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TMI Blog2022 (5) TMI 1280X X X X Extracts X X X X X X X X Extracts X X X X ..... ameters, the Assessing Officer was obviously not competent to invoke the provision of Section 147 of the Act which are drastic in nature. The assumption of jurisdiction under Section 147 is thus clearly without sanction of law and void ab initio. The consequent reassessment order is thus clearly bad in law. In this view of the matter, the reassessment order framed in consequence of invalid notice issued under Sect ion 148 is requires to be quashed. Having held the impugned re-assessment order framed without fulfilling prerequisites of Section 147 of the Act to be bad in law, we do not consider it expedient to deal with the challenges raised by the assessee on merits of additions - I.T.As. No.3456/DEL/2019, 5870/DEL/2018 & 5871/DEL/2018 - - - Dated:- 25-5-2022 - Shri Pradip Kumar Kedia, Accountant Member And Shri Yogesh Kumar Us, Judicial Member For the Appellant : Shri Ashwani Kumar, CA For the Respondent : Shri Mithun Shete, Sr.D.R. ORDER PER PRADIP KUMAR KEDIA, A.M.: The captioned Appeals arises from the respective order of CIT(A) for different assessment years tabulated hereunder: ITA No. A.Y. Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the average gross profit ratio earned in the past. The additions on account of bogus purchase was thus eventually sustained at Rs.2,66,13,417/-. 6. Aggrieved by the impugned order of the CIT(A), the assessee has preferred appeal before the Tribunal. The assessee has challenged (i) the usurption of jurisdiction to issue notice under Section 148 and frame reassessment (ii) the correctness of addition/disallowance towards bogus purchases on merits. The grounds of appeal raised by the assessee read as under: 1. That the Ld. CIT(A) has erred in rejecting the following grounds of appeal raised by the appellant. (a) The facts and reasons recorded for u/s 148 of the Act are in contradiction. (b) The reasons recorded for reopening of assessment has been solely on the basis of change of opinion as full and true particulars has been furnished during the original assessment proceedings. (c) The Ld. AO has assumed jurisdiction for reopening of assessment and recording of reasons simply based on the information received from investigation wing and without applying his independent mind and without making proper enquiry. (d) The reasons have been recorded without apprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (f) That assessee company is an excisable unit 86 excise duty has also been paid on Sales thereof; (g) That Quantitative Details of Opening Stock, Purchases, Sales, Work In Progress 86 Closing Stock, if OK, how the purchases can be bogus; (h) That the Ld. AO have not pointed out any discrepancy in the books of accounts; (i) That the principle of natural justice has not been followed, while passing the assessment order and making the additions in the hands of assessee. 7. When the matter was called for hearing before the Tribunal, ld. counsel for the assessee at the outset submitted that the Assessing Officer has wrongfully assumed jurisdiction to make re-assessment by issuing notice under Section 148 of the Act on the basis of perfunctory reasons without any definite tangible material and without applying his independent mind and without making any sort of inquiry on the correctness of information received. Ld. counsel for the assessee further submitted that apart from non-adherence to fundamental and preeminent premise of jurisdiction enjoined under main provisions of Section 147 of the Act, stringent requirement of 1st proviso thereto has also not been s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Counsel paused here to submit that the assessee is not engaged in food grain business at all. Significantly, the assessee is engaged in manufacturing and trading of yarn and manufacturing and trading of garments. It was thus emphatically submitted that the alleged adverse remarks in the statement of supplier would not apply to the assessee herein for variety of reasons, namely; (i) the assessee is not a beneficiary of any food grain bill from the concerns allegedly connected to Ram Prakash Bhatia. (ii) the witness has not expressly implicated the assessee anywhere. (iii) no cross examination of witness was provided to assessee despite requests. (iv) The overwhelming documentary evidences to corroborate the purchases made has not been dislodged by any adverse material. 7.3 The Ld. counsel submitted that other than the sketchy and unproved statement of so called witness, there is no credible adverse material in possession of the Revenue to dislodge the obejctive documentation available with the assessee showing purchases. 7.4 As regards another addition of Rs.7,38,11,268/- attributable to purchases from M/s. Ramesh Kumar Tarun Kumar by the Assessing Officer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer in assuming jurisdiction under Section 147 of the Act by issuance of notice under Section 148(2) of the Act was within the authority of law and thus cannot be interfered. It was next submitted by the ld. DR for the Revenue that once the Assessing Officer has exercised valid jurisdiction under Section 147 of the Act, the onus shifted upon the assessee to prove the genuineness of the purchases made to the satisfaction of the Assessing Officer. The Ld. DR for the revenue thus submitted that no interference with the appellate order of the CIT(A) is called for. 9. We have considered the rival submissions and the orders of the lower authorities together with the material referred to and relied upon in the course of the hearing and case law cited. 9.1 The assessee inter alia has challenged the assumption of jurisdiction under Section 147 of the Act which is fundamental and goes to the root of the matter. Hence, to start with the legal issue of validity of assumption of jurisdiction under Section 147/148 on the contours of factual matrix is dealt with hereunder; 9.2 The reasons recorded under Section 148(2) towards escapement of income giving the cause for issuance of not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. The assessment records of M/s Garg Acrylics Ltd has been perused along with the information and documents provided by the investigation wing and it is noticed that the information as mentioned in paragraph 2 and 3 above was not available at the time of completion of original assessment proceedings. Further, there has been a failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment for above assessment year 2010-11. Hence, I have reason to believe that for AY 2010-11, an income of Rs. 8,98,62,887/- corresponding to accommodation entries in the form of bogus purchase bills has escaped assessment within the meaning of section 147 of the Act. 1. As per the provisions of Section 147 of the Act, for reopening of assessment within a period of 4 years from the end of assessment year, the only requirement is reason to believe . For a period beyond 4 years in cases where an original assessment was made u/s 143(3), Further requirement is the nondisclosure of material facts necessary for assessment by the assessee. A perusal of assessment records suggests that the assessee did not made a full and true disclosure of all material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion on this and besides this, I also have rental income. Q4 Please provide the names of all your firms registered on this address. Ans: The following concerns are registered on this address as well as on other address. All these concerns are either my proprietory concerns or are in the name of my family members. But I manage all these firms: Working Firms 1. Delhi Traders 2. Jai Bharat Foods 3. Rishabh Foods 4. Mohit Trading 5. Chaudhary Co (in my wife s name) 6. Choudhary Traders 7. Ganesh Trading Co 8. Rama Traders 9. Ram Prakash Enterprises 10. Ram Prakash Bhatia . 11. Neha Enterprises Some firms which have been closed down are as under: 1 Prakash foods 2. Shree Bajrang Foods 3. Punjab foods 4. Bajrang Corporation 5. Shiva Store 6. Pankaj Mart Limited Q5. In response to Q 3 you stated that you are doing the business of billing. What do you mean by billing , please explain in detail Ans: There are different types of entries in billing work which is explained in detail as under: 1. We approach various mills owner who take different food grains bills from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of matching the delivery token (number of any currency note). Larger cash amounts are transferred through tokens by the persons giving cash to the person who is to receive cash, directly. Q11 Please explain the token system in detail. Ans: We use the token system for cash transactions. Token is number of currency note valuing Rs. 2 to Rs 10. We do not use token system in cash transactions with a known person but whenever any party ask to send cash to an unknown person in that case the party takes the currency note number as token from said unknown person and give to me over telephone. Whenever any person brings the currency note of that number, we give cash to him. Similarly, we use token system in receiving cash from unknown persons. Q18 How do you manage the signatures of different signatories of bank accounts of various firms for RTGS? Ans: All signatories are my family members or my friends who lives in my neighborhood. I get signed 3-4 cheques daily in the morning and use these for circulating entries. (underline is ours) 10. Before we objectively look at the reasons under challenge, it will be pertinent to observe that the instant case per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement (9.3 of this order) would show that Shri Ram Prakash Bhatia has merely asserted that they approach various mill owners to provide bogus food grain bills as accommodation entries in lieu of cash without any real supply. Contextually, it was asserted that the assessee is engaged as dealers in cot ton and not in food grains. The case of the assessee is thus clearly ousted from the aspersions cast by the third party through its general statement . I t is contended that the assessee is not a beneficiary of any food grain accommodation bills from two concerns named in the statement . The Assessing Officer has failed to apply its mind to the facts of the case and perfunctorily reopened the completed assessment without assessing the glaring fact situation emerging from the records. (iii) It is not known at to how Shri Ram Prakash Bhatia is connected to the concerns named in the statement and what is his locusstandi in the matter of governing these firms/concerns to assign any weight to his assertions. (iv) the allegation in the reasons recorded under Sect ion 148(2) towards failure on the part of the assessee to disclose truly and fully all material facts necessary for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t condition of main provision of Section 147 is fulfilled nor the additional conditions embedded in 1s t proviso has been complied with. The twin conditions of format ion of belief towards escapement of income and such escapement attributable to failure on the part of the assessee are solely missing in the instant case. 14. Without scrupulous compliance of jurisdictional parameters, the Assessing Officer was obviously not competent to invoke the provision of Section 147 of the Act which are drastic in nature. The assumption of jurisdiction under Section 147 is thus clearly without sanction of law and void ab initio. The consequent reassessment order is thus clearly bad in law. In this view of the matter, the reassessment order framed in consequence of invalid notice issued under Sect ion 148 is requires to be quashed. Having held the impugned re-assessment order framed without fulfilling prerequisites of Section 147 of the Act to be bad in law, we do not consider it expedient to deal with the challenges raised by the assessee on merits of additions, being an infructuous exercise. 15. The order of the CIT(A) is thus set aside and the re-assessment order is quashed. 16. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hands of the assessee and where the CIT(A) has confirmed the addition to the extent of Rs.42,41,917/ - (average GP 16.26% to Rs.2,60,88,054/ -] (ii) action by way of notice under Section 148 of the Act was taken under Section 147 of the Act before the expiry of four years from the end of the relevant Assessment Year 2012-13 in question and thus bar of limitation under first proviso is not applicable in the instant case. 22. Bar ring these two dissimilarities, observations made in the preceding two assessment years squarely applies in the factual matrix. 23. In other two preceding assessment years, it was delineated that the information received by the Assessing Officer from the Investigation Wing which, in turn, emanates from the statement of Shri Ram Prakash Bhatia does not give rise to the requisite belief towards escapement of income primarily on the ground that the assessee is not beneficiary of food grain bills from the suppliers connected to Shri Ram Prakash Bhatia and secondly the statement of Shri Ram Prakash Bhatia is generic and does not pin point the name of the assessee to be beneficiary of any accommodation entry so as to crucify the assessee herein. The abs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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