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TMI Blog2022 (4) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... n fully disclosed. It is further not known as to which fact has not been truly disclosed which the Assessee was found privy to. AO appears to have drawn adverse inference which is not intelligible in the absence of any basic inquiry on the information in the peculiar facts of the present case. The stringent conditions of 1st proviso to Section 147 is thus not satisfied. Hence seen from any angle, we do not see any error per se in the process of reasoning adopted by the CIT(A) to uphold the plea of the assessee towards lack of jurisdiction. Hence, Ground No. 1 of the appeal of Revenue is dismissed. Addition u/s 68 - CIT(A) has also found total lack of merit in the impugned additions. The CIT(A) has observed that the transactions with Natwest Trade Link were offered as part of the turnover/sale, whereas the addition has been made under Section 68 of the Act without reducing the corresponding sales. Such an act of the Assessing Officer tantamount to double addition; one under the head 'turnover' and other under Section 68 of the Act. Such course of action is manifestly unsustainable and cannot be countenanced in law. Without reiterating each observations of the CIT(A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - made by the Assessing Officer under Section 68 of the IT Act. 5. As noted earlier, the CIT(A) has granted relief both on the point of jurisdiction as well as merit. The relevant operative paragraph of the CIT(A) is reproduced as under: 3. I have considered the assessment order, written submission filed by the Ld. AR of the appellant and also perused the documents placed in the paper book. In this case the regular assessment was completed on 29-12-2009 u/s. 143(3). During the original assessment proceeding, Ld. Assessing Officer enquired the correctness of GP declared by the appellant. To verify the correctness of GP, the purchases and sales were examined. From the records it appears that details of the parties with whom the purchases above ₹ 2 lacs and the parties to whom sales above ₹ 50 lacs made were furnished and examined. After examination, Ld. Assessing Officer has given the finding that there is no fall in the GP and the trading results are accepted, on page 2 of the original assessment order. Later on Ld. AO received the information from the DDI (Inv.)-I, Faridabad that M/s. SSB Sales Corporation, M/s. R.K. Trading Co. (Prop Ram Kishan), M/s. Global T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Hon'ble Supreme Court in the case of ITO v. Laxmi Mewal Dass reported in 103 ITR 437, I hold that the information available with the assessing officer was a mere suspicion. On the basis of that information, no belief can be formed. Since the original assessment was completed u/s. 143(3) and reopening was made after 4 years, it was necessary on the part of the Ld. Assessing Officer to show that tax has escaped by reasons of failure on the part of the assessee to make a return u/s. 139 or to disclose fully and truly all material facts necessary for the assessment, for that assessment year In this case, there was no failure on the part of the appellant. In view of these facts, I find that Ld. Assessing Officer has wrongly assumed the jurisdiction u/s. 147 of the IT Act. In view of these facts, the grounds of appeal No. 2, 3 4 are allowed. (ii) Regarding the merits, I have considered the issue. The sales and purchases were verified at the time of original assessment proceedings and trading results were accepted. The exact turnover shown against M/s. Nat West Trade Links is ₹ 3,64,99,691/- which is declared in the return. Again Ld. Assessing Officer has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Per contra, Ld. counsel for the assessee submitted that the Assessing Officer had wrongly assumed the jurisdiction for making reassessment by issuing notice under Section 148 of the Act without authority of law. It was further submitted that on the face of it, the vital ingredients of Section 147/148 are not fulfilled in the instant case to enable the Assessing Officer to exercise jurisdiction and to proceed with reassessment proceedings. Ld. counsel for the assessee further submitted that the assessment has been reopened without meeting the requirements of 1st proviso to Section 147 of the Act. Ld. counsel next submitted that the assessment was earlier completed under Section 143(3) and the notice for reassessment has been issued after four years from the end of the relevant Assessment Year 2007-08. Thus, the Assessing Officer was entitled to exercise jurisdiction under