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TMI Blog2024 (9) TMI 1622X X X X Extracts X X X X X X X X Extracts X X X X ..... A) has made the addition. Addition u/s 68/69C - In the instant case the CIT(A) has deleted the addition u/s. 68 of the Act and made the addition u/s 69 of the Act without giving the notice to the assessee. The books of account were never rejected by the AO. AO had not made any effort to verify the sundry creditors which details were provided by the assessee. The disallowance of corresponding purchase u/s 68 of the Act cannot be made when the assessee has disclosed the sales and purchases as well as gross profit, and which were accepted by the AO. CIT(A) has made the addition u/s 69 of the Act as the purchases were not made through banking channels. The books of account and audit report were accepted by the AO and entire alleged bogus transaction cannot be disallowed when the sales have been accepted. The assessee s gross profit rate was also increased 4.39% for the current year. Hence, the addition made by CIT(A) u/s 69C of the Act is liable to be deleted. From the above discussion, we are of the view that CIT(A) has wrongly made the addition u/s 69 of the Act. The addition made by the Ld. CIT(A) u/s.69C of the Act is deleted. Hence, the appeal of the assessee is liable to be allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A), who vide order dated 27-01-2017 dismissed the appeal against which the assessee is in appeal before us. 4. The Ld.AR for the assessee has submitted that the order passed by AO u/s 143(3) of the Act is void ab-initio and invalid because the AO has no jurisdiction to pass the assessment order and no notice was issued by the jurisdictional assessing officer. The Ld AR has also submitted that the notice issued by the ACIT, circle (5) (1) New Delhi was without jurisdiction. The Ld AR has further submitted that notice issued by the ITO was time barred by limitation. He has also submitted that the trading result of the assessee have been accepted then the Ld CIT(A) has no power to make the addition u/s 69 C of the Act without giving the show cause notice to the assessee. 5. Reliance has placed on the following judgments; 1. KA Wires Ltd. Vs. ITO, Ward- 8 (3), Kolkata [2020(3) TMI 418 ITA No.1149/Kol/2019 2. YKM holdings Pvt. Ltd. Va ACIT Circle 4 (1), New Delhi [2024 (5) TMI 92] ITAT Delhi [ ITA no.1020/Del/2019] 3. Pushpa Gupta Vs. ITO, Ward0 3 (3), Gurgaon [2024(4) TMI 800] [ITA No.3604/Del/2019] ITAT Delhi 4. Botique International Pvt. ltd. Vs. ITO, Ward0 5 (1), Delhi [2020 (12) TM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted in the order has dismissed the appeal. He has further submitted that the assessee has not challenged the notice within time. Therefore, he submitted that the order of Ld.CIT(A) be upheld. 7. We have heard the rival arguments and perused the material available on record. 8. The Ld AR has submitted that the notice was issued by ACIT, Circle-5(1), Delhi who had no jurisdiction over the assessee. The Ld. ITO has the jurisdiction to issue the notice. The notice was void. In the case of YKM holdings Pvt Ltd vs ACIT Circle-4 (1) New Delhi ITA no 1020/Del/2019 the Hon ble ITAT Bench Delhi held as under :- 5. We find that assessee's returned income for the A.Y. 2015- 16 was Rs. 37,78,510/- hence, the jurisdiction of the assessee should lie with ACIT/DCIT since the returned income had exceeded Rs. 30,00,000/-, in view of the CBDT Instruction No.1/2011 dated 31.01.2011. For the sake of convenience, the said Instruction No.1/2011 [F. No.187/12/2010-IT(A-I)] dated 31.01.2011 is hereby reproduced:- SECTION 119 OF THE INCOME-TAX ACT, 1961- INCOME-TAX AUTHORITIES -INSTRUCTIONS TO SUBORDINATE AUTHORITIES INSTRUCTION NO. 1/2011 [F. NO. 187/12/2010-IT(A- 1)), DATED 31-1-2011 References have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO on receipt of the notice. In the instant case, nowhere up to learned CIT(A), the assessee has challenged the jurisdiction of the learned AO. In our considered opinion, this argument of the learned DR is wrong in as much as section 124(3) of the Act talks only about territorial jurisdiction, whereas the issue involved here is pecuniary jurisdiction. Further, the provisions of section 124(3) of the Act could be taken shelter by the Revenue only when legal valid notice under section 143(2) of the Act has been issued by the Revenue. In the instant case, notice issued under section 143(2) of the Act on 12.04.2016 by ITO is not legal as he did not possess jurisdiction over the assessee for A.Y. 2015-16 in as much as the returned income for A.Y. 2015-16 had exceeded Rs. 30,00,000/-. We find that the issue in dispute is no longer res integra by the decision of Hon'ble Delhi High Court in the case of Ashok Devichand Jain vs. UOI reported in 452 ITR 43 (Bom). In this case, very same issue was addressed in the light of CBDT Instruction No.1/2011[F. No.187/12/2010-IT(A-I)] Dated 31.01.2011. For the sake of convenience, the entire order is reproduced hereunder: 1. Petitioner is im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid observations and respectfully following the judicial precedent relied upon hereinabove, we have no hesitation to hold that the assessment framed under section 143(3) of the Act deserves to be quashed in the instant case as the initial scrutiny notice issued under section 143(3) of the Act dated 12.04.2016 by ITO was without jurisdiction as he did not possess jurisdiction over the assessee for the A.Y. 2015-16. Consequently, assessment framed under section 143(3) of the Act is hereby quashed as void ab initio. The additional ground no.2 is hereby allowed. 8. Since, the entire assessment is quashed the adjudication of original grounds of appeal and other additional grounds become academic in nature and no opinion is hereby rendered thereon and they are left upon. 9. In the result, appeal of assessee is allowed. 9. Hon'ble Delhi High Court in the case of Ashok Devichand Jain vs. UOI reported in 452 ITR 43 (Bom), in this case, very same issue was addressed in the light of CBDT Instruction No.1/2011 [F. No.187/12/2010-IT(A-I)] Dated 31.01.2011. For the sake of convenience, the entire order is reproduced here under:- 1. Petitioner is impugning a notice dated 30th March, 2019 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the jurisdiction of the AO within the time allowed u/s. 124(3) of the Act. He has submitted that notice u/s 143(2) was served within time. On change of incumbent the AO again issued the notice u/s 143(2) and 143(1) of the Act. The Ld AR has attended the proceedings but never challenged the jurisdiction of the AO within time. Reliance has placed on the followings judgments : 1. Abhishek Jain Vs Income Tax officer, ward-55(1), New Delhi{2018} 94 taxmann.com 355 (Delhi), in this case Hon'ble Delhi High Court held as under :- 19. We would reiterate that sub-section (1) to Section 124 states that the Assessing Officer would have jurisdiction over the area in terms of any direction or order issued under sub-section (1) or sub-section (2) to Section 120 of the Act. Jurisdiction would depend upon the place where the person carries on business of profession or the area in which he is residing. Subsection (3) clearly states that no person can call in SS. Ahlinvalia (supra) would negate and reject arguments question jurisdiction of an Assessing Officer in case of non-compliance and/or after the period stipulated in clauses (a) and (b), which as predicated on lack of subject matter juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs Shri Shyam the Hon ble Delhi High Court held s as under :- 5. Learned counsel for the assessee contended that the ITAT possessed jurisdiction to return a finding on whether the AO s order was a nullity, and can give the verdict that such adjudication cannot go into the merits of such of the proceedings. Facially, Section124(3) stipulates a bar to any contention about lack of jurisdiction of an AO. It is not as if the provisions of the Act disable an assessee from contending that in the given circumstances the AO lacks jurisdiction; rather Section 124(3) limits the availability of those options at the threshold. The assessee upon receipt of notice of the kind mentioned in Clause (a) and (b) of sub section 3 has the option to urge the question of jurisdiction; the expressed tenor and terms of the provisions clarify that such objections are to be articulated at the threshold or at the earlier points of time. The two points of time specified in Section 124(3)(a) are as under: (i) Within one month from the date of service of notice or; (ii) After completion of assessment - whichever is earlier. 6. In the present case, there is no dispute that the reassessment notice was issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13 as ACIT has power over the returned income Rs. 30,00,000/-and the returned income of the assessee was below Rs 30,00,000/- it means ACIT may also issue the notice below the returned income Rs. 30,00,000/-which was within the power of the ACIT. The cases relied by the Ld AR are distinguishable because in those cases notices were issued by the ITO when the assessee s income was above the thirty lakh, and the ACIT was the power to issue the notices, but instant case the returned income of the assessee was below the thirty lakh and ACIT has the power to issue the notice. 14. The Ld AR of the assessee has submitted that the notice issued by the Ld ITO was time barred by limitation. The notice should have been served before the expiry of six months from the end of the financial year in which return was filed or before 30-09-2013. From the perusal of the order of the Ld CIT(A) it is evident that the first notice was issued on 06-08-2013 by ACIT circle 5(1) which was within time. The case of the assessee was transferred to the jurisdictional assessing officer, who issued the second notice on 28-11-2014. The notice issued by the ACIT was not time barred. Grounds are decided accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether these parties were physically available or they were fictitious? The Delhi Bench of the ITAT in the case of Annamaria Travels and Tours P. Ltd. that has been relied upon by the AP. supports ray contention that section 68 cannot apply where goods or services are acquired by the assessee on credit and an entry is made crediting the liability in the account of the person from whom such goods and services are acquired. Further the Hon'ble Delhi High Court in the case of Ritu Anurag Aggarwal in ITA no. 325/2008 has held that when the sales, purchases as well as gross profit disclosed by the assessee have been accepted by the AO, there was no case for disallowance of corresponding purchases u/s 68, in as much as it is not in dispute that the creditors outstanding related to purchases, in a situation where the trading results are accepted by the AO. 5.3 In the present case it is not in doubt that the trading results of the appellant have been accepted. As per the month-wise break up purchases and sales, the appellant purchased Rs. 4,27,49,260/- and Rs. 4,01,96,550/- of Soya bean DOC in the months of January February, 2012 and sold these at Rs. 4,31,03,845/- and Rs. 4,04,82,213/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chases made. The same story is repeated in all the bank accounts of all the five parties. I may also mention that no closing stock inventory has been prepared and furnished before the AO or before the undersigned during the assessment present proceedings. If, as the appellant contends, the purchases are genuine and corresponding sales have been made and booked against the impugned purchases, there would be no difficulty in furnishing the quantitative tally of the goods traded in. It is important to note that the appellant has never furnished the ledger account of these parties for the subsequent period evidencing how payments were made or its own bank account statements for the subsequent financial year 2012-13 to show that the payments have been made through the banking channel. It is also clear that these parties have not included the sales made to the appellant in their turnover and consequently in their ITRs as copies of their ITRs have not been filed as additional evidence. Hence although the AO has made addition u/s 68, the facts of the present case demonstrate that it is a case of alleged bogus purchases In CIT v. Daulat Ram Rawat Mull [1973] 87 ITR 349 the Supreme Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer to a decision dated 03.11.2015 by Pune ITAT in the case of Sh. Mukeshkumar Pukhraj Mehta (Prop. Arihant Tubes Fittings) (ITA NO. 2026/PN/2014) wherein it was held that in the absence of any confirmations being filed by the assessee from the suppliers or the evidence of the bank statements of the said parties having been placed on record by the assessee to prove its case that payments were made through banking channel, the purchases could not be said to be genuine. The case laws to the effect, that in the absence of any evidence being available with the A.O, to show that the cheques issued in favour of the selling dealers for purchases affected by them, had come back to the assessee, no addition could be made, was held by the Pune ITAT to be not applicable to support the assessee's case. The present case stands on a better footing as it is not demonstrated by the appellant that payments have been made to these parties through banking channel. 5.7 Keeping in view the above discussion, it is held that the impugned purchases not having been made through banking channels and not supported by any of the surrounding circumstances such as inclusion in the stock register/sales of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank that while making the repayment of the unsecured loan to M/s LMJ Logistics Ltd., there were certain repayments to M/s LMJ Logistics Ltd. and also EMI of the loan which were preceded by certain cash deposits and which were not explained. 6. The Bench is of the considered view that the ld.CIT(A) being satisfied with the additional evidences filed establishing the genuine sources of investment in the hands of the assessee for purchase of property, travelled beyond the mandate of the Tribunal in the first round of litigation vide the order dated 27.02.2018. The ld.CIT(A) was directed to adjudicate the appeal afresh after admitting the additional evidences of the assessee. Thus, the question restored to the files of the ld.CIT(A) was to examine if the additions made by the AO completing the assessment u/s 144 of the Act was not justified in the light of the evidences available with the assessee. Consequent to the filing of evidences, if the CIT(A) intended to examine the issue further, then, at one hand same was beyond mandate of Tribunal order restoring issue to CIT(A) and otherwise that certainly required putting the assessee to notice. However, the ld.CIT(A) failed to put the a ..... 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