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TMI Blog2018 (1) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... e extent of amount mentioned against their names:- S.No. Name of the Party Amount (Rs.) 1. Aastha Impex 10,13,041/- 2. Navkar Diamonds 57,39,581/- 3. Pankaj Exports 98,02,433/- Total 1,65,85,055/- 4. It was also noticed that the entire bogus nature of the transactions had been admitted by Shri Bhanwarlal Jain in his statement recorded u/s. 132(4) of the Act. Since the assessee had not physically purchased any goods from the above bogus sellers, it was believed that the expenditure to that extent had been inflated by the assessee. Since there was inflation of expenditure which ultimately resulted into underassessment of income, the Assessing Officer had reason to believe that income to the extent of Rs. 1,65,85,055/- chargeable to tax had escaped assessment for assessment year 2010-11. In this regard, the Assessing Officer placed reliance on the judgment of Hon'ble Bombay High Court in the case of Nikunj Eximp Enterprises P. Ltd. v. ACIT (Writ Petition No.2860 of 2012) wherein the action of the Assessing Officer in re-opening the assessment had been upheld. 5. During the course of re-assessment proceedings, the Assessing Officer took into information re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f record that the assessment of the appellant was reopened on the basis of the information received from the DGIT(Inv.), Mumbai vide letter dated 13.03,2014 that the appellant had obtained fictitious purchase bills or accommodation entries to the tune of Rs. 1,65,85,0557- from aforesaid 3 parties and thereby suppressed its true profit for the relevant period. This information is found to have been unearthed in the course of search and seizure action carried out by the Department in the case of Shri Bhanwarlal Jain Group. This shows that the reopening of assessment was based not on subjective opinion or suspicion of the AO but on concrete and credible information received from the Investigation Wing. It is well-settled that the sufficiency or correctness of the material is not a thing to be considered at this stage. It has only to be seen whether there was prima facie some material on the basis of which the Department could reopen the case [Raymond Woollen Mills Ltd. v. ITO 236 ITR 34 (SC)]. Therefore, having received the said information from the Investigation Wing of the Department, no independent enquiry or verification was required to be undertaken by the AO before arriving at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the appellant for the A.Y. under consideration based on the above information received from the Investigation Wing and proceeding to reassess the income escaping assessment on this count. 9. On merits, the ld. Commissioner of Income Tax (Appeals) noted that: It is noticed from the record that the A.O. treated the aforesaid purchases from 3 parties as bogus or non genuine not merely on the basis of information received from the Investigation Wing but also because the appellant failed to furnish the purchase orders, delivery challans/angadia receipts etc. in respect of the said purchases of cut and polished diamonds. The absence of these supporting evidences lent credence to the A.O.'s finding that the purchases shown to have been made by the appellant from aforesaid 3 concerns were nothing but accommodation entries without any actual movement or delivery of goods. 10. However, the ld. Commissioner of Income Tax (Appeals) sustained only 2% of the bogus purchase as addition. 11. Against the above order of ld. Commissioner of Income Tax (Appeals), the assessee is in appeal before the ITAT. 12. I have heard both the counsel and perused the records. As regards the reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is not required to be proved to the guilt. In this regard, I refer to the decision of the Hon'ble Apex Court in the case of CIT(A) Vs. Rajesh Jhaveri Stock Brokers P. Ltd, 291 ITR 500:- "Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to lax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the AO has cause or justification to know or suppose (hat income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. I find it further strange that assessee wants the Revenue to produce assessee's own vendors, whom the assessee could not produce. The purchase bills from these non-existent/bogus parties cannot be taken as cogent evidence of purchases. In light of the overwhelming evidence, the Revenue authorities cannot put upon blinkers and accept these purchases as genuine. This proposition is duly supported by Hon'ble Apex Court decision in the case of Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC) and CIT vs. Durga Prasad More [1971] 82 ITR 540 (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. 17. I further find that Hon'ble jurisdictional H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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