TMI Blog2017 (12) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) is appropriate and does not need any interference on our part. Both the ld. Counsel also fairly agreed to this proposition. - I.T.A. No. 3707/Mum/2016 And I.T.A. No. 3761/Mum/2016 - - - Dated:- 11-12-2017 - SHRI SHAMIM YAHYA, AM AND SHRI PAWAN SINGH, JM For The Assessee : Shri Sashi Tulsiyan For The Revenue : Shri M. C. Omi Ningshan ORDER Per Shamim Yahya, A. M.: These are cross appeals by the Revenue and assessee arising out of the order of the ld. Commissioner of Income Tax (Appeals) dated 17.02.2016 and pertain to the assessment year 2007-08. 2. The grounds of appeal in assessee s appeal read as under: Legal Grounds: (1) On the facts and in the circumstances of the case and in law. the Ld. CIT(A) erred in upholding the assessment framed u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961 eventhough the said assessment order is invalid and illegal because the reopening of the assessment is not in conformity with the express legal provisions in view of the following: a) Re-opening of the assessment is done without independent application of mind since the Assessing Officer relied on the information received from the Investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. l(b). On the facts and in the circumstances of the case, the Ld.CIT(A) failed to appreciate that the findings of the search action of the Investigation Wing of the department revealed that the Bhanwarlal Jain group was engaged in the business of providing accommodation entries of unsecured loans, sales purchases, share application money to many parties and the assessee could not conclusively establish the genuineness of the purchases made from the two concerns M/s. Jewel Diam M/s. Little Diam belonging to operated by the Bhanwarlal Jain Group. l(c). On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have confirmed the addition of ₹ 95,94,430/- made u/s 69C of the Income Tax Act, 1961 being the peak of the purchases of ₹ 1,19,32,516/- made frqm the two concerns of the Bhanwarlal Jain Group. 2. The appellant prays that the order of the Ld. CIT(A) be set aside and the order of the AO be restored. 4. Brief facts of the case are as under: In this case, the Assessing Officer noted that the information in the case of assessee for A.Y. 2007-08 was received from DIT(Inv)-II, Mumbai vide letter dated 13.03.2014, wherein it is stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee for cross examination is not entertained for that the statements and finding of the Investigation Wing is extensive and covers all aspects of inquiry and further cross examination will only be a waste of precious time. That as regards the case laws cited by the ld.AR, it is seen that the facts of case is distinguishable. That in the given facts and circumstances of the case, therefore, an addition of the peak amount of ₹ 95,94,427/- is made to the total income of the assessee company u/s.69C of the Act. 5. Against the above order, the assessee appealed before the ld. Commissioner of Income Tax (Appeals) challenging both the reopening and the merits of the addition. 6. The ld. Commissioner of Income Tax (Appeals) confirmed the reopening by holding as under: I have gone through the facts and circumstances of the case. Originally there was scrutiny u/s 143(3) concluded on 18.8.2009 accepting loss returned. The assessment is reopened beyond four years but within six years. From the facts, it is gathered that the reopening was done based on the information received by the AO from DIT(Inv,)-II, Mumbai that search and seizure action u/s 132 of the Act was conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no question of any change of opinion, when the income which was chargeable to tax is actually taxed as it ought to have been under the Law but was not taxed due to an error committed at the first assessment, the reopening was held valid. (v) ITAT, Chennai in the case of Chennai Petroleum Corpn. Ltd A. Y. 2006-07 (ITA No.66/11-12/LTU(A) dated 08.01.2013 relying on the High Court of Delhi in the case of Consolidated Photo and Finvest Ltd v. ACIT (281 ITR 394) (2006) and High Court of Mumbai in the case of Dr.Amir's Pathological Laboratory v. JCIT (252 ITR 673) has held that mere production of books of account, balance sheet and profit and loss account will not necessarily amount to disclosure necessary for Explanation1 of Sect 147. (vi) High Court of Delhi in the case of Honda Siel Power Products Ltd v. DCIT (197 taxman 415) (2011) has held that merely because the material lies embedded in the material evidence which the AO could have uncovered but did not uncover, is not a good reason for striking down reopening. (vii) High Court of Mumbai in the case of Export Credit Guarantee Corporation of India Ltd v. Addl.CIT (30 taxmann.com 211) (2013) has held that there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e investigation wing during the course of which Bhanwarlal Jain and his staff members have given categorical statements clearly stating the modus operands followed by them in providing the accommodation bills. They have also admitted unequivocally before the investigation wing that they were not involved in any real trading of diamonds except giving bogus bills to those who need them for certain commission. Having observed that those parties are non-existant sellers and they have not made any sales except the bogus invoices issued in their name, the AO has brought to tax the entire bogus purchases standing in the names of the so-called sellers, u/s 69C of the Act as the expression given by the appellant was not satisfactory to him. Their argument was that unless the AO proves positively that the material was not delivered to the assessee and the payment made through the Bank channels have been bogus or the amounts paid in the names of the suppliers have come back to the purchaser-assessee, the AO cannot make any addition u/s.69C. Further, as the AO has not doubted the sales disclosed by the appellant he has to allow the purchases since there cannot be any sales without the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes appearing the books of the appellant. Therefore the link is established. Even though the AO could not prove substantively that the amounts given to the sellers in cheque form have come back to the appellant, the activities of accommodation entries in the trading community is not unheard of. Further, the disturbing facts revealed by Bhanwarlal Jain group during the course of search and seizure proceedings conducted by the investigation wing of the income tax department itself, cannot be lost sight of. Even though there are catena of cases, including some of them delivered by the jurisdictional ITAT, which have decided the issue in favour of the assessee, they are not uniform in all the cases as they were decided as per the facts and circumstances of that particular case before them. I am of the opinion that the theory laid down by the Hon'ble Gujrat Court in the case of Simit P Seth (supra.) should be applied in the instant case. Decision rendered by Gujarat High Court in the above case is on the basis of VAT benefit the appellant might have saved by taking accommodation entries since the goods dealt by them were excisable commodities, where the VAT rates are on a higher sid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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