9911796707
TMI Blog2018 (1) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... of these bills is bogus and nonexistent. The Sales Tax Department in its enquiry has found the parties to be providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. I find it further strange that assessee wants the Revenue to produce assessee’s own vendors, whom the assessee could not produce. The purchase bills from these non-existent/bogus parties cannot be taken as cogent evidence of purchases. In light of the overwhelming evidence, the Revenue authorities cannot put upon blinkers and accept these purchases as genuine - Decided against assessee - I.T.A. No. 3872/Mum/2017 - - - Dated:- 5-1-2018 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER For The Appellant : None For The Respondent : Ms. N. Hemalatha ORDER Per Shamim Yahya, A. M.: This appeal by the assessee is directed against order of the ld. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Jain, an alleged bogus biller as observed by the Assessing Officer in Para-2 of the assessment order. However, the said notices were returned unserved by the postal authorities with the remark not known . Subsequently, summons u/s.131 of the Act was also issued to the said parties which were returned back undelivered with the remark not known . Thereafter, the Assessing Officer deputed his Inspector to serve notices u/s.133(6) on the said parties but as per his report, he was unable to locate the aforesaid parties. 6. After considering the issue, the Assessing Officer was of the view that the goods had been received from other sources known to the assessee which had not been disclosed to the department even after enquiry. Considering full facts of the case and in light of the facts and evidences gathered by the DGIT(Inv), Mumbai through independent enquiries, the Assessing Officer concluded that the entire amount covered under such purchases could not be taxed but the profit element embedded therein would be subject to tax. Therefore, it was held that the addition on account of non-genuine purchases from the above-mentioned parties aggregating to ₹ 1,65,85,055/- would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appears that in the absence of this information, the issue of verification of genuineness of purchases made from the said 3 parties escaped the attention of the AO while making the earlier assessments u/s.143(3) of the Act on 28.02.2011. There is nothing to indicate that any query was raised or any information was sought by the then AOs in regard to the purchases made from said 3 parties during the course of assessment. In other words, the issue was not under consideration at all in the course of said assessment. When the matter was not examined by the AO in such assessment, the appellant cannot say that reopening is an attempt to review or reinvestigate the same or that it amounts to change of opinion. In this connection, reliance is placed on judicial precedents in the cases of EMA India Ltd. v. ACIT 226 CTR (All) 659 and Consolidated Photo Finvest Ltd. v. ACIT 281 ITR 394 (Del.) wherein it has been held that the principle that a mere change of opinion cannot be a basis for reopening completed assessment would be applicable only to situations where the Assessing Officer has applied his mind and taken a conscious decision on particular matter in issue and not where the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer from DGIT Investigation (Mumbai) there are some parties who are engaged in the hawala transactions and are also involved in issuing bogus purchase bills for sale of material without delivery of goods, which information was based on information received by Revenue from Maharashtra Sales Tax Authority. Information was received that the assessee was beneficiary of hawala accommodation entries from entry providers by way of bogus purchase. The accommodation entry provider has deposed and admitted before the Maharashtra Sales Tax Authority vide statement/ affidavit that they were engaged in providing bogus accommodation entries wherein bogus sale bills were issued without delivery of goods, in consideration for commission. These, accommodation entry providers, on receipt of cheques from parties against bogus bills for sale of material, later on withdrew cash from their bank accounts, which was returned to beneficiaries of bogus bills after deduction of their agreed commission. The Assessee was stated to be one of the beneficiaries of these bogus entries of sale of material from hawala entry operators in favour of the assessee wherein the assessee made alleged bogus purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ITO v. Selected Dalurband Coal Co, (P.) Ltd. (1996) 217 ITR 597 (Supreme Court): Raymond Woollen Mills Ltd. v. ITO (1999) 236 ITR 34 (Supreme Court). 14. The above discussion and precedent from Apex Court fully justify the validity of reopening in this case. Further I find that the Ld. CIT(A) has carefully examined the issue and has properly appreciated the issue. Hence, I do not find any infirmity in the same. Accordingly, I uphold the order of the Ld. CIT(A) on the issue of reopening. Since, the issue has been decided on the basis of the Hon ble Apex Court decision, the other case laws referred by assessee are not supporting the assessee s case. 15. As regards the merits, I find that credible and cogent information was received in this case by the assessing officer that certain accommodation entry provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 18.6.2014) has upheld 100% allowance for the purchases said to be bogus when the sales have not been doubted. However, the facts of that case were different. Furthermore, the sales in that case were basically to government departments. Hence, the ratio from this decision is not applicable on the facts of the case. 18. In these circumstances, the learned Departmental Representative has referred to Hon ble Gujarat High Court decision in the case of Tax Appeal No. 240 of 2003 in the case of N K Industries vs. Dy. CIT vide order dated 20.06.2016, wherein 100% of the bogus purchases was held to be added in the hands of the assessee and tribunals restriction of the addition to 25% of the bogus purchases was set aside. It was expounded that when purchase bills have been found to be bogus, 100% disallowance was required. The special leave petition against this order along with others has been dismissed by the Hon ble Apex Court vide order dated 16.1.2017. 19. I further note that Hon ble Rajasthan high court has similarly taken note of decisions of the apex court on the issue of bogus purchases in the case of CIT Jaipur vs Shruti Gems in ITA No. 658 of 2009. The Hon ble High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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