IMRAN AHMAD,MORADABAD, UTTAR PRADESH vs. INCOME TAX OFFICER, MORADABAD

Delay of 482 days in filing of the assessee’s instant appeal is condoned in larger interest of justice and in light of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC). 3. We next note with the able assistance coming from the Revenue side that the learned CIT(A)/NFAC has upheld the Assessing Officer’s action setting into motion section 148/147 proceedings against the assessee thereby disallowing his purchases of Rs. 4,02,55,000/-, reading as under:- “Ground No. 1 and 2

I have considered the written submissions, including the case laws relied upon, order of the AO and material available on record. In these grounds the appellant contended that the issue of the notice u/s 148 of the Act for A.Y. 2013-14 was expired on 31.03.2021. The appellant relied on judgments passed by Hon’ble Supreme Court in the case of Ashish Agarwal Vs Union of India in Civil Appeal no 3005/2022, Hon’ble Gujrat High Court in the case of Shree and Hon’ble Allahabad High Court in the case of Rajiv Bansal Vs Union Of India & Another In Writ Tax NO 1086 OF 2022. 12. In this case notice u/s 148 of the Act was issued on 31.03.2021. The time limit for issue of notice u/s 148 of the Act, for the relevant assessment year was extended by the CBDT vide Notification No.38 of 2021-dated 27.04.2021 whereby the time limit was extended till 30.06.2021. Further, the cases relied by the appellant, examine and review the validity of notices u/s 148 of the Act which were issued from 01.04.2021 onwards for the A.Y. 2013- 14. However, in the instant case the notice u/s 148 of the Act was issued on 31.03.2021. Therefore, the judgements relied upon by the appellant are clearly not applicable to the facts of the instant case. Hence, these grounds of the appeal are dismissed.

Reliance is also placed upon the decision of Hon’ble Gujarat High Court order dated 07.01.2021 (2021) 127 taxmann.com 806 wherein it has been held that where Assessing Officer after receiving information from Investigation Wing that assessee had booked bogus expenses in names of certain entities, verified return of assessee and observed that expenses were inflated by assessee by booking bogus expenses without receiving any actual goods/services, reopening of assessment was justified.

The Hon’ble Rajasthan High Court in the case of Ankit [2018] 89 taxmann.com 45 4 | P a g e

The Hon’ble Gujarat High Court in the case of Pushpak Bullion (P.) Ltd. Vs DCIT (Entry Receiver) [2017] 85 taxmann.com 84 (Gujarat)/[2017] 250 Taxman 201 (Gujarat) wherein it was held that where investigation wing of department had during course of investigation in case of a third party found that he was indulged in providing accommodation entries and bogus bills, and assessee had made sizeable purchases from him, reopening notice against assessee was justified.

The Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd. v. ITO And Others [1999] 236 ITR 34 (SC)/[1999] 152 CTR 418 (SC) wherein it was held that in determining whether commencement of reassessment proceedings was valid it has only to be seen 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 is not a thing to be considered at this stage.

The Hon’ble Gujarat High Court in the case of Amit Polyprints (P.) Ltd. Vs DCIT [2018] 94 taxmann.com 393 (Gujarat) wherein it was held that where reassessment proceedings were initiated on basis of information received from Investigation wing that assessee had received certain amount from shell companies working as an accommodation entry provider, reassessment could not be held unjustified.

The Hon’ble Gujarat High Court in the case of Ankit Financial Services Ltd. Vs DCIT [2017] 78 taxmann.com 58 (Gujarat) wherein it was held that where material recovered in search of another person indicated that assessee had received bogus share applications through accommodation entries, since assessee was beneficiary, initiation of re-opening was justified.

In the present case it has been found as above that the AO on the basis of tangible information before him, has recorded the facts while recording the reasons to believe. In view of the above facts and discussion it is found that there is no merit in the grounds of appeal Nos. 3 taken by the appellant and the same is hereby dismissed.

In this ground the appellant has claimed that the confirmations letter of M/S Brave Traders and M/s Ashi Traders with list containing names of the suppliers were provided. Mere submission of name of supplier and confirmation on plain paper does not establish the authenticity of a huge purchase transaction particularly when the identity of supplier in absence of PAN, Address, ITR does not inspire such confidence. Mere submission of name and the fact that the purchases were through the banking channel, does not establish the genuineness of transactions.when entire purchases are establish unproved and rather are proved to be non genuine in view of alleged transactions with ficticious entites , the issue of applying GP rate does not arise.

N K Proteins Ltd Vs CIT [2017] 84 taxmann.com 195 (SC)/[2017] 250 Taxman 22 (SC), 2017-TIOL-23-SC-IT wherein it was held that entire undisclosed income generated out of bogus transactions, deserves to be added to total income.

Nemi Chand Kothari v. CIT [2004] 136 Taxman 213 (Gauhati)/[2003] 264 ITR 254 (Gauhati)/[2003] 185 CTR 635 (Gauhati) wherein it was held that merely because a transaction takes place by cheque is not sufficient to discharge the burden. The assessee has to prove the identity of the creditors and genuineness of the transaction. "It cannot be said that a transaction, which takes place by way of cheque, is invariably sacrosanct. Once the assessee has proved the identity of his creditors, the genuineness of the transactions which he had with his creditors, and the creditworthiness of his creditors vis-a-vis the transactions which he had with the creditors, his burden stands discharged and the burden then shifts to the revenue to show that though covered by cheques, the amounts in question, actually belonged to, or was owned by the assessee himself "

Regarding the case laws referred to by the appellant, it is found that facts of the present case and the cases referred by the appellant are entirely different.

In the case of ACIT v. Uday Bhagwan Industries, the hon’ble tribunal held that the purchases were supported by bills and vouchers. Therefore, the initial burden stood discharged to prove that the assessee entered into genuine transactions. However, in the instant case the appellant has not furnished GST No., voucher No., Bills, etc. in respect to the alleged purchases and has failed to 7 | P a g e discharge the onus by producing cogent evidence to prove the genuineness of the purchases.

Similarly, in the case of ITO v. Sunsteel ITA No. 2641/Ahd/1997, it was held that he assessee had discharged all its onus and complied with his duties providing that purchases are genuine, parties are not bogus, goods have been received, whereas in the instant case the appellant has not able to substantiate the genuineness of alleged purchases. Further, the above decision of the Hon’ble ITAT was also relied on the fact that for the A.Y. 1994-95, the unexplained expenditure u/s 69C can be set off as deduction under the general provision of Section 37 of the Act. This provision has been amended by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999. 20. The ADIT (Inv) Surat made a detailed enquiry in the case of Samrat Dial Pvt. Ltd., which received credit through RTGS from various fictitious entities including M/s Asahi Trading Co. & M/s Brave Traders. The appellant failed to prove the details of goods supplied with cogent evidence from the said entities. The AO has made detailed enquiries by deputing ITI to serve summons to Samrat Dial Pvt. Ltd. Company, a nonfiler and to its directors & reported that entities doesn’t exist at the given address at Surat. The owner of the said premises stated that he used that premises and never gave on rent to said company or its director. This company directly dealt with the bogus entities, Asahi Trading Co. & M/s Brave Traders, which were also non-filers and the transactions were found to be non- genuine and without any business rationale. There was no genuine business transaction or relation of M/s Asharfi Empire Prop. Imran Ahmad, the appellant and thus, the nature & source of huge payments in the form of alleged purchases from ‘on paper’ entities could not be proved to be genuine. The appellant’s submission of handwritten confirmations remained an afterthought and unsubstantiated with any cogent evidence. Furthermore, the appellant also claimed that the AO had made addition of Rs.4,02,55,000/- based on irrelevant material and third party evidences which were not even confronted before being used against the assessee. In this regard, it is noticed that the reasons for reopening was intimated to the appellant against which, the appellant had raised no objections. Thereafter, various opportunities were provided to the appellant vide notices & show cause during the assessment proceedings but appellant avoided the statutory notices. Also before finalizing the assessment, the AO provided the final opportunity to the appellant vide Draft Assessment Order, however, the appellant did not respond to the same. Therefore, I find no merit in this ground of the appellant. 8 | P a g e

Thus, in view of above discussion and rationale held in the above cases, it is held that the appellant has failed to establish the genuineness of purchases amounting to Rs.4,02,55,000/-and entire bogus purchases are to be disallowed as there is no genuine sale and GP rate is not applicable here, hence, it is held that the AO has rightly disallowed the entire purchases. Ground No.4 & 5 of the appellant are dismissed.”