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TMI Blog2024 (9) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... d the entire reasons in totality. Therefore, after reading the entire reasons, we are convinced that AO has properly recorded the satisfaction regarding escapement of income. The mere mention of the word verification does not vitiate the entire reasons in totality. The Hon ble Supreme Court in Raymond Woollen Mills ltd. [ 1997 (12) TMI 12 - SUPREME COURT] has laid down the law that the sufficiency or correctness of the material is not a thing to be considered at this stage. One only needs to see whether there was any prima-facia satisfaction based on some material. We are convinced that the AO has properly recorded the reasons for reopening. Therefore, CIT(A) has erred in holding that AO was not justified in taking recourse to the provisions of section 147 of the Act, merely to verify the facts. Decided in favour of revenue. - Shri Satbeer Singh Godara, Judicial Member And Dr.Dipak P. Ripote, Accountant Member For the Assessee : Shri Prateek Jha AR For the Revenue : Shri Sourabh Nayak, IRSAddl.CIT(DR) ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by Revenue against the order of ld. Commissioner of Income Tax(Appeal)-12 Pune, passed under section 250 of the Income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is outside the purview of section 147. Accordingly, Ld.CIT(A) allowed the Legal ground raised by the assessee. The Ld.CIT(A) has not discussed merits of the additions. Aggrieved by the order of the Ld.CIT(A) the Revenue has filed appeal before us. Submission of ld.DR : 3. The ld. Departmental Representative(ld.DR) for the Revenue Shri Sourabh Nayak, Addl.CIT[Ld.DR] for the Revenue submitted written submissions as under : 1.1 The assessee is an individual and engaged in business of resale of steels and deals in steel scrap, making purchases from various factories and selling it to steel manufacturers. The assessee engaged in proprietary business with name and style as M/s Brahma Steel. The assessee filed his return of income for A.Y. 2014-15 on 30.09.2014 declaring total income at Rs. 32,60,560/-. The return was processed u/s 143(1) of the Income Tax Act, 1961. 1.2 In this case information was received from Tax Recovery Officer (TRO)-2, Aurangabad by the ACIT, Circle-2, Aurangabad vide letter dated 09.01.2017. As per information, the TRO-2, Aurangabad during the course of assessment proceedings for the A.Y. 2014-15 in the case of Mr. Muzammil AM Rashid Ali Syed, Prop. M/s. Shidrah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding balance of Rs. 1,96,57,205/- in his books of accounts. Hence the difference amount of Rs. 1,68,24,239/- is required to be taxed in the hands of M/s Brahma Steels. The information received from TRO-2, was based on firm and concrete facts. Hon'ble Apex Court in the case of State of Uttar Pradesh Vs. Aryaverth Chawal Udyog reported in (2016) 91 VST. 1 (SC)has held that the material on which the assessing authority bases its opinion must not be arbitrary, irrational, vague, distant or irrelevant. It must bring the appropriate rationale of action taken by the assessing authority in pursuance of such belief. Thus, reason to believe cannot be said to be subjective satisfaction of the assessing authority but means an objective view on the disclosed information in the particular case and must be based on firm and concrete facts that some income has escaped assessment. The assessing officer is required to act, not on mere suspicion, but on direct and circumstantial evidence. On perusal of information received from TRO it is clear that the Information/material on which the AO has formed his reasons to believe was not arbitrary, irrational, vague, distant or irrelevant. The AO has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has inflated its purchase in; order to reduce profits and thereby income to the tune of Rs. 36,56,250/- has escaped assessment. On this issue, the AO while recording reasons does refer to the word needs verification . Apart from this, other information with regard to cash payments made by assessee and difference in outstanding balance of the assessee and M/s. Sidhrah Multi Trade Link Prop. Mr. Muzammil Ali was received. Based on these tangible -material and concrete information the AO has recorded reason. Therefore the decision of Hon'ble Bombay High Court in the case of Nivi Trading Ltd. Vs. UOI is not squarely applicable to the case of the assessee as held by Ld. CIT(A) in para 7.4 of the appellate order. 3.4 The CIT(A) while setting aside the order, relied upon another case of Jurisdictional Hon'ble Bombay High Court in the case of NuPower Renewables Pvt. Ltd. Vs. ACIT. The facts of this case are different from the facts of the case of assessee. In this case basis of forming reasons to believe and escapement of income was recorded as under: Information has been received from ADIT(lnv), Unit4(2), Mumbai vide letter dated 15/03/2018, that NuPower Renewables Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yyar Vs. ACIT is not squarely applicable to the case of the assessee as held by Ld. C1T(A) in para 7.4 of the appellate order. 3.6 The AO in this case before issue of notice u/s 148 has recorded reasons which are reproduced as under: In this case, information was received in this office from TRO-2, A'bad regarding Shri SuryachandraLalmani Dubey, Prop. M/s Brahma Traders. As per information during the course of assessment proceedings of Mr. Muzammmil Ali Rashid AH Syed Prop. M/s Shidrah Multi Trade Link, following observations were made: (i) The sales shown by the M/s Shidrah Multi Trade Link to Mr. Brahma Steels was Rs. 2,62,36,903/- in his books of accounts whereas purchase shown by M/s Brahma Steel in his books of accounts was of Rs. 2,98,93,153/-. (ii) The M/s Shidrah Multi Trade Link has shown cash receipts of Rs. 93,88,389/- from M/s Brahma Steels and shown the outstanding balance of Rs. 28,32,967/-in his books of accounts. On the other hand, M/s Brahma Steels has shown outstanding balance of Rs. 1,96,57,205/- in his books of accounts. Hence the difference amount of Rs. 1,68,24,239/- is required to be taxed in the hands of M/s Brahma Steels. Further, cash payment of Rs. 93 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 36,56,250/- has escaped assessment within the meaning of section 147.It can seen from above reason recorded by the AO that he has not referred to the words needs verification on this issue, on which AO has formed his reason to belief that income to the tune of Rs. 36,56,250/- has escaped assessment within the meaning of section 147 . It is true that on other two issues mentioned in para (ii) (iii) of the reasons recorded the AO has referred the words as needs to be verified but the Ld.AO has not formed his reason to belief that income has escaped assessment on these issues. Therefore it is amply clear from the reasons recorded by AO that notice u/s 148 was not issued merely on suspicion for making enquiry or verification. In fact reasons were recorded on tangible and concrete material available with AO which was found during the course of assessment proceedings of M/s Shidrah Trade Link by TRO- 2, who subsequently forwarded the information to AO. 3.6 The Return of Income was filed by assessee on 30.09.2014 and the re-opening notice was issued on 09.10.2017 which is well within the four year period as per the then existing provision of section 148 of the act. It is not disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded are as under : In this case, information was received in this office from fRO-2, A'bad regarding Shri SuryachandraLalmani Dubey, Prop. M/s Brahma Traders. As per information during the course of assessment proceedings of Mr. Muzammmil Ali Rashid Ali Syed Prop. M/s Shidrah Multi Trade Link, following observation were made; i) The sales shown by the M/s Shidrah Multi Trade Link to Mr. Brahma Steels was Rs. 2,62,36,903/- in his books of accounts whereas purchase shown by M/s Brahma Steel in his books of accounts was of Rs. 2,98,93,153/- ii) The M/s Shidrah Multi Trade Link has shown cash receipts of Rs. 93,88,389/- from M/s Brahma Steels and shown the outstanding balance of Rs. 28.32,967/- in his books of accounts. On the other hand, M/sBrahma Steels has shown outstanding balance of Rs. 1,96,57,205/- in his hooks of accounts. Hence the difference amount of Rs. 1,68,24,239/- is required to be taxed in the hands of m/s Brahma Steels. Further, cash payment of Rs. 93,88,389/- is also required to be verified. iii) The following bills issued by M/s Shidrah Multi Trade Link, which were booked as purchased by H.A. Khan (Scrap Dealer, A bad) as well as M/s. Brahma Steel, A bad, nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in earlier paragraphs hence to avoid duplication they are not reproduced in this paragraph. 5.1 Ld.CIT(A) held that the AO has merely mentioned that he needs to verify the transactions. However, we do not agree with the conclusion drawn by the ld.CIT(A). 5.2 The AO in the reasons has also observed as under : Quote , i) The sales shown by the M/s Shidrah Multi Trade Link to Mr. Brahma Steels was Rs. 2,62,36,903/- in his books of accounts whereas purchase shown by M/s Brahma Steel in his books of accounts was of Rs. 2,98,93,153/- ii) The M/s Shidrah Multi Trade Link has shown cash receipts of Rs. 93,88,389/- from M/s Brahma Steels and shown the outstanding balance of Rs. 28.32,967/- in his books of accounts. On the other hand, M/s Brahma Steels has shown outstanding balance of Rs. 1,96,57,205/- in his hooks of accounts. Hence the difference amount of Rs. 1,68,24,239/- is required to be taxed in the hands of m/s Brahma Steels ******** On verification of ledger abstracts of M/s Shidrah Multi Trade Linkand M/s Brahma Steels in their respective books of accounts, it can be seen that M/s Brahma Steels has shown total purchases at Rs. 2,98,93,153/- in his books of accounts, whreas M/s Shi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs. 6. Therefore, in these facts and circumstances of the case, we are convinced that the AO has properly recorded the reasons for reopening. Therefore, ld.CIT(A) has erred in holding that AO was not justified in taking recourse to the provisions of section 147 of the Act, merely to verify the facts. 6.1 The ld.CIT(A) has relied on the decision of the Hon ble High Court of Bombay in the case of Nu Power Renewables (P.) Ltd., vs. DCIT [2018] 94 taxmann.com 29 (Bombay). In this case, the Hon ble High Court has recorded a finding that AO had not examined the facts before arriving at a conclusion of escapement of income. However, in the case of the assessee, the AO has properly analysed the ledger accounts and then, arrived at a prima-facia conclusion of escape ..... X X X X Extracts X X X X X X X X Extracts X X X X
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