Appeal details
Counselvise Citation
[2019] 115 COUNSELVISE.COM (IT) 8469 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 5 month(s) 2 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
07-10-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Assessment Year
2007-2008
Appeal Filed On
05-05-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2523/DEL./2016 (ASSESSMENT YEAR : 2007-08) SHRI SURENDER KUMAR RASTOGI, VS. ITO, WARD 63 (3), 5907, BASTI HARPHOOL SINGH, NEW DELHI. SADAR BAZAR, DELHI 110 066. (PAN : AAEPR8413L) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.K. GUPTA, CA REVENUE BY : DR. VIJAY KUMAR CHADHA, SENIOR DR DATE OF HEARING : 11.09.2019 DATE OF ORDER : 07.10.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, SHRI SURENDER KUMAR RASTOGI (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 18.03.2016 PASSED BY THE COMMI SSIONER OF INCOME-TAX (APPEALS)-20, NEW DELHI QUA THE ASSESSM ENT YEAR 2007-08 ON THE GROUNDS INTER ALIA THAT :- 1. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS IN UPHOLDING THE. ASSUMPTION OF JURISDICTION BY THE AO U/S 147 OF THE I T ACT BASED ON MERE INFORMATION PASSED ON BY THE INVESTIGATION WING OF THE DEPARTMENT WITH THE NO SU PPORTING ITA NO.2519/DEL./2016 2 MATERIAL SO AS TO ALLOW THE AO TO INDEPENDENTLY APP LY HIS MIND ON SUCH INFORMATION. 2. THE LD CIT (A) HAS CLEARLY ERRED IN LAW AND ON T HE FACTS AND CIRCUMSTANCES OF THE CASE IN UPHOLDING THE ADDI TION OF RS.20,47,818/- WITHOUT PROVIDING OPPORTUNITY OF CRO SS EXAMINATION OF THE PERSON WHOSE TESTIMONY WAS RELIE D BY THE AO TO MAKE ADDITION AND ALSO NOT FOLLOWING THE DECISIO N TAKEN BY THE LD CIT (A) IN AY 2006-07 ON THE IDENTICAL FACTS OF THE CASE. 3. THE LD CIT (A) HAS UPHELD THE ADDITION OF RS.20 ,47,818/- ON THE BASIS ALLEGED BOGUS PURCHASES IGNORING THE F ACT THE APPELLANT HAD MAINTAINED THE ITEMWISE QUANTITATIVE RECORDS OF STOCK AND THE STOCK SHOWN AS PURCHASE HAS EITHER BE EN SOLD OR THE SAME APPEARS AS CLOSING STOCK BOTH PART OF CRED IT SIDE IN P & L ACCOUNT AS PART OF BUSINESS INCOME. 4. THE LD CIT (A) HAS ERRED BOTH ON FACTS AND IN LA W IN ENHANCING THE INCOME OF THE APPELLANT BY RS.4,19,90 1/- ON HYPOTHETICAL BASIS, ASSUMPTIONS, SURMISES AND CONJE CTURES UNSUPPORTED WITH THE ANY MATERIAL ON RECORD. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE AT HAND ARE : RETURN OF INCOME FOR THE YEAR UNDER CONS IDERATION IS FILED BY THE ASSESSEE AT AN INCOME OF RS.96,650/- WHICH WAS PROCESSED UNDER SECTION 143 (1) OF THE INCOME-TAX ACT, 1961 (FOR SH ORT THE ACT) AT THE DECLARED RETURNED INCOME. SUBSEQUENTLY, ON THE BAS IS OF INFORMATION RECEIVED FROM ACIT, CENTRAL CIRCLE 10, JHANDEWALAN EXTENSION, NEW DELHI VIDE LETTER DATED 13.03.2013 ALONG WITH COMPA CT DISC (CD) WHEREIN THE LIST OF PARTIES TO WHOM THE BOGUS PURCH ASES/ACCOMMODATION ENTRIES PROVIDED BY SHRI RAKESH GUPTA, SHRI VISHESH GUPTA, SHRI NAVNEET JAIN AND SHRI VAIBHAV JAIN WERE RECORDED, P ROCEEDINGS U/S 147/148 OF THE ACT HAVE BEEN INITIATED. AFTER RECO RDING REASONS THAT RS.20,47,818/- HAS ESCAPED ASSESSMENT IN THE CASE O F M/S. TARUN METAL CO., PROP. SURENDER KUMAR RASTOGI, ASSESSEE IN THIS CASE. ITA NO.2519/DEL./2016 3 CONSEQUENTLY, NOTICE U/S 148 OF THE ACT WAS ISSUED. ON THE BASIS OF STATEMENTS GOT RECORDED WITH ACIT, CENTRAL CIRCLE 1 0, JHANDEWALAN EXTENSION, NEW DELHI BY SHRI RAKESH GUPTA, SHRI VIS HESH GUPTA, SHRI NAVNEET JAIN AND SHRI VAIBHAV JAIN THAT THEY ARE EN GAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES THROUGH THEIR FIRM AND VISHESH GUPTA CATEGORICALLY STATED THAT HIS PROPRIE TARY CONCERNS, M/S. SHREE SHYAM TRADING COMPANY AND SHREE SHYAM TRADER S ARE ENGAGED IN THE METAL TRADING AND 95% OF HIS BUSINESS WAS TO ISSUE BOGUS PURCHASE BILLS/ACCOMMODATION ENTRY BILLS AT THE COM MISSION OF 20 TO 50 PAISA PER RS.100/-. ASSESSING OFFICER (AO) PROCEED ED TO CONCLUDE THAT AFORESAID FOUR PERSONS THROUGH THEIR 11 FIRMS CONTR OLLED AND MANAGED BY RAKESH GUPTA AND VISHESH GUPTA AND THEIR FAMILY MEM BERS HAVE PROVIDED BOGUS BILLS / ACCOMMODATION ENTRY BILLS TO THE ASSESSEE AFTER PAYING REQUISITE ACCOMMODATION ENTRY CHARGES AND TH E MODUS OPERANDI HAS BEEN DULY EXPLAINED BY RAKESH GUPTA AND VISHESH GUPTA IN THEIR REPLY TO QUESTION NO.5 OF THEIR STATEMENT RECORDED ON OATH BY THE ACIT, CENTRAL CIRCLE 10, JHANDEWALAN EXTENSION, NEW DELHI DURING THE ASSESSMENT PROCEEDINGS. ON FAILURE OF THE ASSESSEE TO PROVIDE PROPER DETAILS AND BOOKS OF ACCOUNT IN RESPONSE TO THE SHO W-CAUSE NOTICE, AO PROCEEDED TO MADE ADDITION OF RS.20,47,818/- ON ACC OUNT OF PURCHASES OF RS.20,47,818/- MADE FROM SHYAM TRADING CO. AND S HREE GOVERDHAN INTERNATIONAL BEING BOGUS PURCHASES OBTAINED BY THE ASSESSEE AS EXPLAINED BY RAKESH GUPTA AND VISHESH GUPTA AT THE TIME OF RECORDING ITA NO.2519/DEL./2016 4 THEIR STATEMENT BEFORE ACIT, CENTRAL CIRCLE 10, JHA NDEWALAN EXTENSION, NEW DELHI AND THEREBY ASSESSED THE TOTAL INCOME AT RS.21,44,470-. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITION WITH FURTHER ENHANCEMENT OF INCOME OF THE ASSESSEE TO THE TUNE OF RS.4,19,901/- BY DISMISSING THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME U P BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UP ON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 5. AT THE VERY OUTSET, LD. AR FOR THE ASSESSEE CONT ENDED THAT THE CASE OF THE ASSESSEE QUA REOPENING AS WELL AS ON MERIT I S DULY COVERED IN ASSESSEES OWN CASE VIDE ORDER DATED 30.11.2016 PAS SED IN ITA NO.407/DEL/2016 FOR AY 2006-07 . HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVENUE BY RELYING UPON THE ORDER PASSED BY THE LD. CIT (A) CONTENDED THAT THE FACTS OF THE PRESENT CASE ARE DI FFERENT TO THAT OF AY 2006-07 AND AS SUCH IS NOT A COVERED CASE. 6. PERUSAL OF ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2006-07 (SUPRA) APPARENTLY SHOWS THAT THE REASONS FOR REOPENING IN THE PRESENT CASE AS WE LL AS THE CASE OF THE ASSESSEE FOR AY 2006-07 ARE VERBATIM SAME. FOR REA DY PERUSAL, REASONS RECORDED IN AY 2006-07 AND IN AY 2007-08 ARE EXTRAC TED AS UNDER :- ITA NO.2519/DEL./2016 5 REASONS RECORDED FOR REOPENING IN CASE OF TARUN ME TAL CO., PROP. SURENDER KUMAR RASTOGI FOR AY 2006-07 A LETTER BEARING F.NO.ADDL.CIT/(HQ)/(COORD.)/ ACCOMMODATION ENTRY/2012-13/15016 DATED 26.03.2013 WAS RECEIVED FROM THE OFFICE OF THE CHIEF CIT, DELHI-I, NEW DELHI THEREIN FORWARDING LETTER BEARING F.NO. CIT(C)-II/2 012-13/3898 DATED 19.03.2013 RECEIVED FROM THE CIT, CENTRAL-II, NEW DELHI ALONG WITH A CD CONTAINING THE DETAILS OF ACCOMMODA TION ENTRIES PROVIDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AN D SH. NAVNEET JAIN & SH. VALBHAV JAIN AND DIRECTING THIS OFFICE TO TAKE NECESSARY ACTION AS PER SECTION 148 IN RESPECT OF E NTRIES PERTAINING TO AY 2006-07, WHICH IS TIME BARRING ON 31.3.2013. THE INFORMATION PROVIDED BY THE CIT, CENTRAL-II NEW DELHI VIDE HIS LETTER DATED 19,03.2013 READS AS UND ER :- 'KINDLY FIND ENCLOSED HEREWITH LETTER DATED 13,03.2 013 OF ACIT, CENTRAL CIRCLE-10 DULY FORWARDED BY THE ADDL. CIT, CENTRAL RANGE-IV, ALONG WITH ITS ENCLOSURES ON THE SUBJECT MENTIONED ABOVE. 2. THE ASSESSMENT OF SEARCH CASES OF SH. RAKESH GUPTA, SH. VISHESH GUPTA, SH. NAVNEET JAIN & SH. VAIBHAV JAIN ARE UNDER PROCESS WITH THE ACIT, CENTR AL CIRCLE-10. DURING THE ASSESSMENT PROCEEDINGS U/S 15 3A IN THE AFORESAID CASES, DETAILS REGARDING ACCOMMODATIO N ENTRIES GIVEN BY THE ABOVE ENTRY PROVIDERS HAS BEEN OBTAINED BY THE A.O. 3. THE LIST OF ACCOMMODATION ENTRY RECIPIENTS HAS BEEN OBTAINED FROM SH. RAKESH GUPTA AND SH. VISHESH GUPTA. HARD COPY OF THE LIST IS ENCLOSED AS ANNEXUR E A, DULY SIGNED BY SH. VISHESH GUPTA. THE LIST GIVES TH E NAME OF THE FIRM WHICH HAS PROVIDED THE ACCOMMODATION EN TRY ALONG WITH THE NAME AND ADDRESS OF THE RECIPIENTS O F ACCOMMODATION ENTRY. 4. SH. NAVNEET JAIN & SH. VAIBHAV JAIN HAS PROVIDED ACCOMMODATION ENTRY THROUGH THIRTY-SEVEN P APER ENTITIES. THE LIST OF THE FIRMS GIVING ACCOMMODATIO N ENTRY IS ENCLOSED AS ANNEXURE-B. THE LIST OF ACCOMMODATIO N ENTRY RECIPIENTS, HAS BEEN OBTAINED FROM SH. NAVENE ET JAIN & SH. VAIBHAV JAIN. IT DOES NOT GIVE YEAR WISE BIFURCATION. HARD COPY OF THE LIST IS ENCLOSED AS A NNEXURE- C, DULY SIGNED BY SH. VAIBHAV JAIN. THUS, THE FIRMS MENTION IN THE LIST 'B' HAVE PROVIDED ACCOMMODATION ENTRIES TO THE FIRMS MENTIONED IN LIST 'C'. ITA NO.2519/DEL./2016 6 5. THE SOFT COPY OF THE INFORMATION IN RESPECT TO ANNEXURE A, B & C IS ALSO ENCLOSED. 6. THE INFORMATION OF ACCOMMODATION ENTRY INCLUDES A. Y. 2006-07 ALSO, WHICH IS A TIME BARRING YEAR FO R TAKING ACTION U/S 148. 7. THIS INFORMATION IS FORWARDED TO YOU FOR EARLY DISSEMINATION TO VARIOUS FIELD OFFICES IN DELHI (SO FT COPY ALSO ENCLOSED).' ON EXAMINING THE LIST OF ACCOMMODATION ENTRIES PROV IDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAV NEET JAIN & SH. VALBHAV JAIN PERTAINING TO A.Y. 2006-07, IT I S NOTICED THAT THE FOLLOWING ACCOMMODATION ENTRIES HAVE BEEN TAKEN BY THE ASSESSEE NAMELY M/S TARUN METAL CO. :- SL. NO. ACCOMMODATION ENTRY PROVIDED BY NAME OF PARTY TO WHOM ACCOMMODATION ENTRY IS PROVIDED AMOUNT OF ACCOMMODA- TION ENTRY 1. SHREE BANKEY BIHARI TRADING CO. M/S TARUN METAL CO. RS.14,32,039 2. VISHNU TRADING CO. - DO - RS.4,31,203 TOTAL AMOUNT OF ENTRIES = RS.18,63,242 SINCE SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & SH. VAIBHAV JAIN DURING THE COURSE O F SEARCH PROCEEDINGS, U/S 153A OF I.TAX ACT HAVE ADMITTED TH AT THEY HAVE GIVEN ACCOMMODATION ENTRIES TO THE PARTIES WHOSE LI STS HAVE BEEN PROVIDED BY THEM TO THE ACIT, CENTRAL CIRCLE-10, NE W DELHI, THEREFORE, IT IS FAIR TO CONCLUDE THAT M/S. TARUN M ETAL COMPANY WHOSE NAME IS APPEARING IN THE SAID LIST, HAS TAKEN ACCOMMODATION ENTRIES FROM SH. RAKESH GUPTA & SH. V ISHESH GUPTA AND SH. NAVNEET JAIN & SH. VAIBHAV JAIN PERTA INING TO AY 2006-07. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THA T INCOME CHARGEABLE TO TAX OF M/S. TARUN METAL COMPANY AMOUN TING TO RS.18,63,242/- FOR THE F.Y. 2005-06 RELEVANT TO A.Y . 2006-07 HAS ESCAPED ASSESSMENT AND IT IS A FIT CASE FOR INITIAT ION OF PROCEEDINGS U/S 147 OF THE ACT. PROPOSAL IN THE PRESCRIBED FORM FOR THE AY 2006-07 (F.Y. 2005-06) IS SUBMITTED HEREWITH FOR KIND CONSIDERATI ON AND NECESSARY APPROVAL U/S 151(2) OF THE I.TAX ACT, 196 1 AS THE SAME IS GETTING BARRED BY LIMITATION ON 31.3.2013. IF APPROVED, NOTICE U/S 148 OF THE ACT MAY BE ISSUE D. ITA NO.2519/DEL./2016 7 REASONS RECORDED FOR REOPENING IN CASE OF TARUN ME TAL CO., PROP. SURENDER KUMAR RASTOGI FOR AY 2007-08 REASONS FOR THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF M/S. TARUN METAL CO., PROP. SH. SURENDE R KUMAR RASTOGI FOR THE ASSESSMENT YEAR 2007-08 A LETTER BEARING F.NO.ADDL.CIT/(HQ)/(COORD.)/ ACCOMMODATION ENTRY/2012-13/15016 DATED 26.03.2013 WAS RECEIVED FROM THE OFFICE OF THE CHIEF COMMISSIONER OF I.TAX, DELHLI,. NEW DELHI THEREIN FORWARDING LETTER BEARIN G F.NO. CIT(C)-II/2012-13/3898 DATED 19.03.2013 RECEIVED FR OM THE COMMISSIONER OF I.TAX, CENTRAL-II, NEW DELHI ALONG WITH A CD CONTAINING THE DETAILS OF ACCOMMODATION ENTRIES PRO VIDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JA IN & SH. VALBHAV JAIN IN THE SHAPE OF BOGUS PURCHASES AND DI RECTING THIS OFFICE TO TAKE NECESSARY ACTION AS PER SECTION 148 IN RESPECT OF ENTRIES PERTAINING TO A.Y. 2006-07, WHICH WERE GOIN G TO BE BARRED BY LIMITATION ON 31.03.2013. THE INFORMATION PROVID ED BY THE CIT, CENTRAL-H. NEW DELHI VIDE HIS LETTER DATED 19, 03.2013 READS AS UNDER :- 'KINDLY FIND ENCLOSED HEREWITH LETTER DATED 13,03.2 013 OF ACIT, CENTRAL CIRCLE-10 DULY FORWARDED BY THE ADDL. CIT, CENTRAL RANGE-IV, ALONG WITH ITS ENCLOSURES ON THE SUBJECT MENTIONED ABOVE. 2. THE ASSESSMENT OF SEARCH CASES OF SH. RAKESH GUPTA, SH. VISHESH GUPTA, SH. NAVNEET JAIN & SH. VAIBHAV JAIN ARE UNDER PROCESS WITH THE ACIT, CENTR AL CIRCLE-10. DURING THE ASSESSMENT PROCEEDINGS U/S 15 3A IN THE AFORESAID CASES, DETAILS REGARDING ACCOMMODATIO N ENTRIES GIVEN BY THE ABOVE ENTRY PROVIDERS HAS BEEN OBTAINED BY THE A.O. 3. THE LIST OF ACCOMMODATION ENTRY RECIPIENTS HAS BEEN OBTAINED FROM SH. RAKESH GUPTA AND SH. VISHESH GUPTA. HARD COPY OF THE LIST IS ENCLOSED AS ANNEXUR E A, DULY SIGNED BY SH. VISHESH GUPTA. THE LIST GIVES TH E NAME OF THE FIRM WHICH HAS PROVIDED THE ACCOMMODATION EN TRY ALONG WITH THE NAME AND ADDRESS OF THE RECIPIENTS O F ACCOMMODATION ENTRY. 4. SH. NAVNEET JAIN & SH. VAIBHAV JAIN HAS PROVIDED ACCOMMODATION ENTRY THROUGH THIRTY-SEVEN P APER ENTITIES. THE LIST OF THE FIRMS GIVING ACCOMMODATIO N ENTRY IS ENCLOSED AS ANNEXURE-B. THE LIST OF ACCOMMODATIO N ENTRY RECIPIENTS, HAS BEEN OBTAINED FROM SH. NAVENE ET JAIN & SH. VAIBHAV JAIN. IT DOES NOT GIVE YEAR WISE ITA NO.2519/DEL./2016 8 BIFURCATION. HARD COPY OF THE LIST IS ENCLOSED AS A NNEXURE- C, DULY SIGNED BY SH. VAIBHAV JAIN. THUS, THE FIRMS MENTION IN THE LIST 'B' HAVE PROVIDED ACCOMMODATION ENTRIES TO THE FIRMS MENTIONED IN LIST 'C'. 5. THE SOFT COPY OF THE INFORMATION IN RESPECT TO ANNEXURE A, B & C IS ALSO ENCLOSED. 6. THE INFORMATION OF ACCOMMODATION ENTRY INCLUDES A. Y. 2006-07 ALSO, WHICH IS A TIME BARRING YEAR FO R TAKING ACTION U/S 148. 7. THIS INFORMATION IS FORWARDED TO YOU FOR EARLY DISSEMINATION TO VARIOUS FIELD OFFICES IN DELHI (SO FT COPY ALSO ENCLOSED).' IT IS EVIDENT FROM THE ASSESSMENT ORDER PASSED BY T HE ACIT, CENTRAL CIRCLE-10, NEW DELHI ON 28.03.2013 TH AT SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JA IN & SH. VAIBHAV JAIN DURING THE COURSE OF SEARCH PROCEEDING S, IN POST SEARCH PROCEEDINGS AND IN ASSESSMENT PROCEEDINGS U/ S 153A OF I.TAX ACT ADMITTED THAT THEY HAVE GIVEN ACCOMMODATI ON ENTRIES TO THE PARTIES WHOSE LISTS HAVE BEEN PROVIDED BY TH EM TO THE ACIT, CENTRAL CIRCLE-10, NEW DELHI. THEREFORE, THE ASSESSMENT OF THE FIRMS/CONCERNS/INDIVIDUALS FOR AY. 2006-07, WHOSE NAMES WERE APPEARING IN THE SAID LIST OF ACCOMMODATION EN TRIES PROVIDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AN D SH. NAVNEET JAIN & SH. VAIBHAV JAIN WERE REOPENED U/S 1 47 OF I.TAX ACT AND NOTICES U/S 148 OF I.TAX ACT WERE ISSUED. AFTER MAKING NECESSARY VERIFICATION AND DISPOSING O FF THE OBJECTIONS FILED BY MOST OF THE ASSESSEES' AGAINST REOPENING OF THEIR CASE U/S 147 OF I.TAX ACT AND AFTER CONSIDERI NG THE REPLIES/DETAILS/DOCUMENTS FURNISHED BY THE ASSESSEE S' IN THEIR RESPECTIVE CASES, INCLUDING THE CASE OF THE ASSESSE E, IT WAS HELD THAT NO SATISFACTORY EXPLANATION ABOUT THE SOURCES OF BOGUS PURCHASES MADE FROM SH. RAKESH GUPTA AND SH. VISHES H GUPTA COULD BE FURNISHED. HENCE KEEPING IN VIEW THE PROVI SIONS OF SECTION 69C OF I.TAX ACT READ WITH SECTION 4, 5 AND 14 OF I.TAX ACT, THE AMOUNT OF SUCH BOGUS PURCHASES WERE TREATE D AS DEEMED INCOME OF THE ASSESSEE FOR A.Y. 2006-07. SINCE THE ACCOMMODATION ENTRIES PROVIDED BY SH. RAK ESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JAIN & SH . VAIBHAV JAIN IN THE SHAPE OF BOGUS PURCHASES WERE T REATED AS DEEMED INCOME OF THE ASSES SEES' FOR A. Y 2006-07 A ND IN THE SAID LIST, NAMES OF THE CONCERNS/PERSONS WHO HAVE TAKEN ACCOMMODATION ENTRIES IN THE SHAPE OF BOGUS PURCHAS ES IN SUBSEQUENT ASSESSMENT YEARS WERE ALSO APPEARING, IN CLUDING A.Y.2007-08, THEREFORE, THIS OFFICE IS OF THE FIRM VIEW THAT THESE ITA NO.2519/DEL./2016 9 CASES ALSO NEED TO BE REOPENED U/S 147 OF I. TAX AC T. ACCORDINGLY, ON EXAMINING THE LIST OF ACCOMMODATION ENTRIES PROV IDED BY SH. RAKESH GUPTA & SH. VISHESH GUPTA AND SH. NAVNEET JA IN & SH. VALBHAV JAIN PERTAINING TO A.Y. 2007-08, IT IS NOTI CED THAT THE FOLLOWING ACCOMMODATION ENTRIES HAVE BEEN TAKEN BY THE ASSESSEE NAMELY M/S TARUN METAL CO. IN A.Y. 2007-08:- SL. NO. ACCOMMODATION ENTRY PROVIDED BY NAME OF PARTY TO WHOM ACCOMMODATION ENTRY IS PROVIDED AMOUNT OF ACCOMMODA- TION ENTRY 1. SHREE SHYAM TRADING COMPANY M/S TARUN METAL CO. RS.15 , 04 , 725 2. SHREE GOVERDHAN INTERNATIONAL M/S TARUN METAL CO. RS.5,43,093/- TOTAL AMOUNT OF ENTRIES = RS.20,47,818 ALSO THE DETAILS OF INCOME TAX RETURN FILED BY M/S TARUN METAL CO. FOR A.Y. 2007-08 AND PROCESSING DONE U/S 143(1) OF I.TAX ACT THEREOF WERE TAKEN OUT FROM ITD SYSTEM. O N EXAMINING THE SAME, IT IS NOTICED THAT THE ASSESSEE HAD FILED HIS INCOME TAX RETURN FOR THE A.Y. 2007-08 RELATING TO THE F.Y. 2006-07 ON 28.10.2007 DECLARING AN INCOME OF RS. 96 ,650/- ONLY. FURTHER, NO SCRUTINY ASSESSMENT WAS DONE IN A.Y. 20 07-08. THEREFORE, I HAVE REASONS TO BELIEVE THAT INCOME CH ARGEABLE TO TAX AMOUNTING TO RS. 20,47,818/-FOR THE F.Y. 2006-0 7 RELEVANT TO A.Y. 2007-08 HAS ESCAPED ASSESSMENT AND IT IS A FIT CASE FOR INITIATION OF PROCEEDINGS U/S 147 OF THE ACT. 7. COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2006-07 (SUPRA) HELD THE REOPENING BAD IN LAW ON ACCOUNT O F NON- APPLICATION OF MIND BY THE AO BY RETURNING FOLLOWIN G FINDINGS :- 5.1. A PERUSAL OF THE REASONS DEMONSTRATE THAT THE RE IS NON APPLICATION OF MIND BY THE LD.A.O. ON SIMILAR SET O F REASONS ARISING FROM THE VERY SAME MATERIAL THE ITAT DELHI. BENCH IN ITA NO.1365/DEL/2005 ETC. IN THE CASE OF KRINHNA MA TERIAL STORES HELD AS FOLLOWS. '10. ON CAREFUL CONSIDERATION AND VIGILANT PERUSAL OF THE ORDERS OF THE TRIBUNAL INCLUDING THAT OF THE UN IQUE METAL INDUSTRIES [SUPRA] THE AO HAD RECORDED SIMILA RLY WORDED REASONS AND NAME OF THE PARTIES FORM WHICH T HE ASSESSEE ALLEGED TO HAVE MADE BOGUS PURCHASES WERE ALSO SAME EXCEPT THE AMOUNT MENTIONED THEREIN IN THE REA SONS ITA NO.2519/DEL./2016 10 RECORDED IN THE TABULAR FORM ARE SAME AS IN THE CAS E OF THE PRESENT ASSESSEE. THEREFORE, WE HAVE NO ALTERNA TIVE BUT TO FOLLOW THE DECISIONS OF THE TRIBUNAL IN THE CASE UNIQUE METAL INDUSTRIES [SUPRA] AND OTHER AS MENTIO NED HEREINABOVE. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE INITIATION OF REASSESSMENT PROCEEDINGS AS WELL AS ISSUANCE OF NOTICE U/S 148 OF THE ACT WAS NOT VALID AND THE SAME WAS VOID AB INITIO-AND THUS WE QUASH THE SAME AND SUBSEQUENTLY THE ASSESSMENT ORDER PASSED IN PURSUAN CE THERETO IS ALSO QUASHED. ACCORDINGLY, GROUND NOS.2 AND 3 OF THE ASSESSEE ARE ALLOWED. 8. FOLLOWING THE ORDER PASSED BY THE COORDINATE BEN CH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2006-07 (SUPRA) IN WHICH ASSESSMENT WAS REOPENED ON THE SIMILAR SET OF FACTS WITHOUT APPLICATION OF MIND, BARE PERUSAL OF THE ASSESSMENT ORDER ITSEL F GOES TO PROVE THAT THE ENTIRE INVESTIGATION AS TO RECORDING STATEMENTS AND TAKING AFFIDAVITS OF SHRI RAKESH GUPTA, SHRI VISHESH GUPTA, SHRI NAVN EET JAIN AND SHRI VAIBHAV JAIN HAS BEEN CONDUCTED BY THE ACIT, CENTRA L CIRCLE 10, JHANDEWALAN EXTENSION, NEW DELHI AND THE SAID INVES TIGATION HAS BEEN ADOPTED BY THE AO OF THIS CASE WITHOUT APPLYING HIS MIND AND WITHOUT GETTING THEIR STATEMENT CORROBORATED FROM THE FURTH ER MATERIAL. SO, IN VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW T HAT REOPENING IN THIS CASE ITSELF IS BAD IN LAW, HENCE ORDERED TO BE QUAS HED. 9. FURTHERMORE, ON THE SIMILAR SET OF FACTS, ADDITI ON MADE BY THE AO IN AY 2006-07 WAS DELETED ON MERITS ON THE GROUND T HAT AO WAS NOT EMPOWERED TO MADE ADDITION TREATING THE ENTIRE PURC HASES OR PART OF THE PURCHASES AS INCOME PARTICULARLY WHEN PURCHASES HAV E NOT BEEN DECLARED ITA NO.2519/DEL./2016 11 AS BOGUS. FURTHERMORE, IN THE ABSENCE OF REJECTION OF BOOKS OF ACCOUNT BY THE AO, NO ADDITION CAN BE MADE BY OVERLOOKING T HE TRADING RESULTS SHOWN BY THE ASSESSEE. FOR READY PERUSAL, FINDING OF COORDINATE BENCH OF THE TRIBUNAL IN AY 2006-07 ARE EXTRACTED AS UNDE R :- 5.2. EVEN ON MERITS THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ITAT ORDER (SUPRA) AT PARAS 11 TO 14 HELD AS FOLLOWS : ON MERITS :- 11. THE REMAINING ISSUES ON MERITS ARE SUSTENANCE O F ADDITION MADE BY THE LD. CIT (A) TO THE EXTENT OF 2 0% PURCHASES MADE BY THE ASSESSEE DURING F.Y.2005-06 PERTAINING TO A.Y. 2006-07, FROM THE ORDER OF THE TRIBUNAL IN THE CASE OF UNIQUE METAL INDUSTRIES [SUPRA] DATED 30.11.2015 AND OTHER CASES OF THE TRIBUNAL, WE NOTE THAT THE TRIBUNAL HAS FOLLOWED TH E FINDINGS GIVEN BY THE COORDINATE BENCH OF THE TRIBUNAL IN TH E ORDER DATED 28.10.2015 IN THE CASE OF UNIQUE METAL INDUSTRIES [ SUPRA]. THE RELEVANT OPERATIVE FINDING OF THE ORDER OF THE TRIBUNAL IN THE CASE OF RADHEY SHYAM (SUPRA) READS AS UNDER :- 7. NOW COMING TO THE MERIT ABOUT THE SUSTENANCE O F THE ADDITION BY THE CIT(A) @ 20% OF THE PURCHASES MADE BY THE ASSESSEE FROM SHRI BANKEY BIHARI TRADING CO., AFTER HEARING THE RIVAL SUBMISSIONS AND GOING THROUGH THE ORDER OF TH E TRIBUNAL, I NOTED THAT THIS TRIBUNAL VIDE ITS ORDER DATED 28.10 .2015 IN THE CASE OF UNIQUE METAL INDUSTRIES (SUPRA), DELETED SI MILAR ADDITION BY OBSERVING IN PARA 27 AS UNDER: '27. AS REGARDS THE ADDITION OF 20% SUSTAINED BY TH E LD. CIT I AM OF THE VIEW THAT SINCE PURCHASES ARE NOT BOGUS T HE ADDITION ON THIS ACCOUNT CANNOT BE SUSTAINED. EVEN OTHERWISE TH E ADDITION OF 20% ON THE FACTS AND CIRCUMSTANCES IS APPARENTLY TO O HIGH. THE LD. CIT (A) HAVING HELD THAT TAX HAS TO BE LEVIED O N REAL INCOME AND THE PROFIT CANNOT BE ASCERTAINED WITHOUT DEDUCT ING THE COST OF PURCHASES FROM THE SALES AS OTHERWISE IT AMOUNT TO LEVY OF TAX ON GROSS RECEIPT, SHE OUGHT TO HAVE APPLIED PROFIT RATE IN THIS NATURE OF TRADE. ESTIMATING PROFIT @ 20% BY TAKING INTO CONSIDERATION THE OR VISIONS OF SECTION 40A(3) WILL NOT LEAD TO DETERMINATION OF CORRECT REAL INCOME. SECTION 40A( 3) IS MEANT FOR A DIFFERENT PURPOSE WHEN THE ASSESSEE HAS MADE PURCHASES IN CASH. THIS PROVISION CANNOT BE APPLIED IN SUCH CA SES. ONCE THE PURCHASES ARE HELD TO BE BOGUS THEN THE TRADING RES ULTS DECLARED BY THE ASSESSEE CANNOT BE ACCEPTED AND RIGHT COURSE IN SUCH CASE ITA NO.2519/DEL./2016 12 IS TO REJECT BOOKS OF ACCOUNTS AND PROFIT HAS TO BE ESTIMATED BY APPLYING A COMPARATIVE PROFIT RATE IN THE SAME TRAD E. THOUGH THERE CAN BE A LITTLE GUESS WORK IN ESTIMATING PROF IT RATE BUT SUCH PROFIT RATE CANNOT BE PUNITIVE. 12. HOWEVER, WE MAY POINT OUT THAT THE LD. DR HAS VEHEMENTLY SUPPORTED THE ADDITION MADE BY THE AO AN D SUSTAINED BY THE LD. CIT (A) AND CONCLUDED THAT THE LD. CIT(A ) HAS QUITE CORRECT IN HOLDING THAT SINCE THE PURCHASES ARE BOG US, THEREFORE, THE ADDITION TO THE EXTENT OF 20% OF PURCHASES HAS TO BE SUSTAINED. ON SPECIFIC QUERY FROM THE BENCH, THE LD . OR COULD NOT BRING TO OUR NOTICE ANY COGENT OR RELEVANT MATE RIAL OR EVIDENCE WHICH MAY COMPEL US TO TAKE A DIFFERENT VI EW WHICH COULD LEAD US TO NOT TO FOLLOW THE DECISION OF THE COORDINATE BENCHES OF THE TRIBUNAL IN THE CASE OF UNIQUE METAL INDUSTRIES [SUPRA] AND OTHER RELEVANT ORDERS. WE THEREFORE, RE SPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF UNIQUE METAL INDUSTRIES [SUPRA] WHICH DELETED THE ADDITION , AS SUSTAINED BY THE LD. CIT(A) BEING 20% OF THE PURCHASES MADE B Y THE ASSESSEE DURING THE RELEVANT F.Y. CONSEQUENTLY, TH E GROUNDS OF THE ASSESSEE ON MERITS ARE ALSO ALLOWED. 13. AS A RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.1365/ DEL/2015 IN THE CASE OF KRISHNA METAL STORE VS. ITO ARE ALLOWED. 