ANSHUMAN AUTO IMPEX PRIVATE LIMITED,NEW DELHI vs. INCOME TAX OFFICER, WARD 2(1), NEW DELHI

2 | P a g e (i) "[2022] 138 taxmann.com 69 (SC)[04-03-2022] Priya Blue Industries (P.) Ltd. vs. Assistant Commissioner of Income-Tax- "where Assessing Officer had reason to believe that income chargeable to tax had escaped assessment as assessee was beneficiary of accommodation entries and basis for formation of such belief were several inquiries and investigation by Investigation Wing that there had been escapement of income of assessee from assessment because of his failure to disclose fully and truly all material facts, reopening of assessment was justified" (ii) Hon'ble Gujarat High Court decision in case of Peass Industrial Engineers 73 Taxmann 185 (Gujarat) wherein it was held that AO was justified in reopening of assessment proceedings on the basis of information received from Investigation Wing that the assessee was one of the beneficiaries of bogus accommodation entry providers (iii) AO justified in reopening of assessment proceedings on the basis of information given by investigation wing-110 Taxmann 174 (Gujarat)in the case of Meghavi Minerals Pvt Ltd vs ITO (iv) 236 ITR 34 (SC) Raymond Woolen Mills, in this case, the Apex Court held that We have only to 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 is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case (v) Hon'ble Gujarat High Court in case of Hemjay Construction Vs ITO [2019] 109 taxmann 59 (Gujarat) held that on facts it could not be said that there was total non-application of mind on part of Assessing officer while recording reasons for reopening of assessment and his conclusion was merely based on observations and information received from Investigation wing and thus, no case was made out by the assessee for quashing reassessment proceedings (vi) Reliance is also paced on the decision of Hon'ble High Court of Gujarat in the case of Zaveri & Company (P) Ltd. Vs DCIT [2021] 133 Taxmann 397 in which it was held by the Hon'ble High Court that when AO had received specific information from Investigation Wing outlining evasion of taxes and other satisfaction arrived at by AO was subjective in nature and was based on fresh material by way of such information from Investigation wing for coming to prima facie conclusion that assessee had failed to disclose fully and truly all material facts necessary for assessment Thus, is could not be said that reopening proceedings were initiated on basis of incorrect facts or borrowed satisfaction from Investigation Wing. Therefore, Impugned reopening notice issued against assessee is justified

3 | P a g e (vii) Hon'ble Gujarat High Court in case of Amit Polyprints (P) Ltd. Vs DCIT [2018] 94 Taxmann 393 (Gujarat) held that merely because Assessing officer nad called for some information from another wing of department before forming of belief that income had escaped assessment would not be render impugned reassessment notice bad in law, (viii) Hon'ble Gujarat High Court in case of Sanjay Babulal Surana Vs ACIT [2021] 129 taxmann.com 375 (Gujarat) [11-08-2021] held that where information was received from Dy Director, Investigation Wing that two companies were involved in activity of providing accommodation entries through various companies controlled and managed by them and assessee had received a certain sum from one of said controlled companies and notice under section 148 was issued to assessee since Assessing Officer had reason to believe that assessee was a beneficiary of accommodation entry and basis for formation of such belief was several inquiries and investigation by Investigation Wing and report thereof, initiation of reassessment was justified. (ix) Hon'ble Delhi High Court in "[2020] 114 taxmann.com 510 (Delhi) [20- 12-201 Vedanta Ltd. vs. Assistant Commissioner of Income-tax wherein it was held that "Where AO initiated reassessment proceedings in case of assessee on ground that it had received accommodation entries from a sham concern, since assessee failed to controvert said finding of AO, validity of reassessment proceeding deserved to be upheld" (x) Hon'ble Delhi High Court in [2013] 29 taxmann.com 420 (Delhi) [05-12- 2012] Pratibha Finvest (P.) Ltd. vs. ITO held that "Reopening of assessment on basis of investigation report in case of search on third parties revealing accommodation entries received by assessee, was justified" (xi) Hon'ble Delhi High Court in [2011] 197 Taxman 177 (Delhi) [07-01-2011 AGR Investment Ltd. vs. Additional Commissioner of Income-tax held that "where Assessing Officer had specific information from office of DIT (Investigation) as regards transactions entered into by assessee-company with a number of concerns which had made accommodation entries and they were not genuine transactions, it could be said that there was material on basis of which notice under section 148 could be issued. (xii) Hon'ble Allahabad High Court in (2024) 162 taxmann.com 738 (Allahabad)[15-05-2024] Rahul Sachan vs. Income-tax Officer held that Where a reopening notice was issued upon assessee on ground that as per information flagged under risk management strategy (RMS) formulated by CBDT, assessee had supplied goods/services of certain amount to a company which was not doing any actual business activities and was involved in receiving and giving bogus contracts/sub-contracts and raising invoices without delivery of any actual goods/services impugned reopening on basis of said information was justified 4 | P a g e Therefore, in view of the above discussion and judicial pronouncements, the contention of the appellant is not acceptable. 6.2 Further, In Ground No.2 of the appeal the appellant contended that it had submitted copy of invoices, copy of ledger account, bank statement copy of declaration in Form C to the AO. However, the AO made addition on the basis that Shri Rahul Sharma has not filed the return of income. 6.2.1 The contention of the appellant is not acceptable. It is pertinent to mention here that not only Shri Rahul Sharma was non-filer but the appellant has also failed to submit the contra confirmation of Shri Rahul Sharma regarding the alleged sale transaction as claimed by the appellant. By not providing return financial accounts and bank statement of the creditor, the appellant had failed to prove the creditworthiness of the creditor and genuineness of the transaction. Further, it is also noticed that to verify the genuineness of the transaction notice u/s 133(6) was issued to Shri Rahul Sharma by the AO. However, no response was received. Even during appeal proceedings, the appellant has failed to submit the contra-confirmation of Shri Rahul Sharma Prop. Mangal International The appellant was expected to establish to the satisfaction of the Assessing Officer CIT v. Precision Finance (P.) Ltd. [1995] 82 Taxman 31/[1994] 208 ITR 465 (Cal.):  Proof of Identity of the creditors  Capacity/creditworthiness of creditors to advance money.  Genuineness of transaction By not providing details like return of income, financial statements and confirmation from the books of the creditor, the appellant has failed to discharge her initial onus and to satisfy the AO. 6.2.2 Hon'ble Supreme Court in case of PCIT Vs NRA Iron and Steel (P) Itd (2019) 103 Taxmann 48 (SC) has held that where there was failure of assessee to establish creditworthiness of the creditors, addition is justified Further, in case of CIT Vs Durga Prasad More 83 ITR 540 SC the Hon'ble Apex Court held that primary onus is on the assessee to prove the Identity. creditworthiness of the creditor and genuineness of the transaction In case of Roshan Di Hatti vs. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-03-1977], Hon'ble Supreme Court held that if assessee fails to discharge the onus by producing cogent evidence and explanation, the AO would be justified in making addition Same view was taken in the case of 5 | P a g e Kale Khan Mohammad Hanif Vs CIT (1963) 50 ITR 1(SC) by the Hon'ble Apex Court Reliance is also placed on the decision of Delhi High Court in case of CIT VS Oasis Hospitalities (2011) 9 Taxmann 179 (Delhi), in which it was held "The initial onus is upon the assessee to establish three things. Those are: (i) identity of the creditor; (ii) their creditworthiness/investments; and (iii) genuineness of the transaction. Only when these three ingredients are established prima facie, the department is required to undertake further exercise." In CIT Vs United commercial & industries Co. P.Ltd. (1991) 187 ITR 596(Cal.), the Hon'ble Calcutta High Court held that the onus does not get discharge merely by filing confirmation letter from own books Further, reliance on this aspect is also placed on the following decisions 1. Kamal Motors Vs CIT (2003) 131 Taxmann 155 (Raj.) 2. Sumit global P. Ltd. Vs ITO (Chattisgarh) Tax No. 120/2024 In the present case, since the appellant has failed to discharge its primary onus to prove the creditworthiness of the creditor and genuineness of the transaction Therefore, the ratio laid down in the aforesaid cases of Hon'ble Courts is clearly applicable in this case. 6.2.3 Further, It has been held that merely proving the identity of the creditor does not discharge the onus of the assessee, if the capacity or credit-worthiness has not been established in Shankar Ghosh v. ITO [1985] 13 ITD 440 (Cal.), the assessee failed to prove the financial capacity of the person from whom he had allegedly taken the loan. The loan amount was rightly held to be the assessee's own undisclosed income. Further, merely because a transaction has taken place by cheque/Banking channel is not sufficient to discharge the burden. The appellant has to prove the identity of the creditor and genuineness of the transaction. Reliance is placed on the decision of Hon'ble Guwahati High Court in case of Nemi Chand Kothari Vs CIT (2004) 136 Taxmann 213 in which it was held: "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" 6 | P a g e Reliance is also placed on the decision of CIT vs Precision Finance (P.) Ltd (1995) 82 Taxmann 31(Cal.). The said para of this order is reproduced here as under "6. It is for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. In our view, on the facts of this case, the Tribunal did not take into account all these ingredients which have to be satisfied by the assessee Mere furnishing of the particulars is not enough. The enquiry of the ITO revealed that either the assessee was not traceable or there was no such file and, accordingly, the first ingredient as to the identity of the creditors had not been established. If the identity of the creditors had not been established consequently the question of establishment of the genuineness of the transactions or the creditworthiness of the creditors did not and could not arise The Tribunal did not apply its mind to the facts of this particular case and proceeded on the footing that since the transactions were through the bank account, accordingly, it is to be presumed that the transactions were genuine. It was not for the ITO to find out by making investigation from the bank accounts unless the assessee proved the identity of the creditors and their creditworthiness. Mere payment by account payee cheque is not sacrosanct nor can it make a non-genuine transaction genuine in that view of the matter, the question before us is answered in the negative and in favour of the revenue." In Mittal Belting & Machinery Stores vs CIT (P&H) 253 ITR 341, The Hon'ble Punjab & Haryana High Court held that "If on examination of evidence, it is found that there was no genuine Transaction between the parties, a pure paper Transaction can not entitle assessee to claim benefit under the law Mere on basis of paper Transaction, the same does not become genuine 6.2.5 The onus was on the appellant to establish the genuineness of the transaction made from Shri Rahul Sharma Prop. Mangal International, which it had failed to do so. In this regard, Hon'ble Supreme Court in SC- Civil Appeal no 230/2023-2572/2022 dt. 13.10.23 in the case of State of Karnataka vs Ecom Gill Coffee Trading has held that mere invoices & cheque payment are not sufficient for genuineness of Purchases and the person must prove movement of goods, ack of delivery of goods, invoices and payment proof. 6.2.6 Considering the facts of the case and judicial pronouncements (as mentioned above), I am of the view that the appellant has failed to discharge his primary onus to prove the identity, creditworthiness of the creditor and the genuineness of the transaction. Therefore, it is clear that the amount of Rs.67,00,000/- is nothing but an accommodation entry taken by the appellant from Shri Rahul Sharma Prop. Mangal International.

7 | P a g e Accordingly, addition made by AO is confirmed. Ground No. 1 and 2 of the appeal are dismissed. 6.3 As regard to ground No. 3, the AO is directed to re-calculate interest u/s 234B & 234C as per provisions of the Act after giving effect to this order.