SHREE HARI AGRO INDUSTRIES LIMITED ,ALWAR vs. ACIT, CENTRAL CIRCLE, ALWAR

The brief facts of Ground No.1 for A.Y. 2012-13 are that the assessee is engaged in the business of manufacturing of refined edible oil and extraction of solvent oil. The original assessment order u/s. 143(3) of the Act was made on 14.03.2015. A search was conducted on 14.10.2015 and consequently order u/s. 143(3) r.w.s. 153A of the Act was passed on 21.12.2017. Thereafter AO issued notice u/s. 148 of the Act dt. 27.03.2019 on the basis of information received from Jt. DIT (Inv.), Gurugram vide letter dt. 16.01.2018 that assessee has paid Rs. 12,25,000/- to Shri Ram Trading Company and information received from ADIT(Inv.), Unit 5(2), New Delhi vide letter dt. 23.03.2018 that assessee has made transaction of Rs. 1, 25, 15,151/- with M/s. Varsha Enterprises. However, these transactions were not examined during assessment proceedings. Notice u/s. 133(6) of the Act was issued to the assessee was not responded. Therefore, AO concluded that he has reason to believe that income of assessee to the tune of Rs. 1, 37, 40,151/- has escaped assessment on account of failure on part of assessee to disclose fully and truly all material facts necessary for his assessment. The assessee filed objection

The Ld. CIT(A)upheld the validity of reopening of assessment holding that AO has material before him for formation of reasonable belief of escapement which has live nexus in his possession for assuming valid jurisdiction for reopening u/s 147 of the Act. The Ld. AO also carried out specific enquiry directly from the appellant before reopening the case but the appellant did not furnish the information. The AO has disposed of the objections as well. Thus all the conditions for reopening of assessment are fulfilled.

The assessee submitted before us that AO has not examined the information received by him rather he has mechanically and blindly acted upon the information received from the ADIT(Inv.), New Delhi and Jt. DIT(Inv.), Gurugram without applying his own mind to arrive at believe that income of the assessee has escaped assessment. He also ignored that this amount has already been considered by the assessee in the income. Hence, the reopening of assessment only at the instance of ADIT (Inv.), New Delhi and Jt. DIT (Inv.), Gurugram is illegal and bad in law.

We find that AO received the information from Jt. DIT (Inv.), Gurugram vide letter dt. 16.01.2018 and from ADIT (Inv.), New Delhi on 23.03.2018. This is the new information which is received after the AO passed the order u/s. 143(3) r.w.s. 153A of the Act dt. 21.12.2017. The assessee has not filed reply in response to notice u/s. 133(6) of the Act dt. 13.04.2018. The objection filed by assessee was disposed of by the AO. The AO has independently applied his mind to the information received and therefore considering the overall facts of the case, the reopening of assessment u/s. 148 of the Act is as per law and thus this ground of appeal of assessee is dismissed.

The Ld. CIT (A) after reproducing the submission of the assessee at Pg 38 to 90 of the order, at Para 5.2, Pg 90 to 105 after referring to certain decisions and relying on the statement of Sh. Vipin Garg, at Pg 105 Para (xxi) held that the assessee has not furnished any judgment wherein the addition made u/s. 68 on account of accommodation entry receipt in garb of sale has been deleted whereas the sales were treated as not genuine. Even assuming that the sales are genuine the assessee has not proved the identity, genuineness and creditworthiness of these parties in as much as these parties did not respond to notice u/s. 133(6) of the Act, assessee did not produced these parties or filed their confirmation and has not furnished document like P&L A/c, Balance Sheet, bank statement of these parties. Accordingly the addition made by the AO is upheld.

The assessee submitted before us that the lower authorities have considered the transaction made with these two parties as accommodation entry ignoring that when assessee has included such amount in income as part of sale, again making addition for the same results into double addition. In support of the transaction assessee has furnished various evidences, i.e., copy of accounts of M/s. Shree Ram Trading Company and M/s. Varsha Enterprises (Annexure 17) in the books of accounts, VAT invoices (Annexure 18), freight receipt (Annexure 19), weighment receipt (Annexure 20),dispatch register (Annexure 21),VAT Form 49A (Annexure 22), CST Form-C (Annexure 23), broker note (Annexure 24), ledger account of broker (Annexure 25),excise return (Annexure 26)and complete details of sales made to both the parties (Annexure 27).The assessee has sold goods to both the parties after receipt of payment and therefore only because these concerns have not responded to the notice issued to them u/s. 133(6) of the Act that is too after a lapse of more than 6 years cannot be viewed adversely more particularly when sales made to these concerns has been accepted by AO and the assessee has offered the entire sales made to them in its income. The assessee also submitted a statement stating the rate at which goods were sold to these two concerns vis-à-vis the rate at which the goods were sold to other parties on the nearby dates to demonstrate that the rates are comparable. Reliance was placed on the decision of ITAT Jaipur Bench in case of Goyal Vegoils Ltd Vs. DCIT for AY 2012-13 where similar addition made on the basis of statement of Shri Vipin Kumar Garg in respect of sales transaction made with M/s. Shree Ram Trading Company was deleted. Accordingly assessee prayed for the deletion of entire addition made by the AO.

The Ld. D/R vehemently supported the order of Ld. CIT (A) by arguing that once the assessee has not furnished the identity of parties and genuineness of transactions, addition u/s. 68 of the Act is correctly made. In the rejoinder the A/R of assessee argued that if the sale is considered non genuine, the same should be excluded from the sales and to that extent the profit declared would be reduced which would offset the addition made u/s. 68 of the Act.

We have considered the rival contentions and perused the material available on record. From the assessment order we note that AO has not brought on record any statement or the report of ADIT (Inv.), Delhi in respect of sales made to M/s. Varsha Enterprises that this party is engaged in providing accommodation entry. The name of this party is also not appearing in the list of concerns through whom Sh. Vipin Garg was providing the accommodation entries. Hence in the absence of any documentary evidence by way of statement or otherwise, the sales made to Varsha Enterprises cannot be held

In the result, appeal of the assessee is partly allowed.

In the result, appeal of the assessee is partly allowed.

In the result of the above, both the appeals filed by the assessee is partly allowed.