2009 (5) TMI 128
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....o frame the order of reassessment. Thus, such an order was bad in law. Ground Nos. 3 and 4 are against addition of Rs. 5 lakhs made by the assessing officer and sustained by the learned Commissioner (Appeals) under Section 69C of the Act. It is mentioned that on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in directing the assessing officer to make the addition of Rs. 5 lakhs under Section 69C. It is also mentioned that the making of such an addition amounts to enhancement of income by the Commissioner (Appeals), for which no notice was given to the assessee and, therefore, the addition is illegal and bad in law. On the other hand, the revenue has taken up two grounds in the appeal. Ground No. 1 is to the effect that on the facts and in the circumstances of the case and in law, the Commissioner (Appeals) erred in deleting the addition of Rs. 6,10,95,391 made by the assessing officer on account of bogus transactions of purchase and sale shown in the books in the names of M/s Allure Creations, M/s Shashi Sales & Marketing (P) Ltd., M/s N.V. Marketing (P) Ltd. and M/s Ganesh Textile. It is further mentioned that enquiries revealed....
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.... 25-5-2005. He had reason to believe that income escaped assessment, which could be inferred on the basis of the TEP and the enquiries made therein. Therefore, the reopening of the assessment was upheld by him. 3. Before us, the learned Counsel for the assessee submitted that the return of income was filed on 2-12-2003. Therefore, notice under Section 143(2) could have been issued on the basis of the TEP, which was received by the CIT on 24-11-2004. Section 143(2) contains a provision that where a return of income has been furnished and the assessing officer considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner, he shall serve on the assessee a notice under the section. In spite of the fact that on the date of the receipt of the TEP, time was available with the assessing officer to issue notice under this section, he did not do so, but issued notice under Section 148 on 26-5-2005. Such an act was not warranted in law. Therefore, the notice issued under Section 148 was invalid. In this connection, reliance was placed on the decision of Hon'ble Rajasthan High Co....
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....reassessment proceedings, which stood covered in the notices issued under Sections 143(2) and 142(1). In this connection, reliance was also placed on the decision of Hon'ble Punjab & Haryana High Court in the case of Vipan Khanna v. CIT (2002) 255 ITR 220 (P&H); and Amrinder Singh Dhiman v. ITO (2004) 269 ITR 378 (P&H), in which the decision in the case of Vipan Khanna (supra) was followed. 3.2 In reply, the learned departmental Representative submitted that the assessing officer had received the TEP on 24-11-2004. The content of the TEP required verification before taking any action either under Section 143(2) or Section 148 of the Act. This verification took sometime and the enquiry was not completed by 31st Dec, 2004. In fact, the inquiries continued far beyond the aforesaid date, being the last date of issue of notice under Section 143(2), and on completion of the inquiries, notice under Section 148 was issued on 26-5-2005. On this date notice could not have been issued under Section 143(2), being barred by limitation. The facts mentioned in the TEP were not in the knowledge of the assessing officer when he processed the return under Section 143(1). Therefore, it was argue....
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.... that this could not be done. However, as mentioned earlier, the facts of the instant case are completely distinguishable from the facts of the aforesaid case, inasmuch as the assessing officer was not aware about the escapement of income at the time of processing the return and not satisfied about such concealment till 31st Dec, 2004. Therefore, we are of the view that on the date when notice under Section 148 was issued, there was no jurisdiction with him to issue notice under Section 143(2) and accordingly he was competent to issue notice under Section 148. The other ground taken by the learned Counsel is factually incorrect as an addition of Rs. 9 lakhs was made on the issues covered in the satisfaction note. Further, we are of the view that the whole situation regarding the reopening of the assessment has to be seen from the facts obtained on the date of recording of the reasons. It may happen that on that day, the assessing officer may be prima facie convinced that there were reasons to believe that the income had escaped assessment. However, it may further happen that on detailed enquiry in the reassessment proceedings, he may come to the conclusion that no addition was call....
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....sions. We are not in agreement with the learned Counsel that mere change of Section amounts to enhancement of income by the learned Commissioner (Appeals) for the reason that the amount of addition remained the same and it is made in respect of the payment made to Shri Rajiv Goyal in cash. It was admitted that the assessee does not want to argue the case on merit as the amount had been surrendered before the learned Commissioner (Appeals). Therefore, these grounds are also dismissed. ITA No. 3424/Del/2007 - Appeal of the revenue 5. In regard to ground No. 1, it is mentioned in the assessment order that the assessee undertook transactions of purchase and sale with Allure Creations, Shashi Sales & Marketing (P) Ltd., M.V. Marketing (P) Ltd. and Ganesh Textile. Total purchases made from these parties aggregated to Rs. 3,06,13,239 and total sales effected to these parties aggregated to Rs. 3,04,82,152. These transactions were stated to be bogus in the TEP. The assessing officer required the assessee to prove the genuineness of the purchases and sales. It was submitted that the purchases and sales were reflected in the sales-tax return, which was accepted by the STO. No documentary ev....
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....les-tax returns filed by the appellant and which has been duly accepted by the STO. On merits, I have tried to analyze and co-relate the purchases and sales effected by the appellant vis-a-vis various parties. It is observed that the assessing officer has treated M/s Allure Creations as a non-genuine party and addition has been made for sales of Rs. 89,82,262 and purchases of Rs. 90,06,627 effected by the appellant with this party. If the assessing officers contention is accepted then it creates a paradoxical situation as it can be seen that the material purchased from M/s Allure Creations has been sold at a profit to M/s Ethenic Creations (P) Ltd., M/s Shashi Sales Marketing (P) Ltd., M/s M.V. Marketing (P) Ltd., M/s Ganesh Textiles and M/s Rabik Exports (P) Ltd. If all the purchases are taken as bogus purchases then it is beyond comprehension as to how some of the sales are taken as genuine and others are taken as non-genuine. Similar is the case with M/s Ganesh Textiles from whom the appellant has purchased total material worth Rs. 63,59,225.10 and out of which sales have been made to M/s Akshay Sales (P) Ltd., M/s Rabik Exports Ltd., M/s Ethenic Creations (P) Ltd. and M/s Allur....
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....oods or services are acquired by the assessee on credit and an entry is made crediting the liability on the account of the person from whom the goods and services are acquired and the conclusion drawn is that when payment to creditors were not doubted and commission income in respect of those very tickets has been assessed as income of the agent, amounts standing to the credit of airlines towards purchase of tickets "could not be added under Section 68. Similar is the case with CIT v. Pancham Doss Jain (2006) 205 CTR (All) 444 the head notes of which says as follows: Income - Cash credit - Credit purchase - Provisions of Section 68 are not attracted to amounts representing purchases made on credit - Tribunal has recorded a categorical finding of fact based on appreciation of materials and evidence on record that the assessing officer has accepted the purchases, sales as also the trading result disclosed by the assessee - It has also recorded a finding that the two amounts in question represented the purchases made by the assessee on credit - Therefore, addition of said amounts could not be made under Rule 68. In view of the decisions mentioned above along with the facts and cir....
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....ty employee of a concern of which Satya Pal Jain was a partner. In fact Satya Pal Jain was a partner of Medipac, one of the sister concerns of the assessee firm. On enquiries conducted by the authorities after due notice to the assessee it was found that there was no such concern called Kalpana Enterprises at either 71, Canning Street, Calcutta, or 479, Bartan Market, Sadar Bazar, Delhi. Additionally, Chedi Lal opened the bank account with the introduction of Satya Pal Jain and the amounts were withdrawn. If the purchases were really effected from Kalpana Enterprises it is not understood as to how some other person, namely, Inder Sain Jain (HUF), accepted that the materials were supplied by it. The question before the Tribunal was not whether the purchases were made from another concern. What was under consideration was whether the purchases were made from Kalpana Enterprises as was claimed by the assessee. Ample material has been brought on record by the revenue show that the purchases were in fact not made from Kalpana Enterprises. These are some of the relevant materials which have not been considered by the Tribunal. The Tribunals conclusion that even if it is accepted that Che....
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...., the learned Counsel submitted that all transactions of purchase and sale were on credit basis and, thus, no investment was made in purchase of goods, which could be said to be unaccounted investment. He referred to the ledger account of these parties and other material placed before the learned Commissioner (Appeals) showing that profit was earned from these transactions. Thus, it was argued that if the transactions are held to be bogus, the profits cannot be brought to tax in respect of these transactions. It was further submitted that the books of account had not been rejected by the assessing officer from which it can be indirectly inferred that the transactions were not bogus. Since the transactions of purchase and sale were recorded in the trading account, addition could not have been made under Section 68 of the Act as trading transactions led to the profit. 5.4 We have considered the facts of the case and rival submissions. From the submissions made before us, it is clear that the transactions of purchase and sale were recorded in the books of account and these transactions led to profit to the assessee, which was brought to tax. If sales have been effected out of purchas....
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....s exceeded Rs. 20,000. Therefore, the addition made by the assessing officer was deleted. His findings are contained in para 6.2, which are reproduced below: 6.2 I have considered the submissions made by the learned Authorised Representative of the appellant as well as the facts recorded by the assessing officer while making the addition. The alleged receipt of Rs. 4,00,000 in cash , has also been perused. It is noticed that during the course of assessment proceedings, the assessing officer has not been able to controvert the contentions of the appellant that on 20-1-2003 cash payment of Rs. 4,00,000 has not been paid to Ms. Sneh Sengar. Instead, cash voucher of Rs. 4,000 has been produced before the assessing officer to justify its stand that Ms. Sneh Sengar has never been paid any cash over and above Rs. 20,000. The assessing officer has not been able to refer to any concrete evidence to show and prove the falsity of the explanation tendered by the appellant. Despite all this, the assessing officer made the addition of Rs. 4,00,000 on the basis of TEP only and without probing the genuineness and/or otherwise of the contentions raised in TEP meaning thereby that in absence of an....