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TMI Blog2022 (9) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment invalid. Further with respect to the claim of the assessee that whether the goods have been purchased from Maruti enterprises or Apex Corporation, the learned assessing officer has mentioned both the names. Therefore, it does not invalidate the reopening of the assessment. We are of the view that the AO had valid reason to believe‟ that income of the assessee has escaped assessment when a specific information in the form of tangible material‟ received from DGIT investigation that assessee has obtained only bills without material from different parties - Therefore, we confirm the order of the learned CIT A in upholding the reopening of the assessment. Ground number 1 and 2 of the appeal of the assessee are dismissed. Addition u/s 69C - We find that the AO has recorded the reasons for reopening of the assessment on the basis of specific information that 5 different parties have provided bogus bills to the assessee, he has also the information that those parties have given their statement that they are non genuine suppliers, the information is also travelled to the DGIT investigation to the learned assessing officer, therefore, it is evident that assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 8-9-2022 - Shri Prashant Maharishi, AM And Shri Sandeep Singh Karhail, JM For the Assessee : Shri Vijay Mehta, AR For the Department : Shri OP Sharma, CIT DR ORDER PER PRASHANT MAHARISHI, AM: 01. This appeal is filed by assessee against the appellate order of The Commissioner of Income tax (Appeals)-41, Mumbai [the learned CIT (A)] dated 29 December 2017 for Assessment Year 2011-12. Assessee has raised the following grounds of appeal:- 1. The CIT (A) has erred in law and on facts in upholding the order passed by the Assessing Officer u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961, which is illegal and bad in law. 2. The CIT (A) has erred in law and on facts in not holding that the reopening of the assessment by issuing notice u/s. 148 of the Act was illegal and bad in law. 3. The CIT (A) has erred in law and on facts in concurring with the view of the Assessing Officer that the return of income manually filed u/s. 139(1) of the Act within due date was an invalid return as it was not filed electronically. 4. The CIT (A) has erred in law and on facts in sustaining the disallowance of deduction u/s. 80-lB of the Act claimed at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer examined whether on ITD system return filed by assessee is available or not. The learned Assessing Officer found that return for Assessment Year 2011-12 is not available. Assessee was questioned about the ROI. Assessee submitted that in terms of its written submissions dated 20th September, 2011 and 30th September, 2011 addressed to ACIT, Central Circle-32, Mumbai for filing the return in physical format along with audited financial statements and form no. 10CCB for the reason that the Director of the Company were jailed and the digital signature could not be affixed of the signatory to the return of income, Therefore, Assessee filed return of income manually [ In paper format and not online] on 30th September, 2011 and therefore the same is not available on ITD. 07. The learned Assessing Officer held that physical return filed on 30 September 2011 is not a valid return filed under section 139(1) of the Act. The Assessing Officer relied upon the decision of co-ordinate Bench in case of shri Dwarkadas G. Panchmatiya vs. ACIT in ITA No. 4727/Mum/2012 for Assessment Year 2008-09 dated 30 January 2015. Accordingly, he held that the claim of deduction under section 80IB of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant for the year under consideration, as per the prescribed procedure as well as the information received from the DGIT (investigation) regarding the alleged bogus purchases made by the appellant. Non-e-filing of return of income and the information received were tangible material in the hands of AO, which resulted into the formation of the reason to believe that the income to the extent of ₹ 980,300/ chargeable to tax has escaped assessment for assessment year 2011 12. Once such a reason to believe has been formed by the AO on the basis of material available with him, he is well within his powers to issue notice u/s 147/148 as per procedure prescribed in that Section. Such formation of the reason to believe was on the basis of the information available which the AO was in his possession and acted upon and therefore the reopening of the assessment in this case cannot be faulted. 15. It is trite that the court should examine as to whether or not there was a reasonable belief on the part of the AO to come to a prima facie view that the income chargeable to tax has escaped assessment, if on examination of the facts on record, it can be held that there was a prima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he partner is found in form number 10CCB. This demonstrates that the books of accounts of the firm were completed in the month of May 2011 itself and the audit were completed on 14/9/2011. The due date for filing of the return was 30/9/2011. Hence, the appellant firm does not have any reason not to arrange for the registration of another digital signature in the system, even if claim of the appellant is accepted that the main promoters of the DB group were arrested in the matter related to 2G scam. According to the AO, there is no provision in the I-T act which stipulates that the appellant firm may file the return physically in the condition where an appellant is prevented to file the return of income electronically. Hence, the physical return filed on 30/9/2011 is treated as invalid return by the AO. 20. On the other hand, according to the learned AR the main promoter of the DB group, namely Shri Shahid Balwa, and also Mr Rajeev Agarwal who are arrested and jailed in relation to the matters relating to the 2G scam. Due to this, no person in the DB group was ready to cooperate in giving the digital signature of the concerned person who is director of a partner company. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... digital signature. The rule states as Under:- { Rule 12 (3) (aaa) [ Not extracted by us] } The rule uses the words shall . This makes it compulsory furnishing of return electronically under digital signature only. Hence, it is mandatory for the appellant including the assessee to furnish the return in form number ITR 5 to file return electronically under digital signature. The Section 139 (1) read with rule 12 (3) (aaa) does not give any option to an assessee to file return manually who is otherwise required to file electronically under digital signature. Therefore in my considered opinion, if an assessee files return of income manually u/s 139 (1), who is otherwise required to file return electronically with digital signature, such return will be non- est , as if the return does not exist or an invalid return. 23. The learned AR contention that the manual return of income may be considered as defective but not invalid return is without any merit. The return of income compulsory required to be filed electronically, but filed manually will not partake the character of return of income filed u/s 139 (1) as per provisions of Section 139 (9) of the IT act related to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tners in the appellant firm was not able to procure digital signature for the purpose of electronically filing return of income just because Mr Balwa was Under arrest. If that was the reason, none of these companies could have filed their returns of income as well as for any other statutory work. Moreover, filing of return of income by a firm electronically, was made compulsory much before financial year 2010 11. Hence, there was no reason for the appellant firm to postpone procurement of digital signature till the last date of filing of return of income for assessment year 2011 12. Hence the handicap expressed by the learned authorised representative in procuring the digital signature is not found convincing. 25. The reliance of the learned AR on the provisions of Section 292B is also found misplaced. In my considered opinion, Section 292B is helpful to such a return of income by mistakes, defects or omission are of such a nature that the substance and effect is in conformity with the intent and purposes of the IT act. Once, the intent of the IT act is very clear that the return of income for the year Under consideration are mandatory required to be filed electronically w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the said decision of the honourable Punjab and Haryana High Court was not brought to the notice of honourable tribunal at the time of arguing the case of luxury goods retail private limited which is directly on this point and by a superior authority. 27, considering the totality of the facts and circumstances of the issues involved, it is very clear that the manual return filed by the appellant for the year Under consideration is non-est , as if the return does not exist or an invalid return. 011. Further as there is no valid return under section 139(1) of the Act, he also confirmed disallowance of deduction under section 80IB (10) of the Act. He held that :- 28. The next issue for consideration is whether on the facts and circumstances of the case, the appellant is eligible for deduction u/s 80 IB of ₹ 521,831,943/ . The AO has denied the deduction claimed by the appellant u/s 80 IB in view of the conditions laid down u/s 80 AC that the assessee was required to file a valid return Under the provisions of Section 139 (1) of the IT act. The AO is also relied upon the decision in the case of Dwarkadas G Panchmatya versus ACIT in ITA number 4727/M/2012 dated 30/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as received by the appellant. 31. The claim of the learned AR that the provisions of Section 80 of The Act is directory in nature are not mandatory is also not correct in view of the decision of the honourable Karnataka High Court in case of Unique shelters private limited versus Union of India (2013) 37 taxmann.com 338. The honourable High Court did not interfere with the observation of the AO that there is a strict applicability of Section 80 AC insofar as it relates to filing of return u/s 139 (1) for claiming deduction u/s 80 IB (10) of the IT act. Accordingly, it was held that delay in filing of return of claim u/s 80 IB relief can only be condoned by CBDT. 32. I have also carefully perused the various judgments relied upon by the appellant and find this distinguishable on facts. All these cases, there were valid returns of income filed for claim of deduction Under chapter VI A. However, in the instant case, as held in the preceding paragraphs, there is no valid return filed for the year Under consideration for such claim of deduction u/s 80 IB. The same time, the reliance of the AO on the decision of honourable Mumbai tribunal in the case of Dwarkadas G Panchmatiya versus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n providing bills without actual delivery of materials. The learned Authorized Representative submitted that the learned Assessing Officer has stated that the above information is received by him but there is no such information or its source is revealed by making reference to the communication and manner of receipt of information. Therefore, he stated that the learned Assessing Officer does not have any information available with him but has merely reopened the assessment without any tangible material. He further submitted that there are discrepancies in information with respect to names of the parties as well as amount. He stated that there are enough evidences of receipt of material with respect to purchases transaction of all the 5 parties. He referred to Page No. 76 of the Paper Book, where the bill of purchase of material from M/s PK Trading is produced amounting to ₹51,063/-. However, in the reasons recorded by the learned Assessing Officer amount mentioned is only ₹49,163/-. He therefore submitted that information received by the learned Assessing Officer is vague. He further referred that assessee purchase material from that party of ₹51,640/- and which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded by the Assessing Officer and finding of the learned CIT (A). He submitted that the learned Assessing Officer in reasons recorded has stated that information has been received from DGIT (Investigation), Mumbai‟, whereas, learned CIT (A) in Para no. 12 has wrongly referred to the issue that the information has been received from Sales Tax Department and DGIT (Investigation), Mumbai‟. He therefore, stated that there is no reference of any information received from the Sales Department. In view of this, he submitted that reopening of the assessee deserves to be quashed on this ground itself. 014. On the issue of merits of the case referring to grounds no. 3 and 4, he stated that the disallowance of deduction under section 80IB was not part of the reasons recorded. Therefore, if the assessee succeeds on grounds no. 1 and 2, or on ground no 5 , grounds no. 3 and 4 become academic. 015. He stated that assessee has challenged the addition of ₹9,80,300/- made under section 69C of the Act. If assessee succeeds on ground no. 5 even then, grounds no. 3 4 do not survive for the reason that reopening has been made for only one ground of addition under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the parties, reopening cannot be said to be invalid. He further submitted that when the assessment is reopened, the whole assessment is open before the assessing officer and he can make any further addition more adjustment to the income of the assessee. Hence, according to him there is no infirmity in disallowance of deduction u/s 80 IB (10) of the act. On the merits of addition of bogus purchase, he submitted that assessee has failed to produce the parties before the learned assessing officer and therefore the purchases are not proved to be genuine and hence addition u/s 69C has correctly been made. He further submitted that assessee has claimed to file the return of income manually, which was not permitted at that particular time, the return of the assessee is treated as invalid. Therefore, is no valid return lies in the eyes of the law, the learned that AO has correctly held that assessee has not filed any return of income. For the purpose of claim of any deduction u/s 80 IB (10) of the act, assessee should have filed its return of income in time, which has not been filed, therefore the deduction u/s 80 IB (10) of the act has been correctly denied to the assessee. He furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n available about the details of the payment made by the assessee, recording of those transactions in the books of the assessee and any further information about the income of the assessee, no fault can be found in reopening of the assessment. 022. Merely some difference in mentioning of the amount, when the name of the party is mentioned correctly does not make the reopening of the assessment invalid. Further with respect to the claim of the assessee that whether the goods have been purchased from Maruti enterprises or Apex Corporation, the learned assessing officer has mentioned both the names. Therefore, it does not invalidate the reopening of the assessment. 023. The learned authorised representative has relied upon the decision of the honourable Delhi High Court in case of principal Commissioner of income tax versus G G Pharma India Ltd 384 ITR 147 to submit that prior to forming of reason to believe that income has escaped assessment there has to be a proper application of mind by the assessing officer. According to the decision, the learned assessing officer should have applied his mind to the materials produced to conclude that he has reason to believe that income h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned assessing officer, detailed note on standard operating procedure in respect of purchases. Assessee is also stated that it is engaged in the business of real estate development. Assessee has also produced the invoices of purchase of goods from each of the parties, their ledger accounts from the books of accounts of the assessee, bank statement of assessee showing payment made to different parties, delivery challans and material receipt note of goods received from those parties. On verification of the delivery notes it is found that the material received has been certified by the project engineer, Chief engineer and quality checked by the assessee. In material receipt note, there is a reference of lorry number and the date of receipt of material. Therefore it is apparent that assessee has produced all the details available with it to show that the goods have been purchased from those parties, debt due to them is discharged by account payee cheques , material has been received by the assessee, mode of receipt of the material is also mentioned, quantity and quality of which has also been verified by engineers of the assessee. The learned assessing officer has made the addition only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer had failed to show that the purchase material were bogus and held that there was no justification to doubt the genuineness of the purchases made by the respondent assessee. We are in agreement with the views expressed by the tribunal. Merely on suspicion based on information received from another authority, the assessing officer ought not to have made the additions without carrying out independent enquiry and without affording due opportunity to the respondent assessee to controvert the statements made by the seller‟s before the other authority. Accordingly, we do not find any good ground to entertain this question for consideration as well. 028. The question arises that as assessee has failed to furnish the correct and current interest of the suppliers for making necessary enquiries by the learned assessing officer, failure of the assessee to produce this parties could be fatal and deserves an addition or not. We find that the learned assessing officer has recorded the reasons for reopening of the assessment on the basis of specific information that 5 different parties have provided bogus bills to the assessee, he has also the information that those parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 wherein even the addresses were given and 133 (6) inquiries were made by the learned assessing officer which remained unresponded, the coordinate bench has deleted addition of unaccounted purchases holding that the AO cannot make the addition u/s 69C of the act by merely relying on information obtained from the sales tax Department, the statements, affidavits of third parties without the assessee being afforded any opportunity of cross-examination of those persons for non-response to information called for u/s 133 (6) of the act. It is also an admitted fact that the learned assessing officer has not confronted assessee with statements of those parties/suppliers made before the sense tax authorities. 031. In view of these facts, the addition made by the learned assessing officer and confirmed by the learned CIT A cannot be upheld. Accordingly, ground number 5 of the appeal is allowed and the learned assessing officer is directed to delete the addition of ₹ 980,300/ made u/s 69C of the act with respect to purchases from five different parties. 032. Now it is apparent that only issue in the reasons for reopening of the assessment was with respect to alleged bogus purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It can be seen from the reasons recorded by the AO that he took up the re-assessment proceedings on account of excess capital balance of Rs.4.00 lakh and also Tax Evasion Petition (TEP) detailing undisclosed investment made by the assessee in certain properties. However, the assessment was completed by making an addition of Rs.4.00 lakh and further disallowance of Rs.81,405/- out of expenses. No addition was made towards excess investments given in the TEP. We have deleted the addition of Rs.4.00 lakh in an earlier para by holding the same as not sustainable for the year under consideration. 6. Section 147 of the Act provides that: If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section...‟. A bare perusal of the above provision manifests that the AO is fully empowered to bring to tax any other income which has escaped assessment and which comes t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the sole addition made by the AO on the foundation of the recorded reasons has not passed the judicial scrutiny by the Tribunal in an earlier para. Thus, there can be no question of making any other addition to the income. We, therefore, hold that the initiation of reassessment was bad in law. Such initiation as well as the further proceedings are, therefore, set aside. Ex consequenti, we order to delete the addition of Rs.81,405/-. 034. In view of the fact that the reasons recorded for reopening of the assessment with respect to disallowance/addition u/s 69C of the act of ₹ 980,300/ has already been deleted no other disallowance, which are not part of the reasons recorded by the learned assessing officer, has any legs to stand, but fails. Therefore, without going into the merits of the disallowance u/s 80 IB of the act vis- -vis filing of the return by the assessee u/s 139 (1) of the act the deduction claimed by the assessee u/s 80 IB (10) cannot be disallowed. 035. Even otherwise, the fact shows that assessee has consistently been allowed deduction u/s 80 IB (10) in earlier assessment years as well as subsequent assessment years. For peculiar reasons, assessee cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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