SHRI PARASMAL K. JAIN, MUMBAI V. INCOME TAX OFFICER WARD 18(2)(5), MUMBAI

ITA 2474/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7699 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Reopening of assessment; Bogus purchase; Depreciation; Charitable institution; Tangible material; Onus to prove; Reason to believe
• Section: 143(3); 142(1); 147; 148

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE HONBLE SH. B. R. BASKARAN , AM & HONBLE SH. SANDEEP GOSAIN, JM ./ I.T.A. NO . 2474/MUM/2018 ( / ASSESSMENT YEAR: 2009 - 10 ) SHRI PARASMAL K. JAIN, BANSI BHUVAN, R. NO. 48, 14, 3 RD KHETWADI LANE, MUMBAI - 400004 / VS. ITO - 18(2)(5 ) , EARNEST HOUSE, NCPA MARG, NARIMAN POINT, MUMBAI - 400 021 ./ ./ PAN NO. A A APJ7624H ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENTBY : SHRI S. K. BEPARI , D R / DATE OF HEARING : 19.11 .2018 / DATE OF PRONOUNCEMENT : 16.01.2019 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 29 , MUMBAI DATED 02.02.2018 F OR AY 2009 - 10 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN (A) ARRIVING AT THE CONCLUSION THAT PURCHASES MADE OF RS. 5496826 / - FROM PARTIES MENTIONED IN ASSESSMENT ORDER ARE NOT GENUINE AND NOT MADE FROM THEM BUT FROM OTHER SOURCES (B) CONFIRMING ESTIMATION OF PROFIT ELEMENT @ 12.5% ON ALLEGED NON GENUINE PURCHASE S OF RS.5496826/ - WHICH IS OVER AND ABOVE THE NORMAL PROFIT DECLARE @ 5.71% IN BOOKS OF ACCOUNTS. (C) CONFIRMING ADDITION OF RS. 687103/ - MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE APPELLANT. 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT (A) PROCEEDING INITIATED UNDER SECTION 147 /148 OF THE ACT IS ON THE BASIS OF REASON TO SUSPECT AND NOT ON REASON TO BELIEVE. (B) THERE IS NO NEW TANGIBLE MATERIAL IN POSSESSION OF THE ASSESSING OFFICER WHICH JUSTIFY ISSUANCE OF NOTICE U/S 148 OF THE ACT 3 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, (C) THE INITIATION OF PROCEEDING UNDER SECTION 147 OF THE ACT AND ISSUANCE OF NOTICE UNDER SECTION 148 IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF THE ACT AND LIABLE TO BE CANCELLED / ANNULLED 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING ORDER MADE UNDER S ECTION 143(3) RWS 147 OF THE ACT BY THE LEARNED ASSESSING OFFICER WHICH IS ILLEGAL, BAD - IN - LAW, ULTRA VIRES AND WITHOUT ALLOWING REASONABLE OPPORTUNITY OF THE HEARING, WITHOUT APPRECIATING THE FACTS, SUBMISSION AND EVIDENCES IN THEIR PROPER PERSPECTIVE, WI THOUT PROVIDING COPIES OF MATERIAL USED AGAINST THE APPELLANT AND WITHOUT PROVIDING CROSS EXAMINATION OF PARTIES IS LIABLE TO BE ANNULLED. 4. THE LEARNED ASSESSING OFFICER ERRED IN CHARGING INTEREST UNDER SECTION 234A, 234B, 234C AND 234D OF THE ACT. 5. THE APPELLANT CRAVE LEAVE TO ADD, AMEND, ALTER AND / OR VARY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. AT THE VERY OUTSET, IT IS NOTICED THAT NONE HAS APPEARED ON BEHALF OF ASSESSEE IN SPITE OF CALLS AND EVEN NO APPL ICATION FOR 4 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, ADJOURNMENT WAS MOVED. FROM THE RECORDS, WE NOTICED THAT THE REGISTERED NOTICE WITH AD HAD ALSO RETURNED BACK WITH THE REMARKS NOT KNOWN BY THE POSTAL AUTHORITY. THE SAID NOTICE THROUGH REGISTERED POST WAS SEND ON THE ADDRESS SUPPLIED BY THE ASSESSEE IN FORM NO. 36. ON THE OTHER HAND L D. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PA RTE WITH THE ASSISTANCE OF THE L D. DR AND THE MATERIAL PLACED ON RECORD. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND NON - FERROUS METALS. THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE A.Y.2009 - 10 ON 23.09. 2009 DECLARING TOTAL INCOME AT RS.1,27,470/ - . THE RETURN WAS PROCESSED U/S 1 43(1) OF THE I.T. ACT. SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT THROUGH THE DGIT( INV.), MUMBAI THAT THE ASSESSEE HAD PROCURED BOGUS PURCHASE BILLS TOTALING TO RS.54,96,826/ - FROM 21 PARTIES. THE AO ISSUED NOTI CE U/S.148 ON 06.03.2014. SUBSEQUENTLY, NOTICES U/S. 143(2) AND 142(1) WERE ISSUED ALONGWITH QUESSTIONNARIE AND AFTER PROVIDING SUFFICIENT OPPORTUNITY, ASSESSMENT ORDER U/S 143(3) 5 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, R.W.S. 147 OF THE I.T. ACT WAS PASSED THEREBY MAKING ADDITIONS ON ACCOUNT OF BOGUS PURCHASES. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES, PARTLY ALLOWED THE APPEAL OF THE ASSESS EE . NOW BEFORE US, THE ASSESSEE HAS PREFERRED THE PRESENT APP EAL BY RAISING THE ABOVE GROUNDS. GROUND NO. 1 & 3 4 . THESE GROUND S RAISED BY THE ASSESSEE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHA LLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING ADDITIONS MADE BY AO ON ACCOUNT OF NON - GENUINE PURCHASES MADE BY ASSESSEE, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 5 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. 6 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WI TH THE ABOVE GROUND RAISED BY THE ASSESSEE IN PARA NO. 3.3. TO 3.3.2 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 3.3 THE SUBMISSIONS AND CASE LAWS RELIED BY THE LD. COUNSEL FOR THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. WHEN THE EXPENDITURE HAS BEEN CLAIMED BY THE ASSESSEE, THE ONUS IS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE SAME. AS IT IS THE CLAIM OF THE ASSESSEE THAT HE HAS MADE PURCHASES FROM THE SAID PARTIES, THE AO HAD REQUESTED THE ASSESSEE TO PRODUCE THE PARTIES FOR VERIFICATION. HOWE VER, THE ASSESSEE FAILED TO DO SO. AS THE PARTIES FROM WHOM THE PURCHASES WERE SUPPOSED TO HAVE BEEN MADE WERE NOT FOUND EXISTING, THE GENUINENESS OF THE PURCHASES FROM SUCH NON EXISTING PARTIES WAS NOT ESTABLISHED. 3.3.1. COMING TO THE ADDITION, THE H ON'BLE ITAT, AHMEDABAD 'C' BENCH IN THE CASE OF VIJAY PROTEINS LTD. VS. ACIT 58 ITD 0428 HELD THAT IN SIMILAR CIRCUMSTANCES, 25% OF THE PURCHASE PRICE ACCOUNTED THROUGH FICTITIOUS INVOICES HAS TO BE DISALLOWED. THE HON'BLE HIGH C OURT OF GUJARAT IN THE CASE OF SANJAY OIL CAKES V/S CIT 316 ITR 0274 DEALT WITH SIMILAR CASE WHERE SOME OF THE ALLEGED SUPPLIERS 7 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, WHO HAD ISSUED BILLS TO THE ASSESSEE WERE NOT GENUINE AS THEY WERE NOT TRACEABLE. THE GOODS MUST HAVE BEEN RECEIVED FROM OTH ER PARTIES. THE LIKELIHOOD OF THE PURCHASE PRICE OF THESE ALLEGED PURCHASES BEING INFLATED COULD NOT BE RULED OUT AND THEREFORE THE HON'BLE HIGH COURT HAS UPHELD THE DECISION OF CIT(A) AND THE ITAT DISALLOWING 25% OF THE PAYMENTS MADE TO SUCH PARTIES. TH E HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. SIMIT P. SHETH 356 ITR 0451 HELD THAT ONCE THE SALE IS ACCEPTED BY THE AO, THE VERY BASIS OF PURCHASES COULD NOT BE QUESTIONED. NOT THE ENTIRE PURCHASE PRICE COULD BE DISALLOWED BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES COULD BE ADDED TO THE INCOME OF THE ASSESSEE. THE ESTIMATION VARIES WITH THE NATURE OF BUSINESS AND NO UNIFORM YARDSTICK COULD BE ADOPTED. GIVEN THE FACTS AND C[RCUMSTANCES OF THE INSTANT CASE, I FIND IT REASONABLE TO ESTIMATE THE GROSS PROFIT ON THE ALLEGED BOGUS PURCHASES AT 12.5%. 3.3.2 THE ACTION OF THE AO IN MAKING AN ADDITION OF 12.5% OF THE ALLEGED BOGUS PURCHASES IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 6. AFTER HAVING GONE THROUGH THE ORDERS PASSED BY REVENUE AUTHORITIES AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES AND 8 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, CONSIDERING THE FACTS AS DISCUSSED ABOVE, WE FIND THAT LD. CIT(A) AFTER APPREC IATING THE FACTS OF THE CASE HAD RIGHTLY CONCLUDED THAT THE ASSESSEE HAD NOT DISCHARGE ITS ONUS TO PROVE THE GENUINENSS OF CLAIM. EVEN THE PARTIES FROM WHOM THE MATERIAL WAS PURCHASED WERE NOT PRODUCED EVEN AFTER SPECIFICALLY ASKED FOR BY THE AO. FROM THE RECORDS, WE ALSO NOTICED THAT THE PARTIES WERE NOT FO UND EXISTING , THEREFORE IN THESE CIRCUMSTANCES, THE GENUINENESS OF THE PURCHASES FROM NON - EXISTING PARTIES COULD NOT BE ESTABLISHED. THE LD. CIT(A) HAD CORRECTLY RELIED UPON THE DECISION OF HONBLE ITAT AHEMDABAD 'C' BENCH IN THE CASE OF VIJAY PROTEIN S LTD. VS. ACIT 58 ITD 0428 WHEREIN IT WAS HELD THAT 25% OF THE PURCHASE PRICE ACCOUNTED THROUGH FICTITIOUS INVOICES HAS TO BE DISALLOWED. THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF SANJAY OIL CAKES V/S CIT 316 ITR 0274 HAD ALSO DEALT WITH SIMILAR CASE WHERE SOME OF THE ALLEGED SUPPLIERS WHO HAD ISSUED BILLS TO THE ASSESSEE WERE NOT GENUINE AS THEY WERE NOT TRACEABLE. THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. SIMIT P. SHETH 356 ITR 0451 HAD HELD THAT ONCE THE SALE IS ACCE PTED BY THE AO, THE VERY BASIS OF PURCHASES COULD NOT BE QUESTIONED. NOT THE ENTIRE PURCHASE PRICE COULD BE 9 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, DISALLOWED BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES COULD BE ADDED TO THE INCOME OF THE ASSESSEE. 