Rakasha Marketing Pvt. Ltd, Ahmedabad V. ITO, Ward-3(1)(3), Ahmedabad

ITA 113/AHD/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4768 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 28-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Search and seizure; Principle of natural justice; Tangible material; Accommodation entries; Reassessment proceedings; Set aside
• Section: 143(3); 143(1); 201; 13; 32; 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [CONDUCTED THROUGH VIRTUAL AT AHMEDABAD] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER& MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 112/AHD/2019 (ASSESSMENT YEAR: 2010-11) KANSAL STEELS PVT. LTD. 59, SHIVASHISH SOC, NR. KALUPUR BANK, BOPAL, AHMEDABAD-380058 VS. ITO WARD-2(1)(2), AHMEDABAD [PAN NO. AAACK6149D] ( APPELLANT ) .. ( RESPONDENT ) I.T.A. NO. 113/AHD/2019 (ASSESSMENT YEAR: 2012-13) RAKASHA MARKETING PVT. LTD. B-812, FAIRDEAL HOUSE, NR. SWASTIK CHAR RASTA, NAVRANGPURA, AHMEDABAD - 380009 VS. ITO WARD-3(1)(3), AHMEDABAD [ PAN NO. AAACR9274N ] ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI CHETAN AGARWAL, AR ASSESSEE BY : SHRI PURUSHOTTAM KUMAR, SR. DR DATE OF HEARING 21.09.2021 DATE OF PRONOUNCEMENT 30.09.2021 O R D E R PER MS. MADHUMITA ROY - JM: BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 28.12.2018 & 14.11.2018 PASSED BY THE LD. CIT(A)-2 & 9, AHMEDABAD ARISING OUT OF THE SEPARATE ORDERS DATED 22.12.2017 & 07.11.2017 PASSED BY THE ITO, WARD-2(1)(2) & 3(1)(3), AHMEDABA D UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) FOR THE ASSESSMENT YEAR (A.Y.) 2010-11 & 2012-13. ITA NO.112/AHD/2019 & ITA NO.113/AHD/2019 KANSAL STEELS PVT. LTD. & RAKASHA MARKETING PVT. LT D. VS. ITO ASST.YEAR 2010-11 & 2012-13 - 2 - ITA NO. 112/AHD/2019(A.Y. 2010-11):- 2. ON THE BASIS OF CERTAIN INFORMATION RECEIVED FRO M DGIT (INVESTIGATION), MUMBAI THAT SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE CASE OF ONE PRAVEEN KUMAR JAIN ON 01.10.2013 INCRIMINATING MATERIAL WHEREOF WERE SEIZED AND ON THE BASIS OF THE STATEMENT RECORDED D URING SEARCH OF SHRI PRAVEEN KUMAR JAIN WHERE HE HAS ACCEPTED THAT HE HAS ENGAGE D IN PROVIDING ACCOMMODATION ENTRIES OF BOGUS UNSECURED LOANS BOGU S SHARE APPLICATION/CAPITAL ETC. WHEREIN THE ASSESSEE WAS A LSO FOUND TO BE ONE OF THESE BENEFICIARIES WHO HAS TAKEN ACCOMMODATION ENTRIES B Y WAY OF SHARE APPLICATION MONEY TO THE TUNE OF RS. 20 LAKH DURING F.Y. 2009-10 RELEVANT TO A.Y. 2010-11 FROM THE BOGUS COMPANIES OPERATED BY S HRI PRAVEEN KUMAR JAIN REOPENING OF ASSESSMENT OF THE ASSESSEE COMPANY WAS MADE BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT DATED 27.03.2017 WHICH WAS SERVED UPON THE ASSESSEE. THE ASSESSEE DENIED ESCAPEMENT OF INCOME AND CLAIMED TO HAVE BEEN FILED CORRECT RETURN. IN FACT, RETURN WAS FILED ON 26.09.2017 IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE S CONTENTION IS THIS THAT THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN WAS NEVER SUPP LIED NEITHER ANY OPPORTUNITY TO CROSS-EXAMINATION WAS GRANTED TO THE ASSESSEE. ON THE CONTRARY, THE ADDITION TO THE TUNE OF RS. 20 LAKH WAS MADE BY THE LD. AO WHICH WAS FURTHER CONFIRMED BY THE LD. CIT(A). UPON PERUSAL OF THE ORDERS PASSED BY THE AUTHORITI ES BELOW AND THE RECORDS AVAILABLE BEFORE US WE FIND THAT THE FOLLOW ING REASON WAS RECORDED BY THE LD. AO WHILE REOPENING THE CASE UNDER SECTION 1 47 OF THE ACT: REASONS RECORDED FOR INITIATION OF ASSESSMENT PROCE EDINGS U/S. 147 OF THE ACT IN THIS CASE, RETURN OF INCOME WAS FILED ON 14.10. 2010 DECLARING TOTAL INCOME OF RS. 63,907/-WHICH WAS PROCESSED U/S 143(1) OF TH E ACT ON 23.05.2011. ITA NO.112/AHD/2019 & ITA NO.113/AHD/2019 KANSAL STEELS PVT. LTD. & RAKASHA MARKETING PVT. LT D. VS. ITO ASST.YEAR 2010-11 & 2012-13 - 3 - AS PER INFORMATION SHARED BY THE DGIT(INVESTIGATIO N), MUMBAI VIDE LETTER NO. DGIT(INV)/INFORMATION/PJ/2014-15 DATED 03/07/20 14 AND FORWARDED BY THE DIT(INV.), AHMEDABAD VIDE LETTER DATED 16.06.2015 A SEARCH AND SEIZURE ACTION WAS CARRIED OUT IN PRAVEEN JAIN GROUP ON 01/10/2013 IN WHICH EVIDENCES COLLECTED AND THE STATEMENTS OF VARIOUS PERSONS RECORDED INCLUDIN G THAT OF SHRI PRAVEEN KUMAR JAIN, ESTABLISHED THE MODUS OPERANDI WHICH LED TO D ETECTION OF ACCOMMODATION ENTRIES IN THE NATURE OF SALES, UNSECURED LOANS AND SHARE APPLICATION MONEY. IT HAS BEEN NOTICED THAT IN THE CASE OF CERTAIN COMPANIES ACCOMMODATION ENTRIES HAVE BEEN PROVIDED BY SHRI PRAVEEN KUMAR JAIN. ONE OF THE ASS ESSES COMPANY VIZ. M/S KANSAL STEELS P LTD. BEARING PAN AACCK 6149 D HAD RECEIVED SHARE APPLICATION MONEY FROM FOLLOWING CORPORATE ENTITIES OF SHRI PRAVEEN J AIN GROUP. NAME OF THE BOGUS CONCERN OF SHRI PRAVEEN KUMAR JAIN PAN OF BOGUS CONCERN OF SHRI PRAVEEN KUMAR JAIN AMOUNT INVOLVED (IN RS.) ANSH MERCHANISE P LTD. (NEW - PLANET TRADING CO. P LTD.) AABCN8176E 5,00,000/ - ATHARV BUSINESS P LTD. FASTSTONE TRADE (I) P LTD. AAACF 9430 A 5,00,000 / - OVERSEAS P LTD. (REASLGOLD TRADING CO P LTD.) AACCR4512K 5,00,000/ - TRIANGULAR INFOCOM LTD. (LEXUS INFOTECH LTD.) AAACK6149D 5,00,000/ - TOTAL 20,00,000/ - THUS, THE INTRODUCERS OF THE SHARE APPLICATION MON EY ARE FOUND TO BE BOGUS BY INVESTIGATION WING. IT IS ALSO SEEN (AS TABULATE D BELOW) FROM THE RETURNS OF INCOME (ROI) OF ASSESSEE COMPANY THAT IN PRECEDING AND FOL LOWING ASSESSMENT YEARS, THE ASSESSEE DOES NOT HAVE PROFITS TO WARRANT SUCH LARG E AMOUNT OF SHARE APPLICATION MONEY. A.Y. DATE OF ROI FILED ROI (IN RS.) 2007 - 08 26.10.2007 0 2008 - 09 26.09.2008 0 2009 - 10 27.09.2009 1225/ - 201 1 - 12 07.09.2011 12597/ - 2012 - 13 25.09 . 