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TMI Blog2012 (5) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... rocessed u/s 143(1) and intimation was sent to the assessee. Subsequently, the A.O. issued notice u/s 148 after re-opening the assessment u/s 147 by recording the following reasons:- "A search action was conducted under section 132 of the I.T. Act, 1961 in the assessee's case on 14.03.2000. In the block assessment order under section 158BC consequent to search, it was held that the assessee was not entitled to deduction under section 80HHC of the I.T. Act as the entire purchases were bogus and the export sales were also bogus. For the Assessment Year 1999-2000 and 2000-01 the assessee has filed returns of Income declaring income of Rs. 1,64,410/- and Rs. 40,370/- respectively. In both these years the assessee has shown purchases of diamonds/jewellery from sister concerns by the names of M/s Galaxy Exports, M/s Kunal Exports and M/s Prima Star Exports. These purchases were found to be bogus. Accordingly, the A.O. had reason to believe that income chargeable to tax has escaped assessment for the Assessment Years 1999-2000 and 2000-01. The reassessment proceedings under section 147 are initiated by issue of notice under section 148." 2.2 In response to the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... What is required from the A.O. is that before making any assessment, the A.O. shall serve on the assessee a notice u/s 148 and will record reasons to believe that income chargeable to tax has escaped assessment. If these conditions are fulfilled, there is no bar on the A.O. from taking an action u/s 147 of the Act. He noted that the reasons were duly recorded by the A.O., a copy of the reasons so recorded were supplied to the assessee and finally the A.O. after receipt of the objections raised by the assessee has rejected the objection and thereafter proceeded to reassess the income which has escaped the assessment. As regards the contention of the assessee that the A.O. wanted a second route to make the same addition by reopening the case u/s 147 after the CIT(A) deleted similar additions in the block assessment, the ld. CIT(A) noted that such allegation has no strength. He noted that the subject matter of the appeal before the ld. CIT(A) was block assessment order and not a regular assessment order or a reassessment order. He further noted that in the block assessment u/s 158 BC only one addition of Rs. 63,50,720/- on account of bogus purchase was the subject matter. However, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed has upheld the order of the ld. CIT(A). He submitted that the Department has not gone to High Court against the order of the Tribunal dismissing the appeal filed by the Revenue. 3.3 Referring to the decision of Hon'ble Bombay High Court in the case of Metro Auto corporation vs. ITO and Others reported in [2006] 286 ITR 618 (Bom) he submitted that when an addition made by the A.O. was deleted by the CIT(A) and was appeal filed by the Department before the Tribunal against such order, during the pendency of such appeal, no notice u/s 148 could be issued and the notice issued was liable to be quashed. Since, in the instant case when the notice u/s.148 issued on 29.07.2004 the matter was pending before the Tribunal (since the date of order of Tribunal is 31.01.2005) therefore, in view of the decision of the Jurisdictional High Court, the notice issued by the AO is liable to be quashed. 3.4 Referring to the decision of Hon'ble Bombay High Court in the case of Ador Technopark Ltd. v. Dr. Zakir Hussein, Dy. CIT reported in 271 ITR 50 he submitted that when there is no failure on the part of the assessee to furnish material facts necessary for assessment and when n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Legislature, in its wisdom, not put the block assessments within the ken of reassessment proceedings." 3.6 Referring to the decision of Hon'ble Allahabad High Court in the case of Vishwanath Prasad Ashok Kumar Sarraf v. CIT and Others reported in [2010] 327 ITR 190 (All) he submitted that reassessment for years comprised in block period to tax same sums not permissible. Referring to the decision of the Hon'ble Gujarat High Court in the case of Cargo Clearing Agency (Gujarat) v. JCIT reported in [2008] 307 ITR 1 (Guj) he submitted that the A.O. has no jurisdiction to re-open a block assessment by issuing notice u/s 148. Referring to the decision of the Hon'ble Bombay High Court (Goa Bench) in the case of Smt. Mira Ananta Naik and Ors. V. DCIT (Investigation) and Ors. reported in (2008) 15 DTR (Bom) 8, he submitted that merely because the block assessment made u/s 158 BC has not been upheld, it cannot be said that assessee's income has escaped assessment and therefore the same cannot be reason enough to invoke section 147 more so when the reasons recorded for reopening the assessments make no reference to the block assessment or the proceedings pursuant thereto. Referring to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent cannot be accepted in view of the judgment of the Hon'ble Supreme Court in the case of Suresh N. Gupta reported in 297 ITR 322 where it was held that the other provisions of the Act would be applicable to the scheme under chapter XIV-B if no conflict arises above such application. 4.1 The ld. counsel for the assessee, in his rejoinder, submitted that the decision of the Hon'ble Supreme Court in the case of Suresh N. Gupta (supra) has been doubted and referred to a larger Bench in Vatica Township reported in 314 ITR 338. 5. We have considered the rival arguments made by both the sides, pursued the orders of the Assessing Officer and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only question to be decided in the impugned ground is as to whether the notice issued by the A.O. u/s.148 for the impugned assessment year is valid or not in view of the block assessment proceedings taken place for assessing the same income. At the cost of repetition, the reasons recorded by the A.O. as per para 2 and 3 of the assessment order are reproduced as under:- "A search action was conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been able to produce the said seller for examination. Similarly, the so called exports are also not free from doubt and the assessee has not produced any further proof in this regard. As stated earlier as per the findings in the case of search, the assessee group basically consists of two persons viz. Shri Kamal Kumar Johari and Shri Hari Om Sharma, who are C.As.by qualification. They have only shown purchase and sale of diamonds on paper without any actual purchase/sale. The remittances from abroad are nothing but hawala transaction for laundering of black money of its clients to take undue advantage of VDIS 97 scheme and to enable them to claim huge incomes under VDIS 97 and thereafter to convert the same into white money by showing capital gains on account of sale of the said diamonds. As stated earlier the entire purchases are bogus. Hence the sales are also bogus. In view of the same, the assessee's claim of Rs. 63,50,720 u/s 80HHC in the year A.Y. 99-2000, is not genuine and the same is disallowed and added in assessee hands as undisclosed income for the block period." 