R.S. Syal ORDER
R.S. Syal, Vice President
1. These two appeals by the assessee relating to the assessment years 2010-11 & 2011-12 arise out of the common order passed by the Commissioner of Income-tax (Appeals) - 2, Pune on 22-06-2018.
2. Briefly stated, the facts for A.Y. 2010-11 are that the Assessing Officer (AO) got information from the Sales Tax Department that the assessee received fake purchase bills from Hawala dealers, listed on page 2 of the assessment order, to the tune of Rs. 1,28,26,897/-. Notice was issued u/s. 148. After entertaining objections from the assessee, the AO made addition @ 12.5% of bogus purchases amounting to Rs. 16,03,362/-.
3. Similar is the position for the A.Y. 2011-12. For this year also, the assessee was found to have received accommodation bills to the tune of Rs. 1,11,79,133/-. Applying the same percentage of 12.5%, the AO made addition of Rs. 13,97,391/-. The ld. CIT(A) upheld the assessment orders.
4. I have heard both the sides and gone through the relevant material on record. In so far as the initiation of reassessment is concerned, it is clear that the AO got specific information from the Sales tax Department about the assessee being a beneficiary of fake accommodation entries from hawala dealers. The contention of the assessee that reassessment on such basis is wrong, in my considered opinion, completely unfounded.
5. The Hon'ble Supreme Court in Raymond Woolen Mills vs. ITO MANU/SC/2045/1997 : (1999) 236 ITR 34 (SC) has held that there should be reason to believe about the escapement of income at the stage of initiation of reassessment proceedings. Sufficiency or correctness of such material cannot be considered at that stage. The Hon'ble Apex Court has held in ACIT vs. Rajesh Jhaveri Stock Broker (P) Ltd. MANU/SC/2389/2007 : (2007) 291 ITR 500 (SC) that : 'The word "reason" in the phrase "reason to believe" would mean cause or justification. If the AO has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion'. Explaining the position further, it laid down that: 'at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the AO is within the realm of subjective satisfaction.'
6. At this stage, it is relevant to take note of the judgment of the Hon'ble Supreme Court in Phoolchand Bajrang Lal and Anr. vs. ITO and Anr. MANU/SC/0361/1993 : (1993) 203 ITR 456 (SC), in which the AO's jurisdiction to initiate reassessment was challenged. Repelling the assessee's arguments, the Hon'ble Supreme Court held that an ITO acquires jurisdiction to reopen assessment under s. 147(a) r/w. s. 148 only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons which he must record, to believe that by reason of omission of failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profit or gains chargeable to income-tax has escaped assessment. He may start reassessment proceedings either because some fresh facts come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tend to expose the untruthfulness of those facts. In that case, the ITO was held to h........