Shri Anil Ghanshyambhai Kumawat, Surat V. The Income Tax Officer, Ward-3(3)(1), Surat

ITA 403/SRT/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1865 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-05-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 07-09-2017
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Bogus purchase; Search and seizure; Opportunity of cross examination; Accommodation entries; TDS
• Section: 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr. ARJUN LAL SAINI, ACCOUNTANT MEMBER (Hearing in Virtual Court) ITA No. 745/Srt/2018 (AY 2009-10) Mahesh Shreedhar Pareek, 143, ShreejiAwas, Mini Bazar, Varachha Road, Surat. PAN : AGTPP 7596 H Vs I.T.O., Ward 3(3)(3), Surat. Appellant / Revenue Respondent / assessee ITA No. 746/Srt/2018(AY 2009-10) MahendraTikamchand Jain, 126,Sardar Complex, Mini Bazar, Varachha Road, Surat. PAN : AAVPJ 2151 L Vs I.T.O.,Ward 3(3)(3), Surat. Appellant / Revenue Respondent / assessee ITA No. 401, 402, 403 & 404/Srt/2017 (AY 2009-10, 2010-11, 2011-12 & 2012-13) Anil G. Kumawat, Prop. of Kumawat Exports, 126, Sardar Complex, Mini Bazar, Varachha Road, Surat-395003. PAN : ARNPK 7859 D Vs I.T.O.,Ward 3(3)(1), Surat. Appellant / Revenue Respondent / assessee Assessee by Shri Suchek Anchalia, CA Revenue by Shri H.P. Meena, CIT-DR & Shri Vinod Kumar, Sr.DR Date of hearing 30/05/2022 Date of pronouncement 18/07/2022 Order under section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 2 1. This group of 6 appeals are directed against the separate orders of learned Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A) Surat-3, for the Assessment year (AY) 2009-10 to 2012-13 by different assessee (s). In all the appeals, the facts are almost common, the assessee has raised common grounds of appeal, except variation of disallowance of disputed purchase. The addition in all the appeals was made on account of bogus purchases shown from Bhanwar Lal Jain and his group, who were declared as entry provider by the Income Tax Department. All the appeals were dismissed by ld CIT(A) in ex-party order. Therefore, with the consent of parties, all the appeals were clubbed and heard together and are decided by the consolidated order to avoid the conflicting decision. For appreciations of facts the facts in case of Mahesh Sreedhar Pareek are treated as lead case. The assessee in his appeal in ITA No. 745/Srt/2018 for A.Y. 2008-09 has raised following grounds of appeal; “1 On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in not considering that the assumption of jurisdiction by the Ld. Assessing Officer is bad in law as the conditions laid down under the Act for initiating reassessment proceeding have not been fulfilled. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in Confirming 25% of the Purchases amounting to Rs. 22,43,67,503/-by treating the purchase on behalf of principal parties as a purchase of appellant. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the addition, without giving an opportunity of cross examination Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 3 with parties, without providing any corroborative evidence & without the copy of statements relied upon. 4. On the facts and in the circumstances of the case and in law, the Ld. C1T(A) erred in passing the order without giving proper opportunity to present the case. 5. The appellant craves to add, alter, classify, reclassify, delete or modify any of the above grounds of appeal and requests to consider each of the above grounds without prejudice to one another. 2. Brief facts as noted from the orders of the lower authorities are that the assessee is engaged in trading of diamonds. The assessee filed his return of income for Assessment Year 2009-10 declaring total income at Rs.1,48,810/- on 28/07/2009. The case of assessee was reopened under section 147 of the Income tax Act, 1961 (in short, the At). Notice under section 148 of the Act was issued on 31/03/2016 and served on the assessee. The case was reopened on the basis of information received from DGIT (Investigation) Mumbai. In the information received from Investigation Wing, Mumbai it was informed that a search and seizure action was carried out by Investigation wing-Mumbai on Bhanwarlal Jain Group on 03.10.2013, which resulted in collection of evidence that Bhanwarlal Jain, his son Rajesh were operating 70 benami concerns in the name of their employees and staff for providing bogus accommodation entries of unsecured loans, sale and purchase of different kinds of material. The statement of Bhanwarlal Jain was recorded under section 132(4) of the Act, wherein he had admitted that his family members are managing Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 4 various entities which are providing accommodation entries. During the course of search, blank cheque book signed by dummy partners / directors /proprietor of entities were found and seized. It was informed that assessee is one of the beneficiaries of bogus purchase form three following entities managed by Bhanwarlal Jain Group. The assessee has shown purchased of Rs. 89,74,70,013/- from the 14 business entity managed by Bhanwarlal Jain and his group. The details of all the entities are mentioned in para 1 of assessment order. On the basis of such information, the Assessing Officer (AO) formed opinion that income of the assessee has escaped from assessment and that he was satisfied that it is a fit case for reopening under section 147 of the Act. Notice under section 148 dated 31.03.2016 after recording reasons of reopening was served on the assessee. The assessee in response to notice under section 148, vide his letter dated 18/04/2016 has stated that the original return of income filed on 23/10/2007 may be treated as return of income filed in response to notice under section 148 of the Act. The reasons of reopening was asked by the assessee. The assessee filed his objections against the reopening. The objection of the assessee was rejected in detailed and speaking order by the assessing officer. Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 5 3. During the course of assessment, the Assessing Officer has noted that the assessee has shown purchase from the entities managed by Bhanwarlal Jain Group. Bhanwarlal Jain Group is engaged in providing accommodation entry by various bogus concern. The assessee has shown bogus purchase of Rs. 89,74,70,013/- from 14 companies/ firms and proprietorship concern which were managed by Sh. Bhanwarlal Jain Group. The Assessing Officer issued a show cause notice narrating fact that DGIT (Investigation), Mumbai, informed that there was a search action under section 132 of the Act on the group of Shri Bhanwarlal Jain on 03.10.2013, which resulted in collection of evidences and other findings, which conclusively proved that the said Shri Bhanwarlal Jain was providing accommodation entries. The investigation team also provided the list of beneficiary of such accommodation entry. From the list of purchase provided to the Assessing Officer, the assessing officer identified such three bogus entities from which the assessee has shown purchase of Rs. 89,74,70,013/- -. On the above observation the assessing officer issued show cause notice as to why the purchased should not be disallowed and added to the income of the assessee. 4. The assessee filed its reply to the said show cause notice. In the reply, the assessee submitted that he is not aware that in which capacity Bhanwarlal Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 6 Jain is connected with the parties. The assessee is a commission agent. There is no purchase and sale in assessee’s. The bills were issued in the name of assessee for sales of goods by the principal but the goods were sold at the same price and the assessee charged commission which was credited to the profit and loss account. TDS was deducted on the commission by principal. There is no corroborative evidence to prove that the assessee has taken accommodation entry from such concerns. The assessee also filed copy of audited accounts, profits and loss account, balance sheet, copy of contract note of purchase/ sales of goods, debit and credit note of alleged commission and the statement of commission received. The assessee demanded copy of the statement of Bhanwarlal Jain, cross examination of Bhanwarlal Jain. 5. The reply of the assessee was not accepted by Assessing Officer. The Assessing Officer without making specific reference of various evidences filed by the assessee, solely relied upon the information received from DGIT(Investigation) Mumbai and recorded that search and seizure action was carried on Bhanwarlal Jain Group on 3 rd Oct, 2013 which resulted in collection of evidences, which conclusive prove that Bhanwarlal Jain Group provided entries of Rs. 25,000/- crore through their 70 benami entities. The Assessing Officer noted that Bhanwarlal Jain was providing bogus Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 7 entry of unsecure loan and bogus purchase without actual delivery of goods. From the evidences collected from the premises of Bhanwarlal Jain Group, in search action, it was conclusively proved that said group was indulging in providing accommodation entry without actual delivery of goods. No stock of diamonds were found at the time of search except books of account of entries and the blank cheques book signed by the dummy partners, directors of proprietors. The Assessing Officer by relying upon report of investigation wing treated the transaction as bogus and disallowed 25% of aggregate of transaction of Rs. 89,74,70,013/- -. The assessing officer worked out disallowance of Rs. 22,45,16,310/-. 6. Aggrieved by the addition as well as on reopening under section 147, the assessee filed appeal before CIT(A). the Ld. CIT(A) recorded that despite serving more than three notice of hearing, neither the assessee attended the hearing nor filed any documentary evidences to support his contention about the grounds of appeal. The Ld. CIT(A) in para-3 of his order also recorded that the assessee was also informed telephonically about the date of hearing. The Ld. CIT(A) dismissed the appeal of assessee in ex- party proceedings with discussing the merits of the case by just noting that no details were furnished before him and the appeal was dismissed. Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 8 Further aggrieved the assessee has filed present appeal before this Tribunal. 7. We have heard the submissions of the learned authorised representative (Ld. A.R) of the assesse and the Ld. CIT- DR for the revenue and have gone through the orders of the authorities below. The Ld. A.R for the assessee submits that no fair and proper opportunity of hearing was granted by the Ld. CIT(A). The Ld. A.R for the assessee while arguing other appeal listed on the date of hearing submits that in six appeal the Ld. CIT(A) passed the ex-party order, though no order is passed on the merits of the cases, but the bench may adopt a uniform while deciding the appeal instead of restoring the matter back to the file of Ld. CIT(A). 8. On the other the ld. Sr. DR for the Revenue submits that the assessee was given four opportunity as recorded in page 4 of the order passed by the ld. CIT(A). The assessee failed to comply with the notice issued by the ld.CIT(A). The ld. CIT(A) left with no option, except to proceed to decide the issue and in absence of any evidence or explanation affirm the action of AO. In alternative submission, the ld. Sr. DR for the Revenue submits that in case the Hon’ble Tribunal is deem appropriate, the assessee be directed to be vigilant and not to default in attending the proceedings and to waste the time of public authorities/ld.CIT(A). Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 9 9. We have considered the rival submission of both the parties and have gone through the orders of Lower Authorities. We find that the ld. CIT(A) fixed the hearing on various occasions as mentioned in para 3 of the impugned order. It is recorded by ld. CIT(A) that no compliance was made by the assessee. However, we find that Ld. CIT(A) recorded that the assessee was also informed telephonically about the date of hearing. Facts remains the same that the assessee has not represented his case. The substantial right of the assessee are involved. The Ld. CIT(A) upheld the huge addition on account of bogus/ disputed purchase. No specific submissions for explaining the reasons for non-appearance was disclosed. We instead of going into controversy, whether the assessee defaulted in attending the proceedings despite service of notice or not, before the ld.CIT(A). We find that the order of the ld. CIT(A) is not in accordance with mandate of section 250(6) of the Income Tax Act. Section 250(6) of the Act mandates that the Ld. CIT(A) while deciding the appeal is required to pass order on points of determination (grounds of appeals), decision therein on and reasons for such decision. Therefore, considering the facts and circumstances of the case, the appeal of the assessee is restored back to the file of the ld.CIT(A) to decide all the grounds of appeal on merit in accordance with law. Needless to order that before passing the order the Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 10 ld. CIT(A) shall grant fair opportunity of hearing to the assessee. The assessee is also directed to appear before the ld.CIT(A) as and when the date of hearing is fixed and to provide all necessary evidence and information without any further delay and not to seek the adjournment without any valid reasons. The assessee is further directed to provide his e-mail address and telephone number to make communication with him or his representative. The assessee shall file his latest address and e-mail address and his telephone number or of his representative, within fifteen days of receipt of this notice in the office of assessing officer as well as before jurisdictional CIT(A). As the case relates to A.Y. 2009-10, thus, the Ld. CIT(A) is further directed to decide the appeal as early as possible. Accordingly the grounds of appeal by assessee are allowed for statistical purpose. 10. In the result, appeal of the assessee is allowed for statistical purpose. 11. The assessee (Mahendra Tikamchand Jain) in his appeal in ITA No. 746/Srt/2018 for A.Y. 2009-10 has raised following grounds of appeals; “1 On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in not considering that the assumption of jurisdiction by the Ld. Assessing Officer is bad in law as the conditions laid down under the Act for initiating reassessment proceeding have not been fulfilled. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in Confirming 25% of the Purchases amounting to Rs. 20,89,30,612/-by treating the purchase on behalf of principal parties as a purchase of appellant. Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 11 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the addition, without giving an opportunity of cross examination with parties, without providing any corroborative evidence & without the copy of statements relied upon. 4. On the facts and in the circumstances of the case and in law, the Ld. C1T(A) erred in passing the order without giving proper opportunity to present the case. 5. The appellant craves to add, alter, classify, reclassify, delete or modify any of the above grounds of appeal and requests to consider each of the above grounds without prejudice to one another. 12. We find that the assessee has raised similar grounds of appeal as raised by Mahesh Sreedhar Pareek in ITA No. 745/Srt/2018, facts of this appeal are almost similar, the Ld. CIT(A) passed the similar order, therefore, by maintaining the consistency, this appeal is also restore to the file of Ld. CIT(A) with similar direction as contained in para-9 (supra). In the result, the grounds of appeal raised by the assessee are allowed for statistical purpose. 13. In the result, this appeal is allowed for statistical purpose. 14. The assessee (Anil G Kumawat ) in his appeals in ITA No. 401 to 404/Srt/2017 for A.Y. 2009-10 to 2012-13 has raised following common grounds of appeal: “1 On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in not considering that the assumption of jurisdiction by the Ld. Assessing Officer is bad in law as the conditions laid down under the Act for initiating reassessment proceeding have not been fulfilled. 2. On the facts and in the circumstances of the case and in law, the Ld. CIL (A) erred in erred in treating the appellant as diamond trader, without appreciating the fact that the appellant is only a commission agent and the purchase and sale was made on behalf of other parties and the addition was made without providing any opportunity of cross Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 12 examination, without any corroborative evidence and without providing copy of statements relied upon. 3. On the facts and in the circumstances of the case and in law the Ld. CIT (A) erred in estimating the profit @ 25% on alleged bogus purchase, without appreciating the fact that the appellant is only a commission agent and the purchase and sale was made on behalf of other parties. 4. On the facts and circumstances of the case as well as law, the Ld. CIT(Appeals) has erred in passing the order ex-parte thereby not providing the appellant an opportunity of being heard and in blindly confirming the assessment order of the Ld. A.O., without providing any independent justification for the same. 15. We find that the assessee has raised similar grounds of appeal as raised by Mahesh Sreedhar Pareek in ITA No. 745/Srt/2018, facts of this appeal are almost similar, the Ld. CIT(A) passed the similar order, therefore, by maintaining the consistency, this appeal is also restore to the file of Ld. CIT(A) with similar direction as contained in para-9 (supra). In the result, the grounds of appeal raised by the assessee in all four years are allowed for statistical purpose. 16. In the result, the appeal of the assessee for all four assessment years 2009-10 to 2012-13 are allowed for statistical purpose. Registry is directed to place one copy of this order in respective files. Order announced in open court on 18 th July 2022 and result was also placed on notice board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 18/07/2022 Ranjan Amit Sr PS Mahesh Sreedhar Pareek & 5 others (A.Y. 2009-10 to 2012-13) 13 Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By order / / TRUE COPY / / Assistant Registrar, ITAT, Surat