TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1158
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....ssessee contacted the Senior Counsel, then he opined to file Cross Objections challenging the re-opening of assessment. Accordingly, Cross Objections have been filed. 4. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross-objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in sub-section 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon'ble High Court as well as before the Hon'ble Supreme Court, then, Hon'ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon'ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1....
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....of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by t....
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....sment order was passed on 31.12.2019 vide which income of the assessee was assessed at Rs. 7,23,74,980/- whereas in assessment year 2016-17, return was accepted u/s 143(1). The AO has reopened both these assessments on the ground that he has received information from Dy. Director of Investigation (Investigation Unit)-6(2), New Delhi wherein it was informed that survey u/s 133A of the Act in the case of Shri Ashok Kumar Gupta and Shri Sandeep Gupta was conducted at their business premises on 30.11.2018. During the course of survey proceedings, statement of Shri Ashok Kumar Gupta was recorded 'on oath' u/s 131(1)(A) of the Act. According to the Revenue, Shri Ashok Kumar Gupta has disclosed in his statement that he is providing accommodation entries to various concerns, therefore, the AO harboured a belief that purchases alleged to have been made from the concern of Shri Ashok Kumar Gupta are bogus and he reopened the assessment. The AO has heard the assessee and ultimately disallowed the claim of purchases from these concerns in both the years. 10. Dissatisfied with the assessment order, assessee carried the matter in appeal before the CIT (Appeals). The ld. CIT (Appeals) ha....
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.... of the parties not doubted by the Assessing Officer and in respect of two parties whose purchases have been doubted as bogus purchases. * It was further argued that the raw material from these doubtful parties have been purchased at lesser process than the rates as charged by the parties whose purchases have not been doubted. The same plea was also taken before the Assessing Officer. A chart in this respect is placed during the appellate proceedings and sample copies of both types of parties i.e. treated genuine and tatted non-genuine. Further it has been brought on record that there is a daily receipt of Grain record being maintained having complete details of the material inward, date, party-name, vehicle number, gross weight, Tare Weight, Net Weight, Moisture, Starch, and Total Cut and the detail of weight received as per each consignment is being maintained and further the said material had gone into production of the finished product. Another important argument of the appellant is that the manufacturing operations of the company are under direct control and supervision of the State Excise and Taxation Department, Government of Punjab and said official remained stationed in ....
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....sp; x x (ii) It has also been brought on record before Assessing Officer and during appellate proceedings that the rates of the raw material purchases from the doubtful parties almost similar, as in case of other parties whose purchases have not been doubted, and rather these are lower rates. The appellant has submitted the copies of the bills of both the parties. The rates as charged by the doubtful parties are less than the rates as charged by the other parties. (iii) It is also a matter of record that the Rice Nakku as purchased from these doubtful parties and the other parties have been consumed for the purpose of manufacturing of finished product like Liquor/spirit/ENA. (iv)The sales have not been doubted by the AO. (v) All the payments in respect of the purchases made from the doubtful parties have been made through RTGS and there is no evidence on record to demonstrate that the amount as paid by the assessee in respect of the purchases made from the doubtful parties have come back to the assessee. (vi) The Hon'ble Supreme Court in the case of Pr. CIT vs. Tejua Rohit Kumar Kapadi....
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....ality well appreciated by the First Appellate Authority, we do not find any error or infirmity in the findings of the First Appellate Authority. Ground No. 1 is accordingly dismissed." It can thus be seen that the appellate authority as well as the Tribunal came to concurrent conclusion that the purchases already made by the assessee were duly supported by bills and payments were made by Account Payee cheque/RTGS. Raj Impacts also confirmed the transactions. There was no evidence to show that the amount was recycled back to the assessee. Particularly, when it was found that the assessee the trader had also shown sales out of purchases made from Raj Impex which were also accepted by the Revenue, no question of law arises. 4. Tax Appeal is dismissed." Unquote (vi) Thus, basic conditions for the purchaser, under which purchases cannot be treated as non-genuine can be summarized as under: (a) The purchases are duly supported by bills, (b) All payments are made by account payee cheques, (c) There is no evidence to show that the purchase consideration has come back to the assessee in cash i.e., the payment has been recycled. (d) The sales out of purchases have been ac....
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....ingly, these grounds of appeal are allowed. 5.2 Ground of Appeal No. 2,3 & 4 In these grounds, the AR have taken legal grounds. As the addition has already been deleted on merits, these grounds of appeal become academic in nature, and need no further adjudication. 5.3 Ground of Appeal No. Sis regarding charging of interest u/s 234B & 234C of the Income Tax Act, 1961 which is consequential in nature. The AO shall charge the Interest as per law. 5.4 Ground of Appeal No. 6 is regarding penalty u/s 271(1)(C) of the Income Tax Act, 1961 which is premature in nature. 5.5 Ground of Appeal No. 7 is consequential in nature. 5.6 Ground of Appeal No. 8 has not been argued by the AR during the course of appellate proceedings. 6. In the result the appeal is allowed on factual grounds. " 11. Before us, ld. DR submitted that AO put reliance upon the statement of Shri Ashok Kumar Gupta which has been extensively reproduced in the assessment order, though such reproduction is not very legible but complete copy of the statement has been placed on record by the assessee on page No. 78 to 94 of the Paper Book. According to the ld. CIT DR, the Department has confronted Shri Ashok Kumar Gu....
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.... to assessee merely on a statement given by director of assessee, without adducing evidence of other necessary parties - It was found that assessee had produced certain documents including ledger extracts of parties, confirmation from parties, bank statements and certificate from registered valuer showing construction of a building indicating procurement of steel for which said payments were made by cheque - Capitalization was denied solely based on statement made by only party recorded under section 131 - No enquiry in this regard was made and no evidence generally was made available by Assessing Officer - Whether since entire order of Assessing Officer was based merely on statement of Director of assessee without summoning or adducing additional/supplementary evidence of any other person corroborating allegation regarding bogus payments made by assessee, Tribunal was justified in deleting impugned addition - Held, yes [Paras 6 to 9] [In favour of assessee] b) Deputy Commissioner of Income-tax vs. VVD & Sons (P.) Ltd. [2024] 158 taxmann.com 395 (Chennai - Trib.) [13-09-2023] INCOME TAX : Where Assessing Officer, based on sworn statement recorded from one directors of assessee-....
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....court is as under: 22. We have heard the rival submissions of the counsels and we have considered the materials on record and also the contents of the paper book filed by the assessee along with the copy of the judgment set of various decisions of various courts relied upon by the assessee in support of his argument. We find that in the instant case, the original assessment was framed u/s 143(3) on 19th December, 2016 and the reopening notice u/s 148 was issued on 19th March, 2021 which has been issued beyond four years, on the basis of statement of two parties recorded behind the back of the assessee by the ITO, Ward 2(4), Abohar and on the basis of information supplied by the ITO, Ward-2(4), Abohar to the AO of the assessee, proceedings has been initiated u/s 148 without verifying the particulars and the contents of such information. The AO has not made any enquiry before issue of such notice u/s 148. We find that the Assessing Officer has not recorded his independent satisfaction. He has simply relied upon the information passed on to him by the AO, Abohar and relying on the report of the investigation wing, he has proceeded to reopen the assessment without any independent sat....
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....ers was given to assessee thereby violating principles of natural justice, Tribunal was justified in deleting addition made by Assessing Officer" b) [2023] 157 taxmann.com 193 (SC) SUPREME COURT OF INDIA Principal commissioner of Income-tax v. Hadoti Punj Vikas Ltd INCOME TAX : SLP dismissed against impugned High Court's order that where AO made addition under section 68 solely on basis of information received from Investigation Wing that lenders from whom assessee-company acquired loans were indulged in bogus accommodation entries, since assessee was not granted an opportunity to cross-examine persons whose statements were recorded during investigation, impugned addition made on basis of such investigation which was not privy to assessee were to be deleted c) [2015] 281 CTR 0241 (SC) Andaman Timber Industries Vs. Commissioner of Central Excise. d) [2024] 161 taxmann.com 586 (Punjab & Haryana) Principal Commissioner of Income-tax (Central) v. DSG Papers (P.) Ltd . INCOME TAX : Where pursuant to a search conducted at business premises of assessee, department made additions on account of suppressed turnover through under-invoicing based on third-party statements, since ....
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....ase was not valid, accordingly, the same is quashed." * Gaurav Joshi vs. ITO as reported at (2019) 55 CCH 0083 (Jalandhar Camp) "Held, AO while issuing notice u/s 148 had mentioned that assessee had deposited cash during FY 2009-10 in bank account which had escaped assessment-On contrary, in assessment order, he mentioned that cash deposited in assessee's bank account was less than amount mentioned in reopening notice-Therefore, reasons recorded by AO were not emerging from record available with him-AO recorded reasons which were not found to exist on record, therefore, reassessment framed deserved to be quashed-Assessee's appeal allowed." * Sagar Enterprises vs. ACIT (2002) 257 ITR 335 (Gujarat High Court) * Harjeet Singh vs. ITO (ITAT Delhi), order dated 12.11.2018, in ITA No. 2013/DEL/2015 * KMV Collegiate Sr. Sec. School vs. ITO (2017) 163 ITD 653 (Asr.) (Trib.) * Fortune Metaliks Limited vs. DCIT, ITA No. 1090/Chd/2019 dated 12.01.2021 - CHD Trib. Thus AO recorded reasons which were not found to incorrect/non-existing on record, therefore, reassessment framed deserved to be quashed. On the issue of Books of Account not rejected 4. Our contention is th....
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....s. The appeal as such was dismissed." * Judgment of Hon'ble Delhi High Court in the case of Forum Sales (P.) Ltd. as reported in 160 Taxmann.com 93(Delhi) wherein, it has been held as under: "Section 145, read with sections 144 and 153A, of the Income-tax Act, 1961 - Method of accounting - Rejection of (General) - Assessment years 2013-14 and 2014-15 - Assessee-company was engaged in providing corporate gifting solutions to various companies - A search and seizure operation under section 132 was conducted upon AMQ group of companies including assessee - Assessing Officer issued a notice under section 153A to assessee - Assessing Officer made additions to income of assessee on account of estimation of unaccounted profit, disallowance of expenses and inflated purchases - It was noted that Assessing Officer was provided with requisite bills, vouchers and addresses of transacting parties but he did not make any effort to confirm veracity of alleged bogus or inflated bills - Whether since Assessing Officer made additions to income of assessee on estimate basis without rejecting books of account, said additions were to be deleted - Held, yes [Paras 25 and 29] [In favour of assess....
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....h Dutta in ITA No 1492/Kol/2011 vide order dated 25.06.2012. e) ITO vs. M/s Rajeev & Company in ITA No. 46/Lkw/2012 vide order dated 17.12.2014 f) 315 ITR 185 (P&H) CIT vs. OM Overseas g) 320 ITR 116 (All) CIT vs. Mascot India Tools & Forgings (P) Ltd. h) 64 DTR 409 (Jai) Asstt. CIT vs. Shankar Exports i) 325 ITR 13 (Del) CIT vs. Paradise Holidays "6 The AO has not pointed out any specific defect or discrepancy in the account books maintained by the assessee. Admittedly, the assessee had been maintaining regular books of accounts, which were duly audited by an independent chartered accountant. As noted by CIT(A), the financial results were fully supported by the assessee with vouchers and the books of account were complete and correct in all respects. The accounts which are regularly maintained in the course of business and are duly audited, free from any qualification by the auditors, should normally be taken as correct unless there are adequate reasons to indicate that they are incorrect or unreliable. The onus is upon the Revenue to show that either the books of accounts maintained by the assessee were incorrect or incomplete or method of accounting adopted by him as....
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....idences filed before the AO and CIT(A) to prove the genuineness of the purchases as under: a. Copy of audit report of the assessee showing consumption of the assessee yield of different items as per point no 35 of the of the audit report at page 14 of the Paper book. b. Copy of ledger account of the both the parties showing purchases made by the assessee from M/s. SA Agro International as per page 35-38 of the PB & M/s. Ridhi Sidhi Enterprises as per page 39-42 of the PB. c. Sample copy of purchase bills, along with description of Vehicle number, weight and other particular made from doubted party namely M/s. SA Agro International as per page 43-51. d. Sample copy of purchase bills, along with description of Vehicle number, weight and other particular made from doubted party namely M/s. Ridhi Sidhi Enterprises as per page 52-60. e. Copy of purchase bills of non-doubted parties, along with description of Vehicle number, weight and other particular showing rates of Rice Nakku purchases at favorable rates made from doubted party namely M/s. SA Agro International as per page 43-51. f. Comparative chart showing rates of purchases made by assessee from doubted parties viz-a-v....
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....reposition that since the sales have not been doubted and inflation in the purchases and no defects have been found in day to day maintenance of quantitative record, consumption register, stock tally and, as such, no addition could be made on account of such bogus purchases. 21. Further, as regards the profit element embedded, the Ld. Counsel drew our attention to the chart submitted before the Ld. CIT(A) for the preposition that the finding of the Authorities below regarding the profit embedded in such purchases, is wholly misconceived and not sustainable, because the rates on which, the material have been purchased from the alleged doubtful parties, is same or less than the rates with regard to the rates of other parties and that chart is self- explanatory and from the said chart, it was argued vehemently that since there is no inflation in respect of purchases made from the alleged doubtful parties, whole basis of applying the gross profit or profit embedded as applied by the Assessing Office or CIT(A) is out of context and that finding deserves to be quashed. Our attention particularly was drawn to the judgment of Apex Court in the case of CIT Vs Century Plyboards (I) Ltd. re....
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....cled back to assessee, Assessing Officer was not justified in treating said purchases as bogus under section 69C: SLP dismissed. (vi) Judgement iin the case of PCIT vs. Nitin Ramdeoji Lohia as reported in [2022] 145 taxmann.com 546 (Bombay) INCOME TAX: Where Assessing Officer made addition by disallowing expenses on purchases on ground that an information was received from sales tax department that assessee was beneficiary of accommodation entries on account of bogus purchases, since Assessing Officer had not disputed corresponding sales transactions, purchases also could not be bogus and, thus, impugned addition made on account of bogus purchases to be deleted (vii) Also, it is submitted that assessee has filed quantitative stock tally in form stock inventory, yield chart showing consumptions, purchases, goods returned, sales made by the assessee and no defect has been pointed out by the AO as well as CIT(A) during the course of assessment proceedings and appellate proceedings and reliance is being placed on judgment in the case of Piyush Developers Pvt. Ltd V/s ACIT in ITA No.5599/DEL/2010, ITAT, Delhi Bench (on the issue, if no defect have been pointed out, no addition is ....
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....upported by the sufficient no of evidences. 6. Trading results of the assessee have been accepted and no books of account have been rejected. 7. Sales made by the assessee was also accepted. 8.No evidence of Cash received by the assessee, anywhere filed by the AO." 12. We have duly considered the rival contentions and gone through the record. A perusal of the record would suggest that in assessment year 2017-18, scrutiny assessment of the assessee was open when this survey was conducted upon the premises of Shri Ashok Kumar Gupta. The material could have been easily transmitted to the AO and the alleged witness could also be produced for the cross-examination but nothing of that course was adopted by the Revenue. A perusal of the assessment order would indicate that there are two sets of facts, on the one hand, the assessee is maintaining complete details and its accounts are audited. It has produced copy of the invoices, ledger account, lorry receipts, weight slips, goods slips and transportation details. It is engaged in the business of manufacturing and trading of liquor and allied products. It has purchased various type of grains and other items required for this manufact....
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....s would indicate that issue before the Hon'ble Court was whether on the strength of the statement recorded during the course of survey and an admission made by the deponent in his statement, addition could be made in the hands of the person upon whom survey was conducted ". After a detailed examination and reference to Section 132, where search is being conducted, Hon'ble Court has replied these questions in favour of the assessee and against the Revenue. We deem it appropriate to take note of the observations of the Hon'ble Court on page No. 165 of the Journal, which read as under : "What is more relevant, in the instant case, is that the attention of the Commissioner and the Tribunal was rightly invited to the circular of the Central Board of Direct Taxes dated 10.3.2003 with regard to the confession of additional income during the course of search and seizure and survey operations. The said circular dated 10.3.2003 reads as follows: " Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based....
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.....K.Senniappan [(2006) 284 I.T.R. 220]; (iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment, vide decision of this Court in T.C.(A) No.2620 of 2006 (between Commissioner of Income-tax v. S.Ajit Kumar); [2008] 300 ITR 153 (Mad) (v) Finally, the word "may" used in Section 133A (3)(iii) of the Act, viz., "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act, as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under Section 133A are not conclusive piece of evidence by itself. For all these reasons, particularly, when the Commissioner and the Tribunal followed the circular of the Central Board of Direct Taxes dated 10.3.2003, extracted above, for arriving at the conclusion that the materials collected and the statement obtained under Section 133A would not automatically bind upon the assessee, we do not see any reason to interfere with the order of the Tribunal. Accordingly, finding no substantial question of law arises for consideration, the tax case appeal stands dismissed....