AI Drafter 
TaxTMI 
TaxTMI 
2026 (5) TMI 1481
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....t without there being any valid reasons leading to the belief of escapement of income; 2. passing order u/s 143(3) r.w.s. 147 of the Act determining taxable Income at Rs. 1,20,63,390/- against returned income in a sum of Rs. 6,76,120/- ; 3. making an addition of Rs. 1,13,87,270/- on account of alleged bogus purchases u/s 68 of the Act; The above actions being arbitrary, fallacious, unwarranted and opposed to principles of natural justice must be quashed with directions for appropriate relief." 3. Brief facts of the case are, return of income for the A.Y.2012-13 was electronically filed by the assessee company on 19.09.2012 declaring total income of Rs. 6,76,120/-. The return was accordingly processed u/s 143(1) of the Income-tax Act, 1961 (for short 'the Act') on 21.02.2013 accepting the returned income. In this case, very vital and credible information was received from DDIT(Inv.), Karnal vide letter dated 05.02.2019 informing that: "During the post search proceedings, it is noticed that Mr. Hitesh Jain is doing activity of providing accommodation entries to the various beneficiaries with the help of approx. 40 shell/paper concerns. When summ....
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....6. Account No. :-02172320017643, HDFC, DELHI (copy of the relevant portion of bank statement is enclosed). 65,37,270 Total . 1,13,87,670 It is further requested that please take appropriate action in respect of the above credited/debited transactions by your assessee with dummy concerns for the time-barring year F. Y.2011-12, as per the provisions of the Income Tax Act, 1961. Further, it is advised to please verify if you found any other transactions besides these amounts with the above concerns, then also take the necessary action. 2.1. As per the information, the assessee has taken accommodation entries from the following dummy companies controlled by Hitesh Jain :- NAME PAN AMOUNT Company controlled by Hitesh Jain M/s. SNT Agro Industries Pvt. Ltd. AABCS8002L 1,13,87,670 M/s. Raghuveer SinghDavinder Kumar andM/s. GaganEnterprises. 4. On the basis of information and further verification, the case of assessee was reopened u/s. 147 after recording reasons and obtaining necessary approvals u/s. 151 of the Act, a notice u/s. 148 was issued on 28.03.2019 to the assessee company. The assessee furnished its return of income....
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....purchase take place. Accordingly, he came to the conclusion that Shri Hitesh Jain was engaged in the business of providing entries of bogus sale/purchase. 7. He further observed that several documents seized from the premises of Shri Hitesh Jain also revealed that bogus sale/purchases amounting to Rs. 1,13,87,670/- taken/made by the assessee company from the entry provider companies i.e. M/s. Raghuveer Singh Davinder Kumar and M/s. Gagan Enterprises, which were controlled by Shri Hitesh Jain, an entry operator. Accordingly, an amount of Rs. 1,13,87,670/- represented unexplained credit u/s. 68 of the Act in books of account of the assessee. Hence, he held that the amount of Rs. 1,13,87,270/- being bogus purchases of the assessee company during the year is treated as unexplained transaction and added the same to the income of the assessee u/s 68 of the Act. 8. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A) and filed detailed submissions. Ld. CIT (A) after going through the detailed submissions of the assessee sustained the additions. 9. Aggrieved with the above order, assessee is in appeal before us. 10. At the time of hearing, ld. AR ....
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.... the nexus between such material and the formation of the belief of the escapement of income by the Assessing Officer and that the reopening was done entirely on borrowed satisfaction. 2. In this context, in reply, the Id. Departmental Representative relied upon the following three cases which are clearly distinguishable on facts and do not in any way answer otherwise to the above listed objections pleaded on behalf of the Appellant:- (a) Amit Polyprints (P) Ltd. Vs. DClT [2018] 94 taxman.com393 (Guj) (b) Pro CIT Vs. Paramount Communication (P.) Ltd. [2017] 392 ITR 444 (Del) (c) Raymond Woollen Mills Ltd. Vs. Income Tax Officer [1999] 236 ITR 34 (SC). 3. As to the first decision of the Gujarat High Court at (a) of Amit Polyprints, the facts are clearly distinguishable, in as much as, in the said case the Surat Unit of the Income Tax Department had obtained both credible and definite information from the Investigation Unit of the Department at Kolkata about the falsity of the impugned transactions. Such fact stood duly confirmed by the entry providers themselves. Before the Investigation Unit at Kolkata the concerned entry operators had c....
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....st search statements made by Mr. Hitesh Jain that these companies are shell companies and DDIT-INV advised the AO to verify the case of the assessee, who was found to be taken benefit from the above said entry provider. On the above information and basis, the AO formed an opinion that the assessee had taken bogus accommodation entries, he also obtained the approval from the appropriate authorities to proceed with the reopening of the assessee's case. We observed that the AO had no material with him apart from the above information and statement recorded from Mr. Hitesh Jain. The assessee was never confronted with any material except forwarding the investigation report in the case of Hitesh Jain and the connected entities who were found to be providing accommodation entries. The AO had only information that the entities, Raghuveer Singh Davinder Kumar and Gagan Enterprises had credit entries in their bank accounts from the assessee during the year under consideration to the extent of Rs. 48,50,400/- and Rs. 65,37,270/- respectively. The AO reopened the assessment in order to verify the above transaction but the investigation wing advised the AO to verify apart from the above, if the....
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....r cash memos totaling Rs. 22.06 lacs, as tabulated above, which amount was included in the books of account. The assessee replied to the A.O's objections by stating that usually sales were made through demand draft/cheque and only in a case of certain new unknown party, the assessee was making sales either after collection of cheque or on receipt of cash. The reason for the above four cash memos amounting to Rs. 22.06 lacs was stated to be for as these parties approaching the assessee and coming directly to godown for collecting their goods and directly transporting them to their respective destinations. The assessee further submitted that all the goods were sold after charging due VAT, which amount was duly deposited in the government account within the specified time. The reason for such cash memos in the handwriting of a different person, was stated to be their issuance by the assessee's brother who was there at the time of delivery of goods at stockyard. Relevant extract or the assessee's cash book from 7.6.2005 to 4.10.2005 is available on pages 34 and 35 of the paper book, from which it is clear that the cash in hand of the assessee stood at Rs. 23.10 lacs at the clos....
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....ssession of the AO to establish the escapement of income except the information from the investigation wing and the statement of Mr. Hitesh Jain. Hence, the proceedings initiated by the AO is without any credible evidence or material at his possession. 17. Coming to the case law relied by Ld DR, we noticed that the case of Amit Polyprints, the facts are distinguishable to the facts in the present case, even though the information received from the investigation wing, still the AO had credible and definite material to initiate the proceedings. In the given case, AO never had any material except information as forwarded by the DDIT investigation. The next case of Paramount Communications (P) Ltd (supra), the information was received from the outside sources and High court had right sustained the findings, whereas in this case, the information was received from the internal sources. Next case, Raymond Woollen Mills (Supra), the AO had prima facie material on record to reopen the assessment indicating escapement of income. Whereas in the given case, the same was not established. Therefore, we observed that the assessee had already declared the sales out of the same purchases and the....