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TMI Blog2024 (12) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... s from M/s. Sonu Monu Telecom Pvt. Ltd. of Rs. 76,47,675/-. Thus, the information was that M/s. Sonu Monu Telecom Pvt. Ltd. has executed sales of Rs. 76,47,675/- to M/s Vinayak Traders. However, the correct facts were found that assessee has sold goods worth Rs. 85,69,197/- to M/s. Sonu Monu Telecom Pvt. Ltd. Thus, the reopening is based on incorrect information. Reasons for reopening also shown the same reason that the assessee has purchased goods from M/s. Sonu Monu Telecom Pvt. Ltd., which is incorrect. Therefore, as the information received it is not correct, reopening made on that basis is invalid. Bogus purchases - when the assessee is found to have sold goods to M/s. Sonu Monu Telecom Pvt. Ltd., the directions suggested by the CBIC clearly shows that entities from whom purchases have been made by the M/s. Sonu Monu Telecom Pvt. Ltd., addition to the extent of 2% of such purchases can be made. However, the learned Assessing Officer has made addition of 100% sales already recorded in the Profit Loss Account as income of the assessee, added the same amount to the total income of the assessee. This addition was made u/s. 68 of the Act. Addition u/s. 68 of the Act could be made o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act 3. That on the facts and in the circumstances of the case, the ld CIT(A) erred in upholding the finding of ld AO that the sales made by appellant to M/s Sonu Monu Telecom Centre Pvt Ltd as bogus particularly when the sales are subject to GST and dully disclosed in the GST return and also part of audited trading and P L account. 4. That on the facts and in the circumstances of the case, the ld CIT(A) erred in sustaining addition of Rs 85,69,197/- by upholding the genuine sales made by appellant as bogus sales u/s 68 of the Act. 5. That on the facts and in the circumstances of the case, the ld CIT(A) erred in upholding the provision of section 68 of the Act as the sales made by appellant are duly recorded and income earned on such sales are offered for taxation. 6. That on the facts and in the circumstances of the case, the ld CIT(A) erred in not appreciating the submission, evidence and legal position of law in right perspective and judicious manner and made arbitrary allegation while sustaining the addition made by ld AO. 7. That on the facts and in the circumstances of the case, the ld CIT(A) erred in upholding the validity of report given by the Investigation wing without an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xv. Assessee has not made any purchase from the above said party but has sold goods to that party. xvi. The sale consideration is received by cheque, the relevant quantitative details also disclosed the same and such sale transaction of Rs. 85,69,197/-, therefore, amount stated of Rs. 76,47,675/- in reasons recorded is incorrect. It was submitted that reopening proceedings may be dropped. xvii. The Assessing Officer found that DGIT, Investigation has communicated on 29.06.2021 that M/s. Sonu Monu Telcom Centre Ltd. is engaged in providing bogus taxes invoices to various entities without physical supply of goods with a view to passing irregular input tax credit to other entities. For doing this M/s. Sonu Monu has also availed itself of an input tax credit against fake invoices issued by other entities. The GST return of M/s. Sonu Mony was downloaded. The Assessing Officer noted that assessee is also one of the beneficiaries. xviii. The Assessing Officer noted that the transaction of Rs. 85,69,197/- as stated by the assessee genuine, but assessee has failed to prove receipt bills, transportation, loading and unloading and godown details with respect to the sale. xix. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious documents such a sale bill, stock register, bank statement, copy of the account of Sonu Monu Telecom Service Pvt. Ltd. was submitted. v. He submits that the goods sold by the assessee are subject to goods and service @ 12% which received by the assessee and deposited to the Sales Tax Department. vi. On the issue of reopening of the assessment, he submitted that assessment has been carried out in the case of the assessee by the National Faceless e- Assessment team. He referred to the paper book and submitted that the notice u/s. 148 of the Act has been issued by the Jurisdictional Assessing Officer on 27.03.2022. He referred to Page-11 of the P.B. and submitted that there is no justification of reopening of notice issued by the learned Income Tax Officer, Shri Ganganagar, who is the jurisdictional Assessing Officer when the assessment is carried out by the Faceless Assessment Unit. vii. He supported its contention. He referred to the decision of the Hon ble Bombay High Court in the case of Hexaware Technologies Ltd. vs. ACIT , 464 ITR 430, and stated that when the notice issued itself is invalid, subsequent reassessment order is also invalid. viii. He, therefore, submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is valid. ii. On the issue of notice u/s. 148 of the Act issued by the jurisdictional Assessing Officer, it was submitted that the law does not bar the jurisdictional Assessing Officer to issue notice u/s. 148 of the Act. iii. On the merits of the addition, it was submitted that assessee has failed to provide any information such as receipt bills in respect of transport, delivery, loading/unlading of articles and godowns. There is no evidence that assessee has make sold goods to the M/s. Sonu Monu Telecom Pvt. Ltd. iv. Merely preparation of bills, entry in the stock register and receipt of payment by cheque prove the genuineness of the credit. v. Therefore, the learned Assessing Officer has correctly made the addition of Rs. 85,69,197/- u/s. 68 of the Act. 7. In rejoinder, the learned A.R. reiterated the submission made earlier. 8. We have carefully considered the rival contention and have perused the orders of the learned lower authorities. Facts shows that the assessee is an authorized dealer and stockiest of Micromax Mobile. The information was received from CBIC, wherein it was reported that the entities are involved in the practice of availing/issuing bogus sales/stock/purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by (a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction. (2) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, 2022. (3) Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament. Section 151A of the Act gives the power to the Central Board of Direct Taxes ( CBDT ) to notify the Scheme for : (i) the purpose of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court held that guidelines are subordinate to the principal Act or Rules, it cannot restrict or override the application of specific provisions enacted by legislature. The guidelines cannot travel beyond the scope of the powers conferred by the Act or the Rules. The guidelines do not deal with or even refer to the Scheme dated 29th March 2022 framed by the Government under section 151A of the Act. Section 151A(3) of the Act provides that the Scheme so framed is required to be laid before each House of the Parliament. Therefore, the Scheme dated 29th March 2022 under section 151A of the Act, which has also been laid before the Parliament, would be binding on the Revenue and the guideline dated 1st August 2022 cannot supersede the Scheme and if it provides anything to the contrary to the said Scheme, then the same is required to be treated as invalid and bad in law. 34. As regards ITBA step-by-step Document No. 2 regarding issuance of notice under section 148 of the Act, relied upon by Revenue, an internal document cannot depart from the explicit statutory provisions of, or supersede the Scheme framed by the Government under section 151A of the Act which Scheme is also placed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in Section 144B of the Act and Section 144B of the Act does not refer to issuance of notice under section 148 of the Act and hence, the notice cannot be issued by the FAO as per the said Scheme, we express our view as follows:- Section 151A of the Act itself contemplates formulation of Scheme for both assessment, reassessment or recomputation under section 147 as well as for issuance of notice under section 148 of the Act. Therefore, the Scheme framed by the CBDT, which covers both the aforesaid aspect of the provisions of Section 151A of the Act cannot be said to be applicable only for one aspect, i.e., proceedings post the issue of notice under section 148 of the Act being assessment, reassessment or re-computation under section 147 of the Act and inapplicable to the issuance of notice under section 148 of the Act. The Scheme is clearly applicable for issuance of notice under section 148 of the Act and accordingly, it is only the FAO which can issue the notice under section 148 of the Act and not the JAO. The argument advanced by respondent would render clause 3(b) of the Scheme otiose and to be ignored or contravened, as according to respondent, even though the Scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 144B of the Act, such as keeping the International Tax Jurisdiction or Central Circle Jurisdiction out of the ambit of Section 144B of the Act would also apply under the Scheme. Further the exceptions provided in sub-section (7) and (8) of Section 144B of the Act would also be applicable to the Scheme. 37. When an authority acts contrary to law, the said act of the Authority is required to be quashed and set aside as invalid and bad in law and the person seeking to quash such an action is not required to establish prejudice from the said Act. An act which is done by an authority contrary to the provisions of the statue, itself causes prejudice to assessee. All assessees are entitled to be assessed as per law and by following the procedure prescribed by law. Therefore, when the Income-tax Authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to assessee. Therefore, there is no question of petitioner having to prove further prejudice before arguing the invalidity of the notice. 