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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
PER OM PRAKASH KANT, AM These appeals by the assessee are arising, consequent to the order dated 26/07/2021 passed by the Tribunal in Miscellaneous
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 2 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
Application Nos. 42 to 44/Mum/2021 for assessment year 2008 42 to 44/Mum/2021 for assessment year 2008-09 42 to 44/Mum/2021 for assessment year 2008 to 2010-11 respectively respectively, wherein the captioned appeals have , wherein the captioned appeals have been recalled for the limited purpose of adjudication of grounds recalled for the limited purpose of adjudication of grounds recalled for the limited purpose of adjudication of grounds challenging validity of jurisdiction for assessment i.e challenging validity of jurisdiction for assessment i.e challenging validity of jurisdiction for assessment i.e. ground No. 1 to 4 of respective appeals (wrongly mentioned at S. No. 8 to 11 in to 4 of respective appeals (wrongly mentioned at S. No. 8 to 11 in to 4 of respective appeals (wrongly mentioned at S. No. 8 to 11 in the grounds of appeal raised) the grounds of appeal raised).
The identical groun The identical grounds have been raised in all the three ds have been raised in all the three captioned appeals. The captioned appeals. Therefore, for brevity, relevant grounds relevant grounds for AY 2008-09 are only reproduced as under: reproduced as under:
On the facts and in the circumstances of the case, the l On the facts and in the circumstances of the case, the learned On the facts and in the circumstances of the case, the l cit (a) erred in rejecti cit (a) erred in rejecting the contention of the appellant that appellant that A.O. has fail A.O. has failed to assume a valid and legal jurisdiction to issue d to assume a valid and legal jurisdiction to issue notice under section 147 of the it. Act. notice under section 147 of the it. Act. 2. On the facts and the circumstances of the case whether the On the facts and the circumstances of the case whether the Ld. On the facts and the circumstances of the case whether the CIT (A) was correct in holding that return of income on which CIT (A) was correct in holding that return of income on which CIT (A) was correct in holding that return of income on which assessment was made was a valid return assessment was made was a valid return. 3. 3. On facts and circumstances of the case Whether 3. On facts and circumstances of the case Whether learned 3. On facts and circumstances of the case Whether CIT(A) was correct in holding that assessment CIT(A) was correct in holding that assessment order was valid order was valid in spite of the fact that no noti in spite of the fact that no notice under section 143(3) of the act section 143(3) of the act was issued after filing of return. was issued after filing of return.
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 3 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
On the facts and the circumstances of the case, whether the On the facts and the circumstances of the case, whether the On the facts and the circumstances of the case, whether the Learned CIT(A) was holding that assessment order passed by Learned CIT(A) was holding that assessment order passed by Learned CIT(A) was holding that assessment order passed by A.O. was a legal assessment order in spite of violation of natural A.O. was a legal assessment order in spite of violation of natural A.O. was a legal assessment order in spite of violation of natural justice. 5. On the facts and circumstances of the case whether the Learned On the facts and circumstances of the case whether the Learned On the facts and circumstances of the case whether the Learned nvoking of section 69 of the I.T. ACT. CIT (A) in co CIT (A) in confirming the invoking of section 69 of the I. 6. On the facts and circumstances of the case whether the Learned On the facts and circumstances of the case whether the Learned On the facts and circumstances of the case whether the Learned CIT (A) in confirming the addition of CIT (A) in confirming the addition of ₹11,60,990/ to th ₹11,60,990/ to the total income of the appellant and ignoring all the documentary income of the appellant and ignoring all the documentary income of the appellant and ignoring all the documentary supporting produced by the appellant. supporting produced by the appellant. 7. The appellant craves leave to add, delete, alter, or modify any of The appellant craves leave to add, delete, alter, or modify any of The appellant craves leave to add, delete, alter, or modify any of the aforesaid grounds of appeal at or before the hearing of the the aforesaid grounds of appeal at or before the hearing of the the aforesaid grounds of appeal at or before the hearing of the appeal. appeal.
As far as grounds of the assessee challenging the addition on rounds of the assessee challenging the addition on rounds of the assessee challenging the addition on
merit, same have been , same have been allowed by the Tribunal by the order dated by the order dated
20/12/2019 observing as under: 20/12/2019 observing as under:
“2. Brief facts of the case are the assessee is engaged in the Brief facts of the case are the assessee is engaged in the Brief facts of the case are the assessee is engaged in the business of metal and alloys. Disallowance of business of metal and alloys. Disallowance of bogus purchases was bogus purchases was done on the basis of inquiry u/s. 131 of the Act and conduct by the done on the basis of inquiry u/s. 131 of the Act and conduct by the done on the basis of inquiry u/s. 131 of the Act and conduct by the DDIT (Inv) on the basis of information received from the sales tax DDIT (Inv) on the basis of information received from the sales tax DDIT (Inv) on the basis of information received from the sales tax department regarding the purchases made by the firm from the department regarding the purchases made by the firm from the department regarding the purchases made by the firm from the list of suspicious dealers who h list of suspicious dealers who have issued false bills without actual without actual delivery of goods. In the assessment order the Assessing Officer delivery of goods. In the assessment order the Assessing Officer delivery of goods. In the assessment order the Assessing Officer observed that during enquiry, statement of proprietor of the firm observed that during enquiry, statement of proprietor of the firm observed that during enquiry, statement of proprietor of the firm was recorded on oath. In the statement reproduced in the was recorded on oath. In the statement reproduced in the was recorded on oath. In the statement reproduced in the
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 4 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
assessment order the said propriet assessment order the said proprietor has duly mentioned that he or has duly mentioned that he was a small time trader. That all supporting documents available was a small time trader. That all supporting documents available was a small time trader. That all supporting documents available with it have been furnished to the Assessing Officer. It was with it have been furnished to the Assessing Officer. It was with it have been furnished to the Assessing Officer. It was submitted in the statement that he had purchased any material submitted in the statement that he had purchased any material submitted in the statement that he had purchased any material from the trader neither in cash nor ob from the trader neither in cash nor obtained any bills from any tained any bills from any hawala dealers. It was also submitted that the assessee being a hawala dealers. It was also submitted that the assessee being a hawala dealers. It was also submitted that the assessee being a small trader it becomes cumbersome to maintain the purchase small trader it becomes cumbersome to maintain the purchase small trader it becomes cumbersome to maintain the purchase order, gate pass, lorry receipt, octroi receipt, delivery challan etc. order, gate pass, lorry receipt, octroi receipt, delivery challan etc. order, gate pass, lorry receipt, octroi receipt, delivery challan etc. It was further submitted that durin It was further submitted that during the enquiry itself that the g the enquiry itself that the Revenue authority has not find any cash transaction documents or Revenue authority has not find any cash transaction documents or Revenue authority has not find any cash transaction documents or any other illegal documents at the site of the assessee. Despite any other illegal documents at the site of the assessee. Despite any other illegal documents at the site of the assessee. Despite noting the aforesaid submissions of the assessee on enquiry u/s. noting the aforesaid submissions of the assessee on enquiry u/s. noting the aforesaid submissions of the assessee on enquiry u/s. 131 of the Act and statement in 131 of the Act and statement in the course of survey u/s. 133A, the the course of survey u/s. 133A, the Assessing Officer proceeded to hold that the purchases to be bogus. Assessing Officer proceeded to hold that the purchases to be bogus. Assessing Officer proceeded to hold that the purchases to be bogus. In this regard it is noted that the Assessing Officer has not even In this regard it is noted that the Assessing Officer has not even In this regard it is noted that the Assessing Officer has not even bothered to issue notice to the assessee who bothered to issue notice to the assessee who have said have said to have given bogus bills. Th given bogus bills. There is no other corroborative material ere is no other corroborative material found in survey of bogus purchase. Thereafter on the theory of peak survey of bogus purchase. Thereafter on the theory of peak survey of bogus purchase. Thereafter on the theory of peak credit the disallowances were done. Consequent to learned CIT(A) credit the disallowances were done. Consequent to learned CIT(A) credit the disallowances were done. Consequent to learned CIT(A) sustaining the addition, assessee is in appeal before the ITAT. the addition, assessee is in appeal before the ITAT. the addition, assessee is in appeal before the ITAT.
Upon hearing both Upon hearing both the counsel and perusing the records, the counsel and perusing the records, we find that the assessee has submitted documentary details in the we find that the assessee has submitted documentary details in the we find that the assessee has submitted documentary details in the survey and enquiry itself. The assessee has categorically stated in survey and enquiry itself. The assessee has categorically stated in survey and enquiry itself. The assessee has categorically stated in the survey itself that he was not obtaining bogus hawals bills. The the survey itself that he was not obtaining bogus hawals bills. The the survey itself that he was not obtaining bogus hawals bills. The assessee reiterated that no evidence of cash purchase or any other rated that no evidence of cash purchase or any other rated that no evidence of cash purchase or any other incriminating documents have been found at the time of survey. incriminating documents have been found at the time of survey. incriminating documents have been found at the time of survey. Despite the above even without making any enquiry from the Despite the above even without making any enquiry from the Despite the above even without making any enquiry from the concerned party the Assessing Officer has treated purchase to be concerned party the Assessing Officer has treated purchase to be concerned party the Assessing Officer has treated purchase to be
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 5 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
bogus and made d bogus and made disallowances on the theory of peak credit. In our isallowances on the theory of peak credit. In our considered opinion it is settled law that statements obtained considered opinion it is settled law that statements obtained considered opinion it is settled law that statements obtained during the survey, are not conclusively proved for any addition. As during the survey, are not conclusively proved for any addition. As during the survey, are not conclusively proved for any addition. As a matter of fact, in this case even survey did not a matter of fact, in this case even survey did not reveal anything reveal anything against the assessee. The Assessing Officer has not even bothered he assessee. The Assessing Officer has not even bothered he assessee. The Assessing Officer has not even bothered to issue notice to alleged bogus suppliers. All the purchases are to issue notice to alleged bogus suppliers. All the purchases are to issue notice to alleged bogus suppliers. All the purchases are through banking channel. Sales have not at all being doubted. In through banking channel. Sales have not at all being doubted. In through banking channel. Sales have not at all being doubted. In this view of the matter in our considered opinion addition is totall this view of the matter in our considered opinion addition is totall this view of the matter in our considered opinion addition is totally based upon surmises and conjecture, not sustainable in law. based upon surmises and conjecture, not sustainable in law. based upon surmises and conjecture, not sustainable in law. Accordingly, we set aside the orders of the authorities below and Accordingly, we set aside the orders of the authorities below and Accordingly, we set aside the orders of the authorities below and delete the additions. delete the additions.
The assessee has also challenged the validity of jurisdiction 4. The assessee has also challenged the validity of jurisdiction The assessee has also challenged the validity of jurisdiction of the assessment. Since, we have already of the assessment. Since, we have already deleted the additions on deleted the additions on merit, in our considered opinion consideration of validity of merit, in our considered opinion consideration of validity of merit, in our considered opinion consideration of validity of jurisdiction of the Assessing Officer is only of academic interest. jurisdiction of the Assessing Officer is only of academic interest. jurisdiction of the Assessing Officer is only of academic interest. Hence, we are not engaging the same. Hence, we are not engaging the same.
In the result, all these appeals of the assessee stand partly In the result, all these appeals of the assessee stand partl In the result, all these appeals of the assessee stand partl allowed.”
We have heard rival submission of the parties rd rival submission of the parties rd rival submission of the parties on the issue in
dispute and perused the relevant material on record including the dispute and perused the relevant material on record including the dispute and perused the relevant material on record including the paperbook containing pages 1 to 131 filed by the paperbook containing pages 1 to 131 filed by the paperbook containing pages 1 to 131 filed by the Ld. counsel of
assessee.
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 6 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
In ground No. 1 ( In ground No. 1 (wrongly mentioned as ground No. 8), the as ground No. 8), the assessee has challenged validity of reassessment assessee has challenged validity of reassessment completed completed under section 147 of the Act Act. The assessee has assailed the validity on two iled the validity on two issues. The first issue is that there was no information from credible . The first issue is that there was no information from credible . The first issue is that there was no information from credible source and no enquiry was carried out by the source and no enquiry was carried out by the Assessing Officer Assessing Officer before recording reasons to believe and therefore there was no before recording reasons to believe and therefore there was no before recording reasons to believe and therefore there was no application of the mind by the application of the mind by the Assessing Officer. In the second i the second issue, the Ld. counsel has submitted that reasons were recorded has submitted that reasons were recorded has submitted that reasons were recorded subsequent to the issue of notice under section 148 of the subsequent to the issue of notice under section 148 of the subsequent to the issue of notice under section 148 of the Act.
While making argument While making argument in support of the first issue, t in support of the first issue, the Ld. counsel referred to “reasons to believe” recorded by the referred to “reasons to believe” recorded by the referred to “reasons to believe” recorded by the Assessing Officer, which are available on page 25 to 26 of the paperbook. For , which are available on page 25 to 26 of the paperbook. For , which are available on page 25 to 26 of the paperbook. For ready reference, said reason to believe that income ready reference, said reason to believe that income ready reference, said reason to believe that income escaped Assessment, are reproduced as under: are reproduced as under:
“M/s Shreenathji Metal & Alloys (Prop. Shri Khangaram Dewasi) M/s Shreenathji Metal & Alloys (Prop. Shri Khangaram Dewasi) M/s Shreenathji Metal & Alloys (Prop. Shri Khangaram Dewasi) A.Y.-2009-10 Reasons for reopening of assessment u/s 147 of the IT Act, 1961 reopening of assessment u/s 147 of the IT Act, 1961 reopening of assessment u/s 147 of the IT Act, 1961
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 7 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
The case of the assessee has been centralized to this circle vide The case of the assessee has been centralized to this circle vide The case of the assessee has been centralized to this circle vide order u/s. 127 of the Act dated 26.04.2013 issued by the CIT order u/s. 127 of the Act dated 26.04.2013 issued by the CIT order u/s. 127 of the Act dated 26.04.2013 issued by the CIT-21, Mumbai. Thereafter, the assessee submitted the audit report in Mumbai. Thereafter, the assessee submitted the audit report in Mumbai. Thereafter, the assessee submitted the audit report in this charge on 12/03/2014. Assessee is engaged in the business e on 12/03/2014. Assessee is engaged in the business e on 12/03/2014. Assessee is engaged in the business of trading in Iron and Steel. of trading in Iron and Steel.
A enquiry report has been received from the office of 2. A enquiry report has been received from the office of 2. A enquiry report has been received from the office of DGIT(Inv), Unit DGIT(Inv), Unit-V(1) Mumbai, in respect of the assessee that it V(1) Mumbai, in respect of the assessee that it has been engaged in bogus purchase activity i.e. has been engaged in bogus purchase activity i.e. taking taking accommodation entries from bogus companies/ concerns. The accommodation entries from bogus companies/ concerns. The accommodation entries from bogus companies/ concerns. The said assessee is a beneficiary of this accomodation transaction said assessee is a beneficiary of this accomodation transaction said assessee is a beneficiary of this accomodation transaction as reported by DGIT(Inv) and has obtained accommodation as reported by DGIT(Inv) and has obtained accommodation as reported by DGIT(Inv) and has obtained accommodation bills for various F.Ys. as under: bills for various F.Ys. as under: Sr. No. Name of the concern Name of the concern F.Y. Amount 1. Aryen Sales Corporation Aryen Sales Corporation 2007-08 10,25,213/- 2. Suryadev Metal India Suryadev Metal India 2007-08 13,03,536/- 3. Om Corporation Om Corporation 2007-08 1,54,000/- Total 24,82,749/- 1. River Gold Elevators River Gold Elevators 2008-09 3,02,162/- 2. Paras Steel India Paras Steel India 2008-09 2,34,300/- 3. Anand Deep Metal Anand Deep Metal 2008-09 21,25,432/- 4. R.J. Metal Industries & M/s Rajlaxmi R.J. Metal Industries & M/s Rajlaxmi 2008-09 9,12,750/- Corporation & Reliable Metal Works Corporation & Reliable Metal Works 5. Aaren Sales Corporation Aaren Sales Corporation 2008-09 4,51,140/- 6. Manglik Metal (India) Manglik Metal (India) 2008-09 50,002/- 7. Suryadev Metal (India) Suryadev Metal (India) 2008-09 97,500/- 8. N B Enterprises Enterprises 2008-09 10,47,438/- 9. Naman Enterprises Naman Enterprises 2008-09 9,44,213/- 10. Om Corporation Om Corporation 2008-09 3,25,024/- 11. Manav Impex Manav Impex 2008-09 10,17,193/- 12. Pradeep Metal Syndicate Pradeep Metal Syndicate 2008-09 2,49,670/- 13. Navratan Impex Navratan Impex 2008-09 5,46,104/- 14. Ramani Metal Corporation Ramani Metal Corporation 2008-09 9,17,464/- 15. Rishab Metal (India) Rishab Metal (India) 2008-09 85,000/- 16. Shiv Sagar Steel (India) Shiv Sagar Steel (India) 2008-09 8,54,409/- 17. Antriksh Metals Antriksh Metals 2008-09 68,690/- 18. Kavita Sales & Jyoti Enterprises Kavita Sales & Jyoti Enterprises 2008-09 5,03,634/-
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 8 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
Total 1,07,32,125/- 1. Anand Deep Metal Anand Deep Metal 2009-10 10,97,899/- 2. Valianat Steel Engineering Co. Valianat Steel Engineering Co. 2009-10 11,64,189/- 3. Ramani Metal Corporation Ramani Metal Corporation 2009-10 31,47,840/- 4. Aryen Sales Corporation Aryen Sales Corporation 2009-10 31,47,840/- 5. Krishana Steel Industries Krishana Steel Industries 2009-10 2,94,371/- Total 57,57,264/- Shiv Sagar Steel (India) Shiv Sagar Steel (India) 2010-11 3,69,895/- Asian Metal Industries Asian Metal Industries 2010-11 5,86,137/- Rainbow Steel Impex Rainbow Steel Impex 2010-11 7,60,419/- Deep Metal & Tube Deep Metal & Tube 2010-11 7,79,785/- Prime Steel Impex Prime Steel Impex 2010-11 6,89,648/- Total 31,85,884/- Shiv Sagar Steel (India) Shiv Sagar Steel (India) 2011-12 2,14,860/- Asian Metal Industries Industries 2011-12 6,52,692/- Total 8,67,552/-
As per information tabulated above, the above named assessee As per information tabulated above, the above named assessee As per information tabulated above, the above named assessee has taken bogus has taken bogus A.Y.2009-10. In the enquiry report, it is stated 10. In the enquiry report, it is stated that the assessee had failed to produce that the assessee had failed to produce purchase bill of Rs. purchase bill of Rs. 1,07,32,125/- from various parties during F.Y.2008 from various parties during F.Y.2008-09 relevant 09 relevant to the purchase party as well as broker and delivery challan for to the purchase party as well as broker and delivery challan for to the purchase party as well as broker and delivery challan for the purchase made from the above parties, it is emerged that the purchase made from the above parties, it is emerged that the purchase made from the above parties, it is emerged that the purchase are not genuine. The actual purchase must have the purchase are not genuine. The actual purchase must have the purchase are not genuine. The actual purchase must have been done from the un been done from the undisclosed parties in the market in cash disclosed parties in the market in cash and the total amount in each year represents the undisclosed and the total amount in each year represents the undisclosed and the total amount in each year represents the undisclosed cash/ income in the hands of the assessee. cash/ income in the hands of the assessee.
In view of this new piece of information on bogus purchase of 4. In view of this new piece of information on bogus purchase of 4. In view of this new piece of information on bogus purchase of Rs.1,07,32,125/ for F.Y.2008 Rs.1,07,32,125/ for F.Y.2008-09 relevant to A.Y.2009- -10, it could be easily deduced that income of Rs. 1,07,32,125/ could be easily deduced that income of Rs. 1,07,32,125/ could be easily deduced that income of Rs. 1,07,32,125/- assessable to tax has escaped assessment. assessable to tax has escaped assessment.
