TaxTMI 
TaxTMI 
2026 (1) TMI 469
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble material or valid "information" as required under section 148 and Explanation 1 thereto, as the entire reopening was based on a mere borrowed satisfaction and mechanical reproduction of findings of the Investigation Wing without independent application of mind by the Assessing Officer (AO). 3. That the Ld.CIT(A) has erred in law and on facts in not being able to establish any live link/nexus between the information provided and the allegation of income escaping assessment as there is in effect no information suggesting escapement of income, rendering the entire reassessment proceedings bad in law. 4. That on the facts and circumstances of the case, the reassessment proceedings initiated are bad in law as the notice under section 148 of the Act dated 25.03.2022 was issued by the Jurisdictional Assessing Officer in violation of provisions of section 151A of the Act, read with Notification No. 18/2022 dated 29.03.2022, which should have been issued by National Faceless Assessment Centre under e-Assessment of Income Escaping Assessment Scheme, 2022. 5. That the CIT(A) has erred on facts and in law in confirming the addition of Rs. 11,05,348/ by estimating....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ld. Assessee's Representative has not made any submission on Ground No. 1, accordingly the Ground No. 1 is dismissed as not pressed. 6. The Ld. Assessee's Representative arguing on Ground No. 2 & 3 submitted that, the case of the Assessee was reopened based on borrowed satisfaction without any direct or tangible nexus to the case of the Assessee and there was no live and rational nexus between information received and the belief of escapement of income formed by the A.O. The A.O. has not demonstrated the fact that the information relied upon by him has a direct, tangible and specific connection with Assessee's transaction and the alleged escapement of income. Further submitted that the A.O. has relied on vague, incomplete and factually incorrect information and the A.O. made no effort to co-relate with the information to the actual business transaction of the Assessee. The Ld. Counsel has also taken us through the reasons recorded in the notice issued u/s 148A(b) of the Act and submitted that A.O. has merely reproduced information without verifying its accuracy or the relevance to the Assessee. The Ld. Counsel has also submitted that A.O. while relying Report of the Inve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated that certain cases were received from CBIC wherein the entities were involved in the practice of availing/issuing bogus sales/purchase bills. It has been reported that the transactions were being facilitated through chain of many entities of which Shri Vikas Jain (PANBLBPJ4780R). As per the Trail of these transaction many intermediary entities are involved in this practice. Data of purchase made by Shri Vikas Jain had been examined and it has been noticed that most of these entities from whom substantial purchases have been made are either non-filers or have declared negligible incomes. It has also been informed that out of these bogus purchases/sales, Shri Vikas Jain and other entity had made sales/purchases to beneficiary entities of which the assessee is one the beneficiaries whose transaction details is as bellow- S. No Source PAN Source PAN name Information F.Y Value 1 BLBPJ4780R Jitender 2017-18 Rs. 5,52,67,414/- From the above, it is evident that Shri Vikas Jain and other entity (Jitender) have acted as a conduits for bogus transaction and the assessee is one of the beneficiaries. 3. The above mentioned information has als....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o the impugned transaction. The information received from the Investigation Wing stated that certain entities, including one Shri Vikas Jain (PAN: BLBPJ4780R), were involved in issuing or availing bogus invoices. However, in the very same table forming part of the reasons, the name mentioned against the transaction of Rs. 5,52,67,414/- was of "Jitender." The reasons further go on to state that "Shri Vikas Jain and other entity (Jitender)" acted as conduits for bogus transactions. The said contradiction within the recorded reasons shows that the AO did not verify even the basic facts before forming a belief of escapement. The two names Vikas Jain and Jitender are entirely distinct individuals and no material has been brought on record to establish any connection between either of them and the Assessee, which also give strength to the argument of the Assessee's Representative and also demonstrates that the belief of escapement was formed mechanically by the A.O. and without any live or rational nexus to the actual facts of the Assessee's case. 11. Further, even the quantum of the alleged transaction mentioned in the notice issued u/s 148A(b) of the Act notice was factually inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d deposit of applicable GST. The A.O. without making any verification from the purchaser and without pointing out any defect in the documents, without there being any adverse material available on record, made the addition. The Ld. Assessee's Representative has also relied on the order of the Coordinate Bench of the Tribunal in the case of JMK Exports D. ACIT [2024] 161 taxmann.com 481 (Del. Trib.) (Third Member) and sought for allowing the Ground No. 5 of the Assessee. 14. Per contra, the Ld. Department's Representative submitted that the documents produced by the Assessee which are though voluminous, consists largely of self-generated documents and lacks independent verification, such as audited financials of the buyer, third party transport receipts or bank transaction filed directly linking the sales process to legitimate business activity. Thus, submitted that 2% commission is a pragmatic approach, relying on the order of the Ld. CIT(A), sought for dismissal of the Ground No. 5 of the Assessee. 15. We have heard both the parties and perused the material available on record. During the assessment proceedings Assessee produced the documentary evidence such as tax i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mmission without identifying any corresponding flow of funds, receipt, or benefit to the Assessee. It is a settled law that no addition can be made on account of a notional or assumed income and only real income that has actually accrued or arisen can be brought to tax. The Hon'ble Supreme Court in CIT D. A. Raman & Co. [(1968) 67 ITR 11 (SC)] categorically held that income-tax cannot be levied on hypothetical or potential income and that the charge is confined to real income earned by the assessee. In view of the above, we find merit in Ground No. 5 of the Assessee and the addition made by the A.O. which has been confirmed by the Ld. CIT(A) is liable to be deleted. 18. The Ground No. 6 is against the Addition of Rs. 88,95,892/- made by the A.O. on account of bogus purchases from M/s Royal International. The Ld. Assessee's Representative submitted that the above said addition has been made based merely on assumptions and presumptions without any supporting material or inquiry and contended that there was no information received from the Investigation Wing regarding any alleged bogus purchases, nor was there any allegation that M/s Royal International was engaged in provi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the parties and perused the material available on record. 22. It is not in dispute that there was no information received from the Investigation Wing regarding any alleged bogus purchases, nor was there any allegation that M/s Royal International was engaged in providing accommodation entries. The AO concluded that the purchases were not genuine. During the relevant year, the Assessee had purchased goods aggregating to Rs. 5.73 crore from M/s Royal International. However, the AO selected only Rs. 88.95 lakh out of the total purchases for making the disallowance, while accepting the remaining purchases of identical nature from the same supplier as genuine. This approach demonstrates that the conclusion of the AO is not based on any objective or verifiable material, but merely on suspicion and conjecture. Once the nature of goods, supplier, and mode of transaction are uniform, in the absence of any contrary material brought on record, the selective disallowance of a portion of purchases has no rational or legal basis. 23. In order to substantiate the genuineness of the purchase, Assessee produced purchase invoices, purchase orders, delivery challans, goods receipt notes, transp....