Harish Kumar Arora, Delhi V. ITO ward-63(3), New Delhi

ITA 1787/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3957 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 05-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAGDISH SINGH
• Keywords: Bogus purchase; Principle of natural justice; Accommodation entries; Reassessment proceedings
• Section: 69C; 143(3); 147; 131; 148; 132

Judgement Text

1 ITA NO. 1787/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I ( 2) + SMC NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER, AND SHRI PRASHANT MAHARISHI, ACCOU NTANT MEMBER ITA NO. 1787/DEL/2019 ( A.Y 2007-08) HARISH KUMAR ARORA 5520, BASTI HARPHOOL SINGH SADAR BAZAR, DELHI 110006 PAN: AMYPK9990R (APPELLANT) VS ITO WARD-63(3) DELHI (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SH. JAGDISH SINGH, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 09/01/2019 PASSED BY CIT(A)-18, NEW DELHI FOR ASSESSMENT YEAR 2007-08. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A )] IS BAD, BOTH IN THE EYES OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEAR NED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTION OF THE ASSESSEE THAT THE INITIATION OF THE REASSESSMENT PROCEEDINGS AND THE REASSESSMENT ORDER ARE BAD, BOTH ON THE FACTS AND IN LAW AND LIABLE TO BE QUASHED, AS THE STATUTORY CONDITIONS AND PROCEDURE PRESCRIBED UNDER THE STATU TE HAVE NOT BEEN COMPLIED WITH. DATE OF HEARING 26.02.2020 DATE OF PRONOUNCEMENT 02 .03.2020 2 ITA NO. 1787/DEL/2019 3 (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, L EARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN REJECTING THE CO NTENTION OF THE ASSESSEE THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO AR E BAD IN THE EYES OF LAW, AS THE REASONS RECORDED FOR THE ISSUE OF NOTICE UND ER SECTION 148 ARE BAD IN THE EYES OF LAW AND ARE CONTRARY TO THE FACTS. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, L EARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTION OF THE ASSESSEE THAT THE REASSESSMENT ORDER PASSED BY THE AO IS BAD AND LIAB LE TO BE QUASHED AS THE SAME HAS BEEN REOPENED ON THE BASIS OF THE REASONS WHICH ARE VAGUE AND HAVE BEEN RECORDED WITHOUT APPLICATION OF MIND ON T HE PART OF THE AO. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF AN AMOUNT OF RS. 1,86,161/- ON ACCOUNT OF PURCHASES MADE BY THE ASSE SSEE TREATING THE SAME AS BOGUS INVOKING SECTION 69C OF THE INCOME TAX ACT . (5) (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN CONFIRMING THAT THE FIRM M/S OM AGENCIES,, IS NOT ENGAGED IN ACTUAL BUSINESS IGNORING THE FACT THAT DURING THE COURSE OF SEARCH ON THESE FIRMS SUBSTANTIAL INVENTORY IN RESP ECT OF THE MATERIAL BEING PURCHASED BY THE ASSESSEE WAS FOUND, WHICH CONFIRMS THE FACT THAT THESE FIRMS WERE DOING ACTUAL BUSINESS. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN REJECTING THAT THE INFE RENCE DRAWN BY THE AO MERELY ON THE BASIS OF A STATEMENT THAT THESE FIRMS ARE NOT IN ACTUAL BUSINESS IS BASELESS AND CONTRARY TO THE FACTS ON RECORD 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTIO N OF THE ASSESSEE IN IGNORING 3 ITA NO. 1787/DEL/2019 THE FACT THAT THE QUANTITY PURCHASED AND SOLD BEING COMPLETELY TALLYING, THE ALLEGATION THAT THE ASSESSEE HAS NOT MADE PURCHASES CANNOT BE SUSTAINED. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES, DESPITE THEIR BEING ADEQUATE MATERIAL AN D EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE BEFORE THE AO TO SHOW THAT T HE PURCHASES AND SALES WERE MADE IN THE REGULAR COURSE OF BUSINESS. 8. ON THE FACTS ARID CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTIO N OF THE ASSESSEE THAT THE ADDITION SO MADE ON THE BASIS OF MATERIAL COLLECTED AT THE BACK OF THE ASSESSEE, IS BAD IN LAW AND LIABLE TO BE DELETED. 9. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTIO N OF THE ASSESSEE THAT THE ADDITION MADE BY THE AO IS UNTENABLE IN THE EYES OF LAW, HAVING BEEN MADE WITHOUT PROVIDING OPPORTUNITY TO CROSS EXAMINE THE PERSON ON THE BASIS OF WHOSE STATEMENT THE ALLEGATIONS HAVE BEEN MADE AGAI NST THE ASSESSEE AND WITHOUT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE . 3. THE ASSESSEE FILED RETURN OF INCOME ON 23.10.2007 A T A TOTAL INCOME OF RS. 1,03,000/-. ASSESSMENT U/S 143(3) OF THE ACT WA S COMPLETED ON 24.11.2009 AT A TOTAL INCOME OF RS. 1,31,658/-. SUB SEQUENTLY, THE ASSESSING OFFICER RECEIVED AN INFORMATION FROM THE INVESTIGAT ION WING THROUGH CIT(CENTRAL)- NEW DELHI, AS PER WHICH THE APPELLANT HAS OBTAINED ACCOMMODATION ENTRIES IN THE FORM OF BOGUS PURCHASE S THROUGH VARIOUS PERSONS NAMELY, SH. RAKESH GUPTA, SH. VISHESH GUPTA , SH. NAVNEET JAIN AND SH. VAIBHAV JAIN. BASED ON THE INFORMATION, THE ASS ESSING OFFICER REOPENED ASSESSMENT U/S 147 OF THE ACT AND ISSUED NOTICE U/S 148 ON 31.03.2014. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER ISSUED A 4 ITA NO. 1787/DEL/2019 DETAILED SHOW CAUSE NOTICE TO THE APPELLANT ON 20.0 2.2015 IN WHICH THE DETAILS OF THE ACCOMMODATION ENTRIES AMOUNTING TO RS. 7,44, 644/- OBTAINED BY THE APPELLANT IN THE NAME OF HIS PROPRIETORSHIP CONCERN M/S LAKSHMI METAL TRADERS FROM A CONCERN NAMELY, M/S OM AGENCIES, WAS FURNISHED TO THE ASSESSEE AND IT WAS ALSO STATED THAT SH. RAKESH GUP TA AND SH. VISHESH GUPTA HAVE ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRIE S IN THEIR STATEMENTS RECORDED DURING THE COURSE OF SEARCH PROCEEDINGS U/ S 132 AND THEREAFTER IN THE STATEMENTS RECORDED BY ACIT, CENTRAL CIRCLE-10, NEW DELHI ON 12.02.2013 AND 04.02.2013 RESPECTIVELY. IT WAS ALSO STATED THAT TH ESE PERSONS HAVE ALSO FILED AFFIDAVITS IN WHICH THEY HAVE CONFIRMED THAT THEY W ERE NOT MAKING ANY ACTUAL SALES BUT WERE ISSUING BOGUS PURCHASE BILLS TO PROV IDE ACCOMMODATION ENTRIES. THE APPELLANT WAS ASKED TO SHOW CAUSE WHY THESE PUR CHASES BOOKED BY THE APPELLANT AMOUNTING TO RS. 7,44,644/- BE NOT TREATE D AS BOGUS PURCHASES AND BE NOT ADDED TO THE TOTAL INCOME. THE AO HAD ALSO I SSUED SUMMONS U/S 131 OF THE ACT TO SH. RAKESH GUPTA AND SH. VISHESH GUPTA D URING THE COURSE OF ASSESSMENT PROCEEDINGS IN OTHER CASES PENDING BEFOR E HIM AND HAS RECORDED THE STATEMENTS IN WHICH THEY HAVE RECONFIRMED THE F ACT THAT THEY ARE PROVIDING ACCOMMODATION ENTRIES AND ARE NOT ENGAGED IN ANY AC TUAL SALE. THE APPELLANT ALSO FAILED TO FURNISH THE BOOKS OF ACCOUNTS BEFORE THE AO. THE AO WAS ALSO NOT SATISFIED WITH THE REPLY OF THE APPELLANT AND THERE FORE, THE AO HAS TREATED THESE PURCHASES OF RS. 7,44,644/- AS BOGUS PURCHASES AND HAS TREATED THE SAME AS INCOME OF THE APPELLANT U/S 69C OF THE ACT . 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF TH E ASSESSEE. 5. AT THE TIME OF HEARING, NONE APPEARED FOR THE AS SESSEE AND THERE IS NO APPLICATION FOR ADJOURNMENT. THE NOTICE HAS BEEN D ULY SERVED TO THE ASSESSEE. THEREFORE, WE ARE PROCEEDING ON THE BASIS OF THE SU BMISSIONS MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS BE FORE THE CIT(A). 5 ITA NO. 1787/DEL/2019 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L AVAILABLE ON RECORD. DESPITE GIVING NOTICE NONE APPEARED FOR THE ASSESSE E AND THERE IS NO ADJOURNMENT APPLICATION FILED BEFORE US. AFTER GOI NG THROUGH THE ASSESSMENT ORDER AND CIT(A), WE FIND THAT THE ASSESSING OFFICE R IN PARA 17 OBSERVED THAT SUMMONS U/S 131 WAS RESPONDED AND THE CONFIRMATION AND EXPLANATION WAS GIVEN BY DESCRIBING STATE WISE PROCEDURE FOR PROVID ING BOGUS PURCHASE BILL/ACCOMMODATION ENTRY. THE ASSESSING OFFICER HA S TAKEN COGNIZANCE OF THE DOCUMENTS/EVIDENCES PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. DURING THE ASSESSMENT PROCEEDINGS NO B OOKS OF ACCOUNTS WERE PRODUCED BY THE ASSESSEE AND NO EXPLANATION WAS OFF ERED AS REGARDS BOGUS PURCHASE OF RS. 7,44,644/-. THEREFORE, THE ASSESSI NG OFFICER HAS RIGHTLY MADE ADDITION U/S 69C READ WITH SECTION 4, 5 AND 14 OF T HE INCOME TAX ACT, 1961. THE CIT(A) ALSO CONFIRMED THE ADDITION AFTER GOING THROUGH ALL THE EVIDENCES PRODUCED BY THE ASSESSEE BEFORE THE REVENUE AUTHORI TIES. THE ASSESSEE FAILED TO ESTABLISH THE BOGUS PURCHASES. THEREFORE, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). HENCE, APPEAL OF THE ASSES SEE IS DISMISSED. 8. IN RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND MARCH, 2020. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 02/03/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 6 ITA NO. 1787/DEL/2019 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELH DATE OF DICTATION 27.02.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28.02.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 02.03.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 02.03.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 02.03.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER