TaxTMI 
TaxTMI 
2024 (11) TMI 1499
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...., therefore, with the consent of parties, all the appeals and COs were clubbed, heard together and are decided by consolidated order to avoid conflicting decisions. For appreciation of fact, for A.Y. 2009-10, in Revenue's appeal ITA No.346/SRT/2024 is treated as "lead" case. The Revenue has raised the following grounds of appeal: - "i) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition made by the Assessing Officer from 25% of the unverifiable purchases to 12.5% of such purchase and allowing the appeal of the assessee partly ignoring the facts that these purchases are sham transactions fabricated through bogus paper concerns of Shri Bhanwarlal Jain & Others which were engaged in providing accommodation entries? ii) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition made by the Assessing Officer on account of bogus purchases even though in the case of Mayank Diamonds Pvt. Ltd. [2014] (11) TMI 812] the Hon'ble High Court has directed to make addition at the rate of 5% of the total turnover. iii) On the facts and circumstances of the case in law,....
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.... search and seizure operation under section 132 in case of Bhanwarlal Jain Group on 03.10.2013. In the search action various incriminating documentary evidences were found and seized. During investigation, it was found that Bhanwarlal Jain Group was running various companies/partnership firms or proprietary firm in the name of relative and employees and were not engaged in genuine business activities. Bhanwarlal Jain Group and his group was providing accommodation entries without actual delivery of goods. The list of beneficiary was prepared by Investigation Wing who has availed accommodation entry from various entities of Shri Bhanwarlal Jain Group. The assessee has availed such accommodation entries in the form of bogus purchases aggregating of Rs.80.98 crores from 11 such entities nongenuine entities managed by Bhanwarlal Jain Group. The Assessing Officer has recorded name of such entities and the corresponding accommodation entries provided by such entities. On the basis of such information, case of assessee was reopened. The assessee filed his objection dated 21.07.2015. Objection of assessee was disposed of in a speaking order dated 12.08.2015. The contents of objection raise....
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....ted to issue notice to the parties to appear before Assessing Officer as such parties are available at the addresses and ready to appear and requested to issue notice under section 133(6) or summons under section 131 of the Act for verification of transactions. The Assessing Officer recorded that notice under section 133(6) was issued to 11 parties and Ward-Inspector was deputed to serve such notices on the their address. The Ward-Inspector in his report dated 28.01.2016 submitted that the said parties had closed their respective business 2/3 years back, as reported by neighbours. The assessee was asked to furnish confirmation but the assessee failed to file any such confirmation produce. In absence of confirmations, the Assessing Officer disallowed the 25% of purchases shown from eight parties. The Assessing Officer thereby disallowed Rs.20.24 crores, in the assessment order passed under section 143(3) r.w.s. 147 of the Act on 03.03.2016. 4. Aggrieved by the additions in the assessment order, the assessee preferred appeal before Ld. CIT(A). The appeal of assessee was dismissed in ex parte order for want of compliance by assessee. Further aggrieved assessee filed appeal before T....
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..... The delay is not too long and may be condoned as the assessee has raised legal issue which goes to the root of the case. 7. On the other hand, Ld. CIT-DR for the Revenue has submitted that assessee has disclosed self-serving story without substantiating without proper evidence or documents. The delay is not properly explained and application for condonation of delay deserves to be dismissed. 8. We have considered the submission of both the parties. Firstly, we shall consider the plea of condonation of delay in filing CO's by the assessee. The foremost contention of the assessee is that delay is occurred only due to fact that office of Ld.AR is situated in Ahmedabad and assessee's business at Surat. Though, such explanation is not plausible and convincing, yet keeping in view with the principle of natural justice that delay in filing CO's are only 42 days each and that assessee is not going to be benefited by filing CO's belatedly. Hence, keeping in view the principle of law that when technical considerations are pitted against the cause of substantial justice, the cause of justice may be preferred. Thus, delay in filing CO's by the assessee are condoned. Now adverting to he....
