TaxTMI 
TaxTMI 
2022 (11) TMI 361
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....or A.Y. 2009-10 as lead case. ITA No. 480/Asr/2018 The assessee has taken the following grounds which are as under: "1. On the facts & in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the validity of notice issued under section 148 of the Income Tax Act whereas as per facts and other material placed on record, notice issued under section 148 of the Income Tax Act is a illegal and invalid notice issued without any proper and valid reasons. 2. On the facts & in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred by holding the validity of re-assessment proceedings and thereby confirming the addition of Rs. 3,45,200/- after applying NP of 1% on the transactions which have duly been disclosed by the assessee appellant in his books of accounts. 3. That the appellant craves to add or amend the grounds of appeal." ITA No. 479/Asr/2018 3. The revenue has also taken the following grounds which are as under: "(i) The CIT(A) erred in not appropriately taking into consideration the order of Hon'ble Supreme Court in the case of N.K. Protein Ltd. vs. CIT, 84 taxmann.com 19....
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....n was treated as bogus. Further Rs. 3 lac was added back for introduction of capital by the partner, Mr. Subhash Gupta and also Rs. 18,04,903/- outstanding balance of Mr. Sadhu Ram was added back as it is not credited in the books of account. The assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the addition amount of Rs. 3 lac related introduction of capital in partnership firm by partner and Rs. 18,04,903/- related to the bogus sundry creditors. Related to bogus purchased only the addition was made @ 1% of total purchased and rest of the amount was deleted by the Ld. CIT(A). 5. Being aggrieved assessee & revenue both filed an appeal before us. Adjudication of ITA No. 480/Asr/2018 6. The Ld. Counsel of the assessee, Mr. Sudhir Sehgal vehemently argued and placed that the assessee is a trader of cotton and is in same line of business from past many years. The case of the assessee was reopened u/s. 148 of the Act by issuing notice on 31.03.2016. The case was reopened on basis of the reasons recorded. The copy of the reasons recorded in APB page 24 is reproduced here as below: "Reasons Under Section 147 Of The Income Tax Act, 1961. This office is in posses....
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....he necessary copies of the same be supplied so that proper reply be filed accordingly. Further the firm has paid a sum of Rs. 17,80,000/- to M/s. Partap Enterprises, Sirsa against purchase of goods from this concern. During year firm has purchased goods of Rs. 3,45,20,115/- as per copy of account enclosed. Further as per our record the PAN of M/s. Partap Enterprises, Sirsa is AZSPK9182C." 6.2. The Ld. Counsel further argued that the issue was placed before the Ld. AO and Ld. CIT(A). Both had not considered the issue during the adjudication. The Ld. Counsel further submitted the catena of judgment which is as below: (i) PCIT Vs. G & G Pharma Ltd., 384 ITR 147 (DEL), in which, it has been held as under:- "Without forming a prima facie opinion, on the basis of such material, it was not possible for him to have simply concluded that it was evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries. The basic jurisdictional requirement was application of mind by the Assessing Officer to the material produced before issuing the notice for reassessment. Without analysing and forming a prima facie opinion on the basis of mate....
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.... and which was discussed in para 5.3 of the order of Ld. CIT(A). In the said remand report, it is duly been mentioned that the parties M/s. Birla Textile Mills, Baddi and M/s. Chenab Textile Mills, has duly filed the information to the Ld. AO depicting the goods purchased from the assessee, GIR No. date and invoice No. along with amount. In the paper book the assessee submitted copy of account of Pratap Enterprises APB page Nos. 34 to 35 copy of detail sales made to M/s. Chenab Textile Mills, Kathua, after purchasing from M/s. Pratap Enterprises in APB page No. 43 to 69. The detailed flow sheet related movement of goods was prepared regarding purchases made from Pratap Enterprises and corresponding sales made to M/s. Birla Textile Mills, Baddi and M/s. Chenab Textile Mills, Kathua, enclosed by assessee in APB pages 79 to 82. 9.1. The Ld. CIT(A) has accepted the assessee's submission and the entire purchase was duly considered. The observation was depicted in the relevant paragraph of the order of the Ld. CIT(A) is extracted as below: "It is also settled that in order to arrive at net profit the Assessing Officer would have to resort to Guess Work for the reason that estimati....
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.... of capital Rs. 3 lac by the partner. The partners are already dealt by the Ld. CIT(A) in para 7 & 7.1 of his order. The extract of the observation of the Ld. CIT(A) is as below: "7.0 Ground of Anneal No. 9: This ground of appeal is related to addition of Rs. 3,00,00/- received from Sh. Subhash Gupta, partner which as per discussions made in paragraph 6 of the assessment order was unexplained cash credit within the meaning of section 68 of Income Tax Act and hence added. 7.1 The appellant in the course of appeal proceedings submitted the aforesaid amount referred to by the Assessing Officer in the assessment order was in fact appearing in the capital account of the partner Sh. Subhash Gupta who is also proprietor of Saurabh Enterprises. It was contended that the credits appearing in partner's capital account have to be examined in the hands of the partner and not in the hands of the partnership firm." 13. The Ld. CIT DR vehemently argued and relied on the order of the assessing authority. 14. The Ld. Counsel in his counter argument relied on the order of the Hon'ble Punjab & Haryana High Court in the case of; i) Income Tax Officer vs. M/s. Capital Sales Corpn, Phagw....