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2024 (12) TMI 692
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.... 2. That on the facts and in the circumstances of the case, the ld CIT(A) eared in upholding the legality & validity of notice u/s 148 of the Act 3. That on the facts and in the circumstances of the case, the ld CIT(A) erred in upholding the finding of ld AO that the sales made by appellant to M/s Sonu Monu Telecom Centre Pvt Ltd as bogus particularly when the sales are subject to GST and dully disclosed in the GST return and also part of audited trading and P&L account. 4. That on the facts and in the circumstances of the case, the ld CIT(A) erred in sustaining addition of Rs 85,69,197/- by upholding the genuine sales made by appellant as bogus sales u/s 68 of the Act. 5. That on the facts and in the circumstances of the case, the ld CIT(A) erred in upholding the provision of section 68 of the Act as the sales made by appellant are duly recorded and income earned on such sales are offered for taxation. 6. That on the facts and in the circumstances of the case, the ld CIT(A) erred in not appreciating the submission, evidence and legal position of law in right perspective and judicious manner and made arbitrary allegation while sustaining the a....
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....return filed and submitted that assessee is working as a super stockiest of mobile set of Micromax Company, therefore, purchase and sale of such mobile set are made on wholesale basis. xiv. It was submitted that all the invoices of purchases are made from the principal whereas the sale is made to the retailers and wholesalers. xv. Assessee has not made any purchase from the above said party but has sold goods to that party. xvi. The sale consideration is received by cheque, the relevant quantitative details also disclosed the same and such sale transaction of Rs. 85,69,197/-, therefore, amount stated of Rs. 76,47,675/- in reasons recorded is incorrect. It was submitted that reopening proceedings may be dropped. xvii. The Assessing Officer found that DGIT, Investigation has communicated on 29.06.2021 that M/s. Sonu Monu Telcom Centre Ltd. is engaged in providing bogus taxes invoices to various entities without physical supply of goods with a view to passing irregular input tax credit to other entities. For doing this M/s. Sonu Monu has also availed itself of an input tax credit against fake invoices issued by other entities. The GST return of M/s.....
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....he invoices without supply of material to various parties by issuing the bogus tax invoices with a view to passing irregular input to tax credit to other tax entities. He submits that such information received was that assessee has made bogus purchase of Rs. 76,47,675/- to M/s. Sonu Monu Telecom Centre Pvt. Ltd. iii. He submits that assessee has not executed sales of the above amount at Rs. 85,69,197/-. iv. He submitted a paper book wherein the various documents such a sale bill, stock register, bank statement, copy of the account of Sonu Monu Telecom Service Pvt. Ltd. was submitted. v. He submits that the goods sold by the assessee are subject to goods and service @ 12% which received by the assessee and deposited to the Sales Tax Department. vi. On the issue of reopening of the assessment, he submitted that assessment has been carried out in the case of the assessee by the National Faceless e- Assessment team. He referred to the paper book and submitted that the notice u/s. 148 of the Act has been issued by the Jurisdictional Assessing Officer on 27.03.2022. He referred to Page-11 of the P.B. and submitted that there is no justification of reop....
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....nu Telecom Pvt. Ltd. If the information of DGCI can be looked into, that agency has doubted that when M/s. Sonu Monu Telecom Pvt. Ltd. have issued sales bill without delivery of the goods then wherefrom those purchase bills were obtained by M/s. Sonu Monu Telecom Pvt. Ltd. The source shows that assessee has sold goods without supply of material to M/s. Sonu Monu Telecom Pvt. Ltd. Therefore, the reasons recorded for reopening of the assessment and the facts before the Assessing Officer cannot be doubted. Thus, the reopening of the assessment is valid. ii. On the issue of notice u/s. 148 of the Act issued by the jurisdictional Assessing Officer, it was submitted that the law does not bar the jurisdictional Assessing Officer to issue notice u/s. 148 of the Act. iii. On the merits of the addition, it was submitted that assessee has failed to provide any information such as receipt bills in respect of transport, delivery, loading/unlading of articles and godowns. There is no evidence that assessee has make sold goods to the M/s. Sonu Monu Telecom Pvt. Ltd. iv. Merely preparation of bills, entry in the stock register and receipt of payment by cheque prove the g....
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....the assessment proceedings. 10. The Hon Bombay High Court has dealt with identical issue in the case of Hexaware Technologies Ltd. (supra), and it is held as under: 32. As regards issue no. 4, Section 151A reads as under : 151A. Faceless assessment of income escaping assessment.-(1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or re-computation under section 147 or issuance of notice under section 148 [or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A] or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by- (a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a team-based assessment, reassessment, re-computation or issuance or sanction of notice with dynamic jurisdiction. (2) The Central Government may, for the purpose of gi....
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....the endorsement on the first page of the guideline - "Confidential For Departmental Circulation Only". The said guidelines are not issued under section 119 of the Act. Any such guideline issued by the CBDT is not binding on petitioner. Further the said guideline is also not binding on respondent no. 1 as they are contrary to the provisions of the Act and the Scheme framed under section 151A of the Act. The effect of a guideline came up for discussion in Sofitel Realty LLP v. ITO (TDS) [2023] 153 taxmann.com 496/294 Taxman 766/457 ITR 18 (Bom.) wherein this Court has held that the guidelines which are contrary to the provisions of the Act cannot be relied upon by the Revenue to reject an application for compounding filed by an assessee. The Court held that guidelines are subordinate to the principal Act or Rules, it cannot restrict or override the application of specific provisions enacted by legislature. The guidelines cannot travel beyond the scope of the powers conferred by the Act or the Rules. The guidelines do not deal with or even refer to the Scheme dated 29th March 2022 framed by the Government under section 151A of the Act. Section 151A(3) of the Act provides that....
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....etion to the Department to choose whether to follow it or not. That automated allocation is defined in paragraph 2(b) of the Scheme to mean an algorithm for randomised allocation of cases by using suitable technological tools including artificial intelligence and machine learning with a view to optimise the use of resources. Therefore, it means that the case can be allocated randomly to any officer who would then have jurisdiction to issue the notice under section 148 of the Act. It is not the case of respondent no. 1 that respondent no. 1 was the random officer who had been allocated jurisdiction. 36. With respect to the arguments of the Revenue, i.e., the notification dated 29th March 2022 provides that the Scheme so framed is applicable only 'to the extent' provided in Section 144B of the Act and Section 144B of the Act does not refer to issuance of notice under section 148 of the Act and hence, the notice cannot be issued by the FAO as per the said Scheme, we express our view as follows:- Section 151A of the Act itself contemplates formulation of Scheme for both assessment, reassessment or recomputation under section 147 as well as for issuance of noti....
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....es of making assessment or reassessment, the provisions of Section 144B of the Act would be applicable as no such manner for reassessment is separately provided in the Scheme. For issuing notice, the term "to the extent provided in Section 144B of the Act" is not relevant. The Scheme provides that the notice under section 148 of the Act, shall be issued through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Act and in a faceless manner. Therefore, "to the extent provided in Section 144B of the Act" does not go with issuance of notice and is applicable only with reference to assessment or reassessment. The phrase "to the extent provided in Section 144B of the Act" would mean that the restriction provided in Section 144B of the Act, such as keeping the International Tax Jurisdiction or Central Circle Jurisdiction out of the ambit of Section 144B of the Act would also apply under the Scheme. Further the exceptions provided in sub-section (7) and (8) of Section 144B of the Act would also be applicable to the Scheme. 37. When an authority acts contrary to law, the said act of the Authority is requir....
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....under section 148 of the Act. Respondent is clearly incorrect in its understanding of the said Scheme as the reference to random in the said Scheme is reference to selection of Assessing Officer at random and not selection of Section 148 cases as random. If the cases for issuance of notice under section 148 of the Act are selected based on criteria of the risk management strategy, then, obviously, the same are not randomly selected. The term 'randomly' by definition mean something which is chosen by chance rather than according to a plan. Therefore, if the cases are chosen based on risk management strategy, they certainly cannot be said to be random. The Computer/System cannot select cases on random but selection can be based on certain well-defined criteria. Hence, the argument of respondents is clearly unsustainable. If the case of respondent is that the applicability of Section 148 of the Act is on random basis, then the provision of Section 148 itself would become contrary to Article 14 of the Constitution of India as being arbitrary and unreasonable. Randomly selecting cases for reopening without there being any basis or criteria would mean that the section is applied ....
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....he case is selected prior to issuance of notice are decided on the basis of an algorithm as per risk management strategy and are, therefore, randomly selected. It is further stated that these cases are 'flagged' to the JAO by the Directorate of Systems and the JAO does not have any control over the process. It is further stated that the JAO has no way of predicting or determining beforehand whether the case will be 'flagged' by the system. The contention of the Revenue is that only cases which are 'flagged' by the system as per the risk management strategy formulated by CBDT can be considered by the Assessing Officer for reopening, however, in clause (i) in the Explanation 1 to Section 148 of the Act, the term "flagged" has been deleted by the Finance Act, 2022, with effect from 1st April 2022. In any case, whether only cases which are flagged can be reopened or not is not relevant to decide the scope of the Scheme framed under section 151A of the Act, which required the notice under section 148 of the Act to be issued on the basis of random allocation and in a faceless manner. (v) The Revenue has wrongly contended in paragraph 3.1 of the Office Mem....
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....e has to be issued. Further the argument of the Revenue that Section 151A of the Act takes into account that the procedure may be modified under the Act is without appreciating that if the procedure is required to be modified then the same would require modification of the notified Scheme. It is not open to the Revenue to refuse to follow the Scheme as the Scheme is clearly mandatory and is required to be followed by all Assessing Officers. (viii) The argument of the Revenue in paragraph 5.1 of the Office Memorandum that the Section and Scheme have left it to the administration to device and modify procedures with time while remaining confined to the principles laid down in the said Section and Scheme, is without appreciating that one of the main principles laid down in the Scheme is that the notice under section 148 of the Act is required to be issued through automated allocation and in a faceless manner. There is no leeway given on the said aspect and, therefore, there is no question of the administration to device and modify procedures with respect to the issuance of notice. 39. With reference to the decision of the Hon'ble Calcutta High Court in Triton Ove....
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.... Monu Telecom Pvt. Ltd., the directions suggested by the CBIC clearly shows that entities from whom purchases have been made by the M/s. Sonu Monu Telecom Pvt. Ltd., addition to the extent of 2% of such purchases can be made. However, the learned Assessing Officer has made addition of 100% sales already recorded in the Profit & Loss Account as income of the assessee, added the same amount to the total income of the assessee. This addition was made u/s. 68 of the Act. 15. The addition u/s. 68 of the Act could be made only when the assessee fails to show that the nature and source of credit in the books of account. Here in this case, the nature of credit in the books of account is sale of goods, such sale of goods is supported by sale bill, stock register, and availability of goods from the principal, receipt of consideration by cheque. Therefore, the nature of credit in the books of account is sales. When all these details are placed before the learned Assessing Officer, he did not make any enquiry but rejected the evidences produced by the assessee. When the assessee discharges its onus by producing overwhelming evidences of the sales already recorded in the books of account, th....