TaxTMI 
TaxTMI 
2023 (8) TMI 1664
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....essee against the Assessment Order, dated 30/03/2016, passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). 3. The Appellant has raised following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in not considering that the assumption of jurisdiction by the Ld. Assessing Officer is bad in law as the conditions laid down under the Act for initiating reassessment proceeding u/s 147 of the Act have not been fulfilled. 2. On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming the addition of Rs.15,46,747/- being 3% of Rs. 5,15,58,261/- by treating genuine purchases made by the appellant in the normal course of business, as bogus, without appreciating the fact that the appellant has submitted all relevant documentary evidences to substantiate the genuineness of the impugned purchases. 3. On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming the addition of Rs. 61,00,000/- by treating genuine loan taken by the appellant, as unexplained source of income, without apprec....
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....also perused the material placed on record. We find that the reassessment proceedings have been initiated within a period of 4 years from the relevant assessment year as the notice under Section 148 of the Act for initiating the reassessment proceedings under Section 147 of the Act for the Assessment Year 2010-11 has been issued on 04/03/2015. The reasons recorded for reopening the assessment read as under: "Specific Information has been received from the office of Director of Income Tax (Investigation- 11), Mumbai vide letter dated 10.03.2014 that the assessee has indulged in receiving accommodation entries from the Bhanwarlal Jain group which is a leading entry provider of Mumbai. The group provides accommodation entries of bogus unsecured loans and bogus purchases through 70 benami concerns operated and managed by Bhanwarlal Jain and his sons. During a search & seizure action in the case of Bhanwarlal Jain group carried out by Investigation wing, Mumbai several incriminating documentary evidences have been found and statements of various key persons involved have been recorded. In view of the detailed enquiries made by the Directorate, it is evident that the as....
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....essing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record....
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....how many accommodation entries were taken or the aggregate amount involved. Whether as per the information received by the Assessing Officer the Appellant has taken accommodation entry for bogus purchases or bogus unsecured loan was also not mentioned. The reasons recorded are also silent as to the link between such alleged accommodation entry/entries and the formation of belief by the Assessing Officer that the income has escaped assessment. 5.5. During the course of the hearing the Learned Departmental Representative made an attempt to salvage the situation. The Ld. Departmental Representative submitted that the Assessing Officer has made reference to the same and had stated in the reasons recorded that on the basis of the aforesaid information the Assessing Officer has formed a belief that income has escaped assessment. Therefore, the reasons recorded show the link between the information received and the reasons recorded. Thus, fulfill the requirements of Section 147 of the Act. Further, Ld. Departmental Representative, without prejudice to the contention that the reasons recorded fulfill the requirement of Section 147 of the Act, contended that voluminous information was re....
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.... of Rs. 1,37,80255- and 3% on purchase of polished diamonds of Rs. 11,67,76,188 by treating gemaine purchases made by the appellant in the normal course of business, as bogus, without appreciating the fact that the appellant has submitted all relevant documentary evidences to substantiate the genuineness of the impugned purchases. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) med in confirming the addition made by Ld. AO, without providing any opportunity of cuss examination, without any corroborative evidence and without providing copy of stuements relied upon." 9. We note that reasons recorded for reopening the assessment for the Assessment Year 2011-12 are identically worded when compared to reasons recorded for reopening assessment for the Assessment Year 2010-11. Since the reassessment proceedings were initiated in identical facts and circumstances by assigning identical reasons, both the sides agreed that our findings/adjudication in appeal for the Assessment Year 2010-11 would apply mutatis mutandis to the appeal for the Assessment Year 2011-12. Accordingly, adopting the reasoning given in paragraph 5 to 5.7 above while adjudica....
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.... computed at the rate of 3% and 5% of the alleged bogus purchases of rough diamond (INR 1,98,23,995/-) and polished diamond (INR 11,58,34,551/-), respectively; and (b) addition of INR 1,85,00,000/- being aggregate amounts of unsecured loan taken by the Appellant during the relevant previous year held by the Assessing Officer to be unexplained cash credit under Section 68 of the Act. 13.1. In appeal the CIT(A) confirmed the additions made by the Assessing Officer by adopting the reasoning given while confirming addition for the Assessment Year 2010-11; and dismissed the appeal preferred by the Appellant vide common order dated 06/02/2023. 13.2. Being aggrieved, the Appellant in now before us in appeal on the grounds reproduced in paragraph 12 above. Ground No. 1 14. Ground No. 1 pertains to addition of INR 44,66,235/- made by the Assessing Officer on account of alleged bogus purchases made from the following parties: Sr. No . Name of the Party PAN Purchase Amount 1 Aastha Impex AEOPL0917R 1,49,15,255 2 Impex Gems AHNPJ4936G 1,79,84,724 3 Marvin Enterprises AAOFM3214C 2,11,16,528 4 Mayur Exports ABXPJ03747F 2,50,....
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....IT(A) was not convinced and taking note of the fact the suppliers/vendors formed part of Bhanwarlal Jain Group, and Appellant had failed to produce the suppliers/vendors personally before the Assessing Officer during the assessment proceedings, the CIT(A) confirmed the addition made by the Assessing Officer holding that purchases were bogus. 14.3. Before us the Learned Authorised Representative for Appellant reiterated the contentions raised before the Assessing Officer and the CIT(A). Learned Authorised Representative for Appellant vehemently contended that the purchases were genuine and all supporting document were filed during the assessment proceedings. Apart from the failure on the part of the Assessing Officer to produce the suppliers/vendors, the Appellant has complied with all the directions issued by the Assessing Officer during the assessment proceedings and furnished all the details and documents. Even the notices issued by the Assessing Officer under Section 133(6) of the Act were duly responded by the suppliers/vendors. Learned Authorised Representative for Appellant further submitted that in view of the gross profit margins already declared by the Appellant no furt....
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....ken and matched with the estimation sheets as well as other data gathered during the course of search action from various premises, disclosed as well as secret. The data was found to be identical. The complete correlation was established between the parallel books of accounts found on the pen drive with books of 70 concerns being managed and controlled by the assessee. It transpired that the daily accounts were first written manually on estimation sheets and thereafter entered into pen-drive electronically. So much so, identical pen drive was found from the possession of Shri Rohit Birawat at CST Terminus who was apprehended by the search team while attempting to flee from Mumbai to Rajasthan with incriminating material. 7. All these facts have been admitted not only by the assessee but also by his son as well as trusted employees in various statements as recorded on oath u/s 132(4) at various points of time. The statements were recorded in the presence of independent witnesses. The contents of the statement were said to be duly explained to the assessee at the time of recording thereof. 8. In the backdrop of such clinching and overwhelming evidences, no substance....
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....at the retraction was made after more than 8 months and the same was devoid of any material evidence. The statements were made on oath u/s 132(4) and heavy onus was on assessee to rebut the same with cogent material while retracting the same. However, nothing of that sort as done by the assessee, has been shown before us. Glaring contradictions as well as similarities has been found in the retraction affidavits. As rightly held by lower authorities, the retraction was nothing but mere afterthought and tutored statement to thwart the process of investigation. The retraction was bereft of any material evidence and therefore, the same was to be completely ignored. 11. The aforesaid factual matrix as well as findings would lead to inescapable conclusion that all the 70 entities under consideration were being managed and controlled by the assessee group and therefore, lower authorities were quite justified in estimating commission income earned by the assessee group from all these benami concerns." (Emphasis Supplied) 14.6. We note that even after the above decision of the Tribunal none of the persons, who were stated in the records to be persons in the management a....
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....rt rejected the contention of Revenue and declined to frame question of law. While dismissing the appeal preferred by the Revenue on this issue, the Hon'ble Bombay High Court held as under: "8. In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to th....
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....us purchases representing the benefit drawn by an assessee in making purchases from grey market. However, an assessee cannot as a matter of right claim that the additions on account of purchases should be restricted to the difference between the profit margin on purchases from grey market and the normal sales accepted by the Revenue and no more. It is trite of law that a judgment cannot be read divorced from the context in which the precise questions had came up for consideration. The Hon'ble Supreme Court had, in the case of CIT Vs. Sun Engineering Works (1992) 198 ITR (SC), observed as under: "37. The principle laid down by this Court in V. Jaganmohan Rao's case (supra) therefore, is .....................................Such an interpretation would be reading that judgment totally out of context in which the questions arose for decision in that case. It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this Court. The judgment must be read as a whole and the observations from the judgment have to ....
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....ed or considered in relation to the issue of estimation of profit element embedded. The issue of perversity raised by the Revenue was examined and answered in view of the facts of that case in favour of the assessee. Finally, the Hon'ble Bombay High Court dismissed the appeal of the Revenue holding that no question of law arose in the said appeal. It is well-settled that a precedent is an authority only for what it actually decides and not for what may remotely or even logically follow from it [Goodyear India Ltd. v. State of Haryana [1991] 188 ITR 402 (SC)]. Therefore, we conclude that reliance placed by Appellant on the judgment of the Hon'ble Bombay High Court in the case of Mohommad Haji Adam & Co (supra) as regards computation of profit element embedded in purchases made from grey market is misplaced. Accordingly, we reject the contention of the Appellant that the addition made by the Assessing Officer should be restricted to the amount of different between the profits declared on purchases made from grey market and the profits on normal purchases accepted by the Revenue and no more. This issue of estimated profits embedded in purchases from grey market would have to be decide....
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....unt confirmations, ledger account and the relevant extract of the bank statement of the lenders corroborating the aforesaid averments made by the Ld. Authorised Representative for the Appellant were placed before the Assessing Officer during the assessment proceedings. A perusal of the extract of bank statement of the lenders furnished by the Appellant shows that there were no cash deposit/withdrawal during that limited period. Since the Appellant had placed the aforesaid information/documents along with the financial statements of the lenders before the Assessing Officer, the Appellant had, in our view, discharged the primary onus cast upon the Appellant under Section 68 of the Act. The Assessing Officer brushed aside the documents/details furnished by the Appellant by merely stating that the lenders-concerns giving loan to the Appellant were part of the Bhanwarlal Jain Group and that the Appellant had failed to provide any evidence of identity & creditworthiness of the lender and the genuineness of the transaction. We note that the assessment order as well as the order passed by the CIT(A) are silent as to inquiry, if any, conducted by the Assessing Officer. There is no reference....
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....examination, without any corroborative evidence and without providing copy of statements relied upon." 20. The relevant facts in brief are that assessment was framed on the Appellant vide assessment order dated 30/03/2016, passed under Section 143(3) of the Act after making (a) addition of INR 54,18,861/- being profits embedded in the alleged bogus purchases computed at the rate of 5% of the alleged bogus purchases of diamond (INR 10,83,77,230/-); and (b) addition of INR 6,30,00,000/- being aggregate amounts of unsecured loan taken by the Appellant during the relevant previous year held by the Assessing Officer to be unexplained cash credit under Section 68 of the Act. 20.1. In appeal the CIT(A) confirmed the additions made by the Assessing Officer by adopting the reasoning given while confirming addition for the Assessment Year 2010-11; and dismissed the appeal preferred by the Appellant vide common order dated 06/02/2023. 20.2. Being aggrieved, the Appellant is now before us in appeal on the grounds reproduced in paragraph 19 above. Ground No. 1 21. Ground No. 1 pertains to addition of INR 54,18,861/- made by the Assessing Officer on account of alleged bogus purcha....
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....is excluded. Thus, gross profit margin declared by the Appellant on normal sales is 6.31%. Keeping in view the fact and circumstances of present case and the judgment of the Hon'ble Bombay High Court in the case of Mohommad Haji Adam & Co (supra) we hold that aforesaid rate of 6.31% represents fair estimate of profits embedded in purchases from grey market. However, since the Appellant has already disclosed profit margin of 6.26%, we restrict the addition to the difference between the aforesaid gross profit margin rate on normal sales (i.e. 6.31%) and the gross profit margin rate of 6.26% declared by the Appellant and delete that balance amount of addition sustained by the CIT(A). Thus, Ground No. 1 raised by the Appellant is, thus, partly allowed. Ground No. 2 22. During the assessment proceedings, the Assessing Officer noticed that the Appellant had taken unsecured loans from entities forming part of Bhanwarlal Jain Group and made an addition of INR 6,30,00,000/- under Section 68 of the Act holding the same to be unexplained cash credit. The CIT(A) also confirmed the addition. Therefore, the Appellant in now in appeal before us. 22.1. Ground No. 2 raised in the present a....