AI OCR 
TaxTMI 
TaxTMI 
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2025 (11) TMI 1140
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....ase summary of new material etc. by appellant before Ld. CIT(A). 2. Whether on the facts and circumstances of this case, the Ld. CIT(A) erred in deleting the addition of Rs. 16,62,309/- made by the AO on account of accommodation entry assessee incurred for obtaining expenditure at the rate of 2% as commission paid to entry operator considering addition as a result of accommodation entry of Rs. 8,31, 15,448/ -. 3. Whether on the facts and circumstances of this case, the Ld. CIT(A) erred in holding the assessment order passed u/s 147 dated 27.3.2022 to be illegal and erroneous, ignoring the fact that the assessee had itself undertaken in the writ petition before the Hon'ble High Court against the notice issued u/s 148A(b) dated 2.6.2022 that if such proceeding are dropped, the assessee will not challenge legality of notice issued u/s 148 dated 31.3.2021 that the notice was issued or dispatched beyond the limitation period. 4. Whether the Ld. CIT(A) has erred in allowing the appeal of the assessee by holding that the assessment made u/s 147 on 27.3.2022 is in violation of principle of natural justice by ignoring the fact that the reasons for reopening th....
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....n the document submitted by the assessee has been highlighted and actually, the assessee has submitted all requisite documents (a) confirmed ledger account, (b) Copies of bank statements of the vendors, (c) Copy of Bank Statement of assessee company, (d) quantitative purchase summary of copper wire/ rods, (e) Summary of production and duty, (f) Status of entities as downloaded from MCA website etc. 6. The CIT (A) has observed that if the purchases from the above impugned vendors are treated as bogus as alleged by the AO, the impugned purchases which is around 50% of total purchases of material by the assessee has to be reduced from the total quantity of material purchased/consumed production of finished goods which is required for admitted sale executed by the assessee during the year. 7. The CIT (A) has observed that the AO has failed to appreciate that it is incumbent on his part to first verify the correctness of the information received, cross-check the same with reference to the facts of the assessee already available on record, independently analyze the same and then, come to a prima facie case/belief of any escapement of income on the part of the assessee. ....
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....e emphasises that there cannot be a reassessment of a reassessment on the same allegations. Issue notice. Mr. Zoheb Hossain, learned Senior Standing Counsel for Revenue accepts notice. He has handed-over the following instructions received by him from the ITO, Ward-4(1), Delhi :- "Sir. As per discussion with the Ld. PCIT-1, Delhi the followings are the instruction in the above said case :- 1. On 21.09.2022, on query by the Court, the Ld. Standing Counsel for the Respondent Revenue had prayed for some time to obtain instructions as to whether the Revenue would be inclined to pursue the reassessment order dated 27.03.2022 u/s 147 of the Income Tax Act, 1961, or pursue the subsequent notice dated 02.06.2022 u/s 148A(b) of the Act. 2. The petitioner at Para 4.9 of the Writ Petition has disclosed that it has already filed an appeal before the Commissioner of Income Tax (Appeals) in Form 35 on 13.04.2022 u/s 246A of the Income Tax Act, 1961 against the reassessment order dated 27.03.2022. 3. Sr. Standing Counsel for Revenue has returned with instructions today that if the petitioner states that it has not taken or will not ta....
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....ty of notice issued u/s 148 of the Act dated 31.3.2021. The plea raised by the assessee before the Ld. CIT(A) on limitation of notice u/s 148, in our opinion should not have entertained by the Ld. CIT(A) since it is contrary to the undertaking given by the Assessee before the Hon'ble High Court. In the circumstances, the decision rendered by the Ld. CIT(A) holding that the assessment pursuant to the notice issued u/s 148 dated 31.3.2021 is barred by limitation, is hereby reversed by allowing ground nos. 3 & 4 of grounds of appeal of the Revenue. 8. Coming to ground nos. 1 & 2 of grounds of appeal of the Revenue, we find that the Ld. CIT(A) considering the submissions and evidences filed by the assessee deleted the addition observing as under: GROUND No. 6& 7 These grounds of appeal relates to addition of Rs 8,31,15,448/- as made by the A.O u/s 68 of the Act and Rs 16,62,309/- being 2% commission on alleged accommodation entries of Rs. 8,31,15,448/- taken by the appellant from three entities. It is submitted that the appellant is engaged in the business of manufacturing of Copper and Aluminum Wire as per last year. During the year under review the a....
