TMI Blog2017 (12) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... aining to the assessment year 2009-10 to 2011-12. 2. The common grounds of appeal in assessee s case read as under: ( 1) On the facts and in law, the Ld. CIT (A) erred in upholding re-opening of assessment completed u/s 143 (3) of the Act, solely on the basis of list of suspicious dealers uploaded on website of Sales Tax Dept., without proving that alleged bogus parties have actually provided accommodation entries to appellant. ( 2) On the facts and in law, the Ld. CIT (A) erred in upholding purchases made from alleged bogus parties as accommodation entries, ignoring the fact that appellant is a trader and there are documentary evidences available to substantiate purchases i.e. payments were made by account payee cheques, quantitative records are maintained and for every purchase there was corresponding sales which has been accepted by AO, ( 3) On the facts and in law and without prejudice to above grounds of appeal, the Ld. CIT (A) erred in sustaining addition estimated @ 12.5% on the alleged bogus purchases, on the ground that the motive of obtaining bogus bills was to suppress true profit without reducing the G P already earned on such purchases. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet entry dated 24-12-2013 to produce the parties. In these circumstances, Assessing Officer issued show cause notice to furnish the details and also to produce the parties for verification. Subsequently, vide letter dated 16-01-2014 06-02-2014, furnished the ledger accounts, Xerox copies of sale invoices, delivery challans chart showing bill wise purchases in respect of the purchase parties and at the same time objected the reassessment proceedings stating that the assessment was completed u/s 143(3) of the Act, where the purchases were examined and requested not to make any addition in respect of bogus purchases in the reassessment proceedings u/s 147 in respect of alleged parties on the basis of the information received from the Sales Tax Department. Assessing Officer without accepting the submissions and contentions of the appellant, concluded that the assessee did not purchase any goods from the above parties and hence addition in respect of peak amount of investment made out of unaccounted money by the assessee for purchase of materials from the parties, which worked out to ₹ 48,45,233/-, u/s 69C of the Act, relying on several judgments quoted in the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. 2.5.6 Thus, it is laid down in the first proviso to section 147 of the Act that where an assessment under sub-section (3) of section 143 r.w.s. 147 has been made for the relevant assessment year, no action shall be taken under the section after expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment 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. 2.5.7 The facts of the present case are now tested in the light of the aforesaid provisions of sec. 147 as applicable to the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of section 147 of the IT. Act, 1961. A notice u/s. 148 r.w.s. 147 is therefore, being issued to re-assess such income and also any other income chargeable to tax which has escaped assessment, which comes to my notice subsequently in the course of proceedings for reassessment for A. Y. 2009-10 . 2.5.8 If the period between the end of the relevant assessment year under appeal i.e. 31.03.2009 and the date of issuance of the notice under section 148 on 22.03.2013 is reckoned, it is evident that the notice was issued within a period of four years from the end of the relevant assessment year. In the present case, it is an admitted position that prior to issue of notice under sec 148, assessment was made under sec 143(3). In such case for reopening the assessment which was finalized u/s 143(3) of the Act, the conditions are the income chargeable to tax should have escaped assessment by reason of failure on the part of the assessee either (i) 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 (ii) to disclose fully and truly all material facts necessary for his assessment. It is an undisputed position that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es have not been doubted. He proceeded to confirm 12.5% addition for the bogus purchase. 10. Against the above order of ld. Commissioner of Income Tax (Appeals), the assessee is in appeal before the ITAT. 11. We have heard both the counsel and perused the records. As regards the reopening of the assessee, on a careful consideration, we note that in this case information was received by the Assessing Officer from DGIT Investigation (Mumbai) there are some parties who are engaged in the hawala transactions and are also involved in issuing bogus purchase bills for sale of material without delivery of goods, which information was based on information received by Revenue from Maharashtra Sales Tax Authority. Information was received that the assessee was beneficiary of hawala accommodation entries from entry providers by way of bogus purchase. The accommodation entry provider has deposed and admitted before the Maharashtra Sales Tax Authority vide statement/ affidavit that they were engaged in providing bogus accommodation entries wherein bogus sale bills were issued without delivery of goods, in consideration for commission. These, accommodation entry providers, on receipt of che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court in Central Provinces Managnese Ore Co, ltd. v. ITO(1991) 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe , but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the AO is within the realm of subjective satisfaction ITO v. Selected Dalurband Coal Co, (P.) Ltd. (1996) 217 ITR 597 (Supreme Court): Raymond Woollen Mills Ltd. v. ITO (1999) 236 ITR 34 (Supreme Court). 13. The above discussion and precedent from Hon ble Apex Court fully justify the validity of reopening in this case. Further we find that the Ld. CIT(A) has carefully examined the issue and has properly appreciated the issue. Hence, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (SC). In the present case, the assessee wants that the unassailable fact that the suppliers are non-existent and, thus, bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable in light of Hon ble Apex Court decisions. 16. In these circumstances, the learned Departmental Representative has referred to Hon ble Gujarat High Court decision in the case of Tax Appeal No. 240 of 2003 in the case of N K Industries vs. Dy. CIT vide order dated 20.06.2016, wherein 100% of the bogus purchases was held to be added in the hands of the assessee and tribunals restriction of the addition to 25% of the bogus purchases was set aside. It was expounded that when purchase bills have been found to be bogus, 100% disallowance was required. The special leave petition against this order along with others has been dismissed by the Hon ble Apex Court vide order dated 16.1.2017. 17. We further find that Hon'ble jurisdictional High Court in the case of Nikunj Eximp Enterprises (in Writ petition no 2860, order dt. 18.6.2014) has upheld 100% allowance for the purchases said to be bogus when the sales have not been doubted. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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