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....axmann.com 154 (Guj) and in ITO Vs Pankaj K Chaudhary ITA No. 1152/Ahd/2017 (Surat Trib). Thus, Ld.AR of the assessee submits that disallowance should not be exceed more than 6% of the disputed purchases. 11. On the grounds of Cross Objections, the Ld. AR of the assessee submits that admittedly case of assessee was reopened on the basis of information that search action was carried in case of Bhanwarlal Jain Group and statement of Shri Bhanwarlal Jain was recorded under section 132(4) of the Act about operating various dummy concerned and providing accommodation entries. Some of the materials seized in the search action was considered and pertaining to other persons including of assessee, if the Assessing Officer is required to assess the other persons like assessee, he was required to records his satisfaction and to issued notice under section 153C of the Act. The Assessing Officer cannot take recourse of provision of Section147/148 for making addition on the basis of materials seized in case of such persons. The Legislature has specifically introduced provisions of Section 153C for making assessment on the basis of incriminating material pertaining to other persons seized duri....
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....and his associates on 03.10.2013 wherein incriminating materials were found which conclusively proved that Bhanwarlal Jain and his associates are dummy concern, were engaged in providing accommodation entries to various beneficiaries in the form of sale/purchase, loans etc. The assessee was identified as one of the concern person who has availed accommodation entries to the extent of Rs.80.98 crores from eleven bogus concern of Bhanwarlal Jain and his associates. The Assessing Officer after recording the reasons issued notice under section 148. We find that assessee has not challenged the validity of reopening, though for the first time, Ld.AR of the assessee has challenged the action of the Assessing Officer by taking plea that Assessing Officer should have assessed the assessee under section 153C and not section 147/148 of the Act, which we will deal with later part of this order. So far as disallowance in quantum assessment concerned, the Assessing Officer made addition by disallowance @25% of purchases identified as bogus purchase. The Assessing Officer while making addition held that Bhanwarlal Jain in his statement under section 132(4) has admitted that his group were engaged....
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.... dismissed with similar findings. 17. So far as grounds in CO's are concerned as raised by assesse that assessment proceedings and notice under section 148 is bad in law and provisions of Section 153 is applicable, the Ld. AR of the assessee has submitted that provisions of section 153C of the Act and not those of section 147 of the Act are applicable to the facts of the present case. We find that the assessment years involved in these appeals pertain to AYs.2009-10 to 2012-13. Hence, it would be proper to analyze provisions of section 153C of the Act as it stood at the relevant time. Section 153C of the Act was inserted by Finance Act, 2003 relating to assessment in case of search or requisition made on or after 01.06.2003. The new provisions were inserted after discontinuing block assessment provisions in Chapter XIV-B (sections 158B to 158BH) of the Act. The section at the relevant point was as under: "153C.^89 [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or d....
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....ss the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A] :] Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person: Provided further that the Central Government may by rules ^59 made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which....
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....ve a bearing on the determination of total income of such other person for the relevant assessment year or years referred to sub-section (1) of section 153A. 22. Jurisdiction of Assessing Officer to reassess the income u/s 153C of the Act is predicated on (i) the Assessing Officer of the searched person being satisfied that assets and material found during the search proceedings or requisitioned are incriminating insofar as the assessee other than the searched person is concerned; (ii) recording his (Assessing Officer of searched person) satisfaction to the aforesaid effect; (iii) transmitting the same to the Assessing Officer of the other person; (iv) Assessing Officer of the non-searched person being satisfied that the material information has a bearing on the determination of total income and (v) the Assessing Officer of such non-searched person issuing a notice to commence assessment / reassessment proceedings. If any of the aforesaid conditions are not satisfied, the income of such other person cannot be assessed or reassessed u/s 153C of the Act. 23.According to Ld. AR of the assessee in such circumstances, the Assessing Officer is precluded from initiating proceedings ....
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....ld that provisions of section 153C are enacted for the purpose of simplifying the procedure in search cases. The import of such provisions cannot be to ousted the recourse to the normal provision, which in any event are available for assessment / reassessment of an income of an assessee. In the said case, the revenue has disputed that a satisfaction note by Assessing Officer of the searched person was forwarded to the Assessing Officer of the assessee along with requisite documents. Hence, the Hon'ble held that jurisdictional condition to initiate further steps under section 153C were not satisfied. 24.At this stage, it would be proper to refer to the decision of the Hon'ble Supreme Court in case of CIT vs. Calcutta Knitwears, 362 ITR 673 and CBDT Circular No.24/2015, dated 30.12.2015. The Hon'ble Supreme Court in above case held that u/s 158BD of the Act, the existence of cogent and demonstrative material is germane to the Assessing Officer's satisfaction in concluding that seized documents belong to a person other than the person against whom searched was conducted and it is necessary for initiation of action u/s 158BD of the Act. For the purpose of section 158BD, a satisfacti....