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TMI Blog2021 (3) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... g an addition of Rs. 2,52,18,773/- on account of alleged bogus purchase. 2.1 The assessee approached the Ld. First Appellate Authority challenging the reopening of assessment as well as challenging the addition on merits of the case. 2.2 The Ld. First Appellate Authority, however, upheld the initiation of re-assessment proceedings and also upheld the addition on merits. 2.3 Aggrieved, the assessee has now approached this Tribunal and has challenged the order of the Ld. First Appellate Authority by raising the following grounds of appeal: "1. That the order passed by the Ld. CIT(A) is bad in law and nature and liable to be quashed because: (a) The very basis of issue of notice under section 147 and assuming jurisdiction by the AO is erroneous, as while assuming jurisdiction for reopening, the ld. AO has recorded the reasons that the Assessee has not filed his return of income for the year, therefore, the assessee has escaped income of Rs. 2,48,99,600/-. Whereas, the assessee had already filed his return of income for the AY vide ack. no.011771 on 21.12.2016 declaring income of Rs. 2,19,175/-. (b) That the ld. CIT(A) failed to appreciate the fact that the reasons for reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the grounds of appeal." 3.0 The Ld. Authorized Representative (AR) drew our attention to the reasons recorded for reopening as contained in the Assessment Order. The reasons are being reproduced herein under for a ready reference: "A letter F.No. JCIT/Range- 28/2015-16 dated 23.03.2016 forwarding herewith the letter of F.No.ADlT/INVII/ FBD./2015-16/4525 dated 21.03.2016 received from O/o Asstt. Director of Income Tax (Inv.-II), Faridabad regarding sharing of information with regard to accommodation entry of bogus purchase obtained by M/s Rama Enterprises Prop. Sh. Raman Sood(PANAREPS4176J) from Sh. Vinod Goyal through his proprietary concern i.e. M/s Maa Durga Trading Compay. In this regard, it is submitted that Sh. Vinod Goyal prop, of M/s Maa Durga Trading Company given statement u/s 131(1) of Income Tax Act, that he had provided accommodation entries through bogus billing against which no goods were supplied by his company to the different parties. His company M/s Maa Durga Trading Company received e payment through cheques against the bills issued and then they withdrew the cash and arcer deducting the commission, remaining cash was given to the same party from w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 65,000/- 25. 30.01.2009 FTD from 286.200,1917 to ?86.201.88 Rs. 7,50,000/- 26. 03.02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 3,95,000/- 27. 05.02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 10,20,000/- 28. 07.02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 6,45,000/- 29. 10.02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 9,90,000/- 30. 11,02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 9,90,000/- 31. 11.02.2009 FTD from 286.200.1917 to 286,201.88 Rs. 12,60,000/- 32. 12.02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 9,90,000/- 33. 13.02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 12,25,000/- 34. 18.02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 8,55,000/- 35. 18.02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 8,10,800/- 36. 09.02.2009 FTD from 286.200.1917 to 286.201,88 Rs. 8,00,000/- 37. 24.02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 8,00,000/- 38. 25.02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 9,90,000/- 39. 26.02.2009 FTD from 286.200.1917 to 286.201.88 Rs. 4,68,800/- 40. 09.03.2009 FTD from 286.200.1917 to 286.201.88 - Rs. 10,05,000/- 41. 17.03.2009 FTD from 286.200.1917 to 286.201.88 - Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame of M/s Maa Durga Trading Company was not appearing. He drew our attention to the copies of VAT returns and also copy of the ledger account of M/s Maa Durga Trading Company placed in the Paper Book and our attention was drawn to the fact that the said ledger account only contained opening balance and debits pertaining to payments made to M/s Maa Durga Trading Company during the year under consideration and that there were no purchases from the said company in the relevant year. It was also submitted that apparently these aspects were ignored by the Lower Authorities, although the same had been brought to their notice. The Ld. AR also placed reliance on numerous judicial precedents to support his contention that the reopening was bad in law. 4.0 Per contra, the Ld. Sr. Departmental Representative (DR) placed reliance on the concurrent findings of both the Lower Authorities and submitted that the Department had acted on the basis of information received from the Investigation Wing regarding the assessee being one of the parties benefiting from accommodation entries relating to bogus purchases and, therefore, the reopening was within the four corners of law. The Ld. Sr. DR also su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that they were not certified by the VAT Authorities. The only reason for rejecting the contention of the assessee was that the assessee could not produce the books of account before the Lower Authorities. In our considered opinion this approach of the Lower Authorities is not correct in as much as it remains undisputed that the assessee had duly filed copies of audited accounts at the time of filing of the return of income and so it cannot be inferred that the assessee did not maintain any books of account. Further the evidentiary value of the VAT returns cannot be simply be brushed aside specially when the same were brought to the notice of the Assessing Officer in the very first instance when the assessee was raising objections against the initiation of reassessment proceedings. Even the table produced by the Assessing Officer in his assessment order depicts only payments made to M/s Maa Durga Trading Company and there is no entry depicting purchases from the said company. In such a situation, on the factual matrix of the case, it is our considered opinion that the reopening in the instant case was bad in law specially, when the error in the approach of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that 'reason to believe' that income has escaped assessment must be based on correct facts. Notice based on wrong facts is without jurisdiction and is liable to be quashed. The Hon'ble Delhi High Court in the case of PCIT vs. M/s SNG Developers Ltd., reported in 404 ITR 312 has held that condition precedent for issue of notice for reassessment is that the 'reason to believe' that income has escaped assessment must be based on correct facts. Notice based on wrong facts is without jurisdiction and has to be quashed. This order of the Hon'ble Delhi High was challenged before the Hon'ble Apex Court and the Hon'ble Apex Court dismissed the Revenue's Special Leave Petition in SLP No.42379/2007 vide order dated 9th February, 2018. Since, in the instant case, although, the assessee has filed return of income, the Assessing Officer proceeding to reopen the assessment by mentioning that no voluntary return had been filed by the assessee and, thereafter, proceeded to reopen the assessment on wrong appreciation facts on record, in such a situation, we have no option but to quash the reassessment proceedings itself. Accordingly, relying on the above mentioned judicial precedents, we quash the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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