TMI Blog2017 (12) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) has erred in upholding the reopening of the assessment on the premise that information received from the Sales tax department that the purchases are bogus constitutes enough reason to believe for re opening of the assessment , and also holding at Para 3.2 of his order that considering the fact that the assessee is not in position to produce the parties for cross verification of facts and that the appellant failed to produced the parties before the AC), the question of cross examination does not arise, and the ground for re opening. 2 On the facts and in the circumstances of the case, and in law, the Learned Commissioner of Income tax (Appeals), erred inter alia a) in sustaining the addition to (he extent of 12.5% of the alleged bogus purchases by holding in para 3.5 of his order Looking into the entirety of the facts, therefore in my considered opinion only the profit derived out of such transactions should be assessed to lax and relying on the decision in the case of Bholenath Poly Fab Pvt. ltd , addition to the extent of 12.5% of such tainted purchases is considered reasonable and sustained as suppressed profit element embedded in such purchase. This estim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. The Assessing Officer noted that the copies of their statements taken under oath by Sales Tax Department were also forwarded to this office. That these were shown to the assessee. That the summary to the above bills found to be bogus by the Sales Tax Department is as under: For F.Y. 2003-09 Sr. Name Amount (Rs) 1 Siddhivinayak Steel 28,865 2 Asian Steel 23,54,625 3 Sarailgi syndicate 17,24,625 4 Sunrise Enterprises 19,55,344 5 Amar Enterprise 19,52,440 6 Navkar Traders 38,45,250 7 MaJwvir Traders 9,99,900 8 Kkidee Sales 15,34,781 Total 1,43,98,830/- 4.1 The assessee was asked to explain its claim in light of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ani Sugar Syndicate Pvt Ltd (1980) 125 ITR 158 (All) iii) Eastern Sales Pvt Ltd vs CIT (1979) 117 ITR 477 (Cal) iv) CIT vs West Coast Shipping Agencies Pvt Ltd (1981) 127 ITR 442 (ker). 4.6 It is case where enquiries originated from the Sales Tax Department and the assessee has accepted the wrong claim of set off of VAT and paid the resultant tax and penalty. It is also pertinent to mention that in the case of bogus purchases only bills are received but not the goods. This is one kind of accommodating other parties so that unaccounted funds are legalized and given the colour of accounted money. The assessee is a part of large number of entities which were engaged in subverting law and in activities aimed at fostering and enhancing tax fraud. 4.7 This view also supported by the following case laws : - Addition made on the basis of admission by assessee is justified. (Hira Singh and Co. * Vs. CJT (HP) 230 ITR 791) - An admission is the best evidence that an opposing party can rely upon and though not conclusive, is decisive of the matter, unless successfully withdrawn or proved erroneous. (Narayan Bhagwantrao Gosavi Batajiwale Vs. Gopal AIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage. This is because the formation of belief by the A.O is within the realm of subjective satisfaction. In this case, the AO has reopened the assessment on the basis of information obtained from Sales Tax department that the purchases made are bogus. Therefore, in my opinion, there was reason to believe that income has escaped assessment and the AO has rightly initiated reassessment proceedings. The appellant was duly given opportunity to produce the parties for cross verification of the facts. However, the appellant failed to produce the parties before the AO. Since due opportunity was given to the appellant to produce the parties, therefore in my considered opinion the question of cross examination does not arise and further there is no evidence on record that the appellant has asked for cross examination of the parties. Looking into the entirety of the facts, these grounds of appeal are dismissed. 3.3 The appellant has in ground No. 4 contested the additions on merits also. The detailed submissions of the appellant are reproduced above. The appellant has also submitted copies of correspondences made with the AO during the course of assessment proceedings. It is noted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue are in cross appeal before us. 7. We have heard the counsel and perused the records. The ld. Counsel of the assessee submitted that the reopening has been based upon the information received from the Sales Tax Department. The same is based upon the website of Sales Tax Department which he claimed that was akin to newspaper information. He further submitted that the hawala dealers must have given some statements and if so the assessee would like to know how the assessee has been implicated. He further submitted that DGIT Investigation report has been said to be basis of reopening. The ld. Counsel of the assessee submitted that what is the report of the DGIT (Invtg.) is not known. The ld. Counsel of the assessee further pleaded that the original assessment was done u/s. 143(3) of the Act. Hence, the reopening is not at all justified. In this regard, the ld. Counsel of the assessee placed reliance upon Hon ble Delhi High Court decision in the case of Principal CIT vs. Meenakshi Overseas (P.) Ltd. [2017] 395 ITR 677 (Delhi), CIT vs. Jyoti Prakash Dutta [2014] 367 ITR 568 (Bom); CIT vs. Vardhman Industries [2014] 363 ITR 625 (Raj); CIT vs. Eastern Commercial Enterpris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cheques from parties against bogus bills for sale of material, later on withdrew cash from their bank accounts, which was returned to beneficiaries of bogus bills after deduction of their agreed commission. The Assessee was stated to be one of the beneficiaries of these bogus entries of sale of material from hawala entry operators in favour of the assessee wherein the assessee made alleged bogus purchases through these bogus bills issued by hawala entry providers in favour of the assessee. These dealers were surveyed by the Sales Tax Investigation Department whereby the directors of these dealers have admitted in a deposition vide statements/affidavit made before the Sales Tax Department that they were involved in. issuing bogus purchase bills without delivery of any mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Selected Dalurband Coal Co, (P.) Ltd. (1996) 217 ITR 597 (Supreme Court): Raymond Woollen Mills Ltd. v. ITO (1999) 236 ITR 34 (Supreme Court). 11. The above discussion and precedent from Apex Court fully justify the validity of reopening in this case. Further I find that the Ld. CIT(A) has carefully examined the issue and has properly appreciated the issue. Hence, I do not find any infirmity in the same. Accordingly, we uphold the order of the Ld. CIT(A) on the issue of reopening. Since, the issue has been decided on the basis of the Hon ble Apex Court decision, the other case laws referred by assessee are not supporting the assessee s case. 12. As regards the merits of the case, we find that credible and cogent information was received in this case by the assessing officer that certain accommodation entry provider/bogus suppliers were being used by certain parties to obtained bogus bills. The assessee was found to have taken accommodation entry/bogus purchase bills during the concerned assessment year from different parties. Based upon this information assessment was reopened. The credibility of information relating to reopening remains un-assailed. In such factual scena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. We further note that Hon ble Rajasthan high court has similarly taken note of decisions of the apex court on the issue of bogus purchases in the case of CIT Jaipur vs Shruti Gems in ITA No. 658 of 2009. The Hon ble High Court has referred to the decision of CIT Jaipur vs. Aditya Gems, D. B . in ITA No. 234 of 2008 dated 02.11.2016, wherein the Hon ble Court had inter alia held as under: Considering the law declared by the Supreme Court in the case of Vijay Proteins Ltd. Vs. Commissioner of Income Tax, Special Leave to Appeal (C) No.8956/2015 decided on 06.04.2015 whereby the Supreme Court has dismissed the SLP confirmed the order dated 09.12.2014 passed by the Gujarat High Court and other decisions of the High Court of Gujarat in the case of Sanjay Oilcake Industries Vs. Commissioner of Income Tax (2009) 316 ITR 274 (Guj) and N.K. Industries Ltd. Vs. Dy. C.I.T., Tax Appeal No.240/2003 decided on 20.06.2016, the parties are bound by the principle of law pronounced in the aforesaid three judgments. 16. However, we note that the Hon ble jurisdictional High Court in the case of Nikunj Eximp Enterprises (in Writ petition no 2860, order dt. 18.6.2014) has upheld 1 ..... 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