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TMI Blog2019 (8) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... which were only issuing accommodation bills and were not having any stock available with them, the A.O. formed an opinion that there was escapement of income. The reopening of assessment was done by the AO after properly recording the reasons and following due procedure of law. The sufficiency or correctness of material is not a thing to be considered at the time of reopening the assessment. Proper approval was taken by the AO before reopening the assessment. Accordingly, we do not find any merit in the contention of the ld.AR that reopening was not justified. Addition u/s 68 - we found that the assessee was unable to prove the genuineness of the purchase, accordingly, the AO added 25% of such alleged purchases in assessee's income. After rejection of books of account, the addition is to be made keeping in view gross profit rate actually declared by the assessee during the year as compared to average gross profit shown by him in earlier years. We found that in the Assessment Year 2009-10, the assessee had shown the gross profit rate of 21.24%, in Assessment Year 2010-11- gross profit rate of 18.97%, in Assessment Year 2011-12- gross profit rate of 17.37%, in Assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained accommodation entries from the concerns operated by Shri Rajendra Jain Group, Shri Sanjay Choudhary Group and Shri Dharmichand Jain Group. The A.O. found the purchases from these concerns to be bogus, accordingly, assessments were reopened by issuance of notice U/s 148 of the Act. The A.O. issues show cause notice as to why the purchases made from these concerns should not be treated as bogus in so far as the assessee had primary facts in his knowledge and onus lies on him to prove the purchases claimed by him are genuine and fully and exclusively for the business purposes. After enquiry, the A.O. observed that the assessee has only provided copy of bills. Finally, the A.O. concluded that the assessee has obtained bogus bills of purchases to decrease its gross profit, hence, books of account of the assessee were held to be not reliable. After considering the decision of the Hon ble Gujarat High Court in the case of Sanjay Oilcake Industries Vs CIT (2008) 10 DTR 153 (Guj) and other judicial pronouncement in the case of Rameshwal Lal mali Vs CIT 256 ITR 536 (Raj), the A.O. disallowed 25% of alleged bogus purchases. 4. By the impugned order, the ld. CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in toto. 7. The ld AR has also argued that it is not a fit case for reopening U/s 147 but provisions of Section 153C of the Act should have been invoked. 8. So far as merit of addition is concerned, the ld. AR has argued that the A.O. has not called the books of account for verification, therefore, rejection was without verifying the books of account. As per the ld AR purchases, sales, expenses were 100% vouched. Stocks were also maintained. In view of the details filed before the ld. CIT(A) regarding name and address of the supplier with confirmation and bank account, the assessee has discharged its onus and the only evidence against the assessee was the statement of third party. The said statement was not corroborated with any evidence even the A.O. did not make any independent enquiry by issuing notice U/s 131 or 133(6) of the Act. Our attention was also invited by the ld AR to the various visits/travelling of assessee to the Bombay and Surat in support of his contention that delivery of goods was taken by the assessee himself by travelling to the place of suppliers. As per the ld AR, in view of plethora of decisions whenever books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties which were only issuing accommodation bills and were not having any stock available with them, the A.O. formed an opinion that there was escapement of income. The reopening of assessment was done by the AO after properly recording the reasons and following due procedure of law. So far as the contention of the assessee with regard to sufficiency of reasons is concerned, it was held by the Hon'ble Supreme Court in the case of Raymond Woollen Mills Ltd. vs ITO [1999] 236 ITR 34 that there should be prima facie some material with the AO on the basis of which Department could reopen the case. The sufficiency or correctness of material is not a thing to be considered at the time of reopening the assessment. Similarly, the Hon'ble Gujarat High Court in the case of Amit Polyprints (P) Ltd. vs DCIT [2018] 94 taxmann.com 393 held that where reassessment proceedings were initiated on the basis of information received from Investigation Wing that assessee had received certain goods from shell companies working as an accommodation entry providers, the reassessment could not be held as unjustified. We found that the ld. CIT(A) has dealt with various judicial pronouncements a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17.37% 2012-13 3,23,62,451 50,01,469 15.45% 2013-14 5,22,06,218 68,96,986 13.21% 2014-15 8,71,75,611 96,11,098 11.02% 22,96,00,053 3,24,50,498 14.13% 12. In the case of CIT vs Vaibhav Gems Ltd [2014] 112 DTR 84, the Hon'ble Rajasthan High Court held that past history becomes the relevant basis for determining the trading addition to be made after rejection of the books of account. It is clear from the above chart that the average of the gross profit declared by the assessee works out at 14.13%. Thus, after rejection of books of account, the addition is to be made keeping in view gross profit rate actually declared by the assessee during the year as compared to average gross profit shown by him in earlier years. We found that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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