AI Drafter 
TaxTMI 
TaxTMI 
2021 (8) TMI 507
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....allowance retained by Ld.CIT(Appeals) being wrong on facts and bad in law same may kindly be deleted. 4. The grounds of appeal raised by the revenue read as under: (i) "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in restricting the addition to the extent of average G.P. of three previous years as against the addition of Rs. 4,93,60,854/- made by the Assessing Officer on account of peak credit of bogus purchases ignoring the fact that in the process of purchases from open market from one dealer and obtaining bills from other dealer, the deployment of unaccounted money is involved which was quantified by taking peak credit." (ii) "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting addition of Rs. 18,01,043/- being commission @ 1% on total bogus purchases amounting to Rs. 18,01,04,399/- ignoring the fact that for availing bogus bills, the assessee would have incurred commission and the same was confirmed by the statements of various parties recorded during the search." 5. Brief facts of the case are that assessee belongs to M/s Tirupati Group of Companies. A search operation u/s 13....
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....ted that since purchases are from local, lorry owners normally do not given any lorry receipts. Assessee also placed reliance upon case laws in this regard. However, the AO was not satisfied. He proceeded to add peak credit involved in the transactions and held as under:- a. Upon analyzing the submissions and details, it was observed, during the course of survey as well as scrutiny proceeding, that the assessee failed to produce the supporting documents i.e. proper delivery' challan, transport receipt, GRNs, Storekeeper register or acknowledgement of receiving goods from the above subject. b. Further, the payment pattern shows that there is delayed payment to these bogus parties when compared to the payment to other parties. c. It is observed that the purchases are bogus and the sales are genuine and the assessee company has resorted to cash purchases from undisclosed parties from open market but they have obtained accommodations entries from these alleged parties. d. As the assessee company was unable to substantiate the purchases made from alleged 4 concerns as mentioned in para 7.3, hence, the purchases made from these parties are proved t....
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....s worked out. The bogus purchase during the year under consideration from bill providers isRs. 5,58,60,854/- . h. From the above findings and on the basis of Sales Tax Department (Maharashtra) findings regarding these alleged parties, it is inferred that the assessee has resorted to cash purchases in the open market, and the payments were done through cheques to the alleged parties, the peak credit balance shows the cash in the hands of each assessee. Hence, the peak credit is also calculated. The peak credit in the case of assessee company is Rs. 4,93,60,854/-. Hence, an amount of Rs. 4,93,60,854/- is added back to the total income of the assessee. The penalty proceedings have been initiated u/s 271(l)(c) of the IT Act, 1961, separately for concealing the particulars of total income and filing inaccurate particulars of income. 7. The AO further made unaccounted commission expenses addition as under:- From the statements of various bogus purchase billers as mentioned above, it is seen that, the assessee company has made bogus purchases from / with the help of these persons and their concerns. In return of which, the assessee company has paid certain amount to t....
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....und No.4, the appellant has challenged the addition of commission expenses of Rs. 18,01,043/-. An the impugned order, the AO noted that for availing such bogus bills, the appellant would have incurred commission expenses @ 1% and observed that the fact that such transactions involved payment and receipt of commission was confirmed by the statements of various parties recorded during the search. Considering that the rate of commission in this trade ranged from 0.5% to 2.0%, the AO estimated commission @1% on the total bogus purchases of Rs. 18,01,04,399/-and added back an amount of 18,01,043/-. In appeal it has been argued that the said addition is based purely on estimate without any evidence of any such expense having been incurred by the appellant. I have considered the issue at hand. As in the preceding grounds it has been decided that the purchases is question have not been shown to be bogus, the addition on account of estimated commission expenses is consequently deleted. 9. Against this order, assessee and revenue appeals are in before us. We have heard both parties and perused the record. Ld. Counsel of the assessee submitted that without doubting the sales purch....
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....,000/- Aakash Ferromet etc. Thus the fact that payments are made through banking channels is evident. However, though this aspect has been dismissed by the AO, no further investigation has been found to be made in this regard and no evidence is brought on record to show that the money was routed back to the appellant. As such in the face of these facts, the appellant's arguments have considerable force. 11. Here, we note that on this facts of Ld.CIT(A) was of the opinion that some more investigation was required. In our considered opinion, the same should have been conducted by the Ld.CIT(A) himself as his powers are coterminous with that of AO. In this regard, we note that Hon'ble Supreme Court in the case of Kapoor chand Shrimal 131 ITR 451 has held that it is the duty of the appellate authority to correct the errors in the orders of the authorities below and remit the matter with or without direction, unless prohibited by law. Here, we note that even after noting that the payments are in multiple of large amounts with no relationship whatsoever with the invoice value, Ld.CIT(A) has not made any further investigation. Moreover, the examination of the bank statement and the ....
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.... 2010-11 and Ld.CIT(A) has adjudicated the issue as under:- 8.2 I have noted that in the case at hand, the information was received from DGIT (Investigation), Mumbai that the appellant has taken accommodation entries from three parties, the details of which are tabulated as under:- Sr. No. Name of the Party Hawala TIN Hawala PAN Amount (Rs.) 1. New Steel (India) 27030085243V AGWPP5068K 3.10 Cr. 2 Apex Ferromate Pvt. Ltd. 27040739260V AAICAOG13Q 7.30 Cr. 3. Arihant trading Company 27G70GG8443V AVLPP4843Q 1.71 Cr. TOTAL 12.11 Cr 8.3 A perusal of the above tabular data reveals that the appellant had taken accommodation entries to the tune of Rs. 12.11 Crores, during the year under consideration. I have also noted that the AO has duly recorded the reason before reopening the case u/s 148 of the Act, which have been duly reproduced on page 2 of the assessment order. 8.4 The appellant has been duly provided with the reasons for reopening the assessment by the AO, vide letter dated 11.02.2015. The objections filed by the AR vide letter dated 26.03.15 has been disposed of by the AO, vide a speaking....
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..... vs. M.R .. Singh, DCIT, 287 ITR 482 held that a notice issued u/s.148 based on assessment of subsequent assessment year is valid even if the appeal is pending for such assessment. 8.9 Further, it is the duty of the assessee to disclose full and true materials to the A.O. but for which the A.O. could initiate the reassessment proceedings. It has been held by the Hon'ble Supreme Court in Shri Krishna P. Ltd. 221 ITR 538, 549 that every disclosure is not and cannot be treated to be a true and full disclosure. A disclosure may be a false one or a true one. It may be a full disclosure or it may not be. The Hon'ble Supreme Court held that a partial disclosure may very often be a misleading one. Therefore, what is required is a full and true disclosure of all material facts necessary for making assessment for that year. 8.10 The Hon'ble Supreme Court in the case of Raymond Woollen Mills Ltd. VS. ITO 236 ITR 34, 35 (SC) has held that for determining whether initiation of reassessment proceedings was valid, it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. It further held that the su....
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....s during-the course of the assessment proceedings. This can happen when the assessee does not disclose or furnish to the AO complete and correct information and details it is required and under an obligation to disclose. Burden is on the assessee to make full and the true disclosure. 8.1 5 Further, in the case of Piaggio Vehicles P. Ltd. YS. DCIT 290 ITR 377 (Bom), the Hon'ble Jurisdictional High Court held that in a case of reopening after 4 years subsequent to scrutiny assessments, contradiction was discovered between Tax Audit report and Return of income, it was a case of omission and/or failure on the part of the assessee to disclose fully and truly all facts for computation of its income. It is also held by Hon'ble Supreme Court in the following cases that facts which could have been found by the ITO by further probing are covered under failure to disclose fully and truly all material facts. 8.16 In the case of Coca Cola India Vs. ACIT &Ors. (2009) 221 CTR 0225 : (2009) 1 7 DTR 0066 : (2009) 309 ITR 0194 : (2009) 1 77 TAXMAN 0103, the Hon'ble Punjab & Haryana High Court has held that notice u/s 147 should be held as bad in law, only if extraneous ....