TaxTMI 
TaxTMI 
2017 (12) TMI 747
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....bed under the statute have hot been complied with. (ii) On the facts and circumstances of the case, learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the 3. (i) On the facts and circumstances of the case, learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the AO are bad in the eyes of law, as the reasons recorded for the issue of notice under section 148 are bad in the eyes of law an(J are contrary to the facts. (ii) On the facts and circumstances of the case, learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the reassessment order passed by the AO Is bad and liable to be quashed as the same has been reopened on the basis of the reasons which are vague and have been recorded without application of mind on the part of the AO. 4 On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of an amount of Rs. 52,47,565/- on account of bogus purchases. 5. (i) On the facts and circumstances o....
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....g the contention of the assessee that the addition so made on the basis of material collected at the back of the assessee, is bad in law and liable to be deleted. 11. On the facts and circumstances of the case, the ld CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that the addition made by the AO is untenable in the eyes of law, having been made without providing opportunity to cross examine the person on the basis of whose statement the allegations have been made against the assessee and without following the principles of natural justice." 3. The facts of the case is that the assessee is an individual carrying on the business, filed return of income for Assessment Year 2006-07 for Rs. 148750/- on 31.10.2006. The return was processed u/s 143(1) of the Act on 29.03.2007. A letter was received from the Chief Commissioner of Income Tax along with a CD containing the details of accommodation entries provided by one Shri Rakesh Gupta, Shri Vishesh Gupta, Navneet Jain and Vaibhav Jain. The proprietary concern of the assessee M/s. Sanjay Metal Udyog was found to have obtained accommodation entries from two parties M/s. Vishnu Trading Co....
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.... of commission paid for obtaining bogus accommodation entries. He further made an addition of Rs. 1049513/- as gross profit earned on such accommodation entry @20%. Therefore, assessee is in appeal before us. 4. The ld Authorised Representative vehemently contended that reopening made by the ld Assessing Officer is not correct. To substantiate his claim he relied upon the various orders of the coordinate bench where it is held that reopening is invalid with respect to the same parties:- a. Unique Metal Industries Vs. Income Tax officer in ITA No. 1372/Del/2015 dated 28.10.2015 b. Nayar Metal Company Vs. ITO in ITA No. 1374/Del/2015 dated 31.03.2016 c. Rajesh Kumar Arora Vs. ITO in ITA No. 2861/Del/2016 dated 25.11.2016 5. Therefore, ld AR was of the view that this issue is covered in favour of the assessee so far as reopening of the above assessment is concerned. 6. On the issue of reopening the ld DR submitted that on identical facts and circumstances of the case the Hon'ble Gujarat High Court has upheld the reopening of the assessment on bogus purchases in Gujarat Ambuja Export Ltd Vs. DCIT in SCA No. 10745/ 2016 dated 11.09.2017. He furthe....
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....ment proceedings. The ld DR further relied upon the decision of the Hon'ble Gujarat High Court in case of Gujarat Ambuja Export Pvt. Ltd (supra) wherein, in para No. 9, on identical issue, where the information was received from the income tax department about huge deposits in the account of the suppliers who were found to be providing accommodation entries. The court held that:- "8. Undisputedly, these transactions were not examined by the Assessing Officer during the original assessment proceedings though he did find sufficient evidence suggesting that not all purchases made by the assessee were genuine. In fact though the appellate authority and the Tribunal reduced the addition made by the Assessing Officer on this count, in theory, the non-genuineness of some of the purchases was approved by the Tribunal also. Be that as it may. So far as the assessee's purchases from S.R. Sales are concerned they were not subject matter of the assessment proceedings and in that view of the matter the question of change of opinion would not arise. In any event, when fresh material was unearthed by the department through the investigation wing who had inquired into the transactions....
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.... Intelligence (DRI) Regional Unit at Jaipur. This in turn was based upon information given by the Central Excise Department. While it is true that the court is conscious that the reassessment notice should not have been routinely issued, at the same time, the nature of power is wide enough that when there an escapement of income and the Revenue has information ruling that this escapement is also relatable to suppression of material facts (which could include false claims), the power to reopen concluded assessment can validly be exercised. The consideration which ought to weigh with the Revenue and are considered valid are the existence of tangible material or information - in the light of the judgment in CIT v. Kelvinator of India [2010] 320 ITR 561 (SC). 9. Having regard to the contents of the notice for AY 2003-04, the court is unable to agree with the findings of the ITAT. It constitutes reference to tangible material "outside" the record, i.e. information based upon the investigation of the Commissioner of Central Excise with respect to the purchases made by the assesses. However, as far as the second issue is concerned, the Court is of the opinion that even the rectif....
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....ssed of providing accommodation entries as per the list. On that basis the ld Assessing Officer reached at a fair conclusion that assessee has obtained accommodation entries from these two parties and then notice u/s 148 of the Act was issued. It shows that Assessing Officer has applied his mind to the information received from third party (in the case from the CIT, Central-2, New Delhi). Hence, no fault can be found in the reopening proceedings initiated by the ld AO. 11. Reliance on the decisions of the coordinate bench by the ld AR were not followed by us for the reason that at that particular time when they were rendered, both the above decisions of Hon'ble Delhi High Court and Hon'ble Gujarat High Court were not available. In view of this we find no infirmity in the order of the ld Assessing Officer in initiating reassessment proceedings which was confirmed by the ld CIT(A). In view of this ground No. 1 to 3 of the appeal of the assessee are dismissed. 12. Now coming to ground of addition of Rs. 5247565/- on account of bogus purchases, Rs. 262377/- on account of commission paid on obtaining the accommodation entries and addition of 20% of the purchases of Rs. 1049513....