5.2 From the above, it is clear that the AO in the block assessment has doubted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cials and the officials of DGFT are to be taken as properly performed in the course of their official duties. The presumption attached to the official records cannot be taken away merely by assumptions or suggestion raising doubts. Considering the documentary evidence placed on record, in my view, the actual export of diamonds is clearly proved. On the other hand, the Assessing Officer has not placed any material to disprove the same. The only plank of the Assessing Officer's argument is that the concerns from whom purchases were made indulged in bogus transactions. As rightly pointed out by the AR, this is too general and vague an observation to be made the basis for disallowance of the appellant's claim for deduction u/s.80HHC of I.T. Act, 1961. Be that as it may, the issue here is whether exports were bogus so as to withdraw the deduction u/s.80HHC and once the export is proved to be genuine, it is immaterial as to from whom the goods were purchased, because without purchases there could be no actual exports. Hence, the issue whether purchases were made from the appellant's sister concerns or someone else, is not material. In my view, therefore, the Assessing Officer's reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accordingly deleted the addition aforesaid addition of undisclosed income. Considering all the facts and circumstances of the case as also the elaborate discussion made by Ld. CIT(A), we find the impugned order of Ld. CIT(A) in deleting this addition of undisclosed income to be quite justified and so we uphold the same. In the result, revenue's appeal being IT(SS)A No. 604/M/2002 is dismissed." 5.5 The submission of the ld. counsel for the assessee that the Revenue has not challenged the order of the Tribunal before the Hon'ble High Court could not be controverted by the ld. D.R. Under these circumstances, it is to be seen as to whether the notice issued by the A.O. u/s 148 is valid or not. We find the A.O. in his reasons recorded for re-opening of the assessment for the impugned assessment year has again referred to the block assessment order wherein it has been held that the assessee was not entitled to deduction u/s 80HHC as the entire purchase and sales are bogus in A.Y. 1999-2000 and 2000-01. 5.6 We find the Hon'ble Gujarat High Court in the case of Cargo Clearing Agency (Gujarat) (supra) at page 29 of the order has held that once the assessment has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee for the block period. In appeal, the CIT(A) cancelled the assessment on interest income. The AO cannot after cancellation of block assessment by the CIT(A) proceed to make an assessment for assessing the very same bank deposits as escaped income. The AO has no jurisdiction to assess the very same amount, which was considered and given up while making block assessment. It cannot be accepted that deposit amounts were not considered in block assessment, because when interest from the same deposits were assessed as undisclosed income of the block period, it can be legitimately assumed that the officer considered the deposit amounts for assessment but gave up the same. In this context, the findings of the Tribunal that reassessment under s.147 is a result of change of opinion of the AO, cannot be said to be illegal or incorrect because what was not treated as undisclosed income in block assessment is later treated as escaped income in another round of assessment under a difference provision of the Act (s.147) which is impermissible." 5.9 We find the Hon'ble Supreme Court in the case of Kelvinator of India Ltd. (supra) at page 564 and 565 has held as under:- "On go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper book we find it as an attempt on the part of revenue to, somehow or other, re-open the proceedings and more particularly the block assessment proceeding which they could not successfully support and sustain right up the Tribunal. It is an attempt which is apparent from the notice and, therefore, the reasons which are relied upon by the revenue failed to indicate any escapement or concealment of income by the assessee or suppression of any material fact by him. They do not meet the requirement u/s 147 of the Act. In this view of the matter and in view of the ratio of various decisions cited (supra) by the ld. counsel for the assessee, the notice issued u/s 148 in our opinion, is void ab initio. Since the assessee succeeds on this preliminary ground raised by the assessee, the other grounds being academic in nature are not decided. 6. In the result, the assessee appeal for A.Y. 1999-2000 is allowed. ITA 2777/M/2009 for A.Y. 2000-01 (By assessee) 7. In grounds of appeal No. 1, the assessee has challenged the order of the ld. CIT(A) upholding the reassessment proceeding for the impugned assessment year. 7.1 The ld. counsel for the assessee referring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. From the copy of the assessment order where the reasons are recorded, we find the A.O. re-opened the assessment on the ground that purchase of diamonds/jewellery from the sister concerns namely M/s Galaxy Exports, M/s Kunal Exports and M/s Prime Star Exports were found to be bogus, hence, he has reason to believe that income has escaped assessment. From the details of purchase and sales given by the assessee as per paper book 2 we find the assessee has made purchase from Vijay Bhav only during the year and there is no purchase from any of the three parties namely M/s Galaxy Exports, M/s Kunal Exports and M/s Prime Star Exports as mentioned in the Notice issued u/s.148. A perusal of the reasons shows that the same is just a repetition of the reasons recorded for A.Y. 1999-2000 and there is no application of mind. The reasons recorded by the A.O. suffers from defect and the reasons itself are wrong. It has been held in a number of decisions that when there is no reason recorded or the reasons recorded are wrong/absurd or irrelevant the re-asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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