AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2023 (8) TMI 1015
X X X X Extracts X X X X
X X X X Extracts X X X X
...., learned CIT(A) has erred both on facts and in law in confirming the order of the AD rejecting the contention of the assessee that reopening the assessment under Section 147 of the Act and consequent reassessment without complying with the statutory conditions and the procedure prescribed under the law are bad and liable to be quashed. 3. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the order of the AO rejecting the contention of the assessee that the reasons recorded for reopening the assessment does not meet the requirements under section 147 of the Act, bad in law and are contrary to the facts. 4. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the reopening ignoring the fact that there is no live nexus between the reasons recorded and the belief formed by the assessing officer. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming action of the AO despite that assessment order having been framed on the basis of material collected at the back of the assessee, without pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd in law in confirming the addition on account of bogus purchases, despite their being adequate material and evidences brought on record by the assessee before the AO to show that the purchases and sales were made in the regular course of business. 12. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that AO has erred in not taking the allegation to the logical conclusion after having held that purchases are not genuine it's the obvious implication would have been made that sales are also not genuine. 13. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in rejecting the contention of the assessee that reasons recorded by the AO are contrary to the report received by it whereby it was clearly stated that purchases made by the assessee are actual purchases and hence there was no reason to believe that income has escaped assessment. 14. (1) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs 2,12,316/- made on account of commission ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mal course of business. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition, despite the fact that the assessee has regularly maintained complete stock records, books of accounts are audited as per law and nothing adverse were pointed out both by the AO as well as CIT(A) 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition, despite the fact that the amount has already declared by the assessee as cash sales and the action of the learned AO will tantamount to double taxation of the same amount. 5. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the learned AO in charging the income of Rs. 1,23,77,599/- already offered by the assessee as discrepancy in stock under section 68 read with section 115BBE of the Act. (ii) That the above action of the learned CIT(A) is invalid in total disregard to the fact that the additional income was on account of discrepancy in stock found during the course of survey and is the business in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e current year, even though the total yearly cash sale had decreased, the cash in hand as on 8th November, 2016 was shown at an abnormal increase of about Rs. 3.40 Crores which was equal to cash sales of about 18 days' iv. The Ld. CIT(A) has erred on facts and in law in deleting the addition ignoring the facts of the case that the assessee has shown big increase in sales on 8th November 2016 in a single day resulting into increase in the cash-in-hand whereas it could not submit complete copy of cash account with narration of entries and details of persons from whom the cash had been received in the required format. v. The Ld. CIT(A) was not justify in law in overlooking the modus operandi adopted by the assessee to take benefit of the situation and circumstances arised due to demonetization wherein the assessee just managed artificial entries of cash sales which is nothing but part of a colorable device, as held by Hon'ble Supreme Court in the case of Mc Dowell & Co. Ltd. Vs CTO 154 ITR 148(SC), to bring the unaccounted cash into the books of account." 7. With regard to the reopening u/s 147, we affirm the order of the ld. CIT(A). 8. The assessee fil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2013. In his statement, Bhanwarilal Jain has mentioned the names of the 68 firms/companies which are engaged in the business of providing accommodation entries and bogus purchase bills. The statements of Sh. Lunkaran Parasmal Kothari, Sh. Anil Khichda and Sh. Ritesh Siroya were recorded u/s 131 of the Act on 06.10.2013, 06.10.2013 and 04.10.2013 respectively. They all concurred in the whole modus operandi of issuing bogus purchase bills to parties. It was also revealed that Bhanwarilal Jain Group comprises of about 70 companies who are engaged in booking bogus sales in their books, thereby providing bogus purchase entries to its customers. The firms mentioned below viz., M/s Rajan Diamonds, M/s Mayur Exports and M/s Mukti Exports figure in the list of group firms/companies of Bhanwarilal Jain Group. Consequent upon the search operation, information was received from the Director of Income Tax (Investigation)-II, Mumbai regarding bogus purchase entries provided by Bhanwarilal Jain Group to M/s Neha Jewellers Pvt. Ltd., 1170, Kucha Mahajani, Chandni Chowk, Delhi. As per the information, the bogus purchase entries provided to M/s Neha Jewellers Pvt. Ltd. by the group....
X X X X Extracts X X X X
X X X X Extracts X X X X
....08.2017 submitted the details of the above 2 parties from whom the purchases were made by the assessee. The assessee stated that it was not aware about any of those statements and asked for the copy of the statement of Bhanwar Lal. Thereafter, the AO vide notice u/s 142(1) dated 10.10.2017 asked to file various details in respect of these 2 parties to whom assessee has purchased the material during the year under consideration. The assessee vide reply dated 06.11.2017 also submitted the following documentary evidences to prove the genuineness of the transaction: i. Ledger A/c in the books of the assessee. ii. Copy of purchase Bill and Purchase Account. iii. Stock Ledger in the books of assessee. iv. Bank statement of the assessee highlighting the payment made for purchase. v. Sales Ledger of the assessee showing sales of the goods purchased from the alleged parties. vi. Confirmation of Accounts from the parties from whom purchases have been made. vii. Copy of PAN Card of the alleged parties. viii. Copy of VAT/CST Registration of the parties. ix. Copy of ITR of the alleged parties. x. Bank statement of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e purchases made by the assessee from Megha Jems and Navkar India as bogus purchases. The AO also made an addition Rs. 2,12,316/- i.e. 1% of Rs. 2,12,31,648/- as commission paid. 17. Aggrieved by the order of the AO, the assessee filed an appeal before the ld. CIT(A). 18. The ld. CIT(A) in his order at PB Pg 46 para 5.5.10 observed that assessee has demonstrated beyond doubt that it has indeed made purchases and therefore the genuineness of purchases cannot be doubted, however the Ld. CIT(A) assumed that purchases has been made from grey market and the assessee has obtained bogus purchase bill from Bhanwarlal Jain and therefore the Ld. CIT (A) confirmed the addition of Rs. 42,46,330/- i.e. 20% of Rs. 2,12,31,648/-. 19. Aggrieved, both the Revenue and the assessee are in appeal before the Tribunal against the order of CIT(A). The revenue filed appeal against the deletion made by the ld. CIT(A) on account of bogus purchases and the assessee is in appeal against the determination of 20% of the purchases as undisclosed income. Since, the issue is inter-connected, it is being dealt by common adjudication. 20. Heard the arguments of both the parties and perused the material a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s not raised any concern whatsoever regarding the identities of parties or about the authenticity of the documents submitted by the parties directly to the AO in the response to the notice under section 133(6) of the Act. the Id.AO did not make any further enquiry and just passed the adverse order against the assessee. * The assessee has made purchases from M/s Megha Gems which is the proprietorship concern of Sh, Mitesh Pamecha and M/s Navkar India which is the proprietorship concern of Sh. Abhishek Lodha who have not given any such statement where they would have admitted being employees of Sh. Bhanwarlal Jain and providing accommodation entry. * Infact, Sh. Mitesh Pamecha and Sh. Abhishek Lodha, have provided confirmations and affidavit to the assessee confirming that the purchases were actually made and are totally genuine. * During the course of search operation in the case of assessee in the year 2014, the business operation of the assessee company were verified by the search party. The block period covered in said search included the year under consideration. However, no incriminating material was found during the course of search for the year unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rs. The AO has done independent enquiry during the course of assessment proceedings by issuing notices u/s 133(6) of the Act to all the suppliers. We notice that the notices were duly served upon the suppliers and they have also responded by filing their replies duly confirming the transactions. The AO has rejected the replies by observing that the replies lacked details and they did not mention about the nature of transactions. In our view, the said observations are vague in nature. On the contrary, a perusal of the affidavits furnished by the suppliers would show that they have confirmed the sales affected by them to the assessee. Further they have also verified and signed the ledger account copies as available in the books of account. When the suppliers confirm that the transactions of sales made by them to the assessee are genuine, that too, in response to the notices issued by the AO u/s 133(6) of the Act during the course of assessment proceedings, in our view, the said replies cannot be rejected without bringing on record any material to show that they are not true. We notice that the AO did not bring any material on record and he simply relied upon the report given by the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of cash. 29. The ld. CIT(A) restricted the addition of Rs. 4,58,30,000/- to Rs. 2,63,34,940/-. Aggrieved with the order of the ld. CIT(A), the assessee filed appeal against the confirmation of Rs. 2,63,34,940/- and the revenue came in appeal against the deletion of Rs. 1,94,95,000/-. 30. Heard the arguments of both the parties and perused the material available on record. 31. Before us, the ld. AR argued that where assessee has filed its submissions and placed evidence on record, then it is the duty of AO to act fairly as a reasonable person and examine the fact of the case in the light evidence available and should not come to a conclusion on the basis of surmises and conjectures. 32. It is a fact on record that out of the total cash deposits, an amount of Rs. 48,35,500/- pertains to deposit of new currency note on various dates from 06.12.2016 to 30.12.2016 in State Bank of India A/c No. 31021809029 and in A/c No. 000026426830019 Deutsche Bank. The deposit on 10.11.2016 of specified currency note was to the tune of Rs. 4,10,00,000/- in the State Bank of India A/c No. 34355670650. 33. It is a fact that cash deposits during the demonetization period was made in 3 b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he above facts it can be clearly noticed that the deposits made in new currency was nowhere unexplained, since assessee had submitted all the details pertaining to the same including name and address of the buyer, amount received in new currency alongwith invoice number against which said amount was received, it cannot be treated as undisclosed income. 34. It was further argued that vide note no. 28- Disclosures on Specified Bank Notes, of audited financial statement of the assesse wherein the details of specified bank notes and new currency notes held and transacted during the period from 08.11.2016 to 30.12.2016 is given. On perusal of the same, it can be found that the assesse has deposited Rs. 4,10,00,000 only in demonetized currency and balance amount of Rs. 48,34,500/- was deposited in new currency. Therefore, it was argued that addition to the extent of cash deposited in new currency notes amounting to Rs. 48,34,500/- is liable to be deleted. 35. The ld. AR argued that the cash sales have been made to the extent of Rs. 8,14,975/- on 08.11.2016 to identified parties having PAN and assessee has given including name, address, PAN of the buyer alongwith the amount of sales....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... AR argued that even after demonetization the assessee had made total sales of Rs. 20.13 Crores which includes credit sales of Rs. 13.74 crores and cash sales of Rs. 6.39 cores in the months of December, 2016 to March, 2017. The ld. AR also submitted the details of sales and cash deposits of the pre demonetization period of the assessee company which is as under: Month Total Sales Credit sales Cash Sales Cash Deposits Apr-16 5,380,720 1,802,233 3,578,487 15,000,000 May-16 32,979,075 19,845,550 13,133,525 12,000,000 Jun-16 25,063,109 1,875,662 23,187,447 3,600,000 Jul-16 19,080,896 2,183,136 16,897,760 11,050,000 Aug-16 21,839,490 4,981,748 16,857,742 43,800,000 Sep-16 44,663,884 17,723,595 26,940,289 26,000,000 Oct-16 82,179,512 29,859,787 52,319,725 54,000,000 Total 231,186,686 78,271,711 152,914,975 165,450,000 Average of Seven Months 33,026,669 11,181,673 21,844,996 23,635,714 38. The ld. AR argued that if the monthly average data of first seven months (pre demonetization period) is compared with the last four months (post demon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....were of Rs. 41.54 Crores and in the year under consideration there was decline in cash sales to Rs. 26.97 Crores, but the cash deposits made during the course of demonetization had increased was Rs. 4.58 Crores as against Rs. 93,00,000/- in the preceding year during the corresponding period which shows the abnormal pattern of cash sales as well as cash deposits in the year under consideration vis-a-vis last year, the ld. AR argued that AO is trying to compare the decline in cash sales in the year under consideration with the abnormal rise in the cash deposit during the demonetization period and the argument of the Assessing Officer is factually incorrect. It was argued that the main reason for decline of cash sale in the year under consideration is mainly on account of cash/new currency crunch in the market during the post demonetization period. the cash sales made in the pre demonetization i.e. April, 2016 to October, 2016 is Rs. 15.29 Crores in comparison to Rs. 19.52 crores in the preceding year (April, 2015 to October, 2015) did not have much variation, the variation was only 21.67%. However, if we look at the post demonetization period cash sales i.e. from December, 2016 to Ma....