ACIT vs Shree Anjaney Traders LLP

1)

On the facts and circumstances of the case, the Ld. CIT(A)/NFAC has erred in deleting all the additions of Rs.3,93,15,422/-(20% of unaccounted sales/purchase of Rs. 19,65,77,110/-) on account of unaccounted sales/purchases, as assessee failed to prove genuineness of entries in this regard. That on the facts and circumstances of the case, the Ld. CIT(A)/NFAC has ignored the fact the quantity of closing stock around 46,64985kg (around 50 lakh KG), which require to store, huge storage is needed. As the assessee does not have any go-down, the amount of rent payment of Rs. 12,04,175/- is very less in comparison to closing stock. On the facts and circumstances of the case, the Ld. CIT(A) has ignored the fact that as per audit report the closing stock of value Rs. 115,11,00,777/- has not been verified by the Auditor, the value of closing stock was taken as per certification of partners. Assessee has failed to provide supporting proof of closing stock of value Rs. 115,11,00,777/-.

2)

On the facts & circumstances of the case, the Ld. CIT(A) has ignored the fact that assessee has shown bogus purchases amounting to Rs. 19,65,77,110/- from five parties i.e. Ram Sing Prop. Shiv Traders, Dev Rajpoot Prop. Dev Traders & Nirbhya Kausihik Prop. UV Impex, are of suspicious credentials and their GST registration was suo motto cancelled OR suspended. On the facts and circumstances of the case, the Ld CIT(A) has ignored the fact that the transporter vendor Mohit Cargo Movers Prop. Mohit Arora (GSTIN: 09AFIPA8721R2ZV) GST registration has been cancelled on 31.01.2018, from which it is evident that the bills are bogus and no such delivery took place.

1.

That in view of the facts and circumstances of the case, the notice issued under section 148, order passed under section 148A(d) and Assessment Order passed under Section 147 read with section 143(3) are illegal, bad in law, without jurisdiction and barred by time limitation

2.

That in view of the facts and circumstances of the case, the notice issued under section 148, order passed under section 148A(d) and Assessment Order passed under Section 147 read with section 143(3) are illegal, bad in law, without jurisdiction and liable to be quashed particularly in view of the fact that the issue on which the case was reopened, no addition was made in that aspect and in view of the fact that no appeal is filed before the Tribunal on the issue of loans received.

3.

That in view of the facts and circumstances of the case, the notice under section 148 is issued on the basis of wrong facts and as such the said notice, order passed under section 148A(d) and Assessment Order passed under Section 147 read with section 143(3) are liable to be quashed.

4.

That the evidence filed and materials available on record have not been properly construed and judiciously interpreted, hence the additions/disallowances made are uncalled for.

5.

That the addition made is illegal, unjust, and arbitrary and based on conjectures and surmises. The same cannot be justified on the basis of material available on record.

“22.

We have approached the issue of interpretation that has arisen for decision in these appeals. both as a matter of first principle, based on the language used in s. 147(1) and on the basis of the precedent on the subject. We agree with the submissions which has been urged on behalf of the assessee that s. 147(1) as it stands postulates that upon the formation of a reason to believe that income chargeable to tax has escaped assessment for any assessment year, the AO may assess or reassess such income "and also" any other income chargeable to tax which comes to his notice subsequently during the proceedings as having escaped assessment. The words "and also" are used in a cumulative and conjunctive sense. To read these words as being in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion of Expln. 3 to s. 147. Parliament must be regarded as being aware of the interpretation that was placed on the words "and also" by the Rajasthan High Court in Shri Ram Singh (supra). Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the plenitude of its legislative powers to do so, the provisions of s. 147(1) as they stood after the amendment of 1st April, 1989 continue to hold the field. 23. In that view of the matter and for the reasons that we have indicated, we do not regard the decision of the Tribunal in the present case as being in error. The question of law shall, accordingly, stand answered against the Revenue and in favour of the assessee. The appeal is, accordingly, dismissed. There shall be no order as to costs.”

“18.

We are in complete agreement with the reasoning of the Division Bench of Bombay High Court in the case of Jaganmohan Rao (supra) [sic-Jet Airways (I) Ltd. (supra)]. We may also note that the heading of s. 147 is "Income escaping assessment" and that of s. 148 "Issue of notice where income escaped assessment". Sec. 148 is supplementary and complimentary to s. 147. Sub-s. (2) of s. 148 mandates reasons for issuance of notice by the AO and sub-s. (1) thereof mandates service of notice to the assessee before the AO proceeds to assess, reassess or recompute escaped income. Sec. 147 mandates recording of reasons to believe by the AO that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Expin. 3 if during the course of these proceedings the AO comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature could not be presumed to have intended to give blanket powers to the AO that on assuming jurisdiction under s. 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before AO during the course of proceedings of required to issue a fresh notice under s. 148. assessment or reassessment of escaped income, and which he intends to take into account, he would be 19. In the present case, as is noted above, the AO was satisfied with the justifications given by the assessee regarding the items viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, he found the deduction under ss. 80HH and 80-l as claimed by the assessee to be not admissible. He consequently while not making additions on those items of club fees, gifts and presents, etc., proceeded to make deductions under ss. 80Hand 80-1 and. accordingly reduced the claim on these accounts. 20. The very basis of initiation of proceedings for which reasons to believe were recorded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the AO proceeded to reduce the claim of deduction under ss. 80HH and 80-l which as per our discussion was not permissible. Had the AO proceeded not (sic) to make disallowance in respect of the items of club fees, gifts and presents, etc., then in view of our discussion as above, he would have been justified as per Expln. 3 to reduce the claim of deduction under ss. 80HH and 80-1 as well. 21. In view of our above discussions, the Tribunal was right in holding that the AO had the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated but he was not so justified when the reasons for the initiation of those proceedings ceased to survive. Consequently, we answer the first part of question in affirmative in favour of Revenue and the second part of the question against the Revenue. 22. The present appeal is accordingly allowed.”

“…We are conscious of the elongation of the scope of reassessment by Direct Tax laws (Amendment) Act, 1987, w.e.f. 1st April, 1989. However, we find that s. 147 mandates the basic condition that 'if the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of ss. 148;to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section........ A bare perusal of this section reveals that there is no bar on the powers of the AO to put to" tax 'any other income chargeable to tax which has escaped assessment and which subsequently comes to his notice in the course of proceedings'. However, the important words prefixing are "and also" which succeed to any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of ss. 148 to 153, assess or reassess such income". On a plain reading of the section, it becomes abundantly clear that existence of income for which the AO formed belief to have escaped assessment is precondition for including any other income chargeable to tax escaping assessment and coming to the notice of the AO subsequently in the course of proceedings. Unless and until "such income" as giving reasons to form belief for escaping assessment continues to exist and constitutes the subject-matter of assessment unders.147, no "other income" coming to the notice of the AO during the course of proceedings can be roped in. The obvious reason is the distinction in the ambit of regular assessment under s. 143(3) and reassessment under s. 147. Whereas the former section empowers the AO to make assessment when the return is filed under s. 139 or in response to notice unders. 142(1) if he considers it necessary or expedient to ensure that the assessee had not understated income or has not computed excess loss or has not underpaid the tax in any manner, s. 147 envisages the prima facie belief of the AO that income chargeable to tax has escaped assessment/in order to invoke the power unders. 147 he has to form reason to believe for escapement of income. Unless such reasons positively exist, no cognizance can be taken of the provisions enshrined in later sections, as they create the foundation for assuming jurisdiction under s. 147. Coming back to the point in issue, we find that all the reasons recorded by the AO for issuance of notice under s. 148 were non-existent…”

ITA No.8783/DEL/2025