Fortune Metaliks Ltd., Ludhiana V. DCIT, CC-I, Ludhiana

ITA 1090/CHANDI/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8267 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 06-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Depreciation; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings; Borrowed satisfaction; Set aside
• Section: 143(3); 115JB; 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A CHANDIGARH BEFORE: SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI R.L.NEGI, JUDICIAL MEMBER ./ ITA NO. 1090/CHD/2019 / ASSESSMENT YEAR : 2011-12 FORTUNE METALIKS LIMITED, OPP CIRCUIT HOUSE, FEROZEPUR ROAD, LUDHIANA. VERSUS THE DCIT, CENTRAL CIRCLE-1, LUDHIANA. ./ PAN NO: AABCF3202D / APPELLANT / RESPONDENT (VIRTUAL COURT) / ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE ! / REVENUE BY : SMT. MEENAKSHI VOHRA, ADDL.CIT ' # $/ DATE OF HEARING : 22.12.2020 %&'( $/ DATE OF PRONOUNCEMENT : 12.01.2021 / ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 07.06.2019OF THE COMMISSION ER OF INCOME TAX (APPEALS)-5, LUDHIANA,(IN SHORT REFERRED TO AS CIT(A),PASSED U/S 250(6) OF THE INCOME TAX ACT,1961,(HEREINAFTER REFERRED TO AS ACT) PERTAIN ING TOASSESSMENT YEAR (A.Y) 2011-12. 2. THE BRIEF FACTS RELATING TO THE CASE ARE THAT T HE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND ITA -1090/CHD/2019 A.Y. 2011-12 PAGE 2 OF 9 TRADING OF TMT BARS AND OTHER STEEL ITEMS. FOR THE IMPUGNED ASSESSMENT YEAR, RETURN OF INCOME WAS FILED BY THE ASSESSEE DECLARING LOSS OF RS. 7.54 CR AS PER NORMAL PROVIS IONS AND INCOME AMOUNTING TO RS. 38.43 LACS AS PER SECTION 1 15JB OF THE ACT. THE ASSESSMENT U/S 143(3) WAS COMPLETED A T THE RETURNED INCOME. THEREAFTER, THE CASE OF THE ASSES SEE COMPANY WAS REOPENED U/S 147 OF THE ACT AND THE ORIGINAL RE TURNED LOSSOF RS. 7.54 CR WAS REDUCED TO RS. 5.86 CR BY A DDING BACK AN INCOME OF RS. 1.67 CR. AGAINST THE ORDER SO PAS SED, THE ASSESSEE FILED APPEAL TO THE LD. CIT(A) CHALLENGING THE ASSUMPTION OF JURISDICTION BY THE AO U/S 147 OF THE ACT AND ALSO RAISING GROUNDS ON THE MERITS OF THE CASE. TH E LD. CIT(A) DISMISSED THE LEGAL GROUND RAISED BY THE ASSESSEE W HILE HE PARTLY ALLOWED THE GROUND RAISED ON MERITS. 3. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME IN APPEAL BEFORE US RAISING BOTH LEGAL GROUND AND ALSO ON MER ITS. WE SHALL FIRST BE DEALING WITH THE LEGAL GROUND RAISED BY THE ASSESSEE SINCE IT CHALLENGES THE VALIDITY OF THE AS SESSMENT ORDER ITSELF. THE SAID GROUND RELATES TO GROUND NO. 1 RAISED BY THE ASSESSEE AND READS AS UNDER : 1. THAT THE LD. CIT(A) HAS ERRED IN DISMISSING THE GROUND OF PROCEEDINGS OF RE-OPENING THE CASE U/S 148 OF THE I NCOME TAX ACT,1961. ITA -1090/CHD/2019 A.Y. 2011-12 PAGE 3 OF 9 4. THE PRIMARY ARGUMENT OF THE ASSESSEE CHALLENGING THE ASSUMPTION OF JURISDICTION BY THE AO U/S 147 OF THE ACT IS ON THE PREMISE THAT THE REASONS RECORDED BY THE AO FOR ASSUMING JURISDICTION TO REOPEN THE CASE WERE BAD IN LAW, B EING BASED ON INCORRECT FACTS WHICH SHOWED NO APPLICATION OF MIND BY THE AO ON THE INFORMATION IN HIS POSSESSION AND ALSO TH AT THE SATISFACTION FOR ESCAPEMENT OF INCOME WAS NOT HIS O WN BUT BORROWED. OUR ATTENTION WAS DRAWN TO THE REASONS RE CORDED, COPY OF WHICH WAS PLACED BEFORE US ON PAPER BOOK PA GE NO. 35 TO 37, AS UNDER : REASONS FOR ISSUE OF NOTICE U/S 148 OF THE ACT IN T HE CASE OF M/S FORTUNE METALIKS LTP.FOR THE.A.Y.2011-12. THE ASSESSEE IS A LIMITED COMPANY AND ENGAGED IN BU SINESS OF ROLLING MILLS. THE ASSESSEE HAS FILED RETURN OF INCOME THROUGH E-FILLI NG 30.09.2011 FOR A.Y.2011-12 DECLARING INCOME OF RS. NIL (RS. 38,43,004/- U/S 11 5JB)/-. FURTHER RETURN OF INCOME ASSESSED U/S 115JB AT RS. 38,43,004/- ORT 20.03.201 4. 2. THIS OFFICE IS IN THE POSSESSION OF THE INFORMATION RECEIVED FROM ADIT(INV.), UNIT-I, CENTRAL REVENUE BUILDING, CIVIL LINES, RIAP UR (C.G) ON 12.03.2018 IN THE CASE OF M/S FORTUNE METALIKS LTD. 3. IN HIS REPORT ADIT(INV.), UNIT-I, RIAPUR, HAS MADE FOLLOWINGOBSERVATIONS:- THE COMMERCIAL TAX DEPARTMENT, CHHATTISGARH HAS DET ECTED AND IDENTIFIED THE CONCERNS IN WHOSE NAME BOGUS SALE BILLS HAVE BEEN I SSSUED. SUCH BOGUS SALE BILLS WERE DETECTED WITH THE HELP OF SPECIALIZED SOFTWARE OF T HE COMMERCIAL TAX DEPARTMENT. AFTER DETECTION OF SUCH BOGUS BILLS, THEY WERE CONF IRMED THROUGH ENQUIRY AND SPOT VERIFICATION BY THE COMMERCIAL TAX DEPARTMENT. THE FINDINGS ON SUCH BOGUS BILLING HAVE BEEN SHARED TO THE VARIOUS INTELLIGENCE AND IN VESTIGATION AGENCIES IN THE MEETING OF RE1C, RAIPUR ON VARIOUS DATES. AS PER THESE FIND INGS, THE BENEFICIARIES HAVE BEEN TAKEN BOGUS PURCHASE BILLS FROM BOGUS DEALERS. THUS , THE BENEFICIARIES HAVE SUPPRESSED THEIR TOTAL INCOME BY WAY OF DEBITING BO GUS PURCHASES. ACCORDINGLY, ACTION U/S 14? OF THE INCOME TAX ACT, 1961 HAS TO BE TAKEN IN CASE OF SUCH BENEFICIARIES FOR F.Y. 2010-11 WHICH IS GOING TO BE TIME BARRED BY LI MITATION ON 31 S ' MARCH, 201S. DETAILS OF SUCH BENEFICIARIES AND CORRESPONDING BOG US DEALERS, AMOUNT OF BOGUS BILLS ETC. PERTAINING TO F.Y. 2010-11 ARE BEING FORWARDED FOR TAKING ACTION ' U/S 147 OF THE I. T. ACT 1961 AS THE PAN AND JURISDICTION LIES WITH Y OU. ITA -1090/CHD/2019 A.Y. 2011-12 PAGE 4 OF 9 4. THIS OFFICE HAS CHECKED THE ENTIRE DETAILS OF THE A SSESSEE ON 360 DEGREE PROFILE ON ITBA PORTAL LIKE BANK DETAILS, ADDRESS OF ASSESS EE, ITR'S DETAILS, PROCESSING DETAILS, TAX DETAILS ETC. 5. FROM THE ABOVE INFORMATION IT WAS SEEN THAT ASSESSE E IS INVOLVED IN TAKING BOGUS PURCHASE BILL FROM BOGUS DEALERS NAMELY AS M/ S SHITAL TRADING COMPANY FOR RS. 1,31,78,094AND FROM M/S RAJ DEALERS FOR RS. 35, 96,520/- IN THE A.Y 2011-12 AND THUS THE ASSESSEE HAS SUPPRESSED ITS PROFIT BY WAY OF DEBITING BOGUS PURCHASES IN THE TRADING AND PROFIT & LOSS ACCOUNT. 6. IN VIEW OF ABOVE FACTS OF THE CASE, I HAVE REASON T O BELIEVE THAT THE INCOME CHARGEABLE TO TAX, AS DISCUSSED IN PARA NO. 05 ABOV E I.E. .RS. 1,67,74,614/-, HAS ESCAPED ASSESSMENT (AND ALSO ANY OTHER INCOME CHARG EABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO NOTICE SUBSEQUENTLY I N THE COURSE OF THE PROCEEDINGS U/S 147 OF INCOME TAX ACT. 7. IN THIS CASE A RETURN OF INCOME WAS FILED FOR THE Y EAR UNDER CONSIDERATION AND REGULAR ASSESSMENT U/S 143(3)/147 WAS MADE 20.03.20 14. SINCE, 4 YEARS FROM THE END OF THE RELEVANT YEAR HAS EXPIRED IN THIS CASE, THE REQUIREMENT TO INITIATE PROCEEDING U/S 147 OF THE ACT ARE REASON TO BELIEVE THAT INCOME FO R THE YEAR UNDER CONSIDERATION HAS ESCAPED ASSESSMENT BECAUSE OF FAILURE .ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IT IS PERTINENT TO MENTION HERE THAT REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT FOR THE YEAR UNDER CONSIDERATION HAVE BEEN RECORDED ABOVE. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT RECORDS CO NTAINING THE SUBMISSION MADE BY THE ASSESSEE IN RESPONSE TO VARIOUS NOTICES ISSUED DURING THE ASSESSMENT /REASSESSMENT PROCEEDINGS AND HAVE NOTED THAT THE ASSESSEE HAS NO T FULLY AND TRULY DISCLOSED THE FOLLOWING MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT FOR THE YEAR UNDER CONSIDERATION: UNEXLPAINED EXPENDITURE. IT IS EVIDENT FROM THE ABOVE FACTS THAT THE ASSESSE E HAD NOT TRULY AND FULLY DISCLOSED MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE YEAR UNDER CONSIDERATION THEREBY NECESSITATING REOPENING U/S 147 OF THE ACT. IT IS TRUE THAT THE ASSESSEE HAS FILED A COPY OF AN NUAL REPORT AND AUDITED P& L A/C AND BALANCE SHEET ALONGWITH RETURN OF INCOME WHERE VARIOUS INFORMATION/MATERIAL WERE DISCLOSED. HOWEVER, THE REQUISITE FULL AND TRU E DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT HAS NOT BEEN MADE AS NOTED ABOVE. IT IS PERTINENT TO MENTION HERE THAT EVEN THOUGH THE ASSESSEE HAS PRODUCED BOO KS OF ACCOUNT, ANNUAL REPORT, AUDITED P& L A/C AND BALANCE' SHEET OR OTHER EVIDEN CE AS MENTIONED ABOVE, THE REQUISITE MATERIAL FACTS AS NOTED ABOVE IN THE REAS ONS FOR REOPENING WERE EMBEDDED IN SUCH A MANNER THAT MATERIAL EVIDENCE COULD NOT BE D ISCOVERED BY THE AO AND COULD HAVE BEEN DISCOVERED WITH DUE DILIGENCE, ACCORDINGL Y ATTRACTING PROVISIONS OF EXPLANATION 1 OF SECTION 147 OF THE ACT. IT IS EVIDENT FROM THE ABOVE DISCUSSION THAT IN THI S CASE, THE ISSUES UNDER CONSIDERATION WERE NEVER EXAMINED BY THE AO DURING THE COURE OF REGULAR ASSESSMENT /REASSESSMENT. THIS FACT IS CORROBORATED FROM THE C ONTENTS OF NOTICES ISSUED BY THE AO U/S 143(2)/142(1) AND ORDER SHEET RECORDED DURING T HE 143(3)/147 PROCEEDINGS. IT IS IMPORTANT TO HIGHLIGHTED HERE THAT MATERIAL FACTS R ELEVANT FOR THE ASSESSMENT ON THE ISSUE(S) UNDER CONSIDERATION WERE NOT FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE SAME MAY BE EMBEDED IN ANNUAL R EPORT, AUDITED P&L A/C, ITA -1090/CHD/2019 A.Y. 2011-12 PAGE 5 OF 9 BALANCE SHEET AND BOOKS OF ACCOUNT IN SUCH A MANNER THAT IT WOULD REQUIRE DUE DILIGENCE BY THE AO TO EXTRACT THESE INFORMATION. F OR AFORESAID REASONS, IT IS NOT A CASE OF CHANGE OF OPINION BY THE AO. IN THIS CASE, MORE THAN FOUR HEARS HAVE LAPSED FROM THE END OF ASSESSMENT YEAR UNDER CONSIDERATION. HENCE NECESSARY SANCTION TO I SSUE NOTICE U/S 148 HAS BEEN OBTAINED SEPARATELY FROM PRINCIPAL COMMISSIONER OF INCOME TAX AS PER THE PROVISIONS OF SECTION 151 OF THE ACT. 5. REFERRING TO THE ABOVE, LD. COUNSEL FOR THE ASSE SSEE POINTED OUT THAT THE AO HAD RECORDED SATISFACTION OF ESCAPEMENT OF INCOME ON THE BASIS OF INFORMATION WH ICH HAD COME TO HIS POSSESSION FROM THE COMMERCIAL TAX DEPA RTMENT, CHHATISGARH, THAT BOGUS PURCHASE BILLS HAD BEEN TAK EN BY THE ASSESSEE FROM TWO PARTIES. DRAWING OUR ATTENTION T O PARA 5 OF THE REASONS RECORDED, LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT WHILE NOTING THE FIGURES OF BOGUS PURCHASES, T HE AO HAD RECORDED WRONG FIGURES. THAT THE ACTUAL PURCHASES FROM ONE SUCH ALLEGED PARTY M/S SHEETAL TRADING COMPANY, NOT ED BY THE AO AT RS. 1,31,78,094/- IN PARA 5, WAS RS 67,18,244 /-WHILE THAT OF THE ANOTHER M/S RAJ DEALERS, RECORDED AT RS 35,96,520/- WAS RS73,62,946/-.FURTHER THE NAME OF ONE OF THE PA RTIES HAD ALSO BEEN NOTED WRONGLY AS M/S RAJ DEALERS IN PLACE OF ITS ACTUAL NAME RAJ TRADERS.HE FURTHER CONTENDED THAT T HE AO HAD NOTED THAT THE ASSESSEE HAD DEBITED THESE AMOUNTS T O PROFIT & LOSS ACCOUNT WHICH AGAIN WAS AN INCORRECT FACT SINC E THESE BILLS RELATED TO PURCHASE OF FIXED ASSETS AND HAD NOT BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT. THE LD. COUN SEL FOR THE ASSESSEE CONTENDED, THAT THE SATISFACTION BEING BA SED ON ITA -1090/CHD/2019 A.Y. 2011-12 PAGE 6 OF 9 INCORRECT FACTS IT COULD NOT FORM THE BASIS FOR RE -OPENING THE CASE. IN THIS REGARD, HE PLACED RELIANCE ON THE FO LLOWING DECISIONS OF THE ITAT HOLDING THAT SATISFACTION OF THE AO OF ESCAPEMENT OF INCOME BASED ON INCORRECT FACTS WOULD NOT EMPOWER THE AO TO REOPEN THE CASE : SMT.MONIKA RANI VS ITO ITA NO.582/CHD/2019 DT 28-02-2020 SAGAR ENTERPRISES V/S ACIT 257ITR335 GUJ-HC BABA KARTAR SINGH DUKKI EDUCATIONAL TRUST V/S ITO 158 ITD 0965 CHD-TRIB VAN OORD DREDGING AND MARINE CONTRACTORS BV V/S ADIT ITANO.495/MUM/2016 SHRI RAM MOHAN RAWAT V/S INCOME TAX OFFICER ITANO.1014/JP/2018 SHRI ALLEN DE NORONHA V/S ACIT ITA NO. 338/LKW/2015 LKW-TRIB IOT INFRASTRUCTURE & ENERGY SERVICES LTD V/S ACIT & ANR 329 ITR0547BOM-HC THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT IT IS EVIDENT THAT THE AO HAD NOT CARED TO APPLY HIS MIND AT ALL TO THE INFORMATION BEFORE HIM AND THE SATISFACTION OF THE AO OFESCAPEMENT OF INCOME WAS WITHOUT APPLICATION OF M IND AND WAS INFACT BORROWED SATISFACTION. HE DREW OUR ATT ENTION TO THE FOLLOWING CASE LAWS PURPORTEDLY HOLDING THAT NON-AP PLICATION OF MIND BY THE AO WHILE RECORDING REASONS WOULD RENDER THE RE- ASSESSMENT PROCEEDINGS INVALID. 1.HOLY FAITH INTERNATIONAL PVT. LTD. V/S DCIT ITA NO.181/ASR/2017 CHD-TRIB ITA -1090/CHD/2019 A.Y. 2011-12 PAGE 7 OF 9 2. HARI STEELS AND GENERAL INDUSTRIES LIMITED V/S DCIT 104 TAXMANN.COM 293 DEL-TRIB 3. MAGANBEHARI LAI V/S DEPUTY COMMISSIONER OF INCOME TAX 75 ITR (TRIB) 322 DEL-TRIB 6. THE LD. DR ON THE OTHER HAND DREW OUR ATTENTION TO THE FINDINGS OF THE LD. CIT(A) IN THIS REGARD AT PAGE 6 0 OF THE ORDER AS UNDER : .THE ASSESSING OFFICER, THEREFORE, HAD A CAUSE TO SHOW THAT INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT AND THE AO HAD A B ONAFIDE REASON TO BELIEVE, FORMED ON THE BASIS OF TANGIBLE MATERIAL/INFORMATIO N ON RECORD THAT INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147. CREDIBLE INFORMATION WAS RECEIVED BY ME AO RELATING TO THE C ASE AND THE AO WAS DUTY BOUND TO ACT ON THE SAME. THE AO COULD NOT HAVE SLEPT ON THE INFORMATION WITHOUT TAKING ANY ACTION. THE CREDIBLE INFORMATION RECEIVED COULD NOT BE KEPT IN THE FILE WITHOUT TAKING COGNIZANCE AND THE AO WAS RATHER DUTY BOUND TO ACT ON THE SAME. CONSIDERING THE FACTS IN THIS CASE, IT IS FOUND TO BE A FIT CASE WHERE THE AO HAS RIGHTLY INITIATED ACTION UNDER SECTION 147 ON THE B ASIS OF INFORMATION RECEIVED FROM DIRECTORATE OF INCOME TAX (INVESTIGATION). THE ISSU E IS COVERED BY THE DECISION OF THE HON'BLE ITAT, MUMBAI (ITA NO. 995/MUM/2012) IN THE CASE OF RATNAKAR M. PUJARI, MUMBAI VS. ITO WARD-25(3)(3), MUMBAI, WHERE , THE HON'BLE ITAT HAS ELABORATELY DISCUSSED THE ISSUES OF RE-OPENING U/S 147 AND CONSEQUENTIAL ADDITION. THE HON'BLE ITAT HAS HELD THAT THE REOPENING U/S 14 7 IS JUSTIFIED, AS THE INFORMATION RECEIVED FROM THE INVESTIGATION WING IS FRESH AND T ANGIBLE MATERIAL WHICH HAS LIVE LINK AND NEXUS WITH THE FORMATION OF BELIEF THAT TH E INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. IN VIEW OF THESE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE, THE ARGUMENTS OF THE AR ARE FOUND DEVOID OF MERITS AND THE ISSUE OF NOTICE BY THE AO U/S 148, AFTER RECORDING REASONS FOR RE-OPENING U/S 147 , BASED UPON INFORMATION RECEIVED, IS FOUND TO BE AS PER LAW 7. WE HAVE HEARD BOTH THE PARTIES. WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE RE- ASSESSMENT PROCEEDINGS UNDERTAKEN BY THE AO IN THE PRESENT CASE WERE INVALID SINCE THE REASONS RECORDING HIS S ATISFACTION OF ESCAPEMENT OF INCOME WERE BASED ON INCORRECT FAC TS AND THERE WAS NO APPLICATION OF MIND AT ALL BY THE AO. THE FALLACIES IN THE FACTS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE,REGARDING THE QUANTUM OF BOGUS PURCHASES N OTED BY ITA -1090/CHD/2019 A.Y. 2011-12 PAGE 8 OF 9 THE AO IN HIS REASONS AS ALSO NAME OF ONE OF THE PA RTIES, HAS NOT BEEN DISPUTED OR CONTROVERTED BY THE REVENUE. FURTHER, EVEN THE FACT RECORDED BY THE AO IN THE REASONS THA T THE BOGUS BILLS HAD BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT WAS INCORRECT WHICH IS EVIDENT FROM THE FACT THAT THE L D. CIT(A) IN HIS ORDER PASSED ON MERITS HAS FOUND THESE BILLS TO BE RELATING TO PURCHASE OF FIXED ASSETS AND HAS ACCORDINGLY, MA DE THE DISALLOWANCE OF ONLY DEPRECIATION RELATING TO THE S AME, WHICH HAS NOT BEEN CHALLENGED BY THE REVENUE BEFORE US. IT IS CLEARLY EVIDENT THAT ON RECEIVING INFORMATION FRO M THE COMMERCIAL TAX DEPARTMENT, THE LD. AO DID NOT EVEN CARE TO VERIFY THE SAME FROM HIS RECORDS FROM WHERE ALL THE SE FACTUAL INACCURACIES WOULD HAVE BEEN BROUGHT OUT. THERE WA S CLEARLY TOTAL NON APPLICATION OF MIND BY THE AO AND THE BEL IEF OF ESCAPEMENT OF INCOME IS DEFINITELY NOT HIS OWN BUT BORROWED FROM THAT OF THE COMMERCIAL TAX OFFICER WHO HAD FOR WARDED THE INFORMATION. THE BASIC REQUIREMENT OF LAW FOR REOPENING AN ASSES SMENT IS APPLICATION OF MIND BY THE AO TO THE MATERIAL OR IN FORMATION IN HIS POSSESSION TO CONCLUDE AND ARRIVE AT A SATISFAC TION THEREFROM THAT INCOME HAS ESCAPED ASSESSMENT.BOTH APPLICATION OF MIND AND SATISFACTION/BELIEF OF THE AO ARE LACKING IN THE PRESENT CASE . THE REASSESSMENT THER EFORE WE ITA -1090/CHD/2019 A.Y. 2011-12 PAGE 9 OF 9 HOLD IS INVALID. THE CASE LAWS RELIED UPON BY THE L D.COUNSEL FOR THE ASSESSEE SUPPORT THE CASE OF THE ASSESSEE,THE O RDER PASSED BY THE AO IS, THEREFORE, SET ASIDE. 8. THE GROUND OF APPEAL NO. 1 IS, THEREFORE, ALLOWE D. 9. SINCE WE HAVE SET ASIDE THE ORDER PASSED BY THE AO, WE DO NOT CONSIDER IT NECESSARY TO ADJUDICATE THE GROUNDS RAISED ON MERITS, SINCE IT WOULD BE A MERE ACADEMIC EXERCISE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN ABOVE TERMS. ORDER PRONOUNCED ON 12.01.2021. SD/- SD/- (R.L.NEGI) (ANNAPURNA GUPTA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER POONAM &)*+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./0 , $0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35# / GUARD FILE &) ' / BY ORDER, 6 ! / ASSISTANT REGISTRAR