TaxTMI 
TaxTMI 
2012 (7) TMI 341
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....R submitted that there was no valid assumption of jurisdiction u/s 147 of the Income-tax Act, 1961 on the basis of which assessment was reopened u/s 147 of the Act. Ld. AR pleaded that notice u/s 148 was without jurisdiction. The reasons recorded are highly illusory and are in the nature of mere pretence. The proceedings have been initiated to examine certain transactions of purchases of the assessee. Thus, the proceedings were initiated only for the purposes of investigation. There is no material or evidence to allege that the income of the assessee company has escaped assessment. Ld. AR further pleaded that there must be existence of tangible material or formation of belief which is a pre-requisite for initiation of action u/s 147 of the Act. Section 147 postulates that Assessing Officer must have reason to believe that income has escaped assessment and there should be facts before Assessing Officer which reasonably give rise to the belief. Ld. AR pleaded that there was no material which has nexus with the formation of the reason to believe by the Assessing Officer. Ld. AR also pleaded that reassessment proceedings cannot be initiated only on the basis of reason to suspect. Ld. A....
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....reported in 291 ITR 500 where the Hon'ble Supreme Court has held when the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, the law does not require that Assessing Officer should have finally ascertained the fact of legal evidence or conclusion. The material required for conclusively proving the escapement of income is not concerned at the stage of reopening. The information received form the investigation wing was specific. The information was sufficient for making a belief that income has escaped and the Assessing Officer was justified in initiating the proceedings for reassessment by issuing notice u/s 148 after recording the reasons as required by law. Ld. DR submitted to dismiss this plea of assessee. 5. We have heard both the sides on the issue and have considered all the material available on the record and case laws relied upon by both the sides. The Assessing Officer received information from investigation wing that assessment is a beneficiary of the bogus accommodation purchase bills. On this information, the Assessing Officer applied his mind and formed a belief that income has escaped assessment. For this, the Ass....
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....lved is against the deletion of addition of Rs. 41,56,449/- made on account of bogus purchases made from M/s. N.K. Trading Co.. 9. While pleading on behalf of the revenue, the ld. DR submitted that the CIT (A) is not justified in holding that even if it is assumed that the purchases made from these parties are bogus or were not made but it cannot be said that no purchases had been made because the Assessing Officer has accepted the sales as per books of account. Ld. DR submitted that the assessee company is doing voluminous work and it is indulged in the production of atta and other bye-products out of wheat. Hence, there cannot be a direct link between the purchases and the sales. Therefore, the CIT (A) is completely misunderstood the business process of the assessee. Since there was no direct link between the purchase and sales, such findings of the CIT (A) are perverse. The assessee has never established the direct link between the purchase of the wheat and corresponding sales of atta and bye-products. Therefore, all these findings are presumed and not based on any evidence. These are only hypothetical presumptions which the CIT (A) has wrongly asserted. Further, he pleaded t....
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....estigation and 16.11.2006 by Assessing Officer. The statement of 19.10.2005 was recorded by DDIT (Inv.). A copy of the statement was given to the authorized representative of the assessee. On 16.11.2006 Assessing Officer recorded statement and the statement itself shows that Assessing Officer provided opportunity to cross the person whose statement was recorded. Shri Sunil Dhupar, CA was present during the recording of statement. Shri Dhupar was offered an opportunity to cross examine Naresh Kumar whose statement was recorded in his presence. Thus, Assessing Officer provided an opportunity to cross examine Shri Naresh Kumar, Proprietor of N.K. Trading Company. Therefore, in our considered view, assessee's plea for cross examination is baseless. Shri Naresh Kumar, Proprietor of N.K. Trading Company has never produced any documentary evidence for purchase of goods which were ultimately claimed to have been sold to assessee company. Naresh Kumar has also not produced even the copy of bank statement where the payments were claimed to have been received. Such statements could have been very well obtained by Shri Naresh Kumar from the bank even when books were claimed to have been taken ....
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....ee had miserably failed to establish the purchase as genuine from N.K. Trading Company. We are also not pleased by the observation of CIT (A) that there is provision for penalty for not getting books of account audited. Rather we would like to state that had the genuine turnover of the N.K. Trading Company be so, then accounts might have been audited. The conduct of proprietor of N.K. Trading Company during the investigation and facts stated in statement and also facts gathered in survey operations clearly establish that assessee had failed to prove genuineness of purchases made from N.K. Trading Company. CIT (A) had deleted the addition without any reliable evidence and cogent reasons. In view of these facts, we set aside the order of CIT (A) on this issue. We allow this ground of revenue's appeal. 12. In the ground no.3, the issue involved is against the deletion of addition of Rs. 55,959/- made on account of employees provided fund and ESIC. 13. We have heard both the sides on the issue. The details of payment of provident fund are as under :- Month Amount Delayed by April, 1998 9,388/- 2 days June, 1998 10,392/- 4 days August, 1998 9,001/-....
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....sion, the deduction of payment of employees' contribution towards provident fund and ESI cannot be disallowed under section 43B, if paid before the due date of filing the return. In view of this fact, this ground of appeal of the revenue is dismissed. ITA No.2778/Del/2010 (Assessment Year : 2000-01) 14. Ground Nos.1, 4 & 5 are general in nature and do not require any adjudication. 15. Ground No.2 is against the deletion of addition of Rs. 27,05,320/- made on account of bogus purchase made from M/s. N.K. Trading Co. This issue is covered by our aforesaid decision in ITA No.2777/Del/2010 for Assessment Year 1999-00 vide paras 11 & 11.1 in favour of the revenue. Accordingly, following the same, we allow this ground of revenue's appeal. 16. Ground No.3 is against the deletion of addition of Rs. 29,340/- made on account of belated payment of employees' contribution of EPF and ESI. This issue is covered by our aforesaid decision in ITA No.2777/Del/2010 for Assessment Year 1999-00 vide para 13 against the revenue. Accordingly, following the same, we dismiss this ground of revenue's appeal. ITA No.2779/Del/2010 (Assessment Year : 2001-02) 17. Ground Nos.1, 3 & 4are genera....
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.... In this regard, I am of the opinion that since the net owned funds of the company has considerably increased from previous Balance Sheet as at 31/3/2002 being Rs. 7.84 Crores to Rs. 12.96 crores as at 31/3/2003 and the Sales revenue of the company has also increased by about 50 % as compared to the previous year, hence, no notional interest can be disallowed on any single transaction entered during the course of the business of the company. Further, when company has the surplus available net owned funds, hence, additions made notionally being interest calculated hypothetically on conjectures and surmises cannot be disallowed. It must be noted that this loan has not been given in the current year, hence, interest disallowance out of current year income is not substantiated. Under the available facts, additions made amounting to Rs. 3,00,000/- be hereby deleted." 24. We have heard both the sides in detail and we have also considered the facts of this issue. We find that the issue is covered by the decision of Hon'ble jurisdictional High Court in the case of CIT vs. Basti Sugar Mills Co. Ltd. in ITA No.89 of 1993 dated 1st September, 2010 wherein the Hon'ble High Court h....