9911796707
TMI Blog2020 (5) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 802600/- alleged to be bogus purchases without appreciating the fact that the learned assessing officer did not assume the jurisdiction to complete the assessment proceedings as the notice under section 143 (2) of The Income Tax Act, 1961 have been issued by him on the same day when the return of income has been filed by the appellant in compliance to notice under section 148 of the act, which clearly shows nonapplication of mind by him to the return of income filed by the appellant before the issuance of notice under section 143 (2) of the act and thus the reassessment is liable to be quashed. ii. That the Honourable Commissioner of income tax (appeals) has erred in law as much as on facts of the case by upholding the addition of Rs. 820600/- alleged to be bogus purchases made by the appellant from M/s Mohit international, are concerned alleged to have been controlled and managed by Sri Praveen Jan and his associates being alleged to be the entry operators. iii. That the Hono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 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 a denial of opportunity of cross-examination is against the principle of natural justice and the rear smiled reassessment proceedings are liable to be quashed. vii. That the Honourable Commissioner of income tax appeals has failed to appreciate the fact that the learned assessing officer has failed to provide the appellant the copy of report of the investigation wing, Mumbai in case of Sri Praveen Kumar Jan whereby it was held that the appellant have been provided with the accommodation entry in this action of the learned assessing officer is not only bad in law but also against the principles of natural justice. viii. That the Honourable Commissioner of income tax (appeals) have further failed to appreciate the fact that though the learned assessing officer has made the addition with regard to the bogus purchases but at the same time, he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 the contention of the assessee for the reason that proprietor of Mohit international was summoned under section 131 of the act and on2/10/2013, statement was recorded. He submitted that Mr. Praveen Jain is managing and controlling the numerous companies and Nilesh Parmar[Prop. Of Mohit International] is an accountant of approximately 30 companies controlled and managed by Mr. Jain. M/s Mohit international is also controlled by him. No genuine business activities carried out in any of the said accounts. He has never seen any stock in any of the said concern. There is no warehouse for goods where any stock is maintained. There is no place from where any genuine business activities are being carried out in any of the concerned. Mr.Praveen Jain'sstatement was also recorded on 1/10/2013 where the whole gamut of providing the accommodation entry was confessed. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 tax act by saying that the return filed originally may be treated as return in response to the above notice, the learned assessing officer issued the notice under section 143 (2) of the income tax act. Therefore it was submitted that the notice has been issued on the same date, therefore there is no application of mind by the learned assessing officer and therefore notice issued under section 143 (two) is bad in law. 11. He also raised all other issues mentioned in grounds of appeal. 12. The learned authorized representative submitted that purchases have been confirmed by the seller by Mr. Nilesh Parmar, proprietor of Mohit international wherein the goods sold have been confirmed and delivered to the assessee and payment received from the assessee is confirmed. He referred to the affidavit placed at page number 33 and 34 of the paper book. It was further stated that purchases have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation 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, it is merely an accommodation entry and goods have never passed on by the seller to the assessee, there is no reason to disbelieve the fact that the learned assessing officer has a reasonable belief that assessee has booked bogus purchases. Therefore he confirmed the reopening of assessment. With respect to the satisfaction, it was submitted that the issue is squarely covered in favour of the revenue by the decision of Mrs.Sonia Gandhi and M/s Meenakshi oversees of Honorable Jurisdictional High court in case where the identical satisfaction recorded by the approving authority was accepted as in accordance with the law. Therefore he submitted that there is no infirmity in reopening the assessment of the assessee as assessee has obtained an accommodation entry of Rs. 8 20600/-.He submitted that assessee has produced the bill, if assessee claims it to be genuine, it is assessee who should have brought Mr. Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmodation 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 assessee. There is a tangible material available with the assessee. There is live link in the material as well as income of the assessee as the party issuing the bill has confirmed that it has not supplied by the material but has provided accommodation entry. Identical issue arisebeforehonorable Gujarat high court in case of [2017] 394 ITR 65 PUSHPAK BULLION PVT LTD VERSUS DEPUTY COMMISSIONER OF INCOME TAX where in the same accommodation entry operators, same bill provider and same modus operandi in the same period with the assessee's original return not picked up for scrutiny, the case of the assessee was reopen and in writ petition same was upheld. Honourable High court held as under :- "5. We have perused materials on record. We may recall that the original assessment was not framed after scrutiny. The return filed by the assessee was accepted under section 143(1) of the Act. In this context, we may refer the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 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 recorded the company has received share application money from the three parties tabulated below. S.N Name of Hawala operator Amount Date Nature of transaction 1 Kunal Gems 6,34,00,000 20.9.2006 Bogus Investments/re application 2 Natasha Enterprises 3,13,90,000 21.2.2007 Bogus investments/re-application 3 Mohit International 3,13,80,000 10/01/07 Bogus investments/re application Total 12,61,70,000 However, as per assessee,it has in fact received share application money of Rs. 90,00,000/- from following two parties as on 31.3.2007 relevant to AY 2007-08. Sr.No Name Amount 1 Ken Securities Ltd., Ahmedabad 7500000 2 Winter fresh Food Pvt.Ltd. Ahmedabad 1500000 3 Total 9000000 Thus assessee has contended that the reason recorded for reopening is erroneous. 7. The contention of the assessee has been examined. The reopening of the assessee company's case for AY 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated the accommodation entry credits as sales in its books, which is an afterthought arrangement and fudging of books of accounts." 7. Upon perusal of the above quoted portions of the objections of the petitioner and the Assessing Officer disposing them of, it can be seen that the Assessing Officer had nowhere abandoned reasons which were the foundation for issuance of the notice for re-opening. He had considered the objections of the petitioner and disposed them of on the basis of material on record. The sole ground of the petitioner therefore, must fail. 8. In the present case, notice for re-opening having been issued in the case of assessment which was not framed after scrutiny. The Assessing Officer would have considerable latitude in issuing notice for re- opening if it is found that he had tangible material to form a belief that income chargeable to tax had escaped assessment, it would not be appropriate on our part to strike down the notice. For such reasons, the petition is dismissed." 19. Therefore, naturally, the reopening of the assessment are in accordance with the law. The issue is also squarely covered by the decision of SIL gold (supra) wherein on identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer. Further, the evidences were so clinching in the form of statement of the entry operator, statement of the supplier of the invoice and the inquiries conducted by the income tax department clearly proved that assessee has obtained an accommodation entry. Further, it cannot be said that if the notice has been issued by the assessing officer on the same date on which return of income has been filed/or the return originally filed is intimated to be return in response to notice under section 148 of the act, the assessing officer cannot apply his mind immediately. According to us , he can. There is no minimum threshold or gap of time prescribed under section 143 (2) of the act. Therefore, putting an artificial time break between the time of intimation of the return filed by the assessee and notice to be issued by the assessing officer would be unreasonably putting a burden on the revenue. In view of this, we dismiss this argument of the AR. 22. In this case allegation is that assessee has obtained bogus purchase bills. In such an allegation probably three common situations[ many other can be visualized] arise :- a. Assesse buys an accommodation entry without procurin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased the goods from Mohit international, sold them as per sale price recorded in the books and result in profit thereon. The assessee also supported the purchases with the copies of the bill and payments were made by account payee cheques. There was also no evidence to show that the amount was recycled back to the assessee and particularly the assessee has shown that the sales have been made out of the purchases made from Mohit international which were also accepted by the revenue. Further, the assessee has shown from the copies of the travelling expenses with respect to travel from the early to Surat on various dates. Therefore the issue before us is squarely covered by the decision of the honourable Gujarat High Court in tax appeal number 691 of 2017 dated 18/9/2017 in case of TejuaRohitkumarKapadia against which the SLP has been dismissed by the honourable Supreme Court wide order dated 4/5/2018. In any case, the learned commissioner of income tax has also added the gross profit only with respect to the alleged bogus purchase of the goods. When the sales are already accounted for in the books of accounts then once again making an addition of the gross profit will amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases made from insurance Mohit international of Rs. 1194250/-. For the reasons given by us in case of the appeal of Surana enterprises, we confirm the reopening of the assessment validly made by the assessing officer. For the similar reasons given by us in deciding the appeal of the same assessee for assessment year 2008 - 2009 wherein we have directed the learned assessing officer to retain the addition to the extent of 2% of the bogus purchases on account of expenditure incurred for obtaining the accommodation entry as the profit on the sale of the goods and 5 % investemnts in sale of goods, we direct the AO to retain the addition of 2% of the bogus purchases and 5 % of investment and delete the balance addition. 27. In view of the above facts appeal filed by the assessee M/S SuranaJwellers is partly allowed. 28. Now we come to the appeal of M/s SuaranaJwellers for assessment year 2008 -2009 in ITA number 5416/del/2018 wherein the assessee of has obtained the accommodation entry of Rs. 1 718500 from MrsMohit and to international. As the facts of the case are identical to the facts of the case of the assessee for assessment year 2007 - 08 wherein we have deleted the addition ..... 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