AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 764
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....d by the Revenue and the Cross Objections filed by the assessee were heard together and are being disposed off by this common order. ITA No.2155/PUN/2024 2. Facts of the case, in brief, are that the assessee is a trust registered u/s 12A of the Act. It filed its return of income on 29.09.2014 declaring Nil income. Subsequently information was received from the DDIT, Investigation U-2(4), New Delhi that the assessee had received accommodation entries through bogus purchase bills amounting to Rs. 1,84,99,795/-. The Assessing Officer, therefore, reopened the assessment as per the provisions of section 147 of the Act by recording the following reasons: "1. Assessee is Charitable trust registered u/s 12A of IT Act. The activities of trust mainly involves educational activities like running of Schools & Colleges. The ITR for AY 2014-15 was filed on 29-09-2014 and subsequently processed u/s 143(1) on 28-08-2015 generating refund of Rs. 8,68,200/-. 2. From the material available on record, it is found that Assessee trust has made fictitious purchases to extent of Rs. 1,84,99,795/- from one of the shell entities namely M/s Dev Shreem Solutions. These purchases were m....
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....t was made. Accordingly, in this case, the only requirement to initiate proceedings u/s 147 is reason to believe which has been recorded in above paragraph 2 to 4. 6. It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s 2(40) of the Act was made and the return of income was only processed u/s 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. 7. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s 148 has been obtained separately from Commissioner of Income Tax as per the provisions of section 151 of the Act." 3. Accordingly, notice u/s 148 of the Act was issued to the assessee on 30.03.2021. Since the assessee has not filed the return of income in response to the notice u/s 148 of the Act, the Assessing Officer issued notice u/s 142(1) to the assessee to submit cer....
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....of money. It was further submitted that the total application of money during the year was Rs. 108,17,64,353/- towards purpose of the trust as against the income for the year at Rs. 102,37,86,355/-. Thus, there was excess application of Rs. 5,79,77,998/-. The assessee has also not claimed statutory accumulation u/s 11(1) of the Act. Presuming, but without admitting that the said payment was on account of fake bills, the Assessing Officer could have reduced the application of funds of the assessee by that amount and even by doing so also the entire income had been applied for the purposes of the trust and there was no income chargeable to tax for that year. Relying on various decisions, it was argued that the Assessing Officer was not justified in making addition of Rs. 1,85,00,000/-. 7. Based on the arguments advanced by the assessee the Ld. CIT(A) / NFAC deleted the addition. While doing so, he noted that neither the assessee nor his employees know any Shri Joginder Pal Gupta. Further during the course of assessment proceedings the assessee was never given a chance to cross-examine Jogindar Pal Gupta. He observed that no third party enquiry has been conducted by the Assessing O....
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....has erred in not appreciating that the statement of Shri Jogindar Pal Gupta, recorded under Section 132(4) of the Income Tax Act, 1961, holds significant evidentiary value and should not have been dismissed merely due to the absence of cross-examination. 4. On the facts and circumstances of the case, the Ld. CIT(A) has erred in not appreciating the fact that the case laws relied upon by the Ld. CIT(A) are not applicable to the facts of the present case. The cited judgments address issues related to the genuineness of the application of income, rather than focusing on the matter of bogus transactions. 5. The appellant craves leave to add, alter or amend any or all the grounds of appeal. 10. The assessee has raised the following grounds in its Cross Objection: 1. On facts and circumstances prevailing in the case and as per provisions of law; it be held that the appeal filed by Dy. Commissioner of Income Tax (Exemptions) contending that the Respondent was involved in booking of bogus expenses is improper, invalid and unjustified. Just and proper relief be granted to the respondent in this respect. 2. On facts and circumstances prevailing in the c....
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....perandi you have also mentioned that whenever a client wants a bill, he provide you the requirements such as nature of items, quantity, rate to you which is then ultimately forwarded by you to the party providing the bill. The party providing the Invoices/Bill sends you a copy of bill either through whatsapp or in hard copy. In case the bill sent is in soft copy or on whatsapp, you take print out of the same & put stamp and signature and then send it to client/parties requiring hills. You have also stated that once the bills are sent, the party requiring Bills sends RTGS to the bank account mentioned in the bill and you collect cash from the party which has provided the bills. From the cash received, you pass on the cash back to the client/party requiring bill after deducting your commission. Please confirm and acknowledge that you had stated the same and also provide the list of the beneficiaries (Purchaser/Seller as per bill) of the bill entries provided through you for the last 6 years. Ans. Sir, I acknowledge and accept that such modus operandi as explained by me in my statement on Oath is correct and is stated by me. I have asked my staff to prepare a list of such ben....
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....mpanies/individuals/entities for providing loan accommodation entries in relation to Mumbai based parties. On page number 2 there exist date wise entries for cash received by me through Tyagiji for Good Earth Commodities India Pvt. Ltd. to provide loan accommodation entries for the month of February and March 2019 through Olwin Garments Pvt. Ltd., Nicky Marmo Ltd., Saloni Buildtech Pvt. Ltd. and Bell Indus Fibrecom Pvt. Ltd. (All companies/entities are related to me). The total cash in crores is received by me through Tyagiji till 31 March 2019 for providing loan accommodation entries. Sir, this amount is also reflected in books of the account of my related companies/entities as loans and advances to Good Earth Commodities India Pvt. Limited. The same is also reflected in unsecured loans (Liabilities) in their books of accounts. Page no. 3 is blank." 13. He submitted that Shri Joginder Pal Gupta has categorically stated that he has started giving such fake entry bills since January, 2018 only, whereas the assessment year involved in the instant case is assessment year 2014-15. However, the same has been completely ignored by the Assessing Officer. Referring to page 33 o....
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....ar. His statement has not been considered in its entirety but considered selectively. Therefore, there is absolutely non-application of mind by the Assessing Officer. He has not verified the bank entries along with the bills when the books of account were produced. The Assessing Officer relied on something which has not happened during the year, therefore, the addition could not have been made. Further, on account of bogus purchases how can the Assessing Officer made addition u/s 68 is also not known. 15. The Ld. Counsel for the assessee in his alternate plank of argument submitted that search has taken place on Shri Joginder Pal Gupta during which certain incriminating material were found. Therefore, the only course of action that could have been taken by the Assessing Officer is under the provisions of section 153C and not u/s 147 of the Act and therefore the notices issued u/s 148 instead of under section 153C renders the assessment invalid. For the above proposition, he relied on the following decisions: 1. Sejal Jewellary Vs. Union of India [2025] 171 taxmann.com 846 (Bombay High Court) 2 Tirupati Construction Company v. ITO [2024] 165 taxmann.com 176 (Raj....
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....f Amar Jewellers Ltd. vs. ACIT (2022) 137 taxmann.com 249 (Guj), he submitted that the Hon'ble High Court in the said decision has held that there was no condition u/s 153A that the additions should be strictly made on the basis of evidence found in the course of search or other post-search material or information available with the Assessing Officer which could be related to evidence found to show that the assessment undertaken u/s 153A and never be reopened u/s 147 would be incorrect statement of law. Relying on various other decisions, he submitted that the proceedings initiated u/s 147 of the Act are valid and cannot be held to be invalid. 21. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed by both the sides. We have also considered the various decisions cited before us. We find the Assessing Officer, on the basis of information obtained from the Investigation Wing that the assessee has indulged in making bogus purchases from M/s. Dev Shreem Solutions which came to light during the course of search on Shri Joginder Pal Gupta on 23.12.2019, reopened the assessment by recor....
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....der Pal Gupta in his statement recorded u/s 132(4) of the Act has categorically stated that he was indulged in providing such bogus entries from 2018 onwards, therefore, in absence of any contrary material at the disposal of the Assessing Officer, he could not have made the addition in the assessment year 2014-15 merely based on information obtained from the Investigation Wing and without applying his independent mind or without conducting any independent investigation to show that the bills produced by the assessee are false. 24. We find some force in the above arguments of the Ld. Counsel for the assessee. We find certain incriminating material were found from the computer of one Miss Kajal an office employee of Mr. Joginder Pal Gupta during the course of search at the premises of Shri Joginder Pal Gupta and his statement was also recorded u/s 132(4) of the Act. As mentioned earlier, Shri Joginder Pal Gupta in his statement recorded u/s 132(4) in reply to question No.11 has categorically stated that he has started giving such entries for bills since January, 2018 only. We reproduce his answer to Question No.11 at the cost of repetition which read as under: "Q11. In re....
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....s clearly and categorically stated that he was indulging in providing such fictitious bills to various parties who are interested only from January, 2018. It has been held in various decisions that the statement which is the basis for any addition should be read as a whole and cannot be read selectively. The Revenue cannot rely on a part of the statement that suits it and ignore the other part that is unfavourable to it. As mentioned earlier, in the instant case the purchases were made during the financial year 2013-14. Therefore, when the books of account were produced before the Assessing Officer along with bills and vouchers and bank statements, the Assessing Officer should have conducted some further enquiries to establish that such bills are false or not true. However, he has failed to do so in the instant case. Since Shri Joginder Pal Gupta in his statement recorded u/s 132(4) of the Act has stated that he was indulging into providing such type of bills from January, 2018, therefore in absence of any other material before the Assessing Officer that Shri Joginder Pal Gupta has also provided such type of bogus bills even in financial year 2013-14, he could not have made any add....