (Rate of depreciation/ATMs) - Assessment years 2005-06 to 2007-08 - Assessee bank installed ATMs, and claimed depreciation at rate of 60 per cent by treating it as computer - Assessing Officer sought to reopen case on ground that depreciation allowable on plant and machinery was to be allowed - Reasons for opening assessment which had already been concluded did not show that there was any failure on part of assessee to disclose fully and truly all material facts and thus, it was merely a change of opinion - Whether reassessment was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....allowable as per different provisions under Income Tax Act, since there was not even allegation in reasons recorded for reopening that there was any failure on part of assessee to fully and truly disclose all material facts necessary for assessment, impugned reopening notice issued after four years was to be quashed f) [2022] 139 taxmann.com 245 (Bombay)[27-04-2022] Section 69, read with section 147, of the Income-tax Act, 1961 - Unexplained investments (Shares) - Assessment year 2013-14 - Assessment was sought to be reopened in case of assessee on ground that its income chargeable to tax had escaped assessment within meaning of section 147 as based on information received from DDIT, assessee had done transactions in shares of 'F', which was a penny stock company traded in Bombay Stock Exchange - However, there was no allegation at all in reasons recorded for reopening or in affidavit-in-reply that investigations had revealed that assessee was mastermind or actively involved in rigging of share price of 'F' in stock market - Further, in response to a query raised under section 142(1), assessee had also admitted that it had traded in 'F' and even provided....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee had made ad hoc claim for expenditure at 30 per cent of the processional receipts in the revised return of income which was later withdrawn. In fact the reason for reopening the assessment for the year 2002-03 itself recorded that the claim of 30 per cent ad hoc expenses was withdrawn when the assessee was asked to substantiate the claim. Therefore, the same material was a subject-matter of consideration during the proceedings for original assessment. In the circumstances, there could be no basis for the Assessing Officer to form a belief that income had escaped assessment. Therefore, the order of the Tribunal was to be upheld. i) 2021 (5) TMI 122 - GUJARAT HIGH COURT GHANSHYAMBHAI ADARBHAI PATEL VERSUS UNION OF INDIA Reopening of assessment u/s 147 - Sham transaction of gift - whether the revenue is justified in reopening the assessment for the year under consideration ? - HELD THAT:- We are of the view that, when specific query with regard to transaction of gift was raised by the AO and the same was answered by the assessee, the AO thought fit not to make any addition, which clearly proves that, he consciously formed the opinion and framed the assessment. We have ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed as a gift were disclosed, but neither book value nor market value of shares was disclosed in balance sheet - Assessee challenged impugned notice as being illegal and arbitrary - Whether as long as all material facts necessary for assessment were disclosed and market value of share was clearly discernible from returns and documents, revenue could not take shelter under proviso to section 147 just because market value of shares was not separately stated or mentioned - Held, yes - Whether even otherwise market price of these shares was irrelevant because in reasons recorded, nowhere it was specifically alleged and established that alleged escapement of income was by reason of so-called non-disclosure of share price - Held, yes - Whether further, where Assessing Officer even after being in possession of all relevant facts relating to gifts of shares received by assessee, consciously chose not to apply section 56(2)(vii)(c), however, after expiry of period of four years mentioned in proviso to section 147 attempted to take a new view, it would not be permissible in law - Held, yes - Whether therefore, jurisdictional condition precedent laid down by proviso to section 147 i.e. failure....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w l) [2023] 151 taxmann.com 411 (SC) SUPREME COURT OF INDIA Assistant Commissioner of Income-tax v. Virbac Animal Health India (P.) Ltd. Section 37(1), read with section 148, of the Income-tax Act, 1961 - Business expenditure - Allowability of (Sales promotion/freebees) - Assessment year 2014-15 - Assessee company, engaged in business of marketing of animal health products, filed its return of income which was scrutinized and an assessment order was passed - After four years, Assessing Officer issued a reopening notice on ground that expenditure incurred by assessee towards cost of purchase of samples for distribution under head 'advertisement and sales promotion' was in violation of provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2022 and, thus, same was not allowable under section 37(1) being expenses prohibited by law - It was noted that Assessing Officer had all material facts related to such expenses before him when he made original assessment - Apart from it, specific query in respect of expenditure in question was raised at time of original assessment and same was also replied by assessee - High Court held that there....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sale to other parties (Pg 105-112 of PB). x) Annual summary of VAT Transaction of Akansha Enterprises depicting sales made to assessee (Pg 90-104 of PB). xi) Copy of audit report of AVM construction (Pg 113 of PB) 20. The assessing officer by rejecting all above documents filed by the assessee passed the assessment order u/s 147 dated 19.12.2018 wherein addition of Rs. 17,17,58,348/- was made by the assessee after considering the correct figures of purchases out of our documentary evidences provided, but not considered the genuineness of the documentary evidences provided. 21. Assessee rebuttal to findings of the Ld CIT (A) in his appeal order : PAGE WISE Remarks/Allegation of CIT(A) Response of the Assessee : In Para 4.3 of the order passed by CIT(A), it has been mentioned that the appellant has not demonstrated with any documentary evidence to show that issue of bogus purchases was examined in the light of such report or otherwise and there was any change of opinion on that issue and there was any change of opinion on this issue of bogus purchases. In this regard, it is submitted that the as mentioned in para 6 above, the assessee had filed ample number of documents to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n different dates and sales made on different dated the assessee use to mainly stored that material in vacant land he owned and due to need of large vacant are during the year under consideration the assessee has purchased an another land, duly declared in the block of Fixed Assets under head of Land amounts to Rs. 22,35,000/- as evident from copy of Fixed Asset forming part of Audit report at Pg. 12 of the PB. Therefore, it can't be said material purchased by the assessee were not stored by the assessee before making further sales. Further, In evidence to prove that the major transportation was directly sold by the assessee to M/s. AVM Construction Co. and the material sold on different dated were stored and then delivered as per copy of details chart forming part of paper book from Pg 83 to 85. Generally, in the routine course of business of Building material stores, the dealers use to keep their material in open area or vacant space for easy access and easy loading while making sales to other parties. In para 4.7 to 4.9, the Ld. CIT(A) has mentioned about the Statement of Sh. Rajinder Kumar Prop. M/s Hitesh Industries was recorded u/s 131 of the Act by ADIT(Inv.), Bathinda 04.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e parties who can supply new material, indeed the said firm was having the sufficient material to supply, the assessee made purchase from the above said parties by making the quality check of material that is need in the business of the assessee, not made the enquiry of the proprietor of the said firms and history of the parties that was not needed in the modus operandi of the assessee business. 8. Further, it is submitted that the assessee should not be declared guilty as per the statement given by the assessee, the assessee had only made the purchases from the above said parties as a businessman, who was in need of material during the relevant year under consideration. Therefore the addition made in the hands of the assessee alleging that assessee has made bogus purchases from the parties instead of making enquiry from the other parties i.e. Sh. Rajesh Kumar and Ajay Kumar, those name given in the statement of the Sh. Rajinder Kumar. In Para 4.17, The Ld. CIT(A) has erred in upholding the addition of 25% on the basis of judgment of N.K Proteins without giving any plausible findings and addition has been made on estimations only. The addition to the tune of 25% upheld by the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng noticed copies of invocies and challans, proof of payments, bank statements, transportation payments, vouchers for movement of goods and like documents, concluded that transactions between assessee and 'D' were not bogus or fraudulent - Accordingly, impugned revisional order was set aside - High Court upheld order passed by Tribunal - Whether, on facts, SLP filed against decision of High Court was to be dismissed - Held, yes [Para 2] [In favour of assessee] PCIT vs. SHAPOORJI PALLONJI & CO. LTD. as reported in [2022] 141 taxmann.com 509 (SC) Section 69C of the Income-tax Act, 1961 - Unexplained expenditure (Bogus purchase) - Assessment year 2010-11 - State Sales Tax Department informed Assessing Officer that two sellers from whom assessee made purchases, had stated that they had not actually sold any material to assessee - Though assessee furnished copies of relevant bills and entries made in its books of account, Assessing Officer made addition under section 69C on account of bogus purchases - Tribunal found that Assessing Officer had not carried out any independent enquiry and failed to show that purchases were bogus - High Court by impugned order held that merely on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r rent, etc. was ever furnished by the appellant. 2. The Ld. AR has contended that the information received from Investigation Wing of the Income Tax Department was only regarding one party namely M/s Hitesh Industries and also that the Assessing Officer did not have any tangible material and records regarding the other bogus supplier, M/s Akanksha Enterprises. The reasons for reopening the case u/s 148 are well recorded, wherein the mention of a second bogus supplier namely, M/s Akansha Enterprises shows an independent application mind of the officer who had recorded the reason of initiation of the proceedings u/s 148 of the IT Act'1961. Further, apart from the statements recorded u/s 131 by the ADIT(lnv.), Bhatinda of Sh. Rajendra Kumar (Prop M/s Hitesh Industries PAN: BSCPK5383F), the bank account no. 05431011001253 with OBC bank Mansa (the bank statement) has been examined and hence forms part of the tangible material in possession and which is duly examined by the AO. The analysis of the tangible material is evident from the reasons recorded that such amounts were immediately withdrawn on the same day in cash from the bank account of M/s Hitesh Industries. Further, reg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pugned supplier, M/s Hitesh Industries is Rs. 2,06,50,000/- and the Ld AR is claiming that since the total amount transferred to the bank account was Rs 2,26,45,000/-, therefore, the reasons are factually incorrect. It may be noted that there is a difference of merely Rs. 20,05,000/- from the total transaction amount of Rs 2,26,45,000/-. This figure recorded is lesser than the actual bank transfer and is not far from the actual amount. It may be taken that at the time of recording of reason for reopening u/s 148, the AO had formed belief of escapement of income to the extent of Rs. 2,06,50,000/-. b. Regarding the impugned transaction with M/s Akanksha Enterprises, the AO has recorded the exact amount of Rs. 8,22,90,198/-. The Ld. AR would agree that this amount was actually transferred by the assessee to the impugned supplier, which was subsequently withdrawn in cash. Hence, the reasons are recorded as per law and are correct. c. Further, reliance is placed upon the judgment of Hon'ble Supreme Court in the case of DCIT V/s M.R. Shah Logistic Pvt Ltd where it is held that " Where the "reasons to believe" forming part of the Section 147 of the Act, clearly point to the fact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f borrowed satisfaction as the AO has applied his mind and recorded very elaborate reasons for initiation of proceedings u/s 148. It is not a prerequisite of section 148 that the notice of inquiry must be given to the assessee. The AO can make enquiries from third parties also. 6. In this case, the sales are doubted repeatedly by the AO and the Ld. CIT Appeal. This fact is also apparent from the ground of appeal no.7 furnished by the appellant in this case. "Sale made to AVM Construction Company are doubted by Ld. CIT Appeal that they could have been made directly to the customers by the appellant." 7. The appellant has concealed the fact that the sister concern AVM is a partner of the appellant who is the introducer of the bank account no. 5431011001345 of M/s Akanksha Enterprises, to whom payment of Rs. 8,24,00,000/- has been made which was withdrawn in cash on the next date itself. The assessee has concealed the information that M/s AVM Construction Company is the sister concern to whom the impugned sales have been made. 8. That this case is not a change of opinion. Since fresh information was received from Investigation Wing. Despite having been given multiple opportuniti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ired to be unloaded and stored in between transit (because that is practically not feasible because unloading and loading costs are very high ) and as such arrangement of sales and purchase are made keeping in mind, transportation of goods from point to point, which is the general practice in the business of supply of construction materials and in cases of rare and urgent necessity, the materials were stored by the assessee on the vacant lands owned by the assessee himself (as duly disclosed at part of fixed assets in audit report page - 12 ). 22. Regarding the argument of the Ld. DR, in the matter of recording of reasons and initiation of reassessment proceedings, the procedure to be followed in course of reassessment has been laid down by the Hon'ble Apex court in the case of GKN Drive Shafts ( India ) Limited vs ITO, 259 ITR 19, and in this case the assessee after obtaining the recorded reasons, has not filed any objections to the same, which he should have filed, before the AO itself, objecting to the reasons, which has not been done in this case. The explanation of the assessee, on this issue was that it is absolutely true that the assessee has not filed any objections to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....accounts maintained in OBC bank by M/s Hitesh Industries and M/s Akanksha Enterprises, (c) return of income of M/s Akanksha Enterprises, (d) examination of the introducer of said bank accounts, on which the AO has based his reasons for reopening, to argue that the reasons are correctly recorded and there is no factual inaccuracy. 23. On this issue it has already been explained by the assessee that the recorded figures in the reasons and the figures emerging from the materials available on record are factually different and wrong reasons are recorded based on incorrect appreciation of facts ( as already discussed in earlier paragraph ). It has been further explained that both the bank accounts maintained in Oriental bank of Commerce, are the sellers bank accounts and naturally operated under the signature of the sellers and the question of introducer of the bank account opening forms, is not of much significance, because signature as an introducer in the bank means " I know the gentleman ", that's all, with no liability attached, and the fact that payments made by the assessee through bank channel to the sellers, by way of bank transfer, against consideration for supply of construc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat after completion of assessment u/s 143(3) of the Act 61, this case is sought to be reopened after four years, and there is no mention in the recorded reasons that there has been any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment year for formation of belief that income has escaped assessment. On this aspect of the matter also the case is covered in favour of the assessee by the decision of the Hon'ble Supreme court in the case of CIT vs Canara Bank ( 2023 ) 155 taxmann.com 290 (SC), where the Hon'ble High Court observed that where the AO had not even stated or alleged that there was failure on the part of the assessee to disclose fully and truly all material facts in respect of claim of deduction under section 36(1)(viia), Tribunal rightly held that reopening assessment initiated beyond four years was bad in law- Whether SLP filed by revenue against said impugned order was to be dismissed - Held YES. In favour of assessee. 25.1 Similar views has been taken in the case of ACIT Vs Virbac Animal Health India (Pvt.) Ltd (2023) 151 taxman. com 411(SC), where special leave petition filed against the order of the High C....