9911796707
TMI Blog2016 (4) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 96-97, the Assessee filed a return of income on 29.11.1996 declaring total income of Rs. 21,889/-. An order of assessment was passed u/s.143(3) of the Act on the said return of income on 30.3.1999. The total income of the Assessee was determined by the AO in the said order at Rs. 16,51,168/-. In the said order of assessment the AO has acknowledged the fact that there was a search and seizure operation at the business premises of the Assessee as well as its sister concerns at No.23A, N.S.Road, Calcutta by the Department of Revenue Intelligence (DRI) on 30.11.1995, 1.12.1995 and 3.6.1996. Books of accounts seized by the DRI were requisitioned by the Income Tax Department u/s.132A of the Income Tax Act, 1961 (Act). Based on the seized documents so requisitioned, the AO came to the conclusion that the Assesssee had made sales to Sagittarious Era of Rs. 77,50,000 but recorded only sales of Rs. 61,76,217 in the books of accounts. The difference of Rs. 16,09,632 was sought to be added to the total income of the Assessee. The Assessee in reply had submitted that the sale figure of Rs. 16,09,632 was in fact sale made to an entity by name M/S.Canny Enterprises which is duly recorded in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in the return originally filed on 29.11.1996. The AO passed an order of assessment u/s.147 read with Sec.143(3) of the Act dated 31.3.2004. In the said order the AO has referred to the fact that the Commissioner of Customs, Customs House, Kandla in his order dated 28.12.2000 had found that the Assessee had during the previous year relevant to AY 2006-07 imported 504 MTS of HDPE valued at Rs. 1,36,87,350/- and sought clearance of the same from the Kandla Customs House with forged/tampered licences and evaded customs duty amounting to Rs. 1,05,79,669/-. The AO has further referred to the fact that when the above facts were confronted to the Assessee, the Assessee pleaded that the aforesaid sales had been duly disclosed in the books of accounts maintained on the basis of which total income was declared under the Act and that the sales were made to two parties by name Pan Am Impex Corporation and Rohan Exim. The AO after recording his inability to serve notice u/s.133(6) of the Act on these parties at the address given by the Assessee thereafter issued a show cause notice dated 18.3.2004 to the Assessee to show cause as to why the customs duty of Rs. 1,05,79,669/- be not treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the ITAT in coming to the aforesaid conclusion had placed reliance on the decision of the Hon'ble Supreme Court in the case of Coca cola Export Corporation Vs. ITO 231 ITR 200 (SC) wherein it was held that when facts showed that imports were duly recorded in the books of accounts, there was no basis to form opinion regarding escapement of income. It was also argued that initiation of reassessment proceedings were based on a mere change of opinion and reliance was placed on the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Kelvinator of India Ltd. 256 ITR 1(Del.). 7. The CIT(A) on consideration of the above submissions held that initiation of reassessment proceedings were bad in law and in holding so followed the decision of the Hon'ble ITAT in the case of Ashwini Kumar More (supra). The following were the relevant observations of the CIT(A): "5.3 I have perused the assessment order and considered the submission of the appellant. In the case of Shri Ashwani Kumare More, A.Y. 1996-97 on the identical facts, the ITAT, Kolkata "C" Bench in their order no. I.T.A. No.953 (Kol) of 2005 dated 14.07.2006 has held- "We have perused the orders of authorities carefull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings for reassessment were initiated in the case of Shri Ashwani Kumar More for AY 1996-97. Ashwani Kumar More is a business Associate of the Assessee carrying on business at the same business premises of the Assessee and was subjected to search and seizure operations by the DRI. In his case reassessment proceedings were initiated on identical reasons. The reasons recorded in the case of Ashwani Kumar More (supra) are set out in para 9 page-5 of the order of the Tribunal dated 14.7.2006 a copy of which is placed at pages 16 to 24 of the Assessee's paper book. The operative portion of the said order has already been extracted by the CIT(A) in his order which we have set out in para-7 of this order. It is clear from the order of the Tribunal that no reassessment proceedings could be initiated merely on the basis of action initiated by Customs Department. We also find that in the case decided by the Tribunal the stage at which reassessment proceedings were initiated u/s.147 of the Act was when show cause notice was issued by the Customs Authorites and in the reasons recorded by the AO in the present case also it was at the stage of show cause notice before the Customs Authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the AO to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the AO to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the AO to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the AO. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The AO, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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