DCIT CIR. 4(3)(2), MUMBAI vs. VIPUL IMPEX & INFRABUILD LTD., MUMBAI

आदेश / O R D E R

Per Joginder Singh (Judicial Member) This bunch of six appeals are by the Revenue as well

as by the assessee against the impugned orders all dated

18/02/2016 of the Ld. First Appellate Authority, Mumbai.

First, we shall take up the appeals of the assessee (ITA

No.3004 to 3006/Mum/2016).

challenged the reopening of assessment u/s 147/148 of

the Income Tax Act, 1961 (hereinafter the Act). The crux of

argument on behalf of the assessee by Shri Vimal

Punamiya is that the assessment was framed u/s 144 of

the Act and no reassessment can be made just to make an

enquiry or verification merely on information received from

Investigation Wing and further reassessment proceedings

cannot be initiated on suspicion. The assessee has also

ITA Nos.2313 to 2315 and 3004 to 3 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. filed written submissions, which are kept on record. The

Ld. counsel reiterated its submissions, mentioned in the

written submissions. Our attention was invited to various

pages of the paper book/written submissions by claiming

that the payment was made by account payee cheque. Our

attention was also invited to section 40A(3) of the Act. On

the other hand, the Ld. CIT-DR. Shri Abhijit Patankar,

strongly defended the reopening of assessment by arguing

that it was validly done. It was pleaded that certain

information were received from the investigation wing. Our

attention was invited to the reasons for reopening of case

u/s 148, which has been reproduced in the assessment

order. It was pleaded that in spite of issuance of statutory

notice u/s 143(2) and 142(1), the assessee did not appear

before the Ld. Assessing Officer, therefore, the assessment

was framed u./s 144 of the Act and the Ld. Assessing

Officer was forced to pass and ex-parte order due to non-

compliance of the notices served upon the assessee.

2.1. We have considered the rival submissions and

perused the material available on record. So far as, re-

ITA Nos.2313 to 2315 and 3004 to 4 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. opening of assessment u/s 147/148 of the Act on the plea

that the Ld. AO ignored the fact that there was no reason to

believe that income has escaped assessment as there was

no tangible material with the Assessing Officer and

independent application of mind is concerned, we find that

the assessee did not respond to the notice issued u/s 148

of the Act, which was issued after recording the reasons for

reopening and the same was duly served upon the

assessee, thereafter, notices u/s 143(2) and 142(1) were

also served upon the assessee. There was information with

the Assessing Officer that the assessee made payments by

way of other than account payee cheque for purchase office

and these amounts were more than Rs.20,000/-, therefore

no deduction is allowed with respect to such expenditure.

With this background, we shall analyze whether the Ld.AO

was right in re-opening the assessment u/s.147 of the Act.

2.2 In the light of the foregoing discussions, it is our

bounded duty to examine the validity of reopening u/s 147

r.w.s 148 of the Act. Before adverting further we are

ITA Nos.2313 to 2315 and 3004 to 5 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. reproducing hereunder the relevant provision of section

147 of the Act for ready reference and analysis:-

“. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1.—Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.—For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :— (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person

ITA Nos.2313 to 2315 and 3004 to 6 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax ; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E; (c) where an assessment has been made, but— (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed; (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.—For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.—For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.”

2.3. If the aforesaid provision of the Act is analyzed,

we find that after insertion of Explanation -3 to section 147

of the Act by the Finance (No.2) Act of 2009 with effect from

01/04/1989 section 147 has an effect that Assessing

officer has to assess or reassess income (such income)

ITA Nos.2313 to 2315 and 3004 to 7 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. which has escaped assessment and which was basis of

formation of belief and, if he does so, he can also assess or

reassess any other income which has escaped assessment

and which came to the notice during the course of

proceedings. Identical ratio was laid down by Hon’ble

jurisdictional High Court in CIT vs Jet Airways India Pvt.

Ltd. (2010) 195 taxman 117 (Mum.) and the full Bench

decision from Hon’ble Kerala High Court in CIT vs Best

Wood Industries and Saw Mills (2011) 11 taxman.com 278

(Kerala)(FB). A plain reading of explanation-3 to section

147 clearly depicts that the Assessing Officer has power to

make addition, where he arrived to a conclusion that

income has escaped assessment which came to his notice

during the course of proceedings of reassessment u/s 148.

Our view is fortified by the decision in Majinder Singh Kang

vs CIT (2012) 25 taxman.com 124/344 ITR 358 (P & H) and

Jay Bharat Maruti Ltd. Vs CIT (2010) Tax LR 476 (Del.) and

V. Lakshmi Reddy vs ITO (2011) 196 taxman 78 (Mad.).

The provision of the Act is very much clear as with effect

from 01/04/1989, the Assessing Officer has wide powers to

initiate proceedings of reopening. The Hon’ble Kerala High

ITA Nos.2313 to 2315 and 3004 to 8 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. Court in CIT vs Abdul Khadar Ahmad (2006) 156 taxman

206 (Kerala) even went to the extent so long as the AO has

independently applied his mind to all the relevant aspect

and has arrived to a belief the reopening cannot be said to

be invalid.

2.4. We are aware that “mere change of opinion”

cannot form the basis of reopening when the necessary

facts were fully and truly disclosed by the assessee in that

situation, the ITO is not entitled to reopen the assessment

merely on the basis of change of opinion. However, powers

under amended provision are wide enough where there is a

reasonable belief with the Assessing Officer, that income

has escaped assessment, because the powers with effect

from 01/04/1989 are contextually different and the

cumulative conditions spelt out in clauses (a) and (b) of

section 147, prior to its amendment are not present in the

amended provision. The only condition for action is that

the Assessing Officer “should have reason to believe” that

income chargeable to tax has escaped assessment. Such

belief can be reached in any manner and is not qualified by

a pre-condition of faith and true disclosure of material facts

ITA Nos.2313 to 2315 and 3004 to 9 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. by an assessee as contemplated in pre-amended section

much wider under the amended provision. Our view is

fortified by the decision from Hon’ble Delhi High Court in

Bawa Abhai Singh vs DCIT (2001) 117 taxman 12 and

Rakesh Agarwal vs ACIT (1996) 87 taxman 306 (Del.). The

Hon’ble Apex Court in CIT vs Sun Engineering works Pvt.

