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TMI Blog2022 (4) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded should be independent and not borrowed or dictated‟ satisfaction Admittedly in this case, the AO while recording reasons for selection of the case, neither made any enquiry qua the information dated 14.03.2017 of the ADIT, Investigation, Faridabad nor made any effort to find out the veracity and authenticity of information and any corroborative evidence/material thereto, but only acted on the information while forming belief qua escapement of the income and initiation of proceedings u/s 147/148 of the Act, without connecting tangible material and the formation of the reasons to believe for escapement of income. The reasons recorded in the instant case are vague and based on un-substantive reasoning, uncorroborated material and lack of evidence and hence as per decisions of the jurisdictional High Court referred above, the reasons referred above tantamount to be based on borrowed satisfaction and according to our considered view, does not sound valid reasons in the eyes of law, for reopening of the case. CIT(A) without appreciating the facts of the case, explanation submitted and evidences places on record judiciously, was absolutely unjustified in uphold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on were tried to verify from the various sources but the same could not be verified at all, as the Assessee had failed to produce documentary evidence which may substantiate that the transactions reported are genuine and not a bogus entry. 3 Against the said addition and reopening of the case, the Assessee filed first appeal before the ld. Commissioner and raised the issue related to the merits of the case and reopening of the case u/s 147/148 of the Act as well, mainly on the ground that the AO acted only on the basis of information received from ADIT(Investigation), Faridabad and did not apply his mind while recording the reasons u/s 147 of the Act and initiation of the proceedings u/s 147/148 of the Act, which goes to the root of the case and dent the re-opening itself. 3.1 The Assessee also relied upon various judgments of the jurisdictional High Court and the Tribunal in support of its case such as in the cases of PCIT Vs. RMG Polyvinyl (I) Ltd (396 ITR 5) and Pr. CIT Vs. Meenakshi Overseas Pvt. Ltd (395 ITR 677), etc and raised the contention that the reopening was done on the basis of borrowed satisfaction without applying independent mind and even otherwise the reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year. Explanation 1.- Production before the assessing officer of account books or other evidence from which material evidence could with due diligence have been discovered by the AO will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2- For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment namely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income tax. (b) Where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the assessing officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return. (c) Where an assessment has been made, but- (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Neel Kanth Steel has not filled his VAT return in any financial year till date in spite of having substantial sales and purchase transaction. d. ShriMunish Kumar Prop. Of M/s. Neel Kanth Steel is not registered with VAT department. e. The purchase and sales by the assessee, as reflecting through banking entries are almost same. f. The funds in the bank account are received through cheques and followed by immediate withdrawal by way of cash. g. The debit entries arc immediately followed by credit entries of same amount. h. Pattern of transaction in his bank account is very peculiar i.e. all transactions are made in round figures. i. The account was opened on 13.06.2009 and has been closed on 01.10.2009 i.e. in spite of substantial and frequent transaction of approx 40 lakhs in few months the account gets closed suddenly. j. The statement of purchaser Shri Sunil Sharma, Director of M/s. Technicon Holdings Pvt Ltd. was recorded on oath and has stated that he does not know ShriMunish Kumar Prop, of M/s. Neel Kanth Steel though the person made purchases from him. k. The purchaser have failed to produce the evidences in support of purchases like transport, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had escaped assessment. In the present case too, the information received from the Investigation Wing cannot be said to be tangible material per se without a further inquiry being undertaken by the AO . 5.7 Further in the case of CIT Vs. SPL‟s Siddhartha Ltd 345 ITR 223 also dealt with the identical issue and held as under:- In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the AO one after the other. There is no independent application of mind by the AO to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The conclusions of the AO are at best a reproduction of the conclusion in the investigation report. Indeed it is a 'borrowed satisfaction . The reasons fail to demonstrate the link between the tangible material and the formation of the reason to believe that income has escaped assessment. For the aforementioned reasons, the Court is satisfied that in the facts and circumstances of the case, no error has been committed by the ITAT in the impugned order in concluding that the initiation of the proceedings under Section 147/148 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of information and any corroborative evidence/material thereto, but only acted on the information while forming belief qua escapement of the income and initiation of proceedings u/s 147/148 of the Act, without connecting tangible material and the formation of the reasons to believe for escapement of income. 5.10 The reasons recorded in the instant case are vague and based on un-substantive reasoning, uncorroborated material and lack of evidence and hence as per decisions of the jurisdictional High Court referred above, the reasons referred above tantamount to be based on borrowed satisfaction and according to our considered view, does not sound valid reasons in the eyes of law, for reopening of the case. 5.11 On the aforesaid discussion, we are of the considered view that the Ld. CIT(A) without appreciating the facts of the case, explanation submitted and evidences places on record judiciously, was absolutely unjustified in upholding the reopening of the assessment u/s 147 of the Act. Consequently the order under challenge whereby the addition made by the AO has been sustained by the Ld. CIT(A) along with the re-assessment order stands quashed. 5.12 As we have quashed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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