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TMI Blog2024 (7) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... re as under: "1. The Learned AO has erred in not appreciating the fact that the notice u/s 148 dated 28-03-2014 was issued without getting any approval u/s 151 and therefore, the same is bad in law and void. 2. The Learned AO has erred in not appreciating the fact that, the notice u/s 148 has not served / issued within time limit of 6 years and therefore, the proceeding is bad in law and void. 3. The Learned AO has erred in not appreciating the fact that the copy of the reason recorded is dated 01-06-2018 whereas, the 148 notices is dated 28.03.2018 and it is further said that there is no such copy of the approval u/s. 151 provided and therefore, the proceeding is bad in law and void. 4. The Learned AO has also erred in not appreciating the fact that the appellant's books are duly audited and no such Section 145 has been applied nor the books have been rejected and therefore, there is no question of making any addition. 5. The Learned AO has also erred in not appreciating the fact that the Assessing Officer has grossly erred in providing complete statement of Bhanwarlal Jain as well as the inquiry made with the disputed parties and no cross-examination has been allowed ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e names of their employees through which they provided accommodation entries for bogus purchases and bogus unsecured loans to various beneficiaries. In the case of assessee, the total purchases was Rs. 8,28,40,884/- i.e., (i) Meridian Jewellery Pvt. Ltd. Rs. 1,46,11,740/-; (ii) Pushpak Gems Rs. 27,14,724/- & (iii) Meridian Gems Rs. 6,55,14,420/- all from Bhanwarlal Jain group. The AO issued notice u/s 148 with prior approval from higher authorities. He had also handed over copy of the reasons for reopening to the assessee. The objection against re-assessment proceedings was disposed of by order dated 19.12.2018. As stated earlier, there was non-compliance to various notices issued by AO. In view of the above, show-cause notice was issued to the assessee on 09.12.2018 to explain the bogus purchase of Rs. 8,28,40,884/- and why it should not be added to total income. In absence of any compliance, the impugned purchase of Rs. 8,28,40,884/- was treated as bogus and added to the total income of the assessee. The AO has also initiated penalty proceedings u/s 271(1)(c) of the Act. 3. Aggrieved by this order of the AO, the assessee filed appeal before Ld.CIT(A). The Ld.CIT(A) issued three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and issued the notice u/s 148 of the Act after receiving sanction u/s 151 of the Act from the Competent Authority under the Act. The AO has also passed order disposing off objections against re-opening of assessment vide order dated 19.12.2018. 7. We have heard the rival submissions and perused the materials on record. We have also called for the original records from the AO and carefully gone through it. The reasons for reopening are at pages 5 to 7 of the paper book filed by appellant. The AO, Shri Anil V. Viramama, ITO-2(3)(8), Surat has signed it on 19.03.2018. It is noted that the "date of providing the reasons" for reopening to the assessee by AO was on 01.06.2018 as per page-53 of the paper book. The date of recording reasons was 19.03.2018. Pages 54 is continuation of the reasons recorded by the AO. Therefore, absence of date at page-53 of the paper book is not fatal because in the 2nd page, (i.e., page 7 of paper book) date has been duly written by the AO. The same is also clear from the original assessment record of AO i.e., the date was 19.03.2018. Even the reply u/s 7(1) of the Right to Information Act also mentioned about the same reasons which are at pages 5 to 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Officer Ward-2(3)(8), Surat 12 Whether the Additional Commissioner of Income Tax, Range-2(3), Surat is satisfied with the reasons recorded by the ITO,Ward-2(3)(8), Surat that it is a fit case for issue of notice u/s 148 of the I.T.Act, 1961 I have examined material on records in view of merits of the facts, I am satisfied with the reasons recorded by AO for issuance of notice u/s 148 of the Act. Date: Sd/-S.R.Meena Joint.Commissioner of Income Tax, Range-2(3), Surat 13 Whether the Pr. Commissioner of Income Tax is satisfied on the reasons recorded by the Assessing Office that it is a fit case for issue of notice. Yes, I am satisfied with the reasons recorded by the AO that it is a fit case for the issue of notice u/s 148 of the I.T.Act. Sd/- Anand Kumar (Anand Kumar) Pr.Commissioner of Income-tax-2, SURAT Annexure-B Reason for Reopening - where no regular assessment made 1 Name of the Assessee: : Sh. Rohit Lodha, Prop. Mother exports 315-New DTC, Hat Faliya, Haripura, Surat 2 PAN of the Assessee: : ADAPL2300H 3 Assessment Year: 2012-13 4 Details of the Assessing Officer having jurisdiction over the : Ward-2(3)(8), Surat Reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. 5 & 6. Findings of the AO & basis of forming reason to believe and details of escapement of income:- In this case, specific information was received from Investigation Wing, Mumbai which is the internal part of the Department that search operation was carried out in the case of Shri Bhanwarlal Jain Group on 03.10.2013. the key person of the group, Shri Bhanwarlal Jain in the statement recorded u/s 132(4) of the Act, explained the modus operandi of the group. Shri Bhanwarlal Jain, Key person of the group, has admitted, in his sworn statement recorded during the course of search operation that he and his group were engaged in fraudulent billing activities of bogus purchase and in giving accommodation entries to various parties. The entire bogus nature of the transaction has been admitted by Bhanwarlal Jain in his statement recorded under section 132(4) of the I.T. Act. In the statement, Shri Bhanwarlal Jain has also submitted list of 70 benami concerns of Bhanwarlal Jain and Family. According to the evidence gathered, it has been ascertained that, the assessee has taken accommodation entries to the tune of Rs. 4,10,30,197/- from M/s Merredian Jwellery Pvt. Ltd. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment on 19.03.2018, which is prior to the sanction u/s 151 of the Act dated 23.03.2018. Notice u/s 148 of the Act was issued on 27.03.2018. The last date for issue of notice for AY 2011-12 was 31.03.2018. Hence, the issue of notice was well within the time. The AO has also mentioned in his assessment order that notice u/s 148 with prior approval was issued on 27.03.2018. This issue was also agitated before the Ld.CIT(A) and the Ld.CIT(A) after detailed discussion has dismissed the grounds, which is at page-18 of his order. The same is reproduced for ready reference: "6.2.2 Ground No.2: Re-opening is bad in law: The appellant challenged the assumption of jurisdiction u/s 148 of the Act. Further, the appellant stated that the assessing office re opened the case solely on the basis of information received from the Investigation Wing without causing any independent enquiry by himself and hence he had no reason to believe himself that income chargeable to ta has escaped assessment. It has to be decided whether the notice issued u/s 148 of the Act was issued as per the section 148 of the Income tax act or not? The appellant filed his return of income for AY 2011-12 on 23.09.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (supra) and hence, we do not find any infirmity in the order of Ld.CIT(A). 7.2 Regarding the merits of the reasons for reopening, it may be stated that similar addition had come up for consideration before this Tribunal in the case of Sunilkumar Parasmai Jain in ITA Nos. 750 & 874/SRT/2023 for A.Y 2010- 11 dated 06.05.2024. In the said case, the grounds of appellant were dismissed by holding as under: "10.1 We have heard the submission of both parties, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We have also carefully deliberated on all the decisions relied upon by both the sides. We have also gone through the reasons recorded by the AO and having gone through the entire gamut of facts and circumstances, we are of considered opinion that not only there existed new information with the AO from the credible sources, but also that he has applied has mind and recorded the conclusion that the purchases claimed were non-genuine and therefore bogus, clearly meaning that what was disclosed was not true and false. The Hon'ble Supreme Court in the case of Phul Chand Bajrang Lal and another vs. ITO 203 ITR 456, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, not only there existed new information with the AO from the credible sources, but also he had applied his mind and recorded the conclusion that the purchases of Rs. 10,73,43,555/- claimed were non-genuine and therefore bogus, clearly meaning that what was disclosed was not true and false. The requirements of section 147 r.w.s. 148 have clearly been met; and the reopening was validly initiated. We also find that the assessee's appeal is squarely covered by the order of this Tribunal in the case of Pankaj K. Choudhary, in ITA No.1152/AHD/2017 for AY 2007-08 dated 27.09.2021, wherein the Tribunal held as follows: "17. We have considered the submissions of the parties and have gone through the order of the lower authorities. We have also deliberated on each and every case laws relied by both the parties. We have also examined the financial statement of all the assessee(s) consisting of computation of income and audit report. We have also gone through the documentary evidences furnished in all cases. Ground No.1 in assessee's appeal relates to the validity of reopening. The ld AR for the assessee vehemently argued that the AO reopened the case of the assessee on the basis of thir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified. Hence, the ground No. 1 in assessee's appeal is dismissed." 10.4 The facts of the present case are similar to the facts of the above case. There is no reason as to why the decision of the above case should not be applicable to the case of the appellant. In above case, the Co-ordinate Bench of this Tribunal relied upon the decisions of Hon'ble jurisdictional High Court in the case of Peass Industrial Engineers (P) Ltd vs. DCIT and Pushpak Bullion (P) Ltd. vs. DCIT (supra). Therefore, we dismiss the ground Nos.1 & 2 raised by the assessee in ITA No.874/SRT/2023 (assessee`s appeal)." The facts of the present case are similar to the facts of the above case(supra). The Tribunal dismissed the grounds of assessee by relying upon the decisions of Hon'ble jurisdictional High Court in cases of Peass Industrial Engineers (P) Ltd. vs. DCIT (supra) and Pushpak Bullion (P) Ltd. vs. DCIT (supra) Hence, following the reasons given above and the decision cited supra, the grounds at Sl. No. 1 to 3 are dismissed. 8. Regarding merits of the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal sustained addition @ 6% of the bogus purchases. The facts of the present appeal are similar and hence, it is squarely covered by the order of the Tribunal in the case of Pankaj K. Choudhary (supra). The relevant part of the order is reproduced hereunder for ready reference and appreciation: "19. Ground No. 2 in assessee's appeal and the grounds of appeal raised by the revenue are interconnected, which relates to restricting the disallowance of bogus purchases to the extent of 12.5%. The AO made of 100% of purchases shown from the hawala dealers/ entry provider namely Bhanwarlal Jain. We find that the AO while making additions of 100%, of disputed purchases solely relied on the report of the investigation wing Mumbai. No independent investigation was carried by the AO. The AO has not disputed the sale of the assessee. The AO made no comment on the evidences furnished by the assessee. We further find that ld CIT(A), while considering the submissions of the assessee accepted the lapses on the part of the AO and noted that no sale is possible in absence of purchases. The Books of the assessee was not rejected by the AO. The ld CIT(A) on further examination of the facts and variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er). Before us, the ld CIT-DR for the revenue vehemently submitted that the ratio of decision of Hon'ble Gujarat High Court in Mayank Diamond Private Limited (supra) is directly applicable on the facts of the present case. We find that in Mayank Diamonds the Hon'ble High Court restricted the additions to 5% of GP. We have seen that in Mayank Diamonds P Ltd (supra), the assessee had declared GP @ 1.03% on turnover of Rs. 1.86 Crore. The disputed transaction in the said case was Rs. 1.68 Crore. However, in the present case the assessee has declared the GP @ 0.78%. It is settled law that under Income-tax, the tax authorities are not entitled to tax the entire transaction, but only the income component of the disputed transaction, to prevent the possibility of revenue leakage. Therefore, considering overall facts and circumstances of the present case, we are of the view that disallowances @ 6% of impugned purchases / disputed purchases would be sufficient to meet the possibility of revenue leakage. In the result the ground No. 2 of appeal raised by the assessee is partly allowed and the grounds of appeal raised by revenue are dismissed. 22. In the result the appeal of revenue is dism ..... X X X X Extracts X X X X X X X X Extracts X X X X
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