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TMI Blog2020 (4) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... 008 declaring total income to the tune of Rs. 14,37,550/-. The return was processed u/s 143(1) of the Act. The case of the assessee was reopened u/s 147 of the Act. Notice u/s 148 of the Act dated 27.03.2015 was issued and served upon the assessee. Subsequently, the notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee is a firm engaged in the business of traders ferrous and non-ferrous metals. The case of the assessee was reopened on the basis of information received from the DGIT(Inv.) Wing, Mumbai in which it was conveyed that the assessee has taken the bogus purchase entries from the 12 parties. After the reply of the assessee, the AO made the addition to the extent of 12.5% of bogus purchase i.e. in sum of Rs. 77,78,371/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who restricted the addition to the extent of 6.5%. The assessee was not satisfied, therefore, the assessee has filed the present appeal before us. The revenue has also filed the appeal to sustain the addition to the extent of 12.5%. 4. The grounds raised by revenue reads as under.:- "I "Whether in the facts and in the circumstances of the case and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case. 3. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeal) erred in (a) arriving at the conclusion that the appellant failed to reconciled alleged bogus purchases with the item sold, which is contrary to the facts of the case on record. (b) The learned Commissioner of Income tax (Appeals) failed to consider statement of purchases and corresponding sales filed in paper book submitted before him at the time of hearing of appeal. 4. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming and failed to appreciate that (a) Proceeding initiated under section 147 /148 of the Act is on the basis of reason to suspect and not on reason to believe. (b) There is no new tangible material in possession of the Assessing Officer which Justify issuance of notice u/s 148 of the Act (c) The initiation of proceeding under section 147 of the Act and issuance of notice under section 148 is bad in law and contrary to the provisions of the Act and liable to be cancelled / annulled (d) assuming that the learned authorised representative of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leave to add, to amend, alter or vary the Grounds of Appeal either before or at the time of hearing of the Appeal." 7. The precise grounds raised by assessee reads as under.:- "1. Because, in any view, the assessment framed u/s.143(3) r.w.s.147 of the Income-tax Act, 1961 is without jurisdiction, void ab-initio as the assessee challenges validity of the assessment order on the ground that the ITO who had passed the assessment order did not have the authority of law to act as the A.O. and to pass the impugned assessment order. 2. Because, in any view, the A.O. has to record reasons showing due application of mind before taking recourse to reassessment proceedings, A. 0. Having initiated reassessment proceedings simply stating that Sales-tax Department, Maharashtra has unearthed a scam regarding issue of hawala bills or accommodation entries by several parties in Mumbai without giving list of both hawala parties as well as list of beneficiaries and without any independent evidence/corroborative material as to how the assessee partnership firm could be linked to the activity of hawala bills, accommodation entries which has led to escapement of income. Belief must be independentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt judgment in the case of Pr. CIT, Surat vs Teja Rohit Kapadia. 7. The Revenue erred in not appreciating that in the case of the Hon'ble Mumbai Tribunal judgment in the case of Shree Sundha Steels P. Ltd, which is in the same line of business i.e. ferrous and non-ferrous metals, the Hon'ble Tribunal reduced the G.P. percentage to 2% when M/s. Shree Sundha Steels Pvt. Ltd have shown G.P. of 2.39% in respect of total sales as against G.P. percentage of 4.91% declared by the appellant in respect of total sales in the same line of business. Therefore, Hon'ble Tribunal ought to delete the entire addition because the Appellant has already declared G.P. percentage of 4.91% which is more than percentage of G.P. 2.39% in the case of M/s. Shree Sundha Steels Pvt. Ltd." 8. We have heard the argument advanced by the Ld. Representative of the parties and perused the record. The brief facts of the case are that assessee is engaged in the business of trading in ferrous and non-ferrous metals. The AO got an information from the Sales Tax Department regarding assessee taken purchase bills which was alleged to be bogus. Accordingly, the AO reopened the assessment and after making in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t because their names appear in the list it cannot be concluded that the said purchases from the suppliers are bogus. The A.O. should have called for KYC details. It is stated that since the period of more than six years has elapsed, the assessee being businessman cannot keep track of the transactions of the other party with whom he has made purchases. The A.O. should have deputed ward inspector and forced the attendance of these parties. It is submitted that the A.O. failed to collect and bring on record the evidences from Sales Tax Department and not provided copies of the same to the assessee. It is submitted that observation made by the A.O. that purchases made by the appellant from the above parties are non-genuine is wrong and baseless therefore requested to delete the additions. Appellant placed reliance on the following decisions which includes:- Ramanand Sagar Vs. DCIT (256 ITR 134), CIT v. Nangalia Fabrics (P.) Ltd. 220 Taxmann 17 (Guj.), CIT Vs. M.K. Brothers (163 FR 547), Nikunj Eximp Enterprises (P.) Ltd. v. CIT 216 Taxman 171 (Born.), CIT v. M.K. Bros. 163 FIR 249 (Guj.),etc. It is also argued that the dealers are regularly assessed to tax and the purchases properly r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Pr.CIT Vs M/s Mohommad Haji Adam & Co. in ITA No. 1004 of 2016 vide its order dated 11/02/2019 have held as under: "8. In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assesses additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee' s sales . There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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