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2018 (3) TMI 658
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....gnoring the fact that the Directors and the employees of the assessee company accepted the bogus expenditure and bogus purchase during the search and also the assessee company was unable to produce the books of account. 2. On the facts and in the circumstances and in law, the Ld. CIT(Appeal) has erred in not considering on merit and not upholding the addition made by the Assessing Officer for bogus expenditure and non-genuine purchase of Rs. 15,97,22,639/-. The appellant craves, leave to add, to amend and /or alter any of the grounds of appeal, if need be. The appellant therefore, prays that on the grounds stated above, the order of the CIT(A)-51,Mumbai may be set aside and that of the Assessing Officer be restored." 2. Briefly stated, the facts of the case are that the assessee is a closely held company established in collaboration with its German principal, viz. M/s Enercon BmbH and Indian promoters with the shareholding pattern of 56% and 44%, respectively. The assessee which was engaged in the business of manufacturing and selling wind turbine generators and providing wide range of services in the wind power industry had e-filed its return of incom....
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....und Rs. 17,40,27,652/- It is also submitted that the DDIT (Inv.), Unit IV(1), Mumbai that exact quantification of bogus purchases for the period of F.Y. 2005-06 relevant to the A. Y. 2006-07 may take some more time. Since the matter for F.Y. 2005-06 relevant to the A. Y. 2006-07 is going to be barred on 31.03.2013, the DDIT(Inv.), Unit IV(1), Mumbai has recommended to reopen the assessment for A.Y. 2006-07 on the basis of facts enumerated above. Thus, I have reasons to believe that the income of Rs. 17,40,27,652/- in respec t of bogus pur chases made dur ing the year under consideration has escaped assessment within the meaning of clause (c) below Explanation (2) to section 147 of the Act by reason of failure on the part of the assessee to disclose fully and truly all Material facts necessary for its assessment for A.Y. 2006-07. 3. In view of the above facts, I am satisf ied that this is a f it case for issue of notice u.s 148 of the Income Tax Act, 1961." 4. The assessee in compliance to the notice issued under Sec. 148 of the Act, submitted that its return of income filed on 28.11.2006 under Sec. 139(1) may be treated as a return filed in response to the aforesaid not....
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....t all the referred case laws mandates that the reopening should be based on material facts that leads the assessing officer to believe that there has been an escapement of income due to failure on part of the Assessee to truly and fully disclose all details. This obligation has been fully conformed by the assessing officer. The reopening has been based on material facts received from DDIT(Inv.), Unit-IV(1) on the tax evasion practices of assessee by booking bogus purchases, unearthed during search. This fact clearly brings out that the assessee has not truly and fully disclosed material facts regarding its business and accounting practices. Thus, the failure of the assessee to fully and truly disclose, as per first proviso to section 147 of the Income Tax Act, is a fact which lead the assessing officer to believe that there has been an escapement of income owing to the failure of the assessee to truly and fully disclose all facts. The relevant portion of the reasons recorded by the Assessing Officer is as under. "Thus, I have reason to believe that the income of Rs. 17,40,27,652/- in respect of bogus purchases made during the year under consideration has escaped assessment....
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....ctices and information by the assessee clearly is a failure on part of the assessee to truly and fully disclose details required for assessment. It is once again reiterated that reopening based on information on statements recorded during search and evidences gathered u/s 132, which were earlier not available before the assessing officer during assessment u/s 143(3), is valid, legal and complete in jurisdiction and in complete consonance with the provisions of the Income Tax Act. With respect to reliance placed on decision of the Hon'ble Supreme Court in the case of Sheo Nath Singh V/s Appellate Assistant Commissioner of Income Tax reported in 82 ITR 147(SC), the facts of the case in question is completely different, also in view of the change of the legal position from the time of the said order. The said case was reope ned o n th e b as is o n 'pu rpo r te d' secret prof its, whereas in the current case, it is based on specific issue of bogus purchases unearthed during search. Thus, given the above discussion, your objection is hereby rejected. 3. Point-2- With respect to disallowance u/s 14A, queries are raised only to give effect to the appellate ....
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.... 12. 52021648 V & V ASSOCIATES 38,92,930/- 13. 52024250-52 GAJAMBUJA CEMENT 4,19,499/- 14. 52027991 SAV engineering 20,58,232/- 15. 52027992-93 G SELVAM ENGINEERING 30,87,348/- 16. 52031503 M P MALAVIYA 24,75,592/- 17. 52031306 LANCO INFRATECH LTD. 11,24,194/- TOTAL AMOUNT 5,97,22,639/- The A.O further observed that Shri Awadhesh Kumar Jha (Assisstant General Manager-Accounts of M/s Enercon India Ltd.) in his statement had categorically stated that he was neither in a position to provide the above mentioned bills, nor establish the actual receipt of goods/services or identify the site to which the goods pertained. The A.O on the basis of the aforesaid state of affairs directed the assessee to establish with documentary evidence the fact of actual receipt of goods/services in respect of the aforementioned bills/vouchers and the site to which those pertained. The A.O observed that as the assessee despite being afforded sufficient time and opportunity failed to produce the bills as well as establish the actual receipt of goods/services and the site to which the same pertained, ther....
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....backdrop of the aforesaid facts, the A.O observed that the assessee was engaged in inflation of its expenses by booking non-genuine purchases and expenses. It was further observed by the A.O that the fact as regards the booking of non-genuine purchase and expenses by the assessee could also safely be gathered from a perusal of the statement of Shri Awadhesh Kumar Jha (Assistant General Manager-Accounts of M/s Enercon India Ltd) recorded during the course of search & seizure proceedings, wherein he had categorically stated that he was unable to provide the bills as well as establish the actual receipt of goods/services or provide information as regards the site to which the goods pertained. The A.O observed that the fact of non-genuine purchases was also clearly admitted by Shri Biju Thomas, Manager-Finance and Shri Yogesh Mehra, Managing Director of the company in their respective statements recorded under Sec. 131 of the Act on 15.03.2013. The A.O further took support of the fact that Shri Yogesh Mehra (supra) had in his disclosure statement dated 03.06.2013 clearly accepted the fact of non-genuine purchases. The A.O further in order to support his conviction that the assessee had....
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....he DDIT(Inv.), Unit-IV(1), Mumbai, that bogus purchases for the period pertaining to F.Ys 2009-10 to 2011-12, which formed an average 1.04% of the turnover had emerged during the search & seizure proceedings conducted under Sec.132 on the assessee on 14.03.2013. The CIT(A) observed that the A.O adopted the aforesaid bogus purchases/turnover ratio of 1.04% as a yardstick and worked out the bogus purchases for the year under consideration, viz. A.Y. 2006-07 at Rs. 17,40,27,652/- (i.e 1.04% of the turnover of the assessee of Rs. 1673,34,28,055/- for A.Y. 2006-07). The CIT(A) observed that though the reasons to believe revealed that the case of the assessee was reopened on the ground that the bogus purchases of Rs. 17,40,27,652/- of the assessee for the year under consideration had escaped assessment, but however, while framing the assessment no such addition was made in the hands of the assessee. Rather, the A.O instead of making addition of Rs. 17,40,27,652/- on account of the bogus purchases, on the basis of which the case of the assessee was reopened, had rather made an addition of Rs. 5,92,54,319/- on account of unverifiable purchases that were admitted by Shri Awadhesh Kumar Jha,....
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....efore, reopening of the case by the A.O under Sec.147 thus could not be sustained for the said reason too. It was observed by the CIT(A) that the A.O while reopening the case of the assessee must have reasons to believe that income chargeable to tax had escaped assessment. The CIT(A) after deliberating on the reasons on the basis of which the case of the assessee was reopened, was unable to persuade himself to be in agreement with the view taken by the A.O. 10. The revenue being aggrieved with certain observations of the CIT(A), had thus to the said extent carried the matter in appeal before us. The ld. Departmental Representative (for short 'D.R') during the course of hearing of the appeal submitted that the CIT(A) had erred in quashing the assessment framed under Sec. 143(3) r.w. Sec. 147, by holding that there was no failure on the part of the assessee to disclose fully and truly all the material facts necessary for framing of assessment for the year under consideration. It was submitted by the ld. D.R that the CIT(A) while observing as hereinabove, had failed to appreciate that the directors and employees of the assessee company had accepted the bogus expenditure and bogus p....
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....ar 2009-10 to 2011-12, could not have constituted a reason to believe that a similar discrepancy existed in the case of the assessee for the year under consideration. 12. We find that the revenue in the present appeal had only assailed before us the observations of the CIT(A) that in the absence of any failure on the part of the assessee to disclose fully and truly all material facts necessary for framing of the assessment for the year under consideration, the concluded assessment of the assessee for the year under consideration, viz. A.Y 2006-07 could not have been reopened after a lapse of a period of 4 years from the end of the assessment year. We have perused the reasons to believe on the basis of which the A.O had assumed jurisdiction under Sec. 147 and had reopened the case of the assessee. We find that as observed by us hereinabove, the case of the assessee was reopened on the basis of the information received by the A.O from the DDIT(Inv.),Unit-IV(1), Mumbai, that search proceedings conducted on the assessee under Sec. 132 on 14.03.2013, revealed bogus purchase/turnover ratio of 1.04% for the F.Ys 2009-10 to 2011-12. We find a perusal of the reasons to believe reveals th....