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TMI Blog2021 (4) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... t of information/documents to the extent which were available with the AO. The material before the Assessing Officer was relevant and affords a live link or nexus to the formation of the prima facie belief that income chargeable to tax has escaped assessment in the hands of the assessee. The sufficiency and correctness of material need not be looked at the initial stage at the time of reopening of the case. While considering whether commencement of reassessment proceedings was valid, the court has only to see whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not anything to be considered at that stage. The reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, he can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion and what is required is reason to believe , but not the established fact of escapement of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(2) and thereafter in framing the assessment and accordingly all proceedings are nullity. 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. The brief facts of the case are that, in this case, an information was received that the assessee had deposited ₹ 2,90,000/- in cash in her bank account maintained with Urban Cooperation Bank Ltd during the year under consideration but no return of income was filed by the assessee. Therefore, notice U/s 148 of the Income Tax Act, 1961 (in short, the Act) was issued on 27/03/2017 after recording reasons and obtaining necessary approval from the competent authority and the same was served upon the assessee through post. In compliance thereof, the assessee filed her return of income on 13/10/2017 declaring total income of ₹ 1,01,860/- under the head Business Income . Thereafter notices were issued by the A.O. and after making detailed enquiry, the A.O. passed assessment order on 28/12/2017 assessing total income of assessee at ₹ 20,37,281/-. 4. Aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 46745628.00 in her account as turnover belonging to assessee and assuming net profit thereupon at the arbitrary rate of 5%. Thus, as against the declared commission income of the assessee of ₹ 101864.00, assessment was concluded by assessing income at ₹ 2037281.00. An addition of ₹ 1935421.00 was made. The copy of assessment order is enclosed as a part of paper book vide page nos. 2-9. The assessee is an illiterate housewife and her husband is a labour/job worker who belongs to an economic very weaker section of the society. They even did not own any house or two wheeler and were living in a rented accommodation. During the period under consideration, the husband of the assessee in anticipation of some work and commission allowed one Mr Sitaram Khandelwal to use her account. This account was opened by that person only taking assesse with him to a bank. The assesse intimated the department about the details of said persons that were known to her but she was not aware of present day whereabouts of said person. Further, the assessee was completely unaware and ignorant about the quantum and nature of transactions that were routed out through her accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where he got the details of VAT registration of the party. However, it is pertinent to note that these details were already with the Ld. A.O as mentioned in Page 2 of assessment order (Para 1) which has been obtained under section 133(6). It was further informed by the commercial taxes department vide letter dated 27.12.2017 that the assesse has not filed any return or declared any turnover in VAT for relevant period and onwards. Thus, in absence of any new material coming into his notice, it is hereby clear that the view taken in assessment order was totally different to that he mentioned in the letter wrote to Ld. JCIT. Thus, on one hand, he has accepted the modus operandi of the assessee and on the other hand, it has made an addition applying a arbitrary profit rate which is in alternate too excessive. The Ld. A.O also ignored the statement of Mr Bankim Mandel Mr Vichy Dabi who clearly vetted the facts as stated above and who were called for recording statement in the matter by the Ld. A.O. Thus, the department ignored the evidences in the form of statements. The copy of statements of both these persons are also enclosed as a part of paper book vide Page No. 35-36 37. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Ld. AR has filed before us the copy of the bank account. The copy of the bank account contains 9 pages. There are number of entries in each month. The maximum credit balance in the bank account is to the extent of ₹ 1,51,905/- as on 11.08.2004. The minimum balance is of ₹ 563/-. The credit balance as on 31.03.2004 is ₹ 56,558/- while credit balance as on31.03.2005 is ₹ 566/-. This shows that the amount deposited during the year is less as compared to the withdrawal made during the year. This is not the case of the revenue that withdrawals made in this account have been utilised elsewhere. In case the amounts have been deposited by the assessee in the bank account then revenue is required to consider the availability of such deposits from the withdrawals made from such bank account. It is true that the assessee has not been able to give the required details because such details have not been kept by the assessee. Under such circumstances, one has to consider the totality of the circumstances and accordingly one will have to consider income portion from the turnover as mentioned in the bank account. It is an accepted position that the assessee is do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assesse where it was clearly an admitted fact that she was a housewife and married to a labour class person b. Letter of Ld. AD seeking directions under section 144A where he himself admitted this fact c. Statement of husband of the assesse d. Modus operandi in the bank account of the assesse e. Statement of neighbor of the assesse f. Affidavit filed by the assesse where she wrote that she provided only accommodation entry and earned commission income. Further, she declared that she did not give any confirmation of account to any party. g. The order in the matter of Mrs Hansa Vijay one more case quoted by assesse and again quoted by AD himself in the letter seeking directions under section r1.4A where the department has taken the view that only commission will be treated as income in such cases h. Reply by the commercial taxed department where it was mentioned that the assesse has not deposited any returns for the period under consideration or subsequent periods and thus not declared any sort of turnover. Further the Ld. CIT(A) also rejected the contention of the assesse as an alternative plea that the net profit rate adopted of 5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission income. 2.3.1 Ld. Authorized Representative argued that profit rate at 5% much higher in case of assessee is being treated as carrying on business of jewellery and gemstone. On perusal of facts, it is seen that the credit is in the bank account of the assessee and its the onus of appellant to prove correct nature of the credits. She has not given any evidence to prove that this is not the turnover. The affidavit filed by her is not supported by any evidence and is self serving. Therefore, action of the Assessing Officer in treating the entire credits as turnover of the assessee is confirmed. 2.3.2 So far as net profit rate of 5% is concerned. The same is reasonable. The appellant did not furnish any comparative cases where the net profit rate is lesser than 5%. Therefore, the addition made by applying net profit of 5% is confirmed. This ground of appeal is dismissed. The ld. CIT(A) has held that the Assessing Officer treated the entire deposit in bank account of assessee as sale of assessee and estimated net profit by applying net profit rate of 5%. The Ld. Authorized Representative argued that assessee was housewife not doing any business. She allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal was dismissed without taking account the relevant facts on record. We also produce gist of important judicial pronouncements on the same where the judicial authorities has rendered entire proceedings as null and void in absence of proper recording of satisfaction by the requisite authority. He relied on the following judicial pronouncements: (i) Pr.CIT Vs M/s NC Cables Ltd. In ITA No. 335/2015 (Delhi High Court) (ii) CIT Vs S. Goyanka Lime Chemicals Ltd. (2015) 56 taxmann.com 390 (MP) (iii) CIT Vs S. Goyanka Lime Chemicals Ltd. (2015) 64 taxmann.com 313 (SC) (iv) Virat Credit Holdings (P) Ltd. Vs ITO (CO No. 57/Del/2012 in ITA No. 89/Del/2012). (v) Hari Ram Gupta Vs ITO in ITA 5111/Del/2013 order dated 07/07/2016. (vi) M/s Tara Alloys Ltd. Vs ITO in ITA No. 2421/Del/2017 (Del Trib) (vii) Chhugamal Rajpal Vs S.P. Chaliha 79 ITR 603 (SC) (viii) DCIT Vs Kanchan India Pvt. Ltd. ITA No. 1280 1281/JP/2018. 11. On the other hand, the ld DR has relied on the orders of the revenue authorities. 12. We have considering the rival contentions of both the parties and have perused the material placed on record. We have also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The case of the assessee was reopened in the light of information/documents to the extent which were available with the AO. The material before the Assessing Officer was relevant and affords a live link or nexus to the formation of the prima facie belief that income chargeable to tax has escaped assessment in the hands of the assessee. The sufficiency and correctness of material need not be looked at the initial stage at the time of reopening of the case. While considering whether commencement of reassessment proceedings was valid, the court has only to see whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not anything to be considered at that stage. The reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, he can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion and what is required is reason to believe , but n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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