Genuineness of purchase must be proved and employees contribution of PF or ESI deducted from salary cannot be treated as income if deposited to the authority within prescribed p

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
Although all these appeals have been filed by the revenue however the ld. AR submitted that under Rule 27 of Income Tax (Appellate Tribunal) Rules, 1963, assessee wants to support order on the ground of reopening decided against the assessee by the CIT (A). The ld. AR submitted that there was no valid assumption of jurisdiction u/s 147 of the Income-tax Act, 1961 on the basis of which assessment was reopened u/s 147 of the Act. Ld. AR pleaded that notice u/s 148 was without jurisdiction. The reasons recorded are highly illusory and are in the nature of mere pretence. The proceedings have been initiated to examine certain transactions of purchases of the assessee. Thus, the proceedings were initiated only for the purposes of investigation. There is no material or evidence to allege that the income of the assessee company has escaped assessment. Ld. AR further pleaded that there must be existence of tangible material or formation of belief which is a pre-requisite for initiation of action u/s 147 of the Act. Section 147 postulates that Assessing Officer must have reason to believe that income has escaped assessment and there should be facts before Assessing Officer which reasonably give rise to the belief. Ld. AR pleaded that there was no material which has nexus with the formation of the reason to believe by the Assessing Officer. Ld. AR also pleaded that reassessment proceedings cannot be initiated only on the basis of reason to suspect. Ld. AR relied on the decision of Hon'ble Delhi High Court in the case of Bawa Abhai Singh reported in 253 ITR 83 (Del.). Ld. AR also submitted that the reasons to suspect are not the same as reasons to believe. For this, he relied on the decision of Hon'ble Supreme Court in the case of CIT vs. Indian Oil Corporation reported in 158 ITR 956 (SC). Ld. AR also submitted that the reason to believe must have a rational connection with or relevant bearing on the formation of the belief. For this, he relied on the decision of Hon'ble Supreme Court in the case of ITO vs. Lakhmani Mewal Das reported on 103 ITR 437 (SC). Finally, Ld. AR pleaded to set aside the order of the CIT (A) on this issue.

Citation :
ACIT, Central Circle 7, New Delhi. (APPELLANT) Vs. M/s. Shakti Bhog Foods Pvt. Ltd., 24, SSI Industrial Area, G.T. Karnal Road, DELHI. (PAN: AAACS4153M) (RESPONDENT)