38. With respect to the Office Memorandum dated 20th February 2023, the said Office Memorandum merely contains the commen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of respondent is that the applicability of Section 148 of the Act is on random basis, then the provision of Section 148 itself would become contrary to Article 14 of the Constitution of India as being arbitrary and unreasonable. Randomly selecting cases for reopening without there being any basis or criteria would mean that the section is applied by the Revenue in an arbitrary and unreasonable manner. The word 'random' is used in clause 2(1)(b) of the said Scheme in the definition of automated allocation . Automated allocation is defined in the said clause to mean an algorithm for randomised allocation of cases .. . The term 'random', in our view, has been used in the context of assigning the case to a random Assessing Officer, i.e., an Assessing Officer would be randomly chosen by the system to handle a particular case. The term 'random' is not used for selection of case for issuance of notice under section 148 as has been alleged by the Revenue in the Office Memorandum. Further, in paragraph 3.2 of the Office Memorandum, with respect to the reassessment proceedings, the reference to 'random allocation' has correctly been made as random allocati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gged can be reopened or not is not relevant to decide the scope of the Scheme framed under section 151A of the Act, which required the notice under section 148 of the Act to be issued on the basis of random allocation and in a faceless manner. (v) The Revenue has wrongly contended in paragraph 3.1 of the Office Memorandum that Therefore, whether JAO or NFAC should issue such notice is decided by administration keeping in mind the end result of natural justice to the assessees as well as completion of required procedure in a reasonable time. In our opinion, there is no such power given to the administration under either Section 151A of the Act or under the said Scheme. The Scheme is clear and categorical that notice under section 148 of the Act shall be issued through automated allocation and in a faceless manner. Therefore, the argument of the Revenue is clearly contrary to the provisions of the Scheme. (vi) In paragraph 3.3 of the Office Memorandum, it is again erroneously stated that Here it is pertinent to note that the said notification does not state whether the notices to be issued by the NFAC or the Jurisdictional Assessing Officer ( JAO ) It states that issuance of notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner. There is no leeway given on the said aspect and, therefore, there is no question of the administration to device and modify procedures with respect to the issuance of notice. 39. With reference to the decision of the Hon'ble Calcutta High Court in Triton Overseas (P.) Ltd. (supra), the Hon'ble Calcutta High Court has passed the order without considering the Scheme dated 29th March 2022 as the said Scheme is not referred to in the order. Therefore, the said judgment cannot be treated as a precedent or relied upon to decide the jurisdiction of the Assessing Officer to issue notice under section 148 of the Act. The Hon'ble Calcutta High Court has referred to an Office Memorandum dated 20th February 2023 being F No. 370153/7/2023 TPL which has been dealt with above. Therefore, no reliance can be placed on the said Office Memorandum to justify that the JAO has jurisdiction to issue notice under section 148 of the Act. Further the Hon'ble Telangana High Court in the case of Kankanala Ravindra Reddy v. ITO [2023] 156 taxmann.com 178/295 Taxman 652 (Telangana) has held that in view of the provisions of Section 151A of the Act read with the Scheme dated 29th March 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the learned Assessing Officer, he did not make any enquiry but rejected the evidences produced by the assessee. When the assessee discharges its onus by producing overwhelming evidences of the sales already recorded in the books of account, the rejection of the arguments and submission of the assessee without making any enquiry and then making an addition is not correct. It is case of the assessee that assessee has recorded this sales in the P L account and resulted profit thereon have already been offered for taxation. Details of s carriage cost and godown etc was disputed in the case of assessee for sale of 85 lakhs where the assessee has sold goods worth Rs 35 Crores. Thus, this reason does not support the case of revenue. Therefore, addition of the above sum once again by the Assessing Officer, which is confirmed by the learned CIT(A), is not sustainable. 16. In view of facts, i. reopening of the assessment stands quashed for the twin reasons that notice u/s. 148 of the Act is issued by the Jurisdictional Assessing Officer and ii. further the reopening is made on the incorrect information. iii. Even on the merits, the addition cannot be made in case of discharge of onu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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