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Income Tax Appellate Tribunal, DELHI BENCH “C”, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI PRASHANT MAHARISHI
Date of Hearing : 09-03-2016 Date of Order : 28-04-2016 ORDER
PER H.S. SIDHU : JM
The Assessee has filed the present appeal against the impugned order dated 10/12/2014 passed by the Ld. Commissioner of Income Tax (Appeals)- XX, New Delhi on the following grounds:-
1. On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad, both in the eye of law and on the facts.
2. On the facts and circumstances of the case, CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the initiation of the reassessment proceedings and the reassessment order 1
are bad both on facts and in law and liable to be quashed as the statutory conditions and procedure prescribed under the statute have not been complied with.
3 (i) On the facts and circumstances of the case, CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned AO are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts.
(ii) On the facts and circumstances of the case, CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the reassessment order passed by the AO is bad and liable to be quashed as the same has been reopened on the basis of the reasons which are vague and has been recorded without application of mind on the part of the AO.
4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in confirming the rejection of the books of accounts of the assessee by the AO, despite the fact that the assessee has been maintaining proper books of accounts as per law.
5. On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the addition of an amount of Rs. 9,08,838/- on account of bogus purchases.
6. On the facts and circumstances of the case, the learned CIT(A) has erred in confirming the addition to the extent of 20% of such purchases, without there being any basis for the same.
7.(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in confirming that the firms MIs Vishnu Trading Company, MIS Shree Shyam Trading Company & MIs Shree Bankey Bihari Trading Co. are not engaged in the actual business ignoring the fact that during the course of the search substantial inventory in respect of the material being purchased by the assessee were found which confirm the fact that this firm was doing actual business.
(ii) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in rejecting that the inference drawn by the AO merely on the basis of a statement that these firms are not in actual business is baseless and contrary to the facts on record.
On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in rejecting the contention of the assessee in ignoring the fact that there being a complete tally of the quantity purchased and sold the allegation that the assessee has not made purchases cannot be sustained.
9. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in confirming the addition to the extent of 20% of such purchases rejecting the material and evidences brought on record by the assessee to show that the purchases were made in regular course of the business and material so purchased was sold in the regular course of business.
On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in giving the direction to the A.O. in respect to an amount of Rs. 10,28,926/- on account of purchases not related to the relevant assessment year.
On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in rejecting the contention of the assessee that the addition so made on the basis of material collected at the back of the assessee is bad in law & liable to be deleted.
On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in rejecting the contention of the assessee that the addition made by the learned AO is untenable in the eye of law having
bee made without providing opportunity to cross examine the person on the basis of whose statement the allegations have been made against the assessee and without following the principle of natural justice.
The appellant craves leave to add, amend or alter any of the grounds of appeal.
2. The brief facts of the case are that on verifying the ITD system, it was noticed that no return of income for the year under consideration was filed. Later on, information was received from ACIT, Central Circle10, Jhandewalan Extension, New Delhi vide his letter dated 13.3.2013 forwarded through CIT, Central-II, New Delhi and the CCIT, Delhi-I, New Delhi vide their letters dated 19.3.2013 and 26.3.2013 respectively therein providing a CD wherein the list of parties to whom the bogus purchases / accommodation entries provided by Sh. Rakesh Gupta, Sh. Vishesh Gupta, Sh. Navneet Jain and Sh. Vaibhav Jain was appearing. After going through the complete list and indentifying the parties, after recording the reasons, as stated in page 2 of the assessment order, Ld. AO has made an addition of Rs.45,44,189/- on account of bogus purchase and completed the assessment at an income of Rs. 45,44,190/- u/s. 143(3)/147 of the I.T. Act, 1961.
3. Aggrieved by the order of the AO, the assessee came in appeal before the learned CIT(A), who vide impugned order dated 10.12.2014 has partly allowed the appeal of the assessee.
4. Against the order of the Ld. CIT(A), assessee is in appeal before the Tribunal.
At the time of hearing, Ld. Counsel has stated the issues in dispute are squarely covered by the ITAT, Delhi decision dated 28.10.2015 in the case of Unique Metal Industries vs. ITO in ITA No. 1372/Del/2015. He stated that the assessment in this case was also reopened on the same allegation. He further submitted that the facts of the case are identical as number of assessments were opened by the same AO on the basis of the same set of information and by recording similar reasons. He draw our attention towards the page no. 9 vide para 7 to 13 of the Tribunal’s order dated 28.10.2015 wherein, the issue of reopening was held to be invalid and accordingly the same was quashed. Therefore, he requested that by following the said precedent, the reopening proceedings may be quashed and Appeal of the assessee may be allowed.
6. On the contrary, Ld. DR relied upon the order of the authorities below and requested that the same may be upheld.
We have heard the both parties and perused and considered the relevant record available with us specially the impugned orders passed by the Revenue Authorities and the copy of the Tribunal’s order dated 28.10.2015 passed in the case Unique MetaI Industries vs. ITO in ITA No. 1372/Del/2015. In our view, it will be relevant to refer to the reasons recorded by the AO and the approval of the Joint Commissioner of Income Tax which reads as under:-
“Reasons for the belief that the income has escaped assessment in the case of M/s Unique Metal Ind for the assessment year 2006-07 A letter bearing F.No. Addl. CIT/(Hq)/(Coord.)/Accommodation entry/2012-13/15016 dated 26.03.2013 was received from the Office of the Chief Commissioner of I. Tax, Delhi-I, New Delhi herein forwarding letter bearing F. No. CIT(C)-II/2012-13/3898 dated 19.3.2013 received from the Commissioner of I. Tax, Central-II, New Delhi along with a CD containing the details of accommodation entries provided by Sh. Rakesh Gupta & Sh. Vishesh Gupta and Sh. Navneet Jain & Sh. Vaibhav Jain and directing this office to take necessary action as per section 148 in respect of entries pertaining to A.Y. 2006-07, which is time barring on 31.03.2013.
The information provided by the CIT, Central-II, New Delhi vide his letter dated 19.03.2013 reads as under:-
“Kindly find enclosed herewith letter dated 13.03.2013 of ACIT, Central Circle-10 duly forwarded by the Addl. CIT, Central Range- IV, along with its enclosures on the subject mentioned above.
2. The assessment of search cases of Sh. Rakesh Gupta, Sh. Vishesh Gupta, Sh. Navneet Jain & Sh. Vaibhav Jain are under process with the ACIT, Central Circle-10. During the assessment proceedings u/s 153A in the aforesaid cases, details regarding accommodation entries given by the above entry providers has been obtained by the AO.
3. The list of accommodation entry recipients has been obtained from Sh. Rakesh Gupta and Sh. Vishesh Gupta. Hard copy of the list is enclosed as Annexure A, duly signed by Sh. Vishesh Gupta. The list gives the name of the firm which has provided the accommodation entry along with the name and address of recipients of accommodation entry.
4. Sh. Naveen Jain & Sh. Vaibhav Jain has provided accommodation entry through thirty-seven paper entities. The list of the firms giving accommodation entry is enclosed as annexure- B. The list of accommodation entry recipients, has been obtained from Sh. Navneet Jain & Sh. Vaibhav Jain. It does not give year wise bifurcation. Hard copy of the lost is enclosed as annexure-C, duly signed by Sh. Vaibhav Jain. Thus, the firms mention in the list ‘B’ have provided accommodation entries to the firms mentioned in list ‘C’.
5. The soft copy of the information in respect to annexure A, B & C is also enclosed.
6. The information of accommodation entry includes A.Y. 2006- 07 also, which is a time barring year for taking action u/s 148.
7. The information is forwarded to you for early dissemination to various field officers in Delhi (Soft copy also enclosed).
On examining the list of accommodation entries provided by Sh. Rakesh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain pertaining to A.Y. 2006-07, it is noted that the following accommodation entries have been taken by the assessee namely M/s GG Metal Udyog:-
Sl. Accommodation Name of party to whom Amount of No. entry provided by accommodation entry is Accommodation provided entry 1 Shree Shyam M/s GG Metal Udyog Rs. 10,28,926/- Trading Co. 2 Shree Bankey Bihari M/s GG Metal Udyog Rs. 21,05,940/- Trading Co.
3 Vishu Trading Co. M/s GG Metal Udyog Rs. 7,08,448/- 4 Shree Shyam M/s GG Metal Udyog Rs. 7,00,875/- Trading Co.
Total amount of entries= Rs.45,44,189/- Since Sh. Rakeh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain during the course of assessment proceedings u/s 153A of I. Tax Act have admitted that they have given accommodation entries to the parties whose lists have been provided by them to the ACIT, Central Circle-10, New Delhi, therefore, it is fair to conclude that M/s GG Metal Udyog whose name is appearing in the said list, has taken accommodation entries from Sh. Rakeh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain pertaining to A.Y. 2006-07.
In view of the above, I have reasons to believe that income chargeable to tax of M/s GG Metal Udyog amounting to Rs.45,44,1899/- for the F.Y. 2005-06 relevant to A.Y. 2006-07 has escaped assessment and it is a fit case for initiation of proceedings u/s 147 of the Act.
Proposal in the prescribed form for the A.Y. 2006-07 (F.Y. 2005-06) is submitted herewith for kind consideration and necessary approval u/s 2006-07 (F.Y. 2005-06) is submitted herewith for kind consideration and necessary approval u/s 151(2) of the I. Tax Act, 1961 as the same is getting barred by limitation on 31/3/2013.
If approved, notice u/s 148 of the act may be issued.
Sd/- 28.3.2013 (Pawan Kumar Vashist) Income Tax Officer Ward-39(3), New Delhi Joint CIT, Range-39, N.Delhi
For the reasons recorded by the AO, ITO Ward – 39(3), it is a fit case for issue of notice u/s 148 of the I.T. Act, 1961. Accordingly necessary approval for reopening the above case for A.Y. 2006-07 is hereby given s per the provision of section 151(2) of I.T. Act, 1961.
ITO, Ward 39(3)
Sd/- 28.3.2013 (Vijay BabuVasanta) Jt. Commission of Income Tax Range-39, New Delhi” 8. On going through the above reasons it is evident that this assessment has been reopened on the basis of the letter received from the ld. CIT, Central-2, New Delhi with the direction to take necessary action as per section 148 of the Act. As per this, accommodation entries were obtained by various persons from Sh. Rakesh Gupta and Sh. Vishesh Gupta as well as Sh. Navneet Jain and Sh. Vaibhav Jain. Copy of this list was forwarded in a CD to the Assessing Officer. Thus this list contained the name of the assessee. The Assessing Officer reopened the assessment on the basis of this information. The basis given by the Assessing Officer in the reasons is that these persons have admitted that they have given accommodation entries to the parties whose lists have been provided by them. From the above facts it is apparent that the Assessing Officer at that point of time when he recorded the reasons was not having the copy of the statement or any other material in which these people have alleged to have provided accommodation entries to the assessee. This position gets also corroborated from the facts stated by the Assessing Officer himself in the reassessment order in para 3 page 5 which read as under:-
“Here it is pertinent to mention that in the intervening period, this office had conversations with the ACIT, Central Circle-10, New Delhi from whom vide this office’s letter dated 23.07.2013, 02.09.2013, 14.10.2013, 06.11.2013, 22.11.2013, 09.12.2013 & 24.12.2013 and vide Joint CIT, Range-39, New Delhi’s letter dated 16.12.2013, the following details/documents were sought:-
(i) Copies of the statements recorded of Sh. Rakeh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain in search/post search/assessment proceedings. (ii) Soft copies of the statements recorded of Sh. Rakeh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain in search/post search/assessment proceedings. (iii) Hard copy of assessment orders passed in these cases for A.Y. 2006-07 (iv) Soft copy of assessment orders passed in these cases for A.Y. 2006-07 (v) Any other detail/document you may deem fit that need to be confronted with the parties whose cases have been reopened u/s 148 of I.Tax. Act.
4. In response to these letters, the ACIT, Central Circle-10, New Delhi vide his letter dated 20.12.2013, received by this office on 27.12.2013, forwarded his reply along with supporting documents, which were running into 92 pages. After going through the reply forwarded by the ACIT, Central Circle-10, New Delhi and the annexure enclosed therein, this office was of the view that the purchase bills provided by the 11 firms/concerns controlled and managed by Sh. Rakesh Gupta and Sh. Vishesh Gupta or their family members is nothing but bogus purchase bills/accommodation bills.”
In view of above facts and circumstances of the case, we find considerable cogency in the contention of the ld. Counsel of the assessee that the facts and circumstances of the present case are similar to that of Unique Metal Industries (supra) and the legal issue of reopening in the Assessee’s Appeal is squarely covered by the Order dated 28.10.2015 of this Bench passed in the case of Unique MetaI Industries vs. ITO in dated 28.10.2015 wherein, the Tribunal has adjudicated the legal issue at page no. 9 to 23 vide para no. 7 to 13 as under:-
“7. I have perused the assessment order, order passed by the learned CIT(A) as well as the paper book. It will be relevant to refer to the reasons recorded by the Assessing Officer and the approval of the Joint Commissioner of Income Tax which reads as under:-
“Reasons for the belief that the income has escaped assessment in the case of M/s Unique Metal Ind for the assessment year 2006-07
A letter bearing F.No. Addl. CIT/(Hq)/(Coord.)/Accommodation entry/2012-13/15016 dated 26.03.2013 was received from the Office of the Chief Commissioner of I. Tax, Delhi-I, New Delhi herein forwarding letter bearing F. No. CIT©-II/2012-13/3898 dated 19.3.2013 received from the Commissioner of I. Tax, Central-II, New Delhi along with a CD containing the details of accommodation entries provided by Sh. Rakesh Gupta & Sh. Vishesh Gupta and Sh. Navneet Jain & Sh. Vaibhav Jain and direct this office to take necessary action as per section 148 in respect of entries pertaining to A.Y. 2006-07, which is time barring on 31.03.2013.
The information provided by the CIT, Central-II, New Delhi vide his letter dated 19.03.2013 reads as under:-
“Kindly find enclosed herewith letter dated 13.03.2013 of ACIT, Central Circle-10 duly forwarded by the Addl. CIT, Central Range- IV, along with its enclosures on the subject mentioned above.
The assessment of search cases of Sh. Rakesh Gupta, Sh. Vishesh Gupta, Sh. Navneet Jain & Sh. Vaibhav Jain are under process with the ACIT, Central Circle-10. During the assessment proceedings u/s 153A in the aforesaid cases, details regarding accommodation entries given by the above entry providers has been obtained by the AO.
The list of accommodation entry recipients has been obtained from Sh. Rakesh Gupta and Sh. Vishesh Gupta. Hard copy of the list is enclosed as Annexure A, duly signed by Sh. Vishesh Gupta. The list gives the name of the firm which has provided the accommodation entry along with the name and address of recipients of accommodation entry.
Sh. Naveen Jain & Sh. Vsaibhav Jain has provided accommodation entry through thirty-seven paper entities. The list of the firms giving accommodation entry is enclosed as annexure- B. The list of accommodation entry recipients, has been obtained from Sh. Navneet Jain & Sh. Vaibhav Jain. It does not give year wise bifurcation. Hard copy of the lost is enclosed as annexure-C, duly signed by Sh. Vaibhav Jain. Thus, the firms mention in the list 13
‘B’ have provided accommodation entries to the firms mentioned in list ‘C’.
5. The soft copy of the information in respect to annexure A, B & C is also enclosed.
The information of accommodation entry includes A.Y. 2006- 07 also, which is a time barring year for taking action u/s 148.
7. The information is forwarded to you for early dissemination to various field officers in Delhi (Soft copy also enclosed).
On examining the list of accommodation entries provided by Sh. Rakesh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain pertaining to A.Y. 2006-07, it is noted that the following accommodation entries have been taken by the assessee namely M/s Unique Metal Industries:-
Sl. Accommodation Name of party to whom Amount of No. entry provided by accommodation entry is Accommodation provided entry 1 Shree Shyam M/s Unique Metal Industries Rs.2,44,399/- Trading Co. 2 Vishnu Trading Co. M/s Unique Metal Industries Rs.8,12,542/- 3 Shree BankeyBihari M/s Unique Metal Industries Rs.3,28,368/-
Total amount of entries= Rs.13,85,309/- Since Sh. Rakeh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain during the course of assessment proceedings u/s 153A of I.
Tax Act have admitted that they have given accommodation entries to the parties whose lists have been provided by them to the ACIT, Central Circle-10, New Delhi, therefore, it is fair to conclude that M/s Unique Metal Industries whose name is appearing in the said list, has taken accommodation entries from Sh. Rakeh Gupta & Sh. Vishesh Gupta dn Sh. Navneet Jain & Sh. Vaibhav Jain pertaining to A.Y. 2006-07.
In view of the above, I have reasons to believe that income chargeable to tax of M/s Unique Metal Industries amounting to Rs.13,85,309/-for the F.Y. 2005-06 relevant to A.Y. 2006-07 has escaped assessment and it is a fit case for initiation of proceedings u/s 147 of the Act.
Proposal in the prescribed form for the A.Y. 2006-07 (F.Y. 2005-06) is submitted herewith for kind consideration and necessary approval u/s 2006-07 (F.Y. 2005-06) is submitted herewith for kind consideration and necessary approval u/s 151(2) of the I. Tax Act, 1961 as the same is getting barred by limitation on 31/3/2013.
If approved, notice u/s 148 of the act may be issued.