Appeal Details
Counselvise Citation
[2018] 112 COUNSELVISE.COM (IT) 5290 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 7 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-10-2018
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2011-2012
Appeal Filed On
02-03-2017
Judgement Text
, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, VICE PRESIDENT, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NOS.1485 & 1486/MUM/2017 ASSESSMENT YEARS: 2010-11& 2011-12 M/S SOLO HARDWARE PRIVATE LIMITED, SHOP NO.03, SHASTRI NAGAR, OPP. PANT NAGAR POLICE STATION, GHATKOPAR (EAST), MUMBAI-400075 / VS. ACIT, CIRCLE-5(3)(2), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 !' / ASSESSEE # / REVENUE P.A. NO . AAJCS0760R !' / ASSESSEE BY NONE # / REVENUE BY CHAUDHARY ARUN KUMAR SINGH - DR $ #%&'' / DATE OF HEARING 17/10/2018 &'' / DATE OF ORDER: 24/10/2018 / O R D E R THESE TWO APPEALS ARE BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 16/11/2016 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. DURING HEARING, NONE W AS ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 2 PRESENT FOR THE ASSESSEE, IN SPITE OF THE FACT THAT ON 17/09/2018, THE APPEALS WERE ADJOURNED AT THE REQUE ST OF THE ASSESSEE (LETTER DATED 14/09/2018 IS AVAILAB LE ON RECORD) FOR TODAY I.E. 17/10/2018. THE ASSESSEE NEI THER PRESENTED ITSELF NOR MOVED ANY ADJOURNMENT PETITION . IT SEEMS THAT THE ASSESSEE HAS NOTHING TO SAY, THEREFO RE, WE HAVE NO OPTION BUT TO PROCEED, EX-PARTE, QUA THE AS SESSEE AND TEND TO DISPOSE OF THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 2. THE FIRST GROUND RAISED BY THE ASSESSEE IS WITH RESPECT TO REOPENING OF ASSESSMENT UNDER SECTION 14 7 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) ON T HE PLEA THAT THE ASSIGNED REASONS ARE WRONG AND INSUFFICIENT, THUS, THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT FOR REOPENING IS ITSELF ILLEGAL AND UNJUSTI FIED. ON THE OTHER HAND, THE LD. DR, CHAUDHARY ARUN KUMAR SINGH, STRONGLY DEFENDED THE REOPENING BY INVITING OUR ATTENTION TO THE FACTUAL MATRIX CONTAINED IN THE ASSESSMENT ORDER AS WELL AS IN THE IMPUGNED ORDER. ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 3 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SO FAR AS , RE- OPENING OF ASSESSMENT U/S 147/148 OF THE ACT, IS CONCERNED, IT IS NOTED THAT THE ASSESSEE HAS DECLAR ED INCOME OF RS.29,77,205/- AND BOOKS PROFIT AT RS.29,56,171/-, UNDER SECTION 115JB OF THE ACT. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) AT RS.29,77,205/-. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE ACT AFTER RECORDI NG THE REASONS TO THE EFFECT THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THEREFORE, NOTICE UNDER SECTION 148, DATED 09/03/2015 WAS SERVED UPON THE ASSESSEE, TO WHICH THE ASSESSEE ASKED FOR THE REASONS OF REOPENI NG. NOTICE UNDER SECTION 142(1) AND 143(2) WERE ALSO IS SUED. THE REASONS FOR REOPENING HAVE BEEN MENTIONED IN TH E ASSESSMENT ORDER. THE LD. ASSESSING OFFICER RECEIVE D INFORMATION FROM THE OFFICE OF THE DGIT(INV.) AND A LIST OF CASES, WHEREIN, CERTAIN PARTIES WERE INVOLVED IN HA WALA TRANSACTION AND THE ASSESSEE WAS FOUND TO BE ONE OF SUCH BENEFICIARIES. THE DETAILS OF SUCH PARTIES HAVE ALS O BEEN MENTIONED IN THE ASSESSMENT ORDER. IT WAS FOUND TH AT ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 4 THE ASSESSEE MADE PURCHASES TO THE TUNE OF RS.6,23,19,289/- MADE FROM THE HAWALA PARTIES AS BO GUS PURCHASES. 2.2. IN THE LIGHT OF THE FOREGOING DISCUSSIONS, I T IS OUR BOUNDED DUTY TO EXAMINE THE VALIDITY OF REOPENI NG U/S 147 R.W.S 148 OF THE ACT, THEREFORE, BEFORE AD VERTING FURTHER WE ARE REPRODUCING HEREUNDER THE RELEVANT PROVISION OF SECTION 147 OF THE ACT FOR READY REFER ENCE AND ANALYSIS:- . IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER I NCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF T HE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LO SS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEV ANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR TH E RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REAS ON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETUR N UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 5 (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATE D OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY A SSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTER S WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REV ISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY TH E ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE W ITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER T HIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY TH E ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOM E OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR REL IEF IN THE RETURN ; (BA) WHERE THE ASSESSEE HAS FAILED TO FURNISH A REP ORT IN RESPECT OF ANY INTERNATIONAL TRANSACTION WHICH HE WAS SO REQUI RED UNDER SECTION 92E; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESS ED ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; (D) WHERE A PERSON IS FOUND TO HAVE ANY ASSET (INC LUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REA SSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSES S OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAP ED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBS EQUENTLY IN ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 6 THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAV E NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB-SECTION (2) OF SECTION 148. EXPLANATION 4.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT THE PROVISIONS OF THIS SECTION, AS AMENDED BY THE FINANCE ACT, 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSM ENT YEAR BEGINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2012. 2.3 IF THE AFORESAID PROVISION OF THE ACT IS ANALYZED, WE FIND THAT AFTER INSERTION OF EXPLANATI ON -3 TO SECTION 147 OF THE ACT BY THE FINANCE (NO.2) ACT OF 2009 WITH EFFECT FROM 01/04/1989 SECTION 147 HAS AN EFFE CT THAT ASSESSING OFFICER HAS TO ASSESS OR REASSESS IN COME (SUCH INCOME) WHICH HAS ESCAPED ASSESSMENT AND WHIC H WAS BASIS OF FORMATION OF BELIEF AND, IF HE DOES SO , HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH CAME TO THE NOTICE DUR ING THE COURSE OF PROCEEDINGS. IDENTICAL RATIO WAS LA ID DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN CIT VS JET AIRWAYS INDIA PVT. LTD. (2010) 195 TAXMAN 117 (MUM. ) AND THE FULL BENCH DECISION FROM HONBLE KERALA HIG H COURT IN CIT VS BEST WOOD INDUSTRIES AND SAW MILLS (2011) 11 TAXMAN.COM 278 (KERALA)(FB). A PLAIN REA DING OF EXPLANATION-3 TO SECTION 147 CLEARLY DEPICTS THA T THE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 7 ASSESSING OFFICER HAS POWER TO MAKE ADDITION, WHERE HE ARRIVED TO A CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT WHICH CAME TO HIS NOTICE DURING THE COUR SE OF PROCEEDINGS OF REASSESSMENT U/S 148. OUR VIEW I S FORTIFIED BY THE DECISION IN MAJINDER SINGH KANG VS CIT (2012) 25 TAXMAN.COM 124/344 ITR 358 (P & H) AND JA Y BHARAT MARUTI LTD. VS CIT (2010) TAX LR 476 (DEL.) AND V. LAKSHMI REDDY VS ITO (2011) 196 TAXMAN 78 (MAD.) . THE PROVISION OF THE ACT IS VERY MUCH CLEAR AS WITH EFFECT FROM 01/04/1989, THE ASSESSING OFFICER HAS WIDE POW ERS TO INITIATE PROCEEDINGS OF REOPENING. THE HONBLE KERALA HIGH COURT IN CIT VS ABDUL KHADAR AHMAD (2006) 156 TAXMAN 206 (KERALA) EVEN WENT TO THE EXTENT SO LONG AS THE AO HAS INDEPENDENTLY APPLIED HIS MIND TO ALL TH E RELEVANT ASPECT AND HAS ARRIVED TO A BELIEF THE REO PENING CANNOT BE SAID TO BE INVALID. 2.4. WE ARE AWARE THAT MERE CHANGE OF OPINION CANNOT FORM THE BASIS OF REOPENING WHEN THE NECESSA RY FACTS WERE FULLY AND TRULY DISCLOSED BY THE ASSESSE E IN THAT SITUATION, THE ITO IS NOT ENTITLED TO REOPEN T HE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 8 ASSESSMENT MERELY ON THE BASIS OF CHANGE OF OPINION . HOWEVER, POWERS UNDER AMENDED PROVISION ARE WIDE ENOUGH WHERE THERE IS A REASONABLE BELIEF WITH THE ASSESSING OFFICER, THAT INCOME HAS ESCAPED ASSESSME NT, BECAUSE THE POWERS WITH EFFECT FROM 01/04/1989 ARE CONTEXTUALLY DIFFERENT AND THE CUMULATIVE CONDITION S SPELT OUT IN CLAUSES (A) AND (B) OF SECTION 147, PRIOR TO ITS AMENDMENT ARE NOT PRESENT IN THE AMENDED PROVISION. THE ONLY CONDITION FOR ACTION IS THAT THE ASSESSING OFFICER SHOULD HAVE REASON TO BELIEVE THAT INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT. SUCH BELIEF CAN BE REA CHED IN ANY MANNER AND IS NOT QUALIFIED BY A PRE-CONDITI ON OF FAITH AND TRUE DISCLOSURE OF MATERIAL FACTS BY AN A SSESSEE AS CONTEMPLATED IN PRE-AMENDED SECTION 147. VIEWED IN THAT ANGLE, POWER TO REOPEN ASSESSMENT IS MUCH WIDE R UNDER THE AMENDED PROVISION. OUR VIEW IS FORTIFIED BY THE DECISION FROM HONBLE DELHI HIGH COURT IN BAWA ABHAI SINGH VS DCIT (2001) 117 TAXMAN 12 AND RAKESH AGARWAL VS ACIT (1996) 87 TAXMAN 306 (DEL.). THE HONBLE APEX COURT IN CIT VS SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297 (SC) CLEARLY HELD THAT PROCEEDINGS U/S ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 9 147 ARE FOR THE BENEFIT FOR THE REVENUE, WHICH ARE AIMED AT GATHERING THE ESCAPED INCOME. AT THE SAME TIM E, WE ARE AWARE THAT POWERS U/S 147 AND 148 OF THE ACT AR E NOT UNBRIDLED ONE AS IT IS HEDGED WITH SEVERAL SAFE GUARDS CONCEIVED IN THE INTEREST OF ELIMINATING ROOM FOR A BUSE OF THIS POWER BY THE AO. HOWEVER, THE MATERIAL AVAILA BLE ON RECORD, CLEARLY INDICATES THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THEREFORE, THE LD. ASSESSIN G OFFICER WAS WITHIN HIS JURISDICTION TO REOPEN THE ASSESSMENT. THE HONBLE APEX COURT IN ESS ESS KAY ENGINEERING CO. PVT. LTD. (2001) 247 ITR 818 (SC) H ELD THAT MERELY BECAUSE THE CASE OF THE ASSESSEE WAS CO RRECT IN ORIGINAL ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR, IT DOES NOT PRECLUDE THE ITO TO REOPEN THE ASSESSME NT OF AN EARLIER YEAR ON THE BASIS OF FINDING OF HIS FACT THAT FRESH MATERIAL CAME TO HIS KNOWLEDGE. 2.5. UNDER SECTION 147, AS SUBSTITUTED WITH EFFECT FROM 01/04/1989, THE SCOPE OF REASSESSMENT HAS BEEN WIDENED. AFTER SUCH SUBSTITUTION, THE ONLY RESTRICT ION, PUT IN THAT SECTION IS THAT REASON TO BELIEVE. THAT R EASON ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 10 HAS TO BE A REASON OF A PRUDENT PERSON WHICH SHOULD BE FAIR AND NOT NECESSARILY DUE TO FAILURE OF THE ASSE SSEE TO DISCLOSE FULLY AND PARTIALLY SOME MATERIAL FACTS RE LEVANT FOR ASSESSMENT (DR. AMINS PATHOLOGY LABORATORY VS JCIT (2001) 252 ITR 673, 682 (BOM.) IDENTICAL RATIO WAS LAID DOWN BY HONBLE DELHI HIGH COURT IN UNITED ELECTRIC AL COMPANY PVT. LTD. VS CIT (2002) 258 ITR 317, 322 (D EL.) AND PRAFULL CHUNNILAL PATEL VS ACIT 236 ITR 832, 83 8 (GUJ.). THE ESSENTIAL REQUIREMENT FOR INITIATING REASSESSMENT PROCEEDING U/S 147 R.W.S 148 OF THE AC T IS THAT THE LD. ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. THE HONBLE GUJARAT HIGH COURT IN PRAFULL CHUNNILAL PATEL VS AC IT (SUPRA) EVEN WENT TO THE EXTENT THAT AT THE INITIAT ION STAGE FORMATION OF REASONABLE BELIEF IS NEEDED AND NOT A CONCLUSIVE FINDING OF FACTS. IDENTICAL RATIO WAS LA ID DOWN IN BRIJMOHAN AGRAWAL VS ACIT (2004) 268 ITR 400, 4 05 (ALL.) AND RATNACHUDAMANI S. UTNAL VS ITO (2004) 26 9 ITR 272, 277 (KARNATAKA) APPLYING SOWDAGAR AHMED KHAN VS ITO (1968) 70 ITR 79(SC). ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 11 2.6. SO FAR AS, THE MEANING OF EXPRESSION, REASON TO BELIEVE IS CONCERNED, IT REFERS TO BELIEF WHICH PROMPTS THE ASSESSING OFFICER TO APPLY SECTION 147 TO A PAR TICULAR CASE. IT DEPEND UPON THE FACTS OF EACH CASE. THE B ELIEF MUST BE OF AN HONEST AND REASONABLE PERSON BASED ON REASONABLE GROUNDS. THE ASSESSING OFFICER IS REQUIR ED TO ACT, NOT ON MERE SUSPICION, BUT ON DIRECT OR CIRCUMSTANTIAL EVIDENCE. OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN FOLLOWING CASES:- I. EPICA LABORATORIES LTD. VS DCIT 251 ITR 420, 425-426 (BOM.), II. VISHNU BOREWELL VS ITO (2002) 257 ITR 512 (ORISSA), III. CENTRAL INDIA ELECTRIC SUPPLY COMPANY LTD. VS ITO (2011) 333 ITR 237 (DEL.), IV. V.J. SERVICES COMPANY MIDDLE EAST LTD. VS DCIT (2011) 339 ITR 169 (UTTRAKHAND), V. CIT VS ABHYUDAYA BUILDERS (P. ) LTD. (2012) 340 ITR 310 (ALL.), VI. CIT VS DR. DEVENDRA GUPTA (2011) 336 ITR 59 (RAJ.), VII. EMIRATES SHIPPING LINE FZE VS ASST. DIT (2012) 349 I TR 493 (DEL.). VIII. REFERENCE MAY ALSO MADE TO FOLLOWING JUDICIAL DECISIONS:- IX. SAFETAG INTERNATIONAL INDIA P. LTD. (2011) 332 ITR 622 (DEL.), X. CIT VS ORIENT CRAFT LTD. (2013) 354 ITR 536 (DEL.) ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 12 XI. ACORUS UNITECH WIRELSS PVT. LTD. VS ACIT (2014) 362 IT R 417 (DEL.). XII. PRAFUL CHUNILAL PATEL: VASANT CHUNILAL PATEL VS ASST. CIT (1999) 832, 843-44, 844-45 (GUJ.), XIII. VENUS INDUSTRIAL CORPORATION VS ASST. CIT (1999) 236 ITR 742, 746 (PUNJ.), XIV. SRICHAND LALCHAND TALREJA VS ASST. CIT (1998) 98 TAXMAN 14, 19 (BOM.), XV. USHA BELTRON LTD. VS JCIT (1999) 240 ITR 728, 736-37 , 739 (PAT.) XVI. KAPOOR BROTHERS VS UNION OF INDIA (2001) 247 ITR 324 , 331, 332-33 XVII. VIPPY PROCESSORS PVT. LTD. VS CIT (2001) 249 ITR 7, 8 (MP) 2.7. IN DILIP S. DAHANUKAR VS ASST. CIT (2001) 248 ITR 147, 150-51 (BOM.). THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- HELD, THAT THERE WAS MATERIAL ON RECORD ON THE BASIS OF SURVEY AND STATEMENT OF PERSON TO SHOW THAT THE ASSESSEE HAD WRONGFULLY CLAIM DEDUCTION U/S 80IA. THEREFORE, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 1994-95. IDENTICALLY IN THE CASE OF SRICHAND LALCHAND TALREJA V. ASST. CIT, (1998) 98 TAXMAN 14, 19 (BOM) , WHERE THE INFORMATION REGARDING ACQUISITION OF THE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 13 ASSET WAS NOT AVAILABLE WITH THE ASSESSING OFFICER DURING THE RELEVANT ASSESSMENT YEAR 1992-93 AND SUCH INFORMATION WAS DISCLOSED IN THE RETURN FOR TH E ASSESSMENT YEAR 1995-96, THE HONBLE JURISDICTIONAL HIGH COURT HELD THAT THE ASSESSING OFFICER CAN FORM A BONA FIDE BELIEF THAT THERE WAS ESCAPEMENT OF INCOM E IN RELATION TO ASSESSMENT YEAR 1992-93 . 2.8. THE HONBLE JURISDICTIONAL HIGH COURT IN EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. V . ADDL. CIT, (2013) 350 ITR 651 (BOM), WHERE THERE HA D BEEN NO APPLICATION OF MIND TO THE RELEVANT FACTS D URING THE COURSE OF THE ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE VALID. 2.9. THE HONBLE JURISDICTIONAL HIGH COURT IN GIRILAL & CO. V. S.L. MEENA, ITO, (2008) 300 ITR 43 2 (BOM), HELD THAT IN ORDER TO INVOKE THE EXTRAORDIN ARY JURISDICTION OF THE COURT THE PETITIONER MUST ALSO MAKE OUT A CASE THAT NO PART OF THE RELEVANT MATERI AL HAD BEEN KEPT OUT FROM THE ASSESSING OFFICER). THE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 14 INFORMATION WAS IN THE ANNEXURES AND CONSEQUENTLY EXPLANATION 2(C)(IV) OF SECTION 147 WOULD APPLY. TH E REASSESSMENT PROCEEDINGS AFTER FOUR YEARS WERE VALI D. 2.10. IN THE CASE OF DEPUTY CIT V. GOPAL RAMNARAYAN KASAT, (2010) 328 ITR 556 (BOM), IT WAS NOT THE CASE OF THE ASSESSEE THAT THE NOTICE ISSUED WAS AFTER THE EXPIRY OF THE TIME LIMIT PROVIDED IN SECTION 15 3(2). THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN INDIAN HUME PIPE CO. LTD. V. ASST. CIT, (2012) 348 ITR 439 (BOM), BOTH IN THE COMPUTATION OF TAXABLE LONG- TERM CAPITAL GAINS IN THE ORIGINAL RETURN OF INCOME AND IN THE COMPUTATION THAT WAS SUBMITTED IN RESPONSE TO THE Q UERY OF THE ASSESSING OFFICER THERE WAS A COMPLETE SILEN CE IN REGARD TO THE DATES ON WHICH THE AMOUNTS WERE INVES TED, AS SUCH THERE BEING A FAILURE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. THI S VIEW WAS ALSO CONFIRMED IN FOLLOWING CASES:- A. DALMIA P. LTD. V. CIT, (2012) 348 ITR 469 (DEL); B. CIT V. K. MOHAN & CO. (EXPORTS), (2012) 349 ITR 653 (BOM); ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 15 C. REMFRY & SAGAR V. CIT, (2013) 351 ITR 75 (DEL); D. OPG METALS & FINSEC LTD. V. CIT, (2013) 358 ITR 144 (DEL). 2.11. IN THE CASE OF VENUS INDUSTRIAL CORPORATION V. ASST. CIT, (1999) 236 ITR 742, 746 (P & H) [WHERE INITIATION WAS STARTED WITHIN FOUR YEARS FOR RE-EXA MINING THE DEDUCTION UNDER SECTION 80HHC, WAS HELD TO BE WRONGLY ALLOWED IN THE ORIGINAL ASSESSMENT. IDENT ICALLY, IN THE CASE OF HAPPY FORGING LTD. V. CIT, (2002) 25 3 ITR 413,416-17 (P & H), WHERE EXCISE DUTY PAID IN ADVAN CE WAS SHOWN AS AN ASSET IN THE BALANCE SHEET AND WAS ALLOWED AS A DEDUCTION, REASSESSMENT NOTICE ON THE GROUND THAT EXCISE DUTY WAS SHOWN AS AN ASSET IN TH E BALANCE SHEET AND WAS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT. THE REOPENING AT THIS STAGE WAS HELD TO BE VALID. IN THE CASE OF VIPAN KHANNA V. CIT, (2002) 255 ITR 220, 230 (P & H), WHERE FROM THE FACTS IT WAS C LEAR THAT THE ASSESSEE HAD CLAIMED DEPRECIATION IN THE R ETURN AT THE RATE OF 50 PER CENT AND HE HAD NOWHERE DISPU TED THE FACT THAT THE ADMISSIBLE RATE OF DEPRECIATION T O HIM WAS 40 PER CENT., SUCH FACT ALONE WAS SUFFICIENT TO INITIATE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 16 REASSESSMENT PROCEEDINGS UNDER SECTION 147 AND, THEREFORE, SUCH INITIATION WAS SUSTAINED. THE HONB LE PUNJAB & HARYANA HIGH COURT IN MRS. RAMA SINHA V. CIT, (2002) 256 ITR 481, 483, 486, WHERE THE REASSESSMENT NOTICE HAS BEEN ISSUED ON THE BASIS OF DEFINITE INFORMATION FROM CBI REGARDING INVESTMENTS BY THE ASSESSEE WHICH HAD NOT BEEN DISCLOSED DURING TH E ORIGINAL ASSESSMENT PROCEEDINGS, SUCH INITIATION HA S BEEN UPHELD. 2.12. IN THE CASE OF PAL JAIN V. ITO, (2004) 267 I TR 540, 544-45, 548, 549 (P & H), APPLYING PHOOL CHAND BAJRANG LAL V. ITO, (1993) 203 ITR 456 (SC), ALTHOU GH THE TRANSACTION OF SALE OF SHARES WAS DISCLOSED AND ACC EPTED IN THE ORIGINAL ASSESSMENT, BUT THE SUBSEQUENT DISC OVERY BY THE DDI (INVESTIGATION) REVEALED THAT THE TRANSA CTION WAS NOT GENUINE, A REASSESSMENT NOTICE AFTER FOUR Y EARS HAS BEEN HELD TO BE VALID BECAUSE THERE WAS NO TRUE DISCLOSURE OF THE MATERIAL FACTS. IN THIS REGARD, T HE PETITIONER-ASSESSEE CANNOT DRAW ANY SUPPORT FROM TH E STATEMENT FOR CHALLENGING THE VALIDITY OF THE NOTIC E FOR ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 17 REASSESSMENT. IT GOES WITHOUT SAYING THAT FOR THE P URPOSE OF MAKING THE ASSESSMENT, THE ASSESSING OFFICER SHA LL HAVE TO CONFRONT THE PETITIONER WITH THE ENTIRE MAT ERIAL IN HIS POSSESSION ON THE BASIS OF WHICH HE PROPOSES TO MAKE THE ADDITIONS. IN PUNJAB LEASING PVT. LTD. V. ASST. CIT, (2004) 267 ITR 779, 781-82 (P & H), WHERE DEPRECIAT ION WAS ALLOWED TO THE ASSESSEE, WHO WAS ENGAGED IN THE BUSINESS OF FINANCING OF VEHICLES AND CONSUMER DURA BLES ON 'HIRE-PURCHASE BASIS' AS WELL AS ON 'LEASE/RENT BASIS', A REASSESSMENT NOTICE ISSUED AFTER FOUR YEARS HAS BEE N HELD NOT TO SUFFER FROM ANY ILLEGALITY AS THE SAME WAS B ASED ON THE BONA FIDE ACTION OF THE COMPETENT AUTHORITY TO DETERMINE WHETHER OR NOT THE VEHICLES IN RESPECT OF WHICH THE PETITIONER HAD BEEN CLAIMING DEPRECIATION, WERE ACTUALLY OWNED BY IT. 2.13. IN JAWAND SONS V. CIT(A), (2010) 326 ITR 39 (P & H), IN THE INITIAL ASSESSMENT, THE BENEFIT OF DED UCTION OF THE DUTY DRAWBACK AND DEPB UNDER SECTION 80-IB WAS WRONGLY GRANTED TO THE ASSESSEE, FOR WHICH IT WAS N OT ENTITLED. THEREFORE, REASSESSMENT PROCEEDINGS TO ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 18 WITHDRAW THE DEDUCTION WERE HELD TO BE VALID. LIKE WISE, IN CIT V. HINDUSTAN TOOLS & FORGINGS P. LTD., (2008 ) 306 ITR 209 (P & H), WHERE, THE ASSESSEE IN THE REGULAR ASSESSMENT HAD BEEN ALLOWED DEDUCTION MORE THAN ACTUALLY ALLOWABLE UNDER SECTION 80HHC. THEREFORE, THE ACTION INITIATED BY THE AO FOR REASSESSMENT UNDER S ECTION 147(B) COULD NOT BE HELD TO BE INVALID. 2.14. IN THE CASE OF MARKANDA VANASPATI MILLS LTD. V. CIT, (2006) 280 ITR 503 (P & H), WHEREIN, THE INFOR MATION FURNISHED BY THE ASSESSEE GAVE NO CLUE TO THE PAYME NT OF LIABILITY IN REGARD OF THE SALES TAX COLLECTED IN E XCESS. THE ASSESSING OFFICER WAS HELD TO BE VALIDLY INITIATED THE REASSESSMENT PROCEEDINGS UNDER SECTION 147 FOR BOTH THE YEARS UNDER CONSIDERATION. IN THE CASE OF SAT NAR AIN V. CIT, (2010) 320 ITR 448 (P & H), THE DOCUMENT DID N OT FORM THE SOLE BASIS FOR THE ASSESSING OFFICER TO I NITIATE REASSESSMENT PROCEEDING BUT HE ALSO TOOK INTO CONSIDERATION THE LETTER WRITTEN BY THE ASSISTANT COMMISSIONER AS WELL AS THE FACT THAT NO RETURN HAD BEEN FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 1995-96. THUS, ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 19 IT WAS HELD THAT THE ASSESSING OFFICER HAD RIGHTLY INVOKED THE JURISDICTION TO INITIATE THE REASSESSMENT PROCE EDINGS UNDER SECTION 147. IN THE CASE OF CIT V. HUKAM SIN GH, (2005) 276 ITR 347 (P & H), IT WAS HELD THAT THE RESPONDENTS DID NOT HAVE THE LOCUS STANDI TO QUESTI ON THE ORDERS OF REASSESSMENT ON THE GROUND OF LACK OF NOT ICE. NON-ISSUANCE OF NOTICE TO SOME OF THE LEGAL HEIRS O F THE LATE P WAS MERELY AN IRREGULARITY AND THE SAME DID NOT AFFECT THE VALIDITY OF THE REASSESSMENT ORDERS. LI KEWISE, IN TILAK RAJ BEDI V. JOINT CIT, (2009) 319 ITR 385 (P & H), WHEREIN, FACTS COMING TO LIGHT IN A SUBSEQUENT ASSESSMENT YEAR COULD VALIDLY FORM THE BASIS FOR IN ITIATING REASSESSMENT PROCEEDINGS, IN VIEW OF EXPLANATION 2 TO SECTION 147. THE ACTION OF THE INCOME TAX AUTHORITI ES IN REOPENING THE ASSESSMENT OF THE ASSESSEE AND RESTRI CTING THE DEDUCTION UNDER SECTION 80-IB WAS HELD TO BE VA LID. 2.15. IN THE CASE OF SMT. USHA RANI V. CIT, (2008) 301 ITR 121 (P & H), THERE WAS NOTHING ON RECORD TO SHOW THE RELATIONSHIP BETWEEN THE DONOR AND THE DONEE, CAPACITY OF THE DONOR TO MAKE GIFTS AND THE OCCASIO N ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 20 THEREFORE. THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS TO PROVE THE GIFTS. THE REASSESSMENT PROCEEDINGS WE RE HELD TO BE VALID. IN THE CASE OF USHA BELTRON LTD. V. JOINT CIT, (1999) 240 ITR 728, 736-37, 739 (PAT), WHERE T HE INVESTIGATION REPORT INDICATED THAT THE OFFICER HAD REASON TO BELIEVE THAT ON ACCOUNT OF FAILURE ON THE PART O F THE PETITIONER-ASSESSEE TO DISCLOSE TRUE AND FULL FACTS , INCOME HAD BEEN GROSSLY UNDER ASSESSED, REASSESSMENT PROCEEDINGS WERE HELD VALIDLY INITIATED. 2.16. IN THE CASE OF KAPOOR BROTHERS V. UNION OF INDIA, (2001) 247 ITR 324, 331, 332-33 (PAT), WHERE THE MATERIAL EVIDENCE FOR THE PURPOSE OF REOPENING OF T HE ASSESSMENT ALREADY COMPLETED HAS BEEN BROUGHT TO TH E NOTICE OF THE AUTHORITY DURING THE COURSE OF ENQUIR Y. THE NOTICE WAS HELD TO BE VALID BY THE HONBLE HIGH COU RT. IN THE CASE OF VIPPY PROCESSORS PVT. LTD. V. CIT, (200 1) 249 ITR 7, 8 (MP), WHERE THE NEED TO ISSUE NOTICE AROSE DUE TO NOTICING OF VAST DIFFERENCE IN VALUE OF PROPERTIES DISCLOSED BY THE ASSESSEE AND THAT OF THE REPORT OF THE VALUA TION OFFICER AND THE REASONS THAT LED TO THE ISSUE OF TH E NOTICE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 21 WERE DULY RECORDED AND THE SAME WERE ALSO ADEQUATE AND BASED ON RELEVANT FACTS AND MATERIAL, INITIATION WA S UPHELD. IN TRIPLE A TRADING & INVESTMENT PVT. LTD. V. ASST. CIT, (2001) 249 ITR 109, 110-11 (MP), WHERE T HE NOTICE WAS ISSUED AFTER RECORDING REASONS IN THAT R EGARD, INITIATION WAS UPHELD. 2.17. LIKEWISE, HONBLE GUJARAT HIGH COURT IN GARDEN FINANCE LTD. V. ADD/. CIT, (2002) 257 ITR 48 1, 489, 494-95, SPECIAL LEAVE PETITION DISMISSED BY TH E SUPREME COURT: (2002) 255 ITR (ST.) 7-8 (SC), WHERE THE ASSESSEE WAS HOLDING SHARES IN AN AMALGAMATING COMPANY AND HE WAS ALLOTTED SHARES IN THE AMALGAMAT ED COMPANY AND SUCH SHARES WERE SOLD BY HIM AND HE HAS DISCLOSED THE MARKET PRICE OF SUCH SHARES AS ON THE DATE OF AMALGAMATION AS THE COST OF ACQUISITION OF SUCH SHARES AND HAS NOT DISCLOSED THE COST OF ACQUISITION OF SH ARES IN THE AMALGAMATING COMPANY IN ACCORDANCE WITH SECTION 49(2) READ WITH SECTION 47(VII), INITIATION OF REAS SESSMENT PROCEEDINGS AFTER FOUR YEARS HAS BEEN SUSTAINED BEC AUSE THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DI SCLOSE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 22 MATERIAL FACTS NECESSARY FOR ASSESSMENT. LIKEWISE, IN SUMAN STEELS V. UNION OF INDIA, (2004) 269 ITR 412, 418- 19 (RAJ), WHERE THE RETURN OF THE ASSESSEE FOR ASSE SSMENT YEAR 1995-96 WAS PROCESSED UNDER SECTION 143(1)(A) ACCEPTING THE NET PROFIT RATE DECLARED BY THE ASSES SEE, WHO CARRIED ON CON- TRACT BUSINESS, INITIATION OF REASSESSMENT PROCEEDINGS BY ISSUING A NOTICE DATED 15-5- 2001 PROPOSING TO REASSESS PETITIONER-ASSESSEE AT H IGHER RATE IN VIEW OF THE PRESUMPTIVE RATE PRESCRIBED UND ER SECTION 44AD HAS BEEN SUSTAINED. IN THE CASE OF D R. SAHIB RAM GIRI V. ITO, (2008) 301 ITR 294 (RAJ), TH E REASSESSMENT PROCEEDINGS WERE INITIATED AFTER RECOR DING REASONS IN WRITING BY THE AO. THE NON-AVAILABILITY OF A FEW DOCUMENTS DEMANDED BY THE ASSESSEE WOULD NOT MAKE THE REASSESSMENT PROCEEDINGS INITIATED FOR THE REAS ONS RECORDED IN DETAIL ILLEGAL. 2.18. IN THE CASE OF DESH RAJ UDYOG : CHAMAN UDYOG V. ITO, (2009) 318 ITR 6 (ALL), IN THE ASSESSMENT Y EARS IN QUESTION, THE MATTER WAS STILL TO BE DECIDED FINALL Y BY THE ASSESSING AUTHORITY WHETHER THE INCOME SHOULD BE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 23 TREATED UNDER THE HEAD 'BUSINESS INCOME' OR 'PROPER TY INCOME'. THE ASSESSEE WOULD GET OPPORTUNITY TO SHOW SUFFICIENT CAUSE TO THE ASSESSING AUTHORITY DURING THE COURSE OF ASSESSMENT. THUS, IT COULD NOT BE SAID TH AT THERE WAS NO RELEVANT MATERIAL TO INITIATE PROCEEDI NGS UNDER SECTION 147. IN THE CASE OF KARTIKEYA INTERN ATIONAL V. CIT, (2010) 329 ITR 539 (ALL), IN VIEW OF THE MA TTER, THE PETITIONER WAS NOT ENTITLED FOR THE DEDUCTION ON TH E DUTY DRAWBACK AMOUNT UNDER SECTION 80-IB AND SINCE IT HA D BEEN ALLOWED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(1), IT HAD ESCAPED ASSESSMENT. ON THESE FACTS THE INITIATION OF THE PROCEEDINGS UNDER SECTION 147 READ WITH SECTION 148 FOR ASSESSMENT YEARS 2005-06 AND 2006-07 WAS LEGAL AND IN ACCORDANCE WITH LAW. 2.19. LIKEWISE, IN THE CASE OF SUNIL KUMAR LAIN: SURESH CHANDRA LAIN V. ITO, (2006) 284 ITR 626 (ALL ), NOTWITHSTANDING THE FACT THAT THE AMOUNT HAD BEEN ASSESSED TO TAX IN THE HANDS OF P, HE HAD TAKEN A S TAND THAT THE AMOUNT DID NOT BELONG TO HIM AND INSTEAD BELONGED TO S. THUS, IT WAS NOT CLEAR AS TO IN WHOS E ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 24 HANDS THE AMOUNT IN QUESTION HAD TO BE ASSESSED. TH E ITO WAS JUSTIFIED IN TAKING PROCEEDINGS UNDER SECTI ON 147 FOR ASSESSING THE AMOUNTS IN THE HANDS OF THE PETIT IONERS ACCORDING TO THE CLAIM MADE BY THE PETITIONERS. LI KEWISE, HONBLE KERALA HIGH COURT IN CIT V. DR. SADIQUE UMM ER, (2010) 322 ITR 602 (KER), WHERE, THE ASSESSING OFFI CER COLLECTED FURTHER INFORMATION TO COMPLETE THE REASSESSMENTS WHICH WAS ALSO PERMISSIBLE UNDER THE ACT. THE FINDING OF THE FIRST APPELLATE AUTHORITY AS WEL L AS THE TRIBUNAL, THAT THE ASSESSING OFFICER HAD NO MATERIA L TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT WAS WRONG AND CONTRARY TO FACTS. THE ASSESSEE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT. THEREFORE, THE REOPENING OF ASSESSMENTS WAS HELD TO BE VALID AND W ITHIN TIME. IN THE CASE OF CIT V. UTTAM CHAND NAHAR, (2 007) 295 ITR 403 (RAJ), THE NOTICE REQUIRING THE ASSESSE E TO FILE THE RETURN WITHIN 30 DAYS WAS IN ACCORDANCE WITH SE CTION 148 AS IT MUST BE DEEMED TO BE IN FORCE WITH EFFECT FROM 1-4-1989, AND IN FORCE AS ON THE DATE NOTICE WAS IS SUED. THERE WAS NO VIOLATION OF SECTION 148 IN RESPECT OF THE SPECIFIED PERIOD WITHIN WHICH THE RETURN IS TO BE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 25 SUBMITTED. THE REASSESSMENT PROCEEDINGS WERE HELD T O BE VALID. 2.20. IN THE CASE OF CIT V. C. V. LAYACHANDRAN, (2 010) 322 ITR 520 (KER), WHERE, THE ASSESSEE DID NOT CONC EDE THE INCOME ON CAPITAL GAIN EITHER UNDER THE UN-AMEN DED PROVISION OR UN-DER THE AMENDED PROVISION, THE RECO URSE OPEN TO THE DEPARTMENT WAS TO BRING TO TAX INCOME ESCAPING ASSESSMENT UNDER SECTION 147 WHICH WAS NOT TIME BARRED OR OTHERWISE INVALID. LIKEWISE, IN AT UL TRADERS V. ITO, (2006) 282 ITR 536 (ALL), THE ACCOU NT BOOKS OR RECORD AND OTHER MATERIAL WERE ALL COMMON WHICH WERE BEING CONSIDERED BY THE CIT(A) IN THE PROCEEDINGS RELATING TO THREE APPEALS. THE PETITION ER HAD NOTICE AND OPPORTUNITY OF BEING HEARD. THE REASSESS MENT PROCEEDINGS WERE HELD TO BE VALIDLY INITIATED. IN THE CASE OF INDUCTOTHERM (INDIA) P. LTD. V. LAMES KURIAN, AS ST. CIT, (2007) 294 ITR 341 (GUJ), THE ASSESSING OFFICER HA D FOUND THAT THERE WERE ERRORS IN THE COMPUTATION OF ALLOWANCES. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN THE CASE OF PAPAYA FARMS PVT. LTD. VS. DCIT, ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 26 (2010) 323 ITR 60 (MAD), WHERE THE ASSESSEE HAD FURNISHED INCORRECT PARTICULARS AND THEREFORE, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE JUSTIFIE D. 2.21. IN THE CASE OF CIT V. KERALA STATE CASHEW DEVELOPMENT CORPORATION LTD., (2006) 286 ITR 553 (K ER), WHEREIN, THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING SHOULD NOT HAVE CLAIMED DEDUCT ION OF PENAL INTEREST WHICH HAD ACCRUED NOT IN THE PREV IOUS YEAR RELEVANT TO THE ASSESSMENT YEAR BUT IN EARLIER YEARS. THIS THE ASSESSEE HAD NOT DISCLOSED. THE REASSESSME NT WAS HELD TO BE VALID. LIKEWISE, IN KUSUM INDUSTRIE S P. LTD. V. CIT, (2008) 296 ITR 242 (ALL), AS THE AWARD HAD BECOME FINAL IT WOULD BE TAKEN THAT THE DIRECTORS O F THE ASSESSEE HAD ACCEPTED THE FACTUM OF EARNING OF SECR ET PROFIT NOT REFLECTED IN THE BOOKS OF ACCOUNT, WHICH WAS ALSO BINDING ON THE COMPANY. THE NON-APPEARANCE OF ONE OF THE ARBITRATORS AND ONE OF THE DIRECTORS IN RESP ECT OF THE SUMMON ISSUED UNDER SECTION 131 WOULD NOT MAKE THE REASSESSMENT INVALID. THE HONBLE KERALA HIGH C OURT IN CIT V. INDO MARINE AGENCIES (KERALA) P. LTD., (2 005) ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 27 279 ITR 372 (KER), HELD THAT THE ENTRY WOULD AMOUNT TO AN ORDER UNDER SECTION 144. THE MERE FACT THAT IT W AS NOT COMMUNICATED TO THE ASSESSEE WOULD NOT MAKE SUCH AN ASSESSMENT RECORDED IN THE ORDER SHEET ILLEGAL AND THAT WOULD NOT BAR FURTHER PROCEEDINGS UNDER SECTION 147 . THUS, THE ASSESSMENT WAS HELD TO BE VALIDLY REOPENE D UNDER EXPLANATION 2(C) TO SECTION 147. LIKEWISE, I N CIT V. N. JAYAPRAKASH, (2006) 285 ITR 369 (KER), WHERE, TH E ASSESSEE COULD NOT, AFTER HAVING PERSUADED THE ASSE SSING AUTHORITY TO WITHDRAW THE NOTICE DATED 1-10-1993, POINTING OUT THAT IT WAS NOT IN CONFORMITY WITH LAW , BE ALLOWED TO CONTEND THAT THE NOTICE WAS VALID DUE TO THE OMISSION OF THE TIME-LIMIT BY THE FINANCE (NO.2) AC T, 1996, WITH EFFECT FROM 1-4-1989. IN THE ABSENCE OF SPECIFIC PROVISION IN THE FINANCE (NO. 2) ACT, 1996 , INVALIDATING PROCEEDINGS INITIATED BY THE INCOME-TA X OFFICER, THE ACTION TAKEN BY HIM APPLYING THE THEN EXISTING LAW COULD NOT BE SAID TO BE INVALID. 2.22. LIKEWISE, IN CIT V. S.R. TALWAR, (2008) 305 ITR 286 (ALL), THE FACTUM OF TAKING ADVANCES OR LOAN FR OM T ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 28 AND K, IN WHICH THE ASSESSEE WAS ONE OF THE DIRECTO RS HAD NOT BEEN DISCLOSED NOR A COPY OF THE LEDGER ACCOUNT OF THE ASSESSEE MAINTAINED BY THE COMPANY FILED. IN VIEW O F THE ABSENCE OF THESE DETAILS, THE ASSESSING OFFICER CO ULD NOT EXAMINE THE TAXABILITY OF ADVANCES OR LOAN RAISED B Y THE ASSESSEE. THERE WAS FAILURE TO DISCLOSE MATERIAL FA CTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PROCEEDI NGS WERE HELD TO BE VALID. IN ANOTHER CASE, THE HONBL E ALLAHABAD HIGH COURT IN CHANDRA PRAKASH AGRAWAL V. ASST. CIT, (2006) 287 ITR 172 (ALL), WHEREIN, THE I NCOME- TAX DEPARTMENT HAD SENT A REQUISITION ON 27-3-2002, UNDER SECTION 132A REQUISITIONING THE BOOKS OF ACCO UNT AND OTHER DOCUMENTS SEIZED BY THE CENTRAL EXCISE DEPARTMENT. THE RECORD OF THE PROCEEDING DATED 18-4 - 2002, SHOWED THAT THE REQUISITION WAS NOT FULLY EXE CUTED AS ALL THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS HAD NOT BEEN DELIVERED TO THE REQUISITIONING AUTHORITY. THE PROCEEDINGS INITIATED UNDER SECTION 147 WAS HELD TO BE VALID. ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 29 2.23. IN RAMILABEN RATILAL SHAH V. CIT, (2006) 282 ITR 176 (GUJ), HELD THAT THE NOTING IN THE DIAR Y CONSTITUTED SUFFICIENT INFORMATION FOR THE ESCAPEME NT OF INCOME BY EITHER NON-DECLARATION OF CORRECT SALE CONSIDERATION OR FURNISHING OF INACCURATE PARTICULA RS AS REGARDS SALE CONSIDERATION. THUS, THE TRIBUNAL W AS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD FAILED T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT OF THE RELEVANT ASSESSMENT YEAR. THE REASSESSMENT PROCEEDINGS HAD BEEN VALIDLY INITIATED. 2.24. LIKEWISE, IN CIT V. ABDUL KHADER AHAMED, (2006) 285 ITR 57 (KER), IT WAS CLEAR FROM THE REAS ONS RECORDED BY THE DEPUTY CIT THAT HE PRIMA FACIE HAD REASON TO BELIEVE THAT THE ASSESSEE HAD OMITTED TO DISCLOSE FULLY AND TRULY THE MATERIAL FACTS AND THA T AS A CONSEQUENCE INCOME HAD ESCAPED ASSESSMENT. THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF U.P. STATE BRASSWARE CORPORATION LTD. V. CIT, (2005) 277 ITR 40 (ALL), THE PRINCIPLES LAID DOWN BY THE CALCUTTA HIGH ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 30 COURT IN CIT V. NEW CENTRAL JUTE MILLS CO. LTD. : ( 1979) 118 ITR 1005 (CAL) DID CONSTITUTE INFORMATION ON A POINT OF LAW WHICH SHOULD BE TAKEN INTO CONSIDERATION BY THE ITO IN FORMING HIS BELIEF THAT THE INCOME TO THAT E XTENT HAD ESCAPED ASSESSMENT TO TAX AND, THE REASSESSMENT WAS HELD TO BE VALID. IN SUNDER CARPET INDUSTRIES V. ITO, (2010) 324 ITR 417 (ALL), HELD THAT THE DEPARTMENTA L VALUER'S REPORT CONSTITUTED MATERIAL FOR ENTERTAINI NG A BELIEF OF ESCAPED INCOME IN THE YEARS UNDER CONSIDERATION. THE REASSESSMENT PROCEEDING WAS HELD TO BE VALID. 2.25.. IN AUROBINDO SANITARY STORES V. CIT, (2005) 276 ITR 549 (ORI), THERE BEING A SUBSTANTIAL DIFFERENCE BETWEEN THE FIGURES OF LIABILITIES TOWAR DS SUNDRY CREDITORS IN THE PARTY LEDGERS OF THE ASSESS EE-FIRM AND THE FIGURES OF LIABILITIES TOWARDS SUNDRY CREDI TORS IN THE BALANCE-SHEET OF THE ASSESSEE-FIRM FOR THE PREV IOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1989-90. THESE MATERIALS HAD A DIRECT LINK AND NEXUS FOR FORMATION OF A BELIEF BY THE ASSESSING OFFICER THAT INCOME OF THE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 31 ASSESSEE-FIRM HAD ESCAPED ASSESSMENT BECAUSE OF FAI LURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR THE ASSESSMENT. IN THE CASE OF CIT V. BEST WOOD INDUSTRIES & SAW MILLS, (2011) 331 ITR 63 (KER), THE ASSESSEE CHALLENGED THE VALIDITY OF THE REASSESSMENT ON THE GROUND THAT THE AO HAD EXCEEDED HIS JURISDICTION UNDER SECTION 147 AND BOTH THE FIR ST APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL ACCEPTE D THE CONTENTION OF THE ASSESSEE HOLDING THAT SO FAR AS T HE REASSESSMENTS RELATED TO ASSESSMENT OF UNEXPLAINED TRADE CREDITS, THEY WERE INVALID. ON APPEAL, IT HAS BEEN HELD THAT THE REASSESSMENTS WERE TO BE VALID. IN H ONDA SIEL POWER PRODUCTS LTD. V. DEPUTY CIT, (2012) 340 ITR 53 (DEL), THERE BEING OMISSION AND FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MATERIAL F ACTS THUS REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID . 2.26. IN ATMA RAM PROPERTIES PRIVATE LTD. V. DEPUT Y CIT, (2012) 343 ITR 141 (DEL), AS THE BOOKS OF ACCO UNT AND OTHER MATERIAL WERE NOT PRODUCED AND NO LETTER WAS FILED, THE ORDER PASSED BY THE COMMISSIONER (APPEAL S) IN ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 32 THE ASSESSMENT YEAR 2001-02 WOULD CONSTITUTE 'INFORMATION' OR MATERIAL FROM ANY EXTERNAL SOURCE AND, AS SUCH, THE REASSESSMENT PROCEEDINGS FOR THE ASSESSME NT YEAR 2000-01 WERE HELD TO BE VALID. LIKEWISE, IN T HE CASE OF CIT V. SMT. R. SUNANDA BAI, (2012) 344 ITR 271 (KER), THE REASSESSMENT IN QUESTION WERE HELD TO BE VALID ON THE FACT THAT THE ASSESSEE CLAIMED AND WAS GIVEN RELIEF UNDER SECTION 80HHA FOR THE THREE PRECEDING YEAR WHICH DISENTITLED HER FOR DEDUCTION UNDER SECTION 80HH FO R THE ASSESSMENT YEARS 1992-93 AND 1993-94. 2.27. IN THE CASE OF AQUAGEL CHEMICALS P. LTD. V. ASST. CIT, (2013) 353 ITR 131 (GUJ), SINCE THERE BE ING SUFFICIENT MATERIAL ON RECORD FOR THE ASSESSING OFF ICER TO FORM A BELIEF AS REGARDS THE ESCAPEMENT OF INCOME I N RELATION TO THE CLAIM OF DEPRECIATION IN RESPECT OF THE BUILDING OF COAL FIRE BOILER, THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF CONVERGYS CUSTOMER MANAGEMENT V. ASST. DIT, (2013) 357 ITR 177 (DEL), WHERE THERE BEING PRIMA FACIE MATERIAL IN THE POSSE SSION OF THE ASSESSING OFFICER TO FORM A TENTATIVE BELIEF THAT ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 33 SECTION 9(1)(I) HELD ATTRACTED, SAID REASON BY ITSE LF CONSTITUTED A RELEVANT GROUND TO REOPEN THE ASSESSM ENT OF THE ASSESSEE. REFERENCE MAY ALSO BE MADE TO I. AJAI VERMA V. CIT [(2008) 304 ITR 30 (ALL)]; II. ASHOK ARORA V. CIT [(2010) 321 ITR 171 (DEL)]; III. CIT V. CHANDRASEKHAR BALAGOPAL [(2010) 328 ITR 619 (KER)]; IV. JAYARAM PAPER MILLS LTD. V. CIT [(2010) 321 ITR 56 (MAD)]; V. KERALA FINANCIAL CORPORATION V. JOINT CIT [(2009) 308 ITR 434 (KER)]; VI. MAVIS SATCOM LTD. V. DEPUTY CIT [(2010) 325 ITR 428 (MAD)]; VII. CIT V. MADHYA BHARAT ENERGY CORPORATION LTD. [(2011) 337 ITR 389 (DEL)]; VIII. KONE ELEVATOR INDIA P. LTD. V. ITO [(2012) 340 ITR 45 4 (MAD)]; IX. VIJAY KUMAR SABOO V. ASST. CIT [(2012) 340 ITR 382 (KARN)]; X. SIEMENS INFORMATION SYSTEMS LTD. V. ASST. CIT [(2012) 343 ITR 188 (BOM)]; XI. I.P. PATEL & CO. V. DEPUTY CIT [(2012) 346 ITR 207 (GUJ)]; XII. DISHMAN PHARMACEUTICALS & CHEMICALS LTD. V. DEPUTY CIT [(2012) 346 ITR 228 (GUJ)]; XIII. VIDEO ELECTRONICS LTD. V. JOINT CIT [(2013) 353 ITR 73 (DEL)]; ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 34 XIV. A G GROUP CORPORATION V. HARSH PRAKASH [(2013) 353 ITR 158 (GUJ)]; XV. INDUCTOTHERM (INDIA) P. LTD. V. M. GOPALAN, DEPUTY CIT [(2013) 356 ITR 481 (GUJ)]; CIT V. DHANALEKSHMI BAN K LTD. [(2013) 357 ITR 448 (KER)]; XVI. SITARA DIAMOND PVT. LTD. V. ITO [(2013) 358 ITR 424 (BOM)]; XVII. RAYALA CORPORATION P. LTD. V. ASST. CIT [(2014) 363 IT R 630 (MAD)]. 2.28. SO FAR AS, THE DECISION IN THE CASE OF CIT V S KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) IS CONCERNED, THE HONBLE APEX COURT, WHILE COMING TO A PARTICULAR CONCLUSION, ONLY IN A SITUATION, WHEN NO T A SINGLE PIECE OF PAPER OR DOCUMENT WAS RECOVERED, THEREFORE, THE HONBLE COURT HELD THAT SINCE THERE WAS NO TANGIBLE MATERIAL FOUND AND THE ADDITION WAS MERELY ON THE BASIS OF STATEMENT ONLY THEN REOPENING OF ASSES SMENT U/S 147 OF THE ACT WAS NOT PERMISSIBLE. LIKEWISE, IN THE CASE OF CIT VS S. KHADER KHAN SON (2012) 254 CTR 22 8 (SC), AFFIRMING THE DECISION OF MADRAS HIGH COURT I N (2008) 300 ITR 157 (MAD.), THE WHOLE ADDITION WAS M ADE SOLELY ON THE BASIS OF STATEMENT U/S 133A AND NO OT HER ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 35 MATERIAL WAS FOUND, IN THAT SITUATION, IT WAS HELD THAT THE SUCH STATEMENT HAS NO EVIDENTIARY VALUE. 2.29. IN THE CASE OF ARADHNA ESTATE PVT. LTD. VS D CIT (2018) 91 TAXMANN.COM 119 (GUJARAT), THE HON'BLE HI GH COURT OBSERVED/HELD AS UNDER:- IN REASONS RECORDED BY THE ASSESSING OFFICER FOR R EOPENING THE ASSESSMENT. HE POINTED OUT THAT THE INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT CALCUTTA RE GARDING SHELL COMPANIES WHICH HAD GIVEN ACCOMMODATION ENTRIES FOR SHARE PREMIUM TO SURAT BASED COMPANIES. A LIST OF 114 CAL CUTTA BASED COMPANIES WAS PROVIDED WHICH HAD GIVEN ACCOMMODATIO N ENTRIES TO SUCH SURAT BASED COMPANIES. STATEMENTS OF MANY ENTR Y OPERATORS AND DUMMY DIRECTORS RECORDED DURING VARIOUS SEARCH AND SEIZURE OPERATION, SURVEY OPERATION AND INVESTIGATION WERE CHECKED. THE ASSESSING OFFICER THEREUPON PROCEEDED TO RECORD THA T 'ON PERUSAL OF DATA SO PROVIDED BY THE DEPUTY DIRECTOR (INVESTIGAT ION), IT IS NOTICED THAT DURING THE PERIOD UNDER CONSIDERATION, THE ASS ESSEE COMPANY HAS ACCEPTED SHARE CAPITAL/SHARE PREMIUM FROM THE FOLLO WING ENTRIES/PARTIES WHICH HAVE BEEN PROVED TO BE SHELL COMPANIES BASED ON THE INVESTIGATION CONDUCTED BY THE DEPUTY DIRECT OR (INVESTIGATION). UNDERNEATH, HE PROVIDED A LIST OF 17 COMPANIES WHO HAD TRANSACTED WITH THE ASSESSEE COMPANY DURING THE YEAR UNDER CON SIDERATION AND WERE ALLOTED EQUITY SHARES BY PURPORTED INVESTMENT OF SIZEABLE SHARE CAPITAL AND SHARE PREMIUM AMOUNTS. ON VERIFICATION OF SUCH MATERIALS, THE ASSESSING OFFICER NOTED THAT THE ASS ESSEE HAD RECEIVED SHARE CAPITAL/SHARE PREMIUM AMOUNT, SINCE THE INVES TOR COMPANIES WERE FOUND TO BE SHELL COMPANIES INDULGING IN PROVI DING ACCOMMODATION ENTRIES, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE SHARE CAPITAL/SHARE PREMIUM CLAIMED TO HAVE BEE N RECEIVED FROM THE COMPANY BY THE ASSESSEE WAS NOT GENUINE. AMOUNT IS NOTHING BUT ASSESSEE'S OWN MONEY INTRODUCED IN THE GARB OF SHAR E CAPITAL/SHARE PREMIUM FROM THE SHELL COMPANIES AND THEREFORE, SUC H AMOUNT IS LIABLE TO BE TAXED UNDER SECTION 68. HE THEREFORE, RECORDED HIS SATISFACTION THAT THE INCOME HAD ESCAPED ASSESSMENT AND THAT THIS WAS DUE TO THE ASSESSEE HAVING FAILED TO DISCLOSE TRULY AND FULLY ALL FACTS. [PARA 7] SECTION 147 PROVIDES INTER ALIA THAT IF THE ASSESSING OFFICER HAS THE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, HE MAY SUBJECT TO THE PROVISIONS OF SEC TIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME. PROVISO TO SECTION 147 OF COURSE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 36 REQUIRES THAT WHERE THE ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF THE FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON PART OF THE ASSESSEE TO MAKE RETURN UNDER SECTION 139 OR IN RES PONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT FOR THAT ASSESSMENT YEAR. IN THIS CONTEXT, IT IS WELL SETTLE D THAT THE REQUIREMENT OF FULL AND TRUE DISCLOSURE ON PART OF THE ASSESSEE IS NOT CONFINED TO FILING OF RETURN ALONE BUT WOULD CONTINUE ALL THROU GHOUT DURING THE ASSESSMENT PROCEEDINGS ALSO. IN THIS CONTEXT, THE M ATERIALS ON RECORD WOULD SUGGEST THAT THE ASSESSING OFFICER HAD RECEIV ED FRESH INFORMATION AFTER THE ASSESSMENT WAS OVER PRIMA FACIE SUGGESTING THAT SIZEABLE AMOUNT OF INCOME CHARGEABLE TO TAX IN CASE OF THE ASSESSEE HAD ESCAPED ASSESSMENT AND THAT SUCH ESCAPEMENT WAS ON ACCOUNT OF FAILURE ON PART OF THE ASSESSEE TO DISCLOSE TRULY A ND FULLY ALL MATERIAL FACTS. THE ASSESSING OFFICER FORMED SUCH A BELIEF O N THE BASIS OF SUCH MATERIALS PLACED BEFORE HIM AND UPON PERUSAL OF SUC H MATERIAL. THIS IS NOT A CASE WHERE THE ASSESSING OFFICER WAS REEXA MINING THE MATERIALS AND THE DOCUMENTS ALREADY ON RECORD FILED BY THE ASSESSEE ALONG WITH THE RETURN OR SUBSEQUENTLY, BROUGHT ON R ECORD DURING THE ASSESSMENT PROCEEDINGS. IT WAS A CASE WHERE ENTIREL Y NEW SET OF DOCUMENTS AND MATERIALS WAS PLACED FOR HIS CONSIDER ATION COMPILED IN THE FORM OF REPORT RECEIVED FROM THE INVESTIGATION WING. SUCH MATERIAL WAS PERUSED BY THE ASSESSING OFFICER AND UPON EXAMI NATION THEREOF, HE FORMED A BELIEF THAT THE ASSESSEE COMPANY HAD RE CEIVED SHARE APPLICATION AND SHARE PREMIUM MONEY FROM AS MANY AS 20 DIFFERENT INVESTOR COMPANIES WHO WERE FOUND TO BE SHELL COMPA NIES AND INDULGING IN GIVING ACCOMMODATION ENTRIES. FROM THI S VIEW POINT, SINCE THE ASSESSING OFFICER HAD SUFFICIENT MATERIAL AT HIS COMMAND TO FORM SUCH A BELIEF. SUCH MATERIALS DID NOT FORM PAR T OF THE ORIGINAL ASSESSMENT PROCEEDINGS AND WAS PLACED BEFORE THE AS SESSING OFFICER ONLY AFTER THE ASSESSMENT WAS COMPLETED. SINCE ON T HE BASIS OF SUCH MATERIALS, ASSESSING OFFICER, CAME TO A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, MERELY BE CAUSE THESE TRANSACTIONS WERE SCRUTINISED BY THE ASSESSING OFFI CER DURING THE ORIGINAL ASSESSMENT ALSO WOULD NOT PRECLUDE HIM FRO M REOPENING THE ASSESSMENT. HIS SCRUTINY DURING THE ASSESSMENT WILL NECESSARILY BE ON THE BASIS OF THE DISCLOSURES MADE BY THE ASSESSEE. [PARA 8] THE CONTENTION THAT THERE WAS NO FAILURE ON PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY FACTS CANNOT BE ACCEPTED. THE ASSESSING OFFICER, AS NOTED, RECEIVED FRESH MATERIAL AFTER TH E ASSESSMENT WAS OVER, PRIMA FACIE , SUGGESTING THAT THE ASSESSEE COMPANY HAD RECEIVED BOGUS SHARE APPLICATION/PREMIUM MONEY FROM NUMBER O F SHELL COMPANIES. [PARA 10] ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 37 MERELY BECAUSE THE TRANSACTIONS IN QUESTION WERE EX AMINED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT WO ULD NOT MAKE ANY DIFFERENCE. THE SCRUTINY WAS ON THE BASIS OF DISCLO SURES MADE AND MATERIALS SUPPLIED BY THE ASSESSEE. SUCH MATERIAL I S FOUND TO BE PRIMA FACIE UNTRUE AND DISCLOSURES NOT TRUTHFUL. EARLIER SCRUT INY OR EXAMINATION ON THE BASIS OF SUCH DISCLOSURES OR MAT ERIALS WOULD NOT DEBAR A FRESH ASSESSMENT. EACH INDIVIDUAL CASE OF T HIS NATURE IS BOUND TO HAVE SLIGHT DIFFERENCE IN FACTS. [PARA 11] THE NEXT CONTENTION THAT THE ASSESSING OFFICER DID NOT DEMONSTRATE ANY MATERIAL ENABLING HIM TO FORM A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IS FALLACIOUS. THE ASSESSING OFFICER RECORDED DETAILED REASONS POINTING OUT THE MATERIAL AVAILABL E WHICH HAD A LIVE LINK WITH FORMATION OF BELIEF THAT THE INCOME CHARG EABLE TO TAX HAD ESCAPED ASSESSMENT. AT THIS STAGE, AS IS OFTEN REPE ATED, ONE WOULD NOT GO INTO SUFFICIENCY OF SUCH REASONS. [PARA 13] SECTION 68 AS IS WELL KNOWN, PROVIDES THAT WHERE AN Y SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, I N THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEAR. THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSE E FROM ABOVE- NOTED COMPANIES WAS ONLY BY NATURE OF ACCOMMODATION ENTRIES AND IN REALITY, IT WAS THE FUNDS OF THE ASSESSEE WHICH WAS BEING RE-ROUTED. UNDOUBTEDLY. SECTION 68 WOULD HAVE APPLICABILITY. P ROVISO ADDED BY THE FINANCE ACT, 2012 WITH EFFECT FROM 1-4-2013, DO ES NOT CHANGE THIS POSITION. [PARA 14] AS PER THIS PROVISO, WHERE THE ASSESSEE IS A COMPAN Y AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, EXPLANATION OFFERED BY THE ASSESSEE COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS THE PERSON IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF THE COMPANY ALSO OFFERS AN EXPLANAT ION ABOUT THE NATURE AND SOURCE OF SUM SO CREDITED AND SUCH EXPLA NATION IN THE OPINION OF THE ASSESSING OFFICER HAS BEEN FOUND TO BE SATISFACTORY. ESSENTIALLY, THIS PROVISO EASES THE BURDEN OF PROOF ON THE REVENUE WHILE MAKING ADDITION UNDER SECTION 168 WITH RESPEC T TO NON GENUINE SHARE APPLICATION MONEY OF THE COMPANIES. EVEN IN A BSENCE OF SUCH PROVISO AS WAS THE CASE GOVERNING THE PERIODS WITH WHICH WE ARE CONCERNED IN THE PRESENT CASE, IF FACTS NOTED BY TH E ASSESSING OFFICER AND RECORDED IN REASONS ARE ULTIMATELY ESTABLISHED, INVOCATION OF SECTION 68 WOULD BE CALLED FOR. [PARA 15] THE CONTENTION THAT THE ASSESSING OFFICER HAD MEREL Y AND MECHANICALLY ACTED ON THE REPORT OF THE INVESTIGATI ON WING ALSO CANNOT BE ACCEPTED. ONE HAS REPRODUCED THE REASONS RECORDE D BY THE ASSESSING OFFICER AND NOTED THE GIST OF HIS REASONS FOR RESORTING TO ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 38 REOPENING OF THE ASSESSMENT. THE ASSESSING OFFICER HAD PERUSED THE MATERIALS PLACED FOR HIS CONSIDERATION AND THEREUPO N, UPON EXAMINATION OF SUCH MATERIALS FORMED A BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. [PARA 16] IN THE RESULT, PETITION IS DISMISSED. [PARA 17] 2.30. THE HON'BLE GUJARAT HIGH COURT WHILE VALIDATING THE REOPENING OF ASSESSMENT UNDER SECTIO N 147/148 OF THE ACT IN A LATER ORDER (AFORESAID) DAT ED 20/02/2018 ON THE ISSUE OF CASH CREDIT (SHARE APPLICATION MONEY) DULY CONSIDERED THE ARGUMENTS OF BOTH SIDES AND FOLLOWED THE FOLLOWING THE DECISIONS I. JAYANT SECURITY AND FINANCE LTD. V. ASSTT. CIT [SPECIAL CIVIL APPLICATION NO. 18921 OF 2017, DATED 12-2-2018 ] (PARA 12); II. RAYMOND WOOLEN MILLS LTD. V. ITO [1999] 236 ITR 34 (SC) (PARA 13); III. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 291 ITR 500/161 TAXMAN 316 (SC) (PARA 13) IV. PR. CIT V. GOKUL CERAMICS [2016] 241 TAXMAN 1/71 TAXMANN.COM 341 (GUJ.) (PARA 16) AND DISTINGUISHED THE FOLLOWING DECISIONS I. ALLIED STRIPS LTD. V. ASSTT. CIT [2016] 384 ITR 424/69 TAXMANN.COM 444 (DELHI) (PARA 11) AND II. YOGENDRAKUMAR GUPTA V. ITO [2014] 366 ITR 186/46 TAXMANN.COM 56 (GUJ.) (PARA 11) ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 39 THE HON'BLE HIGH COURT WHILE UPHOLDING THE VALIDITY OF REOPENING ALSO CONSIDERED FOLLOWING DECISION, WHICH WERE REFERRED BY BOTH SIDES- I. ALLIED STRIPS LTD. V. ASSTT. CIT [2016] 384 ITR 424/69 TAXMANN.COM 444 (DELHI) (PARA 5), II. HARIKRISHAN SUNDERLAL VIRMANI V. DY. CIT [2017] 394 ITR 146 (GUJ.) (PARA 5), III. RAYMOND WOOLEN MILLS LTD.V. ITO [1999] 236 ITR 34 (SC) (PARA 6), IV. YOGENDRAKUMAR GUPTA V. ITO [2014] 366 ITR 186/46 TAXMANN.COM 56 (GUJ.) (PARA 6), V. AASPAS MULTIMEDIA LTD. V. DY. CIT [2017] 83 TAXMANN.COM 82/249 TAXMAN 568 (GUJ.) (PARA 6), VI. JAYANT SECURITY & FINANCE LTD. V. ASSTT. CIT [SP. CIVIL APPLICATION NO. 18921 OF 2017, DATED 12-2- 2018] (PARA 12), VII. ASSTT. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 291 ITR 500/161 TAXMAN 316 (SC) (PARA 13) AND VIII. PR. CIT V. GOKUL CERAMICS [2016] 241 TAXMAN 1/71 TAXMANN.COM 341 (GUJ.) (PARA 16). 2.31.. THE SUM AND SUBSTANCE OF THE AFORESAID DECISION WAS THAT SINCE THE ASSESSING OFFICER WAS H AVING SUFFICIENT MATERIAL AT HIS COMMAND TO FORM A REASON ABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, MERELY BECAUSE THIS TRANSACTIONS WERE SCRUTINIZE BY THE ASSESSING OFFICER DURING THE ORIG INAL ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 40 ASSESSMENT, WOULD NOT PRECLUDE HIM FROM REOPENING ASSESSMENT. THUS, THE ASSESSMENT NOTICE WAS HELD TO BE JUSTIFIED. IN THE APPEAL BEFORE US, THE LD. ASSESSING OFFICER AS STATED ABOVE, RECEIVED INFORMATION THAT THE ASSE SSEE IS BENEFICIARY OF BOGUS PURCHASES AMOUNTING TO RS.6,23,19,289/- , THEREFORE, THE LD. ASSESSING OFFICER WAS UNDER A REASONABLE BELIEF THAT INCOME CHARGEABL E TO TAX HAS ESCAPED ASSESSMENT. THE FACTS HAS BEEN ENUMERATED IN THE ASSESSMENT ORDER, THEREFORE, THE SAME ARE NOT BEING REPEATED BEING MATTER OF RECORD. ON T HE BASIS OF FACTUAL MATRIX AND THE CASE LAWS, WE ARE O F THE CONSIDERED OPINION THAT THE LD. ASSESSING OFFICER W AS QUITE JUSTIFIED TO REOPEN THE ASSESSMENT UNDER SECT ION 147/148 OF THE ACT, THUS, THIS GROUND OF THE ASSESS EE IS HAVING NO MERIT, THEREFORE, DISMISSED. 3. THE NEXT GROUND IS WITH RESPECT TO UPHOLDING THE ADDITION @12.5% OF THE ALLEGED BOGUS PURCHASES AMOUNTING TO RS.6,23,19,289/- MADE UNDER SECTION 69 C OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). WE HAVE PERUSED THE ASSESSMENT ORDER AS WELL AS THE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 41 IMPUGNED ORDER AND THE CONTENTION OF THE ASSESSEE RAISED THEREIN. ON THE OTHER HAND, THE LEARNED DR STRONGLY DEFENDED THE ASSESSMENT ORDER/IMPUGNED ORD ER BY PLACING RELIANCE UPON THE DECISION IN THE CASE O F N K PROTEINS FROM HON'BLE APEX COURT. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE T HAT THE LEARNED ASSESSING OFFICER ESTIMATED THE GROSS P ROFIT @ 12.5% OF SUCH BOGUS PURCHASES, RESULTING INTO ADDIT ION OF RS.77,89,911/- (12.5% OF RS.6,23,19,289/-) FOR ASSESSMENT YEAR 2010-11 AND RS.35,44,809/- AT THE SAME RATE ON THE BOGUS PURCHASES TO THE TUNE OF RS.2,83,58,475/- FOR ASSESSMENT YEAR 2011-12 . 3.2. BEFORE ADVERTING FURTHER, WE DEEM IT APPROPRIATE TO CONSIDER VARIOUS DECISIONS FROM HON' BLE HIGH COURTS/HON'BLE APEX COURT, SO THAT WE CAN REAC H TO A PROPER CONCLUSION. THE HON'BLE GUJARAT HIGH COURT IN SANJAY OILCAKES INDUSTRIES VS CIT (2009) 316 ITR 27 4 (GUJ.) HELD AS UNDER:- ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 42 11. HAVING HEARD THE LEARNED ADVOCATES APPEARING FOR THE RESPECTIVE PARTIES, IT IS APPAREN T THAT NO INTERFERENCE IS CALLED FOR IN THE IMPUGNED ORDER OF THE TRIBUNAL DATED APRIL 29, 1994, READ WITH THE ORDER DATED SEPTEMBER 29, 1994, MADE IN MISCELLANEOUS APPLICATION. IN THE PRINCIPAL ORDER THE TRIBUNAL HAS RECORDED THE FOLLOWING FINDINGS : '8.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE FACTS ON RECORD. IN OUR OPINION, THE ACTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMING 25 PER CENT. OF THE AMOUNTS CLAIMED IS FAIR AND REASONABLE AND NO INTERFERENCE IS CALLED FOR. THE COMMIS SIONER OF INCOME-TAX (APPEALS) HAS GONE THROUGH THE PURCHASE PRICES OF THE RAW MATERIAL PREVALENT AT THE TIME AND RIGHTLY CAME TO THE CON CLUSION THAT THE DISALLOWANCE TO THE EXTENT OF 25 PER CENT. WAS CALLED FOR. IT IS ESTABLISHED THAT THE PARTIES WERE NOT TRACEABLE ; THEY OPENED THE BANK ACCOUNTS IN WHICH THE CHEQUES WERE CREDITED BUT SOON THEREAFTER THE AMOUNTS WERE WITHDRAWN BY BEARER CHEQUES. THAT FAIRLY LEADS TO THE CONCLUSION THAT THESE PARTIES WERE PERHAPS CREATION OF THE ASSESSEE ITSELF FOR THE PURPOSE OF BANKING PURCHASES INTO BOOKS OF ACCOUNT BECAUSE THE PURCHASES WITH BILLS WERE NOT FEASIBLE. THUS, THE ABOVENOTED PARTIES BECOME CONDUIT PIPES BETWEEN THE ASSESSEE-FIRM AND THE SELLERS OF THE RAW MATERIALS. UNDER THE CIRCUMSTANCES, IT WAS NOT IMPOSSIBLE FOR THE ASSESSEE TO INFLATE THE PRICES OF RAW MATERIALS. ACCORDINGLY, AN ADDITION AT THE RATE OF 25 PER CENT. FOR EXTRA PRICE PAID BY THE ASSESSEE THAN OVER AND ABOVE THE PREVALENT PRICE IS FAIR AND REASONABLE AND ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 43 WE ACCORDINGLY CONFIRM THE FINDING OF THE COMMIS SIONER OF INCOME-TAX (APPEALS).' 12. THUS, IT IS APPARENT THAT BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE CONCURRENTLY ACCEPTED THE FINDING OF THE ASSESSING OFFICER THAT THE APPARENT SELLERS WHO HAD ISSUED SALE BILLS WERE NOT TRACEABLE. THAT GOODS WERE RECEIVED FROM THE PARTIES OTHER THAN THE PERSONS WHO HAD ISSUED BILLS FOR SUCH GOODS. THOUGH THE PURCHASES ARE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENT THEREOF BY ACCOUNT PAYEE CHEQUES, THE CHEQUES HAVE BEEN DEPOSITED IN BANK ACCOUNTS OSTENSIBLY IN THE NAME OF THE APPARENT SELLERS, THEREAFTER THE ENTIRE AMOUNTS HAVE BEEN WITHDRAWN BY BEARER CHEQUES AND THERE IS NO TRACE OR IDENTITY OF THE PERSON WITHDRAWING THE AMOUNT FROM THE BANK ACCOUNTS. IN THE LIGHT OF THE AFORESAID NATURE OF EVIDENCE IT IS NOT POSSIBLE TO RECORD A DIFFERENT CONCLUSION, DIFFERENT FROM THE ONE RECORDED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL CONCURRENTLY HOLDING THAT THE APPARENT SELLERS WERE NOT GENUINE, OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE-FIRM AND THE ACTUAL SELLERS OF THE RAW MATERIALS. BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE, THEREFORE, COME TO THE CONCLUSION THAT IN SUCH CIRCUMSTANCES, THE LIKELIHOOD OF THE PURCHASE PRICE BEING INFLATED CANNOT BE RULED OUT AND THERE IS NO MATERIAL TO DISLODGE SUCH FINDING. THE ISSUE IS NOT WHETHER THE PURCHASE PRICE REFLECTED IN THE BOOKS OF ACCOUNT MATCHES THE PURCHASE PRICE STATED TO HAVE BEEN PAID TO OTHER PERSONS. THE ISSUE IS WHETHER THE PURCHASE PRICE PAID BY THE ASSESSEE IS REFLECTED AS RECEIPTS BY THE RECIPIENTS. THE ASSESSEE HAS, BY SET OF EVIDENCE AVAILABLE ON RECORD, MADE IT POSSIBLE FOR THE RECIPIENTS NOT BEING TRACEABLE FOR THE PURPOSE OF INQUIRY AS TO ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 44 WHETHER THE PAYMENTS MADE BY THE ASSESSEE HAVE BEEN ACTUALLY RECEIVED BY THE APPARENT SELLERS. HENCE, THE ESTIMATE MADE BY THE TWO APPELLATE AUTHORITIES DOES NOT WARRANT INTERFERENCE. EVEN OTHERWISE, WHETHER THE ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT SUM, CAN NEVER BE AN ISSUE OF LAW. 3.3. IN THE AFORESAID CASE, THE HON'BLE HIGH COURT ACCEPTED THAT THE APPARENT SELLERS, WHO ISSUE D THE SAID BILLS WERE NOT TRACEABLE AND THE GOODS RECEIVE D FROM PARTIES OTHER THAN THE PERSONS, WHO HAD ISSUED THE BILLS FOR SUCH GOODS. THE PURCHASES WERE SHOWN TO HAVE BE EN MADE BY MAKING PAYMENTS, THROUGH BANKING CHANNEL AND THUS THE APPARENT SELLERS WERE NOT GENUINE OR W ERE ACTING AS CONDUIT BETWEEN THE ASSESSEE AND THE ACTU AL SELLER. IN SUCH A SITUATION, THE CONCLUSION DRAWN B Y THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS BY THE TRIBUNAL WAS AFFIRMED. HON'BLE APEX COURT IN KACHWALA GEMS VS JCIT (2007) 158 TAXMAN 71 OBSERVED THAT AN ELEMENT OF GUESSWORK IS INEVITABLE IN CASES , WHERE ESTIMATION OF INCOME IS WARRANTED. ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 45 3.4. THE HON'BLE GUJARAT HIGH COURT IN CIT VS BHOLANATH POLY FAB. PVT. LTD. (2013) 355 ITR 290 (G UJ.) HELD/OBSERVED AS UNDER:- 5. HAVING COME TO SUCH A CONCLUSION, HOWEVER, THE TRIBUNAL WAS OF THE OPINION THAT THE PURCHASES MAY HAVE BEEN MADE FROM BOGUS PARTIES, NEVERTHELESS, THE PURCHASES THEMSELVES WERE NOT BOGUS. THE TRIBUNAL ADVERTED TO THE FACTS AND DATA ON RECORD AND CAME TO THE CONCLUSION THAT THE ENTIRE QUANTITY OF OPENING STOCK, PURCHASES AND THE QUANTITY MANUFACTURED DURING THE YEAR UNDER CONSIDERATION WERE SOLD BY THE ASSESSEE. THEREFORE, THE PURCHASES OF THE ENTIRE 1,02,514 METRES OF CLOTH WERE SOLD DURING THE YEAR UNDER CONSIDERATION. THE TRIBUNAL, THEREFORE, ACCEPTED THE ASSESSEE'S CONTENTION THAT THE FINISHED GOODS WERE PURCHASED BY THE ASSESSEE, MAY BE NOT FROM THE PARTIES SHOWN IN THE ACCOUNTS, BUT FROM OTHER SOURCES. IN THAT VIEW OF THE MATTER, THE TRIBUNAL WAS OF THE OPINION THAT NOT THE ENTIRE AMOUNT, BUT THE PROFIT MARGIN EMBEDDED IN SUCH AMOUNT WOULD BE SUBJECTED TO TAX. THE TRIBUNAL RELIED ON ITS EARLIER DECISION IN THE CASE OF SANKET STEEL TRADERS AND ALSO MADE REFERENCE TO THE TRIBUNAL'S DECISION IN THE CASE OF VIJAY PROTEINS LTD. V. ASST. CIT [1996] 58 ITD 428 (AHD). 6. WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTED NO ERROR. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MADE WERE BOGUS IS ESSENTIALLY A QUESTION OF FACT. THE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 46 TRIBUNAL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUSION THAT THE ASSESSEE DID PURCHASE THE CLOTH AND SELL THE FINISHED GOODS. IN THAT VIEW OF THE MATTER, AS NATURAL COROLLARY, NOT THE ENTIRE AMOUNT COVERED UNDER SUCH PURCHASE, BUT THE PROFIT ELEMENT EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. THIS WAS THE VIEW OF THIS COURT IN THE CASE OF SANJAY OILCAKE INDUSTRIES V. CIT [2009] 316 ITR 274 (GUJ). SUCH DECISION IS ALSO FOLLOWED BY THIS COURT IN A JUDGMENT DATED AUGUST 16, 2011, IN TAX APPEAL NO. 679 OF 2010 IN THE CASE OF CIT V. KISHOR AMRUTLAL PATEL. IN THE RESULT, TAX APPEAL IS DISMISSED. 3.5. LIKEWISE, THE HON'BLE GUJARAT HIGH COURT IN CIT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2013) 355 ITR 498 (GUJ.) HELD/OBSERVED AS UNDER:- 6. AS IS APPARENT FROM THE FACTS NOTED HEREINABOVE, THE COMMISSIONER (APPEALS) AFTER APPRECIATING THE EVIDENCE ON RECORD HAS FOUND THAT THE ASSESSEE HAD IN FACT MADE THE PURCHASES AND, HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE AMOUNT. HE, HOWEVER, WAS OF THE VIEW THAT THE ASSESSEE HAD INFLATED THE PURCHASES AND, ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF VIJAY PROTEINS (SUPRA) RESTRICTED THE DISALLOWANCE TO 20 PER CENT. THE TRIBUNAL IN THE IMPUGNED ORDER HAS FOLLOWED ITS EARLIER ORDER IN THE CASE OF VIJAY PROTEINS TO THE LETTER AND ENHANCED THE DISALLOWANCE TO 25 PER CENT. THUS, IN BOTH CASES, THE DECISION OF THE COMMISSIONER (APPEALS) AS WELL AS THAT OF THE TRIBUNAL IS BASED ON ESTIMATE. THIS HIGH COURT IN THE CASE OF SANJAY OIL CAKE [2009] 316 ITR 274 (GUJ) HAS HELD THAT WHETHER AN ESTIMATE SHOULD BE AT A ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 47 PARTICULAR SUM OR AT A DIFFERENT SUM CAN NEVER BE A QUESTION OF LAW. 7. THE APEX COURT IN THE CASE OF KACHWALA GEMS [2007] 288 ITR 10 (SC) HAS HELD THAT IN A BEST JUDGMENT ASSESSMENT THERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK. NO DOUBT, THE AUTHORITIES SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBITRARILY BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGMENT ASSESSMENT. 8. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID DECISIONS, THE DECISION OF THE TRIBUNAL, BEING BASED ON AN ESTIMATE, DOES NOT GIVE RISE TO ANY QUESTION OF LAW SO AS TO WARRANT INTERFERENCE. 9. IN SO FAR AS THE PROPOSED QUESTIONS (C), (D) AND (E) ARE CONCERNED, THE SAME ARE SIMILAR TO THE PROPOSED QUESTION (A) WHEREIN THE TRIBUNAL HAS RESTRICTED THE ADDITION TO 25 PER CENT. ON SIMILAR FACTS. IN THE CIRCUMSTANCES, FOR THE REASONS STATED HEREINABOVE, THE SAID GROUNDS OF APPEAL DO NOT GIVE RISE TO ANY QUESTION OF LAW. 10. AS REGARDS THE PROPOSED QUESTION (B) WHICH PERTAINS TO THE DELETION OF ADDITION OF RS. 7,88,590 MADE ON ACCOUNT OF INFLATION OF EXPENSES PAID TO METAL AND MACHINE TRADING CO. (MMTC), THE ASSESSING OFFICER HAS FOUND THAT MMTC WAS A PARTNERSHIP FIRM OF SHRI NITIN GAJJAR ALONG WITH HIS FATHER AND BROTHER OPERATING FROM BHAVNAGAR. A PERUSAL OF THEIR TRANSACTIONS WITH THE ASSESSEE INDICATED THAT THERE IS SOME INFLATION OF EXPENSES AS DETAILED IN PARAGRAPH 6.1 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE EVIDENCE ON RECORD, THE ASSESSING OFFICER DISALLOWED THE AMOUNT RS. 7,88,590 ON ACCOUNT OF PAYMENT MADE TO MMTC. ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 48 11. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER (APPEALS), WHO UPON APPRECIATION OF THE EVIDENCE ON RECORD FOUND THAT THE ASSESSING OFFICER HAD NOT REJECTED THE GENUINENESS OF THE PURCHASES MADE FROM MMTC WHILE MAKING THE DISALLOWANCE. HIS OBSERVATIONS WERE BASED ON INFLATION OF RATES WHICH WERE BEING CHARGED FROM THE ASSESSEE. ACCORDING TO THE COMMISSIONER (APPEALS), THOUGH MMTC IN SOME RESPECT COULD BE ATTRIBUTED TO BE ASSOCIATED WITH THE ASSESSEE-COMPANY, STILL IT COULD NOT BE EXPECTED THAT MMTC WAS CARRYING OUT ITS BUSINESS WITHOUT ANY MOTIVE OR PROFIT. ACCORDING TO THE COMMISSIONER (APPEALS), IT WAS PROVED BY THE ASSESSEE THAT THE RATES CHARGED BY MMTC WERE COMPARABLE WITH THE PREVAILING MARKET RATES, NO SUCH ADDITION CAN STAND. THE COMMISSIONER (APPEALS) TOOK NOTE OF THE FACT THAT IT WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE PURCHASES HAD BEEN DIRECTLY EFFECTED FROM THIRD PARTIES AND NOT DIRECTLY FROM MMTC ; THE DIFFERENCE COULD NOT BE THE NET PROFIT IN THE HANDS OF MMTC ; AND THAT WHILE CONDUCTING THE ENTIRE EXERCISE MMTC WOULD HAVE TO INCUR CERTAIN EXPENDITURE IN TRANSPORTATION, IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WAS ACCORDINGLY OF THE VIEW THAT THERE WAS NO CASE OF ACTUAL INFLATION OF RATES AND DELETED THE ADDITION. 12. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS CONCURRED WITH THE FINDINGS RECORDED BY THE COMMISSIONER (APPEALS) AND HAS FOUND THAT THE ASSESSEE HAD MADE PURCHASES FROM MMTC AT THE PREVAILING MARKET RATES AND THAT MMTC HAD INCURRED CERTAIN EXPENDITURE IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WOULD MAKE SOME INCOME FROM THE ENTIRE EXERCISE. IN THE CIRCUMSTANCES, THE PURCHASES MADE BY THE ASSESSEE FROM MMTC WOULD NOT BE HIT BY THE PROVISIONS OF SECTION 40A(2) OF THE ACT. ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 49 13. THUS, THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY THE COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL. IT IS NOT THE CASE OF THE REVENUE THAT THE TRIBUNAL HAS TAKEN INTO ACCOUNT ANY IRRELEVANT MATERIAL OR THAT ANY RELEVANT MATERIAL HAS NOT BEEN TAKEN INTO CONSIDERATION. IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY BEING POINTED OUT ON BEHALF OF THE REVENUE, THE IMPUGNED ORDER BEING BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY THE TRIBUNAL UPON APPRECIATION OF THE EVIDENCE ON RECORD, DOES NOT GIVE RISE TO ANY QUESTION OF LAW IN SO FAR AS THE PRESENT GROUND OF APPEAL IS CONCERNED. 14. IN RELATION TO THE PROPOSED QUESTION (F) WHICH RELATES TO THE DELETION OF ADDITION OF RS. 44,54,426 MADE ON ACCOUNT OF PURCHASE OF CRANE AND ALLOWING DEPRECIATION ON THE SAME, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PURCHASED A CRAWLER CRANE FOR AN AMOUNT OF RS. 24,61,000 EXCLUDING THE COST OF SPARE PARTS OF RS. 14,98,490. THE ASSESSING OFFICER AFTER EXAMINING THE EVIDENCE ON RECORD AND CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, MADE ADDITION OF RS. 44,54,426, RS. 39,59,490 BEING THE PURCHASE PRICE OF THE CRANE ALONG WITH ITS SPARE PARTS AND RS. 4,94,936 BEING DEPRECIATION CLAIMED BY THE ASSESSEE. THE COMMISSIONER (APPEALS), UPON APPRECIATION OF EVIDENCE ON RECORD, WAS OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT APPRECIATED THE FACTS OF THE CASE PROPERLY AND HAD MADE DISALLOWANCE WHICH WAS NOT PERMITTED BY THE INCOME-TAX ACT. IT WAS HELD THAT DISALLOWANCE COULD ONLY HAVE BEEN MADE IN RESPECT OF EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT WHEREAS IN THE PRESENT CASE THE PURCHASE OF CRANE AND SPARE PARTS OF THE CRANE AND OTHER MACHINERIES WERE IN THE NATURE OF ACQUISITION OF CAPITAL ASSET. ACCORDING TO THE COMMISSIONER (APPEALS), THE DISALLOWANCE COULD ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 50 HAVE BEEN MADE ON DEPRECIATION ONLY IF AT ALL THE ASSESSING OFFICER CONCLUSIVELY PROVED THAT THE PURCHASES OF CRANE AND OTHER PARTS ARE BOGUS. UPON APPRECIATION OF THE MATERIAL ON RECORD THE COMMISSIONER (APPEALS) FOUND THAT THE ASSESSING OFFICER HAS SIMPLY BRUSHED ASIDE ALL THE EVIDENCE ON ACCOUNT OF TECHNICAL INFIRMITIES AND THAT THE EVIDENCE SUCH AS OCTROI RECEIPT ; HYPOTHECATION OF THE CRANE TO THE BANK; EXISTENCE OF THE CRANE EVEN TILL DATE WITH THE ASSESSEE CONCLUSIVELY PROVED THAT THE CRANE WAS PURCHASED AND IT WAS IN USE EVEN AS ON DATE WITH THE ASSESSEE. THE COMMISSIONER (APPEALS) ACCORDINGLY FOUND THAT THERE WAS NO SCOPE FOR ANY DISALLOWANCE AND ACCORDINGLY DELETED THE DISALLOWANCE MADE ON ACCOUNT OF PURCHASE OF CRANE AND ALLOWED THE DEPRECIATION AS CLAIMED BY THE ASSESSEE. 15. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS NOTED THAT THE COST OF CRANE WAS NEVER CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. BEFORE THE TRIBUNAL, THE ASSESSEE PRODUCED THE EVIDENCE THAT THE CRANE IN QUESTION WAS REGISTERED WITH THE RTO AND THE SAME WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSES OF ITS BUSINESS. THE TRIBUNAL, THEREFORE, HELD THAT THE COMMISSIONER (APPEALS) WAS LEGALLY AND FACTUALLY CORRECT IN DELETING THE DISALLOWANCE OF COST OF CRANE AS WELL AS DEPRECIATION THEREON. 16. FROM THE FACTS EMERGING FROM THE RECORD, IT IS APPARENT THAT THE ASSESSEE HAD NEVER CLAIMED THE COST OF THE CRANE IN THE RETURN NOR HAD IT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, AND AS SUCH THE QUESTION OF DISALLOWING THE SAME AND ADDING THE SAME TO THE INCOME WOULD NOT ARISE. MOREOVER, IN THE ABSENCE OF ANY EVIDENCE TO INDICATE THAT THE PURCHASE WAS BOGUS OR THAT THE CRANE IN FACT DID NOT EXIST, THE QUESTION OF DISALLOWING THE DEPRECATION IN RESPECT OF THE SAME ALSO WOULD NOT ARISE. WHEN THE ASSESSEE HAD CONCLUSIVELY PROVED THE PURCHASE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 51 AND EXISTENCE OF THE CRANE, AND HAD NOT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, NO ADDITION COULD HAVE BEEN MADE IN RESPECT OF THE PURCHASE PRICE NOR COULD HAVE DEPRECIATION BEEN DISALLOWED IN RESPECT THEREOF. THE TRIBUNAL WAS, THEREFORE, JUSTIFIED IN DELETING THE ADDITION AS WELL AS DISALLOWANCE OF DEPRECIATION. 17. IN THE LIGHT OF THE AFORESAID DISCUSSION, IT IS NOT POSSIBLE TO STATE THAT THERE IS ANY LEGAL INFIRMITY IN THE IMPUGNED ORDER MADE BY THE TRIBUNAL SO AS TO WARRANT INTERFERENCE. IN THE ABSENCE OF ANY QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW, THE APPEAL IS DISMISSED. 3.6. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS ASHISH INTERNATIONAL LTD. (ITA NO.4299/2009) ORDER DATED 22/02/2011, OBSERVED/HELD AS UNDER:- THE QUESTION RAISED IN THIS APPEAL IS, WHETHER THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES ALLEGEDLY MADE BY THE ASSESSEE FROM M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. ACCORDING TO THE REVENUE, THE DIRECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. IN HIS STATEMENT HAD STATED THAT THERE WERE NO SALES / PURCHASES BUT THE TRANSACTIONS WERE ONLY ACCOMMODATION BILLS NOT INVOLVING ANY TRANSACTIONS. THE TRIBUNAL HAS RECORDED A FINDING OF FACT THAT THE ASSESSEE HAD DISPUTED THE CORRECTNESS OF THE ABOVE STATEMENT AND ADMITTEDLY THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE THE CONCERNED DIRECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 52 LTD. WHO HAD MADE THE ABOVE STATEMENT. THE APPELLATE AUTHORITY HAD SOUGHT REMAND REPORT AND EVEN AT THAT STAGE THE GENUINENESS OF THE STATEMENT HAS NOT BEEN ESTABLISHED BY ALLOWING CROSS EXAMINATION OF THE PERSON WHOSE STATEMENT WAS RELIED UPON BY THE REVENUE. IN THESE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL BEING BASED ON THE FACT, NO SUBSTANTIAL QUESTION OF LAW CAN BE SAID TO ARISE FROM THE ORDER OF THE TRIBUNAL. THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. 3.7. THE HON'BLE GUJARAT HIGH COURT IN CIT VS M.K. BROTHERS (163 ITR 249) HELD/OBSERVED AS UNDER:- BEING AGGRIEVED BY THE AFORESAID ORDER, THE ASSESSEE WENT IN SECOND APPEAL BEFORE THE TRIBUNAL. IT WAS URGED ON BEHALF OF THE ASSESSEE THAT THE TRANSACTIONS IN QUESTION WERE NORMAL BUSINESS TRANSACTIONS AND THE ASSESSEE HAD MADE PAYMENTS BY CHEQUES. THE PARTIES DID NOT COME FORWARD AND IF THEY DID NOT COME, THE ASSESSEE SHOULD NOT SUFFER. HOWEVER, ON BEHALF OF THE REVENUE, IT WAS URGED THAT DETAILED INQUIRIES WERE MADE AND THEREAFTER THE CONCLUSION WAS REACHED. THE TRIBUNAL FOUND THAT THERE WAS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE BOGUS VOUCHERS TO THE ASSESSEE. NO DOUBT, THERE WERE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE WAS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE SAID PARTIES WERE BOGUS. THE TRIBUNAL ACCORDINGLY, DID NOT SUSTAIN THE ADDITION RETAINED BY THE APPELLATE ASSISTANT COMMISSIONER. HENCE, AT THE INSTANCE OF THE REVENUE, THE AFORESAID QUESTION HAS BEEN REFERRED TO THIS COURT FOR OPINION. ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 53 ON A PERUSAL OF THE ORDER OF THE TRIBUNAL, IT CLEAR LY APPEARS THAT WHETHER THE SAID TRANSACTIONS WERE BOGUS OR NOT WAS A QUESTION OF FACT. THE TRIBUNAL HAS ALSO POINTED OUT THAT NOTHING IS SHOWN TO INDICATE THAT ANY PART OF THE FUND GIVEN BY THE ASSESSEE TO THESE PARTIES CAME BACK TO THE ASSESSEE IN ANY FORM. IT IS FURTHER OBSERVED BY THE TRIBUNAL THAT THERE IS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE VOUCHERS TO THE ASSESSEE. EVEN THE TWO STATEMENTS DO NOT IMPLICATE THE TRANSACTIONS WITH THE ASSESSEE IN ANY WAY. WITH THESE OBSERVATIONS, THE TRIBUNAL ULTIMATELY HAS OBSERVED THAT THERE ARE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE IS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FROM THESE PARTIES WERE BOGUS. IT MAY BE STATED THAT THE ASSESSEE WAS GIVEN CREDIT FACILITIES FOR A SHORT DURATION AND THE PAYMENTS WERE GIVEN BY CHEQUES. WHEN THAT IS SO, IT CANNOT BE SAID THAT THE ENTRIES FOR THE PURCHASES OF THE GOODS MADE IN THE BOOKS OF ACCOUNT WERE BOGUS ENTRIES. WE, THEREFORE, DO NOT FIND THAT THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS AGAINST THE WEIGHT OF EVIDENCE. IN THAT VIEW OF THE MATTER, WE ANSWER THE QUESTION IN THE AFFIRMATIVE, THAT IS, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, THE REFERENCE STANDS DISPOSED OF WITH NO ORDER AS TO COSTS. 3.8. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS RAJEEV G. KALATHIL (2015) 67 SOT 52 (MUM . TRIB.)(URO), IDENTICALLY, HELD AS UNDER:- 2.2.AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM IT WAS ARGUED THAT ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 54 ASSESSEE HAD FILED COPIES OF BILLS OF PURCHASE FROM DKE AND NBE, THAT BOTH THE SUPPLIERS WERE REGISTERED DEALERS AND WERE CARRYING PROPER VAT AND REGISTRATION NO.S, THAT LEDGER ACCOUNTS OF THE PARTIES IN ASSESSEE'S BOOKS SHOWED BILLS ACCOUNTED FOR, THAT PAYMENT WAS MADE BY CHEQUES, THAT A CERTIFICATE FROM THE BANKER GIVING DETAILS OF CHEQU E PAYMENT TO THE SAID PARTIES WAS ALSO FURNISHED. COPIES OF THE CONSIGNMENT, RECEIVED FROM THE GOVERNMENT APPROVED TRANSPORT CONTRACTORS SHOWING THAT MATERIAL PURCHASED WAS ACTUALLY DELIVERED AT THE SITE WAS FURNISHED BEFORE THE AO. IT WAS ALSO ARGUED THAT SOME OF THE MATERIAL PURCHASED FROM THE SAID PARTIES WERE LYING PART OF CLOSING STOCK AS ON 31.03.2009 AS PER THE STATEMENT SUBMITTED ON RECORD. AFTER CONSIDERING THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE ASSESSEE, FAA HELD THAT THE TRANSACTIONS WERE SUPPORTED BY PROPER DOCUMENTARY EVIDENCES, THAT THE PAYMENTS MADE TO THE PARTIES BY THE ASSESSEE WERE IN CONFIRMATION WITH BANK CERTIFICATE,T HAT THE SUPPLIERS WAS SHOWN AS DEFAUL T UNDER THE MAHARASHTRA VAT ACT COULD NOT BE SUFFICIENT EVIDENCES TO HOLD THAT THE PURCHASES WERE NON-GENUINE, THAT THE AO HAD NOT BROUGHT ANY INDEPENDENT AND RELIABLE EVIDENCES AGAINST THE ASSESSEE TO PROVE THE NON-GENUINENESS OF THE PURCHASES, THAT THERE WAS NO EVIDENCE REGARDING CASH RECEIVED BACK FROM THE SUPPLIERS. FINALLY, HE DELETED THE ADDITION MADE BY THE AO . 2.3.BEFORE US, DEPARTMENTAL REPRESENTATIVE ARGUED THAT BOTH THE SUPPLIERS WERE NOT PRODUCED BEFORE THE AO BY THE ASSESSEE, THAT ONE OF THEM WAS DECLARED HAWALA DEALER BY VAT DEPARTMENT, THAT BECAUSE OF CHEQUE PAYMENT MADE TO THE SUPPLIER TRANSACTION CANNOT BE TAKEN AS GENUINE. HE RELIED UPON THE ORDER OF THE G BENCH OF MUMBAI TRIBUNAL DELIVERED IN THE CASE OF WESTERN EXTRUSION INDUSTRIES. (ITA/6579/MUM/2010- DATED 13.11.2013). AUTHRORISED REPRESENTATIVE (AR) CONTENDED THAT PAYMENTS MADE BY THE ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 55 ASSESSEE WERE SUPPORTED BY THE BANKERS STATEMENT, THAT GOODS RECEIVED BY THE ASSESSEE FROM THE SUPPLIE WAS PART OF CLOSING STOCK,THAT THE TRANSPORTER HAD ADMITTED THE TRANSPORTATION OF GOODS TO THE SITE.HE RELIED UPON THE CASE OF BABULA BORANA (282 ITR251), NIKUNJ EXIMP ENTERPRISES (P) LTD. (216TAXMAN171)DELIVERED BY THE HONBLE BOMBAY HIGH COURT. 2.4.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO THE SITE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK. AS FAR AS THE CASE OF WESTERN EXTRUSION INDUSTRIES. (SUPRA)IS CONCERNED, WE FIND THAT IN THAT MATTER CASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEFORE US, THERE IS NOTHING, IN THE ORDER OF THE AO , ABOUT THE CASH TRAIAL. SECONDLY, PROOF OF MOVEMENT OF GOODS IS NOT IN DOUBT. THERERFORE, CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON FILE TO ENDORSE THE VIEW TAKEN BY THE AO. SO, CONFIRMING THE ORDER OF THE FAA, WE DECIDE GROUND NO.1 AGAINST THE AO . ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 56 3.9. THE RATIO LAID DOWN IN THE CASE OF M/S NEETA TEXTILES VS INCOME TAX OFFICER 6138/MUM/2013, ORDER DATED 27/05/2013, SHRI JIGAR V. SHAH VS INCOME TAX OFFICER (ITA NO.1223/M/2014) ORDER DATED 22/01/2016 , M/S IMPERIAL IMP. & EXP. VS INCOME TAX OFFICER ITA NO.5427/MUM/2015, ORDER DATED 18/03/2016 SUPPORTS THE CASE OF THE ASSESSEE AND THE CONCLUSION DRAWN I N THE IMPUGNED ORDER. HOWEVER, AS RELIED BY THE LD. DR, T HE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.K. INDU STRIES LTD.,ETC VS DCIT (SUPRA) CONSIDERING VARIOUS DECISI ONS DECIDED THE ISSUE IN FAVOUR OF THE REVENUE AND THE HON'BLE APEX COURT DISMISSED THE SLP VIDE ORDER DAT ED 16/01/2017 (SLP NO.(C) 769 OF 2017). WE FIND THAT I N THAT CASE, DURING SEARCH PROCEEDINGS, CERTAIN BLANK SIGNED CHEQUE BOOKS AND VOUCHERS WERE FOUND AND THU S THE PURCHASES MADE FROM THESE CONCERNS, WERE TREATE D AS BOGUS BY THE ASSESSING OFFICER. 3.10. THE HON'BLE GUJARAT HIGH COURT IN N.K. INDUSTRIES LTD. VS DCIT (IT APPEAL NO.240, 261, 242 , 260 AND 241 OF 2003), VIDE ORDER DATED 20/06/2016 ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 57 CONSIDERED THE DECISION OF THE TRIBUNAL AND VARIOUS JUDICIAL DECISIONS INCLUDING THE CASE OF VIJAY PROT EINS AND SANJAY OILCAKES INDUSTRIES LTD., M/S WOOLEN CARPET FACTORY VS ITAT (2002) 178 CTR 420 (RAJ.), THE TRIB UNAL WAS HELD TO BE JUSTIFIED IN DECIDING THE CASE AGAIN ST THE ASSESSEE. THE HON'BLE APEX COURT CONFIRMED THE DEC ISION OF THE HIGH COURT FOR ADDING THE ENTIRE INCOME ON ACCOUNT OF BOGUS PURCHASES (SLP (C) NOS. 769 OF 201 7, ORDER DATED 16/01/2017. 3.11. IN SUCH TYPE OF CASES, BROADLY, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS THIS TRIBUNAL HAS FOLLOWED THE DECISIONS FROM HON'BLE GU JARAT HIGH COURT IN THE CASE OF SIMIT P. SETH (2013) 356 ITR 451 (GUJ.), CIT VS VIJAY M. MISTRY CONSTRUCTION LTD . (2013) 355 ITR 498 (GUJ.), CIT VS BHOLA NATH POLY F AB. (P.) LTD. (2013) 355 ITR 290 (GUJ.) AND VARIOUS OTH ER DECISIONS OF THE TRIBUNAL AND THE DECISION OF M/S N IKUNJ EXIMP(SUPRA) FROM HON'BLE JURISDICTIONAL HIGH COURT , WHEREIN, THE AGGREGATE DISALLOWANCE WAS RESTRICTED TO 12.5%. ADMITTEDLY, THERE CANNOT BE SALE WITHOUT ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 58 PURCHASES. THE CASE OF THE REVENUE IS THAT THERE I S BOGUS NATURE OF PURCHASES MADE FROM SUPPLIERS AND T HE PARTIES WERE NOT FOUND EXISTING AT THE GIVEN ADDRES SES. ADMITTEDLY, IN SUCH TYPE OF CASES, THERE IS NO OPTI ON BUT TO ESTIMATE THE PROFIT WHICH DEPENDS UPON THE SUBJE CTIVE APPROACH OF AN INDIVIDUAL AND THE MATERIAL FACTS AV AILABLE ON RECORD. IN THE PRESENT APPEAL, THE LD. ASSESSING OFFICER RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT WITH RESPECT TO NON-PAYMENT OF VAT BY SOME OF THE PARTIE S AND WHOSE REGISTRATION WAS CANCELED LATER, HAVING OBSERVED THAT THEY WERE NON-EXISTENCE SELLERS AND T HEY HAVE NOT MADE ANY SALES ACCEPT BOGUS INVOICED ISSUE D THEIR NAMES. SO FAR AS, THE ARGUMENT OF THE ASSESSE E THAT PAYMENTS WERE MADE THROUGH BANKING CHANNEL TO SUCH SELLERS AND RECEIVED MATERIAL HAS ALREADY BEEN CONS IDERED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). CONSIDERING THE TOTALITY OF FACTS, THE VIOLATION OF VAT CANNOT BE LOST SIGHT OF AND THUS THE AFOREMENTIONED DECISION ALSO THROWS LIGHT ON THE ISSUE. THERE IS UNCONTROVERTED FINDING IN PARA-6.2 OF THE ASSESSMEN T ORDER THAT NOTICES ISSUED TO TWO PARTIES UNDER SECT ION ITA NOS. 1485 & 1486/MUM/2017 M/S SOLO HARDWARE PVT. LTD. 59 133(6) WERE RETURNED BACK UNSERVED, THUS, WE FIND N O INFIRMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IN ADOPTING/SUSTAINING THE ADDI TION @12.5% OF SUCH BOGUS PURCHASES, RESULTANTLY, THE AP PEAL OF THE ASSESSEE ARE HAVING NO MERIT, THEREFORE, DIS MISSED. FINALLY, THE APPEALS OF THE ASSESSEE ARE DISMISSED . THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON17/10/2018. SD/- SD/- ( RAMIT KOCHAR ) (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $%& /VICE PRESIDENT $ % MUMBAI; ) DATED : 24/10/2018 F{X~{T? P.S / *# !'()*+,+-) / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 00 $ 1' ( + ) / THE CIT, MUMBAI. 4. 00 $ 1' / CIT(A)- , MUMBAI 5. 4#5.' , 0+'+ 6 , $ / DR, ITAT, MUMBAI 6. 7 8 / GUARD FILE. ! / BY ORDER, / (DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI
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