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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘A’
Before: SHRI RAJPAL YADAV & SHRI PRADIPKUMAR KEDIA
Assessee by : Shri K.C. Thakkar, AR Revenue by : Ms.Somogyan Pal, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 07/08/2019 घोषणा क� तार�ख /Date of Pronouncement: 8/08/2019 आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER:
Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-2, Ahmedabad dated 8.9.2017 passed for the Asstt.Year 2009-10.
Assessee has taken six grounds of appeal, out of which under ground no.1, it has challenged reopening of the assessment by issuance of notice under section 148 of the Income Tax Act, 1961.
Brief facts of the case are that the assessee has filed its return of income on 24.9.2009 declaring total income at Rs.10,60,240/-. The ld.AO has recorded reasons and reopened the assessment after taking prior approval of the competent authorities. Notice under section 148 of the Act was issued on 30.3.2016. The AO thereafter passed assessment order under section 143(3) r.w.s. 147 on 13.12.2016. The ld.CIT(A) has upheld the reopening of the assessment.
The ld.counsel for the assessee while impugning the orders of the Revenue authorities took us through reasons recorded for reopening which are available on page no.17 of the paper book. Such reasons read as under: Annexure-A In this connection, investigation is being carried out in' the case of M/s Bhoomidev Credit Corporation Limited and so far it has been concluded the said company has been indulged in providing bogus entry to various companies/persons. The said company has also made investment of Rs. 25 lacs in the assessee company i.e. M/s Haq Enterprises during the FY 2008-09, which appears to be bogus in nature and the same requires verification. In view of above, I have reason to believe that income of Rs. 25 lacs has escaped assessment within the meaning of section 147 of the Act. Therefore, it is a fit case for initiation of action under section 147 of the Income tax Act, 1961 to tax the escaped income. (M Anand Kumar) Deputy Commissioner of Income-tax, Circle-2(1)(1), Ahmedabad
He submitted that the AO was unable to form his opinion about escapement of income, rather he just wanted to verify the alleged investment of Bhoomidev Credit Corporation Ltd. in the assessment company. For this aspect, he cannot reopen the assessment. For buttressing his contentions he relied upon the decision of Hon’ble jurisdictional High Court rendered in the case of Pr.CIT Vs. Manzil Dineshkumar Shah in R/Tax Appeal No.451, 457 and 458 of 2018. He pointed out that identical question has been considered by the Hon’ble Gujarat High Court and held that under this circumstances, assessment cannot be reopened.
On the other hand, the ld.DR contended that no doubt, the AO has made mention in the reasons that information revealed during the investigation carried out in the case of Bhoomidev Credit Corporation Ltd. for verification, but in the same breath he propounded that income to the extent of Rs.25 lakhs has escaped whose information revealed to the investigation wing during the course of investigation carried out in the case of Bhoomidev Credit Corporation Ltd. Reasons are not based on suspicion rather exact information is available with the AO and he has not scrutinized the return of the assessee. In such situation, he cannot make a candid opinion about the escapment of income unless he verified the details of investment made by the Bhoomidev Credit Corporation Ltd. with the assessee company. The details of investment will not be available with the return of income. It has to be verified only; there is no course open for the AO.
We have duly considered rival submissions and gone through the record carefully. Somewhat similar situations were arisen before the Hon’ble jurisdictional High Court in the case of Manzil Dineshkumar Shah (supra). The reason in that case read as under:
“The assessee has filed his return of income in ACIT, CPC, Bangalore vide cknowledgment No.96931140300909for A.Y. 200910 on 30/09/2010 declaring total income Rs. 3,44,587/ which was processed u/s. 143(1) of the I.T. Act on 11/08/2010. However no scrutiny assessment u/s. 143(3) was made.
In this case the information conveyed by the DGIT (Inv.) Mumbai dated 22/02/2013 addressed to DGIT(Inv.)Ahmedabad alongwith the Board’s confidential letter dated 21/02/2013 to take actions in respect of cases of no genuine Bills information emanating out of VAT Department, Mumbai to the CCITIII, Ahmedabad. The CCITIII, Ahmedabad vide letter dated 20/03/2013forwarded the same to the CITV, Ahmedabad. The same was forwarded to the O/o. The Jt. CIT, Range11, Ahmedabad by the CITA’bad-V, Ahmedabad vide letter No.VIT- V/Ahd/Inf.VAT/201213/6675 DATED 21/03/2013. The Jt. CIT. Range11, Ahmedabad vide letter No.Jt.CIT/R11/ Non Genuine Bills/201213/6675 dated 22/03/2013 forwarded the same to this office.
The information received from the VAT Department, Mumbai relating to bogus purchases of each beneficiary firm from Hawala Biller. On verification of information it is found that the assessee MANJIT DINESHKUMAR SHAH has also made purchases of Rs.3,21,74,262/during theF.Y. 200809 (A.Y. 200910) from Hawala Dealer as information received by this office.It needs deep verification.
I have therefore firm reason to believe that the income chargeable to tax has escaped assessment for the A.Y. 200910 due to the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Thus, the case needs to be reopened by issuing notice u/s 148 of the I.T. Act, 1961.”
Examining the observation of the AO that it needs deep verification, the Hon’ble High Court has observed as under:
“8. With this background, we may revert to the reasons recorded by the Assessing Officer. Information from the Value Added Tax Department of Mumbai was placed for his consideration. This information contained list of allegedly bogus purchases made by various beneficiaries from Hawala dealers. Assessee was one of them. As per this information, he had made purchases worth Rs.3.21 crores (rounded off) from such Hawala dealers during the financial year 2010-11. According to the Assessing Officer, this information ‘needed deep verification’.
If on the basis of information made available to him and upon applying his mind to such information, the Assessing Officer had formed a belief that income chargeable to tax has escaped assessment, the Court would have readily allow him to reassess the income. In the present case however, he recorded that the information required deep verification. In plain terms therefore, the notice was being issued for such verification. His later recitation of the mandatory words that he believed that income chargeable to tax has escaped assessment, would not cure this fundamental defect.
10. Learned counsel for the Revenue however urged us to read the reasons as a whole and come to the conclusion that the Assessing Officer had independently formed a belief on the basis of information available on record that income in case of the assessee had escaped assessment. Accepting such a request would in plain terms require us to ignore an important sentence from the reasons recorded viz. ‘it needs deep verification’.” 9. Thus, the Hon’ble High Court has deprecated that for verification assessment cannot be reopened. Respectfully following the decision of Hon’ble jurisdictional High Court in the case cited (supra) we are of the view that reopening is not sustainable. Accordingly, it is quashed. Appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed. Order pronounced in the Court on 8th August, 2019.