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2021 (4) TMI 636 - AT - Income TaxReopening of assessment u/s 147 - not supplying of reasons for reopening of the assessment - HELD THAT - We are of the view that there is no merit in the contention of the assessee that reason for reopening was not furnished to him. Since it is evident from the material placed on record from the assessment record that assessee has been supplied reasons for reopening the assessment therefore the judicial pronouncements referred by the assessee of Hon ble Court of Bombay in the case of CIT Vs. IDBI Ltd. 2016 (10) TMI 166 - BOMBAY HIGH COURT are distinguishable from the facts of the case of the assessee and not applicable to the case of the assessee. In the light of the above circumstances, we do not find any justification of the contention of the assessee that no reasons for reopening of the assessment under section 147 was furnished to the assessee, and therefore, we reject this ground of appeal. Addition on account of alleged quantum of sales without invoices based on the information supplied by the DGCEI - HELD THAT - First appellate authority, in his final conclusion recorded a finding that during the appellate proceedings the appellant has submitted that the AO has rectified the mistake of quantum by taking gross profit @19.02% and has passed a rectification order under section 154 of the Act by taking the gross profit at 9.70%, and accordingly, this has resulted into a reduced addition of ₹ 17,20,563/- and not ₹ 33,73,722/- as made by the AO in his assessment framed under section 143(3)/147 of the Act. This means, the assessee himself has agreed in principle to the addition at the rate of 9.70% of GP. Even during the assessment proceedings, the assessee has not disputed or denied selling of products out of books of accounts without invoices. Therefore, we do not find any infirmity in the conclusion of the ld.CIT(A) to confirm the addition to the extent of 9.70% of GP to the income of the assessee on account of sales without invoice. Accordingly, his order is confirmed, and this ground of appeal is dismissed. Sham transaction - HELD THAT - CIT(A) referred to statement recorded under section 131 on 1.5.2013 and answers given to question no.2, 5 and 6, in which they explained the modus operandi of the transaction and how the accommodation entries are given. Assessee has not disputed transaction between the assessee and the M/s. Vitale Bio Science Ltd. Transaction was unearthed on the basis of information received from the office of Dy. Commissioner of Income Tax, Cent.Cir.1(4), Ahmedabad in which it was mentioned that a search under section 132 of the Act was conducted in the case of M/s. VITALE Bio Science Ltd. and during the search directors of the company admitted of providing accommodation entry, which statement was not denied by the assessee except by making a bald statement that the statement given by the directors are general in nature. The ld. CIT(A) has made detailed analysis of the material available on record and justified the action of the AO in making the impugned order. We do not find any infirmity in the order both the authorities below accordingly, we reject this ground appeal. TDS u/s 195 - Addition u/s. 40(a)(i) on failure of the assessee to deduct tax at source on payment of commission to various persons outside India - assessee has not furnished form no. 15CA and 15CB - HELD THAT - In the instant case, the Assessing Officer has not disproved the claim of the assessee that non-resident agents had procured order abroad and no services were rendered in India. The payments have been made directly to the non-resident abroad. The Assessing Officer has also failed to controvert the claim of the assessee that foreign agents were not having any business connection in India. In spite of scrutiny assessment, the Assessing Officer had merely referred non-submission of form no. 15C and 15CB but did not make any investigation/verification to disprove the material facts reported by the assessee as stated above in this order. The Assessing Officer has not brought any material on record to substantiate that income was accrued in India or deemed to accrue in India. Therefore, CIT(A) is not justified in confirming the action of the Assessing Officer. Therefore, this ground of appeal of the assessee is allowed. Difference of income shown in the 26AS - HELD THAT - CIT(A) has restored the issue pertaining to the amount of ₹ 69,06,808/- to the file of the Assessing Officer with direction that if assessee has already offered the same amount in F.Y. 2011-12 then the same should be deleted. Therefore, the ld. CIT(A) has restricted the addition only to the extent of ₹ 2,79,660/- which was remained unexplained. After perusal of the aforesaid facts and findings of the ld. CIT(A) we consider that ld. CIT(A) has rightly restored the issue to the extent of ₹ 69,06,808/- to the file of Assessing Officer as per the claim made by the assessee for verification as the same was shown as income for F.Y. 2011-12 with direction to delete the same if it is found correctly reported by the assessee. In respect of remaining amount of ₹ 2,79,660/- the assessee has neither explained before the lower authorities nor furnished any explanation during the course of appellate proceedings before us, therefore, we do not find any infirmity in the decision of ld. CIT(A).
Issues Involved:
1. Validity of reassessment proceedings. 2. Addition of Gross Profit (GP) on unaccounted sales. 3. Addition of ?26,25,000/- based on alleged sham transaction. 4. Disallowance of foreign commission under section 40(a)(i). 5. Addition based on difference in income declared in Profit & Loss Account and Form 26AS. Issue-wise Detailed Analysis: 1. Validity of Reassessment Proceedings: - Assessee's Contention: The reassessment proceedings were bad in law as the reasons for reopening the assessment were not supplied. - Tribunal's Finding: The department provided evidence showing that reasons for reopening were supplied to the assessee. Hence, the contention that reassessment was invalid was rejected. 2. Addition of Gross Profit on Unaccounted Sales: - Facts: The assessee was engaged in manufacturing and trading of steel products. Information from DGCEI indicated unaccounted sales worth ?1,77,37,760/- through M/s. Shakti Freight Carriers without invoices. The AO applied a GP rate of 19.02% on these sales, resulting in an addition of ?33,73,722/-. - Assessee's Argument: The actual amount of unaccounted sales was ?1,33,70,948/-. The assessee argued for a GP rate of 9.70% instead of 19.02%. - Tribunal's Decision: The AO rectified the GP rate to 9.70%, reducing the addition to ?17,20,563/-. The Tribunal upheld this rectified addition as the assessee had agreed to the 9.70% GP rate. 3. Addition of ?26,25,000/- Based on Alleged Sham Transaction: - Facts: During a search, it was found that M/s. Vitale Bio Science Ltd. provided accommodation entries. The AO added ?26,25,000/- received from this entity to the assessee's income. - Assessee's Defense: The assessee provided documents to prove the genuineness of the transaction. - Tribunal's Conclusion: The Tribunal upheld the addition, noting that the directors admitted to providing accommodation entries and the assessee failed to disprove the sham nature of the transaction. 4. Disallowance of Foreign Commission under Section 40(a)(i): - Facts: The AO disallowed ?36,98,579/- paid as foreign commission for non-deduction of tax at source. - Assessee's Argument: The foreign parties operated outside India with no business connection in India, hence no tax was deductible. - Tribunal's Ruling: The Tribunal allowed the appeal, stating that the AO did not prove that the income was taxable in India. The requirement to furnish Form 15CA/15CB does not imply a tax deduction obligation if the income is not taxable in India. 5. Addition Based on Difference in Income Declared in Profit & Loss Account and Form 26AS: - Facts: The AO added ?71,86,468/- as suppressed income based on discrepancies between the income declared and Form 26AS. - CIT(A)'s Action: The CIT(A) restricted the addition to ?2,79,660/- and remanded ?69,06,808/- for verification. - Tribunal's Decision: The Tribunal upheld the CIT(A)'s decision, noting that the assessee did not provide any explanation for the remaining ?2,79,660/-. Combined Result: - Appeals for assessment years 2009-10 and 2010-11 were dismissed. - Appeals for assessment years 2011-12 and 2013-14 were partly allowed for statistical purposes.
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