TMI Blog2023 (1) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... form a belief that the income of the assessee has escaped assessment, it is always open for the assessing authority to reopen the assessment. Therefore, based on these facts and circumstances, we do not find any infirmity in the reasons recorded by Assessing Officer, hence the Cross Objection No.1 raised by the assessee is dismissed. Estimation of income - Bogus purchases - HELD THAT:- As the issue is squarely covered by the judgment of Co-ordinate Bench in the case of Pankaj K. Chaudhary ( 2021 (10) TMI 653 - ITAT SURAT] and there is no change in facts and law and the Ld. DR for the Revenue has failed to controvert the findings of the Co-ordinate Bench. We note that Co-ordinate Bench has sustained the addition @ 6% of bogus purchases, therefore, respectfully following the binding precedent, we partly allow the appeal of the Revenue. - ITA Nos. 460/SRT/2019, ITA No.165/SRT/2021 Cross Objecti on. No.14/S RT/2021[Arising out of ITA No. 460/SRT/ 2019 - - - Dated:- 25-7-2022 - SHRI PAWAN SINGH , JM And DR. A. L. SAINI , AM Assessee by Shri Prakash G. Jhunjhunwala, CA with Shri Anand R. Chourasia, CA Respondent by Shri H. P. Meena, CIT(DR) ORDER PER DR. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and restrict the addition @ 1% of alleged non-genuine purchase at Rs. 15,42,620/- (1% of Rs. 15,42,62,091/-) since normal profits corresponding to disputed purchase had been offered to tax. The appellant craves leave to add, amend, alter, and/or withdraw any of the grounds of appeal at the time of hearing. 4. The relevant material facts, as culled out from the material on record, are as follows. Assessee before us is an individual and filed his return of income on 27/09/2009, declaring total income of Rs.3,56,590/-. In assessee`s case, Assessment u/s 143(3) of the I.T. was passed on 11.01.2011 determining total income at Rs.4,72,450/-. As per the information received from Vat Department, Mumbai, the assessee`s case was re-opened u/s 147 of the I.T. Act. The said information contains details of accommodation entries of bogus purchases, sales, unsecured loan share capital etc. received from VAT Department. In this case the assessee had entered into transaction of Rs.15,42,62,091/- consists of purchases from two parties namely Kotsons Impex Private Ltd of Rs.8,68,35,840/-, and Shri Jalaram Enterprise of Rs.6,74,26,251/- during the F.Y. 2008-09, which is reported as bogus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not mention the nature of transaction and the parties from whom the transaction have been done. Therefore, the entire reasons recorded were on account of borrowed satisfaction. The reasons should be linked with the tangible material which can suggest that income has escaped assessment. Therefore, based on these facts, the Ld. Counsel relied on the judgment of Hon'ble Gujarat High Court in the case of Surani Steel Tubes Ltd., 136 Taxmann.com 139 (Guj. HC). 8. Learned DR for the Revenue argued that Assessing Officer has recorded valid reasons for reopening the assessee s case, based on the information received from Investigation Wing. To support his arguments, Ld. DR relied on the judgment of Hon'ble Gujarat High Court in the case of Peass International Engineering (P.) Ltd.,76 taxmann.com 106 (Guj.). 9. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We have gone through the reasons recorded by the Assessing Officer and noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if four years have been passed, it is not open for the Authority to reopen the assessment. In the present case, there was independent application of mind on behalf of the assessing authority in arriving at the conclusion that income had escaped assessment and therefore, the contentions raised by the petitioner are devoid of merits. Dealing with the contentions of the petitioner that the information received from DGIT, Investigation Branch, Ahmedabad, can never be said to be additional information. We are of the opinion that the information which has been received is on 26-3-2015 from the DGIT, Investigation Branch, Ahmedabad, whereby it has been revealed that present petitioner is also the beneficiaries of those Kayan brothers, who are in the activity of entry operation throughout the country and therefore, it cannot be said that this is not justifiable material to form a reason to belief by the Authority and therefore, this being a case, the Authority is justified in issuing notice under section 148 of the Act to reopen the assessment and therefore, the challenge contained in the petition being devoid of merits, same deserves to be dismissed. As we found that for the exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing officer made addition at the rate of 100% of bogus purchases, on appeal, ld. CIT(A) restricted the addition @ 5% of bogus purchases observing as follows: 8.2.9 In the instant appeal, there is no such adverse finding as in the case of N K Proteins (supra). The facts in instant appeal are identical to Gangani Impex (supra) and the cases decided by the jurisdictional ITAT (supra). In view of this, respectfully following jurisdictional ITAT, the disallowance is restricted to 5%. The AR has furnished orders Hon'ble ITAT Mumbai, Delhi and Kolkata wherein, an identical circumstances 85 factual matrix involving the same accommodation entry providers the entire disallowance made by Ld. AO was deleted (Sanghvi Export International Ltd. ITA No. 3305, 3375/Mum/2017 dt 21.08.2018, Karamchandra Rubber Industries ITA No.6599/Del/2014 12.02.2018 M/s Vaman International Pvt. ITA 1040 85 1041 /M/2017 dtd 27.09.2017, Fancy wear ITA No. 1596/M/2016 dtd. 20.09.2017, Suraj Jewells Co. ITA No.1581/Kol/2016 dtd 05.05.2017). The AR also furnished copies of order of CIT(A) Valsad in the case of (1) Sahjanand Export CIT(A)/vls/236/2016-17 dtd. 24.08.2017, (2) Rushabh International No. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to reduce the ultimate profit. No stocks of diamonds were found at the time of search on Bhanwarlal Jain Group. The assessee has shown a very meagre gross profit (GP) @ 0.78% and not net profit (NP) at 0.02%. The ld. CIT(A) restricted the addition to the extent of 12.5% which is on the lower side. The ld. CIT-DR for the revenue prayed that disallowance made by the AO may be upheld or in alternative submitted that it may restricted at least @ 25%, keeping in view that the NP declared by the assessee is extremely on lower side. 13. On the validity of reopening, the ld.CIT-DR for the revenue submits that the AO received credible information about the accommodation entry provided by Bhanwarlal Jain Group. The assessee is one of the beneficiaries, who had availed accommodation entries from such hawala trader. At the time of recording reasons, the mere suspicious about the accommodation entry is sufficient as held by Hon'ble jurisdictional High Court in various cases. To support his submissions, the ld.CITDR relied upon the decision; Pushpak Bullion (P) Ltd Vs DCIT [2017] 85 taxmann.com 84(Gujarat High Court), Peass Industrial Engineers (P) Ltd Vs DCIT [2016] 73 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t prejudice and alternative submissions, the Ld. AR for the assessee submits that in alternative submission, the disallowance may be sustained on reasonable basis. To support his various submission, the ld.AR for the assessee is relied upon case laws: 1 M/s Andaman Timber industries VsCommissioner of Central Excise, CIVIL APPEAL NO. 4228 OF 2006 (Supreme Court) 2 CIT vs. Indrajit Singh Suri [2013] 33 taxmann.com 281 (Gujarat) 3 Albers Diamonds Pvt. Ltd. Vs ITO 1(1)(1), Surat I.T.A. No.776 1180/AHD/2017 4 The PCIT-5 vs. M/s. Shodiman Investments Pvt. Ltd. TTANO. 1297 OF 2015 (Bombay High Court) 5 ShilpiJewellers Pvt. Ltd. vs. Union of India Ors. WRIT PETITION NO. 3540 OF 2018 (Bombay High Court) 6 CIT in Vs. Mohmed Juned Dadani 355 ITR 172 (Gujarat) 7 Micro Inks Pvt. Ltd. Vs. ACIT [2017] 79 taxmann.com 153 (Gujarat) 8 Shakti Karnawat Vs. ITO - 2(3)(8), Surat ITA 1504/Ahd/2017 and 1381 /Ahd/2017 9 Asian Paints Ltd. Vs. DCIT, [2008] 296 ITR 90 (Bombay) 10 PCIT, Surat 1 Vs. Tejua Rohit kumar Kapadia [2018] 94 taxmann.com 325 (SC) 11 The PCIT-17 vs. M/s Mohommad Haji Adam Co. ITA NO. 1004 OF 2016(Bombay High Court) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of similar notice of reopening, which was also issued on the basis of information of investigation wing that they have searched a person who is engaged in providing accommodation entries, held that where after scrutiny assessment the assessing officer received information from the investigation wing that well known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified in re-opening assessment. Further similar view was taken by Hon ble Jurisdictional High Court in Pushpak Bullion (P) Ltd Vs DCIT (supra). Therefore, respectfully following the order of Hon ble High Court, we find that the assessing officer validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of investigation wing Mumbai. So far as other submissions of the ld AR for the assessee that there is no live link of the reasons recorded, we find that the Hon ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd clearly held that when assessing officer received information from the investigation wing that two well known entry operators of the country provided bogus en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, considering the fact that where Gross Profit shown by those assessee s are more than 5%. However, in the present case, the assessee has merely shown Gross Profit Rate only at 0.78% of turnover, accordingly, the ld. CIT(A) was of the view that disallowance of 12.5% of impugned purchases/bogus purchases would be reasonable to meet the end of justice. 21. We have seen that during the financial year under consideration the assessee has shown total turnover of Rs. 66,09,62,458/-. The assessee has shown Gross Profit @ .78% and net Profit @ 0.02% (page 11 of paper Book). The assessee while filing the return of income has declared taxable income of Rs.1,81,840/- only. We are conscious of the facts that dispute before us is only with regard of the disputed purchases of Rs, 4.34 Crore, which was shown to have purchased from the entity managed by Bhanwarlal Jain Group. During the search action on Bhanwarlal Jain no stock of goods/ material was found to the investigation party. Bhanwarlal Jain while filing return of income has offered commission income (entry provider). Before us, the ld CIT-DR for the revenue vehemently submitted that the ratio of decision of Hon ble Gujarat High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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