TaxTMI 
TaxTMI 
2022 (12) TMI 1208
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....al of the Revenue is below the monetary limit prescribed by the CBDT Circular No.17/2019 dated 08.08.2019. Therefore, due to low tax effect, the appeal of the Revenue should be dismissed. 4. On the other hand, Learned Departmental Representative (Ld. DR) for the Revenue fairly agreed that due to low tax effect, the appeal of the Revenue may be dismissed. 5. The CBDT has issued Circular No. 17/2019 dated 08.08.2019, whereby the monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal and High Courts and SLP before Supreme Court have been increased as measure for reducing Litigation. The revised monetary limits laid down in para-2 of this Circular are as follows: 1. Before Appellate Tribunal Rs.50,00,000/- 2. Before High Court Rs.1,00,00,000/- 3. Before Supreme Court Rs.2,00,00,000/- 6. In the present case, that is, the tax effect in the Revenue's appeal is less than Rs.50,00,000/-. Though this appeal had been filed by the Revenue on 28/02/2019 and was within the monetary limit in the form of tax effect for filing appeals before Tribunal, however, in view of the recent Circular of CBDT, even such appeals will be ....
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....assessing officer to the tune of Rs.85,45,283/- should be sustained whereas assessee is in cross appeal before us that addition restricted by the ld CIT(A) at the rate of 5% of bogus purchases at Rs.4,27,264/- should also be deleted. We have dismissed the Revenue`s appeal for the same assessment year 2008-09 on account of low tax effect. However, assessee is in appeal before us against the addition sustained by ld CIT(A) at the rate of 5% of bogus purchases at Rs.4,27,264/-. Therefore, first we shall adjudicate ground no. 1, raised by the assessee, wherein the assessee has challenged the validity of reopening of assessment under section 147 of the Act. 11. Brief facts qua the issue are that the assessee has filed original return of income for AY.2008-09 declaring total income at Rs.2,32,590/- on 26.09.2008 The assessment was finalized u/s. 143(3) on 24.08.2010 determining the total income at Rs 2,99,980/-. In this case, an information was received by the office of the undersigned from the DIT (Inv). Mumbai that assessee was one of the beneficiaries of bogus purchase bills provided by Shri Rajendra Jam, Shri Sanjay Chaudhary and Dharmichand Jain Group during the previous year rel....
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.... Chaudhary and Dharmichand Jain Group are all paper companies / proprietorships and with no real business activities, operating solely with the purpose of facilitation of fraudulent financial transactions which includes providing accommodation entries in the form of unsecured loans to the interested parties, issuing of bogus sale / purchase bills to various parties etc. During the course of search and seizure action in the case of Shri Rajendra Jam, Shri Sanjay Chaudhary and Dharmichand Jain Group of cases on 03.10.2013 by the DGIT(Inv), Mumbai, it was found that there are name-sake dummy directors / partners / proprietors / brokers, etc. These concerns were being actually managed by Shri Rajendra Jain, Shri Sanjay Chaudhary and Dharmichand Jain & others. These group concerns were believed to be concerns actively involved in providing non-genuine purchase bills and also unsecured loan accommodation entries to various interested parties. As a result of the search and seizure action, it was conclusively proved that these diamond concerns are only on paper base with no real business activities. Findings of the search action on Shri Rajendra Jain, Shri Sanjay Chaudhary and Dharmichand ....
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....s in which the persons who were his employees are also shown as directors, partners and proprietors. The List of group concerns operated and managed by Shri Rajendra Jain, Shri Sanjay Chaudhary and Dharmichand Jain & others was obtained from him. It must be mentioned at the outset, that all these group concerns were shown to be in the business of import and export of diamonds. All of them have license which make them eligible for importing diamonds. Further, data collected from customs department had revealed that all the said group concerns have genuinely been importing diamonds for last many years. The imported diamonds were also getting cleared by the CHAs. It prima facie gives an impression that all the group benami concerns were indeed in the business of import of diamond and its subsequent exports (which is a miniscule amount; and local sale. However, many evidences were found during the course of search which proved that these concerns were not into any genuine business. Such findings are enumerated below: (i) No Stock of diamond found: During the course of search, all the registered offices, business premises, business and residential premises of various dummy directors,....
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....ho are in need of taking accommodation entries for bogus purchases. The above finding of the Investigation Wing as summarized above clearly established the bogus nature of the transactions entered into by the Shri Rajendra Jain, Shri Sanjay Chaudhary and Dharmichand Jain Group, it also establishes that forming of basis for reopening of the case was substantive and not based on mere belief. The Investigation Wing has carried out thorough Investigation and established beyond doubt that the transactions arc bogus. 15. In response to the notice issue by the Assessing Officer, the assessee submitted its reply before the assessing officer, vide letter dated 01.07.2015, wherein assessee requested to treat the original return of income filed on 23.03.2008, as return of income filed in response to notice u/s 148 of the Act. The notice u/s 143(2) of the Act, dated 15.12.2015 was issued and served upon the assessee. The notice u/s 142(1) was also issued by AO along with the detailed questionnaire to the assessee calling for various details clarifications etc. 16. In response to the notices issued, the assessee has filed the details and submissions before the assessing officer. However, ....
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....hat there is no infirmity in the reasons recorded by the Assessing Officer. 20. After giving our thoughtful consideration to the submission of the parties and perusing the judicial decisions relied upon by the Ld. Counsel. We have gone through the reasons recorded by the assessing officer and noted that not only there existed new information with the AO from the credible sources, but also that he has applied has mind and recorded the conclusion that the purchases claimed were nongenuine and therefore bogus, (clearly meaning that what was disclosed was false and untruthful). The Hon'ble Supreme Court in the case of Phul Chand BajrangLal and another vs. ITO 203 ITR 456, was considering the question of reassessment beyond the period of four years in the case of an assessee firm; and had held that in case of acquiring fresh information specific in nature and reliable, relating to the concluded assessment, which went to falsify the statement made by the assessee at the time of original assessment and, therefore, he would be permitted under the law to draw fresh inference from such facts and material. The Court also went to an extent of saying that there are two distinct and diffe....
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.... proceedings by conducting an investigation or an enquiry but was not in fact so obtained, it would not affect the jurisdiction of the Income Tax Officer to initiate reassessment proceedings, if the twin conditions prescribed under Section 147 of the Act are satisfied. As observed earlier not only there existed new information with the AO from the credible sources, but also he had applied his mind and recorded the conclusion that the purchases claimed were non-genuine and therefore bogus, (clearly meaning that what was disclosed was false and untruthful). The requirements of section 147 r.w.s. 148 have clearly been met; and the reopening is held justified and legal. Therefore, we dismiss ground no.1 and 3 raised by the assessee. 23. Coming to ground no. 2 raised by the assessee, which is on merit, we note that Co-ordinate Bench of this Tribunal has taken a view in the case of Pankaj K. Chaudhary, in ITA No.1152/AHD/2047, dated 27.09.2021 that addition at the rate of 6% on bogus purchases is fair and sufficient. The findings of the Coordinate Bench are given below: "12. We have heard the submission of ld.CIT-DR for the Revenue and the ld. Authorised Representative (AR) o....
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....elhi) and Chuharmal Vs CIT [1998] 38 Taxman 190 (SC). 14. On the other hand, the ld.AR of the assessee submits that he has challenged the validity of reopening as well as restricting the addition to the extent of 12.50% of the alleged bogus purchases. The ld.AR of the assessee submits during the assessment, the AO has not made any independent investigation. The AO reopened the case of the assessee on the basis of third party information without making any preliminary investigation. The AO received vague information about providing accommodation entry by Bhanwarlal Jain Group. No specific information about the accommodation entry obtained by assessee was received by AO. There is no live link between the reasons recorded qua the assessee. Therefore, the re-opening is invalid and all subsequent action is liable to be set aside. 15. On account of additions of bogus purchases, the ld.AR submits that in the original assessment, the assessee filed its complete details of purchases to prove the genuineness of expenses. The AO accepted the same in the assessment order passed under section 143(3) on 10.03.2009. During re-assessment, the assessee again furnished com....
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....ained in the Evidence Act is not applicable before the tax authorities. It was submitted that the ratio of various case laws relied by the ld. AR for the assessee is not applicable on the facts of the present cases. The ratio of decision of Hon'ble Gujarat High Court in Mayank Diamond Private Limited (supra) is directly applicable on the facts of the present case. 17. We have considered the submissions of the parties and have gone through the order of the lower authorities. We have also deliberated on each and every case laws relied by both the parties. We have also examined the financial statement of all the assessee(s) consisting of computation of income and audit report. We have also gone through the documentary evidences furnished in all cases. Ground No.1 in assessee's appeal relates to the validity of reopening. The ld AR for the assessee vehemently argued that the AO reopened the case of the assessee on the basis of third party information, and without making any preliminary investigation, which was vague about the alleged accommodation entry by Bhanwarlal Jain Group. And that there was no specific information about the accommodation entry availed by the assessee. T....
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....n assessee's appeal and the grounds of appeal raised by the revenue are interconnected, which relates to restricting the disallowance of bogus purchases to the extent of 12.5%. The AO made of 100% of purchases shown from the hawala dealers/ entry provider namely Bhanwarlal Jain. We find that the AO while making additions of 100%, of disputed purchases solely relied on the report of the investigation wing Mumbai. No independent investigation was carried by the AO. The AO has not disputed the sale of the assessee. The AO made no comment on the evidences furnished by the assessee. We further find that ld CIT(A), while considering the submissions of the assessee accepted the lapses on the part of the AO and noted that no sale is possible in absence of purchases. The Books of the assessee was not rejected by the AO. The ld CIT(A) on further examination of the facts and various legal submissions find that Ahmedabad Tribunal in Bholanath Poly Fab Private Limited (supra) held that in the such cases the addition of bogus purchases was sustained to the extent of 12%, on the observation that the assessee may have made purchases from elsewhere and obtained the bills from impugned supplier to i....