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TMI Blog2022 (4) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... alid. In view of the above discussion, in our view, the Assessing Officer has wrongly and illegally assumed jurisdiction in this case to reopen the assessment. The reasons pointed out by the Assessing Officer cannot be said to be the reasons to form the belief that income of the assessee had escaped assessment. Therefore, the assessment framed by the Assessing Officer was bad in law and the same is accordingly quashed. - I.T.A. No.230/Kol/2021 (Assessment Year: 2012-13) - - - Dated:- 16-3-2022 - SHRI SANJAY GARG, JUDICIAL MEMBER Shri Sunil Surana, CA, appeared on behalf of the appellant. Shri Gautam Mondal, Sr. DR, appeared on behalf of the Respondent. ORDER The present appeal has been preferred by the assessee against the order dated 28.06.2021of the National Faceless Appeal Centre [hereinafter referred to as CIT(A) ] passed u/s 250 of the Income Tax Act (hereinafter referred to as the Act ). The assessee in this appeal has taken the following grounds of appeal: 1. For that the CIT(A) erred in upholding the validity of there-assessment since no notice u/s 148 in accordance with law was served on the assessee. 2. For that the CIT(A) erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. Since this legal ground taken by the assessee is regarding the validity of assumption of jurisdiction by the Assessing Officer to reopen the assessment and frame the assessment in question, hence, at the request of the parties, this legal ground is taken first for adjudication. 4. The Ld. Counsel for the assessee has submitted that there was no valid reason for the Assessing Officer to believe that the income of the assessee had escaped assessment. That the Assessing Officer has reopened the assessment without any tangible material coming to his knowledge or any other relevant evidence which may be sufficient to form the belief that the income of the assessee has escaped assessment. He has further submitted that the Assessing Officer has reopened the assessment on the basis of mere suspicion which could not be said to be the reason to believe of the escapement of income from assessment, which is sine qua non for issue of notice u/s 148 of the Act for reopening of the assessment. The Ld. Counsel for the assessee, in this respect, has invited our attention to the copy of reasons recorded by the Assessing Officer for reopening of the assessment, a copy of the same has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns has not been spelt out in the reasons recorded. The details of bank account through which transactions were undertaken has not been spelt out in the reasons recorded. The names of entities through which the funds were allegedly transferred by Smart Udyog in which initial cash was deposited has not been spelt out in the reasons recorded. The AO has stated that most of the layering entities do not file return. He is silent as to whether Overall Distributors through which the appellant received funds of ₹ 1o lakhs has filed its return of income or not. The names of so called entry operators have not been spelt out in the reasons recorded. The reasons recorded were vague without any tangible material and reopening simply on suspicion without any independent application of mind is not valid. Reference is invited to Judgement of Chandigarh Bench of ITAT in the case of Indo Global Techno Trade Ltd in ITA No.1616/CHD/2018 pronounced on 15/06/2020. (Copy enclosed) Copy of sanction given by higher authority us 151 of the I. T. Act were not forwarded to the appellant along with the reasons recorded for reopening the Reference in this connection is invited to the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount further to the accounts of M/s Goodfaith Barter Pvt. Ltd. and M/s Overall Distributors Pvt. Ltd. which allegedly was further transferred to the account of the assessee. There is nothing in the record to correlate the aforesaid two transactions of the assessee with any shell entities as alleged. 9. On the other hand, the counsel for the assessee has submitted that the assessee, in fact, had not received the alleged amount of ₹ 16,05,300/- from M/s Goodfaith Barter Pvt. Ltd., rather, it was paid by the assessee to the said company for clearing the opening/ outstanding liability which was duly recorded in the ledger book of the assessee. So far as the loan amount received of ₹ 10,00,000/- from M/s Overall Distributors Ltd. was concerned, there was nothing on record that the said amount was brought back by the assessee through any of the shell entities. The ld. counsel for the assessee has submitted that the said loan amount was repaid within a span of 9 days by the assessee to M/s Overall Distributors Pvt. Ltd. If the Assessing Officer would have consulted the records of the assessee, then the Assessing Officer could have easily verified the aforesaid contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds and that the Income-tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income-tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the court. The entire law as to what would constitute reason to believe had summed up by Supreme Court in Income Tax Officer v Lakhmani Mewaldas (1976) 103 ITR 437. Reliance in this respect can also be placed on the decision of the Hon'ble Punjab Haryana High Court in the case of 'CIT vs ParamjitKaur' (2008) 311 ITR 38 (P H), wherein, making identical observations, the Hon'ble High Court held that the in the absence of sufficient material to form satisfaction of the Assessing Officer that income of the assessee had escaped assessment, the issuance of notices u/s 148 of the Act was not valid. In view of the above discussion, in our view, the Assessing Officer has wrongly and illegally assumed juri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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