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TMI Blog2019 (3) TMI 1610X X X X Extracts X X X X X X X X Extracts X X X X ..... to disclose fully and truly all the material facts in the return of income so filed, accordingly, in terms of the jurisdictional High Court decision in the case of IPCA Laboratories Ltd., vs. Gajanand Meena, DCIT Others [ 2001 (7) TMI 100 - BOMBAY HIGH COURT] no reopening after expiry of four years is valid unless department shows that there is failure on the part of the assessee to disclose fully and truly all material facts. Accordingly, we do not find any justification in the reopening so made u/s.147. Bogus purchases addition - From the record we found that the assessee had submitted all the documents during the assessee proceedings, such as purchase bill, sales against said alleged purchase, payment by account payee cheque, confirmation of accounts of alleged parties, stock register. The assessee has also produced the complete books of accounts, AO has not pointed out any mistake in such records. The assessee has also produced the retraction statement of alleged parties. AO has not provided any cogent material in support of his claim. There is no material on record other that the third party statement, which were also retracted. Alleged parties have also replied to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT, Cir-2, for reopening of the case is without jurisdiction. Our attention was invited to the following facts:- a. The assessee has filed its original return of income for 2007-08 Asst. Year vide acknowledgment no. 2407471241007 on 24.10.2007 with ward 4(2), Thane, The copy of acknowledgment is placed on record b. The original assessment order u/s 143(3) of the Act for 2007-08 Asst. Year was passed by ITO ward 2(3), Thane, on 22.12.2009. Further, the rectification u/s 154 of the Act was done by ITO ward 2(3), Thane on 10.03.2010. The copy of the said order passed u/s 143(3) of the Act as well as order passed u/s 154 of the Act is placed on record. c. The Ld. AO in para 2.1 of his assessment order specifically mentioned as under: 2.1 On the strength of the above valid information, recourse to section u/s 147 was taken, accordingly, notice u/s 148 of the I.T. act was issued by the ACIT, Cir-2, Thane on 28.03.2014 f. --'Ch was duly served upon the assessee through registered post. The case was transferred to the ITO, Wd-2(2), Thane who issued notices u/s 143(2)/142(1} 07.08.2014. d. It is clear from the above that the notice was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable in terms of the order of Delhi Bench of ITAT dated 14/09/2010 in the case of M/s Naseman Farms Pvt. Ltd. (Appeal No.970/2010). Accordingly, it was pleaded that notice issued u/s.148 of the Act is without valid jurisdiction. After reading the provisions of Section 147, Ld. AR contended that section states that the assessing officer has to believe, hence it is clear and also it is well settled law that the assessing officer should have his own satisfaction for reason to believe that income chargeable to tax has been escaped and he cannot borrow the reason from others. As per the assessment order, the reopening was made only on the basis of information received from Director General of Income tax (Inv.) Mumbai and there was no satisfaction of the concern AO, who has reopened the case. Our attention was invited to the text mentioned in para 2, 2.1 and 8.1 of the assessment order, which read as under: 2. Brief facts of the case was that on the basis of information received from the Director General of Income tax (Inv), Mumbai vide letter dated 13.03.2014, in connection with sharing of information in the case of beneficiaries of accommodation entries- Shri Gautamchond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o argued by Ld. AR that original assessment was completed u/s.143(3) after making detailed enquiry with regard to the purchases and sales so made by the assessee. However, reopening was made after more than four years from the end of the relevant assessment year by issue of notice u/s.148. As per Ld. AR, there is no failure on the part of the assessee to make return u/s.139 or in response to notice issued under sub-section 1 of Section 142 or Section 148 to disclose fully and truly all material facts necessary for assessment, accordingly, no reopening can be made after expiry of four years from the end of the relevant assessment year in terms of proviso to Section 147. 12. On the other hand, Ld. DR relied on the order of the lower authorities in respect of validity of the reopening and the reasons recorded. 13. We have considered rival contentions and carefully gone through the orders of the authorities below. Under the provisions of Section 147, reopening solely on the basis of information received from the Investigation wing and without independent application of mind is void. The last five line of para 2 of the reason recorded in Writing are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In para 7 of the assessment order in which the Ld. AO once again mentioned as Under: During the course of assessment proceedings, Shri Manoj Jain duly authorised by the assessee attended along with the two directors namely Shri Ashok Jain and Uttamchand Osfwai They were confronted upon the information received from the investigation wing. 19. It is again established that the Ld. AO was having just information and the same is part of assessment order. Hence, it is established that the reasons were recorded just on the basis of information without any material and the same is not sufficient for reopening the assessment completed under scrutiny proceedings of Sec.143(3) of IT Act. Furthermore, the relevant assessment year under consideration is 2007- 08, whereas reopening was on 28/03/2014 by issue of notice u/s.148. Since the assessment was reopened after expiry of four years from the end of the relevant assessment year, the department has to show that there is failure on the part of the assessee to make return u/s.139 or in response to notice issued u/s. 142(1) or Section 148 are to disclose fully and truly all material facts necessary for his assessment, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utamchand Jain appeared before the AO on 25/03/2015 when the AO recorded his statement which has been reproduced in the assessment order at page No.14 to 20. 23. From the record we also found that the alleged parties have also replied to summons issued u/s 131 of the Act and provided all the required details to the Ld. AO. The assessee has produced the director/partner of alleged parties and the Ld. AO had recorded the statement on oath. In the whole statement there is no adverse answer by the said director/partner of alleged parties. 24. In view of the above discussion, we do not find any merit for the addition so made by the AO when all the documentary evidences with respect to the purchases, corresponding sales, quantitative statement was filed before the AO. The alleged party has also replied to the summon issued by the AO u/s.131 and provided all the information required by the AO. Furthermore, the Directors / Partners of alleged parties were produced before the AO and the AO has recorded a statement on oath. Accordingly, there is no justification for any addition made by the AO. 23. In the result, appeal of the assessee is allowed. ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rib.). J. K. Construction Co. v. /TO [2007] 162 Taxman 46 (Jodhpur) (Trib) 29. So far as enquiry made by the AO and the addition made by the AO to the extent of 3% of alleged bogus purchases is concerned, we found that the case of the assessee company was selected for scrutiny and the assessment was completed u/s 143(3) of the Act. During the assessment proceedings, the assessee company has submitted all the required details which include the confirmation of accounts, stock register, payment through account payee cheques etc. The assessee has produced Mr. Gautam B Jain during the assessment proceedings of 2007-08 Asst. Year and the Ld. AO could not brought any adverse material against the assessee, however, the AO has made addition of 3% of alleged bogus purchase. The addition of 3% of alleged bogus purchases was made by AO after making detailed inquiry. However, there is no material available before CIT to justify the addition of 100%. It is further worthwhile to mentioned here that as per orders placed by Ld. AR on record, the department has also estimated 3% of alleged purchase and made addition accordingly in numerous case by Range 19, Mumbai. There are so many decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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