ITO-27(1)(5), INCOME TAX OFFICE VASHI vs. J.V.CHEM INDIA, B NEELKANTH CHHAYA, R.B. MEHTA

O R D E R Per Amarjit Singh (AM): This appeal filed by the revenue in electronic mode is directed against the order passed by the ld. CIT(A) for A.Y. 2010-11. The revenue has raised the following grounds before us:

P a g e | 2 ITO-27(1)(5) Vs. J.V. Chem India 3. whether on the facts and circumstances of the case, the Ld. CIT (A) being the fact finding Authority failed to adjudicate the matter on merits of the case in the backdrop of factual matrix and circumstantial evidence the instant case as elaborately discussed by the AO in the assessment order and also in reasons of reopening.

P a g e | 3 ITO-27(1)(5) Vs. J.V. Chem India Since in the original assessment order passed u/s 143(3) of the Act the AO has assessed the peak of the unexplained purchase amount of Rs.14,69,766/- u/s 69 of the Act, therefore, for remaining part of the amount the case was reopened and stated that assessee has not produced the concern parties with relevant document to prove that the entire purchase made were genuine purchases. Therefore, the entire amount of purchases of Rs.21,15,881/- was added to the total income of the assessee.

4. Heard both the sides and perused the material on record. During the course of original assessment proceedings the assessing officer has determined the bogus purchases at Rs.14,69,766/- after confronting the information of obtaining accommodation entries from the aforesaid parties by the assessee. In the order u/s 143(3) the assessing officer has clearly referred the seven parties from whom the assessee has obtained the accommodation bills as per the information provided by P a g e | 4 ITO-27(1)(5) Vs. J.V. Chem India the Sale Tax Department. After analysing such information the AO had restricted the disallowance to the extent of peak purchase of Rs.14,69,766/-. On the basis of same information which were available at the time of original assessment u/s 143(3) the assessing officer had reopened the case that entire purchases to the amount of Rs.21,15,881/- should have been disallowed as against addition of Rs.14,69,766/- made by the assessing officer. In the copy of reason recorded the assessing officer has simply stated he has reason to believe that there is escapement of income to the balance amount of Rs.648,155/- as being difference in the total purchases amount of Rs.21,15,881/- and the amount of purchases already disallowed of Rs.14,69,766/- as per the original assessment order passed u/s 143(3) of the Act. In the reason recorded, nowhere assessing officer has mentioned that there was any failure on the part of the assessee to disclose fully and truly of material fact relating to its assessment. Therefore, after expiry of 4 year from the end of the relevant assessment year the income which has escaped assessment can be charged to tax only when there is failure on the part of the assessee to make a return u/s 139 of the Act or in response to notice issue sub-section (1) of Sec. 142 or Sec. 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. The AO has not brought on record any facts to demonstrate that there was failure on the part of the assessee to disclose fully and truly all material facts when the assessment was reopened in the case of the assessee u/s 147 of the Act after expiry of 4 years from the end of the relevant assessment year. It is also not in dispute that original assessment for the same assessment year was completed under section 143(3) of the Act on the basis of same information obtained from Sales Tax from the office of the DGIT (Inv.). Therefore, we don’t find any reason to interfere in the decision of ld.