Income Tax Appellate Tribunal - Delhi
Ravi Prakash Aggarwal, New Delhi vs Acit, Rohtak on 17 February, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'F', NEW DELHI
Before Sh. Amit Shukla, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
(Through Virtual Hearing)
ITA No. 1423/Del/2017 : Asstt. Year : 2011-12
ACIT, Vs Sh. Ravi Parkash Aggarwal,
Circle, Prop. M/s R.P. Jewellers, 1186, 1st
Rohtak Floor, Kucha Mahajani Chandni
Chowk, New Delhi-110006
(APPELLANT) (RESPONDENT)
PAN No. ADAPA3506E
CO No. 98/Del/2019 : Asstt. Year : 2011-12
Sh. Ravi Parkash Aggarwal, Vs ACIT,
Prop. M/s R.P. Jewellers, 1186, Circle,
1st Floor, Kucha Mahajani Chandni Rohtak
Chowk, New Delhi-110006
(APPELLANT) (RESPONDENT)
PAN No. ADAPA3506E
Assessee by : Sh. Sanjay Mehra, FCA
Revenue by : Sh. Hemant Gupta, Sr. DR
Date of Hearing: 24.11.2021 Date of Pronouncement: 17.02.2022
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the Revenue and Cross Objection by the assessee against the order of ld. CIT(A), Rohtak dated 14.12.2016. The CO filed by the assessee reads as under:
"Reopening notice issued by the Assessing Officer based on information received by him from the DDIT(Inv.) and not on his own satisfaction amounts to reop ening on borrowed satisfaction 2 ITA No.1423/Del/2017 CO No. 98/Del/2019 Ravi Parkash Aggarwal in clear breach of settled position of law rendering the reassessment proceedings without jurisdiction."
2. The assessee has filed return of income on 30.09.2011 declaring total income of Rs.1,66,73,810/-. Owing to the search conducted u/s 132 of the Income Tax Act, 1961 notice u/s 153A has been issued to the assessee. The assessee filed letter dated 07.02.2014 that the return filed u/ s 139(1) dated 30.09.2011 may be treated as return filed in response to notice u/s 153A. Assessment was comp leted on 31.03.2014 by making addition of Rs.1,05,918/- at an assessed income of Rs.1,67,79,730/-.
3. Subseq uent to this, an information was received from the DIT(Investigation)-II, Mumbai vide letter no. DIT(Inv.)-II/ Information / BLJ/ SAL/ 2014-15 /458 dated 16.07.2014 through the Range regarding bogus purchases made by the assessee worth Rs.56,75,500/- from concern of Bhanwar Lal Jain Group namely M/s Lucky Exports during the A.Y. 2010-11 and worth Rs.26,26,25,669/- from concern of Bhanwar Lal Jain Group namely M/s Look at me Retail Pvt. Ltd. during the A.Y. 2011-12. On perusal of the information and case records, the case was reopened after record ing reasons of reopening as under:
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4. We have gone through the reasons recorded. The first four lines consists of a factual information received from the DDIT (Inv.), Mumbai, the second part indicates that it has been estab lished from the report that the assessee has taken accommodation entries and the third part consists of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.
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5. The AO mentions so as to reopen the case, it was estab lished that BL Jain Group was providing accommodation entries of unsecured loan and bogus purchases. Then, he goes on to mention that it is established from the report that the assessee has taken accommodation entries and hence he has reasons to belief that the income has escaped assessment.
6. Primarily, we find that the reasons recorded by the assessee are too sketchy and d oes not instill any confidence with regard to the reasons recorded for reopening. It is not even clear whether the assessee has received entries pertaining to loans or purchases. The details of the report wherein it was alleged that the assessee has received bogus entries could not be made as a basis for reopening. The existence of belief has to be bonafide and has to be based on material which is relevant hence specific in nature. The b asis of the belief should be discernab le from the facts on record and ascertainable with regard to the escapement of income.
7. Joshi Vs. Income-Tax Officer and Another, 2010 (324) ITR 154 (Bom.) and it was held as under:
"S ec tion 147 provides that if t he Assessing Officer has reas on to believe that a ny income cha rgeable t o tax has escaped asses sment f or any assess ment year, he may subj ec t to the provisions of s ec tions 148 to 163, assess or reassess suc h income and also any ot her i nc ome c hargeable to tax, W.P. (C ) NO. 8067/2010 Pa ge 10 whic h has esc aped assessment and whic h comes to his notice subsequently in the c ours e of the proceedi ngs under t he secti on. The firs t proviso to s ec tion 147 has no ap plication i n the f acts of this case. T he basis post ulate whi ch underlies s ecti on 147 is the f ormati on of t he belief by the Assessi ng Offic er tha t any i nc ome chargeabl e to tax has esca ped ass es sment f or a ny ass ess ment year. The Assessi ng Offi cer must have reason t o believe that s uch is the 5 ITA No.1423/Del/2017 CO No. 98/Del/2019 Ravi Parkash Aggarwal case bef ore he proceeds to issue a notice under s ection 147. The reasons which are rec orded by the Assessing Of ficer for r eopeni ng an assessment a re the only reasons whic h can be c onsidered when the f ormation of the belief is imp ugned. The r ecording of reas ons distingui s hes an objective from a s ubjective ex ercise of power . The requirement of rec ording reasons is a check against arbitrary exercise of power. For it is on the basis of the reas ons rec orded and on those reas ons alone that the validity of the order reop eni ng the assessment is to be decided. T he reas ons rec orded whil e reopeni ng the ass essment ca nnot be allowed to grow wi th age and ingenuit y, by devisi ng new grounds in replies and af fidavits not envisaged when the reas ons f or reopeni ng a n ass essment were rec orded. The pri nciple of law, theref ore, is well settled that the ques tion as to whet her there was reas on to believe, withi n the meaning of s ec tion 147 that income has escaped ass essment, m ust be determi ned with ref erence to the reas ons rec orded by t he As sessing Offic er. The reasons whic h are r ecorded cannot be s upplement ed by af fidavits. The impositi on of that requirement ens ures a gai nst an arbit rary exercise of powers under s ecti on 148."
8. In Hind ustan Lev er Ltd . vs. R.B. Wadkar, [2004] 268 ITR 332 (Bom), a Division Bench has opined thus:
".... the reasons are r equired to be read as they wer e rec orded by the Ass essi ng Offi cer . No substit ution or deletion is permissible. No additi ons c an be ma de to t hose r eas ons . No i nf erence can be allowed to be drawn bas ed on reasons not recor ded. It is for the Assessi ng O fficer to disclos e and open his mi nd through reas ons rec orded by him. He has t o speak t hrough his reasons. It is for the Assessi ng Of ficer to reac h t o the c onclusion as to whether t here was failure on the part of the ass ess ee to disclos e f ully and t ruly all mat erial facts necessar y f or his ass essment for the c onc erned assessment yea r. It is for the Ass essing O fficer to f orm his opi nion. It is f or him to put his opini on on rec ord in blac k and whit e. The reasons rec orded shoul d be clear a nd unambi guous a nd s hould not 6 ITA No.1423/Del/2017 CO No. 98/Del/2019 Ravi Parkash Aggarwal suff er f rom any vagueness. The reasons r ecorded must disclos e his mind. Reasons are the manifes tation of mi nd of t he Ass essi ng Of ficer. The reas ons rec orded shoul d be self -expla natory and s hould not keep t he ass es see guessi ng for the reasons. R eas ons pr ovide the link between conclusi on and evidence. The reas ons recor ded m ust be bas ed on evidenc e. The Ass essi ng Offic er, in the event of c hallenge to t he reasons, must be abl e t o jus tify the sam e bas ed on mat erial availabl e on recor d. He mus t disclose i n the reasons as t o which fac t or mat erial was not disclosed by t he assess ee fully and trul y nec es sary f or as sessment of that assessment year, so as to establis h t he vital link bet ween t he reasons and evidenc e. That vital link is the saf eguard agai ns t arbitrary reopeni ng of the concl uded assessment ."
9. In this case, a regular assessment u/s 153B(1) has also been completed on 31.03.2014. The reasons, in the instant case recorded by the AO do not satisfy the requirements of Section 148 of the Act. The reasons and the information referred is extremely scanty and sudden jump to the conclusions. There is no reference to any specific document except the Annexure which cannot be regarded as material or prima facie evidence to estab lish the link to point out escapement of income. The Annexure is not a pointer and does not ind icate escapement of income per se. Hence, going through the reasons recorded of the AO on 10.10.2014 and the jud icial pronouncements mentioned above, in the absence of any tangible material to establish the escapement of income for assessment, we hold that the action of the AO issuing the notice u/s 148 cannot be held to b e legally valid .
10. Since, at the outset, the reopening has been held to be invalid, we refrain to adjudicate on the merits of the case.
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11. In the result, Cross Objection of the assessee is allowed and consequently the appeal of the Revenue is dismissed.
Order Pronounced in the Open Court on 17/02/2022.
Sd/- Sd/-
(Amit Shukla) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 17/02/2022
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR