9911796707
TMI Blog2024 (11) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order was to be dismissed - Held YES. In favour of assessee. Similar views has been taken in the case of ACIT Vs Virbac Animal Health India (Pvt.) Ltd [ 2023 (5) TMI 554 - SC ORDER] where special leave petition filed against the order of the High Court was dismissed, where the High court held that there was no failure on the part of the assessee to truly and fully disclose all material facts necessary for purpose of assessment which were carefully scrutinized by AO during original assessment and thus reopening notice issued after four years on account of change of opinion was to be set aside. Bogus purchases - The entire sales are considered as part of gross turnover and duly reflected in books of accounts and considered for determination of disclosed profits, and the entire turnover of sales has been subjected to taxation, which are also supported by VAT returns, and the output tax on such sales (after adjustment of input credit) has been deposited to credit of state revenue. Assessee has travelled a step further and explained with materials on record that the goods purchased from both the sellers, has been sold to M/s AVN Construction Company, who in turn sold the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 2) The Ld. CIT(A) has erred in limiting the addition only to the extent of 25% of bogus purchases as against 100% made by the AO through he himself arrived at the conclusion that the alleged bogus purchases are bogus purchase and not inflated purchases and taxing only 25% of these bogus purchases goes against the principles of Section 68,69A and 69C of the Income Tax Act. The Ld. CIT(A) has erred in limiting the addition only to the extent of 25% of bogus purchases by arriving at the conclusion that since the corresponding sales have been accepted and so entire alleged purchases cannot be disallowed by not taking into consideration the business type of the assessee. The corresponding sales cannot be doubted in case of a pure trading firm but the assessee firm was also a colonizer and contractor and so the entire purchases were not traded by the firm and some purchases were used for in-house consumption. Hence corresponding sales made by the assessee were also in doubt. 4) The appellant craves leave to add, amend, alter, and vary any or all the above grounds of appeal. 5) It is prayed that the order passed by the Ld. CIT(A) may be set aside and that of the AO may be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on mis-stated facts is unjustified, uncalled for and addition made in response to such notice is illegal. The same be deleted. 6. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred by upholding the findings of the A.O. that the alleged purchases made from Hitesh Industries and Akansha Enterprises are bogus without appreciating that the sales could not be made in the absence of purchases whereas sales are not in dispute especially when the purchases of Rs. 17,17,58,348/- made from Hitesh Industries and AkanshaEnterprises are ultimately used in the construction of Talwandi Sabo Thermal Plant. Therefore, the addition 7. On the facts and circumstances of the case as well as in the law, the Ld. CIT(A) has erred by holding that the sales made to M/s AVM Construction Co., Mansa are under doubt on the ground that the sales could have been made directly to the customers by the assessee appellant to whom the sales have been made by M/s AVM Construction, Mansa 8 On the facts and circumstances of the case, the Ld. CIT(A) and A.O. have erred in holding that the alleged purchases of Rs. 17,17,58,348/- are bogus whereas as per material placed on record, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled in response to notice u/s 148 and copy of the recorded reasons was also obtained and in course of proceedings detailed questionnaire was issued by the AO and the assessee responded through written submissions and explanations along with copies of ledger accounts of the purchases as made from the above two parties, namely, M/s. Hitesh Industries and M/s. Akansha Enterprises, (as per assessee books of accounts), supported by VAT-23 and VAT-24 returns, and copies of the purchase bills, invoices, bank records, and other evidences explaining and demonstrating that all payments has been made, through banking channels. It was further stated that that the material as purchased from these two ( alleged bogus ) parties was sold to one M/s AVM Construction Company, who, in turn, has sold the materials to various buyers, the ultimate destination being construction of Talwandi Sabo Thermal Power Plant , and the entire sales, has been reflected in the audited books of accounts of the assessee and, duly reflected in audited trading and profit and loss account as at year end, and has formed part of gross turnover of sales, which has already been accepted in course of assessment proceedings by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubted then how purchase alone can be treated as bogus. The Ld. AO while dealing with the issue has relied upon the decision in the case of N.K. Proteins Ltd. Vs DCIT, 84 taxmann.com 195. The Hon'ble Supreme Court dismissed the SLP filed by the appellant and thus confirmed the addition of 25% held by the ITAT and not in contrary to said decision. The ratio and fact of the case is similar to the case in hand. However, while concluding the case he held that the purchases of Rs. 3,21,49,587/- from M/s Hitesh Industries, Sunam and purchases of Rs. 13,96,08,761/- from M/s Akanksha Enterprises are bogus and considered unexplained expenditure of the assessee, which correspondence to section 69C of the Act. The amount of Rs. 17,17,58,348/-debited by the assessee on account of alleged purchase is held to be deemed income of the assessee added to returned income of the assessee. However, in my considerate view though the Ld. AO relied upon the N.K. Proteins Ltd. Vs DCIT (supra) which has relied on the decision in Vijay Protein Ltd.(supra) should have restricted the addition to 25% of the bogus purchase as the corresponding sale was accepted. Reliance is also placed in the case of Sumer Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground of appeal of the assessee. 14. Regarding the addition of Rs. 17,17,58,348/-, it was stated by the CIT(A) in his order that no confirmed copy of account of two parties have been filed and also stated that the statement of Sh. Rajinder Kumar Prop. Hitesh Industries is on record, in which, he has denied making any purchases sales and further as and when, the payments have been made by the assessee to M/s. Hitesh Industries and M/s. Akansha Enterprises, the amount have been withdrawn immediately by cash by the supplier and the assessee has failed to establish the genuineness of such purchases as made from the two parties. However, the CIT(A) held that M/s. AVM Construction, Mansa, to whom, the sales have been made in respect of the material purchased by the assessee, from both the parties is a sister concern of the assessee and the transactions appear to be suspicious and the filing of VAT returns by the assessee and by the AVM Construction Company, does not prove that the goods were sold to them. 15. The CIT(A) however, considered the argument of the assessee that the sales having not been doubted by the Assessing Officer, then the purchases alone cannot be treated as bogus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disputed parties. 2. Thereafter, assessment order u/s 143(3) of the Act was passed dated 24.03.2014 as per copy of original assessment order forming part of PB at pages 33-38 and refer to page 33 of the Paper Book where the Assessing Officer has mentioned as under:- Also produced books of account consisting of cash book, ledger, bill/vouchers, purchase/sale bills, which were examined on test c heck basis. Information/details as called for were furnished and the same are also test checked. The case was discussed with him. Thus, the Assessing Officer has duly applied his mind to the purchases specially to these two parties and above all, books of accounts and bills and other details were filed before Assessing Officer during assessment proceedings and details of two parties were given. 3. Thereafter, on the basis of the information received from investigation wing, the case was reopened u/s 148 of the Act and as per reasons recorded; the assessee had made bogus purchases from two parties namely M/s Akansha Enterprises and M/s Hitesh Industries. Copy of the satisfaction note is at pages 39 to 40 and in that satisfaction note is only with regard to one party namely M/s Hitesh Indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, reliance is being placed on the judgment of Hon ble Amritsar Bench of the ITAT in the case of Sh. Darshan Garg, copy placed at pages 34 to 44 of JS, and also on the recent Judgement of Kissan Fats of the Chandigarh Bench of the ITAT, placed at pages 45 to 59 of Judgement Set and M/s Atlas Cycle Industries, as reported in 180 ITR 319, P H High Court, placed at pages 66 to 70 in which, it has held has under:- 9. Adverting to the question referred regarding the reassessment proceedings, we are of the view that the Tribunal was right in cancelling the reassessment as both the grounds on which reassessment notice was issued were not found to exist, and the moment such is the position, the ITO does not get the jurisdiction to make a reassessment. This view of ours finds support from the Supreme Court decisions in CIT vs. A. Raman Co. (1968) 67 ITR 11 (SC) and Bankipur Club Ltd, vs. CIT 1972 CTR (SC) 245 : (1971) 82 ITR 831 (SC). Similar view has been taken by the Rajasthan High Court in Addl. CIT vs. Ganeshilal Lal Chand (1984) 43 CTR (Rai) 120 : (1985) 154 ITR 274 (Raj)., On behalf of the Revenue, CIT vs. Ahmedabad Manufacturing and Calico Printing Co. Ltd. 1976 CTR (Gui) 214 : ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material or information in his possession to conclude and arrive at a satisfaction therefrom that income has escaped assessment. Both application of mind and sat is faction /belief of the AO are lacking in the present case. The reassessment therefore we hold is invalid. The case laws relied upon by the Ld. Counsel for the assessee support the case of the assessee, The order passed by the AO is, therefore, set aside. Therefore, the reopening of the case made by the Ld. AO on the basis of incorrect facts and figures is void-ab-initio and the reassessment proceeding deserves to be quashed. 8. The reopening of the case of the assessee is bad in law as clear from the above fact that the details of purchases made have been already provided by the assessee during the course of original assessment proceedings and reliance is placed on the latest judgement of Karnataka High Court in the case of Smt. VASANTHI RAMDAS PAI Vs. ITO in WP No. 8797/2022 C/W WP No. 8815/2022, wherein, it has been held that provisions of section 148 of the Act cannot be used for information already disclosed in ITR and any reason/any information cannot be a basis of reopening of case and there must be escapement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 of Judgement Set) Further the appeal of the department has even been dismissed by the Hon'ble Punjab Haryana HC vide order dated 05.09.2023 in 1TA-101-2022 (O M).Placed at pages 106 to 110. 1. As regards the reason recorded, nothing has been brought on record by the revenue that the A.O has applied his mind to the information of the ADI, Bathinda. On such borrowed satisfaction of the ADIT, Bathinda, section 147 does not confer power on the A.O to initiate reassessment proceedings as per the following case laws:- i) Mohd Yousuf Wani vs. lTO in ITA No. 372/Asr/2009(Amritsar ITAT): In our considered view, reliance placed by the A.O on the letter of Vigilance Department was not sufficient to make a belief that the income of the Assessee has escaped assessment. In the present case, the reason for formation of belief was only the information received from the vigilance Organization. In our opinion, the so-called reason recorded by the A.O could not be held the reason for proceedings under section 147/148 of the Act, since it was only an information and was not at all discernible as to whether the A.O has applied his mind to the information and independently arrived at a belief on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial before the ITO and the believe which he has to form regarding the statement of income and in the present case both of them are missing. 13. Assessee argument on CHANGE OF OPINION The assessment was completed u/s 143(3) vide order, dated 24.03.2014 and copy of the audited balance sheet was there with the Assessing Officer alongwith copies of accounts of the parties and each and everything has been explained and the Assessing Officer examined the books of accounts including purchases from above two parties and complete satisfaction has been recorded by the Assessing Officer in the order u/s 143(3) and even the detailed replies in respect of purchases from these two parties and others have been placed in Paper Book at pages 22 to 32 and list of the purchases is there at page 22 and copies of accounts of two parties are from pages 23 to 27 and, thus, the reopening merely on account of change of opinion and, since except the statement of the assessee, which have not been confronted to the assessee and neither any cross examination has been given, it was merely a change of opinion since the assessment has been reopened beyond four years and there is no tangible material with the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. 17. However, in the instant case, there is no allegation in the reasons recorded that there was any failure on the part of assessee to truly and fully disclose all material facts necessary for its assessment for the relevant assessment year and on that ground alone the assessment order passed u/s 147 and confirmed by the CIT(A) should be quashed and set aside. Though if the factum of failure to disclose can be culled down from the reasons in support of the notice seeking to reopen assessment, that will certainly not be fatal to the assumption of jurisdiction under sections 147 and 148, the reasons, does not indicate anything cogen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax* Section 32, read with section 148, of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of (Rate of depreciation/ATMs) - Assessment years 2005-06 to 2007-08 - Assessee bank installed ATMs, and claimed depreciation at rate of 60 per cent by treating it as computer - Assessing Officer sought to reopen case on ground that depreciation allowable on plant and machinery was to be allowed - Reasons for opening assessment which had already been concluded did not show that there was any failure on part of assessee to disclose fully and truly all material facts and thus, it was merely a change of opinion - Whether reassessment was justified - Held, no [Para 11] [In favour of assessee] d) [2007] 163 Taxman 387 (Punjab Haryana) HIGH COURT OF PUNJAB AND HARYANA Commissioner of Income-tax, Patiala v. Air Craft Radio Corporation Section 148 of the Income-tax Act, 1961 - Income escaping assessment - General - Assessment year 1969-70 - Whether where reassessment order has been set aside by Commissioner (Appeals), Assessing Officer has no jurisdiction to once again embark upon same proceedings - Held, yes e) [2024] 159 taxmann.com 51 (Bombay)[29-01-2024] Section 37(1), read with section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts income chargeable to tax had escaped assessment within meaning of section 147 as based on information received from DDIT, assessee had done transactions in shares of 'F', which was a penny stock company traded in Bombay Stock Exchange - However, there was no allegation at all in reasons recorded for reopening or in affidavit-in-reply that investigations had revealed that assessee was mastermind or actively involved in rigging of share price of 'F' in stock market - Further, in response to a query raised under section 142(1), assessee had also admitted that it had traded in 'F' and even provided documents thereto - Issue of capital gains from shares which included shares of 'F' was under active consideration before Assessing Officer - Whether therefore, there being no failure to truly and fully disclose material facts, reopening of assessment