9911796707
TMI Blog2022 (11) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue is squarely covered by the decision of the Co-ordinate Bench in the case of Pankaj K. Chaudhary [ 2021 (10) TMI 653 - ITAT SURAT] and there is no change in facts and law and Revenue is unable to produce any material to controvert the aforesaid findings of the Co-ordinate Bench (supra). We find no reason to interfere in the above said order of Co-ordinate Bench, therefore we dismiss the appeals of the assessees and we allow the appeals of the Revenue partly. X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2016 which was duly served upon the assessee. Further, notice u/s 142(1) of the Act was issued on 17.02.2016. In response to the above notices assessee appeared before the assessing officer. 5. In turn the assessee filed a civil application SCA/2493 of 2016 before the Hon'ble Gujarat High Court, Ahmedabad against the speaking order passed by the A.O. for disposing the objections raised by the assessee and issuance of notice u/s.148 of the Act. The civil application of the assessee was admitted by the Hon'ble High Court and granted interim relief to the assessee vide order dated 16.02.2016, directing the respondent (Deputy Commissioner of Income tax) to not proceed further pursuant to the notice dated 26.03.2015 issued u/s.148 of the Income tax Act, 1961. The hon'ble High Court of Gujarat vide its order dated 13/06/2016 permitted the assessee to withdraw the petition. The order was dispatched by the Hon'ble High Court vide dispatch No.DDSCA/ 20160115331/201G on 227-26/2016 and received by AO on 29/06/2016. The investigation wing, Mumbai conducted search on Shri Bhanwarlal Jain and Rajesh Bhanwarlal Jain on 03.12.2013, covered certain name sake/dummy directors/prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to Bhanwarlal Jain. In his statement recorded u/s.132(4) of the Act on 11.10.2013, Bhanwarlal Jain has admitted that he manages and controls the business affairs of all concerns in which the persons who are his employees are shown as Directors, partners and proprietors and that these concerns were bogus entities floated by him only for the purpose of providing bogus accommodation entries in the barge of sales bills/purchase bills/unsecured loans, etc. and that no other business activity has been carried out by these entities. During the course of search, evidences were found and persons were examined on oath which established that Bhanwarlal Jain and family have been using 70 benami concerns to give accommodation entries in the" nature of bogus purchases and bogus unsecured loans to various beneficiaries. Examination on oath of trusted employees of Bhanwarlal Jain and family revealed the complete modus operandi used by Bhanwarlal Jain for giving such accommodation entries of bogus purchases and loans and advances to various beneficiaries. On the basis of statements given by Shri Bhanwarlal Jain and also the dummy partners/directors/proprietors of various entities of this g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing of income tax department, Mumbai had also recorded the statement of above said partners/proprietors during the course of which they had accepted that they were not really doing any business and on the other way they were only facilitating bogus bills of sales and the overall affairs of their entities were been managed by Shri Bhanwarlal Jain and his group consisting of his family members. Since the evidential and material facts found during the course of search and survey operations carried out in the case in Shri Bhanwarlal Jain Group prove giving of above mentioned accommodation sales entries, it is prima facie apparent that the assessee have utilized such bogus purchases to suppress profit for the year to that extent. There is no other prudent use of bogus purchase bills. The report of Investigation Wing, Mumbai with enclosures contains specific information in respect of entities who have availed accommodation entries in the nature of purchase bill/unsecured loans. This list also include the name of the entities discussed above, who were flotted and managed by Shri Bhanwarlal Jain group, mainly for the purpose of providing accommodation entries to prospective seekers of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he IT Act in the case of M/s Anjana Exports. I have been visited on 10.08.2016 at address give on notices and found as under: In order to give natural justice to the assessee and before proceeding further, a show cause notice dated 12.08,2016 was issued to the assessee which was sent through email/speed post and required him to furnish the details called for on 17.08.2016 from the above parties and also to produce the parties for verification of the transaction. In response to the above show cause notice, neither the assessee nor his representative appeared or furnished any reply. Giving another opportunity again the show cause notice dated 22.08.2016 was sent to the assessee through email and speed post. Then after, assessing officer, taking into account information available on record, made addition of Rs.13,19,35,109/-. 9. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has partly deleted the addition made by Assessing Officer. During the appellate proceedings, the assessing officer rejected the ground raised by the assessee challenging the reopening of assessment under section 147 of the Act. On merits, ld CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer to assess or reassess income chargeable to tax if he has reason to believe that the said income for any assessment year has escaped assessment. The expression 'escaped assessment' clearly connotes a very basic postulate that the income for a particular assessment year went unnoticed by the Assessing Officer and because of it not being noticed by him for any reason, it escaped assessment. The meaning of the expression 'escaped assessment' is so simple and straight that it does not leave anyone in doubt that power under section 147 could be invoked by the Assessing Officer if it is a case of escape of assessment of income for a particular year. The provisions of section 147 require that the Assessing Officer should have 'reason to believe' that any income chargeable to tax has escaped assessment. Thus, ld DR stated that reasons recorded by the assessing officer are valid reasons thus reopening of assessment should be upheld. 12. On merits, ld DR stated that decision of the Ld. CIT(A) is not acceptable considering the fact that ld CIT(A) has mentioned in order that the assessee has made purchases somewhere else, but have obtained bills from im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disclosure of the transaction cannot be said to be true and full disclosure and the Income-tax Officer would have jurisdiction to reopen the concluded assessment. It would be apt to quote some observations of the Apex Court in the case of Phul Chand Bajrang Lal (supra), which read as under: "...one has to look to the purpose and intent of the provisions. One of the purposes of Section 147 appears to be to ensure that a party cannot get away by willfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice to turn around and say 'you accepted my lie, now your hands are tied and you can do nothing'. It would, be travesty of justice to allow the assessee that latitude." 16. The Hon'ble Gujarat High Court in the case of Dishman Pharmaceuticals and Chemicals Ltd. vs. DCIT (OSD), Ahmedabad (2012) 346 ITR 228 (Guj) has summed up the requirements of the law, in such circumstances and has held that: "There is no set format in which such reasons must be recorded. It is not the language but the contents of such recorded reasons which assumes importance. In other words, a mere statement that the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious documentary evidences furnished by assessee. The ld. CIT-DR for the Revenue supported the order of AO. The ld. CIT-DR submits that Investigation Wing, Mumbai made a search on Bhanwarlal Jain Group. During the search and after search, the Investigation Wing made a thorough investigation and concluded that Bhanwarlal Jain Group and his associates including his sons were indulging in managing about 70 benami concerns. The benami concerns were engaged in providing accommodation entries. The assessee is one of the beneficiaries of such accommodation entries. In the transaction of accommodation entries, the documentary evidences are created in such a way, so that the bogus transaction is looks like genuine transaction. In bogus transaction, the fabricated evidences are always maintained perfectly. The assessee has obtained accommodation entry only to inflate the expenses and to reduce the ultimate profit. No stocks of diamonds were found at the time of search on Bhanwarlal Jain Group. The assessee has shown a very meagre gross profit (GP) @ 0.78% and not net profit (NP) at 0.02%. The ld. CIT(A) restricted the addition to the extent of 12.5% which is on the lower side. The ld. CIT-D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, accounts of the parties, bank statement of assessee showing transaction to the banking channel. The AO has not made any comment on the documentary evidence furnished by assessee. The AO solely relied upon the statement of third party and the report of Investigation Wing. The report of wing and the statement of Bhanwarlal Jain were not provided to the assessee. The AO has not disputed the sales of assessee. No sale is possible in absence of purchase. The books of accounts were not rejected. The AO made the disallowance of entire purchases. The assessing officer not provided cross examination of the alleged hawala dealers. The disallowances sustained by the Ld. CIT(A) @ 12.5% of the impugned purchases, is on higher side and deserve to be deleted in total. The ld.AR of the assessee submits that entire purchases shown by assessee are genuine. In without prejudice and alternative submissions, the Ld. AR for the assessee submits that in alternative submission, the disallowance may be sustained on reasonable basis. To support his various submission, the ld.AR for the assessee is relied upon case laws: 1 M/s Andaman Timber industries VsCommissioner of Central Excise, CIVIL APPEAL NO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was duly disposed by AO in his order dated 09.02.2015. The assessee raised ground of appeal before ld CIT(A) while assailing the order of AO on reopening. The ld CIT(A) while considering the ground of appeal against the reopening held that the AO has received report from investigation wing Mumbai, which indicate that the assessee is beneficiary of the accommodation entry operators. The accommodation entry provider admitted before investigation wing that he has given such entry to various persons; based on such report the AO has reason to believe that the income of the assessee has escaped assessment and thus the action of AO in reopening is justified. 18. We find that the Hon'ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd Vs DCIT (supra) while considering the validity of similar notice of reopening, which was also issued on the basis of information of investigation wing that they have searched a person who is engaged in providing accommodation entries, held that where after scrutiny assessment the assessing officer received information from the investigation wing that well known entry operators of the country provided bogus entries to various be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of jurisdictional High Court in Mayank Diamonds Pvt. Ltd. (supra) and compared the fact of the present case with the facts in Mayank Diamonds Pvt Ltd (supra) and noted that assessee in that case was also engaged in the trading of polished diamonds. The ld CIT(A) noted that in that case the AO made disallowance of entire bogus purchase and on first appeal before CIT(A) the disallowances were maintained. However, the Tribunal gave partial relief to the assessee directing to sustain the addition @12% of such bogus purchases. And on further appeal, the Hon'ble High Court sustained Gross Profit Rate @ 5% being average rate of profit in industry. 20. Now adverting to the facts of the present case, the ld.CIT(A) held that in some other similar cases; though he had sustain 5% of Gross Profit Rate, considering the fact that where Gross Profit shown by those assessee's are more than 5%. However, in the present case, the assessee has merely shown Gross Profit Rate only at 0.78% of turnover, accordingly, the ld. CIT(A) was of the view that disallowance of 12.5% of impugned purchases/bogus purchases would be reasonable to meet the end of justice. 21. We have seen that during the fina ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
