M/s Reliance Chemotex Industries Ltd., Kolkata V. D.C.I.T.,Circle-10(2), Kolkata

ITA 58/KOL/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6418 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-08-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 14-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: AJOY KR GUPTA
• Keywords: Reopening of assessment; Accommodation entries; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

1 ITA NO. 58/KOL/2020 M/S. RELIANCE CHEMOTEX IND. LTD., AY 2011-12 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI A. T. VARKEY, HONBLE JUDICIAL MEMBE R AND DR. M. L. MEENA, HONBLE ACCOUNTANT MEMBER] I.T.A. NO. 58/KOL/2020 ASSESSMENT YEAR: 2011-12 M/S. RELIANCE CHEMOTEX IND. LTD. [PAN: AABCR 3739 H] VS. DCIT, CIRCLE 10(2), KOLKATA APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 03.08.2021 DATE OF PRONOUNCEMENT 25.08.2021 FOR THE APPELLANT SHRI AJOY KR. GUPTA, AR FOR THE RESPONDENT SHRI SUPRIYO PAL, ADDL. CIT ORDER PER SHRI A.T. VARKEY: THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF LD. CIT(A)-4, KOLKATA DATED 29.11.2019 FOR ASSESSMENT YEARS 2011- 12. 2. AT THE OUTSET THE LD. A.R. OF THE ASSESSEE SHR I AJOY KR. GUPTA DRAWING OUR ATTENTION TO THE GROUNDS OF APPEAL PREFERRED BY IT SUBMITTED THAT THE ASSESSEE HAS CHALLENGED THE ACTION OF AO TO HAVE INVOKED THE REOPENING JURI SDICTION U/S 147 OF THE ACT WITHOUT SATISFYING THE ESSENTIAL CONDITION PRECEDENT I.E. T HE AO RECORDING REASON TO BELIEVE ESCAPEMENT OF INCOME AS PER WELL SETTLED LAW ON THE SAME. ACCORDING TO LD. A.R. FROM A PERUSAL OF REASONS RECORDED BY THE AO TO REOPEN THE ASSESSMENT WHICH IS PLACED AT PAGE 4 OF THE PB IT WOULD REVEAL THAT THE AO HAS REOPENED THE ASSESSMENT ON THE BASIS OF CERTAIN INFORMATION FROM THE INVESTIGATION WING THAT THE AS SESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRY FROM SHRI GAUTAM JAIN ( SURAT BASED DIAMOND CONCERN ) TO THE TUNE OF RS. 12,33,210/- AND THEREFORE HE REOPENED IT WHE REAS WHILE FRAMING THE ASSESSMENT THE AO HAS CHANGED THE FACTS IN CONTRA-DISTINCTION WITH THE FACTS STATED IN THE REASONS RECORDED TO REOPEN I.E. IN THE ASSESSMENT FRAMED PURSUANT TO REOPENING THE AO HAS MADE A NEW ALLEGATION THAT THE ASSESSEE HAS TAKEN ACCOMMODATIO N ENTRY FROM M/S RAJAT GEMS (RS. 6,16,605/-) AND M/S RANJAN GEMS (RS. 6,16,605/-); A ND THEREAFTER TAKING NOTE THAT THE 2 ITA NO. 58/KOL/2020 M/S. RELIANCE CHEMOTEX IND. LTD., AY 2011-12 ASSESSEE HAS PURCHASED GOLD AND DIAMOND JEWELLERY O F RS. 6,16,605/-, M/S RANJAN GEMS HAS MADE AN ADDITION OF RS. 6,16,605/- ( IN PLACE OF HIS ALLEGATION IN THE REASONS RECORDED OF RS.12,33,220/- ). FROM THE AFORESAID FACTS NARRATED, ACCORDING TO LD. A.R., IT IS QUITE CLEAR THAT THE BASIS OF REOPENING HAS UNDERGONE CHA NGES FROM THE NAME OF ACCOMMODATION ENTRY OPERATOR (I.E. GAUTAM JAIN TO RANJAN GEMS AND THE ESCAPED INCOME C HANGED FROM RS.12,33,330/- TO RS.6,16,605/- ). THEREFORE, ACCORDING TO LD. A.R. WHEN THE JURISD ICTIONAL FACT ON THE BASIS OF WHICH THE REOPENING WAS CARRIE D OUT BY THE AO WAS ON INCORRECT ASSUMPTION OF FACTS, THE VERY BASIS/FOUNDATION ON W HICH THE AO RECORDED THE REASONS ON THE BASIS OF WHICH HE FORMED HIS BELIEVE IS NOT EXI STING AND THEREFORE, ON CHANGED FACTS HE COULD NOT HAVE PROCEEDED TO REASSESS THE ASSESSEE. SO, ACCORDING TO LD. AR., THE AO COULD NOT HAVE INVOKED THE JURISDICTION TO REOPEN IN THE FACTS DISCUSSED (SUPRA) AND THEREFORE, THE IMPUGNED ORDER OF AO NEEDS TO BE QUASHED. 3. PER CONTRA, THE LD. D.R SHRI SUPRIYO PAL SUPPORT ING THE ACTION OF AO AND LD. CIT(A) AND CONTENDED THAT THE AO HAS CLEARLY MENTIO NED IN HIS ORDER THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRY FROM RANJAN GEMS AND IN THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS ACCEPTED TO HAVE TRANSACTION WITH THEM TO THE TUNE OF RS. 6,16,605/-; AND SINCE THE AO HAD INFORMATION THAT RANJAN GEMS ARE I NDULGING IN PROVIDING ACCOMMODATION ENTRIES, THEREFORE, AO FORMED THE BEL IEF THAT THERE WAS ESCAPEMENT OF INCOME AND THEREAFTER HE TAXED IT. THEREFORE HE DOE S NOT WANT US TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) WHO HAS DISMISSED THE LEGAL ISSUE RAISED BY THE ASSESSEE. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. BEFORE WE ADVERT TO THE LEGAL ISSUE RAISED BY THE ASSESSEE LET US EXAMINE T HE SETTLED LEGAL PRECEDENTS ON THE REOPENING OF ASSESSMENT AS WELL AS REFRESH OUR MIND AS TO THE CONCEPT OF ASSESSMENT OF AN INCOME OF AN ASSESSEE. FIRST OF ALL, WE HAVE TO KE EP IN MIND THAT THE CONCEPT OF ASSESSMENT IS GOVERNED BY THE TIME BARRING RULE AND ASSESSEE A CQUIRES A RIGHT AS TO THE FINALITY OF PROCEEDINGS. QUIETUS OF THE COMPLETED ASSESSMENTS CAN BE DISTURBED ONLY WHEN THERE IS INFORMATION OR EVIDENCE REGARDING UNDISCLOSED INCO ME OR AO HAS INFORMATION IN HIS POSSESSION SHOWING ESCAPEMENT OF INCOME. EVEN IF T HE AO HAS INFORMATION IN HIS POSSESSION THAT THERE IS ESCAPEMENT OF INCOME OF AN ASSESSEE, THEN ALSO THE AO CANNOT LEGALLY/VALIDLY REOPEN THE ASSESSMENT U/S. 147 OF T HE ACT UNLESS THE JURISDICTIONAL FACT AND 3 ITA NO. 58/KOL/2020 M/S. RELIANCE CHEMOTEX IND. LTD., AY 2011-12 LAW WHICH IS REQUIRED TO REOPEN AN ASSESSMENT EXIST I.E. THE AO SHOULD HAVE REASONS TO BELIEVE ESCAPEMENT OF INCOME. REASONS TO BELIEVE POSTULATES A FOUNDATION BASED ON INFORMATION AND BELIEF BASED ON REASONS. EVEN AFTE R A FOUNDATION BASED ON INFORMATION IS MADE, THERE STILL MUST BE SOME REASON WHICH SHOULD WARRANT HOLDING OF A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. T HIS CONDITION PRECEDENT IS SINE-QUA- NON FOR VALIDITY REOPENING AN ASSESSMENT. AND THE A O HAS TO RECORD THE REASONS THUS FORMED AND THEREAFTER ONLY HE CAN SUCCESSFULLY REOP EN AND ISSUE NOTICE U/S 148 OF THE ACT. AND IF AN ASSESSEE CHALLENGES THE JURISDICTION OF A N AO TO REOPEN THE ASSESSMENT, THEN THE APPELLATE AUTHORITIES CAN EXAMINE WHETHER THE REASO NS RECORDED BY THE AO TO REOPEN THE ASSESSMENT, SATISFIES THE LEGAL REQUIREMENT FOR VAL IDLY REOPEN THE ASSESSMENT. WHILE DOING SO, THE APPELLATE FORUM CANNOT INVESTIGATE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE AO IN COMING TO THE BEL IEF (ESCAPEMENT OF INCOME), BUT THE APPELLATE FORUM CAN CERTAINLY EXAMINE WHETHER THE R EASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTER IN REGARD TO WHICH HE IS REQU IRED TO ENTERTAIN THE BELIEF BEFORE HE CAN ISSUE NOTICE U/S. 148 OF THE ACT. IF THERE IS NO I NTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF, SO THAT ON SUCH REASON, NO ONE PROPERLY INSTRUCTED ON FACTS AND LAW COULD REASONABLY ENTERTAIN THE BELIEF, THEN THE CONCLUSIO N WOULD BE FRAGILE AND RESULTANTLY THE INESCAPABLE CONCLUSION WOULD THAT THE AO COULD NOT HAVE HAD ENTERTAINED THE REQUISITE REASON TO BELIEVE THAT ANY PART OF ASSESSEES INCO ME HAD ESCAPED ASSESSMENT. CONSEQUENTLY THE REOPENING MADE BY AO WOULD BE HELD INVALID AND THE REASSESSMENT WOULD BE NIXED. IN THIS CONTEXT LET US LOOK AT SOM E WELL SETTLED JUDICIAL PRECEDENTS ON THE ISSUE IN HAND. IT IS WELL SETTLED IN LAW THAT REASO NS, AS RECORDED BY THE AO FOR REOPENING THE REASSESSMENT, ARE TO BE EXAMINED ON A STAND ALONE B ASIS. NOTHING CAN BE ADDED TO THE REASONS SO RECORDED, NOR ANY THING CAN BE DELETED F ROM THE REASONS SO RECORDED. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN LEVER [2004] 267 ITR 332 HAS INTERALIA, OBSERVED THAT .. IT IS NEEDLESS TO MENTION THAT THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE AO. NO SUBS TITUTION OR DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENC E CAN BE ALLOWED TO BE DRAWN ON THE BASIS OF REASON NOT RECORDED BY HIM. HE HAS TO SPEA K THROUGH THE REASONS. THEIR LORDSHIP ADDED THAT THE REASONS RECORDED SHOULD BE SELF-EXP LANATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING FOR REASONS. REASONS PROVIDE LINK BETWEEN CONCLUSION & THE 4 ITA NO. 58/KOL/2020 M/S. RELIANCE CHEMOTEX IND. LTD., AY 2011-12 EVIDENCE. THEREFORE IT HAS TO BE KEPT IN MIND T HAT REASONS ARE TO BE EXAMINED ONLY ON THE BASIS OF THE REASONS AS RECORDED BY THE AO. ANOTHER IMPORTANT POINT IS THAT EVEN THOUGH REASONS, AS RECORDED, MAY NOT NECESSARILY PR OVE ESCAPEMENT OF INCOME AT THE STAGE OF RECORDING THE REASONS, SUCH REASONS MUST POINT O UT TO AN INCOME ESCAPING ASSESSMENT AND NOT MERELY NEED OF AN INQUIRY WHICH MAY RESULT IN DETECTION OF AN INCOME ESCAPING ASSESSMENT. UNDOUBTEDLY AT THE STAGE OF RECORDING T HE REASONS FOR REOPENING THE ASSESSMENT; ALL THAT IS NECESSARY IS THE FORMATION OF PRIMA FACIE BELIEF THAT AN INCOME HAS ESCAPED THE ASSESSMENT; AND IT IS NOT NECESSARY THA T THE FACT OF INCOME HAVING ESCAPED IS PROVED TO THE HILT. WHAT IS HOWEVER, NECESSARY IS T HAT THERE MUST BE SOMETHING WHICH INDICATES EVEN IF NOT ESTABLISHES THE ESCAPEMENT OF INCOME FROM ASSESSMENT. IT IS ONLY ON THIS BASIS THAT THE AO CAN FORM THE BELIEF THAT AN INCOME HAS ESCAPED ASSESSMENT. AND MERELY BECAUSE SOME FURTHER INVESTIGATION HAVE NOT BEEN CARRIED OUT, WHICH IF MADE, COULD HAVE LED TO DETECTION TO AN INCOME ESCAPING ASSESSM ENT, CANNOT BE REASON ENOUGH TO HOLD THE VIEW THAT INCOME HAS ESCAPED. IT IS ALSO IMPORT ANT TO BEAR IN MIND THE SUBTLE BUT IMPORTANT DISTINCTION BETWEEN FACTOR WHICH INDICATE AN INCOME ESCAPING THE ASSESSMENT AND THE FACTORS WHICH INDICATES A LEGITIMATE SUSPIC ION ABOUT INCOME ESCAPING THE ASSESSMENT. THE FORMER CATEGORY CONSISTS OF THE FA CTS WHICH, IF ESTABLISHED TO BE CORRECT, WILL HAVE A CAUSE & EFFECT RELATIONSHIP WITH THE IN COME ESCAPING ASSESSMENT. THE LATER CATEGORY CONSISTS OF FACTS, WHICH, IF ESTABLISHED T O BE CORRECT, COULD LEGITIMATELY LEAD TO FURTHER INQUIRIES WHICH MAY LEAD TO DETECTION OF AN INCOME WHICH HAS ESCAPED ASSESSMENT. THERE HAS TO BE SOME KIND OF CAUSE & EFFECT BETWEEN REASONS RECORDED AND THE INCOME ESCAPING ASSESSMENT. WHILE DEALING WITH THIS SUBJE CT IT IS USEFUL TO BEAR IN MIND THE FOLLOWING OBSERVATION OF HONBLE SUPREME COURT IN I TO VS. LAKHMANI MEWAL DAS [1976] 103 ITR 437 WHEREIN WAS HELD AS FOLLOWS: THE REASONS FOR THE FORMATION OF THE BELIEF MUST H AVE A RATIONAL CONNECTION WITH OR RELEVANT BEARING OF THE FORMATION OF THE BELIEF . R ATIONAL CONNECTION POSTULATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MAT ERIAL COMING TO THE NOTICE OF THE ITO AND THE FORMATION OF HIS BELIEF THAT THERE HAS BEEN ESCAPEMENT OF INCOME OF THE ASSESSEE FROM THE ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FAILURE TO DISCLOSE FULLY & TRULY ALL MATERIAL FACTS. IT IS NO DOUBT TRUE THAT THE CO URT CANNOT GO INTO THE SUFFICIENCY OR ADEQUACY OF THE MATERIAL & SUBSTITUTE ITS OWN OPINI ON FOR THAT OF THE ITO ON THE POINT AS TO WHETHER ACTIONS SHOULD BE INITIATED FOR REOPENING A SSESSMENT. AT THE SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT THAT ANY OR EVERY MATER IAL, HOWSOEVER VAGUE AND INDEFINITE OR 5 ITA NO. 58/KOL/2020 M/S. RELIANCE CHEMOTEX IND. LTD., AY 2011-12 DISTANT, REMOTE AND FAR-FETCHED, WHICH WOULD WARRAN T THE FORMATION OF THE BELIEF RELATING TO ESCAPEMENT OF THE INCOME OF THE ASSESSEE. 5. KEEPING THE AFORESAID LEGAL PRINCIPLES IN MIND I N ORDER TO ADJUDICATE THE LEGAL ISSUE RAISED BY THE ASSESSEE THAT THE AO DID NOT HAD THE JURISDICTION TO REOPEN THE ASSESSMENT U/S 147 OF THE ACT LET US LOOK INTO THE REASONS RECORDE D BY THE AO FOR REOPENING WHICH IS FOUND PLACED AT PAGE 4 OF PB. THE REASONS RECORDED READS AS UNDER: THE RETURN OF INCOME FOR THE AY 2011-12 FILED ON 3 0.09.2011, AT RS. 21815815/-, THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 05.02.2014 AT A TOTAL I NCOME OF RS. 65997920/-. SUBSEQUENTLY, INFORMATION RECEIVED FROM DGIT(INV.) THAT THE ASSES SEE M/S RELIANCE CHEMOTEX INDUSTRIES LTD. HAS TAKEN ACCOMMODATION ENTRIES FROM SHRI GAUTAM JAIN & ORS (SURAT BASED DIAMOND CONCERN) GROUP FOR RS. 1233210/- DURING THE FY 2010-11, ON WHICH I T HAD EARNED UNDISCLOSED INCOME. THEREFORE, I HAVE REASON TO BELIEVE THAT THE RETURN FILED BY THE ASSESSEE HAS NOT A TRUE REFLECTION OF INCOME AND THE ASSESSEE DID NOT DISCLOSE HIS TRUE A ND CORRECT INCOME DURING THE ASSESSMENT PROCEEDINGS ALSO. HENCE, INCOME OF THE ASSESSEE TO THE EXTENT OF RS. 1233210/- HAS ESCAPED ASSESSMENT. FROM A PERUSAL OF THE REASONS RECORDED IT IS DISCER NED THAT IN THE CASE OF THE ASSESSEE THE ORIGINAL ASSESSMENT U/S 143(3) WAS FRAMED ON 05.02. 2014 AND SUBSEQUENTLY THE AO BASED ON INFORMATION RECEIVED FROM DGIT(INV.) THAT THE AS SESSEE HAS TAKEN ACCOMMODATION ENTRY FROM SHRI GAUTAM JAIN & ORS ( SURAT BASED DIAMOND CONCERN ) FOR RS. 12,33,210/- ALLEGED THAT THE ASSESSEE HAD EARNED UNDISCLOSED IN COME AND THEREBY HAS NOT DISCLOSED TRUE AND CORRECT INCOME DURING THE ASSESSMENT PROCEEDING S. SO ACCORDING TO AO AN INCOME OF RS. 12,33,210/- HAS ESCAPED ASSESSMENT. PURSUANT TO THE RECEIPT OF THE REASONS RECORDED FOR REOPENING, THE ASSESSEE FILED OBJECTION BEFORE THE AO CONTENDING THAT THE ASSESSEE DID NOT HAD ANY TRANSACTION WITH THE PURPORTED ACCOMMODATIO N PROVIDER SHRI GAUTAM JAIN & ORS. THEREAFTER, IT IS NOTED THAT THE AO WHILE FRAMING T HE RE-ASSESSMENT HAS COME OUT WITH TWO DIFFERENT ACCOMMODATION ENTRY PROVIDERS I.E. M/S RA NJAN GEMS FOR RS. 6,16,605/- AND M/S RAJAT GEMS FOR RS. 6,16,605/- AND ALLEGED THAT THE ASSESSEE HAD MADE UNDISCLOSED INCOME FROM THESE TWO ACCOMMODATION ENTRY PROVIDERS AND W HEN THE ASSESSEE POINTED OUT THAT IT DID NOT HAD ANY BUSINESS DEALING WITH M/S RAJAT GEM S, THE AO DID NOT TAKE ANY ADVERSE ACTION AGAINST THE ASSESSEE IN RESPECT OF M/S RAJAT GEMS. HOWEVER, SINCE THE ASSESSEE HAD MADE PURCHASES OF GOLD AND DIAMOND JEWELLERY WORTH RS. 6,16,605/- FROM M/S RANJAN GEMS WHICH FACT THOUGH SUPPORTED BY BILLS/VOUCHERS AND PAYMENTS HAVE BEEN MADE THROUGH CHEQUE, THE AO IGNORED THE SAME AND MADE AD DITION OF RS. 6,16,605/-. ON APPEAL 6 ITA NO. 58/KOL/2020 M/S. RELIANCE CHEMOTEX IND. LTD., AY 2011-12 THE LD. CIT(A) HAS DISMISSED THE GROUNDS RAISED ON LEGAL ISSUE AS WELL AS ON MERITS. NOW WHEN WE ARE EXAMINING THE LEGAL ISSUE RAISED BY THE ASSESSEE WE NOTE THAT THE AO HAD REOPENED THE ORIGINAL ASSESSMENT FRAMED U/S. 143(3) OF THE ACT DATED 05.02.2014, BY RECORDING THE REASONS THAT THE ASSESSEE IS THE BENE FICIARY OF TAKING ACCOMMODATION ENTRY FROM ENTRY PROVIDER SHRI GAUTAM JAIN & ORS (SURAT B ASED DIAMOND CONCERN) FOR RS. 12,33,210/- WHEREAS FROM A PERUSAL OF THE RE-ASSESS MENT ORDER FRAMED, WE FIND THAT THERE IS NO WHISPER ABOUT SHRI GAUTAM JAIN & ORS. AND WHEN T HE REASSESSMENT WAS FRAMED, IT IS NOTED THAT THE AMOUNT SUPPOSED TO HAVE ESCAPED ASSE SSMENT WHILE RECORDING OF REASON HAS TAPERED DOWN FROM RS. 12,33,210/- TO RS. 6,16,605/- . IT IS SETTLED LAW THAT THE REASONS RECORDED FOR REOPENING AN ASSESSMENT, ARE TO BE EXA MINED ON A STANDALONE BASIS. NOTHING CAN BE ADDED TO THE REASONS SO RECORDED, NOR ANYTHI NG CAN BE DELETED FROM THE REASONS RECORDED. AND NO INFERENCE CAN BE ALLOWED TO BE DRA WN ON THE BASIS OF THE REASONS NOT RECORDED BY THE AO. THE AO HAS TO SPEAK THROUGH THE REASONS RECORDED AND IT SHOULD BE SELF-EXPLANATORY AND SHOULD NOT KEEP THE ASSESSEE G UESSING FOR REASON. REASONS RECORDED BY THE AO SHOULD SPEAK FOR ITSELF. [REFER HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF HINDUSTHAN LEVER (SUPRA). SINCE THE ESSENTI AL CONDITION PRECEDENT FOR REOPENING THE ASSESSMENT WAS THAT AO SHOULD HAVE REASON TO BELIEV E ESCAPEMENT OF INCOME WE FIND IN THE FACT OF THIS CASE AS DISCUSSED (SUPRA), WE FIND THAT JURISDICTIONAL FACT ON THE BASIS OF REOPENING/REASON TO BELIEVE ESCAPEMENT OF