TaxTMI 
TaxTMI 
2026 (8) TMI 1186
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....s. 2. Present petition has been filed to challenge the order dated 31.03.2024 passed by the Assessing Authority under Section 148A(d) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') and the consequential reassessment notice dated 31.03.2024 issued under Section 148 of the Act for the Assessment Year 2017-18. 3. Facts in brief are that petitioner is an incorporated private limited company engaged in the business of manufacture of shoes and finished leather, from raw goat hides and skins. It claims that its manufactured goods are largely exported outside the country and that it does not engage in cash sales etc. For the Assessment Year 2018-19, the petitioner was assessed to tax under Section 143(3) of the Act....
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....ead with Rules 6DD(e)(ii), it has been submitted that under the prescription of law, the petitioner is permitted to purchase raw hides and skins against cash payments exceeding Rs.10,000/-, per person, per day. In absence of any challenge to the gross sales made by the petitioner and in absence of any doubt as to the manufacturing performed by the petitioner, the audit objection is only a figment of imagination. To the extent the petitioner manufactured goods using raw hides and skins and sold the same for which it has been taxed upon disclosure made by the petitioner, the allegation being made is untenable. 6. Third, it has been submitted that the existence of the sundry creditors is not in doubt inasmuch as their names, with reference ....
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....burden to prove the genuineness of the sundry creditors was on the petitioner. To the extent that burden was not discharged, clearly income has escaped assessment occasioned by the hurried acceptance of the books of the accounts of the petitioner, by the Assessing Officer. 9. Having heard learned counsel for the parties and having perused the record, first it cannot be denied that under the scheme of Section 40(A) of the Act read with Rule 6DD of the Rules framed thereunder, it is lawful for a person to purchase, amongst others raw hides and skins, against payment in cash exceeding Rs.10,000/-, per person, per day. To the extent such expenditure may not be disallowed, the business practice has arisen where hides and skins may be purchase....
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....ally the suspicion ought to have been addressed during regular assessment proceedings. Beyond that, no enquiry by way of reassessment may arise except on cogent material clearly indicating which part of the sundry credit disclosed by the petitioner was non-genuine. 13. If allowed to initiate the reassessment proceedings in absence of such material, it would be to allow for a fishing expedition to be undertaken by the revenue. Though reason to believe are not required to be recorded under the amended law, at the same time existence of objective material to initiate a reassessment proceeding remains equally if not more vital step in the initiation of reassessment proceedings. 14. In view of above, we are not convinced that any valid sat....