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TMI Blog2017 (11) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... s of information received from the Sales Tax Department Maharashtra, through Directorate General of Income Tax (Inv.), Mumbai regarding bogus purchases made by various companies including the present assessee, the assessment was re-opened u/s 147 of the Act. The assessee was one of the companies, which had made bogus purchases from the said entities. As per the information, the assessee company during the year relevant to the assessment year under consideration made bogus purchases to the tune of Rs. 1,04,30,084/- from the bogus entities i.e. Vardhman International and Maharaja Impex. 3. The assessee objected the re-opening, however, the assessee's objection was rejected. During the re-assessment proceedings, the assessee could not establish the genuineness of the transaction. Accordingly, show cause notice was issued as to why the amount of bogus purchases should not be added to the income of the assessee. The assessee submitted that the purchases were genuinely made and the payments were made to the parties through banking channels and the materials purchased were utilized. To substantiate its claim, the assessee submitted the bills, delivery challans, bank statements, utilizati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the transaction, the Ld. CIT(A) ought to have confirmed the addition made by the AO. 7. On the other hand, the Ld. counsel for the assessee submitted that since the assessee has submitted the copies of bills, delivery challans, bank statements, utilization certificate from the site engineer, the Ld. CIT (A) has wrongly sustained the addition to 10% of the total alleged bogus purchases. The Ld. counsel further submitted that the action of AO of re-opening of assessment order itself is invalid and bad in law and the Ld. CIT (A) has wrongly upheld the re-opening of the assessment. The Ld. counsel further submitted that the assessee has also filed cross objection challenging the validity of proceedings initiated u/s 147 of the Act..Placing reliance on the decision of Hon'ble Supreme Court rendered in CIT Vs. Orissa Corporation Pvt. Ltd. 159 ITR 78 (SC) Hon'ble Bombay High Court in CIT Vs. Nikunj Eximp Enterprises Pvt. Ltd. 372 ITR 619 (Bom) and CIT Vs. U M Shah 90 ITR 396 (Bomb.) and Jodhpur Bench of the Tribunal in Jagdamba Trading Company Vs. ITO (2007) 16 SOT 66 Jodhpur, the assessee submitted that as per the ratio laid down in the aforesaid cases, if sales bills are accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the learned C.I.T. (A) erred in upholding the re-opening of assessment and the validity of the assessment order passed u/s 143 (3) r.w.s. 147 of the act." 2. Since, there is a delay of 13 days in filing the present cross objection, the Ld. counsel for the assessee submitted that the application for condonation of delay filed by the assessee may be allowed and the delay may be condoned. The Ld. counsel further submitted that the delay has been caused due to the circumstances beyond control of the assessee therefore, there was sufficient cause for not presenting the cross objection within the limitation period. 3. On the other hand, the Ld. departmental representative (DR) opposed the application and submitted that the reason mentioned in the application is not sufficient to condone the delay, hence, the cross objection is not maintainable being barred by law of limitation. 4. We have heard the rival submissions. The assessee has mentioned in the application that the cross objection could not be presented as the Director of the company had to go out of India several times during the relevant period in connection with the sudden and untimely death of his son on 1st January, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said case, we allowed the application of the assessee for condonation of delay and allowed the counsel for the assessee to argue the case on merit. 7. The Ld. counsel submitted that reopening of assessment is bad in law as the same has been done on the basis of information received from Sales Tax Department through the Directorate General of Income Tax (Inv.), Mumbai. The Ld. counsel relying on the decision of the Hon'ble Gujarat High Court rendered in CIT vs. M.K. Brothers (163 ITR 249) (Guj) and decisions of Mumbai Tribunal in Balaji Textiles Industries Ltd. Vs. ITO (49 ITD 177) (Mum), DCIT vs. Rajeev G Kalathil (ITA NO. 6727/Mum/2012), Ramesh Kumar & Co. Vs. ACIT (ITA No. 2959/Mum/2014) submitted that since the action of AO is bad in law, the Ld. CIT(A) ought to have set aside the action of the AO and deleted the addition. 8. On the other hand, the Ld. DR submitted that under section 147 of the Act, the AO has power to reassess the income which has escaped assessment if, he has reason to believe that any income chargeable to tax has escaped assessment. In the present case, since the income of Rs. 10,33,71,250/- had escaped assessment, the AO has rightly initiated proceedings u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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