7. EVEN BEFORE US, N O NEW FACTS O R CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS SO RECORDED BY THE LD.CIT( A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THESE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO. 2 8 . THIS GROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN UPHOLDING THE PROCEEDINGS INITIATED U/S 147/148 OF THE ACT. 9 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. 10 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUND RAISE D BY THE ASSESSEE IN PARA NO. 5.1 TO 5.2.2 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 5.1. IT IS THE CONTENTION OF THE LEARNED COUNSEL THAT THE NOTICE HAS BEEN ISSUED ON THE BASIS OF MERE SUSPICION AND NO TANGIBLE MATERIAL IS AVAILABLE IN POSSESSION OF THE ASSESSING OFFICER. THE LD. COUNSEL FOR THE APPELLANT HAS ALSO RELIED ON CERTAIN CASE LAWS LIKE C IT VS. KELVINATOR OF INDIA LTD. 320 ITR 561, BALKRISHNA HIRALAL WANI VS. ITO 321 ITR 519, CIT VS. SMT. PARAMJIT KAUR 311 ITR 38, DHAKESHWARI COTTON MILLS LTD. VS CIT 26 ITR 775 AND SO ON. 5.2. SECTION 147 OF THE INCOME TAX ACT IS REPRODUCED AS UNDER: ' IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTION 148 TO 153, ASSESS OR REASSESS, SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE T O TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTED THE LOSS OR THE DEPRECIATION 11 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, 'OR THE ASSESSMENT YEAR CONC ERNED ( HEREAFTER IN THIS SECTION AND IN S ECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR.' 5.2.1 THE SECTION MERELY SAYS THAT THE AO HAS TO HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. REASON TO BELIEVE CAN BE ON THE BASIS OF ANY INFORMATION WHICH COMES TO HIS POSSESSION OR KNOWLEDGE. THIS INFORMATION IS MORE THAN ENOUGH FOR ANY REASONABLE PERSON TO FORM A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. FURTHER, THE INFORMATION IS NOT ANONYMOUS INFO RMATION BUT AUTHENTICATED INFORMATION RECEIVED FROM A GOVERNMENT DEPARTMENT. THE AO OR ANY REASONABLE PERSON IN HIS PLACE WOULD NOT IGNORE OR OVER LOOK THIS KIND OF INFORMATION. IF THE AO IS NOT SATISFIED WITH THE REASON, HE WOULD NOT HAVE ISSUED NOTICE U/ S.148. THE VERY FACT THAT REASONS ARE RECORDED AND NOTICE U/S.148 IS ISSUED GOES TO SHOW THAT THE AO HAS APPLIED HIS MIND AND SATISFIED HIMSELF ABOUT THE REOPENING OF THE CASE. THE REASONS RECORDED ARE NOT VAGUE AND SCANTY BUT PRECISE AND CONCRETE. IN THIS CASE, THE INFORMATION HAS COME FROM THE INVESTIGATION WING OF THE SAME DEPARTMENT WITH SUPPORTING STATEMENTS AND MODUS OPERAND!. THERE IS NO REASON OR OCCASION TO DISBELIEVE 12 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, THIS INFORMATION. BESIDES, WHAT THE ACT ENVISAGES IS THAT THE AO SHOULD ONLY HAVE A REASON TO BELIEVE TO REOPEN A CASE. HE NEED NOT ESTABLISH BEYOND DOUBT THAT THERE IS ESCAPEMENT BEFORE ISSUING THE NOTICE. THIS CAN BE DONE AT THE TIME OF ASSESSMENT BUT NOT AT THE TIME OF ISSUE OF NOTICE. RELIANCE IS PLACED ON THE FOLLOWING