Section 147 of the Act only upon fulfillment of additional conditions imposed under 1st proviso to Section 147 of the Act. It was alleged that the Assessing Officer had issued notice under Section 147/148 of the Act without meeting the mandatory requirements of 1st proviso to Section 147 of the Act. It was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. SSB Sales Corporation IC/70, side of Bata Petrol Pump, NIT, Faridabad 630305011253 As per STR reporting SSB sales Corporation is proprietorship concern and Sh. Ram Kishan is its proprietor. Another firm linked to Sh. Ram Kishan is M/s. R.K. Trading Co. On enquiry it has been found that address of I-C/70, NH-1, is located behind Bata Petrol pump in the street adjoining Indian Overseas Bank, main market (sic)pfNM-1 (Back side) and the premise is being used by Sh. Barender Manoeha for his business of screen printing in the name and style M/s. Inter India i.e. these concerns are not doing any business at the given address. As per FIU-IND reporting received vide above STR the firm M/s. SSB Sales Corporation, M/s. R.K. Trading Co., (Prop. Ram Kishan) and M/s. Global Trade Corporation, M/s. Natwest Tarde Links (Prop. Tek Chand Sharma) claimed to have been doing business. However, no such business is found existing at this address. These concerns are operating 12 banks accounts in different banks of Faridabad and Delhi. It appears to be case of bogus billing of Steel. The assessee was asked to fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 500, 000. 00 24.01.2007 Shubham Chemcials and Solvents Ltd. 300, 000. 00 25.01.2007 Shubham Chemcials and Solvents Ltd. 350, 000. 00 25.01.2007 Shubham Chemcials and Solvents Ltd. 650, 000. 00 27.01.2007 Shubham Chemcials and Solvents Ltd. 450, 000. 00 31.01.2007 Shubham Chemcials and Solvents Ltd. 500, 000. 00 05.02.2007 Shubham Chemcials and Solvents Ltd. 400, 000. 00 05.02.2007 Shubham Chemcials and Solvents Ltd. 400, 000. 00 06.02.2007 Shubham Chemcials and Solvents Ltd. 400, 000. 00 07.02.2007 Shubham Chemcials and Solvents Ltd. 500, 000. 00 08.02.2007 Shubham Chemcials and Solvents Ltd. 400, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information received by the Assessing Officer as reproduced in the assessment order, it is ostensible that the information so provided by the DDIT (Inv.) goes to show that certain transactions through banking channel has been carried out by the assessee with Global Trade Corporation, R.K. Trading, SSB Sales Corporation and Natwest Trading Links. Noticeably, the information supplied by the DDIT is merely advisory in nature whereby the Assessing Officer was advised to check the copy of account of the assessee with all these firms and examine them from an angle as to whether the entries are in the nature of accommodation entries with such parties and check necessary action as a consequence thereof. In a sense, the Assessing Officer was advised to make proper inquiries into such hugely suspicious entries. However, the Assessing Officer in response to such information dated 07.03.2014 issued notice under Section 148 on 28.03.2014 without any intermittent inquiry to ascertain the propriety of facts emerging from such information and to make prima facie opinion of escapement of chargeable income on such purportedly suspicious transactions. 9.3. In this backdrop, where an inquiry was wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, in our view, has been rightly struck down by the CIT(A). Hence, we decline to interfere with the action of the CIT(A) in holding such notice under Section 148 to be non-est on the contours of Section 147 of the Act. 9.5. Delineating further, we now advert to the requirement of 1st proviso to Section 147 of the Act. The instant case has been reopened after four years from the end of the relevant assessment year where the assessment was earlier framed under Section 143(3) of the Act. Consequently, the reasons so recorded must pass the examply burden placed upon Assessing Officer by the 1st proviso to Section 147 of the Act in addition to the condition stipulated in main provisions of Section 147 of the Act. The instant case being covered by 1st proviso to Section 147 could be reopened only when twin conditions co-exist namely, (i) the Assessing Officer holds reasons to believe about the escapement of chargeable income (which is not found to be satisfied as deliberated in the preceding paragraph); (ii) the escapement is due to failure on the part of the assessee to disclose fully and truly all material facts. As a logical corollary, the burden is on the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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