ASHAPURA STONE INDUSTRIES,ANAND vs. THE INCOME TAX OFFICER, WARD-3 NOW WARD-1, ANAND

The information was received by the AO from the office of the Dy. Director of Income Tax (Inv.), Unit-1 (2), Ahmedabad that the firm M/s. Umiya Industries, which was operated by Shri Alpeshkumar Vitthalbhai Patel, a proprietor, has provided accommodation entries to the assessee firm (M/s Ashapura stone industries) during the Financial Years (FY) 2011-12 & FY 2012-13 relevant to AY 2012-13 and AY 2013-14. On account of admission of Shri Alpeshkumar Patel, it was concluded by the AO that the assessee has availed bogus accommodation entries and the same remains undisclosed. After recording reasons for re-opening the assessment and after availing prior permission, the assessment was re-opened by AO after issuing the notice u/s.148 of the Act 31/03/2019. 2. 1. In compliance to the notice issued u/s 148 of the Act, the assessee filed its reply along with copy of acknowledgment of return of income. Subsequently, notice u/s 142(1) of the Act was issued. It was observed by the AO that the Assessee had purchased machinery by paying an advance of Rs.50,00,000/- in FY 2011-12 to said M/s. Umiya Industries. The purchase of Machinery was completed in FY 2012-13 at total cost of Rs.2,16,77,985/- as per the invoice No. 91 dated 09/07/2012. 2. 2. During the course of reassessment proceedings, the AO added Rs.50,00,000/- and Rs.1,66,77,985/- u/s.69 of the Act as unexplained investment for AY 2012-13 and AY 2013-14 respectively. For AY 2013-14, the AO also disallowed the depreciation of Rs.16,25,849/- claimed by the ITA Nos.27 & 28/Ahd/2024 Asst. Years : 2012-13 & 2013-14

Aggrieved by the order the Assessing Officer, the assessee filed appeals for respective assessment years before the Ld.CIT(A), who dismissed the appeal(s) of the assessee ex-parte, after issuing three notices in respect of both the assessment years, but the assessee failed to respond thereto. While dismissing the appeals, the Ld.CIT(A) obtained verification report from the AO.

Not satisfied with the orders of Ld.CIT(A) in both the AYs, i.e. 2012-13 and 2013-14, the assessee is in appeals before us, with following grounds of appeal:

The Ld.Representative of the Assessee (AR) contended that the Ld.CIT(A) passed the appeal order without providing an opportunity of being heard to the assessee, which is a violation of the principles of natural justice. Furthermore, the Assessee asserted that he was not given the opportunity to cross-examine the supplier, whose statement formed the basis for the addition.

The Ld.AR submitted the following documents before us:

The Ld.AR also contented that as per section 69 of the Act, the assessee has explained the source of the investment and also recorded the purchase price of machinery in his books of accounts. Therefore, the AO was not right in making addition u/s 69 of the Act.

The Ld.Departmental Representative (DR), on the other hand, relied on the orders of lower authorities. He stated that M/s.Umiya Industries is dealing with different items, than what is invoiced to the assessee. He also contented that the assessee never objected to the proceedings of reassessment.

We have carefully considered the submissions of both parties and perused the material on record. It is evident that the reassessment was based primarily on the supplier’s denial of the machinery supply and the alleged forgery of the invoice. The statement of the Proprietor of M/s. Umiya Industries is the only basis for addition and, the Assessee was not ITA Nos.27 & 28/Ahd/2024 Asst. Years : 2012-13 & 2013-14

Considering the aforementioned facts, we are of the view that the matter requires a thorough examination with due adherence to the principles of natural justice. Therefore, we deem it appropriate to remand the matter back to the file of the Ld.CIT(A) with directions that – - The Ld.CIT(A) shall provide the Assessee an opportunity of being heard. - The Ld.CIT(A) shall allow the Assessee to cross-examine the supplier. - The Ld.CIT(A) shall get the statement of the bank officer recorded regarding the loan sanctioned against the machinery with respect to its claim of bogus purchase. - The Ld.CIT(A) shall decide the matter afresh on merits, considering all relevant evidence and submissions.

In view of the above, the impugned order of the Ld.CIT(A) is set aside and the matter is remanded back to the file of the Ld.CIT(A) for fresh adjudication in accordance with the directions stated herein. Hence, the appeal of the assessee in ITA No.27/Ahd/2024 for AY 2012-13 is allowed for statistical purposes.

As far as remaining appeal of the assessee, i.e. ITA No.28/Ahd/2024 for AY 2013-14 is concerned, before us, both the parties submitted that though the appeals relate to different assessment years, but the facts in the present appeal are identical and the submissions made by Ld.Representatives of the parties while arguing the case would be applicable to the present appeal of the assessee also. In view of the aforesaid submissions of both the parties, we for the similar reasons stated hereinabove while deciding the Assessee’s appeal for AY 2012-13 in ITA No.27/Ahd/2024 (supra) and for the similar reasons, we allow the assessee’s appeal in ITA No.28/Ahd/2024 for AY 2013-14 also for statistical purposes,

In the combined result, both the appeals of assessee are treated as allowed for statistical purposes.

""यथ" / The Respondent. 3. संबं"धत आयकर आयु"त / Concerned CIT 4. आयकर आयु"त ( अपील ) / The CIT(A)-(NFAC), Delhi

"वभागीय ""त"न"ध , आयकर अपील"य अ"धकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड" फाईल /Guard file.