JUDGEMENTS : 1) ROHILKHAND EDUCATIONAL CHARITABLE TRUST VS. CCIT AND OTHERS 365 ITR 233(AII.) WHEREIN THE HON'BLE HIGH COURT HELD AO SHOULD HAVE RELEVANT AND CREDIBLE MATERIAL WITH HIM TO FORM REQUISITE REASON TO BELIEVE THAT INCOME OF ASSESSEE HAS ESCAPED ASSESSMENT . MATERIAL AVAILABLE ON RECORD HAS RATIONAL CONNECTION AND RELEVANT BEARING ON SUCH FORMATION OF BELIEF FOR ISSUING VALID NOTICES FOR RE - ASSESSMENT. - SUFFICIENCY OR CORRECTNESS OF MATERIAL WAS NOT TO BE CONSIDERED AT THIS STAGE. 2) SUN PHARMACEUTICALS INDU STRIES LTD. VS. DCIT 353 ITR 474 (GUJ.) WHERE THE HON'BLE HIGH COURT HELD FORMATION BY BELIEF BY AO IS ESSENTIALLY WITHIN HIS SUBJECTIVE SATISFACTION - AT THE STAGE OF ISSUE OF NOTICE, ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH REASONABL E PERSON COULD HAVE FORMED REQUISITE BELIEF. 13 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, 3) N.K. INDUSTRIES LTD. VS. ITO 362 ITR 542 (GUJ.) WHERE THE HON'BLE HC HELD IF A PARTICULAR ISSUE IS BROUGHT TO THE NOTICE OF THE AO BY AUDIT PARTY AND AO OF HIS /HER APPLICATION OF MIND FINDS THIS GROUND AS V ALID, REOPENING OF ASSESSMENT CANNOT BE QUASHED MERELY BECAUSE SUCH GROUND WAS BROUGHT TO THE NOTICE OF AO BY THE AUDIT PARTY. 5 .2.2. IN THIS CASE, THE AO HAS AMPLE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND HAS RIGHTLY ISSUED THE NOTICE U/ S.148 TO THE APPELLANT AFTER RECORDING REASONS FOR REOPENING. THE AO WAS WELL WITHIN JURISDICTION AND ACTED IN ACCORDANCE WITH THE PROVISIONS OF THE I.T. ACT. THE ACT OF THE AO BEING VALID AND LEGAL, IS UPHELD. THESE GROUNDS OF APPEAL ARE THEREFORE DISMISS ED. 10. AFTER HAVING GONE THROUGH THE ORDERS PASSED BY REVENUE AUTHORITIES AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES AND CONSIDERING THE FACTS AS DISCUSSED ABOVE, WE FIND THAT LD. CIT(A) AFTER APPRECIATING THE FACTS OF THE CASE HAS RIGHTLY CONCLUDED THAT AS PER THE BARE PROVISIONS OF SECTION 147 OF THE ACT, THE AO HAS TO HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. REASON TO BELIEVE CAN BE ON THE BASIS OF ANY 14 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, INFORMATION WHICH COMES TO HIS POSSESSION OR KNOWLEDGE. THIS INFORMATION IS MORE THAN ENOUGH FOR ANY REASONABLE PERSON TO FORM A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. AS PER THE FACTS OF THE PRESENT CASE, THE INFORMATION IN THIS CASE WAS NOT ANONYMOUS INFORMATION , BUT AUTHENTICATED INFORMATION RECEIVED FROM A GOVERNMENT DEPARTMENT. THE AO OR ANY REASONABLE PERSON IN HIS PLACE WOULD NOT IGNORE OR OVER LOOK THIS KIND OF INFORMATION. IF THE AO IS NOT SATISFIED WITH THE REASON, HE WOULD NOT HAVE ISSUED NOTI CE U/S.148. THE VERY FACT THAT REASONS ARE RECORDED AND NOTICE U/S.148 IS ISSUED GOES TO SHOW THAT THE AO HAS APPLIED HIS MIND AND SATISFIED HIMSELF ABOUT THE REOPENING OF THE CASE. THE REASONS RECORDED ARE NOT VAGUE AND SCANTY BUT PRECISE AND CONCRETE. IN THIS CASE, THE INFORMATION HAS COME FROM THE INVESTIGATION WING OF THE SAME DEPARTMENT WITH SUPPORTI NG STATEMENTS AND MODUS OPERANDI. HENCE, T HERE IS NO REASON OR OCCASION TO DISBELIEVE THIS INFORMATION. APART FROM THIS , WHAT THE ACT ENVISAGES IS THAT THE AO SHOULD ONLY HAVE A REASON TO BELIEVE TO REOPEN A CASE. HE NEED NOT ESTABLISH BEYOND DOUBT THAT THERE IS ESCAPEMENT BEFORE ISSUING THE NOTICE. THIS CAN 15 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, BE DONE AT THE TIME OF ASSESSMENT BUT NOT AT THE TIME OF ISSUE OF NOTICE. RELIANCE IS PLACED ON THE F OLLOWING JUDGEMENTS : 1) ROHILKHAND EDUCATIONAL CHARITABLE TRUST VS. CCIT AND OTHERS 365 ITR 233(AII.) WHEREIN THE HON'BLE HIGH COURT HELD AO SHOULD HAVE RELEVANT AND CREDIBLE MATERIAL WITH HIM TO FORM REQUISITE REASON TO BELIEVE THAT INCOME OF ASSESSEE HA S ESCAPED ASSESSMENT. MATERIAL AVAILABLE ON RECORD HAS RATIONAL CONNECTION AND RELEVANT BEARING ON SUCH FORMATION OF BELIEF FOR ISSUING VALID NOTICES FOR RE - ASSESSMENT. - SUFFICIENCY OR CORRECTNESS OF MATERIAL WAS NOT TO BE CONSIDERED AT THIS STAGE. 2) SUN PHARMACEUTICALS INDUSTRIES LTD. VS. DCIT 353 ITR 474 (GUJ.) WHERE THE HON'BLE HIGH COURT HELD FORMATION BY BELIEF BY AO IS ESSENTIALLY WITHIN HIS SUBJECTIVE SATISFACTION - AT THE STAGE OF ISSUE OF NOTICE, ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIA L ON WHICH REASONABLE PERSON COULD HAVE FORMED REQUISITE BELIEF. 3) N.K. INDUSTRIES LTD. VS. ITO 362 ITR 542 (GUJ.) WHERE THE HON'BLE HC HELD IF A PARTICULAR ISSUE IS BROUGHT TO THE NOTICE OF THE AO BY AUDIT PARTY AND AO OF HIS /HER APPLICATION OF MIND F INDS THIS GROUND AS V ALID, REOPENING OF ASSESSMENT CANNOT BE QUASHED 16 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, MERELY BECAUSE SUCH GROUND WAS BROUGHT TO THE NOTICE OF AO BY THE AUDIT PARTY. EVEN ACCORDING TO US, IN THIS CASE, THE AO HA D AMPLE R EASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND THUS HAD RIGHTLY ISSUED THE NOTICE U/S.148 TO THE APPELLANT AFTER RECORDING REASONS FOR REOPENING. IN THIS WAY, THE AO WAS WELL WITHIN JURISDICTION AND ACTED IN ACCORDANCE WITH THE PROVISIONS OF THE I.T. ACT. ACCORIDINGLY, THE LD. C IT(A) HAD RIGHTLY DISMISSED THIS GROUND. 11. EVEN BEFORE US, N O NEW FACTS O R CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS SO RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DIS MISSED . 17 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, GROUND NO. 4 12 . THIS GROUND IS RAISED BY THE ASSESSEE CONSEQUENTIAL IN NATURE, THEREFORE THIS GROUND BECOMES INFRUCTUOUS. GROUND NO. 5 13 . THESE GROUND RAISED BY THE ASSESSEE ARE GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 14. IN THE NET RESULT , THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JAN, 2019. SD/ - SD/ - ( B. R. BASKARAN ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 16 . 01 .201 9 SR.PS . DHANANJAY 18 I.T.A. NO. 2474 /MUM/201 8 SHRI PARASMAL K. JAIN, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI