TaxTMI 
TaxTMI 
2025 (7) TMI 1158
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....these are departmental appeals, however, when assessee 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 Colle....
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....licae up sit finislitium (it is for the general welfare that a period be putt to litigation). Rules 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 consider....
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....16-17 respectively. The return was selected for scrutiny assessment in assessment year 2017-18 and the assessment 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 ....
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.... the payment to the respective parties and in nutshell, it was vehemently argued that the same modus operandi is adopted in respect 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....
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....have been treated as bogus purchases. For reference, a sample of daily receipt sheet of grain is reproduced as under: x 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....
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....o adverse inference has been drawn so far as the sales made by the assessee is concerned. We also find that the entire purchases made by the assessee from M/s. Raj Impex have been accounted by Raj Impex and have paid the taxes accordingly. Considering the facts in totality 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....
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....which, these purchases can be distinguished from the other purchases (which has been accepted). Statement of a third person, who has given a general statement without naming the appellant and also not supported by any corroborative evidence or any further inquiry, cannot alone form a basis of addition on account of bogus purchase. Therefore, the addition amounting to Rs. 2,93,25,267/- made by the AO is deleted. Accordingly, 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. ....
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....manufacture of high-pressure seamless cylinders - Pursuant to search and seizure operations of group concerns of assessee, Assessing Officer on basis of statement made by a director of assessee opined that assessee-company siphoned off cash by issuing cheques against bogus capital expenses debited in accounts of assessee-company - Accordingly, he made an addition on account of bogus purchases which was confirmed by Commissioner (Appeals) - However, Tribunal had held that capitalization could not be denied 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 stateme....
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....ged to be have made from namely M/s. SA Agro International (Prop. Sandeep Gupta S/o Ashok Kumar Gupta) and M/s. Ridhi Sidhi Implex (Prop. Mr. Ashok Gupta) were bogus sales made by assessee 3 Figures of sales mentioned in the reasons to believe were wrong in figures Figures of sales mentioned in the reasons to believe were wrong in figures of M/s. SA Agro International The Hon'ble tribunal has followed the judgement of M/s. Supertech Forgeins India Pvt. Ltd. Vs PCIT of jurisdictional Punjab and Haryana High court in the case of Vohra Solvex and the relevant extract of findings given by the 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 recor....
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.... has been held that the statements taken at the back of the Assessee cannot be used for making additions unless a chance to cross examine has been given to the Assessee. a) [2024] 162 taxmann.com 5 (SC) Principal Commissioner of Income-tax v. Kishore Kumar Mohapatra, "INCOME TAX : SLP dismissed against order of High Court that where Assessing Officer denied exemption claimed by assessee under section 10(38) on long-term capital gain on sale of shares on basis of statement of entry operators recorded on various dates in some other proceedings not connected with assessee and no opportunity to cross-examine so-called entry providers 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 accommodat....
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....amount of cash in bank account and issued reopening notice, since AIR information relied upon was incorrect and Assessing Officer failed to verify amount of cash deposited in bank from copies of bank statements duly furnished by assessee during course of assessment proceedings, there was non-application of mind by Assessing Officer and thus, impugned reopening notice was void ab initio * Smt. Monika Rani in ITA no. 582/chd/2019 dated 28.02.2020 at page 58-68 of J. Set "10.6 In the present case also the A.O. reopened the assessment on the basis of wrong facts, so respectfully following the ratio laid down in the aforesaid referred to cases, I am of the view that the reopening of the assessment in the present case 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 r....
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....he bills of cash sales and it would not go to disbelieve the books of accounts since the assessee was trading in gold bullion. The day to day rates would have also been ascertainable from the rates declared by National market, Sarrafa Bazzars etc. Resultantly, a finding was recorded that the AO was not justified in rejecting the book version of the assessee and to apply the profit rate of 0.54% without any good reason and no comparable instance had been given and there was no valid reason to doubt the record of the assessee and the assessee had maintained quantitative tally of the stock. The Revenue had not been, thus, able to make out a case that the assessee had not adopted consistent method of accounts and the profit and gains earned by the assessee could easily be detected from the books of accounts. 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-c....
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....question of law arose from Tribunal's order - Held, yes [Para 5] [In favour of assessee]" Besides that, the following judgments are also applicable to the facts and circumstances of the case: a) CIT vs. Anil Kumar & Co. in ITA No. 200001 & 200002 vide order dated 25.02.2016 (Karnataka HC) wherein it has been held as under: "The tribunal has rightly held that when the books of account of the assessee had not been rejected and assessment having not been framed under section 144, the Assessing Officer and the Commissioner (Appeals) were in error in resorting to an estimation of income and such exercise undertaken by them was not sustainable." b) ITO vs. Amit Verma in ITA No. 4558/Del /2011 vide order dated 19.12.2012 (Del Bench) c) ACIT vs. Ercon Composites as reported in 49 taxmann.com 489 (Jodhpur Bench) d) ITO vs. Pranab Prakash 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 ....
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....which is summarized at page 24 of the order of CIT(A) and the relevant extract is as under: 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 accepted" (vii) On the basis of these criteria, it is observed that, (a) Purchases are supported by the bills. (b) All payments by account payee cheque or RTGS/NEFT. (c) No evidence that cash has been received back by the appellant. M/s. Malbros International Pvt. Ltd., Faridkot. Appeal No. 10278/CIT(A)-5/Ldh/2016-17 Assessment Year 2017-18, u/s 143(3) (d) Sales have been accepted in assessment. Here is the list of documentary evidences filed before the AO and CIT(A) to prove the genuineness of the purchases as under: a. Copy of audit repo....
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....w of copies of invocies and challans, proof of payments, bank statements, transportation payments, vouchers for movement of goods etc, it could be concluded that purchase transactions between assessee and 'D' were not bogus or fraudulent and, thus, addition could not be made under section 69C, SLP filed against decision of High Court was to be dismissed (ii) Judgment in the case of Supertech Forgings (India) Pvt. Ltd as reported in ITA -101-2022 followed by CIT(A) on the legal issues as well on merits of the case. (iii) M/s. Prime Steel Industries Pvt. Ltd. vs. The DCIT Circle, Patiala in ITA No. 275/CHD/2024, wherein the Hon'ble tribunal had given findings on merits, which is as under: 20. The Ld. Counsel also relied upon the number of judgments of Hon'ble 'Apex Court', Punjab & Haryana High Court and also the judgment of ITAT in the case of M/s Supertech Forgings (India) Pvt. Ltd. in ITA No. 6599/2014, vide order, dated 12.12.2018, which has been approved by the Hon'ble Punjab 8t Haryana High Court in ITA No. 10/2022 and many other judgments of different Benches of the Jurisdictional ITAT and Others for the preposition that s....
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....rchases) - Assessing Officer had disallowed some expenditure treating purchases as bogus and made addition - High Court in impugned order noted that purchases made by assessee-trader were duly supported by bills and payments were made by account payee cheque and seller also confirmed transaction and there was no evidence to show that amount was recycled back to assessee, and held that addition was not called for - Whether, on facts, SLP against said order was to be dismissed - Held, yes - In favour of assessee. (iv) Judgment in the case of CIT vs. Odeon Builders (P.) Ltd as reported in [2019] 110 taxmann.com 64 (SC). INCOME TAX: Where assessee had submitted purchase bills, transportation bills, confirmed copy of accounts and VAT Registration of sellers as also their Income-tax Return and payment was made through cheques, impugned purchases could not be disallowed. (v) Judgment in the case of PCIT vs. Tejua Rohit Kumar Kapadia reported in [2018] 94 taxmann.com 325 (SC) Where purchases made by assessee-trader were duly supported by bills and payments were made by account payee cheque, seller also confirmed transaction and there was no evidence to s....
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....ere found clear, without appreciating the fact that the purchase made from the doubted parties have been already shown by the assessee in the books of the assessee. Further, it is submitted that, the Ld. CIT(A) has rightly deleted the addition made by the AO. From perusal of above referred case laws, the assessee has proved the genuineness of the purchases by way of various documentary evidences as mentioned above, wherein, it is mentioned that, if sales the sales results are accepted and no defect has been pointed out in the stock inventory and no material on record that proves transactions not genuine. Thus, the addition cannot be made. Conclusion of the Case: 1. Reopening made in the case of the assessee based on mere statement of third party, recorded at the back of assessee during the course time of survey, which had no admissibility. 2. No opportunity of cross examine the person, whose statement have been relied up for selecting the case of assessee. 3. Reopening made by the assessee based on wrong reasons to believe having wrong figures. 4. Reopening made by the AO after four years, wherein original assessment of the assessee have....
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....g the course of survey u/s 133A. This position has been analytically examined by Hon'ble Chennai High Court in the case of CIT Vs S.Khadar Khan Son reported in 300 ITR 157 (Madras). The Hon'ble Court has made reference to the judgement of Hon'ble Kerala High Court in the case of Paul Mathews & Sons Vs. CIT 263 ITR 101. The questions formulated by the Chennai High Court for consideration, which are being reproduced as under : "(i) Whether, on the facts and in the circumstances of the case, the Income-tax Tribunal is right in law in holding that the statement made during a survey under section 133A of the income-tax Act has no evidentiary value ? ii) Whether, on the facts and in the circumstances of the case, the Income-tax Tribunal is right in not considering the fact that the branch contractors' agent account book in which entries were made subsequent to the survey and not found during the survey nor proceed the survey, could be relied upon ? (iii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in not considering the fact that the voluntary statement made without any coercion or dures....
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....ssion is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of accounts do not correctly disclose the correct state of facts, vide decision of the Apex Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [(1973) 91 I.T.R. 18]; (ii) In contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law, vide Paul Mathews and Sons v. Commissioner of Income-tax [(2003) 263 I.T.R. 101]; (iii) The expression "such other materials or information as are available with the Assessin....
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.... order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable." 12.4 According to this judgement, if the deponent was not put to cross-examination, then statement of such a witness cannot be used against the interest of any other person. In the present case, this statement was recorded from the back of the assessee and the assessee was not given an opportunity to cross-examine the deponent. Therefore, the statement is to be excl....