GOLD ANCHER EXIM PRIVATE LIMITED,KHAR WEST - MUMBAI V. INCOME TAX OFFICER WARD 12(2)(1), AAYKAR BHAVAN

ITA 5464/MUM/2024

AI Insights

The case involves Gold Ancher Exim Private Limited, which appealed against the order of the National Faceless Assessment Centre (NFAC), Delhi, concerning the assessment year 2013-14. The primary issues in the appeal were the dismissal of the appellant's earlier appeal for non-prosecution and the validity of the re-assessment proceedings under sections 147 and 148 of the Income Tax Act, 1961. The appellant contested the addition of Rs. 2,86,09,257 made under section 69C, arguing that the re-assessment and the subsequent order were illegal and unjustified. The Tribunal's decision was influenced by the precedent set in the case of Usha Exports vs. ACIT, where it was held that reopening based on the same set of facts constitutes a change of opinion and is not valid.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469884 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Other Referred Cases: N K Proteins Ltd. vs. DCIT, Usha Exports vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHANGEPATIL PUSHKARAJ RAMESH; DR
• Assessee Lawyers: RITU PANJABI; AR
• Keywords: Set aside; Difference of opinion; Change of opinion; Reassessment proceedings; Bogus purchase; Reopening of assessment; Reason to believe; Bogus
• Section: 148; 143(3); 143(2); 69C; 2