Ltd. 198 ITR 297 (SC) clearly held that proceedings u/s

147 are for the benefit for the Revenue, which are aimed at

gathering the ‘escaped income’. At the same time, We are

aware that powers u/s 147 and 148 of the Act are not

unbridled one as it is hedged with several safeguards

conceived in the interest of eliminating room for abuse of

this power by the AO. However, the material available on

record, clearly indicates that income chargeable to tax had

escaped assessment, therefore, the ld. Assessing Officer

was within his jurisdiction to reopen the assessment. The

Hon’ble Apex Court in Ess Ess Kay Engineering Co. Pvt.

Ltd. (2001) 247 ITR 818 (SC) held that merely because the

case of the assessee was correct in original assessment for

the relevant assessment year, it does not preclude the ITO

ITA Nos.2313 to 2315 and 3004 to 10 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. to reopen the assessment of an earlier year on the basis of

finding of his fact that fresh material came to his

knowledge.

2.5. Under section 147, as substituted with effect

from 01/04/1989, the scope of reassessment has been

widened. After such substitution, the only restriction, put

in that section is that “reason to believe”. That reason has

to be a reason of a prudent person which should be fair

and not necessarily due to failure of the assessee to

disclose fully and partially some material facts relevant for

assessment (Dr. Amin’s Pathology Laboratory vs JCIT

(2001) 252 ITR 673, 682 (Bom.) Identical ratio was laid

down by Hon’ble Delhi High court in United Electrical

Company Pvt. Ltd. vs CIT (2002) 258 ITR 317, 322 (Del.)

and Prafull Chunnilal Patel vs ACIT 236 ITR 832, 838

(Guj.). The essential requirement for initiating

reassessment proceeding u/s 147 r.w.s 148 of the Act is

that the ld. Assessing Officer must have reason to believe

that any income chargeable to tax has escaped assessment

for any assessment year. The Hon’ble Gujara High Court in

Prafull Chunnilal Patel vs ACIT (supra) even went to the

ITA Nos.2313 to 2315 and 3004 to 11 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. extent that at the initiation stage formation of reasonable

belief is needed and not a conclusive finding of facts.

Identical ratio was laid down in Brijmohan Agrawal vs

ACIT (2004) 268 ITR 400, 405 (All.) and Ratnachudamani

S. Utnal vs ITO (2004) 269 ITR 272, 277 (Karnataka)

applying Sowdagar Ahmed Khan vs ITO (1968) 70 ITR

79(SC).

2.6. So far as, the meaning of expression, “reason to

believe” is concerned, it refers to belief which prompts the

Assessing Officer to apply section 147 to a particular case.

It depend upon the facts of each case. The belief must be of

an honest and reasonable person based on reasonable

grounds. The Assessing Officer is required to act, not on

mere suspicion, but on direct or circumstantial evidence.

Our view find support from the ratio laid down in following

cases:-

i. Epica Laboratories Ltd. vs DCIT 251 ITR 420, 425-426 (Bom.), ii. Vishnu Borewell vs ITO (2002) 257 ITR 512 (Orissa), iii. Central India Electric Supply Company Ltd. vs ITO (2011) 333 ITR 237 (Del.), iv. V.J. Services Company Middle East ltd. vs DCIT (2011) 339 ITR 169 (Uttrakhand),

ITA Nos.2313 to 2315 and 3004 to 12 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. v. CIT vs Abhyudaya Builders (P. ) Ltd. (2012) 340 ITR 310 (All.), vi. CIT vs Dr. Devendra Gupta (2011) 336 ITR 59 (Raj.), vii. Emirates Shipping Line FZE vs Asst. DIT (2012) 349 ITR 493 (Del.). viii. Reference may also made to following judicial decisions:- ix. Safetag international India P. Ltd. (2011) 332 ITR 622 (Del.), x. CIT vs Orient Craft Ltd. (2013) 354 ITR 536 (Del.) xi. Acorus Unitech Wirelss Pvt. Ltd. vs ACIT (2014) 362 ITR 417 (Del.). xii. Praful Chunilal Patel: Vasant Chunilal Patel vs Asst. CIT (1999) 832, 843-44, 844-45 (Guj.), xiii. Venus Industrial Corporation vs Asst. CIT (1999) 236 ITR 742, 746 (Punj.), xiv. Srichand Lalchand Talreja vs Asst. CIT (1998) 98 taxman 14, 19 (Bom.), xv. Usha Beltron Ltd. vs JCIT (1999) 240 ITR 728, 736-37, 739 (Pat.) xvi. Kapoor Brothers vs Union of India (2001) 247 ITR 324, 331, 332-33 xvii. Vippy Processors Pvt. Ltd. vs CIT (2001) 249 ITR 7, 8 (MP)

2.7. In Dilip S. Dahanukar vs Asst. CIT (2001) 248 ITR

147, 150-51 (Bom.). The Hon’ble jurisdictional High Court

held as under:-

“Held, that there was material on record on the basis of survey and statement of person to show that the assessee had wrongfully claim deduction u/s 80IA. Therefore, the Assessing Officer had reason to believe that income had

ITA Nos.2313 to 2315 and 3004 to 13 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. escaped assessment for assessment year 1994- 95.”

Identically in the case of Srichand Lalchand Talreja

v. Asst. CIT, (1998) 98 Taxman 14, 19 (Bom), where the

information regarding acquisition of the asset was not

available with the Assessing Officer during the relevant

assessment year 1992-93 and such information was

disclosed in the return for the assessment year 1995-

96, the Hon’ble jurisdictional High Court held that the

Assessing Officer can form a bona fide belief that there

was escapement of income in relation to assessment

year 1992-93.

2.8. The Hon’ble jurisdictional High Court in Export

Credit Guarantee Corporation of India Ltd. v. Addl. CIT,

(2013) 350 ITR 651 (Bom), where there had been no

application of mind to the relevant facts during the course

of the assessment proceedings by the Assessing Officer, the

reopening of the assessment was held to be valid.

2.9. The Hon’ble jurisdictional High Court in

Girilal & Co. v. S.L. Meena, ITO, (2008) 300 ITR 432

ITA Nos.2313 to 2315 and 3004 to 14 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. (Bom), held that in order to invoke the extraordinary

jurisdiction of the court the petitioner must also make

out a case that no part of the relevant material had

been kept out from the Assessing Officer). The

information was in the annexures and consequently

Explanation 2(c)(iv) of section 147 would apply. The

reassessment proceedings after four years were valid.

2.10. In the case of Deputy CIT v. Gopal Ramnarayan

Kasat, (2010) 328 ITR 556 (Bom), it was not the case of the

assessee that the notice issued was after the expiry of the

time limit provided in section 153(2). The reassessment

proceedings were held to be valid. In Indian Hume Pipe Co.

Ltd. v. Asst. CIT, (2012) 348 ITR 439 (Bom), both in the

computation of taxable long-term capital gains in the

original return of income and in the computation that was

submitted in response to the query of the Assessing Officer

there was a complete silence in regard to the dates on

which the amounts were invested, as such there being a

failure to disclose fully and truly material facts necessary

ITA Nos.2313 to 2315 and 3004 to 15 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. for assessment. The reassessment proceedings were held to

be valid. This view was also confirmed in following cases:-

a. Dalmia P. Ltd. v. CIT, (2012) 348 ITR 469 (Del); b. CIT v. K. Mohan & Co. (Exports), (2012) 349 ITR 653 (Bom); c. Remfry & Sagar v. CIT, (2013) 351 ITR 75 (Del); d. OPG Metals & Finsec Ltd. v. CIT, (2013) 358 ITR 144 (Del).

2.11. In the case of Venus Industrial Corporation v.

Asst. CIT, (1999) 236 ITR 742, 746 (P & H) [Where initiation

was started within four years for re-examining the

deduction under section 80HHC, was held to be wrongly

allowed in the original assessment. Identically, in the case

of Happy Forging Ltd. v. CIT, (2002) 253 ITR 413,416-17 (P

& H), where excise duty paid in advance was shown as an

asset in the balance sheet and was allowed as a deduction,

reassessment notice on the ground that excise duty was

shown as an asset in the balance sheet and was not routed

through the profit and loss account. The reopening at this

stage was held to be valid. In the case of Vipan Khanna

v. CIT, (2002) 255 ITR 220, 230 (P & H), where from the

facts it was clear that the assessee had claimed

ITA Nos.2313 to 2315 and 3004 to 16 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. depreciation in the return at the rate of 50 per cent and he

had nowhere disputed the fact that the admissible rate of

depreciation to him was 40 per cent., such fact alone was

sufficient to initiate reassessment proceedings under

section 147 and, therefore, such initiation was sustained.

The Hon’ble Punjab & Haryana High Court in Mrs. Rama

Sinha v. CIT, (2002) 256 ITR 481, 483, 486, where the

reassessment notice has been issued on the basis of

definite information from CBI regarding investments by the

assessee which had not been disclosed during the original

assessment proceedings, such initiation has been upheld.

2.12. In the case of Pal Jain v. ITO, (2004) 267 ITR

540, 544-45, 548, 549 (P & H), applying Phool Chand

Bajrang Lal v. ITO, (1993) 203 ITR 456 (SC), although the

transaction of sale of shares was disclosed and accepted in

the original assessment, but the subsequent discovery by

the DDI (Investigation) revealed that the transaction was

not genuine, a reassessment notice after four years has

been held to be valid because there was no true disclosure

of the material facts. In this regard, the petitioner-assessee

ITA Nos.2313 to 2315 and 3004 to 17 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. cannot draw any support from the statement for

challenging the validity of the notice for reassessment. It

goes without saying that for the purpose of making the

assessment, the Assessing Officer shall have to confront the

petitioner with the entire material in his possession on the

basis of which he proposes to make the additions. In

Punjab Leasing Pvt. Ltd. v. Asst. CIT, (2004) 267 ITR 779,

781-82 (P & H), where depreciation was allowed to the

assessee, who was engaged in the business of financing of

vehicles and consumer durables on 'hire-purchase basis' as

well as on 'lease/rent basis', a reassessment notice issued

after four years has been held not to suffer from any

illegality as the same was based on the bona fide action of

the competent authority to determine whether or not the

vehicles in respect of which the petitioner had been

claiming depreciation, were actually owned by it.

2.13. In Jawand Sons v. CIT(A), (2010) 326 ITR 39 (P &

H), in the initial assessment, the benefit of deduction of the

duty drawback and DEPB under section 80-IB was wrongly

granted to the assessee, for which it was not entitled.

Therefore, reassessment proceedings to withdraw the

ITA Nos.2313 to 2315 and 3004 to 18 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. deduction were held to be valid. Likewise, in CIT v.

Hindustan Tools & Forgings P. Ltd., (2008) 306 ITR 209 (P

& H), where, the assessee in the regular assessment had

been allowed deduction more than actually allowable under

section 80HHC. Therefore, the action initiated by the AO for

reassessment under section 147(b) could not be held to be

invalid.

2.14. In the case of Markanda Vanaspati Mills Ltd. v.

CIT, (2006) 280 ITR 503 (P & H), wherein, the information

furnished by the assessee gave no clue to the payment of

liability in regard of the sales tax collected in excess. The

Assessing Officer was held to be validly initiated the

reassessment proceedings under section 147 for both the

years under consideration. In the case of Sat Narain v.

CIT, (2010) 320 ITR 448 (P & H), the document did not form

the sole basis for the Assessing Officer to initiate

reassessment proceeding but he also took into

consideration the letter written by the Assistant

Commissioner as well as the fact that no return had been

filed by the assessee for assessment year 1995-96. Thus, it

was held that the Assessing Officer had rightly invoked the

ITA Nos.2313 to 2315 and 3004 to 19 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. jurisdiction to initiate the reassessment proceedings under

section 147. In the case of CIT v. Hukam Singh, (2005)

276 ITR 347 (P & H), it was held that the respondents did

not have the locus standi to question the orders of

reassessment on the ground of lack of notice. Non-issuance

of notice to some of the legal heirs of the late P was merely

an irregularity and the same did not affect the validity of

the reassessment orders. Likewise, in Tilak Raj Bedi v.

Joint CIT, (2009) 319 ITR 385 (P & H), wherein, facts

coming to light in a subsequent assessment year could

validly form the basis for initiating reassessment

proceedings, in view of Explanation 2 to section 147. The

action of the income tax authorities in reopening the

assessment of the assessee and restricting the deduction

under section 80-IB was held to be valid.

2.15. In the case of Smt. Usha Rani v. CIT, (2008) 301

ITR 121 (P & H), there was nothing on record to show the

relationship between the donor and the donee, capacity of

the donor to make gifts and the occasion therefore. The

assessee had failed to discharge the onus to prove the gifts.

The reassessment proceedings were held to be valid. In the

ITA Nos.2313 to 2315 and 3004 to 20 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. case of Usha Beltron Ltd. v. Joint CIT, (1999) 240 ITR 728,

736-37, 739 (Pat), where the investigation report indicated

that the Officer had reason to believe that on account of

failure on the part of the petitioner-assessee to disclose

true and full facts, income had been grossly under

assessed, reassessment proceedings were held validly

initiated.

2.16. In the case of Kapoor Brothers v. Union of India,

(2001) 247 ITR 324, 331, 332-33 (Pat), where the material

evidence for the purpose of reopening of the assessment

already completed has been brought to the notice of the

authority during the course of enquiry. The notice was held

to be valid by the Hon’ble High Court. In the case of Vippy

Processors Pvt. Ltd. v. CIT, (2001) 249 ITR 7, 8 (MP), where

the need to issue notice arose due to noticing of vast

difference in value of properties disclosed by the assessee

and that of the report of the Valuation Officer and the

reasons that led to the issue of the notice were duly

recorded and the same were also adequate and based on

relevant facts and material, initiation was upheld. In Triple

ITA Nos.2313 to 2315 and 3004 to 21 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. A Trading & Investment Pvt. Ltd. v. Asst. CIT, (2001) 249

ITR 109, 110-11 (MP), where the notice was issued after

recording reasons in that regard, initiation was upheld.

2.17. Likewise, Hon’ble Gujarat High Court in Garden

Finance Ltd. v. Add/. CIT, (2002) 257 ITR 481, 489, 494-

95, special leave petition dismissed by the Supreme Court:

(2002) 255 ITR (St.) 7-8 (SC), where the assessee was

holding shares in an amalgamating company and he was

allotted shares in the amalgamated company and such

shares were sold by him and he has disclosed the market

price of such shares as on the date of amalgamation as the

cost of acquisition of such shares and has not disclosed the

cost of acquisition of shares in the amalgamating company

in accordance with section 49(2) read with section 47(vii),

initiation of reassessment proceedings after four years has

been sustained because there was failure on the part of the

assessee to disclose material facts necessary for

assessment. Likewise, in Suman Steels v. Union of India,

(2004) 269 ITR 412,418-19 (Raj), where the return of the

assessee for assessment year 1995-96 was processed under

ITA Nos.2313 to 2315 and 3004 to 22 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. section 143(1)(a) accepting the net profit rate declared by

the assessee, who carried on con- tract business, initiation

of reassessment proceedings by issuing a notice dated 15-

5-2001 proposing to reassess petitioner-assessee at higher

rate in view of the presumptive rate prescribed under

section 44AD has been sustained. In the case of Dr. Sahib

Ram Giri v. ITO, (2008) 301 ITR 294 (Raj), the

reassessment proceedings were initiated after recording

reasons in writing by the AO. The non-availability of a few

documents demanded by the assessee would not make the

reassessment proceedings initiated for the reasons recorded

in detail illegal.

2.18. In the case of Desh Raj Udyog : Chaman Udyog

v. ITO, (2009) 318 ITR 6 (All), in the assessment years in

question, the matter was still to be decided finally by the

assessing authority whether the income should be treated

under the head 'Business income' or 'property income'. The

assessee would get opportunity to show sufficient cause to

the assessing authority during the course of assessment.

Thus, it could not be said that there was no relevant

ITA Nos.2313 to 2315 and 3004 to 23 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. material to initiate proceedings under section 147. In the

case of Kartikeya International v. CIT, (2010) 329 ITR 539

(All), in view of the matter, the petitioner was not entitled

for the deduction on the duty drawback amount under

section 80-IB and since it had been allowed in the

assessment order passed under section 143(1), it had

escaped assessment. On these facts the initiation of the

proceedings under section 147 read with section 148 for

assessment years 2005-06 and 2006-07 was legal and in

accordance with law.

2.19. Likewise, in the case of Sunil Kumar lain: Suresh

Chandra lain v. ITO, (2006) 284 ITR 626 (All),

notwithstanding the fact that the amount had been

assessed to tax in the hands of P, he had taken a stand

that the amount did not belong to him and instead

belonged to S. Thus, it was not clear as to in whose hands

the amount in question had to be assessed. The ITO was

justified in taking proceedings under section 147 for

assessing the amounts in the hands of the petitioners

according to the claim made by the petitioners. Likewise,

ITA Nos.2313 to 2315 and 3004 to 24 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. Hon’ble Kerala High Court in CIT v. Dr. Sadique Ummer,

(2010) 322 ITR 602 (Ker), where, the Assessing Officer

collected further information to complete the reassessments

which was also permissible under the Act. The finding of

the first appellate authority as well as the Tribunal, that

the Assessing Officer had no material to believe that the

income had escaped assessment was wrong and contrary to

facts. The assessee had not maintained any books of

account. Therefore, the reopening of assessments was held

to be valid and within time. In the case of CIT v. Uttam

Chand Nahar, (2007) 295 ITR 403 (Raj), the notice

requiring the assessee to file the return within 30 days was

in accordance with section 148 as it must be deemed to be

in force with effect from 1-4-1989, and in force as on the

date notice was issued. There was no violation of section

148 in respect of the specified period within which the

return is to be submitted. The reassessment proceedings

were held to be valid.

2.20. In the case of CIT v. C. V. layachandran, (2010)

322 ITR 520 (Ker), where, the assessee did not concede the

ITA Nos.2313 to 2315 and 3004 to 25 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. income on capital gain either under the un-amended

provision or un-der the amended provision, the recourse

open to the Department was to bring to tax income

escaping assessment under section 147 which was not time

barred or otherwise invalid. Likewise, in Atul Traders v.

ITO, (2006) 282 ITR 536 (All), the account books or record

and other material were all common which were being

considered by the CIT(A) in the proceedings relating to

three appeals. The petitioner had notice and opportunity of

being heard. The reassessment proceedings were held to be

validly initiated. In the case of Inductotherm (India) P. Ltd.

v. lames Kurian, Asst. CIT, (2007) 294 ITR 341 (Guj), the

Assessing Officer had found that there were errors in the

computation of allowances. The reassessment proceedings

were held to be valid. In the case of Papaya Farms Pvt. Ltd.

vs. DCIT, (2010) 323 ITR 60 (Mad), where the assessee had

furnished incorrect particulars and therefore, the reopening

of the assessment was held to be justified.

