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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
O R D E R PER KUL BHARAT, JM:
This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals)-18, New Delhi, dated 31.08.2020, pertaining to the assessment year 2007-08. The assessee has raised following grounds of appeal:
Dina Nath Vs. ITO “1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eyes of law and on facts.
2. On the facts and circumstances of the case, learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the initiation of the reassessment proceedings and the reassessment order are bad, both on the facts and in law and liable to be quashed, as the statutory conditions and procedure prescribed under the statute have not been complied with.
3. On the facts and circumstances of the case, learned CIT(A) has erred, both on facts and in law in ignoring the contention of the assessee that the reopening of the assessment proceedings of AY 2007-08 has been made on the basis of reopening of assessment proceedings of the AY 2006-07, which has been quashed by Hon’ble ITAT. 4. (i) On the facts and circumstances of the case, learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the AO are bad in the eyes of law, as the reasons recorded for the issue of notice under section 148 are bad in the eyes of law and are contrary to the facts. (ii) On the facts and circumstances of the case, learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the reassessment order passed by the AO is bad and liable to be quashed as the same has been reopened on the basis of the reasons which are vague and have been recorded without application of mind on the part of the AO.
5. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of an amount of Rs. 7,85,893/- on account of purchases made by the assessee treating the same as bogus invoking section 69C of the Income Tax Act. (ii) That the abovesaid addition has been confirmed at the arbitrary rate of 25% of the total purchases without there being any basis of the same. 6. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in confirming that the firms from which purchases had been made are not engaged in actual business, ignoring the fact that during the course of search on these firms substantial inventory in respect of the material being purchased by the assessee was found, which confirms the fact that these firms were doing actual business. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in rejecting that the inference drawn by the AO merely on the basis of a statement that these firms are not in actual business is baseless and contrary to the facts on record.
7. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee in ignoring the fact that the quantity purchased and sold being completely tallying, the allegation that the assessee has not made purchases cannot be sustained.
On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in confirming the addition on account of bogus purchases, despite their being adequate material and evidences brought on record by the assessee before the AO to show that the purchases and sales were made in the regular course of business.
On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the addition so made on the basis of material collected at the back of the assessee, is bad in law and liable to be deleted.
On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the addition made by the AO is untenable in the eyes of law, having been made without providing opportunity to cross examine the person on the basis of whose statement the allegations have been made against the assessee and without following the principles of natural justice.
The appellant craves the leave to add, amend or alter any of the grounds of appeal.”
Facts, in brief, are that in this case return of income for the year under appeal was filed on 17.11.2007 declaring income of Rs. 1,45,418/-. The same was processed u/s 143(1) of the Income-tax Act, 1961, hereinafter referred to as the “Act”. Thereafter the Assessing Officer reopened the assessment on the basis of certain information regarding escapement of income amounting to Rs. 31,43,572/-.
Accordingly, a notice u/s 148 of the Act was issued and served on the assessee. In response to the same authorized representative of the assessee attended the proceedings. The Assessing Officer thereafter proceeded to make assessment u/s 143(3) read with Section 147 of the Act. Thereby he made addition of Rs. 31,43,572/- on account of bogus purchases and assessed the income at Rs. 32,88,990/- against the returned income of Rs. 1,45,418/-. Aggrieved against this Dina Nath Vs. ITO the assessee preferred appeal before the learned CIT(Appeals), who, after considering the submissions, partly allowed the appeal. Thereby the learned CIT(Appeals) restricted the addition to 25% of total bogus purchases amounting to Rs. 7,85,893/-. Aggrieved against this the assessee is in the present appeal.
3. At the outset learned counsel for the assessee reiterated the submissions as made in the written synopsis. For the sake of clarity the submissions of the assessee are reproduced herein below:
“1. This is an appeal filed by assessee against the order passed by the learned CIT(A) whereby he has upheld the action of the Assessing Officer in reopening the assessment under section 148 of the Act and on merit has confirmed of Rs. 7,85,893/- at the rate of 25% of the total addition of Rs. 31,43,572/- made by the AO on account of purchases made by assessee from M/s Shree Bankey Bihari Trading Co. and M/s Shyam Trading Company 2. At the very outset, it is submitted that the case of Assessee Company is squarely covered by the order of this Hon’ble Tribunal in assessee’s own case for A.Y. 2006-07 in dated 2.12.2015 & AY 2008-09 in ITA No. 3819/Del/2019 Dated. 20.01.2021 whereby the Hon’ble Tribunal has quashed the reassessment proceedings initiated by the AO and has also deleted the impugned addition made by the AO on the merits of the case. The findings of the Hon’ble Tribunal In the case of A.Y. 2006-07 with regard to the reopening of the case are at Page 5 - 8 in Para 8-9 (enclosed at PB 186-190) and with regard to the merits of the case are at Page 10 in Para 13 (enclosed at PB 183-192). In the case of AY 2008-09 with regard to the reopening as well as on Merits Page 10 Para 12 to Page 14 Para 14 (enclosed at PB Pg.217- 221)
As regards the merits of the case, it is submitted that the AO has accepted the sales of assessee and as such, there was no reason for holding that purchases are bogus.
4. It is submitted that similar cases have also been heard before this Hon’ble Tribunal involving verbatim reasons, similar arguments and similar findings. These cases are also being relied upon, which are as under:
Unique Metal Industries v. ITO in dated 28.10.2015 M/s Radhay Shyam and Co. vs ITO in ITA No. 1429/Del/2015 dated 30.11.2015 before SMC-1 Bench. M/s Kishan Lal Gambhir & Sons v. ITO in ITA No.1516/Del/2015 dated 02.12.2015 before ‘F’ Bench M/s Kakkar Bartan Store v. ITO in ITA No. 1380/Del/2015 dated 23.03.2016 M/s Krishan Lal & Sons v. ITO in ITA No. 1379/Del/2015 dated 23.03.2016 M/s Laxmi Dhatu Bhandar v. ITO in ITA No. 1369/Del/2015 dated 23.03.2016 M/s Karshni Metal Store v. ITO in ITA No. 1365/Del/2015 dated 23.03.2016 M/s Kashmir Metals v. ITO in ITA No. 1366/Del/2015 dated 23.03.2016 M/s Bhardwaj Metal (India) v. ITO in ITA No. 1370/Del/2015 dated 23.03.2016 M/s Nayar Metal Co. v. ITO in ITA No. 1374/Del/2015 dated 31/03/2016 Neeraj Rathore Prop. M/s Anjli Metal Overseas and Rajiv Jain Prop. M/s Rajeev Metal Trading Co. v. ITO in ITA No. 059/Del/2017 And ITA No:- 7061/Del/2017 dated 27.09.2018 Jyoti Engineering Works, Sadhna Sharma, Ajay Sharma v. ITO in ITA No. 2719/Del/2018, ITA No. 2720/Del/2018, ITA No. 2721/Del/2018, ITA No. 2722/Del/2018 And ITA No. 2723/Del/2018 dated 26.09.2018
Rajender Prasad Prop. M/s Priya Enterprises v. ITO in dated 07.09.2018 M/s Sapra Metal Co. v. ITO in ITA No. 2910/Del/2016 dated 09.3.2017
5. Therefore, in view of the above, reassessment order passed by the AO is liable to be quashed and the addition made by the Ld. AO and confirmed by the Ld. CIT(A) is liable to be deleted.”
On the contrary, learned DR opposed the submissions and supported the orders of the authorities below.
I have heard rival submissions, perused the material on record and gone through the orders of the authorities below. I find that under identical facts the Division Bench of this Tribunal, in for assessment year 2006-07 vide order dated 02.12.2015, had deleted the addition and allowed the appeal of the assessee. There is no change in facts and circumstances of the case.
The revenue has not brought to my notice any other binding precedence. It is also seen that coordinate Bench of this Tribunal in for the subsequent assessment year 2008-09, vide order dated 20.01.2021, allowed the appeal of the assessee by holding as under:
“13. Since the facts of this case are identical to the facts of the case decided by the Tribunal in assessee’s own case for Assessment Year 2006- 07, therefore, respectfully following the decision of Tribunal in assessee’s own case for Assessment Year 2006-07, I quash the re-assessment proceedings and direct the Assessing Officer to delete the addition.”
Dina Nath Vs. ITO 6. The Revenue has not placed any material to take a contrary view as taken by the coordinate Bench. Therefore, respectfully following the binding precedence, I hereby direct the Assessing Officer to delete the addition. Grounds raised in the appeal are allowed.
In the result, assessee’s appeal is allowed.
Order pronounced in open court on 17th May 2022.