14. SINCE THE LD. OR HAS FAIRLY ACCEPTED THAT THE F ACTS AND CIRCUMSTANCES IN THE CASE OF UNIQUE METAL INDUSTRIE S [SUPRA] ARE QUITE SIMILAR TO THE FACTS AND CIRCUMSTANCES IN ITA NO.1365/DEL/2015 IN THE CASE OF KRISHNA METAL STORE VS. ITO IN ALL THE OTHER FIVE APPEALS VIZ: 1. ITA NO.1378/DEL/2015 (2006-07) BHARDWAJ METAL (I NDIA) 2. ITA NO.1369/DEL/2015 (2006-07) LAXMI DHATU BHAND AR 3. ITA NO.1379/DEL/2015 (2006-07) KRISHAN LAL & SON S 4. ITA NO.1380/DEL/2015 (2006-07) KAKKAR BARTAN STO RE 5. ITA NO.1366/DEL/2015 (2006-07) KASHMIR METAL STO RE THEREFORE, OUR CONCLUSION DRAWN BY THE EARLIER PART OF THIS ORDER IN THE CASE OF KRISHNA METAL STORE VS. ITO [SUPRA] WOULD APPLY MUTATIS MUTANDIS TO ALL THE OTHER FIVE APPEALS AS W ELL. CONSEQUENTLY, THE LEGAL GROUNDS AS WELL AS GROUNDS ON MERITS IN ALL THE OTHER ABOVE MENTIONED FIVE APPEALS ARE ALSO ALLOWED. 10. LD. DR FOR THE REVENUE DREW OUR ATTENTION TOWAR DS THE ASSESSMENT ORDER WHEREIN THE AO HAS CATEGORICALLY R ECORDED THAT BOOKS ITA NO.2519/DEL./2016 13 OF ACCOUNT HAVE NOT BEEN PRODUCED BY THE ASSESSEE. HOWEVER, THE LD. AR FOR THE ASSESSEE TO REPEL THIS CONTENTION AND FI NDINGS RETURNED BY THE AO THAT BOOKS OF ACCOUNT HAVE NOT BEEN PRODUCED, DR EW OUR ATTENTION TOWARDS LETTER DATED 02.03.2015, AVAILABLE AT PAGES 57 TO 60 OF THE PAPER BOOK ACKNOWLEDGED BY THE AO, HAVING BEEN RECEIVED I N PARA 16 OF THE ASSESSMENT ORDER, WHEREIN THE ASSESSEE HAS CATEGORI CALLY MENTIONED AT PAGE 59 PARA (G) AND PARA (H) THAT : (G) BOOKS OF ACCOUNT ALONG WITH VOUCHERS/SUPPORTIN G BILLS ARE PRODUCED FOR YOUR KIND EXAMINATION SIR. (H) THE COPY OF ACCOUNT OF THE PARTIES IN QUESTION AS PER LEDGER ACCOUNT OF THE ASSESSEE IS ENCLOSED HERE WITH. HAVE BEEN FILED. SO, THE AO HAS MADE THE ASSESSMEN T ON THE BASIS OF INCORRECT FACTS. SO, WHEN THE BOOKS OF ACCOUNTS HA VE NOT BEEN REJECTED AFTER HAVING CROSS CHECKED, NO ADDITION CAN BE MADE BY IGNORING THE TRADING RESULTS SHOWN BY THE ASSESSEE. 11. SO FAR AS QUESTION OF MAKING ENHANCEMENT OF INC OME BY THE LD. CIT (A) IS CONCERNED, IT IS CONTENDED BY THE LD. AR FOR THE ASSESSEE THAT WHILE ENHANCING THE INCOME OF THE ASSESSEE, THE LD. CIT (A) HAS FAILED TO CONSIDER THE REPLY FILED BY THE ASSESSEE, AVAILABLE AT PAGES 116 & 117 OF THE PAPER BOOK, STATING THEREIN THAT DURING THE ASS ESSMENT PROCEEDINGS, BOOKS OF ACCOUNT AND OTHER CONNECTING EVIDENCE WAS PRODUCED BEFORE THE AO ALONG WITH ITEMIZED STOCK SHOWING DAY-TO-DAY MOVEMENT/HANDLING OF STOCKS WAS ALSO PERUSED BY AO, WHO HAS NOT POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNT AND STOCK REGISTER ITA NO.2519/DEL./2016 14 PRODUCED. WE ARE OF THE CONSIDERED VIEW THAT IN TH ESE CIRCUMSTANCES, ENHANCING THE INCOME BY THE LD. CIT (A) BY ESTIMATI NG THE GROSS PROFIT IS NOT SUSTAINABLE IN THE EYES OF LAW. 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AND F OLLOWING THE DECISION RENDERED BY THE COORDINATE BENCH OF THE TR IBUNAL FOR AY 2006- 07, WE ARE OF THE CONSIDERED VIEW THAT WHEN REOPENI NG IN THIS CASE IS BAD IN LAW ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT (A) IS NOT SUSTAINABLE IN THE EYES OF LAW, HENCE ORDERED T O BE DELETED. CONSEQUENTLY, THE APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 7 TH DAY OF OCTOBER, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 7 TH DAY OF OCTOBER, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-20, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.
