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TMI Blog2019 (8) TMI 1768X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of Rs. 11,07,73,186/- as alleged bogus purchase, without appreciating the fact that the payment was made through cross account payee cheque and the same goods were subsequently sold and quantity is tallied and the addition was made without providing any opportunity of cross examination, corroborative evidence and without providing copy of statements relied upon." 3. Brief facts as discernible from the orders of lower authorities are that the assessee has filed return of income on 10.09.2011 declaring total income of Rs. 2,30,378/-. The same was accepted under section 143(1) of the Act. Subsequently an information was received from the Director of Investigation (Inv)-II, Mumbai that a search and survey operations were carried out by the Investigation Wing, Mumbai in the case of Shri Bhanwarlal Jain Group of Mumbai on 03.10.2013. During the year under consideration the assessee has carried out transaction with M/s. Rose Gems Pvt. Ltd. of Rs. 11,07,73,186/- which was nothing but accommodation entries as no real business was carried out by M/s. Rose gems Pvt. Ltd. and this bogus nature was confirmed in the statement recorded on oath by one of the directors of the group. It was fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that retracted statement of third party could not be made basis of reopening of assessment. However, the CIT (A) observed that there was credible information from Investigation Wing Mumbai regarding search and seizure action in the case of Shri Bhanwarlal M. Jain who were found engaged in providing accommodation entries. Therefore, the requirement of section 147 of the Act was clearly met and therefore, reopening of assessment is justified. The assessee was one of such beneficiaries who has received accommodation entries. Therefore, the AO has rightly reopened the assessment. The ld.CIT(A) has also supported his view by placing reliance in the case of Phoolchand Bajranglal v. ITO [1993] 203 ITR 456 (SC) and Dishman Pharmaceuticals & Chemicals v. DCIT (OSD) [2012] 346 ITR 228 (Gujarat). However, on merit, the CIT (A) has allowed substantial relief by restricting impugned addition to Rs. 55,38,660/- being 5% as against the addition of Rs. 1,38,46,651/- being 12.5% of total disputed purchases of Rs. 11,07,73,186/- made by the AO. 5. Being, aggrieved the assessee filed this appeal before this Tribunal. The learned counsel for the assessee submitted that the notice under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no transaction whatsoever of nature with him nor purchase party has any relation or contact whatsoever nature with said Shri Bhanwarlal M. Jain. M/s. Rose Gems Pvt. Ltd. is assessed to tax and filing regular return of income. The copy of return acknowledgement is placed at Paper Book Page No. 95. The copy of confirmation was filed from said party. The said company has filed its copy of ledger account, bank statement, purchase bills and audited balance sheet and books of accounts, which are audited under section 44AB of the Act. These are placed at Paper Book Page No. 59 to 96. The transaction are through banking channel and assessee has made payment by account payee cheques. The reasons recorded for reopening of assessment does not talk of any statement recorded of any director of M/s. Rose Gems Pvt. Ltd. The assessee has filed affidavit from Shri Bhanwarlal M. Jain wherein he has retracted for his statement recorded under section 132(4) of the Act. However, the AO has not provided the copy of statement of Shri Bhanwarlal M. Jain to the assessee. Therefore, the third party statement cannot be relied without cross-examination. The assessee has demanded cross-examination of Shri Bhan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Act, is not tenable in law. Even on merit, it was submitted that all details of seller party were filed, who is assessed to tax, who had filed confirmation, bank statement and copies of account which are audited under section 44AB of the Act, and the said party is very much in existence, and hence, addition so made is not sustainable in law and on facts in the light of judgement of Hon`ble Gujarat High Court in the case of Pr. CIT v. Tejua Rohitkumar Kapadia (Tax Appeal No. 691 of 2017 dated 18.09.2017) which has been affirmed by the Hon`ble Supreme Court in the case of Pr. CIT Surat v. Tejua Rohitkumar Kapadia [by dismissing SLP No.12670/2018 dated 04.05.2018]. In view of above, after placing reliance on the various decisions of Tribunals, Hon'ble High Court and Hon`ble Supreme Court, it was submitted that reopening of assessment is bad in law. 6. Per contra, the Ld. DR supported the order of Ld. CIT (A). The learned D.R. vehemently pointed out that not only there existed new information with the AO from the credible sources, but also that he has applied his mind and recorded the conclusion that the purchases claimed were non genuine and therefore bogus, which clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - from the following party , which are accommodation entries only and no real transaction has taken place. Sr. No. Name of the concern from whom made transaction PAN Amount 1 M/s. Rose Gems Pvt. Ltd. AADCR7141M 11,07,73,186 A search and seizure operation u/s. 132 of I.T. Act was carried out in the case of Shri Bhanwarlal Jain Group, which is leading entry provider of Mumbai. The Group is involved in providing accommodation entries of bogus purchases /sales, through benami concerns. The assessee M/s. Albers Diamond Pvt. Ltd. is one of the beneficiary and received accommodation entries pertaining to bogus purchases / sales from the above mentioned parties aggregating to Rs. 11,07,73,186/- which is bogus entry only as no real transaction taken place. Hence, I have reason to believe that the income exceeding Rs. One lac has escaped assessment for A.Y. 2011-12 by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary in the return of income. In this case, a notice u/s.148 r.w.s. 147 of the Income Tax Act,1961 is required to be issued for re-opening the case of Assessment Year 2011-12." 8. The perusal of above reasons would sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant case are identical, hence, squarely applied to present case. The above statement suggests that even quantification of escaped income of Rs. 11.07 crores is also based on information supplied by the Director of Investigation (Inv) and the AO has not verified these figures from the return of income filed by the assessee and assessment records. There is no mentioned or reference of filing of any return of income by the assessee in the reason so recorded by the AO. Considering the facts and circumstances and above discussed judicial ruling Co-ordinate Bench of Tribunals, Hon'ble High Court and Hon`ble Supreme Court, we are of the view that reopening of assessment in the present case, is bad in law. We observe that the AO has not applied his mind and he has merely acted and initiated reassessment proceedings and issued notice u/s. 148 of the Act on the basis of information of Director of Investigation (Inv) Mumbai which was received by him along with in respect of alleged accommodation entries of bogus bills of purchases alleged to be taken by the assessee. We note that Learned Counsel has relied in the case of CIT v. Indrajit Singh Suri [2013] 33 taxmann.com 281 (Gujara ..... X X X X Extracts X X X X X X X X Extracts X X X X
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