Raman Sood , New Delhi V. ITO ward-28(4), New Delhi

ITA 4642/DEL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9512 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K GUPTA
• Keywords: Reopening of assessment; Bogus purchase; Period of limitation; Accommodation entries; Assessment record; Time period of passing order; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 207; 13; 148; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI G.S. PANNU, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER I.T.A NO.4642/DEL/2019 (ASSESSMENT YEAR 2 009-10) SH. RAMAN SOOD 38, KHEMCHAND MARKET, KHANPUR, NEW DELHI-110 062. PAN-AREPS 4176J VS. INCOME TAX OFFICER, WARD-28(4), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY SH. S.K. GUPTA, CA RESPONDENT BY SH. SANDEEP KUMAR, SR. DR DATE OF HEARING 23.12.2020 DATE OF PRONOUNCEMENT 18.03.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 08.03.2019 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-33, NEW DELHI {CIT(A)} FOR ASSESSMENT YE AR 2009-10. 2 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO 2.0 THE BRIEF FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF STEEL PLATES ETC. THE RETURN OF INCOME WAS FILED DECLARING A TOTAL INCOME OF RS.2,19 ,175/- ON 30.09.2009. ON RECEIPT OF INFORMATION FROM THE OFFI CE OF ASSISTANT DIRECTOR OF INCOME TAX (INV.II), FARIDABAD, REGARD ING THE ASSESSEE HAVING RECEIVED ACCOMMODATION ENTRY OF ALLEGED BOGU S PURCHASE, NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 (HEREINA FTER CALLED THE THE ACT) WAS ISSUED ON 30.03.2016. SUBSEQUENTLY, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.2,54,37,940/- U/S 1 47 R.W.S 143(3) OF THE ACT AFTER MAKING AN ADDITION OF RS.2, 52,18,773/- ON ACCOUNT OF ALLEGED BOGUS PURCHASE. 2.1 THE ASSESSEE APPROACHED THE LD. FIRST A PPELLATE AUTHORITY CHALLENGING THE REOPENING OF ASSESSMENT A S WELL AS CHALLENGING THE ADDITION ON MERITS OF THE CASE. 2.2 THE LD. FIRST APPELLATE AUTHORITY, HOWEV ER, UPHELD THE INITIATION OF RE-ASSESSMENT PROCEEDINGS AND ALSO UP HELD THE ADDITION ON MERITS. 3 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO 2.3 AGGRIEVED, THE ASSESSEE HAS NOW APPROA CHED THIS TRIBUNAL AND HAS CHALLENGED THE ORDER OF THE LD. FI RST APPELLATE AUTHORITY BY RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ORDER PASSED BY THE LD. CIT(A) IS B AD IN LAW AND NATURE AND LIABLE TO BE QUASHED BECAUSE: (A) THE VERY BASIS OF ISSUE OF NOTICE UNDER SECTION 14 7 AND ASSUMING JURISDICTION BY THE AO IS ERRONEOUS, AS WH ILE ASSUMING JURISDICTION FOR REOPENING, THE LD. AO HAS RECORDED THE REASONS THAT THE ASSESSEE HAS NOT FILED HIS RET URN OF INCOME FOR THE YEAR, THEREFORE, THE ASSESSEE HAS ES CAPED INCOME OF RS.2,48,99,600/-. WHEREAS, THE ASSESSEE H AD ALREADY FILED HIS RETURN OF INCOME FOR THE AY VIDE ACK. NO.011771 ON 21.12.2016 DECLARING INCOME OF RS.2,19 ,175/-. (B) THAT THE LD. CIT(A) FAILED TO APPRECIATE THE FACT T HAT THE REASONS FOR REOPENING OF ASSESSMENT BY THE LD. AO A RE BASED ON THE BORROWED SATISFACTION AND THAT THERE IS NO A PPLICATION OF INDEPENDENT MIND BY THE PCIT IN GRANTING APPROVA L FOR REOPENING. (C) THAT THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE AO HAS NOT DISPOSED OF THE OBJECTION SO RAISED BY THE ASSESSEE IN THE