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.... status of the company is "active" on the website of MCA. It has duly filed its Annual Return for F.Y. 2011-12 till date. It is duly registered with VAT Deptt. which is evident from the registration No. 07100413249 as mentioned in the purchase invoices raised by BMPL to the appellant company (PB 256). II. M/s Moral Alloys Pvt. Ltd. (MAPL) is an corporate entity having CIN U51102DL2010PTC208375 and is engaged in the trading of vanous Metal & Alloys. The present status of the company is "active" on the website of MCA. It has duly filed its Annual Return for F.Y. 2011-12 till date. It is duly registered with VAT Deptt. which is evident from the registration No. 07810389239 as mentioned in the purchase invoices raised by MAPL to the appellant company. (PB 257). III. M/s Progressive Alloys India Pvt. Ltd. (PAIPL) is an corporate entity having CIN U51909DL2011PTC223334 and is engaged in the trading of various Metal & Alloys. The present status of the company is "active" on the website of MCA. It has duly filed its Annual Return for F.Y. 2011-12 till date. It is duly *registered with VAT Deptt. which is evident from the registration No. 07060410943 as mentioned in the pu....
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.... purchases 327273 Kgs during the year, that constitute around 47.25% of total purchases of copper wire. In such scenario, it the purchases from the above impugned vendors are treated as bogus as alleged by the AO, logically speaking, the impugned purchases which is around 50% of total purchases of material by the appellant has to be subtracted from the total quantity of material purchase/consumed i.e. 327273 Kg of copper wire/rod, meaning thereby there will not be sufficient production of finished goods which is required for admitted sale executed by the appellant during the year. Despite of all of above details and documents, the A.O has relied upon impugned information as received from DDIT (Inv.) Delhi, having following findings/ doubts regarding creditability of M/S Moral alloys Pvt Ltd & Ors. As summarised below :- 1. M/s Moral Alloys Pvt Ltd & Ors. has made turnover of Rs 856 Crores in its bank account No. 9110200042960662 2. Some Unusual debit/credit patterns were observed in the account. 3. The outflows in the said account were exact equivalent to inflows and on the same day after every withdrawal, the account was left with minim....
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....on with regard to the transaction with M/s. Brilliant Metals Pvt. Lid. M/s. Brilliant Metals Pvt.Ltd. is not engaged in any genuine business activity and are providing non-genuine accommodation entries by rotating funds. ITA 525/2014. CIT V/s Mis Fansampark Advertising And Marketing (P) Ltd. Delhi HC) dated 11.03.2015 The provision contained in Section 68 read in above context suggests that the initial burden of proof is on the assessee to explain. Thus, in the absence of discharging primary onus by the assessee company, qua fresh capital received (other than IPO), the following questions remained un-answered, vis-a-vis, who were the subscribers, whether they are person of means or not, what is their creditworthiness, what is their nature of business, how and in what manner they get to know that the shares of the assessee company are available for subscription, details of their other investments in shares of other public limited companies and private limited companies, whether any broker or middleman was involved, what was the source out of which they invested in shares of the assessee company, whether these shareholder are still shareholders of otherwise....
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....ese impugned entities. The AO has failed to appreciate that the provisions of section 68 of the Act are not applicable where the amount in question represents purchases and the outstanding credit balance against the purchases. The provision of section 68 can only be invoked where any sum is found credited in the books of accounts of an assessee, maintained for any previous year, whereas, it is not the case of the appellant that it has taken any loan or deposit from the said creditors and even the amount of purchases is found credited in the books of the appellant. That on the contrary, the appellant has purchased raw material and the amount of purchases is debited in books of the appellant and thus the provisions of section 68 are not applicable for the purpose of allowability and disallowability of any deduction, as section 68 which is deeming provision, is applicable only when the sum is found credited in the books of the assessee and the assessee is not able to explain the nature and source or such credit. The appellant in support of its contention rely upon the following judicial pronouncements. 1. 'CIT vs. PanchamDass Jain', 205 CTR 444 (Alld.) ....
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.... produced for examination - Therefore, considering the fact that the purchases so made from the impugned parties are duly supported by the VAT paid invoices and the corresponding payment has been made by account payee cheques only. Moreover, the appellant maintained day to day stock register for its material consumption which is even verified by Excise department and the corresponding purchases from these three impugned parties constitutes almost 50% of raw material consumption, the purchases so made cannot be held bogus in view of the fact that the AO has duly accepted the trading results as declared by the appellant in its ITR on the basis of audited books of accounts. Accordingly, it is prayed as under :- 1. Addition of Rs. 8,31,15,448/- as made u/s 68 of the Act may please be deleted as the same is patently wrong and uncalled for in view of facts and circumstances as stated above. GROUNDS No .- 6- 7: These grounds of appeal relates to addition of Rs. 8,31,15.448/- u/s 68 of the Act and alleged commission @ 2% i.e. Rs 16,62,309/- as paid by the appellant to the entry providers. I have gone through the assessment order and sub....
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....al is "Active" and they have filed necessary documents in compliance under Companies Act 2013 2. The bank statements of the impugned parties as mentioned para 3 reflects that receipt of the payment by cheques /RTGS from the appellant and there is no corresponding cash withdrawl in the bank statement of the vendors. 3. The appellant has meticulously maintained stock register showing inward and outward of goods as and when purchases were made and issued for manufacturing of end products of the appellant. The stock register shows the purchases from the said parties and issuance of the same time to time for consumption for manufacturing of finished products which has resulted in declared sale in profit & loss account. 4. The appellant maintained quantitative records of its raw material purchases, consumption and production of final product as required under the Excise Laws and VAT. The Tax Auditor in its report has confirmed the availability of stock records and also provide quantitative details of raw material consumed etc in its tax audit report. 5. Quantitative detail of raw material consumption at point No. 28 (A) of Tax Audit Report as enclosed ....
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.... bills, delivery challans etc. to prove the genuineness of the purchases. It was also a faci on record that the AO had not doubted the sales effected by the assessee. Thus, it was logical to conclude that without corresponding purchases being effected the assessee could not have made the sales. Moreover, the AO had not brought any material on record to conclusively establish the fact that the purchases were bogus. Merely relying upon the information from the sales Tax Department or the fact that parties were not produced the Assessing Officer could not have treated the purchases as bogus and made addition. If the AO had any doubt with regard to purchases made, it was incumbent upon him of make further investigation to ascertain the genuineness of the transactions." Likewise, the Hon'ble ITAT in the case of Rajesh P Soni v/s. ACIT (2006) 100 TTJ 892 (Ahd - D. ) held as under :- " ... Purchases made by the assessee having been properly recorded in books of account and supported by authenticated purchase bills/vouchers for which payments were made through banking channels, and sales against these purchases are not doubted, addition u/s 69 was not justified merely....
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....r such credit. Further, reliance being placed on decision of the higher courts on this issue in case of : * CIT v/s. Pancham Dass Jain 2205 CTR 444(Alld), * CIT v/s. Jagdish Prasad Tewari 220 Taxman 141 (Alld), * CIT v/s. Swastik Roadlines (P) Ltd. 36 Taxmann.com 441 (Agra Trib), * Smt. Sudha Loyalka vs ITO 97 Taxmann.com 303 (Delhi Trib) & * PCIT vs Rishabhdev Technocable Ltd. 115 taxmann.com 333 (Bombay) In CIT v/s. Pancham Dass Jain (SUPRA) the Hon'ble Jurisdictional Allahabad High Court has held that the provisions of section 68 of the I.T. Act are not attracted to the amounts representing purchases made on credit. In CIT vs. Jagdish Prasad Tewari (SUPRA) the Hon'ble Jurisdictional Allahabad High Court has held that where the assessee had made payments to the creditors through cheques, merely because some creditors had not confirmed the receipts no addition as cash credit could be made to the assessee's income. In view of above facts and circumstances, it is found that, the addition of Rs. 8,31,15,448/- as made by the AO u/s 68 has no merit and is deleted. Consequently addition of Rs. 16,62,309/....