Judgement Text

"| आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 5464/Mum/2024 Assessment Years: 2013-14 Gold Ancher Exim Private Limited 11th Floor, Satra Residency Ahimsa Marg, Khar West Mumbai - 400052 [PAN: AACCG3982E] Vs Additional/Joint/Deputy/Assist ant Commissioner of Income Tax/Income-tax Officer, National Faceless Assessment Centre, Delhi अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Ms. Ritu Panjabi, A/R Revenue by : Shri Bhangepatil Pushkaraj Ramesh, Sr. D/R सुनवाई की तारीख/Date of Hearing : 21/01/2025 घोषणा की तारीख /Date of Pronouncement: /01/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 20/08/2024 by NFAC, Delhi [hereinafter ‘the ld. CIT(A)’] pertaining to AY 2013-14. 2. The grievance of the assessee reads as under:- “1. The National Faceless Appeal Centre [\"the CIT(A)\"] erred in dismissing the appeal of the Appellant for non-prosecution of the appeal. 2. The CIT(A) erred in upholding the validity of the re-assessment proceedings.The notice issued for re-opening of assessment under section 148, the re-opening of assessment under section 147, the reassessment proceedings and also the reassessment order are illegal, invalid and unjustified. 3. The CIT(A) erred in upholding the validity of re-assessment proceedings which was conducted without the issue of notice under section 143(2) of the Act. Hence, the re-assessment proceedings and also the re-assessment order are ab-inito void and bad in law. 4. The CIT(A) erred in confirming the addition of Rs. 2,86,09,257 made by the AO under section 69C of the Act. In doing so, the learned CIT(A) ignored the decision of the Hon'ble Income Tax Appellate Tribunal in the Appellant's own case. I.T.A. No. 5464/Mum/2024 2 5. The Appellant craves leave to add to, to alter or to amend the above grounds of appeal.” 3. Representatives were heard at length. Case records carefully perused. 4. The reasons for reopening the assessment as extracted in the body of the assessment order, read as under:- “Return of Income for A.Y.2013-14 declaring total income of Rs.7,21,850/- was e- filed on 02.09.2013. Thereafter, assessment was completed u/s. 143(3) r.w.s. 147 on 16.10.2017 accepting the total income at Rs. 42,98,007/-. 2. The assesse company is a trader in textile. In this case assessment was reopened for examining the genuineness of assessee's claim of bogus purchases during the F.Y. 2012-13 aggregating to Rs. 2,86,09,257/- with respect to parties who appeared to be hawala dealers as per the verification from Maharashtra Sales Tax Department. The facts were also confirmed from the website of Sales Tax Department and as per the DGIT (Investigation), Mumbai report of 26.12.2013 that the parties were involved in issuing hawala sales bills without supplying goods and that assessee is one of the beneficiaries of such hawala transactions. 2.1. Further, on perusal of records, it is noticed that the reasons recorded in the order for reopening the assessee case were made on the aforesaid facts and since the case was not subject to scrutiny assessment for the said period necessary evidences were called for. It was seen that the assessment proceedings concluded with well- established facts that the assessee was neither able to substantiate the claim of bogus purchases of Rs. 2,86,09,257/- with relevant documentary evidences nor the concerned parties (hawala dealers) could be traceable. Thus the onus of proof for genuineness of the purchases failed to be discharged by the assessee. Further, reliance was also placed on decisions (1) to record that even payment by account payee cheque is not sacrosanct to prove the transaction as genuine and in this case there is uncontroverted evidence from an impeccable source (Maharashtra Sales Tax Department) which has the primary duty of taxing a purchase sale transaction in the form of admission of the so called seller about issuing bogus bills of purchase/sale. 2.2 Thereafter, the assessing officer while relying on several judgments had held that assesse failed to establish the genuineness of the purchases claimed by it. However, made a disallowance of only 12.5% of the bogus purchases and added back an amount of Rs. 35,76, 157/- since the entire purchases purported to have been claimed on bills issued by the hawala dealers as confirmed from the Sales Tax Authorities/investigation wing, could not be proved to be genuine by the assessee the disallowance was required to be done for the total amount of bogus transactions of Rs. 2,86,09,257/-. Omission to do so has resulted in under assessment of income to the extent of Rs. 2,50,33, 100/- (Rs. 2,86,09,257-Rs. 35,76, 157) in the wake of SC decision in N K Proteins Ltd. Vs. DCIT 2017 -TIOL - 23-SC-IT dated January 16,2017 for addition of entire income on account of bogus purchases subsequently I.T.A. No. 5464/Mum/2024 3 there has been an issuance of order of the 0/o Pr. CIT (Coordination), Mumbai dated 24/08/2017 to report and review identical issues for entire addition of bogus purchases. 3. On the basis of the aforesaid details stated above, I have reasons to believe that the assessee has failed to disclose fully and truly all material facts necessary for assessment. Therefore, I have reason to believe that income chargeable to tax exceeding Rs. 1 lakhs has under assessed and escaped assessment within the meaning of section 147 of the I. T. Act 1961. 5. In this case since RO/ was filed for relevant A. Y. and regular assessment u/s 143(3) was made, the provision of clause (c) of Explanation 2 to section 147 are applicable and the assessment year under consideration is deemed to be a case where income chargeable tax has escaped assessment is more than four years have elapsed from the end of assessment year under consideration. Hence, necessary sanction to issue notice u/s 148 is sought as per the provisions of section 151(1) of the Income Tax Act, 1961.” 5. It can be seen from the aforementioned reasons that, assessment u/s 143 r.w.s. 147 of the Act was already made in the case of the assessee in which addition of 12.5% of the bogus purchases were added back. The quarrel has travelled up to the Tribunal and the Tribunal restricted the addition to 1% of the bogus purchases. 6. Pursuant to the decision of the Hon’ble Supreme Court in the case of N K Protiens Ltd. vs. DCIT (supra), the O/o Pr. CIT (Coordination), issued an order for making addition of entire amount on account of bogus purchases. Therefore, the AO reopened the assessment once again. 7. We are of the considered view that once the assessment has been framed u/s 147 of the Act, for the very same reasons, the AO should not have reopened the assessment and that too for making the entire additions pursuant to the order issued by the O/o Pr. CIT. This is nothing but a change in the view earlier taken by the AO. 8. On identical set of facts, the Hon’ble Jurisdictional High Court in the case of Usha Exports vs. ACIT in W.P. No. 2506 of 2019 held as under:- I.T.A. No. 5464/Mum/2024 4 “10. Dr. Shivram then submitted that the foundation of the first reopening notice and the second notice is the same. That is the issue of bogus purchases and accommodation of entries and that there is a clear change of opinion by the Assessing Officer. He submitted that, in the reasons supplied along with first reopening notice, the issue of bogus accommodation of entries regarding purchases was discussed. The reasons given for second reopening notice reproduced above also refer to the said fact. The reasons also refer to a decision of the Supreme Court in the case of M/s.N.K.Proteins Ltd. (2017-TIOL-23-SC-IT v. DCIT this decision was before the Assessing Officer in the proceeding pursuant to first reopening notice. The Petitioner, along with its objections, placed explanatory note as to how the said decision of the Supreme Court in M/s.N.K.Proteins did not apply to the facts of the case. Therefore, this aspect was also considered when the proceeding under the first reopening notice was conducted. In the circumstances, the contention of the Petitioner that the impugned reopening notice is issued only on mere change of opinion will have to be accepted.” 9. Considering the facts of the case, in light of the aforementioned decision of the Hon’ble Jurisdictional High Court, we set aside the impugned notice for reopening the assessment thereby quashing the assessment order. Since we have quashed the reopening of the assessment, we do not find it necessary to dwell into the merits of the case. 10. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 23rd January, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 23/01/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs I.T.A. No. 5464/Mum/2024 5 आदेश की \u0015ितिलिप अ\u001aेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001c / The Appellant 2. \u0015\u001dथ\u001c / The Respondent 3. संबंिधत आयकर आयु\" / Concerned Pr. CIT 4. आयकर आयु\" ) अपील ( / The CIT(A)- 5. िवभागीय \u0015ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "