9911796707
TMI Blog2025 (1) TMI 1347X X X X Extracts X X X X X X X X Extracts X X X X ..... iate to set aside the show cause notice/draft assessment order dated 19.04.2021 and remit the matter back to the file of Ld. AO to decide the issue afresh after affording reasonable opportunity of being heard to the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... on 01.05.2020, 23.12.2020, 07.01.2021 and 25.02.2021. In response to the above notices, the assessee filed reply on 04.01.2021, 27.01.2021 & 15.03.2021. A show cause notice was issued to the assessee on 19.04.2021, wherein the draft assessment order was reproduced with a request to show cause on or before 21.04.2021, as to why the assessment order may not be passed as per the modifications proposed in the draft assessment order. In response to above show cause notice, no reply was filed by the assessee. After considering the material available on record and proper opportunity, assessment order u/s 143(3) r.w.s. 144B was passed for the year under consideration, by making an addition on account of bogus purchase treating the same as unexplained expenditure u/s 69C of the Act for Rs. 1,23,97,06,013/- and the total assessed income of the assessee was determined at Rs. 1,23,98,67,719/-. 3. Aggrieved with the aforesaid findings enhancing the income of assessee by Rs. 1,23,97,06,013/-, an appeal is preferred before the Ld. CIT(A). It is evident that the assessee's conduct was not found to be law abiding/compliant, which initially have not responded to the notice of hearings on 09.07.2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3D 211BRPS1663DIZH 11 Apex Marketing ANGPJ2685P 23ANGPJ2685PIZJ 12 Amar Enterprises AFMPJ9281M 23AFMPJ9281MIZU 13 Amber Enterprises FPRPS5427E 21FPRPS5427EIZN 14 Annapurna Enterprises AUGPS4997L 21CVOPS4320QIZ2 15 Ayush Steels AFZPA7090L 22AFZPA7090LIZZ 16 Gravity Ferrous Pvt Ltd AACCG3005C 22AACCG3005C1 ZL 17 Maa Kali Industries IAPD7188A 22AlAPD7188AIZU 18 Om Sai Traders AOAPD0954N 21AOAPD0954NIZ9 19 R.K. STEELS AHNPN5209N 22AHNPN5209NIZ1 20 Rajendra Kumar Agrawal ADUPA4591R 22ADUPA4591RIZW 21 Rajesh Traders DDNPS5639J 22DDNPS5639JIZZ 22 Suresh Enterprises CPCPP6230A 21CPCPP6230AIZL Notice u/s 133(6) was issued to the parties from whom purchases have been made to furnish information regarding the purchases made but no reply has been received except from Gravity Ferrous Pvt. Ltd. Rajesh Traders and Royal Enterprises. As per the confirmation received from Gravity Ferrous Pvt. Ltd. purchases of Rs. 7,70,383/- have been made during the year against which the assessee has shown purchases of Rs. 2,20,967/- only. The seller has also furnished copy of GST return filed. As per the confirmation received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o deduct tax on the payments made as the payment made to each labourer exceeds Rs. 1,00,000/- as per the ledger furnished. Alternatively, if the labourers were employed the assessee was required to deduct PF from the monthly payment made to employees and contribute an equal amount but no such deduction/contribution made has been mentioned in the audit report. Thus, the loading/unloading expenditure shown by the assessee is unexplained. In the profit and loss account the assessee has claimed salary expenditure of Rs. 1,20,000/- only. Considering the huge sales turnover of Rs. 1,24,33,22,731/- the salary payment of Rs. 1,20,000/- is unrealistic. The major expenditure claimed by the assessee in the P&L account is discount of Rs. 18,64,344/- paid to M/S. Sawariya Enterprises which is the proprietorship concern of Sh. Santosh Aggarwal who is also one of the partners in the firm. Besides discount, the assessee has paid remuneration of Rs. 4,67,560/- to partners. Thus, out of gross profit of Rs. 27,76,718/- the assessee has incurred expenditure of Rs. 4,44,814/- only for running of business against gross turnover of Rs. 1,24,33,22,731/- which puts a question on the genuineness of busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order may not be passed as per the modifications proposed in the draft assessment order. No reply was filed by the assessee. In view of the above, the amount of the entire purchase of Rs. 1,23,97,06,013/- found credited in the books of the assessee maintained for the F.Y. 2017-18 is treated as unexplained expenditure and added back to the total income of the assessee u/s 69C of the l. T. Act, 1961 and the same is taxed u/s 115BBE at maximum marginal rate of tax. Since, the Id. AO passed the assessment order u/s 143(3) r.w.s. 144B for the year under consideration according to procedures provided in the Act and all the additions were made as per following procedure provided in the l. T. Act, 1961. "During the course of assessment proceedings, the assessee was requested vide notice u/s 142(1) dt.23.12.2020 to provide the details of purchases/sales made alongwith the details of transportation ie. date of transportation, name & address of the transporter, vehicle no., weight amount paid, details of TDS, the assessee furnished details of sales/purchases made by them but transportation details was not submitted and stated that no transportation expenses have been borne by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear" The ld. AO referred to Section 69C of the Act and pointed out that once it is established that the expenditure is unexplained/bogus, the entire amount of bogus expenditure is to be added to the total income of the assessee. When the AO gave an opportunity to the assessee to explain the transaction, the assessee did not produce any document. The Id. AO issued a show cause notice to the assessee regarding proposed of addition, the assessee was failed to submit his reply. Therefore, it would mean that the assessee had accepted the allegations. Despite the repeated opportunity of hearing to appellant, no explanation has been furnished by the appellant during the course of assessment' proceedings and appellate proceedings on the findings and conclusion of the Id. AO. In absence of any explanation and supporting documents for favoring appellant contention & on the basis of facts gathered and discussed by the Id. AO, considering entire facts in the assessment order, I find that the Id. AO is justified in assessing the total income of the appellant as discussed above. Hence, the appeal filed by the appellant deserves to be dismissed accordingly, addition of Rs. 1,23,97,06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a huge variation was proposed in draft assessment order, therefore the law of natural justice had not been followed. 7. Ld. AR placed his reliance on the following judgments: (i) M/s Sri Gopal Store vs AO, Assessment Unit, NFAC in W.P. (C)No. 18079 of 2023, dated 13.07.2023, by Hon'ble High Court of Orrisa, Cattuck dated 23.07.2023, wherein on the issue of reasonable time for the assessee to answer, considering the directions of Central Board of Direct Taxes (CBDT) to allow minimum 7 days notice, unless to be curtailed by reason expiring period of limitation for the assessment, has been the question of law addressed by the Hon'ble Court. The observations of Hon'ble Orrisa High Court in the aforesaid matter are as under: 4. We made query from Court on whether there is any CBDT provision in Income Tax Act, 1961 or the rules having empowered the CBDT to issue a directive on dispensation of requirement to give show cause notice on earlier omission by assessee in the proceeding. Nothing could be shown. It transpires that revenue was mandated to give the show cause notice and on having given it was bound by directions made by CBDT on reasonable time for the assessee to· answe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be out of place to mention here that the real intention of Section 144 B, etc of the Income Tax Act is to provide an opportunity of being heard to the assessee before passing any orders, which are prejudicial to their rights/ interests. It is, with such motive, law has been enacted to safeguard the interest of the assessee, but, it is very unpleasant to see that in umpteen number of Writ Petitions, the assessment orders were assailed on the very ground of violation of principles of natural justice, audi alteram partem. If the real thoughts and intention of the Assessing Officer attached to the Income Tax Department is to provide fair opportunity of hearing to the assessee to put forth their defence, the same should be extended to the assessee in a real nature and it should not be a nominal one. This Court would like to point out that under the guise of providing opportunity, the assessee should not be called for to file reply within a short span of time. If done so, the object behind, which the provisions of the Act was enacted, will not be achieved and the same would lead to depriving away the legal rights of the assessee. 6.4 Reverting to the present case, as already sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forms the basis for issuance of_ show cause notice, the same shall also be fun1ished to the assessee, as the case may be, wherever, it is required; and after conducting a full-fledged enquiry, shall conclude the assessment proceedings, in which, the Assessing Officer has to deal with the queries/points, (which the assessee would raise/put forth in the f01m of reply/objections) in detail along with reasons for rejection of the reply, if any and thereafter, shall pass final assessment order in accordance with law. 6.8 Unless and otherwise, the above aspects are not scrupulously followed, the same would pave a way for the assessee to go on Appeal before the Appellate Authority and even in the Appeal, if the assessee is unable to succeed, ultimately, it will come to the scrutiny of this Court and Hon'ble Supreme Court, in which case, if the assessment order is set aside, the Department will loose it's revenue. Therefore, it is bounden duty of the Assessing Officer to pass a detailed order, providing reasons for rejection of the contention of the assessee. If any cryptic order is passed without touching upon the queries/contentions of the assessee, ultin1ately, it would be fat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the administrative authorities have declared complete lockdown till 26.04.2021, this fact was brought to the knowledge of Ld. AO by the assessee vide its request for adjournment dated 22.04.2021, though such request was after the date i.e., 21.04.2021, upto which the assessee was requested to respond, also no acknowledgement of such online request made by the assessee has been furnished before us, since the time allowed by the Ld. AO was only for 3 days, the same cannot be considered as a reasonable time to respond. We, thus, are of the considered view that the assessee was not afforded with reasonable time to respond, that proves violation of the principle of natural justice, our such opinion is supported with the view expressed by Hon'ble High Courts of Orissa and Madras in the cases referred to (supra), which is further fortified by the decision of Hon'ble Jurisdictional High Court of Chhattisgarh in the case of MM Wonder Park Private Limited vs. Union of India & Others, in Writ Petition (T) No.172/2022, dated 17.06.2022, while dealing with the issue of reasonable time to respond towards the show cause notice u/s 148A(b) of the Act, wherein Hon'ble High Court had observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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