SPIRIT OF LAW. (D) THAT THE LD. CIT(A) FAILED TO APPRECIATE THE FACT T HAT THE SUBMISSION OF THE COPY OF VAT RETURNS FILED FOR THE YEAR, 4 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO WHEREBY THE NAMES OF PARTIES FROM WHOM PURCHASES WE RE MADE IS APPEARING, AND THAT THERE IS NO NAME OF THE PARTY M/S MAA DURGA TRADING COMPANY, THE ALLEGED PARTY IN THE YEAR UNDER ASSESSMENT, ALSO, THE DETAILS OF THE NAM ES OF THE PARTIES FROM WHOM THE PURCHASES WERE MADE DURING TH E YEAR WERE GIVEN, SHOWING THAT NO PURCHASES WERE MADE FRO M THE ALLEGED PARTY, WERE TOTALLY IGNORED. EVEN THE REFER ENCE BY THE LD. CIT(A) OF GKN DRIVESHAFT INDIA LTD. VS. ITO & O RSS. (2003) 259 ITR 19 (SC) THAT THE AO HAS FOLLOWED THE PROCED URE IS ERRONEOUS, IN AS MUCH AS THE REJECTION OF THE OBJEC TION OF ASSESSEE THAT NO PURCHASE FROM THE ALLEGED PARTIES WERE MADE, WAS DISPOSED OF BY HIM, WITHOUT GIVING ANY CO GENT REASON AS HOW THE VAT RETURNS ARE UNAUTHENTIC AND UNRELIABLE. 2. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFI RMING THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS.2,52,18,773/- MADE FROM ALLEGED PARTIES IN THE P REVIOUS YEAR. THE PROOF OF VAT RETURNS WITH THE NAME OF THE PARTI ES, DETAILS OF THE PURCHASES MADE WERE IGNORED AND THE ADDITIONS W ERE CONFIRMED MERELY ON WHIMS, BECAUSE: (A) THAT DURING THE PRECEDING TO PREVIOUS YEAR, THE PUR CHASES WERE MADE FROM THE ALLEGED PARTY. THE PURCHASE IN T HAT YEAR HAS BEEN ACCEPTED BY THE DEPARTMENT. THE RESUL TS OF THAT YEAR HAS BEEN ACCEPTED BY THE DEPARTMENT, HOW THE 5 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO PURCHASE, THAT HAS BEEN MADE IN THE PRECEDING TO PR EVIOUS YEAR NOT RELEVANT TO THE ASSESSMENT YEAR CAN BE ADD ED IN THIS YEAR. (B) THAT THE LD. CIT(A) HAS NOT CONSIDERED THE FACT, WH EN THE QUANTITATIVE TALLY OF THE PURCHASE, SALE, OPENING S TOCK AND CLOSING STOCK IS CORRECT, HOW THE PURCHASE FROM THE ALLEGED PARTY CAN BE BOGUS. 3. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEAL, THE LD. AO AS WELL AS LD. CIT(A) HAS GROSSLY ERRED IN D ISALLOWING THE WHOLE OF THE ALLEGED PURCHASE AND HOLDING THE SAME AS BOGUS. 4. THE APPELLANT CRAVES LEAVE FOR ADDITION, MODIFIC ATION, ALTERATION, AMENDMENT, DELETION OF ANY OF THE GROUN DS OF APPEAL. 3.0 THE LD. AUTHORIZED REPRESENTATIVE (AR) D REW OUR ATTENTION TO THE REASONS RECORDED FOR REOPENING AS CONTAINED IN THE ASSESSMENT ORDER. THE REASONS ARE BEING REPRODUCED HEREIN UNDER FOR A READY REFERENCE: A LETTER F.NO. JCIT/RANGE- 28/2015-16 DATED 23.03. 2016 FORWARDING HEREWITH THE LETTER OF F.NO.ADLT/INV- II/FBD./2015-16/4525 DATED 21.03.2016 RECEIVED FROM O/O ASSTT. DIRECTOR OF INCOME TAX (INV.-II), FARIDA BAD REGARDING SHARING OF INFORMATION WITH REGARD TO ACCOMMODATION ENTRY OF BOGUS PURCHASE OBTAINED BY M /S 6 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO RAMA ENTERPRISES PROP. SH. RAMAN SOOD(PAN- AREPS4176J) FROM SH. VINOD GOYAL THROUGH HIS PROPRI ETARY CONCERN I.E. M/S MAA DURGA TRADING COMPAY. IN THIS REGARD, IT IS SUBMITTED THAT SH. VIN OD GOYAL PROP, OF M/S MAA DURGA TRADING COMPANY GIVEN STATEM ENT U/S 131(1) OF INCOME TAX ACT, THAT HE HAD PROVIDED ACCOMMODATION ENTRIES THROUGH BOGUS BILLING AGAINST WHICH NO GOODS WERE SUPPLIED BY HIS COMPANY TO THE DIFFER ENT PARTIES. HIS