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TMI Blog2022 (7) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... much as the AO has made the detailed inquiry and the office note is also prepared to this effect and that the copy of the office note was not provided to the assessee in spite of reminders. 2.1 The appellant says and submits that the assessee has carried on genuine business and that the allegation made about the accommodation entry is baseless and without appreciating the facts." 3. The brief facts of the case are that the assessee filed return of income on 30-09-2008 declaring total income of _ 1,55,210/-. Thereafter an intimation was received from Investigation Wing, Mumbai wherein it was mentioned that the assessee was involved in providing accommodation entry of purchase amounting to rupees 225,96,76,090/- to various parties. Based on the information, the case was reopened under section 147 of the Act. However, the re-assessment was completed accepting the returned income of _ 1,55,210/- as originally filed by the assessee. Thereafter, the Principal Commissioner of Income Tax-1 Ahmedabad initiated 263 proceedings by observing that it is noticed from the records that the AO has not made any detailed enquiry at the time of assessment before accepting the accommodation entry a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises, so as to verify the affairs and nature of business carried out by the assessee. Similarly, the Assessing Officer has not verified or made any enquiry regarding the actual status of business of the above mentioned parties through issue of commission or personal examination or spot verifications. Further the reply was received from only 4 parties mentioned above, but here were total seven parties and from the record it is seen that no verification whatsoever of other three parties, viz. (1) Ketan Madhusudan Shroff (2) Prakash Natvarlal Patel (3) Sreshtha Art and Commodities Pvt. Ltd. was carried out by the Assessing Officer. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 6. Thus the assessment order is passed extremely casually, without making proper inquires or verification which should have been made during the course of assessment proceedings considering the report of the Investigation Wing and the huge amount involved. The Assessing Officer has simply accepted the claim of the assessee based on confirmation of the parties from whom assessee has claimed to have made the purchase. As in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable in this case. Accordingly, provisions of sec. 263 of the IT Act are involved and the said assessment is hereby cancelled and the AO is directed to make fresh assessment in accordance with law and after carrying out proper investigation/inquiry and also after giving proper opportunity of being heard to the assessee." 4. Before us, the counsel for the assessee drew our attention to pages 11 to 12 of the paper book dated 09-06-2021 and contended that perusal of the order passed under section 147 for the impugned assessment year demonstrates that the AO had conducted due enquiries during reassessment and on the basis of information and due verification provided to him, passed the order. The Ld. Counsel for the assessee submitted that the assessee is primarily engaged in sale of gold bullion also gold jewellery to various vendors. The counsel for the assessee then drew our attention to paper book dated 25-06-2009 and submitted that from time-to-time detailed submissions were made by the assessee during the course of 147 proceedings before the AO, which were duly considered by him in the assessment order. The counsel for the assessee also relied on order sheet entries for the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Ld. Assessing Officer did not make any further enquiries with regards to this allegation on the basis of bank book and cash book which were produced before him. A perusal of the bank statement shows that substantial amounts have been deposited and that too not on a regular basis. However, the Ld. Assessing Officer without making any further enquiries accepted the same at their face value as representing business income of the assessee. It is further observed that the Ld. Assessing Officer called for the statements of four parties and accepted the statements of parties on the basis of confirmation given through post / tapal. However, no effort was made to call them or personally examine them, especially in light of the fact when case has been set aside u/s 263 of the Act on the basis of specific allegations of the assessee being engaged in providing accommodation entries. The confirmation letters furnished by the parties, sent through post, were accepted as genuine by the ld. Assessing officer on their face value, without carrying out any further examination regarding the genuineness of parties, especially when the matter was set aside on the basis of specific allegations of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer did not make any enquiry regarding why such a miniscule net profit rate of 0.0025% has been offered to tax on the huge turnover. Further, AO during the course of assessment proceedings made no enquiries as to the mode of delivery of such substantial amount of bullion and jewellery. Thus, there seems to be an evident lack of enquiry / investigation into the facts of the case during the course of assessment proceedings and all contentions made by the assessee have been accepted, without detailed examination / analysis. In the case of JR Industries v. PCIT [2021] 132 taxmann.com 302 (Jaipur - Trib.), the ITAT observed that where Assessing Officer sought to reopen assessment in case of assessee on basis of investigation made by Investigation wing of department that assessee had provided accommodation entries in garb of business transactions, but without carrying out any investigation, he treated sales as bogus and charged 25 per cent as income derived out of accommodation entries, order of Assessing Officer being erroneous, Commissioner was justified in exercising his revisionary jurisdiction. While passing the order, the ITAT made the following relevant observations: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at cost without submitting method of valuing said shares, order of Assessing Officer accepting loss on sale of said shares without making further enquiry was erroneous and prejudicial to interest of revenue. The Ahmedabad ITAT in the case of Nakoda Fashion (P.) Ltd. [2018] 92 taxmann.com 46 (Ahmedabad - Trib.) upholding order passed u/s 263 of the Act has held that where there were material to show that share applicants were paper companies, mere furnishing of particulars or payment by account payee cheque or submission of confirmation letter by share applicants would only prove identity of subscribers and by itself, not enough to establish their creditworthiness and genuineness of transactions. The Ahmedabad ITAT made the following observations while passing the order: 19. From going through all the above judgments and decision, we find that along with evidences, surrounding circumstances, human probability and intentional acts are also to be taken note of while accepting the identity, creditworthiness and genuineness of the cash creditors which in this case is the share applicants. In the case before us we observe that assessee is trying to assert again and again upon the PA ..... X X X X Extracts X X X X X X X X Extracts X X X X
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