Income Tax Appellate Tribunal - Mumbai
Khangaram K. Dewasi, Mumbai vs Dcit, Cc-2(3), Mumbai on 5 August, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "SMC" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND
SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER)
ITA No. 2806/MUM/2018
Assessment Year: 2008-09
&
ITA No. 2807/MUM/2018
Assessment Year: 2009-10
&
ITA No. 2805/MUM/2018
Assessment Year: 2010-11
Mr. Khangaram K. Dewasi, Prop. The DCIT, Central Circle-2(3),
Of Shreenathji Metal & Alloys, Mumbai-21
Shop No. 5, Sultan Market, Opp. Vs.
ASH Krishna Bldg. Andheri
Ghatkoper Road, Sakinaka,
Andheri (East),
Mumbai-400072.
PAN No. AEEPD 8897 C
Appellant Respondent
Assessee by : Mr. Bharat Kumar, AR
Revenue by : Mr. Ajeya Kumar Ojha, DR
Date of Hearing : 28/06/2022
Date of pronouncement : 05/08/2022
ORDER
PER OM PRAKASH KANT, AM
These appeals by the assessee are arising, consequent to the order dated 26/07/2021 passed by the Tribunal in Miscellaneous ITA Nos. 2805 to 2807/M/2018 2 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys Application Nos. 42 to 44/Mum/2021 for assessment year 2008-09 2008 respectively, wherein the captioned appeals have been to 2010-11 respectively, recalled for the limited purpose of adjudication of grounds challenging validity of jurisdiction for assessment i.e. i.e ground No. 1 to 4 of respective appeals (wrongly mentioned at S. No. 8 to 11 in the grounds of appeal raised) raised).
2. The identical grounds grounds have been raised in all the three captioned appeals. The Therefore, for brevity, relevant grounds for AY 2008-09 are only reproduced as under:
1. On the facts and in the circumstances of the case, the learned l rejecti the contention of the appellant that cit (a) erred in rejecting fail d to assume a valid and legal jurisdiction to issue A.O. has failed notice under section 147 of the it. Act.
2. On the facts and the circumstances of the case whether the Ld. CIT (A) was correct in holding that return of income on which assessment was made was a valid return return.
3. 3. On facts and circumstances of the case Whether learned CIT(A) was correct in holding that assessment order was valid notice under section 143(3) of the act in spite of the fact that no noti was issued after filing of return.ITA Nos. 2805 to 2807/M/2018 3
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
4. On the facts and the circumstances of the case, whether the Learned CIT(A) was holding that assessment order passed by A.O. was a legal assessment order in spite of violation of natural justice.
5. On the facts and circumstances of the case whether the Learned CIT (A) in confirming co nvoking of section 69 of the I. the invoking I.T. ACT.
6. On the facts and circumstances of the case whether the Learned CIT (A) in confirming the addition of ₹11,60,990/ to th the total income of the appellant and ignoring all the documentary supporting produced by the appellant.
7. The appellant craves leave to add, delete, alter, or modify any of the aforesaid grounds of appeal at or before the hearing of the appeal.
3. As far as grounds rounds of the assessee challenging the addition on merit,, same have been allowed by the Tribunal by the order dated 20/12/2019 observing as under:
"2. Brief facts of the case are the assessee is engaged in the business of metal and alloys. Disallowance of bogus purchases was done on the basis of inquiry u/s. 131 of the Act and conduct by the DDIT (Inv) on the basis of information received from the sales tax department regarding the purchases made by the firm from the have issued false bills without actual list of suspicious dealers who h delivery of goods. In the assessment order the Assessing Officer observed that during enquiry, statement of proprietor of the firm was recorded on oath. In the statement reproduced in the ITA Nos. 2805 to 2807/M/2018 4 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys proprietor has duly mentioned that he assessment order the said proprietor was a small time trader. That all supporting documents available with it have been furnished to the Assessing Officer. It was submitted in the statement that he had purchased any material from the trader neither in cash nor obtained any bills from any obtained hawala dealers. It was also submitted that the assessee being a small trader it becomes cumbersome to maintain the purchase order, gate pass, lorry receipt, octroi receipt, delivery challan etc. during the enquiry itself that the It was further submitted that during Revenue authority has not find any cash transaction documents or any other illegal documents at the site of the assessee. Despite noting the aforesaid submissions of the assessee on enquiry u/s. 131 of the Act and statement in the course of survey u/s. 133A, the Assessing Officer proceeded to hold that the purchases to be bogus. In this regard it is noted that the Assessing Officer has not even bothered to issue notice to the assessee who have said to have There is no other corroborative material found given bogus bills. There in survey of bogus purchase. Thereafter on the theory of peak credit the disallowances were done. Consequent to learned CIT(A) sustaining the addition, assessee is in appeal before the ITAT.
3. Upon hearing both the counsel and perusing the records, we find that the assessee has submitted documentary details in the survey and enquiry itself. The assessee has categorically stated in the survey itself that he was not obtaining bogus hawals bills. The rated that no evidence of cash purchase or any other assessee reiterated incriminating documents have been found at the time of survey. Despite the above even without making any enquiry from the concerned party the Assessing Officer has treated purchase to be ITA Nos. 2805 to 2807/M/2018 5 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys disallowances on the theory of peak credit. In our bogus and made disallowances considered opinion it is settled law that statements obtained during the survey, are not conclusively proved for any addition. As a matter of fact, in this case even survey did not reveal anything he assessee. The Assessing Officer has not even bothered against the to issue notice to alleged bogus suppliers. All the purchases are through banking channel. Sales have not at all being doubted. In this view of the matter in our considered opinion addition is totall totally based upon surmises and conjecture, not sustainable in law. Accordingly, we set aside the orders of the authorities below and delete the additions.
4. The assessee has also challenged the validity of jurisdiction of the assessment. Since, we have already deleted the additions on merit, in our considered opinion consideration of validity of jurisdiction of the Assessing Officer is only of academic interest. Hence, we are not engaging the same.
5. In the result, all these appeals of the assessee stand partly partl allowed."
4. We have heard rd rival submission of the parties on the issue in dispute and perused the relevant material on record including the paperbook containing pages 1 to 131 filed by the Ld. counsel of assessee.
ITA Nos. 2805 to 2807/M/2018 6
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
5. In ground No. 1 ((wrongly mentioned as ground No. 8), the assessee has challenged validity of reassessment completed under section 147 of the Act.
Act The assessee has assailed iled the validity on two issues.. The first issue is that there was no information from credible source and no enquiry was carried out by the Assessing Officer before recording reasons to believe and therefore there was no application of the mind by the Assessing Officer. In the second issue, i the Ld. counsel has submitted that reasons were recorded subsequent to the issue of notice under section 148 of the Act.
6. While making argument in support of the first issue, the t Ld. counsel referred to "reasons to believe" recorded by the Assessing Officer,, which are available on page 25 to 26 of the paperbook. For ready reference, said reason to believe that income escaped Assessment, are reproduced as under:
M/s Shreenathji Metal & Alloys (Prop. Shri Khangaram Dewasi) "M/s A.Y.-2009-10 Reasons for reopening of assessment u/s 147 of the IT Act, 1961 ITA Nos. 2805 to 2807/M/2018 7 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys The case of the assessee has been centralized to this circle vide order u/s. 127 of the Act dated 26.04.2013 issued by the CIT CIT-21, Mumbai. Thereafter, the assessee submitted the audit report in this chargee on 12/03/2014. Assessee is engaged in the business of trading in Iron and Steel.
2. A enquiry report has been received from the office of Unit V(1) Mumbai, in respect of the assessee that it DGIT(Inv), Unit-V(1) has been engaged in bogus purchase activity i.e. taking accommodation entries from bogus companies/ concerns. The said assessee is a beneficiary of this accomodation transaction as reported by DGIT(Inv) and has obtained accommodation bills for various F.Ys. as under:
Sr. No. Name of the concern F.Y. Amount
1. Aryen Sales Corporation 2007-08 10,25,213/-
2. Suryadev Metal India 2007-08 13,03,536/-
3. Om Corporation 2007-08 1,54,000/-
Total 24,82,749/-
1. River Gold Elevators 2008-09 3,02,162/-
2. Paras Steel India 2008-09 2,34,300/-
3. Anand Deep Metal 2008-09 21,25,432/-
4. R.J. Metal Industries & M/s Rajlaxmi 2008-09 9,12,750/-
Corporation & Reliable Metal Works
5. Aaren Sales Corporation 2008-09 4,51,140/-
6. Manglik Metal (India) 2008-09 50,002/-
7. Suryadev Metal (India) 2008-09 97,500/-
8. N B Enterprises 2008-09 10,47,438/-
9. Naman Enterprises 2008-09 9,44,213/-
10. Om Corporation 2008-09 3,25,024/-
11. Manav Impex 2008-09 10,17,193/-
12. Pradeep Metal Syndicate 2008-09 2,49,670/-
13. Navratan Impex 2008-09 5,46,104/-
14. Ramani Metal Corporation 2008-09 9,17,464/-
15. Rishab Metal (India) 2008-09 85,000/-
16. Shiv Sagar Steel (India) 2008-09 8,54,409/-
17. Antriksh Metals 2008-09 68,690/-
18. Kavita Sales & Jyoti Enterprises 2008-09 5,03,634/-
ITA Nos. 2805 to 2807/M/2018 8
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys Total 1,07,32,125/-
1. Anand Deep Metal 2009-10 10,97,899/-
2. Valianat Steel Engineering Co. 2009-10 11,64,189/-
3. Ramani Metal Corporation 2009-10 31,47,840/-
4. Aryen Sales Corporation 2009-10 31,47,840/-
5. Krishana Steel Industries 2009-10 2,94,371/-
Total 57,57,264/-
Shiv Sagar Steel (India) 2010-11 3,69,895/-
Asian Metal Industries 2010-11 5,86,137/-
Rainbow Steel Impex 2010-11 7,60,419/-
Deep Metal & Tube 2010-11 7,79,785/-
Prime Steel Impex 2010-11 6,89,648/-
Total 31,85,884/-
Shiv Sagar Steel (India) 2011-12 2,14,860/-
Asian Metal Industries 2011-12 6,52,692/-
Total 8,67,552/-
As per information tabulated above, the above named assessee
10. In the enquiry report, it is stated has taken bogus A.Y.2009-10.
that the assessee had failed to produce purchase bill of Rs.
F.Y.2008 09 relevant 1,07,32,125/- from various parties during F.Y.2008-09 to the purchase party as well as broker and delivery challan for the purchase made from the above parties, it is emerged that the purchase are not genuine. The actual purchase must have undisclosed parties in the market in cash been done from the undisclosed and the total amount in each year represents the undisclosed cash/ income in the hands of the assessee.
4. In view of this new piece of information on bogus purchase of Rs.1,07,32,125/ for F.Y.2008-09 F.Y.2008 relevant to A.Y.2009--10, it could be easily deduced that income of Rs. 1,07,32,125/ 1,07,32,125/-
assessable to tax has escaped assessment. ITA Nos. 2805 to 2807/M/2018 9
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
5. Therefore, I have reason to believe that in the case of assesee, 1,07,32,125/ has escaped assessment within the income of Rs. 1,07,32,125/-
meaning of section section u/s147 of the IT Act, 1961. The case is therefore required to be reopened u/s. 147 and notice u/s148 of the IT Act may be issued accordingly."
accordingly.
7. The Ld. counsel of the assessee submitted that presumably the source of information for the Assessing Officer is a list of suspicious dealer published on the website of Sales-tax tax Department of Government of Maharashtra. According to him the Assessing Officer has formed belief merely on the basis of the list displayed by the Sales-tax Authorities on their website and the Assessing Officer has not applied his mind on the said information and did not gather any other information or evidence to support the formation of his belief. According to the Ld. counsel of the assessee, the Assessing Officer did not make any further enquiry for recording reasons to believe that income escaped assessment. The Ld. counsel relied on the decision of the Hon'ble Delhi High Court in the case of Signature Hotels Private Limited vs. vs ITO 338 ITR 51 (Delhi Delhi). According to ITA Nos. 2805 to 2807/M/2018 10 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys the Ld. counsel the Hon'ble Delhi High Court in the said case quashed the reassessment proceeding in view of vague information received ed from the Director of Income-tax (Investigation Investigation) and reopening of the assessment is in mechanical manner. But we find that in the case of Signature Hotels Private Limited (supra), one of the main reason for quashing the reassessment by the Hon'ble High Court, is not referring the relevant material in the reasons recorded. The only material which was referred by the Assessing Officer was an annexure. The relevant finding of the Hon'ble Delhi High Court is reproduced as under:
17. In the counter affidavit it is stated that M/s Swetu Stone Pvt. Ltd.
"17.
had applied for allotment of shares worth Rs.5 lacs and the same were allotted by the petitioner. It is further stated that statements of Mahesh petitioner.
Garg and Shubhash Gupta were recorded by the Director of Income-Tax Income (Investigation) and on the basis of the statements they have come to the conclusion that the said persons were entry operators. Copy Co of the statements of Mahesh Garg and Shubhash Gupta have not been placed on record by the respondent. The petitioner, has, however, enclosed copy of statements of Mahesh Garg and Shubhash Gupta recorded on different dates. The said persons W.P. (C) NO. 8067/2010 Page 14 have ITA Nos. 2805 to 2807/M/2018 11 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys not specifically named the petitioner though other parties have been named and details have been given and it is stated that they were provided accommodation entries. However, it is stated that the entries were made by giving cheque/DD/PO cheque/DD/PO after receiving cash and sometimes expenses entries were provided. The reasons recorded by the Assessing Officer do not make reference to any statement of Mahesh Garg or Shubhash Gupta. This may not also be necessary, if the statements were on record and it is claimed and prima facie established that they were examined by the Assessing Officer before or at the time of recording reasons. On the other hand, in the present case, information as enclosed as Annexure, has been referred. This is the only mat material erial relied upon by Officer. The said Annexure has been quoted above. In this the Assessing Officer.
connection, we may notice that M/s Swetu Stone Pvt. Ltd. is an incorporated company and the petitioner has pleaded and stated that the said company has a paid-up paid apital of Rs.90 lacs. The company was capital incorporated on 4th January, 1989 and was also allotted a permanent account number in September, 2001. To this extent, there is no dispute. In these circumstances, we feel the judgments of the Delhi High Court in Commissioner ssioner of Income W.P. (C) NO. 8067/2010 Page 15 Tax versus SFIL Stock Broking Limited, [2010] 325 ITR 285 (Delhi) and Sarthak Securities Company Private Limited versus Income Tax Officer, 2010 (329) ITR 110 (Delhi), in which CIT versus Lovely Exports (P) Limited, (2009) 216 CTR 195 (SC) has been applied and followed, are applicable.
We may notice here that the respondent in their counter affidavit have stated that Swetu Stone Pvt. Ltd. is unidentifiable and, therefore, the aforesaid decisions should not be applied and the ratio of the decision dated 7th January, 2011 in Writ Petition (Civil) No. 7517/2010, AGR Investment Limited versus Additional Commissioner of Income Tax and ITA Nos. 2805 to 2807/M/2018 12 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys Another should be applied. In the said decision, decisions in the case of Sarthak Securities Company Private Limited (supra) and SFIL Stock Broking Limited (supra) was distinguished by giving the following reasons:
"22. ....In SFIL Stock Broking Ltd. (supra), the bench has interfered as it was not discernible whether the Assessing Officer had applied his mind to the information and independently arrived at a belief on the basis of material which he had before him that the income had escaped assessment. In our considered opinion, the decision rendered therein is factual matrix in the case at hand. In the case of not applicable to the factual Sarthak Securities Co. Pvt. Ltd. (supra), the Division Bench had noted that certain companies W.P. (C) NO. 8067/2010 Page 16 were used as conduits but the Assessee had, at the stage of original assessment, rnished the names of the companies with which it had entered into furnished transaction and the Assessing Officer was made aware of the situation and further the reason recorded does not indicate application of mind.
nott disputed and the That apart, the existence of the companies was no companies had bank accounts and payments were made to the Assessee company through the banking channel. Regard being had to the aforesaid fact situation, this Court had interfered.
Thus, the said decision is also distinguishable on the factual score."
18. The facts indicated above do not show that M/s Swetu Stone Pvt. Ltd.
existing and a fictitious entity/person. Decision in AGR is a non-existing Investment Limited (supra), therefore, does not help the case of the respondent."
ITA Nos. 2805 to 2807/M/2018 13
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
8. The Ld. counsel also referred to the decision of the Hon'ble Delhi High Court in the case of PCIT Vs G & G Pharma India Ltd in ITA No. 545/2015. We find that in the said case, the Revenue failed Court, the material relied upon to producee before the Hon'ble High Court, by the Assessing essing Officer for or reopening of the assessment. The relevant finding of the Hon'ble High Court is reproduced as under:
When this appeal was first listed on 7th August 2015, the Court "When enquired from Mr. Kamal Sawhney, learned Senior Standing counsel for the Revenue, whether he could produce the materials on the basis of which the assessment was reopened. He sought and was granted three weeks time for this purpose. The matter was next listed on 10th September 2015 when on account of the fact that the date had been wrongly noted by the Ld. Standing counsel,, the case was adjourned for today. It was made clear on 10th September 2015 that the order dated 7th August 2015 must be complied with positively before the next date of hearing.
called out, Mr. Sawhney produced before Today when the case was called th September 2010 the Court the very same letter of the AO dated 15th which has been reproduced in its entirely in the impugned order of the ITAT. He submitted that the AO was himself present in the Court and further efforts would be made to locate the materials on the basis of which the AO formed his opinion regarding reopening of the ITA Nos. 2805 to 2807/M/2018 14 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys assessment. The Court was not prepared to grant 10.1 Further, time for this purpose since it was not clear that the materials were, in fact, available vailable with the Department."
Department.
8.1 Whereas in the instant case before us there is no such doubts have been raised by the assessee on the existence of the material relied upon i.e. enquiry report of the DGIT Investigation Investigation.
9. The Ld. counsel has also referred to the other decisions of Hon'ble Delhi High Court and submitted that reasons and information referred in the case of the assessee is being extremely vague and scanty and therefore reopening is invalid in law.
However, in the instant case before us the claim of information being scanty and vague has as not been substantiated by the Ld. counsel of assessee.
9.1 The Ld. counsel of the assessee has presumed the source of information as website of Government of Maharashtra, whereas the Assessing Officer has rreopened eopened the assessment on the basis of ITA Nos. 2805 to 2807/M/2018 15 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys enquiry report forwarded by the Investigation Wing of the Income- tax Department,, which is based on survey under section 133A of the Act carried out by the investigation wing and on the basis of the said enquiry report of the Investigation Wing, the Assessing Officer has reopened the assessment. The report of the Investigation Wing is based on verification carried out after due inquiries inquiries, therefore, it is one of the credible source, on which the Assessing Officer has relied upon for reopening of the assessment assessment. In our opinion said report from Investigation Wing is one of the relevant information on which a reasonable person can make requisite belief that income escaped assessment ass held by the Hon'ble Sup Supreme reme Court in the case ACIT v. Rajesh Jhaveri Stock Broker P. Ltd. [2007] (7 SCR 765). Therefore, we reject the contention of the Ld. counsel that the source of information was only a list of suspicious dealers available on the website of the Sales-tax Department of Maharashtra Government.
ITA Nos. 2805 to 2807/M/2018 16
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
10. As far as the contention of the Ld. counsel that Assessing Officer did not carry out further inquiries before forming reasons to believe is concerned, we are of the opinion opi that during uring the relevant ing Officer was not empowered for carrying out an period the Assessing investigation either from the assessee or from outside before reopening the assessment, therefore the Assessing Officer cannot be expected to verify those purchases from the assessee or the relevant suppliers. Now by way of Finance Act 2021, w.ee.f. 01/04/2021, relevant section 148A has been introduced, under which the Assessing Officer shall conduct an enquiry if required for issuing notice under section 148 of the Act.. Relevant provision under section 148A is reproduced as under:
"148A. The Assessing Officer shall, before issuing any notice under section 148, -
(a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;ITA Nos. 2805 to 2807/M/2018 17
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
(b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice basis of information under section 148 should not be issued on the basis which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);
(c) consider the reply of assessee furnished, if any, in response respons to the show-cause cause notice referred to in clause (b);
(d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval approva of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause
(b) expires:
Provided that the provisions of this section shall not apply in a case where, -
(a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or ITA Nos. 2805 to 2807/M/2018 18 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
(b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or
(c) the Assessing Officer is satisfied, with the prior approval of the missioner or Commissioner that any books of account or Principal Commissioner documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information conta contained therein, relate to, the assessee.
assessee."
10.1 The relevant provision of section 148A was not in operation during the assessment year in consideration before us, and therefore we reject the contention of the Ld. counsel of the assessee that no enquiry was carried out by the Assessing Officer before forming requisite belief that income escaped assessment.
11. The Ld. CIT(A) has rejected the ground of the assessee challenging the validity of the jurisdiction observing as under: ITA Nos. 2805 to 2807/M/2018 19
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
8. Ground no.2: In this ground assessee has challenged the jurisdiction "8.
of AO to issue notice u/s 148 and assume jurisdiction. To adjudicate this case, it would be relevant to bring out all the facts of the case.
1. Original return of income was filed fi on 11-08-2009 2009 and it was processed u/s 143(1)(a) of the Act.
2. No scrutiny of original return u/s 143(3) was done.
3. AO got information from Director General IT (Investigation) that assessee had got accommodation bills from various parties for various vario financial years including F.Y. 2007 2007-08, 2008-09, 2009-10 2010 10 and 2010-11 and 2011-12.
The enquiry report was received by DGIT(Inv), Unit V(1) in respect of assessee that it has been engaged in bogus purchase activity, i.e. taking accommodation entries from bogus companies/concerns. The assessee was found to be beneficiary of accommodation transactions as reported by DGIT (Inv). There was a detailed list given from which companies bogus purchases have been made. It was mentioned that assessee had taken bogus purchase bill of Rs.24,82,749/ Rs.24,82,749/- for various parties during F.Y. 2007-08 2007 09. In the enquiry relevant to A.Y. 2008-09.
report, it was stated that the assessee had failed to produce the purchase party as well as broker and delivery challan for the purchase rom the above parties, it is emerged that the purchase are not made from genuine.
4. The information from office of DGIT was based on an elaborate exercise and field inquiries, collection of information and recording of scores of statements of the parties involved and in collaboration with ITA Nos. 2805 to 2807/M/2018 20 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys exercise was laborious and other government departments. The entire exercise indepth investigation and not a casual and superficial one.
5. Based on such elaborate and extensive investigating report, AO had recorded reasons to believe that since assessee had failed to produce the purchase party as well as brokerr and delivery challan for the purchase made from the above parties, it is emerged that the purchase are not genuine. The actual purchase must have been done from the undisclosed parties in the market in cash and the total amount in each year which represents the undisclosed cash/ income in the hands of the represents assessee. Hence, satisfaction regarding income escaped was recorded on reasonable belief and notices u/s 148 were issued by AO. 8.1 There were new facts before the AO: Reasons to believe:
(i) The requirement require facie reason to of Sec. 147 is only to have prima-facie believe that income has escaped assessment. It has been held in plethora of case laws that at the time of reopening, A.O. is not required to establish the escapement of income. The existence of reason is enough. In this regard, reliance is placed on following case laws of the Apex Court:
a. Kalyanji Mavji & Co. vs CIT (SC) 102 ITR 287 b. ITO vs Lakhmani Mewal Das (SC) 103 ITR 437 c. Phool Chand Bajrang Lal and Another vs ITO & Anr. (SC)203 ITR 456 d. Sri Krishna (P) Ltd. ys CIT (SC)221 ITR 538 e. Central Provinces Manganese Ore Co. Ltd. vs ITO (SC) 191 ITR 662 ITA Nos. 2805 to 2807/M/2018 21 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
(ii) A close reading of reasons recorded by A.O. shows that A.O. had perused and understood the facts discovered in the extensive inquiries conducted by Investigation Investigation Wing and failure of assessee to produce the parties, brokers or any delivery challans of goods, etc.
(iii) Not a case of change of opinion: It is not a case of change of as no opinion was formed in 143(1)(a) processing. There was no 143(3) earlier in these cases. New tangible facts, in the form of elaborate inquiries by Investigation-Wing-had Investigation come before A.O.
(iv) It is not intended by law that each officer should be working in a silo, The sharing and flow of information from one department to her or from one officer to another is very much within the legal another framework of an integrated government set up. Thus, to use the re open the assessment on its information gathered by Inv. Wing and re-open basis is very much valid.
(v) Once a specific investigation has been done by a particular Wing of government, the same information can be used by other officers for initiating necessary legal actions in their jurisdiction.
8.2 Reopening on information from Investigation Wing as valid It has been held in a large number of cases that AO is fully authorized as per law to use the information received from Investigation Wing to reopen the assessments.
1. ITO vs Purshottam Das Bangur 90 Taxmann.com 541 (SC) - wherein Hon'ble SC that information contained in letter it was propounded by Hon'ble of Directorate of investigation could be said to be definite information and ITO could act upon for taking action u/s 147(b) and ITO could ITA Nos. 2805 to 2807/M/2018 22 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys have formed opinion that there was reason to believe that income had escaped.
2. Nickunj Eximp Enterprise vs ACIT 48 Taxmann.com 20 (Bombay HC)
-Since Since genuineness of purchase bills was not subject matter of original assessment u/s 143(3) and these bills being bogus was discovered subsequently to 143(3) during survey. (Present case in appeal is on still better footings as only 143(1)(a) had been done in this case).
3. Paramount Communication (P) Ltd vs PCIT 2017 TIOL-253-SC-IT 2017-TIOL (SC) - wherein it was held, (SLP of assessee dismissed) that information regarding bogus purchase by a assessee ssessee received by DRI from CCE which was passed on to revenue authorities was 'tangible material outside record' to initiate valid reassessment proceedings.
2017 83 Taxmann.com 82(Guj)
4. Aaspas Multimedia Ltd. vs DCIT 2017-83 assessment was made on basis of inf ormation received from Principal information DIT (Inv) that assessee was beneficiary of accommodation entries by way of share application provided by a third party, same was justified.
5. Indu Lata Rangwala vs DCIT 80 Taxmann.com 102 (Delhi)[2016] 384 ITR 337 Del High Court- where initial return of income is processed u/s 143(1), it is not necessary in such a case for AO to come across some fresh tangible material to form 'reasons to believe' that income has escaped assessment."
(Entry Receiver) 85 Taxmann.com
6. Pushpak Bullion (P) Ltd vs DCIT (Entry 84 Gujarat High Court - where Investigation Wing of department had during course of investigation in case of a third party found that he was indulged in providing accommodation entries and bogus bills and ITA Nos. 2805 to 2807/M/2018 23 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys sizeable purchases from him, reopening notice assessee had made sizeable against assessee was justified.
8.4 Cases relied upon by assessee distinguished: The case laws relied upon by assessee are distinguishable as the facts of assessee's case are different, in so far as there was specificc specifi information-
information partywise/amountwise which was available with AO. Also, assessee had failed to produce the parties and he did not have any contemporary evidences of purchase like delivery challans, octroi and stock register, etc. Thus, on the basis of such detailed and specific information including statements of persons supplying bogus bills without actual delivery of goods - all distinguish the case laws quoted by assessee in its defence.
In view of difference in facts and AO's case being on much stronger footings and various specific case laws quoted above in the order, the case laws relied upon rejected and do not come to rescue of assessee. 8.5 Thus, there is no force in the arguments of assessee, ground no.2 is, therefore, dismissed."
dismissed.
11.1 In view of our discussion above, we do not find any infirmities in the finding of the Ld. CIT(A) on the issue in dispute.
12. As far as second issue of whether the reasons were recorded prior to issue a notice under section 148 of the Act,, the Ld. counsel of the assessee drawn our attention to notice issued under section ITA Nos. 2805 to 2807/M/2018 24 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys 148 of the Act,, which is available on page 23 of the paperbook. For ready reference, said notices reproduced as under: ITA Nos. 2805 to 2807/M/2018 25
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
13. The Ld. counsel of the assessee referred to the reasons recorded, which we have reproduced above. According to the Ld. counsel reasons were recorded after issue of the notice notic in view of Firstly there is no date mentioned, three observations. Firstly, mentioned on the reasons recorded. Secondly, Secondly he referred to the line 3 of the reasons re recorded which reads as "thereafter, "thereafter, the assessee submitted audit report in this charge on 12/03/2014". According to the Ld. counsel when there is a mention of the audit report submitted by the assessee on 12/03/2014, which according to him was submitted in "Tapal", therefore he is of the view that reasons have been recorded only after 12/03/2014 whereas notice has been issued on 12/03/2014. Thirdly, the Ld. counsel submitted that he took inspection of the assessment record and found a note sheet dated 10/03/2014, which says that reasons were recorded on 10/03/2014.ITA Nos. 2805 to 2807/M/2018 26
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys conclusion have been drawn by the
14. In our opinion, above conclusions assessee merely on basis of presumptions and there is no evidence on record, which could support his view that reasons were not recorded on 12/03/2014. Firstly, not mentioning date on the reasons recorded in itself is not sufficient to establish that same sam was recorded after 12/03/2014.
12/03/2014 Secondly, itt is very much possible that after going through the audit report on date of its filing filing, the Assessing Officer gone through the said report and recorded the reasons to believe. Thirdly, no evidence duly certified from the authorities are produced before us which could establish that reasons were recorded on 10/03/2014. Merely on the presumption of the assessee, it cannot be held that reasons were recorded after 12/03/2014. Accordingly we reject the contention of the Ld. counsel of the assessee. The ground No. 1 of the appeal is accordingly dismissed.
ITA Nos. 2805 to 2807/M/2018 27
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
15. In the N 2 to 4 (wrongly mentioned as Ground No he ground No. No. 9 to 11), the assessee has challenged validity of the assessment order passed by the Assessing Officer.
Officer
16. In ground No. 2 ((wrongly y mentioned as ground No. nine), nine) the assessee has raised the issue as to whether the return of income filed on 12/08/2014 can be considered as a valid return of income and an assessment made on the basis of sa said d return of income can be considered as valid and legal assessment assessment.
17. In ground No. 3 (wrongly (wrongly mentioned as ground No. 10), the assessee has submitted that no notice under section 143(2) of the Act was issued after filing of the return of income and therefore assessment completed is void ab initio.
18. The Ld. CIT(A) has rejected the contention of the assessee that no notice under nder section 143(2) of the Act was issued after filing a return of income by the assessee. The Ld. CIT(A) has observed that ITA Nos. 2805 to 2807/M/2018 28 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys the Assessing Officer issued notice under section 148 of the Act on 12/03/2014, asking the assessee to file return of income within 10 days. The assessee chose not to file return of income within the prescribed time period. The assessee alternatively did not ask for extension of the time for filing return of income also and therefore in absence of the return of income filed by the assessee asse the Ld. Assessing Officer issued notice under section 142(1) of the Act on 15/07/2014 and asked ask the assessee information for completion of the assessment. In view of the Ld. CIT(A) the Assessing Officer has jurisdiction to make assessment as per section 142(1) of the Act as the assessee failed to file return of income. Subsequent to notice under section 142(1), the assessee vide letter dated 11/08/2014 intimated the Assessing Officer that the original return filed under section 139(1) of the Act (On 11/08/2009) might be treated as return in response to notice under section 148. The Ld. CIT(A) further observed that notice under section 143(2) of the Act was ITA Nos. 2805 to 2807/M/2018 29 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys actually served on the assessee on 12/08/2014 i.e. after af the letter of the assessee regarding return of income was received and therefore 143(2) notice was served upon the assessee subsequent to his filing return of income vide letter dated 11/08/2014. The Ld. CIT(A) has reproduced both the letter of the assessee ass dated 11/08/2014 and notice under section 143(2) served on the assessee on 12/08/2014. The Ld. CIT(A) also distinguish distinguished the cases relied upon by the assessee observing as under:
9.1 Cases relied upon by assessee distinguished The case laws relied "9.1 pon by assessee are studied and it is seen that the facts being different upon in those cases than facts of assessee's case, the case laws do not support the contention of assessee. In fact, in case of Delhi High Court Shiv Shankar Traders (P) Ltd (IT decision in the case of Pr.CIT vs Shri Shiv Appeal no. 519 of 2015) relied upon by assessee, actually supports the stand of AO as the deficiency of not serving any notice in that case is fully met with in assessee's case as has been brought out above in the e, AO had actually served notice to assessee on 12/08/2014 para 9. Since, after return of income was purportedly filed vide letter dated 11/08/2014 submitted on 12/08/2014, the requirement of law was fully met with. Hence, case laws quoted by assessee do not support this cause.ITA Nos. 2805 to 2807/M/2018 30
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys Thus, on totality of facts, jurisdiction of AO is very much valid in the light of facts and conduct of assessee. Hence, ground no. 3 of appeal is dismissed."
19. Before us,, the Ld. counsel of the assessee submitted that section 148 of the Act requires that assessee should furnish his return of income within the time period p prescribed rescribed in the said notice and any return of income filed after expiry of the prescribed period should be treated as invalid return. The assessee submitted that in the notice (which we have reproduced ice under section 148 (which above), the Assessing Officer had specified period of 10 days for filing a return of income. Said notice was issued on 12/03/2014 whereas the assessee has filed return of income on 12/08/2014 and therefore thee return has been filed much beyond the prescribed period and thus according to the assessee it was a belated return and the Assessing Officer could not have taken cognizance of the said return. According to him the said return was not a valid return filed and therefore Assessing Officer cannot make assessment ITA Nos. 2805 to 2807/M/2018 31 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys thereon under section 143(3) of the Act.. He submitted that in such a case, the Assessing Officer could have made the assessment under section 144 of the Act.
Act
20. On the issue of requirement of notice under section 143(2) to be issued and served subsequent to filing ing of return of income, the Ld. counsel relied on the decision of the Mumbai Tribunal 'E' Bench in the case of Sudhir Menon Vs ACIT Central Circle (Appeal No. 1744 of 2016 dated 3/10/2018).
3/10/2018) Further, the Ld. counsel relied on the decision of the Hon'ble Supreme Court in the case of Hotel Blue Moon 132 ITR 362 (SC) to support that any assessment framed without issuing notice under section 143(2) of the Act is invalid.
21. The Ld. DR on the other hand submitted that it is the assessee who defaulted in filing return of income in response to notice under section 148, whereas as the Assessing Officer has accepted the delayed ITA Nos. 2805 to 2807/M/2018 32 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys filing of the return of income by the assessee assessee on 11/08/2014 and served notice under section 143(2) on 12/08/2014, which is subsequent to the filing of return of income by the assessee and therefore there is no error in the finding of the Ld. CIT(A) on the issue in dispute.
22. We have heard ri rival val submission of the parties on the issue in dispute and perused the relevant material on record. We find that the assessee is claiming that return of income filed by the assessee on 11/08/2014 is not valid because it was filed too late after the period of 10 days ass specified in notice dated 12/03/2014 issued under section 148 of the Act,, and therefore assessment completed under section 143(3) of the Act is invalid. In our opinion, the understanding of the assessee is based on the presumption that return filed by the assessee has been held to be invalid by the Assessing Officer.. But from the record, we do not find any such action taken by the Assessing Officer.. On the other hand, the ITA Nos. 2805 to 2807/M/2018 33 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys Assessing Officer has taken cognizance of the return of income filed by the assessee on 11/08/2014 though with a delay and thereafter issued notice under section 143(2) of the Act on 12/08/2014 and therefore in our opinion the Assessing Officer has validly completed the assessment under section 143(3) of the Act.. We do not find any error in the order of the Ld. CIT(A) on this is issue sue in dispute. The ground No. 2,, of the appeal is accordingly dismissed.
23. As regards to ground No. 3 of the appeal, it is evident from the facts brought on record, we find that notice under section 143(2) of the Act has been served upon the assessee on 12/08/2014, which is after the filing of return of income by the assessee. The assessee has been put to notice only after the filing of the return of income and therefore, the contention of the assessee that the notice bear the date of 14/07/2014 is of no relevance, which may be due to any typographical error covered under section 292B of the Act. In view of the our finding of the fact that notice under section 143(2) has ITA Nos. 2805 to 2807/M/2018 34 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys been issued after filing return of income and therefore the decisions relied upon by the assessee are of no assistance because in those decisions either no notice under section 143(2) has h bebeen issued and served or same has been issued or served prior to filing of return of income and therefore facts of those cases are distinguishable.
24. Further, we find that in this case on 11/08/2014, 11/08/2014 the assessee has only submitted a letter that original original return of income filed by the assessee might be treated as return of income filed in response to notice under section 148 of the Act.. The said original return of income was already available with the Assessing Officer, Officer and therefore it does not take much time in going through the said return and thereafter issue notice under section 143(2) of the Act. Therefore, the contention of the assessee that even notice issued under section 143(2) of the Act on the day of filing of return of income is also invalid invalidate ate the assessment, is rejected. In view of the above discussion, the ground No. 3 of the appeal is also dismissed. ITA Nos. 2805 to 2807/M/2018 35
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys (wrongly mentioned as ground No. 11), the
25. In ground No. 4 (wrongly assessee is claiming that documents in relation to bogus purchases relation were impounded by the investigation wing of the Income-tax Department & not returned back and therefore, the assessment has been completed in violation of the principle of natural justice and hence it should be held invalid.
26. The Ld. DR on the other hand submitted that the assessee has produced copy of a single letter dated 08/09/2014 filed before the Assessing Officer.. According to him photo copies of books of accounts and vouchers are normally impounded during the course of thee survey action and if original books of accounts and vouchers are impounded than photo copies are immediately provided to the assessee even during the ccourse proceedings He ourse of the survey proceedings.
submitted that assessee has not filed any letter to show that he raised ised this issue with the Investigation Wing of the Department. He ITA Nos. 2805 to 2807/M/2018 36 Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys further submitted that this issue of violation of the principle of the natural justice was not raised before the Ld. CIT(A) also.
27. We have heard rival submission of the parties and perused perus the relevant material on record. From the paperbook filed by the assessee, we find that assessee has filed copy of ledger account in respect of the all alleged bogus purchase parties, copy of stock registers, bank statements etc. et and therefore it is evident that same are available with the assessee.
assessee In the paperbook, the assessee has also certified that same were produced before the lower authorities therefore contention of the assessee that same were not available with him is ill founded. Further Further, wee find that on the issue of the merit of the addition is concerned, the Tribunal in order dated 20.12.2019 has already allowed relief to the assessee and deleted the addition and therefore in our opinion this issue is rendered only an academic cademic and infructuous.
infructuous Accordingly, we are not adjudicating upon.
ITA Nos. 2805 to 2807/M/2018 37
Mr. Khangaram K. Dewasi, Prop. Of Shreenathji Metal & Alloys
28. The ground No. 1 to 4 (wrongly mentioned as ground No. 8 to
11) of the appeal of assessee related to challenging assumption of jurisdiction under section 147 and validity of the assessment assess are dismissed.
29. In the result, the appeal appeals to the extent of the ground recalled, are dismissed.
Order pronounced ounced in the Court on 05/08/2022.
Sd/- Sd/--
(SANDEEP
SANDEEP SINGH KARHAIL)
KARHAIL (OM
OM PRAKASH KANT)
KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 05/08/2022
Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A)-
4. CIT
5. DR, ITAT, Mumbai
6. Guard file.
BY ORDER,
//True Copy//
Sr. Private Secretary)
(Sr. Secretary
ITAT, Mumbai