COMPANY M/S MAA DURGA TRADING COMPANY RECEIVED E PAYMENT THROUGH CHEQUES AGAINST THE BILL S ISSUED AND THEN THEY WITHDREW THE CASH AND ARCER DEDUCTING THE COMMISSION, REMAINING CASH WAS GIVEN TO THE SAME PARTY FROM WHICH TNEY RECEIVED CHEQUE AGAINST BOGUS BILLS. THERE WAS NO SELLING/ SUPPLY OF GOODS OF THE SE PARTIES. SH. RAMAN SOOD PROP, OF M/S RAMA ENTERPRISES, WAS ONE OF THE PARTY W'HICH HE PROVIDED ACCOMMODATION E NTRIES THOUGH BOGUS BILLING AGAINST WHICH NO GOODS WERE SU PPLIED BY M/S MAA DURGA TRADING COMPANY. SH. RAMAN SOOD PROP, OF M/S RAMA ENTERPRISES GAVE CHEQUES TO VINOD GOYAL PROP, OF M/S MAA DURGA COMPANY WHICH HE DEPOSITED IN HIS BANKS NAMELY KOTATK MAHINDRA BANK, SECTOR-16, FARIDABAD AND AXIS BANK, FARIDABAD IN FO LLOWING MANNER IN F.Y. 2008-09 AGAINST THE BOGUS PURCHASES. 7 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO S.N DATE MODE OF PAYMENT CASH/CHEQUE AMOUNT IN RS. 1. 22.10.2008 CH EQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 40,000/ - - 2. 14.11.2008 CHE QUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 2,30,000/ - 3. 15.11.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 1,25,000/ - 4. 18.11.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 1,10,000/ - 5. 18.11.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 1,75,000/ - 6. 18.11.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 1,90,000/ - 7 24.11.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 50,000/ - 8. 24.11.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 1,80,000/ - 9. 24.11.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 2,10,000/ - 10. 08.12.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 2,25,000/ - 11. 08.12.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 1,50,000/ - 12. 12.12.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 1,60,000/ - 13. 12.12.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 1,50,000/ - 14. 18.12.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 2,85,000/ - 15. 19.12.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 2,20,000/ - 16. 23.12.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 3,10,000/ - 17. 27.12.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS, 1,05,000/ - 18. 30.12.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 1,20,000/ - 19. 30.12.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 4,95,000/ - 20. 30.12.2008 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 5,00,000/ - 21. 02.01.2009 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 1,60,000/ - 22. 03.01.2009 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS, 4,00,000/ - 23. 06.01.2009 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 1,00,000/ - 24. 14.01.2009 CHEQUE DEPOSITED IN KOTAK MAHINDRA BANK RS. 65,000/ - 25. 30.01.2009 FTD FROM 286.200,1917 TO ?86.201.88 RS.7,50,000/ - 26. 03.02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 3,95,000/ - 27. 05.02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 10,20,000/ - 28. 07.02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 6,45,000/ - 29. 10.02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 9,90,000/ - 30. 11,02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 9,90,000/ - 31. 11.02.2009 FTD FROM 286.200.1917 TO 286,201.88 RS. 12,60,000/ - 32. 12.02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 9,90,000/ - 33. 13.02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 12,25,000/ - 34. 18.02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 8,55,000/ - 35. 18.02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 8,10,800/ - 36. 09.02.2009 FTD FROM 286.200.1917 TO 286.201,88 RS. 8,00,000/ - 37. 24.02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 8,00,000/ - 38. 25.02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 9,90,000/ - 39. 26.02.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 4,68,800/ - 40. 09.03.2009 FTD FROM 286.200.1917 TO 286.201.88 - RS. 10,05,000/ - 41. 17.03.2009 FTD FROM 286.200.1917 TO 286.201.88 - RS. 7,00,000/ - 42. 19.03.2009 FTD FROM 286.200.1917 TO 286.201.88 RS. 1,25,000 / - 43. 19.3.2009 FTD FROM 286.200.1917 TO 286.201.88 ALL ARE FROM KODAK MAHINDRA BANK RS. 7,00,000/ - 44. 07.04.2008 AXIS BANK RS. 6,00,000/ - 8 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO 45. 07.04.2008 AXIS BANK RS. 3,00,000/ - 46. 04.04.2008 AXIS BANK RS. 4,00,000/ - 47. 04.04.2008 AXIS BANK RS. 4,00,000/ - 48. 04.04.2008 AXIS BANK RS. 3,00,000/ - 49. 15.04,2008 AXIS BANK RS. 1,25,000/ - 50. 17.04.2008 AXIS BANK RS. 3,60,000/ - 51. 21.04.2008 AXIS BANK RS. 11 ,60,000/ - 52. 24.04.2008 AXIS BANK RS. 2,50,000/ - 53. 24.04.2008 AXIS BANK RS. 1,30,000/ - 54. 30.04.2008 AXIS BANK RS. 2,50,000/ - 55. 14.05,2008 AXIS BANK RS. 3,50,000/ - TOTAL RS.2,48,99,600 / - SINCE THE ASSESSEE HAD DRAWN ABOVE MENTIONED CHEQUES TO M/S MAA DURGA COMPANY OF RS.2,48,99,600/- AND MAA D URGA TRADING COMPANY DEPOSITED THE SAME IN KOTAL MAHINDR A AND AXIS BANK. THUS, SH. RAMAN SOOD PROP OF M/S RAMA ENTERPRISES HAD ESCAPED INCOME OF RS.2,48,99,600 FO R BOGUS PURCHASING 3.1 THE LD. AR SUBMITTED THAT THE REOPENING WAS BAD IN LAW BECAUSE THE ASSESSING OFFICER HAS MENTIONED IN PAGE 6 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAD NOT FILED HI S RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. IT WAS SU BMITTED THAT, APPARENTLY, THE ASSESSING OFFICER HAD NOT SEEN THE PRIMARY MATERIAL WHICH WAS BEFORE HIM. IT WAS SUBMITTED THAT SINCE THE ASSESSEE HAD FILED HIS RETURN OF INCOME BUT THE ASSESSING OFFICE R HAD NOT TAKEN NOTE OF IT, IT WAS A CLEAR CASE OF NON-APPLICATION O F MIND BY THE ASSESSING OFFICER AND, THEREFORE, THE INITIATION OF RE-ASSESSMENT 9 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO PROCEEDINGS WAS BAD IN LAW. THE LD. AR FURTHER SUBMIT TED THAT AFTER THE REASONS HAVING BEEN SUPPLIED TO THE ASSESSEE, T HE ASSESSEE HAD RAISED OBJECTIONS TO THE REOPENING VIDE LETTER DATE D 26.12.2016 SUBMITTING THAT THE REASONS RECORDED WERE NOT CORRE CT IN AS MUCH AS THE ASSESSEE HAD NOT MADE ANY PURCHASE FROM M/S MAA DURGA TRADING COMPANY DURING THE ASSESSMENT YEAR UNDER CO NSIDERATION AND, THEREFORE, THE REOPENING, WHICH WAS INITIATED ON THE GROUND OF ALLEGED BOGUS PURCHASE WAS NOT MAINTAINABLE. THE LD . AR ALSO SUBMITTED THAT THE COPIES OF VAT RETURNS FILED BY T HE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION HAD ALSO BE EN FURNISHED BEFORE THE ASSESSING OFFICER WHEREIN THE DETAILS OF PARTY-WISE PURCHASES WERE STATED AND EVEN IN THE VAT RETURNS T HE NAME OF M/S MAA DURGA TRADING COMPANY WAS NOT APPEARING. HE DREW OUR ATTENTION TO THE COPIES OF VAT RETURNS AND ALSO COP Y OF THE LEDGER ACCOUNT OF M/S MAA DURGA TRADING COMPANY PLACED IN THE PAPER BOOK AND OUR ATTENTION WAS DRAWN TO THE FACT THAT TH E SAID LEDGER ACCOUNT ONLY CONTAINED OPENING BALANCE AND DEBITS P ERTAINING TO PAYMENTS MADE TO M/S MAA DURGA TRADING COMPANY DURI NG THE YEAR UNDER CONSIDERATION AND THAT THERE WERE NO PUR CHASES FROM 10 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO THE SAID COMPANY IN THE RELEVANT YEAR. IT WAS ALSO S UBMITTED THAT APPARENTLY THESE ASPECTS WERE IGNORED BY THE LOWER A UTHORITIES, ALTHOUGH THE SAME HAD BEEN BROUGHT TO THEIR NOTICE. THE LD. AR ALSO PLACED RELIANCE ON NUMEROUS JUDICIAL PRECEDENT S TO SUPPORT HIS CONTENTION THAT THE REOPENING WAS BAD IN LAW. 4.0 PER CONTRA, THE LD. SR. DEPARTMENTAL REPRES ENTATIVE (DR) PLACED RELIANCE ON THE CONCURRENT FINDINGS OF BOTH THE LOWER AUTHORITIES AND SUBMITTED THAT THE DEPARTMENT HAD A CTED ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATIO N WING REGARDING THE ASSESSEE BEING ONE OF THE PARTIES BENEFITING FR OM ACCOMMODATION ENTRIES RELATING TO BOGUS PURCHASES A ND, THEREFORE, THE REOPENING WAS WITHIN THE FOUR CORNERS OF LAW. THE LD. SR. DR ALSO SUBMITTED THAT THE ASSESSEE COULD NOT SUBSTANT IATE THE CLAIM OF NO PURCHASES HAVING BEEN MADE FROM M/S MAA DURGA TR ADING COMPANY DURING THE YEAR UNDER CONSIDERATION AS NO B OOKS OF ACCOUNT WERE PRODUCED. THE LD. SR. DR ALSO SUBMITTE D THAT THE ASSESSEE HAD AWAITED TO RAISE THE OBJECTIONS AGAINS T ISSUANCE OF NOTICE U/S 148 OF THE ACT ONLY AT THE FAG END OF TH E LIMITATION PERIOD AND, THEREFORE, THE CONDUCT OF THE ASSESSEE WAS NOT BONAFIDE. IT WAS 11 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO SUBMITTED THAT GIVEN THE FACTUAL MATRIX OF THE CASE , THE REOPENING WAS JUSTIFIED AND SO WAS THE ADDITION ON MERITS. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. IT IS UNDISPUTED TH AT THE RE- ASSESSMENT PROCEEDINGS WERE INITIATED ON RECEIPT OF CERTAIN INFORMATION FROM THE INVESTIGATION WING OF THE DEPA RTMENT THAT THE ASSESSEE WAS BENEFICIARY OF CERTAIN ACCOMMODATION EN TRIES PERTAINING TO BOGUS PURCHASES. THE ASSESSING OFFICE R HAS REPRODUCED THE TABLE CONTAINING ENTRIES PERTAINING TO PAYMENTS MADE TO M/S MAA DURGA TRADING COMPANY AMOUNTING TO RS.2,48,99,600/- AND HAS ADDED THE SAME TO THE INCO ME OF THE ASSESSEE ON THE GROUND THAT THE SAID AMOUNTS PERTAI NED TO PURCHASES WHICH WERE NOT ACTUALLY RECEIVED BY THE AS SESSEE IN STOCK. ON THE OTHER HAND, IT IS THE CONTENTION OF T HE ASSESSEE THAT THESE ENTRIES PERTAINED TO PAYMENTS MADE TO M/S MAA DURGA TRADING COMPANY AGAINST THE OPENING BALANCE STANDIN G TO THE PARTYS CREDIT AND THAT NO PURCHASES HAD BEEN MADE DURING THE YEAR UNDER CONSIDERATION FROM M/S MAA DURGA TRADING COMPANY. THIS CLAIM OF THE ASSESSEE IS VERIFIABLE FROM THE C OPY OF LEDGER 12 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO ACCOUNT OF M/S MAA DURGA TRADING COMPANY WHICH HAS B EEN ENCLOSED IN THE PAPER BOOK FILED BY THE ASSESSEE. T HIS LEDGER ACCOUNT CONTAINS ONLY DEBIT ENTRIES DEPICTING PAYME NTS MADE TO M/S MAA DURGA TRADING COMPANY AND THERE ARE NO CRED ITS APPEARING IN THE SAID LEDGER ACCOUNT WHICH COULD BE DEPICTING PURCHASES MADE FROM THIS COMPANY. THE ASSESSEE HAD SUBMITTED BOTH, BEFORE THE ASSESSING OFFICER AS WELL AS LD. C IT(A), THAT HE HAS NOT MADE ANY PURCHASES FROM M/S MAA DURGA TRADING C OMPANY DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE H AS SUBMITTED COPIES OF VAT RETURNS WHICH CONTAINS PARTY-WISE BREAK -UP OF PURCHASES MADE BY THE ASSESSEE DURING THE YEAR UNDE R CONSIDERATION BEFORE THE LOWER AUTHORITIES. HOWEVER , THESE VAT RETURNS WERE NOT CONSIDERED TO BE PROPER EVIDENCE B Y THE LOWER AUTHORITIES ON THE GROUND THAT THEY WERE NOT CERTIF IED BY THE VAT AUTHORITIES. THE ONLY REASON FOR REJECTING THE CONT ENTION OF THE ASSESSEE WAS THAT THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNT BEFORE THE LOWER AUTHORITIES. IN OUR CONSID ERED OPINION THIS APPROACH OF THE LOWER AUTHORITIES IS NOT CORRE CT IN AS MUCH AS IT REMAINS UNDISPUTED THAT THE ASSESSEE HAD DULY FI LED COPIES OF 13 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO AUDITED ACCOUNTS AT THE TIME OF FILING OF THE RETUR N OF INCOME AND SO IT CANNOT BE INFERRED THAT THE ASSESSEE DID NOT MAI NTAIN ANY BOOKS OF ACCOUNT. FURTHER THE EVIDENTIARY VALUE OF THE VA T RETURNS CANNOT BE SIMPLY BE BRUSHED ASIDE SPECIALLY WHEN THE SAME W ERE BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER IN THE VERY FIRST INSTANCE WHEN THE ASSESSEE WAS RAISING OBJECTIONS AGAINST THE INI TIATION OF REASSESSMENT PROCEEDINGS. EVEN THE TABLE PRODUCED B Y THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER DEPICTS O NLY PAYMENTS MADE TO M/S MAA DURGA TRADING COMPANY AND THERE IS NO ENTRY DEPICTING PURCHASES FROM THE SAID COMPANY. IN SUCH A SITUATION, ON THE FACTUAL MATRIX OF THE CASE, IT IS OUR CONSIDERE D OPINION THAT THE REOPENING IN THE INSTANT CASE WAS BAD IN LAW SPECIAL LY, WHEN THE ERROR IN THE APPROACH OF THE ASSESSING OFFICER IN R ECORDING OF REASONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES WAS BR OUGHT TO THE NOTICE OF THE ASSESSING OFFICER IN THE OBJECTIONS R AISED BY THE ASSESSEE AGAINST INITIATION OF RE-ASSESSMENT PROCEE DINGS. IT IS TRITE LAW THAT TO ACQUIRE JURISDICTION FOR REOPENING THE A SSESSMENT U/S 147 OF THE ACT, THE ASSESSING OFFICER MUST HAVE REA SON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T AND SUCH A 14 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO REASON TO BELIEVE SHOULD BE BASED ON TANGIBLE MATER IAL HAVING LIVE NEXUS WITH THE INCOME ESCAPING ASSESSMENT. INFORMATI ON OR MATERIAL RECEIVED FROM INVESTIGATION WING OR ANY OT HER WING OF THE DEPARTMENT CAN CONSTITUTE RELEVANT MATERIAL. HOWEVER , BASED ON SUCH MATERIAL, THE ASSESSING OFFICER HAS TO FIRST A PPLY HIS MIND ON THE FACTS AND ASSESSMENT RECORDS OF THE ASSESSEE TO PRIMA FACIE REACH A CONCLUSION THAT THERE IS SOME KIND OF LINK OR NEXUS WITH SUCH MATERIAL OR INFORMATION WHICH EMPOWERS HIM WITH THE JURISDICTION TO REOPEN THE CASE U/S 147 OF THE ACT. IN THE INSTANT CASE, ALTHOUGH, THERE WAS INFORMATION ABOUT THE ASS ESSEE HAVING RECEIVED BENEFIT OF ACCOMMODATION ENTRIES RELATING TO ALLEGED BOGUS PURCHASE, THE ASSESSEE HAD DEMONSTRATED BEFORE THE ASSESSING OFFICER WITH EVIDENCE THAT NO PURCHASES HAD BEEN MAD E BY THE ASSESSEE COMPANY FROM M/S MAA DURGA TRADING COMPANY DURING THE YEAR UNDER CONSIDERATION AND FURTHER THAT THE A MOUNTS IN THE TABLE REPRODUCED BY THE ASSESSING OFFICER ONLY DEPI CTED ENTRIES PERTAINING TO PAYMENTS MADE AGAINST OUTSTANDING OPE NING BALANCE OF THE SAID PARTY. WE ALSO NOTE THAT THE ASSESSING OFFICER HAS NOTED IN THE RE-ASSESSMENT ORDER THAT THE ASSESSEE HAS NO T FILED HIS 15 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO RETURN OF INCOME, ALTHOUGH, AS PER RECORDS, THE RET URN WAS FILED ON 30.09.2009. THUS, APPARENTLY, THERE WAS A MIS-APPRE CIATION OF THE ASSESSMENT RECORD BY THE ASSESSING OFFICER. THE HON BLE BOMBAY HIGH COURT IN THE CASE OF ANKITA A. CHOKESY VS. ITO AND ORS. [2009] 411 ITR 207 (BOMBAY) HAS HELD THAT THE CONDITIONS P RECEDENT FOR ISSUANCE OF NOTICE FOR REASSESSMENT IS THAT THE RE ASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT MUST BE BASED ON CORRECT FACTS, NOTICE BASED ON WRONG FACTS IS WITHOUT JURISDI CTION AND HAS TO BE QUASHED. SIMILARLY, THE DELHI BENCH OF THE TRIBU NAL IN THE CASE OF DCIT VS. M/S K.L.A. FOODS (INDIA) LTD. IN ITA NO .2846/DEL/2015, VIDE ORDER DATED 8 TH APRIL, 2019, HAS HELD THAT THE CONDITION PRECEDENT FOR ISSUANCE OF NOTICE FOR REASSESSMENT I S THAT REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT MUST BE BASED ON CORRECT FACTS. NOTICE BASED ON WRONG FACTS IS WITHOUT JURISDICTION AND IS LIABLE TO BE QUASHED. THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. M/S SNG DEVELOPERS LTD., REPORTED IN 404 ITR 312 HAS HELD THAT CONDITION PRECEDENT FOR ISSUE OF NOTI CE FOR RE- ASSESSMENT IS THAT THE REASON TO BELIEVE THAT INC OME HAS ESCAPED ASSESSMENT MUST BE BASED ON CORRECT FACTS. NOTICE B ASED ON WRONG 16 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO FACTS IS WITHOUT JURISDICTION AND HAS TO BE QUASHED. THIS ORDER OF THE HONBLE DELHI HIGH WAS CHALLENGED BEFORE THE HO NBLE APEX COURT AND THE HONBLE APEX COURT DISMISSED THE REVE NUES SPECIAL LEAVE PETITION IN SLP NO.42379/2007 VIDE ORDER DATE D 9 TH FEBRUARY, 2018. SINCE, IN THE INSTANT CASE, ALTHOUGH, THE ASS ESSEE HAS FILED RETURN OF INCOME, THE ASSESSING OFFICER PROCEEDING TO REOPEN THE ASSESSMENT BY MENTIONING THAT NO VOLUNTARY RETURN H AD BEEN FILED BY THE ASSESSEE AND, THEREAFTER, PROCEEDED TO REOPE N THE ASSESSMENT ON WRONG APPRECIATION FACTS ON RECORD, IN SUCH A SITUATION, WE HAVE NO OPTION BUT TO QUASH THE REASS ESSMENT PROCEEDINGS ITSELF. ACCORDINGLY, RELYING ON THE ABO VE MENTIONED JUDICIAL PRECEDENTS, WE QUASH THE RE-ASSESSMENT PROC EEDINGS. BEFORE PARTING, WE WOULD ALSO LIKE TO ADD THAT EVEN ON MERITS, THE ADDITION HAS NO FEET TO STAND ON AS THE IMPUGNED AD DITION HAS BEEN MADE ON ACCOUNT OF ALLEGED BOGUS PURCHASES AND THE ASSESSEE HAS DEMONSTRATED WITH AN AMPLE EVIDENCES THAT THERE WER E NO PURCHASES FROM M/S MAA DURGA TRADING COMPANY DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER HAS MADE A DISALLOWANCE ON ACCOUNT OF THOSE PURCHASES WHICH WERE NOT EVEN 17 ITA NO.4642 /DE L/2019 RAMAN SO OD VS. ITO DEBITED TO THE PROFIT & LOSS ACCOUNT DURING THE YEA R UNDER CONSIDERATION. THEREFORE, ON MERITS ALSO THIS ADDIT ION CANNOT BE SUSTAINED. 6.0 IN THE FINAL RESULT, THE APPEAL OF THE ASS ESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 18 TH MARCH, 2021. SD/- SD/- (G.S.PANNU) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER DATED:18/03/2021 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI