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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH, VP & SHRI S. RIFAUR RAHMAN, AM
O R D E R भहावीय स िंह, उऩाध्मक्ष के द्वाया / PER MAHAVIR SINGH, VP: This appeal of the assessee is arising out of order of the Commissioner of Income Tax (Appeals)]-45, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-45/ITO-33(2)(3)/ITA-23/2015-16 vide dated 23.07.2018. The Assessment was framed by the Income Tax Officer, ward 33(2)(3), Mumbai (in short ITO/ AO) for the A.Y. 2006- 07 vide order even date 30.03.2015 under section 143(3) read with section 147 of the Income-tax Act, 1961 (hereinafter ‘the Act’).
1. The Honourable Commissioner of Income Tax (Appeals)-45, has erred in upholding that re-opening of assessment proceedings 4 years is valid in law.
Briefly stated facts are that for the relevant Assessment Year 2007-08 original assessment was framed by the Assessing Officer under section 143(3) vide order dated 30.11.2009. Subsequently, Assessing Officer issued notice under section 148 of the Act dated 26.03.2014. For issuance of this notice, the Assessing Officer recorded the following reasons:-
“The assessee filed returned of income on 29.10.2007 declaring total income of ₹NIL it is informed by the Director General of Income Tax (Investigation), Mumbai vide letter F. NO.DI(Inv)-II/information/ BU/LDV/2013-14/802 dated 10.03.2014 that the assessee is one of the beneficiaries and had taken unsecured loans/ advance during the year from the following concern controlled and managed by Shri Banwarlal Jain amounting to total ₹80,78,355/-. These concerns are as under:
Sr. Name of Concern controlled and managed Amount In view of the provisions of section 151(2) of the Income tax Act, approval of the Jt. Commissioner of Income tax- 25(3), Mumbai is required for the purpose of reopening the said Assessment i.e. AY 2007-08. Approval for reopening the assessment for Assessment Year 2007-08 may kindly be given for reasons mentioned above so that ntie under section 148 can be issued.”
The assessee vide letter dated 2nd March 2015 objected to 4. reopening of assessment stating that since, 4 years from the end of the assessment year 2007-08 have already been expired and moreover, original assessment was completed under section 143(3) of the Act and as per reasons recorded there is no whisper about any failure on the part of the assessee to disclose fully and truly all material fact necessary for assessment. It was also adjudicated that as per the reasons, the assessee has taken the loan from the following parties:-
Sr. Name of Concern controlled and managed Amount NO. by Shri Bhanwarlal Jain 1. Mohit Enterprises 618,800 2. Mayur Exports 59,79,755 “4.2 I have gone through the assessment order and submissions of the assessee including the case laws relied. Assessee basically through the submissions tried to make a point that the case was reopened after 4 years and for doing so, there should be "failure of the assessee to make full and true disclose of all material facts necessary for assessment." Only fresh facts will constitute 'reason to believe'. Based on the orders of High Court of Delhi in the cases cited, assessee contested that the reopening cannot be done merely based on the information received from DGIT(Inv.) without independent enquiry by the AO. In this case it is a fact that original assessment was completed by the AO on 30.11.2009 making disallowance of 10% of 4.3 Further, filing of details of list of purchases during the assessment does not amount to disclosing of the details in the return filed. The factum of purchase of goods from the three concerns, which were the entities providing accommodation entries was not disclosed by the assessee in the return or anytime earlier. In the absence of such an important information in the return, reopening of the case beyond 4 years is justified. It came to light only after the search in the case of Bhanwarlal Jam group by the department that such information of bogus purchases/ bogus loans came to light. This information was 'fresh information', which was not present earlier. Therefore, the AO was justified in reopening the assessment based on the fresh and tangible information as held by the courts.
4.4 Assessee further argued that AO reopened the case without making any independent enquiries. The AO is not required to carry out any investigation before reopening as held by Hon'ble Supreme Court in the case of Raymond Woolen Mills Ltd vs. ITO 236 ITR 34(SC). Hon'ble Apex
Interesting fact noted by the CIT(A) that there is no unsecured loans taken by the assessee but the CIT(A) treated these amounts as bogus purchases. He recorded this fact in para 5.2 as under:
“5.2 I have gone through the assessment order and the submissions of the assessee. After verification of the documents filed, I am inclined to agree with the assessee to the extent that he has not taken unsecured loans from the parties namely Mohit Enterprises, Mayur Export and Prime Star. This is because, the information that came to light during the search in the case of Sh. Bhanwarlal Jain was that he was providing accommodation entries for both unsecured loans and bogus purchases. The AO made addition of ₹ 80,78,355/- under section 68 of Act, without correctly verifying the records of the assessee which showed the entries for purchases taken by the assessee from the same three concerns received from Investigation wing. For making an addition under section 68, there should be a cash credit in the books of the assessee. From
He deleted the addition made under section 68 of the Act but confirmed the addition by applying profit rate at the rate of 12.5% of the bogus purchases of Rs. 88,77,335/-. Thereby, the CIT(A) restricted the addition at Rs. 10,09,794/-.
Aggrieved, now assessed is in appeal before us.
We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the assessee from the very beginning has been objecting about the reopening of assessment and particularly, vide letter dated 02.03.2015 he objected for the reopening of the assessment proceedings under section 147 read with section 148 of the Act before Assessing Officer. It is wrong on the part of the CIT(A) to say that assessee has not objected the reopening. It is also a fact that assessee during the