DATA PROCESSING FORMS PVT. LTD.,AHMEDABAD V. THE DY. CIT., CIRCLE-1(1)(2), AHMEDABAD

MA 103/AHD/2023

AI Insights

The case involves Data Processing Forms Pvt. Ltd. (the appellant) contesting various aspects of a reassessment order issued by the Deputy Commissioner of Income Tax, Ahmedabad, for the assessment year 2012-13. The appellant filed a Miscellaneous Application claiming that certain grounds were inadvertently left unaddressed in the Tribunal's earlier order and that there were errors in the application of law and facts. The Tribunal, however, found that the application did not point out specific deficiencies or inaccuracies in the original order but rather sought a review of the decision, which is not permissible under the law.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 35029 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-10-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-08-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 04-12-2023
• Other Referred Cases: GKN Driveshaft (India) Ltd. v. ITO, Adinath Industries, Coronation Agro Industries Ltd. v. DCIT, PCIT v. Krishna Devi, Pratik Suryakant Shah & Others v. CIT v. Chartered Speed (P) Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALPESH PARMAR
• Keywords: Set aside; Reassessment proceedings; Bogus purchase; Gross profit estimation; Accommodation entries; Reason to believe; Bogus
• Section: 147; 143(3)

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Shri Siddhartha Nautiyal, Judicial Member And Shri Narendra Prasad Sinha , Accountant Member Data Processing Forms Pvt. Ltd., Data House, Vejalpur Road, Vejalpur, Ahmedabad PAN: AAACD5480E (Appellant) Vs Dy. CIT, Circle-1(1)(2) Ahmedabad (Respondent) Assessee by: Shri Rajesh C. Shah, A.R. Revenue by: Shri Alpesh Parmar, Sr. D.R. Date of hearing : 02-08-2024 Date of pronouncement : 28-10-2024 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This Miscellaneous Application is arising out of the ITA No. 2812/Ahd/2016 for A.Y. 2012-13 order dated 05-06-2023. 2. The brief facts of the case of the present Miscellaneous Application are that the appeal in this matter was earlier heard by the 'C' Bench of the Tribunal, and after several sessions, including one for clarifications, the matter was finally heard on March 6, 2023, and disposed of vide order dated M.A. No. 103/Ahd/2023 (In ITA No. 2812/Ahd/2016) Assessment Year 2012-13 M.A. No. 103/Ahd/2023 A.Y. 2012-13 Page No. Data Processing Forms Pvt. Ltd. vs. Dy. CIT 2 June 5, 2023. The Grounds of Appeal raised by the assessee, which were also later amended to include revised grounds filed on March 3, 2023, included several issues. These covered (1) the validity of reassessment under Section 147 of the Income Tax Act, (2) the re-assessment order issued without addressing objections filed on July 31, 2014, (3) an addition of Rs. 2,41,18,024 due to a lower Gross Profit (GP) ratio than in the prior year, (4) disallowance of Rs. 85,004 for late payment of employee contributions to the Provident Fund (PF) and Employee State Insurance (ESI), (5) interest of Rs. 25,15,510 levied under Section 234B, despite an earlier refund, and (6) an erroneous interest confirmation of Rs. 52,921 under Section 234D instead of Rs. 46,332 due to delayed refund issuance. 3. The assessee has filed the present Miscellaneous Application stating that the order passed by ITAT is erroneous on several counts. The assessee vide the present Miscellaneous Application submitted that while a detailed paper book with all supporting documents was submitted, Grounds Nos. 1A, 3, 4, and 5 were inadvertently left unaddressed in the Tribunal’s order, constituting an apparent mistake requiring rectification. During hearings, the Authorized Representative (A.R.) emphasized that objections to the reassessment order, along with documentary evidence filed via a letter on July 31, 2014, had not been reviewed by the Assessing Officer (A.O.), contrary to Supreme Court guidelines in GKN Driveshaft (India) Ltd. v. ITO and subsequent Gujarat High Court instructions. The Tribunal had initially directed the Departmental Representative (D.R.) to justify why the reassessment should not be invalidated on this ground. The D.R. responded, and the A.R. provided further observations; however, the Tribunal’s order did not reflect these objections, nor did it reference the relevant Supreme Court and High Court decisions, amounting to an oversight. The A.R. also highlighted errors in Grounds Nos. 1 and 2 that necessitate correction. In M.A. No. 103/Ahd/2023 A.Y. 2012-13 