after expiry of four years was not justified - Held, yes [Paras 6 and 7] [In favour of assessee] INCOME TAX : Where assessment was sought to be reopened in case of assessee on ground that assessee had done transactions in shares of 'F', which was a penny stock company traded in Bombay Stock Exchange, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment. Therefore, the order of the Tribunal was to be upheld. i) 2021 (5) TMI 122 - GUJARAT HIGH COURT GHANSHYAMBHAI ADARBHAI PATEL VERSUS UNION OF INDIA Reopening of assessment u/s 147 - Sham transaction of gift - whether the revenue is justified in reopening the assessment for the year under consideration ? - HELD THAT:- We are of the view that, when specific query with regard to transaction of gift was raised by the AO and the same was answered by the assessee, the AO thought fit not to make any addition, which clearly proves that, he consciously formed the opinion and framed the assessment. We have examined the objections raised by the audit party and subsequent enquiries made by the AO before reopening of the assessment. Except the audit objections, no any new material came in the hands of the assessing officer while initiating the proceedings of reopening of the assessment for the year under consideration. The audit objections do not constitute a tangible material to reopen the assessment. Reliance may be placed on the decision of this Court in the case of Adani Exports [1998 (12) TMI 51 - GUJARAT HIGH COURT] wherein, this Court has held that, reassessment was not valid as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as specifically alleged and established that alleged escapement of income was by reason of so-called non-disclosure of share price - Held, yes - Whether further, where Assessing Officer even after being in possession of all relevant facts relating to gifts of shares received by assessee, consciously chose not to apply section 56(2)(vii)(c), however, after expiry of period of four years mentioned in proviso to section 147 attempted to take a new view, it would not be permissible in law - Held, yes - Whether therefore, jurisdictional condition precedent laid down by proviso to section 147 i.e. failure to disclose a material fact had not been fulfilled, hence, impugned notice and reasons deserved to be quashed - Held, yes [Paras 21, 22, 24, 25 and 27][In favour of assessee]INCOME TAX : Where impugned notice under section 148 was issued to assessee alleging escapement of income on ground that shares received by assessee as a gift were disclosed, but neither book value nor market value of shares was disclosed in Balance Sheet, however, fact that all material facts necessary for assessment were disclosed and market value of share was clearly discernible from returns and documents, mere n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... samples for distribution under head 'advertisement and sales promotion' was in violation of provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2022 and, thus, same was not allowable under section 37(1) being expenses prohibited by law - It was noted that Assessing Officer had all material facts related to such expenses before him when he made original assessment - Apart from it, specific query in respect of expenditure in question was raised at time of original assessment and same was also replied by assessee - High Court held that there was no failure on part of assessee to truly and fully disclose all material facts necessary for purpose of assessment which were carefully scrutinized by Assessing Officer during original assessment and thus, said reopening notice issued after four years on account of change of opinion was to be set aside - Whether special leave petition filed against order of High Court was to be dismissed - Held, yes [Para 3] [In favour of assessee] This view has been taken by the Amritsar Bench of the ITAT, in the case of Sh. Pardeep Kapoor, in which, the following the above said judgment, it has been held in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) in his appeal order : PAGE WISE Remarks/Allegation of CIT(A) Response of the Assessee : In Para 4.3 of the order passed by CIT(A), it has been mentioned that the appellant has not demonstrated with any documentary evidence to show that issue of bogus purchases was examined in the light of such report or otherwise and there was any change of opinion on that issue and there was any change of opinion on this issue of bogus purchases. In this regard, it is submitted that the as mentioned in para 6 above, the assessee had filed ample number of documents to prove the genuineness of purchases at the time of original assessment proceedings as well during 148 proceedings. The purchases alleged as bogus were forming part of financial statements of the assessee and these financial were filed with AO at the time of original assessment proceedings as well during 148 proceedings. Even the AO asked specific queries related to purchases exceeding Rs. 50,000 during the course of original assessment proceedings and then specifically mentioned in the assessment order that books of accounts along with sale/purchase bills were also checked by him. Therefore, it is merely change of opinion on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Construction Co. and the material sold on different dated were stored and then delivered as per copy of details chart forming part of paper book from Pg 83 to 85. Generally, in the routine course of business of Building material stores, the dealers use to keep their material in open area or vacant space for easy access and easy loading while making sales to other parties. In para 4.7 to 4.9, the Ld. CIT(A) has mentioned about the Statement of Sh. Rajinder Kumar Prop. M/s Hitesh Industries was recorded u/s 131 of the Act by ADIT(Inv.), Bathinda 04.01.2016 wherein he denied to have made any business transaction with the assessee. He stated that the account No. 5431011001253 with OBC Bank, Mansa was opened at the instance of Sh. Ajay Kumar and Sh. Pawan Kumar and bank cheque Books was got signed from him and taken away by Sh. Ajay Kumar. He further stated that he never made any sale/purchase with the assessee nor received any payment from the assessee. He further stated that he had never filed any return of income and that his only source of income was Labour jobs. (ii) It is pertinent to note that prop. of M/s Akansha Enterprises is Sh. Rajesh Kumar who is brother of Sh. Ajay Kumar w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar under consideration. Therefore the addition made in the hands of the assessee alleging that assessee has made bogus purchases from the parties instead of making enquiry from the other parties i.e. Sh. Rajesh Kumar and Ajay Kumar, those name given in the statement of the Sh. Rajinder Kumar. In Para 4.17, The Ld. CIT(A) has erred in upholding the addition of 25% on the basis of judgment of N.K Proteins without giving any plausible findings and addition has been made on estimations only. The addition to the tune of 25% upheld by the assessee is not reliable based on the facts that the assessee in respect of proving the genuineness of the purchase filed various documents mentioned in para 6 above. Assessee arguments when SALE considered as genuine, purchase cannot be disallowed: There are plethora of judgments wherein it has been held that if the sale of the assessee is accepted against the same purchase under question then the addition cannot be made in hand of assessee: PCIT vs. TEJUA ROHIT KUMAR KAPADIA [2018] 94 TAXMANN.COM 325 (Supreme Court) Section 69C of the Income-tax Act, 1961 - Unexplained expenditure (Bogus purchases) - Assessing Officer had disallowed some expenditure t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sales Tax Department informed Assessing Officer that two sellers from whom assessee made purchases, had stated that they had not actually sold any material to assessee - Though assessee furnished copies of relevant bills and entries made in its books of account, Assessing Officer made addition under section 69C on account of bogus purchases - Tribunal found that Assessing Officer had not carried out any independent enquiry and failed to show that purchases were bogus - High Court by impugned order held that merely on suspicion based on information received from another authority, Assessing Officer ought not to have made additions without carrying out independent enquiry and affording opportunity to assessee to controvert statements made by sellers - Whether SLP filed by revenue against said impugned order was to be dismissed - Held, yes [Para 1] [In favour of assessee] GANESH DASS PIARA LAL JAIN vs ITO as reported in [2017] 82 taxmann.com 354 (Chandigarh Bench). Section 69C of the Income-tax Act, 1961 - Unexplained expenditure (Bogus purchase) - Assessment year 2009-10 - Non-production of parties cannot be a ground for disallowance of all purchases when sales made out of such pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts recorded u/s 131 by the ADIT(lnv.), Bhatinda of Sh. Rajendra Kumar (Prop M/s Hitesh Industries PAN: BSCPK5383F), the bank account no. 05431011001253 with OBC bank Mansa (the bank statement) has been examined and hence forms part of the tangible material in possession and which is duly examined by the AO. The analysis of the tangible material is evident from the reasons recorded that such amounts were immediately withdrawn on the same day in cash from the bank account of M/s Hitesh Industries. Further, regarding the bogus purchases made from M/s Akanksha Enterprises for which money was transferred by M/s Aggarwal Construction Co. to the bank account no. 05431011001345 maintained with OBC bank was also examined and the analysis of this bank account was duly recorded by the AO in the reasons recorded for reopening of the case u/s 148 of the IT Act'1961. The other tangible material for reopening the case on account of bogus purchases made from M/s Akanksha Enterpirses is the examination of the return of income of M/s Akanksha Enterprises for AY.2011-12. Here, it is recorded that the returned income of the bogus supplier is only Rs. 1,55,533/- for the relevant year. The sales for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the exact amount of Rs. 8,22,90,198/-. The Ld. AR would agree that this amount was actually transferred by the assessee to the impugned supplier, which was subsequently withdrawn in cash. Hence, the reasons are recorded as per law and are correct. c. Further, reliance is placed upon the judgment of Hon'ble Supreme Court in the case of DCIT V/s M.R. Shah Logistic Pvt Ltd where it is held that Where the reasons to believe forming part of the Section 147 of the Act, clearly point to the fact that the reopening of assessment was based on information accessible by the AO that a substantial amount of unaccounted income of promoters/directors was introduced in the closely held companies of the assessee group through Shirish Chandrakant Shah, alleged to be a Mumbai based accommodation entry provider. It was held that information or tangible material which the assessing officer comes by enabling re-opening of an assessment, means that the entire assessment (for the concerned year) is at large, the revenue would then get to examine the returns for the previous year, on a clean slate - as it were. As long as there is objective tangible material (in the form of documents, relevant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank account no. 5431011001345 of M/s Akanksha Enterprises, to whom payment of Rs. 8,24,00,000/- has been made which was withdrawn in cash on the next date itself. The assessee has concealed the information that M/s AVM Construction Company is the sister concern to whom the impugned sales have been made. 8. That this case is not a change of opinion. Since fresh information was received from Investigation Wing. Despite having been given multiple opportunities, the assessee never appeared for cross examination of the owner/proprietor of the concerns, M/s Hitesh Industries and M/s Akanksha enterprises from whom the bogus purchases were made. 9. Reliance is also placed upon, [2022] 143 taxmann.com 173 (Calcutta), HIGH COURT OF CALCUTTA, Principal Commissioner of Income-tax v. Mrs. Premlata Tekriwal, where it has been held that Where name of assessee was found in list of beneficiaries of accommodation entries by way of bogus purchases bills and assessee did not produce any document to explain alleged purchase transactions but rather stated that 2 per cent of purported bogus purchase might be added to total income, entire amount of bogus expenditure was correctly added to income of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon ble Apex court in the case of GKN Drive Shafts ( India ) Limited vs ITO, 259 ITR 19, and in this case the assessee after obtaining the recorded reasons, has not filed any objections to the same, which he should have filed, before the AO itself, objecting to the reasons, which has not been done in this case. The explanation of the assessee, on this issue was that it is absolutely true that the assessee has not filed any objections to the recorded reasons, after receipt of the same, but since it is a legal issue, the objections in respect of recording of incorrect reasons for reopening, can be taken up at any stage of appellate proceedings, and the assessee has rightly challenged the factually incorrect recording before the first appellate authority. It is noted by us that as per the recorded reasons the amount of bogus purchase has been recorded at Rs. 10,40,29,198/-, relating to two sellers M/s Akanksha Enterprise and M/s Hitesh Industries, taken together, whereas the correct purchase figure on record is M/s Akanksha Enterprise Rs. 13,96,08,761/- and M/s Hitesh Industries Rs. 3,21,49,587/-, totaling together at Rs. 17,17,58,348/-, and in case of recording of payments al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sellers bank accounts and naturally operated under the signature of the sellers and the question of introducer of the bank account opening forms, is not of much significance, because signature as an introducer in the bank means I know the gentleman , that s all, with no liability attached, and the fact that payments made by the assessee through bank channel to the sellers, by way of bank transfer, against consideration for supply of construction materials, is already on record since original assessment proceedings, and this fact that never has been denied by the assessee at any stage. The fact that the cash has been withdrawn by the sellers immediately on receipt of the same from bank account, also is very normal in this nature of trading of supply of construction materials, as explained by the assessee, because the suppliers of materials also gathers and arranges the said materials from different sources, like bricks from brick field, sand from river bed, stone chips ( gitti ) from the stone crushers, etc, and all these items are not found in one spot and once payments are received by the suppliers, creditors are always pressing for payments, and it is quite natural to withdraw fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of deduction under section 36(1)(viia), Tribunal rightly held that reopening assessment initiated beyond four years was bad in law- Whether SLP filed by revenue against said impugned order was to be dismissed - Held YES. In favour of assessee. 25.1 Similar views has been taken in the case of ACIT Vs Virbac Animal Health India (Pvt.) Ltd (2023) 151 taxman. com 411(SC), where special leave petition filed against the order of the High Court was dismissed, where the High court held that there was no failure on the part of the assessee to truly and fully disclose all material facts necessary for purpose of assessment which were carefully scrutinized by AO during original assessment and thus reopening notice issued after four years on account of change of opinion was to be set aside. Merits of the case: 25.2 On the merits of the case also it is observed by us that in course of original scrutiny proceedings, full set of financial accounts and audit report was before the AO and full response has been filed by the assessee in writing in response to notices issued and questions raised and full details of purchases from various parties were filed along with ledger account copies of sellers ..... 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