M/S ASHOK SHRICHAND DARYANI (HUF),AKOLA vs. PRINCIPAL COMMISSIONER OF INCOME TAX -1, NAGPUR

Briefly stated, the facts of the case are that action u/s.147 was taken on the ground that the assessee obtained Hawala purchase bills from 5 parties totaling to Rs.2,08,20,445/-. The assessment was completed u/s.143(3) r.w.s.147 on 26-12-2016 in which no addition was made on this score. The ld. Pr.CIT held that the assessment order was erroneous and prejudicial to the interest of the Revenue because the Assessing Officer (AO) did not examine this issue. Aggrieved thereby, the assessee has come up in appeal before the Tribunal.

Having heard the rival submissions and gone through the relevant material on record, it is seen that undoubtedly the AO initiated reassessment proceedings on the ground that the assessee recorded Hawala purchases from the following parties:

Name Amount (in Rs.) 1.Jai Enterprises 49,12,689/- 2.Pink Lotus Trade India Pvt. Ltd. 39,76,939/- 3. Salibhadra Multi Trade (I) Pvt. 39,76,939/- Ltd. 4. Shreyanjali Multi Trade Pvt. Ltd. 39,76,939/- 5. Classic Enterprises 39,76,939/- Total 2,08,20,445/- 4. During the course of assessment proceedings, the AO issued notice on 06-10-2016, inquiring, inter alia, about these transactions and also requiring the assessee to furnish necessary evidences in support of the genuineness of purchases. The assessee gave its reply which was received by the AO on 24-10-2016, a copy of which has been placed at page 8 onwards of the paper book. In such reply, it was submitted that the assessee did not make any purchase from the first 4 parties as recorded in the reasons for initiation of reassessment proceedings. As regards the last party, namely, Classic Enterprises, the assessee submitted that purchases were made from this party. Apart from purchase vouchers, the assessee also furnished transport builtis in respect of these purchases to show that these were genuinely purchased and received at its business premises. The AO, on the basis of such evidences, got satisfied and also discussed the issue in the assessment order. In para 3 of his order, the AO recorded that the assessee was called upon to produce books of accounts, bills/vouchers of purchases and sales. The same were produced by the assessee and duly verified on test check basis. In next para, namely, para 4, the AO, further recorded that the assessee “furnished purchase register along with purchase bills and transportation details”, which were verified by him and found to be correct. As against this, the ld. Pr. CIT revised the order on the ground that: `The order was passed without due verification of the above information’, namely, accommodation entries were obtained from the five parties. It is, therefore, evident that the initiation of revision proceedings on this score is not valid. Not only, no such transactions were entered into with the first 4 parties, the genuineness of the 5th party, whose purchases were recorded, was also substantiated with relevant purchase bills and transportation details.

In the result, the appeal is allowed. Order pronounced in the Open Court on 27th July, 2023.