Page No. Data Processing Forms Pvt. Ltd. vs. Dy. CIT 3 relation to Ground No. 1, the Tribunal's order inaccurately referenced the statements of Yogesh Koli and Kiran Patil, which were neither presented by the A.O. nor accessible to the appellant, and thus inadmissible. Statements from Suresh Parekh and Sushant Ladda, although relied upon by the authorities, lacked specific references to the appellant, Data Processing Forms Pvt. Ltd. (DPFPL), and did not implicate it as a beneficiary of accommodation bills, a necessary element for reassessment under Section 147. Furthermore, the appellant submitted evidence challenging allegations of bogus purchases, including invoices, delivery notes, and VAT assessment orders. These documents, ignored in the Tribunal’s order, support the validity of DPFPL’s purchases from Rheem Tradelinks and Param Trading Co. Additionally, discrepancies between the reported payment of Rs. 21.30 crores and the actual purchases amounting to Rs. 22.09 crores were mischaracterized as evidence of bogus purchases, an error compounded by the omission of references to Maharashtra-specific businesses in the statements and investigation report. Judicial precedents, including Adinath Industries (Gujarat High Court) and Coronation Agro Industries Ltd. v. DCIT (Bombay High Court), clarify that Section 147 requires a “Reason to Believe,” not merely “Reason to Suspect,” for reopening assessments, especially without substantive proof of cash returns. These decisions, submitted in support by the appellant, were also omitted from consideration. In conclusion, the appellant requested that the Tribunal rectify the apparent mistakes in the record, which include unaddressed grounds, reliance on inadmissible evidence, and failure to consider judicial precedents, which are essential for a fair resolution of the issues raised in the appeal. The assessee further submitted in the Miscellaneous Application that various judicial decisions by the Jurisdictional High Court, which are critical to this matter, have not been duly considered by the Tribunal, and the applicant seeks that these decisions be evaluated for a fair outcome. In the Tribunal’s order, a misstatement was M.A. No. 103/Ahd/2023 A.Y. 2012-13 Page No. Data Processing Forms Pvt. Ltd. vs. Dy. CIT 4 made by referencing paragraph 2.3 of the Commissioner of Income Tax (Appeals) [CIT(A)] order, suggesting that the original assessment for the year 2012-13 had been completed under section 143(3) of the Income Tax Act, making the reassessment valid. However, there was no prior assessment under section 143(3) for the concerned assessment year, making this assumption factually incorrect and warranting rectification. Regarding the validity of the reassessment, the Tribunal adopted the Assessing Officer’s (A.O.) view without analyzing the detailed content of the investigation report or the statements of Suresh Parekh and others, which did not establish any explicit link to the applicant as a recipient of accommodation entries. The report, particularly in Answer 12 and paragraph 6, specified that accommodation bills were given to entities in Maharashtra, while the applicant is located in Gujarat. The assessee has stated in the Miscellaneous Application that Tribunal’s conclusion that the applicant engaged in bogus transactions thus lacks a basis in evidence. Notably, the applicant relied on the Delhi High Court decision in PCIT v. Krishna Devi, which establishes that reliance on an investigation report without corroborative evidence cannot substantiate claims of bogus transactions, yet the Tribunal did not address this argument. The Tribunal also presumed, without evidence, that cash withdrawals by different entities were returned to the applicant, contravening precedent requiring that such claims be substantiated by evidence. Further, while the Tribunal cited a perceived lack of necessity for transporting goods from Sangli to Ahmedabad and then back to Maharashtra, it overlooked critical evidence showing that the transport cost was borne by the suppliers from Sangli to Ahmedabad. The Tribunal failed to recognize or discuss this documentation, though it was clearly presented in the paper book. M.A. No. 103/Ahd/2023 A.Y. 2012-13 Page No. Data Processing Forms Pvt. Ltd. vs. Dy. CIT 5 4. Additionally, in the Miscellaneous Application the assessee submitted that the applicant’s argument regarding the fluctuation in gross profit (G.P.) margin was disregarded without examination. Evidence submitted on March 28, 2023, addressing these fluctuations and the business context (lower G.P. in manufacturing and trading segments but increased G.P. in educational booklets) was omitted from consideration. The Tribunal’s decision also contradicts direct rulings by the Gujarat High Court and Ahmedabad Tribunal, such as Adinath Industries, which stipulates that without clear evidence of cash flow back to the assessee, additions cannot be sustained. Furthermore, the Tribunal’s remand of the cross-examination issue to the CIT(A) lacks clear directives, leaving ambiguity about the due process for cross-examination. The applicant had sought to cross-examine all concerned individuals who had given statements against the applicant, as demonstrated in letters dated July 31, 2014, and November 22, 2014. Relevant rulings, including Pratik Suryakant Shah & Others and CIT v. Chartered Speed (P) Ltd., hold that the denial of cross-examination renders statements unreliable for making additions. Despite this, the Tribunal did not directly address these binding precedents. In sum, the assessee has submitted that due to multiple apparent errors in the Tribunal’s order, the order is liable to be recalled. 5. On going through the contents of the present Miscellaneous Application, we are of the considered view that the same is liable to be rejected for the following reasons: Firstly, the present miscellaneous application lacks any basis whatsoever. While passing the order, all the grounds and issues raised by the assessee had been duly addressed by the Tribunal. The Counsel for the assessee had M.A. No. 103/Ahd/2023 A.Y. 2012-13 Page No. Data Processing Forms Pvt. Ltd. vs. Dy. CIT 6 raised a ground challenging jurisdiction under section 147 of the Act. The counsel for the assessee had objected to initiation of proceedings under section 147 of the Act, which though in the initial stages were found plausible by the Tribunal, however, on going through the case records, and the response of the Department, it was found that there were certain discrepancies in the Objections to jurisdiction raised by the assessee. On going through the reply of the Department, the matter was fixed for clarification again for 20th February 2023 where both the Department and assessee were heard at length. It was concluded during the course of hearing itself that the assessee had not raised valid objections to the initiation of 147 proceedings and whatever concerns were raised by the assessee had been duly addressed by the assessing officer at the assessment stage itself and accordingly, the assessee had agreed for participation in assessment proceedings before the Assessing Officer. Even otherwise on going through the case records, the Tribunal observed that on the basis of substantial evidence on record and on the basis of information received from Investigation Unit from Kolhapur, the assessing officer had reason to believe that income had escaped assessment. The Assessing Officer had specifically observed in the assessment order that on the basis of statements recorded of various parties engaged in hawala racket, it was found that the assessee was engaged in bogus purchases. The assessing officer had observed that there was no goods which were sold to the assessee, nor there was any physical movement of goods and therefore, the assessing officer had substantial evidence to come to the conclusion that the assessee was engaged in bogus purchases, with a view to evade taxes. It was after going through the entire records of the case and after putting up the matter again for clarification, where the submissions and arguments of the parties were taken on record, the Tribunal was of the considered view that the assessing officer had validly initiated assessment proceedings, and, the assessee had also not filed any specific objection to the initiation of reassessment proceedings. In the M.A. No. 103/Ahd/2023 A.Y. 2012-13 Page No. Data Processing Forms Pvt. Ltd. vs. Dy. CIT 7 letter addressed to the assessing officer, the assessee had raised certain queries and had sought for certain information, which were duly replied by the assessing officer, and thereafter, the assessee had proceeded to participate in the reassessment proceedings initiated by the assessing officer. Therefore, this ground of the assessee in the Miscellaneous Application is totally misconceived and erroneous, and therefore is liable to be rejected. Secondly, on going to the order passed by the Tribunal, we observe that the assessee the assessee is only seeking “review” of order, vide the present Miscellaneous Application, without pointing out to any specific deficiencies or inaccuracies in the order passed by Tribunal. It is a settled proposition that “review” of order passed by Tribunal is clearly outside the scope of Miscellaneous Application. Thirdly, we note that the order was passed by Tribunal was after taking into consideration relevant Judicial precedents, relevant to the issue before the Tribunal. The plea of the counsel for the assessee that various judicial precedents cited by the assessee were not taken into consideration by the Tribunal is, in our view, erroneous. Even during the course of several hearings before us, Tribunal had pointed out to the counsel for the assessee that the that the judicial precedents cited by the Counsel for the assessee were in relation to those particular to the set of facts which were before the Court and did not pertain/were extraneous to the facts of the assessee’s case. In the assessee’s set of facts, it was evident from the report from the Investigation Unit that the assessee was engaged in bogus purchases, with a view to deflate its profits and to avoid taxes. However, the Tribunal still took a very reasonable approach by accepting the argument of the counsel for the assessee, that in the interest of justice, an opportunity of cross-examination M.A. No. 103/Ahd/2023 A.Y. 2012-13 Page No. Data Processing Forms Pvt. Ltd. vs. Dy. CIT 8 may be provided to the assessee. However, despite this, the assessee has filed the present Miscellaneous Application, and is seeking review of the order passed by the Tribunal, by submitting that even judicial precedents, which were totally extraneous to the issue under consideration, ought to have been considered by the Tribunal, which is not permissible in law. Therefore, on this ground as well, the present Miscellaneous Application filed by the assessee is liable to be rejected. Fourthly, the Tribunal, the time of passing of order had observed that from the facts placed on record, the assessing officer had substantial evidence to come to the conclusion that the assessee has been engaged in fraudulent activities, with a view to evade taxes. However, the Tribunal taking into consideration the relevant judicial precedents on the subject, had restored the matter to the file of Ld. CIT(Appeals) to give another opportunity to the assessee to cross examine the persons who had given statement, so that the assessee is able to have one more opportunity to defend its case on merits. However, vide the present Miscellaneous Application, the assessee is seeking quashing of the re-assessment proceedings itself, only by taking recourse to legal proposition that once an opportunity of cross-examination has been denied by the lower authorities, then the entire assessment/reassessment proceedings are liable to be set aside. However, we are of the considered view that detailed Investigation Report of the Income Tax Department, from which it is coming out that the assessee, in collusion with hawala racketeers, has been engaged in bogus purchases/fake accommodation entries, with a view to evade taxes, cannot be brought to a nullity only on the basis of technical arguments taken by the counsel for the assessee relying on some judicial precedents. The Tribunal in the original order, had taken a very reasonable approach by allowing one more opportunity of cross-examination to the assessee and therefore had restored M.A. No. 103/Ahd/2023 A.Y. 2012-13 Page No. Data Processing Forms Pvt. Ltd. vs. Dy. CIT 9 the matter to the file of Ld. CIT(Appeals) for allowing the assessee another opportunity of cross exmanination to counter the findings of the lower authorities. Therefore, this argument of the assessee is also liable to be rejected. 6. Therefore, for the above reasons and observations, where we are of the considered view that vide the present Miscellaneous Application, the assessee is only seeking “review” of the earlier order passed by Tribunal by taking recourse to irrelevant grounds/arguments, and therefore the present Miscellaneous Application filed by the assessee/applicant is liable to be rejected. 7. In the result, the Miscellaneous Application filed by the assessee is dismissed. Order pronounced in the open court on 28-10-2024 Sd/- Sd/- (NARENDRA PRASAD SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 28/10/2024 आदेश क\u0006 \u0007\bत ल\fप अ\u000fे\fषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, M.A. No. 103/Ahd/2023 A.Y. 2012-13 Page No. Data Processing Forms Pvt. Ltd. vs. Dy. CIT 10 उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद "