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TMI Blog2020 (10) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... g the claim and the genuineness of purchase packing material from two parties i.e. M/s DD Motors Corporation and M/s Amit Trading Co. are quite genuine. CIT(A) has wrongly dismissed the appeal filed by the assessee by upholding the order of the Assessing Officer on merits - Decided in favour of assessee. - ITA NOS. 2032 & 2033/KOL/2017 & 107/KOL/2018 - - - Dated:- 7-10-2020 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER Assessee by : Sh. Ved Jain, Advocate, Ms. Umang Luthra, Advocate Department by : Sh. M. Baranwal, Sr. DR. ORDER PER H.S. SIDHU, JM: These 03 appeals filed by the Assessee are directed against the respective impugned orders dated 31.07.2017 passed by the Ld. CIT(A)-16, Kolkata and Order dated 22.12.2017 passed by the Ld. CIT(A)-3, Kolkata in relation to assessment years 2009-10, 2010-11 2011-12 respectively. Since the grounds raised in these appeals are inter-linked, hence, the same were heard together and are being disposed of by this common order for the sake of convenience by dealing with ITA No. 2032/Kol/2017 (AY 2009-10). 2. The grounds raised in ITA No. 2032/Kol/2017 (AY 2009-10) read as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and without ascertaining the facts just confirmed the Assessing Officer order and dismissed the appeal. 3. That any other grounds of appeal may kindly be allowed at the time of hearing. 4. The grounds raised in ITA No. 107/Kol/2018 (AY 2011-12) read as under:- 1. That the Joint Commissioner Of Income Tax is not justified by disallowing ₹ 28,87,110/- on account of packing materials on the ground that the claim of purchase of packing materials amounting to ₹ 28,87,110/- from the four parties are bogus. Against the order we preferred an appeal before the CIT Appeal-3 Kolkata. The CIT (Appeal) dismissed the appeal and confirmed the Assessing Officer Order on the ground that the issue has already decided against the appellant by my predecessor for the assessment year 2009-10. My predecessor has relied on the findings of the sale tax authorities and has confirmed the addition made by the AO. Further, on perusal of the assessment order, it is observed that the statement of all four parties, the so called suppliers, were recorded wherein they have confirmed that no goods have been supplied and only bills have been issued. The CIT(A) before passing the order ignored all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Accordingly, a letter was issued to the Assessee on 10.04.2014 intimating the reason for reopening the case under section 148. Thereafter, statutory notices were issued and duly served upon the assessee company. Subsequently, notice under section 142(1) along with questionnaire was issued to the Assessee on 12.12.2014 fixing the case for hearing on 29.12.2014. Sri S N Agarwal, Authorised Representative of the Assessee Company appeared on the different dates to explain the return. Assessee s AR filed its written explanation alongwith the party-wise details of packing material expenses for the instant vide letter dated 27.7.2015 and after considering all the documentary evidences filed by the Assessee, AO held that the revised alleged purchases from the Sales Tax Department amounting to ₹ 18,95,014/- from M/s Amit Trading Co. and ₹ 27,57,345/- from M/s DD Corporation totaling to ₹ 46,52,359/- are bogus in nature. Thus, the assessee has obtained bogus entries to the tune of ₹ 46,52,359/- which was disallowed and added back to the income of the assessee company by the AO. 5.1 Against the assessment order, assessee appealed before the L.d CIT(A) who vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the share applicants or directors. No effort was made in that regard, in the absence of any such finding that the material disclosed was untrustworthy or lacked credibility the assessing officer merely concluded on the basis of enquiry report, which collected certain facts and the statements of Mr. Mahesh Garg that the income sought to be added fell within the description of Section 68. 7. Having regard to the entirety of facts and circumstances, the Court is satisfied that the finding of the Tribunal in this case accords with the ratio of the decision of the Supreme Court in Lovely Exports (supra). 8. The decision in this case is based on the peculiar facts which attract the ratio of Lovely Exports (supra; Where the assessee adduces evidence in support of the share application monies, it is open to the assessing officer to examine it and reject it on tenable grounds. In case he wishes to rely on the report of the investigation authorities, some meaningful enquiry ought to be conducted by him to establish a link between the assessee and the alleged hawala operators; such a link was shown to be present in the case of Nova Promoters Finlease (P) Ltd. (supra) relied upon by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and investigation probably the challenge made by the revenue would be justified. In the absence of these inquiries and non verification of the details at the time of assessment proceedings, the factual findings recorded by the Assessing Officer were incomplete and sparse. The impugned order passed cannot be treated and regarded as perverse. The appeal is dismissed as no substantial question of law arises. 9. Following the various judicial pronouncements including above, we are of the opinion that the case of the assessee is squarely covered by the above judgment and therefore the Ld CIT(A) had rightiy deleted the addition. In view of the above, we do not find any reason to interfere in the order of Ld CIT(A). Similar view has been taken in the case of CIT vs Expo Globe Industrial Ltd IT A No. 1257/2011 dated 20-7-2012 where Nova Promotors has been distinguished. Relying upon the judgement of Goel Sons Golden Ltd (Supra) the Delhi Bench of ITAT in the case of ITO vs India Texfab Marketing Ltd ITA no. 1177/D/2012 dated 5-10-2012 deleted the addition. The Delhi Benches of ITAT has passed order in the case of DCIT vs M/s. G S Control P Ltd ITA no. 1560/Del/2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavits and balance sheet. Thereafter the Assessing Officer had asked the assessee to produce the said Directors/ parties. Assessee expressed its inability to produce them. The Assessing Officer did not consequent thereto conduct any inquiry e - dosed the proceedings. This is a case where the ssessing Officer has faiiad to condLr necessary inquiry, verification and deal with the matter in depth specially after the affidav: confirmation along with the bank statements etc. were filed. In case the Assessing Officer had conducted the said enquiries and investigation probably the challenge made by the Revenue would be justified. In the absence of these inquiries and nonverification of the details at the time of assessment proceedings, the factual findings recorded by the Assessing Officer were incomplete and sparse. The impugned order passed cannot be treated and regarded as perverse. The appeal is dismissed as no substantial question of law arises. Reliance is also placed on the judgement of Hon ble ITAT Jodhpur in the case of ITO vs.Permanand, ITA No. 275(Jodh.) of 2005. dated 11.8.2006, wherein it has been held that: 4. After hearing the rival submissions, we are in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat on the basis of third party's observation, no addition can be made. Therefore, by following the above decision and in view of our foregoing observations, we confirm the impugned deletion and dismiss ground No. (i) of the appeal. 5. Ground No. (ii) relates to addition of ₹ 55,632 made by the AO by holding that the assessee did not payany sales-tax to the Department or Mandi tax on 'Arhat' on the purchases made from the aSove two parties and thus made extra profit @5.6 per cent. The AO added this amount by multiplying 5.6 per cent with total purchase value of ₹ 9,93,442 In view of our above findings, where we have held that the purchases are genuine, no such addition can be made. Consequently, we dismiss this ground of appeal also . Reliance is also placed on the judgement of Hon ble Bombay High Court, in the case of Pr. CIT vs. Nikhil Arun Kumar Jhaveri. ITA No. 480 of 2017, dated 1/7/2019, wherein it has been held as under: 4. The Tribunal was, therefore, of the opinion that the addition could not have been made with the aid of section 69C of the Act relying merely on the proceedings in connection with another party carried by the Value A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no purchases at ail. The appellant established his claims by furnishing relevant Tax Invoice, Bank statements. Since the appellant has offered to taxation sales to M/s.Pransukhlal Sons Jewellers, he is entitled to deduction of consequent purchases from Shri Enterprise resulting in tax payment on the profit margin only. Otherwise, the disallowance of purchases from Shree Enterprise of 46,01,040/65,05,236/and 52,09,593/will result in double taxation. There cannot be sales without corresponding purchases and both the things cannot be taxed simultaneously resulting in taxing of Turnover instead of income. Since, there is no evidence of the appellant receiving any money back in respect of the purchases, in question, the purchases could not be held to be bogus. The A.O. has made additions merely on the basis of observations made by the Sales Tax Department, for which he has not conducted; any independent enquiries where as the appellant has discharged its primary onus by producing books of accounts with Stock Register, payment which was made by way of Account Payees cheque, Tax Invoices and bank statements during the assessment proceedings. Hence, such addition could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and Ld. CIT(A) has rightly dismissed the appeal of the assessee. 8. We have heard both the parties and perused the relevant records, especially the orders passed by the revenue authorities and the synopsis filed by the Ld. Counsel for the assesseee as well as the case laws relied by both the parties alongwith the documentary evidences filed by the assessee in the shape of paper book containing pages 1-100 in which the assessee has attached the copy of acknowledgement of ITR alongwith its computation of income; copy of Audited Financials; copy of Tax Audit Report; copy of notice under section 148 dated 26.3.2014; copy of reasons recorded dated 10.4.2014; copy of objection submitted before the AO dated 19.5.2014 alongwith enclosures viz. (a) details of packaging material charges debited in the P L account, (b) detail of party wise packing charges paid during the year, (c) details of packing charges paid to Amit Trading Company and DD Corporation, (d) documents of Amit Trading Company i.e. Ledger Account in the books of the assessee, copy of purchase bills, copy of assessee s bank statement showing the payments, documents with regard to DD Corporation viz. ledger in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the provisio to section 147. The case at hand is covered by the main provision and not the proviso. 18. So long as the ingredients of section 147 are fulfilled, the AO is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the AO powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued. 19. Inevitable conclusion is that High Court has wrongly applied Adanis case (supra) which has no application to the case on the facts in view of the conceptual difference between section 143(1) and Section 143(3) of the Act. 20. Learned counsel for the respondent submitted that other points are available to be raised. Since no other point was urged before the High Court, we find no reason to examine if any other point was available. The appeal is allowed without any orders as to costs. 8.1 After going through the judgment passed by the Hon ble Supreme Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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