AI Drafter 
TaxTMI 
TaxTMI 
2024 (4) TMI 938
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.... - Assessing Officer issued notice under Section 148A(b) of the Act calling upon the assessee as to why reassessment proceedings should not be initiated by issuing show cause notice under Section 148 of the Act on the following grounds: • As per information received by the respondent. M/s S.K. Enterprises, Ahmedabad (i.e. a third party) was involved in availing incorrect Input Tax Credit (hereinafter referred to as "ITC" for the sake of brevity) as well as passing on ITC to others without actual supply of goods. • Reference has been made to statements of Shahrukh khan Pathan and Madhav Shah recorded by the department. In view of the same and certain other aspects, it was concluded that M/s. S.K. Enterprises is dummy concern and was created to defraud and to provide bogus invoices / bills to various buyers. • The petitioner is alleged to be one such entity which has been provided GST ITC of Rs. 60,91,125/- by M/s. S.K. Enterprises. • In view of the above, the respondent was of the view that income of Rs. 60,91,125/- has escaped assessment for the year under consideration. [2.3] The petitioner, in response to the above notice, fi....
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....lance. • There is no escapement of income chargeable to tax, an alleged in the show cause notice. The said fact is evident from the followings: ▪ "Gross profit ratios" as well as "Net profit ratios of "processing division" as well as "yarn division" for the "year in question" and "earlier year". ▪ "Ratio of material consumption to finished goods" of "processing division" as well as "yarn division" for the "year in question" and "earlier year". • The following vital facts also prove that no bogus purchases have been made by the petitioner: ▪ Books of accounts have been duly audited; ▪ Stock register has been maintained; ▪ Quantity details have been maintained; ▪ Stock audits have been periodically carried out by banks. • Merely because M/s. S. K. Enterprise did not file the income-tax return or did not comply with the notices issued by the department cannot conclusively prove that purchases made from the said party are bogus. • Unaccounted purchases cannot be considered as income, but only net profit element embedded therein can be taxed as in....
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....ssment. [5] It was, therefore, submitted that starting point of the inquiry i.e. information has resulted into the decision on the basis of information only ignoring the details of the documents placed on record by the petitioner to show, prima facie, that there is no escapement of income as the petitioner has received the goods, which is supported by the material in the form of delivery challans and transport receipts. [6] On the other hand, learned advocate Mr. Karan Sanghani for the respondent submitted that the respondent - Assessing Officer is only required to come to the decision that information received by him is with regard to M/s. S. K. Enterprises issuing the bills without supplying the goods and there was a transaction between M/s. S. K. Enterprises and the petitioner. It was submitted that the petitioner has not denied the transactions between the petitioner and M/s. S. K. Enterprises, who is alleged to have issued bills without any movement of the goods. [7] In support of his submissions, reliance placed on the decision of the Hon'ble Allahabad High Court in the case of Deepak Kumar Yadav vs. Principal Commissioner of Income-tax reported [2023] 151 taxmann.co....
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.... Enterprises which is found to be a legal entity existing only on paper and is dummy concern and was created to defraud and to provide bogus invoices/bills to the buyers, the assessee firm being one such entity. M/s. S. K. Enterprises has provided GST ITC credit of Rs. 60,91,125/- to the firm without actual supply of goods on such invoices. Thus, it is logical to conclude that the assessee has no proper proof and corroborative information with respect to the guilelessness of the purchases made by them as stated above." [10] Considering the above, it appears that the Assessing Officer has reproduced the reply filed by the assessee and the contents thereof are not even referred or analyzed prima facie to come to the conclusion that it is a fit case to reopen the assessment. [11] On the other hand, the petitioner along with the reply has reproduced the following documentary evidence of purchase, delivery and payment to show the genuineness of the transactions entered into with M/s. S. K. Enterprises: "(b) Documentary evidence of purchase, delivery and payment to prove the genuineness thereof Now in respect of the above purchases, we upload herewith in Annexure-1, the fo....