2012 26S92/ - IN VIEW OF THE ABOVE FACTS, I HAVE REASON TO BELIE VE THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE COMPANY TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ABOVE AMOU NT OF RS. 20 LAKHS STATED TO HAVE BEEN RECEIVED FROM ABOVE ENTITIES IS MERELY AC COMMODATION ENTRIES AND HENCE, INCOME TO THE TUNE OF RS.20 LAKHS HAS ESCAPED ASSES SMENT FOR THE A.Y. 2010-11. ITA NO.112/AHD/2019 & ITA NO.113/AHD/2019 KANSAL STEELS PVT. LTD. & RAKASHA MARKETING PVT. LT D. VS. ITO ASST.YEAR 2010-11 & 2012-13 - 4 - THEREFORE, IT IS A FIT CASE FOR REOPENING OF THIS A SSESSMENT BY INVOKING THE PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT, 1961. ACCORDINGLY, NOTICE U/S 148 OF THIS ACT IS ISSUED. 3. IT APPEARS THAT THE ASSESSEE COMPANY RECEIVED TH E SHARE APPLICATION MONEY FROM THE ABOVE 4 CORPORATE ENTITIES OF SHRI P RAVEEN KUMAR JAIN. IT FURTHER APPEARS FROM THE RECORDS THAT WHILE REPLYIN G TO THE SHOW-CAUSE NOTICE THE ASSESSEE INTER ALIA RAISED THE FOLLOWING OBJECT IONS: I) THE ASSESSEE COMPANY MOST RESPECTFULLY SUBMIT T HAT THE ASSESSEE COMPANY OR ANY OF ITS DIRECTOR OR PROMOTER DO NOT KNOW ANY PRAVEEN KUMAR JAIN AS WELL AS HAS ANY CONNECTIONS AND NEVER MEET OR TALK TO ANY PRAVEEN K UMAR JAIN, OR ANYBODY CONNECTED WITH ANY PRAVEEN KUMAR JAIN AND UP TO THE THEIR KNOWLEDGE PRAVEEN KUMAR JAIN IS NEITHER DIRECTOR NOR PROMOTER OR SHAR E HOLDER OF THE SHARE APPLICANT COMPANIES. J) THAT THE ASSESSEE COMPANY OR ITS DIRECTORS DO NO T HAVE ANY KNOWLEDGE OF ANY SUCH SEARCH OPERATION U/S 132 OF THE IT ACT ON 01-10-201 3 OR INFORMATION FROM ANY SEIZED MATERIALS THAT ANY OF THE SHARE HOLDER COMPANY IS T HE ENTITIES OF PRAVEEN KUMAR JAIN; AND NO SUCH DETAIL OF ANY SEARCH OPERATION U/ S 1 32 OF THE IT ACT, 1961 AGAINST PRAVEEN KUMAR JAIN HAS BEEN PROVIDED TO US NEITHER ANY REPORT ABOUT THE SEARCH OPERATION NOR ANY STATEMENT OF PRAVEEN KUMAR JAIN H AS BEEN PROVIDED TO US. K) THAT THE ASSESSEE COMPANY OR ANY OF ITS DIRECTOR S DO NOT HAVE ANY KNOWLEDGE THAT PRAVEEN KUMAR JAIN WAS A ENTRY OPERATOR OR WERE PRO VIDING BOGUS ENTRIES THROUGH SHARE CAPITAL; AND NO SUCH DETAIL HAS, BEEN PROVIDE D BY YOU THAT PRAVEEN KUMAR JAJN HAS PROVIDED ANY ENTRY TO US OR HE IS AN ENTRY OPER ATOR OR PROVIDER OF BOGUS ENTRIES. L) THAT THE ASSESSEE COMPANY OR ITS DIRECTOR DO NOT HAVE ANY KNOWLEDGE ABOUT ANY STATEMENT RECORDED U/S 132(4) OF THE PRAVEEN KUMAR JAIN IN WHICH THE SAID PRAVEEN KUMAR JAIN HAS TOLD THAT ANY OF THE SHARE HOLDER CO MPANY IS HIS BOGUS ENTITY THROUGH WHICH HE IS PROVIDING ACCOMMODATION ENTRIES BY WAY OF SHARE CAPITAL AND PROVIDED BOGUS ENTRIES TO THE ASSESSEE COMPANY KANSAL STEELS PVT. LTD.; NO SUCH STATEMENT HAS BEEN PROVIDED TO US IN WHICH HE HAS CONFESSED THAT HE HAS PROVIDED BOGUS ENTRY TO KANSAL STEELS PRIVATE LIMITED THROUGH ANY OF SHAREH OLDER COMPANIES. M) THAT THE ASSESSEE COMPANY HAD OBTAINED THE SAID SHARE APPLICATIONS THROUGH THEIR DIRECTORS AND ON ENQUIRY ABOUT THE ABOVE REFERRED F ACT THE DIRECTORS OF THE SAID COMPANIES REVEALED THAT THEY ARE NOT CONNECTED IN A NY WAY WITH ANY PRAVEEN KUMAR JAIN AND AS A CURIOSITY AND ON ENQUIRY THE ASSESSEE COMPANY COULD KNOW THE FACT THAT THE SAID PRAVEEN KUMAR JAIN HAS RETRACTED HIS STATE MENT AS ALLEGED IF ANY GIVEN BY HIM VIDE HIS AFFIDAVIT DATED 15 TH DAY OF MAY,2014 FOR THE REASONS STATED IN THE SAID AFFIDAVIT, THE ASSESSEE COMPANY MADE EFFORTS TO OBT AIN THE SAID AFFIDAVIT AND SUBMITTED TO YOU BY OUR LETTER DATED 17 J 1.2017, T HEREFORE THE STATEMENT OF PRAVEEN KUMAR JAIN, IF ANY GIVEN BY HIM BUT COPY HAS NOT BE EN PROVIDED TO US, IS NULL AND VOID AND DOES NOT HAVE ANY VALUE IN THE EYES OF LAW AND NO ADDITION CAN BE MADE ONLY ON THE BASIS OF ANY SUCH VAGUE STATEMENTS OR F INDING THEREON, IF ANY. N) THAT THE ASSESSEE COMPANY MOST RESPECTFULLY SUBM ITTED THAT IT REBUT ALL THE ALLEGATION MADE BY YOU IN YOUR REASONS RECORDED ON 20/03/2017 FOR REOPENING OF THE ITA NO.112/AHD/2019 & ITA NO.113/AHD/2019 KANSAL STEELS PVT. LTD. & RAKASHA MARKETING PVT. LT D. VS. ITO ASST.YEAR 2010-11 & 2012-13 - 5 - COMPLETED ASSESSMENT ON THE BASIS OF FACTS MENTIONE D ABOVE. IT HAS ALSO REQUESTED YOUR GOOD SELF TO PROVIDE THE REPORT AND STATEMENTS OF PRAVEEN KUMAR JAIN IF ANY AS STATED IN YOUR ABOVE REFERRED LETTER FOR FURTHER RE BUTTAL ONCE THE REPORT/STATEMENT OF THE PRAVEEN KUMAR JAIN IS PROVIDED BUT YOU DID NOT PROVIDE EITHER ANY SUCH REPORT OR ANY SUCH STATEMENT OF PRAVEEN KUMAR JAIN. THE AS SESSEE COMPANY HAS ALSO REQUESTED YOUR GOOD SELF TO PROVIDE AN OPPORTUNITY TO CROSS EXAMINE THE SAID PRAVEEN KUMAR JAIN IN PERSON TO REBUT FURTHER IN THE MATTER AND SUBMIT ANY FURTHER EVIDENCE IF REQUIRED TO SUBSTANTIATE THE FACTS AND CIRCUMSTA NCE OF THE MATTER. 4. THE ASSESSEE SPECIFICALLY REQUESTED FOR PROVIDIN G THE DETAILS OF SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT AGAINST SHRI PRAVEEN KUMAR JAIN AND SUPPLY OF THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN TOO. FURTHER THAT AN OPPORTUNITY OF CROSS-EXAMINE THE SAID PRAVEEN KUMAR JAIN TO REBUT FURTHER IN THE MATTER AND TO SUBMIT ANY FURTHER EVIDENCE HAS A LSO BEEN PRAYED FOR BY THE ASSESSEE IN SUCH REPLY. FROM THE ORDER IMPUGNED IT DOES NOT REFLECT THAT SUCH REPORT WAS PROVIDED TO THE ASSESSEE OR THE OPPORTUN ITY TO CROSS-EXAMINE THE SAID PRAVEEN KUMAR JAIN WAS PROVIDED TO THE ASSESSE E. ONLY AN EXTRACT OF THE STATEMENT MADE BY SAID JAIN HAS BEEN CLAIMED TO BE PROVIDED TO THE ASSESSEE BY THE REVENUE. 5. ON THIS ASPECT THE ASSESSEE RELIED UPON THE JUDG MENT PASSED BY THE COORDINATE BENCH IN ITA NO. 301/AHD/2018 IN THE CAS E OF MARUDHAR POLYCOT (INDIA) PVT. LTD. VS. DCIT FOR A.Y. 2005-06 DECIDIN G THE ISSUE IN THE SELF- SAME CAUSE OF ACTION. IN FACT A REOPENING ON THE B ASIS OF SEARCH CONDUCTED ON 01.10.2013 WAS CONSIDERED. THE COORDINATE BENCH RE LYING UPON THE ORDER PASSED IN THE MATTER OF SANTABEN PARASMAL JAIN VS. DCIT IN ITA NO. 726/AHD/2017 DELETED THE ADDITION MADE BY THE AUTHO RITIES BELOW WITH FOLLOWING OBSERVATION:- 6. IN SUPPORT OF ITS CONTENTION, ASSESSEE CITED A JUDGMENT OF DELHI HIGH COURT IN THE MATTER OF PRINCIPAL CIT VS. MEENAKSHI OVERSEAS PVT. LTD. WHEREIN APPEAL OF THE REVENUE WAS DISMISSED BY THE HONBLE DELHI HIGH COURT ON THE FOLLOWING OBSERVATION: ITA NO.112/AHD/2019 & ITA NO.113/AHD/2019 KANSAL STEELS PVT. LTD. & RAKASHA MARKETING PVT. LT D. VS. ITO ASST.YEAR 2010-11 & 2012-13 - 6 - REASSESSMENTINCOME ESCAPING ASSESSMENTVALIDITY OF PROCEEDING AO PASSED ASSESSMENT ORDER AGAINST ASSESSEEAO U/S. 14 8 ISSUED NOTICE TO ASSESSEE FOR REASSESSMENT HOLDING THAT AO HAD REASO N TO BELIEF THAT INCOME HAD ESCAPED ASSESSMENTAO INITIATED REASSESSMENT PR OCEEDINGS U/S. 147/148CIT(A) UPHELD ORDER OF AOTRIBUNAL HELD THA T REQUISITE SANCTION HAD NOT BEEN OBTAINED BY AO FROM COMPETENT AUTHORIT Y UNDER SECTION 151 AND, THEREFORE, INVALIDATED RE-OPENING , OF ASSESSM ENT UNDER SECTION 147/148 REVENUE'S APPEAL AGAINST SAID ORDER OF ITA T WAS ALLOWED BY COURTITAT HELD THAT AO HAD NOT APPLIED HIS MIND AT TIME OF INITIATING PROCEEDINGS OF REASSESSMENT UNDER SECTION 147TRIBU NAL QUASHED ASSESSMENT PROCEEDINGS UNDER SECTION 147/148HELD, AS RIGHTLY POINTED OUT BY ITAT, 'REASONS TO BELIEVE' WERE NOT IN FACT REAS ONS BUT ONLY CONCLUSIONS, ONE AFTER OTHEREXPRESSION 'ACCOMMODATION ENTRY' WA S USED TO DESCRIBE INFORMATION SET OUT WITHOUT EXPLAINING BASIS FOR AR RIVING AT SUCH CONCLUSIONSTATEMENT THAT SAID ENTRY WAS GIVEN TO A SSESSEE ON HIS PAYING 'UNACCOUNTED CASH' WAS ANOTHER CONCLUSION BASIS FOR WHICH WAS NOT DISCLOSEDTHUS, CRUCIAL LINK BETWEEN INFORMATION MA DE AVAILABLE TO AO AND FORMATION OF BELIEF WAS ABSENTCOURT WAS NOT INCLIN ED TO INTERFERE IN ABOVE CIRCUMSTANCES IN EXERCISE OF ITS WRIT JURISDICTION TO QUASH PROCEEDINGS CAREFUL PERUSAL OF REASONS REVEALED THAT AO DID NOT MERELY REPRODUCE INFORMATION BUT TAKES EFFORT OF REVEALING WHAT WAS CONTAINED IN INVESTIGATION REPORT SPECIFIC TO ASSESSEEAO MADE NO EFFORT TO SE T OUT PORTION OF INVESTIGATION REPORT WHICH CONTAINED INFORMATION SP ECIFIC TO ASSESSEE, HE DID NOT ALSO EXAMINE RETURN ALREADY FILED TO ASCERTAIN IF ENTRY HAD BEEN DISCLOSED THEREINAO WAS NOT MERELY REPRODUCING INFORMATION R ECEIVED FROM INVESTIGATION BUT TOOK EFFORT OF REFERRING TO DEPOS ITION MADE DURING SURVEY BY CHARTERED ACCOUNTANT THAT ASSESSEE COMPANY WAS INVO LVED IN GIVING AND TAKING OF BOGUS ENTRIESAO THUS INDICATED WHAT TANG IBLE MATERIAL WAS WHICH ENABLED HIM TO FORM REASONS TO BELIEVE THAT I NCOME HAD ESCAPED ASSESSMENTIT WAS IN THOSE CIRCUMSTANCES THAT IN CA SE, COURT CAME TO CONCLUSION THAT THERE WAS PRIMA FACIE MATERIAL FOR AO TO COME TO CONCLUSION THAT ASSESSEE HAD NOT-MADE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS RELEVANT FOR ASSESSMENTREASONS TO BELIEVE CONTAINE D NOT REASONS BUT CONCLUSIONS OF AO ONE AFTER OTHERTHERE WAS NO INDE PENDENT APPLICATION OF MIND BY AO TO TANGIBLE MATERIAL WHICH FORMED BASIS OF REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT REASONS FAILED TO DEMONSTRATE LINK BETWEEN TANGIBLE MATERIAL AND FORMATION OF REASON T O BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT-REVENUE'S APPEAL DISMISSED. 7. LD. A.R. ALSO CITED A JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE MATTER OF VARSHABEN SANATBHAI PATEL VS. ITO WHEREIN SIMILA R CIRCUMSTANCES, PLEA OF THE ASSESSEE WAS ACCEPTED. SECTION 147 OF THE INCOME-TAX ACT, 1961 - INCOME ES CAPING ASSESSMENT - NON-DISCLOSURE OF PRIMARY FACTS (INFORMATION FROM E XTERNAL SOURCE) - ASSESSMENT YEARS 2009-10 TO 2011-12 - FOR RELEVANT ASSESSMENT YEARS, ASSESSEE FILED ITS RETURNS DECLARING CERTAIN TAXABL E INCOME -RETURNS WERE PROCESSED UNDER SECTION 143(1) - SUBSEQUENTLY, ON B ASIS OF INFORMATION ITA NO.112/AHD/2019 & ITA NO.113/AHD/2019 KANSAL STEELS PVT. LTD. & RAKASHA MARKETING PVT. LT D. VS. ITO ASST.YEAR 2010-11 & 2012-13 - 7 - RECEIVED FROM DGIT (INV.) THAT ASSESSEE MADE BOGUS PURCHASES AND TO SAID EXTENT INCOME HAD ESCAPED ASSESSMENT FROM TAX, ASSE SSING OFFICER ISSUED NOTICE UNDER SECTION 148 SEEKING TO REOPEN, ASSESSM ENT - ASSESSEE'S OBJECTIONS TO REOPENING OF ASSESSMENT WERE SET ASID E - WHETHER., SINCE FORMATION OF BELIEF OF ASSESSING OFFICER WAS NOT BA SED UPON DETAILS AVAILABLE ON RECORD, RATHER ON BASIS OF INFORMATION SUPPLIED BY DGIT (INV.) I.E. AN EXTERNAL SOURCE, IT COULD NOT BE CONCLUDED THAT REQ UIREMENTS OF SECTION 147 WERE SATISFIED - HELD, YES - WHETHER, THEREFORE, IM PUGNED REASSESSMENT PROCEEDINGS DESERVED TO BE SET ASIDE - HELD, YES [P ARA 13] [IN FAVOUR OF ASSESSEE] 8. LD. A.R. ALSO CITED AN ORDER OF CO-ORDINATE BENC H IN THE MATTER OF SHANTABEN PARASMAL JAIN IN ITA NO. 726/AHD/2017 WHE REIN SIMILAR CIRCUMSTANCES, RELIEF WAS GRANTED BY THE ITAT WITH FOLLOWING OBSERVATION: 14.THE ENTIRE ASSESSMENT IS BASED UPON THE STATEMEN T OF SHRI MUKESH CHOKSI. IT IS AN UNDISPUTED FACT THAT NEITHER A COPY OF THE STATEMENT WAS SUPPLIED TO THE ASSESSEE. NOR ANY OPPORTUNITY OF CROSS-EXAMINAT ION WAS GIVEN BY THE ASSESSING OFFICER/CIT(A). THE HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES IN CIVIL APPEAL NO. 4228 OF 2006 WAS SEIZED WITH THE FOLLOWING ACTION OF THE TRIBUNAL:- '6. THE PLEA OF NO CROSS EXAMINATION GRANTED TO THE VARIOUS DEALERS WOULD NOT HELP THE APPELLANT CASE SINCE THE EXAMINATION O F THE DEALERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE PO SSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX FACTORY PR ICES REMAIN STATIC. SINCE WE ARE NOT UPHOLDING AND APPLYING THE EX FACTORY PR ICES, AS WE FIND THEM CONTRAVENED AND NOT NORMAL PRICE AS ENVISAGED UNDER SECTION 4(1), WE FIND NO REASON TO DISTURB THE COMMISSIONERS ORDERS.' 15. THE HON'BLE APEX COURT HELD AS UNDER:- 'ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS F LAW 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 TIRE COMMISSIONER WAS BAS ED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED ITA NO.726 /AHD/2017 SHANTABEN PARASMAL JAIN VS. DCIT 2010-11 TO CROSS-EXAMINE, TH E ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASS ESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE AD JUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORIT Y, AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS T OTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION O F THE SAID DEALERS COULD ITA NO.112/AHD/2019 & ITA NO.113/AHD/2019 KANSAL STEELS PVT. LTD. & RAKASHA MARKETING PVT. LT D. VS. ITO ASST.YEAR 2010-11 & 2012-13 - 8 - NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT B E IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX- FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS W ORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS- EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPO N THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED I N THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSSEXAMINATION. THEREFOR E, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COU LD BE THE SUBJECT MAILER OF THE CROSS-EXAMINATION AND MAKE THE REMARKS AS ME NTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DI RECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTING O R REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINI ON THAT IF THE TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MA TERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY I TS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS O F ISSUING THE SHOW CAUSE WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED IN THE TRIBUNAL AND ALLOW THIS APPEAL.' 9. SINCE STATEMENT OF SHRI P.K. JAIN WAS NOT SUPPLI ED TO THE ASSESSEE ON THE BASIS OF ADDITION WAS MADE AND IN THE ABSENCE OF SA ID STATEMENT ASSESSEE COULD NOT CROSS EXAMINE TO SHRI P.K. JAIN AND SAME IS AMOUNT TO MISCARRIAGE OF JUSTICE DESPITE OF THE FACT THAT ASSESSEE MADE A FORMAL REQUEST TO THE LOWER AUTHORITIES. IN OUR CONSIDERED OPINION AND AFTER CO NSIDERING THE AFORESAID JUDGMENT, NO ADDITION CAN BE MADE ON THE BASIS OF W HICH VIOLATE PRINCIPLE OF NATURAL JUSTICE. 6. WE FIND THAT THE FACT IN THE ABOVE MATTER IS IDE NTICAL TO THAT OF THE CASE BEFORE US AND THE ISSUE THEREIN AS WELL. THUS, IN THE ABSENCE OF ANY CHANGED CIRCUMSTANCES RESPECTFULLY RELYING UPON THE SAME WE FIND NO MERIT IN MAKING ADDITION IN THE REASSESSMENT PROCEEDING UNDER SECTI ON 68 OF THE ACT PARTICULARLY FOR NON-SUPPLY OF THE REPORT OF THE EN QUIRY TO THE ASSESSEE AND NOT AFFORDING OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAM INE THE SEARCHED PERSON WHICH GOES TO THE ROOT OF THE MATTER. WE DO NOT FI ND ANY BASIS IN SUCH ITA NO.112/AHD/2019 & ITA NO.113/AHD/2019 KANSAL STEELS PVT. LTD. & RAKASHA MARKETING PVT. LT D. VS. ITO ASST.YEAR 2010-11 & 2012-13 - 9 - PROCEEDING AND HENCE THE SAME IS HEREBY QUASHED. C ONSEQUENTLY, THE ADDITION MADE THEREIN IS HEREBY DELETED. HENCE, ASSESSEES APPEAL IS, THUS, ALLOWED. ITA NO. 113/AHD/2019 (A.Y. 2012-13):- 7. THE IDENTICAL ISSUE INVOLVED IN THE CASE HAS ALR EADY BEEN DEALT WITH BY US IN ITA NO.112/AHD/2019 FOR A.Y. 2010-11 AND IN T HE ABSENCE OF ANY CHANGED CIRCUMSTANCES THE SAME SHALL APPLY MUTATIS MUTANDIS. HENCE, THE APPEAL PREFERRED BY THE ASSESSEE IS ALLOWED. 8. IN THE COMBINED RESULTS, THE APPEALS PREFERRED B Y THE ASSESSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 30 / 0 9 /20 2 1 SD/- SD/- (WASEEM AHMED) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/09/2021 TANMAY, SR. PS TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 29.09.2021 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.09.2021 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 30 .09.2021 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .09.2021 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 30 .09.2021 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.09.2021 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER