9911796707
TMI Blog2021 (9) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... fact ,namely the statement of Shri Madan Lal Pahuja,to the Assessee at the time of providing reasons for reopen the assessment. The same has not been done by the Assessing Officer, which is contrary to the law laid down by Delhi High Court in the matter of Sabh Infrastructure [ 2017 (9) TMI 1589 - DELHI HIGH COURT] . From the reading of the answer given by Shri Madan Lal Pahuja in response to question no. 6 and 8 it is clear that the name of the Assessee have not been mentioned by the said Shri Madan Lal Pahuja, as beneficiary party to whom the alleged bogus bills were given by him. He had merely mentioned the name of Brokers with whom, he was carrying the transactions. However there is no evidence to link, the brokers, assessee and MrPhauja on record. Further there is no evidence brought to record , that the assessee had recerived bogus bills from the entities of Phauja. Once the information was available in the assessment record of the Assessee company for the assessment year 2010-11, which was subject matter of scrutiny assessment and on the basis of this information, the assessment was completed and the additions were made. In our opinion, the same information was admitted to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in gross violation of sacred principles of natural justice. The ld.CIT(A), not only erred in not holding the impugned order bad on this score, but also committed a grave legal error to shift the onus on assessee to produce the said person. 5.That when neither the stock tally, nor the sales made were disputed, holding the purchases bogus was prime facie uncalled for, which the ld.CIT(A) ought to have appreciated to delete the addition made by ld.AO. 6.That the revenue itself having taken a contrary stand in the reassessment proceedings of Mr Madan Lal Pahuja, wherein the same very sales made by him were held to be his business turnover in his assessment for AY 2010-11, the ld.CIT(A) committed a grave error in ignoring this contention, to uphold the addition made by ld.AO. 7.That the ld.CIT(A) was not justified in just brushing aside various judicial decisions, relied upon by assessee, squarely applicable to the facts of this, case by wrongly holding the same as distinguishable on facts. 8.That the orders of the authorities below are against law and facts of the case. 9. That the assessee reserves the right to amend, alter or raise an additional ground of appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustries, Mandi Gobindgarh. Further, Sh. Madan Lal Pahuja admitted in the statement recorded on oath on 07.01.2015 by the ADIT(Inv.), Ludhiana that he had not made any physical transactions with the above mentioned assessee company during the relevant period and all the transactions were only paper transactions. He was charging commission @ ₹ 5000 per month from the assessee company. Thus, Sh. Madan Lal Pahuja through its HUF Proprietary concern named as M/s Shiv BholeKirpa Traders, Ludhiana and through his other concern named as M/s Lovy Steel & Allied Industries, Mandi Gobindgarh was engaged in providing bogus sale entries through these above mentioned concerns and now there is no operation in all these concerns since 01.04.2014. Further, as per the finding of the office of ADIT(Inv.), Sh. jatinder Kumar through his Proprietory concern named as M/s Shree Nath Ispat Udyog, Mandi Gobindgarh was maintaining two bank accounts and perusal of bank statements of which reveals that amount deposited by cheques/RTGS has been withdrawn by cash either on the same day or the next day or transferred to the accounts of M/s Shiv BholeKirpa Traders thereby leaving behind the minimum bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that there was no failure on the part of the assessee to disclose either the purchase of goods purchased from the parties named in the reasons for reopening or is no material failure on the part of the assessee to disclose fully and truly all material is necessary for that assessment year. In the reply it was submitted as under: " Even otherwise, on a bare perusal of the reasons recorded, it crystals out that the ld.AO in this case, but for mechanically relying upon the information gathered and forwarded by the Investigation Wing Ludhiana, and the inferences drawn by them on the purported statements of Shri Madan Lal Pahuja and Jatinder Kumar, denying supply of goods by three of their firms namely M/s Shiv BholeKirpa Traders, Ludhiana, M/s Lovely Steel & Allied Inds, Mandi Gobind Garh, and M/s. Nath Ispat Udyog, Mandi Gobind Garh, has not drawn any satisfaction of his own, as to the truth of the matter. As mentioned by him, from the assessment records, he claims to have simply verified the value of goods purchased by assessee from the said parties worth ₹ 4.28 crores, which he found to match with the information received from ADIT (Inv) Ludhiana. This verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sufficient material before him and the existence of material must be real-Further, there must be nexus between the material and the escapement of income-AO has to record reasons showing due application of mind before taking recourse to reassessment proceedings-AO cannot take recourse to reassessment proceedings merely on the basis of reasons to suspect-In the instant case, AO had initiated reassessment proceedings simply on the basis of information received from the survey circle that the assessee had got prepared a demand draft for a sum of ₹ 83,040 which was not accounted in her books of account-AO had not examined and corroborated the said information before recording his own satisfaction of escaped income and initiating reassessment proceedings-Thus, it cannot be said that the reassessment proceedings were based on belief that income chargeable to tax has escaped assessment-Therefore, issuance of notice under s. 148 was not valid." Hon'ble Gujrat High Court in VarshabenSanatabhia Patel vs. ITO (2016) 129 DTR 261(Guj) held that the AO, in reasons recorded for purpose of reopening assessment, placed reliance upon record of case-There was no assertion as regards on what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his own. It is settled law that the provisions of section 147 envisage personal satisfaction of the AO recording the reasons and not of any other superior/parallel authority. Such substituted satisfaction vitiates the very assumption of jurisdiction u/s.147. In CIT v Self Stock broking Ltd (2010) 325 ITR 285(Del), their lordships, in identical facts, while dismissing revenue's appeal, held as under(Head note): 5. Assessing officer, had issued a letter to the assessee dated 8.8.2017 informing that objection raised by the assessee were disposed of in the following manner: The main objections raised by you can be summarised as under:- 1. The proceedings could not have been initiated as there is no failure on the part of the assessee to disclose fully and truly all material facts necessasry for assessment. 2. The A.O. has mechanically relied upon the information received from the investigation wing, whereas he should have himself verified the statements recorded and all other facts before initiating the proceedings u/s 147. In this regard,your attention is drawn to the following case laws which are self speaking and establish beyond doubt that the proceedings in this case have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere earlier available but acting on fresh information. In view of the above, your objections to the initiation of proceedings u/s 147 are hereby rejected as not sustainable and you are requested to cooperate in the early finalization of the assessment proceedings. Further it is also hereby intimated that the enquiry letters u/s 133(6) issued by this office to all the 3 parties viz. M/s Lovy Steel and Allied Industries, M/s ShreenathIspat Udyog, M/s Shiv BholeKirpa Traders have been received back unserved. Thus the onus now lies on you to prove the genuineness of these parties. Your attention is invited to the notice u/s 142(1) issued by this office on 31.05.2017 and you are requested to furnish the complete information called for in that notice. Your case is now fixed for 22.: 2017." 6. During assessment proceedings, the appellant was asked to explain the purchases made from parties on the basis of which re-opening was made. The appellant has submitted VAT returns, bills, stock tally, GP chart along with the detail of parties to whom the sales were made. The appellant also submitted that the goods purchased were not used in manufacturing activities and were only traded. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, the same was not considered while desposing off the appeal. Further the assessee has submitted that in the case of Shri Madan Lal Pahuja FIR was registered in the year 2009 and thereafter the VAT assessment was completed for the Financial Year 2009-10 vide order dated 01-03-12 (PB 245) in hands of Ms Shiv BholeKirpa traders. In the said order, the sales of the Concern were accepted by the Department. Further the VAT assessment in the case of appellant was also completed in the hands of the assessee vide order dated 08- 05-2012 (APB, Pg. 243-245). In the said order the purchases made by the assessee from Ms Shiv BholeKirpa traders and other concerns were accepted by the VAT department. It was also pointed out by the assessee that even the sales were accepted in the hands of the Sh Madan Lal Pahuja in the assessment order 20-12- 2017 which was passed by the assessing officer prior to passing of the assessment order on 26-12-2017in the case of appellant. He had also relied upon the judgement of the Hon'ble Bombay High Court in the matter of CIT(A) V Nikunj Exim Enterprises (P) Ltd 35 taxmann.com 384. 8. The Ld AR had also submitted before the CIT(A) that in subsequent assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses from these very parties stood accepted by the Department to a very substantial extent. The Tribunal, as a matter of fact, noticed that no sale invoices were found to be undervalued or the purchases inflated, yet the extraordinary profit in respect of goods sold to M/s. Mazagoan Dock Ltd., Bombay, and as recorded in the books of account which ought to have been taken favourably qua the assessee, was considered "adverse" by the Assessing Officer by adopting an erroneous approach. The Tribunal also affirmed the conclusion drawn by the Commissioner of Income-tax (Appeals) that M/s. Kohinoor Enterprises and M/s. Swami Enterprises are existing parties doing business of scrap metal and had vast financial resources at their disposal. Similar conclusion was drawn by it in respect of M/s. S.P. Metal Works and M/s. A.S. Metal Company also. The assessee's contention that out of total purchases of non-ferrous metal of ₹ 2.44 crores, the Assessing Officer had treated purchases worth ₹ 1.49 crores only as bogus and it was impossible to manufacture the goods shown to have been manufactured by it out of the remaining purchases if the Assessing Officer's conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, appellant, on being confronted by the. AO with the statement recorded by the ADIT(Inv.), Ludhiana has still reiterated the contentions that purchases made are genuine as all supporting papers are there. The appellant has also stated that sales have been, accepted along with closing stock and therefore, purchases cannot be treated as bogus. 4.15 I find that AO has issued notice to Shri Madan Lal Pahuja'u/s 131 of the IT Act .on account of inability of the appellant to produce him for substantiating the claim of purchases made from that party. Shri Madan Lal Pahuja failed to attend the proceedings on account of his medical condition. The appellant has also failed to produce him even in the course of remand proceedings to substantiate its claim of. purchases made from him or from concerns operated by him or his' family, members. 4.16 Having considered the material available on record, I find that menance of bogus bills being obtained by the business to reduce its taxable income is prevalent and is duly supported with all the paper evidence in the form of transport receipt, payment etc. Further, these transactions are routed through the banking channels to give tehm the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em as bogus the GP Fate would increase to 10%, ihich is fat' more 'than what has been declared by the appellant over a period of time. 4.20 It is well known that in the present times, all' economic frauds take place through the banking channels and therefore, the umbrage taken by the appellant that payments have been made through chectues 'and VAT has been paid cannot be a sufficient defense for treating these transactions as genuine. Also the fact that GP rate declared after treating these transactions as bogus would increase cannot be a sufficient ground for accepting these transactions as genuine. Accordingly, I hold that AO was justified in ,treating these transactions of purchases amounting to ₹ 4,26,93,470 as bogus, in .the absence of any evidence being produced by theappellant to prove the genuineness. 5. In the result, appeal is dismissed." 12. Feeling aggrieved by the order passed by the CIT(A), the assessee is in appeal before us on the ground mentioned hereinabove. The Ld. AR for the assessee had made elaborate submissions on aspect of legal issue of issuance of notice u/s 148 and on factual material in respect of alleged bogus purchases being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made part of the reasons recorded, nor was it supplied to the appellant along with the copy of reasons. The copy of statement was later provided on 08.12.2017 immediately before the fag end of completion of assessment proceedings on 08.12.2017. However, the department has failed to provide the list of beneficiary parties with whom such paper transactions were made by Madan Lal Pahuja as per Q No. 8 of the statement [relevant page no 173].The appellant has requested vide reply dated 15.12.2017 place at point no 2 Page 175 & 177 but, the same was never provided by the department. The order disposing of the objections cannot act as a substitute for the reasons to believe.The reliance is being placed upon the following case law along with other case laws enclosed separately (refer page no.47-69 of case law paper book) Sabh Infrastructure IN THE HIGH COURT OF DELHI AT NEW DELHI, W.P.(C) 1357/2016 [refer Page 7-53] 17. In the facts of this case, the primary facts have not been shown to be false. The five companies do exist. They did subscribe to the share capital of the Petitioner. They did pay the money to the Petitioner. All the five companies are assessed to tax. These are the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of reassessment proceedings on basis of mere suspicion was not sustainable - Held, yes [Para 14] [In favour of assessee] V. NO ADVERSE MATERIAL WAS PROVIDED BY THE DEPARTMENT There is another important aspect which should not be ignored that the statement of madanlalPahuja on 07.01.2015 and thereafter, on 19.08.2015, the business premises of the appellant was surveyed by the department. During survey, various documents, stock, cash and other details were examined by the department and it is pertinent to mention here that even in this marathon exercise, nothing incriminating was found which lead to the conclusion that appellant was indulging in bogus purchases nor any piece of adverse evidence in respect of purchases being made from the alleged parties. It is not the case where something incriminating was found from the premises of the assessee. The whole case is being made by relying upon the statement of Madan lalPahuja. This proves that none of the documents which are stated to be incriminating were available with the AO at the time of initiation of proceedings so as to be satisfied that assessee's income had escaped assessment except the stand alone statement of Madan lal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Commissioner of income tax vs. Sayumya construction private Ltd (2016) 387 ITR 529 (Gujarat). 2019] 110 Taxmann.com 64 (SC) SUPREME COURT OF INDIA Commissioner of Income Tax-7, New Delhi v. Odeon Builders (P.) Ltd [refer Page no 176-177of case law paper book] Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to appellant, thus, denying opportunity of cross examination to appellant, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by appellant was acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner for obtaining sanction under section 147(a) that one creditors had confessed that he was doing only name lending and that other creditors were only name lenders - There was no material to show that confession made by said creditor related to loan to assessee and not to some one else and also that said confession related to period which was subject matter of assessment - There was also no material to show that other creditors were name lenders - Whether live link or close nexus which should be there between material before Income-tax Officer and belief which he was to form regarding escapement of income of assessee from assessment because of latter's failure or omission to disclose fully and truly all material facts was missing in case - Held, yes - Whether, thus, High court was not in error in holding that said material could not have led to formation of belief that income of assessee had assessment because of his failure or omission to disclose fully and truly all material facts - Held, yes Further reliance is being placed upon the case of SheoNath Singh v. AAC (1971) 82 ITR 147 in which it has been stated that an assessment cannot be re-opened on the basis of mere s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind another person. The total amount with regard to three parties mentioned in the reasons recorded, works out to ₹ 3.28 Cr instead of 4.28 Cr mentioned by the AO. The approval u/s 151has also been given based on same reasons as forwarded by the AO to the Pr. CIT on 29.03. 2017.This proves that the reasons were recorded without application of mind. Relilance is being placed upon case laws enclosed at Page no. 308-353 of case law paper book 13. The Ld. AR further submitted that there are certain factual points which are very much necessary before deciding the issue of bogus purchase particularly considering the fact that the sale tax authority based on whom the whole allegation has been made, has accepted the sales made by Mr. madanlalPahuja whose statement was recorded by the investigation wing. The Ld. AR also submitted that the income tax assessment in Mr. Pahuja was also completed by the income tax department and where the sales made by him have been accepted. He further submitted that the sale tax assessment in the case of appellant was also completed. As such, the whole allegation against the appellant is totally based upon surmises and conjectures. The following factua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment works out to ₹ 5372955 as per the list enclosed at page no.252 C) QUANTITATIVE TALLY The department has totally ignored the quantitative details (page no.10 and 164) as submitted by the appellant and has not even pointed out any defect and as such, without there being purchases, there cannot be any sale. The complete stock tally is enclosed at Page No. 6. In this regard reliance is being placed on the case of [2013] 35 taxmann. com 384 (Bombay) HIGH COURT OF BOMBAY CIT-1, Mumbai v.NikunjEximp Enterprises (P.) Ltd. [Refer page No. 354-357 relevant page no.388-389 of case law paper book] D) SALES NOT DOUBTED The department has not doubted the sales and as such, the purchases cannot be said to be bogus. In this regard reliance is being placed on the case of[2018] 94 taxmann. com 324 HIGH COURT OF GUJARAT PCIT, Surat-I v. Tejua Rohit kumar Kapadia. In this judgment, the court has held that, where, the sales are accepted by the department against the information received from the investigation Wing regarding alleged bogus purchases and there is no evidence, in such a case, no addition can be made. Importantly, the appeal filed by the revenue was dismissed vide orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACCEPTED IN THE FY 2010-11 and F.Y.2011-12 I.E. AY 2011-12 and A.Y.2012-13 BY FRAMING ASSESSMENT U/S 143(3) The department has accepted the purchases made in subsequent years from the same parties. During the assessment proceedings, the supplier accounts for the later years were also provided and the same have not been disputed by the department. In this regard, the copy of assessment order is being enclosed herewith at Page no. 232-242 and 287-292 for your ready reference. Furthermore, these facts were also brought to the knowledge of CIT (A) through addendum dated 15.10.2018 enclosed at page no. 230-231 (Relevant page no. 279 of CIT(appeal). In this regard, reliance is being placed upon the judgment of high Court of Punjab and Haryana in the case of leader valves (P.) ltd [Case law enclosed at page no. 416-418 of case law paper book] in which it has been stated that purchases made from parties could not be termed as bogus if the same have been accepted in the subsequent years. The relevant text is being reproduced for your ready reference: - Section 145 of the Income-tax Act, 1961 - Method of accounting - Rejection of accounts - Assessment year 1986-87 - Commissioner (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the purchases of the entire 1,02,514 meters of cloth were sold during the year under consideration. The Tribunal, therefore, accepted the assessee's contention that the finished goods were purchased by the assessee, may be not from the parties shown in the accounts, but from other sources. In that view of the matter, the Tribunal was of the opinion that not the entire amount, but the profit margin embedded in such amount would be subjected to tax. The Tribunal relied on its earlier decision in the case of Sanket Steel Traders and also made reference to the Tribunal's decision in the case of Vijay Proteins Ltd. v. Asst. CIT [1996] 58 ITD 428(Ahd). Section 69 of the Income-tax Act, 1961 - Undisclosed investments [Bogus purchases] - Assessment year 2005-06 - Assessee was engaged in business of trading in finished fabrics - Assessing Officer found that concerned parties from whom material was purchased were not found at their addresses and held that purchases made by assessee were bogus - Accordingly, he made disallowance - Tribunal found that though purchases were made from bogus parties, but purchases themselves were not bogus as entire quantity of stock was sold by asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r AY 2011-12 and 2012-13. 16. In this regard, the AR relied upon the judgment of Punjab& Haryana jurisdictional High Court in the case of Leader Valves [2006] 285 ITR 435 (PUNJ. & HAR.). Furthermore, the Ld. AR has reiterated the facts that the AO's reliance upon the FIR logged on 13.09.2009 by sale tax authority is totally baseless, particularly considering the fact that the complainant being sale tax department has already completed VAT assessment in the case of Madan lalPahuja after a period of 3 years i.e. 01.03.2012. The Ld. AR also submitted copies from Vahan Site in respect of truck no as mentioned in 33 bills, which were not considered by the AO and has pointed that the AO has adopted approach of cherry picking. Therefore, addition on the basis of mere statement does not carry any weight age in the eyes of law. 17. We have considered the rival contention and perused the material available on record, including the judgments cited at bar during the hearing by both parties. Admittedly, the reopening in the present case was made by the assessing officer, pursuant to the report received from the ADIT(Investigation), Ludhiyana. Based on that report, the reasons to reopen were r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver nothing incriminating material was found in the premises . Approval was granted by the official in respect to ---------------------- concerns only 22.3.2017 Reasons to reopen were issued to the assessee in respect to Sh. Madan Lal Pahuja HUF Prop. M/s Shiv BholeKirpaTraders, Shirnlapuri, Ludhiana M/s Lovy Steel & Allied Industries, Dr. Bansal Clinic, sector-3C, Mandi Gobindgarh Sh. Jatinder Kumar Prop. M/s Shree Nath Ispat Udyog, Bank of India Road, Mandi Gobindgarh 31.05.2017 Notice under section 142(1) was issued to assessee asking to explain its transactions with 3 entities namely M/s Shiv Bhole Kirpa Traders, M/s Lovy Steel & Allied Industries and M/s Shree Nath Ispat 8.12.2017 Statement of Madan Lal Pahuja recorded by Investigation wing was provided by the AO ; however, cross examination was never provided to assessee despite request made vide letter dated 15.12.2017.] 19.12.2017 A notice u/s 142(1) dated 19.12.2017 was issued to the assessee, file complete details of the purchases made from the fourth firm M/s Shree Radhey Steel & Alloys, a the AO failed to mention it in the reasons to reopen or notice issued under section 142(1) on 31.05.2017 In response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Brokers with whom, he was carrying the transactions. However there is no evidence to link, the brokers, assessee and MrPhauja on record. Further there is no evidence brought to record , that the assessee had recerived bogus bills from the entities of Phauja. Moreover he had not stated that family concerns of the Phauja were into providing the bogus bills . We are reproducing the Question no 6 and 8 and answers given by MrPhauja , which are as under :- Q-6 Please give name of concerns/firms in which you or any of your family members are either partner/director /proprietor. Ans. As far as I remember I and my family members are proprietor of the following concerns:- i M/s Shiv BholeKirpa Traders, Shimlapur, Ludhiana. ii. M/s Shree Radhey Steel & Alloys, Jasran Road, Mandi Gobindgarh. iii. M/s Lovy Steel & Allied Industries Dr. Bansal Clinic, Sector 3-C, Mandi Gobindgarh. iv. M/s Shree Nath Ispat Udyog, Bank of India Road, Mandi Gobindgarh. v. M/s Sunder Sales Corporation, Preet Nagar, Shimlapuri, Ludhiana. vi. M/s Kanak Overseas, Post Office Road, Mandi Gobindgarh. vii. M/s Gitansh International, Post Office Road, Mandi Gobindgarh. All the above mentioned conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd the Assessment Order passed in the case of the Assessee for the assessment year 2010-11 which was passed on 18.06.2012 and thereafter the assessment year for 2011-12 which was passed on 04.06.2013. The consistent stand of the Assessee in the reply submitted by him in response to the reasons to reopen to AO, was that the Assessee has been receiving the goods from the parties described above and purchases accepted by the Assessing Officer in the subsequent assessment year i.e. 2011-12.In view of the judgment of the Hon'ble High Court of Punjab & Haryana in the matter of Leader Valves (P.) Ltd [2006] 285 ITR 435 (PUNJ. & HAR.), the additions based on the alleged bogus purchase bill for the assessment year 2010-11 are not sustainable. 21. The aforesaid information was available in the record of the Assessing Officer before issuing the reasons to reopen. However, the Assessing Officer has not applied his mind and had merely relied upon the information received by him from the investigating wing. We may safely rely upon the decision in [2018] 93 taxmann.com 153 HIGH COURT OF BOMBAY PCIT-5 v. Shodiman Investments (P.) Ltd] for this preposition. Further, if we look into the reasons to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that reopening made by the Assessing Officer is required be quashed and accordingly, we quashed the same. Further, the non-application of mind by the Assessing Officer is further discernable mainlyfrom the fact that in the reasons to believe the name of three parties, namely (1) Sh. Madan Lal Pahuja HUF Prop. M/s Shiv BholeKirpa Traders, Shirnlapuri, Ludhiana, (2) M/s Lovy Steel & Allied Industries, Dr. Bansal Clinic, sector-3C, Mandi Gobindgarh, (3) Sh. Jatinder Kumar Prop. M/s Shree Nath Ispat Udyog, Bank of India Road, Mandi Gobindgarhwere mentioned, where the Assessing Officer have not made any efforts to record the statement of the Shri Madan Lal Pahuja, the proprietor of M/s Lovy Steel & Allied Industries and Shri Jatinder Kumar, Prop. M/s Shree Nath Ispat Udyog.Further, at the time of finalisation of assessment instead of three parties, the Assessing Officer had made the additions on account of the purchases made from these three parties as well as M/s Shree Radhey Steel & Alloys.Further, the non-application of mind is clear that in reasons to believe, it was mentioned that the Assessee had made purchases for ₹ 4.26 Crores. In contrast, the details of three companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d accepted the sales made to the Assessee in the Assessment Order dated 20.12.2017 passed under Section 143(3) read with 147 of the Act, then the said purchases (sale of Shri Madan Lal Pahuja) cannot be disputed by the Assessing Officer of the Assessee. The abovesaid fact was brought to the notice of the Assessing Officer. However, neither the Assessing Officer nor the CIT (A) had considered the abovesaid fact. Further, both the Lower Authorities had not disputed that the purchases were made by the Assessee from the same parties in subsequent assessment years i.e. 2011-12 & 2012-13 and the Assessment Orders were provided to the Lower Authorities. In our opinion, this is contrary to law laid down by the Hon'ble High Court of Punjab & Haryana in the matter of Leaders Valve (supra). Further, we are of the opinion that nothing has been brought on record by the Assessing Officer or by the CIT (A) to prove that the invoices were issued by the other three concerns namely (1) M/s Lovy Steel & Allied Industries, Dr. Bansal Clinic, sector-3C, Mandi Gobindgarh, (2) Sh. Jatinder Kumar Prop. M/s Shree Nath Ispat Udyog, Bank of India Road, Mandi Gobindgarh, and (3) M/s Shree Radhey Steel & Alloy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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