TMI Blog2022 (7) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee 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 the assessee being an accommodation entry provider. No further enquiry was made regarding the genuineness of the parties or their capacity to advance such huge amounts of money to the assessee. As during the assessment proceedings, the Ld. 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. As we are of the considered view that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as genuine transactions. The AO during the re-assessment proceedings had issued notices under section 133(6) of the Act to four parties and only on the basis of replies filed by those parties through a tapal/post, the AO accepted the purchases from the parties as genuine. Accordingly, after giving opportunity of hearing to the assessee, the PCIT held that the order passed by the AO was erroneous and prejudicial to the interests of the revenue and made the following observations while passing the 263 order: 4. On perusal of the records, as mentioned above, it is noticed that the case was reopened based on the information received from DDIT(Inv) Unit-2(3), Mumbai that the assessee had indulged in providing accommodation entries, i.e. bogus purchase without actual supply of any goods or services. Detailed analysis revealed that the assessee had provided accommodation entries of purchase to the tune of Rs. 2,25,96,76,090/-. While recording the reason, the commission on these accommodat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation 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 intimated by the DDIT(Inv.) Unit. 2(3), Mumbai, it is clear that the assessee and the other parties were members of these accommodation entry syndicate. Therefore, it is but natural that the parties will confirm the transaction to be genuine as there was mutual benefit to them. The Assessing Officer ought to have recorded the statement u/s. 131 of the I.T. Act of all the parties related to the transaction, to ascertain the genuineness of transaction. Further the Assessing Officer was required to make field inquiries and spot verification by deputing the inspector or issuing commission to verify the genuineness of business as claimed by the assessee and the transacting parties. It was mandatory to gather the evidences in support of transportation of goods from the sellers to the assessee and from the assessee to the purchasers to verify the actual transaction (seller-purchase) of goods or services. In the absence of detail verification as stated above and critical examination o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 impugned assessment year to assert that due enquiries were made by the AO during the course of reassessment proceedings. The counsel submitted that a perusal of the order sheet entries reflect that the assessee had submitted bills of purchases, sales bills, cash book, bank book, bank statements etc. during course of 147 proceedings, which were duly considered by the AO while passing the order. He further submitted that copies of VAT returns were filed during reassessment proceedings in order to reconcile the books of account, which were duly taken on record and considered by the assessing officer while passing the 147 order. He submitted that vide letter dated 25- 03-2016, the assessee submitted copy of VAT audit report and also sales quantity summary for the impugned financial year. The Counsel submitted that response from four parties were received and these are the main parties to whom approximately 85% of the sales were made by the assessee during the year u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 the assessee being an accommodation entry provider. No further enquiry was made regarding the genuineness of the parties or their capacity to advance such huge amounts of money to the assessee. The Ld. Counsel for the assessee placed reliance to letter dated 20-03-2016 addressed to ITO, Ward- 1(3)(2) furnishing ledger account from the books of the parties and also to another letter dated 25-3- 2016 again addressed to ITO, Ward- 1(3)(2) furnishing copy of VAT Audit Report and purchase and sale quantity summary for FY 2007-08 to argue that all details have been duly considered by the Ld. Assessing Officer during the course of assessment proceedings and therefore the order has been passed after giving thoughtful consideration to all relevant material. In this regard, the Ld. Counsel for the assessee also furnished submission dated 07-06-2021, wherein at para 4 at pages 5 to 6 of paper-book, it was submitted that the Ld. Assessing Officer had given due considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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: Having considered the entirety of facts and circumstances of the present case, it is further found that here the question is not filing the documents by the assessee with the Assessing Officer during the assessment proceedings, however, here the question is with respect to carrying out necessary verifications on the information of the department and that of the documents submitted by the assessee. Unfortunately, there has not been any sort of verification carried out by the Assessing Officer . It is viewed that the Assessing Officer has proceeded only on the basis that 'modus operandi of providing bogus sales cannot be relied upon in the light of the concrete information available on the record.' Thus, in this way, only on this basis, the Assessing Officer treated the sales as bogus and charged 25 per cent as income derived out in lieu of accommodation entries without any basis, enquiry or verification. Even, throughout the assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 PAN, IT returns, bank statement and confirmations of the impugned 5 parties but has nowhere tried to clarify or disclose the fact which has embedded in the financial statement of these 5 parties which speaks in itself that they are paper companies. Further if it has been genuine transaction and assessee company is asked to produce the new share holders who have been allotted a substantial portion of equity shares, he would have easily called upon the investors. The investors could have come along with all the financial documents and could have clarified about his intention to make investment in the equity shares of the company because every investor wants to earn income from investment in the form of dividend as well as expects appreciation in the valuation of shares with the growth of business. If this has been the situation, then there would have been no doubt on the genuineness of the transactions. On the contrary in the instant case as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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