TMI Blog2020 (3) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... tablish the purchases. The assessee was required to discharge its onus of substantiating the purchases with deliveries of goods. The responsibility of the assessee to substantiate purchases was further increased in view of the statement of Shri Rakesh Kumar Gupta that he had provided accommodation entry bills without supplying the goods physically. But in view of the failure on the part of the assessee in discharging its onus, we do not find any infirmity in the order of the lower authorities on the issue in dispute and accordingly we uphold the same. The ground No. 2 and 3 of the appeal of the assessee are accordingly dismissed. - ITA No.6093/Del/2010 And ITA No.4304/Del./2011 - - - Dated:- 17-3-2020 - Shri Bhavnesh Saini, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Shri K. Sampath, Adv., Shri Raja Kumar, Adv. For the Respondent : Ms. Rakhi Vimal, Sr. DR ORDER PER O.P. KANT, AM: Out of the above two appeals, the appeal bearing ITA No. 6093/Del./2010 for assessment year 2002-03 has arisen due to remission back by the Hon ble Delhi High Court vide decision dated 29/08/2012 for deciding on merit. The appeal bearing ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low: 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : *** 148. Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period... *** 149 (1) No notice under section 148 shall be issued for the relevant assessment year,-- (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer shall record his reasons for doing so. After the decision of the Supreme Court in GKN Driveshafts (India) Ltd. (supra) the Assessing Officer is duty bound to supply the reasons recorded for reopening the assessment to the assessee, after the assessee files the return in response to the notice issued under Section 148 and on his making a request to the Assessing Officer to that effect. 8. The decisions cited above point out the fallacy in the impugned order. R.K. Upadhyaya clarifies that serving of the notice is a precondition to making the assessment order under section 148. It is not the service of notice upon the assessee that confers jurisdiction in the Assessing Officer to reopen assessment; instead, his jurisdiction is derived from the conditions specified in section 147, viz. the existence of reasons to believe that income has escaped assessment. Thus, since the notice was issued within the six year limit prescribed under Section 149, i.e., on 27.3.2009, there is no infirmity with the assumption of jurisdiction by the AO even though the service of the notice was after the expiry of the six year period. 9. Secondly, A.G. Holdings, a decision of an earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodation purchase bills of ₹ 38,99,527/- from three parties, namely, Shri Rakesh Kumar M. Gupta, Prop. of M/s. Manoj Mills (₹ 22,11,176/-); Smt. Hema R Gupta Prop. of M/s Aastha Silk Industries (₹ 5,00,013/-) and Shri Mohit Gupta Prop. of M/s. Shree Ram sales and synthetics (₹ 11,88,338/-), who were running their activities of issuing accommodation entries bills from the premises of shop No. 4, Ram Gally, Pankaj Market ,Champa Gally X-Lane, Kalba Devi, Mumbai-400002. Sh. Rakesh Kumar Gupta, who was responsible for managing and controlling all the aforesaid concerns, in his statement recorded on oath admitted that he was engaged in the activity of providing accommodation entries bills for the past nine years and earning commission at the rate of 1% on amount of sale bills issued. He admitted the modus operandi of issuing sale bills on the requirement of the parties after receipt of cheque for the amount as per the bills, which was deposited in the bank account and same amount of cash was returned to the party concerned after reducing his commission charges. He admitted that to correlate the sales, the purchase bills were prepared by himself by getting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: 4.3 Further, in the course of appellate proceedings, the learned counsel for the appellant was required to produce the necessary records and prove the payment of freight, cartage and loading and unloading expenses, if any, incurred by the appellant in connection with the purchases allegedly made from the aforesaid concerns controlled by Sh. Rakehs Kumar Gupta. However, the ld. counsel has fairly conceded that it was not possible to correlate any such expenditure with specific purchases. Thus, there is no independent proof which may support the purchases from the aforesaid concerns. As said earlier, the accommodation purchase bills are normally obtained by an assessee either to utilize them for undisclosed manufacturing/production or inflate the cost of production. Therefore, in the course of appellate proceedings, the appellant was required to submit a note on the manufacturing process, specifically explaining the stages where shortages/leakages/wastages take place. However, on a careful examination of the note submitted by the appellant company it was found that there was no systematic/scientific method to record the aforesaid items of shortages nor there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oteins Ltd. Vs. CIT (2016-TIOL-3165-HC-AHM-IT) 2. N.K. Industries Ltd. Vs. DCIT [2016] 72 taxmann.com 289 (Gujarat)/[2017] 292 CTR 354 (Gujarat) 3. CIT Vs. Arun Malhotra, 47 taxmann.com 385 (Delhi)/[2014] 363 ITR 195 4. CIT Vs. La Medica [2001] 117 Taxman 628 (Delhi)/[2001] 250 ITR 575 (Delhi)/[2001] 168 CTR 314 (Delhi) 5. Vijay Proteins Ltd. Vs. ACIT, [2015] 58 taxmann.com 44 (Gujarat) 3.7 In support of the contention that entire undisclosed income generated out of bogus transaction deserve to be added, the learned DR relied on following decisions: 1. ITO Vs. M Pirai Choodi [2012] 20 taxmann.com 733 (SC)/[2011] 334 ITR 262 (SC)/[2011] 245 CTR 233 (SC) (Supreme Court). 2. M/s. Pebble Investment and Finance Ltd. Vs. ITO [2017-TIOL-238- SC-IT] (Supreme Court) 3. CIT Vs. Kuwer Fibers (P.) Ltd. [2017] 77 taxmann.com 345 (Delhi) 4. CIT Vs. Sonal Construction [2012-TIOL-851-HC-DEL-IT] (Delhi) 5. Nokia India (P.) Ltd. Vs. DCIT [2015] 59 taxmann.com 2012 (Delhi Trib.) 6. GTC Industries Ltd. Vs. ACIT [1998] 65 ITD 380 (BOM) 3.7 We have heard the rival submission of the parties and perused the relevant material on record. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of such allegations. 5. The ground No. 1 of the appeal being identical to the ground No. 1 of the appeal for assessment year 2002-03 and, therefore, it is squarely covered by the decision of the Hon ble Delhi High Court in the case of the assessee for assessment year 2002-03. The assessee also did not press this ground before us. Accordingly, this ground of the appeal is dismissed. 6. In ground Nos. 2 and 3, the issue of undisclosed purchases and commission thereon is involved. Identical issue has been adjudicated by us in assessment year 2002-03. In the instant year, the Ld. CIT(A) has also upheld the addition following his finding in assessment year 2002-03. In the present appeal, the assessee has also filed paper-book containing pages 1-35, comprising of copy of the bills issued by the accommodation entries providers. On perusal of the bills, it is apparent that there is no mention of mode of transport on those bills, and thus assessee has failed to substantiate its purchases. To have consistency of our decision, we uphold additions made by the Assessing Officer and confirmed by the Ld. CIT(A). The ground No. 2 and 3 of the instant appeal are also dismissed ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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