TaxTMI 
TaxTMI 
2026 (2) TMI 1312
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.... only. 5. The Ld. CIT(A) ought to have appreciated that mere reason to suspect by the A.O cannot be equated to reason to believe that income has escaped assessment. 6. The Ld. CIT (A) erred in confirming the addition of Rs. 58,15,000/- made towards bogus purchases which is based on presumptions & surmises and is not based on any corroborative evidence. 7. The Ld. CIT (A) ought to have appreciated the fact that the addition was made by the A.O merely based on the survey conducted in the case of Rajendra Jain Group and that the AO has not conducted any independent enquiries. 8. The CIT (A) ought to have appreciated the fact that the appellant company has already submitted original purchase invoices, stock registers and bank statements before the AO for verification in support of the impugned purchases. 9. The Ld. CIT (A) ought to have appreciated the fact that all the payments made towards purchases, are through banking channels and that the purchases are genuine." 3. Ground nos.1, 2 and 3 are general in nature and does not require any specific adjudication. 4. Ground nos.4 and 9 raise two issues viz., (i) the validity of the reopeni....
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.... Department has accepted the sales made by the assessee of the purchases made from KIPL. Thus, the learned Authorised Representative of the Assessee has submitted that once the Assessing Officer has accepted the turnover of the assessee, then, the corresponding purchases made by the assessee cannot be doubted and reason for reopening of the assessment beyond 04 years from the end of the assessment year under consideration. In support of his contention, he has relied upon the following decisions: i. CIT vs. Kelvinator of India Ltd., [2010] 320 ITR 561 (SC) ii. DCIT vs. Bajaj Allianz Life Insurance Company Ltd., [2021] 125 taxmann.com 71 (SC) iii. PCIT vs. Farmson Pharmaceuticals Gujarat (P.) Ltd., [2025] 473 ITR 639 (Gujarat-HC) 5.1. He has also referred to the decisions of this Tribunal dated 25.05.2018 for the assessment year 2013- 2014 in ITA.No.2016/Hyd./2017 in assessee's own case whereby the Tribunal has observed that the Assessing Officer has made the addition without verifying the genuineness of the sales and solely depending upon the statement of Sri Rajendra Jain instead of verifying the genuineness of the sales. Thus, the learned Authorised R....
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....Delhi); v. Venky Steels (P.) Ltd. Vs CIT-II [2025] 173 taxmann.com 658 (SC); vi. Ankit Agrochem (P.) Ltd. [2018] 89 taxmann.com 45 (Rajasthan-HC); vii. Sonia Goel vs. ITO, Ward-21(1), New Delhi ITA No.703/2017, Dated. 28.08.2017 of Delhi High Court. 7. We have considered the rival submissions as well as the relevant material on record. There is no dispute that earlier the case of the assessee was reopened and reassessment u/sec.143(3) r.w.s.147 of the Act was completed vide order dated 04.04.2012 whereby the Assessing Officer had assessed the total income of the assessee at Rs. 13,25,780/- as against the returned income of Rs. 12,82,280/-. Thereafter, the Assessing Officer again reopened the assessment by issuing notice u/sec.148 of the Act on 28.03.2017 which is beyond 04 years from the end of the assessment year under consideration. The Assessing Officer has given the reasons in Para nos.5 and 6 of the assessment order for reopening of the assessment which reads as under: "5. Information was received from O/o DCIT, Central Circle 4, Surat stating that a Search and Seizure operation was conducted u/s 132 of the Income Tax Act, 1961 on 03.10.2....
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....us, it is clear that the Assessing Officer has proceeded on the basis of the said information which shows that the total value of the transaction of purchases made by the assessee from KIPL is Rs. 1,68,15,000/- whereas the real value of the transaction as per the said information is Rs. 1,10,00,000/- and therefore, the differential amount of Rs. 58,15,000/- was proposed to be assessed to tax by the Assessing Officer. In the said information prima facie it appears that the value of purchases made by the assessee was inflated and not a case of bogus purchases. The record available with the Assessing Officer did not reveal the specific transaction of purchases as accommodation entries and bogus purchases made by the assessee from KIPL but it shows that the total purchases made by the assessee is inflated by Rs. 58,15,000/-. There is no dispute that all the details of purchases made by the assessee during the year were available before the Assessing Officer at the time of first re-assessment order passed u/sec.143(3) r.w.s.147 of the Act dated 04.04.2012 and the Assessing Officer has not doubted the correctness of the purchases particularly, the purchases made from KIPL. Therefore, the....
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.... been made by the assessee through banking channels and the purchases and sales have also been recorded in the books and the net profit has been offered to tax, then there cannot be any disallowance of the purchases." 7.2. Thus, the Tribunal noted that the addition made by the Assessing Officer without conducting an independent enquiry and based solely on the statement of Sri Rajendra Jain group is not sustainable and justified. Though in the said case it was a regular assessment u/sec.143(3) and not the case of reopening therefore, the Tribunal found it proper to remand the matter for making a proper enquiry and verification of the documents filed by the assessee. We further note that the Chandigarh Bench of this Tribunal in the case of M/s. Talwar Jewellers, Chandigarh vs. ACIT, Central Circle-II, Chandigarh in ITA.Nos.1178 and 1179/CHD./2019 vide Order dated 11.01.2023 as relied upon by the learned Authorised Representative of the Assessee has considered the issue of addition made by the Assessing Officer on account of purchases made from the KIPL and based on the statement of Sri Rajendra Jain in Para nos.7 to 11 as under: "7. We have heard the rival contentions and....
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....is statement has held that since the assessee was one of the beneficiaries of the accommodation entries provided by him through M/s Kriya Impex Pvt Ltd. the purchases from M/s Kriya Impex Pvt. Ltd were bogus in nature. In this regard, we find that the assessee has submitted before the Assessing officer, as evident from the written submissions dated 17.08.2015 reproduced in the reassessment order, that the search was conducted on Shri Rajendra Jain on 3/10/2013 whereas the impugned transaction is dated 6/04/2009. It was submitted that the statement of Shri Rajendra Jain has been recorded at the back of the assessee. is a vague statement without any supporting evidence and the assessee be allowed an opportunity to cross-examine Shri Rajendra Jain whose statement is being relied upon. The Assessing officer has however stated that Shri Rajendra Jain was the director of M/s Kriya Impex Pvt Ltd in whose books the name of the assessee has been found, the statement of Shri Rajendra Jain has been recorded on oath u/s 132(4) where he confessed that he is an entry provider and such statement has an evidentiary value and no opportunity to cross-examine Shri Rajendra Jain was thus provided to t....
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....f statement of third party i.e.. Shri Vikrant Kayan cannot justify the impugned additions. Moreso, when specific request was made by the assessee for allowing cross examination was denied by the Assessing Officer. The first appellate authority also did not consider it fit to allow cross-examination. This is in gross violation of the principles of natural justice and against the ratio laid down by the Hon'ble Supreme Court in the case of Andaman Timber Vs. CIT Civil Appeal No.4228 OF 2006 wherein it has been held as under: "According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected, it is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. ....
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....fficer is directed to allow the claim of exemption u/s 10138) of the Act." 6. Keeping in view of the facts and circumstances of the present case and respectfully following the order of the Tribunal, SMC Bench, Delhi in the case of Smt. Jyoti Gupta vs. ITO (Supra) and in view of the law settled by the Hon'ble Supreme Court of India in the case of Andaman Timber vs. CIT (Supra), on identical facts and circumstances, the addition in dispute is deleted and the appeal of the assessee is allowed." 10. In light of the aforesaid discussions, we are of the considered view that where the assessee has discharged the initial onus cast upon it and has submitted the necessary documentation in support of the purchases so made and such purchases are duly recorded in the books of accounts and forming part of the inventory and such books of accounts and closing inventory being duly accepted and no adverse finding recorded by the AO, mere reliance on statement of Mr Rajender Jain without allowing an opportunity of cross examination to the assessee, the purchases so made cannot be held as bogus. Further, we are intrigued by the fact that where the said purchases are equally formi....