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TMI Blog2022 (12) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be kept in mind while examining the condition precedent for reopening an assessment as stipulated u/s 147 of the Act for the relevant year under consideration (AY. 2009-10). Here in this case, the DGIT (Inv.) had passed on an information regarding the assessee s claim of expenses to be bogus, which assessee has supposed to have incurred while purchasing goods from certain parties. Having received such an information from the DGIT(Inv.), it should have at best triggered reason to suspect , then AO should have made reasonable inquiry and collected material which would make him form a belief that there was in fact escapement of income; but in this case, we note that the reason recorded by the AO before re-opening the assessment doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant d. The impugned assessment order has been upheld by the Ld. CIT(A) on the basis of perverse and arbitrary finding of facts 2. Without prejudice to above the learned CIT (A) has further erred in sustaining part i.e., 30% disallowance of purchases made from alleged bogus parties without considering the fact that learned A.O had made the disallowance without giving the appellant any opportunity of being heard and without bringing on record any adverse evidence. The Ld. CIT (A) has grossly erred in upholding the disallowance of Rs 4,62,66,103/-- being 30% of Purchases considered to be bogus by the Ld. A.O arbitrarily, without any authority of law and without any basis. 3. Since the ground no. 1 is a legal ground, we tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material and asked him to explain about the adverse information with supporting evidence if any. However, according to AO, the assessee failed to satisfactorily explain reply to his query/adverse material. Thereafter, the AO taking note of the fact that the assessee had purchased material from twelve (12) parties and has taken bogus purchase bills to the tune of Rs.15,42,20,343/- added the entire amount of Rs.15,42,20,343/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to sustain only 30% of the addition i.e. Rs.4,62,66,103/-; and balance Rs.10,79,54,240/- was deleted. Still not satisfied, the assessee is before us. 5. Before the Ld. CIT(A) the assessee has raised the legal issue challenging the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Inv.) the AO has jumped to the conclusion that there is escapement of income i.e only based on the investigation report of the DGIT(Inv.), the AO has concluded that assessee s income has escaped assessment which is bad in law because, the essential condition precedent for re-opening i.e reasons to believe that there was escapement of income is absent in this case. And therefore, according to him, the AO could not have reopened the assessment u/s 147 of the Act. And therefore he pleads that the show cause notice issued itself u/s 148 of the Act on 27.11.2012 based on the aforesaid reasons recorded for re-opening be quashed. 7. Per contra, the Ld. DR of the revenue submitted that the along with reasons recorded placed at page 29 (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is foundation based on information, there still must be some reason warrant holding a belief that income chargeable to tax has escaped assessment. 8. In the present case, when we have to adjudicate the legal issue as to whether the AO had satisfied the condition precedent for validly reopen the assessment, we have to examine the reasons recorded as such (supra). The Hon ble Bombay High Court in the case of Hindustan Lever Ltd. (2004) 268 ITR 332 (Bom) has inter alia observed that it is needless to mention that the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn on the basis of reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . From the aforesaid reason to re-open the assessment, we note that the AO only had foundation based on information which was not sufficient to invoke jurisdiction for re-opening the assessment. In this case, next essential condition is found to be absent i.e, the believe based on reason is absent. [At the cost of repetition it should be kept in mind that as per section 147 of the Act, the AO is empowered to reopen the assessment if he has reasons to believe escapement of income . Reasons to believe postulates foundation based on information and belief based on reason. Even if there is foundation based on information, there still must be some reason warrant holding a belief that income chargeable to tax has escaped assessment.] Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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