TaxTMI 
TaxTMI 
2023 (11) TMI 1414
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....ed to as the "Act"]. 2. At the outset, we note that appeals are filed by the Revenue and appeals filed by the Assessee, both are barred by limitation by forty five days and fifty two days, respectively. The Learned DR for the Revenue, as well as, Learned Counsel for the assessee, both have argued on the same line stating that the delay are attributable to Covid 19 pandemic disease; therefore these small delay in filing appeals by Revenue and appeals by Assessee, should be condoned. 3. We have heard both the parties on this preliminary issue. We note that delay in filing appeals are as follows: (i) Revenue`s appeals are barred by limitation by 45 days. (ii) Assessee`s appeals are barred by limitation by 52 days. We note that above delay in filling the appeals by Revenue as well as, by the Assessee, are due to Covid 19 pandemic disease. We have examined that the delay in filing the these appeals fall in the period of Covid 19 pandemic and such delay have been condoned by the Hon'ble Supreme Court, vide suo moto Writ Petition No.3 of 2020. Therefore, respectfully following the binding judgment of the Hon'ble Supreme Court, in MA No. 21 of 2022 in suo moto Wr....
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....he assessee has not filed his return of income on the specified date. Thereafter, due to change of incumbent, the notice u/s 142 (1) r.w.s. 129 of the Act, was issued on 26.05.2017 and served upon the assessee and assessee was requested to attend the office of the assessing officer, on 06.06.2017. But, the assessee has not complied this notice too. Therefore, a show cause letter for noncompliance of notices and explanation for accommodation entries of bogus purchases amounting to Rs.29,78,10,891/-, from various dummy concerns of Shri Rajendra Sohanlal Jain and Shri Surendra Jain and their Group was issued on 13.07.2017 and the assessee was requested to submit explanation with necessary supporting evidences on 25.07.2017. In response to which, the assessee vide letter dated 24.07.2017, requested to treat the return of income filed u/s 139(1) as return of income filed in response to the notice issued u/s,148 of the Act and enclosed copy of acknowledgment of the original return of income, which was filed on 15.10.2010. The assessee has also requested to provide copy of reasons recorded to, initiate proceedings under section 147 the Act and the same has been provided to the assessee vi....
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.... facilitating the operation of providing bogus entries of bills of purchase, sales and unsecured loans. 9. The above investigation made during the course of search and post search in the case of above group revealed that the assessee, proprietor of M/s Amrut Exports, was one of the beneficiaries of non-genuine purchase transactions and found to have availed accommodation entries of bogus purchases to the tune of Rs. 29,78,10,891/-, during the financial year (F.Y.) 2009-10 relevant to assessment year (A.Y.) 2010-11 from the following concerns of Rajendra Jain group: S. N. Name of Entry provider PAN Amount (in Rs.) 1. Avi Export ABIPJ5587A 4,17,10,193/- 2. Karnavat Impex Pvt. Ltd. AADCK1927A 16,57,70,827/- 3. Kriya Impex Pvt. Ltd. AADCK1926B 3,41,72,900/- 4. Moulimani Impex Pvt. Ltd. AADCM1931C 1,42,70,985/- 5. Kalash Enterprise AFRPJ9962J 1,09,30,886/- 6. Sparsh Export Pvt. Ltd. AACKS0761R 2,85,45,600/- 7. Sum Diam ABAFS0852K 24,09,500/- Total 20,78,10,891/- 10. During the course of search proceedings, certain documents were also seized which contain names of different concern....
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....its for the year to that extent. There is no other prudent use of bogus purchase bills. During the course of assessment proceedings, a show cause letter dated 13.07.2017 was issued and served upon the assessee. Relevant portion of the show cause notice is reproduced on page No.5 of the assessment order. 11. In response to the above show cause notice, the assessee has submitted reply on 28.07.2017. But, the assessee has failed to submit copy of final accounts/ audit report for A.Y. 2010-11 with complete postal addresses of the above concerns. Therefore, assessing officer noted that books result of the assessee is not reliable and is susceptible for the manipulation at the will and wish of the assessee. In view of the above, Books result of the assessee's concern was not accepted by the assessing officer. The assessing officer further observed that the assessee has shown gross profit of Rs. 10,50,26,004/- on total turnover of Rs.1,80,68,18,795/- i.e. 5.81% for the year under consideration against gross profit of Rs.8,16,75,381/- on total turnover of Rs.1,45,39,33,687/- i.e. 5.62% for the immediate preceding year to the year under consideration. In view of the aforesaid facts, ....
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.... gross profit rate of 5% as the average rate of the industry and following the judicial pronouncement by the Co-ordinate Bench of Tribunals and the decision of Hon'ble jurisdictional High Gujarat High Court in the case of Mayank Diamond Pvt. Ltd. (Tax Appeal No. 200 of 2003) dated 17.11.201; the addition is restricted to 5% of bogus purchases. The circumstantial evidences itself show that the purchases amounting to Rs. 29,78,10,891/- were not genuine and therefore the AO is being directed to recalculate addition made by the AO @ 5% of the bogus purchases is upheld and the ground of appeal is partly allowed." 13. Aggrieved by the order of ld. CIT(A), the Revenue as well as Assessee are in appeal before us. 14. We note that in these two assessment years, the Assessing Officer made 100% addition on account of bogus purchases. In assessment years 2010-11, the Assessing Officer, after rejecting the books of accounts of the assessee, made addition on account of bogus purchases to the tune of Rs.29,78,10,891/-. On appeal by the assessee, the ld. CIT(A) by following the decision of jurisdictional High Court, in the case of Mayank Diamond (in Tax Appeal No.200 of 2003), restricted....
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....on 147/148 may be quashed in both the assessment years, that is, AY 2010-11 and 2011-12. 17. On the other hand, Learned DR for the Revenue submitted that assessing officer (AO) was having sufficient material to form the "reason to believe" at the time of re-opening of the assessment. Although, the "satisfaction note" by Commissioner of Income Tax for assessment year 2010-11, is in brief, yet it is as per the scheme of the Act. The approval for initiating proceedings under section 147 of the Act may be given by senior officer of the Income Tax Department. The AO on the basis of the information received from the Investigation Wing, has found that the assessee had obtained accommodation entries in form of bogus purchases. The Credible information was received by the AO from the Investigation Wing, regarding search and seizure action carried out in the case of Shri Pravin Kumar Jain group/Rajendra Jain/Bhanwarlal Jain/Gautam Jain and evidences found during it including the statements of various persons, it was found that they were engaged in systematic providing of accommodation entries. The AO has noted that the search has revealed that the assessee managed to have received bogus b....
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....fter, the Principal Commissioner of Income Tax, Surat-3 recorded the 'satisfaction' stating as follows: "Yes, I am satisfied" We note that this 'satisfaction' note is given by the Principal Commissioner of Income Tax, without expressing as to how and why he is satisfied. (iv) The said "satisfaction" was to be recorded by the Additional Commissioner of Income Tax (Addl. CIT), instead of Commissioner of Income Tax (CIT). 20. From the above important defects, inconsistency and arbitrariness in the process of recording reasons, it is abundantly clear that process of recording reasons is itself wrong and not in accordance with law. We note that the Additional Commissioner of Income Tax, Range-3(3), Surat, wrote a letter to the Principal Commissioner of Income Tax-3, on dated 27.03.2017, requesting the Principal Commissioner of Income Tax-3, for sanction under section 151(1) of the Act. Therefore, the reasons must be recorded by the assessing officer prior to 27.03.2017, however, in assessee`s case the reasons were recorded on 23.03.2017, which clearly shows non-application of mind and arbitrariness in the process of recording reasons, hence the reassessment proceedings initi....
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....eference: "FOR AY. 2011-12: 24. After going through the above 'sanction letters' 'reasons recorded' and 'approval', we noticed the following arbitrariness in the process of recording reasons: (i) From the above 'sanction letters' 'reasons recorded' and 'approval' it is clear that Income Tax Officer (HQ) on behalf of Principal Commissioner of Income Tax-3, issued letter to DCIT, Circle-3(3), on 30.03.2017, stating that sanction u/s 151 (1) of the Act has been accorded by the Principal Commissioner of Income Tax-3 Surat, for issue of notice under section 148 of the Act. In this letter, assessee`s name appears on serial number 3. The reasons recorded were not attached with this said letter dated 30.03.2017. (ii) After one year, again Income Tax Officer (HQ) on behalf of Principal Commissioner of Income Tax-3, issued letter to Additional Commissioner of Income Tax, on 30.03.2018, stating that sanction u/s 151 (1) of the Act has been accorded by the Principal Commissioner of Income Tax-3 Surat, for issue of notice under section 148 of the Act and same may be conveyed to the concerned assessing officer. In this letter, assessee`s name appears on serial numbe....
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....010-11 and 2011- 12, on 30.03.2017, which is within four years from the end of the relevant assessment year, hence in assessee`s case there was no requirement to sanction of notice by Principal Commissioner of Income Tax. However, sanction has been accorded by the Principal Commissioner of Income Tax, which is contrary to the provisions of section 151 of the Act, hence reassessment proceedings initiated against the assessee for assessment years, 2010-11 and 2011-12, should be quashed. 26. We also note that satisfaction recorded by the Principal Commissioner of Income Tax, stating "Ys, I am satisfied" is not in accordance with law, for this reliance can be placed on the judgment of the Coordinate Bench of ITAT Delhi in the case of Pioneer Town Planners Pvt. Ltd, in ITA No.132/Del/2018 for Assessment Year, 2009-10, wherein it was held as follows: "19. On careful consideration of above rival submissions, first of all, we may point out that from the proforma of approval u/s 151 of the Act placed at pgs. 16- 17 of the assessee paper book, it is clear that in column 12 the ACIT has granted approval for the issue of notice u/s 148 of the Act by writing that "Yes, I am satisfie....
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....caped assessment. 21. In view of decisions of Hon'ble High Court of Delhi in the cases of PCIT vs. Meenakshi Oversaes (supra), PCIT vs. G&G Pharma (I) Ltd. (supra) and decision in the case of PCIT vs. RMG Polyviny (I) Ltd. (supra), where information was received from investigation wing that assessee was beneficiary of accommodation entries but no further inquiry was undertaken by AO, said information could not be said to be tangible material per se and, thus, reassessment on said basis was not justified. In the case of Meenakshi Overseas (supra), their lordship speaking for the Hon'ble Jurisdictional High Court held that where the reasons recorded by the AO failed to demonstrate the link between the tangible material and the formation of the reasons to believe that income has escaped assessment then, indeed it is a borrowed satisfaction and the conclusion of the AO based on reproduction of conclusion drawn in the investigation report cannot be held as valid reason to believe after application of mind. In this judgment their lordship also held that where nothing from the report of investigation wing is set out to enable the reader to appreciate how the conclusions flow ....
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....nt proceedings. As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous. 28. In the result, assessee`s appeal for both the assessment years, that is, AYs 2010-11 and 2011-12 (in ITA No. 239/SRT/2019 and ITA No. 124/SRT/2020, are allowed, whereas appeals filed by the Revenue (in ITA No. 304/SRT/2019 and ITA No. 122/SRT/ 2020, are dismissed. Registry is directed to place one copy of this order in all appeals folder / case file(s). Order is pronounced on 06/11/2023 in the open court. ============= Document 1 Office of the Pr. COMMISSIONER OF INCOME-TAX-3 Room no.425- Aayakar Bhawan, Majuragate, Surat No.SRT/Pr.CIT-3/ITO(HQ)/151/2016-17 Date: 30.03.2017 The DCIT, Circle- 3(3), og Tay Officer . e Income Tax Officer, Ward- 3(3)(1), 3(3)(3), 3(3)(4) & 3(3)(5) SURAT Sub: Sanction for issue notice u/s. 151(1) of the I. T. Act, 1961 in the following case- reg. Please refer to the above. ************* In this connection, I am directed to convey that sanction u/s 151 (1) of the Act has been accorded by the Pr. Commissioner of Income-Tax-3, Surat in the follo....
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....YAKAR BHAVAN, MAJURAGATE, SURAT Ph.No.0261-2878403 email : [email protected] No.SRT/Rg.3(3)/147/ 2016-17 Dt. 27.3.17 To The Pr. Commissioner of Income Tax -3 Surat Sir Sub : Reasons recorded for re-opening of assessment in the case of Shri. Ravjibhai Becharbhai Dhameliya for A.Y.2010-11. Kindly refer to the above. I am submitting herewith the reason recorded for re-opening of assessment in the 2. case of above named assessee for A.Y.2010-11 received from the DCIT Cir.3(3), Surat dt. 23.03.2017 3. After perusal of the reason recorded by the A.O., it is found that an income of Rs.29,78,10,891/- has escaped assessment in the hands of the assessee for A.Y.2010-11. The case is being re-opened on the basis of information received from DCIT C.C .- 4, Surat that Shri.Rajendra Jain, Shri. Sanjay Choudhari and Shri.Dharmichand [ain are some of the entry providers operating in Mumbai, indulging in providing accomodation entries in the nature of bogus sales and unsecured loans. A search and seizure action in these groups of cases was carried out in 03.10.2013 by the DGIT(Inv) Mumbai charge. Shri. Ravjibhai Becharbhai. Dhamneliya is one of the beneficiary....
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....s, and that he had been also been operating through M/s Minar Gems, a proprietary concern in his name. So, after. quitting the job, he took the idea of operating through various concerns including several proprietorship concerns in the names of our employees. It has also been further confirmed by him that in all such cases, the effective control of business remains with them and the business income of such proprietorship concern get adjusted against the overall salary payable to such employee on annual basis. 3. It has also been reported that Shri Rajendra Sohanlal Jain has admitted that he and his dummy concerns/entities were s/entities were engaged in business of bills shopping through all the concerns, the details which has been admitted by him reply to Q.No.13 of the statement recorded under section 132(4) for on 05.10.2013. It has also been reported that he has admitted to be holding admitted to be holding no physical stock at any of our place at any point of time and that they were merely lending names of various concerns for the purposes of acquiring and providing bills though no actual demand were eve and were ever involved in such transaction, A concerns have been maint....
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....the names of these benami entities at the instance of the actual importers and on receipt of the imported consignments from customs, through- CHA, the consignment is handed over to the actual importer and the bogus stock is entered in the books of the benami entities and the same is not recorded in the books of the actual importer. On the basis of these benami entities, bogus sale bills are issued - against nonexistent against the bogus stock. From the details and evidences made available through the above referred Itter dtd. 14.03.2014 of the Director General of Income Tax (Investigation), Mumbai it is seen that the following entities of Shri Rajendra Sohanlal Jain group' ha accommodation entries of bogus sales to Shri Ravjibhai Becharbhai Dhameliya, Prop of M/s Amrut Exports) as under during F.Y.2009-10 relevant to A. Name of Entry Provider PAN Amount (S.) IPJ5587A 4,17,10,193/- Karnawat Rarna Anya Moulimer Moulimani Kalash AFRPJ996 AACKSO 10K00761 Sparsh Sun ABAFS0852K 24,09,50 29,78,10,891/- Total 8. Thus to summarise, such bogus entities were not really doing any business and on the other way were only facilitating bogus bills of sales and the ....
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....INCOME TAX, Date: 23:03.2017 CIRCLE 3(3), SURAT: 10 I am satisfied Whether the Principal Commissioner income-tax, Surat-3 is satisfied on the reasons recorded by the AO that it is a fit case for issue of Notice under sec. 148 of the I.T. Act, 1961. to 30/3/17 (RAJANI KANT GUPTA) ISSIONER OF INCOME-TAX, SURAT-3 Document 2 Office of the Pr. COMMISSIONER OF INCOME-TAX-3 Room no.425- Aayakar Bhawan, Majuragate, Surat No.SRT/Pr.CIT-3/ITO(HQ)/151/2016-17 Date: 30.03.2017 To The DCIT, Circle- 3(3), Income Tax Officer, SURAT rd- 3(3)(1), 3(3)(3), 3(3)(4) & 3(3)(5) Sub: Sa reg. Sanction for issue notice u/s. 151(1) of the I. T. Act, 1961 in the following case- Please refer to the above. ************* In this connection, I am directed to convey that sanction u/s 151 (1) of the Act has bee accorded by the Pr. Commissi of the Act has been ssioner of Income-Tax-3, Surat in the following cases for issue of Sr. No. Name of the assessee WARD/CIRCLE PAN A.Y. PANKAJ DIAMONDS Circle- 3(3), Surat AADFP5145L 2010-11 2 PRAVIN J BÄ€BARIYA Ward-3(3)(5), Surat |AFYPB2108K 2010-11 3 RAVJI B DHAMELIYA Circle- 3(3), Surat ACCPD5423C |2....
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....bove, , 2. In this connection, I am directed to inform you that the Pr. Commissioner of Income tax-3, Surat has accorded approval for issue of notice u/s 148 of the I.T Act, 1961 in the following cases. The same may kindly be conveyed to the concerned Assessing Officers immediately. S.No Name of the assessee PAN A.Y | AO Nareshbhai Arjanbhai Lathiya ADLPP8388A |2011-12 |Cir-3(3), Surat/ Ravjibhai Becharbhai Dhameliya ACCPD5423C |2011-12 |Cir-3(3), Surat M/s Saket Imper AAQFS1516B |2011-12 Cir-3(3), Surat M/s Tiku Gems AADFT6848C |2011-12 |Cir-3(3), Surat Mahesh Faldu AABPF9344F |2011-12 |Wd-3(3)(3), Surat 6 Nareshkumar Vallabhbhai Chhatrala ABOPC4169R |2011-12 Wd-3(3)(3), Sura 7. M/s Kakadiya diamond AAIFK7394K 2011-12 Wd-3(3)(3), Surat 8. M/s Kakadiya diamond AAIFK7394K 2012-13 |Wd-3(3)(3), Surat Yours faithfully, 4KehoKg Encl: case folders (08) (Gautam Kumar Thakur) ITO(HQ) For Pr. Commissioner of Income tax-3 Surat lett 30/3/ Annexure-B Reason for Reopening - where no regular assessment made 1 |Name of the Assessee: Ravjibhai Becharbhai Dhameliya Prop. Amrut Exports Vraj Shila, Kapodra Char Rasta, Varachha Road, Surat 2 Ad....
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....rn by Shri Rajendra Jain and others in their sworn statement. No actual delivery or movement of goods has taken place. In view of such specific and pointing discovery of investigation, there is a clear case of escapement of income in the hands of the assessee (since the assessee did not disclose true and full facts related to this transaction before the Department). 5 & 6. Findings of the AO & Basis of forming reason to believe and details of escapement of income: The information so received from the Central Circle-4, Surat, it comes to surface that impugned assessee has traded with various concerns(i.e. AADI Impex, AVI Impex, Karnawat Industries Pvt. Ltd., KIPL, Arihant Impex) and derived the bogus purchase of Rs. 30,72,16,240/- for the A.Y. 2011-12. Hence the assessee has to suppress his taxable income. As such, I have a reason to believe that an income of Rs. 30,72,16,240/- as stated above, has escaped assessment in the hand of the assessee i.e. Ravjibhai Becharbhai Dhameliya Prop. Amrut Exports for the year under consideration. 7. Escapement of income chargeable to tax in relation to any assets (including financial interest in any entity) located outside India: Not applic....