2.21 In the case of CIT v. Kerala State Cashew

Development Corporation Ltd., (2006) 286 ITR 553 (Ker),

ITA Nos.2313 to 2315 and 3004 to 26 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. wherein, the assessee was following the mercantile system

of accounting should not have claimed deduction of penal

interest which had accrued not in the previous year

relevant to the assessment year but in earlier years. This

the assessee had not disclosed. The reassessment was held

to be valid. Likewise, in Kusum Industries P. Ltd. v. CIT,

(2008) 296 ITR 242 (All), as the award had become final it

would be taken that the directors of the assessee had

accepted the factum of earning of secret profit not reflected

in the books of account, which was also binding on the

company. The non-appearance of one of the arbitrators and

one of the directors in respect of the summon issued under

section 131 would not make the reassessment invalid. The

Hon’ble Kerala High Court in CIT v. Indo Marine Agencies

(Kerala) P. Ltd., (2005) 279 ITR 372 (Ker), held that the

entry would amount to an order under section 144. The

mere fact that it was not communicated to the assessee

would not make such an assessment recorded in the order

sheet illegal and that would not bar further proceedings

under section 147. Thus, the assessment was held to be

validly reopened under Explanation 2(c) to section 147.

ITA Nos.2313 to 2315 and 3004 to 27 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. Likewise, in CIT v. N. Jayaprakash, (2006) 285 ITR 369

(Ker), where, the assessee could not, after having

persuaded the assessing authority to withdraw the notice

dated 1-10-1993, pointing out that it was not in conformity

with law, be allowed to contend that the notice was valid

due to the omission of the time-limit by the Finance (No.2)

Act, 1996, with effect from 1-4-1989. In the absence of

specific provision in the Finance (No. 2) Act, 1996,

invalidating proceedings initiated by the Income-tax Officer,

the action taken by him applying the then existing law

could not be said to be invalid.

2.22 Likewise, in CIT v. S.R. Talwar, (2008) 305 ITR

286 (All), the factum of taking advances or loan from T and

K, in which the assessee was one of the directors had not

been disclosed nor a copy of the ledger account of the

assessee maintained by the company filed. In view of the

absence of these details, the Assessing Officer could not

examine the taxability of advances or loan raised by the

assessee. There was failure to disclose material facts

necessary for assessment. The reassessment proceedings

ITA Nos.2313 to 2315 and 3004 to 28 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. were held to be valid. In another case, the Hon’ble

Allahabad High Court in Chandra Prakash Agrawal v. Asst.

CIT, (2006) 287 ITR 172 (All), wherein, the Income-tax

Department had sent a requisition on 27-3-2002, under

section 132A requisitioning the books of account and other

documents seized by the Central Excise Department. The

record of the proceeding dated 18-4-2002, showed that the

requisition was not fully executed as all the books of

account and other documents had not been delivered to the

requisitioning authority. The proceedings initiated under

section 147 was held to be valid.

2.23 In Ramilaben Ratilal Shah v. CIT, (2006) 282

ITR 176 (Guj), held that the noting in the diary

constituted sufficient information for the escapement

of income by either non-declaration of correct sale

consideration or furnishing of inaccurate particulars as

regards sale consideration. Thus, the Tribunal was

justified in holding that the assessee had failed to

disclose fully and truly all material facts necessary for

ITA Nos.2313 to 2315 and 3004 to 29 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. the assessment of the relevant assessment year. The

reassessment proceedings had been validly initiated.

2.24 Likewise, in CIT v. Abdul Khader Ahamed,

(2006) 285 ITR 57 (Ker), it was clear from the reasons

recorded by the Deputy CIT that he prima facie had reason

to believe that the assessee had omitted to disclose fully

and truly the material facts and that as a consequence

income had escaped assessment. The reassessment was

held to be valid. In the case of U.P. State Brassware

Corporation Ltd. v. CIT, (2005) 277 ITR 40 (All), the

principles laid down by the Calcutta High Court in CIT v.

New Central Jute Mills Co. Ltd. : (1979) 118 ITR 1005 (Cal)

did constitute information on a point of law which should

be taken into consideration by the ITO in forming his belief

that the income to that extent had escaped assessment to

tax and, the reassessment was held to be valid. In Sunder

Carpet Industries v. ITO, (2010) 324 ITR 417 (All), held that

the Departmental Valuer's Report constituted material for

entertaining a belief of escaped income in the years under

ITA Nos.2313 to 2315 and 3004 to 30 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. consideration. The reassessment proceeding was held to be

valid.

2.25 In Aurobindo Sanitary Stores v. CIT, (2005) 276

ITR 549 (Ori), there being a substantial difference between

the figures of liabilities towards sundry creditors in the

party ledgers of the assessee-firm and the figures of

liabilities towards sundry creditors in the balance-sheet of

the assessee-firm for the previous year relevant to the

assessment year 1989-90. These materials had a direct link

and nexus for formation of a belief by the Assessing Officer

that income of the assessee-firm had escaped assessment

because of failure of the assessee to disclose fully and truly

all material facts necessary for the assessment. In the case

of CIT v. Best Wood Industries & Saw Mills, (2011) 331 ITR

63 (Ker), the assessee challenged the validity of the

reassessment on the ground that the AO had exceeded his

jurisdiction under section 147 and both the first appellate

authority as well as the Tribunal accepted the contention of

the assessee holding that so far as the reassessments

related to assessment of unexplained trade credits, they

ITA Nos.2313 to 2315 and 3004 to 31 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. were invalid. On appeal, it has been held that the

reassessments were to be valid. In Honda Siel Power

Products Ltd. v. Deputy CIT, (2012) 340 ITR 53 (Del), there

being omission and failure on the part of the assessee to

disclose fully and truly material facts Thus reassessment

proceedings were held to be valid.

In Atma Ram Properties Private Ltd. v. Deputy CIT,

(2012) 343 ITR 141 (Del), as the books of account and other

material were not produced and no letter was filed, the

order passed by the Commissioner (Appeals) in the

assessment year 2001-02 would constitute 'information' or

material from any external source and, as such, the

reassessment proceedings for the assessment year 2000-01

were held to be valid. Likewise, in the case of CIT v. Smt.

R. Sunanda Bai, (2012) 344 ITR 271 (Ker), the

reassessment in question were held to be valid on the fact

that the assessee claimed and was given relief under

section 80HHA for the three preceding year which

disentitled her for deduction under section 80HH for the

assessment years 1992-93 and 1993-94.

ITA Nos.2313 to 2315 and 3004 to 32 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd.

2.26 In the case of Aquagel Chemicals P. Ltd. v. Asst.

CIT, (2013) 353 ITR 131 (Guj), since there being sufficient

material on record for the Assessing Officer to form a belief

as regards the escapement of income in relation to the

claim of depreciation in respect of the building of coal fire

boiler, the reassessment was held to be valid. In the case

of Convergys Customer Management v. Asst. DIT, (2013)

357 ITR 177 (Del), where there being prima facie material in

the possession of the Assessing Officer to form a tentative

belief that section 9(1)(i) held attracted, said reason by itself

constituted a relevant ground to reopen the assessment of

the assessee.

Reference may also be made to i. Ajai Verma v. CIT [(2008) 304 ITR 30 (All)]; ii. Ashok Arora v. CIT [(2010) 321 ITR 171 (Del)]; iii. CIT v. Chandrasekhar BaLagopaL [(2010) 328 ITR 619 (Ker)]; iv. Jayaram Paper Mills Ltd. v. CIT [(2010) 321 ITR 56 (Mad)]; v. Kerala Financial Corporation v. Joint CIT [(2009) 308 ITR 434 (Ker)]; vi. Mavis Satcom Ltd. v. Deputy CIT [(2010) 325 ITR 428 (Mad)]; vii. CIT v. Madhya Bharat Energy Corporation Ltd. [(2011) 337 ITR 389 (Del)];

ITA Nos.2313 to 2315 and 3004 to 33 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. viii. Kone Elevator India P. Ltd. v. ITO [(2012) 340 ITR 454 (Mad)]; ix. Vijay Kumar Saboo v. Asst. CIT [(2012) 340 ITR 382 (Karn)]; x. Siemens Information Systems Ltd. v. Asst. CIT [(2012) 343 ITR 188 (Bom)]; xi. I.P. Patel & Co. v. Deputy CIT [(2012) 346 ITR 207 (Guj)]; xii. Dishman Pharmaceuticals & Chemicals Ltd. v. Deputy CIT [(2012) 346 ITR 228 (Guj)]; xiii. Video Electronics Ltd. v. Joint CIT [(2013) 353 ITR 73 (Del)]; xiv. A G Group Corporation v. Harsh Prakash [(2013) 353 ITR 158 (Guj)]; xv. Inductotherm (India) P. Ltd. v. M. GopaLan, Deputy CIT [(2013) 356 ITR 481 (Guj)]; CIT v. Dhanalekshmi Bank Ltd. [(2013) 357 ITR 448 (Ker)]; xvi. Sitara Diamond Pvt. Ltd. v. ITO [(2013) 358 ITR 424 (Bom)]; xvii. Rayala Corporation P. Ltd. v. Asst. CIT [(2014) 363 ITR 630 (Mad)].

2.27 So far as, the decision in the case of CIT vs

Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) is

concerned, the Hon’ble Apex Court, while coming to a

particular conclusion, only in a situation, when not a single

piece of paper or document was recovered, therefore, the

Hon’ble Court held that since there was no tangible

material found and the addition was merely on the basis of

ITA Nos.2313 to 2315 and 3004 to 34 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. statement only then reopening of assessment u/s 147 of

the Act was not permissible. Likewise, in the case of CIT vs

S. Khader Khan Son (2012) 254 CTR 228 (SC), affirming

the decision of Madras High Court in (2008) 300 ITR 157

(Mad.), the whole addition was made solely on the basis of

statement u/s 133A and no other material was found, in

that situation, it was held that the such statement has no

evidentiary value.

2.28. It is noted that Hon'ble jurisdictional High Court

in the case of Yuvraj vs UOI (2009) 315 ITR 84 (Bom.) held

as under:-

“that from the perusal of the order one found no application of mind on the part of the Asstt. Commissioner to the facts of the case, the issue to be dealt with and the reasons for passing the order. The value of the land was not determined by the revenue. The issue relating to capital gain or casual income was also not addressed by the revenue. In the light of the same, in the facts of the case, the Assessing Officer was justified in issuing the notice under section 148. The Asstt. Commissioner did not apply his mind and failed to record good and proper reasons for passing the order. In the facts of the case, one did not find mere change of opinion in recording reasons for issuing notice under section 148 by the Assessing Officer. Likewise, Hon'ble Apex Court in the case of Raymond

Woollen Mills Ltd. vs Income Tax Officer (1999) 236 ITR 34

(Supreme Court) held that the Supreme Court had only to

ITA Nos.2313 to 2315 and 3004 to 35 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. see whether there was prima facie some material on the

basis of which the Department could reopen the case. The

sufficiency or correctness of the material was not a thing to

be considered at this stage. The Supreme Court could not

strike down the reopening of the case in the facts of the

instant case. It would be open to the assessee to prove that

the assumption of facts made in the notice was erroneous.

The assessee might also prove that no new facts came to

the knowledge of the ITO after completion of the

assessment proceeding. The Supreme Court was not

expressing any opinion on the merits of the case. The

questions of fact and law were left open to be investigated

and decided by the assessing authority. The assessee

would be entitled to take all the points before the assessing

authority. The appeals were dismissed.

2.29. If the material available on record and the

judicial pronouncements discussed hereinabove are kept in

juxtaposition with the facts of the present appeal, we find

that the Ld. Assessing Officer was genuinely of the view

that income chargeable to tax has escaped assessment as

the assessee could not prove the genuineness of the

ITA Nos.2313 to 2315 and 3004 to 36 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. transactions for purchasing fish and even the assessee did

not appear before the Ld. Assessing Officer and even

respond to the notices served upon the assessee and were

issued u/s 147, 143(2) and 142(1) of the Act. Therefore, the

assessee certainly cannot challenge the reopening of

assessment and the Ld. Assessing Officer was forced to

frame assessment u/s 144 of the Act. Thus, the totality of

facts available on record, clearly indicates that there was

reasonable belief with the Assessing Officer that income

chargeable to tax had escaped assessment. Consequently,

so far as reopening is concerned, in the light of foregoing

discussion, we do not find any infirmity in the conclusion

of the Ld. Commissioner of Income Tax (Appeal), thus, this

ground of the assessee is devoid of any merit, therefore,

dismissed. This will also cover identical ground in the

appeals of the assessee for remaining Assessment Years.

assessee is that the Ld. Commissioner of Income Tax

(Appeal) erred in confirming the assessment order passed

u/s 144 of the Act, which is against the principle of natural

justice. We have perused the record and find that notices

ITA Nos.2313 to 2315 and 3004 to 37 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. u/s 147, 143(2) and 143(1) were issued and served upon

the assessee in spite of that the assessee choose not to

appear, thus, we find no merit in the ground raised by the

assessee, because, it was the duty of the assessee to make

effective representation and to respond to the statutory

notices issued to the assessee. Thus, there is no violation

of principle of natural justice as has been claimed by the

assessee. This ground is also dismissed. This will also

cover identical grounds in remaining appeals of the

assessee.

disallowance of Rs.11,06,557/-(out of Rs.55,32,788/- made

by the Assessing Officer) u/s 40A(3) of the Act. The

contention of the Ld. counsel for the assessee is that the

assessee is exporter of fresh and frozen sea food and the

business of the assessee is seasonal and highly perishable

in nature, therefore, the assessee is dependent upon koli,

Aadiwasis and tribal fisherman, who are living near the sea

shores from whom the fishes are purchased by making

payment in cash as well as the bearer cheque. Some of the

purchases are made through traders where the payments

ITA Nos.2313 to 2315 and 3004 to 38 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. are made through account payee cheque. Thus, the

payment of Rs.55,32,788/- was made to such persons. Our

attention was invited to circular no.10/2010 dated

15/12/2008 by claiming that the said exception is

applicable to the assessee. Reliance was placed upon the

decision in CIT vs Blue water Foods and Exports Pvt. Ltd.

(2015) 55 taxman.com 511 (Karnataka).

4.1. On the other hand, the Ld. DR, strongly

contested the claim of the assessee by inviting our

attention to the remand report filed by the Ld. Assessing

Officer by claiming that the claim of the assessee is not

proved from the facts, therefore, it may be sent to the file of

the Ld. Assessing Officer as the assessment was framed

u/s 144 of the Act and even the Ld. Commissioner of

Income Tax (Appeal) is also silent on this issue.

4.2. We have considered the rival submissions and

perused the material available on record. The facts, in brief,

are that the assessee company is engaged in export of sea

food. The assessee claimed to have made purchases of fish

from fisherman and other traders from costal areas at

ITA Nos.2313 to 2315 and 3004 to 39 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. different places. It is noted that one of the reason for

reopening the assessment u/s 147 of the Act was that the

assessee made payment of Rs.55,32,788/- by way of other

than account payee cheque/banking channel and thus

section 40A(3) of the Act was invoked. Before adverting

further, it is our bounded duty to analyze the provision of

section 40A(3) of the Act, which is reproduced hereunder:-

(3) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, [or use of electronic clearing system through a bank account, exceeds ten thousand rupees,] no deduction shall be allowed in respect of such expenditure.

(3A) Where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year (hereinafter referred to as subsequent year) the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, 19[or use of electronic clearing system through a bank account], the payment so made shall be deemed to be the profits and gains of business or profession and accordingly chargeable to income-tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day, exceeds 20[ten] thousand rupees: Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3) and this sub- section where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee

ITA Nos.2313 to 2315 and 3004 to 40 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. cheque drawn on a bank or account payee bank draft, 21[or use of electronic clearing system through a bank account, exceeds ten thousand rupees,] in such cases and under such circumstances as may be prescribed22, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors : Provided further that in the case of payment made for plying, hiring or leasing goods carriages, the provisions of sub-sections (3) and (3A) shall have effect as if for the words "23[ten] thousand rupees", the words "thirty-five thousand rupees" had been substituted. (4) Notwithstanding anything contained in any other law for the time being in force or in any contract, where any payment in respect of any expenditure has to be made by an account payee cheque drawn on a bank or account payee bank draft 24[or use of electronic clearing system through a bank account] in order that such expenditure may not be disallowed as a deduction under sub-section (3), then the payment may be made by such cheque or draft 23[or electronic clearing system]; and where the payment is so made or tendered, no person shall be allowed to raise, in any suit or other proceeding, a plea based on the ground that the payment was not made or tendered in cash or in any other manner. 4.3. A plain reading of section 40A(3), makes it clear

that where the assessee makes a payment otherwise by an

account payee cheque drawn on a bank or account payee

draft, the payment so made shall be deemed to be the profit

of business or profession and accordingly chargeable as per

sub-section (3A) whereas, as per sub-section (3) substituted

by the Finance Act, 2008 w.e.f. 01/04/2009 and prior to its

substitution amended by Finance Act 1987, where the

ITA Nos.2313 to 2315 and 3004 to 41 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. payment or aggregate of payment to a person in a day,

otherwise by an account payee cheque/draft, no deduction

shall be allowed in respect of such expenditure. Without

going into much deliberation, it is noted that the assessee

knowingly willfully did not appear before the Assessing

Officer and even did not respond to the notices issued and

served upon u/s 147, 143(2) and 143(1) of the Act. The Ld.

Assessing Officer was precluded from examining the factual

matrix. Even the Ld. Commissioner of Income Tax (Appeal)

while coming to a particular conclusion has not examined

the facts in detail. Even otherwise, the mandate of Article-

265 of Constitution of India, only due taxes has to be

levied/collected, therefore, to safeguard the interest of

assessee as well as of the Revenue, we deem it appropriate

to remand this issue to the file of the Ld. Assessing Officer

to examine the factual matrix and decide in accordance

with law. This ground is, therefore, allowed for statistical

purposes. This will also cover identical ground for

Assessment Year 2008-09 and 2010-11 (ITA No.3005 &

3006/Mum/2016) also.

ITA Nos.2313 to 2315 and 3004 to 42 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. 5. Ground no. 5 relates to confirming the addition

made on account of unexplained cash credit amounting to

Rs.36,68,160/- made u/s 68 of the Act. The crux of the

argument on behalf of the assessee is that except two

parties, all other parties replied to the notices. On the

other hand, the Ld. CIT-DR defended the addition

sustained by the Ld. Commissioner of Income Tax (Appeal).

