9911796707
TMI Blog2021 (5) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A)-17, New Delhi, relating to Assessment Year 2007-08. 2. Facts of the case, in brief, are that the assessee is a partnership firm and engaged in the business of import and export of auto parts. It filed its original return of income on 30.10.2007 declaring total income of ₹ 7,05,890/-. Subsequently, the Assessing Officer reopened the case u/s 147 of the Act by recording the following reasons:- Information has been received from REIC through ITO Ward 43(4) New Delhi that M/s VST Enterprises Bank A/c No.43750 with Punjab Sind Bank, Fatehpuri, Delhi, reveals an inflow of ₹ 72 lakhs in cash and ₹ 1.82 crores from Foreign Sources in 2007. According to the information, M/s VSR Enterprises is part of a Syndicate involved in smuggling of Red Sanders Wood run by one Shri Shekhar. The syndicate involved in trading of banned items across the borders such as exotic herbs, such as Ashwagandha, Peacock feather and a host of items wide name :pyaaz, Aalu , Adrak and Seb . After considering carefully the contents and nature of the information available before me, I have reason to believe that income chargeable to tax has escaped assessment in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover to 10%. 6. Aggrieved with such part relief granted by the learned CIT(A), the assessee is in appeal before the Tribunal by raising following grounds of appeal:- Ground No.1 In its impugned order, the CIT (Appeals) has relied on the information available with assessing officer and has passed the order deleting some additions while upholding the addition made under section 68 of the Act. The Learned AO made an addition of ₹ 27,29,000 section 68 of the Income Tax Act, 1961. The details are as below. Date Source Explained Amount 10/04/2006 Cash withdrawn Dec 5 94,000.00 10/04/2006 Cash withdrawn Dec 5 40,000.00 30/05/2006 Cash withdrawn Dec 5 300,000.00 1/06/2006 Cash withdrawn Dec 5 120,000.00 8/6/2006 Taken from partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, as there is no independent application of mind to the vague material for reopening of a matter and clearly a case of borrowed satisfaction, which is bad in law. On the facts and under the circumstances of the case the assumption of jurisdiction is bad in law as there is no live nexus between the reasons recorded and belief entertained vis-a-vis escapement of income, as is evident that finally the AO has assessed other income which does not form part of the reasons recorded. On the facts and under the circumstances of the case the jurisdiction assumed by the AO u/s 147 is bad in law as the material on the basis of which jurisdiction has been assumed was totally vague and has no bearing on the income finally assessed by the AO 8. The learned counsel for the assessee referring to the above additional grounds, submitted that these grounds are purely legal in nature and go to the roots of the case and all the facts necessary for adjudication of the above grounds are on record. 9. Relying on the decisions of Hon ble Supreme Court in the case of CIT vs Varas International reported in 284 ITR 80(SC), and NTPC Ltd. vs CIT reported in 229 ITR 383(SC) and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been reproduced in the preceding paragraphs. From the various details furnished by the assessee, we find that a part of the amount mentioned in the reasons has been added in AY 2008-09 and the balance part has been added in the hands of the assessee for AY 2007-08. We find that the assessee has challenged the validity of reopening of assessment for AY 2008-09 in shape of additional ground before the Tribunal and the Tribunal vide ITA No.1856/Del/2016, order dated 17.02.2021 has quashed the reassessment proceeding by observing as under:- 9. We have considered the rival submissions. It is well settled Law that validity of the re-assessment proceedings is to be determined with reference to the reasons recorded for reopening of the assessment. The reasons recorded for reopening of the assessment are reproduced above in which A.O. has mentioned that as per information received from REIC through Income Tax Officer, Ward-43(4), New Delhi, assessee has involved in smuggling of various banned items. The A.O. has mentioned that as per information assessee has inflow of ₹ 72 lakhs in cash and ₹ 1.82 crores from foreign source. The assessee has explained that assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. The Income Tax Officer, Ward 2 (5), Gurgaon. (Appellant) (Respondent) For Assessee : Shri Kapil Goel, Advocate For Revenue : Ms. Rinku Singh, Sr.DR Date of Hearing : 03.12.2020 Date of Pronouncement : 07.12.2020 ORDER PER BHAVNESH SAINI, J.M. This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-1, Gurgaon, Dated 30.01.2017, for the A.Y. 2011-2012, challenging the reopening of the assessment under section 147/148 of the I.T. Act, 1961, addition of ₹ 59,50,000/- on account of cash deposit, confirming addition of ₹ 1,50,000/- out of ₹ 9,85,000/- and addition of income of ₹ 7,72,461/- from MCX Business. 2. We have heard the Learned Representative of both the parties through video conferencing and perused the material available on record. 3. Briefly the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 84,37,210/- 3.1. The assessee challenged the reopening of the assessment as well as additions on merit before the Ld. CIT(A). However, the appeal of assessee has been partly allowed. 