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2015 (12) TMI 1538 - ITAT DELHI

2015 (12) TMI 1538 - ITAT DELHI - TMI - Reopening of assessment - assessment was reopened on an information received from the ACIT, Central Circle 10, Jhandelwalan Extn., on the allegation that the assessee had made bogus purchases - sustenance of the addition to the extent of 20% of the purchases - Held that:- Reassessment quashed as barred y limitation.

Now coming to the merit about the sustenance of the addition by the CIT(A) @ 20% of the purchases made by the assessee from Shri Ba .....

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taking into consideration the or visions of section 40A(3) will not lead to determination of correct real income. Section 40A(3) is meant for a different purpose when the assessee has made purchases in cash. This provision cannot be applied in such cases. Once the purchases are held to be bogus then the trading results declared by the assessee cannot be accepted and right course in such case is to reject books of accounts and profit has to be estimated by applying a comparative profit rate in th .....

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for A.Y. 2006-07 on the following grounds: 1. On the facts and circumstances of the case, the order passed by the ld. CIT(A) is bad, both in the eye of law and on the facts. 2. On the facts and circumstances of the case, the CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the initiation of the reassessment proceedings and the reassessment order are bad both on facts and in law and liable to be quashed as the statutory conditions and procedure prescribe .....

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the contention of the assessee that the reassessment order passed by the Assessing Officer is bad and liable to be quashed as the same has been reopened on the basis of the reasons which are vague and has been recorded without application of mind on the part of the Assessing Officer. 4. On the facts and circumstances of the case, the ld. CIT(A) has erred both on facts and in law in confirming the rejecting of the books of accounts of the assessee by the Assessing Officer, despite the fact that .....

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. CIT(A) has erred both on facts and in law in confirming that the firms M/s Om Agencies, M/s Shree Shyam Trading Company & M/s Shree Bankey Bihari Trading Co. are not engaged in the actual business ignoring the fact that during the course of the search substantial inventory in respect of the material being purchased by the assessee were found which confirm the fact that this firm was doing actual business. (ii) On the facts and circumstances of the case, the ld. CIT(A) has erred both on fac .....

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be sustained. 9. On the facts and circumstances of the case, the ld. CIT(A) has erred both on facts & in law in confirming the addition to the extent of 20% of such purchases rejecting the material and evidences brought on record by the assessee to show that the purchases were made in regular course of the business and material so purchased was sold in the regular course of business. 10. On the facts and circumstances of the case, the ld. CIT(A) has erred both on facts & in law in rejec .....

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the allegations have been made against the assessee and without following the principle of natural justice. 12. The appellant craves leave to add, amend or alter any of the grounds of appeal. 2. Brief facts of the case as recorded by the ld. Assessing Officer are as under: The assessee had not filed its return of income for the year under consideration. The assessment was reopened on an information received from the ACIT, Central Circle 10, Jhandelwalan Extn., on the allegation that the assessee .....

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0% of the purchases being ₹ 1,10,845/-. 4. Aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us now. 5. The grounds taken before us by the assessee relates to the validity of the reassessment as well as the sustenance of the addition to an extent of ₹ 1,10,845/-. 5.1. So far as the validity of the assessment is concerned, the ld. AR submitted that, this Tribunal in the case of Unique Metal Industries vs. ITO in ITA No. 1372/Del/2015, vide dated 28/03/2015, has .....

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in law. 6. The ld. AR has also produced before us the order of this Tribunal in the case of Radheshyam & Company vs. ITO, Ward 39(3), New Delhi in ITA No. 1429/Del/2015, wherein this Tribunal vide order dated 30/11/2015 has considered a similar and identical issue, and held the reassessment to be bad in law. 7. On the contrary, the ld. DR relies upon the orders passed by the authorities below. 8. We have heard the rival submissions and carefully considered the documents placed on record. It .....

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98 dated 19.03.2013 received from the Commissioner of I.Tax, Central-II, New Delhi along with a CD containing the details of accommodation entries provided by Sh. Rakesh Gupta & Sh. Vishesh Gupta & Sh. Navneet Jain & Sh. Vaibhav Jain and directing this office to take necessary action as per section 148 in respect of entries pertaining to A.Y. 2006-07, which is time barring on 31.03.2013. The information provided by the CIT, Central-II, New Delhi vide his letter dated 19.03.2013 reads .....

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y providers has been obtained by the Assessing Officer. 3. The list of accommodation entry recipients has been obtained from Sh. Rakesh Gupta and Sh. Vishesh Gupta. Hard copy of the list is enclosed as Annexure A, duly signed by Sh. Vishes Gupta. The list given the name of the firm which has provided the accommodation entry along with the name and address of the recipients of accommodation entry. 4. Sh. Navneet Jain & Sh. Vaibhav Jain has provided accommodation entry through thirty seven pap .....

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is also enclosed. 6. The information of accommodation entry includes A.Y. 2006-07 also, which is a time baring year for taking action u/s 148. 7. This information is forwarded to you for early dissemination to various field offices in Delhi. On examining the list of accommodation entries provided by Shri Rakesh Gupta & Shri Vishesh Gupta and Shri Navneet Jain & Shri Vaibhav Jain pertaining to A.Y. 2006-07. It is noticed that the following accommodation entries have been taken by the ass .....

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u/s 153A of I.T. Act have admitted that they have given accommodation entries to the parties whose lists have been provided by them to the ACIT, Central Circle-10, New Delhi, therefore, it is fair to conclude that M/s Krishan Lal Gambhir & Sons, whose name is appearing in the said list, has taken accommodation entries from Shri Rakesh Gupta & Sh. Vishesh Gupta and Sh. Navneet Jain & Sh. Vaibhav Jain pertaining to A.Y. 2006-07. Also the details of Income Tax Return filed by M/s Krish .....

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tted herewith for kind consideration and necessary approval u/s 151(2) of the I.T. Act, 1961 as the same is getting barred by limitation on 31/03/2013. If approved, notice u/s 148 of the act may be issued. Sd/- (Pawan Kumar Vashist) Income Tax Officer Ward 39(3), New Delhi 9. We found the issue regarding the validity of the reassessment is duly covered by the decision of this Tribunal in the case of Unique Metal (supra) and Shree Radheshyam & Company (supra) in which this Tribunal, vide orde .....

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to the sustenance of the addition by the ld. CIT(A) to an extent of 20% of the purchases made by the assessee, we note that the Tribunal, vide its order dated 30/11/2015 in the case of Shree Radheshyam & Company (supra) have deleted similar addition. 11. The Tribunal in the case of Shree Radheshyam & Company (supra), has followed the findings given in the order dated 28/11/2015 in the case of Unique Metal Industries (supra). This Tribunal has observed as under: 7. Now coming to the merit .....

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