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 9 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
Therefore, I have reason to believe that in the case of assesee, 5. Therefore, I have reason to believe that in the case of assesee, 5. Therefore, I have reason to believe that in the case of assesee, income of Rs. 1,07,32,125/ income of Rs. 1,07,32,125/- has escaped assessment within the has escaped assessment within the meaning of se meaning of section u/s147 of the IT Act, 1961. The case is ction u/s147 of the IT Act, 1961. The case is therefore required to be reopened u/s. 147 and notice u/s148 of therefore required to be reopened u/s. 147 and notice u/s148 of therefore required to be reopened u/s. 147 and notice u/s148 of the IT Act may be issued accordingly. the IT Act may be issued accordingly.” 7. The Ld. counsel Ld. counsel of the assessee submitted that presumably the of the assessee submitted that presumably the source of information for the source of information for the Assessing Officer is a list of suspicious is a list of suspicious dealer published on the website of dealer published on the website of Sales-tax tax Department of Government of Maharashtra. of Maharashtra. According to him the Assessing Officer Assessing Officer has formed belief merely on the basis of the list displayed by the has formed belief merely on the basis of the list displayed by the has formed belief merely on the basis of the list displayed by the Sales-tax Authorities Authorities on their website and the Assessing Officer Assessing Officer has not applied his mind on the said information and did not gather any not applied his mind on the said information and did not gather any not applied his mind on the said information and did not gather any other information or evidence to support the formation of his belief. other information or evidence to support the formation of his belief. other information or evidence to support the formation of his belief. According to the Ld. counsel Ld. counsel of the assessee, the Assessing Officer Assessing Officer did not make any further enquiry for recording reasons to believe any further enquiry for recording reasons to believe any further enquiry for recording reasons to believe that income escaped assessment. The that income escaped assessment. The Ld. counsel Ld. counsel relied on the decision of the Hon’ble Delhi High Court in the case of decision of the Hon’ble Delhi High Court in the case of decision of the Hon’ble Delhi High Court in the case of Signature Hotels Private Limited vs Private Limited vs. ITO 338 ITR 51 (Delhi Delhi). According to
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 10 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
the Ld. counsel the Hon’ble Delhi High Court in the said case the Hon’ble Delhi High Court in the said case the Hon’ble Delhi High Court in the said case quashed the reassessment proceeding in view of vague information quashed the reassessment proceeding in view of vague information quashed the reassessment proceeding in view of vague information received from the ed from the Director of Income-tax (Investigation Investigation) and reopening of the assessment reopening of the assessment is in mechanical manner. mechanical manner. But we find that in the case of Signature Hotels Private Limited Signature Hotels Private Limited Signature Hotels Private Limited (supra), one of the main reason for quashing the reassessment by the Hon’ble of the main reason for quashing the reassessment by the Hon’ble of the main reason for quashing the reassessment by the Hon’ble High Court, is not referring the relevant material in the reasons not referring the relevant material in the reasons not referring the relevant material in the reasons recorded. The only material which was referred by the recorded. The only material which was referred by the recorded. The only material which was referred by the Assessing Officer was an annexure. was an annexure. The relevant finding of the Hon’ble Delhi The relevant finding of the Hon’ble Delhi High Court is reproduced as under: High Court is reproduced as under:
“17. In the counter affidavit it is stated that M/s Swetu Stone Pvt. Ltd. 17. In the counter affidavit it is stated that M/s Swetu Stone Pvt. Ltd. 17. In the counter affidavit it is stated that M/s Swetu Stone Pvt. Ltd. had applied for allotment of shares worth Rs.5 lacs and the same were had applied for allotment of shares worth Rs.5 lacs and the same were had applied for allotment of shares worth Rs.5 lacs and the same were allotted by the p allotted by the petitioner. It is further stated that statements of Mahesh etitioner. It is further stated that statements of Mahesh Garg and Shubhash Gupta were recorded by the Director of Income Garg and Shubhash Gupta were recorded by the Director of Income Garg and Shubhash Gupta were recorded by the Director of Income-Tax (Investigation) and on the basis of the statements they have come to the (Investigation) and on the basis of the statements they have come to the (Investigation) and on the basis of the statements they have come to the conclusion that the said persons were entry operators. Co conclusion that the said persons were entry operators. Co conclusion that the said persons were entry operators. Copy of the statements of Mahesh Garg and Shubhash Gupta have not been placed statements of Mahesh Garg and Shubhash Gupta have not been placed statements of Mahesh Garg and Shubhash Gupta have not been placed on record by the respondent. The petitioner, has, however, enclosed copy on record by the respondent. The petitioner, has, however, enclosed copy on record by the respondent. The petitioner, has, however, enclosed copy of statements of Mahesh Garg and Shubhash Gupta recorded on of statements of Mahesh Garg and Shubhash Gupta recorded on of statements of Mahesh Garg and Shubhash Gupta recorded on different dates. The said persons W.P. (C) NO. different dates. The said persons W.P. (C) NO. 8067/2010 Page 14 have 8067/2010 Page 14 have
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 11 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
not specifically named the petitioner though other parties have been not specifically named the petitioner though other parties have been not specifically named the petitioner though other parties have been named and details have been given and it is stated that they were named and details have been given and it is stated that they were named and details have been given and it is stated that they were provided accommodation entries. However, it is stated that the entries provided accommodation entries. However, it is stated that the entries provided accommodation entries. However, it is stated that the entries were made by giving cheque/ were made by giving cheque/DD/PO after receiving cash and sometimes DD/PO after receiving cash and sometimes expenses entries were provided. The reasons recorded by the expenses entries were provided. The reasons recorded by the expenses entries were provided. The reasons recorded by the Assessing do not make reference to any statement of Mahesh Garg or Officer do not make reference to any statement of Mahesh Garg or do not make reference to any statement of Mahesh Garg or Shubhash Gupta. This may not also be necessary, if the statements were Shubhash Gupta. This may not also be necessary, if the statements were Shubhash Gupta. This may not also be necessary, if the statements were on record and it is claimed and prima facie established that they were and it is claimed and prima facie established that they were and it is claimed and prima facie established that they were examined by the examined by the Assessing Officer before or at the time of recording before or at the time of recording reasons. On the other hand, in the present case, information as enclosed reasons. On the other hand, in the present case, information as enclosed reasons. On the other hand, in the present case, information as enclosed as Annexure, has been referred. This is the only mat as Annexure, has been referred. This is the only material relied upon by erial relied upon by the Assessing Officer Assessing Officer. The said Annexure has been quoted above. In this . The said Annexure has been quoted above. In this connection, we may notice that M/s Swetu Stone Pvt. Ltd. is an connection, we may notice that M/s Swetu Stone Pvt. Ltd. is an connection, we may notice that M/s Swetu Stone Pvt. Ltd. is an incorporated company and the petitioner has pleaded and stated that incorporated company and the petitioner has pleaded and stated that incorporated company and the petitioner has pleaded and stated that the said company has a paid the said company has a paid-up capital of Rs.90 lacs. The company was apital of Rs.90 lacs. The company was incorporated on 4th January, 1989 and was also allotted a permanent incorporated on 4th January, 1989 and was also allotted a permanent incorporated on 4th January, 1989 and was also allotted a permanent account number in September, 2001. To this extent, there is no dispute. account number in September, 2001. To this extent, there is no dispute. account number in September, 2001. To this extent, there is no dispute. In these circumstances, we feel the judgments of the Delhi High Court in In these circumstances, we feel the judgments of the Delhi High Court in In these circumstances, we feel the judgments of the Delhi High Court in Commissioner of Income W.P. (C) NO. 8067/2010 Page 15 Tax versus ssioner of Income W.P. (C) NO. 8067/2010 Page 15 Tax versus ssioner of Income W.P. (C) NO. 8067/2010 Page 15 Tax versus SFIL Stock Broking Limited, [2010] 325 ITR 285 (Delhi) and Sarthak SFIL Stock Broking Limited, [2010] 325 ITR 285 (Delhi) and Sarthak SFIL Stock Broking Limited, [2010] 325 ITR 285 (Delhi) and Sarthak Securities Company Private Limited versus Income Tax Officer, 2010 Securities Company Private Limited versus Income Tax Officer, 2010 Securities Company Private Limited versus Income Tax Officer, 2010 (329) ITR 110 (Delhi), in which CIT versus Lovely Exports (P) (329) ITR 110 (Delhi), in which CIT versus Lovely Exports (P) (329) ITR 110 (Delhi), in which CIT versus Lovely Exports (P) Limited, (2009) 216 CTR 195 (SC) has been applied and followed, are applicable. (2009) 216 CTR 195 (SC) has been applied and followed, are applicable. (2009) 216 CTR 195 (SC) has been applied and followed, are applicable. We may notice here that the respondent in their counter affidavit have We may notice here that the respondent in their counter affidavit have We may notice here that the respondent in their counter affidavit have stated that Swetu Stone Pvt. Ltd. is unidentifiable and, therefore, the stated that Swetu Stone Pvt. Ltd. is unidentifiable and, therefore, the stated that Swetu Stone Pvt. Ltd. is unidentifiable and, therefore, the aforesaid decisions should not be aforesaid decisions should not be applied and the ratio of the decision applied and the ratio of the decision dated 7th January, 2011 in Writ Petition (Civil) No. 7517/2010, AGR dated 7th January, 2011 in Writ Petition (Civil) No. 7517/2010, AGR dated 7th January, 2011 in Writ Petition (Civil) No. 7517/2010, AGR Investment Limited versus Additional Commissioner of Income Tax and Investment Limited versus Additional Commissioner of Income Tax and Investment Limited versus Additional Commissioner of Income Tax and
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Another should be applied. In the said decision, decisions in the case of Another should be applied. In the said decision, decisions in the case of Another should be applied. In the said decision, decisions in the case of Sarthak Securities Company Private Limited (supra) and SFIL Stock Securities Company Private Limited (supra) and SFIL Stock Securities Company Private Limited (supra) and SFIL Stock Broking Limited (supra) was distinguished by giving the following Broking Limited (supra) was distinguished by giving the following Broking Limited (supra) was distinguished by giving the following reasons:
"22. ....In SFIL Stock Broking Ltd. (supra), the bench has interfered as it "22. ....In SFIL Stock Broking Ltd. (supra), the bench has interfered as it "22. ....In SFIL Stock Broking Ltd. (supra), the bench has interfered as it was not discernible whether the was not discernible whether the Assessing Officer had applied his mind had applied his mind to the information and independently arrived at a belief on the basis of to the information and independently arrived at a belief on the basis of to the information and independently arrived at a belief on the basis of material which he had before him that the income had escaped material which he had before him that the income had escaped material which he had before him that the income had escaped assessment. In our considered opinion, the decision rendered therein is assessment. In our considered opinion, the decision rendered therein is assessment. In our considered opinion, the decision rendered therein is not applicable to the fac not applicable to the factual matrix in the case at hand. In the case of tual matrix in the case at hand. In the case of Sarthak Securities Co. Pvt. Ltd. (supra), the Division Bench had noted Sarthak Securities Co. Pvt. Ltd. (supra), the Division Bench had noted Sarthak Securities Co. Pvt. Ltd. (supra), the Division Bench had noted that certain companies W.P. (C) NO. 8067/2010 Page 16 were used as that certain companies W.P. (C) NO. 8067/2010 Page 16 were used as that certain companies W.P. (C) NO. 8067/2010 Page 16 were used as conduits but the Assessee had, at the stage of original assessment, conduits but the Assessee had, at the stage of original assessment, conduits but the Assessee had, at the stage of original assessment, furnished the names of the companies with which it had entered into rnished the names of the companies with which it had entered into rnished the names of the companies with which it had entered into transaction and the transaction and the Assessing Officer was made aware of the situation was made aware of the situation and further the reason recorded does not indicate application of mind. and further the reason recorded does not indicate application of mind. and further the reason recorded does not indicate application of mind. That apart, the existence of the companies was no That apart, the existence of the companies was not disputed and the t disputed and the companies had bank accounts and payments were made to the Assessee companies had bank accounts and payments were made to the Assessee companies had bank accounts and payments were made to the Assessee company through the banking channel. Regard being had to the company through the banking channel. Regard being had to the company through the banking channel. Regard being had to the aforesaid fact situation, this Court had interfered. aforesaid fact situation, this Court had interfered.
Thus, the said decision is also distinguishable on the Thus, the said decision is also distinguishable on the factual score." factual score."
The facts indicated above do not show that M/s Swetu Stone Pvt. Ltd. 18. The facts indicated above do not show that M/s Swetu Stone Pvt. Ltd. 18. The facts indicated above do not show that M/s Swetu Stone Pvt. Ltd. existing and a fictitious entity/person. Decision in AGR is a non-existing and a fictitious entity/person. Decision in AGR existing and a fictitious entity/person. Decision in AGR Investment Limited (supra), therefore, does not help the case of the Investment Limited (supra), therefore, does not help the case of the Investment Limited (supra), therefore, does not help the case of the respondent.”
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 13 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
The Ld. counsel Ld. counsel also referred to the decision of the Hon’ble also referred to the decision of the Hon’ble Delhi High Court in the case of Delhi High Court in the case of PCIT Vs G & G Pharma India Ltd in PCIT Vs G & G Pharma India Ltd in ITA No. 545/2015. We find that in the said case, the We find that in the said case, the Revenue failed We find that in the said case, the to produce before the Hon’ble High Court e before the Hon’ble High Court, the material relied upon , the material relied upon by the Assessing Officer essing Officer for reopening of the assessment. The or reopening of the assessment. The relevant finding of the Hon’ble High Court is reproduced as under: relevant finding of the Hon’ble High Court is reproduced as under: relevant finding of the Hon’ble High Court is reproduced as under:
“When this appeal was first listed on 7th August 2015, the Court When this appeal was first listed on 7th August 2015, the Court When this appeal was first listed on 7th August 2015, the Court enquired from Mr. Kamal Sawhney, learned Senior Standing counsel enquired from Mr. Kamal Sawhney, learned Senior Standing counsel enquired from Mr. Kamal Sawhney, learned Senior Standing counsel for the Revenue, whether he could produce the materials on the basis Revenue, whether he could produce the materials on the basis Revenue, whether he could produce the materials on the basis of which the assessment was reopened. He sought and was granted of which the assessment was reopened. He sought and was granted of which the assessment was reopened. He sought and was granted three weeks time for this purpose. The matter was next listed on 10 three weeks time for this purpose. The matter was next listed on 10 three weeks time for this purpose. The matter was next listed on 10th September 2015 when on account of the fact that the date had September 2015 when on account of the fact that the date had September 2015 when on account of the fact that the date had been wrongly noted by the wrongly noted by the Ld. Standing counsel, the case was adjourned , the case was adjourned for today. It was made clear on 10 for today. It was made clear on 10th September 2015 that the order that the order dated 7th August 2015 must be complied with positively before the August 2015 must be complied with positively before the August 2015 must be complied with positively before the next date of hearing. next date of hearing.
Today when the case was calle Today when the case was called out, Mr. Sawhney produced before d out, Mr. Sawhney produced before the Court the very the Court the very same letter of the AO dated 15th September 2010 th September 2010 which has been reproduced in its entirely in the impugned order of which has been reproduced in its entirely in the impugned order of which has been reproduced in its entirely in the impugned order of the ITAT. He submitted that the AO was himself present in the Court the ITAT. He submitted that the AO was himself present in the Court the ITAT. He submitted that the AO was himself present in the Court and further efforts and further efforts would be made to locate the materials on the would be made to locate the materials on the basis of which the AO formed his opinion regarding reopening of the basis of which the AO formed his opinion regarding reopening of the basis of which the AO formed his opinion regarding reopening of the
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assessment. The Court was not prepared to grant assessment. The Court was not prepared to grant 10.1 Further, Further, time for this purpose since it was not clear that the materials were, in fact, for this purpose since it was not clear that the materials were, in fact, for this purpose since it was not clear that the materials were, in fact, available with the Department. vailable with the Department.” 8.1 Whereas in the instant case before us there is no such doubts Whereas in the instant case before us there is no such doubts Whereas in the instant case before us there is no such doubts have been raised by the assessee on the existence of the material have been raised by the assessee on the existence of the material have been raised by the assessee on the existence of the material relied upon i.e. enquiry report of the DGIT relied upon i.e. enquiry report of the DGIT Investigation Investigation.
The Ld. counsel Ld. counsel has also referred to the other decisions of to the other decisions of Hon’ble Delhi High Court and submitted that reasons and Hon’ble Delhi High Court and submitted that reasons and Hon’ble Delhi High Court and submitted that reasons and information referred in the case of the assessee is being extremely information referred in the case of the assessee is being extremely information referred in the case of the assessee is being extremely vague and scanty and therefore reopening is invalid in law. vague and scanty and therefore reopening is invalid in law. vague and scanty and therefore reopening is invalid in law. However, in the instant case before us the in the instant case before us the claim of information claim of information being scanty and vague being scanty and vague has not been substantiated by the as not been substantiated by the Ld. counsel of assessee.
9.1 The Ld. counsel Ld. counsel of the assessee has presumed the source of of the assessee has presumed the source of information as website of information as website of Government of Maharashtra, whereas the of Maharashtra, whereas the Assessing Officer has r has reopened the assessment on the basis of eopened the assessment on the basis of
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enquiry report forwarded by the enquiry report forwarded by the Investigation Wing Investigation Wing of the Income- tax Department, which is based on , which is based on survey under section 133A of the survey under section 133A of the Act carried out by the investigation wing and on the basis of the carried out by the investigation wing and on the basis of the carried out by the investigation wing and on the basis of the said enquiry report of the enquiry report of the Investigation Wing, the Assessing Officer Assessing Officer has reopened the assessment. The report of the reopened the assessment. The report of the Investigation Wing Investigation Wing is based on verification based on verification carried out after due inquiries carried out after due inquiries, therefore, it is one of the credible source, on which the one of the credible source, on which the Assessing Officer Officer has relied upon for reopening of the assessment upon for reopening of the assessment. In our opinion our opinion said report from Investigation Wing from Investigation Wing is one of the relevant information on which is one of the relevant information on which a reasonable person can make requisite belief a reasonable person can make requisite belief that income escaped that income escaped assessment as held by the Hon’ble Sup s held by the Hon’ble Supreme Court in the case reme Court in the case ACIT v. Rajesh Jhaveri Stock Broker P. Ltd. v. Rajesh Jhaveri Stock Broker P. Ltd. [2007] (7 [2007] (7 SCR 765). Therefore, we reject the contention of the we reject the contention of the Ld. counsel Ld. counsel that the source of information source of information was only a list of suspicious dealers available list of suspicious dealers available on the website of the on the website of the Sales-tax Department of Maharashtra Department of Maharashtra Government.
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As far as the contention of the far as the contention of the Ld. counsel that Assessing Officer did not carry out further inquiries before forming did not carry out further inquiries before forming did not carry out further inquiries before forming reasons to believe is concerned, we are of the opi believe is concerned, we are of the opinion that during the relevant uring the relevant period the Assessing Officer ing Officer was not empowered for carrying out an was not empowered for carrying out an investigation either from the assessee or from outside before investigation either from the assessee or from outside before investigation either from the assessee or from outside before reopening the assessment, therefore the reopening the assessment, therefore the Assessing Officer Assessing Officer cannot be expected to verify those purchases from the assessee or the relevant expected to verify those purchases from the assessee or the relevant expected to verify those purchases from the assessee or the relevant suppliers. Now by way of Finance Now by way of Finance Act 2021, w.e e.f. 01/04/2021, relevant section 148A has been introduced, under which the relevant section 148A has been introduced, under which the relevant section 148A has been introduced, under which the Assessing Officer shall conduct an enquiry if required for issuing shall conduct an enquiry if required for issuing shall conduct an enquiry if required for issuing notice under section 148 of the notice under section 148 of the Act. Relevant provision under . Relevant provision under section 148A is reproduced as under: is reproduced as under:
“148A. The Assessing Officer shall, before issuing any notice under The Assessing Officer shall, before issuing any notice under The Assessing Officer shall, before issuing any notice under section 148, - (a) conduct any enquiry, if required, with the prior approval of (a) conduct any enquiry, if required, with the prior approval of (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests specified authority, with respect to the information which suggests specified authority, with respect to the information which suggests that the income income chargeable to tax has escaped assessment; chargeable to tax has escaped assessment;
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(b) provide an opportunity of being heard to the assessee, with the (b) provide an opportunity of being heard to the assessee, with the (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to prior approval of specified authority, by serving upon him a notice to prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being show cause within such time, as may be specified in the notice, being show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the less than seven days and but not exceeding thirty days from the less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended date on which such notice is issued, or such time, as may be extended date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice by him on the basis of an application in this behalf, as to why a notice by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the bas under section 148 should not be issued on the basis of information is of information which suggests that income chargeable to tax has escaped assessment which suggests that income chargeable to tax has escaped assessment which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry in his case for the relevant assessment year and results of enquiry in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); conducted, if any, as per clause (a);
(c) consider the reply of assessee furnished, if any, in respons (c) consider the reply of assessee furnished, if any, in respons (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); cause notice referred to in clause (b);
(d) decide, on the basis of material available on record including reply (d) decide, on the basis of material available on record including reply (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under of the assessee, whether or not it is a fit case to issue a notice under of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approva section 148, by passing an order, with the prior approva section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the authority, within one month from the end of the month in which the authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply referred to in clause (c) is received by him, or where no such reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in reply is furnished, within one month from the end of the month in reply is furnished, within one month from the end of the month in which time or extended time allowed to which time or extended time allowed to furnish a reply as per clause furnish a reply as per clause (b) expires:
Provided that the provisions of this section shall not apply in a case that the provisions of this section shall not apply in a case that the provisions of this section shall not apply in a case where, -
(a) a search is initiated under section 132 or books of account, other (a) a search is initiated under section 132 or books of account, other (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A documents or any assets are requisitioned under section 132A documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or case of the assessee on or after the 1st day of April, 2021; or case of the assessee on or after the 1st day of April, 2021; or
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(b) the Assessing Officer is satisfied, with the prior approval of the (b) the Assessing Officer is satisfied, with the prior approval of the (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, Principal Commissioner or Commissioner that any money, bullion, Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, se jewellery or other valuable article or thing, seized in a search under ized in a search under section 132 or requisitioned under section 132A, in the case of any section 132 or requisitioned under section 132A, in the case of any section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the other person on or after the 1st day of April, 2021, belongs to the other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the (c) the Assessing Officer is satisfied, with the prior approval of the (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or missioner or Commissioner that any books of account or missioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under documents, seized in a search under section 132 or requisitioned under documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of section 132A, in case of any other person on or after the 1st day of section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information conta April, 2021, pertains or pertain to, or any information conta April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee. therein, relate to, the assessee.” 10.1 The relevant provision of section 148A was not relevant provision of section 148A was not relevant provision of section 148A was not in operation during the assessment year in consideration before us, and during the assessment year in consideration before us, and during the assessment year in consideration before us, and therefore we reject the contention of the therefore we reject the contention of the Ld. counsel Ld. counsel of the assessee that no enquiry was carried out by the that no enquiry was carried out by the Assessing Officer Assessing Officer before forming requisite belief that income escaped assessment. belief that income escaped assessment. belief that income escaped assessment.
The Ld. CIT(A) has rejected the ground of the assessee The Ld. CIT(A) has rejected the ground of the assessee The Ld. CIT(A) has rejected the ground of the assessee challenging the validity of the jurisdiction challenging the validity of the jurisdiction observing as under:
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 19 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
“8. Ground no.2: In this ground assessee has challenged the jurisdiction 8. Ground no.2: In this ground assessee has challenged the jurisdiction 8. Ground no.2: In this ground assessee has challenged the jurisdiction of AO to issue notice u/s 148 and assume jurisdiction. To adjudicate issue notice u/s 148 and assume jurisdiction. To adjudicate issue notice u/s 148 and assume jurisdiction. To adjudicate this case, it would be relevant to this case, it would be relevant to bring out all the facts of the case. bring out all the facts of the case.
Original return of income was fi 1. Original return of income was filed on 11-08-2009 and it was 2009 and it was processed u/s 143(1)(a) of the Act. 143(1)(a) of the Act.
No scrutiny of original return u/s 143(3) was done. No scrutiny of original return u/s 143(3) was done.
AO got information from Director General IT (Investigation) that 3. AO got information from Director General IT (Investigation) that 3. AO got information from Director General IT (Investigation) that assessee had got accommodation bills from various parties for vario assessee had got accommodation bills from various parties for vario assessee had got accommodation bills from various parties for various financial years including F.Y. 2007 financial years including F.Y. 2007-08, 2008-09, 2009-10 and 2010 10 and 2010-11 and 2011-12.
The enquiry report was received by DGIT(Inv), Unit V(1) in respect of The enquiry report was received by DGIT(Inv), Unit V(1) in respect of The enquiry report was received by DGIT(Inv), Unit V(1) in respect of assessee that it has been engaged in bogus purchase activity, i.e. taking assessee that it has been engaged in bogus purchase activity, i.e. taking assessee that it has been engaged in bogus purchase activity, i.e. taking accommodation entries from accommodation entries from bogus companies/concerns. The assessee bogus companies/concerns. The assessee was found to be beneficiary of accommodation transactions as was found to be beneficiary of accommodation transactions as was found to be beneficiary of accommodation transactions as reported by DGIT (Inv). There was a detailed list given from which reported by DGIT (Inv). There was a detailed list given from which reported by DGIT (Inv). There was a detailed list given from which companies bogus purchases have been made. It was mentioned that companies bogus purchases have been made. It was mentioned that companies bogus purchases have been made. It was mentioned that assessee had taken bogus assessee had taken bogus purchase bill of Rs.24,82,749/ purchase bill of Rs.24,82,749/- for various parties during F.Y. 2007 parties during F.Y. 2007-08 relevant to A.Y. 2008-09. In the enquiry 09. In the enquiry report, it was stated that the assessee had failed to produce the report, it was stated that the assessee had failed to produce the report, it was stated that the assessee had failed to produce the purchase party as well as broker and delivery challan for the purchase purchase party as well as broker and delivery challan for the purchase purchase party as well as broker and delivery challan for the purchase made from the above parties, it is emerged that the purchase are not rom the above parties, it is emerged that the purchase are not rom the above parties, it is emerged that the purchase are not genuine.
The information from office of DGIT was based on an elaborate 4. The information from office of DGIT was based on an elaborate 4. The information from office of DGIT was based on an elaborate exercise and field inquiries, collection of information and recording of exercise and field inquiries, collection of information and recording of exercise and field inquiries, collection of information and recording of scores of statements of the parties involved and in collaboration with scores of statements of the parties involved and in collaboration with scores of statements of the parties involved and in collaboration with
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other government departments. The entire exerci other government departments. The entire exercise was laborious and se was laborious and indepth investigation and not a casual and superficial one. indepth investigation and not a casual and superficial one. indepth investigation and not a casual and superficial one.
Based on such elaborate and extensive investigating report, AO had Based on such elaborate and extensive investigating report, AO had Based on such elaborate and extensive investigating report, AO had recorded reasons to believe that since assessee had failed to produce recorded reasons to believe that since assessee had failed to produce recorded reasons to believe that since assessee had failed to produce the purchase party as well as the purchase party as well as broker and delivery challan for the r and delivery challan for the purchase made from the above parties, it is emerged that the purchase purchase made from the above parties, it is emerged that the purchase purchase made from the above parties, it is emerged that the purchase are not genuine. The actual purchase must have been done from the are not genuine. The actual purchase must have been done from the are not genuine. The actual purchase must have been done from the undisclosed parties in the market in cash and the total amount in each undisclosed parties in the market in cash and the total amount in each undisclosed parties in the market in cash and the total amount in each year which represe year which represents the undisclosed cash/ income in the hands of the nts the undisclosed cash/ income in the hands of the assessee. Hence, satisfaction regarding income escaped was recorded assessee. Hence, satisfaction regarding income escaped was recorded assessee. Hence, satisfaction regarding income escaped was recorded on reasonable belief and notices u/s 148 were issued by AO. on reasonable belief and notices u/s 148 were issued by AO. on reasonable belief and notices u/s 148 were issued by AO.
8.1 There were new facts before the AO: Reasons to believe: 8.1 There were new facts before the AO: Reasons to believe: 8.1 There were new facts before the AO: Reasons to believe:
(i) The require (i) The requirement of Sec. 147 is only to have prima-facie reason to facie reason to believe that income has escaped assessment. It has been held in believe that income has escaped assessment. It has been held in believe that income has escaped assessment. It has been held in plethora of case laws that at the time of reopening, A.O. is not required plethora of case laws that at the time of reopening, A.O. is not required plethora of case laws that at the time of reopening, A.O. is not required to establish the escapement of income. The existence of reason to establish the escapement of income. The existence of reason to establish the escapement of income. The existence of reason is enough. In this regard, reliance is placed on following case laws of the enough. In this regard, reliance is placed on following case laws of the enough. In this regard, reliance is placed on following case laws of the Apex Court:
a. Kalyanji Mavji & Co. vs CIT (SC) 102 ITR 287 Kalyanji Mavji & Co. vs CIT (SC) 102 ITR 287 b. ITO vs Lakhmani Mewal Das (SC) 103 ITR 437 ITO vs Lakhmani Mewal Das (SC) 103 ITR 437 c. Phool Chand Bajrang Lal and Another vs ITO & Anr. (SC)203 Phool Chand Bajrang Lal and Another vs ITO & Anr. (SC)203 Phool Chand Bajrang Lal and Another vs ITO & Anr. (SC)203 ITR 456 ITR 456 d. Sri Krishna Sri Krishna (P) Ltd. ys CIT (SC)221 ITR 538 e. Central Provinces Manganese Ore Co. Ltd. vs ITO (SC) 191 ITR Central Provinces Manganese Ore Co. Ltd. vs ITO (SC) 191 ITR Central Provinces Manganese Ore Co. Ltd. vs ITO (SC) 191 ITR 662
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(ii) A close reading of reasons recorded by A.O. shows that A.O. had (ii) A close reading of reasons recorded by A.O. shows that A.O. had (ii) A close reading of reasons recorded by A.O. shows that A.O. had perused and understood the facts discovered in the extensive inquiries perused and understood the facts discovered in the extensive inquiries perused and understood the facts discovered in the extensive inquiries conducted by Inves conducted by Investigation Wing and failure of assessee to produce the tigation Wing and failure of assessee to produce the parties, brokers or any delivery challans of goods, etc. parties, brokers or any delivery challans of goods, etc.
(iii) Not a case of change of opinion: Not a case of change of opinion: It is not a case of change of as It is not a case of change of as no opinion was formed in 143(1)(a) processing. There was no 143(3) no opinion was formed in 143(1)(a) processing. There was no 143(3) no opinion was formed in 143(1)(a) processing. There was no 143(3) earlier in these cases. New tangible facts, in the form of elaborate in these cases. New tangible facts, in the form of elaborate in these cases. New tangible facts, in the form of elaborate inquiries by Investigation inquiries by Investigation-Wing-had come before A.O.
(iv) It is not intended by law that each officer should be working in a (iv) It is not intended by law that each officer should be working in a (iv) It is not intended by law that each officer should be working in a silo, The sharing and flow of information from one department to silo, The sharing and flow of information from one department to silo, The sharing and flow of information from one department to her or from one officer to another is very much within the legal another or from one officer to another is very much within the legal her or from one officer to another is very much within the legal framework of an integrated government set up. Thus, to use the framework of an integrated government set up. Thus, to use the framework of an integrated government set up. Thus, to use the information gathered by Inv. Wing and re information gathered by Inv. Wing and re-open the assessment on its open the assessment on its basis is very much valid. basis is very much valid.
(v) Once a specific investigation Once a specific investigation has been done by a particular Wing of has been done by a particular Wing of government, the same information can be used by other officers for government, the same information can be used by other officers for government, the same information can be used by other officers for initiating necessary legal actions in their jurisdiction. initiating necessary legal actions in their jurisdiction.
8.2 Reopening on information from Investigation Wing as valid Reopening on information from Investigation Wing as valid Reopening on information from Investigation Wing as valid It has been held in a large number of cases that AO is fully authorized as has been held in a large number of cases that AO is fully authorized as has been held in a large number of cases that AO is fully authorized as per law to use the information received from Investigation Wing to per law to use the information received from Investigation Wing to per law to use the information received from Investigation Wing to reopen the assessments. reopen the assessments.
ITO vs Purshottam Das Bangur 90 Taxmann.com 541 (SC) 1. ITO vs Purshottam Das Bangur 90 Taxmann.com 541 (SC) 1. ITO vs Purshottam Das Bangur 90 Taxmann.com 541 (SC) - wherein it was propounded by Ho it was propounded by Hon'ble SC that information contained in letter n'ble SC that information contained in letter of Directorate of investigation could be said to be definite information of Directorate of investigation could be said to be definite information of Directorate of investigation could be said to be definite information and ITO could act upon for taking action u/s 147(b) and ITO could and ITO could act upon for taking action u/s 147(b) and ITO could and ITO could act upon for taking action u/s 147(b) and ITO could
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 22 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
have formed opinion that there was reason to believe that income had have formed opinion that there was reason to believe that income had have formed opinion that there was reason to believe that income had escaped.
Nickunj Eximp Enterprise vs ACIT 48 Taxmann.com 20 (Bombay HC) 2. Nickunj Eximp Enterprise vs ACIT 48 Taxmann.com 20 (Bombay HC) 2. Nickunj Eximp Enterprise vs ACIT 48 Taxmann.com 20 (Bombay HC) -Since genuineness of purchase bills was not subject matter of original Since genuineness of purchase bills was not subject matter of original Since genuineness of purchase bills was not subject matter of original assessment u/s 143(3) and these bills being bogus was discovered assessment u/s 143(3) and these bills being bogus was discovered assessment u/s 143(3) and these bills being bogus was discovered subsequently to 143(3) during survey. (Present subsequently to 143(3) during survey. (Present case in appeal is on still case in appeal is on still better footings as only 143(1)(a) had been done in this case). better footings as only 143(1)(a) had been done in this case). better footings as only 143(1)(a) had been done in this case).
Paramount Communication (P) Ltd vs PCIT 2017 3. Paramount Communication (P) Ltd vs PCIT 2017-TIOL TIOL-253-SC-IT (SC) - wherein it was held, (SLP of assessee dismissed) that information wherein it was held, (SLP of assessee dismissed) that information wherein it was held, (SLP of assessee dismissed) that information regarding bogus purchase by a regarding bogus purchase by assessee received by DRI from CCE which ssessee received by DRI from CCE which was passed on to revenue authorities was 'tangible material outside was passed on to revenue authorities was 'tangible material outside was passed on to revenue authorities was 'tangible material outside record' to initiate valid reassessment proceedings. record' to initiate valid reassessment proceedings.
Aaspas Multimedia Ltd. vs DCIT 2017 Aaspas Multimedia Ltd. vs DCIT 2017-83 Taxmann.com 82(Guj) 83 Taxmann.com 82(Guj) assessment was made on basis of inf assessment was made on basis of information received from Principal ormation received from Principal DIT (Inv) that assessee DIT (Inv) that assessee was beneficiary of accommodation entries by was beneficiary of accommodation entries by way of share application provided by a third party, way of share application provided by a third party, same was justified. same was justified.
Indu Lata Rangwala vs DCIT 80 Taxmann.com 102 (Delhi)[2016] 5. Indu Lata Rangwala vs DCIT 80 Taxmann.com 102 (Delhi)[2016] 5. Indu Lata Rangwala vs DCIT 80 Taxmann.com 102 (Delhi)[2016] 384 ITR 337 Del High 384 ITR 337 Del High Court- where initial return of income is where initial return of income is processed u/s 143(1), it is not necessary in such a case for AO to come processed u/s 143(1), it is not necessary in such a case for AO to come processed u/s 143(1), it is not necessary in such a case for AO to come across some fresh tangible material to form 'reasons to believe' that across some fresh tangible material to form 'reasons to believe' that across some fresh tangible material to form 'reasons to believe' that income has escaped assessment." income has escaped assessment."
Pushpak Bullion (P) Ltd vs DCIT (Entr 6. Pushpak Bullion (P) Ltd vs DCIT (Entry Receiver) 85 Taxmann.com y Receiver) 85 Taxmann.com 84 Gujarat High Court 84 Gujarat High Court - where Investigation Wing of department had where Investigation Wing of department had during course of investigation in case of a third party found that he during course of investigation in case of a third party found that he during course of investigation in case of a third party found that he was indulged in providing accommodation entries and bogus bills and was indulged in providing accommodation entries and bogus bills and was indulged in providing accommodation entries and bogus bills and
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assessee had made sizeab assessee had made sizeable purchases from him, reopening notice le purchases from him, reopening notice against assessee was justified. against assessee was justified.
8.4 Cases relied upon by assessee distinguished: The case laws relied 8.4 Cases relied upon by assessee distinguished: The case laws relied 8.4 Cases relied upon by assessee distinguished: The case laws relied upon by assessee are distinguishable as the facts of assessee's case are upon by assessee are distinguishable as the facts of assessee's case are upon by assessee are distinguishable as the facts of assessee's case are different, different, in in so so far far as as there there was was specifi specific c information- information partywise/amountwise which was available with AO. Also, assessee partywise/amountwise which was available with AO. Also, assessee partywise/amountwise which was available with AO. Also, assessee had failed to produce the parties and he did not have any had failed to produce the parties and he did not have any had failed to produce the parties and he did not have any contemporary evidences of purchase contemporary evidences of purchase like delivery challans, octroi and like delivery challans, octroi and stock register, etc. Thus, on the basis of such stock register, etc. Thus, on the basis of such detailed and specific detailed and specific information including statements of persons supplying bogus bills information including statements of persons supplying bogus bills information including statements of persons supplying bogus bills without actual delivery of goods without actual delivery of goods - all distinguish the case laws quoted all distinguish the case laws quoted by assessee in its defence. by assessee in its defence.
In view of difference in facts and AO's case being on much stronger In view of difference in facts and AO's case being on much stronger In view of difference in facts and AO's case being on much stronger footings and various specific case laws quoted above in the order, the footings and various specific case laws quoted above in the order, the footings and various specific case laws quoted above in the order, the case laws relied upon rejected and do not come to rescue of assessee. case laws relied upon rejected and do not come to rescue of assessee. case laws relied upon rejected and do not come to rescue of assessee.
8.5 Thus, there is no force in the arguments of assessee, ground no.2 is, Thus, there is no force in the arguments of assessee, ground no.2 is, Thus, there is no force in the arguments of assessee, ground no.2 is, therefore, dismissed. dismissed.”
11.1 In view of our discussion above, we do not find any infirmities view of our discussion above, we do not find any infirmities view of our discussion above, we do not find any infirmities in the finding of the Ld. CIT(A) on the issue in dispute. in the finding of the Ld. CIT(A) on the issue in dispute. in the finding of the Ld. CIT(A) on the issue in dispute.
As far as second issue of whether the reasons were recorded second issue of whether the reasons were recorded second issue of whether the reasons were recorded prior to issue a notice under section 148 of the prior to issue a notice under section 148 of the Act, the , the Ld. counsel of the assessee drawn our attention to the assessee drawn our attention to notice issued under section notice issued under section
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148 of the Act, which is available on page 23 of the paperbook. For , which is available on page 23 of the paperbook. For , which is available on page 23 of the paperbook. For
ready reference, said notices reproduced as under: ready reference, said notices reproduced as under:
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The Ld. counsel Ld. counsel of the assessee referred to the reasons to the reasons recorded, which we have reproduced above. According to the recorded, which we have reproduced above. According to the recorded, which we have reproduced above. According to the Ld. counsel reasons were were recorded after issue of the notic recorded after issue of the notice in view of three observations. Firstly three observations. Firstly, there is no date mentioned mentioned, on the reasons recorded. Secondly Secondly, he referred to the line 3 of the re line 3 of the reasons recorded which reads as “ recorded which reads as “thereafter, the assessee submitted audit thereafter, the assessee submitted audit report in this charge on 12/03/2014”. According to the report in this charge on 12/03/2014”. According to the report in this charge on 12/03/2014”. According to the Ld. counsel when there is a mention of the audit report submitted by the when there is a mention of the audit report submitted by the when there is a mention of the audit report submitted by the assessee on 12/03/2014, which according assessee on 12/03/2014, which according to him was submitted in to him was submitted in “Tapal”, therefore he is of the view that reasons have been recorded “Tapal”, therefore he is of the view that reasons have been recorded “Tapal”, therefore he is of the view that reasons have been recorded only after 12/03/2014 whereas notice has been issued on only after 12/03/2014 whereas notice has been issued on only after 12/03/2014 whereas notice has been issued on 12/03/2014. Thirdly, the Thirdly, the Ld. counsel submitted that he took submitted that he took inspection of the assessment record and found inspection of the assessment record and found a note sheet dated a note sheet dated 10/03/2014, which says that reasons were recorded on 10/03/2014, which says that reasons were recorded on 10/03/2014, which says that reasons were recorded on 10/03/2014.
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In our opinion, above conclusion In our opinion, above conclusions have been drawn by the been drawn by the assessee merely on basis of basis of presumptions and there is no evidence and there is no evidence on record, which could support his view that on record, which could support his view that reasons reasons were not recorded on 12/03/2014. recorded on 12/03/2014. Firstly, not mentioning date on the mentioning date on the reasons recorded in itself is not sufficient to establish that sam reasons recorded in itself is not sufficient to establish that sam reasons recorded in itself is not sufficient to establish that same was recorded after 12/03/2014 recorded after 12/03/2014. Secondly, it is very much possible that t is very much possible that after going through the audit report after going through the audit report on date of its filing on date of its filing, the Assessing Officer gone through the said report and recorded the gone through the said report and recorded the gone through the said report and recorded the reasons to believe. Thirdly, no evidence duly certified from the Thirdly, no evidence duly certified from the authorities are produced before us which could establish that authorities are produced before us which could establish that authorities are produced before us which could establish that reasons were recorded on 10/03/2014. reasons were recorded on 10/03/2014. Merely on the presumption Merely on the presumption of the assessee, it cannot be held that reasons were recorded after it cannot be held that reasons were recorded after it cannot be held that reasons were recorded after 12/03/2014. Accordingly we reject the contention of the 12/03/2014. Accordingly we reject the contention of the 12/03/2014. Accordingly we reject the contention of the Ld. counsel of the assessee. The ground No. 1 of the appeal is accordingly The ground No. 1 of the appeal is accordingly The ground No. 1 of the appeal is accordingly dismissed.
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In the ground N he ground No. 2 to 4 (wrongly mentioned as Ground No as Ground No. 9 to 11), the assessee has has challenged validity of the assessment order challenged validity of the assessment order passed by the Assessing Officer Assessing Officer.
In ground No. 2 ( 2 (wrongly mentioned as ground No. nine) y mentioned as ground No. nine), the assessee has raised the issue as to whether has raised the issue as to whether the return of income the return of income filed on 12/08/2014 can be considered as a filed on 12/08/2014 can be considered as a valid return of income valid return of income and an assessment made on the basis of sa and an assessment made on the basis of said return of income can d return of income can be considered as valid and legal assessment be considered as valid and legal assessment.
In ground No. 3 ( 3 (wrongly mentioned as ground No. 10), wrongly mentioned as ground No. 10), the assessee has submitted that no notice under section 143(2) of the assessee has submitted that no notice under section 143(2) of the assessee has submitted that no notice under section 143(2) of the Act was issued after filing of the return of income and was issued after filing of the return of income and therefore was issued after filing of the return of income and assessment completed assessment completed is void ab initio.
The Ld. CIT(A) has rejected the contention of the assessee that The Ld. CIT(A) has rejected the contention of the assessee that The Ld. CIT(A) has rejected the contention of the assessee that no notice under section 143(2) of the nder section 143(2) of the Act was issued after filing a was issued after filing a return of income by the assessee. The Ld. CIT(A) has observed that return of income by the assessee. The Ld. CIT(A) has observed that return of income by the assessee. The Ld. CIT(A) has observed that
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the Assessing Officer Assessing Officer issued notice under section 148 of the issued notice under section 148 of the Act on 12/03/2014, asking the assessee to file 12/03/2014, asking the assessee to file return of income within of income within 10 days. The assessee chose not to file days. The assessee chose not to file return of income within of income within the prescribed time period. The assessee alternatively did not ask for time period. The assessee alternatively did not ask for time period. The assessee alternatively did not ask for extension of the time for filing return of income also and therefore extension of the time for filing return of income also and therefore extension of the time for filing return of income also and therefore in absence of the return of income filed by the asse in absence of the return of income filed by the asse in absence of the return of income filed by the assessee the Ld. Assessing Officer issued notice under section 142(1) of the issued notice under section 142(1) of the issued notice under section 142(1) of the Act on 15/07/2014 and ask 15/07/2014 and asked the assessee information for completion of the assessee information for completion of the assessment. In view of the Ld. CIT(A) the the assessment. In view of the Ld. CIT(A) the Assessing Officer Assessing Officer has jurisdiction to make assessment as per section 142(1) of the jurisdiction to make assessment as per section 142(1) of the jurisdiction to make assessment as per section 142(1) of the Act as the assessee failed to file return of income. Subsequent to notice the assessee failed to file return of income. Subsequent to notice the assessee failed to file return of income. Subsequent to notice under section 142(1), the assessee under section 142(1), the assessee vide letter dated 11/08/2014 letter dated 11/08/2014 intimated the Assessing Officer Assessing Officer that the original return that the original return filed under section 139(1) of the section 139(1) of the Act (On 11/08/2009) might be treated as (On 11/08/2009) might be treated as return in response to notice under section 148. The Ld. CIT(A) in response to notice under section 148. The Ld. CIT(A) in response to notice under section 148. The Ld. CIT(A) further observed that notice under section 143(2) of the further observed that notice under section 143(2) of the further observed that notice under section 143(2) of the Act was
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actually served on the assessee on 12/08/2014 i.e. actually served on the assessee on 12/08/2014 i.e. af after the letter of the assessee regarding return of income was received and therefore the assessee regarding return of income was received and therefore the assessee regarding return of income was received and therefore 143(2) notice was served upon the assessee subsequent to his filing 143(2) notice was served upon the assessee subsequent to his filing 143(2) notice was served upon the assessee subsequent to his filing return of income vide vide letter dated 11/08/2014. The Ld. CIT(A) has letter dated 11/08/2014. The Ld. CIT(A) has reproduced both the letter of the ass reproduced both the letter of the assessee dated 11/08/2014 and 11/08/2014 and notice under section 143(2) served on the assessee on 12/08/2014. notice under section 143(2) served on the assessee on 12/08/2014. notice under section 143(2) served on the assessee on 12/08/2014. The Ld. CIT(A) also distinguish The Ld. CIT(A) also distinguished the cases relied upon by the the cases relied upon by the assessee observing as under: assessee observing as under:
“9.1 Cases relied upon by assessee distinguished The case laws relied 9.1 Cases relied upon by assessee distinguished The case laws relied 9.1 Cases relied upon by assessee distinguished The case laws relied upon by assessee are studied and it is seen that the facts being different pon by assessee are studied and it is seen that the facts being different pon by assessee are studied and it is seen that the facts being different in those cases than facts of assessee's case, the case laws do not in those cases than facts of assessee's case, the case laws do not in those cases than facts of assessee's case, the case laws do not support the contention of assessee. In fact, in case of Delhi High Court support the contention of assessee. In fact, in case of Delhi High Court support the contention of assessee. In fact, in case of Delhi High Court decision in the case of Pr.CIT vs Shri Shi decision in the case of Pr.CIT vs Shri Shiv Shankar Traders (P) Ltd (IT v Shankar Traders (P) Ltd (IT Appeal no. 519 of 2015) relied upon by assessee, actually supports the Appeal no. 519 of 2015) relied upon by assessee, actually supports the Appeal no. 519 of 2015) relied upon by assessee, actually supports the stand of AO as the deficiency of not serving any notice in that case is stand of AO as the deficiency of not serving any notice in that case is stand of AO as the deficiency of not serving any notice in that case is fully met with in assessee's case as has been brought out above in the fully met with in assessee's case as has been brought out above in the fully met with in assessee's case as has been brought out above in the para 9. Since, AO had actually served notice to assessee on 12/08/2014 e, AO had actually served notice to assessee on 12/08/2014 e, AO had actually served notice to assessee on 12/08/2014 after return of income was purportedly filed vide letter dated after return of income was purportedly filed vide letter dated after return of income was purportedly filed vide letter dated 11/08/2014 submitted on 12/08/2014, the requirement of law was 11/08/2014 submitted on 12/08/2014, the requirement of law was 11/08/2014 submitted on 12/08/2014, the requirement of law was fully met with. Hence, case laws quoted by assessee do not support this fully met with. Hence, case laws quoted by assessee do not support this fully met with. Hence, case laws quoted by assessee do not support this cause.
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 30 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
Thus, on totality of facts, jurisdiction of AO is very much valid in the Thus, on totality of facts, jurisdiction of AO is very much valid in the Thus, on totality of facts, jurisdiction of AO is very much valid in the light of facts and conduct of assessee. Hence, ground no. 3 of appeal is light of facts and conduct of assessee. Hence, ground no. 3 of appeal is light of facts and conduct of assessee. Hence, ground no. 3 of appeal is dismissed.” 19. Before us, the , the Ld. counsel of the assessee submitted that of the assessee submitted that section 148 of the Act Act requires that assessee should furnish his requires that assessee should furnish his return of income within the time period p income within the time period prescribed in the said rescribed in the said notice and any return of income filed after expiry of the prescribed notice and any return of income filed after expiry of the prescribed notice and any return of income filed after expiry of the prescribed period should be treated as invalid return. The assessee submitted period should be treated as invalid return. The assessee submitted period should be treated as invalid return. The assessee submitted that in the notice under section 148 ( ice under section 148 (which we have reproduced which we have reproduced above), the Assessing Officer Assessing Officer had specified period specified period of 10 days for filing a return of income. Said notice was issued on 12/03/2014 filing a return of income. Said notice was issued on 12/03/2014 filing a return of income. Said notice was issued on 12/03/2014 whereas the assessee has filed return of income on 12/08/2014 and whereas the assessee has filed return of income on 12/08/2014 and whereas the assessee has filed return of income on 12/08/2014 and therefore the return has been filed much beyond the prescribed e return has been filed much beyond the prescribed e return has been filed much beyond the prescribed period and thus according to the assessee it was a belated return period and thus according to the assessee it was a belated return period and thus according to the assessee it was a belated return and the Assessing Officer Assessing Officer could not have taken cognizance of the could not have taken cognizance of the said return. According to him the said return was not a valid return said return. According to him the said return was not a valid return said return. According to him the said return was not a valid return filed and therefore and therefore Assessing Officer cannot make make assessment
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thereon under section 143(3) of the thereon under section 143(3) of the Act. He submitted that in such a . He submitted that in such a case, the Assessing Officer Assessing Officer could have made the assessment under could have made the assessment under section 144 of the Act Act.
On the issue of requirement of notice under section 143(2) to On the issue of requirement of notice under section 143(2) to On the issue of requirement of notice under section 143(2) to be issued and served subsequent be issued and served subsequent to filing of return of income, the ing of return of income, the Ld. counsel relied on the decision of the Mumbai Tribunal relied on the decision of the Mumbai Tribunal relied on the decision of the Mumbai Tribunal ‘E’ Bench in the case of Sudhir Menon Vs ACIT Sudhir Menon Vs ACIT Central Circle Central Circle (Appeal No. 1744 of 2016 dated 3/10/2018) 1744 of 2016 dated 3/10/2018). Further, the Ld. counsel Ld. counsel relied on the decision of the Hon’ble Supreme Court in the case of on the decision of the Hon’ble Supreme Court in the case of on the decision of the Hon’ble Supreme Court in the case of Hotel Blue Moon 132 ITR 362 (SC) Blue Moon 132 ITR 362 (SC) to support that any assessment to support that any assessment framed without issuing issuing notice under section 143(2) of the notice under section 143(2) of the Act is invalid.
The Ld. DR on the other hand submitted that it is the assessee on the other hand submitted that it is the assessee on the other hand submitted that it is the assessee who defaulted in filing return of income in response to notice under who defaulted in filing return of income in response to notice under who defaulted in filing return of income in response to notice under section 148, whereas as the Assessing Officer has accepted the delayed has accepted the delayed
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filing of the return of income by the a filing of the return of income by the assessee on 11/08/2014 and ssessee on 11/08/2014 and served notice under section 143(2) on 12/08/2014, which is served notice under section 143(2) on 12/08/2014, which is served notice under section 143(2) on 12/08/2014, which is subsequent to the filing of return of income by the assessee and subsequent to the filing of return of income by the assessee and subsequent to the filing of return of income by the assessee and therefore there is no error in the finding of the Ld. CIT(A) on the therefore there is no error in the finding of the Ld. CIT(A) on the therefore there is no error in the finding of the Ld. CIT(A) on the issue in dispute.
We have heard ri have heard rival submission of the parties on the issue in val submission of the parties on the issue in dispute and perused the relevant material on record. dispute and perused the relevant material on record. dispute and perused the relevant material on record. We find that the assessee is claiming that return of income filed by the assessee the assessee is claiming that return of income filed by the assessee the assessee is claiming that return of income filed by the assessee on 11/08/2014 is not valid because it was filed too late on 11/08/2014 is not valid because it was filed too late on 11/08/2014 is not valid because it was filed too late after the period of 10 days as specified in notice dated 12/03/2014 issued s specified in notice dated 12/03/2014 issued s specified in notice dated 12/03/2014 issued under section 148 of the under section 148 of the Act, and therefore assessment completed , and therefore assessment completed under section 143(3) of the under section 143(3) of the Act is invalid. In our opinion, the is invalid. In our opinion, the understanding of the assessee is based on the presumption that understanding of the assessee is based on the presumption that understanding of the assessee is based on the presumption that return filed by the assessee has been held to be invalid by the return filed by the assessee has been held to be invalid by the return filed by the assessee has been held to be invalid by the Assessing Officer. But from the record, we do not find any such . But from the record, we do not find any such . But from the record, we do not find any such action taken by the action taken by the Assessing Officer. On the other hand, the . On the other hand, the
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 33 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
Assessing Officer has taken cognizance of the return of income filed has taken cognizance of the return of income filed has taken cognizance of the return of income filed by the assessee on 11/08/2014 though with a delay and thereafter by the assessee on 11/08/2014 though with a delay and thereafter by the assessee on 11/08/2014 though with a delay and thereafter issued notice under section 143(2) of the issued notice under section 143(2) of the Act on 12/08/2014 and on 12/08/2014 and therefore in our opinion therefore in our opinion the Assessing Officer has validly completed has validly completed the assessment under section 143(3) of the the assessment under section 143(3) of the Act. We do not find any . We do not find any error in the order of the Ld. CIT(A) on this is error in the order of the Ld. CIT(A) on this issue in dispute. The sue in dispute. The ground No. 2, of the appeal is accordingly dismissed. , of the appeal is accordingly dismissed. , of the appeal is accordingly dismissed.
As regards to ground As regards to ground No. 3 of the appeal, it is evident from the of the appeal, it is evident from the facts brought on record, we find that notice under section 143(2) of facts brought on record, we find that notice under section 143(2) of facts brought on record, we find that notice under section 143(2) of the Act has been served upon the assessee on 12/08/2014, which is has been served upon the assessee on 12/08/2014, which is has been served upon the assessee on 12/08/2014, which is after the filing of return of income by the assessee. The assessee has after the filing of return of income by the assessee. The assessee has after the filing of return of income by the assessee. The assessee has been put to notice only after the filing of the return of income and to notice only after the filing of the return of income and to notice only after the filing of the return of income and therefore, the contention of the assessee that the notice bear the the contention of the assessee that the notice bear the the contention of the assessee that the notice bear the date of 14/07/2014 is of no relevance, which may be due to any date of 14/07/2014 is of no relevance, which may be due to any date of 14/07/2014 is of no relevance, which may be due to any typographical error covered under section 292B typographical error covered under section 292B of the of the Act. In view of the our finding of the fact that notice under section 143(2) has of the our finding of the fact that notice under section 143(2) has of the our finding of the fact that notice under section 143(2) has
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 34 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
been issued after filing return of income and therefore the decisions been issued after filing return of income and therefore the decisions been issued after filing return of income and therefore the decisions relied upon by the assessee are of no assistance because in those relied upon by the assessee are of no assistance because in those relied upon by the assessee are of no assistance because in those decisions either no notice under section 143(2) h decisions either no notice under section 143(2) has be been issued and served or same has been issued or served prior to filing of return of been issued or served prior to filing of return of been issued or served prior to filing of return of income and therefore facts of those cases are distinguishable. income and therefore facts of those cases are distinguishable. income and therefore facts of those cases are distinguishable.
Further, we find that in this case on 11/08/2014 we find that in this case on 11/08/2014 we find that in this case on 11/08/2014, the assessee has only submitted a letter that ori has only submitted a letter that original return of income filed by the ginal return of income filed by the assessee might be treated as return of income filed in response to assessee might be treated as return of income filed in response to assessee might be treated as return of income filed in response to notice under section 148 of the notice under section 148 of the Act. The said original return of . The said original return of income was already available with the income was already available with the Assessing Officer Assessing Officer, and therefore it does not take much time in going through the said therefore it does not take much time in going through the said therefore it does not take much time in going through the said return and thereafter issue notice under section 143(2) of the return and thereafter issue notice under section 143(2) of the return and thereafter issue notice under section 143(2) of the Act. Therefore, the contention of the assessee that even notice issued the contention of the assessee that even notice issued the contention of the assessee that even notice issued under section 143(2) of the under section 143(2) of the Act on the day of filing on the day of filing of return of income is also invalid income is also invalidate the assessment, is rejected. In view of the ate the assessment, is rejected. In view of the above discussion, the ground No. above discussion, the ground No. 3 of the appeal is also dismissed. of the appeal is also dismissed.
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 35 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
In ground No. 4 ( In ground No. 4 (wrongly mentioned as ground No. 11), wrongly mentioned as ground No. 11), the assessee is claiming that documents in rel assessee is claiming that documents in relation to bogus purchases ation to bogus purchases were impounded by the investigation wing of the were impounded by the investigation wing of the were impounded by the investigation wing of the Income-tax Department & not returned back and therefore, the assessment has & not returned back and therefore, the assessment has & not returned back and therefore, the assessment has been completed in violation of the principle of natural justice and been completed in violation of the principle of natural justice and been completed in violation of the principle of natural justice and hence it should be held invalid. hence it should be held invalid.
The Ld. DR on the other hand submitted that the assessee has on the other hand submitted that the assessee has on the other hand submitted that the assessee has produced copy of a single letter dated 08/09/2014 filed before the produced copy of a single letter dated 08/09/2014 filed before the produced copy of a single letter dated 08/09/2014 filed before the Assessing Officer. According to him photo copies of books of . According to him photo copies of books of . According to him photo copies of books of accounts and vouchers accounts and vouchers are normally impounded during the course are normally impounded during the course of the survey action and if original books of accounts and vouchers e survey action and if original books of accounts and vouchers e survey action and if original books of accounts and vouchers are impounded than photo copies are immediately provided to the are impounded than photo copies are immediately provided to the are impounded than photo copies are immediately provided to the assessee even during the c assessee even during the course of the survey proceedings ourse of the survey proceedings. He submitted that assessee has not filed any letter to show that he submitted that assessee has not filed any letter to show that he submitted that assessee has not filed any letter to show that he raised this issue with the ised this issue with the Investigation Wing of the Department. He of the Department. He
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 36 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
further submitted that this issue of violation of the principle of the further submitted that this issue of violation of the principle of the further submitted that this issue of violation of the principle of the natural justice was not raised before the Ld. CIT(A) also. natural justice was not raised before the Ld. CIT(A) also. natural justice was not raised before the Ld. CIT(A) also.
We have heard rival submission of the parties and perus We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perus relevant material on record. relevant material on record. From the paperbook filed by the the paperbook filed by the assessee, we find that assessee has filed copy of ledger account in assessee, we find that assessee has filed copy of ledger account in assessee, we find that assessee has filed copy of ledger account in respect of the all alleged bogus purchase parties, copy of stock respect of the all alleged bogus purchase parties, copy of stock respect of the all alleged bogus purchase parties, copy of stock registers, bank statements et registers, bank statements etc. and therefore it is evident that same and therefore it is evident that same are available with the assessee are available with the assessee. In the paperbook, the assessee the assessee has also certified that same also certified that same were produced before the lower lower authorities therefore contention of the assessee that same were not available therefore contention of the assessee that same were not available therefore contention of the assessee that same were not available with him is ill founded. Further founded. Further, we find that on the issue of the e find that on the issue of the merit of the addition is concerned, the merit of the addition is concerned, the Tribunal Tribunal in order dated 20.12.2019 has already allowed relief to the assessee and deleted has already allowed relief to the assessee and deleted has already allowed relief to the assessee and deleted the addition and therefore in our opinion this issue is the addition and therefore in our opinion this issue is the addition and therefore in our opinion this issue is rendered only an academic and infructuous cademic and infructuous. Accordingly, we are not adjudicating we are not adjudicating upon.
ITA Nos. 2805 to 2807/M/2018 ITA Nos. 2805 to 2807/M/2018 37 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
The ground No. 1 to 4 (wrongly mentioned as ground No. 8 to ground No. 1 to 4 (wrongly mentioned as ground No. 8 to ground No. 1 to 4 (wrongly mentioned as ground No. 8 to 11) of the appeal of assessee related to challenging assumption of 11) of the appeal of assessee related to challenging assumption of 11) of the appeal of assessee related to challenging assumption of jurisdiction under section 147 and validity of the assess jurisdiction under section 147 and validity of the assess jurisdiction under section 147 and validity of the assessment are dismissed.
In the result, the appeal In the result, the appeals to the extent of the ground recalled, to the extent of the ground recalled, are dismissed.
Order pronounced in the Court on ounced in the Court on 05/08/2022. Sd/- Sd/- - (SANDEEP SINGH KARHAIL SANDEEP SINGH KARHAIL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 05/08/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Sr. Private Secretary Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai