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TMI Blog2020 (5) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... OSCAR FERNANDES, RAHUL GANDHI [ 2018 (9) TMI 720 - DELHI HIGH COURT] where identical satisfaction was recorded by the approving authority, the honourable Delhi High Court held that there is no error/infirmity can be pointed out.Therefore we are of the view that sanctioned by the authority for reopening of the assessment is also proper. Assessee's argument that on the date of compliance with the notice of 148 issued AO has issued the notice u/S 143 (2) of the act on the same date find no force in the argument as according to the provisions of section 143 (2), AO on receipt of return, if considers it necessary or expedient, to ensure that assessee has not understated the income or has not computed the excessive loss or has not under paid the tax in any manner asks assessee to attend before him. In the present case the assessing officer was already having the original return of income filed by the assessee under section 139 of the act. Thus, there is no change in the facts contained in original return as well as the letter submitted by the assessee. It was merely reiteration of same facts as contained in that return. On receipt of notice under section 148 of the act the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue : Shri Pradeep Singh Gautam, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the three appeals involving the similar issue, those are heard together having common arguments from both the parties, and therefore, they are disposed of by this common order. 2. Facts involved in all these three appeals arecommon that assessee has booked alleged bogus purchase bills from M/s Mohit International, surat, operated by Mr. Praveen Kumar Jain, an accommodation entry provider, and also booked the sales of those material, shown necessary gross profit in its Trading account, but ld AO reopened assessment and made total addition of purchases and CIT (A) confirmed the same. 3. ITA number 5414/Del/2018 is filed by Surana Enterprises against the order of THE COMMISSIONER OF INCOME TAX APPEALS 16, New Delhi dated 29/05/2018 raising following grounds of appeal; i. That the Honourable Commissioner of income tax (appeals) has erred in law as much as on the facts of the case by upholding the addition of ₹ 802600/ alleged to be bogus purchases without appreciating the fact that the learned assessing officer did not assume the jurisdiction to complete the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopened the assessment of the appellant in a hurried manner and only on the basis of the information received from the investigation wing, Mumbai without independent application of their own mind, without carrying out further enquiry and without recording of satisfaction in this regard. The sanction granted by the learned Joint Commissioner of income tax that yes this is a fit case is not sufficient to comply with the requirement of section 151 of the act and means that the satisfaction is granted in a mechanical manner. Thus the assessment completed by the learned assessing officer under section 147/143 (3) of the income tax act, 1961 is not sustainable in law. vi. That the Honourable Commissioner of income tax (appeals) have further failed to appreciate the fact that the learned assessing officer while making the aforesaid addition of ₹ 8 20600/ have relied upon the statement of the Praveen Jan and Shri Nilesh Parmar however the copies of the statements were never provided to the appellant and no opportunity was provided to cross examine these persons in spite of the fact that specific request was made by the appellant from during the reassessment proceedings. Such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accommodation entries like bogus purchases, sales, loan, share capital et cetera. The search and seizure action was carried out on him on 1/10/2013 by investigation wing of the Department. Evidences were collected and statement of various person including Sri Praveen Jain was taken during the course of post such enquiries the AO found that the assessee has made a purchase of ₹ 820600 from Mohit international, a concern controlled and managed by Sri Praveen Jain and his associates. Therefore, notice under section 148 of the income tax act was issued. Assessee submitted that return originally filed may be treated as return filed in response to the above notice. The reasons recorded were provided to the authorized representative of the assessee and objections raised by him were disposed of as per note sheet entry dated 05/9/2015. 6. The assessee was asked after showing the information received from the investigation wing about the genuineness of the above purchases made by the assessee. The assessee submitted a copy of the affidavit of the proprietor of Mohit international along with the copy of the bill along with many other evidences of payment etc. The learned AO rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reopening of the assessment. It was submitted that that the learned assessing officer has recorded the reasons for reopening of the assessment purely based on the information received from the investigation wing of the income tax department. Therefore, the reopening based on the investigation wing without any application of mind by the learned assessing officer, the reopening is not sustainable. 9. He further referred to the satisfaction recorded by the joint Commissioner of income tax wherein he stated that he has, this is a fit case of approval under section 151 of the income tax act 1961 to issue notice under section 148 of the income tax act, 1961. The learned authorized representative also submitted that the satisfaction recorded by the approving authority is non-application of mind. 10. Assessee further submitted that notice under section 148 of the income tax act was issued on 23/3/2015. The assessee complied with the above notice on 4/8/2015 and on the same date the learned assessing officer issued notice under section 143 (2) of the income tax act. Therefore the argument was that the movement the assessee complied with the notice under section 148 of the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uine. 14. The learned authorized representative has also submitted a detailed paper book containing 28 judicial pronouncements of various authorities and submitted that the case of the assessee is covered by the decision of SIL Gold versus ITO in ITA number 1049/del/2018 placed at page number 39 43 of the paper book. Thus, the issue is squarely covered in favour of assessee. 15. The learned departmental representative vehemently supported the orders of the lower authorities. It was submitted that the reasons recorded by the learned assessing officer were based on the statement recorded by the person who has given the accommodation entry of the purchase of goods. He further submitted that the proprietor of the supplier have also submitted in a statement that he is merely an accountant and does not supply any goods. The learned CIT A also noted the above fact and stated that based on these information which are clinching, the learned assessing officer after recording his reasons, reopened the case of the assessee. Therefore he submitted that when the information received from the investigation wing was so crystal-clear that the purchases made by the assessee are bogus, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count where the purchases have been entered and sales have been booked, therefore there is no reason to say that assessee has not booked corresponding sales. 17. We have carefully considered the rival contention and perused the orders of the lower authorities. 18. We first come to the issue of reopening of the assessment. In the present case, revenue has conclusively shown that assessee has purchased only the bill and goods along with the bill has not been received. This is confirmed by the seller during the course of search. The seller is also controlled by one accommodation entry provider he also confirmed the same. During the course of search it was found that the seller was not at all engaged in any business except providing an accommodation entry. The investigation wing of the income tax department on the basis of search, on the basis of posts such inquiries, and on the basis of the statement of the accommodation entry provider, conclusively provided evidence to the ld AO that the assessee by purchase of goods from Mohit international has obtained an accommodation entry of purchase of goods. The case of the assess was never scrutinized in response to return filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any assessment is done by them ? The reply is an emphatic no . The intimation under section 143(1) (a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise. 6. With this background, dealing with the petitioner's sole contention of the Assessing Officer having abandoned reasons for re-opening the assessment while dealing with the objections raised by the petitioner regarding the share application money, it was stated as under: 6. The undersigned has gone through the objections filed by the assessee. The sole objection of the assessee is that the information on basis of which the reopening has been initiated is erroneous and ill conceived. As per the reasons recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus unsecured loan or bogus sale/purchase entries. c. The assessee has nowhere denied that it has not made any transaction with the three concerns. The reason being that the accommodation entries must have been routed through Banking channel, for which the trail cannot be obliterated by the assessee. However, the accounting treatment of the same is in control of the assessee and it has accounted the transactions with the three entities in head other than Share capital/bogus investment i.e. as Sale transactions. d. It can be easily presumed that entities which have no real business besides facilitating accommodation entries were not capable of such purchase of bullion/jewellery. Thus assessee has fabricated sale bill in name of these entities in order to account for the credits. e. The information that bogus share premium has been received by the assessee from the three dummy entities was passed on by the Mumbai Investigating wing. The nature of entry provided has been gathered from the entities searched during course of search conducted by Mumbai Investigation wing on Shri Praveen Kumar Jain on 1.10.2013 and during post search investigation. Thus what treatment the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016)where identical satisfaction was recorded by the approving authority, the honourable Delhi High Court held that there is no error/infirmity can be pointed out.Therefore we are of the view that sanctioned by the authority for reopening of the assessment is also proper. 21. The assessee has raised an over argument that on the date of compliance with the notice of 148 issued by the assessing officer, the AO has issued the notice under section 143 (2) of the act on the same date. Therefore the notice issued by the assessing officer under section 143 (2) of the act is without application of mind. We do not find any force in the argument of the learned authorized representative. According to the provisions of section 143 (2), the assessing officer on receipt of return, if considers it necessary or expedient, to ensure that assessee has not understated the income or has not computed the excessive loss or has not under paid the tax in any manner asks assessee to attend before him. In the present case the assessing officer was already having the original return of income filed by the assessee under section 139 of the act. Thus, there is no change in the facts contained in original re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details, in such a situation onus would be on the assessee to prove linkage of goods received and sold . If assessee fails to prove that, or quantity details does not support the assumption of selling the goods, the complete addition can be made over and above the cost of commission of obtaining the accommodation entry. c. There may be third or many other situations also as held by Hon Delhi high court in la Medica 250 ITR 575 , where also the complete addition can be made. 23. Naturally the revenue has not disputed that assessee has not sold goods so purchased from Mohit international. Therefore, it is apparent that the goods have not received from Mohit international physically but they have been obtained by the assessee outside books of account and sold to its various customers. Thus, it is apparent that assessee has merely procured bill without the goods supplied by the seller and booked in its purchase account. Sales made by the assessee are not disputed. The assessee has submitted the copies of the invoices, copies of the purchase register, copies of the balance sheet trading account and profit and loss account for the year ended on 31st of March for respective years. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat assessee has not purchased goods from M/s Mohit international which is part of Praveen Jain group. Accordingly, ground number 3 of the appeal of the assessee is partly allowed. 24. Naturally, in this case, also, the assessee has shown sales of the goods, or otherwise the goods are lying in the closing stock. If the goods have been sold, the assessee in its trading operation has disclosed the resultant gross profit.Assessee submitted that goods purchased by the assessee has not entered in quantity terms in the books of accounts of the assessee and same has been sold during the year at market rate, thus gross profit on such sales have been embed in the trading account of the assessee. In the SIl Gold ( supra) we have not confirmed the addition on account of investment in the purchase of goods outside it books to match the bogus purchase invoice, but at any time understanding of the situation and consequent results if not visualized properly earlier , can be corrected. In view of this, we direct the assessing officer to confirm the addition to the extent of 2% of the purchase amount involved in the alleged accommodation entry obtained by the assessee andfurther addition of 5 % ..... X X X X Extracts X X X X X X X X Extracts X X X X
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