TMI Blog2020 (2) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee dismissed - C.O. No. 238/MUM/2018, 239/MUM/2018 And ITA No. 2143/MUM/2017, 2144/MUM/2017 (Assessment Year: 2009-10, 2010-11) - - - Dated:- 30-12-2019 - SHRI AMARJIT SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) Revenue by: Ms. Jothilakshmi Nayak, Sr. DR Assessee by: Mr. M. Subramanian, AR ORDER PER N.K. PRADHAN, A.M. The captioned appeals by the Revenue and the cross objections by the assessee are directed against the order of the Commissioner of Income Tax (Appeals)-20, Mumbai [ in short CIT(A) ] and arise out of the order passed by the Assessing Officer (AO) u/s 143(3) r.w.s. 147of the Income Tax Act 1961, (the Act ). As common issues are involved, we are proceeding to dispose them off by a consolidated order for the sake of convenience. ITA No. 2143/MUM/2017 (A.Y. 2009-10) 2. The grounds of appeal filed by the Revenue read as under: 1. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the relief to the assessee merely on the basis that the payments against alleged purchase has been made through banking channel and hence holding that purchases are genuine desp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n namely Ankush Merchandise Pvt. Ltd. (New Planet Trading Co. Pvt. Ltd.) during the year under consideration. The assessee submitted before the AO a purchase bill of ₹ 15,99,052/- in respect of transactions with New Planet Trading Co. Pvt. Ltd.; ledger account and a confirmation from the latter. The said confirmation states that excise invoices were raised by one Ankush Enterprises. In response to a query raised by the AO to explain it, the assessee failed to file any explanation. Observing that the assessee failed to discharge its onus to prove the genuineness of the transactions, the AO made a further addition of ₹ 50,04,407/-. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We find that vide order dated 22.12.2016 the Ld. CIT(A) held in respect of purchases of ₹ 8,16,358/- from Emkay Engineers that the assessee had purchased the material for use in plant and machinery ; the payment was made through banking channel ; depreciation was claimed on the plant and machinery. Therefore, he deleted the addition of ₹ 8,16,358/- made by the AO. 4.1 In respect of purchases of ₹ 2,78,42,277/- made from SB Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther hand, the Ld. counsel for the submits that the order passed by the Ld. CIT(A) be affirmed. Further reliance is placed by him on the decision of the Hon ble Bombay High Court in CIT v. Nikunj Eximp Enterprises Pvt. Ltd. (2015) 372 ITR 619; Pr. CIT v. M/s Mohommad Haji Adam Co. (ITA No. 1004 of 2006) and the order of the Tribunal in Shri Ramesh Kumar Daulatraj Mehta v. ITO (ITA No. 4192/Mum/2018). 7. We have heard the rival submissions and perused the relevant materials on record. We agree with the reasons given by the Ld. CIT(A) in respect of purchases from Ankush Mercantile Pvt. Ltd. (New Planet Trading Co. Pvt. Ltd.) in deleting the addition of ₹ 50, 04, 407/-. We affirm it. However, as mentioned earlier, in the instant case, the assessee failed to produce before the AO Emkey Engineers, SB Industries for examination so that the genuineness of the transactions could have been proved. The inquiry conducted by the Inspector further established that the genuineness of the transactions is in doubt. However, the assessee filed before the AO the purchase bills and also stated that the payments have been made through account payee cheques. Having examined the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Gujarat High Court in the case of N.K. Industries Ltd. v. DCIT in Tax Appeal No. 240 of 2003 and connected appeals decided on 20.06.2016 and also pointed out that the SLP against such decision was dismissed by the Hon ble Supreme Court. The Hon ble Bombay High Court held : 8. In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order passed u/s 143(3) r.w.s.147 is invalid and bad in law. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in retaining addition to the extent of ₹ 5,54,420/- out of addition made as bogus purchases and that too without any proper reason. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the interest charged u/s 234B of the Act. 10. As mentioned earlier, the AO has reopened the assessment which was originally processed u/s. 143(1) of the Act. On receipt of information from the Sales Tax Department, Government of Maharashtra that the assessee has indulged in procuring bogus purchase bills, the AO recorded the following reasons and reopened the assessment. The reasons recorded by the AO are as under: - Sub: Reassessment proceeding in the case of M/s. D.R. Coats Ink Resins (P) Ltd, PAN: AABCD8645A, for A.Y. 2009-10 - reg. Please refer to the above. 1. Reassessment proceeding in your case has been initiated vide notice u/s 148 dated 22.03.2014.In reply vide your letter dated 29.03.2014 has stated to consider the return of income for A.Y. 2009-10, filed on 19.09.2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d without scrutiny. The income-tax investigation had subsequently provided information about certain companies having bank accounts with a bank in Kolkata and who were involved in giving accommodation entries of various nature to several beneficiaries including the assessee. The information supplied by the Investigation Wing to the Assessing Officer formed a prima facie basis to enable the Assessing Officer to form a belief of income chargeable to tax having escaped assessment. The Assessing Officer perused the information supplied by the Investigation Wing and having formed the belief that income chargeable to tax had escaped assessment, could not be stated to have acted mechanically. Further, the mere fact that the assessee had asked for certain information from the Assessing Officer, which at this stage was not supplied, would not invalidate the reasons recorded by the Assessing Officer in issuing the notice. The notice was valid. Thus in the instant case, the AO has rightly issued notice u/s 148 for reopening the return of income processed u/s 143(1) of the Act. Accordingly, the cross objection filed by the assessee (1st and 2nd ground) is dismissed. The 3rd ground has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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