TaxTMI 
TaxTMI 
2024 (7) TMI 276
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.... for AY. 2011-12, treated as "lead" case are as under: "1. The Learned AO has erred in not appreciating the fact that the notice u/s 148 dated 28-03-2014 was issued without getting any approval u/s 151 and therefore, the same is bad in law and void. 2. The Learned AO has erred in not appreciating the fact that, the notice u/s 148 has not served / issued within time limit of 6 years and therefore, the proceeding is bad in law and void. 3. The Learned AO has erred in not appreciating the fact that the copy of the reason recorded is dated 01-06-2018 whereas, the 148 notices is dated 28.03.2018 and it is further said that there is no such copy of the approval u/s. 151 provided and therefore, the proceeding is bad in law and void. 4. The Learned AO has also erred in not appreciating the fact that the appellant's books are duly audited and no such Section 145 has been applied nor the books have been rejected and therefore, there is no question of making any addition. 5. The Learned AO has also erred in not appreciating the fact that the Assessing Officer has grossly erred in providing complete statement of Bhanwarlal Jain as well as the inquir....
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....Jain group was operating and managing large number of benami concerns (around 70 fictitious concerns) in the names of their employees through which they provided accommodation entries for bogus purchases and bogus unsecured loans to various beneficiaries. In the case of assessee, the total purchases was Rs. 8,28,40,884/- i.e., (i) Meridian Jewellery Pvt. Ltd. Rs. 1,46,11,740/-; (ii) Pushpak Gems Rs. 27,14,724/- & (iii) Meridian Gems Rs. 6,55,14,420/- all from Bhanwarlal Jain group. The AO issued notice u/s 148 with prior approval from higher authorities. He had also handed over copy of the reasons for reopening to the assessee. The objection against re-assessment proceedings was disposed of by order dated 19.12.2018. As stated earlier, there was non-compliance to various notices issued by AO. In view of the above, show-cause notice was issued to the assessee on 09.12.2018 to explain the bogus purchase of Rs. 8,28,40,884/- and why it should not be added to total income. In absence of any compliance, the impugned purchase of Rs. 8,28,40,884/- was treated as bogus and added to the total income of the assessee. The AO has also initiated penalty proceedings u/s 271(1)(c) of the Act. ....
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....he paper book. Approval was granted on 23.03.2018 by the Ld.CIT-2, Surat. The AO has followed the due procedure of law and issued the notice u/s 148 of the Act after receiving sanction u/s 151 of the Act from the Competent Authority under the Act. The AO has also passed order disposing off objections against re-opening of assessment vide order dated 19.12.2018. 7. We have heard the rival submissions and perused the materials on record. We have also called for the original records from the AO and carefully gone through it. The reasons for reopening are at pages 5 to 7 of the paper book filed by appellant. The AO, Shri Anil V. Viramama, ITO-2(3)(8), Surat has signed it on 19.03.2018. It is noted that the "date of providing the reasons" for reopening to the assessee by AO was on 01.06.2018 as per page-53 of the paper book. The date of recording reasons was 19.03.2018. Pages 54 is continuation of the reasons recorded by the AO. Therefore, absence of date at page-53 of the paper book is not fatal because in the 2nd page, (i.e., page 7 of paper book) date has been duly written by the AO. The same is also clear from the original assessment record of AO i.e., the date was 19.03.2018. Ev....
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....eedings u/s 147 of the I.T Act, 1961 N/A 11 Reasons for the belief that income has escaped assessment As per Annexure-B Date 19.03.2019 Yours faithfully, Sd/- Anil V Viramgama 19.3.18 (Anil V.Viramgama) Income Tax Officer Ward-2(3)(8), Surat 12 Whether the Additional Commissioner of Income Tax, Range-2(3), Surat is satisfied with the reasons recorded by the ITO,Ward-2(3)(8), Surat that it is a fit case for issue of notice u/s 148 of the I.T.Act, 1961 I have examined material on records in view of merits of the facts, I am satisfied with the reasons recorded by AO for issuance of notice u/s 148 of the Act. Date: Sd/-S.R.Meena Joint.Commissioner of Income Tax, Range-2(3), Surat 13 Whether the Pr. Commissioner of Income Tax is satisfied on the reasons recorded by the Assessing Office that it is a fit case for issue of notice. Yes, I am satisfied with the reasons recorded by the AO that it is a fit case for the issue of notice u/s 148 of the I.T.Act. Sd/- Anand Kumar (Anand Kumar) Pr.Commissioner of Income-tax-2, SURAT Annexure-B Reason for Reopening - where no regular assessment made 1 Nam....
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....ned assessee has obtained accommodation entries of Rs. 4,10,30,197/- from Merredian Jwellery Pvt. Ltd., identified as paper concerns by Shri Bhanwarlal Jain and Shri Manish Bhanwarlal in their sworn on statement. No actual delivery or movement of goods has taken place. In view of such specific and pointing discovery of investigation, there is a clear case of escapement of income in the hands of the assessee. 5 & 6. Findings of the AO & basis of forming reason to believe and details of escapement of income:- In this case, specific information was received from Investigation Wing, Mumbai which is the internal part of the Department that search operation was carried out in the case of Shri Bhanwarlal Jain Group on 03.10.2013. the key person of the group, Shri Bhanwarlal Jain in the statement recorded u/s 132(4) of the Act, explained the modus operandi of the group. Shri Bhanwarlal Jain, Key person of the group, has admitted, in his sworn statement recorded during the course of search operation that he and his group were engaged in fraudulent billing activities of bogus purchase and in giving accommodation entries to various parties. The entire bogus nature of the tra....
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....nction was subsequently given by the PCIT, Surat-2 on 23.03.2018. Therefore, the reliance placed by the Ld. AR for the appellant in the case of Rajoo Engineers Ltd. vs. DCIT in Special Civil Application NO.5773 of 1999 is not applicable in the present case. In that case, the mandatory requirement of recording reasons u/s 148(2) of the Act before issuance of notice had not been complied with. However, in the present case, the AO has recorded reasons for reopening the assessment on 19.03.2018, which is prior to the sanction u/s 151 of the Act dated 23.03.2018. Notice u/s 148 of the Act was issued on 27.03.2018. The last date for issue of notice for AY 2011-12 was 31.03.2018. Hence, the issue of notice was well within the time. The AO has also mentioned in his assessment order that notice u/s 148 with prior approval was issued on 27.03.2018. This issue was also agitated before the Ld.CIT(A) and the Ld.CIT(A) after detailed discussion has dismissed the grounds, which is at page-18 of his order. The same is reproduced for ready reference: "6.2.2 Ground No.2: Re-opening is bad in law: The appellant challenged the assumption of jurisdiction u/s 148 of the Act. Further, t....
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....cularly in view of the fact that the assessing office has followed the procedures laid down by the Hon'ble Supreme Court in reopening of cases. Hence this ground is dismissed." After carefully considering facts of the case, rival submissions including paper book filed by Ld.AR of the assessee and the original assessment records of the AO, we find that the AO has duly followed the procedure mandated in the Income-tax Act, 1961 and the procedure laid down by Hon'ble Supreme Court in case of GKN Driveshofts (India) Ltd. (supra) and hence, we do not find any infirmity in the order of Ld.CIT(A). 7.2 Regarding the merits of the reasons for reopening, it may be stated that similar addition had come up for consideration before this Tribunal in the case of Sunilkumar Parasmai Jain in ITA Nos. 750 & 874/SRT/2023 for A.Y 2010- 11 dated 06.05.2024. In the said case, the grounds of appellant were dismissed by holding as under: "10.1 We have heard the submission of both parties, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We have also carefully deliberated on all the decisions relied upon by both the sides. We....
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....g into his possession subsequent to the previous concluded assessment, reason to believe that income chargeable to tax had escaped assessment. It was held that even if the information be such that it could have been obtained by the I.T.O. during the previous assessment 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 by us, 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 of Rs. 10,73,43,555/- claimed were non-genuine and therefore bogus, clearly meaning that what was disclosed was not true and false. The requirements of section 147 r.w.s. 148 have clearly been met; and the reopening was validly initiated. We also find that the assessee's appeal is squarely covered by the order of this Tribunal in the case of Pankaj K. Choudhary, in ITA No.1152/AHD/2017 for AY 2007-08 dated 27.09.2021, wherein the Tribunal held as follows: "17. We....
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....k Bullion (P) Ltd Vs DCIT (supra). Therefore, respectfully following the order of Hon'ble High Court, we find that the assessing officer validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of investigation wing Mumbai. So far as other submissions of the ld AR for the assessee that there is no live link of the reasons recorded, we find that the Hon'ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd clearly held that when assessing officer received information from the investigation wing that two well known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified. Hence, the ground No. 1 in assessee's appeal is dismissed." 10.4 The facts of the present case are similar to the facts of the above case. There is no reason as to why the decision of the above case should not be applicable to the case of the appellant. In above case, the Co-ordinate Bench of this Tribunal relied upon the decisions of Hon'ble jurisdictional High Court in the case of Peass Industrial Engineers (P) Ltd vs. DCIT and Pushpak Bullion (P) Ltd. ....
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....sponse from the assessee. We find that similar issues were before the Co-ordinate Bench of this Tribunal in the case of Pankaj K. Choudhary and others (supra). The Tribunal decided a bunch of 14 appeals consisting of appeals and cross-appeals by Revenue as well as different assessees by a consolidated order dated 27.09.2021. The "lead" case in these appeals and cross-appeals was the case of Pankaj K. Choudhary vs. ITO(3)(1)(5), Surat in ITA No.1379/AHD/2017 (AY 2007-08). After detailed discussion of the case and the legal position as well as precedents on the subject issue, the Tribunal sustained addition @ 6% of the bogus purchases. The facts of the present appeal are similar and hence, it is squarely covered by the order of the Tribunal in the case of Pankaj K. Choudhary (supra). The relevant part of the order is reproduced hereunder for ready reference and appreciation: "19. Ground No. 2 in 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 fin....
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.... Rs. 66,09,62,458/-. The assessee has shown Gross Profit @ .78% and net Profit @ .02% (page 11 of paper Book). The assessee while filing the return of income has declared taxable income of Rs. 1,81,840/- only. We are conscious of the facts that dispute before us is only with regard of the disputed purchases of Rs. 4.34 Crore, which was shown to have purchased from the entity managed by Bhanwarlal Jain Group. During the search action on Bhanwarlal Jain no stock of goods/ material was found to the investigation party. Bhanwarlal Jain while filing return of income has offered commission income (entry provider). Before us, the ld CIT-DR for the revenue vehemently submitted that 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. We find that in Mayank Diamonds the Hon'ble High Court restricted the additions to 5% of GP. We have seen that in Mayank Diamonds P Ltd (supra), the assessee had declared GP @ 1.03% on turnover of Rs. 1.86 Crore. The disputed transaction in the said case was Rs. 1.68 Crore. However, in the present case the assessee has declared the GP @ 0.78%. It is settled law th....