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TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 11
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....T/2021 for AY.2009-10, therefore, we dismiss the said appeal, as not pressed. 3. First, we shall take assessee's Cross Objection, in Co. No.14/SRT/2021 for AY.2009-10, wherein the grounds of appeal raised by assessee are as follows: 1.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in sustaining the validity of notice u/s 148, being issued by Ld. AO in absence of fresh tangible material, independent application of mind and without having reason to believe of escapement of income and without obtaining the valid approval u/s 151 of the Act. 2.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition on estimating the suppressed profit @ 5% of Rs.77,13,105/- on purchase of traded goods (diamonds) made from 2 suppliers of Rs.15,42,62,091/-. 3.0 The Ld. CIT(A), before confirming the disallowance of purchase of Rs.77,13,105/- @ 5% of disputed purchase, erred in not considering understated vital facts, being; a) The entire addition had been made only on the basis of information received from the Sales Tax department; b) The exhaustive documentary evidences such as purchase bills, confirmations, stock tally, stock ....
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....rved upon the assessee on 29.03.2014. 5. The assessee is engaged in the business of trading of rough and polished diamond and gold jewellery. A summons u/s 131 of the Income Tax Act was also issued on 22.01.2015 and duly served upon the assessee. Thereafter, a show cause notice issued to the assessee on 19.02.2015, wherein the assessee was asked to show cause as to why the bogus purchase entry of Rs.15,42,62, 091/- should not be disallowed and added to the total income of the assessee. In response assessee filed written submission vide letter dated 26/2/2015. The assessing officer after considering the submission of the assessee held that assessee has made bogus purchases from Kotons Impex Pvt. Ltd. and Shri Jalaram Enterprise during the year and accordingly, the amount of Rs.15,42,62,091/- as bogus purchase, from Kotons Impex and Jalaram Enterprise was added to the total income of the assessee. 6. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has dismissed the appeal of the assessee holding the reassessment proceedings as valid. Aggrieved by the order of the ld. CIT(A), the Assessee is in cross objection befo....
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....has held as under: "9. On the basis of aforesaid proposition laid by series of decisions, we are of the opinion that when the Authority is armed with the tangible material in the form of specific information received by the Investigation Wing, Ahmedabad is thoroughly justified in issuing a notice for reassessment. It is revealed from the said additional material available on hand a reasonable belief is formed by the Assessing Authority that income of the petitioner has escaped assessment and therefore, once the reasonable belief is formulated by the Authority on the basis of cogent tangible material, the Authority is not expected to conclude at this stage the issue finally or to ascertain the fact by evidence or conclusion, we are of the opinion that function of the assessing authority at this stage is to administer the statute and what is required at this stage is a reason to believe and not establish fact of escapement of income and therefore, looking to the scope of section 147 as also sections 148 to 152 of the Act, even if scrutiny assessment has been undertaken, if substantial new material is found in the form of information on the basis of which the assessing authority can....
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....ired to be interfered with." 10. From the above judgment of the Hon`ble Gujarat High Court in the case of Peass Industrial Engineers (P.) Ltd(supra), it is vivid that function of the assessing authority at the stage of recording reasons is to administer the statute and what is required is a reason to believe and not to establish fact of escapement of income and therefore, looking to the scope of section 147 as also sections 148 to 152 of the Act, even if scrutiny assessment has been undertaken, if substantial new material is found in the form of information on the basis of which the assessing authority can form a belief that the income of the assessee has escaped assessment, it is always open for the assessing authority to reopen the assessment. Therefore, based on these facts and circumstances, we do not find any infirmity in the reasons recorded by Assessing Officer, hence the Cross Objection No.1 raised by the assessee is dismissed. 11. Other grounds raised by the assessee in cross objection, that is, ground Nos. 2, 3 and 4 is covered against the assessee by the decision of the Co-ordinate Bench in the case of Pankaj K. Chaudhary (in ITA No.1152/AHD/2017 for AY.2007-08). The ....
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....ition made by the assessing officer should be sustained. On the other hand, ld Counsel contended that assessee submitted bills, vouchers, and transactions are through banking channel therefore entire addition should be deleted. We have heard both the parties and note that issue under consideration is squarely covered by the judgment of the Co - ordinate Bench of ITAT Surat, in the case of Pankaj K. Chaudhary (in ITA No.1152/AHD/2017 for AY.2007-08), wherein it was held as follows: "12. We have heard the submission of ld.CIT-DR for the Revenue and the ld. Authorised Representative (AR) of the assessee. We have also gone through the various documentary evidences furnished by assessee. The ld. CIT-DR for the Revenue supported the order of AO. The ld. CIT-DR submits that Investigation Wing, Mumbai made a search on Bhanwarlal Jain Group. During the search and after search, the Investigation Wing made a thorough investigation and concluded that Bhanwarlal Jain Group and his associates including his sons were indulging in managing about 70 benami concerns. The benami concerns were engaged in providing accommodation entries. The assessee is one of the beneficiaries of such accommodation ....
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.... 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 complete details about the genuineness of purchases. The assessee filed confirmation purchases invoices, accounts of the parties, bank statement of assessee showing transaction to the banking channel. The AO has not made any comment on the documentary evidence furnished by assessee. The AO solely relied upon the statement of third party and the report of Investigation Wing. The report of wing and the statement of Bhanwarlal Jain were not provided to the assessee. The AO has not disputed the sales of assessee. No sale is possible in absence of purchase. The books of accounts were not rejected. The AO made the disallowance of entire purchases. The assessing....
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....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. There is no live link between the reasons recorded qua the assessee. We find that the assessee has raised objection against the validity of the reopening before the AO. The objections of the assessee was duly disposed by AO in his order dated 09.02.2015. The assessee raised ground of appeal before ld CIT(A) while assailing the order of AO on reopening. The ld CIT(A) while considering the ground of appeal against the reopening held that the AO has received report from investigation wing Mumbai, which indicate that the assessee is beneficiary of the accommodation entry operators. The accommodation entry provider admitted before investigation wing that he has given such entry to various persons; based on such report the AO has reason to b....
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....f 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 inflate Gross Profit Rate. The ld CIT(A) by considering the overall facts, concluded that the 100% disallowance of purchase is not justified. We also find that the ld.CIT(A) also considered the decision of jurisdictional High Court in Mayank Diamonds Pvt. Ltd. (supra) and compared the fact of the present case with the facts in Mayank Diamonds Pvt Ltd (supra) and noted that assessee in that case was also engaged in the trading of polished diamonds. The ld CIT(A) noted that in that case the AO made disallowance of entire bogus purchase and on first appeal before CIT(A) the disallowances were maintained. However, the Tribunal gave partial relief to the assessee directing to sustain the addition @12% of such bogus purchases. And on further appeal, the....