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TMI Blog2022 (2) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... various financial institutions thereby, the assessee could not file appeal within time and the delay of 51 days to be condoned on the above reasons. The Ld.DR has no objection for condoning the delay. 3. We are satisfied with the reasons given by the assessee, and thereby we condone the delay of 51 days in filing this appeal and take up the appeal for adjudication. 4. Grounds of appeal raised by the assessee are as follows: "1) The Id. CIT(Appeals) has erred in law and on facts in upholding addition of Rs. 51,37,815/- as bogus purchases without properly appreciating the facts of the assessee. 2) The Assessment made u/s.147 r.w.s 143(3) is submitted to be bad in law and on facts on the ground of non assumption of proper jurisdiction and non fulfillment of conditions provided u/s.147 of the Act and the CIT(A) on the facts of the appellant ought to have held the re-assessment order as invalid. 3) On the facts no such addition ought to have been made. 4) The appellant being under the disturbed mind on account of various litigations going/on and being under financial crisis unintended delay occurred which is prayed to be kindly condoned. 5) On the facts no interest u/s.234-A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also assessed vide PAN No.AADCP3995R and that amount was paid from the bank to the assessee and as per the record of ROC, both companies are active. The assessee further submitted that the reasons recorded by the AO is not valid in law, since the basis on the "borrowed satisfaction", it cannot be treated as satisfaction of the AO as required under the Act. Thus, the re-assessment proceedings become void ab initio and relied upon few case laws. However, the ld.CIT(A) upheld that the re-assessment is good in law and confirmed the additions made by the AO thereby dismissed the appeal preferred by the assessee. 7. Aggrieved against the same, the assessee is in appeal before the Tribunal by reiterating submissions as were made before the Revenue authorities. In reply, the ld.DR supported the orders of the lower authorities and prayed that the assessee's appeal be dismissed. 8. We have given our thoughtful consideration to the facts of the case and the material placed before us. The reasons recorded for re- opening of the assessment is placed at page nos.21 and 22 of the paper book filed by the assessee, which read as under: Reasons recorded for reopening of assessment u/s.147 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income Tax, Circle-2(l)(2), Ahmedabad 9. The reasons recorded clearly state that the same was recorded merely on the basis of the information received by the AO from DIT(Investigation), Surat and Ahmedabad relating to the accommodation entries. The AO has not recorded any other information that what extent of income which has escaped from the assessment for the Asst.Year 2009-10 in the case of the assessee by these accommodation entries. The AO was not clear whether these entries in the receipt/income of the assessee. He simply repeated the information that he has received from the DIT(Investigation), Surat and Ahmedabad. 10. Co-ordinate Bench of the Tribunal, Ahmedabad in the case of Mariyam Ismaile Razawani Vs. ITO in ITA No.676/Ahd/2016 vide order dated 9.8.2016 after relying on the decision in the case of Bir Bahadur Singh Sijwali Vs. ITO, (2015) 68 SOT 197 URO (Del) has considered similar issue of validity of reopening of the assessment and held that reopening of the assessment is bad in law, when the reassessment is based on "borrowed satisfaction". The relevant observation of the Tribunal read as follows: "5. Having heard the rival contentions, and having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason alone. Hon'ble Bombay High Court, in the case of Prashant S. Joshi vs. ITO [(2010) 230 CTR (Bom) 232.] has observed: "The AO must have reasons to believe that such is the case (i.e. any income chargeable to tax has escaped assessment for a particular year) before he proceeds to issue notice under s. 147". In other words, when no reasons are recorded for reopening the assessment prior to issuance of notice, the reassessment proceedings must fail for that reason alone. However, for the reasons we will set out now, the conclusions will be no different even if it is presumed that this communication, extracts from which are reproduced before, only conveys the reasons already recorded prior to issuance of notice. 7. It is well settled in law that reasons, as recorded for reopening the reassessment, are to be examined on a standalone basis. Nothing can be added to the reasons so recorded, nor anything can be deleted from the reasons so recorded. Hon'ble Bombay High Court, in the case of Hindustan Lever Ltd. vs. R.B. Wadkar [(2004) 268 ITR 332], has, inter alia, observed that "..........It is needless to mention that the reasons are required to be read as they were record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the matter, it is useful to bear in mind the following observations made by Hon'ble Supreme Court in the case of ITO Vs Lakhmani Mewal Das [(1976) 103 ITR 437], "the reasons for the formation of the belief must have rational connection with or relevant bearing on 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 this belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the Court cannot go into sufficiency or adequacy of the material and substitute its own opinion for that of the ITO on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment." 8. Let us, in the light of this legal position, revert to the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion before Their Lordships. As for her reliance on Hon'ble Supreme Court's judgment in the case of Phool Chand Bajrang Lal Vs ITO [(1993) 203 ITR 456], that was case in which Their Lordships concluded that the AO "rightly initiated the reassessment proceedings on the basis of subsequent information, which was specific relevant and reliable, and after recording the reasons for formation of his own belief that in the original assessment proceedings, the assessee had not disclosed the material facts truly and fully and, therefore, income chargeable to tax had escaped assessment" and we are unable to see anything on the facts of the present case which are materially similar to the facts of the said case. As regards her reliance on the decision of a coordinate bench in the case of Mithila Credit Services Limited Vs ITO (ITA No. 1078/Del/2013; order dated 23.5.2014), it is important to bear in mind the fact that it was a case in which the Assessing Officer had reopened the assessment on the basis of receipt of information from Directorate of Investigation, and, as noted by the Assessing Officer in the reasons recorded for reopening the assessment, "the name of the assessee figur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed infructuous and do not call for any adjudication." 11. In the present case also deposits of Rs. 25 lakhs by Pioneer Mercantile Ltd. and Jupiter Business Ltd were towards share application money to the assessee-company which has been explained by the assessee before the ld.CIT(A) vide its letter dated 10.10.2017, the same was not considered by the ld.CIT(A) and however confirmed the additions. Further, on the validity of re- assessment notice issued on the ground of "borrowed reasons", the CIT(A) has not followed jurisdictional Tribunal's decision and upheld the reopening of the assessment, which is not in accordance with law and following judicial discipline. Since the present case is reopening of the assessment, which is similar to the issue decided by this Tribunal in Mariyam Ismal Razawani (supra), respectfully following the same, we have no hesitation in holding that reopening of the assessment is bad in law, since the Ld.AO has not applied his mind in recording what is the income escaped from the assessment, rather, he reproduced information received from the DIT(Investigation), Surat and Ahmedabad which is nothing but "borrowed information". Therefore, reopening of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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