TaxTMI 
TaxTMI 
2022 (5) TMI 1280
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....eals were heard together and are being disposed of by this common order. 3. To begin with, we shall take up ITA No.3456/Del/2019 concerning Assessment Year 2010-11 in question for adjudication. ITA No.3456/Del/2019 (A.Y. 2010-11 - Assessee Appeal) 4. Briefly stated, the assessee-company filed its original return of income on 28.09.2010 declaring total income of Rs.3,20,64,950/-. The return of income filed was subjected to scrutiny assessment under Section 143(3) vide assessment order dated 21.03.2013. Thereafter, a notice under Section 148 of the Act was issued on 17.03.2017 seeking to reopen the completed assessment. The re-assessment order was consequently finalized after making additions/disallowances on account of bogus purchases amounting to Rs.9,17,83,845/-. The impugned re-assessment order dated 30.12.2017 was thus framed determining the revised/re-assessed income at Rs.12,38,48,800/- as against regular assessment under Section 143(3) dated 21.03.2013 at Rs.320,64,950/-. 5. The assessee challenged the re-assessment order before the CIT(A) on two counts, namely, (i) validity of jurisdiction assumed under Section 148 of the Act and (ii) merits of the additions so m....
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....c) That the goods so purchased are duly entered in Stock Inward Register; (d) That all such purchases were duly supported by way bills, Bilty Etc. (e) That all purchases, when sold are duly entered in Sale Register; (f) That assessee company is an excisable unit 8& excise duty has also been paid on Sales thereof; (g) That Quantitative Details of Opening Stock, Purchases, Sales, Work In Progress 8& Closing Stock, if OK, how the purchases can be bogus; (h) That the Ld. AO have not pointed out any discrepancy in the books of accounts; (i) That the assessee was not provided opportunity to cross examine Sh. R.P. Bhatia, whose statements have been used for making additions in the hands of assessee; (j) That the principle of natural justice has not been followed, while passing the assessment order and making the additions in the hands of assessee. 3. That the Ld. CIT(A) has erred in confirming the additions to the tune of Rs.1,20,01,712/- calculated at Average G.P. Rate @ 16.26% of Rs.7,38,11,268/- being alleged bogus purchases from M/s Ramesh Kumar Tarun Kumar, inspite of the following facts & submission made before ....
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....ed by Excise and Taxation Department Punjab, all entry tax deposit receipts, VAT-19 returns the stock register - Excise Register Form-IV showing purchase quantity etc. The Ld. counsel further contended that the sole basis for reopening the concluded assessment and holding impugned purchases to be unverifiable is the statement recorded on oath under Section 131(1A) of one Shri Ram Prakash Bhatia in a survey operation on him carried out by the Investigation Wing wherein the impugned witness allegedly confessed that he is engaged in providing accommodation entries to different entities in relation to food grain bills. 7.2 Ld. counsel contended that the said Shri Ram Prakash Bhatia stated to be allegedly connected to suppliers, i.e., Choudhry & Co. and Shri Bajrang Foods is the witness of the Department and the statement given by him against the third party, i.e., purchasers/Assessee conveniently exonerates the witness with meager taxation liability to the detriment of the purchasers. The person is not the supplier per se and being witness of the Department, the onus is always on the Revenue to confront the witness to the assessee before using the statement against third party, i.e.....
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....tted that the action of the CIT(A) in assuming element of undisclosed profit in the aforesaid transaction with M/s. Ramesh Kumar Tarun Kumar is contrary to copious evidences filed before him and is thus unsustainable in law in the absence of any contrary evidence of cogent nature. 7.5 Ld. counsel thus submitted that the estimated and ad hoc additions towards unverified/bogus purchases has no leg to stand on facts and requires to be struck down even on merits. 8. Per contra, the ld. DR for the Revenue resisted the challenge to jurisdiction and justified the reopening for the reasons mentioned in the order of the Assessing Officer and the first appellate order. It was submitted that the invocation of jurisdiction under Section 147 meets the pre-requisites of Section 147 and cannot be faulted in the present case where the supplier of goods to the assessee connected through his two firms, namely, Chaudary and Co. and Shri Bajrang Food have categorically stated that he is engaged in providing accommodation entries to different entities as per needs and is merely providing fictitious bills to the purchasers and not actual goods. Ld. DR for the Revenue submitted that the information....
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....firmed that he is engaged in providing accommodation entries to different entities. In his statement he admitted that he used to provide the bills to the various mills owners without supplying any goods. He also admitted that he used to receive the payments in cheque/RTGS and after withdrawing cash from bank account, he used to return the cash to these mill owners. For the purpose of providing entries, he was managing a number of concerns through his family members. Further, the Investigation Wing identified beneficiaries from the bank account statements of concerns managed by Sh. R.P. Bhatia and the material impounded during survey. The details of purchases made by M/s Garg Acrylics Ltd. with the concerns managed by Sh. R.P. Bhatia during the assessment year 2010-11 are as under: S. No. Name of the concerns of Sh. Bhatia Amount (in Rs.) 1. Chaudhary & Co. 1,29,14,170/- 2. Shree Bajrang Foods 7,69,48,717/- Total 8,98,62,8877- 3. It may also be mentioned that the case of the assessee for AY 2009-10 was reopened u/s. 147/148 of the Act and the said reassessment was completed in the month of December, 2016. During these reassessment ....
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....ormation of believe appears to be information disseminated to the Assessing Officer on the basis of statement testified by one Shri Ram Prakash Bhatia who claims to be engaged in providing accommodation entries through his connected entities including Chaudhry & Co. and Shri Bajrang Foods to different entities. It would thus be apposite to reproduce the relevant portion of the statement of Shri Ram Prakash Bhatia before Investigation Wing, (as quoted in paragraph no.7 of the assessment order) for ready reference; "7. The facts of the case are that a survey operation was carried out on 8.2014 by Investigation Wing, Delhi in case of Shri Ram Prakash Bhatia at C- 48/3A, 2nd Floor, Lawrence Road Industrial Area, Delhi. In the statement u/s 131(1 A) recorded on oath on the date of survey proceedings, Sh R P Bhatia confessed that he is engaged in providing entries to different entities on demand. He also confirmed that he used to provide bills to the various mill owners against the goods supplied by some other traders. Further, he used to receive the payments in cheque/RTGS and after withdrawing cash from bank account, he used to return the cash to beneficiaries. The relevant po....
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....mill owners in lieu of the bills provided by us because we do not have any physical stock. Neither do we have any place to store the stock. 2. Another type of entry is for those traders who makes cash sales. These traders sale their goods on our bills and we receive the payment in our account. Either we withdraw cash and settle the transaction by giving cash to these traders or settle it through some RTGS operator as explained earlier. Q6 Do you mean to say that you only do the work of transferring the money received from mill owners through banking channels to the beneficiaries of RTGS operators and transferring of cash received from RTGS operators to mill owners? Ans: Yes, this is correct. Besides this, the amount received from Mills as well as sale consideration on behalf of Traders (who do not want to declare sales in their accounts) is also transferred to the beneficiaries of RTGS operators and the cash received from RTGS operators is returned to Mills owners and traders. Q7 How much commission do you get for this work? Ans: The mills owners give me commission on the basis of per bag. I receive 1 rupee per bag as commission. On the ....
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....in he statedly confessed to have provided the accommodation bills to different entities through firms / concerns connected to him and belonging to his family members. The Investigation Wing inter alia identified two concerns, namely, Choudhry & Co. and Shri Bajran Foods to be connected to Shri Ram Prakash Bhatia and alleged that the assessee is beneficiary of accommodation bill through these concerns. Based on such information received from Investigation Wing, the Assessing Officer proceeded to reopen the completed assessment under Sect ion 147 of the Act for the reasons recorded as reproduced in paragraph 9.2 above. 11. In this background, the contentions of the assessee are broadly summarized as under: (i) A mere transaction of purchase through the two concerns, namely, Shri Bajrang Foods and Choudhry & Co. by itself would not tantamount to accommodation entries particularly where the transaction of purchases are corroborated by exhaustive documentations coupled by documents generated by the State Authorities. (ii) The Assessing Officer has failed to apply its mind to the so called information received from the Investigation Wing and has mechanically acted on....
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....aries is narrow and restricted to supply of food grains bills to the mil l owners. The assessee admittedly is not engaged in the food grain business. Hence, as a corollary, the adverse remarks in the statement does not relate to the assessee by implication. This being the factual posit ion, the statement of Shri Ram Prakash Bhatia is not capable of triggering belief towards any possible escapement at tributable to assessee. The very basis of the information and consequent formation of believe adverse to assessee is thus a damp squib and without any sound basis. Such general and sweeping statement, on a standalone basis, cannot possibly give rise to 'reason to believe' on the face of the manifestation that the assessee is not engaged in food grain business at all and is not a recipient of any accommodation bills on food grain. This apart, the act ion of the Assessing Officer is centered around the testimony which is in the nature of a fleeting statement . 13. In this backdrop, we find sufficient basis for plea of the assessee that even the conditions of 1st proviso to Section 147 is not complied with. It is not shown as to how the assessee has failed to disclose material facts fu....
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....ity with the findings in ITA No.3456/Del /2019 for Assessment Year 2010-11, the jurisdict ion usurped by Assessing Officer cannot be countenanced in law and hence the appeal of the assessee for the Assessment Year 2011-12 in ITA No.5870/Del/2018 is also required to be allowed in identical terms. 18. In the result, the appeal of the assessee in ITA No.5870/Del /2018 is allowed. ITA No.5871/Del /2018 (Assessment Year 2012-13) 19. Briefly stated assessee company filed its original return of income for Assessment Year 2012-13 on 27.09.2012 declaring total income of Rs.6,84,31,560/ -. The assessment was completed under Section 143(3) of the Act earlier . Thereafter, a notice under Sect ion 148 of the Act on 17.03.2017 was issued seeking to reopen the completed assessment . The re-assessment order was consequently finalized after making additions on account of bogus purchases amounting to Rs.52,17,611/- . 20. The assessee challenged the impugned re-assessment order dated 30.12.2017 concerning Assessment Year 2012-13 before the CIT(A) on two counts, namely, (i) validity of jurisdiction under Section 148 of the Act . (i i) merits of the additions so made in the reassessment pro....