M/s. Jayant Food Products , Rajkot V. The ITO, Ward-2 (1) (3), Rajkot

ITA 105/RJT/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9491 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 17-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 147

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, राजकोट 瀈यायपीठ 瀈यायपीठ瀈यायपीठ 瀈यायपीठ, , , , राजकोट IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SMT.SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.105/RJT/2020 Assessment Year :2011-12 M/s.Jayant Food Products GIDC Industrial Estate Phase-II Plot No.336/1, Aji Vasahat Nr.Swati Enterprise Rajkot. PAN : AABFJ 5006 G Vs. ITO, Ward-2(1)(3) Rajkot. अपीलाथ / (Appellant) यथ /(Respondent) Assessee by : Shri D.M. Rindani, AR Revenue by : Shri B.D. Gupta, Sr.DR स ु नवाई क तार ख/Date of Hearing : 28/09/2022 घोषणा क तार ख /Date of Pronouncement: 30/09/2022 आदेश/O R D E R PER ANNAPURNA GUPTA, JUDICIAL MEMBER Present appeal has been filed by the assessee against order passed by the ld. Commissioner of Income-Tax(Appeals)-2, Rajkot [hereinafter referred to as “Ld.CIT(A) under section 250(6) of the Income Tax Act, 1961 ("the Act" for short) dated 19.3.2020 pertaining to the Asst.Year 2011-12. 2. Ground No.1 raised by the assessee is as under: “1. The ld.CIT(A) erred in confirming validity of notice u/s.148 and the reopening of the assessment.” ITA No.105/RJT/2020 2 3. The assessee in the above ground has challenged validity of the assessment framed in the present case under section 147 of the Act. In this regard, the contentions of the ld.counsel for the assessee before us was that the AO did not record any satisfaction vis-à-vis income of the assessee having escaped assessment, and therefore, in the absence of any satisfaction of the AO, he could not have assumed valid jurisdiction to frame assessment under section 147 of the Act. In this regard, he drew our attention to reasons recorded in the present case, which were placed before us in paper book page no.2 as under: “Subject: In response to your request letter dated 07/04/2018 for reasons recorded for reopening your assessment of A.Y. 2011-12, the reason recorded is as under: 2. This office has received information from ADIT(Invt.)-1, Rajkot vide letter No.ADIT(Inv.)-II/RJT/Survey//SE/2014-15 dated 27/03/20125 received under Jt.IT, Central Range, Rajkot’s letter No.JCITCR/Rjt/Angadiya-Sidhnath- Beneficiaries/ 16-17, containing list of beneficiaries who got cheque/DD in lieu of cash from M/s.Siddhnath Enterprise, Rajkot, PAN : AAKFS 6892 E that you have deposited cash amount of Rs.4,27,556/- with M/s.Siddhnath Enterprise, Rajkot on various dates and got cheque/DD, in lieu of cash deposited during the financial year 2010-11. Therefore, to verify the genuineness and correctness of the transactions made through M/s.Siddhnath Enterprise, Rajkot, your case is to be reopened. JOY ANTONY PUTHUSSERY ITO WD 2(1)(3), RKT” 4. Referring to the same, the ld.counsel for the assessee pointed out that it is evident from the above that there was no satisfaction of the AO vis-à-vis any income of the assessee having escaped assessment, and reopening was resorted only to verify genuineness and correctness of the transactions made through one M/s.Siddhnath Enterprise, Rajkot. ITA No.105/RJT/2020 3 5. The ld.DR vehemently argued that information with the AO was sufficient to form a belief of escapement of income, but, he at the same time unable to convert the contentions of the ld.counsel for the assessee that the AO was satisfied on the basis of the information available with him that income of the assessee had escaped assessment. 6. We have heard both the parties. It is trite law that jurisdiction to frame assessment under section 147 of the Act can be assumed by the AO only when he has reason to believe that income chargeable to tax of the assessee has escaped assessment. There is no dispute vis a vis this proposition of law. This reason is to be duly recorded in writing by the AO, for the purposes of enabling judicial scrutiny of the basis of exercising jurisdiction, whether validly assumed or not. 7. In the present case, the reasons recorded by the AO reproduced above, do not disclose any formation of belief of the AO regarding escapement of income. The only thing emanating from the reason is the information in the possession of the AO that the assessee was beneficiary of accommodation entry from one M/s.Siddhnath Enterprise, and thereafter the reasons only state that this transaction of the assessee with M/s.Siddhnath Enterprise needed to be verified for its genuineness and correctness. Clearly, the reasons do not reveal any belief formed by the AO on the basis of information in his possession that income of the assessee had escaped assessment. On the contrary the reasons reveal that the AO needs to apply his mind on the information by making further inquiries vis a vis the same. At the time of recording reasons for reopening the AO therefore it appears was not certain about the ITA No.105/RJT/2020 4 effect /implication of the transaction in the hands of the assessee. The reasons itself clearly reveal that the reopening has been resorted to verify the genuineness & correctness of the transaction 8. In view of the above, in the absence of any formation of belief of the AO of any income of the assessee having escaped assessment, in relation to the transaction of the assessee with one M/s.Siddhnath Enterprise, clearly the jurisdiction assumed by the AO to reopen the case of the assessee, and framing assessment under section 147 of the case goes against all established tenets of law in this regard. The assessment framed therefore is held to be invalid and directed to be set aside. This ground raised by the assessee is accordingly allowed. 9. Since assessee’s appeal on legal ground itself is allowed by setting aside the assessment order passed under section 147 of the Act, grounds raised on merits remains only academic in nature. We do not consider it necessary to deal with the same. 10. In view of the above, appeal of the assessee is allowed on the above terms. Order pronounced in the Court on 30 th September, 2022 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 30/09/2022 vk*