INCOME IS NOT EXISTING I.E. SHRI GAUTAM JAIN AS WELL AS ESCAPEMENT OF INCOME OF RS.12,33,210/- IS N OT EXISTING IN THE REASSESSMENT ORDER PASSED PURSUANT TO REOPENING AFTER RECORDING REASON , AND TOTALLY NEW FACTS HAVE EMERGED, SO IN THE ABSENCE OF THE FOUNDATIONAL FACTS, THE RE ASONS TO BELIEVE FORMED BY THE AO FALLS AND THE AO IN SUCH AN EVENT OUGHT TO HAVE DROPPED T HE PROCEEDINGS AND INITIATED REOPENING BY RECORDING REASON TO BELIEVE ESCAPEMENT OF INCOME SUBJECT TO LIMITATION AND IN ACCORDANCE TO LAW. AT THIS JUNCTURE WE WOULD LIKE T O POINT OUT AN IMPORTANT LEGAL PRINCIPLE THAT INFORMATION ADVERSE MAY TRIGGER REASON TO SUSPECT ; THEN THE AO TO MAKE REASONABLE ENQUIRY AND COLLECT MATERIAL WHICH WOULD MAKE HIM B ELIEVE THAT THERE IS IN FACT AN ESCAPEMENT OF INCOME. AND THE REASON TO BELIEVE OCCURRING IN SECTION 147 OF THE ACT IS STRONGER THAN THE EXPRESSION IS SATISFIED (REFER M/S GANGA SARAN VS. ITO, 130 ITR 1). HERE IN THIS CASE, THE AO IF HAD MADE SOME PRELIMIN ARY ENQUIRY AFTER RECEIPT OF INFORMATION THEN THIS KIND OF GOOF UP COULD HAVE BE EN AVOIDED. THUS IN THIS CASE THE AO 7 ITA NO. 58/KOL/2020 M/S. RELIANCE CHEMOTEX IND. LTD., AY 2011-12 HAS ERRONEOUSLY ASSUMED THE EXISTENCE OF JURISDICTI ONAL FACT/INCORRECT FACT, SO THE REASONS RECORDED TO FORM THE BELIEVE FAILS TO STAND THE SCR UTINY OF LAW, AND THE SAME WAS ON AN ERRONEOUS ASSUMPTION OF FACTS SINCE THE AOS REASON TO BELIEVE ESCAPEMENT OF INCOME WAS THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRY PROVIDER SHRI GAUTAM JAIN & ORS. WHEREAS IN THE ASSESSMENT FRAMED THERE IS NO W HISPER ABOUT SHRI GAUTAM JAIN AND THE FIGURE OF RS. 12,33,210/- HAS COME DOWN TO RS 6,16, 605/-. THEREFORE, REASON TO BELIEVE ESCAPEMENT OF INCOME WAS ON ERRONEOUS FACTS AND THE REFORE THE AO DID NOT ENJOY THE JURISDICTION TO REOPEN THE ASSESSMENT AND THEREFORE THE ASSESSEE SUCCEEDS ON THE LEGAL ISSUE RAISED AND WE QUASH THE RE-ASSESSMENT ORDER. AND WE ARE NOT INCLINED TO DECIDE THE OTHER GROUNDS RAISED CHALLENGING THE MERITS OF THE ADDITI ON, SINCE IT IS NOW ACADEMIC IN NATURE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 25 TH AUGUST, 2021. SD/- SD/- (DR. M. L. MEENA) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH AUGUST, 2021 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- M/S. RELIANCE CHEMOTEX IND. LTD., 14/1B, EZRA STREET, 6 TH FLOOR, KOLKATA 700 001. 2. RESPONDENT DCIT, CIRCLE 10(2), KOLKATA 3. THE CIT(A)- KOLKATA (SENT THROUGH E-MAIL) 4. CIT- KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY/DDO ITAT, KOLKATA BENCHES, KOLKATA