9911796707
TMI Blog2014 (7) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... the formation of belief to come to a conclusion that there is escapement of income. When assessing officer has recorded in the reasons that all the cash transactions are recorded in the assessee's books of a/cs, entire edifies of the veracity of ED information fails. Besides, in the absence of any information about the non plausible explanation from ED point of view this vague information on its own also cannot be a basis to form a reasoned belief. Thus, in our considered opinion the assessing officer has blindly relied on the suspicion intimated by ED. Assessing officer on one hand gave a reason that transactions are recorded, on the other hand without making any effort recorded reason to believe to reopen the assessment of the assessee. - the reason to believe made by assessing officer are self contradictory and based only on suspicion. - the reason to believe as formed by AO are not in terms as contemplated by sec. 147 - AO did not have valid reason to believe that income had escaped assessment – Decided in favour of assessee. - ITA No.5415,5612/Del/2012 - - - Dated:- 18-6-2014 - R P Tolani And T S Kapoor, JJ. For the Appellants : Shri Ashwani Kumar FCA and Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and receipt of cash ticket amounts remains the same as in earlier years. Assessee's original assessment was completed u/s 143(1) at an income of ₹ 36,02,310/-. 4.1. Thereafter, assessing officer received some information from Enforcement Directorate ( ED in short), intimating that huge cash deposits received by the assessee have not been deposited in books of accounts and before ED the partner of assessee could not substantiate the source of cash received . On the basis of this information the assessing officer recorded reasons that he had reason to believe that assessee had not disclosed these transactions in its books of account, therefore, the finalized assessment was reopened. Before the assessing officer, assessee objected to the reopening of the assessment claiming that the ED information was not correct and all the cash transactions were recorded in the books of accounts and cash was deposited in banks which also is incorporated in books of accounts. Beside other objections were raised which are contained in CIT(A)'s order. 4.2. During the course of reassessment proceedings vide questionnaire dated 9-11-2009the assessing officer required the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved, assessee preferred first appeal, where CIT(A) rejected the assessee's ground challenging the reopening relying on following judgments: - ACIT Vs. Rajesh Jhaveri Stock Brokers P. Ltd. 291 ITR 500 (SC); - Central Provinces Manganese Ore Co. Ltd. Vs. ITO (1991) 191 ITR 662 (SC); - ITO Vs. Selected Dalurband Coal Co. P. Ltd. (1996) 217 ITR 597 (SC); - Raymond Woollen Mills Ltd. Vs. ITO (1999) 236 ITR 34 (SC) 4.6. Apropos merits, assessee contended that: (1) It was wrong to say that assessee had not disclosed the amount in the books of a/cs as alleged by the ED inasmuch as what has been added by assessing officer is nothing but the deposits in assessee's own bank accounts reflected in account books. Thus, ED allegation that the assessee had not accounted for the cash receipts in account books was unjustified. (2) The assessee is engaged in travel trade where a huge quantity of sale takes place directly across the counter to the customers. Assessee is associated with Saudi Arabian Airlines, most of his customers are pilgrims or persons who go in search of job to Saudi Arab and they pay the ticket amount in cash. The cash rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Act, 1961 will not be applicable except tot the cases mentioned below at (ii) In order to prove that the cash deposits in the bank are related to amounts received from sundry debtors, the appellant firm has filed confirmations of copies of accounts of various parties wherein the fact of the payment having been made in cash to the appellant firm stands duly confirmed. However, some of the accounts namely M/s Maktab Al-Ta-Awun, M/s Heena Travels, M/s Aqsa Haj Services (Regd) and M/s El Buro Travels have not been duly confirmed and without PAN and addresses. The appellant has stated that in certain cases owing to the passage of time confirmations could not be obtained as the parties were not traceable. I do not agree with this argument and the onus was on appellant to establish where from the cash was received. This onus has not been discharged satisfactorily and the addition on account of cash received from the following parties is liable to be upheld under section 68. S No Name Amount In (Rs) Remark (1) Maktab Al-Ta Awun 1,30,800 i. No c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are before us. 5. Learned counsel for the assessee at the out set contends: (i) The reopening of assessment is bad in law based on a wrong ED information that assessee has not recorded cash transactions in books of accounts. The fact of the matter is these transactions are duly incorporated in books in regular course of business, a fact accepted by both AO and CIT(A). The information furnished by the ED that huge cash transactions in assessee's case which are not incorporated in the books of a/cs itself was wrong. Thus the basis of initiating reassessment proceedings by AO is invalid. All the cash transactions are demonstrated in the books of a/cs. Therefore, the ED information on its own do not constitute any valid piece of information. (ii) The reasons recorded by assessing officer in this behalf are as under: Information has been received from the Enforcement Directorate that in the books of M/s Indo Arab Air Services there has been huge cash deposits. In the books of M/s Indo Arab Air Services, New Delhi there has been cash deposits of amounting to ₹ 3,23,00,550/- during F.Y. 2001-02 a detailed in Annexure- A, but on perusal of records o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le, amounting to suspicion and on the face of reasons recorded contradictory, the same are invalid and deserve to be quashed. Reliance is placed on the following case laws: - ITO v. Lakhmani Mewal Das 103 ITR 437 (SC); - CIT Vs. Kelvinator of India Ltd. 320 ITR 561 (SC); - Ganga Saran Sons (P) Ltd. Vs. ITO 130 ITR 1 (SC). 5.4. On merits ld. counsel for the assessee has applied for admission of additional evidence under Rule 29 of the ITAT rules which are the confirmations containing the PAN numbers of Maktab Al-Ta Awun ₹ 1,30,800 Heena Travels ₹ 2,00,000 Aqsa Haj Service (Regd) ₹ 37,08,000 El Buro Travels ₹ 6,00,000 5.5. It is pleaded that these persons became subsequently moved and are not traceable, their confirmations are filed which may be admitted as additional evidence in the interest of justice. As the assessee was prevented by sufficient cause in not producing them before lower authorities. The assessee's inability has been recorded by CIT(A). Order of CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tements, return of income which was in the custody of assessing officer and further emerge from his reasons. 7.2. Thus the non-verification of the suspicious information recording self contradictory reasons and merely holding the wrong information as the sole basis for reopening of assessment is contrary to the terms contemplated by sec. 147 as interpreted by a catena of judicial pronouncements. The reasons to believe have to be objective, tenable and should not be based on a wrong and unreliable information. The assessing officer has to ascertain the correctness of suspicious information from record and come to reasonable same in a prima facie belief from the record available before him. As the AO's action utterly lacs in these vital terms he cannot assume valid jurisdiction for reopening. Thus, the order of ld. CIT(A) also has not considered this legal issue specifically raised by the assessee. The assessing officer himself has observed that assessee has recorded these transactions in books of a/cs., with these reasons it cannot be held that they are not disclosed. 8. We have heard rival contentions and perused the entire material available on record. Section 147 can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and correct and are indicative escapement of income in material terms, or they amount to mere suspicion, vague, or incorrect information which ought to have been further verified by the assessing officer from assessee record, which not disputed to be available 8.6. In order to make a reasonable belief in terms of sec. 147 the assessing officer should be in possession of some valid information which should have a live nexus with the assessee's record of income. The information should be correct in the first place and should not merely raise suspicion. In the case before us it has not been disputed that the information in possession of assessing officer was only to the effect of communication from ED which is reproduced above. 8.7. From this communication the ED has communicated (i) The assessee has not disclosed cash transactions in its books of a/cs. (ii) In the investigation of ED no plausible explanation was offered by the partner of the assessee about the source of this cash received. 8.8. This ED information in the first place is not correct in as much as assessee is regularly assessed to income tax. Return along with account statement, sales, purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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