5.1. We have perused the record and find that the Ld.

Assessing Officer on comparison of profit & loss account of

Assessment Year 2007-08 and 2006-07, observed that

there is an increase by Rs.1,35,00,000/- in respect of

Share Capital. The assessee was asked to produce

documentary evidence with respect to unsecured loans. No

compliance was made by the assessee. The Ld. Assessing

Officer considering certain decisions like Power drugs Ltd.

(2011) 13 taxman.com 56 (P & H), Hon'ble Apex Court in

Sumati Dayal 80 taxman 89 (Supreme Court) and certain

other decisions observed that the assessee failed to

discharge the onus cast up on it and thus added

Rs.1,35,00,000/- to the total income of the assessee. On

appeal, before the Ld. Commissioner of Income Tax

ITA Nos.2313 to 2315 and 3004 to 43 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. (Appeal), it was noted that the assessee received share

capital and share premium in the name of Kishan Gopal

Agarwal and Kapil K. Agarwal. In order to explain the

genuineness, the assessee was asked to provide basis for

receiving the value of share, which include the face value

along with premium. The assessee submitted a copy of

board resolution passed in the meeting held on

06/03/2007 and valuation certificate dated 26/02/2007,

issued by Chartered Accountant, showing the value of

Rs.30/-. The Ld. Commissioner of Income Tax (Appeal)

observed that in order to establish the identity,

creditworthiness and genuineness of the transaction in

totality merely filed valuation certificate. The whole

difficulty arose due to non-appearance of the assessee

before the Ld. Assessing Officer. Considering the totality of

facts, we remand this issue to the file of the Ld. Assessing

Officer to examine the claim of the assessee afresh. The

assessee is directed to furnish necessary evidence with

justification to substantiate its claim. The assessee be given

opportunity. Thus, this ground is also allowed for statistical

purposes. This will also cover identical ground i.e. No.5 for

ITA Nos.2313 to 2315 and 3004 to 44 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. Assessment Year 2008-09 and 2010-11 (ITA No.3005 &

3006/Mum/2016) also.

made on account of estimated ad-hoc gross profit at the

rate of 5% on turnover merely on presumptive basis.

Considering the arguments advanced from both sides, we

deem it appropriate to remand this issue also to the file of

the Ld. Assessing Officer. The assessee is directed to

produce the necessary evidence and to make effective

representation to substantiate its claim. This ground is also

allowed for statistical purposes. This will cover ground

number 6 for Assessment Years 2008-09 and 2010-11 (ITA

No.3005 & 3006/Mum/2016).

Revenue in ITA No.2314/Mum/2016), deleting the addition

of Rs.3,68,56,119/- made u/s 68 of the Act has been

challenged. The crux of argument on behalf of the Revenue

is that since the assessment was framed u/s 144 of the

Act, the assessee has not established the genuineness of

the sundry creditor in spite of the fact that the assessee

ITA Nos.2313 to 2315 and 3004 to 45 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. was given opportunities. On the other hand, the Ld.

Counsel for the assessee, defended the impugned order by

contending that the confirmation were received from

Meridian Shipping Services.

7.1. We have perused the records and find that the

assessee declared total income of Rs.1,31,82,030/-. Notice

u/s 148 of the Act was issued on 29/03/2012 and due to

non-compliance of notices, the assessment was framed u/s

144 of the Act determining the total income at

Rs.15,27,51,730/-. The Ld. Assessing Officer issued

notices u/s 133(6) of the Act to Merridian Shipping

Services, Hermes Travel and Cargo Pvt. Ltd, FRIDA Sea

Foods, Aqua Fish. The reply was received only from

Merridian Shipping Services, confirming the transaction

and there was no compliance from other parties rather the

notices were returned back unserved. In the case of Hermes

Travel and Cargo Pvt. Ltd. clear cut denial was made by the

party having any transaction with the assessee. However,

in para 6.3.8 of the impugned order, it has been observed

that the assessee has filed confirmation in the case of (a)

Frida Sea Foods (business) Herms Travel and Cargo Pvt.

ITA Nos.2313 to 2315 and 3004 to 46 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. Ltd. before the Assessing Officer. It has been further

observed that when the Assessing Officer made enquiries,

no positive confirmations/reply were sent to the Assessing

Officer by the respective parties and even these parties were

not produced along with their relevant books of accounts to

verify the genuineness. It is also noted that in spite of

providing sufficient opportunities to the assessee, the

assessee did not appear before the Ld. Assessing Officer

and ultimately, the assessment was framed u/s 144 of the

Act. Statutory notices u/s 148, 143(2) and 142(1) were

issued and served upon the assessee asking to furnish the

necessary details, meaning thereby, the Ld. Assessing

Officer was denied opportunities to examine the parties,

genuineness of the transactions, therefore, in the interest of

justice and fair play, we deem it appropriate to remand this

issue to the file of the Ld. Assessing Officer to examine the

claim of the assessee. The assessee is directed to produce

the concerned parties before the Assessing Officer so that

the genuineness of the transaction, creditworthiness and

identity can be examined. This ground is allowed for

ITA Nos.2313 to 2315 and 3004 to 47 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. statistical purposes. This will cover identical ground in the

remaining appeals of the Revenue also.

ITA Nos.2313 to 2315 and 3004 to 48 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. there should be proper justification for the estimation. As mentioned earlier, since, the assessee did not appear before the Assessing Officer and the assessment was framed u/s 144 of the Act and mandate of Article 265 of constitution of India to the effect that only due taxes has to be levied/collected, therefore, to safeguard the interest of both the parties, we deem it appropriate to remand this issue also to the file of the Ld. Assessing Officer for fresh adjudication. The assessee be given opportunity. This ground is allowed for statistical purposes. Our view will also cover identical ground in the remaining appeals of the Revenue.

Finally, the appeals of the assessee are partly allowed for statistical purposes whereas the appeals of the Revenue are allowed for statistical purposes.

This Order was pronounced in the open court on

16/05/2018.

Sd/- Sd/- (G. Manjunatha) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 16/05/2018 f{x~{tÜ? P.S/.�न.स.,

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

ITA Nos.2313 to 2315 and 3004 to 49 3006/Mum/2016 M/s Vipul Impex & Infrabuild Ltd. 4. आयकर आयु�त / CIT(A)- , Mumbai 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file.

आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai