TaxTMI 
TaxTMI 
2018 (4) TMI 625
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....sessee is engaged in the business as a reseller and trader in iron and steel under the proprietorship concern M/s. Harsh Steel. Its case was initially processed u/s 143(1). Subsequently, the AOreceived information from DGIT(Inv.)/ Mumbai and Sales Tax Department that the assessee had claimed purchases of Rs. 6,03,82,692/- from parties who have been declared as hawala dealers by Sales Tax Department. These parties had issued accommodation bills without actual sale and delivery of goods. Therefore, the case was re-opened. On further verification, the Assessing Officer observed that the assessee had claimed purchases of Rs. 8,23,49,198/- from 5 hawala parties. The Assessing Officer issued notice u/s.133(6) to 5 parties which were returned back with remarks 'not known/left/unclaimed and address incomplete'. The Assessing Officer issued summons u/s 131 to the assessee to produce the parties, books of accounts, confirmation, ledger accounts of the purchase parties, evidence of movement of materials, transport receipts and the sale details. The assessee submitted that he had already filed the details of the purchase parties and the sales details, copies of vouchers and expenses ma....
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....31 (All. (HC) wherein it is held that without passing assessment order, there was no occasion to pass the re-assessment order. b) Reassessment proceedings were initiated mechanically on the basis of the information provided by the Investigation Wing and no independent inquiry was conducted by the AO. No tangible material was brought on record to reach a . conclusion that there was escapement of income. c) Further, no return of income was filed by the assessee in response to the notice u/s 148, the assessment is illegal and requires to be quashed. d) The AR stated that section 151 of the Income Tax Act has been violated in as much as there was no requirement of any approval from any authorities for reopening the assessment. However, the AO has sought approval of C1T-24, Mumbai rendering the assessment as invalid. e) The AR argued that the addition was made on presumption and suspicion basis and that the case was reopened to verify the bogus purchases whereas the addition was made u/s 69C of the Income Tax Act. f) Further, the AO has not rejected the book of accounts. The AR stated that the provisions of section 69C of the Income Tax Act c....
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.... goods. The AO has confronted all the materials and findings to the assessee. In fact, findings of the Sales Tax Department are available on its web-site and it is in public domain. The assessee "has also failed to bring evidence of actual transportation and delivery of goods. The appellant has not filed copy of any letter wherein he has made a request for cross-examination. In view of above, the AO's view of treating the purchases from the 5 parties as bogus is upheld. Now the quantum of disallowance/ addition is to be decided based on facts of this case. 8. Thereafter, the ld. Commissioner of Income Tax (Appeals) confirmed 25% of the addition. 9. Against the above order, the assessee is in appeal before us. 10. We have heard both the counsel and perused the records. While challenging the reopening, the ld. Counsel of the assessee's submissions are as under: (a) The original return of income remained unprocessed and an order u/s.147 could not have been passed . (b) No independent inquiry was conducted by the learned AO and the assessment was reopened on the basis of the information received from DG (Inv). (c) The notice issued under 148 was ....
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....sactions and are also involved in issuing bogus purchase bills for sale of material without delivery of goods, which information was based on information received by Revenue from Maharashtra Sales Tax Authority. Information was received that the assessee was beneficiary of hawala accommodation entries from entry providers by way of bogus purchase. The accommodation entry provider has deposed and admitted before the Maharashtra Sales Tax Authority vide statement/ affidavit that they were engaged in providing bogus accommodation entries wherein bogus sale bills were issued without delivery of goods, in consideration for commission. These, accommodation entry providers, on receipt of cheques from parties against bogus bills for sale of material, later on withdrew cash from their bank accounts, which was returned to beneficiaries of bogus bills after deduction of their agreed commission. The Assessee was stated to be one of the beneficiaries of these bogus entries of sale of material from hawala entry operators in favour of the assessee wherein the assessee made alleged bogus purchases through these bogus bills issued by hawala entry providers in favour of the assessee. These dealers w....
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....ant material on which a reasonable person could have formed a requisite belief Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the AO is within the realm of subjective satisfaction ITO v. Selected Dalurband Coal Co, (P.) Ltd. (1996) 217 ITR 597 (Supreme Court): Raymond Woollen Mills Ltd. v. ITO (1999) 236 ITR 34 (Supreme Court)." 15. The above discussion and precedent from Apex Court fully justify the validity of reopening in this case. Further we find that the Ld. CIT(A) has carefully examined the issue and has properly appreciated the issue. Hence, we do not find any infirmity in the same. Accordingly, we uphold the order of the Ld. CIT(A) on the issue of reopening. Since, the issue has been decided on the basis of the Hon'ble Apex Court decision, the other case laws referred by assessee are not supporting the assessee's case. 16. We find that the validity of the reopening has already been found to be justified by us. The other points raised by the ld. Counsel of the assessee are that for the reopening, the Assessing Officer was not required to take any permission but still he has ....
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....ny confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. 18. Hence purchase bills from these non-existent the/bogus parties cannot be taken as cogent evidence of purchases, in light of the overwhelming evidence the revenue authorities cannot put upon blinkers and accept these purchases as genuine. This proposition is duly supported by Hon'ble Apex Court decision in the case of Sumati Dayal 214 ITR 801 and Durga Prasad More 82 ITR 540. In the present case the assessee wants that the unassailable fact that the suppliers are non-existent and thus bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable in light of above apex court decisions. 19. In these circumstances learned departmental representative has referred to Hon'ble Gujarat High Court decision in the case of Appeal No. 240 of 2003 in the case of N K Industries vs Dy CIT, order dated 20.06.2016, wherein hundred percent of the bogus purchases was held to be added in the hands of the assessee and tribunals restriction of the addition to 25% of the bogus purchases was set aside. It was expounded th....