9911796707
TMI Blog2021 (10) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... ain information from the Investigation Wing that the assessee is a beneficiary of accommodation entry from Shri Gautam Jain (Surat Based Diamond Concern) to the tune of Rs. 12,33,210/- and therefore he reopened it whereas while framing the assessment the AO has changed the facts in contra-distinction with the facts stated in the reasons recorded to reopen i.e. in the assessment framed pursuant to reopening the AO has made a new allegation that the assessee has taken accommodation entry from M/s Rajat Gems (Rs. 6,16,605/-) and M/s Ranjan Gems (Rs. 6,16,605/-); and thereafter taking note that the assessee has purchased gold and diamond jewellery of Rs. 6,16,605/-, M/s Ranjan Gems has made an addition of Rs. 6,16,605/- (in place of his allegation in the reasons recorded of Rs. 12,33,220/-). From the aforesaid facts narrated, according to Ld. A.R., it is quite clear that the basis of reopening has undergone changes from the name of accommodation entry operator (i.e. Gautam Jain to Ranjan Gems and the escaped income changed from Rs. 12,33,330/- to Rs. 6,16,605/-). Therefore, according to Ld. A.R. when the jurisdictional fact on the basis of which the reopening was carried out by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validity reopening an assessment. And the AO has to record the reasons thus formed and thereafter only he can successfully reopen and issue notice u/s 148 of the Act. And if an assessee challenges the jurisdiction of an AO to reopen the assessment, then the appellate authorities can examine whether the reasons recorded by the AO to reopen the assessment, satisfies the legal requirement for validly reopen the assessment. While doing so, the appellate forum cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the AO in coming to the belief (escapement of income), but the Appellate Forum can certainly examine whether the reasons are relevant and have a bearing on the matter in regard to which he is required to entertain the belief before he can issue notice u/s. 148 of the Act. If there is no intelligible nexus between the reasons and the belief, so that on such reason, no one properly instructed on facts and law could reasonably entertain the belief, then the conclusion would be fragile and resultantly the inescapable conclusion would that the AO could not have had entertained the requisite reason to believe that any part of assessee's income ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch indicates a legitimate suspicion 'about income escaping the assessment'. The former category consists of the facts which, if established to be correct, will have a cause & effect relationship with the income escaping assessment. The later category consists of facts, which, if established to be correct, could legitimately lead to further inquiries which may lead to detection of an income which has escaped assessment. There has to be some kind of cause & effect between reasons recorded and the income escaping assessment. While dealing with this subject it is useful to bear in mind the following observation of Hon'ble Supreme Court in ITO vs. Lakhmani Mewal Das [1976] 103 ITR 437 wherein was held as follows: "The reasons for the formation of the belief must have a rational connection with or relevant bearing of the formation of the belief . Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the ITO and the formation of his belief that there has been escapement of income of the assessee from the assessment in the particular year because of his failure to disclose fully & truly all material facts. It is no doub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aming the re-assessment has come out with two different accommodation entry providers i.e. M/s Ranjan Gems for Rs. 6,16,605/- and M/s Rajat Gems for Rs. 6,16,605/- and alleged that the assessee had made undisclosed income from these two accommodation entry providers and when the assessee pointed out that it did not had any business dealing with M/s Rajat Gems, the AO did not take any adverse action against the assessee in respect of M/s Rajat Gems. However, since the assessee had made purchases of gold and diamond jewellery worth Rs. 6,16,605/- from M/s Ranjan Gems which fact though supported by bills/vouchers and payments have been made through cheque, the AO ignored the same and made addition of Rs. 6,16,605/-. On appeal the Ld. CIT(A) has dismissed the grounds raised on legal issue as well as on merits. Now when we are examining the legal issue raised by the assessee we note that the AO had reopened the original assessment framed u/s. 143(3) of the Act dated 05.02.2014, by recording the reasons that the assessee is the beneficiary of taking accommodation entry from entry provider Shri Gautam Jain & Ors (Surat Based Diamond Concern) for Rs. 12,33,210/- whereas from a perusal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
