Case Law Details
ACIT Vs Shiv Vegpro Pvt. Ltd. (ITAT Jaipur)
Reopening after 4 years in absence of failure of Assessee to disclose fully & truly all material facts necessary for assessment is invalid
AO has even not mentioned as on what account or transactions the assessee has taken the accommodation entry from Shree Ram Trading Co. It appears that the AO has just narrated the contents as received by him from the Investigation Wing without having all the details and Investigation Report. The AO even in the assessment order has not made any reference of investigation carried out by him during the course of reassessment proceedings but he has simply relied on the information received from the Investigation Wing and the queries raised to the assessee which was replied by the assessee. Apart from seeking the explanation from the assessee, the AO has not conducted any enquiry in respect of the said information from the party concerned who has allegedly made the statement of providing accommodation entries. Thus it is apparent that the reasons recorded by the AO are vague and do not reveal even the nature of transactions in the garb of which the alleged accommodation entries were received by the assessee. Further, the AO in the reasons recorded has not even alleged that there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. In the absence of such an allegation or failure on the part of the assessee, the reopening after 4 years from the end of the assessment year when the original assessment was completed under section 143(3) is not permitted. The ld. DIR has relied upon the Explanation-1 to section 147, however, said explanation has a limited application only to consider the plea of the assessee that he has produced the books of accounts before the AO and thereby all the facts and details were disclosed during the course of scrutiny assessment. In the case in hand, when finally the accommodation entries were found to be on account of sales made by the assessee which is the primary record as part of the Profit & Loss account as well as computation of income and, therefore, in the absence of any allegation by the AO, the Explanation-1 to section 147 cannot be pressed into service. All the sales including the sales in dispute are duly accounted in the books of account which were audited and subject to scrutiny of the Commercial Taxes Department, therefore, the assessee cannot be held guilty for not furnishing all the information necessary for assessment. If the AO proposed to treat some of the sale transactions as bogus, then the assessee is not expected to disclose any other fact than the transaction itself which is duly recorded in the books of account and part of the primary record of the assessee. Therefore, the primary facts disclosed by the assessee at the time of original assessment and in the absence of any allegation on the part of the AO in the reasons recorded for reopening that there is a failure on the part of the assessee to disclose fully and truly all the relevant facts necessary for assessment, the reopening is hit by the provisions of section 147.
Accordingly in view of the above facts and circumstances as well as the legal proposition as laid down in various decisions by the Hon’ble High Courts, the reopening of the assessment is not valid and the same is liable to be quashed.
FULL TEXT OF THE ITAT JUDGEMENT
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