4. Learned Counsel for the Assessee referred to the reasons recorded for reopening of the assessment which have been provided to the assessee under RTI Act, copy of which is placed on record. He has submitted that A.O. in the reasons mentioned that assessee has made investment of ₹ 2 lakhs for purchase of mutual fund and transaction of commodities exchange contract of ₹ 10 lakhs in assessment year under appeal. He has submitted that A.O. has recorded wrong, incorrect and non-existing reasons and did not apply his mind to the material on record before recording reasons for reopening of the assessment. He has submitted that assessee did not make any fresh investment during subject period in mutual fund and even the A.O. did not make any addition on account of investment of ₹ 2 lakhs for purchase of mutual funds. He has submitted that as regards transaction of commodity exchange contract of ₹ 10 lakhs, A.O. has made addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment of ₹ 200000/- for purchase of mutual fund and transaction in commodity exchange contract of ₹ 10,00,000/- during the assessment year 2011- 12. As per record assessee do not have file return of income for the Assessment year 2011-12. The income chargeable to tax amounting to ₹ 1200000/- which is chargeable to tax has escaped assessment and any other income found during the course of assessment proceedings which is chargeable to tax has escaped assessment. I have reasons to believe that the above said income/transaction of ₹ 1200000/- and any other income found during the course of assessment proceedings which is chargeable to tax has escaped assessment which needs examination in the light of the information in my possession. Notice under section 148 of the Income Tax Act, 1961 is being issued. Sd/- Shamsher Singh Income Tax Officer Ward 2(5), Gurgaon. 6.1. In view of the above reasons, the A.O. has mentioned that he has information received through NMS that assessee has made investment of ₹ 2 lakhs for purchase of mutual funds and transaction of commodity exchange contract of ₹ 10 lakhs in assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 10 lakhs in purchase of mutual funds which fact is also incorrect and is contradictorily recorded in the reasons for reopening of the assessment for ₹ 2 lakhs only. The A.O. in the assessment order has also recorded same statement that assessee has made contract in commodity exchange exceeding ₹ 10 lakhs which fact was ultimately found incorrect by the A.O. himself and he has made part addition as against the income mentioned in the show cause notice. These facts clearly show that A.O. did not apply his mind to the information received through NMS and also recorded wrong, incorrect and non-existing facts in the reasons recorded for reopening of the assessment. Learned Counsel for the Assessee has also referred to page-14 which is supplied to the assessee under RTI which according to assessee was asked under the RTI Act. The first page of the RTI reply PB-10 shows that assessee has asked for the copy of the reasons for reopening of the assessment as well as details which are basis of reopening of the case under section 148 of the I.T. Act, 1961. Page-14 is the material supplied by the A.O. which is the information summary in which information is supplied to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds on which the reassessment notice was issued were not found to exist, and, therefore, the Income-tax Officer did not get jurisdiction to make the reassessment. 6.3. The Hon ble Delhi High Court in the case of Pr. CIT vs., SNG Developers Ltd., [2018] 404 ITR 312 (Del.) in which it was held as under : Held, dismissing the appeal, that the reasons recorded by the Assessing Officer for reopening the assessment under section 147, issuing a notice under section 148 did not meet the statutory conditions. As already held by the Appellate Tribunal, there was a repetition of at least five accommodation entries and the total amount constituting the so-called accommodation entries would therefore, not work out to ₹ 95,65,510. It was unacceptable that the Assessing Officer persisted with his belief that the amount had escaped assessment not only at the stage of rejecting the assessee s objections but also in the reassessment proceedings, where he proceeded to add the entire amount to the income of the assessee. Therefore there was non-application of mind on the part of the Assessing Officer. The Appellate Tribunal was justified in confirming the order of the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 10A as amended by the Finance Act, 2000, with effect from the assessment year 2001-02 and as such could not have been made applicable to the assessment year 1999-2000 and the notice had been issued under the mistaken belief about the correct position of law. However, opportunity to show cause was given to the petitioner as to why the loss claimed should not be disallowed to be carried forward. On a writ petition : Held, allowing the petition, (i) that it would be clear from the reasons given that the authority proceeded on the presumption that the law applicable was the law after the amendment and not the law in respect of which the petitioner had filed the return for the year 1999-2000. This by itself clearly demonstrated that there was total non-application of mind on the part of the authority and consequently, the notice based on that reason would amount to non-application of mind. (ii) That the income derived by the assessee from an industrial undertaking to which section 10A applies could not be included in the total income of the assessee. Therefore, the petitioner was right in filing the return by excluding the income in terms of section 10A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee allowed. 9.1. Considering the above discussion in the light of decision of ITAT, Delhi E-Bench, Delhi in the case of Shri Natrajan Monie, Gurgaon vs., ITO, Ward-2(5), Gurgaon (supra), it is clear that A.O. has recorded incorrect, wrong and non-existing reasons in the reasons recorded for reopening of the assessment reproduced above and have also did not apply his mind to the information received from REIC through ITO, Ward- 43(4), New Delhi. Therefore, we are of the view that reopening of the assessment is illegal and bad in Law and liable to be quashed. We, accordingly, set aside the Orders of the authorities below and quash the reopening of the assessment. Resultantly, all additions stand deleted. In view of the above, there is no need to decide other issues raised in the present appeal on merits which are left with academic discussion only. Accordingly, appeal of the Assessee is allowed. 10. In the result, appeal of the Assessee allowed. 15. Since, the facts of the instant case are identical to the facts of the case in the succeeding assessment year which have already been decided by the Tribunal in assessee s own case, therefore, in abs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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